1. 2010 KAA Summer International Conference Busan, Korea Planned IFRS Adoption and Accounting Educators in Taiwan Ling-Tai Lynette Chou, Ph.D., CPA(Texas) Director of International Exchange, TAA Professor of National Chengchi University 1

2. Outline Progress of planned IFRS adoption in Taiwan Challenges facing accounting educators Recent TAA-sponsored conferences on IFRS CPA exam questions and IFRS Selected Research on IFRS in Taiwan Conclusion 2

3. 1. Progress of Planned IFRS Adoption in Taiwan 3

4. Progress of Planned IFRS Adoption in Taiwan In 2001 Taiwan government held an Economic Development Meeting and made a decision to converge with IFRS. The Financial Supervisory Commission (FSC) in 2009 officially announced the Roadmap for full adoption of IFRS: – Listed and financial companies are required to prepare IFRS F/Ss beginning 2013 with 2012 included as the comparative statements. – Non-listed companies will begin after 2015. 4

5. Progress of Planned IFRS Adoption in Taiwan Taiwan GAAPIFRS SFAS No. 34 Financial Instruments: Recognition and Measurement IAS 39 Financial Instruments: Recognition and Measurement SFAS No. 35 Impairment of AssetsIAS 36 Impairment of Assets SFAS No. 36 Financial Instruments: Disclosure and Presentation IAS 32 Financial Instruments: Presentation IFRS 7 Financial Instruments: Disclosures SFAS No. 37 Intangible AssetsIAS 38 Intangible Assets SFAS No. 38 Non-current Assets Held for Sale and Discontinued Operations IFRS 5 Non-current Assets Held for Sale and Discontinued Operations SFAS No. 39 Share-based paymentIFRS 2 Share-based Payment SFAS No. 40 Insurance ContractsIFRS 4 Insurance Contracts SFAS No. 41 Operating SegmentsIFRS 8 Operating Segments The standard statements released based on IFRS during the convergence era include: 5

6. Progress of Planned IFRS Adoption in Taiwan Current GAAPIFRSs 第 1 號財務會計觀念架構及財務報表之編製 Framework: Framework for the Preparation and Presentation of Financial Statements IAS 1 Presentation of Financial Statements IAS 16 Property, Plant and Equipment 第 2 號租賃會計處理準則 IAS 17 Leases 第 3 號利息資本化會計處理準則 IAS 23 Borrowing Costs 第 5 號採權益法之長期股權投資會計處理準則 IAS 28 Investments in Associates 第 6 號關係人交易之揭露 IAS 24 Related Party Disclosures 第 7 號合併財務報表 IAS 27 Consolidated and Separate Financial Statements 第 8 號會計變動及前期損益調整之會計處理 IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors 第 9 號或有事項及期後事項之處理準則 IAS 10 Events after the Reporting Period IAS 37 Provisions, Contingent Liabilities and Contingent Assets 第 10 號存貨之會計處理 IAS 2 Inventories 第 11 號長期工程合約之會計處理準則 IAS 11 Construction Contracts 第 12 號所得稅抵減之會計處理準則 N.A 第 13 號財務困難債務整理之會計處理準則 N.A 第 14 號外幣換算之會計處理準則 IAS 21 The Effects of Changes in Foreign Exchange Rates 第 15 號會計政策之揭露 IAS 1 Presentation of Financial Statements 6

7. Progress of Planned IFRS Adoption in Taiwan Current GAAPIFRSs 第 16 號財務預測編製要點 N.A 第 17 號現金流量表 IAS 7 Cash Flow Statements 第 18 號退休金會計處理準則 IAS 19 Employee Benefits IAS 26 Accounting and Reporting by Retirement Benefit Plans 第 19 號創業期間之會計處理準則 N.A 第 20 號部門別財務資訊之揭露 (2011 年將被第 41 號公報「營運部門資訊之揭 露」取代 ) IFRS 8 Operating Segments 第 22 號所得稅之會計處理準則 IAS 12 Income Taxes 第 23 號期中財務報表之表達及揭露 IAS 34 Interim Financial Reporting 第 24 號每股盈餘 IAS 33 Earnings Per Share 第 25 號企業合併－購買法之會計處理 IFRS 3 Business Combinations 第 28 號銀行財務報表之揭露 IFRS 7 Financial Instruments :Disclosures 第 29 號政府輔助之會計處理準則 IAS 20 Accounting for Government Grants and Disclosure of Government Assistance 第 30 號庫藏股票會計處理準則 N.A 第 31 號合資投資之會計處理準則 IAS 31 Interests in Joint Ventures 第 32 號收入認列之會計處理準則 IAS 18 Revenue 第 33 號金融資產之移轉及負債消滅之會計處理 IAS 39 Financial Instruments: Recognition and Measurement 7

8. Current GAAPIFRSs 第 34 號金融商品之會計處理準則 IAS 39 Financial Instruments: Recognition and Measurement 第 35 號資產減損之會計處理準則 IAS 36 Impairment of Assets 第 36 號金融商品之表達與揭露 IAS 32 Financial Instruments: Presentation IFRS 7 Financial Instruments :Disclosures 第 37 號無形資產之會計處理準則 IAS 38 Intangible Assets 第 38 號待出售非流動資產及停業單 位之會計處理準則 IFRS 5 Non-current Assets Held for Sale and Discontinued Operations 第 39 號股份基礎給付之會計處理準 則 IFRS 2 Share-based Payment 第 40 號保險合約之會計處理準則 IFRS 4 Insurance Contracts 第 41 號營運部門資訊之揭露 IFRS 8 Operating Segments 高度通貨膨脹經濟下之財務報導 ， 尚不適用. IAS 29 Financial Reporting in Hyperinflationary Economies 未訂 IAS 40 Investment Property 未訂 IAS 41 Agriculture 未訂 IFRS 1 First-time Adoption of International Financial Reporting Standards 未訂 IFRS 6 Exploration for and Evaluation of Mineral Resources 係取代 IAS 39 金融資產分類，目前未 依 IFRS 9 修訂第 34 號公報 IFRS 9 Financial Instruments Progress of Planned IFRS Adoption in Taiwan 8

9. 2. Challenges Facing Accounting Educators 9

10. (1)Traditional Chinese Translation Of IFRSs The First Committee of the FSC IFRS Task Force is in charge of the translation and final review of the Traditional Chinese IFRS ( 正體中文版 ). The former President of TAA, Professor Ding-Wong Cheng( 鄭丁 旺教授 ) of NCCU, is the Chairman of this 11-member Committee. The collaboration among accounting scholars across the Taiwan Strait is instrumental to maintain certain level of consistency in key-terms of the traditional and simplified Chinese translations of IFRS. The translation project is due to be completed by the end of this year. 10

11. (2) Other Aspects Regarding the IFRS Adoption The Fourth Committee of the FSC IFRS Task Force is responsible for professional training and public dissemination of IFRS related information. They continually sponsor many workshops and classes for practitioners to obtain updated knowledge regarding the adoption. Many instructors of the training sessions are from the academics and the Taiwan Accounting Research and Development Foundation (TARDF), the standard-setting organization in Taiwan. 11

12. (2) Other Aspects Regarding the IFRS Adoption To facilitate smooth transitions from historical cost principles to fair value accounting, many accounting educators have contributed to the forming of the Valuation Standards Committee under TARDF. Four Statements of Valuation Standards have been released by the Valuation Standards Committee: No. 01 : Summary of Valuation Standards (pronounced on Dec. 26, 2007) No. 02 : Code of Ethics (pronounced on Aug. 13, 2008) No. 03 : Valuation Report (pronounced on Aug. 21, 2009) No. 04 : Valuation Process (pronounced on Dec. 31, 2009) 12

13. (3) Impact of IFRS on Collegiate Accounting Education: Addition, Change or Reform? I Survey of accounting faculty members Ⅱ Survey of accounting department heads III Remaining questions 13

14. I. Survey of Faculty Members Respondents: – Accounting faculty members of universities/colleges in Taiwan Date: 2010/5/22 Location: – IFRS Teaching Workshop (sponsored by TAA) at National Taipei University Responses: 70 faculty members attended the workshop and 33 responded. 14

15. I. Survey of Faculty Members 15

16. I. Survey of Faculty Members Major difficulties in teaching IFRS – Lack of well-recognized teaching materials – Simultaneous coverage of U.S. GAAP and IFRS Limited teaching hours Confusion among students – Uncertain schedule to fully adopt IFRS – No sufficient training opportunities for the faculty – Few examples/exercises illustrating differences between U.S. GAAP and IFRS 16

17. I. Survey of Faculty Members 17

18. I. Survey of Faculty Members 18

19. I. Survey of Faculty Members 19

20. II. Survey of Accounting Department Heads Respondents: members of TAA Accounting Education Committee, all being accounting department heads Responses: A questionnaire was emailed to 23 department heads and 11 responded. 20

21. II. Survey of Accounting Department Heads Characteristics of the sample CategoryPercentage Public schools36.36% PhD. programs offered27.27% Master degrees offered81.81% Baccalaureate degrees offered81.81% 4-year technological institutions 18.18% Mean of number of faculty members 16 (S.D.= 6.39) 21

22. II. Survey of Accounting Department Heads Over 90% of respondents assert that their departments offer specific courses covering IFRS. All respondents assert that IFRS materials are supplemented in the traditional accounting courses. Major difficulties mentioned in offering IFRS courses – Hard to find qualified teaching faculty – Lack of appropriate IFRS teaching materials – Only a few students registered the IFRS-specific courses while most attendants are non-credit earning students – Difficulty in learning IFRS for students 22

23. III. Remaining Questions from the Survey How can we attend to the student needs and/or the accounting curricula in the IFRS adoption era? Are pure additions and changes of accounting course materials sufficient for student learning needs? Will these future decision makers be well equipped to deal with challenges in the IFRS era? Do we need more comprehensive accounting curriculum reform to enhance students’ judgment ability and/or professional skills? 23

24. 3. Recent TAA-sponsored Conferences on IFRS 24

25. Recent TAA-sponsored Conferences on IFRS TAA has continuously sponsored conferences on IFRS. ThemeDateCity/CountyLocation Challenges to Converge with IFRS in Taiwan 2009/3/13Taipei CityShih Chien University Outlook and Vision of IFRS Adoption2009/4/9Taichung County Providence University Challenges and Impacts of IFRS on Domestic Capital Markets 2009/5/19Taipei CityTakming University of Science and Technology 2009 Accounting Forum on IFRS2009/5/22Taipei CityChinese Culture University Impacts of IFRS on Taiwan Accounting Education and Solutions 2009/6/12Taipei CityNational Taiwan University 25

26. Recent TAA-sponsored Conferences on IFRS ThemeDateCity/CountyLocation Educational and Practical Conference on IFRS & XBRL 2009/8/21~ 2009/8/22 Tainan County Tainan University of Technology Plan for Convergence with International Financial Reporting Standards 2009/11/13Taipei CityShih Chien University Challenges Accounting Educators Face in the IFRS Era 2009/12/10~ 2009/12/11 Tainan CityNational Cheng Kung University Implementation and Challenges of International Accounting Principles 2009/12/17~ 2009/12/18 Taipei CitySoochow University 2010 PWC Conference on IFRS2010/5/14Taichung City National Chung Hsing University IFRS Educational and Academic Conference 2010/5/19~ 2010/5/20 Tainan County Chang Jung University 26

27. 4. CPA Exam Questions on IFRS 27

28. CPA Exam Questions on IFRS The percentages of IFRS-related questions in recent Taiwanese CPA exams: YearTotal %ProblemsObjective questions 200530%20%10% 200622%20%2% 200733%25%8% 200825%15%10% 200919%15%4% 28

29. CPA Exam Questions on IFRS SFAS No. 34 Financial Instruments: Recognition and Measurement SFAS No. 35 Impairment of Assets SFAS No. 37 Intangible Assets SFAS No. 38 Non-current Assets Held for Sale and Discontinued Operations SFAS No. 39 Share-based payment YearProblemsObjective questions 200520%8% 2% 2% 200620% 200710% 15%6% 2% 200815%2% 2% 6% 2% 200915%2% 29

30. CPA Exam Questions on IFRS Current Status: The FSC made an official request to the Ministry of Examination in March 2010 to include IFRS contents in future CPA examinations. MOEX Response: Meetings of accounting educators and professionals will start October 2010 to respond to FSC’s request. Major Issue: gradual inclusion or immediate full inclusion after the completion of the traditional Chinese translation in December? 30

31. Selected Research on IFRS in Taiwan Duh, R. R., S. H. Yen, and W. Y. Chen, Factors Affecting the Complete Convergence with International Financial Reporting Standards in Taiwan: An Empirical Study, Journal of Accounting and Corporate Governance, 1(2):15-37.(2004) Lin, S. and A. R. Yen, The effects of IFRS Adoption on Audit Fees for Listed Companies in China, The Illinois International Accounting symposium, June 2010, Taipei Hsu, W. H., R. R. Duh, and K. Cheng, Does control-based approach to consolidated statements reflect market price better than ownership-based approach, The Illinois International Accounting symposium, June 2010, Taipei 31

32. Conclusion Impacts of uncertainty regarding IFRS adoption in the U.S. – Teach only IFRS? – Lecture on both IFRS and U.S. GAAP? – Teach IFRS and supplement some materials of U.S. GAAP or vice versa? Strong demand for well-recognized teaching materials of IFRS – Traditional Chinese text books – English text books 32

33. Conclusion Suggestions regarding pedagogical methods – Emphasize understanding the essence of transactions – Cultivate students’ critical thinking and analytic ability rather than memorization of the rules – Apply active learning approaches, e.g. case studies, role plays, cross debates, etc. – Test students’ skills and ability accordingly 33

34. Acknowledgements Thank President Jang and KAA for this excellent opportunity for us to share our Taiwan experience and learn from colleagues in Australia, Singapore, Korea and Japan. Thank TAA President Shiue and his team members for providing relevant data and assistance in administering the surveys. Thank FSC Commissioner C.C. Liu for providing current status information. 34

35. Acknowledgements Thank my student assistants for their tireless efforts: AssistantTask Angela Lin Analyze the data Collect survey data Jennifer Chang Design the questionnaires Hsiu-Chin Lin Collect data Hsien-Lian Chiu Draft and prepare the PPT 35

36. Thank you! 36