Monday, April 2, 2007

About Thai Accounting Standard

Transparency (Accounting Standards)

Even though Thailand does not adopt the US GAAP (General Accepted Accounting Principle) or the IAS (International Accounting Standard) in its entirety in the financial reports of listed companies, companies listed on the Stock Exchange of Thailand (SET) have to follow the Thai GAAP which implements 21 out of 34 standards set out by the IAS. Moreover, it is the policy and goal of the Institute of Certified Accountants and Auditors of Thailand (ICAAT) that within four years all the IAS that are applicable to Thailand will be adopted by the Thai GAAP. The complete list of Thai GAAP that has adopted the IAS is shown in Standard Adopted as Thai GAAP.

In addition to compliance with the Thai GAAP, companies that are listed on the SET are subjected to rigorous disclosure requirements. Their financial statements have to be reviewed by external and independent auditors and disclosed to the public on a quarterly basis. Their annual financial statements have to be audited by independent auditors and a majority of listed companies have the 5 international audit firms as their external auditors. These auditors apart from having to be licensed by the ICAAT, they also have to be registered with the Thai SEC and their work and standards of auditing are reviewed by the Thai SEC and the ICAAT on a regular basis.

The Thai SEC also requires listed companies to file their annual disclosure statements (Form 56-1) (see Appendix B). Contained in those statements must be extensive information on risk factors that the companies are facing, management discussion and analysis on past performance, and financial position as reflected in the financial statements. In case where there is any negative effect on performance of the companies, discussion in the annual statement should also provide detailed description of plans to avert the problems. The annual statement must also provide information of related parties transactions during the year; the significant ones of which are required by the SET to be approved by shareholder meetings. Discussions on the level of internal control and management control over the companies through audit committees, whose composition includes independent directors, must also be disclosed. The Thai SEC conducts random reviews of approximately a quarter of total number of such disclosure documents. Any company that fails to disclose such information are subjected to sanction by the Thai SEC.

Resource : Thailandoutlook.com

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