In my post Eventful AGM 2017 for TSCC Thai-Swedish Chamber of Commerce I told about how Mr. Korn Chatikavanij, representative of the Democrat Party of Thailand and former Finance Minister of Thailand, gave an inspiring speech on “Thailand 4.0: The Rice of a Stagnant Nation?” and how we exchanged contact informations afterwards. I promised you a continuation and here it comes!
Meeting on accounting for SME
I described my thoughts on harmonization of accounting regulations for SME within the ASEAN for Mr. Korn Chatikavanij. He got interested and asked me to meet his assistant Mr. Noch Hautavanija “to outline my thoughts”, which I gladly agreed to.
Mr. Noch Hautavanija set up a meeting for us at Sheraton Grand Sukhumvit in Bangkok on April 27, 2017. He also brought a former colleague at KPMG, Ms. Loukpud Asinrut to meet me. She’s also a contact of his at Thai CPA and she have been working with Mr. Korn Chatikavanij on accounting for some of his projects.
Harmonized accounting regulations within ASEAN
My starting point for the meeting was my belief in opening the trade borders as an important mean of economic development, national and regional. Therefore I see the newly established ASEAN inner market, AEC, as an important step in the right direction. But there are many trade barriers to remove before such an inner market can work effectively.
I described the background on the accounting field, as it has been mapped by the World Bank in at least two reports. Listed and large companies within ASEAN apply IFRS to a high extent, which is not surprising as it is a natural global set of standards which are necessary for evaluation at a stock market.
For SME, however, the picture is not at all clear. Different member states in ASEAN use different limits to define SME and there’s no global natural standard. Some member states use the standard IFRS for SME, others don’t.
Important to harmonize, but not with IFRS for SME
I highlighted the great importance of harmonizing standards for SME, to remove the barrier of trade raised by different regulations when trying to establish business outside Thailand. Large companies have resources to deal with different regulations in other countries, SME don’t.
I also warned for adapting IFRS for SME as a regional standard in ASEAN. In my opinion the IFRS for SME is still too extensive and complicated for SME to handle, at least without hiring consultancy. A stunning experience is that in Sweden IFRS for SME have been adapted, but as a standard for larger companies (K3)! For smaller companies separate, simplified standards have been produced (K2 and K1).
The need for different categories
There’s also a big difference in size and resources between companies that all can be described as SME, from small-scale entrepreneurs to quite large entities, even if not so large that they are listed and should apply IFRS. Therefore there’s a need for separate treatment of the smallest companies compared to the medium-sized.
In the same time too many categories should be avoided, to not complicate the amount of regulations.
Two-level and two-way work
All-in-all a harmonization needs to be done by working on two levels, regional and national, and nationally in two ways, by legislation and additional standards.
We covered several adjoining topics, about possible obstacles and how they could be solved, but time runs fast and soon we had to close the meeting for this time.
I had prepared a documentation which I sent to Mr. Noch Hautavanija and Ms. Loukpud Asinrut after the meeting.
There’s a long way to go, but if a process of harmonizing the accounting regulations within ASEAN gets started I would really like to take part of it!
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