Exposure draft of TFRS for NPAEs

The current Thai Financial Reporting Standards for Non-publicly Accountable Entities (“TFRS for NPAEs”) came into effect on 1 January 2011. Since then, businesses and their transactions have become more varied in terms of type, size, and stakeholders or related parties.

Keywords: Mazars, Thailand, Accounting, TFRS, NPAEs, TFAC, Exposure draft

27 June 2022

As a result, the Thai Federation of Accounting Professions (“TFAC”) believes that financial statements may not be prepared properly, or that some businesses should provide additional information or reports.

Therefore, TFAC has proposed to update TFRS for NPAEs. A public hearing was held on 27 April 2022 in order to receive opinions from all interested parties, including accountants, auditors, entrepreneurs, and management.

The revised TFRS for NPAEs are expected to become effective on 1 January 2023. The main changes are set out below:

Topic	Current TFRS for NPAEs	Revised TFRS for NPAEs
Number of chapters	There are 22 chapters in the current TFRS for NPAEs	Six new chapters will be added: agriculture; government grants; derivatives; business combinations; exploration for and evaluation of mineral resources; and service concession agreements.
Definition of Non-publicly Accountable Entities	The current TFRS for NPAEs defines NPAEs as those which are not: entities that have their equity securities and debt securities publicly traded; entities that have to submit their financial statements to the SEC, the SET, or other government bodies; entities that are governed by specific legislation, such as banks, insurance companies, securities companies, mutual funds and other financial institutions; and public companies.	The revised TFRS for NPAEs extend the definition of NPAEs to cover other types of entities, such as pawn shops and private asset management companies.
Preparation of interim financial information	The current TFRS for NPAEs does not allow the preparation of interim financial information.	Entities may choose to prepare interim financial information following Thai Accounting Standard (“TAS”) 34, ‘Interim Financial Reporting', by excluding irrelevant transactions such as cash flow, earnings per share, and disclosures of related parties.
Presentation of other comprehensive income	Complete financial statements under the current TFRS for NPAEs consist of the following: a statement of financial position; a statement of income; a statement of changes in equity; and notes to the financial statements.	The revised TFRS for NPAEs allows the presentation of other comprehensive income. Entities can choose to present a single combined statement of profit and loss and other comprehensive income or two separate statements.
Consolidated financial statements and financial statements presenting investments using the equity method	The preparation of consolidated financial statements and financial statements presenting investments using the equity method is not allowed.	Entities can choose to present consolidated financial statements and financial statements presenting investments using the equity method by following all five relevant financial reporting standards, which are as follows: TAS 27, ‘Separate financial statements’; TAS 28, ‘Investments in associates and joint ventures’; TFRS 10, ‘Consolidated financial statements’; TFRS 11, ‘Joint arrangements’; and TFRS 12, ‘Disclosure of interests in other entities’.
Measurement of property, plant and equipment subsequent to initial recognition – Revaluation method	Only use of the cost method is allowed for the subsequent cost recognition of property, plant and equipment.	The revised TFRS for NPAEs allows the use of the revaluation method if fair value can be measured reliably. The entire class of assets to which that asset belongs should be revalued. Revaluation should be carried out regularly (every 3 or 5 years) so that the carrying amount of the asset does not differ materially from its fair value at the date of the statement of financial position.
Amortization of the indefinite useful lives of intangible assets	The indefinite useful lives of intangible assets must be amortized for 10 years.	The indefinite useful lives of intangible assets must not be amortized for more than 10 years.