The impact over the financial statements and operational performance of Construction company after its implementation of IFRS(International Financial Reporting Standards)

• Main Authors: Mao-Yi Hung, 洪茂益
• Other Authors: Jiun-Sheng Lin
• Format: Others
• Language: zh-TW
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/59389996263583845785

碩士 === 國立臺灣大學 === 國際企業管理組 === 99 === To face the globalization era in the world, Taiwan Accounting Research and Development Foundation continuously researched and revised the financial accounting principles and related standards in accordance with the concept of International Financial Reporting Standards (IFRS) in those years. However, the IFRSs became an exclusive accounting principle gradually, so the “directly adoption of IFRS” by the companies become a trend in the capital market globally. Till now, the enterprises of over 115 countries in the world have been required or planned to adapt IFRS directly for preparation their financial reports. The Financial Supervisory Commission of Executive Yuan, ROC also regulated all public listed companies by main board or listed companies of Taiwan GreTai counter in Taiwan should formally adapt IFRS since FY2013. Therefore since FY2012, all public listed companies should prepare the Performa financial information which would be disclosed in their financial reports. When a listed construction company adapted Taiwan GAAP, which were issued by Accounting Research and Development Foundation in Taiwan, of which accounting principles have existed somewhat differences with the concepts of IFRS. And the existed differences are related to the “definition of construction contract, construction revenue recognition, construction cost recognition, evaluation of contingent loss, accounting estimation change, deferred marketing expenditures and inventory evaluation and etc.” My thesis adapted the narrative research approach, and it referring to domestic or international accounting principles regarding to the construction contracts which are the issued generally accepted accounting principles with further interpretations. They all been probed into suitable main points about some variation topics regarding to the financial reports of construction companies as the examples, thus I summarized the trial balances which some accounts had been adjusted and showed financial results with its impacted amount. Therefore I also proposed some suggestions to those construction companies and to their investors in accordance to those problems. Due to the construction companies (a company with construction projects) adapted with IFRS in FY2008 and FY2009 by my recalculation, and we found some material impacts listed as followed, 1. The stockholder equity decreased 2. Operational revenue, current income/loss and the earning per share fluctuated. 3. Liability ration increased When the adoption of IFRS by the construction companies, it not only has material impact over financial information but it also has hugely influence over their operation performance and their operational models respectively. Therefore the construction companies, supervisory organizations or their financing institutes or investors should cautiously evaluate all confronted problems after they adopted IFRS. Thus my thesis is suggesting that the construction company should carefully evaluate the budged cash flow for each construction project for maintaining a healthy financial structure; especially they need to re-arrange the related articles or teams in their outsourced-selling contracts with related commission payments, which should comply with matching principles of its revenue recognition. Especially in disclosure of financial reports, the construction companies have to follow the regulations by Financial Supervisory Commission of Executive Yuan, ROC for full disclosure of related information with necessary reporting content when adopting of IFRS, which would be based on their achieved percentage of processed schedule. So I also suggested the supervisory organizations should clarify the responsibility of Taiwan Accounting Research and Development Foundation and the responsibility of supervisory organizations respectively. Once any disputes happened, the supervisory organizations have to build a formal explanation or interpretation channel for the construction company. To avoid the construction companies will indicate their opinions or interpretations respectively; the supervisory organizations should clearly stipulate the necessary content in details which should be fully disclosed in their financial reports by a construction company. At final, I’m also suggesting that the financial institute (loan lender) or their investor should carefully evaluate the assets’ quality of a construction company and then have to verify whether the cash flow from its operation is normal or not? In addition, the contingent loss and related risk in the company’s financial reports should be fully disclosed, which would be the solid reference for a credit approval by the financial institute or a further investing decision making by the investor subsequently.