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Implementing International Financial Reporting Standards in Asia: Bringing Greater Transparency and Comparability to Asian Banks’ Financial Statements
In the wake of the Asia financial crisis of 1997-1998, market participants raised serious concerns about the reliability of reported financial data and the use of lenient or even “creative” accounting practices in Asia. It has been argued that while the lack of transparent, reliable and comparable financial information did not directly cause the financial crisis in East Asia, the magnitude of the crisis might have been diminished had there been more reliable accounting and greater disclosure standards to serve as an early warning sign for the banking institutions and other enterprises. This led to the recommendation that concerted national and international efforts should be made to develop and implement international accounting and reporting standards, compliance with which should be monitored and enforced. This Asia Focus report reviews the status of the implementation of International Financial Reporting Standards (IFRS) in various Asian economies, discusses the benefits of using one set of internationally accepted accounting principles, and provides some background information on the ongoing reviews of different jurisdictions’ accounting practices in connection with the federal banking agencies’ supervision of foreign banking organizations (FBOs) that operate in the United States.
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