Taiwan’s Financial Reporting Requirements: A Comprehensive Guide

Introduction

Taiwan has specific laws and regulations that govern financial reporting for businesses registered in the country. This guide provides an overview of Taiwan’s financial reporting requirements, including accounting books and records, financial statements, audit requirements, accounting standards, and auditor independence.

Accounting Books and Records

• Companies operating in Taiwan must maintain accounting records in accordance with specific guidelines.
• The fiscal year is typically the calendar year, but companies may be permitted to adopt a non-calendar year-end with approval from relevant authorities.
• Accounting books must be denominated in New Taiwan dollars (NTD), and foreign currency accounts must be translated into NTD for financial reporting purposes.

Financial Statements

• Profit-seeking enterprises in Taiwan are required to prepare a range of financial statements, including:
  • Business reports
  • Balance sheets
  • Income statements
  • Cash flow statements
  • Statements of changes in owners’ equity
• The format of these financial statements is set forth by the Accounting Research and Development Foundation (ARDF), while public companies must also follow guidelines prescribed by the Securities and Futures Bureau (SFB) of the Financial Supervisory Commission (FSC).

Audit Requirements

• Private companies with paid-in capital exceeding NT$30 million are required to have their annual financial statements audited and certified by a Taiwan-licensed certified public accountant (CPA).
• Public companies and financial institutions must also undergo audits, as well as meet additional reporting requirements.
• Public companies are required to have their annual financial statements audited within four months of the close of each fiscal year, while semi-annual financial statements must be audited within two months.

Accounting Standards

• Taiwan’s Financial Accounting Standards Committee under the ARDF has established standards for financial accounting and reporting, which are generally similar to those of IFRS and US GAAP.
• The Financial Supervisory Commission (FSC) plans to adopt IFRS by 2015 for listed companies, OTC companies, emerging companies, and financial institutions.

Auditor Independence and Auditing Standards

• The Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants cover matters related to:
  • Auditor independence
  • Reporting and disclosure requirements
  • Suggested audit procedures
  • General requirements
• Independent auditors must examine financial statements in accordance with current auditing rules and the Statements of Auditing Standards issued by the ARDF.

Conclusion

Taiwan’s financial reporting requirements are designed to ensure transparency and accountability among businesses operating within the country. By understanding these requirements, companies can better navigate the complexities of financial reporting and compliance.