Speakers included three IASB representatives – IASB Chairman Sir David Tweedie, Board Member Warren McGregor, and Director of Standards for SMEs Paul Pacter. Representatives of the Institute of Chartered Accountants of Pakistan (ICAP) presented an update on the adoption of IFRSs in Pakistan. They noted that the ICAP has identified three tiers of entities with different standards applying to each, as follows:
- Tier 1. Publicly accountable entities, including listed companies and banks and other financial institutions must apply IFRSs as adopted in Pakistan.
- Tier 2. Medium-sized entities apply a separate set of standards developed by ICAP (under development, around 60 pages).
- Tier 3. Small-sized entities apply a separate set of standards developed by ICAP (under development, around 6 pages).
Here is a summary of the adoption of IFRSs for Tier 1 entities:
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April 2006 Update on the Use of IFRSs in Pakistan
- The ICAP has adopted all IASs without modification except IAS 29 (hyperinflation). Whilst ICAP has adopted IAS 41, it is awaiting endorsement by the Securities and Exchange Commission of Pakistan (SECP).
- The Pakistani securities and bank regulators have not yet approved IAS 39 (financial instruments) or IAS 40 (investment property) for use by banks and similar financial institutions. Some impediments to their use by banks and similar financial institutions also exist in the tax laws. For all other types of entities, IAS 39 and IAS 40 are required.
- The ICAP has published exposure drafts of IFRS 2 (share-based payment), IFRS 3 (business combinations), IFRS 5 (assets held for disposal), and IFRS 6 (extractive industries), and comments have been received. Those four standards are now before the ICAP Council for adoption. When they are adopted, they will be considered by the SECP for endorsement. Until then, IAS 22 and IAS 35 continue in force in Pakistan.
- Because adoption of IFRS 4 (insurance contracts) would require amendment of the Pakistani insurance ordinance, the ICAP has deferred consideration of it until the IASB issues a final standard on Phase II of its Insurance Project.
- The ICAP will consider IFRS 1 for adoption after the remaining IASs and IFRSs (other than IFRS 4) are adopted in Pakistan.
- For Tier 1 companies, the auditor's report refers to conformity with IFRSs as adopted for use in Pakistan.
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