Enquiry:

Commission has forwarded a requested which was received from a utility company (the subject Company). The provided information is given below:

1.    the subject Company has sought exemption from disclosure about impact of IFRIC-4 “Determining whether an arrangement contains a lease” and IFR1C-12 “Services Concession Arrangements” on its balance sheet based on the operational difficulties it has been facing from various stakeholders.

2.    It is pertinent to mention here that, the Securities and Exchange Commission of Pakistan (the “Commission”) vide S.R.O. 24 (1)/2012 dated January 16, 2012 after consultation with the Institute of Chartered Accountants of Pakistan (ICAP) provided relaxation to all companies including the “Power Sector Companies” and the companies that are not otherwise required to comply with International Financial Reporting Standards (lFRSs) from the requirements of IFRIC-4 and IFR1C-I2. The aforesaid exemption was however subject to compliance with the related disclosure requirements applicable in case of departure from any IFRS. Please note that, similar exemptions were also granted through Circular # 21/2009 dated June 22, 2009 and S.R.O. 87(1)/2011 dated February 02, 2011.

3.    In the instant scenario, the Commission previously has not granted any such exemption from disclosure requirements of IFRIC-4 and IFR1C-12 as it is contrary to the provisions of para 19 and 20 of International Accounting Standard (1AS)-1 (Presentation of Financial Statements). However, before proceeding further in the matter, we would like to have your view point in the subject matter being the apex regulator of the accounting profession in Pakistan.

Opinion:

The Committee considered your enquiry and would like to reiterate its earlier view that  being a member body of International Federation of Accountants (IFAC), ICAP has committed through signing the Statement of Membership Obligations (SMO) to make all possible endeavors to adopt and implement the International Financial Reporting Standards in our jurisdiction. Therefore, Institute is of the view that exemptions to individual companies from provisions of IFRS will defeat the objective of comparability and transparency of the financial statements.

(June 27, 2014)