Iran: 30% Progress in Banks IFRS Adoption
EghtesadOnline: Iranian banks’ progress in adapting to their financial statements with the new model set by the Central Bank of Iran was around 20-30% during the previous Iranian year (ended March 20), said a private bank’s board member.
The CBI had required all banks to conform their balance sheets to International Financial Reporting Standards–the latest international accounting procedures.
“Another part of the IFRS compliance will be implemented in the current year as it is a necessity for establishing connections with international banks,” Asghar Pourmatin, a board member of the Eghtesad Novin Bank was quoted as saying by Securities and Exchange News Agency.
However, he noted, it would be better if the CBI made these changes through a step-by-step process–say in a 5-year period–to prevent any shock to the banking system, Financial Tribune reported.
“If banks are forced to suddenly implement the required changes in their financial statements, they would be faced by numerous problems as they are already dealing with soured assets and non-performing loans,” he added.
The IFRS-based balance sheet templates were first released by CBI in February to improve financial transparency and the international operations of Iranian banks.
CBI has seriously pursued the complete implementation of IFRS and other international banking requirements such as Basel Accords.
IFRS are a single set of accounting standards, developed and maintained by the International Accounting Standards Board for application on a globally consistent basis by developed, emerging and developing economies.
These standards help provide investors and other users of financial statements with the ability to compare the financial performance of publicly listed companies on a like-for-like basis with their international peers.
Pourmatin also named three issues hindering Iran’s international banking ties namely “non-standard financial statements”, “high ratio of NPLs” and “lack of capital”.
Gholamhossein Davani, a certified accountant also told SENA that the changes to banks’ balance sheets might create problems for banks in the short-term but in the long run, it will be beneficial for the Iranian banking system.
“Those banks that started complying with IFRS regulations from last year will not face any difficulties this year but those which refused to do so should implement them as soon as possible,” he added.
After the lifting of sanctions imposed on Iran’s banking system, the necessity of conforming to IFRS was crucial to ease and speed up the process of absorbing foreign resources. IFRS standards are now mandated for use by more than 120 countries, including the European Union and by more than two-thirds of G20 countries.