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Article 6
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To make an accounting change, a financial holding company shall do as follows:
- A change in accounting principle:
- If there is a legitimate reason for a change in accounting principles, then at the end of the year preceding the one in which the new accounting principles are to be implemented, the attesting CPA shall be requested to provide an item-by-item analysis and review opinion on the rationality of the theoretical basis and the reasons for using both the original accounting principles and the newly adopted principles, the reasons for changing to the new accounting principles, concrete evidence for the superiority of the new accounting principles, and the estimated cumulative effect of a change in accounting principles. These shall be submitted as a proposal for passage by the board of directors, after which they shall be submitted to the FSC for approval. Following FSC approval, the issuer shall make a public announcement of the estimated cumulative effect of the change to the new accounting principles and the attesting CPA's review opinion.
- If the cumulative effect of a change in accounting principles cannot be calculated due to practical difficulties as described in paragraph 12 of Statement of Financial Accounting Standards No. 8, the attesting CPA shall be requested to provide an item-by-item analysis and review opinion on the rationality of the theoretical basis and the reasons for using both the original accounting principles and the newly adopted accounting principles, the reasons for changing to the new accounting principles, concrete evidence for the superiority of the new accounting principles, and the reason that the cumulative effect of a change in accounting principles cannot be calculated, and after additionally providing an opinion on the impact on the auditing opinion for the year of the change to the new accounting principles, the matter shall be handled according to the above procedure.
- Unless it is not possible to calculate the cumulative effect of a change in accounting principles as referred to in the preceding item, within two months after the beginning of the year in which the new accounting principles go into effect, the actual cumulative effect of a change in accounting principles shall be calculated, reported to the board of directors, then reported to the FSC for recordation. If the difference between the actual cumulative effect of a change in accounting principles and the original estimated cumulative effect of a change in accounting principles is NT$10 million or more, and if the amount is also one percent or more of net operating revenues for the previous year or more than five percent of total paid-in capital, an analysis of the reason for the difference shall be given and the attesting CPA shall also be requested to provide an opinion on its rationality. The analysis and the attesting CPA's opinion shall be publicly announced and reported to the FSC.
- If the condition in item 2 applies to the issuer, then in the year in which the new accounting principles go into effect, the issuer shall disclose the effect of the change in accounting principles on the profits/losses in the notes to its first quarter, semi-annual, third quarter, and yearly financial reports.
- With the exception of the application of new accounting principles to newly purchased assets, which need not be handled in accordance with the provisions of the preceding items, when any other change in accounting principles is adopted without having first been duly reported for approval, the financial reports for the year in which the change to the new principles was implemented shall be restated, and the new accounting principles applied only in the year after a supplementary report has been filed and approved.
- With respect to the subjects of accounting estimates, any change to the useful life of a depreciable or depletable asset, or to the period of economic benefit of an intangible asset, shall be handled in accordance with the provisions of items 1, 4, and 5 of the preceding subparagraph.
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