Changes in accounting procedures at a Bank shall be undertaken in accordance with the following rules:
- Changes in accounting principles:
- Where legitimate reasons require a change in accounting principles, at the end of the year prior to the projected change, the Bank shall set out the original accounting principles, the reason for changing to the proposed new accounting principles and their theoretical basis, concrete evidence that the new accounting principles will be superior to the old, and the cumulative projected effects of the changes in accounting principles and adoption of the new principles; the Bank shall seek a certified public accountant to provide an analysis of the reasonableness of each item and a review opinion, which shall be presented in a proposal to the board of directors for passage and thereafter submitted to the competent authority for approval and recordation.
- Where there are conditions as set forth in Statement of Financial Accounting Standards No. 8, paragraph 12, in which substantive difficulty prevents determination of the cumulative effect of change in accounting principle, the Bank shall set out the original accounting principles, the reason for changing to the proposed new accounting principles and their theoretical basis, concrete evidence that the new accounting principles will be superior to the old, and the reasons why the cumulative effect cannot be determined, and shall seek a certified public accountant to provide an analysis of the reasonableness of each item and a review opinion and to present opinion on the effects on the audit opinion for the year of the change to the new accounting principles, and thereafter proceed in accordance with the procedures set forth above.
- Except where the cumulative effect of the changes in accounting principles cannot be determined as set forth above, the Bank shall, within two months after the beginning of the year during which it changes to the new accounting principles, calculate the actual cumulative effect of the changes in accounting principles and submit the figure to the SFC for recordation following ratification by the board of directors. If the difference between the figures showing the actual cumulative effect and the projected cumulative effect differs by NT$10 million or more, the Bank shall present an analysis of the reasons for the difference between the two, request a certified public accountant's opinion on its reasonableness, and submit both to the competent authority.
- Where the circumstances in item 2 apply to a Bank, it shall disclose the effects of adopting the new accounting principles with respect to profits and losses for each relevant period in notes to the first quarter, semi-annual, third quarter, and annual financial reports in the year during which the new accounting principles are adopted.
- With the exception of purchases of new assets to which newly adopted accounting principles are applied, which may be exempted from application of the provisions of each of the preceding items, where any other changes in accounting principles have not been duly reported for approval and recordation prior to their adoption, the financial report for the year in which the new principles were adopted shall be rewritten, and the new principles may not be adopted until the year following approval and recordation of a supplementary report.
- Accounting estimates relating to changes in the estimated useful life of depreciable, depletable assets and the utility period of intangible assets shall be handled in accordance with items 1, 4, and 5 of the preceding subparagraph.