Tough new international accounting rules are poised to hit balance sheets, and not just those of banks and financial institutions, says the president of the Federation of Accounting Professions (FAP).
The changes will also affect airlines, retailers, shipping firms, property developers and telecom providers, Prasarn Chuaphanich said.
The new set of International Financial Reporting Standards (IFRS) will require financial institutions to make larger provisions for financial instruments and credit losses. Companies will also have to put lease activities on balance sheets and recognise sales as income only when their customers pay the entire amount.
"However, it is only an accounting practice and should not hurt fundamental and business operations," Mr Prasarn told the Bangkok Post. "We believe that creditors and investors are aware of the change."
The changes, due to take effect in 2018, will be used by more than 100 countries, though not by some major economies such as the US, China and Japan.
Thailand adopted the IFRS in 2009 but will fully implement them one year after the effective date, as it takes time to translate the standards into Thai.
Under the new standards, banks are required to recognise not only impairment that has already occurred but also credit losses that are expected in the future, Mr Prasarn said.
"There are currently different levels of calculating loan-loss provisions and non-performing loans," he said.
As the new accounting standards require banks and other institutions to adopt the expected loss impairment model and this also will be applied to debt instruments, larger loss allowances will be required.
Mr Prasarn said the new rules will require companies to record lease assets on their balance sheets, which will have an impact on airlines, retailers and shipping companies, whose debt will increase significantly.
The new standards will permit companies to record revenue only when customers pay the entire amount, rather than before sales as they do now, so property developers and telecommunication companies will be affected, Mr Prasarn said.
The FAP will invite chief executives and chief financial officers of these companies to help them prepare for the changes.
All Thai companies will be affected by full implementation of the IFRS but the move will have a positive outcome, said Hans Hoogervorst, the London-based chairman of the International Accounting Standards Board, which authorised the standards.
"I think all Thai companies will be impacted by the adoption of the IFRS in a positive way because the Thai capital market will become much better connected with the global economy than it already is," he said.
"The transparency of Thailand's capital market will increase, which should lead to better access to capital with lower costs."
Mr Hoogervorst said a study had indicated that South Korea attracted greater flows of foreign capital and lowered the cost of raising capital once it adopted the IFRS.
Once the system is fully implemented, listed domestic companies will not have to waste time explaining to institutional investors about their accounting standards, said Mr Hoogervorst.
Thai authorities will be motivated to comply fully with the IFRS because they reflect a high level of corporate governance, he said, citing how the 1997 Asian financial crisis had prompted investors to seek transparent financial statements.
Thailand has made substantial progress in preparation for complying with the IFRS compared with its Asian peers, he said, although the country has yet to adopting standards relating to financial instruments.
Small and medium-sized enterprises have much simpler accounting practices than listed companies, he said.
Mr Hoogervorst said he did not think the new accounting standards would make it harder for airline companies to raise capital from financial institutions because of possible higher debt-to-equity ratios in their balance sheets.