Accounting Groups Find IFRS Gets Lost in Translation

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June 16 —The Australian Accounting Standards Board and the Korea Accounting Standards Board are preparing to issue a final study on problems in translating the English version of international financial reporting standards into Korean.

The two boards are working jointly on a project “examining the manner in which Australian and Korean preparers and auditors of financial statements interpret particular terms in IFRS,” according to a summary prepared for the AASB meeting June 21-22.

Terms of Likelihood

In particular, the two boards will examine difficulties in interpreting so-called terms of likelihood that the International Accounting Standards Board uses in drafting and amending international standards.

“Terms of likelihood, such as ’remote’, ’likely’, ’virtually certain’ and ’probable’, are expressions often used in IFRS to denote levels of probability in prescribing recognition, measurement or disclosure of events and transactions in financial reports,” AASB and KASB said in a paper outlining their preliminary findings (12 APPR 03, 2/12/16).

Lack of Consensus

The preliminary study warned that lack of consensus on the meanings of terms of likelihood used in IFRS poses problems in interpreting international standards.

“Some terms of likelihood are interpreted differently in different languages by Korean accounting professionals indicating that there may be a translation issue that should be addressed,” the preliminary assessment said.

Barriers to Translation

Some terms of likelihood can't be translated precisely into Korean, the two boards noted.

The English words “probable” and “likely,” for example, mean the same in the Korean language.

In addition, “the terms ‘virtually certain’ and ‘reasonably certain’ are both translated into a single Korean term,” the preliminary study found.

Consultation with IASB

AASB and KASB plan to jointly consult with IASB on incorporating translation concerns into future standard setting, a summary of current AASB research said.

“Participants noted the need for more of such research and that this kind of issue should be taken into consideration when IFRS standards are set and amended,” a notice on the KASB web site said.

IASB's current deliberations on revising its conceptual framework (12 APPR 08, 4/22/16)— including assessing the concepts of neutrality and prudence — “might be informed by the knowledge that many preparers and auditors factor in their own level of ‘conservatism’ when applying IFRS,” the preliminary study said.

Proposed IASB Action

The IFRS Foundation, which oversees IASB, proposed in a June 10 exposure draft that IASB address problems in translating international standards from English into other languages (12 APPR 12, 6/17/16).

This might include seeking input for its exposure drafts on the use of certain terms that could prove difficult for non-native English speakers to translate or understand, the foundation said.

Publicizing Findings

The two boards aim to publish the final study next month.

KASB received some comments on the preliminary study, but “KASB and AASB have not discussed the comment letters and how they might affect the content of the research report,” AASB said.

The research partners also intend to present their findings this year to the International Forum of Accounting Standard Setters, a worldwide organization comprising national standard setters.

By David R. Jones

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To contact the editor responsible for this story: Laura Tieger Salisbury at

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