No Obstacle to AGMs of IFRS-Compatible Banks

EghtesadOnline: The latest directive issued by the Central Bank of Iran obligating the conformity of banks to the International Financial Reporting Standards will not hinder lenders from holding annual general meetings and does not comprise meddling in the work of auditors, CBI's deputy for supervision said.

News ID: ۷۷۷۸۵۷

23 July 2017

"The annual general meetings of all banks have not been postponed [as a result of the directive] and lenders that have submitted their financial statements in line with the template released by the central bank will hold their meetings," Abbas Kamarei also told Fars News Agency.

"Only a few banks, which have so far failed in making their statements conform to the set standards, will have trouble convening their AGMs," he added.

On Wednesday, the central bank set a number of conditions regarding banks' financial statements whose fulfillment is necessary for shareholder's AGMs to be considered valid with the aim of protecting the interests of banks and credit institutions' depositors and shareholders, and maintaining the stability and health of the banking system, Financial Tribune reported.

According to CBI's directive, banks and credit institutions are obliged to present their financial statements and their footnotes, based on IFRS, to their board members, independent auditors, registered inspectors and also depositors and shareholders for the 2016-17 fiscal year in line with CBI's updated sample.

The directive emphasizes that banks and credit institutions must avoid releasing discrepant financial statements for an accounting period and also deems it necessary for banks and credit institutions' independent auditors to professionally consider only financial statements that are compatible with CBI's framework, avoiding any vague conditional articles that are hard to understand for shareholders and users.

The IFRS-based balance sheet templates were first released by CBI in February to improve financial transparency and the international operations of Iranian banks.

IFRS is a set of accounting standards developed by an independent, not-for-profit organization called the International Accounting Standards Board.

Asked how many lenders will now be able to hold their meetings, Kamarei said he is unaware of the precise number but a number of banks, whose statements have been approved by CBI, will hold their meetings in the following days.

At least three banks have reportedly been able to hold their meetings, namely Bank Ayandeh, Bank Hekmat Iranian and Bank Mellat.

The central bank moved to approve the shareholders' meeting of the former two on Wednesday, with the private Bank Ayandeh becoming the first lender to hold its meeting.

Asked why a considerable number of banks failed to base their financial statements on agreeable standards while the CBI had announced its commitment to IFRS long ago, Kamarei pointed out that conforming to the standards is a time-consuming process while auditors must also review the statements and give their verdict.

"The annual meetings might face a recess for a variety of reasons and the meetings being delayed is not necessarily a bad phenomenon," he added.

Stressing that more lenders will soon hold their meetings, the official noted that many companies active in the capital market have not held their shareholders' meetings for years.

He also referred to protracted talks between banks and auditors as another reason for the prolongation of the process of devising financial statements, saying it does not take long for CBI to review the finalized statements.

According to the CBI deputy, lenders themselves are eager to hold their meetings and conform to the standards as soon as possible in contrast to the previous year when everyone was not on the same page.

On criticisms that the central bank is interfering in the affairs of auditors, Kamarei stressed that anyone who makes such claims and has credible evidence can present them to relevant legal sources.