The PFRSC has formed the Philippine Interpretations Committee (PIC), which issues implementation guidance on PFRSs. The chairman must have an experience or is currently a senior accounting practitioner. ACCOUNTING 2 PHILIPPINE ACCOUNTING STANDARDS (PAS) Set of accounting principles that are uniformly applied in the Philippines Outlines the provisions and requirements in preparing and presenting financial statements; applies to all businesses regardless of their form of organization and nature of operation INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) – set common rules to … [IAS 1.7]. [IAS 1.16], Inappropriate accounting policies are not rectified either by disclosure of the accounting policies used or by notes or explanatory material. Accounting Standards Board and the standards issued by the Board of the International Accounting Standards Committee, and each applicable Interpretation of the International Financial Reporting Interpretations ... $1 = P 51.20. view of Philippine Corporate Sector Accounting and Auditing Practices. 1. 1 Chapter 1 INTRODUCTION Recent developments brought about by the Philippine Public Financial Management Reforms and significant changes in the field of accounting prompted the harmonization of the existing accounting standards with the international accounting standards. [IAS 1.45], Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity. The auditor must have adequate technical training and proficiency to perform the audit 2. This summary includes all new standards and amendments issued before 31 December 2017 with an effective date beginning on or after 1 January 2018. Income taxes. Philippine Financial Reporting Standards 9 Financial Instruments . view of Philippine Corporate Sector Accounting and Auditing Practices. These words serve as exceptions. The 14 members or representatives must come from the following agency or group. [IAS 1.2], General purpose financial statements are those intended to serve users who are not in a position to require financial reports tailored to their particular information needs. a description of the nature and purpose of each reserve within equity. ... •Principles-based accounting standard geared towards the earlier recognition of impairment losses . Accounting Rules Tax Year The fiscal year begins on 1 January and ends on 31 December of the same year. IFRS - standards that are promulgated by the International Accounting Standards Board (IASB) which is based in London, UK. each financial statement and the notes to the financial statements. Income and expenses, including gains and losses. 7 Philippine Stock Exchange Monthly Report, December 2004. [IAS 1.27], The presentation and classification of items in the financial statements shall be retained from one period to the next unless a change is justified either by a change in circumstances or a requirement of a new IFRS. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox. Philippine Financial Reporting Standards (PFRSs) are currently fully converged with International Financial Reporting Standards (IFRSs) except for the deferral of IFRIC 15 Agreements for the Construction of Real Estate. Philippine Accounting Standards Title Effect ive Date Presentation of Financial Statements [superseded by PAS 1 (Revised)] 01/01/ 05 Amendment to PAS 1: Capital Disclosures 01/01/ 07 Presentation of Financial Statements 01/01/ 09 Amendments to PAS 32 and PAS 1: Puttable Financial Instruments and Obligations Arising on Liquidation 01/01/ 09 [IAS 1.18], IAS 1 acknowledges that, in extremely rare circumstances, management may conclude that compliance with an IFRS requirement would be so misleading that it would conflict with the objective of financial statements set out in the Framework. issued capital and reserves attributable to owners of the parent. When an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements, it must also present a statement of financial position (balance sheet) as at the beginning of the earliest comparative period. * Clarified by Disclosure Initiative (Amendments to IAS 1), effective 1 January 2016. That information, along with other information in the notes, assists users of financial statements in predicting the entity's future cash flows and, in particular, their timing and certainty. A different fiscal year may be used. ADA is Unaccompanied IFRSs may be The FRSC was established under the Implementing Rules and Regulations of the Philippine Accountancy Act of 2004 to assist the BOA in carrying out its power and function to promulgate accounting standards in the Philippines. International Accounting Standards (IASs) were issued by the antecedent International Accounting Standards Council (IASC), and endorsed and amended by the International Accounting Standards Board (IASB). ... •Principles-based accounting standard geared towards the earlier recognition of impairment losses . statement of comprehensive income (income statement is retained in case of a two-statement approach), recognised [directly] in equity (only for OCI components), recognised [directly] in equity (for recognition both in OCI and equity), recognised outside profit or loss (either in OCI or equity), removed from equity and recognised in profit or loss ('recycling'), reclassified from equity to profit or loss as a reclassification adjustment, owners (exception for 'ordinary equity holders'), income and expenses, including gains and losses, contributions by and distributions to owners (in their capacity as owners), a statement of financial position (balance sheet) at the end of the period, a statement of profit or loss and other comprehensive income for the period (presented as a single statement, or by presenting the profit or loss section in a separate statement of profit or loss, immediately followed by a statement presenting comprehensive income beginning with profit or loss), a statement of changes in equity for the period, notes, comprising a summary of significant accounting policies and other explanatory notes. 01/01/ 09. PHILIPPINE ACCOUNTING STANDARDS 1 PRESENTATION OF FINANCIAL STATEMENTS Objective of PAS 1The objective of IAS 1 (revised 1997) is to prescribe the basis for presentation of general-purpose financial statements, to ensure comparability both with the entity's financial statements of previous periods and with the financial statements of other entities. All rights reserved. Thus, it has approved two Statement of Financial Accounting [IAS 1.130], In addition to the distributions information in the statement of changes in equity (see above), the following must be disclosed in the notes: [IAS 1.137], An entity discloses information about its objectives, policies and processes for managing capital. PHILIPPINE ACCOUNTING STANDARDS 1 PRESENTATION OF FINANCIAL STATEMENTS Objective of PAS 1 The objective of IAS 1 (revised 1997) is to prescribe the basis for presentation of general purpose financial statements, to ensure comparability both with the entity's financial statements of PAS 10 Events after the Balance Sheet Date [IAS 1.82A]*. [IAS 1.80-80A], Concepts of profit or loss and comprehensive income, Profit or loss is defined as "the total of income less expenses, excluding the components of other comprehensive income". When an entity presents subtotals, those subtotals shall be comprised of line items made up of amounts recognised and measured in accordance with IFRS; be presented and labelled in a clear and understandable manner; be consistent from period to period; not be displayed with more prominence than the required subtotals and totals; and reconciled with the subtotals or totals required in IFRS. # Name Issued IAS 1 Presentation of Financial Statements 2007* IAS 2 Inventories … Further sub-classifications of line items presented are made in the statement or in the notes, for example: [IAS 1.77-78]: IAS 1 does not prescribe the format of the statement of financial position. information about how the expected cash outflow on redemption or repurchase was determined. 2016-02, Leases (Topic 842) (Leases). comparative information prescribed by the standard. [IAS 1.14], The financial statements must "present fairly" the financial position, financial performance and cash flows of an entity. [IAS 1.89], Choice in presentation and basic requirements, The statement(s) must present: [IAS 1.81A], The following minimum line items must be presented in the profit or loss section (or separate statement of profit or loss, if presented): [IAS 1.82-82A], Expenses recognised in profit or loss should be analysed either by nature (raw materials, staffing costs, depreciation, etc.) 1 – from the Board of Accountancy or by function (cost of sales, selling, administrative, etc). [IAS 1.76B], The line items to be included on the face of the statement of financial position are: [IAS 1.54], Additional line items, headings and subtotals may be needed to fairly present the entity's financial position. Construction contracts (IFRS 15 as of jan 1, 2018) PAS 12. Composition of the Financial Reporting Standards Council . [IAS 1.82A], An entity's share of OCI of equity-accounted associates and joint ventures is presented in aggregate as single line items based on whether or not it will subsequently be reclassified to profit or loss. Philippine Accounting Standards PAS Title Effective Date PAS 1 Presentation of Financial Statements [superseded by PAS 1 (Revised [IAS 1.60] In either case, if an asset (liability) category combines amounts that will be received (settled) after 12 months with assets (liabilities) that will be received (settled) within 12 months, note disclosure is required that separates the longer-term amounts from the 12-month amounts. [IAS 1.38], An entity is required to present at least two of each of the following primary financial statements: [IAS 1.38A], * A third statement of financial position is required to be presented if the entity retrospectively applies an accounting policy, restates items, or reclassifies items, and those adjustments had a material effect on the information in the statement of financial position at the beginning of the comparative period. The requirement of the existing Philippine Accounting Standards (PAS)* 41 Agriculture, is to measure biological assets and agricultural produce at fair value less cost to sell, except for biological assets where fair value cannot be measured reliably, in which case, should… Please read, International Financial Reporting Standards, IAS 1 — Presentation of Financial Statements, IAS 8 — Accounting Policies, Changes in Accounting Estimates and Errors, IAS 10 — Events After the Reporting Period, IAS 15 — Information Reflecting the Effects of Changing Prices (Withdrawn), IAS 19 — Employee Benefits (1998) (superseded), IAS 20 — Accounting for Government Grants and Disclosure of Government Assistance, IAS 21 — The Effects of Changes in Foreign Exchange Rates, IAS 22 — Business Combinations (Superseded), IAS 26 — Accounting and Reporting by Retirement Benefit Plans, IAS 27 — Separate Financial Statements (2011), IAS 27 — Consolidated and Separate Financial Statements (2008), IAS 28 — Investments in Associates and Joint Ventures (2011), IAS 28 — Investments in Associates (2003), IAS 29 — Financial Reporting in Hyperinflationary Economies, IAS 30 — Disclosures in the Financial Statements of Banks and Similar Financial Institutions, IAS 32 — Financial Instruments: Presentation, IAS 35 — Discontinuing Operations (Superseded), IAS 37 — Provisions, Contingent Liabilities and Contingent Assets, IAS 39 — Financial Instruments: Recognition and Measurement, Disclosure initiative — Accounting policies, Classification of liabilities — Effective date, Disclosure initiative — Principles of disclosure, Model financial statements and checklists, Educational material on applying IFRSs to climate-related matters, ESMA announces enforcement priorities for 2020 financial statements, We comment on the IASB’s exposure draft on general presentation and disclosures, IASB defers effective date of IAS 1 amendments, EFRAG endorsement status report 6 November 2020, Deloitte comment letter on general presentation and disclosures, EFRAG endorsement status report 28 August 2020, Effective date of IAS 1 amendments on classification, IFRS Practice Statement 'Making Materiality Judgements', SIC-8 — First-time Application of IASs as the Primary Basis of Accounting, SIC-18 — Consistency – Alternative Methods, SIC-27 — Evaluating the Substance of Transactions in the Legal Form of a Lease, SIC-29 — Service Concession Arrangements: Disclosures, Operative for periods beginning on or after 1 January 1975, Operative for periods beginning on or after 1 January 1981, Operative for periods beginning on or after 1 July 1998, Effective for annual periods beginning on or after 1 January 2005, Effective for annual periods beginning on or after 1 January 2007, Effective for annual periods beginning on or after 1 January 2009, Effective for annual reporting periods beginning on or after 1 January 2009, Effective for annual periods beginning on or after 1 January 2010, Effective for annual periods beginning on or after 1 January 2011, Effective for annual periods beginning on or after 1 July 2012, Effective for annual periods beginning on or after 1 January 2013, Effective for annual periods beginning on or after 1 January 2016, Effective for annual periods beginning on or after 1 January 2020, Effective for annual periods beginning on or after 1 January 2022, The new effective ate of the January 2020 amendments is now 1 January 2023, financial assets (excluding amounts shown under (e), (h), and (i)), investments accounted for using the equity method, financial liabilities (excluding amounts shown under (k) and (l)), current tax liabilities and current tax assets, as defined in, deferred tax liabilities and deferred tax assets, as defined in, non-controlling interests, presented within equity. Credit Losses The amendments in this Update amend the mandatory effective dates Credit Losses for all entities as follows: International Financial Reporting Standards, commonly called IFRS, are accounting standards issued by the IFRS Foundation and the International Accounting Standards Board (IASB). Thus, it has approved two Statement of Financial Accounting Comparative information is provided for narrative and descriptive where it is relevant to understanding the financial statements of the current period. Standards for recognising, measuring, and disclosing specific transactions are addressed in other Standards and Interpretations.ScopeApplies to all general purpose financial statements based on International Financial Reporting Standards. This Commission PAS/IAS 7. The objective of IAS 1 (2007) is to prescribe the basis for presentation of general purpose financial statements, to ensure comparability both with the entity's financial statements of previous periods and with the financial statements of other entities. summary quantitative data about the amount classified as equity, the entity's objectives, policies and processes for managing its obligation to repurchase or redeem the instruments when required to do so by the instrument holders, including any changes from the previous period, the expected cash outflow on redemption or repurchase of that class of financial instruments and. IAS 1.8 states: "Although this Standard uses the terms 'other comprehensive income', 'profit or loss' and 'total comprehensive income', an entity may use other terms to describe the totals as long as the meaning is clear. The FRSC is responsible for adopting and promulgating applicable corporate accounting standards in the Philippines. the level of rounding used (e.g. [IAS 1.61], Current assets are assets that are: [IAS 1.66], Current liabilities are those: [IAS 1.69], When a long-term debt is expected to be refinanced under an existing loan facility, and the entity has the discretion to do so, the debt is classified as non-current, even if the liability would otherwise be due within 12 months. To enable the Internal Auditors to fully understand the major standards adopted under the Philippine Public Sector Accounting Standards (PPSAS) required to be adopted by government agencies and instrumentalities classified as non-government business entities A complete set of financial statements includes: [IAS 1.10], An entity may use titles for the statements other than those stated above. Philippine Financial Reporting Standards (PFRS)/ Philippine Accounting Standards (PAS) Title Effective Date Brief Description Disclosure requirements for accounting policies, except those for changes in accounting policies, are set out in PAS 1 Presentation of Financial Statements. Bucket 1 (no significant increase in credit risk) Bucket 3 (impaired) Bucket 2 (with significant Page 4 PFRS 15: An Overview §International Financial Reporting Standard (IFRS) 15, Revenue from contract with customers, was issued in May 2014 by the International Accounting Standards Board (IASB) §IFRS 15 was adopted by the FRSC in 2016 as PFRS 15 §PFRS 15 replaces PAS 18, Revenue, PAS 11, Construction Contracts, and related interpretations effective January 1, 2018 Contact Us. New PFRS standards effective after 1 January 2018 Under paragraph 30 of PAS 8, entities need to disclose any new PFRSs that are issued but not yet effective and that are likely to impact the entity. This board superseded Accounting Standards Council (ASC), the board who created International Accounting Standards (IAS) originally, in 1970's with the hope to achieving greater consitency and comparability among accounting standards in the world. PAS 10. Dissimilar items may be aggregated only if they are individually immaterial. Philippine Accounting Standards (PASs) c. Interpretations. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (Hedging) Accounting Standards Update No. [IAS 1.36], An entity must normally present a classified statement of financial position, separating current and non-current assets and liabilities, unless presentation based on liquidity provides information that is reliable. The Philippine Financial Reporting Standards (PFRS)/Philippine Accounting Standards (PAS) are the new set of Generally Accepted Accounting Principles (GAAP) issued by the Accounting Standards Council (ASC) to govern the preparation of financial statements (Table 1). [IAS 1.32], IAS 1 requires that comparative information to be disclosed in respect of the previous period for all amounts reported in the financial statements, both on the face of the financial statements and in the notes, unless another Standard requires otherwise. 01/01/ 09 : (02) 723 0691 Conceptual Framework The World Bank review is part of the ROSC (Reports on the Obser- vance of Standards and Codes) exercise. Generally Acceptable (Implicit) This means that the principle has gained general acceptance due to practice over time and has been proven to be most useful. Preface to International Standards and Philippine Standards PSA 120 - Framework of Philippine Standards on Auditing PSA 200 (Revised and Redrafted) - Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing Statement of cash flows. Reports that are presented outside of the financial statements – including financial reviews by management, environmental reports, and value added statements – are outside the scope of IFRSs. PAS 1. The 14 members or representatives must come from the following agency or group. Principally, to issue implementation guidance on Philippine Accounting Standards (PAS), Philippine Financial Reporting Standards (PFRS) and related Interpretations (collectively referred to as PFRS) adopted by the Financial Reporting Standards Council (FRSC) from accounting pronouncements issued by the International Accounting Standards Board. expected to be settled within the entity's normal operating cycle. [IAS 1.74] However, the liability is classified as non-current if the lender agreed by the reporting date to provide a period of grace ending at least 12 months after the end of the reporting period, within which the entity can rectify the breach and during which the lender cannot demand immediate repayment. Objective of PAS 1 The objective of IAS 1 (revised 1997) is to prescribe the basis for presentation of general purpose financial statements, to ensure comparability both with the entity's financial statements of previous periods and with the financial statements of other entities. [IAS 1.10]. [Conceptual Framework, paragraph 4.1], IAS 1 requires management to make an assessment of an entity's ability to continue as a going concern. Philippine Financial Reporting Standards (PFRS)/ Philippine Accounting Standards (PAS) Title Effective Date Brief Description Disclosure requirements for accounting policies, except those for changes in accounting policies, are set out in PAS 1 Presentation of Financial Statements. [IAS 1.2] General purpose financial statements are those intended to serve users who do not have the authority to demand financial reports tailored for their own needs. ADA is The standard requires a complete set of financial statements to comprise a statement of financial position, a statement of profit or loss and other comprehensive income, a statement of changes in equity and a statement of cash flows. Assets can be presented current then non-current, or vice versa, and liabilities and equity can be presented current then non-current then equity, or vice versa. address of registered office or principal place of business, description of the entity's operations and principal activities, if it is part of a group, the name of its parent and the ultimate parent of the group, if it is a limited life entity, information regarding the length of the life. PAS 11. [IAS 1.3]Objective of Financial StatementsThe objective of general purpose financial statements is to provide information about the financial position, financial performance, and cash flows of an entity that is useful to a wide range of users in making economic decisions. PHILIPPINE ACCOUNTING STANDARDS 1 PRESENTATION OF FINANCIAL STATEMENTS Objective of PAS 1 The objective of IAS 1 (revised 1997) is to prescribe the basis for presentation of general purpose financial statements, to ensure comparability both with the entity's financial statements of previous periods and with the financial statements of other entities. For example, an entity may use the term 'net income' to describe profit or loss." Page 4 PFRS 15: An Overview §International Financial Reporting Standard (IFRS) 15, Revenue from contract with customers, was issued in May 2014 by the International Accounting Standards Board (IASB) §IFRS 15 was adopted by the FRSC in 2016 as PFRS 15 §PFRS 15 replaces PAS 18, Revenue, PAS 11, Construction Contracts, and related interpretations effective January 1, 2018 the name of the reporting entity and any change in the name, whether the financial statements are a group of entities or an individual entity. Philippine Financial Reporting Standards (PFRSs) are currently fully converged with International Financial Reporting Standards (IFRSs) except for the deferral of IFRIC 15 Agreements for the Construction of Real Estate. Auditing references such as PSA, PSRE, PSRS, PSQC, PAPS and other standards issued by the Auditing and Assurance Standards Council (AASC) in the Philippines Philippine Accounting Standards Friday, March 30, 2007. The statement must show: [IAS 1.106], * An analysis of other comprehensive income by item is required to be presented either in the statement or in the notes. Standards for recognising, measuring, and disclosing specific transactions are addressed in other Standards and Interpretations. If management concludes that the entity is not a going concern, the financial statements should not be prepared on a going concern basis, in which case IAS 1 requires a series of disclosures. The chairman must have an experience or is currently a senior accounting practitioner. An entity must disclose, in the summary of significant accounting policies or other notes, the judgements, apart from those involving estimations, that management has made in the process of applying the entity's accounting policies that have the most significant effect on the amounts recognised in the financial statements. PHILIPPINE ACCOUNTING STANDARDS 1PRESENTATION OF FINANCIAL STATEMENTSObjective of PAS 1The objective of IAS 1 (revised 1997) is to prescribe the basis for presentation of general purpose financial statements, to ensure comparability both with the entity's financial statements of previous periods and with the financial statements of other entities. expected to be realised in the entity's normal operating cycle, held primarily for the purpose of trading, expected to be realised within 12 months after the reporting period. disaggregation of inventories in accordance with, disaggregation of provisions into employee benefits and other items, numbers of shares authorised, issued and fully paid, and issued but not fully paid, par value (or that shares do not have a par value), a reconciliation of the number of shares outstanding at the beginning and the end of the period, description of rights, preferences, and restrictions, treasury shares, including shares held by subsidiaries and associates, shares reserved for issuance under options and contracts. A compilation of Philippine Accounting Standards (PAS) Philippine Financial Reporting Standards (PFRS) Philippine interpretations (PI) Philippine Standard on Auditing (PSA) Philippine Standards on Review Engagements (PSREs) Philippine Standards on Assurance Engagements (PSAEs) Philippine Standards on Related Services (PSRSs) Philippine Standards on Quality Control (PSQCs) Philippine … The World Bank review is part of the ROSC (Reports on the Obser- vance of Standards and Codes) exercise. Not be presented with equal prominence promulgated by the International Accounting Standards Update No Philippine Corporate Sector Accounting philippine accounting standards 1. Meet that objective, financial statements or in the Philippines equal prominence ( Topic 842 (. Term 'net income ' to describe profit or loss and other comprehensive income for the presentation of statements. Dissimilar items may be aggregated only if they are only hyphenated at the end the... 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