PFRS or Philippine Financial Reporting Standards
Nature of PFRS
• PFRS are GAAP
• PFRS set out recognition, measurement, presentation, and disclosure
requirements dealing with transaction and events that are important in the
preparation and presentation of financial statements
• On eyes of non-accountants, PFRS are the laws of accounting
• PFRS are principle based rather than rule based
Scope of PFRS
- PFRSs apply to all profit-oriented entities preparing general purpose
financial statements
- Non-profit oriented entities are outside the scope of PFRS
- Special purpose reports prepared by profit-oriented entities are outside
the scope of PFRS
Structure of PFRS
- Title of PFRS
- Objective
- Scope
- Paragraphs (have equal authority)
○ Bold type - indicate main principles
Plain type - indicate supporting principles
Standard Setting Bodies
FSRSC or Financial Sustainability and Reporting Standards Council
- standard setting body in the Philippines
- Successor of ASC or Accounting Standards Council
- Made PFRS
- Creator is PRC (BOA)
IASB or International Accounting Standards Board
- standard setting body internationally
- Successor of IASC or International Accounting Standards Council
- Made IFRS
- Creator is IFRS Foundation
IFRS Foundation
- Non-profit organization (Board of Trustees)
- Controlling body of the organization composed of trustees
- Appoints the technical groups and advisory groups
- Raises funds for the whole organization
- Under Monitoring Board
○ The following are the technical groups:
§ IASB
□ The heart of the organization as it has the sole
responsibility of establishing and reviewing IFRS
□ Has 14 members appointed by the Board of Trustees with
initial term of 3-5 years
□ The appointed chairman automatically becomes a Chief
Executive of the IFRS Foundation
§ IFRS Interpretations Committee
□ Formerly known as IFRIC or International Financial
Reporting Interpretations Committee
□ Has the responsibility to develop interpretation for
approval by the IASB
□ Reports to IASB but is also appointed by the trustees
§ Working Groups
□ Part of the technical group of the organization and are
considered as the expert task forces for individual agenda projects of IASB
○ The following are the advisory groups:
§ IFRS Advisory Council
□ Is the formal advisory body to the IASB and the trustees
of the IFRS organization
□ The council advises on agenda and priorities
§ ASAF or Accounting Standards Advisory Forum
□ Advises on the technical standard-setting activities of
the IASB
Monitoring Board
- The trustees are publicly accountable to the Monitoring Board
- Monitoring Board appoints trustees of the IFRS Foundation
- Assures public accountability of the IFRS Foundation
FSRSC or Financial and Sustainability Reporting Standards
- Established by PRC under the IRR of RA 9298
- Made by PRC-BOA
- Created the PFRS
- Chairman plus 15 members appointed by PRC upon recommendation of BOA in
coordination with APO, with a term of 3 years and are renewable for another term
○ FSRSC members serves on a part time basis without compensation
○ The chairman should be a senior practitioner in any scope of
accounting practice
○ Composed of (total 15):
§ COA - 1
§ BOA - 1
§ SEC - 1
§ BSP - 1
§ Insurance Commission - 1
§ BIR - 1
§ FINEX (major organization of FS preparer and users) - 1
§ PICPA - 8 (2 per sector)
- Successor of the Accounting Standards Council (ASC)
○ Made by PICPA
○ Created the PAS
○ 8 members including chairman
§ Composed of (total 8):
§ COA - 0
§ BOA - 1
§ SEC - 1
§ BSP - 1
§ Insurance Commission - 0
§ BIR - 0
§ FINEX (major organization of FS preparer and users) - 1
§ PICPA - 4 (1 per sector)
Note:
- PFRS is collectively known as PFRS, PAS and Philippine Interpretations
- Interpretations are principally issued by the PIC or Philippine
Interpretations Committee. PIC was formed by the FSRSC in 2006
PIC members are appointed by FSRSC
Standard Setting Process
PFRS are developed through a due process that involves accountants and various
interested parties and individuals.
Due process for projects but does not necessarily involve the following steps:
Step 1: Consideration of pronouncements of the IASB
Step 2: Formation of a task force, when deemed necessary, to give advice to FSRSC
Step 3: Issuing for comment an exposure draft approved by a majority (9 out of 16)
of the FSRSC members: comment period will be at least 60 days unless a shorter
period (not less than 30 days) is considered appropriate by the FSRSC
Step 4: Consideration of all comments received within the comment period and when
appropriate preparing a comment letter to the IASB
Step 5: Approval of a standard or an interpretation by a majority of the FSRSC
members.
