Financial Reporting and Accountancy Standards

Financial Reporting Standards Council

• Renamed to Financial and Sustainability Reporting Standards Council (FSRSC)

International Sustainability Standards Board (ISSB)

• Created by IFRS Foundation to set IFRS Sustainability Disclosure standards

Continuing Professional Development

• Required for both renewal of CPA license and accreditation to practice the accountancy profession
• Required for every three years
• Requires 120 CPA credit units for accreditation to practice the accountancy profession
• Requires 15 CPA credit units for the renewal of CPA license
• CPAs reaching the age of 65 years are exempted from CPD requirements for renewal of the CPA license but not for accreditation to practice the accountancy profession

Accountancy Profession

• Regulated by R.A 9298 (The Philippine Accountancy Act of 2004)
• Board of Accountancy is the body authorized to promulgate rules and regulations
• Three main areas of practice: public accounting, private accounting and government accounting.

Public Accounting

• Single practitioners and partners of partnerships need to be registered CPAs in the Philippines
• Securities and Exchange Commission can register any corporation organized for the practice of public accounting
• Professional Regulation Commission upon favorable recommendation of the Board of Accountancy shall issue certificate of accreditation to CPAs in public practice
• Minimum requirement is three years of meaningful experience in public practice

National professional organizations of CPAs:

• Association CPAs in Public Practice (ACCPAP)
• Association of CPAs in Commerce and industry (ACPACI)
• National Association of CPAs in Education (NACPAE)

Conceptual Framework

• Highest level of authority
• Followed in the absence of a standard or an interpretation that specifically applies to a transaction
• Management considers its applicability in developing and applying accounting policy

Qualitative Characteristics of Financial Statements

• Either fundamental or enhancing
• Fundamental qualitative characteristics are relevance, faithful representation and materiality

Standard Setting Process Steps

• Research
• Discussion paper
• Exposure draft
• Standard

IFRIC Interpretations

• Considered authoritative and must be followed
• Cover newly identified financial reporting issues not specifically addressed
• Cover issues where unsatisfactory or conflicting interpretations have developed

Due Process System

• Enables interested parties to express their views on issues under consideration

Inventory Cost Flow Assumption

• FIFO consistently results in the highest income in a period of sustained inflation

LCNRV

• Net realizable value is the estimated selling price less estimated cost to complete and estimated cost of disposal

Equity Method

• Total receivable from an investee is reported separately

Bond Amortization

• Interest expense as a percentage of the bond carrying amount varies from period to period when effective interest method is used

Bond Proceeds

• Equal to the present value of the principal amount due at the end of the life of the bond plus the present value of the interest payments made during the life of the bond

Reportable Operating Segment

• Considered reportable when segment revenue is 10% or more, or assets are 10% or more, or liabilities are 10% or more, or segment profit or loss is 10% or more of the greater between combined profit of all profitable segments and combined loss of unprofitable segments

IFRS for SMEs

• Complies with all the requirements of IFRS for SMEs

Small Entities

• Inventories are measured at the lower of cost or market value
• Investment in associate shall be accounted for using cost model, fair value model or equity method
• Property, plant and equipment shall be accounted for using either the cost model or fair value method
• Their benefit obligation is calculated under company policy if higher than R.A. 7641

Small Entities

• Investment property shall be measured using either cost model or fair value model
• All borrowing costs shall be recognized as expense when incurred
• Biological asset shall be measured using either cost model or current market price model
• Leases are accounted for using either operating lease model or finance lease model

Accounting Standards for Entities

• SMEs: IFRS for SMEs
• Micro Entities: PFRS for Small Entities or Income Tax Basis
• Small Entities: PFRS for Small Entities

First Time Adopters

• Under IFRS 1, the first IFRS annual financial statements are called the opening IFRS statement of financial position
• An entity that presents first annual financial statements that conform with IFRS is known as a first-time adopter