TOPIC 02 PREFACE TO PFRS

Philippine Financial Reporting Standards (PFRSs)

Generally Accepted Accounting Principles (GAAP) in the Philippines, acting as principle-based guiding principles for the preparation of financial statements dealing with specific transactions and events.

Scope of PFRS

PFRSs apply to all profit-oriented entities (both private and government-owned) preparing general purpose financial statements directed towards the common information needs of a wide range of users.

Financial Sustainability and Reporting Standards Council (FSRSC)

The current local standard-setting body in the Philippines, established by the PRC under the IRR of the Philippine Accountancy Act of 2004 to assist the BOA, issuing PFRSs.

International Accounting Standards Board (IASB)

The current international standard-setting body, successor of IASC, created by the IFRS Foundation in 2001, issuing IFRSs.

IASB (Technical Group)

Consists of 14 members appointed by trustees; responsible for establishing and reviewing IFRS and approving interpretations developed by the IFRS Interpretations Committee.

IFRS Interpretations Committee (Technical Group)

Develops interpretations for approval by the IASB and undertakes tasks at the request of the IASB.

IFRS Advisory Council (Advisory Group)

The formal advisory body to the IASB and the Trustees of the IFRS Foundation, consisting of representatives from groups affected by and interested in the IASB's work.

Accounting Standards Advisory Forum (ASAF) (Advisory Group)

Advises on the technical standard-setting activities of the IASB, providing a forum to contribute towards developing globally accepted high-quality accounting standards.

IFRS Foundation Trustees (Governance Group)

Oversees the IASB's work, structure, and strategy; responsible for fundraising, appointing IASB and advisory body members, and safeguarding IASB independence, but not involved in technical matters.

Monitoring Board (Governance Group)

Oversees and approves the trustees of the IFRS Foundation, assuring public accountability and ensuring Trustees discharge their duties.

Accounting Standards Council (ASC)

The predecessor of the FSRSC, created in November 1981 by PICPA to establish generally accepted accounting principles in the Philippines, issuing PAS.

Philippine Interpretations Committee (PIC)

Formed by the FSRSC in August 2006 to issue implementation guidance on PFRSs, replacing the Interpretations Committee created by the ASC.

PFRS Pronouncements

Collectively known as PFRS (corresponding to IFRS), PAS (corresponding to IAS), and Philippine Interpretations (corresponding to IFRIC/SIC/PIC interpretations).

Question: What is the composition of the FSRSC?

Answer: A Chairman plus 15 members (1 each from COA, BOA, SEC, BSP, IC, BIR, FINEX; and 8 from PICPA, with 2 per sector).

Question: What was the composition of the ASC?

Answer: 8 members including the chairman (1 each from BOA, SEC, BSP, FINEX; and 4 from PICPA, with 1 per sector).

Question: Who appoints the chairman and members of the FSRSC, and what is their term length?

Answer: Appointed by the PRC upon recommendation of BOA in coordination with APO. The term is 3 years, renewable for another term.

Question: What is Step 1 in the FSRSC standard setting due process?

Answer: Consideration of pronouncements of the IASB.

Question: What is Step 2 in the FSRSC standard setting due process?

Answer: Formation of a task force, when deemed necessary, to give advice to FSRSC.

Question: What is the comment period for an exposure draft under Step 3 of the FSRSC due process?

Answer: At least 60 days, unless a shorter period (not less than 30 days) is considered appropriate by the FSRSC.

Question: What happens in Step 4 of the FSRSC due process?

Answer: Consideration of all comments received within the comment period and, when appropriate, preparing a comment letter to the IASB.

Question: What is the final step (Step 5) in the FSRSC standard setting due process?

Answer: Approval of a standard or an interpretation by a majority of the FSRSC members.