NEW BOA PRONOUNCEMENT

BOA RESOLUTION 22-2018 – REDUCED REQUIREMENTS FOR ACCREDITATION

The Board of Accountancy has reduced the documents and process required for the
accreditation of CPAs in the Public Practice, Academe and Commerce and Industry. BOA
Resolution No.22-2018, which was published in the Philippine Star last February 24, 2018,
discarded the submission of the Professional Tax Receipt, NBI Clearance, the Certificate of
Membership of Good Standing in PICPA and the visitation of the office of the
CPA/Partnership/Firm in Public Practice (in lieu of this, the duly accomplished Quality
Accreditation Checklist and pictures will instead be submitted by the applicant).

BOA RESOLUTION 18-2018 – ADOPTION OF THE 2016 EDITION OF THE

INTERNATIONAL ETHICS STANDARDS BOARD FOR ACCOUNTANTS (IESBA)
CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS AS THE CODE OF ETHICS
FOR PROFESSIONAL ACCOUNTANTS IN THE PHILIPPINES, AND PRESCRIBING
AMENDMENTS THERETO
BOA RESOLUTION 19-2018 – PFRS FOR SMALL ENTITIES
The Securities and Exchange Commission has issued SEC Memorandum Circular No.05
(2018) adopting, as part of its financial reporting rules and regulations, the Philippine Financial
Reporting Standards (PFRS) For Small Entities in line with the corporate regulator’s Ease of Doing
Business initiatives. A small entity shall adopt this PFRS for annual periods beginning on or after
January 1, 2019. Earlier adoption is permitted. Small entities are those that meet all the following
criteria: (1) Total Assets of between PhP 3 million to PhP 100 million or total liabilities of between
PhP 3 million to PhP 100 million. If the entity is a parent company, the said amounts shall be based
on the consolidated figures; (2) Are not required to file financial statements under Part II of SRC
Rule 68; (3) Are not in the process of filing their financial statements for the purpose of issuing
any class of instruments in a public market, and; (4) Are not holders of secondary licenses issued
by regulatory agencies. This PFRS for Small Entities was developed in response to feedback of
small entities that PFRS for Small and Medium-sized Entities (PFRS for SMEs) is too complex to
apply. By reducing choices for accounting treatment, eliminating topics that are not generally
relevant to small entities, simplifying methods for recognition and measurement, and reducing
disclosure requirements, the PFRS for Small Entities allows small entities to comply with the
financial reporting requirements without undue cost or burden. Some of the key simplifications
introduced by the PFRS for Small Entities are as follows:
 Inventories are to be subsequently valued at the lower of cost and market value (i.e., the
probable selling price to willing buyers as of reporting date),
 Investment properties can be carried either at cost or at fair value, depending on the policy
choice made by the entity.
 There is no concept of "finance lease". All lease receipts (payments) are recognized as
income (expense) as earned (incurred).
 There is no accounting for onerous contracts.
 For equity-settled share-based payment transactions, an entity shall measure the goods or
services received, and the corresponding increase in equity, with reference to the net asset
value of the equity instruments granted. Net asset value is derived by dividing the total
assets of the entity less any liabilities, by the number of shares outstanding at measurement
date.
 For defined benefit plans, an entity is required to use the accrual approach in calculating
benefit obligations in accordance with Republic Act (RA) 7641, The Philippine
Retirement Pay Law, or company policy (if superior than RA 7641). Accrual approach is
applied by calculating the expected liability as of reporting date using the current salary of
the entitled employees and the employees' years of service, without consideration of future
changes in salary rates and service periods.
  Entities are given a policy choice of not recognizing deferred taxes in the financial
statements.
 Biological assets can be carried either at cost or at current market price, depending on the
policy choice made by the entity.
 Prior period adjustments are just captured in the opening balance of the current year, but
with appropriate disclosures.
The adoption of the PFRS for Small Entitles was recommended by the Association of Certified
Public Accountants in Public Practice (ACPAPP.) The PFRS for Small Entitles was approved by
the Financial Reporting Standards Council (FRSC) on December 13, 2017, and by the Board of
Accountancy (BOA) and the Professional Regulation Commission (PRC) on February 20, 2018.
 PRC Board of Accountancy

DR. NOE G. QUINOLA

GLORIA J. TOLENTINO-BAYSA ATTY. SAMUEL B. PADILLA

ARLYN SICANGCO - VILLANUEVA THELMA S. CIUDADANO

MARK ROMEO L. FUENTES GERVACIO I. PIATOR