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OVERVIEW OF THE ACCOUNTING PROFESSION

International Scene – IFRS Foundation and IASB
The Overview of the The diagram below illustrates the organizational structure of the
Philippine Accounting standard setting bodies.

Profession

Hon. Antonieta Fortuna-Ibe

Commissioner

January 25, 2018

Regulators’Forum

OVERVIEW OF THE ACCOUNTING PROFESSION OVERVIEW OF THE ACCOUNTING PROFESSION

International Scene (cont’d) International Scene (cont’d)

• The International Financial Reporting Standards (IFRS) Foundation is a
not-for-profit international organization responsible for developing a single
set of high-quality, global accounting standards, known as IFRS Standards.
IFRS Standards are set by the IFRS Foundation’s standard-setting body, the
IASB.
• The Monitoring Board is a group of capital market authorities and provides
formal link between the Trustees and public authorities in order to enhance
the public accountability of the IFRS Foundation.
• The International Accounting Standards Board (IASB) is the independent
standard-setting body of IFRS Foundation responsible for the development
and publication of IFRS and for approving Interpretations of IFRS as
developed by the IFRS Interpretations Committee.
• The Trustees of the IFRS Foundation are responsible for the
governance and oversight of the IASB, including the due process for the
development of the accounting standards.
• The IFRS Advisory Council provides advice and counsel to the Trustees
and the Board, whilst the Board also consults extensively with a range of
other standing advisory bodies and consultative groups.
• The Accounting Standards Advisory Forum (ASAF) provides an
advisory forum in which members can constructively contribute towards
the achievement of the IASB’s goal of developing globally accepted
high-quality accounting standards.
• The IFRS Interpretations Committee is the interpretative body of the
International Accounting Standards Board, which reviews
implementation issues.
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OVERVIEW OF THE ACCOUNTING PROFESSION OVERVIEW OF THE ACCOUNTING PROFESSION

International Scene - IFAC
International Scene – IFRS Foundation and IASB IFAC Public Interest
(1) Public Interest
Oversight
Committee
Board
(PIC)
(PIOB)

The diagram below illustrates the international organizations that

(4)
(3)
INDEPENDENT
STANDARD-SETTING

supports the international accounting standards. BOARDS

(2)

International International
International Ethics International Public
Auditing and Accounting
Standards Board Sector Accounting
Assurance Education
for Accountants Standards Board
Standards Board Standards Board
(IESBA) (IPSASB)
(IAASB) (IAESB)
(c) (d)
(a) (b)

PRONOUNCEMENTS

International Standards on
International Auditing (ISAs)
International Standards on Quality
International Education
Standards (IESs)
International Education
Accounting
Control 1 (ISQC 1)
International Standards on Review Guidelines for Professional Code of Ethics for Professional International Public Sector
Engagements (ISREs) Accountants(IEGs) Accountant Accounting Standards (IPSAS)
Standards International Standards on
Assurance Engagements (ISAEs)
International Standards on Related
International Education Papers
for Professional Accountants
(IEPs)
Services (ISRSs)

OVERVIEW OF THE ACCOUNTING PROFESSION OVERVIEW OF THE ACCOUNTING PROFESSION

International Federation of Accountants (IFAC)
– is the global organization for the accountancy profession dedicated
to serving the public interest by strengthening the profession and
contributing to the development of strong international economies.
– IFAC is comprised of over 175 members and associates in more than
130 countries and jurisdictions, representing almost 3 million
accountants in public practice, education, government service,
industry, and commerce.
– IFAC has issued seven (7) Statements of Membership Obligations
(SMOs), which are meant to assists members like PICPA in ensuring
high quality performance by professional accountants.
– SMO 1 includes the guidance on the design of the Quality Assurance
Review, (QAR), the review cycle, team composition and procedures,
reporting, corrective and disciplinary actions, consideration of public
oversight and review of implementation and effectiveness.
Independent Standard-Setting Boards
International Auditing and Assurance Standards Board (IAASB) sets
high-quality international standards for auditing, assurance, and quality
control that strengthen public confidence in the global profession.
The International Accounting Education Standards Board (IAESB)
establishes standards, in the area of professional accounting education,
that prescribe technical competence and professional skills, values, ethics,
and attitudes.
The International Ethics Standards Board for Accountants (IESBA) sets
high-quality, internationally appropriate ethics standards for professional
accountants, including auditor independence requirements.
The International Public Sector Accounting Standards Board (IPSASB)
develops standards, guidance, and resources for use by public sector
entities around the world for preparation of general purpose financial
statements.

OVERVIEW OF THE ACCOUNTING PROFESSION
The Public Interest Oversight Board (PIOB) oversees the standard-
setting activities of the following independent boards: the IAASB, the
IAESB, and the IESBA;
The Public Interest Committee (PIC) provides assurance that the
IPSASB standard setting activities are in the public interest, by
providing recommendations on the terms of reference of the
IPSASB; arrangement and nominations of IPSASB members;
procedures and processes for formulation of the IPSASB strategy and
work plan and the development of International Public Sector
Accounting Standards.
OVERVIEW OF THE ACCOUNTING PROFESSION
Adoption of International Financial Reporting Standards
• In July 2005, the Philippines adopted the Philippine Financial Reporting
Standards which are fully converged with the International Financial
Reporting Standards.
Philippine Regulatory Commission (PRC)
The PRC performs two important functions:
• conducts and administers licensure examinations to aspiring
professionals, and
• regulates and supervises the practice of the professions
exercised in partnership with the forty-three (43) Professional
Regulatory Boards (PRBs) in the fields of health, business,
education, social sciences, engineering and technology. The
Board of Accountancy (BOA) is a leg of PRC that regulates the
accountancy profession in the Philippines.
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OVERVIEW OF THE ACCOUNTING PROFESSION
Philippine Scene
This diagram shows the structure within which international accounting and
auditing standards are adopted in the Philippines by the Financial Reporting
Standards Council (FRSC) and Auditing and Assurance Standards Council (AASC).
OVERVIEW OF THE ACCOUNTING PROFESSION
Philippine Scene
Financial Reporting Standards Council (FRSC)
• The FRSC was established by the Professional Regulatory Commission
(PRC) to assist the Board of Accountancy (BOA) in carrying out its
power and function to promulgate accounting standards in the
Philippines. The FRSC’s main function is to establish generally
accepted accounting principles in the Philippines.
• The FRSC monitors the technical activities of the IASB and invites
comments on exposure drafts of proposed IFRSs as these are issued by
the IASB. When finalized, these are adopted as Philippine Financial
Reporting Standards (PFRSs). The FRSC similarly monitors issuances of
the International Financial Reporting Interpretations Committee
(IFRIC) of the IASB, which it adopts as Philippine Interpretations–IFRIC.
PFRSs and Philippine Interpretations–IFRIC approved for adoption are
submitted to the BOA and PRC for approval.
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OVERVIEW OF THE ACCOUNTING PROFESSION OVERVIEW OF THE ACCOUNTING PROFESSION

Philippine Scene Philippine Scene

Financial Reporting Standards Council (FRSC) – (Cont’d)

Financial Reporting Standards Council (FRSC) – (Cont’d)
Members of FRSC
• The FRSC formed the Philippine Interpretations Committee (PIC) in Composed of fifteen (15) members with a chairman and fourteen (14)
August 2006 to assist the FRSC in establishing and improving financial representatives from:
reporting standards in the Philippines. The role of the PIC is principally No. of Members

to issue implementation guidance on PFRSs. The PIC members are BOA, SEC, BSP, COA, BIR 5 (1 each)
Financial Executives Institute of the Phil. (FINEX) 1
appointed by the FRSC and include accountants in public practice, the
PICPA:
academe and regulatory bodies and users of financial statements. Public Practice, Commerce and Industry, 8 (2 each)
Academe/Education, Government
TOTAL 14
Philippine Interpretations Committee (PIC)
• Assists FRSC in establishing and improving financial reporting standards
in the Philippines. The role is principally to issue implementation
guidance on PFRSs.

OVERVIEW OF THE ACCOUNTING PROFESSION OVERVIEW OF THE ACCOUNTING PROFESSION

Philippine Scene Auditing and Assurance Standards Council (AASC) – Cont’d

Auditing and Assurance Standards Council (AASC) Members of AASC

• AASC shall have 15 regular members with a term of three years,
• The AASC was created by the PRC upon the recommendation of the BOA to assist renewable for another term, coming from the following:
the BOA in the establishment and promulgation of auditing standards in the No. of Members
Philippines. Chairman 1
BOA, SEC, BSP, COA 4 (1 each)
• It is the stated policy of the AASC to make the International Standards and Practice Association of CPAs in Public Practice 1
Statements issued by the International Auditing and Assurance Standards Board PICPA:
Public Practice 6
(IAASB) the applicable standards and practice statements in the Philippines. In this Commerce and Industry, 3 (1 each)
connection, to facilitate their implementation in the Philippines, the International Academe/Education, Government
Standards and Practice Statements are made Philippine-specific and are described TOTAL 15
as “Philippine standards and practice statements”.
Philippine Institute of Certified Public Accountants (PICPA)
• Each final Philippine Standard and Practice Statement, as well as interpretations, if • The PICPA is the only accredited national professional organization of CPAs in the
deemed appropriate, shall be submitted to the PRC through the BOA for approval Philippines. Its primary functions established for the benefit and welfare of the
after which the pronouncements shall be published in the Official Gazette. After CPAs, the advancement of their profession, and the attainment of other
publication, the AASC pronouncement becomes operative from the effective date professional ends.
stated therein.

Council for Accreditation and Quality Control of
Council for Accreditation and Quality
Control of Practicing CPA’s
ETHICAL PRINCIPLES AND QUALITY CONTROL
ETHICAL PRINCIPLES AND
QUALITY CONTROL STANDARDS
30/01/2018
Practicing CPA’s
• Securities and Exchange Commission (SEC)
Practitioner
– Accredits practitioners who audit publicly listed
companies, companies with at least Php50
million worth of assets and companies with
secondary licenses.
• Bangko Sentral ng Pilipinas (BSP)
– Accredits practitioners who audit banks and
other financial institutions
• Insurance Commission (IC)
– Accredits practitioners who audit insurance
companies
In addition, the Board of Accountancy (BOA) also
accredits CPAs in public practice with basic
requirements.
STANDARDS
Code of Ethics for Professional Accountants in the
Philippines
– Establishes fundamental ethical principles for professional
accountants
Philippine Standards on Quality Control (PSQCs)
– Establish standards and provide guidance on a firm’s system
of quality control.
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Relationship of Accounting, Auditing and Relationship of Accounting, Auditing and

Ethical Standards Ethical Standards
 In acting in the public interest, a professional accountant should
observe and comply with the ethical requirements of the Code of
Code of Ethics Ethics for Professional Accountants. A distinguishing mark of the
for accountancy profession is the acceptance of its responsibility to the
public.
Professional
Accountants  According to the Code of Ethics, the accountancy profession is to work
to the highest standards of professionalism, to attain the highest levels
of performance and generally to meet the public interest requirement.
Accounting
Standards Auditing  A quality audit is achieved when the auditor’s opinion on the financial
(International Financial Standards statement can be relied upon as it was based on sufficient appropriate
Reporting Standards and its
Interpretations/Philippine
(International Standards on audit evidence obtained by an engagement team that exhibited
Auditing/Philippine
Financial Reporting Standards on Auditing) appropriate values, ethics and attitudes.
Standards and its
Interpretations)
 Any deviations from accounting, auditing and ethical standards would
warrant a modification of opinion.

ACCOUNTING AND AUDITING STANDARDS

LIST OF ACCOUNTING STANDARDS IN THE PHILIPPINES
IN THE PHILIPPINES
YEAR EFFECTIVE
TOTAL
STANDARD ISSUANCES 2017 ON OR
2017 2016 2015
ONWARDS BEFORE 2014

PFRS 16 3* - 1 - 12
PAS 28 - - - - 28
Philippine
26** - - - - 25
Interpretations

1**
PSA 37 - - - 36
*
* Pertains to PFRS 9, Financial Instruments and PFRS 15, Revenue from Contracts with Customers effective on 2018, and PFRS 16, Leases
effective on 2019.

** Effectivity date of Philippine Interpretation IFRIC 15 – Agreements for the Construction of Real Estate is still deferred.

*** Pertains to PSA 701 – Communicating key Audit Matters in the Independent Auditor’s Report which is effective for audits of financial
statements for periods ending on or after December 15, 2016.
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AMENDMENTS ON ACCOUNTING STANDARDS AMENDMENTS ON ACCOUNTING STANDARDS

EFFECTIVITY
STANDARDS DESCRIPTION EFFECTIVITY
DATE STANDARDS DESCRIPTION DATE
PFRS 2 Classification and Measurement of Share-based Payment Transactions 1/1/2018
PFRS 11 Accounting for Acquisitions of Interests in Joint Operations 1/1/2016
PFRS 4 Applying PFRS 9, Financial Instruments with PFRS 4, Insurance Contracts 1/1/2018
PAS 16 Clarification of Acceptable Methods of Depreciation 1/1/2016
PFRS 15 Clarifications to PFRS 15 1/1/2018
PAS 7 Disclosure Initiative 1/1/2017 PAS 38 Clarification of Acceptable Methods of Amortization 1/1/2016

PAS 12 Recognition of Deferred Tax Assets for Unrealized Losses 1/1/2017 PAS 16
Agriculture: Bearer Plants 1/1/2016
PFRS 10 PAS 41
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Deferred*
PAS 28 PAS 27 Equity Method in Separate Financial Statements 1/1/2016
PFRS 5 Changes in Methods of Disposal 1/1/2016 PFRS 2 Definition of Vesting Conditions 7/1/2014
PFRS 7 Servicing contracts 1/1/2016 PFRS 3 Accounting for Contingent Considertaion in a Business Combination 7/1/2014
PFRS 7 Applicability of the amendments to PFRS 7 to condensed interim financial statements 1/1/2016 PFRS 8 Aggregation of Operating Segments 7/1/2014
PAS 19 Discount rate: regional market issue 1/1/2016 PFRS 8 Reconciliation of the Total Reportable Segments’ Assets to the Entity's Assets 7/1/2014
PAS 34 Disclosure of information ‘elsewhere in the interim financial report 1/1/2016 PAS 16 Revaluation Method - Proportionate Restatement of Accumulated Depreciation 7/1/2014
PFRS 10 PAS 24 Key Management Personnel 7/1/2014
PFRS 12 Investment Entities: Applying the Consolidation Exception 1/1/2016
PAS 38 Revaluation Method - Proportionate Restatement of Accumulated Amortization 7/1/2014
PAS 28
PFRS 3 Scope Exceptions for Joint Ventures 7/1/2014
PAS 1 Disclosure Initiative 1/1/2016
PFRS 13 Portfolio Exceptions 7/1/2014
*On January 13, 2016, the FRSC decided to postpone the original effective date of January 1, 2016 of the said
amendments until the IASB has completed its broader review of the research project on equity accounting that may Clarifying the interrelationship between PFRS 3 and PAS 40 when classifying property as
PAS 40 7/1/2014
result in the simplification of accounting for such transactions and of other aspects of accounting for associates and joint investment property or owner-occupied property
ventures.

PRONOUNCEMENTS APPROVED BY THE

FRSC AND FOR APPROVAL BY THE
REGULATORS
EFFECTIVITY
STANDARDS DESCRIPTION DATE

PFRS 12 Clarification of the scope of the standard 1/1/2017

PAS 28 Measuring an associate or joint venture at fair value 1/1/2018
PAS 40 Transfers of Investment Property 1/1/2018
Philippine
Interpretation Foreign Currency Transactions and Advance Consideration 1/1/2018
IFRIC-22
PFRS 1 Deletion of short-term exemptions for first-time adopters 1/1/2018
Philippine
Interpretation Uncertainty over Income Tax Treatments 1/1/2019
IFRIC-23