COLLEGE OF ACCOUNTANCY

C-AE14 Conceptual Framework and Accounting Standards

First Semester | AY 2020-2021

MODULE 15
A. Course Code – Title : C-AE14 – Conceptual Framework and Accounting Standards
B. Module No – Title : MO 15 Financial Reporting Standards
C. Time Frame : 1 week – 3 hours
D. Materials : Syllabus or course outline, writing materials

1. Overview
The last module for CFAS deals with the financial reporting standards. It starts with an
introduction of the financial reporting frameworks being used by reporting entities in the
Philippines. The second part enumerates the different Standards under full PFRS. Reliable sources
of information are also given to help students learn more about the application of the financial
reporting standards.

2. Desired Learning Outcomes

Our goal is that, upon completing this module, you will be able to accomplish the following
learning outcomes:
 “I can state the appropriate financial reporting framework that an entity must apply in
the preparation of its financial statements.”
 “I can identify which particular financial reporting standard I shall refer to for specific
accounts in the financial statements.”

3. Content/Discussion

Lesson 1 – Financial Reporting Frameworks

In the previous modules, we have discussed that the Conceptual Framework for Financial
Reporting provides the foundation for the development of financial reporting standards. The
financial reporting standards include the presentation and disclosure requirements that reporting
entities must comply with in the preparation of financial statements. Other than the Conceptual
Framework and Standards, regulatory agencies also prescribe reportorial requirements.

In the Philippines, the Securities and Exchange Commission SRC Rule 68, as amended,
prescribes the general financial reporting requirements and additional requirements for issuers of
securities to the public. A link to where you can access this very important document is provided as
follows:

https://www.sec.gov.ph/wp-content/uploads/2019/12/2019Rule_RSRCRule68.pdf

Preparers of financial statements and auditors need this document because this serves as a
guide in the preparation of financial statements. So keep this in your drive or storage media and
watch out for future amendments because you will have to refer to this even after you graduate and
as you practice the profession.

Faculty: ROSALINDA E. PEREZ 1 | Page

 COLLEGE OF ACCOUNTANCY
C-AE14 Conceptual Framework and Accounting Standards
First Semester | AY 2020-2021

SRC Rule 68, as amended, states that the financial statements that shall be prepared and
filed by entities covered by this Rule shall be in accordance with the financial reporting framework
as prescribed therein. As defined in SRC Rule 68, financial reporting framework means a set of
accounting principles, standards, interpretations and pronouncements that must be adopted in the
preparation and submission of the annual financial statements of a particular class of entities, as
defined in this Rule by the SEC.

As a general rule,
a. For large and/or publicly-accountable entities –Philippine Financial Reporting
Standards (hereinafter referred to as “Full PFRSs”)

The unaccompanied Full IFRSs or Full PFRSs may be downloaded in the ifrs.org
website free of charge, after signing up for a free account.

https://www.ifrs.org/issued-standards/list-of-standards/

b. Medium-sized entities (MEs) – Philippine Financial Reporting Standards for SMEs

(PFRS for SMEs)

The PFRS for SMEs can also be downloaded from the ifrs.org website.

https://www.ifrs.org/issued-standards/ifrs-for-smes/

c. Small entities - Philippine Financial Reporting Standards for SEs (PFRS for SEs)

The PFRS for SEs can be downloaded from the PICPA website.

http://www.picpa.com.ph/attachment/292018161238886.pdf

d. Micro entities - Micro entities have the option to use as their financial reporting
framework either the income tax basis or PFRS for SEs

The aforementioned rules are subject to certain conditions and other frameworks may be
used by entities as stated in the revised SRC Rule 68. In tabular form, the criteria are presented as
follows:
Entities* Total assets Total liabilities Framework
(in millions) (In millions)
Large >P350 >P250 PFRS
Medium-sized >P100 to P350 >P100 to P250 PFRS for SME
Small P3 to P100 P3 to P100 PFRS for Small
Entities
Micro <P3 <P3 Income tax basis or
PFRS for Small
Entities

Faculty: ROSALINDA E. PEREZ 2 | Page

 COLLEGE OF ACCOUNTANCY
C-AE14 Conceptual Framework and Accounting Standards
First Semester | AY 2020-2021

*Publicly accountable entities have no quantitative criteria; refer to the SRC Rule if you want
to find out more about the definitions of these entities.

There are also separate Standards for financial reporting in the government and other forms
of organizations like cooperatives. While this module shall focus only on the Standards under Full
PFRSs, I want you to see the bigger picture and not think that these Standards under full PFRSs are
the only standards that the accountants use or follow in the preparation of financial statements. The
standards in the other financial reporting frameworks were adjusted to suit the needs of the
medium-sized, small and micro entities and the respective users of their financial information.

Lesson 2 – PASs and PFRSs

Knowing that other financial reporting frameworks are available, depending on the size and
nature of the reporting entities, we can now focus on the Standards that comprise the Full PFRSs. As
you proceed in your studies, particularly in financial accounting and reporting, intermediate
accounting and advanced financial accounting and reporting, you will deal with these specific
standards and study them in detail.

You should also keep in mind that Standards will be revised or change over time. In fact,
some of them will even be superseded or replaced with new standards, following the due process
that we have discussed in the earlier modules.

The ultimate goal of this module is to make you students aware that whenever accountants
prepare financial statements, we have to be guided by the appropriate standards for these accounts.
It is hoped that by enumerating the existing Standards, you will be able to easily identify which of
these you will need in actual practice in the not so distant future.

To date, the following Standards are in use by entities using the full PFRSs. Other than these,
we also have interpretations or the IFRICs which provides more clarity and help preparers apply
the Standards in their financial reports.

Code Title
PAS 1 Presentation of Financial Statements
PAS 2 Inventories
PAS 7 Statement of Cash Flows
PAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
PAS 10 Events after the Reporting Period
PAS 12 Income Taxes
PAS 16 Property, Plant and Equipment

Faculty: ROSALINDA E. PEREZ 3 | Page

 COLLEGE OF ACCOUNTANCY
C-AE14 Conceptual Framework and Accounting Standards
First Semester | AY 2020-2021

Code Title
PAS 19 Employee Benefits
PAS 20 Accounting for Government Grants and Disclosure of Government Assistance
PAS 21 The Effects of Changes in Foreign Exchange Rates
PAS 23 Borrowing Costs
PAS 24 Related Party Disclosures
PAS 26 Accounting and Reporting by Retirement Benefit Plans
PAS 27 Separate Financial Statements
PAS 28 Investments in Associates and Joint Ventures
PAS 29 Financial Reporting in Hyperinflationary Economies
PAS 32 Financial Instruments: Presentation
PAS 33 Earnings per Share
PAS 34 Interim Financial Reporting
PAS 36 Impairment of Assets
PAS 37 Provisions, Contingent Liabilities and Contingent Assets
PAS 38 Intangible Assets
PAS 39 Financial Instruments: Recognition and Measurement
PAS 40 Investment Property
PAS 41 Agriculture
PFRS 1 First-time Adoption of International Financial Reporting Standards
PFRS 2 Share-based Payment Standards and Interpretations
PFRS 3 Business Combinations
PFRS 4 Insurance Contracts
PFRS 5 Non-current Assets Held for Sale and Discontinued Operations
PFRS 6 Exploration for and Evaluation of Mineral Resources
PFRS 7 Financial Instruments: Disclosures
PFRS 8 Operating Segments
PFRS 9 Financial Instruments
PFRS 10 Consolidated Financial Statements

Faculty: ROSALINDA E. PEREZ 4 | Page

 COLLEGE OF ACCOUNTANCY
C-AE14 Conceptual Framework and Accounting Standards
First Semester | AY 2020-2021

Code Title
PFRS 11 Joint Arrangements
PFRS 12 Disclosure of Interests in Other Entities
PFRS 13 Fair Value Measurement
PFRS 14 Regulatory Deferral Accounts
PFRS 15 Revenue from Contracts with Customers
PFRS 16 Leases
PFRS 17 Insurance Contracts

You can create traditional tools like pen and paper flashcards or use online flashcards to
help you master these Standards. You can download apps in your mobile device or go to Cram.com
to create flashcards. You can also view summaries or guidance in the current applications of these
standards in the different publication of accounting firms like Deloitte, EY, PwC or organizations
like IFAC, IASB and ICAEW.

Deloitte – summaries of IFRSs

https://www.iasplus.com/en/publications/global/ifrs-in-your-pocket/2019

EY – effect of the coronavirus pandemic in financial reporting

https://www.ey.com/en_ph/ifrs-technical-resources/accounting-considerations-of-the-
coronavirus-pandemic-updated-august-2020

PwC – overview of the IFRSs

https://www.pwc.com/gx/en/audit-services/ifrs/publications/ifrs-19/pwc-ifrs--
overview-2019.pdf

Another favorite well of IFRS resources is the ICAEW website.

https://www.icaew.com/library/subject-gateways/accounting-standards/ifrs

What I know about the IFRSs, I attribute to the Institute of Chartered Accountants in
England and Wales (ICAEW) and the World Bank. These two organizations offered a certification
course for trainers in Asia during the first years of transition from the US GAAP to the IFRSs.

It helps to know where you can find reliable sources of information as there are many fake
and inappropriate sites in the internet. Keep these relevant and reliable resources in your Google
Drive or any cloud or local storage for easy reference every time you prepare financial statements
under full PFRS.

Faculty: ROSALINDA E. PEREZ 5 | Page

 COLLEGE OF ACCOUNTANCY
C-AE14 Conceptual Framework and Accounting Standards
First Semester | AY 2020-2021

Membership to professional organizations like PICPA will also allow you to attend seminars
and trainings about updates in the Standards and other pronouncements from regulatory bodies.
It is our duty as CPAs to be updated in the recent trends so that we can provide quality services to
our clients.

4. Progress Check: Using clean sheets of long bond paper or yellow pad, rewrite and complete
the following tables:
a. Financial Reporting Frameworks

Entities* Total assets Total liabilities Framework

(in millions) (In millions)
Large

Medium-sized

Small

Micro

b. PASs and PFRSs

Code Title
1. PAS 1
2. PAS 2
3. PAS 7
4. PAS 8
5. PAS 10
6. PAS 12
7. PAS 16
8. PAS 19
9. PAS 20

Faculty: ROSALINDA E. PEREZ 6 | Page

 COLLEGE OF ACCOUNTANCY
C-AE14 Conceptual Framework and Accounting Standards
First Semester | AY 2020-2021

Code Title
10. PAS 21
11. PAS 23
12. PAS 24
13. PAS 26
14. PAS 27
15. PAS 28
16. PAS 29
17. PAS 32
18. PAS 33
19. PAS 34
20. PAS 36
21. PAS 37
22. PAS 38
23. PAS 39
24. PAS 40
25. PAS 41
26. PFRS 1
27. PFRS 2
28. PFRS 3
29. PFRS 4
30. PFRS 5
31. PFRS 6
32. PFRS 7
33. PFRS 8
34. PFRS 9
35. PFRS 10

Faculty: ROSALINDA E. PEREZ 7 | Page

 COLLEGE OF ACCOUNTANCY
C-AE14 Conceptual Framework and Accounting Standards
First Semester | AY 2020-2021

Code Title
36. PFRS 11
37. PFRS 12
38. PFRS 13
39. PFRS 14
40. PFRS 15
41. PFRS 16
42. PFRS 17

After completing this progress check, can you now say that you have achieved our learning
outcomes?
 “I can state the appropriate financial reporting framework an entity must apply in the
preparation of its financial statements.”
 “I can identify which particular financial reporting standard I shall refer to for specific
accounts in the financial statements.”

4. Evaluation – to be uploaded as a separate Google Form

E. References
Cabrera, M. E., Ocampo, R. R., & Cabrera, G. A. (2018). Conceptual Framework and Accounting
Standards. Manila, Philippines: GIC Enterprises & Co., Inc.

Empleo, P. M., & Robles, N. S. (2019). The Philippine Financial Reporting Conceptual
Framework and Accounting Standards. Mandaluyong City, Philippines: Millennium Books,
Inc.

IFRS Foundation. (2017). PFRS.org. Retrieved June 11, 2020, from

https://www.ifrs.org/use-around-the-world/use-of-PFRS-standards-by-
jurisdiction/philippines/#participant

International Accounting Standards Board. (2018, March). Conceptual Framework for

Financial Reporting. London, United Kingdom.

Millan, Z. V. (2019). Conceptual Framework and Accounting Standards. Baguio City,

Philippines: Bandolin Enterprise Publishing and Printing.

Valix, C. T., Peralta, J. F., & Valix, C. A. (2019). Conceptual Framework and Accounting
Standards. Manila, Philippines: GIC Enterprises & Co., Inc.

Faculty: ROSALINDA E. PEREZ 8 | Page