CONCEPTUAL FRAMEWORKS AND ACCOUNTING STANDARDS
CHAPTER 1: INTODUCTION TO STANDARDS
I. INTERNATIONAL ACCOUNTING STANDARDS
SETTING BODIES
1. Who is responsible for the development of
international accounting and financial
reporting standards?
• Organizational Structure of the International
Accounting Standards Setting Body who is
mainly responsible for the insurance of
International Accounting Standards
THREE ORGANIZATINAL STRUCTURE OF IFRS FOUNDATION
IFRS FOUNDATIONS –
• It is a not-profit international organization
responsible for overseeing the work of the
International Accounting Standards Board
(IASB), the structure and strategy.
• They select board members of IASB
• The foremost objective of the IFRS foundation
is to develop, in the public interest, a single set
of high quality, understandable, enforceable
and globally accepted financial reporting
standards based on clearly articulated
principles.
• Have 22 trustees
IFRS FOUNDATION MONITORING BOARD –
• It 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.
INTERNATIONAL ACCOUNTING STANDARS BOARD
(IASB)-
• In other for the IFRS Foundation to carry its
mission as the standards setting body, the IASB
was created. It is independent standards-setting
body of IFRS Foundation responsible for the
development and publication of International
Financial Reporting Standards (IFRS) and for
approving interpretations of IFRS as developed
by the IFRS Interpretations Committee.
• The most important organizations here because
they’re the one actually creating the Accounting
Standards, they’re creating IFRS
• 12-16 board members
SUPPORTING GROUP OF IFRS FOUNDATION
IFRS INTERPRETATIONS COMMITTEE –
• It is the interpretative body of the International
Accounting Standards Board, which reviews
the implementation issues.
• There are 14 members appointed by the IFRS
Foundation Trustees
• They basically look at current issues or
problems in International Accounting
• To settle a current issue in accounting.
IFRS ADVISORY COUNCIL –
• It provides advice and counsel to the Trustees
and the Board, whilst the Board also consults
extensively with a range of the other standing
advisory bodies and consultative groups
• Provides guidance in terms of putting together
standards on what accounting issues is to be
addressed
ACCOUNTING STANDARDS ADVISORY FORUM (ASAF) -
• It 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.
 HIERARCHY OF IFRS FOUNDATION
1. IFRS – issued by IASB and most
authoritative in terms of International
Accounting Standards
2. IAS – issued by IFRS
3. INTERPRETATIONS – issued by IFRS and
clarify issues existing in IFR
HOW ARE IFRS STANDARDS DEVELOPED
• Developing Standards through an open and
inclusive process is an important part of our role
as the global accounting standards setter
PROCESS:
1. RESEARCH – explore and identify possible
solutions and seek feedbacks
2. SELECT – which projection graduate to the
actual standards setting
3. SKETCH OUT – what new accounting
standards might look like
4. PUBLISH – as an exposure draft
WHY DO THEY MATTER?
• FINANCIAL INFORMATION - Is the lifeblood of
capital markets
• international investors - need access to
information and information they can trust
• IFRS-
✓ they provide the global language of
financial reporting
✓ International investors trust IFRS
✓ bring transparency by providing high
quality and compatible information
✓ improve accountability by helping to
reduce the information gap
✓ helps companies and markets to operate
more efficiently
II. DEVELOPMENT OF ACCOUNTING STANDARDS
2. Is there a proper guideline followed by IASB IFRS
interpretation committee in developing and
accounting standard?
• The Due Process Handbook provides the full
processes which helps the IASB and IFRS
interpretation committee to follow a thorough
transparent and participatory due process
insurance of IFRS standards and interpretations
3. What are the three principles following by the DUE
PROCESS in order to carry out the mission of the
IASB?
• The due process requirements are built on the
following principle: transparency, full, and
fair consultation and accountability
4. What are the mandatory due process steps that
must be followed to protect the integrity of the
standards - setting process?
a) Debating any proposals in one or more
public meetings
b) Exposing for public comment age of any
proposed new standard, proposed
amendment to a standard or proposed
interpretations - with minimum
comment.
c) Considering in timely manner those
comment letters received on the
proposals
d) Considering whether the proposals
should be exposed again
e) Reporting to the advisory council of the
technical program, major projects,
project proposal and work priorities and
f) Ratification of any interpretation by the
IASB
5. What are the basic steps in developing an
accounting standard?
Step 1: Agenda Consultation
• The IASB is required to undertake public
consultation on its work program every five
years by way of a public request for
information.
• The ISB normally allows a minimum of 120
days to comment on the work program.
• The primary objective is to seek formal public
input on the strategic direction and balance of
the IASB's work program, including the criteria
 for assessing projects that may be added to the
IASB standards level program.
Step 2: Research Program
Main Purpose - is to analyze possible financial
reporting problems be collecting evidence of the
nature and extent of the perceived out coming and
assessing potential way to improve financial
reporting or to remedy a deficiency
Main Output- discussion paper and research paper
billion it is a comprehensive review of the issue
possible approaches to address the issue the primary
views of its author or the IASB and an innovation
to comment. It allows at least 120 days for comment
on a Discussion Paper and allow 60 days for other
requests of information
Step 3: Standard Setting Program
• If the board decides to amend standards or
issue a new one, the board will review the
discussion paper and published an exposure
draft for public consultation. It allows 120
days to comment on Exposure Draft
Step 4: Maintenance Program
• The process includes consulting on the
implementation of new or amended Standard to
identify any implementation problems that may
need to adjust if issues arise the IFRS
Interpretations Committee may decide to create
an IFRIC Interpretation of the Standards or
recommend a narrow scope amendment. Post
Implementation review (PIR) is also part of this
step
6. What are the minimum voting requirements for all
important IASB decisions?
7. What is supermajority?
• Supermajority requires 9 IASB (by ballot)
members in favor of the publication of the
document it has 15, or fewer appointed
members. However, if the IASB has 16
appointed members, the requirement for
supermajority is 10 members (by ballot).
Abstaining is equivalent to voting against a
proposal
8. What are the mandatory part of an Accounting
Standards?
• The mandatory parts of a standard are:
✓ The principles are the related application
guidance
✓ The defined terms
✓ The effective date and transition paragraphs
• Each standard is also normally accompanied by
additional materials that is not integral part of
the standards:
✓ A table of contents
✓ An introduction
✓ The basis of conclusion
✓ Dissenting options
9. What are the different accounting standards
adopted in the Philippines?
The PFRS collectively includes all the primary
accounting standards:
• Philippine Financial Reporting Standards
(PFRS) which corresponds to international
financial reporting standards. The PFRS are
numbered the same way as the IFRS (16 PFRS)
• The Philippine Accounting Standards which
correspond to International Accounting
Standards. The PAS numbered the same way as
IA. (25 IAS)
• Philippine Interpretation which corresponds to
Interpretation of the IFRIC (15 IFRIC) and the
Standing Interpretations Committee (SIC), and
interpretations developed by the Philippine
interpretations committee.
 10. Why do we have two different accounting
standards, namely IFRS and IAS?
• The IAS (International Accounting
Standards) were published by the
International Accounting Standards
Committee (IASC) between 1973 and
2001. In the 2001, the organization was
restricted to become the International
Accounting Standards Board (IASB), it has
agreed to adopt the set of standards that
were issued by IASC, but any standards to
be published after that would follow a
series known as the International Financial
Reporting Standards (IFRS)
• The principal of the IFRS takes precedence
if there's a contradiction with those of the
IAS, thus, resulting for some of the IAS
principles being dropped
III. PHILIPPINE ACCOUNTING STANDARD SETTING
BODIES
11. Is there a law governing now accountancy
practice in the Philippines?
• Yes, the law governing the practice of
accounting in the Philippines is the Philippine
Accounting act of 2004 - RA 9298. The PRC-
BOA is tasked to adapt the rules and regulations
necessary to carry out the provisions of the law
12. What is the setup of the accounting governing
bodies in the Philippines?
• In July 2005 the Philippines adopted the
Philippine financial reporting standards which
are fully converge with International Financial
Reporting Standards.
Below are the key players of the accounting
profession in the country
I. Philippine Regulatory Commission -
Board of Accounting (PRC-BOA)
The two important functions of PRC are:
• Conduct and administer licensure examinations
the aspiring professionals and
• Regulates the supervisors that practice of the
profession. The board of accounting is a leg of
PRC that regulates the accounting profession.
II. Financial Reporting Standards Council
(FRSC)
• The successor of the accounting standards
council whose main function is to establish
GAAP in the Philippines. FRCR was
established in the Board of Accounting in 2006
under the implementing rules and regulations of
the Philippine accounting act of 2004 – RA
9298.
• FRSC monitors the technical activities of the
IASB and invites comments on exposure draft
• It is composed of 15 members. The chairman
should had been or is presently in senior
accounting practitioner and fighting
representative or coming from: BOA (1); SEC
(1); BSP (1); BIR (1); COA (1); FINEX (1),
PICPA – Public Practice (2); PICPA –
Commerce and Industry (2); PICPA – Academe
(2) and PICPA -Government (2).
III. Philippine Interpretations Committee
(PIC)
• PIC was formed by the FRSC in August 2006
to assist the FRSC in establishing and
improving the financial reporting standards in
the Philippines
Main Objectives:
✓ Principally, to issue implementation
guidance of PAS, PFRS and related
 interpretations adopted by the FRSC from
accounting pronouncements issued by
IASB
✓ To comment on exposure draft of proposed
PFRC and other documents that may be
issued for comment by the FRSC
✓ To comment on exposure draft of proposed
accounting standards the proposed
regulations with accounting relevance that
may be issued by government agencies,
such as the SEC, BSP and insurance
Commission.
• There are (15) fifteen Representatives:
Accounting Firms; FINEX Academe (1);
SEC (1); BSP Insurance Commission BOA
(I). Each member shall serve for 3 years and
may be reappointed subject to the approval of
PIC members and FRSC.
IV. Auditing and Assurance Standards
Council (AASC)
• The AASC was created by PRC upon
recommendation of the BOA to assist the BOA
in establishing and promulgating auditing
standards in the Philippines
• The AASC is mandated to make the
International Standards and Practice Statements
issued by the International Auditing and
Assurance Standards Board (IAASB) the
applicable standards and practice statements in
the Philippines. Furthermore, to facilitate is
implementation and making the international
Standards and Practice Statements in Philippine
specific and described as "Philippine Standards
and Practice Statements
• Each auditing standards adopted, and its
interpretations will be submitted to the PRC
through BOA for approval after which the
pronouncement will be published to the Official
Gazette
• AASC shall have 15 regular members:
Chairman (1); BOA (1); SEC (1); BSP (1);
COA (1); ACPAPP (1), PICPA – Public
Practice (6); PICPA – Commerce and Industry
(1); PICPA – Education (1) and PICPA -
Government (1).
V. Philippine Institute of Certified Public
Accountants (PICPA)
• PICPA is the only accredited national
organization of CPAs in the Philippines. Its
primary functions are to establish for the benefit
and welfare of the CPAS, the advancement of
the profession and the attainment of other
professional ends.
The PICPA recognizes the four sectors by which a CPA
may be practicing:
1. Public Practice (ACPAPP) - Association of
Certified Public Accountants in Public
Practice)
2. Commerce and Industry (ACPACI) -
Association of Certified Pub Accountants in
Commerce and industry
3. Education Academe (NACPAE) - National
Association of Certified Public Accountants in
Education.
4. Government (GACPA) - Government
Association of Certified Public Accountants)
Council for Accreditation and Quality Control of
Practicing CPA
a. Security and Exchange Commission (SEC) -
Accredits practitioners who audit publicly
listed companies, companies with at least
million worth of assets and companies with
secondary licenses
b. Bangko Sentral ng Pilipinas (BSP) - Accredits
practitioners who audit banks and other
financial institutions
c. Insurance Commission (IC) - Accredits
practitioners who audit insurance companies
d. Board of Accountancy (BOA) - Accredit CPAs
in public practice with basic requirements.
13. What is CPD?
• CPD is Continuing Professional Development
which refers to the inculcation of advanced
knowledge, skills and ethical values in a post-
 licensure specialization or an inter or
multidisciplinary field of study, for assimilation
into professional practice, self-directed
research and/or lifelong learning.

14. How many CPD units required for the accounting

profession?
• The required CPD units for all CPAs, regardless
of area/sector of practice is 120 units within a
compliance period of 3 years. The required
minimum units to be earned is 20 units from
each of the two immediately preceding years
• Furthermore, a minimum of 40 units from the
120 units must be earned from the three
thematic areas:
a. Technical competence - minimum of
30 units
b. Professional Skills - minimum of 5
units
c. Professional values, ethics and
attitudes - minimum of 5 units
• The remaining 80 units of the 120 units are
flexible CPD units, which are CPD learning
activities that may be earned by spending
training or hours beyond the minimum
competence areas