CFAS

Accounting
- is the process of identifying, measuring, and communicating economic
information to permit informed judgment and decisions by users of the
information.

Important Activities in Accounting

1. Identifying
2. Measuring
3. Communicating

1. Identifying
- process of analyzing events and transactions to determine whether or
not they will recognized. ( Only accountable events are recognize.)

Types of Events or transaction

 External Events
- not directly involved in the operation of the business

 Internal Events
-directly involved in the operation of the business

2. Measuring
- involved assigning numbers, normally in monetary terms, to the
economic transactions and events.

3. Communicating
- process of transforming economic data into useful accounting
information, such as financial statements and other accounting reports, for
dissemination to users. It also involves interpreting the significance of the
processed information. It involved three aspects.
1. Recording
2. Classifying
3. Summarizing

1. Recording
- refers to the process of systematically committing

DEVELOPMENTOF FINANCIAL REPORTING

FRAMEWORK AND STANDARD SETTING BODIES
Objective of general-purpose financial reporting
- is to provide financial information about the reporting entity that is
useful to present equity investors, lenders, and other creditors in making
decisions about providing resources to the entity.

Branches of Accounting

1. Financial Accounting
- it focuses on the process of analyzing, recording, classifying and
summarizing the financial information to have an output called financial
statements. ( External Users )

2. Management Accounting
- using the financial accounting reports in order for them to generate
some sort of strategy even manage decision making or even information to
manage the business. ( Internal user )

3. Cost Accounting
- more on cost accumulation the process of controlling the cost of product
or services

4. Auditing
- independent verification of financial reports generated in the financial
accounting. To improve the reliability of the financial information on which the
users will use of them for decision making

5. Government Accounting
- which focus more on where thus the government funds goes and even
its sources

6. Tax Accounting
- focusing on the preparation of tax returns and tax consideration in
businesses

7. Accounting Education
- Branch of accounting for over seeing that there will be a continuation of
the accounting profession.

THE DEVELOPMENT OF ACCOUNTING STANDARDS

Accounting standards
- these are network of board guidelines, rules and procedures that
represents the generally accepted accounting principles, which define the
practice of financial reporting at a particular time.
 - Its main purpose is to ensure relevance of financial information provided
to external users.
THE NEED FOR INTERNATIONAL ACCOUNTING STANDARDS (IAS)
Aim:
-transparency
-reliabilty
-consistency
-comparability
If not use:
-Accounting reports lack comparability
-Accounting reports will significantly lose credibility if a company reports
different profit numbers in different countries for given transaction

INTERNATIONAL ACCOUNTING STANDARDS COMMITTEE ( IASC )

The following international bodies publicly urged the adoption of a single set of
global accounting standards:
- World Bank
-International Monetary Fund
-International Organization of Securities Commission ( IOSCO )
- Organization for Economic Cooperation Development
( Formed in 1973 to develop global accounting standards )
( The IASC issued 41 International Accounting Standards (IAS’s )

INTERNATIONAL ACCOUNTING STANDARDS BOARD ( IASB )

- it replaced the IASC in 2001
Main objective :
is to develop a single set of high-quality, understandable, and enforceable
global accounting standards to help participants in the world’s capital markets
and other users make economic decisions.

- it has revised many IAS’s and has issued new standards of its own, called
International Financial Reporting Standards ( IFRS )

- IASB has NO AUTHORITY to require compliance with its accounting standards

The IASB structure has the following main features:

-the IASC Foundation is an independent organization having two main
bodies,
1. Trustees and the IASB
2. Standards Advisory Council and the International Financial Reporting
Interpretations Committee.

- Members of the Board are appointed by the Trustees for a term of five years,
renewable once.
- The IASB shall normally comprise 14 members
- Up to 3 members may be part-time members ( part-time meaning members
concerned commit most of their time to paid employment by the IFRS
Foundation) and shall meet appropriate guidelines of independence established
by the Trustees.

The board shall;

a. Have complete responsibility for all Board technical matters, including the
preparation and issuing of IFRS Standards ( other than IFRIC Interpretations )
and Exposure Drafts, each of which shall include any dissenting opinions, and
the approval and issuing of IFRIC Interpretations developed by the
Interpretations Committee.

b. Publish an Exposure Draft on all projects and normally publish a discussion

document for public comment on major projects in accordance with procedures
approved by the Trustees.

c. In exceptional circumstances, and only after formally requesting and

receiving prior approval from 75% of the Trustees, reduce, but not dispense
with, the period for public comment on Exposure Draft below that is described
as the minimum in the IFRS Foundation Due Process Handbook.

d. Have full discretion in developing and pursuing its technical agenda, subject
to the following:
- consulting the Trustees, and the Advisory Council
- carrying out a public consultation every five years from the date of the
most recent public agenda consultation.

e. Have full discretion over project assignments on technical matters: in

organizing the conduct of its work, the Board may outsource detailed research
or other work to national standard-setters or other organizations.

f. Establish procedures for reviewing comments made within a reasonable

period on documents published for comment.

g. Normally form working groups or other types of specialist advisory groups to

give advice on major projects.
h. Consult the Advisory Council on major projects, agenda decisions and work
priorities.

i. normally publish a Basis for Conclusions with a Standard or an Exposure Draft.

J. consider holding public hearings to dicuss proposed Standards, although there

is no requirement to hold public hearings for every project

K. Consider undertaking field tests ( both in developed countries and in

emerging markets) to ensure that proposed Standards are practical and
workable in all environments, although there is no requirement to undertake
field tests for every project
L. Give reason if it does not follow any of the non-mandatory procedures set out
in (b,g,I,j,k)
IASC FOUNDATION / IFRS FOUNDATION
-there are 22 Trustees ( changes adopted the IASC Foundation as of July 1, 2005
)
- trustees shall normally be appointed for a term of three years, renewable
-trustees appoints the members of the IASB, the Standing Interpretations
Committee and the Standards Advisory Council.
- IFRS Foundation is the new name, approved in January 2010, of the IASC
Foundation. The name change formally took effect on July 1 ,2010.

Objectives of IFRS Foundation:

A. To develop, in the public interest, a single set of high quality, understandable,
enforceable, and globally accepted financial reporting standards based upon
clearly articulated principles. These standards should require high quality,
transparent and comparable information in financial statements and other
financial reporting to help investors, other participants in the world’s capital
markets and other users of financial information make economic decisions

B. To promote the use and rigorous application of those standards.

C. In fulfilling the objectives associated with (a) and (b), to take account of, as
appropriate, the needs of a range of sizes and types of entities in diverse
economic settings.

D. To promote and facilitate adaption of the IFRS, being the Standards and
IFRIC Interpretations issued by the Board, through the convergence of national
accounting standards and IFRS Standards.

IFRS INTERPRETATIONS COMMITTEE

- formerly called the International Reporting Interpretations Committee ( IFRIC)
- It shall comprise 14 voting members, appointed by the Trustees for renewable
terms of three years
- The Interpretations Committee shall meet as and when required and 10 voting
members present in person or by telecommunications shall constitute a
quorum: one or two Board members shall be designated by the Board and shall
attend meetings as non-voting observes; other members of the Board may
attend and speak at the meetings.
- Approval of draft or final IFRIC Interpretations shall require that not more than
four voting members vote against that draft or final Interpretation.

Interpretations Committee shall:

- interpret the application of IFRS Standards and provide timely guidance on
financial reporting issues not specifically addressed in the Standards, in the
context of the Boards Framework and undertake other tasks at the request of
the Board.
- in carrying out its work under (a) above, have regard to the Boards objective of
workings actively with national standards-setters to bring about convergence of
national accounting standards and IFRS Standards to high quality solutions
- publish, after clearance by the Board, draft Interpretations for public comment
and consider comments made within a reasonable period before finalizing an
IFRC Interpretation
-report to the Board and obtain the approval of eight of its member for final
IFRIC Interpretations if there 13 members or fewer, or by nine of its members if
there are 14 members.

IFRS ADVISORY COUNCIL ( THE ADVISORY COUNCIL )

- formerly called the Standards Advisory Council
-Members shall be appointed by the Trustees
- The Advisory Council shall comprise 30 or more members, having a diversity of
geographical and professional backgrounds, appointed for renewable terms of
three years.
- The Advisory Council shall normally meet at least two times a year. Meetings
shall be open to the public
Objectives
- giving advice to the Board on Agenda decisions and priorities in the Boards
work
- informing the board of the views of the organizations and individuals on the
Advisory Council on major standard-setting projects
- giving other advice to the Board or the Trustees

DUE PROCESS FOR FINANCIAL REPORTING

The formal due process for the Board and the Interpretations Committee:

A. Specifies the minimum steps to be taken to ensure that their activities have
benefited from a thorough and effective consultation process

B. Identifies the no-mandatory steps to be considered, the comply or explain

approach, meaning that the non-mandatory steps in the process were still
recommended, so non-compliance with them would require an explanation

C. Identifies other, optional, steps available to them to help improve the quality
of IFRS Standards and related documents.

- The International Accounting Standards Board and IFRS Interpretations

Committee will use the Due Process Handbook (2020) as their basis.
THE DUE PROCESS INCLUDES THE FOLLOWING STAGES
1. Setting the Agenda
2. Planning the Project
3. Developing and publishing the Discussion paper
4. Developing and publishing the exposure draft
5. Developing and publishing the Standards
6. Post Implementation Review

STANDARD SETTING BODIES IN THE PHILIPPINES ( Accounting Standards

Council- ASC)
 the original accounting standard setting body in the Philippines was the
Accounting Standards Council (ASC) created by Philippine Institute of
Certified Public Accountant (PICPA) on November 18, 1981.
 prior to 2001, the Philippine accounting standards were based on accounting
standards promulgated by the Financial Accounting Standards Board
( FASB ) of USA.
 the ASC was composed of 8members, 4 from PICPA including the designated
Chairman; and 1 each from SEC, Banko Sentral ng Pilipinas (BSP) or Central
Bank (CB), PRC and Financial Executives of the Philippines ( FINEX ).
 In 1997, the ASC decided to move totally to International Accounting
Standards.
 The Philippine transition to IAS was made on a staggered basis, effective
from 2001.

 The ASC considered the following factors in deciding to move the

International Accounting Standards:
- Support of IAS by Philippine organizations
-Increasing Internationalize of business
Improvements of IAS
-Increasing recognition of IASB standards
 The ASC approved the re-issuance as Philippine Accounting Standards (PASs)
of previously issued Statements of Financial Accounting Standards ( SFASs)
and statements of Financial Accounting Standards (SFASs)/Internal
Accounting Standards (IASs) that were based on IASs.
 The Standards are re-issued for the following reasons:
- To update these for consequential amendments arising from adopted new
International Financial Reporting Standards ( IFRSs ) and revised IASs which
resulted from the Improvements Project of the International Accounting
Standards Board (IASB) and for editorial amendments made to all existing IASs
- to maintain consistency of format and designation of Standards issued by the
ASC
 Philiipine Accounting Standards (PASs) correspond to the adopted
International Accounting Standards (IASs)
 Philippine Financial Reporting Standards (PFRSs) correspond to the adopted
International Financial Reporting Standards (IFRSs)
 The Securuties and Exchange Commission (SEC) as indicated in SEC
Memorandum Circular #19, series of 2004 dated Dec.22, 2004 requires the
adoption of the IAS, PAS and IFRS in the audited financial statements
FINANCIAL REPORTING STANDARDS COUNCIL ( FRSC )
- when created per Section 9(A) of the Rules and Regulations Implementing
Republic Act No. 9298 otherwise known as the Philippine Accountancy Act of
2004, the Financial Reporting Standards Council (FRSC) shall be the new
accounting standards setting body
-it shall be composed of 15 members including the Chairman
-The FRSC’s due process of developing the accounting standards include the
following steps:
1. Consideration of pronouncement of IASB
2. Formation of a task force, when necessary
3. Issuance of exposure draft duly approved by the majority vote of the FRSC
members
4. Consideration of comments ( comment period is at least 60 days, may be
shortened to not less than 30 days )
5. Approval by majority of the FRSC members
6. Publication in the official gazette or a newspaper of general circulation

PHILIPPINE INTERPRETATION COMMITTEE ( PIC )

- the FRSC formed the Philippine Interpretation Committee ( PIC ) in August
2006
Objectives of PIC are:
- To issue implementation guidance on Philippines Accounting Standards
( PAS ), Philippine Financial Reporting Standards ( PFRS ) and related
Interpretations ( collectively referred to as PFRS ) adopted by the Financial
Reporting Standards Council ( FRSC ) from accounting pronouncements
issued by the International Accounting Standard Board.
- to comment on exposure drafts of proposed PFRS and other documents
that may be issued for comment by FRSC
- to comment on exposure drafts of proposed accounting standards or proposed
regulations with accounting relevance that may be issued by government
agencies, such as Securities and Exchange Commission, Bangko Sentral ng
Pilipinas and Insurance Commission

SUMMARY
 IASC
-formed on 1973
- 41 IAS

 IASB
- kapalit ng IASC
- 2001
- IFRS ( mga na establish nyang standards )
- 14 board members ( 3 may be part timers )
- 5 years, renewable once
- appointed by trustees

 IASC Foundation / IFRS Foundation

- 22 trustees
- July 1, 2005
 - new name IFRS Foundation
- approved in Jan 2010
- took effect July 1, 2010
- 3 years, renewable once
- appointed by trustees

 IFRS Interpretations Committee

- IFRIC noon tawag sa kanya
- 14 voting members
- appointed by trustees
- renewable terms of 3 years
- 8 votes to be approved if 13 members
- 9 votes to be approved if 14 members

 IFRS Advisory Council ( The Advisory Council )

- formerly called Standards Advisory Council
- appointed by trustees
- 30 or more members
- renewable terms of 3 years
- shall meet at least 2 times a year
- meetings are open to public
-Giving advice to the Board on Agenda decisions
The IASB and IFRS Interpretations Committee will use DUE PROCESS
HANDBOOK ( 2020 ) as their basis:
1. Setting the Agenda
2. Planning the Project
3. Developing and Publishing the Discussion Paper
4. Developing and Publishing the Exposure Draft
5. Developing and Publishing the Standards
6. Post Implementation Review

ASC- original Accounting Standard setting body of the Philippines

-( Accounting Standards Council )
-created by Philippine Institute of Certified Public Accountant ( PICPA )
- November 18, 1981
- composed of 8 members:
4 from PICPA
1 SEC
1 BSP
1 PRC ( BOA )
1 Financial Executives of the Philippines ( FINEX )

INTERNATIONAL ACCOUNTING STANDARDS

-Kapalit ni ASC
- 1997

PHILIPPINE ACCOUNTING STANDARDS ( PAS )

- Philippine transition to IAS was made on staggered basis effective from
2001
 - PAS arises from IAS
- PFRS arises from IFRS

SEC ( Securities and Exchange Commission )

- indicated in Circular #19 Series of 2004, Dec 22, 2004
- requires adaptation of the IAS, PAS and IFRS in the audited financial
statements

FRSC ( Financial Reporting Standards Council )

- ASC to FRSC
- Section 9 (A) R.A. 9298 Philippine Accountancy Act of 2004 states that
the FRSC shall be the new accounting standard setting body
- 15 members ( 14 members + 1 chairman ):
1 BOA 1 BIR 2 Government 2 commerce and Industry
1 SEC 1 COA 1 BSP 2 Education
1 major organization composed of preparers and users of financial
statements
2 Accredited National Professional Organization of CPA’s

FRSC DUE PROCESS

1. Consideration of Pronouncement of IASB
2. Formation of a task force, when necessary
3. Issuance of Exposure Draft duly approved by the majority vote of the FRSC
members
4. Consideration of comments ( 30 - 60 days )
5. Approval by majority of FRSC members
6. Publication in official gazette

PIC ( Philippine Interpretation Committee

- FRSC formed the PIC in Aug. 2006
CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING

April 1989- framework for the Preparation and Presentation of Financial

Statements ( the framework) was approved by the IASC board
July 1989- Framework was publish
April 2001- Framework adopted by the IASB
September 2010- Conceptual Framework for Financial Reporting 2010 approved
by the IASB
March 2018- Conceptual Framework for Financial Reporting 2018 ( the
Framework ) publish

CONCEPTUAL FRAMEWORK
-is a body of interrelated objectives and fundamentals
-Identifies the goals and purpose of financial reporting
-Underlying concepts that helps achieve those objectives
- Provides guidance in concepts
- selecting transactions, events, and circumstances to be accounted for
- how they should be recognized and measured
- how they should be summarized and reported