Professional Documents
Culture Documents
Topic
Related
PAS/PFRS
Raw
score
Raw
score
PAS 1
(Revised 2007
with
amendments)
PAS 18
Revenue
Inventories
PAS 2 (Revised)
Inventories
Agriculture
PAS 41 and
PFRS 13
Agriculture
Revenue, Inventories and Agriculture
Property, Plant and Equipment
PAS 16
PAS 40 and
PFRS 13
Investment Property
Intangible Assets
PAS 38
Intangible Assets
PPE, Investment Property and Intangible Assets
Accounting for Government Grants and Disclosure of
Government Assistance
Accounting for Government Grants and Disclosure of
Government Assistance
Borrowing costs
PAS 20
PAS 23
(Revised 2007)
Borrowing costs
Government Grants and Borrowing costs
Noncurrent asset held-for-sale and Discontinued Operations
PFRS 5
PAS 36 and
PFRS 13
Impairment of Assets
NCA held-for-sale, Discontinued operations and Impairment
Leases
PAS 17
Leases
Employee Benefits
PAS 19
(Revised 2011)
Employee Benefits
Income Taxes
PAS 12
Income Taxes
Topic
Related
PAS/PFRS
ToA.1602
PAS 28 (Revised
2011), PAS 32,
PAS 39, PFRS 7
and PFRS 9
Topic Code
Topic
Related
PAS/PFRS
PAS 8
PAS 33
PFRS 8
Operating segments
EPS and Operating segments
Related party disclosures
PAS 24
(Revised 2009)
PAS 10
PAS 34
Raw
score
Topic Code
Topic
Related
PAS/PFRS
PFRS 6
PFRS 4
PFRS 1
SIC/IFRIC
Raw
score
THEORY OF ACCOUNTS
LECTURE NOTES
CONCEPTUAL FRAMEWORK FOR FINANCIAL
REPORTING
(2010 Framework)
Purpose and Status of the Framework
The Conceptual Framework describes the basic
concepts that underlie the preparation and
presentation of financial statements for external
users. The Conceptual Framework serves as a
guide to the Board in developing future PFRSs and
as a guide to resolving accounting issues that are
not addressed directly in an International
Accounting Standard or International Financial
Reporting Standard or Interpretation.
(a)
(c)
(d)
(e)
(f)
(g)
THE
OBJECTIVE
OF
FINANCIAL REPORTING
GENERAL-PURPOSE
Relevance
Relevant financial information is capable of
making a difference in the decisions made by
users. Financial information is capable of making a
difference in decisions if it has predictive value,
confirmatory value, or both. The predictive value
and confirmatory value of financial information are
interrelated.
Faithful representation
General purpose financial reports represent
economic phenomena in words and numbers, To
be useful, financial information must not only be
relevant, it must also represent faithfully the
phenomena it purports to represent. This
fundamental characteristic seeks to maximize the
underlying
characteristics
of
completeness,
neutrality and freedom from error. Information
must be both relevant and faithfully represented if
it is to be useful.
Classifying,
characterizing
and
presenting
information clearly and concisely makes it
understandable. While some phenomena are
inherently complex and cannot be made easy to
understand, to exclude such information would
make financial reports incomplete and potentially
misleading. Financial reports are prepared for
users who have a reasonable knowledge of
business and economic activities and who review
and analyze the information with diligence.
Applying
the
characteristics
enhancing
qualitative
constraint
on
useful
financial
OF
THE
FINANCIAL
Assets
Liabilities
Equity
Income
Expenses
Definitions
of
performance
the
elements
relating
to
Expenses are
recognized when
a
decrease in future economic benefit
related to a decrease in an asset or an
increase of a liability has arisen that can
be measured reliably.
Historical cost
Current cost
(a) Financial
capital maintenance.
Under this
concept a profit is earned only if the financial
(or money) amount of the net assets at the
end of the period exceeds the financial (or
money) amount of net assets at the beginning
of the period, after excluding any distributions
to, and contributions from, owners during the
period. Financial capital maintenance can be
measured in either nominal monetary units or
units of constant purchasing power.
(b) Physical capital maintenance.
Under this
concept a profit is earned only if the physical
productive capacity (or operating capability) of
the entity (or the resources or funds needed
to achieve that capacity) at the end of the
period exceeds the physical productive
capacity at the beginning of the period, after
excluding
any
distributions
to,
and
contributions from, owners during the period.
- DONE -
THEORY OF ACCOUNTS
LECTURE NOTES
PRESENTATION OF FINANCIAL STATEMENTS
(PAS 1 REVISED 2007 INCLUDING AMENDMENTS)
Scope
An entity shall apply this Standard in preparing and
presenting general purpose financial statements in
accordance with Philippine
Financial Reporting
Standards (PFRSs).
DEFINITION AND OBJECTIVE OF FINANCIAL
STATEMENTS
Financial statements are a structured representation of
the financial position and financial performance of an
entity. The objective of financial statements is to provide
information about the financial position, financial
performance and cash flows of an entity that is useful to
a wide range of users in making economic decisions.
Financial statements also show the results of the
managements stewardship of the resources entrusted to
it.
COMPLETE SET OF FINANCIAL STATEMENTS
A complete set of financial statements comprises:
(a) a statement of financial position as at the end of the
period;
(b) a statement of comprehensive income for the
period;
(c) a statement of changes in equity for the period;
(d) a statement of cash flows for the period;
(e) notes, comprising a summary of significant
accounting
policies
and
other
explanatory
information; and
(f) a statement of financial position as at the beginning
of the earliest comparative period when an entity
applies an accounting policy retrospectively or
makes a retrospective restatement of items in its
financial statements, or when it reclassifies items in
its financial statements.
An entity may use titles for the statements other than
those used in this Standard.
An entity shall present with equal prominence all of the
financial statements in a complete set of financial
statements.
GENERAL FEATURES (IMPORTANT
CONSIDERATIONS)
1. Fair presentation and compliance with PFRSs
Financial statements shall present fairly the financial
position, financial performance and cash flows of an
entity.
Fair
presentation
requires
the
faithful
representation of the effects of transactions, other
events and conditions in accordance with the definitions
and recognition criteria for assets, liabilities, income and
expenses set out in the Framework. The application of
PFRSs, with additional disclosure when necessary, is
presumed to result in financial statements that achieve a
fair presentation.
2. Going Concern
An entity preparing PFRS financial statements is
presumed to be a going concern. If management has
significant concerns about the entity's ability to continue
as a going concern, the uncertainties must be disclosed.
If management concludes that the entity is not a going
concern, the financial statements should not be
prepared on a going concern basis, in which case PAS 1
requires a series of disclosures.
In assessing whether the going concern assumption is
appropriate, management takes into account all
available information about the future, which is at least,
but is not limited to, twelve months from the end of the
7. Comparative Information
Except when PFRSs permit or require otherwise, an
entity shall disclose comparative information in respect
of the previous period for all amounts reported in the
current periods financial statements. An entity shall
include comparative information for narrative and
descriptive information when it is relevant to an
understanding of the current periods financial
statements.
8. Consistency of Presentation
An entity shall retain the presentation and classification
of items in the financial statements from one period to
the next unless:
(a) it is apparent, following a significant change in the
nature of the entitys operations or a review of its
Current liabilities
An entity shall classify a liability as current when:
(a) it expects to settle the liability in its normal
operating cycle;
(b) it holds the liability primarily for the purpose of
trading;
(c) the liability is due to be settled within twelve months
after the reporting period; or
(d) the entity does not have an unconditional right to
defer settlement of the liability for at least twelve
months after the reporting period.
disposals of investments
discontinuing operations
litigation settlements
Other Disclosures
Disclosures about Dividends
The following must be disclosed either on the face of the
statement of changes in equity or in the notes:
country of incorporation
Capital Disclosures
In August 2005, as part of its project to develop PFRS
7Financial Instruments: Disclosures, the IASB also
amended PAS 1 to add requirements for disclosures of:
- DONE-
THEORY OF ACCOUNTS
LECTURE NOTES
INTRODUCTION AND PREFACE TO PFRSs
Introduction
The Financial Reporting Standards Council (FRSC) was
established by the Board of Accountancy (BOA or the
Board) in 2006 under the Implementing Rules and
Regulations of the Philippine Accountancy of Act of 2004
to assist the Board 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 is the successor of the Accounting Standards
Council (ASC). The ASC was created in November 1981
by the Philippine Institute of Certified Public Accountants
(PICPA) to establish generally accepted accounting
principles in the Philippines. The FRSC carries on the
decision made by the ASC to converge Philippine
accounting standards with international accounting
standards issued by the International Accounting
Standards Board (IASB).
The FRSC
The FRSC consists of a Chairman and members who are
appointed by the BOA and include representatives from
the Board of Accountancy (BOA), Securities and
Exchange Commission (SEC), Bangko Sentral ng
Pilipinas (BSP), Financial Executives Institute of the
Philippines (FINEX) and Philippine Institute of Certified
Public Accountants (PICPA). The FRSC has full discretion
in developing and pursuing the technical agenda for
setting accounting standards in the Philippines. Financial
support is received principally from the PICPA
Foundation.
The FRSC monitors the technical activities of the IASB
and issues Invitations to Comment on exposure drafts of
proposed IFRSs as these are issued by the IASB. When
finalized, these are issued 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.
The FRSC issues news releases to announce the
issuance of final Standards and Interpretations,
exposure drafts and other matters which are posted in
the Philippine Accounting Standards section of the PICPA
website (www.picpa.com.ph).
Philippine Interpretations Committee
The FRSC formed the Philippine Interpretations
Committee (PIC) in August 2006 to assist the FRSC in
establishing and improving financial reporting standards
in the Philippines. The role of the PIC is principally to
issue implementation guidance on PFRSs. The PIC
members were appointed by the FRSC and include
accountants in public practice, the academe and
regulatory bodies and users of financial statements. The
PIC replaced the Interpretations Committee created by
the ASC in 2000.
Preface
to
Philippine
Financial
Reporting
Standards
The Preface to Philippine Financial Reporting Standards
sets out the objectives and due process of the FRSC and
explains the scope, authority and timing of application of
Philippine FRSs.
This Preface is issued to set out the objectives and due
process of the Financial Reporting Standards Council and
3.
9.
Due Process
19. PFRSs are developed through a due process that
involves members of PICPA, financial
executives,
regulatory
authorities,
academics
and
other
interested individuals and organizations. Due
process for projects normally, but not necessarily
involves the following steps:
(a) consideration of pronouncements of the IASB;
(b) formation of a task force, when deemed
necessary, to give advice to the FRSC;
(c) issuing for comment an exposure draft approved
by a majority of the FRSC members; comment
period will be at least 60 days, unless a shorter
period (not less than 30 days) is considered
appropriate by the FRSC;
- DONE -