Financial Crime World

SEC Adopts IFRS Standards, Tightens Reporting Requirements

The Securities and Exchange Commission (SEC) has adopted International Financial Reporting Standards (IFRS) as part of its rules and regulations on financial reporting. This adoption aims to improve the transparency and consistency of financial reporting in the Philippines.

Adoption Process

The adoption process involves several steps:

  • Analysis by the Financial Standards Responsibility Center (FSRSC) to assess potential implications
  • Invitation to comment from stakeholders
  • Approval from the Bangko Sentral ng Pilipinas (BOA) and the Philippine Stock Exchange (PRC)

Implementation of IFRS Standards

When the International Accounting Standards Board (IASB) issues a new or amended IFRS Accounting Standard, the FSRSC adopts it as a Philippine Financial Reporting Standard (PFRS). The process involves:

  • Analyzing potential implications
  • Inviting comments from stakeholders
  • Submitting comments to the IASB
  • Adopting the standard as a PFRS
  • Submitting it for approval from the BOA and PRC
  • Overseeing its publication in the Official Gazette
  • Incorporating the new PFRS into SEC rules and regulations on financial reporting

Accounting Frameworks for Small Entities and Micro Entities

In addition to adopting IFRS Standards, the Philippines has introduced specific accounting frameworks for small entities and micro entities:

  • Small entities must use the PFRS for Small Entities Standard
  • Micro entities have the option to use either:
    • Income tax basis of accounting
    • PFRS for Small Entities Standard

Exemptions from Mandatory Adoption

The SEC has established exemptions from the mandatory adoption of the PFRS for SMEs standard for certain companies, including those with operations or investments in other countries. These companies may instead apply PFRSs or the IFRS for SMEs Standard.

Key Takeaways

  • The Philippine Securities and Exchange Commission (SEC) has adopted International Financial Reporting Standards (IFRS) as part of its rules and regulations on financial reporting.
  • The adoption process involves several steps, including analysis, invitation to comment, and approval from the Bangko Sentral ng Pilipinas (BOA) and the Philippine Stock Exchange (PRC).
  • Small entities must use the PFRS for Small Entities Standard, while micro entities have the option to use either the income tax basis of accounting or the PFRS for Small Entities Standard.
  • The SEC has established exemptions from the mandatory adoption of the PFRS for SMEs standard for certain companies.
  • The adoption of IFRS Standards is expected to improve transparency and consistency in financial reporting, making it easier for investors and other stakeholders to understand the financial performance of listed companies.