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Purpose:
The IFRS is designed as a common global language for
business affairs so that company accounts are
understandable and comparable across international
boundaries. They are a consequence of growing
international shareholding and trade. The IFRS is particularly
important for companies that have dealings in several
countries. They are progressively replacing the many
different national accounting standards.
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•
Transition of Philippine Standard from
US GAAP to PFRS
Philippine Standards were patterned after US GAAP. However, in
1997, the accounting standard setting body in the Philippines
decided to start a program to move fully to International
Accounting Standards issued by the International Standards
Committee (IASC) and since then has continued its adoption of
International Accounting standards. Ins November 2004, The
Philippine Accounting Standards Council (ASC) approved the
adoption of revised IAS, called Philippine Accounting Standards
(PAS) and the International Financial Reporting Standards (IFRS)
issued the International Accounting Standard Board (IASB) called
Philippine Financial Accounting Standards (PFRS) with first
implementation effective January 25 of the following year.
•
Accounting Standards Defined
• Is a common set of principles, standards, and
procedures that define the basis of financial accounting
policies and practices.
• It improves the transparency of financial reporting in all
countries.
• In United States, The Generally Accepted Accounting
Principles from the set of accounting standards widely
accepted for preparing financial statements.
• International companies follow the IFRS, which are set
by the IASB and serve as the guideline for non-US GAAP
companies reorting financial standards.
•
Objectives of Accounting Standards
• To provide a standard set of accounting policies,
valuation norms and disclosure requirements, on basis
of which financial statements should be prepared.
• To make financial statements more meaningful and
comparable.
• To harmonize the diverse accounting policies and
practices in order to ensure standardization in
preparation of financial statements.
• To enable the comparability of financial statements and
thereby improve reliability and usefulness of financial
statements.
Standard Setting
International Financial Reporting Standards
(IFRS) are developed through an international
consultation process, The “due process”,
which involves interested and organisations
from around the world.
Standard Setting Process
The “due process” comprises six (6) 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. After the IFRS is issued
End of Topic