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International Financial

Reporting Standards and


Philippine Financial
Reporting Standards
TOPICS:
• Definition of IFRS
• History of IFRS
• Transition of Philippine Standard from US
GAAP to PFRS
• Purpose of Accounting Standards
• Standard Setting
Definition of IFRS
IFRS – International Financial Reporting Standards
• International Financial Reporting Standards (IFRS) is
a set of accounting standards developed by an
independent, not-for-profit organization called the
International Accounting Standards Board (IASB).
GOAL OF IFRS
• is to provide a global framework for how public
companies prepare and disclose their financial
statements.
• provides general guidance for the preparation of
financial statements, rather than setting rules for
industry-specific reporting.
The IFRS: History and Purpose
History:
The IFRS began as an attempt to harmonize accounting
across the European Union, but the value of harmonization
quickly made the concept attractive around the world. They
are occasionally called by the original name of International
Accounting Standards (IAS). The IAS were issued between
1973 and 2001 by the Board of the International Accounting
Standards Committee (IASC). On April 1, 2001, the new
IASB took over the responsibility for setting International
Accounting Standards from the IASC. During its first meeting
the new Board adopted existing IAS and Standing
Interpretations Committee standards (SICs). The IASB has
continued to develop standards calling the new standards
the IFRS.
The IFRS: History and Purpose

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