“OVERVIEW OF FINANCIAL REPORTING STANDARDS”

(IFRS, IAS, PFRS, PAS)

OBJECTIVES

I- BE ABLE TO DISCUSS INTERNATIONAL STANDARDS

II – FASB AND IASB FRAMEWORK

III – IMPORTANCE OF GAAP AND IFRS

Financial reporting standards provide principles for preparing financial reports and determine the types
and amounts of information that must be provided to users of financial statements, including investors
and creditors, so that they may make informed decisions.

OVERVIEW OF FINANCIAL REPORTING STANDARDS

(IFRS, IAS, PFRS, PAS)

– INTERNATIONAL STANDARDS:

The standards of accounting are set by two bodies that share some commonalities but varies in terms of
scope and jurisdictions.

I – Financial Accounting Standards Board (FASB)

The FASB is an independent nonprofit organization responsible for establishing accounting and
financial reporting standards for companies nonprofit organization in the United States, following
Generally Accepted Accounting Principle (GAAP). The FASB was formed in 1973 to succeed the
Accounting Principle Board and carry it’s mission. It is based in Norwalk, Connecticut.

The Financial Accounting Foundation (FAF) overseas FASB as well as its government counterpart
Government Accounting Standard Board (GASB).

The Financial Accounting Standard Board has the authority to established and interpret generally
accepted accounting principle in the United States for public and private companies and nonprofit
organizations. GAAP is a set of standards that companies nonprofits, and government should follow
when preparing their financial statements including any related party transactions.
The seven members of the FASB serve full time and to foster their independence, are required to serve
connections with the firms or institutions they served before joining the board. The FAF appoints them
and they serve five (5) year terms. They can serve up to ten (10) years altogether.

Board Members Position

Richard R. Jones Chairman

James L. Kroeker Vice-Chairman

Christine Ann Botosan Member

Gary R. Buesser Member

Frederick L. Cannon Member

Susan M. Cosper Member

Marsha L. Hunt Member

In addition to the United States, other countries including France, Canada and Germany, use
GAAP, but not all of the principles are used in commonality by each country.

The Generally Accepted Accounting Principle (GAAP) refers to the combination of accounting,
standards and procedures that govern the preparation of financial statements in the United States as
established by the FASB. GAAP is a combinations of authoritative standards set by policy boards, and the
commonly accepted ways of recording and reporting accounting information . GAAP improves the
clarity of the communication of financial information and is governed by the Financial Accounting
Standard Board (FASB). GAAP combines enforceable standards and conventionally recognized practices
of documenting and reporting accounting information

II – INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB)

The International Accounting Standards Board is an independent private sector body that develops and
approve International Reporting Standard (IFRS). The IASB operates under the oversight of the IFRS
foundation. The IASB was formed in 2001 to replace the International Accounting Standard Committee
(IASC).

The IASB is headquartered in London and consist of members with accounting backgrounds in
professional and academic settings. The IASB is the most popular standard-setting body with
approximately 100 countries conforming to its accounting rules. Its mission is creating superior,
comprehensible, and executable accounting and reporting standards for the public’s interest.
• Must consult the Standards Advisory Council on major projects agenda decisions and work priorities.

• Will normally issues bases for conclusions with international Accounting Standards and Exposure
Drafts.

• Must consider holding public hearings to discuss proposed standards although there is no requirement
to hold public hearings for every project.

• Must consider undertaking field tests both in developed countries and in emerging markets to ensure
that proposed standards are practical and workable in all environment although there is no requirement
to undertake field tests for every project.

FASB and IASB FRAMEWORK

FASB IASB

Year Established 1973 2001____________

Jurisdiction United States European Union

Latin America

Asia

Approximately 100

Nation outside U.S.

Mission Continues improve Create superior

Financial accounting accounting and

And reporting to reporting standards

Investors. For the public good.

Accounting GAAP IFRS

Standards Revenue recognition Revenue recognition

Financial Reporting Financial Reporting

Cash Flow Measurement

GAAP and IFRS

Generally Accepted Accounting Principle- accounting rules, procedures, practices and standards
followed in the preparation and presentation of the financial statements.

The purpose of GAAP is to identify proper accounting practices for the preparation and
presentation of financial statements. Accounting Standards create a common understanding between
preparers or users of financial statements.

High quality accounting standards ensures comparability and uniformity in financial statements
based on the same financial information.

Financial Reporting Standards Council (FRSC) – is an accounting standard setting body created by
the Professional Regulations Commission (PRC) upon recommendation of the Board of Accountancy
(BOA) to assist the BOA in carrying out its powers and functions provided in RA 9298.

Financial Reporting Standards Council (FRSC)replaced Accounting Standards Council (ASC)-its

The approved statements by FRSC are knows as Philippine Accounting Standards (PAS) and
Philippine Financial Reporting Standards (PFRS)

FINANCIAL REPORTING STANDARDS COUNCIL (FRSC) is composed of one (1) chairman and fourteen (14)
members. Accredited National Professional Organizations

Board of Accountancy (BOA) 1

Securities and Exchange Commission (SEC) 1

Bangko Sentral ng Pilipinas (BSP) 1

Bureau of Internal Revenue (BIR) 1

Commission on Audit (COA) 1

Financial Executive Institute of the Philippines (FINEX) 1

INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS )- bring transparency by enhancing the

INTERNATIONAL ACCOUNTING STANDARDS (IAS)- enables investors and other market participants to
make informed economic decisions about investment opportunities and risks and improves capital
allocation.

• To ensure that the financial centers of the world, which have become more interconnected than ever,
can use a global financial reporting framework that ensures effective regulation of financial markets.

The Philippine Financial Reporting Standards (PFRS)and the Philippine Accounting Standards PAS are the
new set of Generally Accepted Accounting Principles (GAAP) issued by the Accounting Standards Council
(ASC) to govern the preparation of financial statements.

PHILIPPINE FINANCIAL REPORTING STANDARDS (PFRS) – to ensure consistency in recording, recognizing

PHILIPPINE ACCOUNTING STANDARDS (PAS) – ensure the financial statements from multiple companies
are comparable. Because all entities follow the same rules, accounting standards make the financial
statements credible and allow for more economic decisions based on accurate and consistent
information.