Philippines
| Extent of IFRS application | Status | Additional Information |
|---|---|---|
| IFRS Accounting Standards are required for domestic public companies | The Philippines has adopted IFRS Standards as Philippine Financial Reporting Standards (PFRSs). The PFRS 17 Insurance Contracts has been deferred from 1 January 2023 to be effective for reporting periods beginning on or after 1 January 2025. Additionally, the Central Bank and the Securities and Exchange Commission permit some options and temporary reliefs, which are considered a deviation from the requirements of PFRSs. Financial statements prepared applying any of the reliefs are considered prepared in accordance with an industry-specific compliance framework and not PFRSs. | |
| IFRS Accounting Standards are permitted but not required for domestic public companies | ||
| IFRS Accounting Standards are required or permitted for listings by foreign companies | IFRS Standards adopted as Philippines Financial Reporting Standards (PFRS) are required. | |
| The IFRS for SMEs Accounting Standard is required or permitted | Required. Philippines has adopted the IFRS for SMEs Standard as the Philippines Financial Reporting Standard for SMEs (PFRS for SMEs). | |
| The IFRS for SMEs Accounting Standard is under consideration |
Profile last updated: 24 October 2023
RELEVANT JURISDICTIONAL AUTHORITY
Professional Regulation Commission (PRC)
Board of Accountancy (BOA)
Philippine Financial and Sustainability Reporting Standards Council (FSRSC), previously Financial Reporting Standards Council (FRSC)
Philippine Interpretations Committee (PIC)
Philippine Sustainability Reporting Committee (PSRC)
Philippine Securities and Exchange Commission (SEC)
Insurance Commission (IC)
Bangko Sentral ng Pilipinas (BSP)
Cooperative Development Authority (CDA)
The FRSC was established under the Implementing Rules and Regulations of the Philippine Accountancy Act of 2004 to assist the BOA in carrying out its power and function to promulgate accounting standards in the Philippines. The FSRSC role was expanded in 2022 to include the adoption of sustainability disclosure standards.
The FRSC formed the 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 Philippine Financial Reporting Standards (PFRSs). Implementation guidance approved by the PIC shall be forwarded to the FSRSC, BOA and PRC for approval before being issued to the public as final guidance.
The BOA, under the stewardship of the PRC, supervises and regulates accountancy in the Philippines.
The SEC has the authority to prescribe the financial reporting framework used by corporations in the Philippines. These general financial reporting requirements are set out in Rule 68 of the Securities Regulation Code.
The BSP and IC are the primary regulators of banking institutions and insurance companies, respectively. They issue rules and guidelines that include financial reporting matters.
The CDA is the primary regulator for cooperatives, having the authority to require submission of audited financial statements.
FSRSC: https://www.pfsrsc.org/
PRC-BOA: https://www.prc.gov.ph/accountancy
FSRSC and PIC: https://www.pfsrsc.org/
IC: https://www.insurance.gov.ph
CDA: https://cda.gov.ph/
COMMITMENT TO GLOBAL FINANCIAL REPORTING STANDARDS
Yes.
Yes.
The Philippines has adopted IFRS Accounting Standards as PFRSs, except:
| IFRS Accounting Standard | Remarks |
|---|---|
| IFRS 17 | The PIC issued Circular Letter No. 2020-62, which deferred the implementation of IFRS 17 Insurance Contracts by two years after its effective date. On 15 December 2021, the FSRSC amended the effective date of PFRS 17 Insurance Contracts from 1 January 2023 to be effective for reporting periods beginning on or after 1 January 2025. |
The BSP and SEC permit the options and temporary accounting reliefs below, which are considered a deviation from the requirements of PFRSs. Financial statements prepared applying any of the reliefs are considered prepared in accordance with an industry-specific compliance framework and not PFRSs.
| IFRS Accounting Standard | Remarks | ||||
|---|---|---|---|---|---|
| IFRS 9 Financial Instruments | The BSP provides a regulatory relief to all BSP Supervised Financial Institutions (BSFIs) to stagger the booking of allowance for expected credit losses on past-due and non-performing loans granted amid the covid-19 pandemic. This regulatory relief is covered by BSP Memorandum M-2020-061, which allowed BSFIs to apply for approval of staggered recognition of allowance for credit losses until March 8, 2021. The staggered recognition of allowance for credit losses shall be for a maximum period of five (5) years. All BSFIs were also allowed to reclassify debt securities measured at fair value to amortised cost under BSP Memorandum M-2020-022. The basis of preparation as an industry-specific compliance framework is provided under SEC Memorandum Circular No. 32, Series of 2020. The SEC provided another relief allowing staggered recognition of provision for credit losses for a maximum period of five (5) years to financing companies, lending companies and accredited micro-finance NGOs under SEC Memorandum Circular No. 35, Series of 2020. | ||||
| IFRS 15 Revenue from Contracts with Customers | The SEC approved a relief for the real estate industry to defer until 2023:
The relief and basis of preparation as an industry-specific compliance framework is provided under SEC Memorandum Circular No. 34, Series of 2020. | ||||
| IAS 23 Borrowing Costs | The SEC approved a relief for the real estate industry to defer until 2023 application of the IFRIC Agenda decision on the requirements related to over time transfers of constructed goods in IAS 23 Borrowing Costs. The relief and basis of preparation as an industry-specific compliance framework is provided under SEC Memorandum Circular No. 34, Series of 2020. |
See response above.
EXTENT OF IFRS APPLICATION
For DOMESTIC companies whose debt or equity securities trade in a public market in the jurisdiction:
PRFSs apply to all domestic companies whose securities trade in a Philippine public market.
Companies that prepare consolidated financial statements in accordance with PFRSs are required to prepare separate financial statements using the same accounting framework.
Yes. The SEC has set quantitative and qualitative criteria that require certain domestic companies whose securities do not trade in a public market to use PFRSs. These companies include:
A company with total assets of more than 350 million Philippine pesos (pesos) or which has total liabilities of more than 250 million pesos;
A company which is in the process of filing its financial statements for the purpose of issuing any class of instruments in a public market;
A holder of secondary licence(s) issued by regulatory agencies; and
such other corporations that the SEC might consider in the future as being of public interest, regardless of the lack of a requirement to obtain a secondary license from the SEC, and might fall under the following criteria:
- Those grantees of legislative franchises;
- Those engaged in nationalised or partly nationalised activities;
- Those grantees or recipients of public funds; and
- Those regulated by other government agencies other than the BSP or IC.
For FOREIGN companies whose debt or equity securities trade in a public market in the jurisdiction:
PFRSs apply to all foreign companies whose securities trade in a Philippine public market.
IFRS ENDORSEMENT
The FSRSC takes several steps to adopt a new or amended IFRS Accounting Standard as a PFRS, which starts when the International Accounting Standards Board (IASB) issues a proposal in the form of an exposure draft or a discussion paper:
the FSRSC analyses the potential implications of the IASB’s proposals on local financial reporting;
the FSRSC issues an invitation to comment on the IASB’s proposals and might submit these comments to the IASB;
when the IASB issues a new or amended IFRS Accounting Standard:
the FSRSC adopts the new or amended IFRS Accounting Standard as a PFRS;
the FSRSC submits the new PFRS to the BOA and PRC for approval;
the BOA and the PRC approve the adoption;
the BOA and the PRC oversee the publication of the new PFRS in the Official Gazette; and
the SEC adopts the new PFRS as part of its rules and regulations on financial reporting, as do other relevant regulators.
See the table in ’What is the jurisdiction's status of adoption?’.
TRANSLATION OF IFRS ACCOUNTING STANDARDS
APPLICATION OF THE IFRS FOR SMEs ACCOUNTING STANDARD
Not applicable.
A medium-sized company that meets all the following criteria must apply the ‘PFRS for SMEs’ standard, unless permitted to use PFRSs:
It has total assets of 100–350 million pesos or total liabilities of 100–250 million pesos. If the company is a parent company, the aforementioned amounts are based on the consolidated figures;
It is not required to file financial statements under Part II of Rule 68 of the Revised SRC Rule 68;
it is not in the process of filing its financial statements for the purposes of issuing any class of instruments in a public market; and
It is not a holder of a secondary licence issued by regulatory agencies.
A medium-sized company that meets any of the following criteria is permitted to apply PFRSs rather than the PFRS for SMEs Standard:
It is a subsidiary of a parent company reporting in accordance with PFRSs;
It is a subsidiary of a foreign parent company that will be moving toward IFRS Accounting Standards pursuant to the foreign country’s published convergence plan;
It is either a significant joint venture or an associate that is part of a group reporting in accordance with PFRSs;
It is a branch office or the regional operating headquarters of a foreign company reporting in accordance with IFRS Accounting Standards;
It has a subsidiary that is required to report in accordance with PFRSs;
It has a short-term projection that shows that it will breach the quantitative thresholds set in the criteria for a medium-sized company. The breach is expected to be significant and continuing due to its long-term effect on the company’s asset or liability size;
It has a concrete plan to conduct an initial public offering within the next two years;
It has been preparing financial statements in accordance with PFRSs and has decided to liquidate; or
Such other cases that the SEC might consider as valid exceptions from the mandatory adoption of the PFRS for SMEs standard.
Companies that are not SMEs might fall under the classification of ‘small entities’ or ‘micro entities’ as set out in the Revised SRC Rule 68, and use the ‘PFRS for Small Entities’ standard or the income tax basis of accounting as follows:
(a) | Small entities. Small entities must use the PFRS for Small Entities Standard. However, a company with operations or investments that are based or conducted in another country with another functional currency do not apply the PFRS for Small Entities Standard, but instead apply PFRSs or the PFRS for SMEs Standard. A company must meet all the following criteria to be a ‘small entity’:
A small entity that meets any of the following criteria is permitted to use, as appropriate, PFRSs or the PFRS for SMEs Standard rather than the PFRS for Small Entities standard:
|
(b) | Micro entities. Micro entities have the option to use either the income tax basis of accounting or the PFRS for Small Entities Standard. A company must meet all the following criteria to be considered a ‘micro entity’:
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