|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), except on the aspect of revenue recognition under IFRS 15 for real estate companies that avail of the relief granted by the SEC.|
|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||Permitted. Philippines has adopted the <em>IFRS for SMEs</em> Standard as the Philippines Financial Reporting Standard for SMEs (PFRS for SMEs).|
|The IFRS for SMEs Accounting Standard is under consideration|
Profile last updated: 04 April 2019
Philippine Financial Reporting Standards Council (FRSC)
Philippine Interpretations Committee (PIC)
Board of Accountancy (BOA)
Philippine Securities and Exchange Commission (SEC)
Insurance Commission (IC)
Bangko Sentral ng Pilipinas (BSP), Philippine Central Bank
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 FRSC’s main function is to establish generally accepted accounting principles in the Philippines.
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 PFRSs. Implementation guidance approved by the PIC shall be forwarded to the FRSC, BOA and PRC for approval before issuance to the public as final guidance.
The BOA, under the stewardship of the Philippine Professional Regulation Commission (PRC), supervises and regulates accountancy in the Philippines.
The SEC has the authority to prescribe the financial reporting framework to be used by corporations in the Philippines. These general financial reporting requirements are set out in Rule 68 of the Securities Regulation Code (SRC).
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 Philippines has adopted IFRS Standards as Philippine Financial Reporting Standards (PFRSs), except on the aspect of revenue recognition under IFRS 15 for real estate companies that avail of the relief granted by the SEC.
When IFRS 15 Revenue from Contracts with Customers (adopted in the Philippines as PFRS 15 Revenue from Contracts with Customers), took effect on January 1, 2018, the real estate industry raised certain implementation issues with the SEC. In response, the SEC provided relief to real estate companies by giving them the option to defer the application of the following requirements of PFRS 15 in accounting for real estate sales:
In addition to the above, a lessor-real estate company that charges Common Usage Area fees to its tenants is also given the option not to present such fees at gross even if it is acting as principal in the arrangement.
The above reliefs can be availed of for a period of 3 years (i.e., from 2018 to 2020). Effective January 1, 2021, real estate companies will adopt the requirements of PFRS 15 in full, together with any subsequent amendments thereto, retrospectively or as the SEC will later prescribe.
Real estate companies availing of any of the above reliefs are required to make additional disclosures in the financial statements.
The SEC Circular indicates that the above relief shall form part of the PFRS for the purpose of preparing and filing general purpose financial statements to the SEC.
Insurance companies follow two different sets of requirements when applying IFRS 17 Insurance Contracts. The Philippines Insurance Commission allows insurance companies to defer the application of IFRS 17 to a year later than its effective date (ie 1 January 2023) with early adoption permitted; whereas the SEC requires the application of IFRS 17 on its effective date.
This requirement applies to all domestic companies whose securities trade in a Philippine public market.
Yes. The SEC has set quantitative and qualitative criteria that require certain domestic companies other than those whose securities trade in a public market to use PFRSs. The following are required to use PFRSs:
This requirement applies to all foreign companies whose securities trade in a Philippine public market.
The FRSC takes the following steps to adopt a new IFRS Standard as a PFRS:
A medium-sized entity that meets all the following criteria must use the ‘PFRS for SMEs’ unless permitted to use PFRSs (see below):
A medium-sized entity that meets any of the following criteria may opt to use full PFRSs rather than the PFRS for SMEs:
With effect from 1 January 2019, entities not required to use PFRSs or the PFRS for SMEs are required to use the PFRS for Small Entities or the income tax basis of accounting. In this respect:
Small entities. Small entities must use the PFRS for Small Entities. However, an entity with operations or investments that are based or conducted in a different country with a different functional currency should not apply the PFRS for Small Entities but must instead apply full PFRSs or the PFRS for SMEs.
An entity is small if its total assets are between PhP3 million (approximately US$57,000) to PhP100 million (approximately US$1.9 million) or if it has total liabilities of PhP3 million to PhP100,000,000 . And the entity must not otherwise be required to file financial statements with the SEC under Part II of Rule 68 of the SRC (ie it is not a company whose securities trade in a public market or which has at least 200 shareholders owning 100 or more shares of a class of its equity securities); nor be in the process of filing its financial statements for the purpose of issuing any class of instruments in a public market; nor be a holder of a secondary license issued by a regulatory agency.
Micro entities. Micro entities have the option to use either the income tax basis of accounting or the PFRS for Small Entities. An entity is micro if its total assets and liabilities are each below PhP3,000,000 and that are not otherwise be required to file financial statements with the SEC under Part II of Rule 68 of the SRC; nor be in the process of filing its financial statements for the purpose of issuing any class of instruments in a public market; nor be the holder of a secondary licence issued by a regulatory agency.