The Monetary Board (MB) approved the deferment of the mandatory effectivity date of Philippine Financial Reporting Standards (PFRS) 9 Financial Instruments to 1 January 2015. The deferment is in line with the issuance by the International Accounting Standards Board (IASB) of further amendments to International Financial Reporting Standards (IFRS) 9 as well as its local adoption by the Financial Reporting Standards Council in December 2011.
The recent move is a reflection of the BSP’s commitment to continuously align existing regulations with globally accepted standards, to the greatest extent possible, as well as promote fairness, transparency and comparability in financial reporting through the adoption of IFRS/International Accounting Standards (IAS).
Corollary to this initiative, the MB also granted transition relief to 2012 to 2014 early adopters on their preparation of interim prudential reports. BSP-supervised financial institutions shall be allowed to reflect the impact of their early adoption of PFRS 9 in their prudential reports as of the end of their calendar- or fiscal- year of initial application, instead of in their first interim prudential report as of the year of initial application. Early adopters, however, are expected to maintain sufficient accounting and information systems to ensure that the reporting of transactions in their year-end prudential reports are in accordance with the provisions of PFRS 9.
The transition relief is consistent with that granted by the Securities and Exchange Commission (SEC) to covered entities under SEC Memorandum Circular No. 3 dated 28 May 2012 for financial reporting purposes.
PFRS 9 is the local adoption of IFRS 9 Financial Instruments – the first phase of the three-phased improvement project by the International Accounting Standards Board (IASB) to ultimately replace IAS 39 Financial Instruments: Recognition and Measurement. Phases 2 and 3 of the project deal with impairment and hedge accounting, respectively, and are currently ongoing with the IASB.