The Monetary Board (MB) approved on 23 December 2004 the adoption of the International Accounting Standards (IAS) and the International Financial Reporting Standards (IFRS) in the financial industry effective the annual financial statements for 2005. This was arrived at in view of the approval by the Accounting Standards Council (ASC) of the new set of Accounting Standards based on revised IAS and new IFRS issued by the International Accounting Standards Board (IASB).
The adoption of these Standards by the ASC will make IAS the Generally Accepted Accounting Principles (GAAP) in the country. Financial institutions that will not be able to comply with the provisions of the said ASC approved new set of Accounting Standards for the annual financial statements beginning 1 January 2005 will get a qualified opinion from their external auditors on their financial reports.
The Board, however, decided that interim financial reports submitted to the BSP need not be immediately in compliance with the requirements of the Standards. This is to give financial institutions effectively a full year to comply with the requirements of the Standards. Further, pursuant to IFRS 1, prior years’ financial statements that are presented in the audited financial reports for comparative purposes need not be restated in so far as the provisions of IASs 32 and 39 are concerned.
BSP will be issuing a series of implementing guidelines to align the existing regulations with the provisions of the IAS.
IAS/IFRS is a set of standards that prescribe how particular types of transaction and other events should be reflected in financial statements. Compliance with the Standards is necessary for the fair presentation of financial statements.
The ASC is the governing body that establishes and improves accounting standards that will be generally accepted in the Philippines. It was established by Philippine Institute of Certified Public Accountants (PICPA) in 1981 and is composed of 8 members from the following organizations: PICPA (4 members), Securities and Exchange Commission (1 member), Bangko Sentral ng Pilipinas (1 member), Board of Accountancy (1 member) and Financial Executive Institute of the Philippines (1 member).