CONCEPTUAL FRAMEWORK

and AC 1101
Tuesday, Thursday
ACCOUNTING STANDARDS 10:30-12:00

Lesson: Chapter 1- Introduction and Development of Standards

INTRODUCTION TO STANDARDS DEVELOPMENT OF STANDARDS

The Due Process Handbook (August 2020), provides full process

that helps the IASB and IFRS Interpretation Committee to follow a
thorough, transparent, and participatory due process issuances of
IFRS standards and interpretation.

3 Principles followed by the DUE PROCESS: transparency, fill and

fair consultation, and accountability.

MANDATORY DUE PROCESS STEPS TO PROTECT INTEGRITY:

a. Debating any proposals in one or more public meetings

b. Exposing for public comment a draft of proposed new Standard,
proposed amendment to a standard/ interpretation
c. Considering timely manner those comments letters received on
the proposals
d. Considering whether the proposals should be exposed again
IFRS Foundation, is a not profit international organization e. Reporting to the Advisory Council on the technical program,
responsible for overseeing the work of the International major projects, project proposals, and work priorities
Accounting Standards Board (IASB), the structure, and strategy. It f. Ratification of an interpretation by the IASB
also has fundraising responsibility.
BASIC STEPS IN DEVELOPING ACCOUNTING STANDARD:
Foremost Objective:
- to develop, in the public interest, a single set of high Step 1. Agenda Consultation
quality, understandable, enforceable, and globally accepted Step 2. Research Program
financial reporting standards based on principles. Step 3. Standard Setting Program
Step 4. Maintenance Program
Monitoring Board, a group of capital market authorities and
provides formal link between trustees and public authorities to Supermajority, requires 8 IASB members (by ballot) in favor of the
enhance public accountability of the IFRS Foundation. It publication document if it has 13 or fewer appointed members.
oversees the IFRS Trustees, participates in the Trustees However, if there are 14, the supermajority requires 9 members.
nomination process, and approves appointments.
MADATORY PARTS OF AN ACCOUNTING STANDARD:
International Accounting Standards Boards (IASB),
• The principles and the related application guidance
independent standard-setting body of IFRS Foundation
responsible for the development and publication of International • The defined terms
Financial Reporting Standards (IFRS) and for approving • The effective date and transition paragraphs
interpretations of IFRS as developed by IFRS Interpretation
Committee. Additional materials not integral part:
• A table of contents
• Formed in 2001, to replace International Accounting • An Introduction
Standards Council • The basis of conclusion
• Normally has 14 board members, one appointed as Chair, • Dissenting opinions
one as Vice Chair. IASB Members have an initial term of 5
years, with renewal option (once) for 3 years or max of 5. ACCOUNTING STANDARDS ADOPTED IN THE PHILIPPINES:
• Constitution requires 4 members from Asia/Oceania, 4 from
Philippine Financial Reporting Standards (PFRS), which
Europe, 4 from Americas, 1 from Africa, and 1 appointed
corresponds to International Financial Reporting Standards.
from any area, subject to maintain overall geographical
balance. Philippine Accounting Standards, which corresponds to
International Accounting Standards.
IFRS Interpretations Committee, interpretative body of the
IASB, that reviews the implementation issues. 14 voting Philippine Interpretations, which corresponds to
members appointed by the IFRS Foundation Trustees for Interpretations of the IFRIC and the Standing Interpretations
renewable terms of 3 years. Committee (SIC) and Interpretations developed by the PH
Interpretations Committee
IFRS Advisory Council, provides advice and counsel to the
Trustees and the Board, whilst the Board also consult extensively 2 Different Accounting Standards:
with a range of other standing advisory bodies and consultative
groups. International Accounting Standards (IAS), published by the
International Accounting Standards Committee (IASC) between
Accounting Standards Advisory Forum (ASAF), provides an
1973 and 2001. In 2001, restructured to become IASB, it was
advisory forum in which members can constructively contribute
towards the achievement of the IASB’s goal of developing
agreed to adopt the set of standards issued by IASC but
globally accepted high-quality accounting standards. standards to be published that would follow a series known
as the International Financial Reporting Standard (IFRS).
CONCEPTUAL FRAMEWORK
and AC 1101
Tuesday, Thursday
ACCOUNTING STANDARDS 10:30-12:00

Lesson: Chapter 1- Introduction and Development of Standards

COUNCIL FOR ACCREDITATION AND QUALITY CONTROL OF
PHILIPPINE ACCOUNTING STANDARD PRACTICTING CPAs
SETTING BODIES
• Security and Exchange Commission (SEC),
RA 9298 Accountancy Act of 2004- law governing the practice accredits practitioner who audit publicly listed
of Accountancy in the Philippines companies with at least P50M worth of assets and
companies with secondary licenses
Philippine Regulatory Commission- Board of Accountancy • Bangko Sentral ng Pilipinas (BSP), accredits
practitioner who audit banks and other financial
(PRC-BOA), tasked to adopt the rules and regulation necessary
institutions
to carry out provision of the law.
• Insurance Commissions (IC), accredits practitioner
who audit insurance companies
• Conduct and administer licensure exam
• Board of Accountancy (BOA), accredits CPAs in
• Regulate and supervise the practice of the profession. public practice with basic requirements
BOA is the leg of PRC that regulates accountancy
profession. Continuing Professional Development (CPD), refers to
inculcation of advance knowledge, skills, and ethical values
Financial Reporting Standards Council (FRSC), main function in a post-licensure specialization or an inter or multi-
is to establish GAAP in the Philippines. Established by BOA. disciplinary field of study.

- Monitors technical activities of the IASB and invites A CPA is required to have 120 units of CPD to advanced his
comments on exposure drafts of proposed IFRS’s and knowledge, skills, and ethical values
when it is finalized, it will be adopted by PFRS.
- Monitor issuances of IFRIC which adopts it as Philippine
Interpretations.
- Composed of 15 members

Philippine Interpretations Committee (PIC), formed by the

FRSC in August 2006 to assist in establishing and improving
financial reporting standards of the Philippines.

Objectives:
- Issue implementation guidance on PAS, PFRS, and
related interpretation adopted by the FRSC from accounting
pronouncements issued by IASB
- Comment on exposure draft of proposed PFRS and
other documents that may be issued for commend by the FRSC
- Comment on exposure draft of proposed accounting
standards or proposed regulations with accounting relevance
that may be issued by government agencies, such as the SEC,
BSP, and Insurance Commission.

Auditing and Assurance Standards Council (AASC), created by

PRC upon recommendation of the BOA to assist in establishing
and promulgating Auditing Standards in the Philippines.
Mandated to make the International Standards and Practice
Statements issued by the IAASB and to facilitate its
implementation of the “Philippine Standards and Practice
Statements”

Philippine Institute of Certified Public Accountants (PICPA),

only accredited national organization of CPAs in the Philippines.
Primary function to establish programs for the benefits and
welfare of CPAs, for the advancement of the profession and the
attainment of other professional ends.

4 SECTORS BY WHICH CPA MAY BE PRACTICING:

• Public Practice, Association of Certified Public Accountants

in the Public Practice (ACPAPP)
• Commerce and Industry, Association of Certified Public
Accountants in Commerce and Industry (ACPACI)
• Education/Academe, National Association of Certified
Public Accountants in Education (nACPAE)
• Government, Government Association of Certified Public
Accountants (GACPA)