FASB definition of Conceptual Framework
-is a coherent system of interrelated basic concepts and propositions that prescribe objectives, limits and other fundamentals of financial accounting and serves as a basis for developing and evaluating of accounting principles, resolving accounting and reporting controversies.
– Financial Reporting Standards Council was established by the BOA in 2006 under the implementing rules and regulations of the Philippine Accountancy Act of 2004 to assist the board in carrying out its power and function to promulgate accounting standards in the Philippines.
-Successor of ASC or Accounting Standards Council
– To establish generally accepted accounting principles in the Philippines.
Main Responsibility :
Approval of Philippine Financial Reporting Standards or FRSCs and interpretation, preparation, presentation of Financial Statements, exposure drafts and other discussion documents.
Philippine Interpretations Committee (PIC) was formed in November 2006 by FRSC to assist in establishing and improving financial reporting standards in the Philippines.
– to issue implementation guidance on PFRSs. Replaced the former interpretations committee created by ASC in 2000.
Objectives of FRSC:
- To establish GAAP in the Philippines and achieved objective issued by IASB.
- To develop, in the public interest a single set of high quality, understandable and enforceable accounting standard that require high quality, transparent, and comparable information in FS and other Financial Reporting to help participants in the various capital markets and other users of the the information to make economic decisions.
- To promote the use and rigorous application of the standards.
- To work for the convergence of Philippine accounting standards and with International Financial Reporting Standards (PFRSs) issued by the IASB.
PFRS – Philippine Financial Reporting Standards consist of:
PFRSs correspond to the International Financial Reporting Standards.(IFRS).
PAS – Philippine Accounting Standards (PASs) correspond to International Accounting Standards (IASs).
Philippine Interpretations – Correspond to the IFRIC and the Standing Interpretations of Committee (SIC). or the IASC.
PFRS promotes the standards in general purpose financial statements and other financial reporting:
PFRS sets out recognition, measurement, presentation, and disclosure requirements. They may also set out such requirements for the transactions and events that may arise in specific industries. The framework also provides basis for the use of judgment in resolving accounting issues.
PFRS are designed to apply the general purpose financial statements and other financial reporting of all profit oriented entities. Profit oriented entities include those engaged in commercial, industrial, financial, and similar activities whether organized in corporate or in any other forms. They include organizations such as mutual insurance companies and other mutual cooperative entities that provide dividends and other economic benefits directly and proportionately to their owners, members or participants. Although PFRSs are not designed to apply to not for profit activities in private sector, public sector or government, entities with such activities may find them appropriate.
PFRS interpretations are intended to give authoritative guidance on issues are likely to receive divergent or unacceptable treatment in the absence of such guidance.
PFRS apply to all general purpose financial statements. These FS are directed towards the common information needs of a wide range users for example shareholders, creditors, employees and the public at large.
_Objective of Financial Statements is to provide information about financial position, performance and cash flows of an entity that is useful to those users making economic decisions.
A Complete set of FS:
- Statement of Financial Position
- Statement of Comprehensive Income
- Statement of Changes in Equity
- Cash Flow Statements
- Accounting Policies and Explanatory Notes