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International Accounting and Auditing Standards: A Comprehensive Overview, Study notes of Accounting

Far Eastern University (FEU)Accounting

A comprehensive overview of international accounting and auditing standards, focusing on the structure and functions of key organizations like the ifrs foundation, iaasb, iaesb, and ipsasb. It delves into the adoption of these standards in the philippines, highlighting the roles of the financial reporting standards council (frsc) and the auditing and assurance standards council (aasc). The document also explores ethical principles and quality control standards, emphasizing the importance of compliance with the code of ethics for professional accountants.

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30/01/2018
The Overview of the
Philippine Accounting
Profession
Hon. Antonieta Fortuna-Ibe
Commissioner
January 25, 2018
Regulators’Forum
OVERVIEW OF THE ACCOUNTING PROFESSION
International Scene – IFRS Foundation and IASB
The diagram below illustrates the organizational stru cture of the
standard setting bodies.
International Scene (cont’d)
•The International Financial Reporting Standards (IFRS) Foundation is a
not-for-profit international organization responsible for d eveloping a single
set of high-quality, global accounting standards, known as IFRS Standards.
IFRS Standards are set by the IFRS Foundation’s standard-setting body, the
IASB.
•The Monitoring Board is a group of capital market authorities and provides
formal link between the Trustees and public authorities in order to enhance
the public accountability of the IFRS Foundation.
•The International Accounting Standards Board (IASB) is the independent
standard-setting body of IFRS Foundation responsible for the development
and publication of IFRS and for approving Interpretations of IFRS as
developed by the IFRS Interpretations Committee.
OVERVIEW OF THE ACCOUNTING PROFESSION
International Scene (cont’d)
•The Trustees of the IFRS Foundation are responsible for the
governance and oversight of the IASB, including the due process for the
development of the accounting standards.
•The IFRS Advisory Council provides advice and counsel to the Trustees
and the Board, whilst the Board also consults extensively with a range of
other standing advisory bodies and consultative groups.
•The Accounting Standards Advisory Forum (ASAF) provides an
advisory forum in which members can constructively contribute towards
the achievement of the IASB’s goal of developing globally accepted
high-quality accounting standards.
•The IFRS Interpretations Committee is the interpretative body of the
International Accounting Standards Board, which reviews
implementation issues.
OVERVIEW OF THE ACCOUNTING PROFESSION
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The Overview of the

Philippine Accounting

Profession

Hon. Antonieta Fortuna-Ibe Commissioner January 25, 2018 Regulators’Forum

OVERVIEW OF THE ACCOUNTING PROFESSION

International Scene – IFRS Foundation and IASB The diagram below illustrates the organizational structure of the standard setting bodies. International Scene (cont’d)

  • The International Financial Reporting Standards (IFRS) Foundation is a not-for-profit international organization responsible for developing a single set of high-quality, global accounting standards, known as IFRS Standards. IFRS Standards are set by the IFRS Foundation’s standard-setting body, the IASB.
  • The Monitoring Board is a group of capital market authorities and provides formal link between the Trustees and public authorities in order to enhance the public accountability of the IFRS Foundation.
  • The International Accounting Standards Board (IASB) is the independent standard-setting body of IFRS Foundation responsible for the development and publication of IFRS and for approving Interpretations of IFRS as developed by the IFRS Interpretations Committee.

OVERVIEW OF THE ACCOUNTING PROFESSION

International Scene (cont’d)

  • The Trustees of the IFRS Foundation are responsible for the governance and oversight of the IASB, including the due process for the development of the accounting standards.
  • The IFRS Advisory Council provides advice and counsel to the Trustees and the Board, whilst the Board also consults extensively with a range of other standing advisory bodies and consultative groups.
  • The Accounting Standards Advisory Forum (ASAF) provides an advisory forum in which members can constructively contribute towards the achievement of the IASB’s goal of developing globally accepted high-quality accounting standards.
  • The IFRS Interpretations Committee is the interpretative body of the International Accounting Standards Board, which reviews implementation issues.

OVERVIEW OF THE ACCOUNTING PROFESSION

OVERVIEW OF THE ACCOUNTING PROFESSION

International Scene – IFRS Foundation and IASB The diagram below illustrates the international organizations that supports the international accounting standards. International Accounting Standards International Scene - IFAC P R O N O U N C E M E N T S International Ethics Standards Board for Accountants (IESBA) (c) Code of Ethics for Professional Accountant International Public Sector Accounting Standards Board (IPSASB) (d) Accounting Standards (IPSAS)^ International Public Sector International Auditing and Standards Board^ Assurance (IAASB) (a) International Standards on Auditing (ISAs) International Standards on Quality International Standards on Review Control 1 (ISQC 1) Assurance Engagements (ISAEs)^ International Standards on^ Engagements (ISREs) International Standards on Related Services (ISRSs) International Accounting Standards Board^ Education (IAESB) (b) International Education Standards (IESs) Guidelines for Professional^ International Education International Education Papers^ Accountants(IEGs) for Professional Accountants (IEPs) IFAC (1) STANDARD-SETTING^ INDEPENDENT BOARDS (2) Public Interest Oversight Board (PIOB) (3) Public Interest Committee (PIC) (4)

OVERVIEW OF THE ACCOUNTING PROFESSION

International Federation of Accountants (IFAC)

  • is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies.
  • IFAC is comprised of over 175 members and associates in more than 130 countries and jurisdictions, representing almost 3 million accountants in public practice, education, government service, industry, and commerce.
  • IFAC has issued seven (7) Statements of Membership Obligations (SMOs), which are meant to assists members like PICPA in ensuring high quality performance by professional accountants.
  • SMO 1 includes the guidance on the design of the Quality Assurance Review, (QAR), the review cycle, team composition and procedures, reporting, corrective and disciplinary actions, consideration of public oversight and review of implementation and effectiveness.

OVERVIEW OF THE ACCOUNTING PROFESSION

Independent Standard-Setting Boards International Auditing and Assurance Standards Board (IAASB) sets high-quality international standards for auditing, assurance, and quality control that strengthen public confidence in the global profession. The International Accounting Education Standards Board (IAESB) establishes standards, in the area of professional accounting education, that prescribe technical competence and professional skills, values, ethics, and attitudes. The International Ethics Standards Board for Accountants (IESBA) sets high-quality, internationally appropriate ethics standards for professional accountants, including auditor independence requirements. The International Public Sector Accounting Standards Board (IPSASB) develops standards, guidance, and resources for use by public sector entities around the world for preparation of general purpose financial statements.

OVERVIEW OF THE ACCOUNTING PROFESSION

Philippine Scene Financial Reporting Standards Council (FRSC) – (Cont’d)

  • The FRSC formed the Philippine Interpretations Committee (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. The PIC members are appointed by the FRSC and include accountants in public practice, the academe and regulatory bodies and users of financial statements.

OVERVIEW OF THE ACCOUNTING PROFESSION

Philippine Interpretations Committee (PIC)

  • Assists FRSC in establishing and improving financial reporting standards in the Philippines. The role is principally to issue implementation guidance on PFRSs. Philippine Scene Financial Reporting Standards Council (FRSC) – (Cont’d) Members of FRSC Composed of fifteen (15) members with a chairman and fourteen (14) representatives from:

OVERVIEW OF THE ACCOUNTING PROFESSION

No. of Members BOA, SEC, BSP, COA, BIR 5 (1 each) Financial Executives Institute of the Phil. (FINEX) 1 PICPA: Public Practice, Commerce and Industry, Academe/Education, Government^ 8 (2 each) TOTAL 14 Philippine Scene Auditing and Assurance Standards Council (AASC)

  • The AASC was created by the PRC upon the recommendation of the BOA to assist the BOA in the establishment and promulgation of auditing standards in the Philippines.
  • It is the stated policy of the AASC to make the International Standards and Practice Statements issued by the International Auditing and Assurance Standards Board (IAASB) the applicable standards and practice statements in the Philippines. In this connection, to facilitate their implementation in the Philippines, the International Standards and Practice Statements are made Philippine-specific and are described as “Philippine standards and practice statements”.
  • Each final Philippine Standard and Practice Statement, as well as interpretations, if deemed appropriate, shall be submitted to the PRC through the BOA for approval after which the pronouncements shall be published in the Official Gazette. After publication, the AASC pronouncement becomes operative from the effective date stated therein.

OVERVIEW OF THE ACCOUNTING PROFESSION

Philippine Institute of Certified Public Accountants (PICPA)

  • The PICPA is the only accredited national professional organization of CPAs in the Philippines. Its primary functions established for the benefit and welfare of the CPAs, the advancement of their profession, and the attainment of other professional ends.

OVERVIEW OF THE ACCOUNTING PROFESSION

Auditing and Assurance Standards Council (AASC) – Cont’d Members of AASC

  • AASC shall have 15 regular members with a term of three years, renewable for another term, coming from the following: No. of Members Chairman 1 BOA, SEC, BSP, COA 4 (1 each) Association of CPAs in Public Practice 1 PICPA: Public Practice Commerce and Industry, Academe/Education, Government^6 3 (1 each) TOTAL 15

Council for Accreditation and Quality Control of Practicing CPA’s

Council for Accreditation and Quality Control of

Practicing CPA’s

  • Securities and Exchange Commission (SEC)
    • Accredits practitioners who audit publicly listed companies, companies with at least Php million worth of assets and companies with secondary licenses.
  • Bangko Sentral ng Pilipinas (BSP)
    • Accredits practitioners who audit banks and other financial institutions
  • Insurance Commission (IC)
    • Accredits practitioners who audit insurance companies In addition, the Board of Accountancy (BOA) also accredits CPAs in public practice with basic requirements. Practitioner ETHICAL PRINCIPLES AND QUALITY CONTROL STANDARDS Code of Ethics for Professional Accountants in the Philippines
  • Establishes fundamental ethical principles for professional accountants Philippine Standards on Quality Control (PSQCs)
  • Establish standards and provide guidance on a firm’s system of quality control.

ETHICAL PRINCIPLES AND QUALITY CONTROL

STANDARDS

AMENDMENTS ON ACCOUNTING STANDARDS

STANDARDS DESCRIPTION EFFECTIVITY DATE PFRS 2 Classification and Measurement of Share-based Payment Transactions 1/1/ PFRS 4 Applying PFRS 9, Financial Instruments with PFRS 4, Insurance Contracts 1/1/ PFRS 15 Clarifications to PFRS 15 1/1/

  • amendments until the IASB has completed its broader review of the research project on equity accounting that mayOn January 13, 2016, the FRSC decided to postpone the original effective date of January 1, 2016 of the said result in the simplification of accounting for such transactions and of other aspects of accounting for associates and joint ventures. PFRS 10 (^) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Deferred* PAS 28 PFRS 5 Changes in Methods of Disposal 1/1/ PFRS 7 Servicing contracts 1/1/ PFRS 7 Applicability of the amendments to PFRS 7 to condensed interim financial statements 1/1/ PAS 19 Discount rate: regional market issue 1/1/ PAS 34 Disclosure of information ‘elsewhere in the interim financial report 1/1/ PFRS 10 PFRS 12^ Investment Entities: Applying the Consolidation Exception^ 1/1/ PAS 28 PAS 1 Disclosure Initiative 1/1/ PAS 7 Disclosure Initiative 1/1/ PAS 12 Recognition of Deferred Tax Assets for Unrealized Losses 1/1/ STANDARDS DESCRIPTION EFFECTIVITY DATE PFRS 11 Accounting for Acquisitions of Interests in Joint Operations 1/1/ PAS 16 Clarification of Acceptable Methods of Depreciation 1/1/ PAS 38 Clarification of Acceptable Methods of Amortization 1/1/ PAS 16 (^) Agriculture: Bearer Plants 1/1/ PAS 41 PAS 27 Equity Method in Separate Financial Statements 1/1/ PFRS 2 Definition of Vesting Conditions 7/1/ PFRS 3 Accounting for Contingent Considertaion in a Business Combination 7/1/ PFRS 8 Aggregation of Operating Segments 7/1/ PFRS 8 Reconciliation of the Total Reportable Segments’ Assets to the Entity's Assets 7/1/ PAS 16 Revaluation Method - Proportionate Restatement of Accumulated Depreciation 7/1/ PAS 24 Key Management Personnel 7/1/ PAS 38 Revaluation Method - Proportionate Restatement of Accumulated Amortization 7/1/ PFRS 3 Scope Exceptions for Joint Ventures 7/1/ PFRS 13 Portfolio Exceptions 7/1/ PAS 40 Clarifying the interrelationship between PFRS 3 and PAS 40 when classifying property as investment property or owner-occupied property 7/1/

AMENDMENTS ON ACCOUNTING STANDARDS

PRONOUNCEMENTS APPROVED BY THE

FRSC AND FOR APPROVAL BY THE

REGULATORS

STANDARDS DESCRIPTION EFFECTIVITY DATE PFRS 12 Clarification of the scope of the standard 1/1/ PAS 28 Measuring an associate or joint venture at fair value 1/1/ PAS 40 Transfers of Investment Property 1/1/ Interpretation^ Philippine IFRIC- Foreign Currency Transactions and Advance Consideration 1/1/ PFRS 1 Deletion of short-term exemptions for first-time adopters 1/1/ Interpretation^ Philippine IFRIC- Uncertainty over Income Tax Treatments 1/1/