Amendments/Updates to PFRS for SMEs effective 2013 onwards

Advertisements

It’s been years since the IASB issued a new financial reporting standards for Small and Medium-sized Entities (SMEs) in 2009 – the International Financial Reporting Standards for SMEs (IFRS for SMEs), which adopted in the Philippines as PFRS for SMEs.  The question is, what has changed from the issuance of PFRS for SMEs?

This discussion will help you understand and will summarize the changes in the standards and related issuances from the regulatory bodies:

  • The IFRS/PFRS for SMEs and Basis for Conclusion
  • SEC Issuances on PFRS for SMEs
  • Changes to IFRS/PFRS for SMEs

The IFRS/PFRS for SMEs and Basis for Conclusion

PFRS for SMEs shall be used by entities that meet the definition of an SME as set forth in the SEC En Banc Resolution dated 13 August 2009.  In  the SEC Commission En Banc meeting dated December 3, 2009, it decided to adopt the PFRS for SMEs.

The PFRS for SMEs is effective for annual periods beginning on or after January 1, 2010. However, theguidance for applying the requirements of Section 23, Revenue, in recognizing revenue from agreements for the construction of real estate set forth in paragraphs 23A.14 and 23A.15 shall apply for annual periods beginning on or after January 1, 2012. The standard does not include a provision for early adoption.

Advertisements

Among our publications/pages discussing these are as follows (click to access):

SEC Issuances on PFRS for SMEs

The adoption of the IFRS for SMEs in the Philippines was approved by the Philippines SEC.  Discussion on this areas are:

  • PFRS for SMEs – a Q&A on the adoption of the IFRS for SMEs by the SEC, who will qualify and when will be the date of effectivity.  TheSRC Rule 68 was also ammended to include PFRS for SMEs.
  • Exemptions to PFRS for SMEs – a discussion on the exemption on the application of SMEs in the Philippines (as already discussed above)

So far, there were no significant SEC issuances that affects entities complying with PFRS for SMEs.  There were this clarification however, from the SEC Financial Reporting Bulletin, that, entities exempted from mandatory adoption of PFRS for SMEs and prepared financial statements in accordance with the full PFRS, such entities will not be considered large and/or publicly listed.

Under Part I (2)(A)(ii)(b) of the Rule, certain types of SMEs may be exempted from the mandatory adoption of the Philippine Financial Reporting Standards (PFRS) for SMEs and may instead apply, at their option, full PFRS. SMEs that availed of the exemption and applied the full PFRS are not considered as large and/or publicly-accountable entities and therefore are not required to file the tabular schedule of all effective standards and interpretations under the PFRS as of year-end, as required under Part I (4)(J) of the Rule.

See post on SEC Financial Reporting Bulletin 6 to 12 (SRC Rule 68) for the related discussion.

Changes to IFRS/PFRS for SMEs

So, to date, is there any changes or amendments on the IFRS/PFRS for SMEs?  None.

There are however various issuances coming from the IASB and the Philippine Interpretations Committee (PIC) that clarify matter on the application of IFRS for SMEs that is applicable to PFRS for SMEs.  Basically, these were in the form of Q&As and other issuances.  We published following posts that informs you of the issuances related to PFRS for SMEs:

To date, there were no changes amendments to IFRS/PFRS for SMEs aside from those Q&As and PIC Interpretations which are by nature, not really changes but just clarifications.

Proposes Limited Amendments to the IFRS for SMEs

Upon issuance of the IFRS for SMEs in 2009, the  IASB stated its plans to undertake an initial comprehensive review of the IFRS for SMEs to enable it to assess the first two years’ experience that entities would have had in implementing it and to consider whether there is a need for any amendments. In many jurisdictions, companies started using the IFRS for SMEs in 2010.  Consequently, the IASB commenced its initial comprehensive review in 2012.

In order to assist in the process of identifying which items to consider for amendment the IASB issued a Request for Information in June 2012 to seek public views and consulted with the SME Implementation Group, an advisory body to the IASB. After considering the feedback it received, and taking into account the fact that the IFRS for SMEs is still a new Standard, the IASB only proposes to make limited amendments to the IFRS for SMEs.

Most of the proposed amendments clarify existing requirements or add supporting guidance, rather than propose changes to the underlying requirements in the IFRS for SMEs.  Consequently, for most SMEs, the proposals are expected to improve understanding of the existing requirements, without having a significant effect on the entity’s financial reporting practices and financial statements.

The proposals are open for comment until 3 March 2014.

Click here for the IASB annoucement for the proposed limited amendments.

Like this update?  Tell us what you think! 🙂


Disclaimer: Opinions expressed in this article are that of the author and information provided are for general conceptual guidance for public information and are not substitute for expert advice. Contact support@philcpa.org for more information and if you want to avail professional services. Find us on Facebook!



Orlando Calundan is a CPA who has exposures in FS audit of entities in various industries such as real estate, food/restaurants, manufacturing, service organizations and BPOs, automotive, holding/investment companies and more. He also has exposure on internal audit engagements.

What are you searching for?


Let us help you! Enter your 'search key word' to search an article / topic!