The SEC has approved the exemption from the mandatory adoption of the Philippine Financial Reporting Standard for Small and Medium-sized Entities (PFRS for SMEs) SMEs that meet any of the following criteria:
1. It is a subsidiary of a parent company reporting under the full PFRS;
2. It is a subsidiary of a foreign parent company that will be moving towards IFRS pursuant to the foreign country’s published convergence plan;
3. It is a subsidiary of a foreign parent company that has been applying the standards for a non-publicly accountable entity for local reporting purposes, and is considering moving to full PFRS instead of the PFRS for SMEs to align its policies with the expected move to full IFRS by its foreign parent company pursuant to its country’s published convergence plan;
4. It has short-term projections that show that it will breach the quantitative thresholds set in the criteria for an SME, and the breach is expected to be significant and continuing due to its long-term effect on the company’s asset or liability size;
5. It is part of a group, either as a significant joint venture or an associate, that is reporting under the full PFRS;
6. It is a branch office of a foreign company reporting under the full IFRS;
7. It has concrete plans to conduct an initial public offering within the next two years;
8. It has a subsidiary that is mandated to report under the full PFRS;
9. It has been preparing financial statements using full PFRS and has decided to liquidated its assets
An SME that avails of the exemption must disclose in the notes to its financial statements the facts that support its adoption of full PFRS instead of the PFRS for SMEs.
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 email@example.com for more information and if you want to avail professional services. Find us on Facebook!