proposed financial reporting standards for coops_0

8/17/2019 Proposed Financial Reporting Standards for COOPS_0

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PROPOSED FINANCIALPROPOSED FINANCIALREPORTING STANDARDS FORREPORTING STANDARDS FOR

COOPERATIVESCOOPERATIVES


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RATIONALERATIONALE

SOLICIT FROM PRACTIONERSSOLICIT FROM PRACTIONERSCOMMENTS ANDCOMMENTS AND

RECOMMENDATIONS TO GUIDE THERECOMMENDATIONS TO GUIDE THE

REGULATORY AGENCY IN THEREGULATORY AGENCY IN THEFORMULATION OF REGULATIONS TOFORMULATION OF REGULATIONS TO

GOVERN THE APPLICATION OF PFRSGOVERN THE APPLICATION OF PFRSTO COOPERATIVE ENTITIESTO COOPERATIVE ENTITIES


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BACKGROUNDBACKGROUND

ARTICLE 81 OF R.A. 6938 REQUIREDARTICLE 81 OF R.A. 6938 REQUIRED

ALL COOPERATIVES BE SUBJECT TOALL COOPERATIVES BE SUBJECT TOAN ANNUAL AUDIT BY ANAN ANNUAL AUDIT BY AN

INDEPENDENT AUDITORINDEPENDENT AUDITOR

CERTIFIED PUBLIC ACCOUNTANTSCERTIFIED PUBLIC ACCOUNTANTS

ARE REQUIRED TO CONDUCT AUDITARE REQUIRED TO CONDUCT AUDIT

USING STANDARDS REQUIRED BYUSING STANDARDS REQUIRED BYTHE PROFESSIONTHE PROFESSION


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IN THE ABSENCE OF SPECIFIC LAWS ORIN THE ABSENCE OF SPECIFIC LAWS ORREGULATION, AN AUDITOR WILL FOLLOWREGULATION, AN AUDITOR WILL FOLLOW

PHILIPPINE FINANCIAL REPORTINGPHILIPPINE FINANCIAL REPORTING

STANDARDS (PFRS), AS CALLED FOR BYSTANDARDS (PFRS), AS CALLED FOR BYTHE PROFESSIONTHE PROFESSION

SPECIAL FACTORS PREVAIL ANDSPECIAL FACTORS PREVAIL AND

TRANSACTIONS ARE UNDERTAKEN IN THETRANSACTIONS ARE UNDERTAKEN IN THE

COOPERATIVE SECTOR WHICH CANNOTCOOPERATIVE SECTOR WHICH CANNOT

BE ACCOUNTED FOR NOR PRESENTEDBE ACCOUNTED FOR NOR PRESENTEDSATISFACTORILY WITHIN THE STRUCTURESATISFACTORILY WITHIN THE STRUCTURE

OF PFRSOF PFRS


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BSP AND SEC HAVE ISSUED REGULATIONBSP AND SEC HAVE ISSUED REGULATION

REGARDING THE APPLICABILITY OF PFRSREGARDING THE APPLICABILITY OF PFRSAND JUSTIFIED EXCEPTIONS FROM PFRSAND JUSTIFIED EXCEPTIONS FROM PFRS

FOR ENTITIES UNDER THEIRFOR ENTITIES UNDER THEIR

JURISDICTIONJURISDICTIONA SIMILAR, UNEQUIVOCAL REGULATION ISA SIMILAR, UNEQUIVOCAL REGULATION IS

NEEDED FROM THE CDA, OTHERWISE, THENEEDED FROM THE CDA, OTHERWISE, THE

OPINION ISSUED ON FINANCIALOPINION ISSUED ON FINANCIAL

STATEMENTS OF COOPERATIVES WOULDSTATEMENTS OF COOPERATIVES WOULD

BE QUALIFIED, AT BESTBE QUALIFIED, AT BEST


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INITIATIVES UNDERTAKENINITIATIVES UNDERTAKEN

DEVELOPMENT OF STANDARDDEVELOPMENT OF STANDARD

CHART OF ACCOUNTS FOR ALLCHART OF ACCOUNTS FOR ALLTYPES OF COOPERATIVESTYPES OF COOPERATIVES

COORDINATION WITH THE PICPACOORDINATION WITH THE PICPANATIONAL COOPERATIVENATIONAL COOPERATIVE

DEVELOPMENT COMMITTEE FOR THEDEVELOPMENT COMMITTEE FOR THE

CONDUCT OF VARIOUSCONDUCT OF VARIOUSCONSULTATIVE CONFERENCESCONSULTATIVE CONFERENCES


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POSSIBLE AREAS OFPOSSIBLE AREAS OF

CONSIDERATIONCONSIDERATIONFIDUCIARY INTEREST (IN THE CASEFIDUCIARY INTEREST (IN THE CASE

OF CREDIT COOPERATIVES)OF CREDIT COOPERATIVES)NUMBER OF MEMBERSNUMBER OF MEMBERS

AMOUNT OF CAPITALAMOUNT OF CAPITALAMOUNT OF ASSETSAMOUNT OF ASSETS

EXTERNAL USERS OF FINANCIALEXTERNAL USERS OF FINANCIALREPORTSREPORTS


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AS DEFINED:AS DEFINED:

AN ENTITY HAS PUBLICAN ENTITY HAS PUBLIC

ACCOUNTABILITY WHEN:ACCOUNTABILITY WHEN:-- IT HAS ISSUED DEBT OR EQUITYIT HAS ISSUED DEBT OR EQUITY

SECURITIES IN A PUBLIC MARKET;SECURITIES IN A PUBLIC MARKET;

OROR-- IT HOLDS ASSETS IN A FIDUCIARYIT HOLDS ASSETS IN A FIDUCIARY

CAPACITY FOR A BROAD GROUP OFCAPACITY FOR A BROAD GROUP OFOUTSIDERS (e.g. banks, insuranceOUTSIDERS (e.g. banks, insurancecompanies, brokers/dealers, mutualcompanies, brokers/dealers, mutual

fund) fund)


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-- IT FILES OR IS IN THE PROCESS OFIT FILES OR IS IN THE PROCESS OFFILING ITS FINANCIAL STATEMENTSFILING ITS FINANCIAL STATEMENTS

WITH A SECURITIES COMMISSION ORWITH A SECURITIES COMMISSION OROTHER REGULATORYOTHER REGULATORY

ORGANIZATION FOR THE PURPOSEORGANIZATION FOR THE PURPOSE

OF ISSUING ANY CLASS OFOF ISSUING ANY CLASS OF

INSTRUMENTS IN A PUBLIC MARKETINSTRUMENTS IN A PUBLIC MARKET


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EXTERNAL USERSEXTERNAL USERS

> OWNERS WHO ARE NOT INVOLVED IN> OWNERS WHO ARE NOT INVOLVED INMANAGING THE BUSINESSMANAGING THE BUSINESS

> EXISTING AND POTENTIAL> EXISTING AND POTENTIALCREDITORSCREDITORS

> CREDIT RATING AGENCIES> CREDIT RATING AGENCIES


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SIMPLICITY IN SMESIMPLICITY IN SME

REMOVES CHOICES FORREMOVES CHOICES FORACCOUNTING TREATMENTACCOUNTING TREATMENT

SIMPLIFIES METHODS FORSIMPLIFIES METHODS FOR

RECOGNITION AND MEASUREMENTRECOGNITION AND MEASUREMENT


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HoweverHowever

COOPERATIVES DEALS ANDCOOPERATIVES DEALS AND

INTERACTS WITH OTHERINTERACTS WITH OTHER

STAKEHOLDERS WHICH MAYSTAKEHOLDERS WHICH MAY

REQUIRE FULL COMPLIANCE WITHREQUIRE FULL COMPLIANCE WITHPFRSPFRS


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RECOMMENDATIONRECOMMENDATION

IT IS THE COOPERATIVEIT IS THE COOPERATIVE

DEVELOPMENT AUTHORITY CALL TODEVELOPMENT AUTHORITY CALL TOISSUE A BENCHMARK AS TO THOSEISSUE A BENCHMARK AS TO THOSE

COOPERATIVES WHICH WILL FALLCOOPERATIVES WHICH WILL FALLUNDER SMEUNDER SME


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PFRS COMPLIANCE FORPFRS COMPLIANCE FORCOOPERATIVESCOOPERATIVES


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ISSUESISSUES

ACCOUNTS PECULIAR TOACCOUNTS PECULIAR TO

COOPERATIVES WITHOUTCOOPERATIVES WITHOUT

APPLICABLE PFRSAPPLICABLE PFRS

* COOPERATIVE DEVELOPMENT * COOPERATIVE DEVELOPMENT

COST COST

* STATUTORY FUNDS * STATUTORY FUNDS

* INTEREST ON SHARE CAPITAL * INTEREST ON SHARE CAPITAL

* PATRONAGE REFUND * PATRONAGE REFUND

* OTHER FUNDS AND DEPOSIT * OTHER FUNDS AND DEPOSIT

* MEMBERS BENEFIT AND OTHER FUND* MEMBERS BENEFIT AND OTHER FUND

PAYABLE PAYABLE


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DEFERMENT OF PFRS FORDEFERMENT OF PFRS FORCOOPERATIVES FALLING UNDERCOOPERATIVES FALLING UNDER

SMEsSMEs

PAS 39PAS 39 – – LOANS RECEIVABLE (useLOANS RECEIVABLE (use

of effective interest rate)of effective interest rate)

PAS 41PAS 41 – – AGRICULTURE (fair valueAGRICULTURE (fair value

gains)gains)


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DEVIATIONS FROM PFRS DUE TODEVIATIONS FROM PFRS DUE TOINDUSTRY PRACTICESINDUSTRY PRACTICES

PAS 18PAS 18 – – REVENUE (use of modifiedREVENUE (use of modified

accrual)accrual)

PAS 20PAS 20 -- DONATION (as capital)DONATION (as capital)

PAS 16PAS 16 -- PROPERTY, PLANT ANDPROPERTY, PLANT AND

EQUIPMENT (at cost)EQUIPMENT (at cost)

PAS 40PAS 40 -- INVESTMENT PROPERTYINVESTMENT PROPERTYPAS 39PAS 39 -- LOAN RECEIVABLELOAN RECEIVABLE – – LOANLOAN

LOSS PROVISIONINGLOSS PROVISIONING


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SPECIAL DISCLOSURESPECIAL DISCLOSUREREQUIREMENTSREQUIREMENTS

PAS 12PAS 12 -- INCOME TAXES (basis of INCOME TAXES (basis of

exemption citing)exemption citing)

PFRS 8PFRS 8 -- SEGMENT REPORTINGSEGMENT REPORTING

(separate books for each(separate books for each

line of business)line of business)

PAS 39PAS 39 – – LOANS RECEIVABLELOANS RECEIVABLE

(details of loans, aging(details of loans, aging

using PAR, etc)using PAR, etc)


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COMPOSITION OF:COMPOSITION OF:1. CASH AND CASH EQUIVALENTS1. CASH AND CASH EQUIVALENTS

2. OTHER FUNDS AND DEPOSITS2. OTHER FUNDS AND DEPOSITS

3. DEPOSIT LIABILITY ACCOUNTS3. DEPOSIT LIABILITY ACCOUNTS

4. MEMBERS’BENEFIT AND OTHER4. MEMBERS’BENEFIT AND OTHER

FUNDS PAYABLEFUNDS PAYABLE5. RISK MANAGEMENT POLICY5. RISK MANAGEMENT POLICY

6. FOR THOSE WITH CREDIT ACTIVITY,6. FOR THOSE WITH CREDIT ACTIVITY,

ASSESSMENT OF OPERATINGASSESSMENT OF OPERATING

PERFORMANCE USING COOPPERFORMANCE USING COOP--PESOSPESOS


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WHAT IS NEXT?WHAT IS NEXT?

FOR CDA:FOR CDA:

To review and update existing circulars toTo review and update existing circulars to

comply with PFRS

omply with PFRS

To align account definition in the

To align account definition in the

SCAs

CAs

with PFRSith PFRS

To issue circulars on reporting standards

To issue circulars on reporting standards

for special factors and transactionor special factors and transaction

undertaken by cooperatives which are not

ndertaken by cooperatives which are not

covered by PFRS

overed by PFRS


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THANK YOUTHANK YOU

proposed financial reporting standards for coops_0

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