PART I GENERAL FINANCIAL REPORTING
GENERAL GUIDE TO FINANCIAL
REQUIREMENTS
1. Application and definition of terms
Corporation that meets certain condition below
must follow the provided form and contents of
financial statements
Stock Corporation - 50,000 paid up capital
stock;
Non Stock corporation - total asset of
500,000 or more and with a gross annual
receipt of 100,000 or more;
Branch offices of stock foreign corporation
and non-stock corporation, with a capital of
1,000,000 and total assets of 1,000,000,
respectively;
Regional operating headquarters of foreign
corporation with total revenue of 1,000,000.
Definition of terms used in the rule
Financial Reporting Framework set of
accounting principles, standards,
interpretations and pronouncements that
used in preparing annual financial
statements which are not limited to PFRS/
PFRS for SME.
Entity juridical person or a corporation
registered under the corporation code
Error unintentional mistake in financial
statements that affect the total assets,
liabilities or income of the company by 5%.
Fraud intentional act of misrepresentation
of financial statements by one or more
individual that reduce or increase the total
assets, liabilities or income by 5%
Gross Negligence performing without due
care
Material Information misstatement of
information can influence the decision
Significant Subsidiary the corporation and
its subsidiaries (a) investments in and
advances to subsidiary (b) proportionate
shares of total assets (c) equity in the
income from continuing operation before
taxes should exceed in 10%.
Summarized financial information shall
include assets, liabilities (current asset, non-
current assets, current liabilities and non-
current liabilities) and results of operation of
the entity ( net sales, gross profit,
income/loss for continuing operations and
net income/loss
2.
STATEMENTS PREPARATION
FINANCIAL REPORTING FRAMEWORK
Large and/or publicly-accountable entities
Criteria:
Total Assets more than 350M or total
liabilities more than 250M
Required to file FS
File FS for the purpose of issuing
instruments in public market
Holders of secondary licenses by
regulatory agencies
Certain subclasses like banks and insurance
companies may follow set of financial
framework other than PFRS.
SME
Criteria:
Assets ( 3M-350M) Liabilities (3M-
250M) if parent, refers to consolidated
balances.
Not required to file FS
Not issuing instruments
Not holders of secondary licenses
Shall use PFRS for SME except:
Subsidiary of a parent reporting PFRS
Subsidiary of foreign parent company
that uses IFRS
Subsidiary of foreign parent company
that uses the standards of non-publicly
accountable entity for local reporting
purposes
Part of a group that is reporting
under PFRS
Branch office/regional headquarters
of a foreign company that uses PFRS
SME that mandated to report PFRS
SME that will breach quantitative
thresholds in criteria for SMEs that will be
significant for the company in long term
basis.
SME that has concrete plan to
conduct IPO in the next 2 years
SME who uses PFRS and has decided
to liquidate
 Other cases allowed by the
commission
If the SME decide to use any of the condition
above, SME should provide discussion in its
notes to financial statement.
If an SME using PFRS for SME breaches the
criteria at the end of that year, entity will
apply the applicable framework next
accounting period if it has a significant
change, otherwise the same framework
apply.
General rule, 20% of consolidated total
assets or liabilities is significant.
Micro Entities
Criteria:
Total assets and liabilities below 3M
Not required to file FS
Not issuing instruments
Not holders of secondary licenses
Can use income tax basis, PFRS for SME, or
accounting standards in effect as of dec. 31 2004
as their financial reporting framework provided that
management shall assess the acceptability.
RESPONSIBILITY FOR FINANCIAL STATEMENTS
Provides unrestricted access to records and
personnel
The company should not allow its
independent auditor to make FS
The Commission can examine the
companys books, records, systems and
control to determine the companys
compliance
FORM ORDER AND TERMINOLOGY
FS should be filed in such form and order
indicating their significance and character.
Money should expressed in whole currency
units if not, insert beneath the caption the
indicated effect
Negative amounts shall be clearly
distinguishes
Chronological arrangement may be with the
most recent date to the right or to the left
provided that it must be consistent in all
documents
FS shall have stamped received by BIR or
can be other alternative proof for authorized
bank as long as BIR allows.
PRESENTATION FOR RECEIPT OF THE AUDITED
FINANCIAL STATEMENTS

The fairness representation of the financial FS should be accompanied by an auditors

statement is responsibility of the report. Failure to comply is considered as a
management. The board reviews and sufficient ground for the denial of the receipt
approve the FS before presenting it to of the FS or tantamount to penalties.
stockholders Acceptance and receipt shall be without
The statement of managements prejudice to the fines that may imposed.
responsibility should be attached to FS
SMR should be signed by the chairman of 3. QUALIFICATIONS AND REPORTS OF
the board, CEO and CFO or persons holding INDEPENDENT AUDITORS
equivalent position. Failure to signed means
material deficiency in FS. EXAMINATION OF FINANCIAL STATEMENTS BY
For branch offices or regional operating INDEPENDENT AUDITOR
headquarters, SMR should be signed by
local manager Registered corporation shall have
Independent auditors responsibility in the independent auditor who are licensed by
FS should include his opinion on the PRC. Corporation who audit FS by auditor
statements not registered in PRC shall be subject to
Management shall provide these penalties.
documents:
o Complete set of FS ADDITIONAL REQUIREMENTS FOR
o All records that arerelevant in INDEPENDENT AUDITORS OF REGULATED
presenting the FS ENTITIES
o Additional info that auditor may
request. GROUP A
 Issuers of registered securities which have General accreditation accreditation under
sold a class of securities group A. Allow to audit companies under
Issuers with a class of securities listed in group B,C, and D.
trading in an exchange
Public companies which have total assets of
at least 50M
Accreditation Requirement for Individual

GROUP B Independent Auditors or Signing Partners.
Issuers of registered timeshares, proprietary
General:
and non-proprietary membership
certificates. Shall be accredited with BOA
Investment houses At least 5 years of experience in external
Brokers and dealers of securities
audit
Investment companies Shall have adequate policies and procedures
GSEDs
related to quality control
Universal banks registered as underwriters
of securities Specific:
Investments company advisers
Clearing agency and clearing agency as Must have sufficient knowledge on the
depository regulatory requirements for the company he
Stock and securities exchange is applying into
Special purpose vehicle Total 60 units of training for the last 3 years
Special purpose corporation covers PFRS, PSA, taxation, professional
Other corporation required by law ethics and relevant laws. Training should be
approved by PRC. Renewal application shall
GROUP C be 90 units for the last 3 years. Additional
topics including relevant topics for the
Financing companies
company.
Lending companies
Quality of audit work is acceptable
Transfer agents
Applicants should have
o Group A at least 5 corporate
GROUP D
clients, total assets of at least 50M
Companies mandated by other regulatory o Group B minimum 3 corporate
agencies not mentioned above. clients, total assets of at least 20M
o Group C minimum of 3 corporate
Scope and limitations of accreditation clients, total asset of at least 5M
o Group D minimum of 1 corporate
Independent auditors and auditing firm in client, total assets of 5M
groups A and B shall be accredited by Application documents for initial
Commission. Accreditation of auditing firm is accreditation include a notarized application
sufficient for Group C form with supporting documents submitted
Commission shall not be liable for any to the Commission. Accreditation for
liability from selecting accredited renewal includes notarized renewal
independent auditor application form with supporting
Accreditation of independent documents.
auditor/auditing firms shall be expired after
3 years unless file within 30 days before Accreditation requirements for Auditing Firms
expiration
Auditing firm shall be accredited with BOA
 At least 1 signing independent auditor who The existing policy is limited only to
is accredited in the time of application applicants with basic qualification and
Shall have adequate policies and procedures documentary requirements.
related to the elements of a system of
quality control Operational Requirement
Application documents include for initial
accreditations are notarized application
form signed by managing partner and
prescribed supporting documents. For
renewal, notarized renewal application form
with supporting documents.

Mutual Recognition Policy

Covers auditors in group c companies

subject to bsp restrictions that 1 auditor
should audit consolidated financial
statements.