This publication provides an illustrative set of consolidated financial statements, prepared in accordance with Philippine Financial Reporting Standards (PFRS), for a fictional manufacturing, wholesale and retail publicly-listed company, Moonwalk Corporation.
Moonwalk Corporation is an existing preparer of PFRS consolidated financial statements. The PFRS, Philippine Accounting Standards (PAS), and interpretations of the Philippine Interpretations Committee (PIC), Standing Interpretations Committee (SIC) and International Financial Reporting Interpretations Committee (IFRIC) considered in preparing these illustrative corporate consolidated financial statements are those issued by Financial Reporting Standards Council (FRSC) up to 31 October 2012 which are effective for annual periods beginning on or after 1 January 2012. These illustrative financial statements do not therefore reflect the effect of the standards that may be issued after 31 October 2012.
Significant changes from the 2011 Illustrative Financial Statements have been highlighted in rose throughout the document, while minor changes are highlighted in yellow
Significant changes are as follows:
This is consistent with PwC's view that that "disclosures [of standards, amendments and interpretations] are not necessary in respect of standards and interpretations that are clearly not applicable to the entity (for example industry-specific standards) or that are not expected to have a material effect on the entity. Instead, disclosure should be given in respect of the developments that are, or could be, significant to the entity. Management will need to apply judgement in determining whether a standard is expected to have a material effect. The assessment of materiality should consider the impact both on previous transactions and financial position and on reasonably foreseeable future transactions. For pronouncements where there is an option that could have an impact on the entity, the management expectation on whether the entity will use the option should be disclosed."
Until 31 October 2012, the FRSC has approved the adoption of the following amendments to existing standards which are effective on or after 1 January 2012:
|Standards, amendments or interpretations||Effective date|
|PFRS 1 (Amendment), First-time Adoption of PFRS - Fixed Dates and Hyperinflation||1 July 2011|
|PFRS 7 (Amendment), Financial Instruments: Disclosures - Transfer of Financial Assets||1 July 2011|
|PAS 12 (Amendment), Income Taxes - Deferred Tax||
1 July 2012
PAS 8, par. 30 states that when an entity has not applied a new Standard or Interpretation that has been issued but is not yet effective, the entity shall disclose this fact and known or reasonably estimable information relevant to assessing the possible impact of the application of the new Standard or Interpretation on the entity's financial statements in the period of initial application.
In complying with paragraph 30, an entity considers disclosing, at the minimum, the title of the new Standard or Interpretation; the nature of the impending change or changes in accounting policy; the date by which application of the Standard or Interpretation is required; the date in which it plans to apply the Standard or Interpretation initially; and either (1) a discussion of the impact the initial application of the Standard or Interpretation on the entity's financial statements; or (2) if that impact is not known or reasonably estimable, a statement to that effect.
However, as discussed above, it is PwC's view that disclosure should only be given in respect of the developments that are, or could be, significant to the entity. Disclosure is not necessary for standards, amendments or interpretations that are clearly not applicable to the entity (for example industry-specific standards) or that are not expected to have a material effect on the entity.
For purposes of preparing the 2012 financial statements, it is important to ensure that disclosures required by the standards and regulatory authorities are adequately disclosed in the financial statements.
No interpretations, new standards or amendments were adopted early for the purpose of these illustrative corporate consolidated financial statements.
Certain items that may or may not apply to a particular reporting entity may have been included in these illustrative corporate consolidated financial statements.
The sample disclosures in this publication should not be considered the only acceptable form of presentation. The form and content of each reporting entity’s financial statements are the responsibility of the entity’s management, and forms of presentation alternative to those proposed in this publication that are equally acceptable, may be preferred and adopted if they comply with the specific disclosure requirements prescribed in PFRS. Also, additional accounting disclosures may be required in order to comply with local laws, national financial reporting standards and/or Philippine Stock Exchange regulations. Example of such is the disclosure requirements by the Philippine and Exchange Commission (SEC) through SRC Rule 68.1. Some of the disclosure requirements are included in the disclosure for Moonwalk Corporation and some are placed as footnotes.
Certain additional statements may be required to accompany the auditor’s report on the financial statements when filed with certain regulatory authorities (such as the SEC and BIR). Examples of these are as follows:
Compliance of concerned companies, both public and non-public, with the disclosure requirements of regulatory bodies such as BIR, SEC, or the Insurance Commission is the responsibility of the client’s management.
This illustrative set of financial statements is intended for general reference only. They are not a substitute for reading the standards and interpretations themselves or for professional judgment as to fairness of presentation. They do not cover all possible disclosures that PFRS requires, nor do they take into account any specific legal framework. Further specific information may be required in order to ensure fair presentation under PFRS. We recommend that readers refer to the PFRS Disclosure and Content Checklist.
In using the Illustrative Financial Statements for existing PFRS users, below are some guidance:
For purposes of the preparation of the Illustrative Financial Statements, the terms PFRS was used as the financial reporting framework. Please see No. 2 for guidance applicable to other Frameworks.
An entity is required by paragraph 1.103(a) of PAS 1, Presentation of Financial Statements,to disclose in the notes to financial statements information about the basis of preparation of the financial statements.
Entities that have complied in full with Philippine Financial Reporting Standards (PFRSs) refer to PFRSs as the basis of preparation of the financial statements.
Certain entities, however, have been permitted to defer the application of PFRSs in part or in full, such as entities which are required to comply with PFRS but were allowed by the primary regulator not to apply a specified PFRS(s) or certain provisions of a PFRS (ie, Pre-need companies and Mining Companies) or PFRS for SMEs.
Certain commentaries are provided in footnotes throughout the Illustrative Financial Statements, which may not necessarily be related to Moonwalk Corporation Group. These commentaries provide additional information, warnings, clarifications, and in certain cases, sample disclosures as in the case of revalued property.
Users could refer to these appendices for other sample disclosures. These consist of a listing of the standards applicable to Moonwalk Corporation Group, alternative presentation methods, policies and disclosures for areas not relevant to Moonwalk Corporation Group, critical accounting estimates and judgments not relevant to Moonwalk Corporation Group, and selected standards and amendments to standards published but not yet effective.
Gina S. Detera
Assurance Partner, Accounting Consulting Services Partner, Corporate Responsibility Leader
Tel: +63 (2) 459 3063
Zaldy D. Aguirre
Tel: +63 (2) 459 3114
Carlos Federico C. de Guzman
Tel: +63 (2) 845 2728
Jocelyn J. De Chavez
Tel: +63 (2) 845 2728 Ext. 3024
Maritess T. Buted
Tel: +63 (2) 845 2728 Ext. 3160