In 2001, the World Bank conducted an assessment of the accounting and auditing framework in the Philippines in order to evaluate the weaknesses and strengths of the accounting and auditing requirements, and to review the reporting requirements against actual practices. International Financial Reporting Standards (IFRSs) and International Standards on Auditing (ISAs) were used as the benchmarks for assessing the national standards. According to the subsequent Update released by the World Bank in 2006, most of the shortcomings identified in the 2001 assessment have been addressed. In 2005, the Philippine Accounting Standards Council (ASC), later superseded by the Financial Reporting Standards Council (FRSC), completed adoption of new IFRSs and the revised versions of previously adopted International Accounting Standards (IASs). According to the FRSC, new IFRSs and amendments to IFRSs will be adopted in the country as they are finalized and issued by the International Accounting Standards Board (IASB). Non-publicly accountable entities (NPAEs) are given the option not to apply the new standards that became effective in 2005, but to apply instead the accounting standards that were effective in 2004. The World Bank commended the Philippine authorities for the progress achieved; however it was noted that there were certain problems with the actual implementation of the accounting requirements. It was recommended that an oversight board for quality control be created, and the technical strength and resources of the Philippine Institute of Certified Public Accountants (PICPA) be built up to improve compliance with the accounting requirements.

General Overview

In 2001, the World Bank conducted an assessment of the accounting and auditing framework in the Philippines in order to evaluate the weaknesses and strengths of the accounting and auditing requirements, and to review the reporting requirements against actual practices. IFRSs and ISAs were used as the benchmarks for assessing national standards. According to the subsequent Update released by the World Bank in 2006, most of the shortcomings identified in the 2001 assessment were addressed. The World Bank commended the Philippine authorities for the progress achieved; however it was noted that there were certain problems with the actual implementation of the accounting requirements. It was recommended that an oversight board for quality control be created, and the technical strength and resources of the Philippine Institute of Certified Public Accountants (PICPA) be built up to improve compliance with the accounting requirements.

The 2001 and 2006 World Bank assessments were benchmarked against International Financial Reporting Standards (IFRSs). The World Bank in 2006 reported that the Accounting Standards Council (ASC), which was later reorganized into the Financial Reporting Standards Council (FRSC), undertook the convergence program as early as 1996 when it decided to replace its U.S.-based standards with IASs issued by the International Accounting Standards Board (IASB). By 2005, the ASC had completed adoption of new IFRSs and the revised versions of previously adopted IASs. According to the FRSC, new IFRSs and amendments to IFRSs will be adopted in the country as they are finalized and issued by the IASB. As PAS 101 Financial Reporting Standards for Non-publicly accountable entities (NPAEs) indicates, the NPAEs in the Philippines are given an option to defer application of IFRSs to 2007 and meanwhile prepare financial statements in accordance with Philippine Generally Accepted Accounting Principles (GAAP), in effect as of 2004, which differ from IFRSs. In March 2007, the FRSC issued a news release announcing amendments to PAS 101. Basing its decision on the fact that the adoption by the IASB of the Standard on Small and Medium-size Enterprises (SMEs) was delayed, the FRSC extended the effective date of PAS 101. SEC Memorandum Circular No. 8 states that, in line with the IASB Exposure Draft on SMEs, PAS 101 specifies that an enterprise is considered to be non-publicly accountable if it (1) is publicly listed; (2) holds assets in a fiduciary capacity; (3) is a public utility; (4) is economically significant (holds assets over Php 250 million (approximately US$ 5 million) or total liabilities over Php 150 million in 2004); or (5) is considered publicly accountable by its regulator.

The World Bank in 2006 observed that the legal system in the Philippines combines both common law principles and written law. The Corporation Code of the Philippines regulates both private stock companies and nonstock companies, and designates the Securities and Exchange Commission (SEC) as the supervisor of all private corporations. The Securities Regulation Code regulates companies that issued securities and gives the SEC powers to set accounting rules and regulations. According to the SEC Rule 68 Rules and Regulations Covering Form and Content of Financial Statements, all companies reporting to the SEC must use Philippine GAAP. SEC Rule 68.1 requires that, in addition to the Philippine GAAP, publicly-held and public companies must follow additional disclosure requirements. Financial institutions are regulated by the General Banking Law of 2000 and must also use Philippine GAAP both for general financial statements and for prudential reporting. Under the Insurance Code, insurance companies must file their financial statements with the Insurance Commission (IC) in accordance with Philippine GAAP and any additional disclosures as required by the IC. Other laws and regulations set reporting requirements for certain types of companies.

According to the World Bank 2006 report, the accounting profession in the Philippines is regulated by the Republic Act 9298 which was revised in 2004 to introduce requirements for continuing professional education (CPE) and quality control review. Moreover, as a result of the revisions, the Philippines Institute of Certified Public Accountants (PICPA) obtained the status of the authorized professional organization, and the FRSC was established as the successor of the ASC. The ASC was established in 1981 with a mandate to set accounting standards in the Philippines, and was funded by the PICPA. The accounting standards are drafted by the FRSC and submitted to the Board of Accountancy (BoA) and the Professional Regulation Commission (PRC). As indicated on the website of the International Federation of Accountants (IFAC), the PICPA is a member of this organization.

The Principles

IFRS 1: First-time Adoption of International Financial Reporting Standards (effective 2006)

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In 2005, the ASC reported that the Philippines had adopted PFRS 1: First-time Adoption of Philippine Financial Reporting Standards, which is equivalent to IFRS 1. PFRS 1 is effective for annual periods beginning on or after January 1, 2005.

IFRS 1: First-time Adoption of International Financial Reporting Standards was issued in June 2003 and applies to an entity whose first IFRS financial statements are for a period beginning on or after January 1, 2004. In June 2005, the IASB issued amendments to IFRS 1: First-time Adoption of International Financial Reporting Standards and the Basis for Conclusions on IFRS 6: Exploration for and Evaluation of Mineral Resources. The amendments clarify the IASB's intentions with respect to an exemption provided to first-time adopters of IFRSs who choose to adopt IFRS 6 before January 1, 2006. The effective date of these amendments is January 1, 2006. As of July 2007, there is no publicly available information regarding adoption of these amendments in the Philippines. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IFRS 2: Share-based Payment (effective 2005)

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In 2005, the ASC reported that the Philippines had adopted PFRS 2: Share Based Payment, which is IFRS 2. PFRS 2 is effective for annual periods beginning on or after January 1, 2005. IFRS 2 Share-based Payment was issued in February 2004 and applies to annual periods beginning on or after January 1, 2005. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IFRS 3: Business Combinations (effective 2004)

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The ASC reported in December 2005 that the Philippines adopted PFRS 3: Business Combinations, which is based on IFRS 3. PFRS 3 is effective for annual periods beginning on or after January 1, 2005. PFRS 3: Business Combinations supersedes Statement of Financial Accounting Standard (SFAS) 22/International Accounting Standard (IAS) 22: Business Combinations. IFRS 3: Business Combinations was issued in March 2004 and is applicable for business combinations for which the agreement date is on or after March 31, 2004. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IFRS 4: Insurance Contracts (effective 2006)

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The ASC reported in December 2005 that the Philippines adopted PFRS 4: Insurance Contracts, which is based on the relevant IFRS. The Standard is effective for annual periods beginning on or after January 1, 2005. PFRS 4: Insurance Contracts supersedes Statements of Financial Accounting Standard (SFAS) 27: Accounting and Reporting for the Nonlife Insurance Industry. IFRS 4 was further amended effective January 1, 2006. These amendments have been incorporated in the Philippines, according to the 2005 ASC publication.

According to the Deloitte IAS Plus website, IFRS 4: Insurance Contracts was issued in March 2004 and is applicable for annual periods beginning on or after January 1, 2005. On August 18, 2005, the IASB amended the scope of IAS 39 to include financial guarantee contracts issued. However, if an issuer of financial guarantee contracts has previously asserted explicitly that it regards such contracts as insurance contracts and has used accounting applicable to insurance contracts, the issuer may elect to apply either IAS 39 or IFRS 4 to such financial guarantee contracts. The amendments to IAS 39 and IFRS 4 are effective for annual periods beginning on or after January 1, 2006, with earlier application encouraged. Adoption by the Philippines of this IASB amendment is effective January 1, 2006 (ASCa, 2005). The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IFRS 5: Non-current Assets Held for Sale and Discontinued Operations (effective 2005)

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The ASC reported in December 2005 that the Philippines adopted PFRS 5: Non-current Assets Held for Sale and Discontinued Operations, which is based on the IFRS. PFRS 5 is effective for annual periods beginning on or after January 1, 2005. PFRS 5 supersedes Statements of Financial Accounting Standard (SFAS) 35/International Accounting Standard (IAS) 35: Discontinuing Operations. IFRS 5: Non-current Assets Held for Sale and Discontinued Operations was issued in March 2004 and is applicable for annual periods beginning on or after January 1, 2005. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IFRS 6: Exploration for and Evaluation of Mineral Resources (effective 2006)

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The ASC reported in December 2005 that the Philippines adopted PFRS 6: Exploration for and Evaluation of Mineral Resources, which is based on the relevant IFRS. PFRS 6 is effective for annual periods beginning on or after January 1, 2006. IFRS 6 was issued in December 2004 and is applicable for annual periods beginning on or after January 1, 2006. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IFRS 7: Financial Instruments: Disclosures (effective 2007)

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The ASC reported in December 2005 that the Philippines adopted PFRS 7: Financial Instruments: Disclosures, which is based on the relevant IFRS. The Standard is effective for annual periods beginning on or after January 1, 2007. IFRS 7: Financial Instruments: Disclosures supersedes Philippine Accounting Standard (PAS) 30: Disclosures in the Financial Statements of Banks and Similar Financial Institutions and some of the requirements in PAS 32: Financial Instruments: Disclosures and Presentation. The Standard applies to any entity that holds financial instruments. The level of disclosure required depends on the extent of the entity's use of financial instruments and its exposure to financial risk.

IFRS 7: Financial Instruments: Disclosures was issued on August 18, 2005 and is applicable for annual periods beginning on or after January 1, 2007. The 2006 World Bank assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IAS 1: Presentation of Financial Statements (effective 2007)

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The ASC reported in December 2005 that the Philippines adopted PAS 1: Presentation of Financial Statements, which is based on the relevant IFRS. PAS 1 is effective for annual periods beginning on or after January 1, 2005. PAS 1: Presentation of Financial Statements supersedes Statement of Financial Accounting Standard (SFAS) 1: Presentation of Financial Statements (rev.).

According to the Deloitte IAS Plus website, the effective date of IAS 1 (rev. 2003): Presentation of Financial Statements was January 1, 2005. However, the IASB further revised IAS 1: Presentation of Financial Statements in August 2005 as a part of its project to develop IFRS 7 Financial Instruments: Disclosures. The IASB concluded to amend IAS 1 to add requirements for disclosures of: (1) the entity's objectives, policies and processes for managing capital; (2) quantitative data about what the entity regards as capital; (3) whether the entity has complied with any capital requirements; and (4) if it has not complied, the consequences of such non-compliance. These disclosure requirements apply to all entities, effective for annual periods beginning on or after January 1, 2007, with earlier application encouraged. The ASC reports in December 2005 that these amendments had been adopted. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IAS 2: Inventories (effective 2005)

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The ASC reported in December 2005 that the Philippines adopted PAS 2: Inventories, which is based on the relevant IFRS. PAS) 2 is effective for annual periods beginning on or after January 1, 2005. PAS 2: Inventories supersedes Statement of Financial Accounting Standard (SFAS) 4: Inventories (rev.). The IASB revised IAS 2: Inventories in December 2003. The revised standard is effective for periods commencing January 1, 2005.

IAS 7: Cash Flow Statements (effective 1994)

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The ASC reported in December 2005 that the Philippines adopted PAS 7: Cash Flow Statements, which is based on the relevant IFRS. PAS 7 is effective for annual periods beginning on or after January 1, 2005. PAS 7: Cash Flow Statements supersedes Statement of Financial Accounting Standard (SFAS) 22: Cash Flow Statements (rev.). IAS 7: Cash Flow Statements (revised 1992) is applicable for periods beginning on or after January 1, 1994. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors (effective 2005)

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The ASC reported in December 2005 that the Philippines adopted PAS 8: Accounting Policies, Changes in Accounting Estimates and Errors, which is based on the relevant IFRS. PAS 8 is effective for annual periods beginning on or after January 1, 2005. PAS 8: Accounting Policies, Changes in Accounting Estimates and Errors supersedes Statement of Financial Accounting Standard (SFAS) 13: Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies (rev). The IASB revised IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors in December 2003. The revised standard is effective for periods commencing January 1, 2005. The 2006 World Bank assessment team noted that a review carried out by the SEC found repeated violations of the Securities Regulation Code, including inadequate or lack of disclosure of significant accounting policies.

IAS 10: Events after the Reporting Period (effective 2005)

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The ASC reported in December 2005 that the Philippines adopted PAS 10: Events after the Balance Sheet Date, which is based on the relevant IFRS. PAS 10 is effective for annual periods beginning on or after January 1, 2005. PAS 10 supersedes Statement of Financial Accounting Standard (SFAS) 10/International Accounting Standard (IAS) 10: Events After the Balance Sheet Date. The IASB revised IAS 10: Events After the Balance Sheet Date in December 2003. The revised standard is effective for periods commencing January 1, 2005. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IAS 11: Construction Contracts (effective 1995)

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The ASC reported in December 2005 that the Philippines adopted PAS 11: Construction Contracts, which is based on the IFRS. PAS 11 is effective for annual periods beginning on or after January 1, 2005. PAS 11 supersedes Statement of Financial Accounting Standard (SFAS) 26: Construction Contracts. IAS 11: Construction Contracts is applicable for periods beginning on or after January 1, 1995. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IAS 12: Income Taxes (effective 2001)

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The ASC reported in December 2005 that the Philippines adopted PAS 12: Income Taxes, which is based on the relevant IFRS. PAS 12 is effective for annual periods beginning on or after January 1, 2005. PAS 12: Income Taxes supersedes Statement of Financial Accounting Standard (SFAS) 12/International Accounting Standard (IAS) 12: Income Taxes. IAS 12: Income Taxes is applicable for periods beginning on or after January 1, 1998. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IAS 14: Segment Reporting (effective 1998)

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The ASC reported in December 2005 that the Philippines adopted PAS 14: Segment Reporting, which is based on the relevant IFRS.. The Standard is effective for annual periods beginning on or after January 1, 2005. PAS 14 supersedes Statement of Financial Accounting Standard (SFAS) 31: Segment Reporting. IAS 14 Segment Reporting is applicable for periods beginning on or after 1 July 1998. The 2006 World Bank assessment team noted that a review carried out by the SEC found repeated violations of the Securities Regulation Code, including incomplete or lack of disclosure related to segments.

IAS 16: Property, Plant and Equipment (effective 2005)

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The ASC reported in December 2005 that the Philippines adopted PAS 16 Property, Plant, and Equipment, which is based on the relevant IFRS. PAS 16 is effective for annual periods beginning on or after January 1, 2005. PAS 16: Property, Plant, and Equipment supersedes Statement of Financial Accounting Standard (SFAS) 16/International Accounting Standard (IAS) 16: Property, Plant, and Equipment. The IASB revised IAS 16 Property, Plant, and Equipment Sheet Date in December 2003. The revised standard is effective for the periods commencing on January 1, 2005.

In the 2006 World Bank's report, the assessment team pointed out that "companies that opt to follow the revaluation model need to identify items of property, plant, and equipment whose fair values can be reliably measured usually through market-based appraisal by professionally qualified valuers. This entailed more discussion with appraisers or valuers to ensure that their appraisal measurements are in accordance with the fair value measured under IAS 16" ( p. 20).

IAS 17: Leases (effective 2005)

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The ASC reported in December 2005 that the Philippines adopted PAS 17: Leases, which is based on the relevant IFRS. PAS 17 is effective for annual periods beginning on or after January 1, 2005. PAS 17: Leases supersedes Statement of Financial Accounting Standard (SFAS) 17/International Accounting Standard (IAS) 17: Leases. The IASB revised IAS 17: Leases in December 2003. The revised standard is effective for periods commencing January 1, 2005. The 2006 World Bank assessment team noted that a review carried out by the SEC found repeated violations of the Securities Regulation Code, including no or incomplete disclosures on leases.

IAS 18: Revenue (effective 1995)

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The ASC reported in December 2005 that the Philippines adopted PAS 18: Revenue, which is based on the relevant IFRS. PAS 18 is effective for annual periods beginning on or after January 1, 2005. PAS 18: Revenue supersedes Statement of Financial Accounting Standard (SFAS) 28: Revenue. IAS 18: Revenue is applicable for periods beginning on or after January 1, 1995. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IAS 19: Employee Benefits (effective 2006)

EN

The ASC reported in December 2005 that the Philippines adopted PAS 19: Employee Benefits, including the 2004 amendment noted below, which is based on the relevant International Financial Reporting Standard (IFRS) issued by the International Accounting Standards Board (IASB). PAS 19 is effective for annual periods beginning on or after January 1, 2005. The amendment to PAS 19 is effective for annual periods beginning on or after January 1, 2006. PAS 19: Employee Benefits supersedes Statement of Financial Accounting Standard (SFAS) 24: Retirement Benefits Costs. According to the Deloitte IAS Plus website, IAS 19: Employee Benefits was issued in 1998 and is applicable for periods beginning on or after January 1, 1999. The IASB revised IAS 19: Employee Benefits in December 2004 to take into account options to recognize actuarial gains and losses in full, outside profit or loss, in a statement of changes in equity. The amendment is applicable for periods beginning on or after January 1, 2006. In the 2006 World Bank's report, the assessment team remarked that there were problems with the actual implementation of this standard.

IAS 20: Accounting for Government Grants and Disclosure of Government Assistance (effective 1984)

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The ASC reported in December 2005 that the Philippines adopted PAS 20: Accounting for Government Grants and Disclosure of Government Assistance, which is based on the relevant IFRS. PAS 20 is effective for annual periods beginning on or after January 1, 2005. PAS 20: Accounting for Government Grants and Disclosure of Government Assistance supersedes Statement of Financial Accounting Standard (SFAS) 20/International Accounting Standard (IAS) 20: Accounting for Government Grants and Disclosure of Government Assistance. IAS 20: Accounting for Government Grants and Disclosure of Government Assistance is applicable for periods beginning on or after January 1, 1984. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IAS 21: The Effects of Changes in Foreign Exchange Rates (effective 2005)

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The ASC reported in December 2005 that the Philippines adopted PAS 21: The Effects of Changes in Foreign Exchange Rates, which is based on the relevant IFRS. PAS 21 is effective for annual periods beginning on or after January 1, 2005. PAS 21: The Effects of Changes in Foreign Exchange Rates supersedes Statement of Financial Accounting Standard (SFAS) 21/International Accounting Standard (IAS) 21. The IASB revised IAS 21: The Effects of Changes in Foreign Exchange Rates in December 2003. The revised standard is effective for periods commencing January 1, 2005. In the 2006 World Bank's report, the assessment team remarked that there were problems with the actual implementation of this standard.

IAS 23: Borrowing Costs (effective 1995)

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The ASC reported in December 2005 that the Philippines adopted PAS 23: Borrowing Costs, which is based on the relevant IFRS. PAS 23 is effective for annual periods beginning on or after January 1, 2005. PAS 23: Borrowing Costs supersedes Statement of Financial Accounting Standard (SFAS) 25: Borrowing Costs. IAS 23: Borrowing Costs is applicable for periods beginning on or after January 1, 1995. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IAS 24: Related Party Disclosures (effective 2005)

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The ASC reported in December 2005 that the Philippines adopted PAS 24: Related Party Disclosures, which is based on the relevant IFRS. PAS 24 is effective for annual periods beginning on or after January 1, 2005. PAS 24: Related Party Disclosures supersedes Statement of Financial Accounting Standard (SFAS) 24/Internatioal Accounting Standard (IAS) 24: Related Party Disclosures. The IASB revised IAS 24: Related Party Disclosures in December 2003. It is applicable for annual periods beginning on or after January 1, 2005. The 2006 World Bank assessment noted that a review carried out by the SEC found repeated violations of the Securities Regulation Code, including incomplete or lack of disclosure of related party transactions.

IAS 26: Accounting and Reporting by Retirement Benefit Plans (effective 1998)

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The ASC reported in December 2005 that the Philippines adopted PAS 26: Accounting and Reporting by Retirement Benefit Plans, which is based on the relevant IFRS. PAS 26 is effective for annual periods beginning on or after January 1, 2005. PAS 26: Accounting and Reporting by Retirement Benefit Plans supersedes Statement of Financial Accounting Standard (SFAS) 26/Internatioal Accounting Standard (IAS) 26: Accounting and Reporting by Retirement Benefits Plans. IAS 26 Accounting and Reporting by Retirement Benefit Plans is applicable for periods beginning on or after January 1, 1988. The 2006 World Bank assessment noted that a review carried out by the SEC found repeated violations of the Securities Regulation Code, including the absence of provisions for retirement benefits and/or inadequate disclosure on retirement benefits.

IAS 27: Consolidated and Separate Financial Statements (effective 2005)

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The ASC reported in December 2005 that the Philippines adopted PAS 27: Consolidated and Separate Financial Statements, which is based on the relevant IFRS. PAS 27 is effective for annual periods beginning on or after January 1, 2005. PAS 27: Consolidated and Separate Financial Statements supersedes Statement of Financial Accounting Standard (SFAS) 27/Internatioal Accounting Standard (IAS) 27: Consolidated Financial Statements and Accounting for Investments in Subsidiaries. The IASB revised IAS 27: Consolidated and Separate Financial Statements in December 2003. The revised standard is effective for periods commencing January 1, 2005. The 2006 World Bank assessment noted that there were problems with the actual implementation of this standard. For example the review conducted by the SEC found out that companies failed to submit consolidated financial statements.

IAS 28: Investments in Associates (effective 2005)

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The ASC reported in December 2005 that the Philippines adopted PAS 28: Investments in Associates, which is based on the relevant IFRS. The Standard is effective for annual periods beginning on or after January 1, 2005. PAS 28: Investments in Associates supersedes Statement of Financial Accounting Standard (SFAS) 28/Internatioal Accounting Standard (IAS) 28: Accounting for Investments in Associates. The IASB revised IAS 28: Investment in Associates in December 2003. The revised standard is effective for periods commencing January 1, 2005. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IAS 29: Financial Reporting in Hyperinflationary Economies (effective 1990)

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The ASC reported in December 2005 that the Philippines adopted PAS 29: Financial Reporting in Hyperinflationary Economies, which is based on the relevant IFRS. PAS 29 is effective for annual periods beginning on or after January 1, 2005. IAS 29: Financial Reporting in Hyperinflationary Economies is applicable for periods beginning on or after January 1, 1990. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IAS 31: Interests in Joint Ventures (effective 2005)

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The ASC reported in December 2005 that the Philippines adopted PAS 31: Interests in Joint Ventures, which is based on the relevant IFRS. PAS 31 is effective for annual periods beginning on or after January 1, 2005. PAS 31: Interests in Joint Ventures supersedes Statement of Financial Accounting Standard (SFAS) 31/Internatioal Accounting Standard (IAS) 31: Financial Reporting of Interests In Joint Ventures. The IASB revised IAS 31: Interests in Joint Ventures in December 2003. The revised standard is effective for periods commencing January 1, 2005. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IAS 32: Financial Instruments: Disclosure and Presentation (effective 2005)

EN

The ASC reported in December 2005 that the Philippines adopted PAS 32: Financial Instruments: Disclosure and Presentation, which is based on the relevant IFRS. PAS 32 is effective for annual periods beginning on or after January 1, 2005. PAS 32: Financial Instruments: Disclosure and Presentation supersedes Statement of Financial Accounting Standard (SFAS) 10: Summary of Generally Accepted Accounting Principles on Investments and SFAS 18: Summary of Generally Accepted Accounting Principles on Stockholders' Equity. IAS 32: Financial Instruments: Disclosure and Presentation was issued in December 2003 and is applicable for annual periods beginning on or after January 1, 2005. In the 2006 World Bank's report, the assessment team remarked that there were problems with the actual implementation of this standard.

IAS 33: Earnings per Share (effective 2005)

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The ASC reported in December 2005 that the Philippines adopted PAS 33: Earnings per Share, which is based on the relevant IFRS. PAS 33 is effective for annual periods beginning on or after January 1, 2005. PAS 33: Earnings per Share supersedes Statement of Financial Accounting Standard (SFAS) 29: Earnings per Share. The International Accounting Standards Board (IASB) revised IAS 33: Earnings per Share in December 2003. The revised standard is effective for periods commencing January 1, 2005. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IAS 34: Interim Financial Reporting (effective 1999)

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The ASC reported in December 2005 that the Philippines adopted PAS 34: Interim Financial Reporting, which is based on the relevant IFRS. PAS 34 is effective for annual periods beginning on or after January 1, 2005. PAS 34: Interim Financial Reporting supersedes Statement of Financial Accounting Standard (SFAS) 30: Interim Financial Reporting. IAS 34: Interim Financial Reporting is applicable for periods beginning on or after January 1, 1999.

IAS 36: Impairment of Assets (effective 2004)

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The ASC reported in December 2005 that the Philippines adopted PAS 36: Impairment of Assets, which is based on the relevant IFRS. PAS 36 is effective for annual periods beginning on or after January 1, 2005. PAS 36: Impairment of Assets supersedes Statement of Financial Accounting Standard (SFAS) 36/International Accounting Standard (IAS) 36: Impairment Operations. The IASB issued IAS 36: Impairment of Assets in March 2004. It is applied to goodwill and intangible assets acquired in business combinations after March 31, 2004 and to all other assets for annual periods beginning on or after March 31, 2004. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IAS 37: Provisions, Contingent Liabilities and Contingent Assets (effective 1999)

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The ASC reported in December 2005 that the Philippines adopted PAS 37: Provisions, Contingent Liabilities and Contingent Assets, which is based on the relevant IFRS. PAS 37 is effective for annual periods beginning on or after January 1, 2005. PAS 37: Provisions, Contingent Liabilities and Contingent Assets supersedes Statement of Financial Accounting Standard (SFAS) 37/International Accounting Standard (IAS) 37: Provisions, Contingent Liabilities and Contingent Assets. IAS 37: Provisions, Contingent Liabilities and Contingent Assets was issued in July 1998 and is applicable for periods beginning on or after July 1, 1999. The 2006 World Bank assessment noted that a review carried out by the SEC found repeated violations of the Securities Regulation Code, including no or incomplete disclosures required by new standards on provisions.

IAS 38: Intangible Assets (effective 2004)

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The ASC reported in December 2005 that the Philippines adopted PAS 38: Intangible Assets, which is based on the relevant IFRS. PAS 38 is effective for annual periods beginning on or after January 1, 2005. PAS 38: Intangible Assets supersedes Statement of Financial Accounting Standard (SFAS) 38/International Accounting Standard (IAS) 38: Intangible Assets. The IASB revised IAS 38: Intangible Assets in March 2004. The revised standard is applied to the accounting for intangible assets acquired in business combinations after March 31, 2004, and to all other intangible assets for annual periods beginning on or after March 31, 2004. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IAS 39: Financial Instruments: Recognition and Measurement (effective 2006)

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The ASC reported in December 2005 that the Philippines adopted PAS 39: Financial Instruments: Recognition and Measurement, which is based on the relevant IFRS. The Standard is effective for annual periods beginning on or after January 1, 2005. Financial Instruments: Recognition and Measurement supersedes Statement of Financial Accounting Standard (SFAS) 10: Summary of Generally Accepted Accounting Principles on Investments and SFAS 19A: Accounting for Investment in Debt and Marketable Securities of Banks. According to the Deloitte IAS Plus website, in December 2003, the IASB issued IAS 39: Financial Instruments: Recognition and Measurement comprehensively revised as a part of the IASB's Improvement Project. IAS 39 became effective in January 2005. Subsequently, during the period of 2004-2005 the IASB issued several amendments to IAS 39 on macro hedging, day 1 gain/loss transition, hedges of forecast intragroup transactions, fair value option, and financial guarantee contracts. The amendment for macro hedging and the amendment for day 1 gain/loss transition are applicable for annual periods beginning on or after January 1, 2005. The amendment for hedges of forecast intragroup transactions, the amendment for fair value option, and the amendment for financial guarantee contracts is applicable for periods beginning on or after January 1, 2006. The December 2005 ASC report indicated that the Philippines had adopted the amendments. However, in the 2006 World Bank's report, the assessment team remarked that there were problems with the actual implementation of this standard.

IAS 40: Investment Property (effective 2005)

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The ASC reported in December 2005 that the Philippines adopted PAS 40: Investment Property, which is based on the relevant IFRS. PAS 40 is effective for annual periods beginning on or after January 1, 2005. PAS 40: Investment Property supersedes Statement of Financial Accounting Standard (SFAS) 10: Summary of Generally Accepted Accounting Principles on Investments. The IASB revised IAS 40: Investment Property in December 2003. The revised standard is effective for periods commencing January 1, 2005. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.

IAS 41: Agriculture (effective 2003)

CP

The ASC reported in December 2005 that the Philippines adopted PAS 41: Agriculture, which is based on the relevant International Financial Reporting Standard (IFRS) issued by the International Accounting Standards Board (IASB). The Standard is effective for annual periods beginning on or after January 1, 2005. IAS 41: Agriculture is applicable for periods beginning on or after January 1, 2003. The 2006 World Bank's assessment, which included a review of actual practices of the companies, did not mention any problems with implementation of this standard.