172 FINANCIAL RECORDS
a. Adoption of PFRS. BSP Supervised Financial Institutions (BSFIs) shall adopt PFRS in recording transactions and in the preparation of financial statements and reports to the Bangko Sentral. However, in cases where there are differences between Bangko Sentral regulations and PFRS as when more than one (1) option are allowed or certain maximum or minimum limits are prescribed by PFRS, the option or limit prescribed by the Bankgo Sentral shall be adopted by BSFIs. These include the accounting treatment of “Government Grants”.
b. Preparation of prudential reports. For prudential reporting, BSFIs shall adopt in all respect the PFRS except in the following cases:
(1) In preparing consolidated financial statements, only investments in financial allied subsidiaries except insurance subsidiaries shall be consolidated with the financial statements of the parent bank on a line-by-line basis; while insurance and non-financial allied subsidiaries shall be accounted for using the equity method. Investments in financial/non-financial allied/non-allied associates and joint ventures shall be accounted for using the equity method in accordance with the provisions of the Philippine Accounting Standards (PAS) 28 “Investments in Associates and Joint Ventures”.
(2) BSFIs shall recognize adequate and timely allowance for credit losses at all times. In this respect, BSFIs shall adopt the principles provided under the Enhanced Standards on Credit Risk Management under Sec. 143 as well as the provisions of Appendix 100 in measuring credit losses.
c. Preparation of Audited Financial Statements (AFS). AFS shall in all respect be PFRS compliant and shall be submitted to the Bangko Sentral in accordance with the provisions of Sec. 174.
d. Guidelines on adoption of PFRS 9 Financial Instruments. BSFIs shall adopt, as part of the PFRS framework, PFRS 9: Financial Instruments upon its mandatory effectivity date of 01 January 2018.
(1) Consistent with the duties and responsibilities of the board of directors provided under Sec. 132 (Specific duties and responsibilities of the board of directors), the board of directors or any equivalent governing body in the case of branches of foreign banks, shall ensure that the BSFI appropriately and consistently adopts PFRS 9 as part of its reporting governance process. In this respect, the board shall assess the impact of PFRS 9 on business strategies and risk management systems and ensure availability of sufficient resources, including capacity building initiatives, in adopting the standard.
(2) Management shall implement the policies set by the board related to the adoption of PFRS 9 and ensure that sound professional judgement is exercised in implementing the provisions of the standard. Management shall provide feedback to the board on the effectiveness of implementation of PFRS 9.
(3) BSFIs shall be guided by the provisions of Appendix 27 on “Guidelines on the Adoption of Philippine Financial Reporting Standards 9 (PFRS 9) – Classification and Measurement” and Appendix 100 on “Impairment” in implementing the provisions of PFRS 9.
e. Enforcement Actions. Consistent with Sec. 002, the Bangko Sentral reserves the right to deploy its range of supervisory tools and enforcement actions to promote adherence with the requirements set out in this Section and bring about timely corrective actions to ensure appropriate and consistent adoption of PFRS. In this respect, the Bangko Sentral may issue directives or impose sanctions on the BSFI and/or its directors, officers and/or employees concerned for noted supervisory issues on the adoption of PFRS 9.
f. Transitory Provisions. BSFIs shall observe the following transition rules:
(1) BSFIs shall apply PFRS 9, retrospectively, in accordance with the transition requirements and guidance provided under PFRS 9 and PAS 8 “Changes in Accounting Policies, Changes in Accounting Estimates and Errors”. BSFIs shall be guided by the provisions of PAS 8 if the retrospective application is impracticable.
(2) A BSFI that applied the earlier versions of PFRS 9 (2009), PFRS 9 (2010) or PFRS 9 (2013) shall be allowed to reclassify its financial assets: Provided, That the reclassification requirements under the standard are met.
(3) A BSFI is expected to comply with the reportorial and disclosure requirements of the Securities and Exchange Commission on the adoption of PFRS 9.
a. In preparing consolidated financial statements, only investments in financial allied subsidiaries except insurance subsidiaries shall be consolidated on a line-by-line basis; while insurance and non-financial allied subsidiaries shall be accounted for using the equity method. Financial/non-financial allied/non-allied associates shall be accounted for using the equity method in accordance with the provisions of PAS 28 “Investments in Associates”; and
b. Banks shall be required to meet the Bangko Sentral recommended allowance for credit losses.
(Circular Nos. 1021 dated 15 November 2018, 1011 dated 14 August 2018, 960 dated 04 May 2017, 957 dated 17 April 2017, 915 dated 05 July 2016, 912 dated 27 May 2016, 890 dated 02 November 2015, 837 dated 18 June 2014, and M-2014-009 dated 17 March 2014)
- As an exception, banks, including their trust entitles, which have early-adopted PFRS 9 (2009 and 2010) as of 31 December 2015, shall continue to account for their financial instruments in accordance with the provisions of Appendix 100 until 31 December 2017.