Professional Documents
Culture Documents
SCOPE OF PPSAS
PPSAS should be read in the context of this Preface and the objective stated in each
Standard. Any exception from the scope of a Standard is likewise stated in that
Standard.
GUIDELINES/ISSUANCES ON PPSAS
The Standards on PPSAS shall set out the recognition, measurement, presentation
and disclosure requirements for financial reporting in the Philippine Government.
Transitional provisions shall be issued to address specific concerns not yet covered by
the PPSAS.
The Government Accounting Manual (GAM) shall provide guidelines to explain and
expand PPSAS, and provide practical assistance to agencies
Supplemental guidelines shall be issued when the need arises.
SETTING OF STANDARDS OF
PPSAS
In developing Standards of PPSAS, the PSASB considers and makes use of the existing
laws, financial reporting, accounting rules and regulations, and pronouncements issued
by the International Public Sector Accounting Standards Board (IPSASB).
The PSASB is also required to take into account all relevant factors, including:
a. Best accounting practices, both local and international;
b. The capacity of agencies to comply with Standards of PPSAS.
Standards of PPSAS are developed either:
.By adopting IPSASs issued by the IPSASB
.By developing a Standard of PPSAS to deal with a specific accounting issue that is
either not comprehensively dealt with the existing IPSAS or for which an IPSAS has
not been developed by the IPSASB.
objectives of the IPSASB and explains the scope and authority of the
IPSASs. This preface should be used as a reference for interpreting
Consultation papers, other discussion documents, Exposure drafts,
Recommended Practice Guidelines and Standards developed and issued by
IPSASB.
The IPSASB serves the public interest by developing and issuing, under its
own authority, accounting standards and other publications for use by
public sector entities other than GBEs.
OBJECTIVE OF IPSASB
-is to serve the public interest by developing high-quality accounting
standards and other publications for use by public sector entities around the
world in the preparation of general purpose financial reports.
- intended to enhance the quality and transparency of public sector financial
reporting by providing better information for public sector financial
management and the decision making.
The IPSASB develops IPSASs which apply to the accrual basis and cash basis
of accounting.
IPSAs set out requirements dealing with transactions and other events in
general purpose financial reports.
The IPSAS are designed to apply to the general purpose financial reports of
all public sector entities other then GBEs. Public sector entities includes:
National Government, Regional, Local Governments, unless otherwise
stated.
The IPSASB has adopted the policy that all paragraphs in IPSASs shall have
equal authority, and that the authority of a particular provision shall be
determined by the language used.
with public sector financial reporting issues that are either not
addressed by adapting IFRS or for which IFRS have not been developed by the
IASB.
The IPSASB has also issued a comprehensive Cash Basis IPSAS that includes
mandatory and encouraged disclosure sections.
LANGUAGE
The official text of the IPSASs and other publications is that approved by
the IPSASB in the English language. Member bodies of IFAC are authorized
to prepare, after obtaining IFAC approval, translation of such
pronouncements at their own cost, to be issued in the language of their
own jurisdiction as appropriate.
Qualitative Characteristics
GPFRs present financial and non-financial information about
economic and other phenomena. The qualitative characteristics of
information included in GPFRs are the attributes that make the
information useful to users and support the achievement of the
objectives of financial reporting. The objectives of financial
reporting are to provide information useful for accountability and
decision making purposes.
The qualitative characteristics of information included in GPFRs of
public sector entities are relevance, faithful representation,
understandability, timeliness, comparability and verifiability.
Pervasive constraints on information included in GPFRs are
materiality, cost benefit and achieving an appropriate balance
between the qualitative characteristics.
Faithful representation
To be useful in financial reporting, information must be faithful and representation of the
economic and other phenomena that is purports to represent. It is attained when the
depiction of the phenomenon is complete, neutral, and free fro, material error.
Information that is faithfully represents an economic or other phenomenon depicts the
substance of the underlying transaction, other event, activity of circumstance-which is
not necessarily always the same as its legal form.
Understandability
Understandability is the quality of information that enables users to comprehend its
meaning. GPFRs of public sector entities should present information in a manner that
responds to the needs and knowledge base of users, and to the nature of the information
presented.
Timeliness
Timeliness- means having information available for users before it loses its capacity to
be useful for accountability and decision making purposes.
Comparability
Comparability is the quality of information that enables users to identify similarities in,
and differences between, two sets of phenomena. It is not a quality of an individual item
of information, but rather a quality of the relationship between two or more items of
information.
Verifiability
Verifiability is the quality of information that helps assure users that information in
GPFRs faithfully represents the economic and other phenomena that purports to
represent.
Constraints on Information included in General Purpose Financial Reports
Materiality
Information is material if it is omission or misstatement could influence the discharge of
accountability by the entity, or the decisions that users make on the basis of the entitys
GPFRs prepared for that reporting period. It depends on both the nature and amount of
item judged in the particular circumstances of each entity.
Cost Benefit
Financial reporting imposes costs. The benefits of financial reporting should justify those
costs. Assessing, whether the benefits of providing information justify the related costs is
often a matter of judgment, because it is often not possible to identify and/or quantify all
the costs and all the benefits of information included in GPFRs.
Reporting Entity
A public sector reporting entity is a government or other public
sector organization, program or identifiable area of activity that
prepares GPFRs.
A public sector reporting entity may comprise two or more
separate entities that presents GPFRs as if they are single entitysuch as reporting entity is referred to as a group reporting entity.
Key characteristics of a reporting entity
It is an entity that raises resources from, or on behalf of,
constituents and/or uses resources to undertake activities for the
benefit of , or on behalf of, those constituents; and
There are service recipients or resource providers dependent on
GPFRs of the entity for information for accountability or decision
Consistency of Presentation
Paragraphs 43 and 44 pertain to changes in the presentation of entitys financial
statements if the changed presentation provides information that is reliable and is more
relevant to users of the financial statements.
Cash Flow Statement
Background
This Philippine Public Sector Accounting Standard consists of international public sector
accounting standard (IPSAS)2, Cash Flow Statements, and the Philippine Application
Guidance (PAG) prepared to suit the Philippine Public sector situation.
Scope
PAG 1. Paragraph 3 deals with the applicability of this standard to all public sector entity
other than Government Business Enterprises.
Accounting Policies, Changes in Accounting Estimates and Errors
Background
This Philippine Public Sector Accounting Standard consists of international public sector
accounting standard (IPSAS) 3, Accounting Policies, Changes in Accounting Estimates
and Errors, and the Philippine Application Guidance (PAG) prepared to suit the
Philippine Public sector situation
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