PHILIPPINE PUBLIC SECTOR
ACCOUNTING STANDARD 1
Presentation of Financial
Statements
BACKGROUND
This Philippine Public Sector Accounting Standard (PPSAS) 1 consists of
International Public Sector Accounting Standard (IPSAS) 1, Presentation
of Financial Statements, , and the Philippine Application Guidance (PAG)
prepared to suit the Philippine public sector situation.
The IPSAS 1 was issued in May 2000 and revised in December 2006 by
the International Public Sector Accounting Standard Board (IPSASB) of
the International Federation of Accountants (IFAC). This includes
amendments resulting from IPSASs issued up to January 15, 2012.
OBJECTIVE
To prescribe the manner in which general purpose financial statements
should be presented to ensure comparability both with the entitys financial
statements of previous periods and with the financial statements of other
entities.
SCOPE
This standard shall be applied to all general purpose financial statements
prepared and presented under the accrual basis of accounting in
accordance with IPSASs.
This standard applies to all public sector entities other than Government
Business Enterprises.
DEFINITIONS
Accrual Basis
Assets
Contributions from owners
Distributions to owners
Economic Entity
Expenses
Government Business
Enterprise
Impracticable
Liabilities
Material
Net assets/equity
Notes
Revenue
DEFINITIONS
Accrual Basis
Assets
Contributions from owners
Distributions to owners
Economic Entity
Expenses
Government Business
Enterprise
Impracticable
Liabilities
Materiality
Net assets/equity
Notes
Revenue
ECONOMIC ENTITY
A group of entities comprising a controlling entity and one or more
controlled entities.
Other terms sometimes used to refer to an economic entity
include administrative entity, financial entity, consolidated
entity, and group.
An economic entity may include entities with both social
policy and commercial objectives.
FUTURE ECONOMIC BENEFITS OR
SERVICE POTENTIAL
Assets provide a means for entities to achieve their objects.
Future Economic Benefits
Service Potential
This standard uses the term future economic benefits or service
potential to describe the essential characteristics of assets.
GOVERNMENT BUSINESS
ENTERPRISES
GBEs include both trading enterprises, such as utilities, and financial
enterprises, such as financial institution.
GBEs are, in substance, no different from entities conducting similar
activities in the private sector.
GBEs generally operate to make a profit.
IPSAS 6 provides guidance on determining whether control exists for
financial reporting purposes, and should be referred to in determining
whether a GBE is controlled by another public sector entity.
MATERIALITY
Assessing whether an omission or misstatement could influence
decisions of users, and so be material, requires consideration of the
characteristics of those users.
NET ASSETS/EQUITY
Net assets/equity is the term used in this Standard to refer to the residual
measure in the statement of financial position (assets less liabilities).
PURPOSE OF FINANCIAL STATMENTS
Financial Statements are a structured representation of financial position
and financial performance of an entity.
Objective of General Purpose Financial Statement
- to provide information about the financial position, financial
performance, and cash flows of an entity that is useful to a wide range of
users in making and evaluating decisions about the allocation of resources.
RESPONSIBILITY FOR FINANCIAL
STATEMENTS
The responsibility for the preparation and presentation of financial
statements varies within and across jurisdictions.
A jurisdiction may draw a distinction between who is responsible for
preparing the financial statements and who is responsible for approving or
presenting the financial statements.
COMPONENTS OF FINANCIAL STATEMENTS
Complete set of financial statements comprises:
A statement of financial position;
A statement of financial performance;
A statement of changes in net assets/equity;
A cash flow statement;
When the entity makes publicly available its approved budget, a
comparison of budget and actual amounts either as a separate additional
financial statement or as a budget column in the financial statements; and
Notes, comprising a summary of significant accounting policies and other
explanatory notes.
OVERALL CONSIDERATIONS
Fair Presentation and Compliance with IPSASs
Going Concern
Consistency of Presentation
Materiality and Aggregation
Offsetting
Comparative Information
Structure and Content
Introduction
This standard requires particular disclosures on the face of the
statement of financial position, statement of financial performance, and
statement of changes in net assets/equity, and requires disclosure of other
line items either on the face of those statements or in the notes. IPSAS 2 sets
out requirements for the presentation of a cash flow statement.
Identification of the Financial Statements
The financial statements shall be identified clearly, and distinguished
from other information in the same published document.
REPORTING PERIOD
Financial statements shall be presented at least annually. When an entitys
reporting date changes and the annual financial statements are presented
for a period longer or shorter than one year, an entity shall disclose, in
addition to the period covered by the financial statements:
a)
The reason for using a longer or shorter period; and
b)
The fact that comparative amounts for certain statements such as
the statement of financial performance, statement of changes in net
assets/equity, cash flow statement, and related notes are not
entirely comparable.
TIMELINESS
The usefulness of financial statements is impaired if they are not made
available to users within a reasonable period after reporting date.
TRANSITIONAL PROVISIONS
All provisions of this standard shall be applied from the date of first adoption
of this standard, except in relation to items that have not been recognized as
a result of transitional provisions under another IPSAS.
Disclosure provision of this standard would not be required to apply to such
items until the transitional provision in the other IPSAS expires.
Comparative information is not required in respect of the financial statements
to which accrual accounting is first adopted in accordance with IPSASs.
EFFECTIVE DATE
An entity shall apply this standard for annual financial statements covering
periods beginning on or after January 1, 2008. If an entity applies this
standard for a period beginning before January 1, 2008, it shall be disclose
that fact.
END
