Question & AnswerQ&A (SEC Notice)
The PFRS for SMEs shall be effective for annual periods beginning on or after January 1, 2010.
Entities transitioning from full PFRS or PAS 101 to PFRS for SMEs and those who have not adopted PFRS for SMEs before are considered first-time adopters and must apply Section 35 (Transition to the PFRS for SMEs).
Yes, a subsidiary that qualifies as an SME under PFRS for SMEs and the SEC Resolution may use the PFRS for SMEs even if the parent uses full PFRS, provided the subsidiary itself does not have public accountability.
If an SME breaches the floor or ceiling threshold significantly and continuously, it should transition to the applicable reporting framework in the next accounting period. Management's judgment guides what is significant, generally 20% or more change in total assets or liabilities.
Micro-business entities may use full PFRS, PFRS for SMEs, or another acceptable basis of accounting such as the income tax basis or cash basis, subject to assessment of acceptability by management.
Required disclosures include an explanation of the transition to PFRS for SMEs and reconciliations as specified under paragraphs 35.12 to 35.15 of Section 35 in the PFRS for SMEs.
Yes, early adoption is allowed for capable SMEs who can efficiently transition, preferably for financial statements as of December 31, 2009, and they must disclose the impact of early adoption.
The size criteria is applied using the entity's audited financial statements for the immediately preceding fiscal year ending closest before the current period.
Such NPAEs should use the full PFRS and apply PFRS 1 if it is their first time adopting full PFRS.
An entity not qualifying for either framework, especially micro-businesses, may use full PFRS, PFRS for SMEs, or another acceptable basis of accounting as assessed by management in light of entity nature and legal requirements.