Question & AnswerQ&A (CIRCULAR NO. 1011)
The main objective is to align financial reporting requirements with internationally accepted standards to promote fairness, transparency, and accountability in the financial industry.
BSFIs must adopt the option or limit prescribed by the Bangko Sentral when there are differences between BSP regulations and PFRS, such as when multiple options are allowed or maximum/minimum limits are prescribed by PFRS.
They shall be measured at fair value at initial recognition, with the difference between fair value and net loan proceeds recorded as Unearned Income-Others and recognized as income systematically over the loan period.
Only investments in financial allied subsidiaries (excluding insurance subsidiaries) are consolidated line-by-line; insurance and non-financial allied subsidiaries use the equity method along with investments in associates and joint ventures as per PAS 28.
BSFIs must recognize adequate and timely allowance for credit losses at all times following the Enhanced Standards on Credit Risk Management and related MORB/MORNBFI provisions.
Audited Financial Statements (AFS) must be PFRS compliant and submitted accordingly, together with adjusting entries reconciling prudential report balances with those in the AFS.
The board must ensure proper and consistent adoption of PFRS 9, assess its impact on business and risk management, allocate resources, approve relevant policies, and ensure integrity controls over reports.
The Bangko Sentral may issue directives, impose sanctions on BSFIs or their officers, and penalties on prudential reports for non-adherence to promote timely corrective actions.
BSFIs must apply PFRS 9 retrospectively following PFRS 9 and PAS 8 guidelines; reclassification of financial assets is allowed if requirements are met; and BSFIs must comply with SEC disclosure requirements on PFRS 9 adoption.