Manila * Cavite * Laguna * Cebu * Cagayan De Oro * Davao

Since 1977

FAR OCAMPO/OCAMPO
FAR.3301 - The Environment of Financial Accounting and Reporting OCTOBER 2022

DISCUSSION QUESTIONS
1. An act regulating the practice of accountancy in the • Bangko Sentral ng Pilipinas (BSP) - 1
Philippines, also known as the Philippine Accountancy • Commission on Audit (COA) - 1
Act of 2004, is • Bureau of Internal revenue (BIR) - 1
a. RA No. 9298 c. RA No. 5166 • A major organization composed of preparers and users
b. PD No. 692 d. Act No. 3105 of financial statements - 1
• Accredited national professional organization (APO) of
Note: Copy of the Philippine Accountancy Act of 2004 can CPAS:
be downloaded at https://www.prc.gov.ph/accountancy. Public Practice - 2
Commerce and Industry - 2
2. Which statement is incorrect regarding the Professional Academe or Education - 2
Regulatory Board of Accountancy (BOA)? Government - 2
a. It is under the supervision and administrative
control of the Professional Regulation Commission. More information about the FRSC can be found at
b. It is composed of a chairman and six (6) members https://www.pfrsc.org/.
appointed by the President of the Philippines.
c. The Chairman and members of the BOA shall hold 6. The FRSC has a chairman who had been or presently a
office for a term of three (3) years. senior practitioner in
d. No person shall serve in the BOA for more than six a. Public accountancy
years. b. Commerce and industry
c. Academe
3. A member of BOA must be a duly registered Certified d. Any scope of accounting practice
Public Accountant with at least ten (10) years of work
experience in 7. Which of the following government agency is not
a. Public accountancy represented in FRSC?
b. Commerce and industry a. Bangko Sentral ng Pilipinas
c. Academe b. Commission on Audit
d. Any scope of practice of accountancy c. Bureau of Internal Revenue
d. Insurance Commission
Note: Refer to the Philippine Accountancy Act of 2004 Sec.
5 to Sec. 12 for more information about the BOA. 8. Which of the following is represented in FRSC?
a. Financial Executives Institute of the Philippines
4. The Financial Reporting Standards Council (FRSC) was b. Association CPAs in Public Practice
created by the BOA to assist the BOA in carrying out c. Association of CPAs in Commerce and Industry
its power and function to d. Association of CPAs in Education
a. Promulgate accounting standards in the
Philippines. 9. The Auditing and Assurance Standards Council (AASC)
b. Promulgate auditing standards in the Philippines. has a chairman who had been or presently a senior
c. Ensure that all higher educational instruction and practitioner in
offering of accountancy comply with the policies, a. Public accountancy
standards and requirements of the course b. Commerce and industry
prescribed by CHED. c. Academe
d. Implement the CPE program. d. Any scope of accounting practice

5. Which statement is incorrect regarding the FRSC?

a. Is the successor of the Accounting Standards LECTURE NOTES:
Council (ASC), which was created in November
Composition of AASC (per IRR of RA 9298)
1981 by the Philippine Institute of Certified Public
Accountants (PICPA). • Chairman - 1
b. The Chairman and members of the FRSC are • Board of Accountancy (BOA) - 1
appointed by the PRC upon the recommendation of • Securities and Exchange Commission (SEC) - 1
the BOA in coordination with the accredited • Bangko Sentral ng Pilipinas (BSP) - 1
professional organization (APO) of CPAs. • Commission on Audit (COA) - 1
c. Composed of fifteen (15) members with a • An association or organization of CPAs in active public
chairman. practice of accountancy - 1
d. Has the authority to establish the accounting • Accredited national professional organization (APO) of
framework to be used by companies under its CPAS:
jurisdiction. Public Practice – 6
Commerce and Industry - 1
LECTURE NOTES: Academe or Education - 1
Government - 1
The FRSC is composed of a chairman and fourteen (14)
representatives from:
• Board of Accountancy (BOA) - 1
• Securities and Exchange Commission (SEC) - 1

Page 1 of 4 www.teamprtc.com.ph FAR.3301

EXCEL PROFESSIONAL SERVICES, INC.

Composition of AASC (per BOA Reso No. 22 series of 2020) a. I, II, III, IV, V, VI, VIII and VII
b. II, III, I, V, IV, VI, VII and VIII
• Chairman - 1
c. II, III, V, I, IV, VI, VII and VIII
• Board of Accountancy (BOA) - 1
d. III, II, I, V, IV, VI, VIII and VII
• Securities and Exchange Commission (SEC) - 1
• Bangko Sentral ng Pilipinas (BSP) - 1
14. Which statement is incorrect regarding the timing of
• Commission on Audit (COA) – 1
application of PFRSs?
• Insurance Commision (IC) - 1
a. PFRSs apply from a date specified in the
• An association or organization of CPAs in active public
document.
practice of accountancy - 1
b. New or revised PFRSs set out transitional
• Accredited national professional organization (APO) of
provisions to be applied on their initial application.
CPAS:
c. Until the effective date of a PFRS, the
Public Practice – 9
requirements of any PFRS that would be affected
Commerce and Industry - 1
by proposals in an exposure draft remain in force.
Academe or Education - 1
d. The FRSC has a general policy of exempting
transactions occurring before a specific date from
More information about the AASC can be found at
the requirements of new PFRSs.
https://aasc.org.ph/.
15. Which statement is incorrect regarding the Philippine
10. Which of the following is represented both to the FRSC
Interpretations Committee (PIC)?
and the AASC?
a. The principal objective of the PIC is to issue
a. Bangko Sentral ng Pilipinas
implementation guidance on PFRSs.
b. Bureau of Internal Revenue
b. The PIC shall deal with accounting issues of
c. Insurance Commission
reasonably widespread importance and not issues
d. None of these
of concern only to a single entity or small group of
entities.
11. Which statement is incorrect regarding PFRSs?
c. The PIC shall have a Chairman who shall be
a. PFRSs set out recognition, measurement,
selected and approved by the PRC from the regular
presentation and disclosure requirements dealing
members of the PIC at the time of selection.
with transactions and events that are important in
d. Each member shall serve for a three-year term and
general purpose financial statements.
may be re-appointed.
b. PFRSs may set out such requirements for
transactions and events that arise mainly in
LECTURE NOTES:
specific industries.
c. PFRSs are based on the Framework, which The PIC Composition
addresses the concepts underlying the information
The PIC shall consist of 15 representatives from the
presented in general purpose financial statements.
following:
d. PFRSs are designed to apply to not-for-profit
• Accounting firms (Isla Lipana & Co., SGV & Co.,
activities in the private sector.
Punongbayan & Araullo, R. G. Manabat & Co., Navarro
Amper & Co, Roxas Cruz Tagle & Co., Villaruz, Villaruz
12. Standards approved by the FRSC include paragraphs in
& Co., R. S. Bernaldo & Associates, Constantino &
bold type and plain type, which have equal authority.
Partners) - 9
Paragraphs in bold type indicate the main principles.
• FINEX – 1
Any limitation of the scope of a PFRS is made clear in • Academe (with a designated alternate) - 1
the standard. • BOA - 1
a. True, True c. False, False • SEC - 1
b. False, True d. True, False • BSP - 1
• IC - 1
13. The FRSC employs a "due process" system which
enables interested parties to express their views on More information about the PIC can be found at
issues under consideration. Arrange in proper order https://www.pfrsc.org/government-organization-about-
the due process for projects of FRSC: the-pic.
I. Issuing for comment an exposure draft approved
by a majority of the FRSC members; comment 16. Which of the following is represented in PIC?
period will be at least 60 days, unless a shorter a. Bureau of Internal Revenue
period (not less than 30 days) is considered b. Commission on Audit
appropriate by the FRSC. c. Insurance Commission
II. Consideration of pronouncements of the IASB. d. None of these
III. Formation of a task force, when deemed
necessary, to give advice to the FRSC. 17. Which statement is incorrect regarding the
IV. Approval of a standard or an interpretation by a implementation guidance issued by the PIC?
majority of the FRSC members. a. The PIC implementation guidance may be in the
V. Consideration of all comments received within the format of Questions and Answers (Q&As).
comment period and, when appropriate, b. The PIC may consult with experts to obtain
preparing a comment letter to the IASB. information that can be used to facilitate
VI. Submission by the FRSC of the new/amended understanding of the issues under consideration, to
PFRS to the Professional Regulation Commission seek assistance in the preparation of the draft
(PRC) through the BOA for approval. guidance, or seek comments on proposed PIC
VII. Approval by BOA/PRC. guidance.
VIII. Publication of the new pronouncement. c. Implementation guidance approved by the PIC
shall be forwarded to the FRSC for approval before
issuance to the public as final guidance.

Page 2 of 4 www.teamprtc.com.ph FAR.3301

EXCEL PROFESSIONAL SERVICES, INC.

d. Implementation guidance released by the PIC and 23. The IASB due process comprises six stages, with the
approved by the FRSC is less authoritative than Trustees of the IFRS Foundation having the
the PFRS to which it relates. opportunity to ensure compliance at various points
throughout. Arrange in proper order the IASB’s due
18. Since the PIC does not establish new accounting process.
standards, as a general rule, there is no need to I. Procedures after a Standard is issued
expose proposed PIC implementation guidance for II. Planning the project
comment. However, depending on the complexity of III. Setting the agenda
the issue, the PIC may decide to circulate the draft to IV. Developing and publishing the Standard
the public for comment, in which case the exposure V. Developing and publishing the Discussion Paper,
period shall be including public consultation
a. Not more than 30 days. VI. Developing and publishing the Exposure Draft,
b. Not less than 30 days. including public consultation
c. Less than 30 days
d. More than 30 days but not to exceed 59 days a. III, II, V, VI, IV and I
b. III, II, VI, V, IV and I
19. Which statement is incorrect regarding the IFRS c. II, III, V, VI, IV and I
Foundation? d. II, III, VI, V and I
a. It is a not-for-profit, public interest organization
established to develop a single set of high-quality, 24. Which statement is incorrect regarding the IFRS
understandable, enforceable and globally accepted Interpretations Committee (IC) and its Interpretations?
accounting and sustainability disclosure a. The IFRS IC is responsible for developing
standards—IFRS Standards—and to promote and Interpretations of IFRSs.
facilitate adoption of the standards. b. If the IFRS IC decides that an IFRS is not clear and
b. Its mission is to develop IFRS Standards that bring that it should provide an interpretation of the
transparency, accountability and efficiency to requirements it either develops an Interpretation
financial markets around the world. or, in consultation with the IASB, develops a
c. It has a three-tier governance structure, based on narrow scope amendment to the IFRS.
two independent standard-setting boards of c. The IFRS IC publishes an agenda decision to
experts, governed and overseen by Trustees from explain why a standard-setting project has not
around the world who in turn are accountable to a been added to the work plan to address a question
monitoring board of public authorities. submitted.
d. None, all the statements are correct. d. The IFRS IC members are appointed by the IASB.

Note: More information about the IFRS Foundation can be 25. Which statement is incorrect regarding the
found at https://www.ifrs.org/about-us/who-we-are/. International Sustainability Standards Board (ISSB)?
a. Created by the IFRS Foundation to help meet the
20. How IFRS Standards bring transparency? demand of international investors with global
a. By enhancing the international comparability and investment portfolios for high quality, transparent,
quality of financial information, enabling investors reliable and comparable reporting by companies on
and other market participants to make informed climate and other environmental, social and
economic decisions. governance (ESG) matters.
b. By reducing the information gap between the b. The ISSB sets IFRS Sustainability Disclosure
providers of capital and the people to whom they Standards.
have entrusted their money. c. The Sustainability Disclosure Standards will require
c. By helping investors to identify opportunities and disclosure of information about the sustainability-
risks across the world, thus improving capital related risks and opportunities that affect the
allocation. company’s future cashflows and business model
d. All of the above. and, thus, its enterprise value—matters that affect
future financial statements.
21. Use of a single, trusted accounting language d. The ISSB is intended to replace the IASB.
a. Lowers the cost of capital.
b. Reduces international reporting costs for 26. Which of these statements regarding the IFRS and
businesses. U.S. GAAP is correct?
c. Both a and b. a. U.S. GAAP is considered to be "principles-based"
d. Neither a nor b. and more detailed than IFRS.
b. U.S. GAAP is considered to be "rules-based" and
22. Which statement is incorrect regarding the less detailed than IFRS.
International Accounting Standards Board (IASB)? c. Both U.S. GAAP and IFRS are considered to be
a. Normally has 14 members, of whom one is "rules-based", but U.S. GAAP tends to be more
appointed as Chair and up to two members as complex.
Vice-Chair. d. IFRS is considered to be "principles-based" and
b. Most of the members are full-time, so that they less detailed than U.S. GAAP
commit all of their time to paid employment as an
IASB member. 27. Which of the following formalized the FASB and IASB’s
c. Members of the IASB shall be appointed initially for commitment to convergence of U.S. GAAP and IFRS?
a term of five years, may be renewed for a further a. The Norwalk Agreement
term of three years (with the possibility of renewal b. The Bologna Accord
up to a maximum of five years). The term of an c. The Mutual Recognition Agreement
individual member of the IASB may not exceed 10 d. The Treaty of Paris
years in total.
d. Majority of the members are should come from
Europe.

Page 3 of 4 www.teamprtc.com.ph FAR.3301

EXCEL PROFESSIONAL SERVICES, INC.

28. Which statement is correct regarding the Philippine

Institute of Certified Public Accountants (PICPA)?
a. The PICPA is the accounting standard setting body
in the Philippines.
b. PICPA is a registered stock corporation with
Geographical divisions, regions and chapters all
over the country.
c. Geographical Areas, Regions and Chapters have
juridical personality separate and distinct from
each other or from the national office.
d. Each region, sector and chapter has its own
respective governing council.

29. Which of the following is a PICPA Geographical Area?

a. Middle East c. Bicol
b. North America d. Metro Manila

30. Which of the following is not a PICPA Region?

a. Metro Manila c. Northern Mindanao
b. Southern Tagalog d. Southern Visayas

Note: More information about the PICPA can be found at

https://picpa.com.ph/.

J - end of FAR.3301 - J

Page 4 of 4 www.teamprtc.com.ph FAR.3301