Sunday, September 9, 2012

IT IS DEFINITE (ALMOST) THAT NEW CO-OP FINANCIAL REPORTING FRAMEWORK; PERFORMANCE AND SOCIAL AUDIT STANDARDS WILL COVER 2013 OPERATIONS





In the sidelines of the Cooperative Development Council (CDC) Luzon Convergence  held last Aug. 28, 2012, at Club Filipino, Mandaluyong City, I had the fortunate moment to talk informally  with the proponent/prime movers/advocates of the New Co-op Financial Reporting Framework; and standards/rules on Performance and Social Audit for cooperatives.

At the first opportunity, I shot the question you, cooperatives are just dying to ask:  "When are the rules of the abovementioned going to come out?  When will they take effect/be implemented by CDA?"

To cut the long story short, these will be implemented next year, at the earliest,  and if the consultations required prior to their adoption and  eventual implementation would be finished before the year (2012) ends.

To this date, I have not heard of/come across any schedules for such consultations. But then, again, there are 4 more months to go.

And also, the new accounting standards for cooperatives, if ever these would be implemented next year (2013),  they will be prospective in application. 

Meaning, if these rules get implemented in 2013, the financial operations of cooperatives in 2012 will not be required to conform with said accounting standards yet.  That is my educated/informed opinion.

So, you, cooperatives who need to clean up your books and cleanse your loan receivables/ assets, you may go ahead charging your losses to the funds provided for these, not excluding the Gross Reserve Fund. (Many cooperatives have been doing this and were tolerated to do this, anyway).

Just what is this FINANCIAL REPORTING FRAMEWORK  being contemplated by the Cooperative Development Authority  for cooperatives?

From some regulations issued by the Securities and Exchange Commission (SEC) I got the following definition:

A Financial Reporting Framework  is:

          "..a set of accounting principles, standards and interpretations and pronouncements that must be adopted in the preparation and submission of the annual financial statements of a particular class of entities, as defined in this Rule (Rule 68) by the Securities and Exchange Commission..."

This includes, but is not limited to, the Philippine Financial Reporting Standards (PFRS); and the Philippine Financial Reporting Standards for Small and Medium Entities (PFRS SME)..."

 For the information of non-accountants like myself, the term "Generally Accepted Accounting Principles in the Philippines {GAAP}"  had been deleted from the Rule.

In the alignment of  International Standards,  it was determined by cooperative regulatory authorities that cooperatives do not fall either under the Financial Reporting Framework of "Full PFRS",  nor under the "PFRS SME".   

Hence, CDA is proposing for a "Philippine Financial Reporting Standards for Cooperatives."

I also "Googled" what is PFRS/Philippine Accounting Standards.  For us who have been hiding under a rock lately, PFRS  are the new set of  "Generally accepted Accounting Principles". These were issued by the Accounting Standards Council  to govern the preparation of financial statements. 

Wikipedia  says that these standards  are patterned after the revised International Financial Reporting Standards (IFRS)  and International Accounting Standards (IAS).

So there.  (END).

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