PREFACE

Public Sector Accounting Standards Board

Commission on Audit
Quezon City

Preface to the Philippine Public Sector Accounting Standards

This preface is issued to set out the objectives and procedures of the Public Sector
Accounting Standards Board (PSASB) in the formulation of the Philippine Public Sector
Accounting Standards (PPSAS) and explains its scope and applicability.
Creation and Functions of the PSASB:
1. The Public Sector Accounting Standards Board (PSASB) was created under the
2008 Commission on Audit (COA) Organization Restructuring, COA Resolution
2008-12 dated October 10, 2008 pursuant to the 1987 Philippine Constitution,
Section 2(2) Article IX-D, which vests on the Commission on Audit the exclusive
authority to promulgate accounting rules and regulations.
2. The PSASB shall assist the Commission Proper in formulating and implementing
public sector accounting standards and establish and maintain linkages with
international bodies, professional organizations and academe on accounting
related fields on financial management.
Application of the PPSAS
3. The PSASB shall determine the PPSAS for the following government agencies:
a. National Government Agencies (NGAs) which refer to departments,
agencies, bureaus, state universities and colleges, government
instrumentalities and commissions including the judiciary and
constitutional commissions;
b. Local Government Units (LGUs) which refer to provinces, cities,
municipalities and barangays; and
c. Government-Owned and/or Controlled Corporations (GOCCs) not
considered as GBEs
4. The PPSAS shall apply to all National Government Agencies (NGAs), Local
Government Units (LGUs) and Government-Owned and/or Controlled
Corporations (GOCCs) not considered as Government business enterprises
(GBEs).
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5. GBE is an entity that has all the following characteristics: (a) Is an entity with the
power to contract in its own name; (b) Has been assigned the financial and
operational authority to carry on a business; (c) Sells goods and services, in the
normal course of its business, to other entities at a profit or full cost recovery;
(d) Is not reliant on continuing government funding to be a going concern (other
than purchases of outputs at arms length); and (e) Is controlled by a public
sector entity. These shall apply the Philippine Financial Reporting Standards
(PFRS) and relevant standards issued by the Financial Reporting Standards
Council, Board of Accountancy, and Professional Regulations Commission.
Scope of PPSAS
6. PPSAS should be read in the context of this Preface and the objective stated in
each Standard. Any exception from the scope of a Standard is likewise stated in
that Standard.
Guidelines/Issuances on PPSAS
7. The Standards of PPSAS shall set out the recognition, measurement,
presentation and disclosure requirements for financial reporting in the Philippine
Government.
8. Transitional provisions shall be issued to address specific concerns not yet
covered by the PPSAS.
9. The Government Accounting Manual (GAM) shall provide guidelines to explain
and expand PPSAS, and provide practical assistance to agencies making the
transition from one basis of accounting to another, particularly if intermediate
steps are involved.
10. Supplemental guidelines shall be issued when the need arises. Any Standard of
PPSAS should be interpreted in conjunction with the applicable supplemental
guidelines. Compliance with PPSAS requires compliance with every Standard of
PPSAS and every supplemental guideline issued.
Setting of Standards of PPSAS
11. In developing Standards of PPSAS, the PSASB considers and makes use of the
existing laws, financial reporting, accounting rules and regulations, and
pronouncements issued by the International Public Sector Accounting Standards
Board (IPSASB).

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12. The PSASB is also required to take into account all relevant factors, including: (a)
best accounting practices, both local and international; and (b) the capacity of
agencies to comply with Standards of PPSAS.
13. Standards of PPSAS are developed either:
by adopting IPSASs issued by the IPSASB. The PSASB attempts, wherever
possible, to maintain the accounting treatment and original text of the
IPSASs and approved amendments thereof, unless there is a significant
accounting issue that warrants a departure; or
by developing a Standard of PPSAS to deal with a specific accounting issue
that is either not comprehensively dealt with in an existing IPSAS or for
which an IPSAS has not been developed by the IPSASB.
14. The following are the processes and other considerations in developing a
Standard of PPSAS:

Applicability of IPSAS. Existing IPSAS were assessed to determine the

applicability of the provisions in the Philippines setting as bases in the
development of PPSAS.

Exposure draft of PPSAS. The PSASB issues exposure drafts of all proposed
PPSAS for comment by interested parties including COA Officials and
auditors, agency finance personnel, oversight agencies, professional
organizations, academe and other stakeholders. The PSASB sets a
reasonable time to allow interested parties to consider and comment on its
proposals. This provides an opportunity for those affected by the PSASBs
pronouncements to present their views before the pronouncements are
finalized and approved by the COA. The PSASB evaluates all comments
received on exposure drafts and makes such modifications, where
appropriate.

Fundamental issues. Where an accounting principle or a significant element

of a disclosure requirement contained in IPSAS is considered to be in
conflict with the Philippines laws, rules and regulations, this would be
regarded as a fundamental issue and the accounting principle or disclosure
requirement may be changed.

Statutory authority. Where the international standard deviates from the

Philippine regulatory or legislative environment, Philippine application
guidance shall be issued, accordingly.

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Disclosure requirements. Disclosure requirements may be amended when

the amendments are regarded as being significant for improving fair
presentation of the matter.

PPSAS Numbering. The PPSAS is assigned the same number as the IPSAS to
maintain the link. For example, IPSAS 1 and PPSAS 1 both deal with
Presentation of Financial Statements. Where a PPSAS is developed and
there is no IPSAS equivalent, the Standard will be assigned a number in a
series of PPSAS starting with 101. When IPSASB subsequently issues the
equivalent Standard as an IPSAS, the 100 series PPSAS will be withdrawn
and reissued as a PPSAS with the IPSAS number. Standards of PPSAS have
equal authority regardless of the numbering used.

Financial reporting issues not dealt with by IPSAS. Where issues related to
financial reporting emerged, researches were done and a discussion
document prepared based on other relevant accounting standards not in
conflict with Philippine laws.

The draft of a PPSAS, developed from the exposure process, is submitted to

the PSASB for consideration of the Commission Proper, COA. Where there
are significant changes or unresolved issues associated with an exposure
draft, the PSASB may decide to re-expose a proposed PPSAS.

If considered appropriate, focus group discussions will be held to obtain

further opinions on issues identified by the exposure process.

Timing of application of PPSAS

15. A Standard of PPSAS applies from the date determined in an issuance by the
Commission on Audit.

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