The Auditor'S Report On General Purpose Financial Statements Prepared in Accordance With A Philippine Financial Reporting Framework Other Than Pfrs

Philippine Auditing Practice Statement 1002Ph (Revised)
THE AUDITOR’S REPORT ON GENERAL PURPOSE

FINANCIAL STATEMENTS PREPARED IN ACCORDANCE
WITH A PHILIPPINE FINANCIAL REPORTING
FRAMEWORK OTHER THAN PFRS
PHILIPPINE AUDITING PRACTICE STATEMENT 1002Ph (Revised)
THE AUDITOR’S REPORT ON GENERAL PURPOSE

FINANCIAL STATEMENTS PREPARED IN ACCORDANCE
WITH A PHILIPPINE FINANCIAL REPORTING
FRAMEWORK OTHER THAN PFRS
CONTENTS
Paragraph
PAPS 1002Ph (Revised)
Introduction……………………………………………………………………. 1-5
Effective Date………………………………………………………………….. 6
Financial Statements Prepared Solely in Accordance with Philippine

Financial Reporting Standards………………………………………………. 7-9
Financial Statements Prepared in Accordance with Philippine Financial

Reporting Framework Other than Philippine Financial
Reporting Standards…………………………………………………………. 10-11
Philippine Auditing Practice Statement (PAPS) 1002Ph (Revised), “The Auditor’s Report
on General Purpose Financial Statements Prepared in Accordance with a Philippine
Financial Reporting Framework Other than PFRS,” should be read in the context of the
Preface to the Philippine Standards on Quality Control, Auditing, Review, Other
Assurance and Related Services,” which sets out the application and authority of PAPS.
This revised PAPS is issued to provide additional guidance on the application of the
existing PSA 700 (Revised), “The Independent Auditor’s Report on a Complete Set of
General Purpose Financial Statements,” and PSA 700 (Redrafted), “Forming an Opinion
and Reporting on Financial Statements.”1 It does not establish any new basic principles
or essential procedures.
THE AUDITOR’S REPORT ON

GENERAL PURPOSE FINANCIAL STATEMENTS PREPARED IN
ACCORDANCE WITH A PHILIPPINE FINANCIAL REPORTING FRAMEWORK
OTHER THAN PFRS
Introduction
1. The existing PSA 700 (Revised), “The Independent Auditor’s Report on a

Complete Set of General Purpose Financial Statements,” and PSA 700
(Redrafted), “Forming an Opinion and Reporting on Financial Statements,”
provide that the auditor shall evaluate whether the financial statements (a) are
prepared and presented in accordance with the specific requirements of the
1 PSA 700 (Redrafted) is effective for audits of financial statements for periods beginning on or after
December 15, 2009.
1
applicable financial reporting framework and (b) adequately refer to or

describe the applicable financial reporting framework.2
2. The existing PSA700 (Revised) and PSA 700 (Redrafted) further state that when
expressing an unmodified opinion on financial statements prepared in
accordance with a fair presentation framework, the auditor’s opinion shall,
unless otherwise required by law or regulation, use the phrase:3
“the financial statements present fairly in all material respects, … in

accordance with [the applicable financial reporting framework]”
The auditor’s opinion identifies the financial reporting framework on which the
financial statements are based to advise users of the auditor’s report of the
context in which the opinion is expressed.4
3. The applicable financial reporting framework is defined in PSA 200 (Revised and
Redrafted), “Overall Objectives of the Independent Auditor and the Conduct of
an Audit in accordance with Philippine Standards on Auditing,” as the financial
reporting framework adopted by management in preparing and presenting the
financial statements that is acceptable in view of the nature of the entity and
the objective of the financial statements, or that is required by law or
regulation.
4. Philippine entities prepare and present their financial statements in accordance

with Philippine Financial Reporting Standards (PFRS) issued by the Financial
Reporting Standards Council, the accounting standard-setting body in the
Philippines. Certain entities, however, have been permitted to defer the
application of PFRS in part or in full or to apply a specified set of accounting
standards.
5. The purpose of this revised Philippine Auditing Practice Statement (PAPS)
1002Ph is to provide guidance on the application of the existing PSA 700
(Revised) and PSA 700 (Redrafted), specifically on the description of the
applicable Philippine financial reporting framework when this is other than
PFRS.
2 Paragraphs 10, 13 and 14 of existing PSA 700 (Revised), “The Independent Auditor’s Report on a
Complete Set of General Purpose Financial Statements,” and paragraphs 12 and 15 of PSA 700
(Redrafted), “Forming an Opinion and Reporting on Financial Statements.”
3 Paragraph 40 of existing PSA 700 (Revised) and paragraph 35 of PSA 700 (Redrafted).
4 Paragraph 43 of existing PSA 700 (Revised) and paragraph A29 of PSA 700 (Redrafted).
2
Effective Date
6. This revised PAPS is effective for audits of financial statements for periods
beginning on or after December 15, 2009. Earlier application is allowed.
Financial Statements Prepared Solely in Accordance with Philippine

Financial Reporting Standards
7. PSA 700 (Redrafted) explains that the financial statements may be described as
prepared and presented in accordance with a particular financial reporting
framework only if the financial statements comply with all the requirements of
that framework effective during the period covered by the financial
statements.5
8. Philippine Accounting Standard (PAS) 1, “Presentation of Financial Statements,”

makes clear that the financial statements should not be described as complying
with PFRS unless they comply with all the requirements of PFRS.
9. Accordingly, when financial statements are prepared solely in accordance with

PFRS, the auditor identifies the financial reporting framework in the opinion
paragraph, and in the paragraph on management’s responsibility for the
financial statements, as:
“…in accordance with Philippine Financial Reporting Standards.”
Financial Statements Prepared in Accordance with a Philippine

Financial Reporting Framework Other than Philippine Financial
Reporting Standards
10. Certain entities have been given transition relief or exemption in the
application of PFRS (i.e., these entities have been permitted to defer the
application of PFRS in part or in full or to apply a specified set of accounting
standards). For example:
• Qualifying non-publicly accountable entities (NPAEs) are permitted to apply

the applicable financial reporting standards effective as of December 31,
2004 instead of PFRS.6
5 Paragraph A6 of PSA 700 (Redrafted).
6 PAS 101, “Financial Reporting Standards for Non-publicly Accountable Entities,” permits qualifying
non-publicly accountable entities (NPAEs) to apply the applicable financial reporting standards effective
as of December 31, 2004, instead of the full PFRS.
3
• Pre-need companies are required by the Securities and Exchange

Commission (SEC) to apply the accounting standards set forth in amended
SEC Pre-need Rule 31, “Accounting Standards for Pre-need Plans and Pre-
need Uniform
Chart of Accounts (PNUCA).”
• Certain entities required to comply with PFRS have been given transition
relief or exemption by a regulator in the application of PFRS.6
11. For entities that have been given transition relief or exemption in the
application of PFRS, the auditor identifies the financial reporting framework in
the opinion paragraph, and in the paragraph on management’s responsibility
for the financial statements, in such terms as follows:
• For NPAEs: “… in accordance with applicable financial reporting framework

for non-publicly accountable entities that are allowed to defer full adoption
of Philippine Financial Reporting Standards as described in Note X….”
• For others such as banks, pre-need companies, mining companies: “… in

accordance with applicable financial reporting framework for entities that
are given relief from certain requirements of Philippine Financial Reporting
Standards as described in Note X….”
When either of the above terms is used, reference shall also be made to a note
that describes further the applicable financial reporting framework.
6
Transition relief or exemption from PFRSs given by a regulator:
4
• The SEC exempted from the tainting provision of PAS 39 certain exchange offers of the Bureau of
Treasury of eligible government securities to new government bonds.
• The SEC provided transitional relief to mining companies on the fair value requirements of PAS 39 for
hedging contracts entered into and effective prior to January 1, 2005.
• The BSP and SEC granted in 2008 exemptive reflief to banks from PAS 39, as amended, particularly on
the reclassification of financial assets of banks as provided in BSP Circular No. 628, Series of 2008.
This PAPS 1002Ph (Revised), “The Auditor’s Report on General Purpose Financial
Statements Prepared in Accordance with a Philippine Financial Reporting Framework
Other than PFRS,” was unanimously approved for adoption on December 2, 2009 by
the members of the Auditing and Assurance Standards Council.
Benjamin R. Punongbayan, Chairman
Felicidad A. Abad Antonio P. Acyatan
Froilan G. Ampil David L. Balangue
Ma. Gracia F. Casals-Diaz Eliseo A. Fernandez
Jose M. Ireneo Judith V. Lopez
Jaime P. Naranjo Ma. Cecilia F. Ortiz
Nestorio C. Roraldo Joaquin P. Tolentino
Jaime E. Ysmael
5

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Philippine Auditing Practice Statement 1002Ph (Revised)

THE AUDITOR’S REPORT ON GENERAL PURPOSE

PHILIPPINE AUDITING PRACTICE STATEMENT 1002Ph (Revised)

THE AUDITOR’S REPORT ON GENERAL PURPOSE

Financial Statements Prepared Solely in Accordance with Philippine

Financial Statements Prepared in Accordance with Philippine Financial

THE AUDITOR’S REPORT ON

1. The existing PSA 700 (Revised), “The Independent Auditor’s Report on a

applicable financial reporting framework and (b) adequately refer to or

“the financial statements present fairly in all material respects, … in

4. Philippine entities prepare and present their financial statements in accordance

Financial Statements Prepared Solely in Accordance with Philippine

8. Philippine Accounting Standard (PAS) 1, “Presentation of Financial Statements,”

9. Accordingly, when financial statements are prepared solely in accordance with

“…in accordance with Philippine Financial Reporting Standards.”

Financial Statements Prepared in Accordance with a Philippine

• Qualifying non-publicly accountable entities (NPAEs) are permitted to apply

• Pre-need companies are required by the Securities and Exchange

• For NPAEs: “… in accordance with applicable financial reporting framework

• For others such as banks, pre-need companies, mining companies: “… in

Benjamin R. Punongbayan, Chairman

Felicidad A. Abad Antonio P. Acyatan

Froilan G. Ampil David L. Balangue

Ma. Gracia F. Casals-Diaz Eliseo A. Fernandez

Jose M. Ireneo Judith V. Lopez

Jaime P. Naranjo Ma. Cecilia F. Ortiz

Nestorio C. Roraldo Joaquin P. Tolentino

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