Coop Framework
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Transcript of Coop Framework
Financial Reporting Framework
for Cooperatives
Seminar on Philippine Financial Reporting
Framework for Cooperatives and the Standard
Chart of Accounts for Cooperatives
Lenox Hotel,
Dagupan City
April 21-22, 2016
Jekell G Salosagcol
• Licensed public accountant in the Philippines• Bachelors of Science in Accounting• Accounting Instructor and CPA Reviewer, Philippines• Former Auditor for SGV (Arthur Andersen in the
Philippines)• Philippine Institute of Certified Public Accountants
Resource Speaker• Cooperative Development Authority Resource
Speaker• Author of 2 Accounting Books
Section 5. Effectivity
This Memorandum Circular shall take effect fifteen (15) days after its
publication at the Office of the National Administrative Register.
Approved by the Board of Administrators per Resolution No.333, Series of
2014 dated January 22, 2014.
For the Board of Administrators:
(SGD) ORLANDO R. RAVANERA
Chairman
MEMORANDUM CIRCULAR NO. 2015-05
Series of 2015
SUBJECT : PHILIPPINE FINANCIAL REPORTING
FRAMEWORK FOR COOPERATIVES
Pursuant to Section 3 of Republic Act No. 6939 and
Republic Act No. 9520 and its Implementing Rules and
Regulations (IRR) , the Authority hereby adopts and
prescribes the use of this Philippine Financial Reporting
Framework for Cooperatives:
Financial Statement Presentation
Fair presentation
Complete set of financial statements
Going Concern
Accrual
Comparatives
Consistency
Borrowing Costs
• Borrowing costs are recognized as expense immediately.
• Borrowing costs incurred in connection with the construction of qualifying assets may be capitalized as part of the cost of the asset
Foreign Exchange
• Transaction is translated into functional currency at the spot rate at the date of the transaction
• Monetary assets and liabilities are translated using the closing rate as of the FS date.
Employee Benefits
• Employee benefits are recognized as expense (or part of the cost of assets) when incurred.
• Retirement benefit expense includes:– Current service costs– Interest costs– Amortized past service costs– Expected return on plan assets– Actuarial Gains and Losses
• Past Service Costs– Vested- recognize immediately– Unvested- to be amortized
Biological Assets
• Biological assets are living plants and animals.– Initial measurement- Cost– Subsequent measurement
• Cost less accumulated depreciation and impairment losses
• Lower of cost and estimated selling price less cost to sell and cost to complete
Investment Property
• Investment property shall be accounted for using the cost-depreciation-impairment model.
Property, plant and equipment
• PPE shall be accounted for
using the Cost Model
• Revaluation of land is
allowed but subject to the
approval of CDA
Intangible Assets
• Organizational costs are recognized as expense immediately
• Research and development costs are recognized as expense immediately
• All intangible assets shall be amortized
Impairment of Assets
• Recognize impairment loss as the excess of carrying amount and recoverable amount
• Impairment loss and reversals are recognized in Statement of Operations
Investment In Associates and Joint Venture
• Initially recognized at Cost
• Subsequently presented in the Statement of Financial Position at Cost less Accumulated Impairment Losses
• Recognize impairment loss when there is an indication that the investment is impaired
Provisions and Contingencies
• Provision is recognized when – the entity has a present obligation; – it is probable that an outflow of
economic resources will be required; and
– a reliable estimate of the amount of obligation can be made
• Contingent assets and liabilities are not recognized
Inventories
• Initially recognized at Cost
• Subsequently measured at the lower of
–Cost and
–Estimated Selling Price less Costs to Complete and Sell
• Cost is determined using
–Specific Identification
–FIFO
Leases• Operating Lease
–Rental income/expense is recognized on a straight-line basis over the lease term.
–Advance rent is recognized as a liability• Finance Lease
–Rental payments are treated as installment payments for the acquisition of asset
–Depreciation and interest expense is recognized by the lessee
Impairment of assets
• An impairment loss is recognized in P&L whenever the carrying amount of an asset is greater than its recoverable amount.
Revenue
• Sale of goods- upon delivery
• Sale of services- when services are performed
• Interest revenue- earned and collected
• Dividends revenue- when declared
Financial instruments
• Debt instruments – at amortized cost• Short-term debt instruments- undiscounted
amount• Investments in publicly- traded securities –
at fair value with changes in fair value recognized in profit and loss
• Investments in non publicly-traded securities mutual funds, as well as other externally-managed funds – at cost less impairment
Donations and grants
–Donations and grants are treated as increase in equity•Donations in the form of PPE shall be recognized as income over the life of the asset
•Donations for working capital purposes shall remain in the equity
Accounting changes
• Accounting estimates- current and prospective
• Change in accounting policy- current• Correction of prior-period errors-
current (use Prior Period Adjustment Account in the Statement of Operations)
Statement of Financial Condition
• Cash and cash equivalents
• Trade and other receivables
• Financial assets
• Inventories
• Property, plant and
equipment
• Investment property
• Intangible assets
• Biological assets carried at
cost less accumulated
depreciation
• Investment in associates
• Investment in jointly
controlled entities
• Trade and other payables
• Financial liabilities
• Liabilities/Assets for current
taxes
• Deferred tax liabilities/assets
• Provisions
• Members’ share capital
• Donation and grants
• Statutory funds
• Revaluation surplus
Statement of Operations
• Revenue• Cost of sales/services• Marketing costs• Administrative costs• Finance costs• Other income and expenses• Tax expense (if applicable)• Allocation of distribution of net
surplus among:– Statutory funds– Interest on share capital–Patronage refund
Statement of Cash Flows• Classify changes in cash and cash
equivalents for a period as to operating,
investing or financing activities
• Cash flows must be split into operating,
investing and financing activities.
• Operating activities may be presented using
either the direct or indirect approach.
• Disclose interest on share capital and
patronage refund paid
• Disclose other interest paid and received.
Statement of Changes in Equity
Show a reconciliation between the carrying amount at the beginning and the end of the period, separately disclosing changes resulting from:
• Amounts of investments by, and distributions to, members, showing separately issues of shares , and treasury share transactions
• Donations and grants• Movements in Statutory Funds (includes
allocation of Net Surplus as reconciled with amounts per Statement of Operations)
• Movements in revaluation surplus
STATUTORY FUNDS
• Reserve Fund– At least 10% of the Net Surplus– New Cooperatives should allocate 50% of its net
surplus for the first 5 years
• Cooperative Education and Training Fund– Not more than 10% of the Net Surplus
• Community Development Fund– Not less than 3% of Net Surplus
• Optional Fund– Not more than 7% of the Net Surplus
Distribution of Surplus and Movements in Statutory Funds
• Distribution of the Net Surplus to Statutory funds, Interest on Share Capital and Patronage Refund must be presented in the Statement of Operations
• Movements in Statutory Funds should be presented in the Statement of Changes in Equity