Financial Instruments: Presentation

Philippine Public Sector Accounting Standard 28

FINANCIAL INSTRUMENTS: PRESENTATION

Table of Contents

PAG
Number
BACKGROUND

INTRODUCTION TO THE IPSAS 28

PHILIPPINE APPLICATION GUIDANCE TO IPSAS 28

Scope 1

Effective Date 2

Philippine Public Sector Accounting Standards (PPSAS ) 28 Page 1

October 20, 2011
 Financial Instruments: Presentation

Philippine Public Sector Accounting Standard 28

FINANCIAL INSTRUMENTS: PRESENTATION

Background

This Philippine Public Sector Accounting Standard (PPSAS) 28 consists of International Public
Sector Accounting Standard (IPSAS) 28 (Issued January 2010), “Financial Instruments:
Presentation,” developed by the International Public Sector Accounting Standards Board
(IPSASB) and published by the International Federation of Accountants (IFAC), and the Philippine
Application Guidance (PAG) prepared to suit the Philippine public sector situation.

The PAG (in italics) provides supplementary guidance on the proper implementation of IPSAS
28 and also the reason for not adopting or modifying some paragraphs of the IPSAS 28 to suit
the Philippine public sector situation.

Introduction to the IPSAS 28

A financial instrument is any contract that gives rise to both a financial asset of one entity and a
financial liability or equity instrument of another entity. Common examples of financial assets
and corresponding financial liabilities are: (a) Accounts receivable and payable; (b) Notes
receivable and payable; (c) Loans receivable and payable; and (d) Bonds receivable and
payable. Currency (cash) is a financial asset because it represents the medium of exchange and
is therefore the basis on which all transactions are measured and recognized in financial
statements. A deposit of cash with a bank or similar financial institution is a financial asset
because it represents the contractual right of the depositor to obtain cash from the institution
or to draw a check or similar instrument against the balance in favor of a creditor in payment of
a financial liability.

IPSAS 28 establishes principles for presenting financial instruments as assets, liabilities or net
assets/equity and for offsetting financial assets and financial liabilities. It applies to the
classification of financial instruments, from the perspective of the issuer, into financial assets,
financial liabilities and equity instruments; the classification of related interest, dividends or
similar distribution, losses and gains; and circumstances in which financial assets and financial
liabilities should be offset.

IPSAS 28 complements the principles for recognizing and measuring financial assets and
financial liabilities in IPSAS 29, “Financial Instruments: Recognition and Measurement,” and for
disclosing information about them in IPSAS 30, “Financial Instruments: Disclosures.”

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 Financial Instruments: Presentation

PHILIPPINE APPLICATION GUIDANCE

Scope

PAG1. Paragraph 7 deals with the applicability of this Standard to all public sector entities other
than Government Business Enterprises (GBEs). In the Philippines, GBEs pertain to
Government-Owned and/or Controlled Corporations (GOCCs). Thus, this standard shall
be applied to all National Government Agencies (NGAs) and Local Government Units
(LGUs).

Effective Date

PAG1. An entity shall apply this PPSAS for annual financial statements covering periods
beginning January 1, 2014.

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October 20, 2011