About FRSC and PIC

The Financial Reporting Standards Council (FRSC) was established by the Professional Regulatory
Commission under the Implementing Rules and Regulations of the Philippine Accountancy of Act of
2004 to assist the Board of Accountancy in carrying out its power and function to promulgate
accounting standards in the Philippines. The FRSC’s main function is to establish generally
accepted accounting principles in the Philippines.

The FRSC is the successor of the Accounting Standards Council (ASC). The ASC was created in
November 1981 by the Philippine Institute of Certified Public Accountants (PICPA) to establish
generally accepted accounting principles in the Philippines. The FRSC carries on the decision made
by the ASC to converge Philippine accounting standards with international accounting standards
issued by the International Accounting Standards Board (IASB).

The FRSC consists of who a Chairman and members are appointed by the BOA and include
representatives from the Board of Accountancy (BOA), Securities and Exchange Commission
(SEC), Bangko Sentral ng Pilipinas (BSP), Financial Executives Institute of the Philippines (FINEX),
Commission on Audit (COA) and Philippine Institute of Certified Public Accountants (PICPA). The
FRSC has full discretion in developing and pursuing the technical agenda for setting accounting
standards in the Philippines. Financial support is received principally from the PICPA Foundation.

The FRSC monitors the technical activities of the IASB and invites comments on exposure drafts of
proposed IFRSs as these are issued by the IASB. When finalized, these are adopted as Philippine
Financial Reporting Standards (PFRSs). The FRSC similarly monitors issuances of the International
Financial Reporting Interpretations Committee (IFRIC) of the IASB, which it adopts as Philippine
Interpretations–IFRIC. PFRSs and Philippine Interpretations–IFRIC approved for adoption are
submitted to the BOA and PRC for approval.

The FRSC formed the Philippine Interpretations Committee (PIC)  in August 2006 to assist the
FRSC in establishing and improving financial reporting standards in the Philippines. The role of the
PIC is principally to issue implementation guidance on PFRSs. The PIC members are appointed by
the FRSC and include accountants in public practice, the academe and regulatory bodies and users
of financial statements. The PIC replaced the Interpretations Committee created by the ASC in 2000.

Information system, an integrated set of components for collecting, storing, and processing data
and for providing information, knowledge, and digital products.

Accounting Definition

Technical definitions of accounting have been published by different accounting bodies. The American
Institute of Certified Public Accountants (AICPA) defines accounting as:

the art of recording, classifying, and summarizing in a significant manner and in terms of money,
transactions and events which are, in part at least of financial character, and interpreting the results
thereof.
Though I am not a fan of technical definitions, I believe that studying the statement above will give us a
better understanding of accounting.

1. Accounting is considered an art

Accounting is considered an art because it requires the use of skills and creative judgment. One has to
be trained in this discipline to be able to perform accounting functions well.

Accounting is also considered a science because it is a body of knowledge. However, accounting is not an
exact science since the rules and principles are constantly changing (improved).

2. Accounting involves interconnected "phases"

Recording pertains to writing down or keeping records of business transactions. Classifying involves
grouping similar items that have been recorded. Once they are classified, information is summarized
into reports which we call financial statements.

3. Concerned with transactions and events having financial character

For example, hiring an additional employee is qualitative information with no financial character. Hence,
it is not recorded. However, the payment of salaries, acquisition of an office building, sale of goods, etc.
are recorded because they involve financial value.

4. Business transactions are expressed in terms of money

They are assigned amounts when processed in an accounting system. Using one of the examples above,
it is not enough to record that the company paid salaries for April. It must include monetary figures – say
for example, $20,000 salaries expense.

5. Interpreting the results

Interpreting results is part of the phases of accounting. Information is useless if they cannot be
interpreted and understood. The amounts, figures, and other data in the financial reports have
meanings that are useful to the users.

By studying the definition alone, we learned some important concepts in accounting. It also gave us an
idea of what accountants do.

You may not notice but the simple things you do and encounter everyday can actually be related to
some level of accounting. You make budgets, count change and check the receipts from the
supermarket. You may also have listed things you spent your money with at one point in your life.

We are surrounded by business – from managing our own money to seeing profit statements of big
corporations. And where there is business, there sure is accounting.

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