SEC allows banks to use industry-specific framework for financial statements
THE SECURITIES and Exchange Commission (SEC) is allowing an industry-specific framework in reporting financial statements for banks and other entities regulated by the Bangko Sentral ng Pilipinas (BSP) in consideration of relief measures extended during the coronavirus pandemic.
In a statement on Wednesday, the corporate regulator said it has approved SEC Memorandum Circular No. 32, Series of 2020, which allows banks to choose whether to prepare their audited financial statements using an industry-specific framework or the Philippine Financial Reporting Standards (PFRS), as would be allowed by the BSP.
An industry-specific framework would allow banks to specify relief measures availed of during the period of the pandemic, and the extent of the impact on their financial statements, the SEC said. The regulator said this can ensure transparency in financial reporting.
Earlier this year, the BSP rolled out relief measures to banks and financial institutions in light of the challenges by the coronavirus disease 2019 (COVID-19) pandemic.
Some of these are allowing the staggered booking of allowance for credit losses and the reclassification of debt securities under a fair value category into amortized cost.
If it would not allow an industry-specific reporting framework, the SEC said the relief offered by the BSP would be counted as deviations from the PFRS. If these have any material impact on the companies’ financial statements, they would need a qualified opinion by an external auditor.
“The industry-specific framework recognizes the necessity of the prudential accounting relief measures, as well as the other regulatory reliefs issued by the central bank, in countering or, at least, cushioning the impact of the COVID-19 outbreak on banks and other financial institutions,” SEC Chairperson Emilio B. Aquino said.
“These reliefs were intended to reduce the impact of losses that (financial institutions) may incur due to exposure to borrowers, industries and sectors severely affected by the COVID-19 pandemic… Consequently, they aim to strengthen the ability of (financial institutions) to continue operating and servicing the financing requirements of the general public,” he added.
For companies that would not record any material impact from the BSP’s relief measures, the SEC said they may note in their financial statements that the filing is in full compliance with the PFRS. — D.A.Valdez