A new accounting guideline approved by the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) seeks to promote prudence and transparency in financial reporting, while setting out supervisory expectations in classifying and measuring financial instruments and recognizing blunders.

The BSP on Friday approved the Philippine Financial Reporting Standards 9 (PFRS) guidelines replacing the International Accounting Standards (IAS) 39.

“The guidelines provide the overarching governance overlay on the adoption of the standard. In particular, the board of directors is required to assess the impact of PFRS 9 on business strategies and risk management systems to be able to adopt appropriate policies and control measures that will ensure integrity of the reporting process,” the BSP said.

With the adoption of the new accounting standards, the BSP said it expects Bangko Sentral supervised financial institutions exercise sound professional judgment in implementing the provisions of the standards considering that these are largely principles-based.

It added the guidelines present a holistic approach in assessing the appropriateness of classification of financial instruments.

Specifically, the BSP will evaluate the consistency of sales activities and metrics being used in monitoring the performance of financial instruments with the business model for holding the instrument. Joshua Lao