The Securities and Exchange Commission said Monday it deferred the implementation of certain accounting rules until 2023 to allow the real estate industry more time to assess impact of these issues amid the COVID-19 pandemic.
It issued SEC Memorandum Circular No. 34 on Dec. 15 to defer the application of Philippine Interpretation Committee Question and Answer No. 2018-12 with respect to the accounting for significant financing component and the exclusion of land in the calculation of the percentage of completion.
The real estate industry will also have three more years to comply with the International Financial Reporting Standards Interpretations Committee’s Agenda Decision on over time transfers of constructed goods under Philippine Accounting Standards 23-Borrowing Cost.
“The real estate industry has suffered from the COVID-19 pandemic as well as other sectors,” SEC Chairperson Emilio Aquino said.
“With the deferral of the accounting rules, the real estate industry will have enough time to further evaluate and resolve the remaining implementation issues,” he said.
Real estate companies may still opt to comply in full with the requirements of PIC Q&A 2018-12 and IFRIC Agenda Decision beginning Jan. 1, 2021.
Those opting for the deferral will have to disclose in the Notes to the Financial Statements the accounting policies applied, a discussion of the deferral of the subject implementation issues and a qualitative discussion of the impact in the financial statement had the concerned application guidelines been adopted.
The regulatory reliefs are not considered in accordance with the Philippine Financial Reporting Standards. As such, real estate companies who adopt and record them for financial reporting purposes should specify in the “Basis of Preparation of the Financial Statements” section of their financial statements that they were prepared in accordance with PFRS, as modified by the application of the above financial reporting reliefs.
The external auditor should also state in the opinion paragraph that the financial statements were prepared in accordance with the compliance framework described in the notes to the financial statements.