The Securities and Exchange Commission (SEC) has given the real estate industry leeway until 2023 to migrate to more stringent accounting rules, thus seeking to iron out implementation kinks amid a prolonged coronavirus (COVID-19) pandemic.
SEC memorandum circular No. 34 was issued on Dec. 15 to defer the application of Philippine Interpretation Committee question and answer (PIC Q&A) 2018-12 that covers accounting for significant financing component and the exclusion of land in the calculation of percentage of completion.
The real estate industry was likewise given three more years to comply with the International Financial Reporting Interpretations Committee (IFRIC)’s agenda decision on overtime transfers of constructed goods under Philippine Accounting Standards (PAS) 23-borrowing cost.
“The real estate industry has suffered from the COVID-19 pandemic as well as other sectors,” SEC Chair Emilio Aquino said in a press statement on Monday. “With the deferral of the accounting rules, the real estate industry will have enough time to further evaluate and resolve the remaining implementation issues.”
Nevertheless, real estate companies have the option to comply in full with the requirements of PIC Q&A 2018-12 and IFRIC Agenda Decision beginning Jan. 1, 2021.
Those choosing the deferral will have to disclose in the notes to the financial statements the accounting policies applied, alongside a discussion of the deferral of the implementation issues, and a qualitative discussion of the impact on the financial statement if the concerned application guidelines had been adopted.
The regulatory reliefs are not considered in accordance with the Philippine Financial Reporting Standards (PFRS). As such, real estate companies who adopt and record them for financial reporting purposes must 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. INQ