GUIDELINES IN THE PREPARATION OF AUDITED FINANCIAL STATEMENTS FOR TRUST INSTITUTIONS
approved the guidelines in the preparation of audited financial
statements (AFS) for trust institutions for the financial reporting
period beginning 1 January 2008.
SECTION 1. Amendments to the Manual of Regulations for Banks (MORB) –
(1) Section X 421 Books and Records and Subsection X426.2 External Audit of the MORB are hereby amended to read as follows:
a. Section X421 Books and Records
“The bank’s trust department or investment management department
shall keep books and records on trust, other fiduciary and investment
management accounts separate and distinct from the books and records of
its other businesses and shall follow the Financial Reporting Package
for Trust Institutions prescribed by the BSP.“ xxx xxx xxx “
(b) Subsection X426.2 External Audit
“The trust and other fiduciary business and investment management
activities of a bank shall be included in the annual financial audit by
independent external auditors required under Subsection X166.1“ xxx xxx xxx “
“The audit of the trust/investment management department of a
bank authorized to engage in trust and other fiduciary
business/investment management activities shall be covered by a separate
supplemental audit report to be submitted to the bank’s board of
directors and to the BSP within the prescribed period containing, among
other things, the complete set of financial statements of the
trust/investment management department of a bank prepare d in accordance
with the provisions of Subsection X425.3 together with the other
information required by the BSP to be submitted under Subsection X166.1:
Provided, That a reconciliation statement of the balance sheet in the
AFS and the Financial Reporting Package for Trust Institutions shall be
prepared for each of the general categories of contractual relationships
(i.e., UITF-trust, institutional-trust, and individual-trust; other
fiduciary; institutional-agency, and individual-agency; and special
purpose trust) of the trust/investment management department of a bank
with its clients following the format in Annex 1*.(2) Subsection X425.3 of the MORB is hereby added as follows:
“Subsection X425.3 Audited Financial Statements (AFS). The
trust/investment management department of a bank shall adopt the
provisions of the Philippine Financial Reporting Standards
(PFRS)/Philippine Accounting Standards (PAS) in all respect, for
purposes of preparing the AFS of its trust and other fiduciary and
investment management activities. The following guidelines shall
likewise be observed in the preparation of the AFS:(a) The provisions of PFRS/PAS shall be adopted effective the annual financial statements beginning 1 January 2008;
(b) A complete set of financial statements shall comprise of the following:
(1) Balance sheet as of the end of the period;
(2) Income statement for the period;
(3) Statement of changes in accountabilities, which shall
show a reconciliation of the net carrying amount at the beginning and
end of the period of the following accounts: (i)principal;
(ii)accumulated income and (iii) net unrealized gains/(losses) on
available for sale financial assets, separately disclosing the changes
in each of the foregoing accounts;(4) Notes, which shall comprise of a summary of significant
accounting policies and other disclosure requirements provided under
PFRS/PAS: Provided, That for purposes of complying with the disclosure
of the nature and extent of risks arising from financial instruments as
required under PFRS 7, disclosure statements may be made based on the
general categories of contractual relationships (i.e., UITF-trust,
institutional-trust, and individual-trust; other fiduciary;
institutional-agency, and individual-agency; and special purpose trust)
of the trust/investment management department of a bank with its
clients; and(5) Balance sheet as at the beginning of the earliest
comparative period when a trust/ investment management department
applies an accounting policy retrospectively or when it makes a
retrospective restatement of items in the financial statements, or when
it reclassifies items in the financial statements.(c) The balance sheet, income statement and statement of changes
in accountabilities shall be presented for each of the general
categories of contractual relationships (i.e., UITF-trust,
institutional-trust, and individual-trust; other fiduciary;
institutional-agency, and individual-agency; and special purpose trust)
of the trust/investment management department of a bank with its
clients;(d) Comparative information for periods before 1 January 2008
need not be presented in the AFS for the financial reporting period
beginning 1 January 2008:Provided, That disclosure statements on the
end-2007 balances of total assets of the general categories of
contractual relationships of the trust/investment management department
of a bank with its clients prepared based on the Generally Accepted
Accounting Principles (GAAP) previously applied, shall be presented in
the notes to financial statements: Provided, further, That
comparative periods shall be presented in the AFS for the financial
reporting period beginning 1 January 2009 and thereafter.(e) The following transitory rules and regulations shall govern
the accounting treatment of specific items for purposes of preparing the
AFS for the financial reporting period beginning 1 January 2008 :(1) The provisions of PFRS/PAS shall only be applied to accounts outstanding as of end-December 2008;
(2) Reclassification of previously recognized financial
instruments shall no longer be allowed except as allowed under existing
regulations;(3) The fair value of Real and Other Properties Acquired (ROPA)
and Investment Properties as of the date of transition to PFRS/PAS may
be used as the deemed cost of said properties as of that date: Provided,
That said ROPA and Investment Properties shall be subsequently
accounted for in accordance with the provisions of the Financial
Reporting Package for Trust Institutions(3) Subsection X425.3 Post-Bond Flotation Report of the MORB is hereby renumbered as X425.4.
SECTION 2. Amendments to the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI).
Section 4421Q and Subsections 4425Q.3 and 4426Q.2 of the MORNBFI shall
likewise be amended in accordance with the foregoing provisions.
SECTION 3. Submission of AFS of Trust Institutions. The
deadline for filing the AFS of trust institutions for the financial
reporting period beginning 1 January 2008 with the BSP as prescribed
under Subsection X426.2 of the MORB is hereby extended up to 30 June
2009, in view of the longer time period needed to prepare the AFS due to
the adoption of the new accounting standards.
This Circular shall take effect fifteen (15) calendar days
following its publication either in the Official Gazette or in a
newspaper of general circulation.
Adopted: 5 May 2009
FOR THE MONETARY BOARD:
(SGD.) ARMANDO L. SURATOS
Officer In-Charge
* Text Available at Office of the National Administrative Register, U. P. Law Complex, Diliman, Quezon City.