SMEs Exempt from the Mandatory Adoption of the Philippine Financial Reporting Standards for Small and Medium Entities

October 11, 2010 SEC NOTICE The Commission En Banc , in its meeting on 07 October 2010, resolved to exempt from the mandatory adoption of the Philippine Financial Reporting Standards for Small and Medium Entities ("PFRS for SMEs") small or medium entities (SMEs) that meet any of the following criteria: (1) It is a subsidiary of a parent company reporting under full Philippine Financial Reporting Standards ("full PFRS"); (2) It is a subsidiary of a foreign parent company that will be moving towards International Financial Reporting Standards ("IFRS") pursuant to the foreign country's published convergence plan; (3) It is a subsidiary of a foreign parent company that has been applying the standards for a non-publicly accountable entity for local reporting purposes, and is considering moving to full PFRS instead of the PFRS for SMEs in order to align its policies with the expected move to full IFRS by its foreign parent company pursuant to its country's published convergence plan; (4) It has short-term projections that show that it will breach the quantitative thresholds set in the criteria for an SME, and the breach is expected to be significant and continuing due to its long-term effect on the company's asset or liability size; (5) It is part of a group, either as a significant joint venture or an associate, that is reporting under full PFRS; (6) It is a branch office of a foreign company reporting under full IFRS; ECSaAc (7) It has concrete plans to conduct an initial public offering within the next two (2) years; (8) It has a subsidiary that is mandated to report under full PFRS; (9) It has been preparing financial statements using full PFRS and has decided to liquidate its assets. An SME that wants to avail any of the foregoing grounds for exemption shall provide a discussion in its notes to financial statements of the facts supporting its adoption of full PFRS instead of PFRS for SMEs. October 11, 2010, Mandaluyong City, Philippines. For the Commission: (SGD.) FE B. BARIN Chairperson