The existence of major differences in financial accounting practices among countries hinders cross-country equity analysis and valuation. It is widely believed that worldwide acceptance of International Accounting Standards (IAS) would make financial statements more useful for analysts, investors, and creditors (Goldman Sachs Research Report).

The local accounting standard-setters deemed it necessary to support the harmonization of accounting standards. In 1996, the Accounting Standards Council (ASC) started to issue standards based on the IAS. In 1997, the ASC, ably supported by PICPA, Board of Accountancy and SEC, decided to move totally to international accounting standards as a result of the increasing internationalization of businesses and the increasing recognition of IAS by World Bank, Asian Development Bank, World Trade Organization, and the International Organization of Securities Commissions.

In March 2001, the ASC decided to reformat the accounting standards based on IAS pursuant to its International Accounting Standards Project. It aims to further promote the adoption of IAS, help foster a common international accounting language, and ensure that Philippine accounting standards reflect changes to IAS on a current basis.

Status of the Adoption of IAS (23kb)