Accounting Practices and International Accounting Standard (IAS)/Philippine Accounting Standard (PAS) 41 Compliance of Cattle Farms: Evidence from the Philippines

IAS/PAS 41, a set of accounting standards which regulates the accounting treatment of agricultural activities, provides the accounting benchmark relative to agricultural activity and includes the transformation of biological assets to agricultural produce. In the Philippines, it was implemented in 2005, but many companies were not yet compliant then with the required accounting treatment. Given that there is a dearth of studies about IAS/PAS 41 compliance, this study was conducted to assess the accounting practices of cattle farms based on the provisions of IAS/PAS 41, including their IAS/PAS 41 compliance relative to past international studies, determine the factors that influence adoption of such accounting practices and capture cattle farmer perceptions on IAS/PAS 41. A descriptive research design was employed involving the conduct of a survey of 81 cattle farms, frequency analysis and an evaluation of compliance vis-à-vis an IAS 41 checklist. Study findings show diversity in the accounting practices of cattle farms depending on the size of operation, business organization and nature of business. Backyard farmers did not maintain records and, therefore, were not IAS/PAS 41 compliant but used the fair market value approach utilized by commercial farms in the valuation of cattle inventories.