MODULE 1.A accounting teachers.

They are also

responsible for the preparation and grading
THE ACCOUNTANCY of the CPA Board Examinations.

PROFESSION
LIMITATION OF THE PRACTICE OF
ACCOUNTANCY IN THE PHILIPPINES
The Accounting Standards Council
defines Accounting as a service activity
Single practitioners or partnerships for the
whose function is to provide quantitative
practice of public accountancy shall be
information, primarily financial in nature,
registered certified public accountants in the
about economic entities, that is useful in
Philippines..
making economic decisions.

A certificate of accreditation shall be issued

THE PRACTICE OF ACCOUNTANCY IN
to certified public accountants in public
THE PHILIPPINES
practice only upon showing in accordance
with the rules and regulations promulgated
Republic Act No. 9298 or The Philippine
by the Board of Accountancy and approved
Accountancy Act of 2004 is the law
by the Professional Regulation Commission
regulating the practice of Accountancy in the
that such registrant has acquired a minimum
Philippines.
of three years of meaningful experience in
any of the areas of public practice including
In the Philippines, to qualify to practice the
taxation.
Accountancy profession, a person must
finish a degree in Bachelor of Science in
The Securities and Exchange Commission
Accountancy and pass a difficult
shall not register any corporation
governmental licensure examination given
organized for the practice of public
by the Board of Accountancy.
accountancy.

The Board of Accountancy is the body

ACCREDITATION TO PRACTICE PUBLIC
authorized by law to promulgate rules and
ACCOUNTANCY
regulations affecting the practice of
Accountancy in the Philippines. They are
Certified public accountants, firms, and
primarily responsible for the accreditation of
partnerships of certified public accountants,
public practitioners, compilers, and
including partners and staff members
thereof, are required to register with the
Board of Accountancy and Professional
Regulation Commission for the practice of
public accountancy.
The Professional Regulation Commission
upon favorable recommendation of the
Board of Accountancy shall issue the
certificate of Registration to practice public
accountancy which shall be valid for three
years and renewable every three years upon
payment of required fees.
Certified Public Accountants generally
practice their profession in four main areas,
namely public accounting, private
accounting, academe, and government
accounting
Public Accounting
The field of public accounting or public
accountancy is composed of individual
practitioners, small accounting firms, and
large multinational organizations, that render
independent and expert financial services to
the public.
Public accountants usually offer the following
services: auditing, taxation, and advisory
services.
Most large multinational accounting firms
have a separate division for each of these
services
Auditing has traditionally been the primary
service offered by most public accounting
practitioners. It is the examination of the
financial statements by independent certified
public accountant for the purpose of
expressing an opinion as to the fairness with
which the financial statements are prepared.
External auditing is an attestation service
provided by independent CPAs.
Banks and lending institutions frequently
require an audit by an independent CPA as a
requirement for granting a loan to a borrower.
Taxation service include the preparation of
annual income tax returns and determination
of tax consequences of certain proposed
business endeavors. The CPA usually
represents the client in tax investigation and
would require the practitioner to be
knowledgeable with the tax laws and
regulations imposed by the regulating
agencies.
Advisory services refer to services to
clients on matters of accounting, finance,
business policies, organization procedures,
product costs, distribution and many other
phases of business conduct and operations.
Advisory services also contemplate advices
on complex transactions like mergers and Government accounting encompasses the
acquisitions. process of analyzing, classifying,
summarizing and communicating all
Private Accounting transactions involving the receipt and
disposition of government funds and
Many accountants are employed in business property, and interpreting the results thereof.
entities in various capacity such as
accounting staff, chief accountant, internal Many accountants in the government are
auditor, and controller. employed in many branches and agencies of
the government, more particularly the
The major objective of the private accountant Bureau of Internal Revenue, Commission on
is to assist management in planning and Audit, Department of Budget and
controlling the entity’s operation. Their Management, Securities and Exchange
functions include: maintaining the records, Commission, and even in a police agency
preparing the financial reports, preparing the like the National Bureau of Investigation.
budgets, and controlling and allocating the
resources of the entity. CONTINUING PROFESSIONAL
DEVELOPMENT (CPD)
The private accountant also has the
responsibility for the determination of the Under Resolution 59 of the Board of
various tax exposures that the entity faces. Accountancy, the term Continuing
Professional Development is used in lieu of
Academe Continuing Professional Education.

Accountants who are in the academe are All certified public accountants shall abide by
employed in a Higher Education Institution the requirements, rules and regulations on
(HEI) offering Accountancy and Business continuing professional development to be
courses. They may also be involved in promulgated by the Board of Accountancy,
institutions providing review sessions for subject to the approval of the Professional
CPA licensure examinations. Regulation Commission in coordination with
the accredited national professional
Government accounting organization of certified public accountants
or any duly accredited educational
institutions.
 the accreditation of CPA to practice the
Continuing professional development refers accountancy profession.
to the inculcation, assimilation and
acquisition of knowledge, skill, proficiency, Exemptions from CPD
and ethical and moral values after the initial
registration of the CPA. A CPA shall be permanently exempted
from CPD requirements upon reaching the
CPD credit units age of 65 years.

The CPD credit units refer to the CPD credit
hours required for the renewal of CPA
license and accreditation of a CPA to
practice the accountancy profession every
three years.
The total CPD credit units shall be 120 credit
units for three years.
However, this exemption applied only to the
renewal of CPA license and not for the
purpose of accreditation to practice the
accountancy profession.
A CPA shall be temporarily exempted from
compliance with the CPD requirements
under the following circumstances:

Under the new BOA resolution, the required  The CPA is working or practicing the
120 units may be earned in any of the three profession or furthering studies
years preceding the year of application for abroad
accreditation.  The exemption is for the duration of
the stay abroad
Excess credit units earned shall not be  The CPA has been out of the country
carried over to the next three-year period, for at least two years immediately
except credit units earned for masteral and prior to the date of renewal of license
doctoral degrees. and accreditation.

It is to be emphasized that the Continuing FINANCIAL ACCOUNTING VS.

Professional Development has become MANAGERIAL ACCOUNTING
mandatory for Certified Public Accountants.
Financial Accounting is primarily
The Continuing Professional Development is concerned with the recording of business
required for the renewal of CPA license and transactions and the eventual preparation of
the financial statements. It focuses on
general purpose reports known as financial
statements intended for internal and external
users. Financial accounting is the area o
accounting that emphasizes reporting to
creditors and investors.
Managerial Accounting is the accumulation
and preparation of financial reports for
internal users only. It is the area of
accounting that emphasizes on the
development of accounting information for
use within an entity.
Financial accounting is bound by GAAP
while managerial accounting is not.
GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (GAAP)
GAAP represent the rules, procedures,
practice and standards followed in the
preparation and presentation of financial
statements.
The process of establishing GAAP is a social
process which incorporates political actions
of various interest user groups as well as
professional judgment, logic, and research.
Purpose of Accounting standards
The overall purpose of accounting standards
is to identify proper accounting practices for
the preparation and presentation of financial
statements.
Accounting standards create a common
understanding between preparers and
users of financial statements particularly the
measurement of the elements of the financial
statements.
FINANCIAL REPORTING STANDARDS
COUNCIL
In the Philippines, the development of
generally accepted accounting principles lies
with the FRSC which was created by the
Board of Accountancy to assist it in carrying
out its function and powers under R.A. No.
9298.
The accounting standards promulgated by
the FRSC constitute the “highest hierarchy”
of generally accepted accounting principles
in the Philippines.
The approved statements of he FRSC are
know as Philippine Accounting Standards or
PAS and Philippine Financial Reporting
Standards or PFRS.
The FRSC shall be comprised of 15
members including a Chairman.
PHILIPPINE INTERPRETATIONS
COMMITTEE
The role of the PIC is to prepare
interpretations of PFRS for approval by the
FRSC and in the context of the Conceptual
Framework, to provide timely guidance on
financial reporting issues not specifically
addressed in current PFRS.

Interpretations are intended to give

authoritative guidance on issues that are
likely to receive divergent or unacceptable
treatment because the standards do not
provide specific and clearcut rules and
guidelines.

THE INTERNATIONAL SCENE

The counterpart of the FRSC in the

international scene is the IASB or the
International Accounting Standards Board
that promulgates the IFRS and IAS on which
the PFRS and PAS are based.