The Accountancy Profession

Chapter 1
What is Accounting?

• Definition of Accounting
– service activity
– art (recording, classifying, summarizing)
– process (identifying, measuring,
communicating)
Objective

The overall objective of accounting is to

provide quantitative financial
information about a business that is
useful to statement users particulary
owners and creditors in making
economic decisions.
Accountancy Profession

• RA No. 9298 (Philippine Accountancy Act

of 2004)
• Professional Regulation Commission
• Board of Accountancy
• BS in Accountancy
• Board Examination
Limitation of the Practice of Public
Accountancy
• Single practitioners and partnerships
– registered CPA
– accredited by BOA (valid for 3 years)
• three years of meaningful experience
• The SEC shall not register any corporation
organized for the practice of public
accountancy
Accreditation to Practice Public
Accountancy
• Public Accounting
– Auditing, Taxation, MAS
• Private Accounting
– Accounting staff, Chief Accountant, Internal
Auditor, Controller
– Assist management in planning and
controlling operations
• Government Accounting
– Custody and administration of public funds
Continuing Professional Development
(CPD)
• Republic Act No. 10912
• Inculcation and acquisition of advanced
knowledge, skill, proficiency, and ethical
and moral values for assimilation into
professional practice and lifelong learning
• Raises and enhances the techincal skill
and competence of the CPA
• 120 CPD units
Exemptions from CPD

• Permanent exemption upon reaching the

age of 65 years
• Exemption applied only to the renewal of
license and not for the purpose of
accreditation to practice public
accountancy profession
Comparison

• Accounting vs Auditing
• Accounting vs Bookkeeping
• Financial Acc. vs Managerial Acc.
• Accounting vs Accountancy
Generally Accepted Accounting
Principles
• Rules, procedures, practices and
standards followed in the preparation and
presentation of FS
• Developed on the basis of experience,
reason, custom, usage and practical
necessity
• Political process, incorporates actions of
various interested user groups,
professional judgment, logic and research
Purpose of Accounting Standards

• identify proper accounting practices for the

preparation and presentation of FS
• create a common understanding between
preparers and users of FS
• ensrue comparability and uniformity
Financial Reporting Standards
Council (FRSC)
• formerly known as Accounting Standards Counci
(ASC)
• accounting standard setting body created by
PRC upon recommendation of BOA
• establish and improve accounting standards that
will be generally accepted in the Phils.
• promulgates standards considered to be the
“Highest Hierarchy” of GAAP in the Phils.
Composition of FRSC

• 15 members including the Chairman

• Representatives from
– BOA, SEC, BSP, BIR, COA, FINEX (1)
– Accredited Professional Organization of
CPAs: Public Practice, Commerce and
Industry, Academe, Goverment (2)
• term of 3 years
Philippine Interpretations Committee
(PIC)
• formed by FRSC in August 2006
• prepare interpretations of PFRS for
approval by the FRSC
• provide timely guidance on financial
reporting issues not specifically addressed
in current PFRS
• give “authoritative guidance”
• IFRIC (UK)
International Accounting Standards
Committee (IASC)
• independent private sector body
• achieve uniformity in the accounting principles
which are to be used by business and
organizations for financial reporting around the
world
• formed in June 1973 (Australia, Canada,
France, Germany, Japan, Mexico, the
Netherlands, the United Kingdom and Ireland,
and the USA
• headquartered in London, UK
Objectives of IASC
• formulate and publish in the public interest
accounting standards to be observed in the
presentation of financial statements and to
promote their worldwide acceptance and
observance
• work generally for the improvement and
harmonization of regulations, accounting
standards and procedures relating to the
presentation of FS
International Accounting Standards
Board (IASB)
• replaces IASC
• published standards in the series of
pronouncements called International
Financial Reporting Standards (IFRS)
• standard setting process includes
research, discussion paper, exposure draft
and accounting standard
Move toward IFRS

• FRSC has adopted in their entirety all IAS

and IFRS
• Move toward IFRS is essential to achieve
the goal of one uniform and globally
accepted financial reporting standards
• Philippines is fully compliant with IFRS
effective January 2005
Factors considered in moving to
IAS
• support of international accounting
standards by Phil Org like SEC, BOA and
PICPA
• increasing internalization of business
• improvement of IAS or removal of free
choices of accounting treatments
• increasing recognition of IAS by World
Bank, Asian Development Bank and World
Trade Organization
Philippines Financial Reporting
Standards (PFRS)
• FRSC issues standards called PFRS
• includes
– PFRS
– Philippine Accounting Standards
– Philippine Interpretations