Documentos de Académico
Documentos de Profesional
Documentos de Cultura
PROFESSION
(DOMESTIC AND GLOBAL)
SUBMITTED BY:
Clarice I. Guintibano
SUBMITTED TO:
Dr. Armando Baares, CPA
TABLE OF CONTENTS
DOMESTIC SETTING
GOVERNMENT REGULATORY AGENCIES
AND THEIR FUNCTIONS 5-7
LIST OF ARTICLES ABOUT THE TOPIC WHAT AWAITS IN THE
ACCOUNTANCY PROFESSION
NEW ACCOUNTANCY TRACKS FORTHCOMING...7-9
PRC BOA ISSUES NEW RULES REQUIRING
THE SUBMISSION OF CERTIFICATE ON
THE COMPILATION SERVICES FOR THE
PREPARATION OF FINANCIAL STATEMENTS AND
NOTES THERETO9-10
BOA RESOLUTION PASSED REQUIRING CPA FS PREPARERS TO SUBMIT
CERTIFICATE10-12
AUDITING THE AUDITORS.........................................................................12-16
ASEAN INTEGRATION16-18
FILIPINO ACCOUNTANTS GEAR TOWARD ASEAN INTEGRATION..18-24
ADOPTION OF THE PFRS/PAS....24-26
BSP, SEC, IC AND BOA SIMPLIFY ACCEDITATION PROCESS FOR EXTERNAL
AUDITORS26-28
RAISING THE BAR OF CONTROL STANDARDS OF INTERNAL CONTROL AND
AUDIT28-29
CHANGES IN THE CPA BOARD EXAMINATION BY CHED AND BOA..29-33
PICPA AND BOA MEETS THE BIR COMMISSIONER.34-35
ASEAN REGULATORS DISCUSS MRA IMPLEMENTATION35-36
2 | Page
CHANGES
IN
THE
CONTINUING
PROFESSIONAL
DEVELOPMENT OF CPAS...37-39
ALL PARTNERS AND CPA STAFF OF AUDIT FIRMS NEED TO BE
ACCREDITED39-73
GLOBAL SETTING
INTERNATIONAL ACCOUNTANCY BODIES
LIST OF ARTICLES ABOUT THE TOPIC WHAT AWAITS IN THE
ACCOUNTANCY PROFESSION
A GLOBAL PERSPECTIVE ON THE ACCOUNTANCY PROFESSION.74-78
PERSPECTIVES OF THE ACCOUNTANCY PROFESSION OVER THE NEXT
DECADE A SCENARIO ANALYSIS78-87
TRENDS THAT WILL SHAPE THE CPA PROFESSION IN 2016...88-91
WHERE WILL THE ACCOUNTANCY PROFESSION BE IN 25 YEARS?....92-103
CHANGES
IN
ACCOUNTING
POLICIES
AND
IN
ACCOUNTING
RECOGNITION:
EFFECTIVELY
MANAGING
ACCOUNTING
CHANGE.114-116
BUSINESS ACCOUNTING: NEW GLOBAL STANDARDS IMPACT BUSINESS
PLANS, LOCATION DECISIONS.116-122
3 | Page
CONSEQUENCES
AND
THE
POLITICAL
NATURE
OF
REFERENCES132-134
4 | Page
DOMESTIC SETTING
In this section, the following accountancy profession updates (what awaits
in the accountancy profession) will be presented based on the articles,
news and updates from accounting regulatory bodies in the Philippine
setting. This research is in consideration of the following factors: Economic
effects, political, ethic, and social responsibility with respective government
regulatory agencies.
FIRST
LETS
ENUMERATE
THE
GOVERNMENT
REGULATORY
the
securities
industry
in
the
Department of Finance
The Philippines' Department of Finance (DOF)
(Filipino: Kagawaran ng Pananalapi) is the
executive
department
of
the
Philippine
THESE
ARE
THE
LIST
OF
ARTICLES
UPDATES
IN
THE
8 | Page
These changes will also provide more focused options for those desiring to
pursue accountancy education and careers. Unlike the present situation
where there is only one option of taking the BS Accountancy course as the
first step in being an accountant, the academic and licensure track of the
future will present more options to cater to the interest and competence of
the future accountant.
With these changes in place, our future accounting professionals will be
more qualified and prepared to meet the growing demands of the local and
global community.
PRC BOA ISSUES NEW RULES REQUIRING THE SUBMISSION
OF CERTIFICATE ON THE COMPILATION SERVICES FOR THE
PREPARATION
OF
FINANCIAL
STATEMENTS
AND
NOTES
THERETO
The Board of Accountancy (BoA) has signed Resolution No. 03 of 2016
dated 19 January 2016 requiring the submission of a Certificate by the
responsible Certified Public Accountant on the Compilation Services for
the preparation of the financial statements and notes to the financial
statements (the Resolution). This Resolution is effective for financial
statements pertaining to year 2015.
The Resolution reiterates the responsibilities of clients and external
auditors in the preparation of the financial statements and notes to the
financial statements promulgated by the Code of Ethics for Certified Public
Accountants.
9 | Page
2.
3.
4.
The reiteration of the rule that CPAs in public practice are prohibited
from preparing or assisting in the preparation of FS and disclosure note
of their clients which engaged them to render attest services for the
same documents.
5.
The CPAs in public practice who violate this prohibition rule shall be
subject to stern sanctions by the Board of Accountancy.
6.
These CPAs should apply for accreditation not later than February
29, 2016 and comply with the CPDrequirements not later than June 30,
2016 after signing an affidavit of undertaking to that effect.
8.
This Resolution shall take effect after fifteen (15) days following its
publication in the Official Gazetteor in any major daily newspaper of
general circulation in the Philippines.
The
question
is
If
the
Practitioner
or
Employee
is
practitioners]
in
their
respective
countries.
In the United States, for example, the Public Company Accounting
Oversight Board (PCAOB) was established by the US Securities and
Exchange Commission (SEC) to oversee theaudits of public companies in
order to protect investors and the public interest by promoting informative,
accurate and independent audit reports.
The PCAOB required that auditors of US public companies be subjected to
external and independent oversight in the performance of theiraudits of
public companies. Similar regulatory bodies have also been in operation in
other Asean countries, including Singapore, through its Accounting and
Corporate Regulatory Authority, and Malaysias Audit Oversight Board.
In our jurisdiction, our Professional Regulatory Board of Accountancy
(BOA), being the designated government regulatory body that supervises
the accountancy profession, has similarly responded through the adoption
of an external audit Quality Assurance Review (QAR) Program to meet its
duties imposed by the Philippine accountancy law, particularly in the
conduct of oversight into the quality of audit of financial statements (FS).
Accordingly, the Professional Regulation Commission (PRC), upon the
recommendation of the BOA, approved a resolution in 2009, entitled
Adoption of the Rules and Regulations [RR] for the Implementation by the
BOA of the QAR Program. This RR was subsequently revised in 2010.
13 | P a g e
However, it is not at all easy for the BOA to implement the provisions of
such RR. It had to stop the implementation of the QAR Program following
the filing of an injunction suit by the Association of Small Accounting
Professionals in the Philippines. The suit was filed in December 2010 and
its resolution has been very slow, until the assumption into office of the
current BOA Chairman Joel Tan-Torres who has been closely working with
the CPA practitioners to resolve relevant issues and for the eventual
implementation of the QAR Program. Very recently, after conducting a
series of consultative meetings and dialogue with the plaintiff and other
stakeholders, the RR earlier mentioned was further revised and, in
December 2015, the BOA passed a resolution endorsing for approval by
the PRC the adoption of the Revised RR for the Conduct by the BOA of
Oversight into the Quality of Audits of FS and Operations of CPA
Practitioners. I am hopeful that the PRC will approve such endorsement
soon that would help pave the way for the final resolution of the injunction
suit. It is also worthy to note that the BOA has included the implementation
of the QAR Program as part of its Six-Point Strategic Plan for the
accountancy profession.
At any rate, while the BOA has adopted a QAR Program, it has yet to be
implemented.
On the part of the Philippine SEC, it currently performs regular evaluation
of audited FS of companies, mostly those that are listed in the stock
exchange and other companies or entities falling under what it calls as
public interest entities. In addition, as part of its accreditation process of
external auditors, it also reviews the audited FS of the selected clients of
14 | P a g e
the external auditors who are applying for the first time or renewing their
SEC accreditation. Both reviews aim to ascertain the compliance of the
reporting companies with their financial reporting requirements. Needless
to say, appropriate sanctions will be imposed on both the reporting
company and its external auditors if significant or material financial
reporting lapses are found. It is also worth mentioning that the SEC has
been working on the revision of its Rules on Financial Statements
Reporting that include, among others, the implementation of its own QAR
System of External Auditors accredited by the commission.
Thus, while the SEC mainly regulates companies registered with the
commission, it may also review the quality of audit of the external auditors
of these registered companies once such revision to the rules is approved
for implementation, and to which I am also hopeful that it will be approved
soon.
The eventual implementation of the BOA of its QAR Program and the final
approval of the SEC of the revisions to its current rules to incorporate its
own QAR System would be good for the accountancy profession and its
stakeholders.
However,
while
the
implementation
and
approval
for
QAR
19 | P a g e
One of the key elements in the Asean integration blueprint is the freer flow
of skilled labor through mutual recognition agreements, initially on seven
professions, namely medical, dental, nursing, accountancy, engineering
and architectural services and surveying.
Alas expressed confidence that Filipino CPAs would benefit from the
impending Asean integration.
With the integration, CPAs can practice in other Asean-member countries,
but they should meet international standards. That is why we are upgrading
our practice, he said. Filipino CPAs, he added, have the benefit of good
training and communication skills.
We have a big advantage because we speak English, we are a good
communicator and the training is good (as well). After training, some of our
CPAs work abroad, he said.
He also dismissed fears that with the Asean integration, more CPAs will be
encouraged to work in other countries, resulting in a brain drain for the
Philippines.
We are producing 8,000 CPAs a year, and they need an employment here.
So, we will not be experiencing possible shortage of CPAs, he said.
El L. Tan-Torres is the Chairman of the Board of Accountancy of the
Professional Regulatory Commission. He was appointed to this position by
the President of the Philippines on May 2014.
20 | P a g e
The Filipino Certified Public Accountants (CPAs) are ready for the ASEAN
integration, so declared Joel Tan-Torres, Board of Accountancy (BoA)
chairperson.
Speaking during the 70th Philippine Institute of Public Accountants (PICPA)
annual convention in Puerto Princesa City in Palawan in November, TanTorres said the country has over 170,000 registered CPAs since 1923.
We have the numbers and our accounting professionals have been in
place for decades, he said.
He said BoA has been doing everything so that the CPAs are ready to face
the challenges of ASEAN integration.
Explaining BoA efforts to prepare CPAs in the regional integration, TanTorres likened the Board as the executive, legislative and judiciary rolled
into one because it can regulate, it can licensed, it can make the rules, and
it can punish every CPA.
In 2009, the ASEAN Mutual Recognition Arrangement Framework on
Accountancy was signed by representatives of the 10 member states in
Cha-am, Thailand.
Five years later, in 2014,
depend
fundamentally
on
establishing
cultural
understanding that would lead to mutual respect with our fellow ASEAN
Member States, he added.
In the same article, Villacorta urged government agencies and education
sector to considerably promote and support for and spread of information
23 | P a g e
however,
financial
allied
ask for those that are already required by BOA. The BSP, SEC and IC will
also prescribe a common set of minimum requirements, which will only be
supplemented by other conditions that are pertinent for those auditing their
respective regulated entities. Moreover, they will also observe a mutual
recognition policy on auditors that they have individually accredited for
certain pre-agreed types of institutions.
The MOA simplifying the accreditation process for external auditors was
developed under the auspices of the Financial Sector Forum (FSF), which
is a voluntary interagency body created to provide an institutionalized
framework for coordinating the supervision and regulation of the financial
system.
oversight
and
control
culture;
risk
recognition
and
The Commission on
and BOA reported the need to have four tracks in the accountancy
education. These four are the existing BSA leading to the qualification for
the taking of the CPA board examinations; and three new programs that
include the BS Management Accounting, BS in Accounting Information
Systems and BS in Internal Audit. The new accounting academic programs
are expected to be in place by School Year 2018.
A lot of efforts were extended on these major breakthrough events. In all of
these activities, there are again a sizable number of Mister/s and Miss/es
Universe of the accountancy profession doing their share and sharing in
the achievements.
Other structural reforms where discussions have started in 2015 are the
strengthening of the small and medium practices (SMPs); the upward
adjustment of the audit threshold; and amendment of the Accountancy Law
of 2004.
With the local and global developments, the SMPs have to strengthen their
organization and practices for them to remain competitive and meet the
growing demands of the market and the regulators. Thus, SMPs may need
to consider consolidation or merger of practices to cope better in the
business environment. The BOA has been discussing how to help the
SMPs in this regard.
The audit threshold in the Tax Code prescribes that enterprises with sales
exceeding P600,000 in a year are required to have and independent CPA
perform audit work on their business. The BOA has formulated a solution
that will address this impractical and unreasonable audit threshold
30 | P a g e
31 | P a g e
licensure examinations given by the BOA last year. Feedback from the
industry and profession indicates that even this number of new CPAs is
inadequate to meet the large market demand for accountants here and
abroad.
32 | P a g e
Despite the limited resources of the BOA, a lot of milestones have been
achieved. Thanks to the contribution of the many unnamed and selfless
individuals and organizations, the projects and activities under the
Expanding Horizons initiative of the BOA on behalf of the accountancy
profession have been planted and have borne fruits already.
These
34 | P a g e
The Accountancy Workshop was organized ASEAN and Aus Aid. The
facilitators fo the workshop were Patrick Corrigan, Gertt Karreman, and
Mahalah Groves of ACCA.
The Board of Accountancy will soon launch an awareness campaign on the
ASEAN Mutual Recognition Arrangement (MRA) on Accountancy Services.
This would be part of the ASEAN AWARENESS FOR ACCOUNTANTS
series or the 3A series.
The ASEAN MRA was signed last November 2014 by all ASEAN member
states. It will be a matter of time when the MRA will be implemented and
will affect our entire accountancy profession, BoA Chairman Joel TanTorres said.
accountancy regulators and a road map has already been formulated that
will soon result in the enhanced mobility of ASEAN accountants within the
region
the
Competence
areas
to
becategorized into
Technical
36 | P a g e
are able and willing to pay and those small practitioners who endures small
fees from numerous small clients.
Others think that this move of BoA is unknowingly killing the small practices
and the small and medium-sized businesses. With the increased cost
of compliance, SMPs are likely to charge small business with a higher fee,
added to the already complicated and burdensome tax requirements, which
may not be afford by the small clients. SMPs, on the other hand, might loss
existing clients and lose business when these small clients started looking
for cheaper services.
Looking at the bright side of it, quality is upheld and BoA will be able to
regulate the practice of the profession properly resulting in greater public
trust and confidence.
ALL PARTNERS AND CPA STAFF OF AUDIT FIRMS NEED TO BE
ACCREDITED
Section 31 of RA 9298 provides that individual CPAs, firms and
partnerships of CPAs involved in the practice of public accountancy,
including partners and staff members thereof, shal register with the
Commission and Board, such registration to renewed every three years,
xxxx.
Accordingly, to put into place this unimplemented requirement of law, BoA
Resolution 295-2015 was issued.
Pursuant to this Resolution, all partners and the CPA staff of all audit
partnerships and firms will have to file their application to as CPAs in public
38 | P a g e
practice not later than June 30, 2016. Upon completion of the prescribed
documents, they will each be given Certificates of Accreditation with unique
numbers that will be linked to the audit partnership or firm that they are
connected. They are also given until June 30, 2016 to complete their CPD
requirements. For those with lacking CPD units at time of this accreditation,
they will have to accomplish and submit a prescribed affidavit of
undertaking with their application form.
Those who file early before June 30, 2016 will be able to get their
Certificate of Accreditation earlier than the rest who may defer their filing
their applications near the June 30 deadline. Therefore, we encourage our
affected CPAs to file as soon as possible so that they will not be affected by
the last minute rush and hassle. Of course, all the affected CPAs should
also ensure that they are able to complete their CPD units of 60 units within
three years from date of filing of the application, said Chairman Joel TanTorres.
There will be a Question and Answer (Q&A) list that will be issued to
address the implementation issues and questions. The Q & A that will be
issued will clarify such issues as the procedure that those leaving,
resigning or retiring from the audit partnership or firm that they are initially
connected with at time of application will have to notify the PRC/BoA of this
matter within a month of their separation. They also will have to notify the
PRC/BoA of their new status or involvement within a month thereafter.
39 | P a g e
There is no need for a new application but merely a notification will suffice,
said Chairman Tan-Torres.
A new BACC form will be used for the application for this affected CPAs.
ACCOUNTING STANDARDS UPDATESEFFECTIVE DATES
FINAL DOCUMENT
DATE
EFFECTIVE DATES
ISSUED
Accounting Standards Updates
Update
2016-15 August
Effective
Statement
Cash 2016
230):
Classification of Certain
Cash
and
Payments(a
Flows
of
(Topic
Receipts
Cash
consensus
of
the
fiscal
for
years
public
business
beginning
after
Force)
periods
within
fiscal
years
Early
adoption
is
interim
period,
any
2016-14Not- August
958):
of
Financial Statements of
Not-for-Profit
Presentation
Entities
The
amendments
Update
Financial Instruments
are
Credit
Exchange
Losses
(Topic
U.S.
Securities
Commission
and
(SEC)
326): Measurement of
Credit
on
Instruments
Financial
Losses
15,
2019,
including
interim
41 | P a g e
2020,
including
interim
entities
and
plan
accounting,
the
for
fiscal
years
years
beginning
after
2018,
including
interim
Contracts
with
Standards
Update
2014-
Narrow-Scope
Improvements
Practical
and
Expedients
the
amendments
in
this
date
and
transition
2014-09).
Standards
Accounting
Update
2015-
by one year.
The amendments in this Update
Revenue
from
Contracts
with
Standards
Update
2014-
Identifying Performance
Obligations
Licensing
and
the
amendments
in
this
effective
date
and
transition
2014-09).
Standards
Accounting
Update
2015-
2016-09 March
CompensationStock
Compensation
2016
by one year.
For public business entities, the
amendments are effective for
(Topic
718): Improvements to
Employee Share-Based
periods
Payment
Accounting
within
those
annual
2016-08 March
adopt
all
of
the
Revenue
from 2016
Contracts
with
Standards
Update
2014-
Considerations
(Reporting
Gross
Revenue
versus
Net)
for
the
amendments
in
this
date
and
transition
Standards
2015-14,Revenue
Update
from
2016-07 March
InvestmentsEquity
Method
and
Joint
2016
fiscal
years,
beginning
45 | P a g e
Simplifying
the
Method of Accounting
[Download]
that
result
in
the
2016-06 March
Derivatives
Hedging
and 2016
(Topic
815):
fiscal
Options
in
Debt
Instruments (a
consensus
years
beginning
after
the
business
entities,
the
Force)
years
beginning
after
within
fiscal
years
adoption
is
permitted,
2016-05 March
Derivatives
Hedging
Effect
and 2016
(Topic
of
815):
Derivative
fiscal
years
beginning
after
Contract Novations on
Existing
Hedge
Accounting
For
Relationships (a
consensus
of
the
all
other
entities,
the
fiscal
years
beginning
Force)
[Download]
periods
within
fiscal
after
years
adoption
is
permitted,
2016-04 March
2016
period.
Effective
for
entities,
certain
public
business
not-for-profit
47 | P a g e
Extinguishments
Liabilities
of
(Subtopic
benefit
plans
for
financial
405-20): Recognition of
Breakage
for
Certain
Prepaid
Stored-Value
Products (a consensus
Task
Force)
[Download]
years
December
15,
beginning
2019.
after
Earlier
2016-03 March
IntangiblesGoodwill
2016
805),
Consolidation
810),
(Topic
Derivatives
and
Hedging
(Topic
815):
Effective
Date
and
Transition
Guidance(a
consensus
of
the
Private
Company
48 | P a g e
Council)
[Download]
Update
2016-02 February
Effective
2016
for
fiscal
years
Leases:
Amendments
of the following:
to
the FASB
1.
Accounting
2.
Standards
Codification
Section
Conforming
exchange or an over-the-counter
Amendments
market
Related to Leases:
Amendments
the
to
FASB
Accounting
Standards
Codification
3.
For
Section
Basis
Conclusions
other
entities,
the
effective
for
fiscal
years
Background
Information
all
and
for
years
December
beginning
15,
after
2020.
49 | P a g e
Early
application
of
the
2016-01 January
effective
10):
and
of
and
Liabilities
Recognition
Measurement
Financial
Financial
Assets
profit
for
fiscal
entities
and
years
employee
may
amendments
in
adopt
this
the
Update
within
those
fiscal
years.
in
comprehensive
other
income
the
at
fair
value
in
Update
Income
740):
Taxes
Balance
Classification
Deferred
(Topic 2015
Sheet
of
Taxes
issued
for
annual
periods
Update
period.
2015-16 Septembe For public business entities, the
fiscal
the
Accounting
for
years
beginning
after
Measurement-Period
Adjustments
applied
prospectively
adjustments
to
to
provisional
been
all
other
issued.
entities,
the
years
beginning
after
within
fiscal
years
applied
adjustments
prospectively
to
to
provisional
Update
2015-14 August
issuance.
The amendments in this Update
Revenue
from 2015
Contracts
with
Date
2014-09
to
annual
reporting
period.
Earlier
reporting
periods
within
that
reporting
period.
All other entities should apply the
guidance in Update 2014-09 to
annual
reporting
periods
and
interim
reporting
periods
beginning
after
annual
reporting
period
within
that
reporting
2015-13 August
Derivatives
Hedging
and 2015
(Topic
2014-09.
Effective upon
issuance
and
815):
the
Normal
Application
of
Sales
Exception
to
Scope
Certain
normal sales.
55 | P a g e
Electricity
within
Contracts
Nodal
Markets (a
Energy
consensus
Task
Force)
Update
Accounting:
Defined
(Topic
Defined
December
Pension
application
960),
Contribution
Plans
(Topic
Health
and
Benefit
Plans
965):
(Part
I)
962),
An
15,
is
entity
apply
the
Welfare
(Topic
Fully
statements
presented.
An
Investment
Contracts,
amendments
prospectively.
Measurement
Earlier
permitted.
should
Benefit-Responsive
Disclosures,
2015.
(Part
entity
should
apply
the
on
Part
III
III)
Date
Practical
Expedient(consensuses
of the FASB Emerging
Issues
Update
Task
Force)
2015-11 July 2015
For
public
effective
business
for
fiscal
entities,
years
56 | P a g e
Simplifying
Measurement
the
of
Inventory
15,
in
2017.
this
The
Update
on
the
amendments
in
this
2015.
Early
adoption
is
interim
period.
All
other
the
issuance
of
this
57 | P a g e
Update
Financial
Services
Update.
For public
effective
business
entities,
annual
periods
for
Disclosures
about
Short-Duration
Contracts
December
15,
2016.
2017.
Effective
Value
Measurement
820):
for
Investments in Certain
Net Asset
effective
(Topic
Disclosures
Share
Value per
(or
Its
for
public
for
business
fiscal
years
Equivalent) (a
entity
Force)
amendments retrospectively to
should
apply
the
58 | P a g e
all
periods
presented.
The
Earnings
Per
permitted.
Effective
for
fiscal
years
Share
those
application
Partnership Dropdown
amendments
Transactions (a
for
presented.
fiscal
all
is
years.
Earlier
permitted.
in
financial
this
The
Update
statements
Force)
Update
Effective
for
annual
periods,
IntangiblesGoodwill
and
OtherInternal-
350-40):
Customers
59 | P a g e
Accounting
for
Paid
in
Fees
Cloud
will
be
effective
periods
for
annual
beginning
after
Computing
Arrangement
periods
in
annual
periods
public
business
Compensation
Retirement
Benefits
(Topic
Practical
715):
Expedient
for
the
Measurement Date of
an Employers Defined
Plan
Assets
Earlier
application
is
permitted.
For public business entities, the
InterestImputation of
30):
the
Debt
Simplifying
Presentation
of
60 | P a g e
Issuance
Costs
all
other
entities,
the
adoption
of
the
2015-02 February
Consolidation
(Topic 2015
issued.
Effective
for
public
business
810): Amendments to
the
Analysis
Consolidation
15,
2017.
Early
entity
early
amendments
in
adopts
an
the
interim
interim
period.
in
this
Update
by
recording
cumulative-effect adjustment to
equity as of the beginning of the
fiscal
year
of
adoption.
Income
Statement 2015
Extraordinary
Unusual
and
Items
(Subtopic
225-20):
apply
the
amendments
Simplifying
Income
Statement Presentation
by
Eliminating
the
Concept
of
Extraordinary
Items
presented
in
the
financial
provided
that
the
same
for
both
public
and 2014
(Topic
for
public
business
815):
Whether
Hybrid
Determining
Financial
Instrument
in
2015,
Equity (a consensus of
the
FASB
Issues
Issued
Emerging
Task
[Download]
Force)
and
interim
periods
If
an
entity
early
Presentation
of 2014
Financial Statements
annual
Going
Concern
(Subtopic
205-40):
of
Disclosure
periods
Uncertainties about an
2016.
Entitys
permitted.
Ability
to
ending
Early
after
application
is
Continue as a Going
Concern
[Download]
Update No. 2014-14 August
ReceivablesTroubled
2014
Debt Restructurings by
annual
periods,
Creditors
(Subtopic
periods
within
Classification
periods,
310-40):
of Certain GovernmentGuaranteed
Loans
December
and
interim
those
annual
beginning
after
15,
2014.
Mortgage
upon
Foreclosure (a
Force)
[Download]
2015.
Earlier
adoption
under
certain
is
permitted
circumstances.
interim
Compensation
718):
(Topic
Accounting
periods
within
those
for
Share-Based Payments
Performance
Could
after
Service
Target
Be
Achieved
effective
date,
or
the
Requisite
Period (a
performance
targets
that
(2)
are
Force)
presented
in
the
financial
awards
thereafter.
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accounting
(Topic
disclosure
860):
changes
for
and
certain
Repurchase-to-Maturity
Transactions,
Repurchase
period
Financings,
Disclosures
and
(interim
or
annual)
business
entity
is
annual
periods
beginning
all
other
entities,
the
after
December
15,
Revenue
from
annual
Contracts
with
reporting
periods
and
Amendments That
Create
Revenue
from
Contracts
with
Customers
Summary
(Topic
606)
and
or quoted on an exchange or an
Deferred Costs
Contracts
with
Customers
(Subtopic 340-40)
to
Section
the
SEC.
B
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Conforming
Amendments
to
entities),
effective
for
annual
Subtopics in the
Codification
and
Status Tables
Section
Background
Information
Basis
and
for
Conclusions
2016,
periods
period
including
within
that
interim
reporting
reporting
period
Presentation
of
Statements
Financial
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(Topic
and
and
Reporting Discontinued
Property,
205)
Plant,
Operations
and
Disclosures
of
Disposals
of
Components
of
an
Entity
[Download]
Update No. 2013-12 December There is no actual effective date
Definition of a Public 2013
for
the
amendment
in
this
Business
EntityAn
Glossary
Other
Accounting
for
andDerivatives
(Topic
(Topic
815):
350):
Goodwill,
and
Hedging
Accounting
for
Interest
Simplified
Rate
Hedge
Swaps-
Accounting
that
will
use
the
Employee
2011-04
Effective
Presentation
of
Statements
Basis
2013.
Financial
of
Accounting
for
Early
entities
adoption
that
is
permitted.
Effective prospectively for fiscal
Not-for-Profit
Entities
Services
from
an
consensus
(Topic
958):
Received
Personnel
Affiliate (a
of
retrospective
Issues
Task
Force)
approach
under
adoption is permitted.
Effective prospectively for fiscal
Foreign
years
Matters
Currency 2013
(Topic
830):
periods
(and
interim
within
reporting
those
years)
the
Cumulative
Translation Adjustment
upon Derecognition of
Certain Subsidiaries or
Groups
of
Assets
or of an Investment in a
Foreign
Entity (a
interim
Obligations
Resulting
Liability Arrangements
for
fiscal
Which
Amount
the
of
Total
the
periods
years
within
ending
those
after
Obligation Is Fixed at
periods
the
thereafter.
Reporting
Date(a
and
annual
periods
GLOBAL SETTING
In this section, the following accountancy profession updates (what awaits
in the accountancy profession) will be presented based on the articles,
news and updates from accounting regulatory bodies in the GLOBAL
setting. This research is in consideration of the following factors: Economic
effects, political, ethic, and social responsibility with respective government
regulatory agencies.
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Caribbean
Institute of Chartered Accountants of the Caribbean
Network of accountancy and financial services bodies covering the
Bahamas, Barbados, the Eastern Caribbean, Guyana, Jamaica and
Trinidad and Tobago.
Europe
European Accounting Association
Organisation for academics and researchers in the field of accounting
European Financial Reporting Advisory Group (EFRAG)
A private sector body that assists the European Commission with
technical guidance on accounting issues, particularly the
implementation of IFRS
Fdration des Experts Comptables Europens (FEE)
Representative organisation for the accountancy profession in
Europe
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combined total of foreign direct investment (FDI) and net annual official
development assistance (ODA). GFI also reports that fraudulent invoicing
of trade transactions was the largest component of illicit financial flows.
Responsibility rests with accountants to act in an ethical way to prevent
such practices in organizations.
Last but not least, the profession can contribute significantly to the
achievement of the Sustainable Development Goals (SDGs) that aim to
end poverty, protect the planet and ensure prosperity for all. The ability of
countries and corporations to measure progress, monitor impact and report
on achievements in these areas will be critical.
This is where, in my
the
World
Bank
has
been
delivering
targeted
capacity
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of
qualification
frameworks,
strengthening
regional
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Henri Fortin: As a former auditor, you often speak passionately about many
issues relating to the accounting profession and its role. What issues have
been sparking your passion recently?
As a former auditor, woman, and development practitioner, I would say that
I have been thinking quite a bit about gender, its related development
challenges, and how the profession can play a role. More and more across
the world, women are entering the accountancy profession at a higher rate
than men. This offers an opportunity for the profession to play a leadership
role in addressing global gender equality and inclusion.
However, an important area that still needs to be addressed is the gender
pay gap. In countries such as the United Kingdom, where recent research
found that women in accountancy earn 83 percent of the basic salary of
their male colleagues, companies employing more than 250 people will
have to disclose the difference between the salaries of their male and
female employees beginning in 2018. These disclosures will be published
on a public, searchable website. Likewise, the United States government
issued new proposals at the end of January 2016 requiring all companies
with at least 100 employees to disclose salaries disaggregated by gender,
race and ethnicity. I hope that other countries will follow suit to ensure
greater equality in the workplace.
I also consider that the accountancy profession is well placed to support
small and medium-sized practices and SMEs to be more gender inclusive
through greater workplace flexibility and mentoring. By removing the
obstacles that have traditionally restricted women from realizing their full
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address
these
developments
adequately,
the
Institut
der
of the Chinese economy, and growth in small and online businesses here in
the U.S. are changing the business landscape. Here are some of the top
economic trends to be mindful of in 2016, and ways they will affect CPAs.
The bifurcated economy. According to Ted Zoller, Ph.D., a professor of
strategy
and
entrepreneurship
and
director
of
the
Center
for
do more work with small and midsize businesses. Theyll need good
communication and analytical skills, as they will be required to interpret
companies financial data for stakeholders such as vendors, customers,
and financial institutions.
As startup culture grows in influence, CPAs will need to become more
nimble, said Anoop Mehta, CPA, CGMA, vice president and CFO at
Science Systems and Applications Inc. and a member of the AICPA
Business & Industry Executive Committee. After all, startups are
characterized by change: Most startup founders aim to scale their
companies up, sell them off, and move on to the next opportunity. CPAs will
also need to wear more hats, Mehta said, since, for small businesses, the
CPA is the proxy CFO.
Mehta also believes that CPAs and other professionals will need to have
more niche knowledge as the economy bifurcates. You will see a lot more
specialization as domain-specific expertise becomes a significant factor in
the growing startup culture of corporate America, he said.
Growth of the informal sector. CPAs will also have a greater role to play
in the informal sector, which encompasses forms of work that do not fall
under tight regulatory control, such as freelance work such as writing and
graphic design, gig-based jobs such as Uber driver or Airbnb owner, or
day labor. This sector will likely expand as it is driven by Millennials, who
now make up one-third of the population. The informal sector, which is now
more about entrepreneurship than survival, typically falls through the
cracks of the tax regulatory environment. However, that is about to change
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and the country could soon see a tightening of the tax regime, Shah said,
meaning CPAs may be needed to perform more tax work for people
working in this sectorand the companies that employ them.
Rapid change. Todays businesses are operating in a fast-changing and
globally integrated environment, and one where risks are as much about
missed opportunities as about unforeseen events.
To increase their relevance in this climate, CPAs must act as strategic
thinkers for businesses, Mehta said. Instead of looking at the past to
understand the present, CPAs will need to act as fortunetellers whose
role is to anticipate, he said.
Companies are also going to place more emphasis on efficiency. Theyre
increasingly going to be asking such questions as Are we utilizing labor
most efficiently?and they are going to be looking to CPAs for the
answer.
One way CPAs can be more strategic is by engaging with Big Data. The
explosion of data means there is a lot of information available that can be
translated into valuable business insightsand who better to do so than a
numerically literate professional such as a CPA?
According to Zoller, the tools of forensic accounting will allow CPAs to mine
data to examine how enterprises interact with one another and how
consumers make purchasing decisions. Such insights can help CPAs
become valuable strategic advisers in an era of rapid change.
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The new IAASB exposure draft is likely to focus on providing insights into
key audit matters, that is those that in the auditors professional judgment
were of most significance in the audit of the financial statements. Thus we
could expect this to include:
Areas identified as significant risks or higher risks of material misstatement
or involving significant auditor judgment;
Areas in which the auditor encountered significant difficulty in performing
the audit, including obtaining sufficient appropriate audit evidence;
Circumstances requiring significant amendment to the planned approach,
including as a result of a significant deficiency in internal control.
The description of each key audit matter is expected to include an
explanation of why this is considered to be key and, to the extent
necessary, its effect on the audit and, where applicable, a cross reference
to the financial statements. Other significant proposals relate to conclusions
on going concern both on the appropriateness of managements use of
the going concern basis of accounting, and on material uncertainties.
Will these changes last 25 years?
All of this amounts to a small revolution in auditing. But will it be enough?
Will such a model of auditing last largely unchanged for 25 years?
My answer is probably not. Having discovered a more visible role for audit,
the demand for still more insight may well grow and this will require deeper
knowledge and more specialist skills of the auditors.
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Corporate Reporting
Whether or not we find these ideas appealing, corporate reporting is
changing. The European Commission, for example, has recently introduced
draft legislation on the transparency of social and environmental
information. Larger companies will be obliged to disclose information on
their policies, risks and results as regards environmental matters, social
and employee related aspects, respect for human rights, anti-corruption
and bribery issues and diversity on boards.
Meanwhile, the International Integrated Reporting Council has recently
published a consultation on its draft framework for integrated reporting.
This is intended to create the foundation for a new reporting model which
will enable businesses to provide concise communication of how they
create value over time.
The objectives of Integrated Reporting are to:
achieve a more cohesive and efficient approach to reporting;
inform capital allocation decisions;
enhance accountability and steward-ship;
Support integrated thinking and long, medium and short term business
strategy, environmental, social and governance matters and financial
performance.
Obviously Integrated Reporting is not going to be adopted overnight but
there is no doubting the momentum behind the initiative which is already
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being piloted in several large companies and has been promoted around
the world in a very effective fashion.
What will be the role of chartered accountants?
From the point of view of our profession, accountants in business and
public practice can expect to play a role in making such information
available, significant, measurable, comparable and reliable. Independent
assurance will certainly be needed over at least some of this.
It is obvious that initiatives such as these will also call for a wider range of
skills than the traditional accountancy qualification provides and therefore
will need to draw on a range of specialists for the integrated reporting to be
provided by companies. Again, auditors and accountants in business can
hope to coordinate and lead these sort of initiatives, providing we have an
open minded, forward looking frame of mind and take the appropriate
initiatives in good time to equip us to avail of these new opportunities and
responsibilities.
Specialisms
If accountants need to work with other specialists, even depend on them, to
fulfil their role in the future, what questions might this raise for the
profession? What might it mean to be a chartered accountant?
Clearly, the notion that some years training as a general auditor and
passing professional exams provides a viable qualification of enduring
relevance for life no longer applies. The examinations develop and change
and so does the training, although this can sometimes be quite narrowly
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corporations will need to manage tax not just from an efficiency and
compliance point of view but also from a reputational point of view. This is
likely to involve members of the accountancy profession who are in
business as well as those in practice. Given Irelands longstanding policy of
low corporate taxes, this probably will have particular significance for Irish
practitioners.
These trends also point up the importance of tax practitioners who are
chartered accountants emphasising publicly their role in helping clients to
manage their tax affairs competently in compliance with the requirements
of tax legislation and also reputationally. This will probably be seen as part
of the public interest and social responsibility of members of our profession.
Deregulation of SMEs
Most members of our profession in business and practice mainly work with
enterprises which are not directly classified as public interest entities. While
some of the trends mentioned above are of course relevant to how smaller
business should be conducted, in fact there are separate and difficult
challenges arising from the outlook of legislators towards SMEs particularly.
In Europe there is an unrelenting drive as a political headline at least to
deregulate and cut red tape which would otherwise apply to SMEs. This
may seem counter intuitive to those of us who are aware of the volume of
new legislation regularly produced by Brussels, but in fact every
Commissioner has a score card to demonstrate the extent to which they
have eased regulatory burdens for SMEs. So with any given EU legislative
initiative there is always a desire to demonstrate that while tighter
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techniques.
That
threshold,
inserted
in
the
draft
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The Board received an update from the July 2016 meeting of the IFRS
Interpretations Committee (the Interpretations Committee). Details of this
meeting were published in the IFRIC Update, available here.
Board
agreed
with
the
Interpretation
Committees
technical
conclusions, but expressed concern that the draft Interpretation would have
strayed into the application of the equity method in IAS 28, in addition to
specifying that long-term interests were within the scope of IFRS 9.
Accordingly, 10 of 12 Board members objected to the release of the draft
Interpretation. The Board instructed the staff to explore whether there is a
more effective way of clarifying which Standards apply to long-term
interests.
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Next steps
The Board will discuss long-term interests at a future meeting.
22
September
2016,
the
Board
discussed
the Conceptual
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Board members agreed with this decision and two Board members
disagreed.
3. the proposed concepts underlying the notions of direct and indirect
control, but not to use those specific terms in the Conceptual
Framework. All 12 Board members agreed with this decision.
4. the proposed concepts related to the usefulness of information
provided in consolidated and unconsolidated financial statements, but
to improve the description of those concepts in the Conceptual
Framework. Eleven Board members agreed with this decision and
one Board member disagreed.
The Board also tentatively decided not to include in the Conceptual
Framework the statement in paragraph 3.25 of the Exposure Draft that an
entity that presents unconsolidated financial statements discloses how a
user may obtain the entitys consolidated statements. Ten Board members
agreed with this decision and two Board members disagreed.
Further, the Board tentatively decided to confirm, consistent with the
Exposure Draft,
1. the proposed going concern assumption; and
2. the proposed statement that financial statements are prepared from
the perspective of the entity as a whole.
All 12 Board members agreed with these decisions.
Agenda Paper 10CPresentation and disclosure
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decision, one Board member disagreed and one Board member was
absent.
Agenda Paper 10DAsymmetry in treating gains and losses
The
Board
tentatively
decided
that
the
main
body
of
the
Next steps
At the October 2016 Board meeting, the Board will discuss:
1. executory contracts;
2. derecognition;
3. liabilities;
4. asymmetry in treating gains and losses;
5. unit of account; and
6. materiality.
The Board will also discuss drafting suggestions for the acknowledgement
of an asymmetric treatment of gains (or assets) and losses (or liabilities).
Further, the Board will discuss the Updating References to the Conceptual
Framework Exposure Draft.
Financial Instruments with Characteristics of Equity (Agenda Paper 5)
The Board met on 20 September 2016 to discuss the Financial Instruments
with Characteristics of Equity research project.
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specific types of derivatives with foreign currency exposure, and only under
certain circumstances.
Nine out of 12 Board members agreed with this decision.
The Board tentatively decided that income and expenses arising from
financial instruments that meet the separate presentation requirements,
including derivatives on own equity, should be presented under other
comprehensive income.
Nine out of 12 Board members agreed with this decision.
The Board tentatively decided that the Discussion Paper should include its
decisions to date regarding the classification and presentation of
derivatives on own equity under the Gamma approach.
All 12 Board members agreed with this decision.
Agenda Paper 5CDisclosure
The Board discussed the inclusion of disclosures about financial
instruments with characteristics of equity in the notes to the financial
statements. It tentatively decided to include a discussion of the following
potential disclosures in the forthcoming Discussion Paper:
a. the priority of claims on liquidation;
b. the potential dilution of ordinary shares; and
c. additional supporting information about the presentation and
classification requirements of the Gamma approach.
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consideration
under
the
new
standards.
diagram).
Youll
need
to
consider
program
management,
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BUSINESS
ACCOUNTING:
NEW
GLOBAL
STANDARDS
rules
represented
by
International
Financial
Reporting
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operations. He also points out that the IFRS will also continue to change
over time and companies must remain on top of the issues.
"Don't try to fight the changes; that's short-sighted," says Jason Hancock,
president of Sowilo Consulting in Arlington, Virginia. "American companies
will be more competitive in the long run. Of course, there will be growing
pains. Adopting the international accounting standards will require time and
a massive effort for many U.S. firms." He believes U.S. companies will
essentially have to keep two sets of books, then start phasing out GAAPbased systems, and make plans now so they have more time to make the
transition to IFRS. "Companies need to plan ahead and not try to run a
marathon at a sprint pace," he says.
Jean Houston Shore, a management consultant with the Business
Resource Group in Roswell, Georgia, sees larger issues: "Companies need
to avoid the trap of thinking that the change to global accounting standards
is only an accounting issue. Nothing could be farther from the truth. It is a
business issue with far-reaching impact on how you will run and manage
your business." According to Shore, the conversion to a single set of
accounting standards will reduce the regulatory and legal burden of setting
up facilities in many foreign countries. Location decisions will be made on
the economics of the location and not the accounting differences and
reporting difficulties. Likewise, changes in how inventories, plant and
equipment, and property are valued will impact where locations are located.
Finally, leases of lands plus buildings can be treated as separate elements
under IFRS, which allows for more flexibility in financing options.
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Commission (SEC) and the current Chairmen of the FASB (Robert Herz)
and the IASB (David Tweedie) have been publicly remarking that the
accounting standard setting process should and must be insulated from the
lobbying of special interest groups and the meddling of government
institutions.
Their concern is understandable, because it has become known that
various accounting enacted standards (i.e., fair value rules, changing lease
rules) have economic consequences that produce adverse effects for
certain identifiable corporate interests, and these parties dont like it.
These affected parties only have three opportunities to lobby their
positions. They can lobby the FASB (or IASB) during the due process
stage before accounting standards are adopted, hoping to get the rule they
want. After implementation of a new rule, they can lobby their auditors for
favorable treatment when they consider how to account for transactions. If
these two fail to produce favorable results, the affected corporations have
one final alternative.
systematically. They are rigged to read at least three mph faster than a car
is actually traveling. If American drivers intend to drive faster than the
speed limit, and most do, then the federal government can bring about
increased compliance if speedometers are rigged to overstate a cars
current speed.
Its not just speedometers.
about a lot of things! What follows are the basics of accounting theory as
understood by the typical accounting professor.
There is no such thing as universal accounting truth. Accounting standards
do not equally benefit all affected parties. Accounting standards all have
economic consequences.
To these three I add a caveat:
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sense. The best that a proposed accounting rule can hope for is that it
seems better than the alternatives, and this desirability will be durable.
Here are some accounting standard setting alternatives that at one time
have been the law of the land.
Research and development expenditures were once capitalizable, but now
must be expensed as incurred.
Lease obligations can be treated as operating leases or capital leases (or
both at the same time as per IFRS). A current proposal calls for all to be
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investors have clamored for more disclosure than the executives running
corporations have wanted to supply. This tension is natural. Metaphorically
speaking, investors want an open window into the corporation, corporate
executives want a closed door. It is up to standard setters to draw the line
in such a place so as to serve as an effective compromise between them.
Capital market regulators in the U.S. learned this one the hard way.
Traveling back in time to when the AICPA was in charge of accounting
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As the SEC
It just doesnt
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standards. The current fair value issue is a good and current example of
this.
Can participants think they are working toward the best accounting
standard? Sure. They always say so, whether or not they actually mean it.
If they mean it, they dont realize that they are only advocating their selfinterest.
If it is agreed that accounting standards have economic consequences, I
believe the next point follows very directly. It is obvious, as we say in
academe.
It is the responsibility of a countrys government to adjudicate between
competing economic interests in the selection of accounting standards.
This is what government does. For example, governments are good at
levying and collecting taxes, which has been going on since the beginning
of human history. And what is tax but one group being forced to transfer its
money to another group.
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We have not always realized the political nature of standard setting in the
U.S. However, since the formation of the FASB every potential accounting
standard has had to go through a political process:
discussion
memorandum, then exposure draft. And the SEC always has the ability to
override (which it has upon occasion).
Not only does the federal government have the authority to determine
accounting standards (the Securities and Exchange Act of 1934 affirms it),
but it has the responsibility to do so. This is because accounting standard
setting is an integral part of the economic regulatory system of the U.S.
And maintaining a stable and sound economy is a basic underpinning of
national security.
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REFERENCES
WEBLIOGRAPHY
http://www.pwc.com/ph/en/accounting-buzz/news/accounting-buzz-012016.html
http://philcpa.org/2016/08/new-accountancy-tracks-forthcoming/
http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1218220137102
http://villacortaaccounting.com/index.php/2016/01/07/filipino-cpas-areprepared-for-asean-integration-boa-chair/
http://philcpa.org/2016/01/miss-and-mister-universe-of-the-accountancyprofession-part-2/
http://www.bsp.gov.ph/publications/media.asp?id=2134
http://www.bsp.gov.ph/publications/media.asp?id=3670
http://economia.icaew.com/opinion/october-2014/top-three-challengesfacing-accountants-today
http://philcpa.org/2016/01/miss-and-mister-universe-of-the-accountancyprofession-part-2/
http://boa.com.ph/asean-mutual-recognition-arrangement/
http://philcpa.org/2016/08/new-accountancy-tracks-forthcoming/
http://philcpa.org/2016/01/forthcoming-changes-in-the-continuingprofessional-development-of-cpas/
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http://philcpa.org/2016/02/all-partners-and-cpa-staff-of-audit-firms-need-tobe-accredited/
http://www.worldbank.org/en/news/opinion/2016/04/26/a-globalperspective-on-the-accountancy-profession
http://www.caquery.com/accountancy-profession/
http://www.journalofaccountancy.com/newsletters/2016/jan/2016-trendsaccounting-profession.html
http://www.gaaaccounting.com/where-will-the-accountancy-profession-bein-25-years/
https://s3.amazonaws.com/ifrswebcontent/2016/IASB/September/IASBSeptember-Update.html#1
http://www.pwc.com/us/en/audit-assurance-services/accountingadvisory/revenue-recognition.html
ARTICLES
NEW ACCOUNTANCY TRACKS FORTHCOMING
by BOA Secretariat on Aug 24th, 2016
BOA RESOLUTION PASSED REQUIRING CPA FS PREPARERS TO
SUBMIT CERTIFICATE
by Orlando Calundan on Jan 21st, 2016
AUDITING THE AUDITORS
By BOA Secretariat on Feb 25th, 2016
A GLOBAL PERSPECTIVE ON THE ACCOUNTANCY PROFESSION
APRIL 26, 2016
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BUSINESS
ACCOUNTING:
NEW
GLOBAL
STANDARDS
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