DAMOLO, KATHLENE C.

BSA12KA2


CHAPTER 1: THE Logical reasoning in the form of a set of
broad principles.
ACCOUNTANCY  Organized set of concepts and related
principles that guide the accountant’s
PROFESSION actions in IMC accounting information.
 Comprises the Conceptual Framework
and the Phil. Financial Reporting
DO YOU WANT TO BE AN
Standards (PFRS)
ACCOUNTANT?
ACCOUNTANCY
It requires:
 Refers to the profession or practice of
1. Creative Thinking
accounting
 Involves the use of imagination and  Broad Classification:
insights to solve problems. 1. Public Practice – does not
involve an employer
 Important in identifying alternative 2. Private Practice –
solutions accountant is an employee

2. Critical Thinking The Accountancy Profession

 involves the use of logic analysis of  R.A. 9298

issues  law regulating the practice of
Accountancy
 Use of indicative or deductive  known as the “Philippine
reasoning to test new relationships Accountancy Act of 2004”
to determine their effectiveness  Status equivalent to law or medicine
 Important in evaluating alternative QUALIFICATIONS
solutions TO PRACTICE ACCOUNTANCY
ACCOUNTING CONCEPTS  Graduate of Bachelor of Science in
Accountancy
 Principles upon which the process of
accounting is based. Used  Passed the CPA Licensure Examination
interchangeable with the following terms: given by the Board of Accountancy
 Accounting Assumptions (Postules) BOARD OF ACCOUNTANCY
 Accounting Theory  Body authorized by Law to promulgate
rules and regulations affecting the
ACCOUNTING ASSUMPTIONS
practice of Accountancy profession in the
 Fundamental concepts or principles that Philippines.
provide the foundation of accounting  Body responsible for preparing and
process grading the CPA Licensure Examination
which is a computerized examination
ACCOUNTING THEORY offered twice a year (May & Oct.) all over
the country.

PRACTICE OF PUBLIC ACCOUNTANCY
 Registered CPAs’ in the Philippines
 With a Certificate of Accreditation from
BOA and approved by PRC that the
registrant has a minimum gainful
experience of 3 years in any area of
public practice including taxation.
 Accreditation is valid for 3 years and
renewable every 3 years upon payment
of required fees.
4 SECTORS IN THE PRACTICE OF
ACCOUNTANCY
1. PUBLIC ACCOUNTANCY
 Rendering of audit, taxation,
accounting related services to more
than one (1) client for a fee basis.
2. COMMERCE & INDUSTRY
 Employment in the private sector
requiring positions for CPAs in
various capacities.
3. Education/Academe
 Employment in an educational which
involves teaching of accounting,
auditing, business law and other
technically related subjects.
4. Government
 Employment in the government to a
position in an accounting professional
group where eligibility as a CPA is
required.
CONTINUING PROFESSIONAL
DEVELOPMENT (CPD)
 R.A. 1012
 Law mandating the CPD program for
all regulated professions.
 Promulgated by the BOA, subject to
the approval of PRC and accredited
DAMOLO, KATHLENE C.
BSA12KA2
organization for CPAs’ or
educational institutions.
CONTINUING PROFESSIONAL
DEVELOPMENT (CPD)
 Raises and enhances the technical skill
of the CPA CPD credit units
requirements ( 3 years)
 2018 – 100 units
 2019 - 120 units
 Mandatory for CPAs’ since it is a
requirement for license renewal* and
accreditation to practice accountancy.
*(excluding CPAs’ 65 years old and up)
BRANCHES OF ACCOUNTING
1. FINANCIAL ACCOUNTING
 focus is on the preparation of General
purpose financial statements that cater to
the needs of :
 External users - users who
have interest on the company
but do not have authority to
demand reports tailored to their
needs.
o governed by PFRS
2 .MANAGEMENT ACCOUNTING
 Focus is on the preparation of financial
reports that cater to the needs of internal
users or management. “Management
Advisory Services”- services to clients
with regards to many other phases of
business conduct and operations.
3. COST ACCOUNTING
Systematic recording and analysis of the cost of
materials, labor and overhead incident to
production.
4. AUDITING

 Process of evaluating the financial
statements based on established criteria
and expressing an opinion thereof.
5. TAX ACCOUNTING
 Preparation of tax returns and rendering
of tax advice and determination of tax
consequences.
6. GOVERNMENT ACCOUNTING
 Accounting for government and its
instrumentalities for the custody and
administration of public funds.
7. FIDUCIARY ACCOUNTING
 Handling of accounts managed by a
person entrusted with the custody and
management of property for the benefit
of another.
8. ESTATE ACCOUNTING
 Handling of accounts for fiduciaries who
wind up the affairs of a deceased
person.
9. SOCIAL RESPONSIBILITY ACCOUNTING
 Process of communicating the social
and environmental effects of an entity’s
economic actions to the society.
10. INSTITUTIONAL ACCOUNTING
 accounting for non-profit entities other
than the government
11. ACCOUNTING SYSTEMS
 Installation of accounting procedures the
accumulation of financial data and
designing of accounting forms to be
used in data gathering.
12. ACCOUNTING RESEARCH
DAMOLO, KATHLENE C.
BSA12KA2
 Pertains to the careful analysis of
economic events and other variables to
understand their impact on decisions.
GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES
 Represents the accounting rules,
procedures, practice and standards
followed in the preparation and
presentation of financial statements.
 represented by the Philippine Financial
Reporting Standards (PFRS)
PFRS
 Standards and interpretations adopted
by the Financial Reporting Standards
Council (FRSC). Comprised of:
 PFRS*
 Philippine Accounting Standards
(PAS)
 Interpretations
*accompanied by a guidance which
states if a requirement is an “integral part”
(mandatory)
ACCOUNTING STANDARDS
Purpose: Identify proper accounting practices for
the preparation and presentation of financial
statements.
 Regarding measurement of
 Assets and Liabilities
 To ensure comparability and
uniformity in the presentation of
financial statements based on
the same financial information.
ACCOUNTING STANDARD SETTING BODIES
AND OTHER RELEVANT ORGANIZATIONS
 DAMOLO, KATHLENE C.
BSA12KA2

FINANCIAL REPORTING STANDARDS Committee (IFRIC) for approval and

COUNCIL adoption by the FRSC

 Official accounting standard setting body Board of Accountancy (BOA)

in the Philippines created under the
 Philippine Accountancy Act of 2004 or  Professional regulatory board created
(RA 9298) under RA 9298 to supervise the
 replaced the Accounting Standards  Registration and Licensure
(ASC)
 Practice of accountancy in the
COMPOSITION OF FRSC Philippine
 Composed of 15 members with a  Consists of a Chairperson and 6
Chairman and members appointed by the President of
 Representatives from : (Total -14) the Philippines.
o BOA 1  The Board shall elect among its
members a Vice-Chairman for a term of
o SEC 1 1 year.

o BSP 1 PROFESSIONAL REGULATIONS

COMMISSION (PRC)
o BIR 1
 Government body in charge of regulating
o COA 1 and licensing the practice of professions.
o FINEX (Fin. Exec. Inst. of the PHILIPPINE INSTITUTE OF CERTIFIED
Philippine) 1 PUBLIC ACCOUNTANTS (PICPA)
o Accredited Professional Organization  National Professional Organization of
of CPAS’s CPAs’ in the Philippines
 Public Practice 2  NACPAE
 Commerce and Industry 2  GACPA
 Academe/ Education 2  AIA
 Government 2  ACPACI
PHILIPPINE INTERPRETATIONS COMMITTEE SECURITIES AND EXCHANGE COMMISSION
(PIC) (SEC)
 Committee formed by the FRSC (  Government agency tasked in regulating
replacing the Interpretations Committee corporations, partnerships, capital and
formed by the ASC) investment markets and the investing
public.
 Role is to review the interpretations of
 SEC rulings affect the accounting
the International Financial Interpretations
requirements of entities and the adoption
and application of accounting policies
 DAMOLO, KATHLENE C.
BSA12KA2

BUREAU OF INTERNAL REVENUE (BIR)  The PFRS collectively includes the ff.:
 Administers the provisions of the Internal  PFRS which corresponds to the
Revenue Code IFRS (numbered the same)
 Influence at times the choice of
accounting methods and procedures  PAS which corresponds to the IAS
(numbered the same)
Bangko Sentral ng Pilipinas (BSP)
 Phil. Interpretations which
 Influences the selection and application corresponds to the interpretations of
of accounting policies by banks and the IFRIC and the SIC
other entities performing banking
functions OTHER RELEVANT INTERNATIONAL
ORGANIZATIONS
Cooperative Dev. Authority (CDA)
International Financial Reporting
 Influences the selection and application Interpretations Committee (IFRIC)
of accounting policies by Cooperatives
 prepares interpretations of how specific
INTERNATIONAL ACCOUNTING STANDARDS issues should be accounted for under
BOARD (IASB) the application of the IFRS

 The standard-setting body of the IFRS

Foundation with the main objective of
developing and promoting global
accounting standards. Based in London.
 Established in 04/01/01 as part of the
International Accounting Standards
Committee (IASC) Foundation, which is
an NPO based in the USA, the parent of
IASB. It was renamed International
Financial reporting Standards
Foundation or IFRS Foundation.
STANDARDS ISSUED BY THE IASB

 International Financial Reporting

Standards composed of:
 IFRS
 IAS
 Interpretations

 Phil. Financial Reporting Standards

Council
 The FRSC issues standards in a series
of pronouncements called PFRS.