ACC plus

Chapter 1
The Accountancy profession and its development
The accountancy profession

Is one of the less expensive , yet most feared field of work due to the highest rate of
unsuccessful board takers in its profession. It is less prestigious and less known than that of medicine
and engineering due to its nature of work. The country has gone from having only 42 registered public
accountants in 1923 to 162,000 as of 2015 , and Sir Armand fabella of Rizal college holds the first
license , cpa license no,001.

Most of the services accountants offer is confidential , because that can be used against the interest of
our client or companies. Don’t disclose information.

Embody the code of ethics of the cpa, to maintain quality services

(What is the accountancy profession?)

CPA’s in the Philippines have to maintain the highest standard in regards to making financial statements
and reporting , the CPA profession in the Philippines is under the WTO , world trade organization , this
means that Filipino accountants have the freedom to compete with other accountants from different
countries on a global scale.

Since the Philippine CPA is under the WTO Filipino accountants are able to compete with other foreign
accountants around the world.

What is an accountant?

(What does it mean to be an accountant?)

In order for someone to be called an accountant he/she must , graduate with a baccalaureate
degree in accountancy. The practice of professional accounting in the Philippines is regulated by the
Professional regulations committee or PRC. Wherein they strictly govern and set the highest standards
for the PRC board exams in order for one to be considered as an accountant. Much to the general
confusion of the masses, is due to the nature of businesses and firms to hire non-accountancy business
graduates to take the role of a bookkeeper or payroll staff within their firms while only taking in at the
minimum 1 or 2 public accountants, this has led to the confusion among the masses about the general
nature of an accountants work and purpose.
What are the career opportunities of an accountant?
Public accounting-

Public accounting means that you will work in the public sector, either you will join a
firm or you will create a firm of your own rendering your accounting services to the public for a fee. This
does not mean that you are in anyway, an employee of one company , you will be acting as a separate
independent legal entity to render accounting services to that company in matters such as auditing
their financial statements and reports , as well as managing and filing tax returns . Doing so in turn
makes you a member of the association of cpa’s in public practice or acpapp.

Individual practicioner , under an audit firm,

Government accounting-

Getting into this field of accounting , you will be working for the government in its vast
array of different departments such as Government owned and controlled corporations , LGU’s
and in the BIR. Doing so , you will be a member of the Government association of CPA’s
( GACPA ) sector.

Employed in BC, LGU , BIR, GOC

Private accounting-

If you choose to work in this filed you will be working for private companies and firms,
wherein you can become a financial analyst , chief accountant , bookkeeper , internal auditor ,
or the highest rank for an accountant within a frim a comptroller, in doing so you will become a
member of the association of public accountants for commerce and industry or (ACPACI).

Chief accountant, internal auditor, financial manager

Accounting education-

If you choose this area in accounting, you can become an educator and teach
accountancy in both public and privately run universities and colleges. Doing so you will be able
to become a member of the association of cpas in the education sector or (ACPAE).

CPA’S teaching in university

What is the Code of professional ethics for CPA’s in the Philippines, when was this developed ?

The code of professional ethics are a set of rules and principles that an accountant must
follow throughout his or her accountancy profession. This came into effect on June 30, 2008. The
International federation of accountants is the governing body wherein its mission is to adopt, and
implement the highest quality for accounting standards and principles globally.

Our code of ethics was just adopted by the code of ethics developed by IFAC on June 30, 2008
What is IFAC ?

International Federation of accountants, international body representing all accounting

all accounting firms across the world its goal is to implement high quality standards that serve as
guidelines in order for accounting firms and professional accountants to follow in order to
achieve a high quality practice worldwide.

IFAC FUNDAMENTAL PRINCIPLES

Integrity-

An accountant must be honest and have truthfulness in engaging in making financial

statements and reports. Integrity means having to be true in the filling of reports, returns so
that it will not contain false statements, have any mistakes or errors in its reports, nor does it
obscure any information in order to mislead potential users of said information.

Accountants should not associate himself with reports and statements wherein he
knows that it is fraudulent or misleading.

Objectivity-

An accountant must not let personal opinions nor third party opinions/biases sway to
report and state what the information is and isn’t.

Personal interests or opinions should not be considered when making sound

judgement.

Professional competence and due care-

Accountants have the obligation to continually hone their expertise and professional
knowledge further in order to help their employers or clients in the matters of accounting
methods and disciplines. Competence of professional accountants must mean that they should
make sound judgement and care whenever they put to use their professional knowledge in the
matters of accounting.

In order for accountants to attain this level of professional knowledge, they must go
through rigorous training and development in their education by means of examination to test
the knowledge that they’ve acquired in the relevant concepts and subjects pertaining to
accounting.

In order for them to maintain such a degree of professional knowledge, one must be
keen and aware of the ever changing concepts and relevant information within their field. Thus
Continuing professional development or (CPD) is needed in order for an accountant to maintain
this level of rigor and expertise.

Confidentiality-

Accountants should be aware not to disclose certain information acquired through

business endeavors and relationships to third parties, such information should not be used in
the advantage of personal accountants or third party business rivals.
 Confidential information should not be disclosed to third parties

Professional behavior-

Accountants should adhere to the relevant laws that govern the accounting standards, they
must be honest and truthful and not make exaggerated claims of their work or smear the work of other
professionals in the field when promoting themselves. Their actions should not put the integrity of the
profession in a bad light.

Don’t do unethical actions of which in turn can discredit the credibility of the profession.

Core competencies and framework for accountants-

Bridge gap between clientele and accountants, the gov has taken considerable action to
improve the entry level qualification for Filipino CPA’s with a set of competencies or benchmarks to
follow. The core competencies are the standards needed in order for accountants to identify their
knowledge and skill to be able to compete and overcome challenges in todays ever changing
environment.

The goal of this implementation is to create technically and professionally capable accountants
in order to compete internationally, hence , high education sectors should develop the following core
competencies.

Knowledge-

General Knowledge-

Ability to speak English , being able to adapt to western business practices, establish
friendships in dealing with foreign partners.

Organizational and business knowledge-

In addition to the already accepted general core knowledge, accountants must also have
a meticulous understanding of how international business systems work. An accountant must be
competent administrative leader, have good decision making capabilities , be great at assessing
and managing risk, have a keen perspective in both industry and private sector.

Information (IT) knowledge-

Accountants must be adept in using computer controlled related systems in order to

govern or manage businesses by using computer related systems an software.

Accounting Knowledge-

This includes knowledge relating to that of accounting , he/she must be proficient in

being up to date with the latest accounting standards, concepts , laws or practices.

Skills-
 Intellectual-

Accountants must be able to be logical and critical thinkers , and be able to see or solve
a problem through their minds eye, they should demonstrate , analytical thinking ,
problem solving capabilities as well as strategic and critical thinking .

Interpersonal-

CPA’s must be able to work well in groups , and have the ability to be a team player,
and be more open towards the professional opinions of others, as well as being able to
respond and work under pressure.

Communications-

Accountants must have clear reasoning and listening skills in order to clearly and
effectively communicate ones point of view as well as persuade and convince others.

Values-

Professional ethics-

Accountants need to have Professionalism, in the sense that they need to exert
professional behavior towards their clients in order to attain a higher standard of ethical
performance.

Moral values-

Accountants must know what is inherently right or wrong.

The accountancy law of 2004-

In may 2004, then pre. Gloria macapagal arroyo repealed president Ferdinand Marcos’
presidential decree no,692 on May 5, 1975 with the R.A 9298 wherein “It seeks to revive the continuing
professional development program which was enacted in 1987, which states that , all CPA’s must
follow to the requirements and rules and regulations for continuing professional development which is
made known by the board with the approval of the commission of the accredited national association
of certified public accountants, thus the CPD council is therefore implemented.”

Philippine act of 2004- May 13,2004 arroyo

Revised accountancy law-May 5 ,1975 Marcos

Accountancy law of 2004

(CPD program revival)

Scope of CPA board examination

1.) FAR
2.) AFAR
3.) MAS
4.) AUDITING
 5.) TAXATION
6.) REGULATORY FRAMEWORK FOR BUSINESS TRANSACTIONS

The board of accountancy and its Compositions (Sec.5)-

6 members ,-a

Admission requirements to the CPA board examination (Sec.14)-

In order for someone to take the board of accountancy, he or she must be a Filipino
citizen, who has good moral character and is a graduate of the bachelors of science in
accountancy , and has no criminal offenses of any kind.

Scope of the CPA board examination (Sec.15)-

The scope of the CPA board exam covers 6 subjects which are as follows: Financial
accounting and reporting , Advance financial accounting and reporting, Management advisory services,
Business law and taxation, Auditing , & Regulatory Framework for Business Transactions.

Accounting problems I, practical accounting problems II

? Rating in the licensure examination (Sec.16)

Accountant students must have a passing grade of 75% or at least 65% in each of the
subjects , failure to achieve a passing grade of 75% or at least 65% in each of the subjects, would
result in the students to be considered as failed.

If he/she can get a majority of 75% passing in all subjects , he .she is given recognition ,
and the remaining subjects that he.she did not pass, will be re-examined within two years of

Must have a grade of 75% Ge average with no grade lower than 65% in each subject.

You need at least to pass 4 subjects then only pass the 2 remaining subjects the next exam.

Reports of rating (Sec.17)

The board shall submit to the commission the results of the candidate with in ten
calendar days, upon which , they will send the results to each individual candidate via mail .

? Failing candidates to take refresher course (Sec.18)

Any candidate who fails two consecutive examinations will be barred from taking the
next, until he/she will give evidence to the board that they have at least completed 24 units of
the subject in the licensure examination.

-If a candidate fails the board exam twice in a row he/she will automatically be
considered as fail and will be barred from taking a third try, unless he/she will take a refresher
course comprised of 24 units of the subjects in the examination.
? The Birth of the Philippine accounting standards PAS
Accounting standards are a set of rules / procedures that showcase how transactions and other
activities related to the accounting profession should be shown on the financial statements.

The ASC governs the accounting standards of which particular type of transactions and events
should be reflected in the financial statements.

The ASC was created in Nov.18 1981, in order to establish and improve the generally accepted
accounting principles in the Philippines, wherein the approved statements and interpretations by the
ASC are known as the Statement of financial accounting standards which will be in law by approval of
the PRC.

ASC > develops new standard/guideline >subjected to PRC for approval of new guideline >
Approved guideline by PRC is called Statement of Financial Accounting Standards.> can be revoked by
the PRC if the PRC can find the newly implemented standard as ineffective.

Sec.9 of R.A 9298 / Philippine accountancy act of 2004 created Philippine Financial Reporting
standards council (PFRC) to replace the Accounting standards council, as the new standard-setting body
of the Philippines , the SFAS is now known as Philippine accounting standards

OLD STANDARD FLOW NEW STANDARD FLOW

(ASC)> create new guidelines > subject to
approval from (PRC)> approved standards are
now called (SFAS)
R.A9298/Philippine Accountancy act of 2004
(PFRC) replaced (ASC)>create new
guidelines>subject to approval from (PRC)>(PAS)
replaces (SFAS) as the approved standards from
PRC.

International accounting standards board (IASB) replaces the International accounting standards
council (IASC)

With the internationalization of business, the IASC a private independent standard setting body
was formed in order to achieve the same uniformity in accounting principles in regards to financial
accounting and reporting which is used around the world.

Find a way to bridge different national accounting standards and practices for high quality global
accounting standards, though it was replace by the IASB which has new financial reporting standards
called the International reporting standards, though it has no legal authority to implement the standards
that it seeks to be promoting , it is however supported by many countries, but for now , it is still called
International Accounting Standards.

IASC- made to promote uniformity/consistency of accounting principles/methods

internationally, the approved standards set by this independent body are called the International
Accounting Standards, IASC , was replaced by the IASB on July 1,2000, and its IAS standards was
correspondingly replaced with IFRS

? who will be subject to approval of the IASC/IASB standards in order to make it into IFRS/IAS
 OLD STANDARD
(IASC)> creates and proposes new international
standards > is subject to approval from the __>
(IAS ) is what is called for the improved standard.
NEW INTERNATIONAL STANDARD
July 1,2000
(IASB)replaces (IASC)> creates and proposes new
international standards > is subject to approval
from the __> (IFRS) replaces (IAS ) and is what is
called for the improved standard.

Philippines ASC has shifted to IAS

Improve , bridge , accounting standards, the PASC based its standards with that of the American
accounting standards, though the US has already made a shift in using the IAS instead of its own USAAS
in 1997, but however , it was only in the year 2000 when the Philippines SFAS was renewed and had
been adapted to its IAS counterpart.

Currently , the IASB has revised its IAS, the IASB has created new accounting standards and are
called the International Financial Reporting standards (IFRS). Wherein the ASC of the Philippines where
happy to adapt to it , implementing it in its own Philippine Financial Reporting Standards In short , PAS
corresponds to IAS, and the PFRS is adapted from the IFRS.

The reason for this change maybe attributed to the fact that the PSEC and BOA as well as the
PICPA all support the standards of the IASB.

As well as having only one point of reference in conducting accounting services in which its
reference is used internationally and is supported by many other countries.

Uniformity in financial reporting , in accordance with an international governing body setting

standards which are supported by many countries around the world.

IASB is recognized and accepted by the WTO , and the ADB.

Before, we based our standards from the United states, but then shifted in 1997 to base our
standards with that of the IAS , ASC> IAS and the approved standards are SFAS to confer w/ its
counterpart, IAS, in the year 2000. But since then , IASC is now IASB , we made revisions as well
accordingly, ASC is now PAS to confer with its counterpart IASC/IASB, approved accounting standards
SFAS is now PFRS to confer with its counterpart IFRS.
 Standard Subject to Approved Standard Subject to Approved
governing approval by standards governing approval by standards
body body

Standard governing body Governing body Subject to Approved standards

(old, 1997)
(Ph) ASC >(Int) IASC
(New revised, 2000 onward)
(Ph) ASC-PAS >(Int) IASC-IASB
approval
(old, 1997) (old, 1997)
For Philippines PRC (Ph)SFAS >(Int) IAS
Int -unknown (New revised, 2000 onward)
(New revised, 2000 onward) (Ph)SFAS-PFRS>(Int) IAS-IFRS
For Philippines PRC
Int unknown

Government sector adopts international accounting standards

COA in gov sector mmodeled the PPSAS from the IAS on Jan 1 ,2014. The role of PPASB is to help
in the editing in the creation and formation of accounting standards for the public sector which will still
be in accordance and be able to work with foreign international bodies and organizations in the field of
financial management.

PPSASB will align with international accounting standards to create uniformity in financial
accounting and reporting in the Philippine public sector entities in accordance with internationally set
standard , which ensures that all public sectors in the Philippines will adhere to the honesty, and
objectivity in reporting with different public sectors around the world. Therefore, the government
decided that all National Government agencies will adhere to the PPASB.

Aiming towards globalization

Business, has reached a global scale, beyond borders , therefore set accounting standards
should adhere internationally for the sake of uniformity and acceptability throughout the world. In a
sense, since businesses are now at the point of conducting transactions internationally in foreign
waters, the Philippines must also adapt to this growing trend , and update and revise their own
accounting standards to comply with that of the internationally set standards so that Filipino Certified
public accountants would be able to compete with different accountants all over the globe. Wherein
Filipino CPA’s can freely practice their profession on any part of the globe without having any constraints
or conflict of interest due to the uniformity of the standards that they use.