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ACCOUNTANCY AS A PROFESSION
WHO ARE PROFESSIONAL ACCOUNTANT?

- An individual who holds a valid certificate issued by Board of Accountancy (i.e

Certified Public Accountants)..

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ACCOUNTANCY AS A PROFESSION
The ideal accountancy profession have five major characteristics

Systematic Theory – underlying theory of public accounting profession consists

of accounting theory , financial accounting and reporting standards and
practices and auditing standards. Achieve through formal education ( BSA
Graduate)

Professional Authority – clients who use the service of a professional often do

not really understand what their needs. It’s the professional who determine what
is good or right for the clients and the clients accedes to this professional
judgment. ( Application of Systematic Theory)

ACCOUNTANCY AS A PROFESSION
The ideal accountancy profession have five major characteristics

Community Sanction – to become a CPA, a candidate must satisfy government

educational and experience requirements and pass the CPA Licensure Exams.

Regulation Code – to prevent abuse and monopoly of its member, the Rules of
Professional Conduct or Code of Ethics have been promulgated and made legally
binding through the Accountancy

A Culture – the profession and the standard norms affect the behavior in the
society. Accounting developed professional culture as evidence by formal norms
such as code of ethics

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ACCOUNTANCY AS A PROFESSION
Scope of Practice

The Philippine Accountancy Act of 2004 (RA. 9298) Article 1, Section 4, paragraphs
(a) to (d) spell out the scope of practice of accountancy as follows:

a. Practice of Public Accountancy

b. Practice in Commerce and Industry
c. Practice in Education/Academe
d. Practice in the Government

ASSURANCE, ATTEST, AND AUDITING

SERVICES DEFINED
Assurance Services – are independent professional services that improved the quality
of information, or its context, for decision makers

Attest Services – occur when practitioner is engage to issue a report on subject matter,
or an assertion about subject matter, that is the responsibility of another party.

Auditing – systematic process of objectivity obtaining and evaluating evidence

regarding assertions about economic actions and events to ascertain the degree of
correspondence between those assertions and established criteria and communicating
the results to internal users

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RELATIONSHIP AMONG ASSURANCE,

ATTEST & AUDITING SERVICES

TYPES OF AUDITOR
• External Auditors
• Internal Auditors
• Government Auditors ( COA Auditors, BIR Examiners, Regulatory Auditors)
• Forensic Auditors

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TYPES OF AUDITOR
Internal Auditor

- Could be CPA firms hired by the entity as consultants or employees of individual

companies who perform independent appraisal activity within the organization such
as review of accounting, financial and other operations as a basis for their service to
management. They provide valuable information for making decisions concerning
effective operation of its business.

- Must be independent of the line functions in an organization and may report directly
to the audit committee or board of directors.

TYPES OF AUDITOR
Government Auditors

COA Auditors – they determine whether the gov’t agencies and other entities use public funds if FS is
presented fairly in accordance with Financial Reporting Standards and applicable laws & regulations;
conduct the programs with economy and efficiency; and desired results are achieved ( Same
responsibilities with CPA in Audit Firm)

BIR Examiners –they audit individual as well as businesses to determine whether the tax payers have
complied with tax laws

Regulatory Auditors- include SEC, BSP, Cooperative Commission, Insurance Commission and other gov’t
agency who checks on the solvency and compliance of various institutions and business firms with
appropriate laws and regulations

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TYPES OF AUDITOR
Forensic Auditor

- Employed by corporations, gov’t agencies, public accounting firms and specialized

consulting and investigative service firms. They are specifically trained in detecting,
investigating, and deterring fraud and white-collar crime. Below are some situations where
forensic auditor are often involve
a. Reconstructing incomplete or damaged accounting records to settle an issurance claim
over inventory valuation
b. Probing money-laundering activities by tracking and reconstructing cash transactions
c. Identify & investing transactions and assets in business or marital disputes. Investigating
and documenting embezzlement allegations and negotiating insurance settlements.

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TYPES OF OTHER AUDIT SERVICES

• Internal Audits
• Compliance Audit
• Operational Audits
• Forensic Audits

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TYPES OF OTHER AUDIT SERVICES

Internal Audit

Internal auditing is an independent, objective assurance and consulting activity

designed to add value and improve an organization’s operations. It helps the
organization accomplish its objectives by bringing a systematic, disciplined approach
to evaluate and improve the effectiveness of risk management, control and government
processes

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TYPES OF OTHER AUDIT SERVICES

Compliance Audit

Examination, audit and settlement in accordance with laws and regulations. It

determines the extent in which rules, policies, laws, covenants or government
regulations are followed by the entity being audited. ( E.g BIR Audit)

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TYPES OF OTHER AUDIT SERVICES

Operational Audit

- Involves a systematic review of part or all of an organization’s activities to evaluate

whether resources are being used effectively and efficiently. Its purpose it to provide
assurance, assess performance, identify areas for improvement and develop
recommendations with respect to operational effectiveness and efficiency. Sometimes
called as performance audit or management audit

Forensic Audit

- Its purpose is to detect a deter fraudulent activities

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TYPES OF OTHER ATTEST SERVICES

Auditors can provide numerous types of attest services regarding almost any subject
matter. For example, an auditor might be asked to attest to the nature and quantity of
inventory stored in warehouse so that the entity can obtain a bank loan with the
inventory as a collateral.

A promising new area of attestation services relates to assertions companies make

about sustainability-claimed reductions in carbon emissions or appropriate handling of
hazardous waste

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OTHER NON-ASSURANCE SERVICES

AGREED-UPON PROCEDURES – the party engaging the professional accountant or the
intended user determines the procedures and the professional accountant provides a
report of factual findings as a result of undertaking those procedures. This is not an
assurance engagement

TAX PREPARATIONS & PLANNING SERVICES – many public accounting firm have tax
professionals that assist clients in preparing and filing tax returns, providing advice on
tax and estate planning, and representing clients on tax issues before the BIR or tax
courts

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OTHER NON-ASSURANCE SERVICES

MANAGEMENT ADVISORY SERVICES – involve providing advice and assistance concerning
an entity’s organization, human resources, finances, operations, IT systems and others.
Other significant MAS service area is helping public companies implement effective
internal control over financial reporting in preparation for an integrated audit to be
performed by different accounting firm.

COMPILATION, ACCOUNTING AND DATA PROCESSING SYSTEM SERVICES – public accounting

firm performs a number of accounting-related services for their nonpublic or nonaudit
clients. These services includes bookkeeping, payroll services and preparing financial
statements. When a public accounting firm prepares the financial statements of
companies, the services are known as compilations.

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