DEFINITION OF ACCOUNTING

Accounting has evolved, as in the case of medicine and law, in response to the social and
economic needs of society.  As business is more complex, accounting develops new
techniques to meet the ever-increasing needs for financial information.
Accounting  is an information system that measures, processes and communicates financial
information about an economic entity(Statement of Financial Accounting Concepts No. 1)

Accounting is the process of identifying, measuring and communicating economic information to

permit informed judgments and decisions by the users of information(American Accounting
Association)

Accounting is an art of recording, classifying and summarizing in a significant

manner and in terms of money, transactions and events, which are, in part at
least,  of a financial character, and interpreting the results thereof (American
Institute of Certified Public Accountants).

 Accounting is a service activity.  Its function is to provide quantitative

information, primarily financial in nature, about economic entities that is intended
to be useful in making economic decisions (Statement of Financial Accounting
Standards No. 1)

HISTORY
Accounting history is important to accounting pedagogy, policy and practices. 
Primitive Accounting started when people have counted and kept records
throughout history. 
The origin of keeping accounts has been traced as far as 8500 B.C.  
During Middle Ages, Arabic numerals were being used as a result of trade with the
Near East allowing columns of numbers  to be added and subtracted.  
Luca Pacioli, is generally associated with the introduction of double entry
bookkeeping. 
Information Age introduce the electronic spreadsheet

ACCOUNTING PROFESSION
Republic Act 9298 otherwise known as Philippine Accountancy Act of 2004. A BS
Accountancy graduate who took the licensure examination and pass the board exam
is given a license to practice as a professional Certified Public Accountant (CPA).

BOARD OR ACCOUNTANCY (BOA)

The BOA is under the supervision and administrative control of Professional

Regulation Commission (PRC).  
The Board is composed of a chairman and 6 members appointed by the President
of the Philippines.  
The Board elects a vice chairman from among its members for a term of 1 year.  
The board will formulate the CPA licensure examination will be given every May
and October. 

REQUIREMENTS FOR CPA EXAMINATION

1. Filipino citizen
2. Of good moral character
3. Holder of the degree of BS Accountancy from school duly recognized and
accredited by CHED
4. Has not been convicted of any criminal offense involving moral turpitude.
5. Must submit the following documents
*   PSA birth certificate
 PSA marriage certificate for married female
     applicants
*    Diploma
*    Transcript of records
*    NBI Clearance

Subject of the CPA licensure examination

1. Financial Accounting and Reporting 

2. Advanced Financial Accounting and Reporting
3. Auditing
4. Taxation
5. Management Advisory Services
6. Regulatory Framework for Business Transactions

Ratings in the Licensure Examination

The examinee must earn a general weighted average of seventy-five percent (75%)
with no grade lower than 65% in any given subject. 
In case the applicant did not obtained an average of 75% but obtained 75% and
above in atleast 4 subjects shall receive a conditional credit for the subject
passed. 
The candidate shall take an examination in the remaining subjects within 2 years
from the preceding examination.  
Upon examination and the candidate fails to obtain atleast a general average of
75% and a rating of atleast 65% in each of the subjects reexamined, the
candidate shall be considered as failed in the entire examination.

Illustration

Subject Case 1 Case 2 Case 3 Case 4 Case 5

1 FAR 80   75       95 90     85
2 AFAR 75   75       95 95     80
3 AUD 60   75         95 90     70
4 TAX 90     75       55 90     60
5 MAS 85   65       70 100     90
6 RFBT 85   85       70 64     85
Weighted Ave. 79.16   75         80        88.17      78.33
Result     Condi  Pass  Failed     Condi   Condi

REFRESHER COURSE
Any candidate who fails in two (2) complete CPA Board Examinations shall be
disqualified from taking another set of examinations unless the candidate submits
evidence to the satisfaction of the Board of Accountancy that he/she enrolled in
and completed  atleast 24 units of the subject given in the licensure examination.

PROFESSIONAL ORGANIZATION
The Philippine Institute of Certified Public Accountants (PICPA) is the integrated
national professional organization of CPAs in the Philippines accredited by BOA and
PRC. 

SCOPE OF PRACTICE OF ACCOUNTANCY/ACCOUNTANCY PROFESSION

The professional accountant is presented with a myriad of opportunities.  The
demand for accounting services has increased with the increase in number, size
and complexity of business.  The accountants may be engaged in any of the
following areas of competence

1. PRACTICE OF PUBLIC ACCOUNTANCY.  

Rendering professional services as CPA to clients on a fee basis. Professional
Organization named as Association of CPAs in Public Practice (ACPAPP)

2.PRACTICE IN COMMERCE AND INDUSTRY. 

They are CPAs who are employed by various business entities. Professional
organization named as Association of CPAs in Commerce and Industry (ACPACI)

3. PRACTICE IN EDUCATION/ACADEME.
It constitutes CPAs in an educational institution which involves teaching  of Board
subjects and other technically related subjects. Professional organization named as
Association of CPAs in Education (ACPAE).

4. PRACTICE IN GOVERNMENT  
A person who holds or is appointed a position in an accounting professional group in
government.  Professional organization named as Government Association of CPAs
(GACPA)
BRANCHES OF ACCOUNTING

1. AUDITING.  Auditing is the accountancy profession’s most significant

service to the public. 
An external audit is the independent examination that ensures the fairness
and reliability of the reports that management submits to users outside the
business entity. 
Internal auditing ensures the accuracy of business records, uncover internal
control problems and identify operational difficulties.

2. BOOKKEEPING 
It is a mechanical task involving the collection of basic financial data.  

The data are first entered  in the accounting records or books of accounts,
journal and ledger.

 3. COST BOOKKEEPING AND COST ACCOUNTING

Cost bookkeeping is the process that involves the recording of cost data in books
of accounts.  

Cost accounting makes use of those data once they have been extracted from the
cost books in providing information for managerial planning and control. 
 
4. FINANCIAL ACCOUNTING
It focused on the recording of business transactions and the periodic preparations
of reports on financial position and results of operations.

5. FINANCIAL MANAGEMENT
It focuses on setting financial objectives, making plans, obtaining the finance
needed and safeguarding all the financial resources of the entity.

6. MANAGEMENT ACCOUNTING.  
It incorporates cost accounting data and adapts them for specific decisions which
management may be called upon to make.  A management accounting system
incorporates all types of financial and non financial information from a wide range
of sources.

7. TAXATION  
It includes the preparation of tax returns and the consideration of the tax
consequences of proposed business transactions  or alternative courses of actions.

8. GOVERNMENT ACCOUNTING
It is concerned with the identification of the sources and uses of resources
consistent with the provision of city, municipality, provincial or national laws.