Accounting is relevant in all walks of life, and it is absolutel business. essential in the world of uantifies business communication. For this reason, he task of learning accounting is very similar to the task of learning a new language; thus, the need for this book which teaches the Basics of Accounting in a very ‘onceptual manner._ DEFINITIONS OF ACCOUNTING “primarily financi , about economic entities that is intended to be useful in making economic decisions (Statement of Financial Accounting Standards No. 1, “Basic Concepts and Accounting Principles Underlying Financial Statements of Business Enterprises” (Manila: Accounting Standards Council, 1983), par. 1). that measures, processes and communicates financial information about an economic entity (Statement of Financial Accounting Concepts No. 1, “Objectives of Financial Reporting by Business Enterprises” (Norwalk, Conn.: Financial Accounting Standards Board, 1978), par. 9). aan Es identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information (American Accounting Association, “A Statement of Basic Accounting Theory” (Evanston, II: American Accounting Association, 1966), par. 1; Accounting Principles Board, Statement No. 4, “Basic Concepts and Accounting Principles Underlying Financial Statements of Business Enterprises” (New York: AICPA, 1970), par. 40). 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, “Review and Resume”, Accounting Terminology Bulletin No. 1 (New York: AICPA, 1953), par. 9).TYPES OF BUSINESS Although the fundamental business model does not vary, there are infinite ways of applying it to provide the range of products and services that make up the business world. However, the range of products and services can be summarized in seven broad categories, they are as follows: Type Activity Services Selling people's time Trader Buying and selling products Manufacture Designing products, aggregating components and assembling finished products Structure Hiring skilled staff and selling their time Buying a range of raw materials and manufactured goods and consolidating them, making them available for sale in locations near to their customers or online for delivery Taking raw materials and using equipment and staff to convert them into finished goods Examples Software development Accounting Legal Wholesaler Retailer Vehicle Assembly Construction Engineering Electricity, Water Food and-drink Chemicals Media Pharmaceuticals’ Type Raw materials Infrastructure Financial Insurance Activity Growing or extracting raw materials Selling the utilization of infrastructure Receiving deposits, lending and investing money Pooling premiums of many to meet claims of afew Structure Buying blocks of land and using them to provide raw materials Buying and operating assets (typically large assets); selling occupancy often it combination with services Accepting cash from depositors and paying them interest; using the money to provide loans to borrowers, charging them fees anda higher rate of interest than the depositors receive Collecting cash from many customers; investing the money to pay the losses experienced by a few customers. By understanding the risk accepted and the likelihood of a claim, more premium income can be earned than claims paid Examples Farming Mining Oil ‘Transport (airport operator, airlines, trains, ferries, buses) Hotels Telecoms Sports facilities Property management Bank Investment house InsuranceFORMS OF BUSINESS ORGANIZATIONS Any of the above types of activities may be performed by a business organization be ita sole proprietorship, a partnership or a corporation. A business generally assumes one of the three forms of organization. The accounting procedures depend on which form the organization takes. Sole Proprietorship. This business organization has a single owner called the proprietor who generally is also the manager. Sole proprietorships tend to be small service-type (e.g. physicians, lawyers and accountants) businesses and retail establishments. The owner receives all profits, absorbs all losses and is solely responsible for all debts of the’ business. From the accdunting viewpoint, the sole proprietorship is distinct from its proprietor. Thus, the accounting records of the sole proprietorship do not include the proprietor’s personal financial records. Partnership. A partnership is a business owned and operated by two or more persons who bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. Each partner is personallySe rtnership as liable for any debt incurred by the partnership. Accounting considers the pal a separate organization, distinct from the personal affairs of each partner. Corporation. A corporation is a business owned by its stockholders. It is an artificial being created by operation of law, having the rights of succession and the powers, attributes and properties expressly authorized by law or incident to its existence. The stockholders are not personally liable for the corporation's debts. The corporation is a separate legal entity.ACTIVITIES IN BUSINESS ORGANIZATIONS = yor 1) Many types of decisions are made in business organizations. Accounting provides important information to make these decisions. The three types of organizational activities are as follows: financing, investing, and operating. ‘ Financing Activities | / Organizations require financial resources to obtain other resources used to produce Boods and services.. They Compete for these resources in financial markets. Financing activities are the methods an organization uses to obtain financial resources from | financial markets and how it manages these resources. Primary sources of financing for Most businesses are owners and creditors, such as banks and suppliers. Repaying the Creditors and paying a return to the owners are also financing activities, Investing Acti Managers use capital from financing activities to acquire“other resources used in the transformation process—that is, to transform resources from one form to a different” form, which is more valuable, to meet the needs of the people. Having the right mix of resources is essential to efficient and effective operations. ies An efficient business is one that provides their selling prices. An effective business.is one that is jed by the customers.| Investing activities involve the selection and management including disposal and replacement of long-term resources that will be used to develop, produce, and sell goods and services. Investing activities include buying*land, equipment, buildings and other resources that are needed in the operation of the business, and selling these resources when they are no longer needed. Operating Activities Operating activities involve the use of resources to design, produce, distribute, and market goods and services. Operating activities include research and development, ‘design and engineering, purchasing, human resources, production, distribution, marketing and selling, and servicing. Organizations compete in supplier and labor markets for resources used in these activities. Also, they compete in product markets to sell the goods and services created by operating activities. i—— FUNDAMENTAL CONCEPTS paola fundamental concepts underlie the accounting process. In recording business fansactions, accountants should consider the following: Entity Concept. The most basic concept in accounting is the entity concept. An accounting entity is an organization or a section of an organization that stands apart from other organizations and individuals as a@BpaEaES economic unit. Simply put, the transactions of different entities should not be accounted for together. Each entity should be evaluated separately. Periodicity Concept. An entity’s life can be meaningfully subdivided into equal time Periads for reporting purposes. It will be aimless to wait for the actual last day of Operations to perfectly measure the entity’s profit. This concept allows the users to obtain! to serve as a basis on making decisions about future activities, For the purpose of reporting to outsiders, one year is the usual accounting period. Stable Monetary Unit Concept. ThelBRilippinelpese ‘is a reasonable unit of measure and that its purchasing power is relatively stable. It allows accountants to add and subtract peso amounts as though each peso has the same purchasing power as any other peso at any time. This is the basis for ignoring the effects of inflation in the accounting records. /aaTeRn FOR GENERAL ACCEPTANCE OF AN ACCOUNTING PRINCIPLE Accounting practices follow certain guidelines. GAAP, which stands for generally accepted accounting principles, encompass the conventions, rules and procedures Necessary to define accepted accounting practice at a particular time. Accounting principles are established by humans. Unlike the principles of physics, chemistry, and the other natural sciences, accounting principles were not deduced from basic axioms, nor can they be verified by observation and experiment. Instead, they have evolved. This evolutionary process is going on constantly; accounting principles are not eternal truths. The general acceptance of an accounting principle usually depends on how well it meets three criteria: relevance, objectivity and feasibility. applicaloititay A principle has relevance to the extent that it results in information that is meaningful and useful to those who need to know something about a certain organization.A principle has\@bjectivity to the extent that the resulting information is not influenced by the personal bias or judgment of those who furnish it, Objectivity connotes relic i and trustworthiness. It also connotes verifiability, which means that there ig « ability of finding out whether the information is correct. ome way aocsivle A principle has, to the extent that it can be implemented without und complexity or cost. These criteria often conflict with one another. in some casa te most relevant solution may be the least objective and the least feasible. on fee PRINCIPLES In order to generate information that is useful to the users of financial st. ache ‘atements, accountants rely upon the following principles: Accounting records and statements are based on the Most reliable data available so that they will be as accurate and as useful as possible. Reliable “data are verifiable when they can be confirmed by independent observers. Ideally, accounting records are based on information that flows from activities documented by objective evidence. Without this principle, accounting records would be based on whims and opinions and is therefore subject to disputes. “FANGHESNICESEY This principle states that acquired assets should be recorded at their (tat and not at what management thinks they are worth as at reporting date. Wergrmbensinye Revenue is to be recognized in the accounting period TS cc: oc ae ionPrinciplé Expenses should be recognized in the accounting period in which goods and services are{SauB}to produce revenue and not when the entity pays for those goods and service: . Requires that all relevant information that would affect the user's understanding and assessment’ of the accounting entity be disclosed in the financial statements. Wace Financial reporting is only concerned with information that is significant enough fo affect evaluations and decisions, Materiality depends on the size and nature of the item judged in the particular circumstances of its omission. In deciding whether an item or an aggregate of items is material, the nature and size of the item are ‘ ize of evaluated together. Depending on the circumstances, either the nature or the size the item could be the determining factor. i fod The firms should use the same accounting method bails to period to achieve comparability over time within a single enterprise Hi changes are permitted if justifiable and disclosed in the financial statements.Fos of Practice (Sec. 4) The practice of accountancy shall include, but not limited to, the following: : Practice of Public Accountancy = shall constitute in 2 person, be it his/her individual capacity, or as a partner or as a staff member in an accounting or auditing firm, holding out himself/herself as one skilled in the knowledge, science and practice of accounting, and as a qualified person to render professional services as a certified public accountant (CPA); or offering or rendering, or both, to more than one client on a fee basis or otherwise, services such as: = the audit or verification of financial transaction and accounting records; or = the preparation, signing, or certification for clients of reports of audit, balance sheet, and other financial, accounting and related schedules, exhibits, statements or reports which are to be used for publication or for credit purposes, or to be filed with a court or government agency, or to be used for any other purpose; or = the design, installation, and revision of accounting system; or = the preparation of income tax returns when related to accounting procedures; or when he/she represents clients before government agencies on tax and other matters related to accounting or renders professional assistance in matters relating to accounting procedures and the recording and presentation of financial facts or data. Practice in Commerce and Industry ~ shall constitute in a person involved in decision making requiring professional knowledge in the science of accounting, or when such employment or position requires that the holder thereof must be a certified public accountant. Education/Academe — shall constitute in a person in an educational institution which involve teaching of accounting, auditing, management advisory services, finance, business law, taxation, and other technically related subjects: Provided, That members of the Integrated Bar of the Philippines may be allowed to teach business law and taxation subjects. Practice in Government — shall constitute in a person who holds, or is appointed to, a position in an accounting professional group in government or in a government-owned and/or —controlled corporation, including those performing proprietary functions, where decision making requires professional knowledge in the science of accounting, or where a civil service eligibility as a certified public accountant is a prerequisite.a tkills The skills to be developed include: ‘ Intellectual This set of skills includes the ability to carry out abstract logical thinking and understand critical thinking. It also includes creative thinking or the generation of new ideas; visualization or “seeing things in the mind’s eye”; and reasoning skills or the discovery of a rule or principle underlying the relationship between two or more objects and applying it when solving a problem. The CPA must demonstrate the following skills: * analysis * problem solving * strategic/critical thinking Interpersonal - This involves developing the ability of CPAs to work in groups and being a team player. It includes the skills to participate as member of a team and contributing to group effort; teaching others new skills; working to satisfy clients’ expectations; negotiation skills and working with diversity or working well with men and women from diverse backgrounds. The CPA must demonstrate attributes such as: «being a team player persuasion, confidence and diplomacy * — discreetness, open mind and patience © capability for work and ability to respond well to pressure “Communication This refers to active listening skills and the ability to communicate effectively one’s points of view, both orally and in writing, at all organizational levels; being able to justify one’s position,. deliver powerful presentations and to persuade and convince others: The CPA must demonstrate skills such as the ability to:“s verbally and/or in writing explain financial/statistical/administrative matters/policies/procedures/regulatory matters/audit results at a level appropriate to the audience. ask clear, concise and relevant questions to obtain desired information to perform a task. © negotiate effectively. 7 Calues Values must concentrate on: Professional Ethics Since the objectives of the accountancy profession are to work in accordance with the highest standards of professionalism, to attain the higher level of performance and generally to meet the public interest, the need for CPAs to conform to the ethical standards of the profession become vital. These include integrity, objectivity and independence, professional competence and due are, confidentiality, and professional behavior. Moral Values Beyond ethical rules, there is a need for CPAs to be able to discern between what is morally right or wrong.__ fundamental Principles A professional accountant is required to observe the following fundamental principles: Integrity A professional accountant should be oo ag gsossors ahd implies and! 4 business relationships. Integrity also A professional accountant should not be associated with reports, returns, communications or other information where they believe that the information: (a) Contains a materially false or misleading statement; (b) Contains statements or information furnished recklessly; or (c)_. Omits or obscures information required to be included where such omission or obscurity would be misleading.Objectivity A professional accounton RETA aes conflict of interest or undue influence of others to override professional or bu judgments. : Professional Competence and Due Care Ak professional accountant has a continuing duty to maintain professional knowledge and skill at the level required to ensure that a client or employer receives competent professional service based on current developments in practice, legislation and techniques. A professional accountant should act diligently and in accordance with applicable technical and professional standards when providing professional services (ie., services requiring accountancy or related skills performed by a professional accountant including accounting, auditing, taxation, management consulting and financial management services). In addition, they should conform with the technical and professional standards of the following: = Board of Accountancy (BOA) / Professional Regulation Commission (PRC) = Securities and Exchange Commission (SEC) = Financial Reporting Standards Council (FRSC) = Auditing and Assurance Standards Council (AASC) * Relevant legislation : Competent professional service requires the exercise of sound judgment in applying professional knowledge and skill in the performance of such service. Professional competence may be divided into two separate phases: 1. Attainment of professional competence. The normal pattern of development starts initially with a high standard of general education followed by specific education, training and examination in professionally relevant subjects, and whether prescribed or not, a period of work experience. 2. Maintenance of professional competence. This requires a continuing awareness and an understanding of relevant technical professional and business developments. Continuing professional development develops and maintains the capabilities that enable a professional accountant to perform competently within the professional environments. Diligence encompasses the responsibility to act in accordance with the requirements of an assignment, carefully, thoroughly and on a timely basis. A professional accountant should take steps to ensure that those working under the professional accountant’s authority in a professional capacity have appropriate training and supervision. Where appropriate, a professional accountant should make clients, employers or other users of the professional services aware of limitations inherent in the services to avoid the misinterpretation of an expression of opinion as an assertion of fact.Confidentiality . / . caeara bassin — respect the confidentiality of information acquired as information to third parties withorr veces sniPs and should not disclose any such or professional right lout proper and specific authority unless there is a legal ight or duty to disclose. Confidential information acquired as a result of professional and business relationships should not be used for the personal advantage of the professional accountant or third parties. Professional Behavior A professional accountant should comply with relevant laws and regulations and should avoid any action that discredits the profession. \n marketing and promoting themselves and their work, professional accountants should not bring the profession into disrepute. Professional accountants should be honest and truthful and should not: make exaggerated claims for the services they are able to offer, the qualifications they possess, or experience they have gained; or make disparaging references or unsubstantiated comparisons to the work of others. THE ACCOUNTANCY PROFESSION Characteristics Accountancy qualifies as a profession because it possesses the following attributes: = All members of the accountancy profession are Certified Public Accountants, which means that they have earned a Bachelor of Science in Accountancy degree and have passed the CPA Licensure Examinations. = CPAs have their own body of language. They use terminology peculiar to the profession (e.g. debits and credits). = CPAs adhere to a Code of Ethics. This code upholds the CPA’s responsibility to serve the public with competence and integrity. The public, in return, expresses its _ confidence to CPAs by relying on the financial statements they audit. = ” Like other professions, CPAs are members of a national organization, the PICPA, whose role is to ensure the continued improvement of the accountancy profession to meet the demands of the times. / Career Opportunities 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 businesses. The accountant may be engaged in any of the following areas of competence:aa E IS sees public Practice der services on a fee basis and ‘Accountants who render | and staff accountants them are engaged in public practice. Public accountants, who practice nivoe by members of public accounting firms, should be certified public accounta mas or as They offer their professional services to the public. Theit work ineluder oe taxation and management advisory services. s auditing, some public accountants pool their talents and work together in a single firm. Mo public accounting firms are called CPA firms since mast of their professional ernployed are CPAs. Firms vary greatly in size. Some are small proprietorships and others are large partnerships. There are large global CPA firms with more than 1,000 partners, In the United States, some of the largest accounting firms (in alphabetical order) are as follows: Deloitte & Touche, Ernst & Young, KPMG, and PriceWaterhouse Coopers. Arthur Andersen & Co. is now history; she used to be the biggest but succumbed to pressures brought about by a lot of financial fiascos including that of Enron, Sunbeam, Waste Management and WorldCom. These firms employ only about 12 percent of the CPAs in the United States but they audit the financial statements of approximately 85 percent of the top corporations. In the Philippines, the biggest firm with eight offices across the country is Sycip Gorres Velayo & Co. (SGV & Co.) with over 1,800 professionals from various disciplines. SGV & Co. is a member practice of Ernst & Young Global. The other bigger firms-are Punongbayan & Araullo, Laya Mananghaya & Co., C.L. Manabat & Co., Isla, Lipana & Co. (Joaquin Cunanan & Co.), Constantino, Guadalquiver & Co., Carlos J. Valdez & Co., Alba Romeo & Co., Diaz Murillo Dalupan & Co. and Reyes Tacandong & Co. among others. The top partners in these large accounting firms earn about the same amount as the top executives of other large businesses. Public accounting is the frequently traveled career path because it offers excellent opportunities to gain multi-faceted business experience. It is normal to hear of managers, executives and even supervisors becoming a large corporation's chief executive or financial officer. Sample Entry-level jobs: Audit Staff, Tax Staff, Management Services/Consulting Staff; Middle-level positions: Audit Manager, Tax Manager, Consulting Manager; Advanced positions: Partner, Senior Partner, Senior Consultant/Financial Advisor. Commerce and Industry Accountants employed in this area vary widely in their scope of activities od Tesponsibilities. Sample Entry-level jobs: Financial Accounting and erate, Staff, Management Accounting Staff, Tax Accounting Staff, Internal Audit Staff Fone nab Budget Analyst, Credit Analyst, Cost Accountant; Middle-level positions: Comptro er aed Information Systems Auditor, Senior Fraud Examiner, Senior Forensic Auditor; Advance Positions: Chief Financial Officer, Chief Information Officer.Government Service Accour i ae ae Hills pit by the following: Congress of the Philippines, Commission on tnndees ae oe Of Internal Revenue (BIR), Department of Finance, Department of ne : agement, Bangko Sentral ng Pilipinas (BSP) and the local government €.8. Provincial, city or municipal governments). Sample Entry-level jobs: state Accounting Examiner, State Accountant, LGU Accountant, Revenue Officer, Audit Examiner, Budget Analyst, Financial Services Specialist; Middle-level positions: State Accountant V, Director III and Director IV, Government Accountancy and Audit, Financial Services Manager, Audit Services Manager, Senior Auditor; Advanced positions: National Treasurer, Vice President f : ‘ for Finance/CFO (for GOCCs), Commissioner, Associate Commissioner, Assistant Commissioner, (COA, BIR, BOC). Education/Academe This area guarantees the continued development of the profession by endeavoring to Clarify and address emerging issues through research and sharing the results obtained with their colleagues. Considered as modern day heroes, they make others understand the body of accounting knowledge. In addition, they painstakingly prepare candidates for the tough CPA exams. With the advent of information technology, this sector is being challenged to focus accounting education from the “transfer of knowledge” approach to the more effective “learning to learn” approach. Sample Entry-level jobs: Junior Accounting Instructor; Middle-level positions: Senior Faculty, ‘Accounting dshscita Chair; Advanced positions: Vice President for Academic Affairs, Dean. BRANCHES OF ACCOUNTING The work that accountants undertake ranges far beyond that of simply summarizing information in order to calculate how much profit a business has made, how much it owes, and how much is owed to it. Although this work is still very important, accountants are involved in other types of work. Of course, other information specialists (such as market researchers and operations analysts) have also been drawn into the preparation of management information, and at one time, some observers expected accounting to be taken over by these newer and mores scientifically-based disciplines. However, this has not happened. There are three main reasons: 1. Financial information supplied to external users still has a dominant influence on internal management information; 2. Other information specialists have been reluctant to become involved in detailed accounting matters; and 3. Accountants have been quick to absorb new methods and techniques into their work.- a The main branches of accounting and their brief descriptions are discussed as follows: 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. The result of the examinations is embodied in the independent auditor’s report. Once the required financial statements have been prepared by management, they have to be evaluated in order to ensure that they do not present a distorted picture. are appointed from outside the organization. The external auditor's he interests of the users of the financial statements. By contrast, je employees of the company. They are appointed by, and answer to, ‘the company’s management though they work independently of the accounting and other departments. They ensure the accuracy of business records, uncover internal control problems and identify operational difficulties. To differentiate further, internal auditors perform routine tasks and undertake detailed checking of the company’s accounting procedures, whereas external auditors are likely to go in for much more selective testing. Nonetheless, they usually work very closely together, although the distinction made between them still remains important. ' Bookkeeping Bookkeeping is a mechanical task involving th data are first entered in the accounting records or the books of accounts, extracted, classified and summarized in the form of income statement, balance sheet and cash flows statement. This process normally takes place once a month. An income statement shows whether the business has made a profit or loss during the period, i.e. it measures how well the business has done. A balance. sheet lists what the entity owns {its assets), and what it owes (its liabilities) as at the end of the period. The cash flows statement presents the cash inflows and outflows of the business during the period The bookkeeping procedures usually end when the basic data have been entered in the books of accounts and the accuracy of each entry has been tested. At that stage, the accounting function takes over. Accounting tends to be used as a generic term covering almost anything to do with the collection and use of basic financial data. It should, he data are put once they have however, be more properly applied to the use to which tl been extracted from the books of accounts. Bookkeeping is ae: accounting requires the ability to examine a problem using pot nS financial data.Cost Bookkeeping, Costing, and Cost Accounting js the process that involves the fecording of cost data in books of, ;. It is, therefore, similar to bookkeeping except that data are recorded in very Much greater detail. Cost accounting makes use of those data once they have been extracted from the cost books in providing information for managerial planning and control. Accountants are now discouraged from using the term ‘costing’ unless it is qualified in some way, ie. by referring to some branch of costing (such as standard Costing), but even so you will still find the term ‘costing’ in general use. The difference between bookkeeping per se and cost bookkeeping is largely one of degree of detail. A cost accounting system contains a great deal more data, and thus} once the data are summarized there is much more information available to the management of the company. Cost accounting deals with the collection, allocation, and ] control ‘of the cost of producing specific goods and services. This accumulation and explanation of actual and prospective cost. data is important to control current Operations and to plan for the future. Cost accounting now forms one of the main sub- branches of management accounting. Financial Accounting Financial accounting is focused on the recording ations and the eparation of reports on financial position al It fationsiyFinancial accountants accord importance to generally accepted accounting principles. Financial accounting is the more specific term applied to the preparation and subsequent Publication of highly summarized financial information. The information supplied is usually for the benefit of the owners of an entity, but it can also be used by management for planning and control purposes. It will also be of interest to other parties, e.g. employees and creditors. Financial Management Financial management is a relatively new branch of accounting that has grown rapidly over the last 30 years. Financial managers are responsible for setting financial objectives, making plans based on those objectives, obtaining the finance needed to achieve the plans, and generally safeguarding all the financial resources of the entity. Financial managers are much more heavily involved in the management of the entity than is generally the case with either financial or management accountants. It should also be noted that the financial manager draws on a much wider range of d ines (such as economics and mathematics) and relies more extensively onion haere ages than does the more traditional accountant. Management Accounting Management accountin, rey \g incorporates cost i dapts th if decisions which manag pe accounting data and adapts them for specific ement may be called upon to make. A management accounting“stem incorportes RDS AASSSL SNS SSREIRTSMRGN rom » wide range of Sources. Taxation Tax accounting includes the preparation of tax returns and the consideration of the tax consequences of proposed business transactions or alternative courses of action. As typically known, accountants involved in tax work are responsible for computing the amount of tax payable by both business entities and individuals but their work is really more complex. Accountants with this specialization aim-to comply with existing tax statutes but are also in constant legal search for ways to minimize tax payments. It is not necessary for either companies or individuals to pay more tax than is lawfully due. If tar exer ia edie hel CHOMULBIGBS ety naccroonee wen the law, this is known as, Tax avoidance is a perfectly legitimate exercise, > eee ncatanseanaaiuaanaseeasess is avery serious offense. Government Accounting It is concerned with the identification of the sources and uses of resources consistent with the provisions of city, municipal, provincial or national laws. The government collects and spends huge amount of public funds annually so it is necessary that there is Proper custody and disposition of these funds.