Course Outline: ACC 111 – Financial Accounting and Reporting

Course Coordinator: Esterlina B. Gevera

E-mail address. : egevera@umindanao.edu.ph
Student Consultation: By appointment
Mobile: 916-586-7793
Phone: (082) 3050646 loc. 137
Effectivity Date: Aug. 17, 2020
Mode of Delivery: Blended (On-Line with face to face or virtual sessions)
Time Frame: 108 Hours
Student Workload: Expected Self-Directed Learning
Requisites: None
Credit: 6
Attendance Requirements: A minimum of 95% attendance is required at all
scheduled Virtual or face to face sessions.

Course Outline Policy

Areas of Concern Details

Contact and Non-contact Hours
This 6-unit course self-instructional manual is designed
for blended learning mode of instructional delivery with
scheduled face to face or virtual sessions. The expected
number of hours will be 108 including the face to face or
virtual sessions. The face to face sessions shall include
the summative assessment tasks (exams) since this
course is crucial in the licensure examination for CPAs.

Assessment Task Submission Submission of assessment tasks shall be on the

schedule stated at the end of each ULOs. The
assessment paper shall be attached with a cover page
indicating the title of the assessment task (if the task is
performance), the name of the course coordinator, date
of submission and name of the student. The document
should be emailed/submitted the hard copy (thru courier
or other means) to the course coordinator. It is also
expected that you already paid your tuition and other
fees before the submission of the assessment task.

If the assessment task is done in real time through the

features in the Blackboard Learning Management
System, the schedule shall be arranged ahead of time
by the course coordinator.

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 Since this course is included in the licensure examination
for CPAs, you will be required to take the summative
exam in a form of Multiple-Choice Question and
competency assessment inside the University. This should
be scheduled ahead of time by your course coordinator.
This is non-negotiable for all licensure-based programs.
Turnitin Submission To ensure honesty and authenticity, all assessment
(if necessary) tasks are required to be submitted through Turnitin with
a maximum similarity index of 30% allowed. This means
that if your paper goes beyond 30%, the students will
either opt to redo her/his paper or explain in writing
addressed to the course coordinator the reasons for the
similarity. In addition, if the paper has reached more
than 30% similarity index, the student may be called for
a disciplinary action in accordance with the University’s
OPM on Intellectual and Academic Honesty.

Please note that academic dishonesty such as cheating

and commissioning other students or people to complete
the task for you have severe punishments
(reprimand, warning, expulsion).

Penalties for Late The score for an assessment item submitted after the
Assignments/Assessments designated time on the due date, without an approved
extension of time, will be reduced by 5% of the possible
maximum score for that assessment item for each day
or part day that the assessment item is late.

However, if the late submission of assessment paper

has a valid reason, a letter of explanation should be
submitted and approved by the course coordinator. If
necessary, you will also be required to present/attach
evidences.
Return of Assignments/ Assessment tasks will be returned to you two (2) weeks
Assessments after the submission. This will be returned by email or via
Blackboard portal.

In case of group assessment tasks, the course

coordinator will require some or few of the students for
online or virtual sessions to ask clarificatory questions to
validate the originality of the assessment task submitted
and to ensure that all the group members are involved.
Assignment Resubmission You should request in writing addressed to the course
coordinator his/her intention to resubmit an assessment
task. The resubmission is premised on the student’s
failure to comply with the similarity index and other
reasonable grounds such as academic literacy
standards or other reasonable circumstances e.g.
illness, accidents
2 or financial constraints.
Re-marking of Assessment
Papers and Appeal
Grading System
Preferred Referencing Style
Student Communication
You should request in writing addressed to the program
coordinator your intention to appeal or contest the score
given to an assessment task. The letter should explicitly
explain the reasons/points to contest the grade. The
program coordinator shall communicate with the
students on the approval and disapproval of the request.
If disapproved by the course coordinator, you can
elevate your case to the program head or the dean with
the original letter of request. The final decision will come
from the dean of the college.
All culled from Black Board sessions and
traditional contact
Course discussions/exercises – 30%
1st to 7th formative assessment – 30%
All culled from on-campus/onsite sessions (TBA):
Final exam – 40%
Submission of the final grades shall follow the usual
University system and procedures.
For referencing style, you will use the Harvard format.
For in-text citation name of author, year, page or
paragraph no. Ex. Ballada (2019, p 3.1) that …… For
reference list: Ex. Ballada, W. 2019, Basic Accounting
and Reporting, DomDane Publishers, Samplaloc
Manila.
You are required to create a umindanao email account
which is a requirement to access the BlackBoard portal.
Then, the course coordinator shall enroll the students to
have access to the materials and resources of the
course. All communication formats: chat, submission of
assessment tasks, requests etc. shall be through the
portal and other university recognized platforms.
You can also meet the course coordinator in person
through the scheduled face to face sessions to raise
your issues and concerns.
For students who have not created their student email,
please contact the course coordinator or program head.
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Contact Details of the Dean
Contact Details of the Assistant
Dean and Program Heads
Students with Special Needs
Online Tutorial Registration
Blackboard Help Desk
Instructional Help Desk
Well-being Welfare Support Held
Desk Contact Details
Dean Lord Eddie Aguilar
Email: aguilar_lordeddie@umindanao.edu.ph
Phone: (082) 305-0645
Asst. Dean Mary Grace Sombilon
Email: sombilon_marygrace@umindanao.edu.ph
Phone: (082) 305-0645
Mr. Devzon Porras
Email: dporrAS@umindanao.edu.ph
Phone : (082) 305-0645
Mr. Jade Solana
Email: jd_solana@umindanao.edu.ph
Phone: 082) 305-0645
Students with special needs shall communicate with the
course coordinator about the nature of his or her special
needs. Depending on the nature of the need, the course
coordinator with the approval of the program
coordinator may provide alternative assessment tasks
or extension of the deadline of submission of
assessment tasks. However, the alternative
assessment tasks should still be in the service of
achieving the desired course learning outcomes.
You are required to enroll in a specific tutorial session
when necessary or upon the recommendation of the
course coordinator. Tutorial session will be announced
later.
blackboardclass@umindanao.edu.ph
cae@umindanao.edu.ph
Ronadora E. Deala
Email: Ronadora_deala@umindanao.edu.ph
09212122846
GSTC Facilitator
Zerdszen P. Rañises
Emai: gstcmain@umindanao.edu.ph
09058924090
GSTC Facebook Page:
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 https://facebook.com/UM-GSTC-Main-CAE-
111901303784349/?modal=admin_todo_tour

Library Contact Brigida E. Bacani

Email: library@umindanao.edu.ph
09513766681

for inquiries, you can email

at umlic.eresources@gmail.com, raphael_digal@umindanao.e
du.ph or
chat with us here http://library.umindanao.edu.ph/
Facebook page: https://www.facebook.com/UM-Learning-
and-Information-Center-Davao-City-962331877193048/

Course Information – see/download course syllabus in the Black Board LMS

CC’s Voice: Hello future CPAs! Welcome to this course ACC 111: Financial Accounting and
Reporting. By now, I am confident that you really wanted to become a CPA and that you
have visualized yourself already being an accountant working in an industry or teaching
in a University.

CO Before you become a CPA, you have to deal with one of the major jobs of the accountant
the “Bookkeeping Skills” which is the ultimate course outcome (CO) of this subject. When
we talked about bookkeeping as a crucial component of Accounting analyzing business
transactions and preparation of financial statements are major tasks that you are going
to make and at the end of the course you will demonstrate the outcomes by completing
the accounting cycle through a competency assessment and a practice set.

Let us begin!

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BIG PICTURE
Unit Leaning Outcome Week 1-3 (SLO): At the end of the unit, you are expected to:
a. Define & describe the nature, scope, functions of accounting and its environment,
including its basic concepts and principles.
b. Describe the professional ethics and values in accounting profession.
c. Classify and define the elements of Financial Statements (Assets, Liabilities and Owner’s
Equity Accounts).

BIG PICTURE IN FOCUS: WEEK 1-3 (Aug. 17 to Sept. 5, 2020)

SLO(a) Define & describe the nature, scope, functions of accounting and its environment
including its basic concepts and principles.
SLO (b) Describe the professional ethics and values in accounting profession.
METALANGUAGE
In this section, the most essential terms relevant to the study of basic accounting and to
demonstrate SLO a & b is operationally defined in order to have a common understanding as to
how these terms are being used in this field. You will encounter these terms as we go through

the study of accounting. Please refer to these definitions in case you will encounter difficulty in
understanding accounting terms.

You can proceed immediately to the “Essential Knowledge” since the first lesson is also definition
of essential terms.

ESSENTIAL KNOWLEDGE
To attain the SLO for these three weeks you need to fully understand the following essential
knowledge that will be presented in the succeeding pages. Please note that you are not limited
to exclusively refer to these resources hence you are expected to utilize books textbook for this
course), research articles and other resources that are available in the university’s library such as
ebrary, search.proquest.com etc.

1. Evolution of Accounting- this refers to the different stages in the development of

accounting from primitive to modern ages.
2. Establishment of ASEAN – this pertains to the creation of Southeast Asian Nations
(ASEAN) envisioning a stable, prosperous and highly competitive ASEAN region. ASEAN
group of Asian nations where Philippines is a member. The practice of accounting
profession is one of the services in the AFAS (Asean Framework Agreement on Services)
whereby accountants in the Philippines is recognized in the ASEAN region to practice the
profession.

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 WHAT ARE THE TYPE OF ACTIVITIES THAT IS NORMALLY DONE IN A BUSINESS?
3. Financing Activities – this refers to activities of obtaining resources and how the
enterprise manage these resources to produce goods and services. Primary source of
financing are the owners and creditors such as banks and suppliers(Cash inflow). Example
of financing activities; investment of owners into the business; borrowing funds from
banks; repayment of these loans(Cash outflow); receipt of dividends (cash inflow) or
payment of dividends (cash outflow) are some example of financing activities.

4. Investing Activities – refers to activities in transforming resources from financing into a

different form to meet the needs of the customer or people. An example is when an
invested money of the owner or borrowed money from a financial institution is used to
buy machineries, building, land or equipment(Cash outflow) for the use of the business,
these are investing activities. When this land, building, machinery or equipment are
dispose (cash inflow) is also an example of investing activities.

5. Operating Activities – refers to activities involve the use of resources to design, produce,
distribute and market goods and services . This include research and development, design
and engineering, purchasing, human resources, production, distribution, marketing
selling and servicing. In other words all other activities that the company does which does
not fall under financing and investing are all operating activities. Example selling of goods,

6. collection of receivable, payment of account to supplier of goods and services, payment

of salaries of employees, etc.

FORMS OF BUSINESS ORGANIZATIONS

7. Sole proprietorship – this is a business organization owned by a single owner (called
proprietor) who generally manages the business such as practice of profession (e.g.
doctors, engineer, CPAs lawyers, etc) shops engage in services (e.g. beauty parlor, dress
shop, internet café, repair shop, etc.) or retail establishments (e.g. sari-sari store
convenient stores, boutique and many more. Since the business is owned by one owner
it follows that the owner shall solely benefit from profit or shoulder all the losses of the
entity.
8. Partnership – this is a business entity owned and managed 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. All partners are personally liable for
the debt incurred by the partnership which means that in case of partnership bankruptcy
the creditors can run after the personal assets of general partners.
9. Corporation – as define by the corporate law this 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 investors are called
shareholders. The shareholders are not personally liable for debts of the corporation.

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 From the point of view of accounting and the legal point of view the entity concept is true,
unlike in sole proprietorship and partnership.

10. Cooperative- Cooperative and Corporation is accounted similarly. These two entities
differs in terms of profit distribution. Cooperative distribute to members 70% of the net
profit (after deducting 30% statutory reserves) while Corporation distribute to
shareholders depending on the an amount declared by the board of directors or trustees.

Cooperative exists for the purpose of providing services to members while profit
oriented corporation exist to provide more return of investment to the investors.

Definition of Accounting
11. ACCOUNTING has four(4) definitions as define by different organization and standard
setting body.
- According to ASC (Accounting Standard Council) Accounting is a service activity,
financial in nature that provides quantitative information about economic entities
intended to useful in making economic decisions.
- According FASB(Financial Accounting Standards Board) Accounting is an information
system that measures, processes and communicates financial information about
economic entity.
- According to AICPA (American Institute of CPAs) Accounting is the process of
identifying, measuring and communication economic information to permit informed
judgments and decision by users of the information.

- According to AICPA this is the oldest definition of accounting. 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 in character, and
interpreting the results thereof.
Whatever is the definition of accounting as define by the different groups,
there is one common definition that encompasses the 4 definitions and
that is accounting provides quantitative information of business entities
useful to decision makers. Therefore, accounting is concern on business
transactions that can be quantified and can be measured.
12. Financial Statements (FS) – are the end product of the accounting process. There are
five(5) basic financial statements.
11.a Statement of Financial Position(SFP) (Old term is Balance Sheet)- it provides
information as to the financial condition of an entity as of a given period.
11.b Statement of Comprehensive Income(SCI) or Income Statement- it provides
information as to the financial performance (profit or loss) of an entity for a
given period.

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 11.c. Statement of Changes in Equity(SCE) – this presents a summary of changes in
capital such as initial investments of owner, additional investments of owner,
profit or loss from business operations and withdrawals of owner during a
specific period.
11.d. Statement of Cash flows (SCF) – it presents the cash flows of cash received
(cash inflow) and disbursed (cash outflow) during the period categorize as
Investing, Financing and Operating Activities.
11.e Notes to Financial Statements –information that are not captured in the FS but
is necessary to help users made an informed decision are presented in the notes
to financial statements. The notes to FS provides information in narrative form
about the items presented in the SFP and SCI such as; summary of significant
policies and other explanatory information, breakdown of line items and other
relevant information about the entity.
13. Micro, Small, Medium Enterprises – this refers to the various category of business,
groups according to its financial capacity. It is important to know what category does an
enterprise belongs to identify what framework is applicable to use in a particular business
entity.

WHO ARE MICRO, SMALL AND MEDIUM ENTERPRISES (MSMEs)

12.a Micro- refers to enterprises with assets of P3.0Million and below and employ not
more than nine (9) workers. This group shall use the PFRS for Small Entities.
12.b Small – refers to enterprises with assets of above P3.0 to P15Million and employ 10
to 99 workers. This group shall use the PRFS for Small Entities.
12.c Medium- refers to enterprises with assets of above P15Million to P100Million and
employ 100 to 199 workers. This group shall use PFRS for Medium Entities.

According to National Statistics Office (NSO) record in 2010, 99.6% of the total business
enterprises of the total 777,687 are MSMEs. 91.6% are micro and 8% are SMEs. This
means that our country is dominated by MSMEs, very few are large enterprise.

14. Accounting Standards in the Philippines- refers to the accounting standards use and
adopted in the Philippines that serves as guidance in the preparation and presentation of
financial reports.

15. Fundamental Concepts of Accounting - these are concepts underlie the accounting
process.
14.a Entity Concept- this concept is considered as the most basic concept in accounting.
In accounting a business entity is a separate economic unit from that of the owner.
Therefore, the owner and the business as an organization are two separate entities. In
case, a business has more than one line of business, it has to be accounted separately.

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 For example if a business is engage in retailing and at the same time has a food chain
business then these two businesses has to be accounted separately. Personal transactions
of the owner should not be mixed with business transactions. That is why any resources
taken by the owner from the business for personal use must be accounted under
withdrawal.
14.b Periodicity Concept- In order to measure the performance of the entity and to
obtain a timely information for decision making, the life of the business is divided into
meaningful periods. For reporting purposes one year is the usual accounting period. If the
business starts in January and ends in December it’s called calendar year, but when it
starts any month of the year and does not end in December it’s called fiscal year
accounting period.
14.c Stable Monetary Unit Concept- since the Philippine peso is a reasonable unit of
measure, therefore its purchasing power is regarded as relatively stable. Effects of
inflation is ignored in the accounting records, which means we do not adjust the amount
in the record every time there is fluctuation in the purchasing power of peso.
14.d Going Concern - business is regarded as a continuing activity. For as long as the
business is doing good, no owner would close a profitable business. When financial
statements are prepared it is based on an assumption that the reporting entity will
continue its operation for the foreseeable future. This assumption supports the practice
of depreciating the asset over its useful life to present a more meaningful and reliable
amount.

16. Fundamental Principles – these are guiding principles that accountants shall rely to
generate information that is useful to the users of financial statements.

WHAT ARE BASIC PRINCIPLES IN ACCOUNTING?

15.a Objectivity Principle- recorded data must be supported by an objective, accurate
and reliable evidences to make it useful to the users. To make data reliable it possess a

verifiable and confirmatory characteristics when confirmed by an independent observers

(normally done during audit). Otherwise without this principles accounting records would
be based on the caprices and opinions of preparers and is therefore subject to dispute.
15.b Historical Cost- this principle supports the objectivity principle which states that
assets acquired should be recorded at their actual cost and not at what management
thinks they are worth as at reporting date. For example a building constructed at P10
Million but if bought from a contractor will cost P15Million, at what amount should the
building be valued, it should be at P10Million because that is the actual amount spent in
the construction.
15.c Revenue Recognition Principle- this principle is in consonance with the accrual basis
of accounting which is the GAAP. Revenue is recognized in the accounting period when
goods are delivered or services are rendered or performed whether or not cash is
received. This principle supports the recognition of account receivable account.

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 15.d Expense Recognition Principle- expenses should be recognized in the accounting
period in which they are incurred whether or not payment is made. This is also in
compliance with the accrual basis of accounting.
15.e Adequate Disclosure – requires that all relevant information that would help the
user’s understanding about the entity must be disclosed in the notes to financial
statements. There are information which are not captured on the face of the financial
statements such as; the method used in valuing receivables, inventories, PPE etc.; if there
are assets being pledged as collaterals for a loan; if there are pledge or assign receivables,
these are only some of the examples which cannot be seen on the face of the FS but need
to be disclosed because it can help the user in making an informed decision.
15.f Materiality – an item is material if its omission or misstatement would reasonably
influence the decisions of a user. In judging whether an item is material or not, depends
on the size and nature of the item in a particular circumstances.
15.g Consistency Principle – methods use from period to period must be the same to
achieve comparability. Though changes are permitted, if such changes will result to a
better and more reliable information, provided the change must be disclosed.

17. Core Competencies Framework for Accountants – this refers to the framework
underlying the competencies required for a professional accountant.

WHAT ARE THE CORE COMPETENCIES FRAMEWORK OF ACCOUNTANTS

16.a KNOWLEDGE – a CPA should have general knowledge of the different cultures in the
world and developing an international perspective. He/she should be competent in
English language, adaptable to western business practices, trainable and possess good
interpersonal relationship attributes. A CPA should have core knowledge in areas of
economics, quantitative method and business statistics, organization behavior, marketing
and operations management and must be conversant as how global business system
works. A CPA should also be conversant with IT concepts for business system and sound
knowledge on internal control in computer-based system. A CPA should be proficient in
accounting and other related areas which includes International accounting and auditing

standards, cost management and the latest concepts in management accounting, recent
tax laws, business and commercial laws.
16.b INTELLECTUAL SKILLS – intellectual skills requires that a CPA can demonstrate
analytical, problem solving and critical thinking skills at all times. The attributes of
interpersonal skills is very important, where a CPA can demonstrate an ability to work in
a groups being a team player. Communication skills is imperative, this refers to the active
listening skills and the ability to effectively communicate both orally and in writing, at all
organizational levels, deliver powerful presentation and etc.
16.c VALUES – an accountant shall work in accordance with the highest standards of
professionalism in order 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

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 profession become vital. There is a need for CPAs to be able to discern between what is
morally right or wrong.

18. Users of accounting information- this refers to people or group of people or organization
(internal or external) who are interested of the accounting information. Such as
management, employees (internal), creditors, tax authorities, potential investors etc.
(external)

19. Quantifiable Business Transactions – this refers to business activities that transpired in
an organization (profit or non-profit) that is measurable therefore it is the subject for
recording. Recording these historical events is the significant function of accounting. Such
as, payment for salaries of employees, rental of office space, purchase of supplies or
materials, payment for utilities (light, water and telephone); selling of goods or services,
payment of accounts and many more. Business activities such as hiring of employees,
signing of business contracts, assisting students in enrolment, Food delivery etc are not
to be recorded since it is not quantifiable. In the case of hiring what is being recorded is
the amount of salaries paid to hired personnel, in contract signing it is the amount of
contract that is going to be recorded not the signing of the contract, in assisting students
during enrolment, it is the salaries of personnel that is recorded not the act of assisting,
in food delivery it is the amount of food delivered not the act of delivering it. In other
words there are business transactions which are not to be recorded simply because it is
not quantifiable. The function of accounting wherein we are going to determine whether
the business transaction is recorded or not is identifying.

WHAT IS GENERALLY ACCEPTED ACCOUNTING PRINCIPLES? (GAAP)

20. GAAP – as define by Ballada (2019, p. 1-21) GAAP encompass the conventions, rules and
procedures necessary to define accepted accounting practice at a particular time. These
accounting principles are established by humans, unlike other principles in physics,
chemistry and other natural sciences that can be verified through observation and
experiment. Instead accounting principles evolved therefore, these are not eternal truths.
General acceptance of an accounting principle usually depends on how well it meets three
criteria: relevance, objectivity and feasibility.

21. Criteria of Relevance- when an information derived from an accounting practice is more
meaningful and useful to the users. One example is when a financial statements are not
timely prepared, therefore it losses its relevance, because it is not used in making a
decision, so the practice of not preparing FS on time is not GAAP.
22. Criteria of Objectivity – when an information derived from an accounting practice is not
a product of bias or personal judgment. When the information is verified by one or more
independent parties and arrive at the same conclusion then such information is objective.
Sales invoice or official receipt is an objective document use to support revenue or
collection. Therefore, if the recorded data is supported by documents like invoice or

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 official receipt then it is an objective data because it can always be verified. That is why
in accounting, records must be supported by objective evidence.
23. Criteria of Feasibility – when a certain practice can be implemented without undue
complexity or cost. This principle supports a new PFRS (Philippine Financial Reporting
Standard) for Small Entities. Under this standard subsequent measure of Investment
Property(IE) and Property Plant Equipment (PPE) is at cost less depreciation or
impairment instead of revaluation model. This is so because revaluation model is costly
for these entities to bear hence, they are allowed to use the other valuation method.
24. International Federation of Accountants (IFAC)- an international organization
representing all the major accountancy bodies across the world. Its mission is to develop
high standards of professional accountant and enhance the quality of services they
provided.
25. Philippine Institute of Certified Public Accountant (PICPA) is the integrated national
professional organization of CPAs in the Philippines, accredited by the BOA (Board of
Accountancy) and PRC (Professional Regulation Commission).
26. Accounting Standards Council (ASC) -an organization created by PICPA to establish and
improve accounting standards that will be generally accepted in the Philippines. This was
replaced by Financial Reporting Standard Council (FRSC) when the Accountancy Act of
2004 was enacted.

Why Ethics is important in Financial Reporting?

27. Ethics is concerned with the right and wrong and how conduct should be judged to be
good or bad. Ethics is important especially in preparing financial reports because users
rely on these reports when they make economic decision hence, it is imperative that
people involved in the preparation must do it in good faith, with accuracy, without
personal biases, and should fully disclose all relevant facts for the users full understanding
of the entity’s financial condition and performance. If people involved in these reports
lied therefore generated information losses credibility.

What would these FS serve as a purpose? It provides financial information, therefore no

ethical financial reporting it will result to distorted information.(Read Enron case and,
WorldCom accounting scandal w/c lead to the creation of Sarbanes-Oxley Act in July
2002).

28. Professional Ethics of Accountants – refers to set of ethical standards approved by PRC
to ensure that professional accountants act in a high standards of professionalism and
provide quality service to the clients, employer or public in general.

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WHAT ARE THE FUNDAMENTAL PRINCIPLES IN THE CODE OF ETHICS FOR PROFESSIONAL
ACCOUNTANT?
27.a Integrity- this is an obligation impose to Professional Accountants (PAs) to be
straightforward and honest in all professional and business relationships. A person of
integrity practiced fair dealing and truthful in words and in action. PAs name should not
permit his name to be associated with reports, returns, communications or other
information where the he/she believes that such information contains a materially false
or misleading information , information furnished recklessly or omits or obscures
information that are required to be included that resulted to a misleading information.

27.b Objectivity – this is an obligation impose to PAs not to perform a professional service
if biases or unduly influences exist in such dealing or relationship which may influence to
override professional or business judgments.

27.c Professional Competence and Due Care – A CPA shall to it that in accepting
professional engagement, he/she possess the required level of skills to ensure that a

client or employer receives competent professional service. CPAs has to perform

diligently in accordance with the applicable technical and professional standards when
providing services. PAs has the obligation to maintain professional knowledge thru
continuing professional development that enable him/her to perform competently within
the professional environment.

27.d Confidentiality – a CPA should not disclosed information acquired as a result of

professional and business relationships without proper and specific authority or unless
there is a legal or professional right or duty to disclose. CPAs are not also allowed to use
confidential information acquired as a result of professional and business relationships
for his/her personal advantage or the advantage of third parties. In other words, PAs shall
maintain the confidentiality of information within the firm or employing organization.

27.eProfessional Behavior – this an obligation that is imposed to PAs to comply with

relevant laws and regulations and should avoid any action that discredits the profession.
PAs are prohibited to make exaggerated claims for the services they are able to offer,
qualification they possess or experience they have gained or making disparaging
references or unsubstantiated comparisons to the work of others.

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29. Accountancy Act 2004 - refers to RA 9298 which is the revised accountancy act, that
governs the practice of accounting profession including the scope of board examination,
scope of accounting practice and the qualification of the examinees.

Scope in the Practice of Accounting

28.a Public Accounting- either individual practitioner or partners of big accounting firms
or employee of big accounting firms that render services on a fee basis to clients. The
work includes: auditing, taxation, preparation of income tax returns and management
consultancy services. A CPA is normally a member of an organization called ACPAPP(Asso.
Of CPAs in Public Practice)

28.b Government Accounting- render services to government such as Dept. of Finance,

SEC, BSP, BIR, DBM, DPWH, COA, GOCC (sss,gsis, hdmf, phic), LGUs and many more. A CPA
is normally a member of GACPA. (Govt. Asso. Of CPAs)

28.c Private Accounting- in this field a CPA is employed in private firms or industry holding
the positions as Chief Accountant, Accounting Manager, Internal auditor, Finance
Manager or Comptroller. A CPA is a member of an organization called ACPACI. (Asso. of
CPAs in Commerce and Industry)

28.d Academe Sector- in this field a CPA is normally employed in an educational

institution offering accounting programs as teachers, researchers, reviewers and some
are authors of accounting books. They are the unsung heroes who are committed to

prepare the students who aspire to become CPAs in the future, they are member of an
organization called ACPAE. (Asso. of CPAs in Education).

30. Branches of Accounting – this pertains to the varied field of work where accountants are
needed. In this topic, you will learn what field of expertise you will choose in this discipline.

WHAT ARE THE BRANCHES OF ACCOUNTING?

29.a Auditing – this is the most significant service to the public in the accounting
profession. External/Independent Auditing refers to the independent examination of the
entity’s records with the purpose of expressing an opinion as to the fairness of the FS
presentation. The external auditor’s responsibility is to protect the interest of the user of
the FS. This is done by an independent auditor (meaning not employed by the company
under audit). Internal Auditing refers to evaluation of company’s internal control
including its corporate governance and accounting processes. This is to ensure
compliance to laws and regulations to help maintain accurate and timely financial
reporting and data collection. It also provide management with tools necessary to attain
operational efficiency by identifying problems and correcting lapses before they are
discovered in an external audit.

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29.b Bookkeeping – this is a mechanical task involving the collection of basic financial
data. Bookkeeping is normally involve of entering data in the books of accounts, classify
or sort the data, extract balances and summarized in the form of SPF and SCI and cash
flows. Bookkeeping is routinary in nature while accounting is analytical in nature.
Accounting is broader, while bookkeeping is one of the task in accounting.

29.c Cost Bookkeeping vs. Cost Accounting – cost bookkeeping is the process of entering
the cost data in the books of accounts, therefore it is similar to bookkeeping except that
data are recorded in very much greater detail. Cost Accounting make use of the
information extracted from the cost books for managerial planning and control. Some
accountants term this as costing, but today costing is not popularly use because it can
create confusion with other terms such as standard costing.

29.d Financial Accounting – this refers to the preparation of periodic of financial reports
such as SCI and SFP with greater compliance to the GAAP and subsequently publish
financial information.

29.e Financial Management – this branch is quite new in the practice of accounting
profession, though other companies employ Financial Managers even if they are not CPAs
for as long as they have long and wide experience in financing activities. This branch
involves setting of financial objectives, making plans, obtaining the finance needed to
achieve the plans and generally safeguarding all the financial resources of the entity.
Normally financial managers deals with a wide range of data such as economics and
mathematics and relies more extensively on non-financial data.

29.f Management Accounting – this branch of accounting is wider in terms of scope

because it incorporates cost accounting data, all types of financial and non-financial
information from wide sources and use it for specific decisions which management may
be called upon to make.

29.g Taxation – this refers to the preparation of tax returns in compliance with the
existing tax laws and regulations, help clients in tax planning to minimize impact on tax
(tax avoidance) and assist clients in resolving tax problems.

29.h Government Accounting – this branch of accounting is only applicable to

government agencies, therefore cannot be used in commercial accounting. This branch is
concern in identifying sources and uses of resources consistent with the provisions of
city, municipal, provincial or national laws. Therefore, it focuses on the proper custody
and disposition of funds collected by the government.

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