Accounting function- to provide quantitative affecting the practice of the accountancy

information, primarily financial in nature, profession

about economic entities that is intended to - Responsible for preparing and
be useful in making economic decisions. grading the CPALE
(ASC)
Single practitioners and partnerships
Components of Accounting: should be registered CPAs in the PH.
1. Identifying (analytical) - A certificate of accreditation is
- Recognition of accountable needed
business activities - Registrant should have a minimum
- Only accountable when it has of three years of meaningful
an effect to ALOE experience in any of the areas of
- Economic activity is the public practice including taxation
subject matter of accounting - Corporations are not allowed to
2. Measuring (technical) register.
- PH peso
- Bases: historical cost (most Certificate of Registration to practice
common), current cost, public accountancy shall be valid for 3
realizable value, and present YEARS and renewable every 3 years upon
value payment of required fees.
3. Communicating (formal)
- Preparing and distributing 3 main areas of CPAs:
accounting reports 1. Public Accounting
- This process is the reason - Render independent and expert
why accounting is called the financial services to the public
universal language of - Usual services: Auditing (primary
business service; external auditing being
- Processes: recording the attest function of CPAs),
(journal), classifying (ledger), Taxation, MAS
and summarizing (prep 2. Private Accounting
financial reports) - Controller is the highest accounting
officer
Key Product of accounting as an - Assist management in planning and
information system= SET OF FS controlling the entity’s operations
- Also responsible for the
Essence of accounting= determination of various taxes the
decision-usefulness entity is obliged to pay
3. Government Accounting
Philippine Accountancy Act of 2004- - Receipt and disposition of
Republic Act No. 9298- current law government funds and property and
regulating the practice of accountancy interpreting the results thereof
- Custody and administration of public
Board of Accountancy- body authorized funds
by law to promulgate rules and regulations
REPUBLIC ACT NO. 10912
- Mandating and strengthening the
continuing professional development
program for all regulated
professions, including accountancy
- Required CPD units: 120
- Excess credit units earned shall
not be carried over to the next
three-year period, except those for
masteral and doctoral degrees
- Those reaching the age of 65 years
are permanently exempted from
CPD
- This exemption is only for
renewal of CPA license, not
for the purpose
accreditation to the practice
BOOKKEEPING VS ACCOUNTING VS
AUDITING
- Bookkeeping is procedural.
- Accounting is constructive and
conceptual
- Auditing is analytical.
Accountancy vs Accounting
- Accountancy refers to the profession
of accounting practice
- Accounting is a particular field of
accountancy
Financial accounting vs Managerial
accounting
- Financial accounting- preparation of
financial reports for internal and
external users
- Managerial accounting- for internal
users only
Generally Accepted Accounting
Principles (GAAP)
- Rules, procedures and practices
followed in the preparation and
presentation of FS
FINANCIAL REPORTING STANDARDS
COUNCIL (FRSC)
- Responsible for the development of
GAAP
- Initially done by Accounting
Standards Council
- Main function: establish and improve
accounting standards, known as the
highest hierarchy of GAAP in PH
- Accounting standard setting body
created by the PRC upon the
recommendation of the BOA to
assist BOA
- Approved statements of the FRSC
are called: Philippine Accounting
of Standards or PAS and the
Philippine Financial Reporting
Standards or PFRS
COMPOSITION OF FRSC
- 15 members
- Chairman, must have an experience
of being or currently a senior
accounting practitioner
- 14 representatives
1 each:
- BOA
- SEC
- BSP
- BIR
- COA
- FINEX
2 each:
- Accredited national
professional orgs of CPAs
(different practices)
- All members have 3 years
renewable for another term
- Those who are members of ASC are
not disqualified from being appointed
to the FRSC
PHILIPPINE INTERPRETATIONS FASB and IASB. But at present, it is now
COMMITTEE (PIC) based on IAS and IFRS.
- Formed by the FRSC in August
2006
- Replaced the Interpretations
Committee formed by ASC
- Role: prepare interpretations of
PFRS for the approval by the FRSC
and provide timely (authoritative)
guidance on financial reporting
issues not specifically addressed in
current PFRS
- Counterpart in the UK: International
Financial Reporting Interpretations
Committee (IFRIC) which replaced
Standing Interpretations Committee
(SIC)

INTERNATIONAL ACCOUNTING
STANDARDS COMMITTEE (IASC)
- Objective of achieving uniformity in
the accounting principles for the
purpose of financial reporting around
the world
- For the improvement and
harmonization of regulations,
standards, and procedures in the
presentation of FS
- Pronouncements: INTERNATIONAL
ACCOUNTING STANDARDS

INTERNATIONAL ACCOUNTING
STANDARDS BOARD (IASB)
- Replaces IASC
- Publishes standards in a series of
pronouncements called:
INTERNATIONAL FINANCIAL
REPORTING STANDARDS (IFRS)
- Adopted the body of standards by
the IASC

In the previous years, FRSC based the

standards on american bodies such as USA