THE

ACCOUNTANCY
PROFESSION
Conceptual Framework and Accounting Standards
OUTLINE
ACCOUNTING
OVERALL OBJECTIVE
OF ACCOUNTING
THE ACCOUNTANCY
PROFESSION
GENERALLY ACCEPTED
ACCOUNTING
PRINCIPLES (GAAP)
OUTLINE
PHILIPPINE FINANCIAL
AND SUSTAINABILITY
REPORTING
STANDARDS COUNCIL
(FSRSC)
PHILIPPINE
INTERPRETATIONS
COMMITTEE (PIC)
OUTLINE
PHILIPPINE FINANCIAL
REPORTING
STANDARDS (PFRSs)

INTERNATIONAL
ACCOUNTING
STANDARDS BOARD
(IASB)
 ACCOUNTING
Accounting
Accounting is a service activity. 1 Standards Council

The accounting function is to

provide quantitative information,
primarily financial in nature,
about economic entities, that is
2
intended to be useful in making
economic decision.
3
 ACCOUNTING
Accounting is the art of
1
recording, classifying and Committee on
summarizing in a significant Accounting
Terminology of the
manner and in terms of money,
transactions and events which
2 American Institute
of Certified Public
are in part at least of a financial Accountants
character and interpreting the
results thereof. 3
 ACCOUNTING
1

2
Accounting is the process of
identifying, measuring and American
communicating economic Accounting
information to permit informed
judgment and decision by
3 Association in its
Statement of Basic
Accounting Theory
users of the information.
 ACCOUNTING
The very purpose of accounting is to provide
quantitative information to be useful in making
an economic decision.

Quantitative Financial in Decision

Information Nature Making
Accounting is The information is The information
about quantitative likely to be financial should be useful in
information. in nature. decision making.
 ACCOUNTING

Identifying Measuring Communicating

IDENTIFYING
Identifying is the process of analyzing
events and transactions to determine
whether or not they will be
recognized.
Ø Recognition refers to the
process of including the
effects of an accountable
event in the statement of
financial position or the
statement of comprehensive
income through a journal
entry.
IDENTIFYING
Only accountable events
are recognized (i.e.,
journalized).

Ø An accountable event is one that affects

the assets, liabilities, equity, income or
expenses of an entity. It is also known as
economic activity, which is the subject
matter of accounting.
IDENTIFYING

Ø Non-accountable events are not

recognized but disclosed only in the
notes, if they have accounting relevance.
Disclosure only in the notes is not an
application of the recognition process.
 TYPES OF
EVENTS OR
TRANSACTIONS
EXTERNAL EVENTS
Events that involve an entity
and another external party.

INTERNAL EVENTS
Events that do not involve
an external party.
TYPES OF
EXTERNAL EVENTS EXCHANGE

An event wherein there is a

1 (RECIPROCAL
TRANSFER)
reciprocal giving and receiving of
economic resources or discharging
of economic obligations between
an entity and an external party. 2
Examples: sale, purchase, payment
of liabilities, receipt of notes
receivable in exchange for accounts
receivable, and the like.) 3
TYPES OF
EXTERNAL EVENTS
A "one way" transaction in that the
1
party giving something does not
receive anything in return, while the
party receiving does not give NON-RECIPROCAL
anything in exchange. 2 TRANSFER
Examples: donations, gifts or
charitable contributions, payment
of taxes, imposition of fines, theft,
provision of capital by owners, 3
distributions to owners, and the like.
TYPES OF
EXTERNAL EVENTS
An event that involves changes in
1
the economic resources or
obligations of an entity caused by
an external party or external
source but does not involve 2
transfers of resources or obligations.
Examples: changes in fair values
and price levels, obsolescence, EXTERNAL EVENT
technological changes, vandalism,
and the like.
3 OTHER THAN
TRANSFER
TYPES OF
INTERNAL EVENTS
PRODUCTION
The process by which resources are
transformed into finished goods.
Examples: conversion of raw materials
into finished products, production of
farm products, and the like.

CASUALTY
An unanticipated loss from disasters
or other similar events. Examples: loss
from fire, flood, and other catastrophes.
 MEASURING
Measuring involves assigning numbers,
normally in monetary terms, to the economic
transactions and events.
Ø historical cost
Ø fair value
Ø present value The most
Ø realizable value commonly used is
Ø current cost historical cost.
Ø replacement cost
Ø inflation-adjusted costs
COMMUNICATING
Communicating is the process of transforming
economic data into useful accounting information,
such as financial statements and other accounting
reports, for dissemination to users.

1. RECORDING
COMMUNICATING
2. CLASSIFYING
PROCESS
3. SUMMARIZING
COMMUNICATING
Communicating is the process of transforming
economic data into useful accounting information,
such as financial statements and other accounting
reports, for dissemination to users.

The process of systematically

committing into writing the identified
RECORDING and measured accountable events in
the journal through journal entries.
COMMUNICATING
Communicating is the process of transforming
economic data into useful accounting information,
such as financial statements and other accounting
reports, for dissemination to users.

The grouping of similar and

interrelated items into their
CLASSIFYING respective classes through postings
in the ledger.
COMMUNICATING
Communicating is the process of transforming
economic data into useful accounting information,
such as financial statements and other accounting
reports, for dissemination to users.

Putting together or expressing in

condensed form the recorded and
classified transactions and events.
SUMMARIZING This includes the preparation of
financial statements and other
accounting reports.
COMMUNICATING
Communicating also involves
interpreting the significance of
the processed information.
Interpreting the processed information
involves the computation of financial
statement ratios. Some regulatory
bodies, such as the Bangko Sentral ng
Pilipinas (BSP), require certain financial
ratios to be disclosed in the notes to
financial statements.
 OVERALL OBJECTIVE OF
ACCOUNTING
The overall objective of accounting is to provide
quantitative financial information about a business
that is useful to statement users particularly owners
and creditors in making economic decisions.

The essence of accounting is

decision-usefulness.
 PHILIPPINE
ACCOUNTANCY
ACT OF 2004
At present, Republic Act No. 9298
or the "Philippine Accountancy Act
of 2004" is the law regulating the
practice of accountancy in the
Philippines.
BOARD OF
ACCOUNTANCY
The Board of Accountancy is the body authorized by
law to promulgate rules and regulations affecting
the practice of the accountancy profession in the
Philippines.
BOARD OF
ACCOUNTANCY

The Board of Accountancy, under the supervision

and administrative control of the Professional
Regulation Commission (PRC), shall be composed
of (Sec. 5, RA 9298):
to be appointed by
Ø a chairman; and
the President of the
Ø six (6) members Philippines
QUALIFICATIONS OF
MEMBERS (Sec. 6, RA 9298) 1
A member of the Board shall, at the time of
his/her appointment, possess the following
qualifications:
2
Must be a natural-born citizen
and a resident of the Philippines
3

4
QUALIFICATIONS OF
MEMBERS (Sec. 6, RA 9298) 1
A member of the Board shall, at the time of
his/her appointment, possess the following
qualifications:
2
Must be a duly registered
Certified Public Accountant with 3
a least ten (10) years of work
experience in any scope of
practice of accountancy 4
QUALIFICATIONS OF
MEMBERS (Sec. 6, RA 9298) 1
A member of the Board shall, at the time of
his/her appointment, possess the following
qualifications:
2
Must be of good moral
character and must not have 3
been convicted of crimes
involving moral turpitude
4
QUALIFICATIONS OF
MEMBERS (Sec. 6, RA 9298) 1
A member of the Board shall, at the time of
his/her appointment, possess the following
qualifications:
2
Must not have any pecuniary interest,
directly or indirectly:
3
Ø in any school, college, university or
institution conferring an academic
degree necessary for admission to
the practice of accountancy; or
4
QUALIFICATIONS OF
MEMBERS (Sec. 6, RA 9298) 1
A member of the Board shall, at the time of
his/her appointment, possess the following
qualifications:
2
Must not have any pecuniary interest,
directly or indirectly:
3
Ø in any school, college, university or
institution where review classes in
preparation for the licensure
examination are being offered or
4
conducted; nor
QUALIFICATIONS OF
MEMBERS (Sec. 6, RA 9298) 1
A member of the Board shall, at the time of
his/her appointment, possess the following
qualifications:
2
He/she shall not be a member of the
faculty or administration in any school, 3
college, university or institution at the
time of his/her appointment to the
Board. 4
BOARD COMPOSITION
PRACTICE OF
ACCOUNTANCY
The practice of accounting can be broadly
classified into two:
it does not involve an
Ø Public practice employer-employee
relationship
it involves an employer-
employee relationship,
Ø Private practice
meaning the accountant
is an employee
 FOUR SECTORS IN
PRACTICE OF ACCOUNTANCY
It involves the rendering of PRACTICE IN PUBLIC
audit or accounting related 1 ACCOUNTANCY
services to more than one
client on a fee basis.
2
3

4
 FOUR SECTORS IN
PRACTICE OF ACCOUNTANCY
It refers to employment in the 1
private sector in a position
which involves decision PRACTICE IN
making requiring 2 COMMERCE AND
INDUSTRY
professional knowledge in the
science of accounting and
such position requires that the 3
holder thereof must be a
certified public accountant.
4
 FOUR SECTORS IN
PRACTICE OF ACCOUNTANCY
1
It involves employment in an
educational institution which
involves teaching of
2
accounting auditing, PRACTICE IN
management advisory
services, finance, business law,
3 EDUCATION /
ACADEME
taxation, and other technically
related subjects.
4
 FOUR SECTORS IN
PRACTICE OF ACCOUNTANCY
It involves employment or 1
appointment to a position in an
accounting professional group
in the government or in a GOCC,
including those performing
2
proprietary functions, where
decision making requires
professional knowledge in the 3
science of accounting or where
civil service eligibility as a PRACTICE IN THE
certified public accountant is a
prerequisite.
4 GOVERNMENT
GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
Generally accepted accounting
principles (GAAP) represent the rules,
procedures, practice and standards
followed in the preparation and
presentation of financial statements.
Generally accepted accounting principles
are like laws that must be followed in
financial reporting.
GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
PURPOSE: To identify proper accounting
practices for the preparation and
presentation of financial statements.

A set of high-quality accounting standards

is a necessity to ensure comparability and
uniformity in financial statements based on
the same financial information.
The term "generally acceptable" means
that either:
1. the standard has been established by
an authoritative accounting rule-
making body, e.g., the PFRSs adopted
by the FRSC; or
2. the principle has gained
general acceptance due
to practice over time and
has been proven to be
most useful, e.g., double-
entry recording and other
implicit concepts.
 GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
The generally accepted accounting principles in the
Philippines is the PHILIPPINE FINANCIAL REPORTING
STANDARDS.
PHILIPPINE FINANCIAL AND
SUSTAINABILITY REPORTING
STANDARDS COUNCIL (FSRSC)
The Financial and Sustainability Reporting
Standards Council (FSRSC) was established
by the Professional Regulatory Commission
(PRC) to assist the Board of Accountancy
(BOA) in carrying out its power and function
to promulgate accounting standards in the
Philippines.
 FSRSC

The FSRSC’s main function is to

establish generally accepted
accounting principles in the
Philippines.
In September 2022, the Professional Regulatory Board of
Accountancy (BOA) issued Board Resolution No. 44 (s.
2022) that contains the approval of the following:

Ø Adoption of the IFRS Sustainability Disclosure

Standards that will be developed by the
International Sustainability Standards Board
(ISSB) in the preparation of the general-
purpose financial statements; and

Ø Renaming of the Financial Reporting

Standards Council (FRSC) to Financial and
Sustainability Reporting Standards
Council (FSRSC).
 The change in name considers the expanded
role of FSRSC in the adoption of future
Sustainability Disclosure Standards.

This is in light of the increasing demand for high quality,

transparent, reliable and comparable reporting by
companies on climate and other environmental, social
and governance (ESG) matters.
FSRSC - Members
The FSRSC shall be composed of sixteen (16) members.
Ø Chairman 1
Ø Board of Accountancy (BOA) 1
Ø Securities and Exchange Commission (SEC) 1
Ø Bangko Sentral ng Pilipinas (BSP) 1
Ø Commission on Audit (COA) 1
Ø Bureau of Internal Revenue (BIR) 1
Ø Insurance Commission (IC) 1
FSRSC - Members
Ø A major organization composed of preparers
and users of financial statements (Financial
Executives Institute of the Philippines - FINEX) 1
Ø Accredited national professional organization
(APO) of CPAS:
o Public Practice 2
o Commerce and Industry 2
o Academe or Education 2
o Government 2 8
Total 16
 FSRSC - Members

The Chairman must have been

or is presently a senior
accounting practitioner in any
of the scope of accounting
practice.
PHILIPPINE SUSTAINABILITY
REPORTING COMMITTEE (PSRC)
The FSRSC established the Philippine
Sustainability Reporting Committee (PSRC)
on October 21, 2022, to evaluate the
International Sustainability Standards
Board’s IFRS Sustainability Disclosure
Standards for local use and to issue local
interpretation and guidance.
 OBJECTIVES
To issue implementation
guidance on Philippine
sustainability disclosure 1
standards adopted by
the FSRSC from the
sustainability disclosure
pronouncements duly issued 2
by the International
Sustainability Standards Board
(ISSB);
3
 OBJECTIVES

To comment on exposure
1
drafts of proposed
sustainability disclosure
standards issued by the ISSB
and other documents that
2
may be issued for comment
by the FSRSC; and
3
 OBJECTIVES
To comment on exposure
drafts of sustainability 1
disclosure standards or
proposed regulations with
sustainability reporting
relevance that may be issued 2
by financial sector regulators
and other relevant
government agencies or
stakeholders, such as the SEC, 3
BSP, IC, COA, and the Philippine
Stock Exchange.
PHILIPPINE INTERPRETATIONS
COMMITTEE (PIC)
The FSRSC formed the Philippine
Interpretations Committee (PIC) in
August 2006 to assist the FSRSC in
establishing and improving financial
reporting standards in the Philippines.

The role of the PIC is principally to issue

implementation guidance on PFRSs.
 OBJECTIVES
To issue implementation
guidance on Philippine
Accounting Standards (PAS), 1
Philippine Financial Reporting
Standards (PFRSs) and
related Interpretations
(collectively referred to as 2
PFRSs) adopted by
the FSRSC from accounting
pronouncements issued by
the International Accounting 3
Standards Board (IASB).
 OBJECTIVES
1
To comment on exposure
drafts of proposed PFRSs and
other documents that may be
issued for comment by
2
the FSRSC.

3
 OBJECTIVES
To comment on exposure 1
drafts of proposed
accounting standards or
proposed regulations with
accounting relevance that 2
may be issued by government
agencies, such as the
Securities and Exchange
Commission (SEC), Bangko
Sentral ng Pilipinas (BSP) and
3
Insurance Commission (IC).
The PIC shall deal with
accounting issues of reasonably
widespread importance and not
issues of concern only to a single
entity or small group of entities.
PIC - Members
The PIC shall consist of 15 representatives from the
following:
Ø Accounting Firms 9
Ø Financial Executives Institute of the Philippines
(FINEX) 1
Ø Academe (with a designated alternate) 1
Ø Securities and Exchange Commission (SEC) 1
Ø Bangko Sentral ng Pilipinas (BSP) 1
Ø Insurance Commission (IC) 1
Ø Board of Accountancy (BOA) 1
Total 15
 PHILIPPINE FINANCIAL
REPORTING STANDARDS
The PFRSs are Standards and Interpretations
adopted by the Financial and Sustainability
Reporting Standards Council (FSRSC).

PFRS PAS Interpretations

Philippine Financial Philippine
Philippine
Reporting Accounting Interpretations
Standards Standards
HIERARCHY OF
REPORTING STANDARDS
When selecting its accounting policies,
an entity considers the following in
descending order:
1. Philippine Financial Reporting Standards (PFRSs)
2. In the absence of a PFRS that specifically applies to a
transaction or event, management shall use its
judgment in developing and applying an accounting
policy that results in information that is relevant and
reliable.
In making the judgment:
1. management shall refer to, and consider the
applicability of, the following sources in
descending order:
a. The requirements in PFRSs dealing with similar
and related issues;
b. The Conceptual Framework.
2. management may also consider
the following:
a. Pronouncements of other
standard-setting bodies
b. Accounting literature and
accepted industry practices
INTERNATIONAL ACCOUNTING
STANDARDS BOARD (IASB)
The International Accounting Standards
Board (IASB) is the standard-setting body
of the IFRS Foundation with the main
objectives of developing and promoting
global accounting standards. The IASB was
established as part of the International
Financial Reporting Standards Foundation
or IFRS Foundation.
 OBJECTIVES
To formulate and publish in
the public interest accounting
standards to be observed in
the presentation of financial 1
statements and to promote
their worldwide acceptance
and observance.
2
 OBJECTIVES

1
To work generally for the
improvement and
harmonization of regulations,
accounting standards and 2
procedures relating to the
presentation of financial
statements.
The standards issued by the IASB are the
International Financial Reporting Standards
(IFRSs), composed of the following:
1. International Financial Reporting Standards (IFRSs)
2. International Accounting Standards (IASs)
3. Interpretations
INTERNATIONAL FINANCIAL
REPORTING INTERPRETATIONS
COMMITTEE (IFRIC)
A committee that prepares interpretations of
how specific issues should be accounted for
under the application of IFRS where:
1. The standards do not include specific
authoritative guidance; and
2. There is a risk of divergent and
unacceptable accounting practices.
 END
THE ACCOUNTANCY PROFESSION
Conceptual Framework and Accounting Standards