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    The Accountancy Profession

    Uploaded by

    Cher Na
    accounting

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    © All Rights Reserved
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    The Accountancy Profession

    Uploaded by

    Cher Na
    15 views29 pages
    accounting

    Copyright

    © © All Rights Reserved

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    PPT, PDF, TXT or read online from Scribd

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    accounting

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    15 views29 pages

    The Accountancy Profession

    Uploaded by

    Cher Na
    accounting

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 29

    THE

    ACCOUNTANCY
    PROFESSION
    Accounting

    Accounting is a service activity, which function is to provide


    quantitative information, primarily financial in nature, about
    economic entities, that is intended to be useful in making
    economic decision.

    -Accounting Standards Council


    Accounting

    Accounting is the art of recording, classifying and


    summarizing in a significant manner and in terms of money
    transactions and events which are in part at least of a
    financial character and interpreting the results thereof.

    - Committee on Accounting Terminology of the American Institute of Certified Public


    Accountants
    Analyzing events and transactions
    Involves assigning to determine whether or not they
    numbers, normally in will be recognized.
    monetary terms, to the
    Accounting economic transactions
    and events.

    Accounting is “the process of IDENTIFYING, MEASURING and


    COMMUNICATING economic information to permit informed
    judgments and decisions by users of the information.

    Transforming economic data into -American Association of Accountants


    useful accounting information, such
    as financial statements and other
    accounting reports, for
    dissemination to users.
    IDENTIFYING

    • Only accountable events are recognized.


    • Accountable event – one that affects the assets, liabilities,
    equity, income or expenses of an entity.
    • Recognition – 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.
    MEASURING

    • Financial statements are said to be prepared using a


    mixture of cost and values.
    • Valuation by opinion – when measurement is affected by
    estimates.
    • Valuation by fact - Several measurement bases are used in
    accounting which include, but not limited to, historical
    cost, fair value, present value, realizable value, current
    cost and sometimes inflation-adjusted cost.
    COMMUNICATING
    • Involves three aspects namely:

    • The communication process is the reason why accounting has been called the “universal language of business”
    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 ACCOUNTANCY PROFES

    • Is regulated by RA 9298 or the Philippine Accountancy Act of


    2004.
    • In order to qualify to the practice of the accountancy
    profession, a person must finish a degree in Bachelor of
    Science in Accountancy and pass a very difficult government
    examination given by the Board of Accountancy.
    • Board of Accountancy – the body authorized by law to
    promulgate rules and regulations affecting the practice of
    accountancy profession in the Philippines.
    THREE MAIN AREAS OF
    ACCOUNTANCY PRACTICE
    Limitations of the Practice of Public
    Accountancy
    Those in the practice of public
    accountancy shall:
    •be registered CPAs in the Philippines;
    •obtain a valid certificate of
    accreditation as CPA in Public Practice;
    •not be a corporation. THE SEC shall
    not register any corporation organized
    for the practice of public accountancy.
    Accreditation to Practice Public
    Accountancy
    • A certificate of accreditation shall be issued to CPAs in
    public practice only upon showing that such
    registrant has acquired a minimum of three years of
    meaningful experience in any of the areas of public
    practice including taxation.
    • The PRC, upon favorable recommendation of the BOA
    shall issue the Certificate of Registration to practice
    public accountancy which shall be valid for 3 years
    and renewable every 3 years upon payment of
    required fees.
    Services Offered by Public Accounting
    Practitioners
    Continuing Professional Development
    (CPD)
    • Continuing Professional Development – the inculcation and
    acquisition of advanced knowledge, skill, proficiency, and
    ethical and moral values after the initial registration of the
    CPA for assimilation into professional practice and lifelong
    learning.
    • Under the new BOA Resolution, all CPAs regardless of area
    or sector of practice shall be required to comply with 120
    CPD credit units in a compliance period of three years.
    • Excess credit units shall not be carried over to the next
    three-year period, except credit units earned for masteral
    and doctoral degrees.
    Exemption from CPD

    • A CPA shall be permanently exempted form CPD


    requirements upon reaching the age of 65
    years.
    • This exemption applies only to the renewal of
    CPA license and not for the purpose of
    accreditation to practice the accountancy
    profession.
    Accounting VS. Auditing
    • In a broad sense, accounting embraces
    auditing.
    • In a limited sense, accounting is essentially
    constructive in nature. Accounting ceases
    when financial statements are already
    prepared. On the other hand, auditing is
    analytical. The work of an auditor begins
    when the work of accountant ends.
    Accounting VS. Bookkeeping

    • Bookkeeping is procedural while Accounting is conceptual


    • Bookkeeping is a procedural element of accounting.
    Accounting VS. Accountancy

    • Broadly speaking, the two terms are synonymous.


    • Technically speaking, accountancy refers to the profession while
    accounting refers only to a particular field of accountancy.
    Financial Accounting VS. Managerial
    Accounting
    • The accounting rules, procedures, practices and
    standards followed in the preparation and
    presentation of financial statements.
    • Developed based on experience, reason, custom,
    usage and practical necessity.
    • The process of establishing GAAP is a political process
    which incorporates political actions of various
    interested user groups as well as professional
    judgment, logic and research.
    Purpose of Accounting Standards

    • 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
    statement based on the same financial information.
    Financial Reporting Standards Council

    • The development of the GAAP is formalized initially through the


    creation of the Accounting Standards Council.
    • The FRSC now replaces the ASC.
    • The FRSC is the accounting standard setting body created by the
    PRC upon recommendation of the BOA to assist the BOA in
    carrying out its powers and functions provided under R.A. 9298.
    • The accounting standards promulgated by the FRSC known as the
    Philippines Accounting Standards (PAS) and Philippine Financial
    Reporting Standards (PFRS), constitute the highest hierarchy of
    generally accepted accounting principles in the Philippines.
    Philippine Interpretations Committee

    • The PIC was formed by the FRSC on August 2006


    and has replace the Interpretations Committee or IC
    formed by the ASC in May 2000.
    • The role of the PIC is to prepare interpretations of
    PFRS for approval by the FRSC and to provide timely
    guidance on financial reporting issues not
    specifically addressed in current PFRS.
    International Accounting Standards
    Committee
    • An independent private sector body, with the objective of achieving
    uniformity in the accounting principles which are used by business
    and other organizations for financial reporting around the world.

    Objectives:
    • To formulate and publish in the public interest accounting standards
    to be observed in the presentation of financial statements and to
    promote their worldwide acceptance and observance.
    • To work generally for the improvement and harmonization of
    regulations, accounting standards and procedures relating to the
    presentation of financial statements.
    International Accounting Standards
    Board
    • The IASB now replaces the IASC.
    • The IASB published standards in a series of
    pronouncements called International Financial
    Reporting Standards.
    • The IASB standard-setting process includes in
    the correct order research, discussion paper,
    exposure draft and accounting standard.
    Move Toward IFRS

    • The move toward IFRS is essential to achieve the goal of one uniform
    and globally accepted financial reporting standards.
    • The Philippines is fully compliant with IFRS starting January 2005. The
    following factors are considered in deciding to move totally to IFRS:
    • Support of international accounting standards by Philippine
    organizations such as SEC, BOA and PICPA.
    • Increasing internalization of business which has heightened
    interest in a common language for financial reporting.
    • Improvement of IAS or removal of free choices of accounting
    standards.
    • Increasing recognition of IAS by the World Bank, Asian
    Development Bank and World Trade Organization.
    Philippine Financial Reporting Standards

    The Philippine Financial Reporting Standards collectively include all of


    the following:
    •Philippine Financial Reporting Standards which correspond to
    International Financial Reporting Standards.
    •Philippine Accounting Standards which correspond to International
    Accounting Standards.
    •Philippine Interpretations which correspond to Interpretations of the
    IFRIC and the Standing Interpretations Committee and Interpretations
    developed by the Philippine Interpretations Committee.
    -End-
    Thank you

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