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The Accountancy Profession acquired a minimum of three years of meaningful experience in any

of the areas of public practice including taxation.


Definition of Accounting The Securities and Exchange Commission shall not register any
corporation organized for the practice of public accountancy.
Accounting Standards Council – Accounting is a service activity. The
accounting function is to provide quantitative information, primarily Accreditation to practice public accountancy
financial in nature, about economic entities, that is intended to be
useful in making economic decision. PRC (with recommendation of BOA) shall issue the Certificate of
Registration to practice public accountancy which shall be valid for 3
American Institute of Certified Public Accountants – Accounting is years and renewable every 3 years upon payment of required fees.
the art of recording, classifying and summarizing in a significant
manner and in terms of money, transactions and events which are in CPAs generally practice their profession in three areas, namely:
part at least of a financial character and interpreting the results Public Accounting – render independent and expert financial
thereof. services to the public. (ex. Auditing, Taxation and MAS)
American Accounting Association – Accounting is the process of a. Auditing or external auditing is the examination of
identifying, measuring and communicating economic information to financial statements by independent certified public
permit informed judgement and decision by the users of the accountant for the purpose of expressing an opinion as to
information. the fairness with which the financial statements are
Important Points prepared.
b. Taxation includes the preparation of annual income tax
One – Accounting is about quantitative information. returns and determination of tax consequences of certain
Two – The information is likely to be financial in nature. proposed business endeavors.
Three – The information should be useful in decision making. c. Management advisory services refer to services to clients
on matters of accounting, finance, business policies etc.
Definition that stood the test of time – American Accounting
Association Private Accounting – is to assist management in planning and
controlling the entity’s operations.
The definition states that accounting has number of components,
namely: The highest accounting officer in an entity is known as the
controller.
a. Identifying as the analytical component.
b. Measuring as the technical component. Government Accounting – custody and administration of public
c. Communicating as the formal component. funds is its focus.

Identifying is the recognition or nonrecognition of business Continuing Professional Development (CPD)


activities as “accountable” events.
Economic activities of an entity are referred to as transactions which Also known as the Republic Act No. 10912. The CPD raises and
may be classified as external and internal. enhances the technical skill and competence of the Certified Public
Accountant.
a. External Transactions –involves one entity and another
entity. CPD credit units
b. Internal Transactions – involves the entity only. - 2017 (80 units), 2018 (100 units), 2019 (120 units)
Measuring is the assigning of peso amounts to the accountable - Revised to 15 units effective March 2019. However, this 15
economic transactions and events. units is applied only to the renewal of CPA license and not
for the purpose of accreditation to practice the
Communicating is the process of preparing and distributing accountancy profession.
accounting reports to potential users of accounting information. - Required for the renewal of CPA license and accreditation
Implicit in the communication process are the recording, classifying of CPA to practice the accountancy profession.
and summarizing aspects of accounting. - A CPA shall be permanently exempted from CPD
requirements upon reaching the age of 65 years.
a. Recording – Journalizing entries. However, this exemption is applied only to the renewal of
b. Classifying – Ledger posting. CPA license and not for the purpose of accreditation to
c. Summarizing – Preparation of Financial Statements. practice the accountancy profession.
Overall objective of Accounting Financial vs managerial accounting:
The overall objective of accounting is to provide quantitative Financial – focuses on general purpose reports intended for internal
financial information about a business that is useful to statement and external users.
users particularly owners and creditors in making economic Managerial – accumulation and preparation of financial reports for
decisions. internal users only.
The essence of accounting is decision-usefulness. Generally accepted accounting principles (GAAP):
The Accountancy Profession These are developed rules and procedures. The principles have
Republic Act No. 9298 – “Philippine Accountancy Act of 2004”. developed on the basis of experience, reason, custom, usage and
The Board of Accountancy is the body authorized by law to practical necessity.
promulgate rules and regulations affecting the practice of the GAAP represent the rules, procedures, practice and standards
accountancy profession in the Philippines. The BOA is also followed in the preparation and presentation of FS. These are like
responsible for preparing and grading the CPA Licensure laws that must be followed in financial reporting.
Examination.
The process of establishing GAAP is a political process which
Limitation of the practice of public accountancy incorporates political actions of various interested user groups as
Certificate of Accreditation – In accordance with rules and well as professional judgement, logic and research.
regulations by BOA and approved by PRC that such registrant has
The overall purpose of accounting standards is to identify proper FRSC – Philippine Financial Reporting Standards (PFRS)
accounting practices for the preparation and presentation of FS. ASC – Philippine Accounting Standards (PAS)*

Financial Reporting Standards Council (FRSC) is the standard *ASC promulgated, adopted by FRSC
setting body created by the PRC upon the recommendation of the
BOA to assist the BOA in carrying out its powers and functions Philippine Standards Which corresponds to
provided under R.A. 9298. It has replaced the Accounting Standards PFRS IFRS
Council (ASC). PAS IAS
Philippine Interpretations IFRIC, SIC and PIC
The main function is to establish and improve accounting standard
that will be generally accepted in the Philippines.

The approved statements of the FRSC are

a. Philippine Accounting Standards (PAS)


b. Philippine Financial Reporting Standards (PFRS)

Composition of FRSC:

FRSC Chairman 1
BOA 1
SEC 1
BSP 1
BIR 1
COA 1
FINEX 1
Accredited national professional
organization of CPAs:
Public Practice 2
Commerce and Industry 2
Academe or Education 2
Government 2
Total 15

Term – 3 years renewable for another term.

Philippine Interpretations Committee (PIC) was formed by the FRS


in August 2006 and has replaced the Interpretations Committee (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 Board (IASB) replaces the


International Accounting Standards Council (IASC). IASC is 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. It
was formed in June 1973.

Objectives of IASC:

a. 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.
b. To work generally for the improvement and harmonization of
regulations, accounting standards and procedures relating to the
presentation of financial statements.

Old New
IASC IASB
ASC FRSC

IASB – International Financial Reporting Standards (IFRS)


IASC – International Accounting Standards (IAS)*

*IASC promulgated, adopted by IASB

The IASB standard-setting process include in the correct order:


research, discussion paper, exposure draft and accounting standard.

Philippine Financial Reporting Standards (PFRS):

The FRSC issues standards in a series of pronouncements called


“Philippine Financial Reporting Standards” or PFRS.