1.

1 The Accountancy Profession

MR. BALBASTRE AUG 6, 2020

DEFINITION (2 members each)

 A service activity. Its function is to provide quantitative  Public Practice
information, primarily financial in nature, about  Commerce and Industry
economic entities, that is intended to be useful in making  Academe or Education
economic decision.  Government
 Chairman who is presently a senior accounting
 It is the art of recording, classifying and summarizing in practitioner
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. ACCOUNTANCY PROFESSION
 It is the process of identifying, measuring and A. PUBLIC ACCOUNTING
communicating economic information to permit  composed of individual practitioners, small accounting
informed judgement and decision by users of the firms and large multinational organizations that render
information. independent and expert financial services to the public.

 Provide quantitative financial information about a a. Auditing/external auditing

business that is useful to statement users (owners, - Primary service mostly offered
creditors) in making economic decisions. - Examination of financial statements by
 PRIMARY TASK: to supply financial information so independent CPA to express a fair opinion.
that the statement users could make informed - “attest function of independent CPAs”
judgement and better decisions.
 ESSENCE: decision-usefulness, necessary in making ex:
important and significant economic decisions. *BIR – to accompany the filing of annual income
*Banks and Lending Ins. – needs auditing before
granting a loan
*Creditors and Inventors – needs auditing to
WHAT QUANTITATIVE INFORMATION? make economic decisions
 Financial Statements
 Statement of Financial Position b. Taxation
 Statement of Comprehensive Income - Preparation of annual income tax returns and
 Statement of Cash Flows/ determination of tax consequences of certain
 Statement of Changes in Equity proposed business endeavors.
 Notes to financial Statements - The CPA not infrequently represents the client in
tax investigations.
- The CPA must be thoroughly familiar with the
WHAT IS THE GENERAL GUIDE/STANDARDS IN tax laws and regulations and updated with
PREPARING THE FINANCIAL STATEMENTS?
changes in taxation law and court cases
 GENERALLY ACCEPTED ACCOUNTING concerned with interpreting taxation law.
PRINCIPLES
 Accounting rules, procedures and practices. c. Management Advisory Services
 Represent the rules, procedures, practice and - Has no precise coverage but is used generally to
standards followed in the preparation and refer to services to clients on matters of
presentation of financial statements. accounting, finance, business policies,
 Develop on the basis of experience, reason, custom, organization procedures, product costs,
usage and practical necessity. distribution and many other phases of business
 Formal GAAP - PAS/PFRS conduct and operations.

Standards in preparing the financial statements Includes:

1. Informal – based on experience
2. Formal – nakasulat na (PAS – old; PFRS – new)
WHO PROMULGATES THE PAS/PFRS?
Composition:
 Financial Reporting Standards Council (FRSC)
(1 member each)
 Board of Accountancy (BOA)
 Securities and Exchange Commission (SEC)
 Bangko Sentral ng Pilipinas (BSP)
 Bureau of Internal Revenue (BIR)
 Commission on Audit (COA)
 Financial Executive Institute of the Philippines
(FINEX)
 Accredited national professional organization:
a. Advice on installation of computer system.
b. Quality control
c. Installation and modification of accounting
system.
d. Budgeting
e. Forward planning and forecasting
f. Design and modification of retirement plans
g. Advice on mergers and consolidations
B. PRIVATE ACCOUNTANCY
 employed in business entities in various capacity
 maintaining the records, producing the financial
reports, preparing the budgets and controlling and
allocating the resources of the entry
  responsibility for the determination of the various
taxes the entity is obliged to pay.

 Accounting Staff
 Chief Accountant
 Internal Auditor
 Controller
- Highest accounting officer in an entity

C. GOVERNMENT ACCOUNTING
 Process of analyzing, classifying, summarizing, and
communicating all transactions involving the receipt
and disposition of government funds and property
and interpreting the results and thereof.
 FOCUS: the custody and administration of public funds.

CPAs in Branches of the Government

a. Bureau of Internal Revenue
b. Commission on Audit
c. Department of Budget and Management
d. Securities and Exchange Commission
e. Bangko Sentral ng Pilipinas

D. ACADEME OR EDUCATION

Board of Accountancy
- The body authorized by law to promulgate rules
and regulations affecting the practice of the
accountancy profession in the Philippines.
- Responsible for preparing and grading the
Philippine CPA examination.

LIMITATION IN PUBLIC PRACTICE

A. Republic Act 9298
- Known as the “Philippines Accountancy Act of
2004”
- Has developed a status equivalent to that of Law
and Medicine.
- Law regulating the practice of accounting in the
Philippines

 Needs to pass the CPALE

 CPD Credit Units
- 15 units to renew professional license.
- 120 units to be accredited to practice public
accounting renewable every 3 years.
 3 years of meaningful experience

A certificate of accreditation shall be issued to CPAs

in public practice only upon showing in accordance with rules
and regulations promulgated by the Board of Accountancy and
approved by the Professional Regulation Commission that
such registrant has acquired a minimum of three years of
meaningful experience in any of the areas of public practice
including taxation.
The security and Exchange Commission shall not
register any corporation organized for the practice of public
accountant.

B. Republic Act 10912

- Law mandating and strengthening the continuing
professional development (CPD) program for all
professions, including the accountancy profession.

Continuing professional development

 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.
 raises and enhances the technical skill and
competence of the CPA.