LESSON 1 Flashcards by BRIAN BEEFS

is to provide
quantitative information to be useful in making economic decisions

ACCOUNTING

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is an 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

Accounting

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OVERALL OBJECTIVES OF
ACCOUNTING

 Provide quantitative financial information about a business that is
useful to statement users particularly its owners and creditors in
making economic decisions
 The accountant’s primarily tasks is to supply financial information so that the users of the financial statements could make informed
judgments and better decision
 The essence of accounting is decision usefulness
 Investors and other users of the financial statements are interested
in accounting information necessary to make important and significant economic decisions

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Public accounting professions consists of accounting theoryfinancial accounting and reporting standards, practices and auditing
standards which is considered as a science of validation

SYSTEMATIC THEORY

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The field of public accounting or public accountancy is composed of
individual practitioners , small accounting firms and large
multinational organizations that render independent and expert
financial services to the public

SCOPE OF PRACTICE – PUBLIC ACCOUNTANCY

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SCOPE OF PRACTICE – PUBLIC ACCOUNTANCY

Public accountants usually offer three kinds of services:
i.e. Auditing, Taxation and Managerial Advisory Services

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Many CPAs are employed in business entities in various capacity as
accounting staff, chief accountant, internal auditor and controller
o The highest position of an accounting officer is Controller, Chief
Financial Officer, Vice-President for Finance, Treasurer

SCOPE OF PRACTICE – PRIVATE ACCOUNTING

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This includes maintaining of records, producing financial reports,
preparing the budgets, controlling and allocating the resources of
the entity

PRIVATE ACCOUNTING

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Shall constitute person in an educational institution which involves
teaching of accounting, auditing, management advisory services ,
finance, law taxation and other technical subjects

SCOPE OF PRACTICE – EDUCATION AND ACADEME

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encompasses the process of analyzing, classifying, summarizing
and communicating all transactions involving the receipt and
disbursement of government funds and property and interpreting
the results thereof

GOVERNMENT ACCOUNTING

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focus of government accounting is the custody and administration
of public funds

GOVERNMENT ACCOUNTING

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Proprietary functions where decision making requires professional
knowledge in accounting or where a civil service eligibility as a
certified public accountant is a prerequisite

SCOPE OF PRACTICE – PRACTICE IN GOVERNMENT

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is the body authorized by law to
promulgate rules and regulations affecting the practice of
accountancy profession in the Philippines
is responsible for preparing the grading of the Philippine CPA
examination

The Board of Accountancy (BOA) `

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is the law regulating the practice of Accountancy in the
Philippines

RA 9298

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LIMITATIONS OF THE PRACTICE OF PUBLIC ACCOUNTANCY

Single practitioners and partnerships engage in the practice of public
accountancy shall be registered certified public accountants in the
Philippines

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A certificate of accreditation shall be issued to CPAs in the public
practice upon showing with rules and regulations promulgated by
the Board of Accountancy and approved by the Professional
Regulation Commission that the registrant has acquired minimum
_____ _____ meaningful experience in any areas of public practice
including taxation

Three years

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shall not register any
corporation organized for practice of public accountancy in the
Philippines

The Securities and Exchange Commission (SEC)

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RATINGS IN THE CPA LICENSURE EXAMINATION

o A candidate must obtain a general average of 75% with no grades
lower than 65% in any given subject
o In the event that the candidate obtains a rating of 75% and above in
at least majority of the subjects as provided in this act, he or she shall receive a conditional credit for the subjects passed
o Provided, that a candidate shall take an examination in the remaining subjects within two (2) years from the preceding examination
o Provided further, that if the candidate fails to obtain at least a general average of 75% and a rating of at least 26% in each of the subjects reexamined, he/she shall be determined failed in the entire
examination

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upon favorable recommendation of BOA shall issue a Certificate
of Registration to practice public accountancy which shall be valid for
3 years and renewable every 3 years upon payment of required fees

PRC

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REQUIREMENTS TO ENTER THE ACCOUNTANCY PROFESSION

Graduate of Bachelor of Science in Accountancy conferred by a school, college or university duly recognized by the Commissioner on Higher Education (CHED)Qualify as professional accountant by passing the CPA Licensure
Examination administered by the Professional Regulatory Board of
Accountancy
`Satisfy all other legal and regulatory requirements before the
individual takes on the role of a professional accountant

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Qualifications of Applicant for Licensure Examination (CPALE)

o Filipino citizen
o Has good moral character
o Holder of a degree of Bachelor of Science in Accountancy
o Has not been convicted of any criminal offense involving moral
turpitude

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o A successful candidate in the examination shall be required to take an ____ of profession before any member of the Board or before any
government official authorized by the Commission or any person
authorized by law
o To administer oaths upon presentation of proof of his/her
qualification prior to entering upon the practice of the profession

oath

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will be issued to the examinees who pass
the CPA Licensure examination subject to the payment of prescribed fees to the Commission

A certificate of registration

A professional identification card bearing the registration number,
date of issuance, expiry date, duly signed by the chairperson of the
Commission shall likewise be issued to every registrant renewable for _____ _____

three years

Under the new BOA Resolution , all CPAs regardless of area or sector of practice shall be required to comply with ___ ___ ______ _____ in compliance period of three years

120 CPD credit units

shall be required to indicate his/her certificate of registration number and date of issuance, the duration of validity, including professional tax receipt number on the documents he/she signs, uses or issues in connection with the practice of her/his profession

certified public accountant

refers to the inculcation and acquisitions of advanced knowledge, skill, proficiency and ethical and moral values after the initial registration of the Certified Public Accountant for assimilation into professional practice and lifelong learning

CONTINUING PROFESSIONAL DEVELOPMENT (CPD)

__________ is essentially constructive in nature. __________ ceases when financial statements are already prepared

Accounting, Accounting

EXEMPTION FROM CPD

o A CPA shall be permanently exempted from CPD requirements upon reaching the age of 65 years o The exemption applied only to the renewal of CPA license and not for the purpose of accreditation to practice the accountancy profession

________ is analytical . The work of an ________ begins when the work of the accountant ends

Auditing, Auditor

examines the financial statements to ascertain whether they are in conformity with generally accepted accounting principles

Auditor

is used in reference only to a particular field of accountancy such as public accounting, private accounting and government accounting

Accounting

replaces the International Accounting Standards Committee or IASC

International Accounting Standards Board (IASB)

`is procedural and largely concerned with development and maintenance of accounting records `is the “how” of accounting

Bookkeeping

 is primarily concerned with the recording of business transactions and the eventual preparation of financial statements  It focuses on general purpose financial statements intended for internal and external users

Financial Accounting

refers to the profession of accounting practice

Accountancy

`represent rules, procedures, practice and standards followed in the preparation and presentation of financial statements `These are laws that must be followed in financial reporting

GENERALLY ACCEPTED PRINCIPLES

New types of transactions occur in trade and commerce, accountants develop rules and procedures for recording them, Accounting rules, procedures and practices came to known as

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

`is the accumulation and preparation of financial reports for internal users only `s the area of accounting that emphasizes developing accounting information for use within an entity

Managerial Accounting

In the ___________, the development of generally accepted accounting principles is formalized initially through the creation of the ___________ _________ _______ (____)

Philippines, Accounting Standards Council

The approved statements of FRSC are known as

the Philippine Accounting Standards (PAS) and Philippine Financial Reporting Standards (PFRS)

_________ _________ _________ _______ (____) now replaces the Accounting Standards Council

Financial Reporting Standards Council (FRSC)

____ is the accounting standard body created by the Professional Regulation Commission upon recommendation of the Board of Accountancy to assist BOA in carrying out its powers and functions provided by RA 9298

FRSC

purpose of accounting standards

`is to identify proper accounting practices for the preparation and presentation of financial statements ` creates a commons understanding between preparers and users of financial statements particularly the measurement of assets and liabilities

 The main function is to establish and improve accounting standards that will be considered generally accepted in the Philippines  The accounting standards promulgated by ____ constitute the “highest hierarchy” of generally accepted accounting principles in the Philippines

FRSC

Interpretations are intended to give authoritative guidance on issues that are likely to receive divergent or unacceptable treatment because the standards do not provide specific and clear cut rules and guidelines

PHILIPPINE INTERPRETATIONS COMMITTEE (PIC)

FRSC is composed of 15 members with a Chairman who had been or presently a senior accounting practitioner and 14 representatives from the following :

Board of Accountancy (1), Securities and Exchange Commission (1), Bangko Sentral ng Pilipinas (1), Bureau of Internal Revenue (1)Commission on Audit (1), Major organization of preparers and users of financial statements (Financial Executive Institute of the Philippines (FINEX), Accredited national professional organizations of CPAs : Public Practice (2), Commerce and Industry (2), Academe or Education (2) and Government (2)

The Chairman and the members of FRSC shall have a term of

3 Years

was formed by the FRSC in August 2006 and has replaced the Interpretation Committee or IC formed by the Accounting Standards Council in May 2000

PHILIPPINE INTERPRETATIONS COMMITTEE (PIC)

to prepare interpretations of PFRS for approval by FRSC and to provide timely guidance on financial reporting issues not specifically addressed in current PFRS

PHILIPPINE INTERPRETATIONS COMMITTEE (PIC)

is an independent private sector body which objective is to achieve uniformity in the accounting principles which are used by business and other organizations for financial reporting around the world

INTERNATIONAL ACCOUNTING STANDARDS COMMITTEE (IASC)

 It was formed in June 1973 through an agreement made by professional accountancy bodies from Australia, Canada, France, Germany, Japan, Mexico, the Netherlands , United Kingdom, Ireland and the United States.  Its headquarter is in London , United Kingdom

INTERNATIONAL ACCOUNTING STANDARDS COMMITTEE (IASC)

The pronouncements of IASC continue to be designated as

International Accounting Standards (IAS)

Objective of International Accounting Standarads Comittee (IASC)

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

publishes standards in a series of pronouncements called International Financial Reporting Standards (IFRS)

Inaternational Accounting Standards Board (IASB)