Professional Documents
Culture Documents
Accountancy Profession
Accountancy Profession
Accounting is a service activity and the 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)
Overall Objective: To provide quantitative financial information about an entity that is useful in making
economic decision.
Components of Accounting: Identifying- accounting process is the recognition or nonrecognition
1. Identifying (analytical) of business activities as accountable events.
2. Measuring (technical)
3. Communicating (formal)
Not all business activities are accountable
The subject matter of accounting is economic activity or the measurement of economic resources and
economic obligations
Sociological and psychological matters are beyond the province of accounting
Historical cost is the most common financial attribute used in measuring financial information
Communicating- is the process of preparing and distributing accounting reports to potential users of accounting
information.
Communicating process is the reason why accounting has been called the “universal language of
business”
Implicit in the communication process are the recording, classifying and summarizing aspects of
accounting
Recording or journalizing is the process of systematically maintaining a record of all economic business
transactions after they have been identified and measured.
Classifying is the sorting or grouping of similar and interrelated economic transactions into their
respective classes. It is accomplished by posting to the ledger. The ledger is a group of accounts which
are systematically categorized into asset, liability, equity, revenue and expense accounts.
Summarizing is the preparation of financial statements.
R.A 9298 “Philippine Accountancy Act of 2004- the law regulating the practice of accountancy in the
Philippines.
Board of Accountancy- it is the body authorized by law to promulgate rules and regulations affecting the
practice of the accountancy profession in the Philippines.
SEC shall not register any corporation organized for the practice of public accountancy
Public accounting- composed of individual practitioners, small accounting firms and large multinational
organizations that render independent and expert financial services to the public.
Auditing is the primary services of CPAs in public practice. Auditing or external auditing is the
examination of financial statements by independent certified public accountant for the purpose of
expressing an opinion as to the fairness with which the financial statements are prepared. External
auditing is the attest function of the independent CPAs.
Taxation service include the preparation of annual income tax returns and determination of tax
consequences of certain proposed business endeavors.
Management advisory services has no precise coverage but it refer to services to clients on matters of
accounting, finance, business policies, organization procedures, product costs, distribution and etc.
o Advice on installation of computer system
o Quality control
o Installation and modification of accounting system
o Budgeting
o Forward planning and forecasting
o Design and modification of retirement plans
o Advice on mergers and consolidations
Private accounting- accountants employed in entities in various capacity as accounting staff, chief accountant or
controller.
Highest accounting officer in an entity is known as the controller.
The major objective of the private accountant is to assist management in planning and controlling the entity’s
operations.
Government accounting- it is the area of the accountancy profession that encompasses the process of analyzing,
classifying, summarizing and communicating all transactions involving the receipt and disposition of
government funds and property and interpreting the results thereof.
Focus: custody and administration of public funds
Bureau of Internal Revenue
Commission on Audit
Department of Budget and Management
Securities and Exchange Commission
Bangko Sentral ng Pilipinas
Continuing professional development refers to the inculcation and acquisition of advanced knowledge, skill,
proficiency and ethical and moral values after the initial registration of the CPA for accumulation into
professional practice and lifelong learning.
Raises and enhances the technical skill and competence of the CPA
The Continuing Professional Education is required for both renewal of CPA license and
accreditation to practice the accountancy profession.
CPD credit units or CPE credit hours required: 60 credits units for three years, provided that a minimum of
15 credit units shall be earned each year.
65 year old CPA- permanently exempted from the CPE requirement for the renewal of CPA license.
Purpose: identify proper accounting practices for the preparation and presentation of financial
statements.
Create common understanding between preparers and users of financial statements particularly the
measurements of assets and liabilities.
A set of high-quality accounting standards is a necessity to ensure comparability and uniformity in
financial statements based on the same financial information
Proper application of accounting principles is most dependent upon professional judgment of the accountant.
Once an accounting standard has been established the standard is continually reviewed to see if modification is necessary.
The singularly unique function performed by Certified Public Accountants is the attest function which means that CPAs are
primarily responsible for expressing an opinion as to the fairness of financial statements.