This document discusses the nature and users of accounting information, the branches of accounting, and the standard-setting process for accounting both internationally and in the Philippines. It describes the different types of accounting including financial, management, cost, tax, and government accounting. It also outlines the key standard-setting bodies including the IASB, IFRS Foundation, Accounting Standards Council in the Philippines, and Financial Reporting Standards Council, and their roles in developing accounting standards.
This document discusses the nature and users of accounting information, the branches of accounting, and the standard-setting process for accounting both internationally and in the Philippines. It describes the different types of accounting including financial, management, cost, tax, and government accounting. It also outlines the key standard-setting bodies including the IASB, IFRS Foundation, Accounting Standards Council in the Philippines, and Financial Reporting Standards Council, and their roles in developing accounting standards.
This document discusses the nature and users of accounting information, the branches of accounting, and the standard-setting process for accounting both internationally and in the Philippines. It describes the different types of accounting including financial, management, cost, tax, and government accounting. It also outlines the key standard-setting bodies including the IASB, IFRS Foundation, Accounting Standards Council in the Philippines, and Financial Reporting Standards Council, and their roles in developing accounting standards.
INFORMATION measurement and recognition of cost services provided or products manufactured. More Internal Users – active owners and managers use associated with manufacturing companies. financial info. for internal decision-making. Users 4. Tax Accounting – concerned with the have ready access to specific type of financial info. computation of taxes and preparation of tax o Active owners & managers – use info to returns submitted to a taxing authority. evaluate the entity’s performance, make 5. Government Accounting – covers the process of financial and operational plans, and analyzing classifying, summarizing, and implement business decisions. communicating all transactions involving the o Management accounting – branch of receipt and disposition of government funds and accounting that is designed to meet the property needs of the internal users. 6. Bookkeeping – refers only to one phase of External Users – do not have ready access to the accounting, the recording phase. financial reports. These users include the inactive 7. Auditing – discipline that is related to accounting owners. Creditors and lenders, suppliers, potential but is distinguishable from it. It refers to an investors, taxing authorities, regulatory bodies, independent examination of the financial the general public, etc. statements for the purpose of rendering an o Financial statements – product of financial opinion as to the fairness of the presentation of accounting, provides general-purpose report the financial statements. Auditing attests the to the external users. credibility to the financial statements. Direct Users – users with direct interest use financial info. As a tool to protect their own FINANCIAL REPORTING AND THE STANDARD- interest in the enterprise. They are the managers, SETTING PROCESS creditors, suppliers, customers, employees, and - there was a need to bring into common basis the taxing authority. system of measurement and communication of Indirect Users – use accounting info to provide economic activities. advice to or protect the interest of a direct user. International Accounting Standards Committee These include regulatory agencies, financial and (IASC) – is the first to recognize this need and was legal consultants, and labor unions. organized in 1973-2001. IASC developed a set of Reporting Entity – oftentimes called accounting uniform global accounting standards called entity may be a business enterprise, a group of International Accounting Standards (IAS). entities, and any other unit that doesn’t the International Accounting Standards Board (IASB) personality of its owners, members, and – was the reconstituted ASC in 2001, is under the employees. It is capable of controlling its own umbrella of the International Financial Reporting economic resources and incurring economic Standards (IFRS) Foundation. obligations. International Financial Reporting Standards Accounting Entity Concept – the concept that (IFRS) Foundation – is a not-for-profit, public separates the personality of the enterprise from interest organization established to develop a its owners and other stakeholders. single set of high-quality, understandable, BRANCHES OF ACCOUNTING enforceable, and globally accepted accounting standards, called the IFRS Standards, and to 1. Financial Accounting – the broadest branch, promote and facilitate adoption of the standards. focusing on the needs of external users. It is Standards by IASB are called the International concerned with the recognition of, measurement Financial Reporting Standards (IFRS) and it and communication of economic resources, includes the ff: economic obligations, and changes in economic o Specific International Financial Reporting resources and economic obligations. Standards; 2. Management Accounting – serves the info needs o Interpretations by the International Financial of internal users. For short-term and long-range Reporting Interpretations Committee (IFRIC); plans for the enterprise. Information provided is o International Accounting Standards not structured and not necessarily conforming to the accounting standards. o Interpretations made by the Standing o Philippine Interpretations, which are Interpretations Committee (SIC) adopted from the interpretations of the IFRIC and the SIC and the interpretations THE STANDARDS SEETTING PROCESS ADOPTED BY of the SIC. IASB - PFRS set out the recognition, measurement, - the IFRS Standards are required in more than 140 presentation, and disclosure requirements dealing countries and permitted in many more. with transactions and events that are important in - One of the primary functions of the IFRS general purpose financial transactions. Foundation is to govern and oversee the activities of its standard-setting body (IASB) - The IASB follows a due process in the CHAPTER 2 THE CONCEPTUAL FRAMEWORK OF development of financial reporting standards. Due FINANCIAL REPORTING process comprises of the ff stages: Purpose of the Conceptual Framework o Setting the agenda; o Planning the project; The purpose of Conceptual Framework is to: o Developing and publishing the discussion paper, exposure draft, and the standard; o And issuance of the standard
THE STANDARD SETTING PROCESS IN THE
PHILIPPINES
- Philippine Institute of Public Accountants
organized the Accounting Standards Council that formalized the standard setting process in the country in 1981. - The Accounting Standards Council (ASC) was formed on Nov. 18, 1981 to study the accounting standard-setting process in the Philippines. The main function of the ASC was to establish and improve generally accepted accounting principles in the Philippines. - ASC composed of 8 members: SEC, PICPA, Bangko Sentral ng Pilipinas, Board of Accountancy, and Financial Executives of the Philippines. - Board of Accountancy the body that regulates the practice of accountancy in the Philippines.
Financial Reporting Standards Council (FRSC)
- Under the Rules and Regulations of the
Philippine Accountancy Act (Republic Act 9298), the FRSC shall be composed of 14 members - Formed the Philippine Interpretations Committee (PIC) in Nov. 2006 to provide the Council assistance in establishing and improving financial reporting standards in the PH. - PIC issues implementation guidelines on Philippine Financial Reporting Standards. This consist of: o Specific PFRS, which are adopted from IFRS o Philippine Accounting Standards (PAS), which are adopted from IAS