In General, Why Do We Have To Study Accounting? | Whenever we hear the word “Accounting” we often | associate it with figures and then relate it to business. We | failed to realize that accounting is not for business alone, | Actually, nearly everyone practices accounting in one form or another everyday. Whenever we go and in everything we do which involves decision-making, accounting is present, Whether we are at home, in school or anywhere else, accounting has always been a part of our daily struggle for survival. This makes accounting to have a universal existence. Even in professions which we may think their fields of | studies are not related to business like engineering, architecture, law, medicine, etc. - you name it- they too | need a working knowledge of accounting in pursuit to the practice of their professions. Accounting is often called the “language of business” ; | the language we often hear in business conversation. But how can we participate actively and communicate effectively in the business community if we don’t speak the same language. It’s the way business people set goals, measure results and evaluate performance. In today’s: business world, learning and understanding the art’of accounting is not just an uphill climb but rather a survival skill. . - : oyTHE ACCOUNTANCY PROFESSION AND ITS DEVELOPMENT Learning Objectives: after studying this chapter, we should be able to: 1. familiarize the background of the accountancy profession, the career opportunities ofa CPA and salient points of the Philippine Accountancy Act of 2004; 2. learn the various acronyms related to business, government agencies and accountancy profession; understand the reason why Philippine ASC has shifted to IAS; and 4. understand the effect of global accounting practice to our Filipino accountants, el THE ACCOUNTANCY PROFESSION Accountancy is not only one of the modest, less expensive but also the most prestigious profession in the land today. Since it existed way back in 1923, it hardly gained recognition among the professions unlike medicine, engineering and law. Accountancy | is least known and unpopular because of the nature of services it accorded to its clients | which is handled with much needed “confidentiality”. Aside from this, the profession | becomes the most feared of and dreaded of all, because it maintained the highest mortality rate among courses that require board examinations. Despite the mortality rate problem, accountancy emetged as the most sought-after Profession with the tremendous growth and development of business in the country today, From a dismal 43 registered Certified Public Accountants in 1923 to approximately 162,000 as of October 2015 with Mr. Armand Fabella of the Jose Rizal College as holder of the first CPA Certificate or PRC-CPA Certificate No. 001.nett sion demands a quality of high standards performance at aij profession eas ae i e, in commerce and industry of public it wernment service, , Peano i Fae eeourt competence, due care and diligence in the futonerts 1 duty which are embodied in the Code of Ethics for CPAS. Much more in Sohn he CPA should maintain a high degree of independence in mentaj ea apa i ial reports and maintain secrecy attitude on matters concerning the impartiality of financial t . i i f the profession is at stake in the ‘of confidential information because credibility 01 performance of the “attest” function. It is a welcome development to note that Accountancy is the first among the professions here in the Philippines to be included under the World Trade Organization's ve policy of liberalization of services. This means that Filipino accountants will be freely competing with other accountants from other parts of the world in the global field of accounting practice. ‘WHAT IS AN ACCOUNTANT? A Certified Public Accountant or a Professional Accountant is a holder of a baccalaureate degree in Bachelor of Science in Accountancy (BSA), who has taken and passed the difficult and competitive licensure examination for Certified Public Accountants and carries the title as "C.P.A.", vested by the laws of the Republic to practice Public Accounting in general under the supervision of the Professional Regulation Commission The course in BS Accountancy replaces all business courses majoring in the subjects of accounting under the old curriculum. So, those who have taken and passed the said examination are included in the above definition of the profession in the past, it has been the practice of private companies especially in areas where there are only few CPAs to hire commerce-accounting graduates (under board) and offered the position as accountant or bookkeeper/accountant although they are not, in the real sense of the word, This created confusion and misled the Public of what really is the role of a bookkeeper and a professional accountant. At this juncture, the work of a bookkee; per is clearly distinguish Professional accountant in Chapter 4. Inguished from the work of a at present, . standards ‘ed oan Gree ‘employs strictness in the implementation of the ermers of a CPA fem eee wherein it requires the registration of staff and both the’ Professional Regulation A eaee with the accreditation requirements with be allowed to practice public iene and Board of Accountancy before we ca" 4pessoa sion and its Development aoe Har ARE THE CAREER OPPORTUNITIES OF AN ACCOUNTANT? become accountants, there we find several opportunitis vyed and worked in various field portunities to grab with. We can ‘ance We Is of endeavor such as the following: be emplo public Accounting - under this field, we are in public practice. And as a public practitioner We have two options to choose from. It is either, we will become individual practitioners and join partnership with other individual practitioners or getting employed with firms of CPAs like, Punongbayan & Araullo, Sycip Gorres Velayo & Co. (sav & Co.) Ampil Elises Ciudadano & Co., Reyes Tacandong & Co. and many other auditing firms. In which case, we are to render services to the public for a fee. We are not an employee of the client company under audit but assume the role as "independent entity” vested with freedom to exercise our own judgment in carrying out the engagement requiring our independence and impartiality of the report we prepared. Our work will include auditing, the examination of financial statements and report our findings to the management; taxation, the preparation of Income Tax Returns and management services, the design and installation of accounting systems. Once we choose this field, we will become a member of the Association of CPAs in Public Practice (Acpapp) sector. Government Accounting - under this field, we are to render services to the government. We will gain employment in the National Government Agencies (NGA), such as Department of Finance, Securities and Exchange Commission, Bangko Sentral ng Pilipinas, National Bureau of Investigation, Bureau of Internal Revenue, Department of Budget and Management, Department of Public Works and Highways, Department of Trade and Industry, etc. ar in the Government-Owned and Controlled Corporations (GOCC), such as Government Service Insurance System, Social Security System, Home Development and Mutual Fund, etc. At present all cities, provinces and municipalities which are considered as Local Government Units (LGU) are already employing accountants pursuant to Republic Act 7160 known as the "Local Government Code of. 1991". This widens the job opportunities of accountants. Once we choose this field, we will become a member of the Government Association of CPAs (GACPA) sector. Private Accounting - under this field, we will gain employment in private firms and hold positions as Chief Accountant, ‘Accounting Manager, Internal Auditor, Finance Manager or the highest accounting officer of an enterprise which is known as the "Comptroller’. Once we choose this field, we will become a member of the Association of CPAs in Commerce and Industry (ACPACI) sector. Accounting Education — there are CPAs who join in the academe and sacrifice the high income generating profession for the sake of love in accounting education. They are our accounting professors, researchers, CPA Reviewers where only few become authors in 5ed to painstakingly prepare the ccountants. Once we of CPAs in Education ne mitt om ounting books; the unsung, heroes ret a to the difficult examinations for one tl mber of the Asst choose this field, we will become a me! (AcPAE) sector sociation They managed their own own rights. uae ccountants are? jr in th tile the ac repreneu Other accountants become entrep! ‘how versa businesses. With all these, can We imagin¢ el nal professional organization known as ‘Philippine the natio AIL CPAs are members of nal ICP). Institute of Certified Public Accounta! CODE OF PROFESSIONAL ETHICS FOR CPAs IN THE PHILIPPINES ilippi tly adopt The Code of Ethics for Professional ‘Accountants in the Philipines Was rnin from the revised Code of Ethics for Professional Accountants Sa Yy Federation of Accountants (IFAC) which took effect on June 30, b yy the Board of Directors of the he same has been adopted by he Professional Regulation OA for the practice of hip among business, The use of this Code of Ethics has been approved b' Philippine Institute of Certified Accountants (PICPA) and tl the Board of Accountancy (BOA) and finally approved by tl Commission (PRC) as part of the rules and regulations of the Bi accountancy profession. This is the start of the relations! government, the investing public and other users of financial information. ‘The Internal Federation of ‘Accountants (IFAC) is an international body representing all the major accounting bodies across the world. Its mission is to develop, adopt and implement with high quality international standards and guidance; contributing to the development of strong professional accounting organizations and accounting firms and to high quality practice ‘of by professional accountants worldwide. Being a member of International Federation of Accountants (IFAC), it is committed to observe the following fundamental principles, viz: Integrity - A professional accountant should be straightforward and honest in all professional and business relationships. Integrity also implies fair dealing and truthfulness. A professional accountant should not be associated with reports, ie communications or other information where they believe that the informatiot i = a) Contains a materially false or misleading statement; me 4 sas eee or information furnished recklessly its or obscures informati ji i seine cay aNbileme 3 ess, Objectivity - A professional i accountant should not allow bias, i i under influence of others to override professional or usines wine one 6incy Profession and its Develo, scoountancy Profe ts Development _ re Account professional Competence and Due Care - A profe duty tO erate ena erotedge and skill at the level required to ensure that a emplo competent profess client oF P oe Professional service based on current ts in practice, legislation and tech developments in pr n niques. A professional accountant should act diligently and erence with applicable technical and professional standards when providing profe: ae | Services (i.e., services requiring accountancy or related skils performed by a pro fessional accountant including accounting , auditing, taxation, management consulting and financial man he ’ i eg ‘agement services), In addition, they should conform with the technical and professional standards of the following: ais « Board of Accountancy (BOA) / Professional sacle mene es Bulation Commission (PRC) + Financial Reporting Standards Council (FRSC) + Auditing and Assurance Standards Council (AASC) «+ Relevant legislation Ssional accountant has a continuing Competent professional service requires the exercise of sound judgment in applying professional knowledge and skill in the performance of such services. Professional competence may be divided into two (2) separate phases: 1, Attainment of professional competence. The normal pattern of development starts initially with a high standard of general education followed by specific education, training and examination in professionally relevant subjects, and whether prescribed or not, a period of work experience. Maintenance of professional competence. This requires a continuing awareness and an understanding of relevant technical professional and business developments. Continuing professional development develops and maintains the capabilities that enable a professional accountant to perform competently " within the professional environments. Diligent encompasses the responsibility to act in accordance with the requirements of an assignment, carefully, thoroughly and on a timely basis. A professional accountant should take steps to ensure that those working under the professional accountant’s authority ina professional capacity have appropriate training and supervision. Where appropriate, a professional accountant should make clients, employers or other users of the professional services aware of limitations inherent in the services to avoid the misinterpretation of an expression of opinion as an assertion of fact. Confidentiality - A professional accountant should respect the confidentiality of information acquired as a result of professional and business relationships and should not disclose any such information to third parties without proper and specific authority Unless there is a legal or professianal right or duty to disclose. Confidential information red as a result of professional and business relationships should not be used for ‘he personal advantage of the professional accountant or third parties. 7comply with relevant laws ion Chapter $$ Professional Behavior - A professio and regulations, and should avoid any tant should gisereaits the Pres nal accou! action that discre ie work, professional accountants eo ee ional accountants should be elaims for the services they are they have gained; or make rk of others. i themselves an In marketing and promoting tisrepute. prof & i 0 should not bring the profession int vegerated honest and truthful and should os ree: OF experience alifications they z He a ipstantiated comparisons t© the wot disparaging reference or unst! TS CORE COMPETENCIES FRAMEWORK FOR ACCOUNTAN gap between clientele. n offer. A competency. matic and effective ‘on how to bridge the fates from the academe cal 5 offers a syste m in the past ur gradu ration of professional It has been a proble companies’ needs and what 0 based approach to the prepa! way of bridging this gap. roach to education is one where the competencies, and skill identified through a formal process atter experts. Such ‘A competency-based app sets required of a newly admitted professional are | and are later validated by business and industry and subject mi: identified competencies (or learner outcomes) have predetermined performance measures for assessing skill acquisition The government has undertaken efforts to improve the entry-level qualification requirements for the Filipino CPAs by releasing the well-defined set of competencies, Core Competency Framework for Entry to the Philippine Accountancy Profession. The core competencies for accountants identify the knowledge, skill, and professional values that new CPAs need to have in order to successfully face the challenges of today’s changing environment and the future. The strategic goal is to produce technically competent and ethical professional accountants ready to compete internationally. Hence, the higher education structure (which includes the curriculum and course syllabi) should develop the fo! i : , ) i he following Knowledge - The CPAs knowledge must cover: General Knowledge - Of em phasis her ini ; cultures in the world and dehabbhing ae serge an understanding of the different believed that it international perspective. It i ‘marketplace Be traits that will make our Filipino CPAs pala pba * competency in the E * adaptability to West * level of training and * 800d capabilities in dealing with foreign part artners, ‘nglish language (the ling. jua franca of busis fern business practices, of business},Profession and its Development ccountancy Pr a ‘recent organizational and Business Knowledge - In addition to the core knowledge in areas ch as economics, quantitative methods and business Statistics, organization mehavir, marketing and operations management, the CPA must be conversant A international business and-have an understanding of how the global business system works. He should also have an appreciation of the importance of ethics and corporate governance in business. The CPA must demonstrate competence in the following: « administrative capability and efficiency « decision modelling ¢ risk analysis and management * measurement « industry and sector perspective Information Technology (IT) Knowledge - This includes not only being conversant with IT concepts for business system but sound knowledge on internal control in computer- based systems, development standards and practices for business systems, management of the adoption, implementation and use of IT, evaluation of computer business systems, and managing the security of information. Accounting Knowledge - This includes core knowledge related to accounting and related areas and must include proficiency in the international accounting and auditing standards, cost management and the latest concepts in management accounting, recent tax laws, business and commercial laws. It also includes knowledge of corporate finance and the Philippine capital markets, professional ethics and environmental accounting and reporting. The CPA should demonstrate competence in the following: * Basic Accounting and Preparation of Financial State! Profession and International Accounting Standards * Advanced Financial Accounting Practices * Advanced Financial Reporting Principles * Management Accounting - Basic Concepts * Management Accounting-Information for Planning, Decision-Making and Control * Taxation * Business and Commercial Laws * Auditing - Fundamentals * Auditing Advanced Concepts * Business Finance and Financial Management Skills The skills to be developed include: ments, the AccountingChapter 1____— intellectual - This set of skis includes the ability to carry Out abstract logical thin, and understand critical thinking. 280 includes creative thinking or the generation ® mew ideas; visualization or “seing things I” the mind's eye”; and reasoning skills or discovery of a rule or principle underlying the relationship between two or more ob and applying it when solving a problem. THE CPA must demonstrate the following ski, © analysis © problem solving «© strategic/critical thinking Interpersonal - This involves developing the ability of CPAs to work in groups and being ateam player. It includes the skills to participate as member ofa team and contributing to group effort; teaching others new skills, working to satisty clients’ expectations negotiation skills and working with diversity or working well with men and women from diverse backgrounds. The CPA must demonstrate attributes, such as: « being a team player « persuasion, confidence and diplomacy « discreetness, open mind and patience «capability for work and ability to respond well to pressure Communication - This refers to active listening skills and the ability to communicate Sftectively one’s points of view, both orally and in writing, at all organization levels; being able to justify one’s position, deliver powerful presentations and to persuade and convince others. The CPA must demonstrate skills such as the ability to: ‘ verbally and/or in writing explain financial/statistical/administrative matters/policies/procedures/regulatory matters/audit results at a level appropriate to the audienice. ‘* ask clear, concise and relevant questions to obtain desired information to perform a task ‘© Negotiate effectively. Values Values must concentrate on: Professional Ethics - Since the objectives of the accountancy profession are to work in accordance with the highest standards of professionalism, to attain the higher level of performance and generally to meet the public interest, the need for CPAs to conform to the ethical standards of the profession become vital. These include integrity, objectivity and independence, professional competence and due cafe, confidentiality, and professional behavior. Moral Values - Beyond ethical rules, there is a need for CPAs to be able to discern between what is morally right or wrong. 10ponte Profession adits Destupmen pe He ACCOUNTANCY LAW OF 2004 one of the remarkable developments in the accountancy profession is the signing into jaw on May 13, 2008 by her Excellency, Madam President Gloria Macapagal-Arroyo No. 9298 known as "Philippine Accountancy Act of 2004" which repe i presidential Decree No. 692 formerly known as the "Revised Accountancy eae enacted on May 5, 1975 by his Excellency, the late President Ferdinand E. Marcos The law mentions the revival of the Continuing Professional Development (CPD) for CPAs which originally took effect in 1987. It states that, "All Certified Public Accountants shall abide by the requirements, rulaé and regulations on continuing professional education to be promulgated by the Board, subject to the approval of the Commission, in coordination with the accredited national professional organizations of certified public fecountants or any duly accredited educational institutions. For this purpose, 0 CPD Council is hereby created to implement the CPD program". Other salient points of the law are as follows: « The Board of Accountancy and its Composition (Sec. 5)- The Board of Accountancy (BOA), under the supervision and administrative control of the Professional Regulation Commission (PRC) shall be composed of a chairman and six (6)' members to be appointed by the President of the Philippines from a list of three (3) recommendees for each position and ranked by the Commission, from a list of five (5) nominees for each position submitted by the accredited national professional organization of Certified Public Accountants. The Board shall elect a vice-chairman from among its members for the term of one (1) year. The chairman shall preside in all meetings of the Board and in the event of a vacancy in the office of the chairman, the vice-chairman shall assume such duties and responsibilities until such time that a chairman is appointed. ‘Admission Requirements to the CPA Board Examinations (Sec. 14) - Any person applying for’ examination shall establish the following requisites to the satisfaction of the Board that he/she: . isa Filipino Citizen has a good moral character . is a holder of the degree of Bachelor of Science in Accountancy conferred by a school, college, academy or institute, duly recognized and/or accredited by the Commission on Higher Education (CHED) or other authorized government offices; and has not been convicted of any criminal offense involving moral turpitude * Scope of the CPA Board Examination (Sec. 15) - The licensure examination for CPA shall cover the following subjects with the corresponding weights in units of two (2) and maximum number of hours of three (3), viz: Theory of Accounts , Business Law and Taxation, Management Services, Auditing Theory, Auditing Problems, Practical wenn = 11Chapter! _— ting Problems I, Practical A eof this CPA Examinatl ; dates. The contents and c outline or syllabus prepa! I by the Professional Ree! of the Commission, may re’ as the need arises. e members of the academe and Examination for Certified Public Accountants {BLECPA) through the Professional Regulatory Board of Accountancy has reslved and approved on Dec. 15, 2015, Resolution No. 275 series of 2015 that el wing changes be made to the existing subjects, thereby, reducing the number of the CPA Examination subjects from seven (7) to six (6) starting May 2016 examinations and counting Problems I! jon is to test the overall knowledge and ‘overage of these subjects shall be red and issued by Board of tation Commission. The Boarg vise or exclude any of Account The purpo: competence of the candi in accordance with the ‘Accountancy upon approval however, subject to the approval the subjects and their syllabi, and add new one However, after having series of consulta other stakeholders, the Board Licensure tions with th onwards, viz: From : ao =] 7. Theory of Accounts [Financial Accounting and Reporting 2. Advanced Financial Accounting and | 2. Practical Accounting Problems | 3. Practical Accounting Problems I! Reporting. 4, Management Services 3, Management Advisory Services 5. Auditing Theory 6. Auditing Problems 4, Auditing 5, Taxation 7. Business Law and Taxation 6. Regulatory Framework for Business Transactions oo The approved resolution does not depart radically from the prescribed content of the BLECPA subjects but serve merely to rationalize and integrate related subjects for better comprehension and more effective application of the theory into practice. + Rating n the Licensure Examination (Sec. 16)- To be qualified as having passed the licensure examination for accountants, a candidate must obtain a general average of seventy-five (75%), with no grades lower than sixty-five (65%) in any given subject. In the event a candidate obtains the. rating of seventy-five (75%) and above in at last a majority of subjects as, provided for in this Act, he / she shall receive a enna cr the subjects passed: Provided, That a candidate shall take an amination es . ii ne subjects within two years from the preceding paaa roar es bed That if the candidate fails to obtain at least a general at the fabless eee a a rating of at least sixty-five percent (65%) in each suamination. i, he/she shall be considered as failed in the entire 12pencil Profession and its Development ninatio conmtanects forthe BLECPA 2s prescribed under ce ee « reports of Rating (Sec. 17) The Board shall rained by each candidate Submit to the commission the ratings within ten (10) a calendar days after the ex: it cami unless extended for just cause . Upon the release of the results of the comination the Commission shall send by mailing the rati i : his/her given address using the mailing aire eae a4 aie « Failing Candidates to Take Refresher Course (Sec, 18) - Any candidate who fail: : two (2) complete Certified Public Accountant Board Examinations, shall be disqualified from taking another set of examinations unless he/she ene evidence to the satisfaction of the Board that he/she enrolled in and completed at least twenty-four (24) units of subject given in the licensure examination. For purposes of this Act, the examination in which the candidate was conditioned together with the removal examination on the subject in which he/she failed shall be counted as one complete examination. s The Accountancy Law of 2004's declaration of policy provided that "the state recognizes the importance of accountants in nation building and development. Hence, it shall develop and nurture competent, virtuous, productive and well-rounded professional ‘accountant whose standards of practice and service shall be excellent, qualitative, word class and globally competitive through regulatory measures, programs and activities that fasten their professional growth and development." THE BIRTH OF THE PHILIPPINE ACCOUNTING STANDARDS (PAS) Accounting Standards are authoritative statements of how particular types of transactions and other events should be reflected in the financial statements. The Accounting Standards Council (ASC) was created by Philippine Institute of Certified Public Accountants (PICPA) on November 18, 1981. Itisa standard-setting body which is tasked to establish and improve the “Generally Accepted Accounting Principles’ (GAAP) in the Philippines. The approved statements and the relative interpretations of the ASC are known as “Statement of Financial Accounting Standards” or SFAS which “i be effective only upon approval by the Professional Regulation Commission (PRC) an Unless indicated to the contrary, shall not be retroactive. 13(4) members nominated by Picp, ission (SEC), Bangko Sentral n, PRC) specifically the Board og the Philippines (FINEX). The renewed. members with four The ASC is composed of eight (8) me exchange Comm ities and one (1) each from Securit Pilipinas (BSP), Professional Regulation ae o Financial Executi Accountancy (BOA) and the Fin j term of office of the members Is two (2) years which can be e Rules and Regulations Implementing R.A. 9293 At present, however, Section 9 (A) of th ‘tet of 2004, created the new otherwise known as the Philippine Accountancy i accounting standard-setting body known as the a sane 1 ae eae i Standards Council. /, the Council (PFRSC) to replace the Accounting Statement of Financial Accounting Standards (SFAS) are now known as the Philippine ‘Accounting Standards (PAS). The PFRSC is created by the Professional Regulation Commission (PRC) upon recommendation of the Board of Accountancy (BOA) to assist the Board of Accountancy in carrying out its powers and functions. The PFRSC is composed fifteen (15) members with a Chairman who has been or is presently a senior accounting practitioner and fourteen (14) representatives from the following: Board of Accountancy Securities and Exchange Commission Bangko Sentral ng Pilipinas Bureau of Internal Revenue Commission on Audit Major organization of preparers and users of financial Statements ‘Accredited National Professional Organization of CPAs: Public Practice Commerce and Industry ‘Academe or Education Government Total TE The Chairman and members of the Council shall have a term of three (3) years renewable for another term. Any member of the ASC shall qualify for appointment to the PFRSC. However, the ASC shall continue to function until the full creation of PFRSC. INTERNATIONAL ACCOUNTING STANDARDS BOARD (IASB) REPLACE: INTERNATIONAL ACCOUNTING STANDARDS COUNCIL (IASC) } ao With the growing and seemin trade, the IASC, a private ind objective of achieving uniformi and other organizations for fi Publishing for the public -int gly unstoppable internationalization of business and lependent standard-setting body was created with the ity in accounting principles which are used by business nancial reporting around the world by formulating and ferest, the accounting standards to be observed in the 14tancy Profession and its Development se hoo ion of financial resertat “s Sa eae to promote their worldwide ac Fork for the pt and harmonious application of account ceptance and to procedures ing standards and d statements of the IASC The approve are known as Inter national Account. He jing Standards the IAS was founded in 1973 through an agreement made by the professional TMountancy bodies from Australia, Canada, France, Ge , . , Germa Mtherlands, the United Kingdom, Ireland and the United states of ae ice in 1997, after nearly 25 years of achievements, the IASC concluded that if it were to effectively continue to perform its task, it must find a way to bring about convergent fetween national accounting standards and practices and high quality global Seccnns standards. And as 2 result, not too long after, on July 1, 2000, the IASC was replaced by international Accounting Standards Board (IASB). The IASB has come out with fe reporting standards that are called International Financial Reporting Standards (IFRS). ‘Although the IASB has no legal authority to impose the standards that it promulgates, many countries support them. For the meantime, the pronouncements of the JASC will ‘ontinue to be designated as International Accounting Standards (IAS). PHILIPPINE ASC HAS SHIFTED TO IAS In an effort to improve and harmonize the accounting standards relative to the preparation and presentation of financial statements, the Philippine Accounting Standards Council which in many decades mostly based its Accounting Standards from the United States or American Accounting Standards has shifted to International Accounting Standards (IAS) in 1997 but it was only in the year 2000 wherein the Philippine ASC made a sweeping revision of its old "Statement of Financial Accounting Standards" (SFAS) to conform with its counterpart, the IAS. Currently, the IASB has revised its IASs which the ASC adopted and are called Philippine ‘Accounting Standards (PASs). The IASB has also formulated new standards and are called International Financial Reporting Standards (IFRS) which the ASC adopted and are called Philippine Financial Reporting ‘Standards (PFRS). !n short, Philippine Accounting 1 Accounting Standards (1ASS) Standards (PASs) corresponds to the adopted International and Philippine Financial Reporting Standards (PERSs) corresponds to the adopted International Financial Reporting Standards (IFRSs). uted to the following factors: ind Exchange Commission, Public Accountants The move of Philippine ASC to shift to IAS could be attribi 1. The Philigpine organizations, such as the Securities and Board of Accountancy and Philippine Institution of Certified (PICPA) support the IASB standard; 2. The removal of free choice of ‘accounting alternative treatment under the 1ASB 15standards which will redound to having a uniform financial reporting around the s world and; 3. The IASB standard was recognized by Asian Development Bank (ADB), World Bank ‘and World Trade Organization (WTO). GOVERNMENT SECTOR ADOPTS INTERNATIONAL ACCOUNTING STANDARDS Meanwhile, in the government sector, the Commission on Audit (COA) adopted the International Accounting Standards on January 1, 2014 and they call it, Philippine Pubic Sector Accounting Standards (PPSAS) and was fully implemented on January 1, 2035 after the creation of the Philippine Public Sector Accounting Standards Board (PPSASB) on October 10, 2008. The role of the PPSASB is to assist the omission in formulating and implementing the public sector accounting standards which will redound to establishing and maintaining linkages with international bodies, professional organizations and academe on accounting related fields on financial management The PPSAS will align with prevailing international standards, provide quality accounting Standards thereby enhancing the quality and uniformity in financial reporting by the Philippine public sector entities, and ensuring accountability, transparency and Comparability of financial information with other public sector entities around the world. It sets out the recognition, measurement, presentation and disclosure requirements for financial reporting in the Philippine Government. PPSAS shall apply to all National Government Agencies (NGAs) which refer to departments, agencies, bureaus, state universities and colleges, government instrumentalities and commission, including judiciary and constitutional commission, Local Government Units and Government-Owned and/or Controlled Corporation. AIMING TOWARDS GLOBALIZATION Globalization has resulted in business enterprises entering into transactions that extend beyond the borders of their home country as evidence by multinational Corporations which have grown widely with their subsidiaries and affiliates located in other parts of the world, It has also awakened the need for accounting principles and standards to Ss "two or three points", how many “takes off for a twinner" or when is 2 obsolete and new rules ) etc, There are rules of the game which are 16a if iT iE arawr peoeneenesenneee Review Questions s less expensive and what made it we. vat eccoomoncy profession considered © ‘ ? unpopular as compared: £0 medicine, taw, engineering, ett 1-2. How does the Trade Organization's policy on liberation of services affect the practice of accountancy profession ; 1-3. What ore the coreer opportunities of 8 CPA? Differentiate and explain. 1-4. Con a CPAin the government service be allowed to practice public accounting? 1-5. Can a CPA in the government service be allowed to teach accounting and tl he reloted subjects in colleges and universities? 1-46. What is a CPA? 1-7. Why's continuing professional development for CPA's important? 1-8. fs ottending a formol Roa _ review a must requirement in taking the CPA Boord 1-9 Does the accreditation requirements Miuidiiectaenitun 1-40. Whot is the moin purpose of the CPA Examination? 1-11. Whot ore the ‘2dmission requirements to the CPA Exam? 1-12. Whot is the required passing grade of CPA candidate? 1-13. When is a CPA candidate : considered “conditioned? “14, How ‘many times » CPA candidate refresher course’ should foil before ? Explain he/she be allowed to take LAS. bs necessary fora CPA Board candidate to Of Accountancy? Explain." °H the six (6) subjects given 116, by the 18 Why was the Accoun Standards Councit (ASC) of the Philippines created?lopment _ spe sont. Profession and its, fe a ——— — 447. What is ASC? What attributed Accounting Standards Council to totally shift to International Accounting Standards? 4-18. What do you call the government's version of International Accounting Standards that was adopted by COA? 4.19. What was the effectivity of the full implementation of the International ‘Accounting Standards by the government sector? 1-20, What replaces the Accounting Standards Council? Quizzers: 11 Identification of Acronyms Instructions: Give the full text of the following acronyms which are related to business, government offices and accountancy profession. 1. PRC 2. wIo 3. ACPAPP 4. GACPA 5. ACPAE 6. ACPACI 7. PICPA 8. BSA 9. CPD 10. SEC 1. BsP 12. NBI 2. BR 44. dem20pecountancy Profession and its Development True or False instruction: Write letter Tif the statements are correct and F if the statement is wrong. 1. — 2 ~ 2 10 ll. 12, — 13, pees Accountancy is not only one of the modest, less expensive but also the most prestigious profession in the country today. . It was in’1923 that accountancy profession was first recognized through the passing of the accountancy law. . Until today, the accountancy profession maintains the highest mortality rate among courses that require board examinations. . Accountancy is the first among, the professions here in the Philippines to be included under the World Trade Organization's policy liberalization of services. . Accountancy is considered a Profession because it has a body of principles, assumptions and a set of ethical standards. . Republic Act 7160 which is known as the “Local Government Code of 1991" created cities, provinces and municipalities as Local Government Units. The Board of Accountancy employs strictness, whereby before a CPA can engage into public practice, he has to obtain accreditation with Professional Regulatory Commission and Board of Accountancy. . All CPAs employed in the government agencies are considered as public practitioners. The knowledge of accounting is important and beneficial to those who are engaged in business only. ‘ACPA who is teaching in the subjects of taxation in a college or university is not considered to be in the exercise of profession. ACPA is not allowed by law to engage in any lawful business activity if he is a public practitioner. « R. A. 9298 known as "Philippine Accountancy Act of 2004" repealed P.D._ 692 formerly known as the "Revised Accountancy Law". ¢@ The Board of Accountancy shall be composed of a chairman and 6 members to be appointed by the President of the Philippines. The purpose of the CPA Board Examination is to test the overall 2114, 15. 16. 18, A Instructions: 1. When was the year that accountan the passing of accountancy law? - A conditional candidate shall automaticalh e inatic is to te: The purpose of, the CPA Board esoeaen st the ote knowledge and competence of the candidates. Under the new accountancy law, the Professional Regulatory Commisse, subject to the approval of the Board of Accountancy may revise o, ee any of the subjects in their syliabi and add ne\ Ch 'w ones as the need arises Tobe dualified as having passed the CPA Board Exam, the can obtain a general average of 75% and ab 65% in any given subject. didate m™ ove with no grades lower the ly become a CPA two years ' ate, without taking examinations on the remaining subjects that he/she faileg Any candidate who failed in 2 from taking another set of exa complete CPA Board shall be disqualitieg Completed at least 24 units of si rmination unless he/she has enrolled « ubject given in the licensure examination The Philippine Finan \cial Reporting Standards Council is the ney Setting-body which W. standarg is tasked to establish and improve the Generali, Accepted Accounting Principles in the Philippines, . The objective of International Accounting Standard is to achieve uniformity in the 2ccounting principles which are.used by business ang other organizations for financial reporting around the world, 1-3 Multiple Choice Encircle the letter of the Corresponding correct answer, cy Profession was first Fecognized through a 1910 c 1945 b. 1923 @& 1975 2. It is in this field of professional Bractice where CPAs are considered a “independent entity” Vested with freedom to exercise his own judgment and impartiality of the reports he Prepared ~ a Government Accounting ©. Private Accounting b. Management Accounting 22 ® Public Accountingi gcountaney Eofesion and its Development 3, ACPA who chooses to join in the academe as a university professor, CPA Reviewer, Researcher, etc. isa member of what sector— a. Association of CPAs in Commerce and Industry b. Government Association of CPAs c, Association of CPAs in Public Practice Association of CPAs in Education Many accountants are employed in business enterprise as chief accountant or comptroller. Said accountants are engaged in- a. General Accounting c. Private Accounting b. Government Accounting d. Public Accounting The accredited national professional organization of CPAs is- Association of CPAs in Commerce and Industry Association of CPAs in Education Government Association of CPAs Philippine Institute of CPAs ‘ACPA in public practice who is engaged in the design and installation of general accounting system is said to be performing a/an- a. management services work c. tax servicing work b. auditing work d. none of the above ACPA in public practice who carefully examines, tests and checks accuracy of accounting data ~ a. Auditor ¢. accountant b. Bookkeeper d. budget officer 3. ACPA in public practice who examines financial statements and renders opinion that is free from bias is said to be engaged in- a. management accounting c. bookkeeping b. auditing d. none of the above . Presidential Decree 692 which was previously known as the “Revised Accountancy Law” which’ was re-enacted May 5, 1975 was repealed by the Republic Act No. 9298 is known as ~ 23couse ine Accountanc y Act of 2004 Law of 2004 r ceed Accountancy ICP of 200 ancy Act of 2008 a fessional Accountancy d. Prof et subject rd Examination covers how many sere c. 8 subjects Jolie d. 9 subjects a ibjects ; es be composed of a chairman and how Many 11, The Board of Accountancy shall members? c. 6members > Smenbe d. 7 members b. Smembers 12. The Boord of Accountancy shall elect a Vice-Chairman from among its members for the term of- c. 3years a. lyear b. 2years ee 13. Any person applying for examination shall establish the following requisites to the satisfaction of the Board that he/she — a. isa Filipino citizen b. has good moral character ¢. has not been convicted of any criminal offen tur:tude d. all of the above se involving moral Commission the ati ic i rete ings that the candidate obtained a. 8 cal iM salle: 10 calendar days do11 calendar days i oe 2 years from the 2 years from the |; ©. 2 years after dat the 4. no need to take Preceding examinati Y Of release a fe the review Course started e €xam as, already Considereg "passed"1ancy Profession and its Development eee ee 16. The new standard-setting body create Standards Council (ASC)- 'd in 2005 to replace the Accounting a. International Standards Commit b. Financial Reporting Standards Courci c. Financial Accounting Standards Board d. Statement of Financial Accounting Standards 17. oe to the creation of FRSC, the Accounting Standards Council's Statement of Financial Accounting Standards (SFAS) are now being renamed as- Philippine Accounting Standards . International Accounting Standard PICPA Standard |. Standards of Reporting eose 18. The chairman of the Philippine Financial Reporting Standards Council (PFRSC) must have been or presently a- . a senior accounting practitioner . a member of PICPA a member of the Board of Accountancy ._ a chairman of the Professional Regulation Commission aegp 19, What do you call the approved statements of the International Accounting Standards Board (1ASB)? International Accounting Standards International Financial Reporting Standards International Financial Statements none of the above aoge 20, The members of the Professional Regulatory Board of Accountancy shall be appointed by the- . Association of CPAs in Public Practice . Professional Regulation Commission Philippine Institute of CPAs |. President of the Philippines pogp 21. Which of the following is not a qualification of an applicant for the CPA licensure examination? a. He/she is of good moral character b. He/she is at least 21 years of ageoo eee ee ee : ‘ i itizen ience in Accountan, ¢. He/sheis@ Lae ee degree of Bachelor of Sc Icy d. He/she is 2 ho correct? lowing statements |S ich of the fol ae was conditioned and the nv svhich he/she failed shall be amination i (2 complete CPA board examinations wiy ke another set of examinations. = two (2) complete CPA board examinations shall be disqualified from taking another set of examinations unless he/she submits evidence to the satisfaction of the Board that he/she enrolled in and completed at least twenty-four (24) units of subjects given in the licensure examination. d. None of the above The examination i removal examinati counted as two (2) 5, Any candidate who no longer be allowed to tal Any candidate who fails in 23. Which among the following is the work of a public practitioner which has a purpose of expressing an opinion on financial statements? a. taxation b. management advisory services ©. external auditor d._ internal auditor 24, ahead in public practice is prohibited from divulging any fential information as a result of professional it ‘ al inf and i third parties without specific authority from the meee feetorenP te objectivity . confidentiality due care |. none of these aeoe a. objectivity b. integrity © professional ¢; ;. omy d, Fone of these petence