Conceptual Framework and

Accounting Standards

Note 1

Prof. Joseph Allan de Leon Jarabejo Jr., CPA

Program Learning Outcomes – Bachelor of Science in
Management Accounting (addressed in this subject)

• Perform the basic functions of management such as planning, organizing, staffing,

directing, and controlling
• Select the proper decision making tools to critically, analytically, and creatively
solve problems and drive results
• Express oneself clearly and communicate effectively with stakeholders both in oral
and written forms
• Apply knowledge and skills in successfully responding to various types of
assessments in the field of accounting.

Credit – 3 Units

Time Allotment
• 3 hours using Synchronous and Asynchronous learning platform every week
• The attendance in this course is contingent with the student’s compliance to the
online activities and assessments.

Grading System

Grade Component Mid Term (1/2) Final Term (1/2)

Written Outputs 30% 30%
Performance Tasks 30% 30%
Major Exam 40% 40%
The Two (2) SMRs
1. Statement of Management’s Responsibility
for Financial Statements
Reference: Revised Securities Regulation Code (SRC) Rule 68

2. Statement of Management’s Responsibility for

Annual Income Tax Return
Reference: Revenue Regulations No. 3-2010
 STATEMENT OF MANAGEMENT’S RESPONSIBILITY
FOR FINANCIAL STATEMENTS

The management of BSMA Corporation is responsible for the preparation and fair
presentation of the financial statements, including the schedules attached therein, for the
year ended December 31st 2021, in accordance with the prescribed financial reporting
framework indicated therein, and for such internal control as management determines is
necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.

In preparing the financial statements, the management is responsible for assessing the
company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the company or to cease operations, or has no
realistic alternative but to do so.

The Board of Directors is responsible for overseeing the company’s financial reporting
process.

The Board of Directors reviews and approves the financial statements, including the
attached therein, and submits the same to the stockholders.

Luca Pacioli, CPA, the independent auditor appointed by the stockholders, has audited
the financial statements of the company in accordance with Philippine Standards on
Auditing, and in its report to the stockholders, has expressed its opinion on the fairness
of presentation upon completion of such audit.

(Name of Signatory) (Name of Signatory)

Chief Executive Officer / Chairman of the Board Chief Financial Officer
TIN 123-456-789-000 TIN 123-456-790-000

Signed this ___ day of___ 2022

SUBSCRIBED AND SWORN TO before me this ______________, at

______________City, Philippines, Affiant exhibited to me their Government issued IDs.

Doc. No. ____;

Page No. ____;
Book No. ____;
Series of 2022.
 STATEMENT OF MANAGEMENT'S RESPONSIBILITY FOR
ANNUAL INCOME TAX RETURN

The management of BSMA Corporation is responsible for all information and

representations contained in the annual Income Tax Return for the year ended
December 31st 2021. The management is likewise responsible for all information and
representations contained in the financial statements accompanying the annual Income
Tax Return covering the same reporting period. Furthermore, the management is
responsible for all information and representations contained in all the other tax returns
filed for the reporting period, including, but not limited to, the value added tax and/or
percentage tax returns, withholding tax returns, documentary stamp tax returns, and any
and all other tax returns.

In this regard, the management affirms that the attached audited financial statements
for the year ended December 31st 2021 and the accompanying Annual Income Tax
Return are in accordance with the books and records of BSMA Corporation, complete
and correct in all material respects. The management likewise affirms that:

(a) The annual Income Tax Return has been prepared in accordance with the
provisions of the National Internal Revenue Code, as amended, and pertinent
tax regulations and other issuances of the Department of Finance and the
Bureau of Internal Revenue;
(b) Any disparity of figures in the submitted reports arising from the preparation
of financial statements pursuant to financial accounting standards and the
preparation of the Income Tax Return pursuant to tax accounting rules has
been reported as reconciling items and maintained in the company’s books and
records in accordance with requirements of Revenue Regulations No. 8-2007
and other relevant issuances;
(c) BSMA Corporation, has filed all applicable tax returns, reports, and
statements required to be filed under Philippine tax laws for the reporting
period, and all taxes and other impositions shown thereon to be due and
payable have been paid for the period, except those contested in good faith.

(Name of Signatory)
Chief Executive Officer / Chairman of the Board

(Name of Signatory)
Chief Financial Officer
Accounting
is the process of identifying, measuring, and communicating economic information to
permit informed judgement and decision by users of information.
- American Accounting Association

The Overall Objective of Accounting

To provide quantitative information to be useful in making economic decisions

Four Areas of Accounting Practice

• Public Accounting
• Private Accounting
• Government Accounting
• Academe

Accounting Standards
The overall purpose of accounting standards is to identify proper accounting practices for
the preparation and presentation of financial statements

E.g. 1: PAS 1, paragraph 66 An entity shall classify an asset as current when the
entity expects to realize the asset within twelve months after the reporting period.

E.g. 2: PFRS 3.4 business combinations should be accounted for using the acquisition
method
Accounting Standard Setting Bodies in the
Philippines

2005 Financial Reporting Standards Council (FRSC)

The Financial Reporting Standards Council (FRSC) was established by the Professional
Regulatory Commission (PRC) under the Implementing Rules and Regulations of the
Philippine Accountancy Act of 2004 to assist the Board of Accountancy (BOA) in carrying
out its power and function to promulgate accounting standards in the Philippines.

1981 Accounting Standards Council (ASC)

The Accounting Standards Council (ASC) was created in November 1981 by the Philippine
Institute of Certified Public Accountants (PICPA) to establish generally accepted
accounting principles in the Philippines.
Matrix of Standard Setting Bodies

Philippines
Year Name of Body Standard Created Interpretation Body
Established Created
2005 Financial Reporting Philippine Financial Philippine
Standards Council Reporting Standards Interpretations
(FRSC) (PFRS) Committee (PIC) / 2006

1981 Accounting Philippine Interpretations

Standards Council Accounting Committee (IC) / 2000
(ASC) Standards (PAS)

International
Year Name of Body Standard Interpretation Body
Established Created Created
2001 International International International Financial
Accounting Financial Reporting Reporting Interpretations
Standards Board Standards (IFRS) Committee (IFRIC) / 2002
(IASB)

1973 International International Standing Interpretations

Accounting Accounting Committee (SIC) / 1997
Standards Standards (IAS)
Committee (IASC)