Accounting 111

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 Table of contents
03 The Accountancy Profession
08 Code of Professional Ethics for CPAs in the Philippines
12 Core Competencies Framework for Accountants

14 The Accountancy Law of 2004

16 The Birth of the Philippine Accounting Standards (PAS)

 01
The Accountancy
Profession
The Accountancy
Profession
promotes, develops and
supports accountants
worldwide. Their role is crucial
in protecting the quality and
integrity of accountants who are
core to the rigorous application
of the Standards.
● Father of Modern Accounting:
Luca Pacioli
● Recognized by the Philippine
Government as a profession in
1923; passing the Accountancy
Act 1923
● British colonizers established the
first accounting firms.
Certified Public Account (CPA)
● Holder of a Bachelor of Science in Accountancy degree
● Passer of the difficult CPA Licensure Examination
● Current Highest Passing Rate: 48.36%
 Career Opportunities
of an Accountant
Public Accounting
● Provides accounting services
to other firms.
● Acts as a third party to
review the financials of a
company for public
disclosure.
Governmental Accounting
Maintains tight control over
resources, also segregating
activities into different funds
to clarify how resources are
being directed at various
programs.
Private Accounting
● Refers to the business practices
of an accountant employed by a
single company.
● Setting up internal systems to
record business transactions
which will help inform a
company’s financial statements
Accounting in Education
Teaches in recording and
maintaining books of accounts.
 Philippine Institute of Certified
Public Accountants (PICPA)
The accredited professional organization (APO) of
CPAs by the Professional Regulation Commission
(PRC):

● Established in 1929
● The professional organization of CPAs
● A non-stock, non-profit organization
 02
Code of Professional
Ethics for CPAs
in the Philippines
 Code of Professional Ethics
for CPAs in the Philippines
● Integrity
● Objectivity
● Professional Competence &
Due Care
● Confidentiality
● Professional Behavior
 Integrity

A professional accountant should be straightforward and honest in all

professional and business relationships.

Objectivity
A professional accountant should not allow bias, conflict of interest, or
undue influence of others to override/compromise professional or
business judgements.
 Professional
Professional
Competence and Confidentiality Behavior
Due Care
● Attain and maintain To respect the A professional
professional confidentiality of accountant should
knowledge and skill information acquired comply with
at a level required to as a results of relevant law and
ensure that a client professional and regulations and
or employing business relationships. should avoid action
organization that discredits the
receives competent profession.
professional
activities.
● Act diligently and in
accordance with
applicable technical
and professional
standards
 03
Core Competencies
Framework for
Accountants
 Core Competencies Framework
for Accountants
Knowledge Skills Values
● General Knowledge ● Intellectual ● Professional Ethics
● Organizational & Business ● Interpersonal ● Moral Values
Knowledge ● Communication
● Information Technology
Knowledge
● Accounting Knowledge
 The
04 Accountancy
Law of 2004
 The Accountancy Law
of 2004
R.A. 9298
Known as the “Philippine
Accountancy Act of 2004”.
Board of Accountancy
Composed of a Chairman
and six (6) members.
Rating in the Licensure Examination
Must obtain a general
average of 75% with no
grades lower than 65%.
Scope of the Board Examination
● Financial Accounting and
Reporting
● Advanced Financial
Accounting and Reporting
● Management Advisory
Services
● Auditing
● Taxation
● Regulatory Framework for
Business Transactions
05 The Birth of the
Philippine Accounting
Standards (PAS)
Philippine Accounting Standards
The new set of Generally Accepted Accounting Principles (GAAP)
issued to govern the preparation of financial statements.
 Philippine Financial Reporting
Standards Council (PFRSC)
● Established on 2006
● Replaced Accounting Standard Council
(established 1981) as the standard-setting body
tasked to establish and improve the GAAP.
● Composed of a Chairman and fifteen (15)
members)
● Approved the Philippine Accounting Standards
(PAS)
 International Accounting
Standards (IAS)
● An older accounting standards issued by the International
Accounting Standards Board (IASB)
● Replaced with International Financial Reporting Standards
(IFRS)
● A set of accounting standards that govern how particular
types of transactions and events should be reported in
financial statements.
 Accounting 111
Notes-ish (Chap 2)
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 Table of contents
03 Accounting & Business

07 Generally Accepted Accounting Principles (GAAP)

10 Basic Accounting Assumptions

 01
Accounting
and Business
MSMEs
● Accounts for 99% of the total business enterprise
in the Philippines
● Considered as the backbone of many economics
around the world
● Defined as any business activity or enterprise
engaged in industry, agri-business, and/or
services that has:
1. An asset size (less land) of up to ₱100
Million
2. An employment size with less than 200
employees
 MSMEs
Micro Small Medium
● Assets of ₱3M or ● Assets above ₱3M ● Assets above ₱15M
less to ₱15M to ₱100M
● Employ not more ● Employ 10 to 99 ● Employ 100 to 199
than 9 workers workers workers

E.g. sari-sari stores, E.g. grocery stores, E.g. probably somewhat

laundry shops, medical stores, similar to small
computer shops, tradespeople, bakeries, enterprises but the
printing shops, small manufacturing comparison would be
canteens etc. units, etc. the scale of the business
 “Book of Accounts”

Records by the business

“Financial Statements”

Records transformed into a report

 02
Generally Accepted
Accounting Principles
Generally ● A uniform set of accounting rules,

Accepted procedures, practices, and

standards that are followed in

Accounting ●
preparing the financial statements.
These principles serve as the

Principles “ground rules” that guide

accounting practitioners.

(GAAP)
 Mentioned Principles
Cost Principle Materiality Principle
Records assets at their All items are reasonably
likely to impact investors’
respective cash amounts at
decision-making must be
the time the asset was recorded in detail in the
purchased or acquired.
financial statements.
Objectivity Principle Consistency Principle
The business should
The concept that the
maintain the same
financial statements of
accounting methods or
an organization be based principles throughout the
on solid evidence. accounting periods.
Matching Principle
Dictates that companies
report expenses the
same time as the
revenues are related to.
Adequate Disclosure
Principle
Demands full disclosure of all
material matters that can affect
financial statements and are to
interest to users of accounting
information.
 03
Basic Accounting
Assumptions
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A company that has the
resources needed to All transactions must
continue operating be consistently
indefinitely until it recorded using the
provides evidence to the same currency.
contrary.

Accrual
Accounting Going Time Period Unit of Basis
Concept Concern Assumption Measure Assumption

The business is A company uses The

recording/recognition
separate from the financial reporting
of revenues and
owner/s of the based on its own expenses arises when
business. chosen periods. earned or used.