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JTAS - Manual Template
JTAS - Manual Template
The process of establishing accounting policies and procedures involves a systematic approach to
ensure consistency, transparency, and compliance in financial reporting practices. These policies
cover various aspects, including revenue recognition, expense allocation, asset valuation, and
financial statement presentation.
Implementation involves integrating these policies into financial reporting processes and systems,
with regular monitoring and updates to ensure compliance and relevance in evolving accounting
landscapes.
II. OBJECTIVES
The basic underlying assumptions, which form the basis of accounting standards and policies, are as
follows:
1. Neutrality – ensures impartiality, free from any bias towards predefined outcomes. Financial
information is deemed neutral when it serves the collective needs of external users, independent
of assumptions regarding specific user requirements.
3. Verifiability – the accounting information ensures that there are adequate supporting documents
available to validate the reported transaction and its corresponding value.
4. Reliability - For financial statements to be considered reliable, there must be level of assurance
these statements do in fact represent what these purports to represent.
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5. Relevance – pertains to the meaningful correlation between financial acco unting information and
its intended uses. For financial information to be valuable, it must be directly applicable to the
needs of one or more users of the financial statements.
6. Functional Currency- All transactions recorded and reported are stated in Philippine Peso. Any
representation in other currency is converted according to specified source of forex rate.
7. Timeliness - Transactions are recorded at the time they are incurred or earned. Revenues
denominated in foreign currencies are reported at the end of each month using the month-end
foreign exchange rates provided by the Bangko Sentral ng Pilipinas (BSP). Any expenses
denominated in foreign currencies are recorded in Philippine Pesos using the BSP exchange rate
on the transaction date.
8. Matching Principle: Net income is most accurately determined by aligning expenses with the
revenues they generate. By doing so, the total resources utilized in operations are matched with
the total resources generated from operations.
9. Entity Concept: Financial accounting statements and records pertain specifically to a defined
business entity, which is separate and distinct from the individuals or groups associated with it.
The entity concept dictates that accounting records should solely reflect the activities of the
business, excluding any personal transactions from the books.
10. 10. Accounting Period: The financial accounting process provides information about the
economic activities of an organization for specified time periods that are shorter than the life of
the organization. The shortest period is typically a month. The longest period is typically one
year. JTAS adopts the calendar accounting period.
11. Historical Cost: The resources (assets) held by an organization and the claims against those
resources (liabilities) are to be recorded at their original prices (costs).
Depreciation is calculated on a straight-line basis over their estimated useful lives at annual
percentages rates designed to write-off the cost of the depreciable fixed assets.
Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of any asset or group of assets may not be recoverable. In case of such
events or changes and when the carrying value exceeds the estimated recoverable amount the
value of the asset is reduced to its recoverable amount, which is higher than the fair value less
selling costs and value in use.
Expenses incurred to replace any part of the property and equipment that is accounted for
separately is capitalized and the carrying value is recorded for the replaced part. Subsequent
expenditures are capitalized only when it increases future economic benefit related to real estate
and equipment. All other expenses are recognized in the income statement and statement of
owner's equity changes as an expense when they occur
12. 12. Recognition Concept: Changes in the company's assets and liabilities are caused by internal
and external events. The effects of internal and external events on the company's assets and
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liabilities should be recognized and reported in the time periods which they relate, rather than
when the cash is received or paid.
13. Basis for Financial Statements Preparations: The company presents its financial statements
(Balance sheet, Income statement, Statement of owner's equity changes, and Cash flows
statement) in accordance with International Financial Reporting Standard (IFRS).
2. Supportive attitude -All personnel of the company and more so those assigned to the Accounting
Section shall maintain and demonstrate a positive and supportive attitude towards established
internal controls at all times. This requires that all personnel are aware and attentive to internal
control matters and take steps to comply and promote the effectiveness of the controls. Good
internal controls require clear lines of authority and responsibility; appropriate reporting
relationships; appropriate separation of authority, education, and information.
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3. Competent personnel - All personnel shall have personal and professional integrity and shall
maintain a level of competence that allows them to accomplish their assigned duties, as well as
understand the importance of developing and implementing good internal controls. This requires
that they maintain and demonstrate (1) personal and professional integrity, (2) a level of skill
necessary to help ensure effective performance, and (3) an understanding of internal controls
sufficient to effectively discharge their responsibilities.
4. Sufficient documentation -All transactions and other significant events shall be clearly
documented, and the documentation shall be readily available for examination. This requires
written evidence of all pertinent aspects of transactions.
5. Proper recording of transactions and events - Transactions and other significant events are to be
promptly recorded and properly classified. This standard applies to (1) the entire process or life
cycle of a transaction or event and includes the initiation and authorization, (2) all aspects of the
transaction whille in process, and (3) its final classification in summary records.
6. Proper execution of transactions and events - Transactions and other significant events shall be
properly authorized and executed only by persons acting within the scope of their authority.
7. Adequate separation of duties - Key duties and responsibilities shall be separated among
individuals. Duties and responsibilities shall be assigned systematically to a number of
individuals to ensure that effective checks and balances exist. Key duties include authorizing,
approving, and recording transactions; issuing and receiving assets; making payments; and
reviewing or auditing transactions.
8. Appropriate supervision - Qualified and continuous supervision over the staff and administration
of the system are to be provided to ensure that internal control objectives are achieved. This
standard requires finance and accounting supervisors to continuously review and approve the
assigned work of their staff. It also requires that they provide their staff with the necessary
guidance and training to help ensure that errors, waste, and wrongful acts are minimized and that
specific management directives are followed. System administrator shall ensure system
maintenance, data file back up and protection against computer viruses.
9. Controlled access to and accountability for resources - Access to Company assets, resources and
records shall be limited to authorized individuals, and accountability for the custody and use of
these resources shall be assigned and maintained. Periodic comparisons shall be made of the
physical inventory of the resources with the recorded accountability to determine consistency.
The frequency of the comparison shall be a function of the vulnerability of the asset. Restrictions
of access to resources shall also depend upon the vulnerability of the resource as well as the
perceived risk of loss, both of which shall be periodically assessed.
10. Prompt resolution of audit findings- The Chief Accountant shall (1) promptly evaluate findings
and recommendations reported by external and internal auditors. (2) determine proper actions in
response to audit findings and recommendations (e.g., develop corrective actions and or
mitigating measures) and (3) complete within established time frames, all actions that correct or
otherwise resolve the matters brought to management’s attention. The audit resolution process
begins when the results of an audit are reported to management and is completed only after
actions have been taken that (1) correct identified deficiencies, (2) produce improvements, or (3)
demonstrate the audit findings and recommendations are either invalid or do not warrant
management actions.
V. ACCOUNT BOOKS
1. General Ledger (GL) - this ledger is a book of final entry containing accounts arranged in the
same sequence as the chart of accounts. Totals of columns in the special journals and the
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individual entries in the General Journal are directly posted in this book. At the end of each
month, the accounts are footed and at the end of the year, these are totaled, ruled and closed and
the balance extracted to serve as the opening balance of the new fiscal year.
2. General Journal - refers to a book of original entries, wherein business transactions are recorded
in the order according to the date events occur to the appropriate account. The transactions are
subsequently posted to the General Ledger.
3. Sales Journal - refers to a book of original entries, wherein the sales of items or rendered
technical services that customers(debtors) have purchased/ordered on account by charging a
receivable on the debit side of an accounts receivable and crediting revenue on the credit side
4. Cash Receipt Journal - refers to a book of original entries, wherein the cash payment for the sales
of items is received, by crediting sales and debiting cash.
5. Purchase Journal - a record of the company's internal accounts that itemizes all credit purchases.
VI. PROCEDURES
STEPS RESPONSIBLE PERSON
ACCOUNTING ENTRIES
1. Daily preparing of Accounting Entries Accounting Staff
2. In case of error in the accounting entry, that entry shall be Accounting Staff
reversed, and the correct entry recorded.
3. Accounting entries shall be prepared based related Accounting Staff
supporting documents
4. Review and approve accounting entries Accounting Supervisor
INTEGRITY OF ACCOUNTS
1. Form1
2. Form2
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* * * NOTHING FOLLOWS * * *
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