CONCEPTUAL FRAMEWORK AND

ACCOUNTING STANDARDS
Accounting
■ Accounting is a service activity. - ASC
■ The accounting function is to provide quantitative information, primarily
financial in nature, about economic entities, that is intended to be useful in
making economic decisions. - ASC
■ Accounting is the art of recording, classifying and summarizing in a
significant manner and in terms of money, transactions and events which
are in part at least of a financial character and interpreting the results
thereof.- AIPCA
■ Accounting is the process of identifying, measuring and communicating
economic information to permit informed judgement and decision by users
of the information. - American Accounting Association
Important points

1. Quantitative information
2. Financial in Nature
3. Useful in Decision Making
Three components
■ Identifying
– Analytical component
– Recognition of accountable/quantifiable events (transactions)
■ External Transactions – one and another entity
■ Internal Transactions – entity only
■ Measuring
– Assigning Peso Amounts
– Ex Historical Cost ; current value
■ Communicating
– Preparing and distributing Accounting Reports - FS
– Recording, Classifying, Summarizing
Accounting Information System

■ Accounting is an information system that measures business

activities, process information into reports and communicates the
reports to decision makers
■ Key product – Financial Reports
– FINANCIAL PERFORMANCE
– FINANACIAL POSITION (STABILITY)
Objective of Accounting

■ The overall objective pf accounting is to provide quantitative financial

information about a business that is useful to users particularly
owners and creditors in making economic decision.
Accountancy Profession

■ Republic Act No. 92 98 – Philippine Accountancy Act of 2004

■ Board of Accountancy
■ Practice of Accountancy
– Public (three year meaningful experiences)
■ Auditing, taxation,MAS
– Private – controller, internal auditor, Accounting analyst/staff
– Government
The Accountancy Profession

■ Republic Act 9298 – Philippine Accountancy Act of 2004

■ Board of Accountancy
– body authorized by law to promulgate rules and regulations
affecting the practice of Accountancy Profession in the PH
– Responsible for preparing and grading the CPA examination
Practice of Profession

■ Public Accounting
– Auditing; Taxation; MAS
■ Private Accounting
– Controller, internal auditor; accounting staff
■ Government Accounting
– Custody and administration of public funds
Continuing Professional Development
(CPD)
■ Continuing Professional Development
– Refers to the inculcation and and acquisition of advanced
knowledge, skill, proficiency, and ethical and moral values after
initial registration of CPA for assimilation into professional
practice and lifelong learning.

– 120 cpd units in three years

Accounting vs other accounting
subjects
■ Auditing
■ Bookkeeping - procedural
■ Financial Accounting – preparation of FS
■ Managerial Accounting – internal use
– Cost Accounting
GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES
■ The principles have developed on the basis of experience, reason,
custom, usage and practical necessity
■ GAAP represents the rules, procedures, practice and standards
followed in the preparation and presentation of Financial statements
Conceptual Framework

■ Conceptual Framework for Financial reporting is a complete,

comprehensive and single document promulgated by the IASB.
■ Summary of terms and concepts that underlie the preparation of
financial statements for external users.
FRSC, PIC, IFRIC

■ Financial reporting standards council (FRSC)

■ Philippine Interpretations Committee (PIC)
– International Financial Reporting Interpretations Committee
(IFRIC)