Introduction to Accountancy Profession

Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decision.

Accounting Standards Council (ASC)

Accounting is the art of recording, classifying, organizing, and summarizing in a significant manner in terms of money, transactions, and events which are in part at least of a financial character and interpreting the results thereof.

CAT of AICPA

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 (AAA)

Characteristics of Accounting

• User-based

• Quantitative of Financial Nature

• Subject to Interpretation

It is the process of determining which transaction or event shall be recognized

Identifying

Identifying process is the ____________ component

Analytical

Types of Accountable Events

• External Events

  • Exchange

  • Non-reciprocal Transfer

  • External Events Other Than Transfer

• Internal Events

  • Production

  • Casualty

It is an accountable event involving reciprocal transfer (sales)

Exchange or Reciprocal Transfer

It is an accountable event involving unilateral transfer (donation, payment of taxes)

Non-reciprocal Transfer

It is an accountable event where no transfer was made but there is a change in resources and obligations (Change in FV, impairment, vandalism)

External Events Other Than Transfer

It is an accountable events involving conversion of raw materials into finished goods

Production

It is an accountable event involving a decrease in the entity’s resources resulting from any sudden, unexpected, or unusual event (Fortuitous Event)

Casualty

It is the process of determining the monetary amounts at which the elements of financial statements are to be recognized and carried in the balance sheet and income statement.

Measuring

The measuring process is the _____________ component

Technical

It is the process of preparing and distributing accounting reports to potential users

Communicating Process

The Communicating Process is the ___________ component

Formal

It is the process of systematically maintaining a record of all economic business transactions after they have been identified and measured.

Recording or journalizing

It is the sorting or grouping of similar and interrelated economic transactions into their respective class.

Classifying

It is the preparation of financial statements.

Summarizing

It is the law regulating the practice of accountancy in the Philippines. “The Philippine Accountancy Act of 2004."

R.A. No. 9298

It is the regulating body of the accountancy profession in the Philippines

PR-BOA

The Board of Accountancy (BOA) is composed of ______ chairman and ______ members.

1 chairman, and six (6) members

Who appoints the chairman and the members of the BOA?

The President of the Philippines

Nomination Process of the Chairman and the members of BOA

APO (5 nominees per position, within 60 days prior to the expiration of the term) ➡PRC (select 3 nominees per position) ➡President of the Philippines

How many years does the chairman and the members of the Board shall hold office?

3 years

The President of the Philippines shall elect a vice chairman of the board (T/F)

False (The Board shall elect a vice chairman among its members)

Term of vice chairman

1 year

No person who has served two (2) successive complete terms shall be eligible for reappointment until the lapse of one (1) year (T/F)

True

No person shall serve the Board for more than _______ years

12

Qualifications of the members of the Board

• Must be a natural-born citizen and a resident of the Philippines

• Must be a duly registered CPA with at least 10 years of working experience in any scope of practice of accountancy

• Must be of good moral character and must not be convicted of crimes involving moral turpitude.

• Must not have any pecuniary interest, directly or indirectly, in any school, college, university, or institution at the time of his/her appointment to the Board.

• Must not be a Director or Officer of the APO at the time of his appointment

• In case there is a pending case of a company or institution where he/she is part of, he/she must resign.

• The four sectors in the practice of accountancy shall as much as possible be equally represented in the Board.

Powers and Function of the BOA

• To prescribe and adopt the rules and regulations necessary for the carrying out the provisions of RA 9298.

• To supervise the registration, licensure, and practice of accountancy in the Philippines.

• To administer oaths.

• To issue, suspend, revoke, reinstate COR for the practice of the accountancy profession.

• To adopt an official seal of the Board

• To prescribe and/or adopt a Code of Ethics for the practice of accountancy

• To monitor the conditions affecting the practice of accountancy and adopt such measures.

• To conduct an oversight into the quality of audits of financial statements.

• To investigate violations of RA 9298

• To issue a cease or desist order

• To punish for contempt of the Board

• To prepare, adopt, issue, or amend the syllabi for the CPALE

• To ensure the coordination with CHED

• To exercise such other powers as may be provided by law to achieve the objectives and purposes of RA 9298

Ground for Suspension or Removal of Members

• Neglect of Duty or Incompetence

• Violation or tolerance of any violation of RA 9298, the Code of Ethics, and technical and professional standards

• Final judgment of crimes involving moral turpitude

• Manipulation or rigging of the CPA licensure examination and its results

The Four (4) Sectors of Accountancy Profession

1. Practice in Public Accountancy

2. Practice in Commerce and Industry (Private)

3. Practice in Government

4. Practice in Education or Academe

It is the practice of rendering accounting and auditing services to one or more client on a fee basis.

Public Accounting

Limitations Practice of Public Accountancy

• A corporation form of the firm is not allowed

• A certificate of accreditation is required for the practice

  • This requires 3 years of meaningful experience and Continuing Professional Development (CPD) unit requirements.

It is the practice where the CPA is employed in the private sector in a position which involves decision making requiring professional knowledge in the science of accounting.

Practice in Commerce and Industry (Private Accounting)

It is the highest accounting officer in a business entity

Controller (Chief Accountant)

It is the practice where the CPA is employed in an educational institution and teaches accounting, auditing, MAS, law, taxation, finance, and other related subjects.

Practice in Education or Academe

It is the practice where the CPA is employed or appointed to a position in government or GOCC which involves decision making requiring professional knowledge in the science of accounting or where civil service eligibility as a CPA is a pre-requisite.

Practice in the Government

The Accredited Professional Organization (APO) for CPAs in the Philippines

Philippine Institute of Certified Public Accountant (PICPA)

Requirements for PICPA to maintain its recognition as APO

• Its membership is open to all registered CPAs without discrimination

• Its membership shall include CPAs in all sectors. It is established for the benefit and welfare

• It shall have a creditable plan to enlist into active membership within three (3) years, at least a majority of the CPAs.

• It shall have adequate chapters/regions in major areas in the Philippines.of the CPAs, the advancement of their profession, and the attainment of other professional ends.

• It shall be judicious and prudent in the management of its financial resources and for this purpose its charter/region/national office and their respective foundation shall keep proper books of accounts and submit audited annual financial statements thereof.

• It shall have a full-time career Executive Director

• It is duly registered as a non-stock corporation or association by the SEC

• It has paid the prescribed accreditation fee.

Number of national directors

15, unless there is a valid reason to have additional representation

Four geographic areas

NCR, Luzon, Visayas, Mindanao

Requirement of a director

A director can only represent a sector in a region if he/she has been a member in good standing in such sector in the region for at least two (2) years at the time of his/her nomination.

Renewal of Certificate of Accreditation of PICPA

Once every 3 years.

Qualifications of Applicants for CPA Examination

1. Filipino Citizen

2. Is of good moral character

3. Is holder of the degree of BSA conferred by a school, college, academy, or institute duly recognized and/or accredited by the CHED or other authorized government offices

4. Has not been convicted of any criminal offense involving moral turpitude

What if the CPA Examination Rating if general average is at least 75% with no grades lower than 65% in any given subject?

Passed

What if the CPA Examination Rating if general average is less than 75%, has a grade of less than 65%, or both, but has obtained 75% and above in at least majority (4 out of 6) of the subjects covered in the licensure examination.

Conditional

What if the CPA Examination Rating if the examinee failed to obtain passed or conditional rating

Failed

How many units should the examinee take for the refresher course?

At least 24 units

Validity of refresher course

2 complete examination

Meaningful Experience

Public Practice - include at least one year as audit assistant and at least two years as auditor in charge of audit engagement covering full audit functions of significant clients.

Commerce and Industry - include significant involvement in general accounting, budgeting, tax administration, internal auditing, liaison with external auditors, representing his/her employer before government agencies on tax and matters related to accounting or any other related functions.

Academe/Education - include teaching for at least 3 trimesters or two semesters subjects in either financial accounting, business law, and tax, auditing problems, auditing theory, financial management and management services. Provided that the accumulated teaching experience on these subjects shall not be less that 3 school years.

Government - include significant involvement in general accounting, budgeting, tax administration, internal auditing, liaison with Commission on Audit or any other related functions.

Ownership of Working Papers

Property of the CPA

Republic Act for CPD

RA 10912

Required CPD for Renewal of Professional Identification Card

15 credit units

Except:

1. OFWs

2. Newly licensed professionals for the first renewal cycle after obtaining their license

Required CPD for Accreditation

120 credit units

Minimum units under required competency areas

Technical:

Professional Skills:

Professional Values, Ethics, and Attitudes:

Flexible CPD Units:

Technical: 30

Professional Skills: 5

Professional Values, Ethics, and Attitudes: 5

Flexible CPD Units: 80

Composition of Auditing and Assurance Standards Council (AASC)

18 (1 chairman and 17 members)

BOA	1
COA	1
BSP	1
SEC	1
Association or organization of CPAs in active public practice of accountancy	1
IC	1
APO:
Public Practice	9
Commerce and Industry	1
Academe/Education	1
Total	17

Qualification of the chairman of AASC

Senior practitioner in public accountancy

It is created to conduct an oversight into the quality of audit of financial statements through a review of the quality control measures instituted by CPAs in order to ensure compliance with accounting and auditing standards and practices

Quality Review Committee

Composition of QRC and ETC

1 Chairman and 6 members

	QRC	ETC
BOA	1	1
APO:
Public Practice	2	1
Commerce and Industry	1	1
Academe/Education	1	2
Government	1	1
Total	6	6