Branches of Accounting

The Accounting Profession

• The practice of accounting and auditing has evolved into a profession.

• A profession is characterized by a common body of knowledge learned through formal education, with standards of conduct higher than legal requirements.

• Standards of conduct in accounting are imposed by national organizations and voluntarily accepted by practitioners.

Classification of Occupations

• Occupations can be categorized into several groups:

  • Professionals: doctors, lawyers, engineers, architects, accountants.

  • Other categories: managers and proprietors, clerical workers, skilled workers, laborers.

Nature and Purpose of Accounting

• Accounting is a service activity that provides quantitative financial information about economic entities.

• It aids in making informed economic decisions and selecting among alternative actions.

Scope of the Practice of Accountancy (Philippine Accountancy Act of 2004 - RA 9298)

1. Public Accountancy:

   • Involves individuals or partners in firms offering professional accounting services.

   • Services include:

     • Auditing and verifying financial transactions and records.

     • Preparing, signing, and certifying financial reports.

     • Designing, installing, and revising accounting systems.

     • Assisting clients with taxation issues and procedures.

2. Practice in Commerce and Industry:

   • Professionals in decision-making roles requiring accounting knowledge.

   • Positions may mandate CPA certification.

3. Practice in Education/Academe:

   • Involves teaching accounting and related subjects in educational institutions.

4. Practice in Government:

   • Working in government or government-owned entities in accounting positions.

   • Roles requiring professional accounting knowledge.

Functions in Different Areas of Accountancy

• Commerce and Industry: Includes general accounting, budgeting, tax administration, and liaising with external auditors.

• Academe: Teaching financial accounting, business law, and auditing subjects.

• Government: Engaging in accounting, budgeting, and liaising with the Commission on Audit.

• Public Practice: Functions may involve audit assistants and audit engagement management.

Professional Qualifications of Independent Auditors

• Independent auditors must be educated and experienced in accounting.

• Collaboration with other professionals might be necessary for areas like inventory evaluations.

Tax Services

• CPAs are often required for various Bureau of Internal Revenue (BIR) reports.

• Tax services include assistance with:

  • Filing income tax returns.

  • Substantiating income and deductions during tax assessments.

  • Offering advice on various taxes.

• CPAs with legal training are beneficial for tax practices, covered by the Code of Ethics.

Management Advisory Services

• Apart from auditing and tax services, firms provide consulting services such as:

  • Installation of accounting systems.

  • Budgeting and financial analysis.

  • Feasibility studies.

Other Accounting Services

• Bookkeeping involves recording financial transactions and preparing financial statements.

• Small firms focus more on this service compared to larger firms which devote less time to it.

• Non-auditing services may be sought by companies voluntarily.

Benefits from Accounting Services

• Accountants serve the public interest beyond individual client satisfaction.

• Functions include:

  • Ensuring integrity of financial statements for loans and investments.

  • Enhancing efficiency in resource management.

  • Providing assurance of reliability in financial information.

  • Supporting fair application of the tax system.

Certification of Accountants

• Different certifications for accountants:

  • CPA: Certified Public Accountant, certification by the Board of Accountancy.

  • CMA: Certified Management Accountant.

  • CIA: Certified Internal Auditor.

Ethics of Professional Accountants

• Definition of Ethics:

  • A set of moral principles or values guiding conduct.

  • Professional ethics often surpass legal requirements.

• The Code of Ethics guides CPAs in relationships with clients, employers, and the public.

• Key ethical considerations include:

  • Independence, integrity, and objectivity are critical for CPAs.

  • The duty to prepare reliable financial reports.

Code of Ethics for Professional Accountants in the Philippines

• Objectives:

  • Achieve high standards of professionalism and meet public interest requirements.

• Fundamental Principles: Include:

  • Integrity: Being honest and straightforward.

  • Objectivity: Fairness without prejudice or bias.

  • Professional Competence: Ensuring services are performed diligently and based on up-to-date knowledge.

  • Confidentiality: Respecting the confidentiality of information acquired during work.

  • Professional Behavior: Upholding the profession's reputation.

  • Technical Standards: Following applicable standards in service provision.

Career Choices in Accounting

• Career planning involves:

  • Self-assessment

  • Career exploration

  • Goal setting

• Job search strategies include family networking, acquaintances, training contacts, and advertisements.