MODULE 2

I. INTRODUCTION

A. OVERVIEW
Module 2 contains the different fields of accounting where you can
choose from for employment after graduation. It also contains the regulatory and
professional bodies in accounting, and some important provisions of
Accountancy Acts of 2004, 2016, and 2017. The theoretical framework of
accounting is also an important content of the module. This is the foundation of
accounting theories and principles. Corporate governance, business ethics, and
the code of professional ethics are also taken up. These topics are important as
yours’ and other accounting professionals’ guide in performance of duties as
professional accountants.

B. LEARNING OUTCOMES

At the end of the lesson, you should be able to:

1. Identify the different accounting fields.

2. Explain the role of the regulatory bodies.
3. Identify the professional bodies in accounting.
4. Discuss the important provisions of the Accountancy Act of 2004.
5. Explain the ethical standards in the practice of accounting profession.

C. REQUIREMENTS

After reading and studying the lessons, please answer the

questions/exercises at the end of the lesson.

D. INSTRUCTION

Study the module and be ready for discussion in our synchronous

meeting.

1|Page
 E. PRE-ASSESSMENT
Recitation/Quiz

II. LESSON

A. CONTENT
1. FIELDS OF ACCOUNTING

An accountant may specialize in any of these different fields: public

accounting, private accounting, government accounting, accounting education,
international accounting, and social accounting.

Public Accounting- it is a professional service rendered by a Certified

Public Accountant and his employees to the public for a fee. The following are
the most common services offered by a public accountant

1. Auditing- this is the principal service offered by public accountants. In

making an audit, they carefully examine, test, and check the accuracy
of the reports and financial data from which these reports were taken.
Then they express their opinion on the fairness of the audited reports.
2. Management advisory services- this includes the design, installation,
and improvements of the firm’s general accounting system and other
systems deemed necessary for controlling and distributing
manufacturing costs. In addition, advice on financial planning,
budgeting, forecasting, and inventory control are offered.
3. Tax services- this includes preparation and filing of income tax returns.

Private Accounting- is done for private business enterprises. The number

of accountants in the firm depends on the size and needs of the business. Small
business firms may employ a few accountants while large business enterprises
may have a hundred of accountants. Accountants in private firms may or may not
be Certified Public Accountant. However, the controller or the head of the
department is usually a CPA.

2|Page
 1. General Accounting- this includes recording transactions and
preparing financial reports for the use of management, owners,
creditors, governmental units, and other interested parties.
2. Cost Accounting- this has to do with determining and controlling costs
in producing a product or service.
3. Budgeting- this provides management with a plan for future
operations. After this plan has been applied, summaries and reports
comparing the actual accomplishments with the plan are provided.
4. Internal Auditing- aside from the audit done by a public accountant,
some business firms usually maintain a staff of internal auditors who
check the records prepared and maintained in each department or
branch. These internal auditors see to it that the established
accounting procedures are being followed throughout the year.

Government Accounting- government officials, like private business firms,

rely on accumulated accounting data. Accountants are responsible for the
accumulation of these data. They also check and audit the income, payroll, and
tax returns submitted to the government.

Accounting Education- faculty members in accounting departments of

various colleges and universities are Certified Public Accountants.

International Accounting- this field of accounting is concerned with the

transactions and special problems of multinational business organizations in their
dealings in the international trade.

Social Accounting- this involves the measurement of social costs and

benefits such as the measurement of traffic patterns for the most efficient use of
traffic funds.

2. REGULATORY BODIES
2.1. Securities and Exchange Commission (SEC)
The SEC is tasked to regulate business operations of
partnerships, corporations, and foreign companies doing business in the
Philippines. It requires these entities to submit/file audited financial reports
as part of its supervisory function over these business organizations. It is

3|Page
 also tasked to protect the investments in the capital market, stocks and
bonds.

2.2. Bureau of Internal Revenue (BIR)

The BIR is tasked to collect licenses and fees; and taxes from
people and business organizations’ earning income. Such collections are
the source of funds of the Philippine government used in its various
projects.

2.3. Bangko Sentral ng Pilipinas (BSP)

The BSP is tasked to regulate all banks and financial institutions in

the Philippines. It monitors importations, exportations, interests, discounts,
loans, and foreign currency transactions. Through sound monetary
policies, it promotes and maintains the stability of Philippine peso.

2.4. Cooperative Development Authority (CDA)

The CDA is tasked to regulate cooperatives in the Philippines

3. PROFESSIONAL REGULATORY BODIES

3.1. Professional Regulation Commission (PRC)

The PRC is a government agency which is in charge of regulating

and licensing the practice of a profession like accounting, engineering,
architecture, education, medicine, nursing, and others.

Among its functions are:

3.1.1. Maintain and enforce professional examinations

3.1.2. Promulgate and implement standards and ethics in the
practice of a profession
3.1.3. Provide legal and other regulatory services
3.1.4. Act on valid complaints
3.1.5. Suspend or revoke license of an erring professional

3.2. Board of Accountancy (BOA- Board)

4|Page
 The BOA is under the jurisdiction of the PRC. It is tasked to
promulgate professional standards and ethics in the practice of
accounting professions. It is composed of a chairman and six members all
appointed by the President of the Philippines upon the recommendation of
the PRC.

Among its functions are:

3.2.1. Monitor the practice of accountancy in the Philippines

3.2.2. Conduct examinations to CPA candidates
3.2.3. Grant certificates to board passers
3.2.4. Register members
3.2.5. Suspend erring members
3.2.6. Conduct dialogue with accountancy students,
examinees, accountants
3.2.7. Conduct seminar to update CPAs on the current
accounting standards and policies

3.3. Philippine Institute of Certified Public Accountants (PICPA)

The PICPA which is the national professional organization of

certified public accountants in the Philippines is an accredited body by the
Board of Accountancy and the PRC. Its main function is to set up and
implement rules regarding accounting profession. To assist the PICPA to
formulate and promulgate standards, the Philippine Financial Reporting
Standards Council (PFRSC) was created by the PICPA and to assist the
PFRSC, the Philippine Interpretation Council was also created.

The Philippine Financial Reporting Standards (PFRS), the

Philippine Accounting Standards (PAS) and the Philippine Interpretation
Council (PIC) comprised the financial reporting standards in the
Philippines.

3.4. International Accounting Standards Council

The International Accounting Standards Council (IASC) is a

standard unifying body which harmonizes financial reporting and

5|Page
 measurement from member countries to make possible comparability of
financial statements.

The International Accounting Standards Board (IASB) is tasked to

formulate new standards for financial reporting and measurement.

4. ACCOUNTANCY ACT OF 2004

The Accountancy Act of 2004 has the following objectives:
4.1. Standardization and regularization of accounting education.

Among the functions to achieve these objectives are:

4.1.1. Define the standard of practice and service an

accountant may engage in
4.1.2. Mandate the creation of standard formulating bodies
such as the Financial Reporting Standard Council
(FRSC) and the Auditing and Assurance Standard
Council (AASC)
4.1.3. Mandate the creation of the Education Technical
Council which is tasked to assist the BOA in matters
involving curriculum making, teaching standards,
monitoring progress of accountancy programs and
evaluating performance of educational institutions
offering accountancy.
4.2. Examination for registration of certified public accountants. To
achieve this objective, the following are undertaken:
4.2.1. Require the taking of the licensure examination,
registration and licensing of certified public
accountants before they can go into practice of
accounting and auditing.

4.2.2. Issue certificate of registration and professional

identification cards, documents which are necessary
for practice of accounting profession.

6|Page
 4.3. Supervision, control and regulation of the accounting practice in
the Philippines. To achieve this objective, the following are
enforced:
4.3.1. Enumerate prohibitions, vested rights, and limitations in
the practice of accountancy
4.3.2. Require certificate of accreditation for individual CPA,
accounting firms, partnership of CPAs, and accounting
educators
4.3.3. Require a continuing professional development (CPD)
for all CPAs as a pre-requisite for renewal of license to
practice. For this purpose, PICPA created the CPE
Council and the NACPAE to conduct seminars to
update competencies of accountants

5. ETHICAL STANDARDS IN THE PRACTICE OF ACCOUNTING PROFESSION

Ethics is a set of values and moral principles which guides one to conduct
oneself accordingly and distinguish right and wrong.

The Code of Professional Conduct specifies two key elements of ethical

behavior: integrity and objectivity.

Integrity is a highly professional characteristic which includes honesty,

sincerity, and trustworthiness. One’s actions must be free from any intentional
malpractice or thought of distortion or misappropriation matters.

Objectivity requires one to be fair in all matters. The elements of objectivity

are competence, independence and confidentiality of records.

Competence requires adequate knowledge, skills, and experience in the

practice of profession.

Independence requires a practitioner to be free of personal interest and

compromising relationship with the client.

Confidentiality of records requires a practitioner to keep information obtained

from the client from leaking out.

7|Page
 B. ADDITIONAL READINGS
1. Accountancy Act of 2004
2. Fundamentals of Accounting by Amelia M. Arganda
3. Conceptual Framework and Accounting Standards by Zeus Millan
4. Financial Accounting and Reporting For Services and Merchandisers
by Zenaida Manuel
5. Fundamentals of Accountancy, Business and Management by Rodiel
C. Ferrer

C. EXERCISES
Direction: In your own words, answer the following exercises then submit your
answers during our next synchronous meeting.

1. In a scale of 1-10, 10 being the highest, evaluate the performance of the

regulatory bodies given in this module, explain your answer.

2. Your “kumpare” hired you to be his bookkeeper. However, along the course of
your service, there were some items whom he would like you to conceal and
you found out later that this concealment will give material advantage to your
kumpare’s business to the determent of the government, particularly the BIR.
What are you going to do?

D. SCORING/RUBRICS
Contents 30%
Reasoning 30%
Clarity 20%
Organization 20%
100%

Prepared by:

PROF. AMELIA M. ARGANDA

8|Page