Limitations of the Practice of Public Accounting

 Single practitioners and partnerships for the practice of public

accountancy shall be registered CPAs in the Philippines
 Certificate of accreditation shall be issued to CPAs in public practice
only once showing compliance with BOA and approved by PRC that
such registrant has acquired a minimum of three years of
meaningful experience in any of the areas of public practice
including taxation.
 SEC shall not register any corporation organized for the practice of
public accountancy.
Continuing Professional Development (CPD)
 Republic Act No. 10912 is the law mandating and strengthening the
CPD program for all regulated professions, including the accountancy
profession.
 CPD refers to the inculcation and acquisition of advanced
knowledge, skill, proficiency, and ethical and moral values after the
initial registration
 All CPAs regardless of area or sector of practice shall comply with
120 CPD units. Excess credit units shall not be carried over except
those earned for Masteral and Doctoral degrees.
 Only 15 units are required for the renewal of the CPA license. An
exemption applies only to those CPAs reaching the age of 65.
Accounting standards
The Generally Accepted Accounting Principles (GAAP)
 GAAP –are rules and procedures by developed accountants in
recording transactions on the basis of experience, reason, custom,
usage, and practical necessity.
 It represents rules, procedures, and practice standards followed by
the preparation and presentation of financial statements.
 These are like laws that must be followed in financial reporting.
 Establishing GAAP is a political process that incorporates the political
actions of users, professional judgment, and research.
Accounting standards in the Philippines
Financial Reporting Standards Council (FRSC) replaces the ASC (Accounting
Standard Council)
 The accounting standard-setting body created by PRC upon
recommendation of BOA to assist them in carrying out its powers
and functions as indicated in R.A. Act. No. 9298.
 Its main function is to establish and improve accounting standards
that will generally be accepted in the Philippines.
 Approved statements are known as PFRSs.
 Philippine Financial Reporting Standards (PFRSs) are Standards and
Interpretations adopted by the Financial Reporting Standards
Council (FRSC). They comprise:
1. Philippine Financial Reporting Standards (PFRSs);
2. Philippine Accounting Standards (PASs); and
3. Interpretations
International Organizations
International Accounting Standards Committee (IASC) -is an independent
private sector body, with the objective of achieving uniformity in the
accounting principles which are used by the business and other
organizations for financial reporting around the world. It was formed in June
1973 with the following objectives:
a. To formulate and publish in the public interest accounting standards to
be observed in the presentation of FS and to promote worldwide
acceptance and observance.
b. To work generally for the improvement and harmonization of regulations,
accounting standards, and procedures relating to the presentation of FS

International Accounting Standards Board (IASB) – replaces International

Accounting Standards Committee (IASC)
  It publishes standards in a series of pronouncements called
International Financial Reporting Standards (IFRS) and continued to
be designated as International Accounting Standards (IAS)
 It has adopted the body of standards issued by the IASC.
 Its standard-setting process includes the correct order research,
discussion paper, exposure draft, and accounting standard.
Moving Towards IFRS
 In developing accounting standards that will generally be accepted in
the Philippines standards issued by other standard-setting bodies
such as USA Financial Accounting Standard Board (FASB) and IASB
are considered.
 At present, the FRSC has adopted in their entirety all International
Accounting Standards and International Financial Reporting
Standards.
 The move toward IFRS is essential to achieve the goal of one
uniform and globally accepted financial reporting standard. The
Philippines is fully compliant with IFRS effective January 2005, a
process started back in 1997.
Factors considered to move Totally to International Accounting Standards.
 Support of international accounting standards by Philippine
organizations.
 Increasing internalization of business which has heightened interest
in a common language for financial reporting.
 Improvement of international accounting standards or removal of
free choices of accounting treatments.
 Increasing recognition of the International accounting standards by
the World Bank, Asian Development Bank and World Trade
Organization.

International Financial Interpretations Committee(IFRIC) -is a committee

that prepares interpretations of how specific issues should be accounted for
under the application of IFRS where
a. The standards do not include specific authoritative guidance; and
b. There is a risk of divergent and unacceptable accounting practices
- is composed mostly of technical partners in audit firms but also includes
preparers and users. In 2002, It replaced the former Standing
Interpretations Committee (SIC) which had been created by the IASC.
The Philippines Interpretations Committee (PIC) –was formed by the FRSC
in August 2006 replacing the Interpretations Committee (IC), formed by
Accounting Standard Council.
 Its role is to prepare interpretations of PFRS for approval by the
FRSC and to provide timely guidance on financial reporting issues
not specifically addressed in current PFRS.
 Interpretations are intended to give authoritative guidance on issues
that are likely to receive divergent or unacceptable treatment
because the standards do not provide specific and clear-cut rules
and guidelines.
IFRS Advisory Council (previously as Standards Advisory Council “SAC) is a
group of organizations and individuals with an interest in international
financial reporting.
- Its role includes advertising priorities within IASB’s work program
and is required to consult with Advisory Council in advance of any
board decisions on major projects that wish to add to its agenda.
International Federation of Accountants (IFAC)
- is a non-profit, non-governmental, non-political organization of the
accountancy bodies that represent the worldwide accountancy
profession.
- Its mission is to develop and enhance the profession to provide
services consistently high quality in public interest.

International Organization of Securities Commissions (IOSCO)

- is an international body of security commissions. The Philippine SEC
is a member of IOSCO
 - develops, implements, and promotes adherence to internationally
recognized standards for securities regulation.
The need for reporting standards
 Entities should follow a uniform set of generally acceptable
reporting standards when preparing and presenting financial
statements; otherwise, financial statements would be misleading.
 The term “generally acceptable” means that either:
o the standard has been established by an authoritative
accounting rule-making body; or
o the principle has gained general acceptance due to practice
over time and has been proven to be most useful.
 The process of establishing financial accounting standards is a
democratic process in that a majority of practicing accountants must
agree with a standard before it becomes implemented.
 The overall purpose of accounting standards is to identify proper
accounting practices for the preparation and presentation of
financial statements.
 It creates a common understanding between preparers and users of
FS, especially in measuring assets and liabilities.
 A set of high-quality standards is a necessity to ensure comparability
and uniformity on FS base on same financial information