CHAPTER 1 PHILIPPINE

INSTITUTE OF
Accounting CERTIFIED PUBLIC
Profession ACCOUNTANTS
-A system that
measures business
DEFINITION activities,
processes given
information into
ACCOUNTING
reports and
STANDARDS communicates
COUNCIL those findings to
-Accounting is a decision makers.
service activity. Its
function is to
provide AMERICAN
quantitative INSTITUTE OF
information, CERTIFIED PUBLIC
primarily financial ACCOUNTANTS
in nature, about -Accounting is the
economic entities art of recording,
that is intended to classifying, and
be useful in making summarizing in a
economic decisions . significant manner
and in terms of
AMERICAN money, transaction
and events which
ACCOUNTING
are, in part at
ASSOCIATION least, a financial
-Accounting is the
character and
process of
interpreting the
identifying,
results thereof.
measuring, and
communicating
economic
information to
COMPONENTS OF
permit informed ACCOUNTING
judgments and 1. identifying
decisions by users 2. measuring
of the information . 3. communicatin
g
IDENTIFYING 4. interpreting
-This process
involves the
recognition or non- RECORDING
recognition of -All financial
business activities transactions that
our transactions as occurred I recorded
accountable or written in a
events. systematic and
chronological
MEASURING manner in the
-This process appropriate books.
involves assigning -A phase of
amounts to accounting that is
accountable known as
economic events bookkeeping.
and transactions.
CLASSIFYING
COMMUNICATING -Involve sorting (or
-This process arranging/organizin
involves g) and grouping
summarizing similar items under
information into a common category.
accounting reports
and distributing SUMMARIZING
them to users of -Cancel involves
accounting summing up events
information. or summarizing
-This component is financial data
the reason why through the
accounting is called preparation of
the language of various financial or
business Bing accounting reports,
graphs, or charts to
make them easy to
PHASES OF understand or
ACCOUNTING interpret.
1. recording
2. classifying INTERPRETING
3. summarizing -Involves analyzing
and understanding
the financial called international
reports in a manner accounting
that allows the standards (IAS).
users of financial These were
information to adopted by the
make sound or IASB.
meaningful -IFRSs are
judgments developed through
regarding the the IASB due
financial condition process, which
and performance of involves various
the business. interested
individuals and
organizations from
around the world.
ACCOUNTING This due process
STANDARD involves the
SETTING BODIES following stages:

INTERNATIONAL
ACCOUNTING Settin
Develop
g and
STANDARDS BOARD plann
ment
and
(IASB) ing
publicat
the
-An independent, proje
ion of
private sector body the
ct
discussi
that issues agend
on paper
a
accounting Develo
standards called pment Post-
international and stand
public ard
financial reporting ation publis
standards (IFRSs). of the hing
exposu proce
-Form in 2001 to re dure
replace the draft
Develop
international ment and
accounting publicati
on of a
standards (IASC). fi n a l i z e d
TAKE NOTE: accounti
Accounting ng
standard
standards issued
by the IASC are
INTERNATIONAL FINANCIAL
FINANCIAL REPORTING
REPORTING STANDARD COUNCIL
STANDARDS (IFRSC)
INTERPRETATIONS -The accounting
COMMITTEE (IFRSIC) standard-setting
-The interpretative body in the
body of the IASB. Philippines
-This committee established by the
develops Professional
authoritative Regulation
interpretations of Commission (PRC)
existing IAS and under the
IFRS (called the Implementing Rules
IFRIC and Regulations of
interpretations) the Republic Act
and provides No. 9298 (R .A .
guidance on 9298), the
financial reporting Philippine
issues not Accountancy Act of
specifically 2004, to assist the
addressed by IAS Board of
and IFRS. Oh Accountancy (BOA)
History of IFRSIC: in carrying out its
-before December power and function
2001: the IASB’s in promulgating
interpretative body accounting
is called the standards in the
Standards Philippines.
Interpretations -The FRSC replaces
Committee (SIC). the Accounting
SIC issued SIC Standards Council
Interpretations. (ASC), which was
-December 2001: created in
SAIC was November 1981 by
reconstituted as the Philippine
IFRIC. IFRIC issues Institute of
IFRIC Certified Public
Interpretations. Accountants
(PICPA).
-The FRSC ’s -Established by the
primary function is FRSC in August
to establish 2006 to develop
generally accepted authoritative
principles (GAAP) interpretations of
in the Philippines. existing PAS and
-The accounting PFRS and provide
standard issued by guidance on
the FRSC are called financial reporting
Philippine issues not
Accounting specifically
Standard (PAS) and addressed in PAS.
Philippine Financial -PIC Interpretations
Reporting Standard becomes part of
(PFRS). This PFRS once they are
constitutes the approved by FRSC.
highest hierarchy -PIC replaces the
of GAAP in the Interpretations
Philippines Committee
-Its international established by the
counterpart is ASC in 2000.
IASB. -Its international
counterpart is the
PHILIPPINE IFRSIC.
INTERPRETATION
COMMITTEE

TAKE NOTE:
-Accounting standards were created with
the goal of identifying suitable accounting
practices for the preparation of financial
statements.
-Accounting standards ensures that
preparers and users of financial statements
have a common understanding of how
assets and liabilities are measured.
 Internat Internati Financ Philippin
ional onal ial e
Account Financial Report Interpret
ing Reportin ing ations
Standar g Stand Committ
d Board Standard ard ee (PIC)
(IASB) s Counci
Interpret l
ations (FRSC)
Committ
ee
(IFRSIC)
Scope of
the Philip Philippin
Global Global
body/com pines es
mittee
Internat
Accou Interpret
ional Standard
nting ations
Account s
Stand Committ
Predecess ing Interpret
ard ee
or Standar ations
Counci establish
d Committ
l ed by the
Committ ee (SIC)
(ASC) ASC
ee
IFRIC
IFRS Interpret
The IAS ations
Accountin issued The SIC
PAS PIC
g by the Interpret
and Interpret
standards IASC ations
PFRS ations
issued were issued
adopted by the
. SIC were
adopted.
THE REPUBLIC ACT NO.
ACCOUNTANCY 9298 / R.A. 9298 OR
THE PHILIPPINE
PROFESSION IN
ACCOUNTANCY ACT
THE PHILIPPINES OF 2004
-The law regulating
the practice of
accountancy in the a. Public
Philippines. Accountancy
-This field of
PROFESSIONAL practice involves
REGULATORY BOARD rendering
OF ACCOUNTANCY independent
(PRBOA) professional
-The body services to the
authorized by law public.
to promulgate rules  Auditing
and regulations financial
affecting the statements
practice of  Preparing tax
accountancy in the returns
Philippines.  Consultancy
-Under the services
supervision of -CPAs are required
Professional to register with the
Regulation PRBOA and PRC for
Commission (PRC). the practice of
PHILIPPINE public accountancy.
-A certificate of
INSTITUTE OF
accreditation shall
CERTIFIED PUBLIC be issued to CPAs
ACCOUNTANTS in public practice
(PICPA) only when the
-Founded in registrant has
November 1929, is acquired a
the accredited minimum of three
professional (3) years of
organization (APO) meaningful
of CPAs by the PRC. experience in any
of the areas of
SCOPE OF PRACTICE public practice
OF ACCOUNTANCY including taxation.
-The practice of -The PRC, upon
accountancy shall favorable
include, but not recommendation of
limited to the the PRBOA , shall
following : issue the
Certificate of
Registration to their agencies,
practice public such as Bureau of
accountancy, which Internal Revenue
shall be valid every (BIR), Bureau of
three years upon Customs (BOC),
payment of Commission on
required fees. Audit (COA), etc.

b. Commerce and CONTINUING

Industry PROFESSIONAL
-This field of DEVELOPMENT (CPD)
practice, also -An ongoing
known as private training
accountancy, requirement to
involves assisting enhance the
management in technical skill and
planning, competence of CPA .
controlling, and -All CPAs,
decision-making regardless of the
activities. sector of practice,
-CPAs under this shall accumulate at
scope of practice least 120 CPD units
are employed by to be accredited to
private companies. practice the
accountancy
c. Education or profession.
Academe -A CPA is
-This field of permanently
practice involves exempted from
the teaching of acquiring the CPD
accounting, requirements for
business law, license renewal
taxation, and other upon reaching the
technically related age of 65. (This
subjects. exemption applies
only to the renewal
d. Government of CPA license and
-CPAs under this not for the
field of practice are accreditation to
employed in practice the
government and
accountancy
profession.

TAKE NOTE:
-Only 15 CPD units
are required for the
renewal of the CPA
license.
*CPD units refers to
the CPD hours
required for the
renewal of a CPA
license and
accreditation of a
CPA to practice the
accountancy
profession every
three years.
*Excess units
earned shall not be
carried over the
next three-year
period, except
units for master ’s
and doctorate
degrees.