Scribd
Upload
9 views

Summary _ Module 1

Summary of The Accounting Profession

Uploaded by

gongoracath97
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
9 views

Summary _ Module 1

Summary of The Accounting Profession

Uploaded by

gongoracath97
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 6

11/27/24, 2:02 PM Summary | Raena AI

T HE ACCOUNTANCY
PROFESSION
Conceptual Framework and Accounting
Standards

This module provides a detailed exploration of the accountancy profession,


focusing on the conceptual framework, accounting standards, and various
vital aspects involved in the practice of accounting. By the end of this
module, students are expected to have a clear understanding of the nature
of accounting, its key functions, and the standards governing practice in the
field.

Learning Outcomes
Define accounting and its purpose.
Identify the different areas within the accountancy profession.
Discuss the considerations that must be taken into account in public
accountancy practices.
Understand Continuing Professional Development (CPD) and its
implications for CPAs.

https://app.raena.ai/summary/jlws54drqx 1/6
11/27/24, 2:02 PM Summary | Raena AI

Differential between Generally Accepted Accounting Principles (GAAP)


and accounting standards.
Identify sources of accounting standards.
Recognize various professional organizations related to Certified Public
Accountants (CPAs).

Topics Included
Definition of Accounting
Areas of Accountancy Profession
Limitations of Public Accountancy Practice
Accreditation for Public Accountancy Practice
Continuing Professional Development and CPD Credit Units
Generally Accepted Accounting Principles
Accounting Bodies that Promulgate IFRS and PFRS
Accredited Professional Organizations

Understanding Accounting

Accounting has several accepted definitions, notably:


Accounting Standards Council: Describes accounting as a service
activity providing quantitative financial information that aids in economic
decision-making.
American Institute of Certified Public Accountants: Defines it as the art
of recording, classifying, and summarizing financial transactions to
interpret results.
https://app.raena.ai/summary/jlws54drqx 2/6
11/27/24, 2:02 PM Summary | Raena AI

American Accounting Association: Views accounting as the process of


identifying, measuring, and communicating economic information to
facilitate informed judgments and decisions.

The overall objective of accounting is to furnish useful quantitative financial


information to stakeholders, especially owners and creditors, for informed
decision-making.

Key Components of Accounting


Identifying: This involves discerning which business activities are
“accountable events,” focusing on ones that affect assets, liabilities, and
equity.
Measuring: Assigning monetary values to transactions deemed
accountable.
Communicating: Distributing financial reports to relevant stakeholders,
establishing accounting as the “universal language of business.”

Accounting Processes

Accounting processes encompass:


Recording: Systematic logging of all transactions.
Classifying: Organizing similar economic transactions into categories in
a ledger, which includes asset, liability, equity, revenue, and expense
accounts.
Summarizing: Preparing financial statements like the statement of
financial position and income statement.

https://app.raena.ai/summary/jlws54drqx 3/6
11/27/24, 2:02 PM Summary | Raena AI

The Regulatory Framework of Accountancy in


the Philippines

In the Philippines, the accountancy profession is regulated by the Republic


Act No. 9298, known as the Philippine Accountancy Act of 2004. To
practice, individuals must earn a Bachelor of Science in Accountancy and
successfully pass the CPA examination administered by the Board of
Accountancy (BOA).

Public Accountancy Practice

Certified Public Accountants (CPAs) in the public accounting sector provide


financial services through independent practice. The main areas of service
include:
Auditing: Involves the external examination of financial statements to
ascertain their fairness and adherence to accounting principles.
Taxation Services: Involves tax return preparation and representing
clients during tax investigations, necessitating in-depth knowledge of
tax laws.
Management Advisory Services: Provides advice on various aspects of
business operations, including finance and organizational procedures.

Private and Government Accounting

CPAs also work in private sectors in roles such as chief accountant or


internal auditor, focusing on assisting management with operations and
financial reporting. Government accounting addresses the management and
reporting of government funds and resources.
https://app.raena.ai/summary/jlws54drqx 4/6
11/27/24, 2:02 PM Summary | Raena AI

Continuing Professional Development (CPD)

CPD is essential for accountants to keep their skills and knowledge updated
post-registration. CPAs must earn a minimum of 15 CPD units for license
renewal and 120 units for accreditation every three years. Those over 65
may be exempt from CPD requirements, although they must still adhere to
accreditation guidelines.

Generally Accepted Accounting Principles


(GAAP)

GAAP consists of the fundamental rules and procedures that guide the
preparation of financial statements, developed through collective agreement
based on experience and practice. The Philippine Financial Reporting
Standards (PFRS) align with International Financial Reporting Standards
(IFRS) as established by the Financial Reporting Standards Council.

Professional Organizations

The Philippine Institute of Certified Accountants (PICPA) serves as the


accredited professional organization for accountants, aiming to uphold
professional standards and facilitate the advancement of accounting
practices. It encompasses various sectoral organizations representing
different areas of the profession: public practice, commerce, government,
and education.

Conclusion
https://app.raena.ai/summary/jlws54drqx 5/6
11/27/24, 2:02 PM Summary | Raena AI

Understanding these foundations and practices of accountancy is essential


for aspiring accountants to navigate their future careers successfully. The
module emphasizes the importance of ongoing education, adherence to
standards, and ethical practices in shaping a competent and trustworthy
profession.

https://app.raena.ai/summary/jlws54drqx 6/6

You might also like