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Conceptual Framework and Accounting Standard

This document provides an overview of the conceptual framework and accounting standards. It defines accounting as the process of identifying, measuring, and communicating economic information to allow for informed decisions. The overall objective of accounting is to provide useful financial information, particularly to owners and creditors. Accounting standards are established to create uniformity and ensure financial statements are prepared and presented consistently. The Financial Reporting Standards Council is the accounting standard setting body in the Philippines that establishes Philippine Accounting Standards and Philippine Financial Reporting Standards.

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Aya Alayon
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139 views

Conceptual Framework and Accounting Standard

This document provides an overview of the conceptual framework and accounting standards. It defines accounting as the process of identifying, measuring, and communicating economic information to allow for informed decisions. The overall objective of accounting is to provide useful financial information, particularly to owners and creditors. Accounting standards are established to create uniformity and ensure financial statements are prepared and presented consistently. The Financial Reporting Standards Council is the accounting standard setting body in the Philippines that establishes Philippine Accounting Standards and Philippine Financial Reporting Standards.

Uploaded by

Aya Alayon
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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CONCEPTUAL

FRAMEWORK AND
ACCOUNTING STANDARD
Learning Objectives
- Explain the definition and the overall
objective of accounting
- Understand the purpose of accounting
standards
- Explain the development and sources of
financial reporting standards
DEFINITION OF ACCOUNTING
► Accounting is a service activity. The accounting function is to provide
quantitative information, primarily financial in nature, about economic
entities, that is intended to be useful in making economic decision.
⭶Accounting Standards Council (ASC)
► Accounting is the art of recording, classifying and summarizing in a significant
manner and in terms of money, transactions, and events which are in part at
least of a financial character and interpreting the results thereof.
⭶American Institute of CPA (AICPA)
► Accounting is the process of identifying, measuring, and communicating
economic information to permit informed judgement and decision by users of
the information.
⭶American Accounting Association
DEFINITION OF ACCOUNTING
► Accounting is the process of identifying, measuring, and communicating
economic information to permit informed judgement and decision by users of the
information.
- American Accounting Association
► IDENTIFYING
- This accounting process is the recognition or nonrecognition of business
activities as “accountable” events.
► MEASURING
- This accounting process is the assigning of peso amounts to the accountable
economic transactions and events.
► COMMUNICATING
- This is the process of preparing and distributing accounting reports to potential
users of accounting information.
DEFINITION OF ACCOUNTING
► Implicit in the communication process are the recording, classifying, and
summarizing aspects of accounting.
► RECORDING
- Also called “journalizing”. Is the process of of systematically maintaining a
record of all economic business transactions after they have been identified and
measured.
► CLASSIFYING
- Is the sorting or grouping of similar and interrelated economic transactions
into their respective classes. It is accomplished by posting to the ledger.
► SUMMARIZING
- Is the preparation of financial statements which include the Statement of
Financial Position, Income Statement, Statement of Comprehensive Income,
Statement of Changes in Equity, and Statement of Cash Flows.
OBJECTIVE OF ACCOUNTING
► To provide quantitative financial information about a business that is useful to
statement users particularly owners and creditors in making economic decisions.

THE ACCOUNTANCY PROFESSION


► RA 9298 – known as Philippine Accountancy Act of 2004. It is the law regulating the
practice of accountancy in the Philippines.
► Board of Accountancy – is the body authorized by law to promulgate rules and
regulations affecting the practice of the accountancy profession in the Philippines.
► Certified Public Accountants generally practice their profession in three main areas:
a. Public Accounting
b. Private Accounting
c. Government Accounting
PUBLIC ACCOUNTING
► Public Accountants usually offer three kinds of services namely:
a. Auditing – Is the examination of financial statements by independent certified public
accountant for the purpose of expressing an opinion as to the fairness with which the
financial statements are prepared.
b. Taxation – Includes the preparation of annual income tax returns and determination of
tax consequences of certain proposed business endeavors.
c. Management Advisory Services – Refer to services to clients on matters of accounting,
finance, business policies, organization procedures, product costs, distribution, and
many other phases of business conduct and operations
PRIVATE ACCOUNTING
► Means that the Certified Public Accountant is employed in business entities in various
capacity as accounting staff, chief accountant, internal auditor, and controller. The
highest accounting officer in a business entity is the controller.

► The major objective of the private accountant is to assist management in planning and
controlling the entity’s operations.
GOVERNMENT ACCOUNTING
► Encompasses the process of analyzing, classifying, summarizing, and communicating
all transactions involving the receipt and disposition of government funds and property
and interpreting the results thereof.
► The focus of government accounting is the custody and administration of public funds.
► Branches of government where a CPA is employed:
a. Bureau of Internal Revenue
b. Commission on Audit
c. Department of Budget and Management
d. Securities and Exchange Commission
e. Bangko Sentral ng Pilipinas
CONTINUING PROFESSIONAL
DEVELOPMENT (CPD)
► RA 10912 is the law mandating and strengthening the continuing professional
development program for all regulated professions, including the accounting
profession.
► CPD refers to the inculcation and acquisition of advanced knowledge, skill, proficiency,
and ethical and moral values after the initial registration of the Certified Public
Accountant for assimilation into professional practice and lifelong learning.
► CPD units refer to the CPD credit hours required for the renewal of CPA license and
accreditation of a CPA to practice the accountancy profession every three years.
GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (GAAP)
► Represent the rules, procedures, practice, and standards followed in the preparation
and presentation of financial statements.

Purpose of Accounting Standards


► Is to identify proper accounting practice/s for the preparation and presentation of
financial statements.
► Create a common understanding between preparers and users of financial statements
particularly the measurement of assets and liabilities.
► It ensures comparability and uniformity in financial statements based on the same
financial information.
FINANCIAL REPORTING STANDARDS
COUNCIL (FRSC)
► Replaces the Accounting Standards Council (ASC)
► It is the accounting standard setting body created by the Professional Regulations
Commission (PRC) upon recommendation of the Board of Accountancy to assist the
Board of Accountancy in carrying out its powers and functions provided under RA
9298.
► The main function of FRSC is to establish and improve accounting standards that will
be generally accepted in the Philippines.
► The accounting standards promulgated by the FRSC constitute the “highest hierarchy”
of generally accepted accounting principles in the Philippines.
► The approved statements of the FRSC are known as Philippine Accounting Standards
(PAS) and Philippine Financial Reporting Standards (PFRS).
COMPOSITION OF FINANCIAL REPORTING
STANDARDS COUNCIL (FRSC)
► Composed of 15 members with a Chairman who had been or is a presently a senior practitioner
and 14 representatives from the following:
▪ Board of Accountancy 1
▪ Securities and Exchange Commission 1
▪ Bangko Sentral ng Pilipinas 1
▪ Bureau of Internal Revenue 1
▪ Commission on Audit 1
▪ Major Organization of preparers and
users of financial statements 1
▪ Accredited national professional Organization of CPAs
▪ Public Practice 2
▪ Commerce and Industry 2
▪ Academe or Education 2
▪ Government 2
Philippine Interpretations Committee
► Was formed by the FRSC in August 2006 and has replaced the Interpretations
Committee (IC) formed by the Accounting Standards Council (ASC) in May 2000.
► The role of PIC 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.

International Accounting Standards


Committee (IASC)
► An independent private sector body with the objective of achieving uniformity in the
accounting principles which are used by business and other organizations for financial
reporting around the world.
a. To formulate and publish in the public interest accounting standards to be observed in
the presentation of financial statements and to promote their worldwide acceptance
and observance.
b. To work generally for the improvement and harmonization of regulations, accounting
standards and procedures relating to the presentation of financial statements.
International Accounting Standards Board
(IASB)
► Replaces the International Accounting Standards Committee (IASC).
► Publishes standards in a series of pronouncements called International Financial
Reporting Standards (IFRS).
END OF PRESENTATION

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