Long Quiz 1 - The 2018 Revised Conceptual Framework for Financial Reporting Accounting Standards Standard Standard Title IFRS/PFRS 1 IAS/PAS 1 IAS/PAS 41 IFRS/PRFS 17 IAS/PAS 21 IFRS/PFRS 2 IAS/PAS 19 IAS/PAS 38 IFRS/PFRS 14 IAS/PAS 23 IAS/PAS 2 IAS/PAS 39 IAS/PAS 20 IFRS/PFRS 3 IAS/PAS 8 IFRS/PFRS 16 IAS/PAS 40 IAS/PAS 7 IAS/PAS 24 IFRS/PFRS 4 IFRS/PFRS 15 IAS/PAS 10 IFRS/PFRS 6 IFRS/PFRS 13 IFRS/PFRS 10 IFRS/PFRS 26 IAS/PAS 29 IFRS/PFRS 8 IFRS/PFRS 5 IAS/PAS 33 IFRS/PFRS 12 IFRS/PFRS 9 IAS/PAS 12 IFRS/PFRS 11 IAS/PAS 37 IAS/PAS 36 IAS/PAS 17 IAS/PAS 27 First-time Adoption of International Financial Reporting Standards Presentation of Financial Statements Agriculture Insurance Contracts The Effects of Changes in Foreign Exchange Rates Share-based Payment Employee benefits Intangible Assets Regulatory Deferral Accounts Borrowing Costs Inventories Financial Instruments: Recognition and Measurement Accounting for Government Grants and Disclosure of Government Business Combinations Accounting Policies, Changes in Accounting Estimates and… Leases Investment Property Statement of Cash Flows Related Party Disclosures Insurance Contracts Revenue from Contracts with Customers Events after the reporting period Exploration and Evaluation of Mineral Resources Fair value measurement Consolidated Financial Statements Accounting and Reporting by Retirement Benefits Plans Financial Reporting in Hyperinflationary Economies Operating Segments Non-current Assets Held for Sale and Discontinued Operation Earnings per Share Disclosure of Interest in Other Entities Financial instruments Income Taxes Joint arrangements Provisions, Contingent Liabilities, and Contingent Assets Impairment of assets Leases Separate Financial Statements IAS/PAS 16 IFRS/PFRS 7 IAS/PAS 34 IAS/PAS 28 IAS/PAS 32 Property, Plant and Equipment Financial Instruments - Disclosures Interim financial reporting Investments in Associates and Joint Ventures Financial Instrument -Presentation BRANCHES OF ACCOUNTING 1. Public Practice - the sector is a frequently traveled career as it offers excellent opportunities to gain multi-faceted business experience. Entry-level jobs include audit staff, tax staff, and consulting staff which leads to advanced positions of being a Partner or Senior Consultant. 2. Government Accounting - The consistency of the sources and uses of resources with the provisions of city, municipality, provincial or national laws is the main concern 3. Auditing - is the independent examination of an entity's financial statements to ensure fairness and reliability of such reports that management submits to users outside the business entity. 4. Commerce and Industry - is employed by various for-profit and not-for-profit entities, accountants in the sector are exposed to a wide scope of activities and responsibilities. An accounting staff or analyst may become the Chief Financial Officer or Chief Executive Officer given an ample period of experience and skills-building exposure. 5. Bookkeeping - is the mechanical task of accounting. This starts with the entering of data in the accounting records and then the extraction, classification, and summary in the forms of financial statements. 6. Financial Accounting - is focused on the recording of business transactions and the periodic preparation of reports on the financial position and results of operation of the entity/organization for which accountants work. 7. Academe - this sector guarantees the continued development of the profession by endeavoring to make others understand the body of accounting knowledge, and, to clarify and address emerging issues through research and sharing the results obtained with their colleagues. This sector is considered the least paid yet most noble sector of the accountancy profession. 8. Taxation - includes the responsibility for computing the amount of contribution or due by both business entities and individuals as a consequence of proposed business transactions or alternative courses of action. Accountants within this branch specialize in complying with existing laws but are also in constant legal search for ways to minimize these dues or liabilities to the government. 9. Government Sector - An accountant may also serve in the government sector as hired by different Presidential cabinets and departments or of the local government units. They may serve the public as state accountants and auditors, financial or budget analysts, or Commissioners, Cabinet Secretaries and Presidents of GOCCs, or Mayors, Governors, Representatives, among others. 10. Forensic Accounting - blends auditing, accounting, and, investigatory skills to assess financial documents. These often review accounting systems and practices related to criminal and legal investigations. 11. Cost Accounting - The process that involves the recording of cost data in books of accounts to provide information for managerial planning and control is covered. 12. Finance - Accountants can also work in the management of large amounts of money and can associate with the activities with banking, leverage, credit, capital market, and asset, liabilities, revenues, debt, and funds management, which are covered. 13. Management Accounting - incorporates cost accounting data and adapts them for specific decisions that management may be called upon to make. This branch incorporates all types of financial and non-financial information from a wide range of sources in coming up with the best decisions for the situation. 14. Internal Auditing - The risk management and evaluation of the effectiveness of a company's own controls, corporate governance, and accounting processes are the areas of concern. 15. Financial Planners - Also, accountants may assist individuals with their finances, from budgeting to taxes to investing in a financial planner that works for firms, or as independent financial consultants. Accounting Standard-Setting 1. Association of CPAs in Commerce and Industry - A group of CPAs employed by private entities and organizations and has sworn to provide quality financial and allied services directed to attaining effective business decisions, which includes, promoting the advancement of the accounting profession in the sector, assisting members in addressing common problems, promote high professionalism and adherence to established ethical standards, maintain effective liaison with the members of other sectoral organizations, and, assist and cooperate with the Board of Accountancy in the attainment of its objectives. 2. Government Association of CPAs - Its objective is to continuously uphold and promote the highest professional and ethical standards among CPAs in the national and civil service through a healthy exchange of ideas and experience among themselves and their counterparts in the private sector. 3. Philippine Institute o,f CPAs - Founded in 1929 and is the accredited professional accountancy organization by the Philippines Professional Regulation Commission (PRC). 4. Bangko Sentral ng Pilipinas - Its primary objective is to maintain price stability conducive to a balanced and sustainable growth of the economy and employment and shall also promote and maintain monetary stability and the convertibility of the peso. 5. Bureau of Internal Revenue - It shall comprehend the assessment and collection of all national internal revenue taxes, fees, and charges, and the enforcement of all forfeitures, penalties and fines connected therewith, including the execution of judgments in all cases decided in its favor by the Court of Tax Appeals and the ordinary courts. 6. Association of CPAs in Public Practice It was created primarily to strengthen the position of the CPAs in offering their service to the public and to preserve the unity of the combined strength of all CPA professionals. 7. Commission on Audit - It shall have the power, authority, and duty to examine, audit, and settle all accounts about the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or about, the Government, or any of its subdivisions, agencies, or instrumentalities, including government-owned or controlled corporations with original charters. 8. National Association of CPAs in Education - Its objective is to attend to the needs of accounting teachers, promote their cause, advance their purpose, and advocate a better quality of life for them and a better quality of accounting education for the aspiring CPAs. 9. Securities and Exchange Commission - National government regulatory agency charged with supervision over the corporate sector, the capital market participants, the securities and investment instruments market, and the protection of the investing public. 10. Philippine Financial Reporting Standards Council The accounting standard-setting body created by PRC upon recommendation of the BOA to assist the Board in carrying out its powers and functions provided under the Philippine Accountancy Act of 2004. 11. Professional Regulation Commission -Performs important functions on conducting and administering licensure examinations to aspiring professionals, and on regulating and supervising the practices of the professions executed in partnership with the 43-regulatory boards in the financial reporting. 12. International Accounting Standards Council - An independent private sector body to achieve uniformity in the accounting principles which are used by businesses and other organizations for financial reporting around the world. 13. Board of Accountancy - The body authorized by law to promulgate rules and regulations affecting the practice of the accountancy profession in the Philippines. 14. Philippine Interpretations Committee - Formed by the FRSC to prepare authoritative guidance on issues that are likely to receive unacceptable treatment because of the absence of specific and clear-cut rules and guidelines from the standards. 15. Financial Executives Institute of Philippines - A non-stock and non-profit organization, working at the forefront of finance in the country, setting the pace in professional development, corporate governance, capital markets development, national policy reforms, entrepreneurship, social involvement, and financial education. Concept of Accounting 1. Going Concern - The owners of a five-star hotel base their accounting records on the assumption that the hotel might close any time. 2. Accounting Entity Concept - An accounting practitioner mixes his accounting records with his accounting practice. 3. Physical Capital Concept - Net income occurs when the physical productive capital of the entity at the end of the year exceeds the physical productive capital at the beginning of the period. 4. Current value measurement - The inventory account is adjusted at the end of the year to reflect the price that would be received to sell it in an orderly transaction between market participants at the measurement date. 5. Neutrality - Preparers of statements should not try to increase the usefulness of the information to a few users to the detriment of others who may have opposing interests. 6. Accrual basis - Revenue is recognized when it is earned regardless of when received and expense is recognized when incurred regardless of when paid. 7. Understability - The entity having 150 accounts payable lists each account among the liabilities in the statement of financial position. 8. Timeliness - The older the information, the less useful. 9. Immediate Recognition Principle - A large entity decides that whenever an asset has a cost of less than P10,000, the cost will be charged to expense even though the asset may benefit several accounting periods. 10. Completeness/Standard adequate disclosure- The entity should always report the important details about share capital, for instance, the number of shares authorized, shares issued, treasury shares, subscribed shares,s, and par value. 11. Historical cost Concept - The delivery equipment recorded at cost by a manufacturing entity is written up to its fair value at the end of the reporting period. 12. Financial Capital Concept - Net income occurs when the nominal amount of the net assets of the entity at the end of the year exceeds the nominal amount of the net assets at the beginning of the period. 13. Expenses Recognition Principle - Expenses are reported whenever the accountant records them rather than when related revenues are earned. 14. Materiality - The accountant of the entity keeps a detailed depreciation record on every asset no matter how small its value. 15. Comparability - It is the goal achieved by consistency. 16. Revenue Recognition Principle - A construction firm signed a three-year contract to build a skyway connecting Davao and Tagum City. The firm immediately records the full contract price as revenue. 17. Periodicity Concept - After starting a business, a mining entity keeps no accounting records. The entity is waiting until the mine is exhausted to determine the success or failure of the business. 18. Faithful representation - The damaged inventory of a department store is being written down. The manager bases the writedown on his own subjective opinion to minimize income tax. 19. Free from errors - There are no errors or omissions in the description of the phenomenon. 20. Consistensy - A department store changes its accounting method every year to report a higher net income possible under accounting standards. 21. Systematic and Rational Allocation- The entity allocates the cost of a patent to the accounting periods in which it helps to produce the revenue. 22. Cause and Effect Association - When the merchandise is sold, the cost thereof is expensed because, at such time, revenue may be recognized. 23. Substance over form - In case of conflict between economic substance and legal form of transaction, the economic substance shall prevail. 24. Stable Monetary Unit Concept - An entity that reports in the currency of a hyperinflationary economy prepared financial statements in pesos that have the same amount of purchasing power. 25. Classification Concept - Liabilities due within 12 months from the end of the reporting period are classified as current liabilities. Other liabilities that do not qualify as such will be reported as noncurrent liabilities. 26. Verifiability - This enhancing qualitative characteristic implies consensus. 27. Conservatism - When in doubt, recognize all losses and don't recognize gains. 28. Understandability - It requires that users have some knowledge of the complex economic activities of entities, the accounting process, and the technical terminology in the statements. 29. Relevance - Information that has no bearing on an economic decision to be made is useless. 30. Aggregation Concept - The P1,000,000 balance of the accounts receivable is arrived at by accumulating all open 1,200 receivable accounts of the customers by the entity. What is the law regulating the practice of the accountancy profession in the Philippines? ➔ Republic Act 9298 ➔ The law is known as the Philippine Act of 2004