THE ACCOUNTANCY PROFESSION

DEFINITION OF ACCOUNTING
The Accounting Standards Council provides the following definition:
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.
The Committee on Accounting Terminology of the American Institute of Certified Public
Accountants defines accounting as follows:
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 financial
character and interpreting the results thereof.
The American Accounting Association in its Statement of Basic Accounting Theory defines
accounting as follows:
Accounting is the process of identifying, measuring and communicating economic
information to permit informed judgment and decision by the users of the information.

REPUBLIC ACT NO. 9298

Republic Act No. 9298, the Philippine Accountancy Act of 2004, is the law regulating the
practice of accountancy in the Philippines.
In the Philippines, in order to qualify to practice the accountancy profession, a person must
finish a degree in Bachelor of Science in Accountancy and pass the government examination
given by the Board of Accountancy.
The Board of Accountancy is the body authorized by law to promulgate rules and regulations
affecting the practice of accountancy profession in the Philippines.
Limitations of the practice of public accountancy
Single practitioners and partnerships for the practice of public accountancy shall be
registered certified public accountants in the Philippines.
A certificate of accreditation shall be issued to certified public accountants in public
practice only upon showing in accordance with rules and regulations promulgated by
the Board of Accountancy and approved by the Professional Regulation Commission
that such registrant has acquired a minimum of three years of meaningful experience
in any of the areas of public practice including taxation.
The Securities and Exchange Commission shall not register any corporation
organized for the practice of public accountancy.

Accreditation to practice public accountancy

Certified public accountants, firms and partnerships of certified public accountants,
including partners and staff members thereof, are required to register with the Board
 of Accountancy and Professional Regulation Commission for the practice of public
accountancy.
The professional Regulation Commission upon favourable recommendation by the
Board of Accountancy shall issue the Certificate of Registration to practice public
accountancy which shall be valid for 3 years and renewable every 3 years upon
payment of required fees.
Certified public accountants generally practice their profession in three main areas,
namely public accounting, private accounting and government accounting. Public
accounting comprises auditing, taxation and management advisory services.
Continuing Professional Development
Under the new BOA Resolution, all CPAs regardless of area/sector of practice are
required to earn 120 credit units within a compliance period of three years before
renewing CPA licence and accreditation to practice accountancy profession.

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

Generally Accepted Accounting Principles (GAAP) represent the rules, procedures,
practice and standards followed in the preparation and presentation of financial statements.
The principles are developed on the basis of experience, reason, custom, usage and practical
necessity.

FINANCIAL REPORTING STANDARDS COUNCIL

In the Philippines, the development of generally accepted accounting principles is formalized
initially through the creation of the Accounting Standards Council (ASC). The Financial
Reporting Standards Council (FRSC) now replaces the ASC.
The FRSC is the accounting standards setting body created by the Professional Regulation
Commission upon recommendation by the Board of Accountancy to assist the Board of
Accountancy in carrying out its powers and function provided under R.A. No. 9298.
The accounting standard 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).

PHILIPPINE INTERPRETATIONS COMMITTEE

The Philippine Interpretation Committee (PIC) was formed by the FRSC in August 2006,
and has replaced the Interpretations Committee (IC) formed by the ASC.
The role of the PIC is to prepare interpretations of PFRS for the approval by the FRSC and to
provide timely guidance on financial reporting issues not specifically addressed in current
PFRS.
In other words, 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 clearcut rule and guidelines.

INTERNATIONAL ACCOUNTING STANDARDS COMMITTEE

The 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
business and other organizations for financial reporting around the world.
The counterpart of the PIC in the United Kingdom is the International Financial Reporting
Interpretations Committee (IFRIC) which has replaced the Standing Interpretations Committee
(SIC).

INTERNATIONAL ACCOUNTING STANDARDS BOARD

The International Accounting Standards Board (IASB) now replaces the International
Accounting Standards Committee.
The IASB publishes standards in a series of pronouncements called “International Financial
Reporting Standards (IFRS). IFRS is a global phenomenon intended to bring about greater
transparency and higher degree of comparability in financial reporting.
However, the IASB has adopted some pronouncements issued by the IASC. The
pronouncements of the IASC continue to be designated as “International Accounting
Standards (IAS)”.

MOVE TOWARDS IFRS

In developing accounting standards that will be generally accepted in the Philippines,
standards issued by other standard setting bodies such as the USA Financial Accounting
Standards Board (FASB) and the IASB are considered.
In the past years, most of the Philippine standards issued are based on American accounting
standards. However, at present, the FRSC has adopted in their entirety all International
Accounting Standards and International Reporting Standards. The Philippines is fully
compliant with IFRS effective January 2005, a process which was started in 1997 in moving
from USA GAAP to IFRS.
The following factors are considered in deciding to move totally to international accounting
standards:
a. Support of international accounting standards by the Philippine organizations, such
as the Philippine Securities and Exchange Commission and Philippine Institute of
Certified Public Accountants.
b. Increasing internalization of business which has heightened interest in a common
language for financial reporting.
c. Improvement of international accounting standards or removal of free choices of
accounting treatments.
 d. Increasing recognition of international accounting standards by the World Bank,
Asian Development Bank and World Trade Organization.
e.
PHILIPPINE FINANCIAL REPORTING STANDARDS
The Financial Reporting Standards Council issues standards in as series of pronouncements
called “Philippine Financial Reporting Standards (PFRS)”.
The PFRS collectively include all of the following:
a. Philippine Financial Reporting Standards which correspond to IFRS.
b. Philippine Accounting Standards which correspond to IAS.
c. Philippine Interpretations which correspond to Interpretations of the IFRIC and
Standing Interpretations Committee, and the Interpretations developed by the
Philippine Interpretations Committee.

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Source:
1. Financial Accounting Vol.I, First Part, 2016 Edition Valix, Conrado T., Peralta, Jose F.
and Valix, Christian Aris M.
2. Professional Regulatory Board of Accountancy Resolution No. 358,s. 2016