BRANCHES OF
ACCOUNTING
Chapter 2
According to Republic Act 9298 on Accounting
Practice in the Philippines;
Republic Act No. 9298 – “An Act regulating the practice of
Accountancy in the Philippines, repealing for the purpose
Presidential Decree No. 692, otherwise known as The revised
Accountancy Law, appropriating funds therefore and for other
purposes”.
Art 1. Sec. 3. Objectives
The standardization and regulation of accounting education;
The examination for registration of certified public accountants; and
The supervision, control and regulation of the practice of accountancy
in the Philippines.
Sec. 4. Scope of Practice
a. Practice of Public Accountancy
shall constitute in a person, be it his/her individual
capacity, or as a partner or as a staff member in an
accounting or auditing firm, holding out himself/herself
as one skilled in the knowledge, science and practice of
accounting, and as a qualified person to render
professional services as a certified public accountant;
b. Practice in Commerce and Industry – shall
constitute in a person involved in decision making
requiring professional knowledge in the science of
accounting, or when such employment or position
requires that the holder thereof must be a certified public
accountant.
c. Practice in Education/Academe – shall
constitute in a person in an educational institution which
involve teaching of accounting, auditing, management
advisory services, finance, business law, taxation and
other technically related subjects: Provided, that
members of the Integrated Bar of the Philippines may be
allowed to teach business law and taxation subjects.
D. Practice in the Government – shall constitute in
a person who holds, or is appointed to, a position in an
accounting professional group in government or in a
government-owned and/or controlled corporation,
including those performing proprietary functions, where
decision making requires professional knowledge in the
science of accounting, or where a civil service eligibility
as a certified public accountant is a prerequisite.
The Accounting Profession
The success of the accountant in the accounting
profession depends on how well he or she
understands the accounting procedures and
principles, and on how clearly the accurately he
or she can communicate financial information to
the users of the statements.
Classification in the Field of
Accounting
1. Public accountants – are those who serve the
general public and collect professional fees for their work
such as what Doctors and Lawyers do. Their work
includes auditing, income tax planning and preparation
and management consulting. Those public accountants
who have certain professional requirements are
designated as CPAs.
2. Private accountants - work for a single business.,
e.g. PLDT, Meralco, Jollibee among others. Charitable
organizations, educational institutions, and government
employed public accountants.
1
CERTIFIED PUBLIC ACCOUNTANT
IS A PROFESSIONAL ACCOUNTANT WHO
EARNS HIS TITLE THROUGH A
COMBINATION OF EDUCATION,
QUALIFYING EXPERIENCE, AND AN
ACCEPTANCE SCORE IN THE WRITTEN
NATIONAL EXAMINATION GIVEN BY THE
BOARD OF ACCOUNTANCY
CPAs in Specialized Areas
1. Forensic Accounting - provide the detective work
needed to investigate and examine evidence of white-
collar financial crimes such as stealing and fraud. They
often act as expert witnesses in legal proceedings and
prepare evidence to be presented in court.
2. Information Technology Services - businesses often
seek individuals who can design and implement
customized software systems. CPAs who possess strong
skills in information technology can work with e-
commerce ventures and consult with others to determine
which decisions are the most financially and
technologically sound for a company.
3. Environmental Accounting. CPAs involved in
environmental accounting to determined how companies
can be both profitable and environmentally responsible.
They do environmental compliance audits and set up
preventative systems to ensure compliance and avoid
future environmental related claims or disputes.
4. International Accounting. Are knowledgeable in
international trade rules and regulations, international
mergers, governmental regulations, tax laws, and
overseas transactions. CPAs who work in this area often
travel abroad and can speak and understand different
languages.
BRANCHES OF
ACCOUNTING
GOVERNMENT
ACCOUNTING
PUBLIC ACCOUNTING PRIVATE
ACCOUNTING ACCOUNTING
ACCOUNTING
EDUCATION
1. Public Accounting
the accountant performs or offers to perform
any activity that will result to the
issuance of an attest report that is in
accordance with professional standards
such as consulting services, preparation
of tax returns, advice on tax matters for
free and personal financial planning
services. Some of the public accounting
firms are SyCip Gorres Velayo & Co, Isla
Lipana & Co., Punongbayan & Araullo,
R.G. Manabat & Co. among others.
Examples of public accounting services
1. External Auditing - In external auditing, public
accounts examine the financial statements in order to
express an opinion on whether statements have been fairly
presented or not.
2. Tax Preparation and Planning Services - offer tax
services wherein they advise and help their clients in tax
planning and preparing tax returns.
3. Management Advisory Services – Management
consulting is an area in public accounting that involves
financial planning and control, and the development of
accounting and computer systems.
2. PRIVATE ACCOUNTING
Private accounting involves setting up systems of recording
business transactions that are aggregated into financial
statements. It includes the development and interpretation of
accounting information intended to assist management in
operating the business.
A private accountant is a salaries employee who deals
with the company’s day-to-day accounting needs. He/She is
trained in the processing of accounting transactions such as
billings and account payables. His or her knowledge may be
limited to the areas of accounting for which they are responsible.
Branches of accounting
under private accounting
Financial accounting – provides economic and financial
information for investors, credits and other external users. It uses
a system of reporting designed to meet the information needed. It
government by an established body, (GAAP) of standards and
principles. It ends in the preparation and presentation of financial
statements.
Cost accounting - focuses on accumulating manufacturing costs
for financial reporting and decision-making purposes. It covers the
reporting of financial information relevant to manufacturing
operations. The primarily role of a cost accountant is to determine
the inventory cost for financial reporting purposes.
● Budgeting - provides a detailed collection and
reporting of expenditures and revenues involved in a
business or company operations. It tracks the financial
details of the firm, including the money taken in and the
money spent by the company and the staff.
● Accounting Information System - collects and
processes transaction data. It also disseminates
information to interested parties. It involves the
designing of both manual and computerized data
processing system
● Tax Accounting - it deals with the preparation
of various tax returns and doing tax planning for
the business. This is similar to the tax services
done in public accounting.
● Internal Accounting - it reviews business
operation to check if they are complying to
management policies. It also evaluates the
efficiency of business operations. Normally, an
internal auditor is a hired employee of a
company.
3. Government Accounting
● Is a system used in government offices to record and report financial
transactions. It is the systematic process of collecting, recording,
classifying, summarizing, and interpreting the financial transactions
relating to the revenues and expenditures of government offices.
● Government accounting reveals how public funds have been
generated and utilized. It is employed in both national and local
governments.
● CPAs are needed in all levels of government. He or she could be a
provincial accountant, a Commission on audit (COA) auditor to
various government agencies, a BIR examiner to local and national
businesses, a budget officer of the DBM, or a bank examiner of BSP.
Accounting Education
● Is responsible for training future accountants. It engages
in teaching accounting, financial management, taxation
and other related business course.
● As per Commission on Higher Education (CHED)
Memorandum Order (CMO) No. 3 Series 2007, a CPA in
accounting education should possess the educational
qualifications, professional experience, classroom teaching
ability, computer literacy, scholarly research productivity,
and other attributes that are essential for the successful
conduct of a professional accounting program.
Accounting RESEARCH
involves conducting a careful and diligent study aimed at discovering and
intrepreting facts, revising accepted theories in the light new facts, or the
practical application of such new or revised theories for the generation of a
new knowledge. It includes collection information about a particular
subject in order to decide and implement new standards in accounting,
presenting current events that might affect the profession, or discovering
new theories that will have an impact on existing accounting knowledge.
Modern Accounting
● Today’s accounting follows the general rule made by Pacioli. Financial reports and
statements were prepared according to these basic principles. The formal accounting
profession (Chartered Accountant) was created in United Kingdom in the 19th century
after the grant of a Royal Charter to recognize the profession. Different institutes then
emerged in Europe from Edinburgh to London and all over the European continent.
● With the rise of different institutes all over the world, accounting treatments have
differed across borders. This led to the formation of a standard setting board whose
authority will be recognized by member countries in the application of rules of
accounting. From the basic principles, specialized standards and pronouncements
were then made to cater specific issues concerning accounting treatments and
applications.
● There are two accounting standard-setting bodies widely known today – one which
originated in Europe and the other one in the US.
THANK YOU!!!
