Accounting

• The course AC5 & 6 deals with the study of the nature, functions, scope and limitation of the accounting discipline.
• In September 2022, the Professional Regulatory Board of Accountancy (BOA) renamed Financial Reporting Standards Council (FRSC) to Financial and Sustainability Reporting Standards Council (FSRSC).
• The course AC5 & 6 provides information regarding service and merchandising enterprise organized as a sole proprietorship.
• Emphasis is placed on understanding the reasons underlying the basic accounting and bookkeeping methodology.
• The committee issued 41 IASs, many of which have been amended or superseded by the IASB.
• Financial accounting standards issued by the IASB are referred to as International Financial Reporting Standards (IFRS).
• This Conceptual Framework for Financial Reporting sets forth the fundamental objective and concepts that the Board uses in developing future standards of financial reporting.
• This Conceptual Framework is not an IFRS and hence does not define standards for any particular measurement or disclosure issue.
• Any company indicating that it is preparing its financial statements in conformity with IFRS must use all of the standards and interpretations.
• Those still remaining are considered under the umbrella of IFRS.
• Nothing in this Conceptual Framework overrides any specific international accounting standard.
• The hierarchy used to determine what recognition, valuation, and disclosure requirements should be used is: International Financial Reporting Standards, International Accounting Standards (issued by the predecessor to the IASB), IFRS interpretations originated by the IFRS Interpretations Committee (and its predecessor, the IAS Interpretations Committee), the Conceptual Framework for Financial Reporting, and pronouncements of other standard-setting bodies that use a similar conceptual framework.
• Prior to the IASB, standard-setting on the international level was done by the International Accounting Standards Committee (IASC), which issued International Accounting Standards (IAS).
• The IASB has issued 17 of these standards to date.
• Financial Accounting is the process that culminates in the preparation of financial reports on the enterprise for use by both internal and external parties.
• A Monitoring Board was created as part of the governance structure to establish a link between accounting standard-setters and those public authorities that generally oversee them.
• The International Accounting Standards Board (IASB) issues three major types of pronouncements: International Financial Reporting Standards (IFRS), Conceptual Framework for Financial Reporting, and IFRS Foundation Discussion Papers.
• The IASB issues International Financial Reporting Standards (IFRS).
• The standard-setting structure internationally is composed of the following four organizations: The International Accounting Standards Board (IASB), The IFRS Advisory Council, The IFRS Interpretations Committee, and The IFRS Foundation.
• The IFRS Interpretations Committee assists the IASB through the timely identification, discussion, and resolution of financial reporting issues within the framework of IFRS.
• The Monitoring Board also provides political legitimacy to the overall organization.
• The IFRS Foundation provides oversight to the IASB, IFRS Advisory Council, and IFRS Interpretations Committee.
• Financial Reporting involves providing financial information about the reporting entity that is useful to various users.
• Users of financial reports include investors, creditors, managers, unions, and government agencies.
• The IFRS Advisory Council provides advice and counsel to the IASB on major policies and technical issues.
• In the same year (2004), the FRSC approved the issuance of the new and revised Philippine Accounting Standards (PAS) and the new Philippine Financial Reporting Standards (PFRS) which directly correspond to IASB’s IAS and IFRS.
• Between 1997 and 2004, the Philippines started adopting the International Financial Accounting and Reporting Standards promulgated by the International Accounting Standards Committee (IASC).
• In 2004, the Accounting Standards Council (ASC) was replaced by the Financial Reporting Standards Council (FRSC) which is now the accounting setting body in the Philippines created by the Professional Regulation Commission upon the recommendation of the Board of Accountancy (BOA).
• Currently, the Accounting Standards that Philippines adopt came from the standard-setting body, international standard-setting organization is based in London, England, and is called the International Accounting Standards Board (IASB).
• The main function of the Accounting Standards Council (ASC) was to establish and improve accounting standards that would be generally accepted in the Philippines.
• The IASC was reorganized in 2001 and is now known as the International Accounting Standards Board (IASB).
• In 1981, the Philippine Institute of Certified Public Accountants (PICPA) created the Accounting Standards Council (ASC) to formulize the accounting standard-setting function in the Philippines.
• In the absence of a standard or an interpretation in item 1, companies look to the Conceptual Framework for Financial Reporting and then to most recent pronouncements of other standard-setting bodies that use a similar conceptual framework to develop accounting standards.
• The Philippine GAAP were principally US-GAAP Based.
• Prior to 1981, the Philippine Institute of Certified Public Accountants (PICPA) designated the Committee on Accounting Principles, to provide guidelines in the adoption of generally accepted accounting principles (GAAP) in the Philippines.
• The approved statements of ASC were called, “Statement of Financial Accounting Standards (SFAS) which were still principally based on accounting standards issued by the US-based Financial Accounting Standards Board (FASB).