ACTG 23 - CFAS

• Business


  An economic entity that produces things of value and is capable of growth
• Business (as defined by IFRS)


  An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing goods or services to customers, generating investment income (such as dividends or interest) or generating other income from ordinary activities
• Business entity (accounting entity or reporting entity)

  Has an identity that is separate and distinct from its owner/s and other business entities
• Transaction Groups


  • Financing Group
  • Revenue Group
  • Investing Group
  • Personnel Group
  • Purchasing Group
  • Conversion Group
• Financing Group


  The starting point of the business because this is concerned with the source of funds and assets
• Revenue Group


  The activities in this group are the main point of operating a business
• Investing Group


  This group is concerned with the purchase of long-term assets used in business operations, selling off old, outdated assets or those no longer being used
• Personnel Group


  Also known as the human resource transactions group, this cluster of activities encompass processes such as hiring, training, promoting, and terminating the services of the company employees
• Purchasing Group


  This group encompasses the ordering of inventory of goods and supplies needed to render services, the receipt of them, and their eventual payment
• Conversion Group


  Also known as the product conversion or manufacturing group. It is a set of processes in converting raw materials into finished goods
• International Accounting Standard Board (IASB)

  (1) Is a global financial reporting standard-setting body that issues the IFRS. (2) IASB is under the oversight of the IFRS foundations with stated mission of transparency, accountability, and efficiency and based in London, England, and UK
• US GAAP


  In the US, financial reporting practices are set forth by the FASB and organized within the framework of the US GAAP
• The primary difference between the two systems is that US GAAP is more rules-based and IFRS is more principles-based
• Sectors of the Accountancy Profession

  • Practice in Commerce and Industry
  • Public Accountancy
  • Practice in the Government
  • Practice in Education/Academe
• Practice in Commerce and Industry

  Is performed by a person involved in an entity's decision-making that requires professional knowledge in the science of accounting or position that requires that the holder thereof must be a certified public accountant (CPA)
• Public Accountancy


  Is rendered by an independent (not employee) professional who renders professional audit services as a CPA to more than one client on a fee basis
• Practice in the Government


  Is rendered by a person who holds, or is appointed to, a position in an accounting professional group in government or 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 civil service eligibility as a CPA is a prerequisite
• Practice in Education/Academe


  Is performed by a person in an educational institution that involves teaching accounting, auditing, Management advisory services, finance, business law, taxation, and other technically related subjects
• Companies


  • Large Companies
  • Public Interest Entities
  • Medium-Sized Entities
  • Small Entities
  • Micro-entities
• Large Companies

  Those with total assets of more than ₱350 million or total liabilities of more than ₱250 million
• Public Interest Entities


  Holders of secondary licenses issued by regulatory agencies are required under Part II of SRC Rule 68
• Medium-Sized Entities


  Those with total assets of more than ₱100 million to ₱350 million or total liabilities of more than ₱100 million to ₱250 million; are not required to file financial statements under Part II of SRC Rule 68
• Small Entities


  Those with total assets or total liabilities between ₱3 million to ₱100 million; are not required to file financial statements under Part II of SRC Rule 68
• Micro-entities


  Those with total assets and total liabilities below ₱3 million; are not required to file financial statements under Part II of SRC Rule 68
• Accredited Integrated, Sectoral, and Students' Organizations

  • PICPA - Philippine Institute of Certified Public Accountants
  • JPIA - Junior Philippine Institute of Accountants
• Government Agencies and Regulators

  • BOA - Professional Regulatory Board of Accountancy
  • BIR - Bureau of Internal Revenue
  • SEC - Securities and Exchange Commission
  • IC - Insurance Commission
  • BSP - Bangko Sentral ng Pilipinas
  • CDA - Cooperative Development Authority
  • CoA - Commission on Audit
  • CHEd - Commission on Higher Education
• IASB Conceptual Framework


  Conceptual Framework for Financial Reporting was issued by the IASB in September 2010 and was revised in March 2018
• Objective of the general purpose of financial reporting

  To provide financial information about the reporting entity that is useful to primary users in making decisions relating to providing resources to the entity
• Eight Chapters of Revised Conceptual Framework

  • The Objective of General Purpose Financial Reporting
  • The Qualitative Characteristics of Useful Financial Information
  • Financial Statements and the Reporting Entity Financial Information
  • The Elements of Financial Statements
  • Recognition and Derecognition
  • Measurement
  • Presentation and Disclosure
  • The Concept of Capital and Capital Maintenance
• Relevance

  Relevant financial information is capable of making a difference in the decision made by users
• Predicted Value

  Financial information with Predicted Value is employed by users in making their own predictions
• Confirmatory Value


  Financial information with Confirmatory Value if it provides feedback about (confirms or changes) previous evaluation
• Faithful Representation (Reliability)


  Financial reports should possess the quality of being reliable, be something sturdy and dependable that users can stand on for decisions
• Completeness


  A complete depiction includes all information necessary for a user to understand the event being depicted, including all necessary descriptions and explanations
• Neutrality


  A neutral depiction is not slanted, weighted, emphasized, de-emphasized, or otherwise manipulated to increase the probability that the financial information will be received favorably or unfavorably by users
• Free From Error


  Means there are no errors or omissions in the description of the event, and the process used to produce the reported information has been selected and applied with no errors in the process
• Enhancing Qualitative Characteristics


  • Comparability
  • Verifiability
  • Timeliness
  • Understandability
• Comparability


  The users' decisions involve choosing between alternatives
• Verifiability


  Helps assure users that the information faithfully represents the economic phenomena it professes to represent
• Timeliness


  Means that the information is available to decision-makers in time to be capable of influencing their decisions