Branches of accounting

• Branches of Accounting
• The Commission on Audit (COA) is a government agency mandated by the Philippine Constitution to investigate and check how other government agencies spend their allocated funds. It performs its mission of ensuring accountability for public resources, promoting transparency, and helping improve government operations, in partnership with stakeholders, for the benefit of the Filipino people.
• Commission on Audit and its role in the Philippine Government

  1. Initially, these reports are sent privately to the different government agencies to give the latter time to explain the findings

  2. These reports, together with the explanation of the government agencies, are made available to the public
• Accounting


  The process of identifying, measuring, and communicating economic information to permit informed judgment and decision by users of the information
• Users of Accounting Information

  • individuals
  • businesses
  • governments
  • other organizations dealing with financial transactions
• Branches of Accounting


  • Financial Accounting
  • Management Accounting
  • Cost Accounting
  • Government Accounting
  • Auditing
  • Tax Accounting
  • Accounting Education
  • Accounting Research
• Financial Accounting


  Concerned with preparing financial reports for external users
• Examples of external users


  • creditors
  • stockholders
  • governments
• Financial Accounting


  Follows the generally accepted principles or accounting standards set by regulatory bodies
• Accounting standards ensure consistency and comparability of financial statements
• Management Accounting


  Concerned with producing accounting information for internal users
• Examples of internal users


  • owners
  • managers
  • employees
• Management Accounting


  • Provides useful information that helps stakeholders make informed decisions concerning day-to-day operations and business direction
  • Does not necessarily adhere to the PFRS
• Management Accounting


  • What expenses can be cut?
  • Did a particular business decision have a positive or negative impact on a company's financial performance?
• Cost Accounting


  Concerned with recording and analyzing the costs for producing goods or services
• Kinds of costs


  • object and driver
  • direct and indirect
  • fixed and variable
• Cost Accounting


  Provides information that is useful in making decisions concerning the production of a business or an organization
• Cost Accounting


  • How can we lower production cost to reduce the selling price?
• Government Accounting


  • Deals with how the government apportions and spends the financial resources
  • Involves the presentation of where the government funds come from and how funds are spent
• Auditing


  • Concerned with verifying the correctness of financial reports
  • Involves evaluation based on established criteria
• Auditing


  Raises the credibility of an organization
• Types of Auditing


  • Internal Auditing
  • External Auditing
• Internal Auditing


  • Performed by someone who works for the reporting entity
  • Checks the validity of accounting records, discovers operational inefficiencies, and identifies weaknesses in the internal control measures implemented by a business
• External Auditing


  • Performed by someone outside the reporting entity
  • Ensures fairness and compliance of financial reports
• Tax Accounting


  Covers everything tax-related: computation of different kinds of taxes, preparation of tax returns, assessment of the repercussions of tax decisions
• Tax Avoidance


  The process of reducing tax in compliance with tax laws
• Tax Evasion


  • The act of omitting sources of income on taxable transactions
  • Intentional non-payment of tax
  • Is illegal and may be subject to imprisonment
• The Bureau of Internal Revenue, or BIR, is a government agency under the Department of Finance mandated by the Philippine constitution to collect taxes from individuals and businesses and impose fines or penalties when these individuals or companies fail to pay their tax.
• Accounting Education


  Helps the education sector in coming up with a curriculum to help aspiring accountants be equipped with relevant accounting knowledge and skills
• Accounting Education


  Accounting practitioners can work as teachers or professors who can share their expertise in the accounting industry, encouraging students to seek a career in accounting
• Accounting Research


  Centers on the pursuit of current and relevant information in the field of accounting
• Benefits of Accounting Research

  • Can help a particular clientele solve problems concerning it business
  • Can help regulatory bodies amend existing accounting principles
  • Can help develop new accounting standards to address issues and trends in accounting practices
• In August 2021, BIR issued a Revenue Memorandum Circular (RMC) No. 97-2021. The circular mentioned that the bureau received reports that social media influencers, despite their vast earnings, are not paying their taxes.
• There were also reports that though these influencers are registered with BIR, they register under a different line of business, and they do not declare their earnings from their social media platforms.
• Because of these reports, the memorandum was issued to remind the social media influencers of their tax obligations and the possible sanctions for their failure to meet these.
• In this situation, tax accounting is involved as this branch of accounting is concerned with the accurate compliance of individuals with the tax code implemented in the country.
• Accounting is a process employed by individuals, organizations, institutions, and businesses. It provides the necessary financial information so that users can make informed judgments and decisions.
• Accounting has eight branches; each one serves different functions and addresses the varied needs of organizations.
• Each branch of accounting differs in terms of purpose and intended user of its services.