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The Environment of Financial Accounting and Reporting

The document discusses the environment of financial accounting and reporting standards. It describes the development of international standards by the International Accounting Standards Board to harmonize reporting globally. In the Philippines, the Financial Reporting Standards Council sets domestic standards and is composed of representatives from accounting organizations, government agencies, and the private sector. Adopting consistent standards improves comparability but challenges remain regarding non-financial measurements and timeliness in financial reporting.

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Ji Baltazar
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856 views12 pages

The Environment of Financial Accounting and Reporting

The document discusses the environment of financial accounting and reporting standards. It describes the development of international standards by the International Accounting Standards Board to harmonize reporting globally. In the Philippines, the Financial Reporting Standards Council sets domestic standards and is composed of representatives from accounting organizations, government agencies, and the private sector. Adopting consistent standards improves comparability but challenges remain regarding non-financial measurements and timeliness in financial reporting.

Uploaded by

Ji Baltazar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
  • The Environment of Financial Accounting and Reporting: Introduces the context and importance of financial accounting and reporting, establishing the framework for further standards discussion.
  • The Need to Develop Standards: Explores why developing standards is crucial for financial reporting consistency and comparability across organizations.
  • Development and Sources of Financial Reporting Standards: Details the history and sources of financial reporting standards, focusing on international efforts and organizations.
  • Accounting Standard Setting in PH: Examines the evolution of accounting standard setting in the Philippines and the role of major institutions involved.
  • Sources of Accounting Standards: Identifies the primary bodies and documents contributing to the accounting standards landscape.
  • Financial Reporting Standards Council (FRSC): Describes the Philippine Financial Reporting Standards Council's formation and function in establishing accounting standards.
  • Other Organizations Influencing Financial and Reporting Accounting Standards: Lists various organizations that play a role in shaping financial accounting standards in the Philippines.
  • Financial Reporting Framework: Explains the components and importance of the framework used to prepare financial reports.
  • Major Challenges in Financial Reporting Environment: Discusses the primary challenges encountered in the current financial reporting landscape.
  • Ethics in Accounting Environment: Highlights the ethical considerations and guidelines essential for practicing accountants.
  • The Role of External Auditors: Describes the responsibilities and importance of external auditors in maintaining the integrity of financial statements.

The environment of

Financial Accounting and


Reporting
The Need to develop STANDARDS

 It helps accountants to meet the information demands of use by providing


guidelines and limits for financial reporting.
 Also, it improves the comparability of financial reports among different
companies.
Development and Sources of
Financial Reporting Standards

 International Accounting Standards Board, 2001 (formerly known as


International Accounting Standards Committee in 1973) – it was developed
to harmonize accounting standards among all nationals. Moreover, its
objective is to raise the quality and consistency of financial reporting and
to have a platform of high quality and improved standards.
 International Financial Reporting Standards (IFRS) and International
Accounting Standards (IAS)
Accounting Standard Setting in PH


Accounting
PICPA, 1981 Standards
Council (ASC)

Approved statement
In 2004, ASC was replaced by Financial - To formalize the
was called,
accounting standard-
Reporting Standards Council (FRSC) – “Statement of
setting function in the
Financial Accounting
created by the PRC upon Philippines.
Standards (SFAS)”
recommendation of the Board of
Accountancy.
SOURCES OF ACCOUNTING
STANDARDS

 A. International Accounting Standards Board (IASB) - produce the


International Financial Reporting Standards (IFRS) and International
Accounting Standards (IAS).
DIFFFERENCE?????

Issued before 2001 are Issued since 2001, are


called International called International
Accounting Standards TIMING Financial Reporting
(IAS) Standards (IFRS)
 B. Financial Reporting Standards Council (FRSC) - formerly the Accounting
Standards Council. Its objective was to assist the Board of Accountancy in
carrying out its powers and functions provided for in Article II, Section 9 of
Philippine Accountancy Act of 2004 (R.A 9298). In the same year,
Philippine Accounting Standard and Philippine Financial Reporting
Standards was issued.
 FRSC is composed of fifteen (15) members with a Chairman.
(a) Board of Accountancy 1
(b) Security and Exchange Commission 1
(c ) Bangko Sentral ng Pilipinas 1
(d) Bureau of Internal Revenue 1
(e) A major organization composed of prepares and users if FS 1
(f) Commission on Audit 1
(g) Accredited National Professional Organization of CPAS
- Public Practice 2
- Commerce or Industry 2
-Academe or Education 2
-Government 2
14
OTHER ORGANIZATION INFLUENCING FINANCIAL
AND REPORTING ACCOUNTING STANDARDS

A. Securities and Exchange Commission


They has the legal authority to prescribe accounting principles and
practices for usually all companies issuing publicly traded securities.
B. Philippine Institute of Certified Public Accountants
It is the forefront in the standard setting activities in the country.
C. Other Professional Associations
Financial Executives Institute (FINEX) and Institute of Management
Accountants (IMA)
D. Bureau of Internal Revenue
It administers the provisions of the Internal Revenue Code.
FINANCIAL REPORTING FRAMEWORK

 It is a set of accounting principles, standards, interpretations and


pronouncements that must be adopted in the preparation and submission
of the annual financial statements of a particular class of entities.
MAJOR CHALLENGES IN FINANCIAL
REPORTING ENVIRONMENT

A. IFRS/PFRS in a Political Environment


B. The Exception Gap
C. Financial Reporting Issues
1. Non-financial measurements
2. Forward-looking information
3. Soft Assets
4. Timeliness
D. The constraints on Useful Financial Reporting
1. Cost-Benefit Balancing
2. Balancing between Qualitative Characteristics
3. True and Fair View Presentation
Ethics in Accounting Environment

Ethics is a term refers to a code or moral system that provides criteria for
evaluating right and wrong.
The Code of Ethics promulgated by the Board of Accountancy provides
guidelines for practicing accountants.
The Role of External Auditors

 An External Auditor, a CPA is an INDEPENDENT professional who conducts


the audit in accordance with the Standards on Auditing.
 It makes no claim to the accuracy of the audited financial statement he
has audited, what he tries to achieve is reasonable assurance that there
are no material misstatements in those financial statements.
 Audit report contains the Audit Opinion as to the company’s compliance
to the IFRS/PFRS.

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