Professional Practice of Accountancy

Summary

This video provides an insightful overview of the professional practice of accountancy, highlighting key learning objectives, the attributes of a profession, and the role of accountants across various sectors. It outlines the scope of accountancy practice in the Philippines, including public, private, educational, and governmental roles. Additionally, the script covers the different types of audits, such as internal, compliance, operational, and forensic audits, as well as non-assurance services like tax preparation, management advisory, and agreed-upon procedures. The focus is on understanding the multifaceted responsibilities of professional accountants and their ethical standards.

Takeaways

• 😀 The accounting profession is defined by five key attributes: systematic theory, professional authority, community sanction, regulative code, and a professional culture.
• 😀 A professional accountant holds a valid certificate from the Board of Accountancy, and can work in public practice, business, education, or government.
• 😀 Public accounting practice involves rendering professional services like audits and financial transaction verification to multiple clients for a fee.
• 😀 Accountants in commerce and industry are involved in decision-making requiring professional accounting knowledge or positions where being a CPA is required.
• 😀 In education, professional accountants teach accounting, auditing, finance, and related subjects in educational institutions.
• 😀 Accountants in government perform accounting functions in government offices or corporations, requiring professional knowledge in accounting.
• 😀 There are five major types of audits: internal audits, compliance audits, operational audits, forensic audits, and financial statement audits.
• 😀 Internal audits help organizations improve operations through independent assurance and consulting on risk management, controls, and governance.
• 😀 Compliance audits assess whether an entity follows relevant laws, policies, and regulations, such as ensuring compliance with tax laws or university policies.
• 😀 Forensic audits are used to detect fraud, money laundering, and other criminal activities, and can also be applied to matrimonial asset disputes.
• 😀 Non-assurance services provided by public accounting firms include tax preparation, management advisory services, compilation services, and agreed-upon procedures engagements.

Q & A

What are the key attributes that define a profession according to Ernest Greenwood?

According to Ernest Greenwood, the five key attributes that define a profession are: 1) a systematic body of theory, 2) professional authority, 3) community sanction, 4) a regulative code, and 5) a culture.

What does the term 'systematic theory' mean in the context of the public accounting profession?

In the context of the public accounting profession, 'systematic theory' refers to the body of knowledge that forms the foundation of accounting practice, including financial accounting and reporting standards, auditing standards, and the science of validation.

How does professional authority play a role in the practice of accounting?

Professional authority in accounting means that the professional accountant determines what is best for the client based on their expertise. Clients often trust the accountant's judgment in situations where they may not fully understand their own needs.

What is the process of becoming a professional accountant in the Philippines?

To become a professional accountant in the Philippines, an individual must meet government, educational, and experience requirements, and pass the CPA licensure board examinations.

What are the different sectors in which a professional accountant may work?

A professional accountant in the Philippines can work in various sectors, including public practice, industry and commerce, education, and government.

What services are included under the practice of public accountancy?

The practice of public accountancy includes offering services such as auditing or verifying financial transactions and accounting records to more than one client, either for a fee or otherwise.

Can you explain the differences between internal auditors, external auditors, government auditors, and forensic auditors?

Internal auditors evaluate and improve an organization's operations and risk management. External auditors provide an independent assessment of financial statements. Government auditors work in the public sector, ensuring compliance with laws and regulations. Forensic auditors investigate fraud and criminal activities involving financial assets.

What is the role of internal audits in an organization?

Internal audits provide independent, objective assurance and consulting services aimed at improving an organization's operations. They focus on evaluating and improving risk management, control, and governance processes.

What types of non-assurance services are commonly provided by public accounting firms?

Non-assurance services offered by public accounting firms include agreed-upon procedures, tax preparation and planning, management advisory services, and compilation services.

What is the difference between an operational audit and a compliance audit?

An operational audit focuses on evaluating the efficiency and effectiveness of an organization's operations, while a compliance audit examines whether the entity is adhering to applicable laws, regulations, or policies.