Accounting for Students

I wasn't able to make any entries here due to busy schedules and I have been doing other stuff that I enjoy more. But at the end of the day, I still have to go back to what's important and that is getting my Philippine Certified Public Accountant license. The sad thing about this is that, I might have worked hard for this but this is still not enough to practice abroad and earn higher salary. Here in the Philippines, the Board of Accountancy gives 7 exams for two weekends, for four days. That is 2 subjects a day. During our undergrad years, we have a lot of subjects to pass, an average of 24 units per semester, we only have two months of OJT and if we're lucky we'll be assigned at an accounting firm. As for my case, I was blessed to have an Uncle who owns one, thus I had write  a letter to my school to request my friend and I. Actually, it was us who need the experience but the school will not write the letter of request, and I had a lot of convincing to do so that my ...

Professional Fees Professional fees should be a fair reflection of the value of the professional services performed for the client, taking into account: The skill and knowledge required for the type of professional services involved. The level of training and experience of the persons necessarily engaged in performing the professional services. The time necessarily occupied by each person engaged in performing the professional services. The degree of responsibility that performing those services entails. The fact that one professional accountant in public practice may quote a fee lower that another is not in itself unethical. Nevertheless, there may be a self-interest threat to professional competence and due care created if the fee quoted is so low that it may be difficult to perform the engagement in accordance with applicable technical and professional standards for the price. Appropriate safeguards which may be adopted include: Making the client aware of the terms of ...

Professional Appointments Client Acceptance Before accepting a new client relationship, a professional accountant in public practice should consider whether acceptance would create any threats to compliance with the fundamental principles. Potential threats to integrity and professional behavior may be created if the client is involved in illegal activities or if the client's owners or management lack integrity. Appropriate safeguards may include obtaining knowledge and understanding of the client, its owners, managers, and those responsible for its governance and business activities or securing the client's commitment to improve corporate governance practices or internal controls.  Engagement Acceptance A professional accountant in public practice should agree to provide only those services that he is competent to perform. A self-interest threat to competence and due care principle is created if the engagement team does not possess, or cannot acquire the competence n...

Safeguards Once a threat that is other than insignificant has been identified and evaluated, safeguards should be considered and applied as necessary. If the firm decides to accept or continue the engagement, in spite of the significant threats identified, such decision should be documented including a description of the threats identified and the safeguards applied to eliminate or reduce the threats to an acceptable level.The nature of the safeguards to be applied will vary depending upon the circumstances. Consideration should always be given to what a reasonable and informed third party having knowledge of all relevant information including safeguards applied, would reasonably conclude to be unacceptable. The consideration will be affected by matters such as the significance of the threat, the nature of the assurance engagement and the structure of the firm. In certain situations, no safeguards are available to eliminate or reduce the threat to an acceptable level. Hence, the ...

Intimidation threat  occurs when a member of the engagement team may be deterred from acting objectively and exercising professional skepticism by threats, actual or perceived, from the directors, or employee of an assurance client. Here are some examples of of circumstances that may create intimidation threat but are not limited to: Being threatened with litigation. Being threatened with dismissal or replacement over a disagreement with the application of an accounting principle. Being pressured to reduce inappropriately the extent of work performed in order to reduce fees. So, we have already discussed the threats to compliance with fundamental principles in auditing. Next, I am going to share with you the safeguards to minimize the threat or completely eliminate the threat to deliver the appropriate opinion in conducting the audit. 

Familiarity threat occurs when by virtue of a close relationship with a client, its directors, officers, or employees, a firm or a member of the engagement team becomes too sympathetic to the client's interest. Here are some examples of the circumstances that may create this threat but are not limited to: A member of the assurance team having an immediate family member or close family member who is a director or officer of the assurance client.  A member of the assurance team having an immediate family member or close family member who, as an employee of the assurance client, is in position to exert direct and significant influence over the subject matter of the assurance engagement.  A former partner of the firm being a director, officer of the assurance client or an employee in a position to exert direct and significant influence over the subject matter of the assurance engagement.  Long association of a senior member of the assurance team with the assurance cli...

Advocacy threat occurs when a firm or a member of the engagement team promotes, or may be perceived to promote an assurance client's position or opinion to the point that objectivity may, or may be perceived to be compromised. Such may be the case if a firm or member of the engagement team were to subordinate their judgement to that of the client. Here are some examples of circumstances that may create this threat, but are mot limited to: Dealing in, or being a promoter of share or other securities of the client. Acting as an advocate on behalf of an assurance client in litigation or in resolving disputes with third parties.