Core Competency Framework For Entry To The Philippine Accountancy Profession

Core Competency Framework for Entry to the Philippine Accountancy Profession

Board of Accountancy Professional Regulation Commission
Foreword
Recent efforts aimed at improving financial governance has had a significant impact on the Accountancy Profession. The new legislative and regulatory reforms brought about by recent corporate scandals that plagued the profession worldwide has required that those entering the profession not only possess technical skills but more importantly, will behave in a manner consistent with ethical standards once admitted. The Board of Accountancy, jointly with the Task Force on Accountancy Education of the Commission on Higher Education, has undertaken efforts to improve the entry-level qualification requirements for those desiring to enter the profession by coming up with a well-defined set of core competencies for Filipino Certified Public Accountants (CPAs). This core competency document articulates the knowledge, skills, and professional values that new CPAs need to have in order to successfully face the challenges of today's changing environment and the future. In a competency-based licensure examination, these represent the competencies that candidates must successfully demonstrate to the Board to prove their readiness to be a member of the accountancy profession. It must be emphasized, however, that this document contains only minimum set of competencies. Higher levels of competencies will be expected from the professional CPA once admitted to the profession. It is expected that once admitted to the profession, the CPA will pursue developmental activities (mainly through experience and continuing professional education) under any of the specific areas of practice (i.e., public practice, commerce and industry, government or academe) where he intends to specialize. This document is issued by the Board of Accountancy as a resource for professional bodies of accountants, practicing CPAs, educators and students aspiring to become CPAs.
Contents
Introduction ................................................................................................................................... 4 Core Competencies Knowledge ............................................................................................................................. 5 Skills ....................................................................................................................................... 6 Values .................................................................................................................................... 7 The CPA Examination Syllabi and Core Competencies .............................................................. 9
Introduction
The focus of this Core Competency Framework is to highlight the minimum set of knowledge, skills and professional values which Certified Public Accountants should have in order to practice their profession effectively. Currently, the need to have competency-based licensure examinations is a popular topic among professional bodies. The intuitive appeal is that professionals should be competent in areas where they practice, and accordingly, the pre-certification education system and professional certification should assess those competencies. It is accepted that professional qualifications should indicate that newly qualified accountants have achieved the standard of performance expected by employers and the general public in all the specified areas of practice. A competence-based approach to professional certification offer a systematic and effective way of achieving this aim. This Core Competency Framework is the result of the work of the Board of Accountancy and the Task Force on Accountancy Education of the Commission on Higher Education. It explicitly identifies competencies or abilities to perform tasks and roles expected of entry level accountants by employers and the public. In preparing this document, the Board relied heavily on the following documents: Guideline on National Requirements for the Qualification of Professional Accountants published by the United Nations Conference on Trade and Development (UNCTAD) in 1999. This contained entry-level requirements as identified by experts from different countries and leading international accounting firms in answer to the call of the International Federation of Accountants (IFAC); and International Education Guideline (IEG) No. 9 entitled Education, Assessment of Professional Competence and Experience Requirements of Professional Accountants issued by the International Federation of Accountants (IFAC) Education Committee in 1997. To ensure that proper persons join the accounting profession, this guideline suggests broad guidelines for entry point and structure of pre-qualification education and experience of professional accountants. It lists three elements of accounting education and experience e.g. knowledge, skills and professional values. International Education Guideline (IEG) No. 11 entitled Information Technology for Professional Accountants issued by the International Federation of Accountants (IFAC) Education Committee (updated Revision in January 2003). This describes the knowledge and competencies required in the IT environment and includes examples of tasks that a competent professional accountant should be able to perform in the workplace. This guideline is intended to help professional accountancy bodies and academics by outlining how they can include coverage of important IT knowledge and competency areas in educational programs. The Board also looked into the competencies of accountants as identified in the AICPAs CPA Core Competencies and Vision Project 2011 and Beyond.
Core Competencies
The core competencies for accountants identify the knowledge, skill, and values considered necessary to perform effectively in today's rapidly changing environment. The strategic goal is to produce competent professional accountants ready to compete internationally. The following is a list of core competencies which every entry-level CPA should possess:
Knowledge
The CPAs knowledge must cover: General knowledge Gaining an understanding of the different cultures in the world and developing an international perspective. Traits that will make our Filipino CPAs prominent in the global marketplace such as competency in the English language (the lingua franca of business), adaptability to Western business practices, level of trainability and good capabilities in dealing with foreign partners. Organizational and business knowledge Broad base of knowledge concerning macroenvironmental, economic and industry issues, business process structures, functions and practices. Includes core knowledge in areas such as economics, quantitative methods and business statistics, organization behavior, marketing and operations management, international business, ethics and corporate governance. In this aspect, the CPA must demonstrate competence in the following:
o
Administrative Capability and Efficiency Ability to manage human, financial, physical and environmental resources within the framework of an organizations place in the industry and global marketplace; strong organization skills such as managing time well, leveraging staff well and ability to use of technology to improve efficiency. Decision modeling Objective identification of problems and evaluation of potential solutions using data, knowledge and insight. Risk analysis and management Identification of the risk of a negative outcome and evaluation of controls used to lessen risk by detecting and either preventing or correcting negative outcomes. Measurement Identification of what needs to be measured, determination of appropriate measurement for each situation, and objective presentation of using applicable reporting or disclosure standards. Industry/Sector Perspective Ability to pinpoint the economic, accounting and broad business financial risks and prospects (mergers, acquisitions, alliances) of an industry and economic sector.
Information technology (IT) knowledge This includes not only being conversant with IT concepts for business systems but sound knowledge on internal control in computer-based systems, development standards and practices for business systems, management of the
adoption, implementation and use of IT, evaluation of computer business systems, and managing the security of information.
Accounting knowledge This includes core knowledge related to accounting and related areas and must include proficiency in the international accounting and auditing standards, cost management and the latest concepts in management accounting, recent tax laws and business and commercial laws. It also includes knowledge of corporate finance and the Philippine capital markets, professional ethics and environmental accounting and reporting. Hence, the CPA should demonstrate competence in the following areas:
o o o o o o o o o o
Basic Accounting and Preparation of Financial Statements, the Accounting Profession and International Accounting Standards Advanced Financial Accounting Practices Advanced Financial Reporting Principles Management Accounting Basic Concepts Management Accounting Information for Planning, Decision-Making and Control Taxation Business and Commercial Laws Auditing Fundamentals Auditing: Advanced Concepts Business Finance and Financial Management
Skills
The skills which every CPA should demonstrate include: Intellectual - This set of skills includes the ability to carry out abstract logical thinking and understand critical thinking. It also includes creative thinking or the generation of new ideas; visualization or seeing things in the minds eye; and reasoning skills or the discovery of a rule or principle underlying the relationship between two or more objects and applying it when solving a problem. Hence, the CPA must demonstrate the following skills:
o
Analysis Ability to review, interpret, evaluate financial data and systems/ operational data/ controls in order to form conclusions and/or make recommendations on validity/ usefulness/ correctness/ compliance within established policies, procedures, guidelines, agreements and/or legislation. Problem solving Discerning the true nature of a situation and evaluation of applicable principles and techniques. Innovative thinking, reliable evaluation of information, openness to constructive change and consideration of future contingencies and developments. Strategic/Critical Thinking Linking data, knowledge and insight together from different sources and disciplines to make informed decisions. Considering the "big picture" when making decisions, as well as potential threats to the vision, strategy, objectives and culture of the organization.
Interpersonal - This involves developing the ability of CPAs to work in groups and being a team player. It includes the skills to participate as member of a team and contributing to group effort; teaching others new skills; working to satisfy clients expectations; negotiation skills and working with diversity or working well with men and women from diverse backgrounds. Hence, the CPA must demonstrate attributes such as: o Being a team player Ability to work independently and work cooperatively with others
in a team environment to establish, build and maintain positive working relationships and to ensure deadlines, goals and objectives are attained. o Persuasion, confidence and diplomacy Ability to calmly listen, assess and clarify problems and respond with options to clients, co-workers, vendors, stakeholders, consumers and the public who may be angry, confused, upset or uncooperative. Discreetness, open mind and patience Ability to create an environment that recognizes, supports, respects and welcomes diversity of employees and clients. Capacity for work and ability to respond well to pressure Ability to undertake large volume of tasks and projects for self and/or others taking into consideration frequent interruptions and conflicting and changing priorities to meet strict deadlines.
Communication This refers to active listening skills and the ability to communicate effectively ones points of view, both orally and in writing, at all organizational levels; being able to justify ones position, deliver powerful presentations and to persuade and convince others. The CPA should demonstrate skills such as the ability to: o Ability to verbally and/or in writing explain financial/ statistical/ administrative matters/ policies/ procedures/ regulatory matters/ audit results at a level appropriate to the audience. Ability to ask clear, concise and relevant questions to obtain desired information to perform a task. Ability to negotiate effectively.
Values
Values that CPAs should possess include: Professional ethics - Since the objectives of the accountancy profession are to work in accordance with the highest standards of professionalism, to attain the higher level of performance and generally to meet the public interest, the need for CPAs to conform to the ethical standards of the profession become vital. These include: o Integrity Avoiding actual or apparent conflicts of interest and advise all appropriate parties of any potential conflict Refraining from engaging in any activity that would prejudice their ability to carry out their duties ethically. Refusing any gift, favor or hospitality that would influence or appear to influence their actions. Refraining from either actively or passively subverting the attainment of the organization's legitimate and ethical objectives.
Recognizing and communicating professional limitations or other constraints that would preclude responsible judgment or successful performance of an activity. Communicating unfavorable as well as favorable information and professional judgments or opinions. Refraining from engaging in or supporting any activity that would discredit the profession.
Objectivity and Independence Communicating information fairly and objectively Disclosing fully all relevant information that could reasonably be expected to influence an intended users understanding of the reports, comments and recommendations presented
Professional competence and due care Maintaining an appropriate level of professional competence by ongoing development of knowledge and skills Performing ones professional duties in accordance with relevant laws, regulations and technical standards Preparing objective and complete reports and recommendations after appropriate analysis of relevant and reliable information
Confidentiality Refraining from disclosing confidential information acquired in the course of their work, except when authorized, unless legally obligated to do so Informing staff as appropriate regarding the confidentiality of information acquired in the course of their work and monitor their activities to assure the maintenance of that confidentiality Refraining from using or appearing to use confidential information acquired in the course of their work for unethical or illegal advantage either personally or through third parties.
Professional behavior Discharging ones professional responsibilities with competence and diligence and performing ones services to the best of a member's ability with concern for the best interest of those for whom the services are performed and consistent with the profession's responsibility to the public. Obligation of self-discipline above and beyond the requirements of laws and regulations Unswerving commitment to honorable behavior, even at the sacrifice of personal advantage
Moral values Beyond ethical rules, there is a need for CPAs to be able to discern between what is morally right or wrong These are the core competencies that every entry-level accountant is expected to have developed in his pre-certification education and hence, demonstrate in the CPA licensure examination.
The CPA Examination Syllabi and Core Competencies

Due to the nature of the examination (multiple choice type), it would be relatively difficult to measure some of the competencies listed above. Hence, the focus of the examination would be on Accounting Knowledge, Information Technology Knowledge and to some extent, Organizational and Business Knowledge. Intellectual Skills will be demonstrated through problem solving and Ethical Values, to the extent that these can be covered through theory questions and situational problems. Analytical and problem solving skills as well as the ability to respond well to pressure will be tested through case problems/situation problems of sufficient length and reasonable difficulty. The matrix that follows ties in the contents of the revised CPA examination syllabi and the competencies being tested.
Core Competency Framework for Entry to the Philippine Accountancy Profession CORE COMPETENCIES (Knowledge of, Ability to Use, or Skill in Using:) A. Knowledge 1.
Organizational and Business Knowledge o Business Finance and Financial Management o Quantitative Methods and Business Statistics Management Services Business Planning
SUBJECT
TOPIC/SUB-TOPIC
Objectives and uses of a business plan Distinction between a business plan and a strategic plan Setting short-term objectives consistent with long-term strategies Development of business plans to meet agreed objectives Basic segments of a business plan
Strategic Management
Strategic planning Strategic evaluation and control Evaluation of the success of strategy Strategic analysis of operating income
Performance Measurement
Performance measures at the individual activity level Executive performance measures and compensation
Environmental and Ethical Responsibilities Balance Scorecard
Perspectives of the balanced scorecard Aligning the balanced scorecard to strategy Features of a good balanced scorecard Pitfalls when implementing a balanced scorecard
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Core Competency Framework for Entry to the Philippine Accountancy Profession CORE COMPETENCIES (Knowledge of, Ability to Use, or Skill in Using:) SUBJECT TOPIC/SUB-TOPIC
Productivity Improvement Financial management related services
Working capital management and financing decision Basic concepts Significance of working capital management Working capital policy; advantages of adequate working capital, disadvantages of excessive working capital, alternative current asset investment and financing policies, risk-return trade-off, external financing needed (EFN) Management of current assets o Objectives of current assets management; cash conversion cycle o Cash and marketable securities management o Receivables management o Inventory management Financing working capital requirements Factors in selecting source of short-term funds Estimating costs of short-term funds Sources of short-term funds Secured short-term financing (pledging of accounts receivable, factoring and inventory financing) Capital budgeting decisions o Basic concepts (definition, characteristics, categories and elements of capital budgeting decisions) o Net investment, net cash returns, cost of capital, screening capital budgeting projects o Net discounted cash flow methods (payback, payback reciprocal, bailout, accounting and average rate of return) o Discounted cash flow (DCF) methods (net present value, profitability index, discounted payback, internal rate of return, equalized annual return (EAR) o Screening decisions (independent projects, preference decisions; mutually exclusive projects; ranking
investment projects, capital rationing, sensitivity analysis, NPV point of indifference (Fisher rate)
Long-term financing decisions Basic concepts (basic tools of capital structure management) Factors influencing capital structure decisions Incorporating capital structure into capital budgeting; weighted average cost of capital (WACC) Effects of operating leverage and financial leverage on capital structure; optimal capital structure Project feasibility studies Basic concepts (nature, purpose and component, development and analysis of project revenue costs under specific assumptions) Procedures in the preparation of projected financial statements Analysis of financial projections
Application of quantitative techniques in planning and control
Rationale in using quantitative techniques Decision theory Decision-making under certainty/uncertainty; probability theory; expected value of perfect information; payoff Gantt chart Decision tree Linear programming Sensitivity analysis Queuing theory Program evaluation and review techniques (PERT); critical path method (CPM) Learning curve
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2.
Information Technology Knowledge
Auditing Theory
Auditing in a Computerized Information Systems Environment
The Computer Environment o Introduction to an Electronic Data Processing System o Unique Characteristics of Specific EDP Systems o Impact of Computers on Accounting Systems o Major Types of Computer Fraud Internal Control in the Computer Information Systems o Auditors Responsibilities o Internal Control Over EDP Activities o General Controls o Application Controls Basic Approach to the Audit of CIS Environment o Introduction o Effects of Computers on the Audit Process o Auditing Clients that use CIS o Audit Techniques using Computers o Computer Knowledge, Expertise, and Experience of the Auditor o Using CAAT o Microcomputer-based systems Specialized Audit Programs and Additional Techniques o IT Environments Stand-Alone Personal Computers o IT Environments On-line Computer Systems o IT Environments Database Systems o Electronic Commerce Effect on the Audit of Financial Statements
Computer-based IS Controls Control environment Methods of processing transactions Obtaining an understanding of the computer system Computer control procedures
Computer Fraud and Security Computer systems security models, use identification and authentication, access control lists Cryptography and key management, password protection. Fundamental concepts of computer networks, TCP, UDP, IP protocols of the Internet. The World Wide Web and HTTP, DNS, Email and SMTP, telnet, ftp. Internet security and standards (SSH, SSL, IPsec), Web browser security (JAVA, CGI scripts). Taxonomy of Computer Attacks system flaws (buffer overflows, out-of-band data, CGI coding), insecure OS, poor configurations, communication vulnerabilities, attacks on network communications Intrusion Detection and Prevention system logs, audit trails, monitoring, firewalls, vulnerability scanning, Intrusion Detection System (IDS) tools on UNIX , etc. Management Services
The Systems Development Environment Introduction to information systems Components of a system Data vs. information Systems Development Life Cycle Approaches People in systems development Managing the Information Systems Project Importance of project management Project management skills needed in the different phases of the project o Project initiation
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o Project planning o Project execution o Project closure Representing and scheduling project plans o Gantt chart o PERT chart o Microsoft project
Automated Tools for Systems Development Computer-aided Software Engineering (CASE) Components of CASE o Diagramming tools o Computer display and report generators o Analysis tools o Repository o Documentation generators o Code generators Identifying and Selecting Systems Development Projects
How Technology has changed the role of information

systems How information systems are identified and selected How information systems planning is related to corporate strategic planning Techniques used to develop an information systems plan Form and content of an information systems plan
Initiating and Planning Information Systems Projects
Nature and objective of project planning Baseline Project Plan (BPP) Statement of Work (SOW) Assessment of a projects feasibility and risk
Determining System Requirements Traditional - interviews, questionnaires, Nominal Group
Technique, and documents analysis. Modern - Joint Application Design (JAD), group support systems, prototyping, and CASE tools. Radical Business process reengineering (BPR)
Process Modeling Descriptive modeling Active modeling Other Topics in Systems Design and Analysis Logic Modeling Conceptual Data Modeling Design Strategies Object-Oriented (OO) Analysis and Design Rapid Application Development CASE Tools Introduction to Information Management Overview of information systems Classification of information systems Operational, managerial and strategic information systems Information infrastructure and architecture Web-based systems Managing information resources Strategic advantage and information technology Strategic information system (SIS) frameworks Web-based SISs Impact of an SIS in global competition . Data management concepts and applications Basic database concepts
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o Data warehousing o Data analysis and mining o Data visualization o Web-based data management systems o Intelligent systems and artificial intelligence o Expert systems o Other intelligent systems Database design Data normalization Data queries Advanced data queries SQL Basic database concepts Forms and reports Calculations and data manipulations Application development Database administration Distributed database and the Internet
Network computing and E-commerce Network computing Business-to-business (B2B) applications E-commerce Accounting Information Systems Overview of the accounting information system Flowcharting New company set-up Setting up the General Ledger Setting up and using Accounts Payable Setting up and using Accounts Receivable Setting up and using Inventory Introduction to Payroll Accounting and Administration 3. Accounting Knowledge Theory of Accounts Accounting and Financial Accounting Concepts
Overview of accounting (definition, purpose and functions,
Core Competency Framework for Entry to the Philippine Accountancy Profession CORE COMPETENCIES (Knowledge of, Ability to Use, or Skill in Using:)
o
SUBJECT
TOPIC/SUB-TOPIC
uses of accounting information and branches of accounting)
Basic Accounting and Preparation of Financial Statements, the Accounting Profession and International Accounting Standards
Accounting standard setting in the Philippines Conceptual framework for the presentation of financial statements o Nature of the framework o Purposes of the framework o Components of the framework
Presentation of financial statements
Definition and nature of financial statements Responsibility for preparation Overall considerations in the preparation and presentation of financial statements Structure of the financial statements Minimum requirements for the content of financial statements
The Accounting Process Double-entry accounting system Accounting cycle Accounting records
Income Determination Approaches to income measurement Concepts of capital maintenance Concept of comprehensive income Bases for recognition of income Revenue and gains Expenses and losses
Discontinued Operations
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Core Competency Framework for Entry to the Philippine Accountancy Profession CORE COMPETENCIES (Knowledge of, Ability to Use, or Skill in Using:) SUBJECT
Accounting for Assets
TOPIC/SUB-TOPIC
Concept of financial and non-financial assets Current assets Non-current assets Impairment of assets
Accounting for liabilities Concept of financial and non-financial liabilities Current liabilities vs. nn-current liabilities Debt restructuring Other financial liabilities
Accounting for equity Preferred and common stock Additional paid-in capital Revaluation surplus Retained earnings (including dividends and appropriations/accumulated profit or loss) Capital restructuring (quasi-reorganization, recapitalization) Treasury stock Other reserves Book value per share
Financial statements Form and content Disclosures Interim financial reporting
Other topics Accounting changes and prior-period errors Accounting for income taxes Research and development

Practical Accounting Problems I
Borrowing costs Employee benefits, including retirement benefit costs Leases (operating leases, finance leases, sale and leaseback)
Preparation of Financial Statements
Accounting process Components of financial statements Cash basis to accrual basis and single entry Reporting in hyperinflationary economies
Accounting for Income and Expenses Net income Accounting changes Prior-period errors Interim reporting Segment reporting Development stage enterprises
Accounting for Assets Cash and cash equivalents Trade and other receivables Inventories Prepaid expenses Investments (excluding investment in subsidiaries and joint ventures) Property, plant and equipment Intangibles Other assets Impairment of assets
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Accounting for Liabilities

Theory of Accounts
Trade and other payables Provisions Income taxes payable Bonds payable Notes payable Debt restructuring (except dacion en pago) Employee benefits Other liabilities
Accounting for Equity Preferred stock/preference shares Common stock/ordinary shares Additional paid-in capital/share premium Reserves (revaluation surplus, translation adjustments and unrealized gain or loss on assets available for sale Treasury stock Earnings per share Book value per share Capital restructuring
Other Topics Accounting for deferred taxes Accounting for leases Accounting for non-current assets held for sale and discontinued operations Other current pronouncements (in effect at the time of taking the examination)
4.
Accounting Knowledge o Advanced Financial Accounting Practices o Advanced Financial Reporting Principles
Other Topics
Foreign currency transactions and translations Cost accumulation for product costing Business combinations and consolidation of financial
statements Practical Accounting Problems II Accounting for Business Combination Mergers and acquisitions (M & A ) Presentation and required disclosures in the financial statements Investment in Subsidiary Preparation of Consolidated Financial Statements
TOPIC/SUB-TOPIC
Date of acquisition Subsequent to date of acquisition Required disclosures in the financial statements
Foreign Currency Transactions
Without derivatives and hedging activities With derivatives and hedging activities (foreign currency forward contracts) Other foreign currency forward contracts (speculation) Foreign currency options
Other Derivatives and Hedging Activities
Future contracts Swaps
Foreign Currency Financial Statements
Translation to the presentation currency Restatement of financial statements
Partnership Accounting
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Formation Operations Dissolution/changes in ownership interest Liquidation Other Special Transactions
Installment method of accounting for revenue Long-term construction contracts Commercial franchise operations Financial reporting of interests in joint ventures Corporate liquidation Insurance contracts Accounting for not-for-profit organizations Accounting for build-operate-transfer and its variants
Accounting for Branch and Agency Transactions Transactions on the books of home office and branch Reconciliation of reciprocal accounts Agency transactions
Government Accounting (New Government Accounting System) Management Services Overview of Management Advisory Services (MAS)
5.
Accounting Knowledge o Management Accounting Basic Concepts o Cost and Management Accounting Information for Planning, Decision-Making and Control
MAS practice by CPAs Role, historical perspective and direction of management accounting
Foundations of Management Accounting
Analysis and interpretation of financial statements
Cost terms and Concepts, Cost Behavior and Design of Cost and Management Accounting
Nature and classification of costs Basics of cost behavior; cost classification and flow of costs in manufacturing, commercial, trading or service companies Splitting mixed costs through high-low method, least-squares regression and scatter graph System design: job order and process costing Activity-based costing (ABC) and activity-based management (ABM)
Cost-Volume Profit Relationship
Basic concepts CVP analysis (with changes in cost structure and for a multiproduct firm) Margin of safety, operating leverage and profit planning
Variable Costing and Absorption Costing Underlying concepts, advantages and disadvantages of variable costing Comparison between variable and absorption costing Preparation of financial statements under each costing method including reconciliation of net income
Comprehensive Budgeting
Budgeting concepts Budgetary process Budget manual preparation Master budgets, operating budgets and financial budget preparation
Responsibility Accounting
Goal congruence and motivation
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Types of responsibility centers (revenue, cost, profit and investment) Transfer pricing (rationale and need, alternative schemes and multinational transfer pricing)
Standard Costing
Basic concepts o Rationale and benefits o Users o Limitations o International uses o How they are met o Performance measurement using variances o Operating performance evaluation Analysis of variances o Direct material variances o Direct labor variances o Factory overhead variances
Using Accounting Information in Decision Making, Relevant Costs and Benefits
Decision making process Identifying relevant costs Approaches in analyzing alternatives in non-routine decisions Types of decisions o Make or buy o Adding or dropping product segments o Sell now or process further o Special sales pricing o Utilization of scarce resources o Other business decisions requiring quantitative analysis
Other Emerging Management Practices/Consultancy Services Management accounting in a changing environment (integrative framework, organizational innovations and management accounting) Management audit and operational audit
Reengineering and business process improvement
Practical Accounting Problems II
Cost Accounting

6. Accounting Knowledge o Taxation o Business and Commercial Laws Business Law
Job order costing system Process costing system Backflush costing system (JIT system) Activity-based costing system Accounting for joint and by-products Standard costing system (two-way variance excluding mix and yield variances) Obligations and Contracts Obligations o Sources of obligations and their concepts (law, contracts, quasi-contracts and quasi-delicts) o Kinds of obligations in general under the New Civil Code o Specific circumstances affecting obligations in general (fortuitous events, fraud, negligence, delay and breach of contract) o Duties of the obligor in an obligation to do or not to do o Extinguishment of obligation (payment of debts of money, mercantile documents as means of payment, special forms or modes of payment, remission or condonation, confusion, compensation and novation and effect of insolvency and bankruptcy on extinguishment of obligation) Contracts o Concepts and classification o Elements and stages
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o o o o o o o o
TOPIC/SUB-TOPIC
Freedom from contract and limitation Persons bound Consent (capacitated persons, requisites and vices of consent) Objects of contracts Consideration of contracts Formalities of contracts Interpretation and reformation of contract Defective contracts (rescissible, voidable, unenforceable and void)
Contract of sales o Nature, forms and requisites o Distinguished from dacion en pago, cession in payment, contract for a piece of work and barter o Earnest money vs. option money o Rights/obligations of vendor and vendee o Remedies of unpaid seller o Warranties (in relation to consumer laws) o Sale with a right to repurchase or conventional redemption, legal redemption o Sale on credit o Installment sales (Recto law, Maceda law, PD 957 or Condominium Act) Contract of agency, pledge and mortgage o Contract of agency o Pledge o Mortgage (real and chattel) Law on partnership o Nature and as distinguished from corporation o Elements and kinds o Formalities required o Rules of management o Distribution of profits and losses
o o o
TOPIC/SUB-TOPIC
Sharing of losses and liabilities Modes of dissolution Limited liability partnership (LLP)
Law on corporations o Nature and classes of corporation o Requirements for organization o Powers of a corporation (expressed, limited and incidental) o Board of directors/corporate officers o Classes of stocks o Powers, duties, rights and obligations of stockholders o Majority and minority control o Corporate reorganization (mergers, consolidations, other business combinations) o Modes of dissolution and liquidation o Foreign corporations o Kinds and availability of corporate books Negotiable instruments law o Negotiability of instrument o Functions and kinds of negotiable instruments o Construction of ambiguous instrument o Parties and their liabilities o Indorsements o Accommodation party o Manner and consequence of transfer of instruments o Dishonored instruments and their effects (including clearing house rules and BP 22) o Requisites of holder in due course o Defense of parties o Forgery and its effects o Discharge of negotiable instruments and parties secondarily liable
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Core Competency Framework for Entry to the Philippine Accountancy Profession CORE COMPETENCIES (Knowledge of, Ability to Use, or Skill in Using:)
Taxation
SUBJECT
TOPIC/SUB-TOPIC
Principles of Taxation and its Remedies
Nature, scope, classification and essential characteristics Principles of sound tax system Limitations of the power of taxation o Inherent limitations o Constitutional limitations Differences between taxation and police power Differences between taxation and eminent domain Similarities among taxation, police power and eminent domain Tax evasion vs. tax avoidance Situs/place of taxation Taxes o Essential characteristics o Classification o Tax vs. other charges (toll, special assessment, license fee, debt) Powers and authority of the Commissioner of Internal Revenue under Sec. 4 to 7, Title I of the Tax Code Authority of the Commissioner to compromise tax payments, abate or cancel tax liability and refund or credit taxes Tax remedies o Remedies of the government (state) o Remedies of the taxpayer Income tax o Taxpayer and tax base (individuals, corporations, partnerships, joint ventures, estates and trusts) o Gross income (inclusions, exclusions, passive income subject to final tax, capital gains tax on sale of shares of stock not through the local stock exchange, final income tax on fringe benefits) o Deductions from gross income (itemized deductions, items not deductible, optional standard deduction) o Accounting periods o Accounting methods o Tax return preparation and tax payments o Withholding taxes
Compliance requirements o Administrative requirements o Attachments to the income tax return (ITR) including CPA certificate per NIRC requirement o Keeping of books of accounts and records including report of inventories o Prescriptive period of books of accounts and other accounting records Transfer taxes o Estate taxes (gross estate, deductions allowed to estate, tax credit, filing of estate returns and payment of estate tax, attachments to estate tax return including CPA certificate) o Donors tax (gross gift, exemption of certain gifts and other deductions, tax rates in general and when the donee is a stranger, filing of donors tax return, payment and requirements) Value added tax (VAT) o VAT-subject transactions o VAT-exempt transactions o Input value added taxes o Refund of VAT input (zero rated sales, purchase of land and capital goods) o Compliance requirements Percentage taxes o Taxpayer, tax base and tax rates o Tax on persons exempt from VAT o Tax on domestic and international carriers (including exemptions) o Tax on franchise o Overseas communications tax (including exemptions) o Tax on banks and non-bank financial intermediaries performing quasi-banking functions o Tax on other non bank financial intermediaries o Tax on life insurance o Tax on agents of foreign insurance companies o Amusement taxes
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o o o
TOPIC/SUB-TOPIC
Tax on winnings Stock transaction tax Returns and payment of percentage tax (regular and electronic filing) Community tax o Computation of basic, additional and optional community tax for individuals and corporations o Maximum amount due Others o Surcharges (late filing/paymenyt, wrong venue, willful neglect, false or fraudulent returns) o Interests (on deficiency, delinquency and on extended payments) o Compromise penalties
7.
Accounting Knowledge o Auditing Fundamentals
Auditing Theory
Fundamentals of Auditing and Assurance Services Introduction to assurance engagements Nature, objectives and elements Types of assurance engagements (audits, reviews and others) Assurance services vs. attestation services Introduction to auditing Nature, philosophy and objectives Types of audit (according to nature of assertion/data and according to type of auditor) The Professional Practice of Public Accounting
Public accounting profession o Public accounting as a profession o Organizations that affect public accounting o Regulation of the public accounting practice (Phil. Accountancy Act of 2004, SEC rulings) CPAs professional responsibilities o Philippine Standards on Auditing (PSA) o Responsibilities on Fraud, Error and Non-Compliance
The Financial Statements Audit Client Acceptance and Audit Planning
Overview of the audit process Pre-engagement procedures Scope and purposes of audit planning o Essential planning requirements o Direction, supervision and review
Accounting and internal control systems Basic concepts and elements of internal control Consideration of accounting and internal control systems o Understanding and documentation o Assessment of control risks o Communication of material weakness Communication of material weakness
Audit Objectives, Procedures, Evidences and Documentation
Nature and significance Evidential matters Audit procedures/techniques Audit working papers
Audit Sampling
Basic audit sampling concepts o Nature and purpose o Non-statistical and statistical sampling o Attribute and variables sampling technique
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o o
TOPIC/SUB-TOPIC
Sampling and non-sampling risk Testing procedures which do not involve sampling
Factors affecting sample design o Audit objectives o Population and its characteristics o Risk and assurance o Tolerable error o Expected error in the population o Variation in the population Factors affecting sample size Sample selection methods Evaluation of sample results
Completing the Audit/Post-Audit Responsibilities
Completion the audit and audit report preparation o Analytical procedures for overall review o Related party transactions o Subsequent events review o Assessment of going concern assumption o Obtaining clients representation letter o Evaluating findings, formulating an opinion and drafting the audit report Post-audit responsibilities o Subsequent discovery of facts o Subsequent discovery of omitted procedures
Reports on Audited Financial Statements
Unqualified auditors opinion Basic elements of the unqualified auditors report Modified auditors report
o o
TOPIC/SUB-TOPIC
Matters that do not affect the auditors opinion Matters that do affect the auditors opinion
Report on comparatives
Other Assurance and Non-Assurance Services
Procedures and reports on special purpose audit engagements o General considerations o Audit of financial statements prepared in accordance with a comprehensive basis of accounting other than GAAP in the Philippines o Audit of a component of financial statements o Reports on compliance with contractual agreements o Reports on summarized financial statements Non-audit engagements: procedures and reports o Examination of prospective financial information o Engagements to review financial statements Non-assurance engagements o Engagements to perform agreed-upon procedures regarding financial information o Engagements to compile financial information
8.
Accounting Knowledge o Auditing: Advanced Concepts
Auditing Problems
Audit Planning and Internal Control Consideration
Application of analytical procedures in audit planning Understanding of the internal control and tests of controls o Revenue and receipt cycle o Expenditure and disbursement cycle o Production cycle o Investing and financing cycle
Evidence Accumulation and Evaluation Substantive Tests of Transactions and Balances
35
Audit of expenditure and disbursement cycle o Audit of acquisitions and purchases o Audit of payroll transactions o Audit of cash disbursement transactions o Audit of inventory balances o Audit of trade payable balances o Audit of prepaid expenses and accrued liabilities Audit of production cycle o Audit of conversion activities o Audit of inventory balances: work- in- process and finished goods o Audit of cost of goods sold Audit of the financing cycle o Audit of financing cycle transactions o Audit of non-trade liability balances o Audit of interest expense and finance cost balances o Audit of owner(s) equity accounts Audit of investing cycle o Audit of investing transactions o Audit of investment account balances o Audit of property, plant and equipment account balances o Audit of intangible account balances Audit of cash balances
Completing the Audit Evaluation of related party transactions, going concern and contingencies Evaluation of the audited financial statements Application of analytical procedures in the overall review Drafting the audit report
B. Skills
1. Intellectual Skills o Problem Solving . Practical Accounting Problems I Practical Accounting Problems II Auditing Problems Business Law and Taxation All relevant topics which involve problem solving or case analysis
C. Values
1. Professional Ethics Auditing Theory
CPAs professional responsibilities o Code of Ethics for Professional Accountants in the Philippines
37
This document was developed by the Board of Accountancy in March 2005.
The Board of Accountancy

Atty. Eugene T. Mateo Chairman Dr. John S. Bala Vice Chairman Members: Solita V. Delantar Froilan D. Ampil Ma. Elenita B. Cabrera Lucila Tarriela

Core Competency Framework For Entry To The Philippine Accountancy Profession - 3

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Core Competency Framework For Entry To The Philippine Accountancy Profession - 3

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Core Competency Framework for Entry to the Philippine Accountancy Profession

Core Competency Framework for Entry to the Philippine Accountancy Profession

Core Competency Framework for Entry to the Philippine Accountancy Profession

Core Competency Framework for Entry to the Philippine Accountancy Profession

Core Competency Framework for Entry to the Philippine Accountancy Profession

Core Competency Framework for Entry to the Philippine Accountancy Profession

Core Competency Framework for Entry to the Philippine Accountancy Profession

Core Competency Framework for Entry to the Philippine Accountancy Profession

Core Competency Framework for Entry to the Philippine Accountancy Profession

Core Competency Framework for Entry to the Philippine Accountancy Profession

The CPA Examination Syllabi and Core Competencies

Environmental and Ethical Responsibilities Balance Scorecard

Application of quantitative techniques in planning and control

Information Technology Knowledge

Auditing in a Computerized Information Systems Environment

How Technology has changed the role of information

Initiating and Planning Information Systems Projects

Determining System Requirements Traditional - interviews, questionnaires, Nominal Group

Overview of accounting (definition, purpose and functions,

Presentation of financial statements

Financial statements Form and content Disclosures Interim financial reporting

Preparation of Financial Statements

Foreign Currency Transactions

Other Derivatives and Hedging Activities

Future contracts Swaps

Foreign Currency Financial Statements

Translation to the presentation currency Restatement of financial statements

Foundations of Management Accounting

Analysis and interpretation of financial statements

Cost-Volume Profit Relationship

Goal congruence and motivation

Using Accounting Information in Decision Making, Relevant Costs and Benefits

Practical Accounting Problems II

Principles of Taxation and its Remedies

Accounting Knowledge o Auditing Fundamentals

Audit Objectives, Procedures, Evidences and Documentation

Completing the Audit/Post-Audit Responsibilities

Reports on Audited Financial Statements

Other Assurance and Non-Assurance Services

Accounting Knowledge o Auditing: Advanced Concepts

Audit Planning and Internal Control Consideration

Evidence Accumulation and Evaluation Substantive Tests of Transactions and Balances

Core Competency Framework for Entry to the Philippine Accountancy Profession

This document was developed by the Board of Accountancy in March 2005.

The Board of Accountancy

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