Services rendered by a Public Accountant in the Philippines

1. Auditing has traditionally been the primary service offered by most public accounting practitioners. Auditing or specifically external auditing is the "examination      of financial statements by independent certified public accountant for the purpose of expressing an opinion as to the fairness with which the financial statements are prepared".
2. Taxation Services include the preparation of annual income tax returns and determination of tax consequences of certain proposed business endeavors. The CPA not infrequently represents the client in tax investigations.
3. Management Advisory Services has become increasingly important in recent years, although audit and tax services are undoubtedly the mainstay of public accountants. It has no precise coverage but is used generally to refer to services to clients on matters of accounting, finance, business policies, organization procedures, product costs, distribution and many other phases of business conduct and operations.

Objectives of a Business Enterprise

It is commonly known that a business enterprise cannot hope to accomplish anything else and continue to exist, unless it meets the two basic tests of survival- operate profitably and stay solvent.

Businesses are formed to make profit

Usually, organizations may be grouped into two- the profit oriented and non-profit oriented organizations. As its name suggests, the primary objective of organizations that fall under the profit-oriented enterprise is to make profit, and these organizations are usually referred to as business enterprise. The main activities of a business enterprise are focused on meeting its primary objective of making profit. Peripheral or related activities are also undertaken to meet the same main objective.

On the other hand, a non-profit organization, whether governmental or private, is established not for profit but to render services and meet the needs of the members of the community. These said needs may be directly or indirectly related to education, health and physical care, livelihood, cultural and social growth, and spiritual and moral development.

Business Solvency

Aside from making profit, another important objective of business enterprise is to make sure that they have immediate access to a sufficient amount of cash that is needed to settle their business obligations within a reasonable period of time. A business enterprise that has sufficient cash to pay its debts as they mature is said to be solvent. 

In contrast, a business enterprise that cannot meet its obligations as they fall due is said to be insolvent.

The Distinction Between Accounting and Bookkeeping

Accounting and bookkeeping are not the same. Bookkeeping involves those mechanical and repetitive recording and classifying procedures related to the business activities of a natural or artificial person, until the voluminous information is summarized and reported in a form of financial statements. 


Bookkeeping is only a part of the wider field of accounting. A person might become a reasonably proficient bookkeeper after completing a course in fundamentals of accounting. However, several years of study, experience, and maturity are needed to become an accountant. 


Among others, accounting includes: the analysis and interpretation of financial statements, the income tax work, the design and installation of an accounting system, audits, and the preparation of forecasts, budgets, and feasibility studies.

Going Concern

Going concern means that the accounting entity is viewed as continuing in operation indefinitely in the absence of evidence to the contrary.


In other words, financial statements are prepared normally on the assumption that the entity shall continue in operation for the foreseeable future. 


Going concern is particularly relevant when management shall make an estimate of the expected outcome of future events.


This postulate is the very foundation of the cost principle. It is also known as the continuity assumption.

Fair Presentation

The financial statements shall present fairly the financial position, financial performance, and cash flow of an entity.


Fair presentation is defined as faithful representation of the effects of transactions and other events in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses laid down in the Framework.

General Features of Financial Statements

The general features in the preparation and presentation of financial statements are:


1. Fair presentation
2. Going Concern
3. Accrual Basis
4. Materiality and aggregation
5. Offsetting
6. Frequency of reporting
7. Comparative information
8. Consistency of presentation

Objective of Financial Reporting

The overall objective of financial reporting is to provide information that is useful for decision making.


Specifically, the AICPA Financial Accounting Standards Board in its Statement of Financial Accounting Concepts enumerates the following objectives of financial reporting:

1. To provide information useful in investment, credit, and similar decisions.
2. To provide information useful in assessing cash flow prospects.
3. To provide information about entity resources, claims to those resources and changes in them.