Chapter 1

THE PROBLEM AND ITS BACKGROUND

Conceptual Framework

Accounting is a glorious but misunderstood field. The popular view is that it's

mostly mind-numbing number-crunching; it certainly has some of that, but it's also a

rich intellectual pursuit with an abundance of compelling and controversial issues.

Accountants are often labelled as soulless drones laboring tiredly in the bowels of

corporate organizations. Although it's often thought of as a discipline of pinpoint

accuracy with rigid rules, accountants rely heavily on best estimates and educated

guesses that require careful judgment and strong imagination.

The short-but-interesting description of accounting is "the language of

business." A more formal definition is offered by The American Accounting

Association: "The process of identifying, measuring and communicating economic

information to permit informed judgments and decisions by users of the information."

However defined, accounting plays a vital role in facilitating all forms of economic

activity in the private, public and nonprofit sectors, in all industries.

The name that looms largest in early accounting history is Luca Pacioli, who

in 1494 first described the system of double-entry bookkeeping or the theory of

debits and credits used by Venetian merchants in his Summa de Arithmetica,

Geometria, Proportioni et Proportionalita. Of course, businesses and governments

had been recording business information long before the Venetians. But it was

Pacioli who was the first to describe the system of debits and credits in journals and

ledgers that is still the basis of today's accounting systems.

The industrial revolution urged the need for more advanced cost accounting

systems. Prior to the Industrial Revolution, which began in Britain in the late 1700s,

manufacturing was often done in people's homes, using hand tools or basic

machines. Industrialization marked a shift to powered, special-purpose machinery,

factories and mass production. The development of corporations created much

larger classes of external capital providers - shareholders and bondholders - who

were not part of the firm's management but had a vital interest in its results. The

rising public status of accountants helped to transform accounting into a profession,

first in the United Kingdom and then in the United States. In 1887, thirty-one

accountants joined together to create the American Association of Public

Accountants. The first standardized test for accountants was given a decade later,

and the first CPAs were licensed in 1896.

Bringing in the Philippines the history of accounting, although it has been

practiced in the Philippines since the Spanish period and possibly even before, the

seeds of Philippine accountancy as a recognized profession was planted on March

17, 1928, when Act No. 3105 was approved by the Sixth Legislature. Entitled 'An Act

Regulating the Practice of Public Accounting; Creating the Board of Accountancy;

Providing for Examination, for the Granting of Certificates, and the Registration of

Certified Public Accountants; for the Suspension or Revocation of Certificates; and

for Other Purposes,' the law paved the way for local accountants to do the work
which, up to that time was performed by foreign accountants in the country. Since

then, both the profession and the body that directly regulates it have grown rapidly.

These accountants perform financial functions related to the collection,

accuracy, recording, analysis and presentation of a business, organization or

company's financial operations. The accountant usually has a variety of

administrative roles within a company's operations. In a smaller business, an

accountant's role may consist of primarily financial data collection, entry and report

generation. Middle to larger sized companies may utilize an accountant as an

adviser and financial interpreter, who may present the company's financial data to

people within and outside of the business. Generally, the accountant can also deal

with third parties, such as vendors, customers and financial institutions.

The accounting structure of a company is an essential component to business

operations. One of the primary roles of an accountant usually involves the collection

and maintenance of financial data, as it relates to a company or firm. The accountant

ensures that financial records are maintained in compliance with lawful and accepted

procedures and policies on the corporate level. The financial information for any

organization should be kept in a pristine system because it is a key component used

in operating and managing any business. The accountant also analyzes financial

data to resolve certain discrepancies and irregularities that may arise.

Recommendations may also involve developing efficient resources and procedures,

while providing strategic recommendations for specific financial problems or

situations.

Accountants typically prepare financial statements that may include monthly

and annual accounts based upon the financial information that is compiled and

analyzed. The preparation of financial management reports can include accurate

quarterly and year-end closing documents. Reports compiled may be used in

connection with the continual support and management of budgetary forecast

activities. The financial reports may be used by a financial director or officer for the

development, implementation and operation of a company's financial software and

systems. An accountant may also be responsible for ensuring that all financial

reporting deadlines are met, internally and externally. For example, quarterly, semi-

annual and annual reports all have specific deadlines, as well as some tax

implications.

Monitoring and supporting taxation issues and filings can also be a

responsibility of an accountant. The accountant also usually coordinates the audit

process by assisting with financial data preparation. Often, accountants must work

with financial professionals from the four major fields of the industry: public,

management, internal auditing and government accounting. Accountants may

provide data to a public accountant, who acts as a consultant, auditor and tax

service professional.

Clearly speaking, an accountant is one of the main players in any business

that he or she works for, whether it is a large corporation or a small business.

Accurate financial information is the lifeblood of all organizations. Leaders use that
information to make decisions every day. Accountants are the guardians of financial

information. They ensure that anyone who needs to make decisions based that

information corporate executives and managers, elected officials, bankers,

investors, individuals and others can trust it.

Statement of the Problem

1. What are the roles of Accountants in terms of:

1.1 Decision Making

1.2 Auditing Financial Statements

1.3 Accuracy

2. What are the Advantages and Disadvantages of the Accountant?

3. What are the common problems that the company may encounter:

3.1 Understatement of Document/ Financial Statements

3.2 Incorrect Amounts

3.3 Wrong Standards Applied

Assumption

Accounting or accountancy is the

universe language of business and figure. Those that fluently speak the language

accountants. An accountant performs financial functions related to the collection, accuracy,

recording, analysis and presentation of a business, organization or company's financial

operations. The accountant usually has a variety of administrative roles within a company's

operations. In a smaller business, an accountant's role may consist of primarily financial data

collection, entry and report generation.

Significance of the Study

 The purpose of this study is to determine the importance of the role of

accountants in Mandaluyong City. This study will be a significant endeavor in

clarifying what accountants really do and how it contributes to the City. This study

will also be beneficial to the students and instructors of accounting subjects when

they employ effective learning in their classroom setting particularly in different

concepts related to the accounting practice. By understanding the role of

accountants, these instructors and students be assured of a competitive advantage.

The accounting students will be open to what their future jobs really do. They will

appreciate their future role and be more enthusiastic to study deeper the principles

and standards of accounting.

Moreover, this study will be helpful to the graduating senior high school in

considering of what course they will take. They can use this study to better

understand where their career leads and may look at accounting course differently

by having a comprehension of the worth of the job their leading to. The studys goal

is designed to help students improve academic competence, develop employability

skills, implement a career plan and participate in a career pathway in preparation for

post-secondary education or careers being accountant after graduating from high

school.

It will also benefit the researchers for the result of this study may give

information to them as they are also accounting students and could even help them

towards their future work performance. It will also serve as a future reference for

researchers to be determined to push through their course no matter hard it

becomes. For the future researchers this study may be useful to them for they may
use this as their reference material for further studies and may also use this as their

guide on how they will make their topic.

Others who may benefit to this study are the accountants themselves as this

may give additional information and motivation for them to know the significance of

their work on the businesses. Also, the potential businessmen will have an idea on

the job descriptions of accountants they have to hire to take over their future financial

transactions, and help them make decisions for their business. The study of

importance and role of accountants in the field of business will help the future

accounting students to appreciate more the beauty of accounting. It is not just a

background for them but also a guide for their chosen path. Also, this study will

answer the reason behind why accounting is also known as " Language of the

Business". The studies goal is also to help CPA's in terms of their role in business

world. With this, it will be easier for them to distinguish on what field they will fit. The

stakeholders are also can acquire benefit in this study. It will help them to make good

economic decision by providing them a financial statements. You wouldnt try to run

an organization or make investment decisions without accurate and timely financial

information, and its the accountant who prepares this information. More importantly,

accountants make sure that stakeholders understand the meaning of financial

information, and they work with both individuals and organizations to help them use

financial information to deal with business problems. Lastly, the company itself can

acquire benefit with this study. It will give them an idea what really the accountants

means to the business -- that is accountants maintain the fairness to the transactions

of a business. All this means that "accounting" can be defined as a system for

measuring and summarizing business activities, interpreting financial information,

and communicating the results to management and other decision makers.

Scope, Limitations and Delimitations

The purpose of this study is to determine the importance of the role of

accountants in Mandaluyong City. It focused on the accounting professionals

currently employed on the various offices within the said City. The researchers will

also tackle the role of accountants in a company in terms of decision making and

auditing financial statements, the advantage and disadvantage of being an

accountant, and the common problems that the company may encounter involving

accountants. The respondents included will be 50 accountants from various

companies within Mandaluyong City. The researchers will gather data through a

survey research method.