best practices in accounting

Best Practices in Philippine Accounting

Companies doing business in the Philippines must comply with the Philippine Financial Reporting Standards (PFRS). The PFRS is a set of Generally Accepted Accounting Principles (GAAP) issued by the Accounting Standards Council (ASC) to govern the preparation of financial statements. These standards aim to promote fairness, transparency, and accuracy in financial reporting.

To ensure compliance with the above-mentioned standards, it is ideal for a company doing business in the Philippines to have an accounting manual/process flow or documentation and recording guidelines in relation to the following:

Proper Cash Management

  • Proper approval of disbursement (from Purchase Requisition to Purchase Order to Check Preparation to Recording)
  • Setting up of controls over Petty Cash Fund
  • Bank Reconciliation
  • Addressing proper segregation of duties over cash management
  • Proper archiving of documents

Proper Inventory Management

  • Addressing proper segregation of duties over inventory management
  • Establishing controls over materials handling, inventory count
  • Proper archiving of documents

Proper Fixed Asset Management

  • Establishing formal policy on the capitalization threshold and depreciation and setting up of acceptable useful life of the assets based on PFRS
  • Establishing controls over disposal of fixed assets
  • Addressing proper segregation of duties over fixed asset management
  • Proper archiving of documents

Proper Order-to-Cash (OTC) Process

  • Addressing proper cut-off of recognizing the revenue in the books in accordance with PFRS
  • Establishing policies on Returns and Allowances and Discounts
  • Receivables Management
  • Proper monitoring of Sales and/or Receivables
  • Addressing proper segregation of duties over OTC Process
  • Proper archiving of documents

Proper Purchase-to-Pay (P2P) Process

  • Addressing proper procedures from Purchase Requisition to Purchase Order to Purchasing to Receiving of Purchase to Check Preparation to Recording
  • Proper substantiation of expenses
  • Proper monitoring of Expenses and/or Payable
  • Proper archiving of documents

Source: bsp.gov.ph/regulations/compliance

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