CHAPTER 1 Introduction Financial statements are the means by which the information accumulated and processed in financial accounting that is periodically communicated to the users. It is the end product or main output of the financial accounting process. Financial statements consist of the structured financial representation of the financial position and financial performance of an entity. Financial statements provide information about the financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions. Financial statements also show the results of the management’s stewardship of the resources entrusted to it. It is one of the reasons that financial statements are being audited for the users to know if the company is supervising or managing the assets, liabilities, equity, income and expenses properly. For the financial statements to be presented fairly and properly, the accounting standards used and to be followed in preparing the financial statements is the Generally Accepted Accounting Principles (GAAP). GAAP is a framework of accounting standards, rules, and procedure. It mandates uniformity in preparation which helps eliminates inconsistency. The accounting standard in our country, the Philippine Financial Reporting Standard (PFRS) is issued by the Financial Reporting Standards Council (FRSC) and is adopted from the International Financial Reporting Standards (IFRS). The Financial
Reporting Standards Council (FRSC) was established by the Board of Accountancy (BOA or the Board) in 2006 under the Implementing Rules and Regulations of the Philippine Accountancy of Act of 2004 to assist the Board in carrying out its power and function to promulgate accounting standards in the Philippines. The FRSC’s main function is to establish generally accepted accounting principles in the Philippines. In deciding on the appropriate accounting framework for companies under its jurisdiction, certain rule requires the SEC to consider Standards issued by the FRSC. However, it is very essential to establish and comply the general accounting principles. OBJECTIVE OF THE STUDY The objective of this study is to investigate the preparation of the audited financial statements of different industries. It is to examine if the businesses prepared their financial statements according to or in conformity with the Philippine Financial Reporting Standards (PFRS) and Philippines Accounting Standard (PAS) and if they presented the financial statement fairly.
Types of Industry There are 10 companies chosen by the researches as venues for the evaluation of the financial statements. 1. Service Service is an industry which does not produce raw materials or manufacturer products but offers a service such as banking, retailing or accounting.