Common Accounting and Bookkeeping Practices in the Philippines

By: Angel Mae Villarino

2023/12/05

Accounting and bookkeeping practices vary in every country. But as a whole, the accounting services generally includes auditing, accounting, bookkeeping and related services. There is Public Accounting which consists of the audit and review function that acts as the check and balance of a company’s financial status. Then there is Management Accounting. This is another aspect in accounting services which gives business directions and provides strategic, tactical and operational decisions based on financial data. 

Bookkeeping, income tax preparation, business valuations, forensic accounting, tax compliance, investment advice, accounting system organization and design and management advisory services are the other accounting services that any Accountant in the field is bound to do. Now, where does online accounting system belong? It actually covers and encompasses most of the accounting practices.

Only an accountant knows the language of accounting. How about its functions and common practices? Well, of course there is such a thing as an accountant’s lingo but in this case, these practices are mostly used and required by law under some so-called standards.

In the Philippines, small and big businesses alike are mandated to comply with the Philippine Financial Reporting Standards (PFRS). The Philippine Financial Reporting Standards is a set of Generally Accepted Accounting Principles better known as GAAP that has been issued by the ASC or the Accounting Standards Council, a governing body that aids in governing and monitoring the preparation of financial statements. 

For any growing business, it is important to follow the standards set by the PFRS. Hence, it is helpful for any company to have an accounting manual with the specific guidelines that pertain to the following:

Appropriate Cash Management

– this is very important in every accounting process. There is nothing to account for when there are no resources or no cash to manage. With an online accounting system, appropriate cash management is a walk in the park.

1. Correct approval of any disbursement of cash – this would mean that any expense or disbursement starting from purchase requisition to purchase order to check preparation and even up to recording should be taken into account for monitoring.
   
   
2. Petty Cash Fund Set-up – This is part of the management of cash and the control over petty cash should be regulated, disbursed and replenished with the necessary documentations.
   
   
3. Bank reconciliation – Check and balance is needed, thus there has to be a correct bank reconciliation.
   
   
4. Documents archiving – A proper storage for documents is needed for future reference.
   
   

Reliable Inventory Management

– Inventory is where the investment is and it is vital for it to be managed precisely.

1. Inventory management procedures – Systems should be in place and inventory monitored. An online accounting system can help promote a reliable inventory management.
   
   
2. Inventory Management Control – With an online accounting system in place, there is better control in inventory.
   
   

Good Fixed Asset Management

– The company’s assets are resources for safe-keeping and also helps the operations of the company.

1. Proper setting up and recording of assets based on PFRS
   
   
2. Implementing controls over disposal of fixed assets

Proper OTC (Order to Cash) Process

1. Establishing rules on returns, discounts and allowances
   
   
2. Management of Receivables
   
   
3. Efficient and correct monitoring of Sales and Receivables
   
   

Correct Purchase to Pay (P2P) Process

1. Observing proper procedures starting from purchase requisition to purchase order to purchasing then to receiving the purchase than the payment of purchase 
   
   
2. Correct substantiation of expenses
   
   
3. Proper monitoring of expenses and payables
   
   

All these accounting and bookkeeping practices are easy to do with EasyFS. It is an automated online account software as well as inventory management system that is well integrated, user-friendly and works perfectly in any kind of business start-up with the following features and benefits:

• End-to-end accounting software with sales and inventory integration.
• Software as a Cloud-Based and Services (SAAS).
• Multi-currency. This system can trade in various currencies.
• Multilingual.
• Higher accuracy and real-time reporting.
• Faster coordination with the team.
• Cost-effective by reducing waste of paper and ink.
• Low cost of installation and maintenance.
• Improve customer service.
• Filipino tax law is ready. EasyFS follows the regulations and guidelines set by the Bureau of Internal Revenue (BIR).
• Compatible with POS front-end software.
• Multi-branch. The system has multiple stores, branches, and warehouses and can monitor sales and inventory for the entire company.

The standards set by the PFRS are easy to comply with the help of an online accounting system, EasyFS. It can do wonders for your taxations needs. For queries, check out: Human Incubator at +63-32-256-2904 or +639088601619 or check our site: https://humedit.ph/