Jhianne Mae M.

Albag
12-ABM A

Practical Research II
1. What are the risks of being an accountant?
Risks in Accounting & Auditing Firms
By: John Freedman
Risks in accounting and audit firms are most often described by the audit risk model. This model describes
how the responsibilities of management and auditors combine to determine the risk of the auditor proclaiming
the financial statements are free of material misstatement when that is not the case. Understanding the
components of the audit risk model can help you understand how your auditor determines the extent of testing
that she performs at your company.
Inherent Risk
Inherent risk is the risk that, without considering internal controls, an account is materially misstated due to
fraud or error. Inherent risk is affected by events external and internal to the company. For example, a tough
economy, the availability of financing or a new competitor all increase inherent risk due to factors outside the
company's control. The competency of the company's accounting staff is an inherent risk factor that is in the
company's control. If the company has complex accounting issues, but accounting staff do not have the
expertise and experience needed to account for these issues correctly, then the risk of misstatement
increases greatly.
Control Risk
Control risk is the chance that a misstatement in the company's accounting records would not be prevented
or detected in a timely enough manner by the company's internal control system to be corrected before the
end of the accounting period. Keeping control risk at an acceptably low level is the responsibility of
management. The combination of control risk and inherent risk is sometimes called the risk of material
misstatement. The risk of material misstatement is the portion of audit risk that is not the responsibility of the
auditor.
Detection Risk
Detection risk is the risk that the audit procedures conducted by the auditor will not detect material
misstatements in the financial statements. Detection risk is the portion of audit risk that is the responsibility
of the auditor. Auditors can lower detection risk by increasing the amount of audit procedures. This is known
an increasing the extent of testing. In addition, auditors can lower detection risk by tolerating less
misstatement. For example, auditors may determine that errors less than $5,000 are immaterial to the
financial statements. However, if the audit determines that detection risk needs to be lowered further, he may
reduce materiality to $3,000. In that case, management would need to adjust the financial statements for any
errors of $3,000 or greater.
Audit Risk
Audit risk is the chance that the auditor will issue a clean audit opinion, stating that the financial statements
are free of material misstatement, when, in fact, they are not. Audit risk is a combination of inherent risk,
control risk and detection risk and the combination of the four types of risk are known as the audit risk model.
This model has an important implication for auditors. Because auditors can only control detection risk,
because inherent risk and control risk are the responsibilities of management, the audit risk models shows
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12-ABM A
that as an auditor wishes to keep audit risk low, his only recourse is to reduce detection risk by increasing
audit procedures or reducing tolerable misstatement.
Reference: http://smallbusiness.chron.com/risks-accounting-auditing-firms-67385.html

5 Accounting Mistakes That Put Your Business At Risk

By: Bill Gerber

As an entrepreneur or small business owner, you face a number of risks every day: Market, product, client,
execution, growth and security challenges are all constant companions when building a business. It only
takes a few significant errors to set growth back for months or even end your business completely.
Bookkeeping and accounting lapses can also hinder your success. Here are five accounting mistakes that
put your business at risk and how to avoid them.
1. Trying to Do Everything Yourself
You've learned to rely on yourself to get things done. In the early days, everything was on your shoulders, so
you took on all tasks and duties. Now that you have a stable business and are generating good revenue,
your independence can hurt you.
Alternatively, you may be continuing to do accounting tasks in an effort to save money or because you think
you are staying on top of things. Both these scenarios mean you are more prone to making mistakes and
you are pulled away from your main mission: growing revenue and profits. Growing businesses face growing
risks and liabilities, meaning the accuracy and integrity of their financial data is even more important to the
health of their business.
2. Avoiding SaaS Cloud Solutions
Are you still running everything on Microsoft Excel? It's powerful software, and it has served you well for
many years. But cloud-based accounting programs typically use the common double-entry approach that
helps avoid errors and provides more accurate reports. Whether you simply move to current technologies
such as QuickBooks Online or any of the hundreds of cloud-based third party accounting applications tackling
everything from time tracking to expense management or make a complete move to outsourced bookkeeping
services that operate entirely in the cloud, you need to realize that there are better options than pencil and
paper (or Excel).
3. Not Investing in Quality Bookkeeping Services
When building a business, it's as important to keep costs down as it is to grow revenue. But when you employ
professional accounting and bookkeeping services, it can hurt you if you insist on using the cheapest provider.
If you make the decision on what accounting provider to use based solely on price, you invite a greater
likelihood of mistakes, something you were trying to avoid by hiring professionals in the first place.
Keep in mind that not all bookkeepers and controllers are created equal. There is a tremendous difference
between a part-time, self-taught QuickBooks data entry person and complete outsourced bookkeeping
services with teams of professionals managing hundreds or thousands of clients like you.
4. Not Admitting You Don't Understand Bookkeeping Jargon
If you look at reports and do not understand them, they are useless, even if the data is perfect and complete.
Your bookkeeping team is there to manage your data and keep you educated and informed. Even if you
Jhianne Mae M. Albag
12-ABM A
know the basics, you don't have time to learn every minute tax and accounting concept driving your
bookkeeping and analysis. Get the data you need in simple terms you understand so you can get back to
growing your business.
5. Not Staying Ahead of Receivables
You get busy. There's never enough time in the day. So when a client pays their invoice, you happily deposit
the money and promptly forget to mark the invoice as paid so your receivables are accurate. You think, "Oh,
I'll do it later." Days blend into weeks, and eventually at tax time your controller services firm is left with a
tangled mess where revenues don't match receivables. You waste more time and money trying to straighten
it out. Even worse, you can't separate out what still needs to be paid, leaving you at potential risk for critical
cash flow issues.
Reference: https://www.accountingdepartment.com/blog/5-accounting-mistakes-business-at-risk

2. Is accountancy an in demand job in the Philippines?

Career opportunities continue to knock in PH
By:.Annelle Tayao-Juego

When it comes to career opportunities and salaries in sectors such as accounting, finance, banking, human
resources and IT, there will be “nothing but growth” for the Philippines in the coming year, says a recent
survey by an international recruitment company.
It also contains predictions for 2018 concerning salary movements and employment opportunities for middle
to senior management positions in four specific sectors: accounting and finance, banking and financial
services, human resources, and information technology.
The report says that for accounting and finance, the growing number of multinational companies setting up
operations here in the country will generate a high demand for multiple-skilled candidates who have the ability
to take on additional business strategy and analytics responsibilities, as well as those with experience with
transactional activities. For those moving companies under this field, the survey forecasts a pay increase of
20 to 30 percent.
Under banking and financial services, the 2017 survey found that this sector expanded because of the influx
of new banks and financial startups—which also led to new regulations, such as a new international finance
reporting standard and a credit bureau for the collation of banking credit data in retail banking. New capital
and liquidity rules were also applied across the banking and insurance industries.
Reference: business.inquirer.net

3. How much is the average salary of an accountant in the

Philippines?
Accountant Salary (Philippines)
An Accountant earns an average salary of PHP 292,416 per year. People in this job generally don't have
more than 10 years' experience. The skills that increase pay for this job the most are Accounting, Tax
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12-ABM A
Compliance, and SAP Financial Accounting and Controlling (SAP FICO). For the first five to ten years in this
position, salary increases steeply, but any additional experience does not have a big effect on pay.
Pay by Experience for an Accountant has a positive trend. An entry-level Accountant with less than 5 years
of experience can expect to earn an average total compensation of PHP 267,000 based on 793 salaries
provided by anonymous users. Average total compensation includes tips, bonus, and overtime pay. An
Accountant with mid-career experience which includes employees with 5 to 10 years of experience can
expect to earn an average total compensation of PHP 403,000 based on 285 salaries. An experienced
Accountant which includes employees with 10 to 20 years of experience can expect to earn an average total
compensation of PHP 417,000 based on 111 salaries. An Accountant with late-career experience which
includes employees with greater than 20 years of experience can expect to earn an average total
compensation of PHP 432,000 based on 32 salaries.
Experience Affects Accountant Salaries
Late-Career ▲43%
Experienced ▲38%
Mid-Career ▲33%
Entry-Level ▼12%
National Average: PHP 302,000
Reference: https://www.payscale.com/research/PH/Job=Accountant/Salary

4. What is the difference between public accounting and private

accounting?
Public vs. Private Accounting: Your Guide to Choosing a Side
By: Ashley Brooks
Public vs. private accounting: The full breakdown
To put it simply, public accountants work with a range of clients to prepare financial documents that an
individual or corporation is required to disclose to the public.
Private accountants, on the other hand, deal with the financial information of the specific company they work
for, usually preparing or analyzing reports for an internal manager.
This simple difference makes a big impact in what your life as an accountant could look like. Take a look at
these factors to see which accounting path is right for you.
Reference: https://www.rasmussen.edu/degrees/business/blog/public-versus-private-accounting/