The Professional Practice of Accounting

THE PROFESSIONAL PRACTICE OF ACCOUNTING THE ACCOUNTING PROFESSION AND ITS CHARACTERISTICS In our society, professions are generally recognized as elite occupational classifications. However, there are no universally established standards as to what should make up a profession. Experts identified five major characteristics of an ideal profession which the CPA profession satisfies. These are: A. Systematic body of theory – the underlying theory of the public accounting profession consists of accounting theory (generally accepted accounting principles and practices) and auditing theory (a science of validation). Knowledge in systematic theory can be achieved best through formal college level education in an academic environment. B. Professional authority – clients who use the service of the professional do not really understand their own needs. Thus, the professional determines what is good or bad for the client and the client accedes to this professional judgment. The basis for the CPA’s authority is his expertise in the systematic theory of accounting and auditing. C. Community sanction – admission to the public accounting profession is controlled. To become a CPA, a candidate must satisfy government, educational and experience requirements and pass the CPA licensure board examinations. The PRC through the BOA controls this licensing system. Although CPAs are responsible to the community for their actions, it is generally accepted that a professional’s performance should be judged based on standards established by the profession itself. D. Regulations code – the powers and privileges granted to the public accounting profession by the community effectively constitute a monopoly. To prevent abuse of this monopoly and to discipline its members, the Rules of Professional Conduct or Code of Ethics have been promulgated and made legally binding through the Accountancy Act. E. A culture – the CPA is member of a time honored profession and the status of the profession and the responsibilities that accompany this status affect his behavior in the society. Accounting has developed a professional culture as evidenced by such factors as the formal norms of the Code of Ethics, the informal rules that guide relationships among practitioners and the traditions and myths that have arisen concerning the CPA examination. Further, the Code of Ethics for Professional Accountants in the Philippines identifies three distinguishing characteristics of a profession, namely: A. Mastery of a particular intellectual skill, acquired by training and education. B. Adherence by its members to a common code of values and conduct established by its administrating body, including maintaining an outlook which is essentially objective. C. Acceptance of a duty to society as a whole, usually in return for restrictions in use of a title or in the granting of a qualification. Regulation of the Accounting Profession The accounting profession is regulated by the following: A. RA 9298 and its IRR (implementing rules and regulations). Republic Act 9298, otherwise known as the Philippine Accountancy Act of 2004 is the act regulating the practice of accountancy in the Philippines which was signed into law on May 13, 2004 repealing Presidential Decree 692, the Revised Accountancy Law. The act provides and governs:

The standardization and regulation of accounting education.  The examination of registration of certified public accountants.  The supervision, control, and regulation of the practice of accountancy in the Philippines. B. Financial reporting standards and engagement standards established by recognized standards setting bodies. C. Adoption of Code of Ethics for CPAs in the Philippines. D. Self-regulation by firms through a system of quality control. E. Sanctions or penalties against violators of laws, rules and regulations affecting the accounting profession. Note: Any person who shall violate any of the provisions of RA 9298 or its IRR as promulgated by the BOA subject to the approval of the PRC, shall, upon conviction, be punished by a fine of not less P50,000 or by imprisonment for a period not exceeding 2 years or both. 

`

SCOPE OF ACCOUNTING PRACTICE The practice of accountancy includes, but is not limited to, the following: A. Practice of public accountancy – constitutes a person (be it his individual capacity or as a staff member in an accounting or auditing firm) holding out himself as one skilled in the knowledge, science and practice of accounting and as a qualified person to render professional services as a certified public accountant or offering or rendering, or both to more than one client on a fee basis or otherwise, services as such as:  The audit or verification of financial transaction and accounting records.  The preparation, signing or certification for clients of reports of audit, balance sheet, and other financial, accounting and related schedules, exhibits, statement of reports which are to be used for publication or for credit purposes, or to be filed with a court or government agency, or to be used for any other purposes.  The design, installation, and revision of accounting system and controls.  The preparation of income tax returns when related to accounting procedures.  The representation of clients before government agencies on tax and other matters relating to accounting  The rendition of professional assistance in matters relating to accounting procedures and the recording and presentation of financial facts or data. B. Practice in commerce and industry – constitutes in a person involved in decision making requiring professional knowledge in the science of accounting, as well as the accounting aspects of finance and taxation, or when he represents his/her employer before government agencies on tax and other matters related to accounting or when such employment or position requires that the holder thereof must be a certified public accountant. In this connection, for any business or company in the private sector which has a paid up capital of at least P5,000,000 and/or an annual revenue of at least P10,000,000, duly registered CPAs should occupy any position which requires supervising the recording of financial transactions, preparation of financial statements, coordinating with the external auditors for the audit of such financial statements and other related functions. This provision shall apply only to persons to be employed after the effectivity of Page|1 of 21

the IRR. Further, this provision shall not result to deprivation of the employment of incumbents to the position. C. Practice in education or academe – constitutes in a person in an educational institution which involve teaching of accounting, auditing, management advisory services, finance, business law, taxation and other technically related subject. Members of the Integrated Bar of the Philippines may be allowed to teach business law and taxation subjects. Moreover, the position of either the dean or the department chairman or its equivalent that supervises the Bachelors of Science in Accountancy program of an educational institution is deemed to be in practice of accountancy in the academe or education and therefore must be occupied only by a duly registered CPA. D. Practice in government – constitutes in a person who holds, or is appointed to, a position in an accounting professional group in government or in an governmentowned or controlled corporation, including those performing proprietary functions, where decision making requires professional knowledge in the science of accounting or where a civil service eligibility as a certified public accountant is a prerequisite. A person who passes the CPA board licensure examination need not take the Civil Service examination given by the Civil Service Commission pursuant to CSC Office Memorandum 4, Series of 2006. CPAs are not prohibited to practice in more than one sector or engage in two or more types of services at the same time, provided that there is no impairment in the integrity, objectivity or independence of the CPA. ORGANIZATIONS AFFECTING THE ACCOUNTING PROFESSION Several organizations affect the practice of accounting. These organizations include government agencies such as the PRC, PRC-BOA, COA, SEC, BSP, BIR and IC, standard-setting bodies such as the FRSC and the AASC, professional organizations such as PICPA and various international organizations such as the IOSCO, IASB, IAASB and the IFAC. GOVERNMENT AGENCIES



PROFESSIONAL REGULATION COMMISSION

Established on June 22, 1973, the Professional Regulation Commission (PRC) is a three-man commission attached to the Office of the President that: A. Investigates cases against erring examinees and professionals. Its decisions have the force and effect of the decisions of a court of law with the same level of authority as a Regional Trial Court. B. Formulates rules and policies on professional regulation. When published in

an official gazette, these rules have the force and effect of law. C. Administers, implements and enforces the regulatory policies of the National Government with respect to the regulation and licensing of the various professions under its jurisdiction including the maintenance of professional standards and ethics and the enforcement of the rules and regulations relative thereto. The Commission has the overall jurisdiction over the regulatory boards in the Philippines among which is the Board of Accountancy. It derives its authority from RA 8981 or the PRC Modernization Act of 2000.



PROFESSIONAL REGULATORY BOARD OF ACCOUNTANCY

The Professional Regulatory Board of Accountancy (PRC-BOA) is the official government agency empowered to enforce RA 9298. The body is under the administrative supervision of the Professional Regulation Commission. Composition of the Board The Board shall be composed of a Chairman and 6 members to be appointed by the President of the Philippines. The 4 sectors in the practice of accountancy shall as much as possible be equitably represented in the Board. The Board shall elect a Vice-chairman from among its members for a term of 1 year. The Chairman shall preside in all meetings of the Board and in the event of a vacancy in the office of the Chairman, the Vice-chairman shall assume such duties and responsibilities until such time as a chairman is appointed. Nomination and Appointment Process A.

The Accredited National Professional Organization (APO) of CPAs, currently the PICPA, shall submit its nominations, 5 nominees for each position, with complete documentation to the Commission not later than 60 days prior to the expiry of the term of an incumbent chairman or member. There should be adequate documentation to show the qualification and primary field of professional activity of the nominee to enable the Commission to determine the competence of the nominee and the sector where he/she belongs. If the APO fails to submit its own nominee(s) to the Commission with the required documentations within the period provided herein, the Commission in consultation with the Board shall submit to the President a list of 3 nominees for each vacant position. B. The Commission in consultation with the Board shall select 3 nominees from those recommended by the APO, rank them and submit such list to the President for consideration. C. The President of the Philippines shall appoint the members of the Board from Page|2 of 21

the list of recommendees submitted by the Commission. Qualification of the Members of the Board A member of the Board shall, at the time of his appointment, possess the following qualifications: A. Must be a natural born citizen and a resident of the Philippines. B. Must be a duly registered CPA with at least 10 years of work experience in any scope of practice of accountancy. He shall be nominated to represent a sector from which he has considerable and meaningful professional experience. C. Must be of good moral character and must not have been convicted of crimes involving moral turpitude. D. Must not have any pecuniary interest, directly or indirectly, in any school, college, university or institution conferring an academic degree necessary for admission to the practice of accountancy or where review classes in preparation for the licensure examination are being offered or conducted, nor shall he be a member of the faculty or administration thereof at the time of his appointment to the Board. E. Must not be a Director or Officer of the APO at the time of his appointment. If the Chairman or any member of the Board is still in active practice of public accountancy or connected with any office in commerce and industry or in the government, he must go on leave during the pendency of any case involving himself, his firm, partnership, company or government office or inhibit himself completely in all the stages of the proceedings thereof. Term of Office of the Members of the Board The Chairman and members of the Board shall hold office for a term of 3 years. Any vacancy occurring within the term of a member shall be filled up for the unexpired portion of the term only. No person who has served 2 successive complete terms as Chairman or member shall be eligible for reappointment as Chairman or member until the lapse of 1 year. Appointment to fill up an unexpired term is not to be considered as a complete term. However, no person shall serve in the Board for more than 12 years. Powers and Functions of the Board The Board shall act as a collegial body and shall exercise the following specific powers, functions and responsibilities: A. To prescribe and adopt the rules and regulations necessary for carrying out the provisions of RA 9298. B. To supervise the registration, licensure and practice of accountancy in the Philippines. C. To administer oaths in connection with the administration of RA 9298. D. To issue, suspend, revoke, or reinstate the Certificate of Registration for the practice of the accountancy profession. E. To adopt an official seal of the Board.

F.

To prescribe and adopt a Code of Ethics for the practice of accountancy. G. To monitor the conditions affecting the practice of accountancy and adopt such measures, including promulgation of accounting and auditing standards, rules and regulations and best practices as may be deemed proper for the enhancement and maintenance of high professional, ethical, accounting and auditing standards. In this regard, domestic accounting and auditing standards, rules and regulations shall include the international accounting and auditing standards and generally accepted best practices. H. To conduct an oversight into the quality of audits of financial statements through a review of the quality control measures instituted by auditors in order to ensure compliance with the accounting and auditing standards and practices. I. To investigate violations of RA 9298 and the rules and regulations promulgated hereunder and for this purpose, to issue summons, subpoena and subpoena ad testificandum and subpoena duces tecum to violators or witness thereof and compel their attendance to such investigation or hearings and the production of documents in connection therewith. In this regard, the Board upon approval of the Commission may, subject to such rules and regulations that may be promulgated to implement this section, delegate the fact-finding aspect of such investigations to the APO of CPAs and the Board and the Commission may adopt their findings of fact as it may deem fit. J. The Board may, motu propio in its discretion, make such investigations as it deems necessary to determine whether any person has violated any provisions of RA 9298 any accounting or auditing standard or rules duly promulgated by the Board as part of the rules governing the practice of accountancy. K. To issue a cease or desist order to any person, association, partnership or corporation engaged in violation of any provision of RA 9298, any accounting or auditing standards or rules duly promulgated by the Board as part of the rules governing the practice of accountancy in the Philippines. L. To prepare, adopt, issue or amend the syllabi of the subjects for examinations in consultation with the academe, determine and prepare questions for the licensure examination which shall strictly be within the scope of the syllabi of the subjects for examinations as well as administer, correct and release the results of the licensure examinations. In this regard the Board may, upon prior approval by the Commission, engage the services of expert test writers, who shall

propose test questions for the CPA licensure examinations. Note that the Board does not delegate its power and function to determine and prepare test questions for the CPA licensure examinations. Moreover, the Board and the Commission shall institute adequate controls over the processing and safekeeping of such test questions to ensure the full integrity of the CPA licensure examinations. M. To punish for contempt of the Board, both direct and indirect, in accordance with the pertinent provisions of and penalties prescribed by the Rules of Court. N. To ensure, in coordination with the Commission on Higher Education (CHED) or other authorized government offices, that all higher educational instruction and offering of accountancy, including accounting review centers and CPD providers offering accounting seminars, comply with the policies, standards and requirements of the course prescribed by CHED or other authorized government offices or CPD Council as the case may be in the areas of curriculum, faculty, library and facilities. In this regard, the Board and the Commission may enter into a MOA with the CHED for the orderly implementation of this provision. O. To exercise such other powers as may be provided by law as well as those which may be implied from, or which are necessary or incidental to the carrying out of, the express powers granted to the Board to achieve the objectives and purposes of RA No. 9298. The policies, resolution, rules and regulations, issued or promulgated by the Board shall be subject to review and approval of the Commission. However, the Board’s decisions, resolutions or orders rendered in administrative cases shall be subject to review only if on appeal. In carrying out its functions, several councils have been created to assist the Board namely, the Education Technical Council (ETC), Quality Review Committee (QRC) and the PRC Continuing Professional Development (CPD) Council. Grounds for Members

Suspension

or

Removal

of

The President of the Philippines, upon the recommendation of the Commission, after giving the concerned member an opportunity to defend himself in a proper administrative investigation to be conducted by the Commission, may suspend or remove any member on the following grounds: A. Neglect of duty or incompetence. B. Violation or tolerance of any violation of RA 9298 and its implementing rules and regulations or the CPA’s Code of Ethics and the technical and professional standards of practice for CPAs. C. Final judgment of crimes involving moral turpitude.

D. Manipulation or rigging of the CPA’s licensure examination results, disclosure of secret and confidential information in the examination questions prior to the conduct of the said examination or tampering of grades. The Commission in the conduct of the investigation shall be guided by the provisions of Republic Act 8981, its implementing rules and regulations and their respective amendments.



EDUCATION TECHNICAL COUNCIL

The Commission upon the recommendation of the Board shall, within 60 days from the effectivity of the IRR to RA 9298, create an Education Technical Council (ETC) to assist the Board in carrying out its powers and functions provided in RA 9298 and to further assist the Board in the attainment of the objective of continuously upgrading the accountancy education in the Philippines to make the Filipino CPAs globally competitive. Composition of the Council and Term of Office of Members The ETC shall be composed of 7 members with a Chairman, who had been or presently a senior accounting practitioner in the academe or education and 6 representatives from the following: Board of Accountancy 1 APO of CPAs (Philippine Institute of CPAs) Academe 2 Commerce and Industry 1 Government 1 Public Practice 1 The APO shall equitably distribute the representation of the academe or education sector among the private and public schools offering the degree of Bachelors of Science in Accountancy. The Chairman and members of the ETC shall be appointed by the Commission upon the recommendation of the Board in coordination with the APO. The ETC shall make an annual review of the composition of the council and may recommend to the Board and the Commission a more suitable representation thereto as it may deem fit. The Chairman and the members of the ETC shall have a term of 3 years renewable for another term. Powers and Functions of the Council The ETC shall have the following functions: A. Determine a minimum standard curriculum for the study of accountancy to be implemented in all schools offering accountancy as an undergraduate degree. B. Establish teaching standards, including the qualifications of members of the faculty of schools and colleges of accountancy. C. Monitor the progress of the program on the study of accountancy and undertaking measures for the attainment of a high quality of accountancy education in the country.

Page|4 of 21

D. Evaluate periodically the performance of educational institutions offering accountancy education. The ETC shall render a report of its findings and recommendations on the foregoing activities to the Board. The Board shall review such report and if found to be meritorious, it shall forward the same to the Commission which shall make proper representation with the CHED for its appropriate consideration.



QUALITY REVIEW COMMITTEE

The Board, upon approval of the Commission, created a Quality Review Committee (QRC) to conduct an oversight into the quality of audit of financial statements through a review of the quality control measures instituted by individual CPAs, firms or partnerships. These reviews are done in order to ensure compliance with accounting and auditing standards and practices. All accredited accounting firms conducting audits in accordance with the PSAs will undergo the quality control review of the QRC at least once every 3 years. The review of the committee is also a requirement for initial accreditation and renewal of accreditation. Composition of the Committee and Term of Office The QRC shall be composed of 7 members with a chairman, who had been or presently a senior practitioner in public accountancy and 6 representatives from the following: Board of Accountancy 1 APO of CPAs (Philippine Institute of CPAs) Academe 1 Commerce and Industry 1 Government 1 Public Practice 2 The Chairman and members of the QRC shall be appointed by the Commission upon the recommendation of the Board in coordination with the APO. The QRC shall make an annual review of the composition of the council and may recommend to the Board and the Commission a more suitable representation thereto as it may deem fit. The Chairman and the members of the QRC shall have a term of 3 years renewable for another term. Powers and Functions of the Committee The QRC shall have the following powers and functions: A. Conduct quality review on applicants for registration to practice public accountancy and render a report which shall be attached to the application for registration. B. Recommend to the Board the revocation of the Certificate of Registration and the professional identification card of an individual CPA, including any of his staff members, firms, including the sole proprietors and any of his staff members and partnerships of CPAs including the partners and staff members thereof who has not observed the quality control measures and who has not complied with

the standards of quality prescribed for the practice of public accountancy. In the event that the QRC cannot accomplish the aforesaid functions for any reason whatsoever, the Board or its duly authorized representatives may conduct the required quality review.



QUALITY DEPARTMENT

ASSURANCE

REVIEW

In the exercise of its power to conduct an oversight into the quality of audits, the PRC-BOA, through BOA Resolution 23, Series of 2007, organized the Quality Assurance Review Department (QARD) of the APO to conduct an independent study, appraisal or review of the quality of audit of financial statements through a review of through a review of the quality control measures instituted by member-CPA practitioners engaged in the practice of public accountancy to ascertain compliance with prescribed professional, ethical and technical standards of public practice. Executive Committee of the Department The BOA shall create an Executive Committee which shall have full power and authority to set policies and to supervise the operation of QARD. The Committee shall be composed of 2 members from the Board and 1 from the APO, as appointed by their respective governing bodies. The appointee shall possess high degree of competence and objectivity. The following are the duties and responsibilities of the Executive Committee: A. To set policies that will ensure effective implementation of the quality assurance review program. B. To monitor the quality of audits through its QARD. C. To maintain independence of the QARD. D. To hire the Chief Inspector and Chief of Administration of QARD including other personnel thereof. E. To recommend to the Board the Quality Assurance Review (QAR) plan for the year, which may be approved by the Board without referral to the Commission. F. To implement the approved QAR plan for the year through the QARD. G. To obtain independent technical advice on the subject of quality assurance when needed and appropriate. H. To receive and evaluate the reports and recommendations of the Chief Inspector, and to resolve whether or not to issue a Certificate of Quality Assurance Compliance to the member-CPA practitioner. I. Submit regularly to the Board a list of erring member-CPA practitioners including the findings and actions taken by the QARD. The Committee shall likewise regularly submit to the Board policies that it adopted and implementing issues that it settled for the oversight review of the Board. It shall also report to the Board any

form of interference by the APO on its policy making or on QARD’s operation. J. To issue through the Board, annual reports for the benefit of the general public. The Chairman of the Committee shall be from the Board’s appointees. The Chairman and the Members shall have a term of 3 years unless replaced earlier by the Board or APO. Personnel of the Department The QARD’s personnel shall be composed of a Head (the Chief Inspector), the Chief of Administration, Assistants to the Chiefs, Staff Auditors and such other employees that may be necessary to carry out effectively the functions of the QARD. They shall be appointed by the Executive Committee and shall be engaged under a contract of service. A. Chief Inspector – to be eligible for appointment as Chief Inspector of the QARD, a person must have the following qualifications:  Must have reached the level of senior manager or partner of an accounting firm that has among its clients publicly listed companies.  Must be independent from the practitioners or firms that will be covered by the QAR Program.  Must have at least 10 year experience in audit.  Must be of good moral character and has a current license as a CPA.  Must not have been found guilty of violating any professional, ethical and regulatory auditing standards.  Must have good oral and written communication skills, being especially adept at report writing. The duties and responsibilities of the Chief Inspector of the QARD follow:  Exercises administrative supervision and control over the QARD and over its personnel as its head.  Assists the Executive Committee in determining quality assurance policies.  Prepares the QAR review plan for each year for submission to the Executive Committee for consideration.  Selects the CPA practitioners to be reviewed for the year, in accordance with the annual plan.  Approves the specific inspection plan for each practitioner selected for review, which must set forth the nature, extent and timing of such work.  Reviews and approves the individual inspection reports.  Has the final authority to approve all inspection reports.  Assists the Executive Committee to prepare its annual report.  Recommends to the Executive Committee the appointment and

termination from service of subordinate QARD personnel as well as appropriate disciplinary action to be taken.  Provides for technical training of inspection personnel.  Performs such duties and functions as the Executive Committee may assign. B. Chief of Administration – to be eligible for appointment as Chief of Administration, a person must have the following qualifications:  Must have appropriate educational qualification.  Must have at least 5 years work experience in human resource management at supervisory capacity.  Must be independent from the practitioners or firms that will be covered by the QAR Program.  Must be of good moral character and has a current license as a CPA.  Must not have been found guilty of violating any professional, ethical and regulatory auditing standards.  Must have good oral and written communication skills, being especially adept at report writing. The Chief of Administration is responsible for the non-technical aspect of the QAR program. The main duties of the Chief of Administration include:  Serves as the administrative officer of the QARD.  Supervises the registration of CPA Practitioners in their respective categories.  Supervises the collection of registration fees.  Supervises the preparation of the regular financial reports of the QARD.  Supervises the administrative aspect of training of QARD personnel.  Supervises communications to all practitioners.  Performs such functions as may from time to time be assigned by the Chief Inspector. C. Staff auditors – the APO, through its Executive Committee, shall enter into contracts of service with auditors who shall be responsible for the field work of a QAR assignment. They shall be appointed by the Executive Committee upon the recommendation of the Chief Inspector. They shall have the following qualifications:  Must have at least 5 year experience in the statutory or regulatory audit of companies, or teaching financial accounting and practical auditing in a CHEDPage|6 of 21

 





recognized educational institution, or in the corporate financial reporting or internal auditing function. Must be of good moral character and has a current license as a CPA. Must not have been terminated from employment as an auditor due to incompetence or below average rating. Must not have been found guilty of violating any professional, ethical and regulatory auditing standards. Must have good oral and written communication skills, being especially adept at report writing.

Coverage of the QAR Program The QAR Program covers all CPAs in the public accounting sector, whether as an individual practitioner, a firm or a partnership. Enrollment in the QAR Program is a pre-requisite for initial as well as renewal of accreditation as a CPA in public practice by the Board of Accountancy. Enrolled CPA practitioners shall likewise maintain compliance and continuous registration with the QAR Program otherwise, it shall be a ground for the imposition of fines or the suspension or revocation of the accreditation of the Board. CPA practitioners should be registered in accordance with the following risk categories: A. Category A – registration for CPA practitioners handling clients that use the full IFRSs or their Philippine equivalents. These would cover CPA practitioners auditing public-interest entities (listed and not-listed but with public accountability). Category A is divided into 6 subcategories. Cat.

Number of Clients

List ed

Risk

Frequency of QAR

A (1)

50 or more

Yes

High

Every year

A (2)

26 to 49

Yes

High

Every year

A (3)

1 to 25

Yes

High

Every year

A (4)

50 or more

No

Less

Every 2 years

A (5)

26 to 49

No

Less

A (6)

1 to 25

No

Less

B. Category B – registration for CPA practitioners handling clients that use the IFRS or their Philippine equivalents for Small and Medium-sized enterprises. Category B is divided into 4 subcategories. Cat. B (1)

Number of Clients More than 200

List ed No

Risk

Frequency of QAR

Minima l

Every 3 years

101 to 200

No

B (3)

51 to 100

No

B (4)

1 to 50

No

Minima l

Every 3 years

Minima l Minima l

Every 3 years Every 3 years

The CPA practitioner’s registration category should be stated in the certificate of accreditation. In connection with the registration of CPA practitioners with the QAR program, the following rules must be observed: A. A CPA practitioner can only register in one category (highest sub-category) division. B. CPA practitioner registered under Category B cannot audit companies that use the full IFRS or their Philippine equivalent, unless he upgrades his registration to Category A. C. A CPA practitioner registered under any of the sub-categories of Category A must upgrade his registration if he exceeds the number of clients under the specific subcategory under which he is registered. D. A CPA practitioner registered under any of the sub-categories of Category B must upgrade his registration if he exceeds the number of audit reports under the specific sub-category under which he is registered. E. All application for initial as well as renewal of annual registration must include information as to the number of clients classified as to public-interest entities using full IFRS and small and mediumsized entities using IFRS for SMEs under oath to determine the public practitioner’s appropriate category. The application should be signed by the individual CPA, or the managing director or head of the firm of partnership provided that the signatory shall be liable administratively or criminally for any misrepresentations made under oath.



Every 2 years Every 2 years

B (2)

PRC CONTINUING DEVELOPMENT COUNCIL

PROFESSIONAL

Continuing professional development (CPD) refers to the inculcation, assimilation and acquisition of knowledge, skills, proficiency and ethical and moral values, after the initial registration of a professional that raise and enhance the professional’s technical skills and competence. The CPD program has these objectives: A. To provide and ensure the continuous education of a registered professional with the latest trends in the profession brought about by modernization and scientific and technological advancements. B. To raise and maintain the professional’s capability for delivering professional services. C. To attain and maintain the highest standards and quality in the practice of his profession. D. To make the professional globally competitive; and

E.

To promote the general welfare of the public. The CPD program consists of properly planned and structured activities, the implementation of which requires the participation of a determinant group of professionals to meet the requirements of voluntarily maintaining and improving the professional standards and ethics of the profession. Voluntary compliance with the CPD program is an effective and credible means of ensuring competence, integrity and global competitiveness of professionals in order to allow them to continue the practice of their profession. CPD was previously known as CPE or continuing professional education. Composition of the Council The Board, upon approval by the PRC, shall create a PRC CPD Council within 30 days from the effectivity of IRR to RA 9298, which shall assist the Board in implementing its CPD program. The PRC CPD Council shall be composed of a Chairperson and two members. The Chairperson of CPD Council shall be chosen from among the members of the Board by the members themselves. The first member shall be the president or, in his absence or incapacity, any officer chosen by the Board of Directors of PICPA. The second member shall be the president or, in his absence or incapacity, any officer of the organization of deans or department heads of schools, colleges or universities offering the degree requiring licensure examination. In the absence of such organization, the second member shall be chosen and appointed by the PRC Chairperson from at least three recommendees of the Board concerned. Said recommendees shall be well-known academicians. The Chairperson of the PRC shall designate or appoint an official with a rank not lower than Division Chief who shall act as the Secretary of the PRC CPD Council. The designated official may participate in the deliberations of the PRC CPD Council but shall not vote. The Secretary shall exercise general supervision and control over the PRC CPD Council Staff, who shall be selected by the Chairperson of the PRC from among the existing personnel of the PRC. Term of Office of the Members of the Council The term of office of the Chairperson of the PRC CPD Council shall be co-terminus with his incumbency in the PRC. The first member shall have a term of office co-terminus with his incumbency as officer of the PICPA while the second member shall have a term of office coterminus with his incumbency as officer of the organization of deans or heads of departments. The chairperson, first member and second member shall continue to function as such in the PRC CPD Council until the appointment or election of their respective successors in the Board, PICPA or organization. Powers and Functions of the Council

The PRC CPD Council shall, upon a majority vote, exercise powers and functions which shall include but shall not be limited to the following: A. Accept, evaluate and approve applications for accreditation of CPD providers. B. Accept, evaluate and approve applications for accreditation of CPD programs, activities or sources as to their relevance to the profession and determine the number of CPD credit units to be earned on the basis of the contents of the program, activity or source submitted by the CPD providers. C. Accept, evaluate and approve applications for exemptions from CPD requirements. D. Monitor the implementation by the CPD providers of their programs, activities or sources. E. Assess periodically and upgrade criteria for accreditation of CPD providers and CPD programs, activities or sources. F. Perform such other related functions that may be incidental to implementation of the CPD programs or policies. The PRC CPD Council shall hold regular meetings once a month on dates to be fixed by said Council. Special meetings may be called by a Chairperson or upon written request of at least a member of the PRC CPD Council. The PRC CPD Council, if the need arises, may delegate to the PICPA the processing of the application, keeping of all records for CPD providers and their respective programs and credit units earned by each CPA who avail of the CPD programs and related functions. For this purpose, the PICPA may create a counterpart CPD Council to be known as PICPA CPD Council and may ask for reimbursement of reasonable processing fees directly from the applicants apart from the accreditation fee that the such applicants pay directly to the Commission. The PICPA CPD Council shall keep separate books of accounts of its expenses and amounts collected from the applicants and make a monthly report thereof to the Commission through the Board. Any excess collection shall be used exclusively as working capital of the PICPA for the CPD activities. Functions of Chairperson

the

PRC

CPD

Council

The PRC CPD Council Chairperson shall have the following functions: A. To preside over the meetings of the PRC CPD Council. B. To direct or supervise the activities of the PRC CPD Council. C. To submit minutes of regular and special meetings within 30 days from date of said meetings. D. To submit annual reports. E. To issue certificate of registration to CPD providers found by the Council to be qualified as well as certificate of accreditation of programs, activities and sources. CPD Requirements for CPAs Page|8 of 21

As per BOA Resolution 59, Series of 2012, the total CPD credit units required for BOA accreditation, which shall be valid for three years, of registered accounting professionals shall be 60 credit units for 3 years. Such required CPD units may be earned by the CPA in any of the three years preceding the year of application for accreditation and shall be distributed among 5 thematic areas as follows: Enabling laws, rules and regulations 6 Standards applicable to professional practice 24 Ethical, governance and quality practice 10 Environment of the practice 10 Development of the person as a professional 10 One credit hour of CPD program, activity or source shall be equivalent to one credit unit. Matrix for Sources

CPD

PROGRAMS

Programs,

Activities

or

CREDIT UNITS

SEMINARS or CONVENTION Seminars refer to the gathering of professionals which shall include, among others, workshops, technical lectures or subject matter meetings, nondegree training courses and scientific meetings whereas conventions shall refer to a gathering of professionals which shall include, among others, conferences, symposia or assemblies for round table discussions. Participant

1 CU per hour

Resource speaker

5 CU per hour

Panelist or Reactor

3 CU per hour

Facilitator or Moderator

2 CU per hour

Book or Monograph Single author Two authors Three or more

25 51>100 -50 100 pp pp pp 40 CU 20 CU 30 CU 10 CU 20 CU 30 CU 5 CU 10 CU 20 CU ½ of the CU of authorship category

Editor Article Single author Two authors Three or more

1-3 pp 4 CU 3 CU 2 CU

4-6 pp 6 CU 4 CU 3 CU

>6 pp 8 CU 6 CU 4 CU

Professional journal editor

5 CU per issue

Peer reviewer

2 CU per article

SELF-DIRECTED LEARNING PACKAGE Self-directed learning packages refer to learning which uses course manuals or accredited learning modules. Accredited learning modules include selfinstructional materials or programs which may be in the form of printed manual, audio and video cassette tapes, films, computer-assisted learning (CAL), study kits, learning aids and modules or the use of the information highway. These should include among others clearly defined objectives, adequate content and an evaluation component for each module. Module

10 CU per complete set of module

Technical paper or 10 CU per professional Professional journal or technical article Masteral degree shall refer to a graduate degree article in accountancy, business or related field from a INVENTIONS recognized school, college or university. 10-30 CU per invention Doctoral degree shall refer to a post graduate degree in accountancy, business or related field POSTGRADUATE OR IN-SERVICE TRAINING from a recognized school, college or university.

PREPARATION (Residential and Distance Mode)

Masteral degree

1 CU per academic unit and 30 additional CU upon completion of degree

Postgraduate or in-service training means training or specialization at the post graduate level for a minimum period of one (1) week. ¼ CU per hour at a maximum of 40 CU per training

Doctoral degree

2 CU per academic unit and 45 additional CU upon completion of degree

STUDY OR OBSERVATION 2 CU per day at a maximum of 30 CU per tour

AUTHORSHIP Authorship refers to the ownership of intellectual property which includes technical or professional books, instructional materials and the like. Credits earned must be claimed within one (1) year from the date of publication. Research or Innovative programs or Creative projects

10 CU per output

PROFESSORIAL CHAIR 10 CU per chair per year SUCH OTHER ACTIVITIES, PROGRAMS OR SOURCES TO BE RECOMMENDED BY THE COUNCIL AND APPROVED BY THE COMMISSION Such as meetings of standard– setting bodies for the Accountancy Profession (FRSC and AASC) as researcher, discussant or participant.

5 CU per presentation or 2 CU per meeting Exemption from CPD Requirements A. Permanent Exemption A registered professional shall be permanently exempted from CPE requirements upon reaching the age of 65 years old. To avail of this exemption, the professional must:  Submit an application for exemption which should include the full name, residence address and phone number of applicant, PRC license number and employment history indicating the positions held and the name and address of employers.  Submit an authentic or authenticated copy of birth certificate. If birth certificate is not available, a voter’s ID or driver’s license will do. B. Temporary Exemption A registered professional who is working or practicing his profession or furthering his studies abroad shall be temporarily exempted from compliance with CPD requirement during the period of his stay abroad, provided that he has been out of the country for at least two years immediately prior to the date of renewal. Any professional availing of this temporary exemption must:  Submit an application for temporary exemption, to include the full name, residence, address and phone number of applicant, PRC license number, degree obtained, college or university attended, year graduated and principal area of professional work. If employed: position held, name and address of employer and certificate of employment. If furthering studies abroad: certificate of enrollment from college or university where presently enrolled.  Submit original or authenticated copy of passport, photocopy of inside front cover, page 2, and the page/s containing visa of country, indicating date of arrival/departure. A temporarily exempt registered professional shall be allowed to renew his license without complying with the CPD requirements upon his accomplishment and submission of the necessary papers as previously mentioned and upon payment of the annual registration fee for 3 years for as long as he continues to be out of the country. Sanctions for Failure to Comply with CPD Requirements

Unless otherwise exempted, registered CPAs in the practice of accountancy who have not completed the CPD requirements provided herein shall not be allowed to renew their professional licenses. Those who failed to renew their professional licenses for a period of 5 continuous years from initial registration, or from last renewal date shall be declared delinquent and shall, after due notice, through the website and publication in the newsletters of PICPA or any newspaper of general circulation, be dropped from the roster of CPAs.



COMMISSION ON AUDIT

The Commission on Audit (COA) is the supreme audit institution in the Philippines. It is the highest and final authority in state auditing. Being one of the three Constitutional Commissions along with the Commission on Elections and the Civil Service Commission, its jurisdiction and responsibility is defined by the 1987 Philippine Constitution. The Commission conducts a comprehensive audit that includes financial, compliance and performance audits. It is not the internal auditor of the government rather it is the sole external auditor of all government departments and agencies, including government owned or controlled corporations. Composition of the Commission and Term of Office The Constitution provides that the Commission shall be composed of a Chairman and 2 commissioners, collectively called the “Commission Proper” who shall be natural borncitizens of the Philippines and at the time of their appointment, at least 35 years of age, CPA with not less than 10 years of auditing experience or members of the Philippine Bar who have been engaged in the practice of law for at least 10 years and must not have been candidates for any elective position in the elections immediately preceding their appointment. Further, at no time shall all members of the Commission belong to the same profession. The Chairman and the Commissioners shall be appointed by the President with the consent of the Commission on Appointments for a term of 7 years without reappointment.



SECURITIES AND EXCHANGE COMMISSION

Created in 1936, the Securities and Exchange Commission (SEC) is the government agency that regulates the registration and operation of corporations, partnership and other forms of associations in the Philippines. Its overall objective is to assist in providing investors with reliable information upon which to make investment decisions. In addition, SEC also monitors compliance with the Corporation Code (Batas Pambansa Bilang 68), Securities Regulation Code (RA 8799), Foreign Investments Act (RA 7042) and other related laws, rules and regulations. The Commission has considerable influence in setting generally accepted accounting principles and disclosure requirements for financial statements as a result of its authority to specify reporting requirements considered necessary for Page|10 of 21

fair disclosure to investors. It is represented in standard setting bodies and in the QRC of the PRCBOA. Further, the SEC has power to establish rules for any CPA associated with audited financial statements submitted to the Commission.

E.

The SEC is a member of the International Organization of Securities Commissions (IOSCO). Established in 1987, this international organization regulates the world’s securities and futures markets. IOSCO consists of more than 100 members which are typically the main financial regulator from each country. Collectively, its members represent a substantial proportion of the world’s capital markets.

G.

F.

H.

Composition of the Commission and Term of Office The Commission shall be composed of a Chairperson and 4 commissioners, appointed by the President for a term of 7 years each and who shall serve as such until their successor shall have been appointed and qualified. A commissioner appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed, shall serve only for the unexpired portion of such term. The Commissioners must be natural-born citizens of the Philippines, at least 40 years of age for the Chairperson and at least 35 years of age for the commissioners, of good moral character, of unquestionable integrity, of known probity and patriotism and with recognized competence in social and economic disciplines. Further, the majority of commissioners, including the chairperson, shall be members of the Philippine Bar. The Chairperson is the chief executive officer of the Commission and shall execute and administer the policies, decisions, orders and resolutions approved by the Commission. He shall also have the general executive direction and supervision of the work and operation of the Commission and of its members, bodies, boards, offices, personnel and all its administrative business. Powers and Functions of the Commission The Commission shall have, among others, the following powers and functions: A. Have jurisdiction and supervision over all corporations, partnerships or associations who are the grantees of primary franchises or a license or permit issued by the Government. B. Formulate policies and recommendations on issues concerning the securities market, advise Congress and other government agencies on all aspects of the securities market and propose legislation and amendments thereto. C. Approve, reject, suspend, revoke or require amendments to registration statements, and registration and licensing applications. D. Supervise, monitor, suspend or take over the activities of exchanges, clearing agencies and other self-regulatory agencies.

I. J.

K.

L.

M.

N.

Regulate, investigate or supervise the activities of persons to ensure compliance. Impose sanctions for the violation of laws and the rules, regulations and orders issued pursuant thereto. Prepare, approve, amend or repeal rules, regulations and orders, and issue opinions and provide guidance on and supervise compliance with such rules, regulations and orders. Enlist the aid and support of and/or deputize any and all enforcement agencies of the Government, civil or military as well as any private institution, corporation, firm, association or person in the implementation of its powers and functions under the SRC. Issue cease and desist orders to prevent fraud or injury to the investing public. Punish for contempt of the Commission, both direct and indirect, in accordance with the pertinent provisions of and penalties prescribed by the Rules of Court. Compel the officers of any registered corporation or association to call meetings of stockholders or members thereof under its supervision. Issue subpoena duces tecum and summon witnesses to appear in any proceedings of the Commission and in appropriate cases, order the examination, search and seizure of all documents, papers, files and records, tax returns, and books of accounts of any entity or person under investigation as may be necessary for the proper disposition of the cases before it, subject to the provisions of existing laws. Suspend or revoke, after proper notice and hearing the franchise or certificate of registration of corporations, partnerships or associations, upon any of the grounds provided by law. Exercise such other powers as may be provided by law as well as those which may be implied from, or which are necessary or incidental to the carrying out of, the express powers granted the Commission to achieve the objectives and purposes of these laws.

Registration of Securities with SEC Securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the SEC. Prior to such sale, information on the securities, in such form and with such substance as the SEC may prescribe, shall be made available to each prospective purchaser. A record of the registration of securities shall be kept in a Register of Securities in which shall be recorded orders entered by the SEC with respect to such securities. Such register and all documents or information with respect to the securities registered therein shall be open to public inspection at reasonable hours on business days.

The requirement of registration shall not as a general rule apply to any of the following classes of securities: A. Any security issued or guaranteed by the Government of the Philippines, or by any political subdivision or agency thereof, or by any person controlled or supervised by, and acting as an instrumentality of said Government. B. Any security issued or guaranteed by the government of any country with which the Philippines maintains diplomatic relations, or by any state, province or political subdivision thereof on the basis of reciprocity. C. Certificates issued by a receiver or by a trustee in bankruptcy duly approved by the proper adjudicatory body. D. Any security or its derivatives the sale or transfer of which, by law, is under the supervision and regulation of the Office of the Insurance Commission, Housing and Land Use Regulatory Board or the Bureau of Internal Revenue. E. Any security issued by a bank except its own shares of stock. Further, the requirement of registration shall not apply to the sale of any security in any of the 18 following transactions: A. At any judicial sale, or sale by an executor, administrator, guardian or receiver or trustee in insolvency or bankruptcy. B. By or for the account of a pledge holder, or mortgagee or any other similar lien holder selling or offering for sale or delivery in the ordinary course of business and not for the purpose of avoiding the provisions of the Securities Regulation Code, to liquidate a bona fide debt, a security pledged in good faith as security for such debt. C. An isolated transaction in which any security is sold, offered for sale, subscription or delivery by the owner thereof, or by his representative for the owner’s account, such sale or offer for sale, subscription or delivery not being made in the course of repeated and successive transactions of a like character by such owner, or on his account by such representative and such owner or representative not being the underwriter of such security. D. The distribution by a corporation, actively engaged in the business authorized by its articles of incorporation, of securities to its stockholders or other security holders as a stock dividend or other distribution out of surplus. E. The sale of capital stock of a corporation to its own stockholders exclusively, where no commission or other remuneration is paid or given directly or indirectly in connection with the sale of such capital stock. F. The issuance of bonds or notes secured by mortgage upon real estate or tangible personal property, where the entire mortgage together with all the bonds or

notes secured thereby are sold to a single purchaser at a single sale. G. The issue and delivery of any security in exchange for any other security of the same issuer pursuant to a right of conversion entitling the holder of the security surrendered in exchange to make such conversion. H. Broker's transactions, executed upon customer's orders, on any registered Exchange or other trading market. I. Subscriptions for shares of the capital stock of a corporation prior to the incorporation thereof or in pursuance of an increase in its authorized capital stock under the Corporation Code, when no expense is incurred, or no commission, compensation or remuneration is paid or given in connection with the sale or disposition of such securities, and only when the purpose for soliciting, giving or taking of such subscriptions is to comply with the requirements of such law as to the percentage of the capital stock of a corporation which should be subscribed before it can be registered and duly incorporated, or its authorized capital increased. J. The exchange of securities by the issuer with its existing security holders exclusively, where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange. K. The sale of securities by an issuer to fewer than 20 persons in the Philippines during any 12 month period. L. The sale of securities to any number of the following qualified buyers: bank, registered investment house, insurance company, pension fund or retirement plan maintained by the Government of the Philippines or any political subdivision thereof or managed by a bank or other persons authorized by the Bangko Sentral to engage in trust functions, investment company or such other person as the Commission may by rule determine as qualified buyers.



BANGKO SENTRAL NG PILIPINAS

The Bangko Sentral ng Pilipinas (BSP) is the independent central monetary authority of the Philippines. The BSP provides policy directions in the areas of money, banking and credit. It has supervision over the operations of banks and exercises such regulatory powers over the operations of finance companies and non-bank financial institutions performing quasi-banking functions and institutions performing similar functions. Its primary objective is to maintain price stability conducive to a balanced and sustainable growth of the economy. It also promotes and maintains monetary stability and the convertibility of the peso. Monetary Board of the Bangko Sentral The powers and functions of the Bangko Sentral are exercised by the Bangko Sentral Monetary Page|12 of 21

Board which is composed of 7 members appointed by the President of the Philippines for a term of 6 years. The seven members are: A. The Governor of the Bangko Sentral who also serves as the chairman of the Monetary Board. The Governor of the Bangko Sentral shall be head of a department and his appointment shall be subject to confirmation by the Commission on Appointments. Whenever the Governor is unable to attend a meeting of the Board, he shall designate a Deputy Governor to act as his alternate and in such event, the Monetary Board shall designate one of its members as acting Chairman. B. A member of the Cabinet to be designated by the President. Whenever the designated Cabinet Member is unable to attend a meeting of the Board, he shall designate an Undersecretary in his Department to attend as his alternate C. Five members who shall come from the private sector all of whom shall serve fulltime. Qualifications of Monetary Board

the

Members

of

the

The members of the Monetary Board must be natural-born citizens of the Philippines, at least 35 years of age, with the exception of the Governor who should at least be 40 years of age, of good moral character, of unquestionable integrity, of known probity and patriotism, and with recognized competence in social and economic disciplines. Further, no member of the Monetary Board may be reappointed more than once.



BUREAU OF INTERNAL REVENUE

The Bureau of Internal Revenue (BIR) is the government agency that aims to raise revenues for the government though the effective and efficient collection of taxes. The Bureau is under the supervision and control of the Department of Finance and generates the bulk of the country’s total government revenues. Composition of the Bureau The Bureau is principally tasked with the enforcement of RA 8424 or the National Internal Revenue Code of 1997. Such law lists the following BIR officers: Commissioner of Internal Revenue, 4 Deputy Commissioners of Internal Revenue, Revenue Regional Directors, Revenue District Officers, Revenue Examiners and Officers, Division Chiefs of the Bureau and BIR collection agents. The following are the constituted agents of the BIR Commissioner: A. Commissioner of Customs and his subordinates. B. Head of appropriate government offices and his subordinates. C. Banks duly accredited by the BIR Commissioner. The Commissioner of Internal Revenue is the chief official of the Bureau and is vested the power

to interpret tax laws, decide tax cases, summon and obtain information or testimony of persons, make assessments and prescribe additional tax requirements and delegate powers vested upon him to the extent allowed by relevant laws. Powers and Functions of the Bureau In meeting its responsibility to raise revenue for the government, the Bureau has the following powers and functions: A. To assess and collect all national internal revenue taxes, fees and charges. B. To enforce all forfeitures, penalties and fines connected with the above. C. To execute judgments in all cases decided in its favor by the Court of Tax Appeals and the ordinary courts. D. To administer, supervise and effect police powers conferred to it by this Internal Revenue Code and other laws.



INSURANCE COMMISSION

The Insurance Commission (IC) is the government agency that supervises and regulates the insurance industry (life and non-life companies, mutual benefit associations and trusts for charitable uses) for the promotion of national interest. It also issues licenses to insurance agents, general agents, resident agents, underwriters, brokers, adjusters and actuaries. It has also the authority to suspend or revoke such licenses. The Commission, as with the BIR, is under the supervision of the Department of Finance. It is headed by the Insurance Commissioner who is assisted by 4 Deputy Commissioners. STANDARD-SETTING BODIES



FINANCIAL COUNCIL

REPORTING

STANDARDS

The Financial Reporting Standards Council (FRSC) is the accounting standard setting body created by the PRC, upon the recommendation of the BOA, in 2006 to assist the Board in carrying out its powers and functions. The Council’s main role is to establish and improve accounting standards that will be generally accepted in the Philippines. It has full discretion in developing and pursuing the technical agenda for setting accounting standards in the Philippines. The FRSC is the successor of the Accounting Standards Council (ASC) which was created in November 1981 by the PICPA to establish GAAP in the Philippines. The FRSC is composed of 15 members with a Chairman, who had been or presently a senior accounting practitioner in any of the scope of accounting practice and fourteen representatives from the following: Board of Accountancy 1 Securities and Exchange Commission 1 Bangko Sentral ng Pilipinas 1 Bureau of Internal Revenue 1 Major organization of preparers and users of financial statements (currently the Financial Executives Institute of the Philippines) 1 Commission on Audit 1

APO of CPAs (Philippine Institute of CPAs) Academe Commerce and Industry Government Public Practice

2 2 2 2

The Chairman and members of the FRSC have a term of 3 years renewable for another term. Philippine Interpretations Committee In August 2006, the FRSC formed the Philippine Interpretations Committee (PIC) to assist the Council in establishing and improving financial reporting standards in the Philippines. The role of the PIC is to prepare interpretations of standards issued by the Council for approval by the Council and in the context of the Framework to provide timely guidance on financial reporting issues not specifically addressed by current standards. In other words, interpretations are intended to give authoritative guidance on issues that are likely to receive divergent or unacceptable treatment because the standards do not provide specific and clearcut rules and guidelines. The PIC replaced the Interpretations Committee (IC) created by the ASC in May 2000. The PIC members are appointed by the FRSC and include accountants in public practice, the academe and regulatory bodies and users of financial statements. Pronouncements of the FRSC The FRSC issues its standards in a series of pronouncements called the Philippine Financial Reporting Standards (PFRSs) which consist of the following: A. Philippine Financial Reporting Standards (PFRSs). B. Philippine Accounting Standards (PASs). C. Philippine Interpretations which consist of Philippine Interpretations – IFRIC, Philippine Interpretations – SIC and the Philippine Interpretations Committee Q and As. Of these, the PASs and Philippine Interpretation – SIC are previously issued standards and interpretation of the ASC that have been adopted by the FRSC and the PIC, respectively. Prior to the issuance of PASs, Philippine accounting standards issued by the ASC were referred to as Statements of Financial Accounting Standards (SFASs). Adoption of International Standards The FRSC carries on the decision made by the ASC to converge Philippine accounting standards with international accounting standards issued by the IASB. In the past years, most of the Philippine standards issued are based on American accounting standards developed by the USA Financial Accounting Standards Board (FASB). The FRSC monitors the technical activities of the IASB and invites comments on exposure drafts of proposed IFRSs as these are issued by the IASB. When finalized, these are adopted as PFRSs. Similarly, the FRSC monitors issuances of the IFRS Interpretations Committee of the IASB, which it

adopts as Philippine Interpretations – IFRIC. PFRSs and Philippine Interpretations approved for adoption are submitted to the BOA and PRC for approval.



INTERNATIONAL ACCOUNTING STANDARDS BOARD

The International Accounting Standards Board (IASB), founded on April 2001 is the foreign counterpart of the FRSC. The IASB is the independent accounting standard-setting body of the IFRS Foundation based in London, UK. The Board’s main objective is to raise the quality and consistency of financial reporting standards and to have a platform of high quality and improved standards. The 15 members of the Board are responsible for developing and publishing International Financial Reporting Standards (IFRSs) and promoting the use and application of these standards. The IASB assumed the accounting standard setting responsibilities of the International Accounting Standards Committee (IASC), which was formed in 1973 through an agreement made by professional accountancy bodies from 10 countries. IFRS Interpretations Committee The IFRS Interpretations Committee, formerly called as the International Financial Reporting Interpretations Committee (IFRIC), is the official interpretative body of the IASB. Consisting of 14 members, the Committee is mandated to review on a timely basis widespread accounting issues that have arisen within the context of current IFRSs and to provide authoritative guidance on those issues. To be operative, the interpretations of the Committee are to be approved first by the IASB. The IFRS Interpretations Committee is the successor of the Standing Interpretations Committee (SIC) of the IASC. Standards Advisory Council The Standards Advisory Council (SAC) is a group of organizations with an interest in international financial reporting. It is a body set up to participate in the standards setting process. Members are appointed by the IFRS Foundation which also appoints members to the IASB. The members are drawn from different geographical locations and have a wide variety of backgrounds. The SAC’s role includes advising on priorities within the IASB’s work program and the IASB is required to consult with the SAC in advance of any board decisions on major projects that it wishes to add to its agenda. International Financial Reporting Standards The IFRS Foundation, through the IASB and IFRS Interpretations Committee, sets out the IFRSs and their interpretations which consist of the following: A. International Financial Reporting Standards (IFRSs). B. International Accounting Standards (IASs). C. International Financial Reporting Standards Interpretations (IFRICs). D. Standing Interpretation Committee interpretations (SICs). Page|14 of 21

to information and other related service engagements as specified by the AASC

Of these, the IASs and SICs are previously issued standards and interpretation of the IASC that have been adopted by the IASB and the IFRS Interpretations Committee, respectively.



AUDITING AND ASSURANCE STANDARDS COUNCIL

The Auditing and Assurance Standards Council (FRSC) is the auditing standard setting body created by the PRC, upon the recommendation of the BOA, in December 2005 to assist the Board in carrying out its powers and functions. The Council’s main objective is to promulgate auditing standards, practices and procedures which shall become generally accepted by the accounting profession in the Philippines. The AASC is composed of 15 regular members with a term of 3 years, renewable for another term, coming from the following: Senior practitioner in an auditing firm (Chairman) 1 Association of CPAs in Public Practice (ACPAPP) 1 Board of Accountancy 1 Securities and Exchange Commission 1 Commission on Audit 1 Philippine Institute of CPAs (PICPA) Academe 1 Commerce and Industry 1 Government 1 Public Practice 7 The AASC replaced the Auditing Standards and Practices Council (ASPC) established by the PICPA and Association of CPAs in Public Practice. Pronouncements of the AASC The AASC issues its standards following pronouncements:

through

the

Standards

Application

Related Practice Statements

Philippine Standards on Quality Control (PSQCs)

AASC Engagements Standards (PSAs, PSREs, PSAEs, PSRSs)

Not applicable

Philippine Standards on Auditing (PSAs)

Audits of historical financial information

Philippine Auditing Practice Statements (PAPSs)

Philippine Standards on Review Engagements (PSREs)

Review of historical financial information

Philippine Review Engagement Practice Statements (PREPSs)

Philippine Standards on Assurance Engagements (PSAEs)

Assurance engagements dealing with subject matters other than historical financial information

Philippine Assurance Engagement Practice Statements (PAEPSs)

Philippine Standards on Related Services (PSRSs)

Compilation engagements, engagements to apply agreedupon procedures

Philippine Related Services Practice Statements (PRSPSs)

Philippine Framework Engagements

for

Assurance

The Philippine Framework for Assurance Engagements: A. Provides a frame of reference for practitioners and others involved with assurance engagements. B. Describes the objectives and elements of assurance engagements intended to provide either a high or moderate level of assurance. The Framework does not itself establish standards or provide procedural requirements for the performance of assurance engagements. It rather defines and describes the elements and objectives of an assurance engagement and identifies engagements to which PSAs, PSREs and PSAEs apply. Philippine Statements

Standards

and

Practice

PSAs, PSREs, PSAEs and PSRSs are collectively referred to as the AASC’s Engagement Standards. Philippine Standards on Quality Control (PSQCs) are to be applied for all services falling under the AASC’s Engagement Standards. Philippine Standards are applicable to engagements in the public sector. In addition, the AASC issues Philippine Practice Statements to serve the following purpose: A. Provide interpretative guidance and practical assistance to professional accountants in implementing Philippine Standards. B. Promote good practice. Professional accountant should be aware of and consider Practice Statements applicable to the engagement. A professional accountant who does not consider and apply the guidance included in a relevant Practice Statement should be prepared to explain how the basic principles and essential procedures in the AASC’s Engagement Standards addressed by the Practice Statement have been complied with. Adoption of International Standards To facilitate preparation by the AASC of its pronouncements and to attain uniformity of those pronouncements with international auditing standards, the AASC has approved the adoption of the pronouncements issued by the IAASB.



INTERNATIONAL AUDITING ASSURANCE STANDARDS BOARD

AND

The International Auditing and Assurance Standards Board (IAASB) functions as an independent standard setting body under the auspices of the IFAC. The Board works to establish high quality auditing, assurance, quality control and related services and to improve the uniformity

of practice by professional accountants throughout the world, thereby strengthening public confidence in the global auditing profession and serving the public interest. The IAASB was founded in March 1978 and was known until 2002 as the International Auditing Practices Committee (IAPC). Pronouncements of the IAASB consist of: A. International Standards on Auditing (ISAs). B. International Standards on Assurance Engagements (ISAEs). C. International Standards on Review Engagements (ISREs). D. International Standards Services (ISRSs). E. Practice Statements.

on

Related

International Federation of Accountants The International Federation of Accountants (IFAC) is the global organization for the accountancy profession. Founded in 1977, IFAC has, as of November 2012, 173 members and associates in 129 countries and jurisdictions, representing more than 2,500,000 accountants employed in public practice, commerce and industry, government and the academe. No other accountancy body in the world and few other professional organizations have the broad-based international support that characterizes IFAC. The IFAC was established to strengthen the worldwide accountancy profession in the public interest by: A. Developing high quality international standards in auditing and assurance, public sector accounting, ethics and education for professional accountants and supporting their adoption and use. B. Facilitating collaboration and cooperation among its member bodies. C. Collaborating and cooperating with other international organizations. D. Serving as the international spokesperson for the accountancy profession. In meeting its objective of setting high quality international standards in auditing and assurance, public sector accounting, ethics and education for professional accountants, IFAC has organized the following standard setting boards aside from the IAASB: A. International Public Sector Accounting Standards Board (IPSASB) – develops the International Public Sector Accounting Standards (IPSASs) which are based on the IFRSs issued by the IASB with suitable modifications relevant for public sector accounting. B. International Accounting Education Standards Board (IAESB) – develops a uniform guideline educational syllabus to be adopted by all its members. The accounting bodies are required to consider these educational standards while formulating their educational systems. C. International Ethics Standards Board for Accountants (IESBA) – develops a model Code of Ethics for Professional

Accountants to be followed by professional accountants throughout the world. The IFAC is supervised by the Public Interest Oversight Board (PIOB) which seeks to improve the quality and public interest focus of the IFAC standards in the areas of audit, education and ethics. PROFESSIONAL ORGANIZATIONS



PHILIPPINE INSTITUTE PUBLIC ACCOUNTANTS

OF

CERTIFIED

Per RA 9298, all registered CPAs whose names appear in the roster of CPAs shall be united and integrated through their membership in a one and only registered and APO of registered and licensed certified public accountants. Founded in November 1929 by a group of illustrious pioneers in the accounting profession, the Philippine Institute of Certified Public Accountants (PICPA) is the APO of the PRC. PICPA is a globally recognized and integrated national organization of Filipino CPAs in all sectors. Its mission is to enhance the integrity of the accountancy profession, serve the best interest of its members and other stakeholders and contribute to the attainment of the country’s objectives. Specifically, PICPA was established with the following aims and objectives: A. To enable the accountancy profession to discharge its public responsibilities more effectively. B. To promote and maintain high professional standards in the accountancy profession. C. To develop among its members high ideals of competence, ethical conduct, integrity and civic consciousness. D. To foster cordial, harmonious and fruitful relations among its members. E. To elevate the standards of accountancy education. F. To guard against the practice of the profession by unauthorized persons or entities and in general. G. To protect and enhance the integrity of the certificate of registration of CPAs. H. To develop a treaty of friendship among its members. As the APO, PICPA is tasked to meet the following requirements: A. It is established for the benefit and welfare of the CPAs, the advancement of their profession and the attainment of other professional ends. B. Its membership is open to all registered CPAs without discrimination. C. Its membership shall include CPAs in all sectors. D. It shall have a creditable plan to enlist into active membership within 3 years, at least a majority of the CPAs in the practice of accountancy. E. It shall have adequate chapters/regions in major areas in the Philippines to effectively attend to the needs of its members. Its national directors shall be elected in Page|16 of 21

accordance with the provision of the Corporation Code of the Philippines. In this regard, national directors should be representative of the sectors in the regions of the country. There should only be 1 director coming from a firm/company and their affiliates. Further, a director can only represent a sector in a region if he has been a member in good standing in such sector in the region for at least 2 years at the time of his nomination. Moreover, there shall only be fifteen (15) national directors, unless there is a valid reason to have additional representation. The 15 national directors shall be apportioned according to sectors in the four geographic areas based on the ratio of latest available number of members in good standing from those areas. F. It shall be judicious and prudent in the management of its financial resources and for this purpose its chapter/region/national office and their respective foundation shall keep proper books of accounts and submit audited annual financial statements thereof. G. It shall have a full time career Executive Director who shall implement the policies promulgated by the PICPA Board of Directors and shall have direct supervision over the PICPA Secretariat. H. It is duly registered as a non-stock corporation or association by the Securities and Exchange Commission (SEC). I. It has paid the prescribed accreditation fee. The PICPA must renew its Certificate of Accreditation once every 3 years.

Mindanao and to the extent practicable, among the four sectors of the profession.

Organizational Structure of the PICPA

Each region, sector and chapter has their own governing council. Through the regional and sectoral councils, both the sectors and the regions are represented in the National Board. Chapters, on the other hand, are represented in the Regional Councils through Chapter Presidents. The National Office, the sectors and the regions are supported by committees which are formed to undertake specific activities. There is no specific limit as to the number of committees that can be established. The National Office sets the overall directions and policies, and each sector identifies the specific professional needs and plans the current and future directions accordingly. At their respective levels, the regions and the chapters take care of implementing the Institute’s policies and projects as determined or planned by the sectors. The committees provide the necessary services and support to undertake the planned activities or projects. Affiliate units located in other countries are recognized after complying with the requirements of the National Office and upon approval of the National Board of Directors.

The PICPA is a registered non-stock corporation with geographical divisions, regions and chapters all over the country. Geographical areas, regions and chapters do not have juridical personality separate and distinct from each other or from the National Office. The PICPA organization consists of the National Office (supported by a national secretariat), the geographical area, regions, the chapters and the general membership. The National Office is under the management of officers elected by the members of the Board themselves, headed by the President, the Executive Vice President, the Vice President for Commerce and Industry, Education, Government and Public Practice, the Vice President for Operations, the Secretary, the Assistant Secretary, the Treasurer and the Assistant Treasurer. The composition of the Board is 21 from the 9 regions and 4 from the sectors. Regional directors are elected regionally – 4 from Metro Manila and two each from each of the remaining regions. Sectoral directors are voted nationally, one coming from each sector. The President is elected annually but rotated among the regional directors from Metro Manila, Luzon, Visayas and

The PICPA recognizes the 4 sectors by which a CPA may be in practice. The PICPA endeavors to have equal sectoral representations in all its offices from the National Office to its chapters and affiliates. Each regional unit elects 4 regional sectoral representatives who are tasked with the professional development of each particular sector through participation in an accredited CPD program. The geographical area office and regional councils are under uniform rules prescribed by the National Board of Directors. Each geographical area consists of regions and each region consists of chapters, except Metro Manila or the National Capital Region which is designated as geographical and regional as well. Each province or city may establish their respective chapter, except Metro Manila which is as already designated under the By Laws. It is the joint responsibility of both the National and the geographical and the regional officers to promote and assist in developing chapters. The four geographical areas and the regions included under each geographical area are as follows: A. National Capital Region or the Metro Manila Geographical Area – Northern Metro Manila, Southern Metro Manila, Eastern Metro Manila and Western Metro Manila. B. Luzon Geographical Area – Northern Luzon, Central Luzon, Southern Tagalog and Bicol. C. Visayas Geographical Area – Eastern Visayas and Western Visayas. D. Mindanao Geographical Area – Northern Mindanao and Southern Mindanao.

Seminars and Publications of the PICPA

Seminars are regularly organized by PICPA on varied technical subjects such as auditing, taxation, management services, accountancy education and similar topics conducted by outstanding lecturers and speakers. Attendance to CPD provides opportunity to make valuable contacts with fellow members for a mutually beneficial exchange of ideas and experiences and to earn CPD credits. The monthly Accounting Times and quarterly Accountants’ Journal are distributed or mailed by the PICPA to its members. The Accounting Times carries a newspaper format and reports on new developments in the profession as well as on activities and trends within the organization. The Journal, on the other hand, contains higher level technical insights and formal papers written by distinguished experts in their field. PICPA also regularly disseminates exposure drafts and publishes bulletins and pronouncements released by the Financial Reporting Standards Council (FRSC) and the Auditing and Assurance Standards Council (AASC). PICPA in the International Scene Through PICPA, the country is actively represented in the world’s major accounting bodies. Foremost among these international organizations is the IFAC. Another organization is the Confederation of Asian and Pacific Accountants (CAPA), which seeks the development of a coordinated regional accounting profession with harmonized standards. Finally, there is the ASEAN Federation of Accountants (AFA), which strives to work together in a spirit of cooperation with the ASEAN region’s varied groups, whose economic efforts may be complemented by the accountancy profession. PICPA had assumed the overall leadership of these organizations in a number of times and has been taking active roles in the pursuit of their respective goals.



SECTORAL ORGANIZATIONS

The other professional organizations that complement PICPA’s objectives and provide specific professional development and other requirements of CPAs in different sectors are: A. Association of CPAs in Public Practice (ACPAPP). B. Association of CPAs in Education (ACPAE). C. Association of CPAs in Commerce and Industry (ACPACI). D. Government Association of CPAs (GACPA). REQUIREMENTS TO OBTAIN A CERTIFICATE OF REGISTRATION No person shall practice accountancy in the Philippines, or use the title “Certified Public Accountant” or the abbreviated title “CPA”, or display or use any title, sign, card, advertisement or other device to indicate such person practices or offers to practice accountancy, or is a certified public accountant, unless such person shall have received from the Board a Certificate of Registration and be issued a professional identification card or a valid temporary or special permit duly issued to him by the Board and the Commission.

In general, the requirements to obtain a CPA certificate are to obtain a degree of Bachelor of Science in Accountancy (BSA) and to pass the CPA Board Examination administered by the Board.



DEGREE OF BACHELOR OF SCIENCE IN ACCOUNTANCY

The program leading to a BSA degree usually lasts for 4 to 5 years. All private higher education institutions intending to offer the BSA program must first secure proper authority from the CHED in accordance with the existing policies. State universities and colleges and local colleges and universities should likewise strictly adhere to existing policies. CMO No. 3, Series of 2007, issued by CHED prescribes the minimum curricular requirements for the BSA program. All graduates with a Bachelor’s Degree, major in Accounting shall be allowed to take the CPA Licensure Examination within 2 years from the effectivity of RA 9298 or until May 2006 under the rules and regulations to be promulgated by the Board subject to the approval by the Commission.



LICENSURE EXAMINATIONS FOR CPAs

The licensure examination for CPAs is a 4 day examination covering the following subjects: Theory of Accounts. Business Law and Taxation, Management Services, Auditing Theory, Auditing Problems, Practical Accounting Problems I and Practical Accounting Problems II. The BOA, subject to the approval of the PRC, may revise or exclude any of the subjects and their syllabi, and add new ones as the need arises. However, such changes shall not be more often than every 3 years. Any person applying for the licensure examination shall establish the following requisites to the satisfaction of the BOA that: A. He is a Filipino citizen. B. He is of good moral character. C. He is a holder of the degree of BSA conferred by a school, college, university, academy or institute duly recognized and accredited by the CHED or other authorized government offices. D. He has not been convicted of any criminal offense involving moral turpitude. The following documents shall be submitted in support of the above requirements: A. Certificate of Live Birth in National Statistics Office (NSO) Security Paper. B. Marriage Contract in NSO Security Paper for married female applicants. C. College diploma with indication therein of date of graduation and Special Order Number unless it is not required. D. Baccalaureate Transcript of Records with indication therein of date of graduation and Special Order Number unless it is not required. E. National Bureau of Investigation (NBI) Clearance. F. Other documents that the Board may require. Rating in the Licensure Examination Page|18 of 21

To be qualified as having passed the licensure examination for accountants, a candidate must obtain a general average of 75%, with no grades lower than 65% in any given subject. In the event a candidate obtains the rating of 75% and above in at least a majority of subjects, he shall receive a conditional credit for the subjects passed provided that a candidate shall take an examination in the remaining subjects within 2 years from the preceding examination. If the candidate fails to obtain at least a general average of 75% and a rating of at least 65% in each of the subjects reexamined, he shall be considered as failed in the entire examination. Any candidate who fails in 2 complete CPA Board Examinations shall be disqualified from taking another set of examinations unless he submits evidence to the satisfaction of the BOA that he enrolled in and completed at least 24 units of subjects given in the licensure examination. Such refresher course shall be offered only by an educational institution granting a degree of BSA and the candidates shall have the option of taking the aforesaid subjects in the regular course offering or in a special refresher course duly accredited by the BOA. For the purposes of this provision, the examination in which the candidate was conditioned together with the removal examination on the subject in which he failed shall be counted as one complete examination. The BOA shall submit to the PRC the ratings obtained by each candidate within 10 calendar days after the examination unless extended for just cause. Upon the release of the results of the examination, the PRC shall send by mailing the rating received by each examinee at his given address using the mailing envelope submitted during the examination. Such report of rating may also be distributed to the successful examinees during their mass oath taking as new registered CPAs. OATH OF PROFESSION, CERTIFICATE OF REGISTRATION AND PROFESSIONAL IDENTIFICATION CARD All successful candidates in the examination shall be required to take an oath of profession before any member of the BOA or before any government official authorized by the PRC or any person authorized by law to administer oaths. An oath shall also be required for CPAs admitted in the practice of accountancy without examination under reciprocity or other international agreements. A certificate of registration shall be issued to examinees who pass the licensure examination subject to payment of fees prescribed by the PRC. Such certificate shall bear the signature of the Chairperson of the PRC and the Chairman and members of the BOA, stamped with the official seal of the PRC and of the BOA, indicating that the person named therein is entitled to the practice of the profession with all the privileges appurtenant thereto. The said certificate shall remain in full force and effect until withdrawn, suspended or revoked in accordance with RA 9298.

A professional identification card bearing the registration number, date of issuance, expiry date, duly signed by the chairperson of the PRC, shall likewise be issued to every registrant after having paid the prescribed fee for the annual registration for 3 years. The reissuance or renewal of the said card shall be subject to payment of the annual registration fees for another and every after 3 years thereafter. A roster showing the names and place of business of all registered CPAs shall be prepared and updated by the BOA and copies thereof shall be made available to any party as may be deemed necessary. The BOA, upon approval of the PRC may delegate the preparation of this roster to the APO. Moreover, the posting of the roster at the internet shall be deemed compliance with this requirement. Refusal to Issue Certificates of Registration and Professional Identification Card The BOA shall not register and issue a certificate of registration and professional identification card to any successful examinee who: A. Was convicted by a court of competent jurisdiction of a criminal offense involving moral turpitude. B. Is guilty of immoral and dishonorable conduct C. Has unsound mind. D. Misrepresentation in the application for the CPA examination. In the event of refusal to issue certificate for any reason, the Board shall give the applicant a written statement setting forth the reasons for such action, which statement shall be incorporated in the record of the BOA. Such written statement shall state the period for the deferment of the registration if the offense or act committed does not call for indefinite period or perpetual deprivation of the chance to register. Registration shall not be refused and a name shall not be removed from the roster of CPAs on conviction for a political offense or for an offense which shall not, in the opinion of the BOA, either from the nature of the offense or from the circumstances of the case, disqualify a person from practicing accountancy under RA No. 9298. Suspension and Revocation of Certificates of Registration and Professional Identification Card The BOA have the power, upon due notice and hearing, to suspend or revoke a practitioner’s certificate of registration and professional identification card or suspend him from the practice of his profession or cancel his special permit for any of the causes or grounds mentioned under RA 9298 or for any unprofessional or unethical conduct, malpractice, violation of any of the provisions of RA 9298 and its IRR , the CPA‘s Code of Ethics and the technical and professional standards of practice for CPAs. The suspension or revocation of the certificate of registration and professional identification card of the offending CPA shall not prejudice his

prosecution for criminal liabilities and meted the penalties provided in the Revised Penal Code. Reinstatement, Reissuance and Replacement of Revoked or Lost Certificates The BOA may, after the expiration of 2 years from the date of revocation of a certificate of registration and upon application and for reasons deemed proper and sufficient, and after being convinced of applicant’s remorse and rehabilitation, reinstate the validity of a revoked certificate of registration and in so doing, may, in its discretion, exempt the applicant from taking another examination. A new certificate of registration to replace lost, destroyed, or mutilated certificate may be issued, subject to the rules promulgated by the BOA and the PRC, upon payment of the required fees. FOREIGN CERTIFIED PUBLIC ACCOUNTANTS Subjects or citizens of foreign countries may be allowed to practice accountancy in the Philippines in accordance with the provisions of existing laws, international treaty obligations including mutual recognition agreements entered into by the Philippine government with other countries. A person who is not a citizen of the Philippines shall not be allowed to practice accountancy in the Philippines unless he can prove, in the manner provided by the rules of court that, by specific provision of law, the country of which he is a citizen, subject or national admits citizens of the Philippines to the practice of the same profession without restriction. A foreign CPA or its equivalent, who desires to practice accountancy in the Philippines through this reciprocity provision shall initiate the establishment of reciprocity between his country or state and the Philippines by presenting or submitting a letter or any document signed and under official seal by the appropriate official of his country or state requesting the Chairman of the BOA to allow the foreign applicant to practice accountancy in the Philippines, that by express provision of the law of his country or state, Filipino CPAs are allowed to practice accountancy in his country or state on terms of strict and absolute equality with the citizens or subjects of said country or state including the unconditional recognition of prerequisite degrees issued by institutions of higher learning duly recognized or established by the Government of the Republic of the Philippines attaching or appending thereto an authentic or authenticated official copy of said law officially translated in the English language. If the letter or document and the copy of the law submitted by the applicant is satisfactory to the BOA, the foreign applicant shall be allowed to practice accountancy in the Philippines by requiring him to file an application and by submitting the following documents that shall accompany the application: A. The original or certified copy of any official documents issued by the Bureau of Immigration and Deportation allowing the applicant to enter and reside in the Philippines.

B.

Present his passport for examination and for photocopying of pertinent information about himself. C. Original or authenticated copy of transcript of records or equivalent document of the course for licensure examination issued by the institution of higher learning where he studied, duly authorized or accredited by his country or state. D. Certificate of registration or its equivalent stating that the foreign applicant is duly registered or licensed CPA or its equivalent in his country or state. E. Other documents which may be required to be submitted by the BOA. If the foreign applicant desires to practice public accountancy in the Philippines, he has to apply for accreditation to do so under the rules and regulations promulgated by the existing rules and regulations. Coverage of Temporary or Special Permits Special or temporary permits may be issued by the Board subject to the approval of the Commission and payment of the fees the latter has prescribed and charged thereof to the following persons: A. A foreign CPA called for consultation or for a specific purpose which must meet the following pre-requisite:  Such consultation or special purpose, in the judgment of the BOA, is essential for the development of the country.  His practice shall be limited only for the particular work that he is being engaged.  There is no Filipino CPA qualified for such consultation or specific purpose. B. A foreign CPA engaged as professor, lecturer or critic in fields essential to accountancy education in the Philippines and his engagement is confined to teaching only. C. A foreign CPA who is an internationally recognized expert or with specialization in any branch of accountancy and his service is essential for the advancement of accountancy in the Philippines. The procedures and documents for the registration and issuance of temporary or special permits to a foreign CPA or its equivalent are as follows: A. A visa and work permit issued by appropriate government agencies. B. Within 30 calendar days after his commission or appointment date, the commissioning party shall secure an employment permit from the Department of Labor and Employment. Thereafter, the commissioning party shall secure the temporary or special permit from the Board subject to the approval by the Commission. C. In the absence of any bilateral agreement, the foreign national shall submit documentary proof or evidence allowing Page|20 of 21

Filipino CPAs to practice the profession in their home country without any limitation. D. Sworn statement of the details of foreign applicant area of specialization which must be consistent with his expertise. E. Upon issuance of the temporary or special permit, the foreign national may become a member of the APO subject to the rules and procedures of its membership. CPA SEAL AND USE OF CPA SEAL All registered CPAs shall obtain and use a seal of a design prescribed by the Board bearing the registrant’s name, registration number and title. The auditor’s reports shall be stamped with said seal, indicating therein his current Professional Tax Receipt (PTR) number, date and place of payment when filed with government authorities or when used professionally. The seal of a CPA shall be circular in form with a smaller circle within. In the upper portion of the space between the circles shall be engraved the name of the individual CPA, firm or partnership as the case maybe and in the lower portion thereof shall be engraved the CPA registration number of the individual CPA, proprietor of the firm and the signing partner of the partnership. In the middle of the smaller circle shall be engraved the letters “CPA”. The CPA shall be required to indicate the numbers of his certificate of registration and professional identification card with its date of issuance and the duration of validity, including the PTR number which the city or municipal treasurer shall issue to the registered CPA upon presentation of his current professional identification card, on the documents he signs, uses or issues in connection with the practice of his profession. Affixing the CPA’s seal and signature is an indication of compliance by the CPA to the requisite accounting and auditing standards and rules. RULES AND REGULATION FOR THE ACCREDITATION OF ACCOUNTING TEACHERS (BOA Resolution 88, Series of 2008) Taking effect on June 20, 2008, the accreditation policy for accounting teachers of the BOA applies to all CPAs involved in the teaching of accounting, auditing, management services, finance, business law, taxation and other technically related subjects. Unless sooner revoked, cancelled or withdrawn, the Certificate of Accreditation issued

by the PRC to an accounting teacher shall be valid for 3 years and renewable every 3 years. The following are the requirements for the accreditation of accounting teachers: A. Possession of a relevant master’s degree. In this regard, any post-graduate degree program in business, accounting, taxation, law, education and related fields earned from any graduate school duly recognized by the CHED will qualify for this requirement. B. Completion of 12 units of relevant education subjects from the CHED recognized schools. In this regard, the 12 units of relevant education subjects may be earned:  Either from the undergraduate education program or from a graduate degree program of any higher education institute duly recognized by CHED.  From in-service or in-house trainings offered by schools or training centers.  From a combination of in-service trainings and units earned in an undergraduate or graduate education programs.  CPAs who have passed the Teachers Board Examination and are already licensed professional teachers shall be exempt from this requirement. C. A total of 3 years meaningful experience in actual accounting work in the public practice, commerce and industry or government sector. In this regard, the 3 year experience is total or cumulative and not necessarily continuing. D. Proof that the CPA has undergone continuing professional development. Any tenured, full time, full load faculty members who does not meet the requirements for accreditation as of June 20, 2008, may be issued a provisional accreditation which will be valid for a period not exceeding 3 years unless earlier withdrawn, revoked, cancelled for cause by the BOA. Provisional accreditation may be issued only once and is not renewable. This provision also applies to returning teachers who have not been teaching for the last 5 years.