Thesis Defense Revised

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES 1
Chapter 1
THE PROBLEM AND ITS BACKGROUND
Introduction
Professional ethics is described by AICPA in a journal as a mixture of moral
and practical concepts, with a sprinkling of exhortation to ideal conduct designed to
invoke right action on the part of the members of the profession concerned all
reduced to rules which are intended to be enforceable, to some extent at least, by
disciplinary action.
Every profession had their own set of ethical standard which they are
compelled to follow and exercise. These ethical standards are the roped that ties
professionals especially in business to be morally because of the expertise they gain
which can monopolized and exploited against those who wants to avail their
services.
E.B. Cabrera (2013) in her book Public Accountancy Profession: Assurance
Principles, Professional Ethics and Good Governance stated that Professional
ethics goals are to ensure high standards of competence among a groups
members, to regulate and strengthen their relationships, and to promote and protect
the image of the profession and the welfare of the community
Professional ethics aims first to ensure that every member of the profession is
always in high standards of competence. It promotes that professionals should
always be competent to produce quality works that will not tarnish the integrity of the
profession. In every profession, especially in accounting profession, integrity and
confidence defines the reliance of every consumer that wants to avail their services.
In accountancy, it includes investors, business management government and the
general public.
Professional ethics objective includes regulating and strengthening the
relations of customer, professionals and professions. It acts as a regulator to provide
professionals the group accepted rules of morals in every service they try to perform.
It also guides them to engage in services with confidentiality and professionally
behaved.
Professional ethics also attempt to promote and protect the image of the
profession and the welfare of the community. In summary, ethics acts to protect the
professions integrity, keep the trust of the public and maintain the closure of the
professionals to their institution.
In align with this, Philippine Institute of Certified Public Accountants made the
Code of Ethics for Professional Accountants in the Philippines to be mandatory
followed by Accountants in the Philippines in every engagement they take part
themselves or services they offered to perform. The fundamental principles include
Integrity, Objectivity, Professional Competence and Due Care, Confidentiality and
Professional Behavior which are part of the Part A of the Code of Ethics and
Professional Appointment and Marketing Professional Services which are written in
Part B of Code of Ethics. These principles are established to guarantee the highest
quality of performance of professional accountants and preserve the confidence of
the public in the profession.
This study assesses the level of compliance in Code of Ethics for Professional
Accountants in the Philippines of auditing firms in Metro Manila.
Background of the Study
Nowadays, accounting profession where strike internationally and locally in
different issues regarding integrity. Starting 20th Century, many issues regarding
accounting fraud where discovered within big companies internationally. These
companies includes Tyco, WorldCom, Enron, recently Toshiba are just few among
other company experience the same crimes.
Accounting code of ethics are guidelines for a certain management to help
them conduct their actions in accordance with its primary values and ethical
standards. Lack of ethics or incompliance to ethics may affect a whole profession by
losing the public confidence
Zeiger (2015) believed that compliance as to ethics could lead to different
situations such as businesses facing large fines and other penalties, negative effect
on employee performance. In some cases, employees are so concerned with getting
ahead and making money that they ignore procedures and protocol.
Zeiger(2015) added that employees who feel acting ethically and following the
rules will not get them ahead in the business sometimes feel a lack of motivation,
which often leads to a decrease in performance. Lastly, if a lack of ethics in a
business becomes public knowledge, that business loses credibility.
In accordance to incompliance to accounting code of ethics, ENRON reported
in 2015 about during the 1990s, the ENRON Scandal is believed to be one of the
most notorious within American history; the ENRON scandal is considered White
Collar Crime is which is defined as non-violent, financially-based criminal activity
typically done within a situation in which its partakers keep hold of advanced
education with regard to employment that is considered to be prominent.
Additionally, WorldCom includes in their reported in 2015, this U.S.-based
telecommunications company was at one time the second-largest long distance
phone company in the U.S. Today, it is perhaps best known for a massive
accounting scandal that led to the company filing for bankruptcy protection in 2002.
WorldCom executives effectively fudged the company's accounting numbers,
inflating the company's assets by around $12 billion dollars. The swift bankruptcy
that followed led to massive losses for investors.
In the Philippine setting, one of the biggest corruption issues awakened the
whole Filipino nation, which involved Janet Lim Napoles who had ran a series of
special reports with the Philippine Daily Inquirer pointing accusations about a
multibillion pork barrel scam concerning her and several lawmakers last July 2013
as reported by Arquiza (2013). She was arrested for alleged misuse of the Priority
Development Assistance Fund (PDAF), together with Philippine Senators Bong
Revilla, Jinggoy Estrada, Juan Ponce Enrile, and other congressmen.

In align with this issues, these study would like to know the level of compliance
of Code of Ethics for Professional Accountants in the Philippines. The principles
included are Integrity, Objectivity, Independence, Professional Competence and
Due Care, Confidentiality, Professional Behavior and Marketing Professional
Services, Professional Appointment and Conflict of Interest.
This study will use five auditing firms within Metro Manila namely: Tardecilla
Verdolaga & Co., Sycip, Gorres, Velayo & Co., Uy Singson Abella & Co., Reyes,
Tacandong & Co., and A.E. Jimenez & Co as a sampling. Six CPAs in these auditing
firms will be chosen from random sampling as respondents. This study will be
covering four months.
The study promotes to know the different ethical position to display the
condition of public trust and confidence to the profession.
Theoretical Framework
As the acknowledge national association of certified public accountants and as
a member if International Federation of Accountants (IFAC), Philippines Institute of
Certified Public Accountants (PICPA) is committed it the IFACs broad objective of
developing and enhancing is coordinated worldwide accountancy profession
harmonized standards. In working toward this objective, IFAC develops guidance on
ethics for professional accountants. PICPA is obliged to support the work IFAC and
it obliged every member of PICPA in following Code of Ethics of Professional
Accountants in the Philippines.

The part of Code of Ethics of Professional Accountants in the Philippines which
will be reference for this study is the fundamental principles which are found in Part
A and professional appointment and marketing professional services which are
found in Part B.
A distinguishing mark of the accountancy profession is its acceptance of the
responsibility to act in the public interest. Therefore, a professional accountants
responsibility is not exclusively to satisfy the needs of an individual client or
employer. In acting in the public interest a professional accountant should observe
and comply with the ethical requirements of this Code.
Fundamental Principles includes Integrity, Objectivity, Professional
Competence and Due Care, Confidentiality and Professional Behavior.
A professional accountant is required to comply with the following fundamental
principles:
Integrity means that professional accountants should straightforward and
honest in all professional and business relationships.
Objectivity means a professional accountant should not allow bias, conflict of
interest or undue influence of others to override professional or business judgments.
Professional Competence and Due Care means a professional accountant has
a continuing duty to maintain professional knowledge and skill at the level required
to ensure that a client or employer receives competent professionals service based
on current developments in practice, legislation and techniques. A professional
accountant should act diligently and in accordance with applicable technical and
professional standards when providing professional services. In addition, they
should conform to the technical and professional standards of the following:
Board of Accountancy (BOA)/ Professional Regulation Commission (PRC)
Securities and Exchange Commission (SEC)
Financial Reporting Standards Council (FRSC)
Auditing and Assurance Standards Council (AASC)
Relevant legislation
Confidentiality means a professional a professional accountant should respect
the confidentiality of information acquired as a result of professional and business
relationships and should not disclose any such information to third parties without
proper and specific authority unless there is a legal professional right or duty to
disclose. Confidential information acquired as a result of professional and business
relationships, should not be used for personal advantage of the profession
accountant or third parties.
Professional behavior means a professional accountant should comply with the
relevant laws and regulation and should avoid any action that discredits the
profession.
Professional appointment means before accepting a new client relationship, a
professional accountant in public practice should consider whether acceptance
would create any threats to compliance with the fundamental principles.

It also means that a professional accountant in public practice should agree to
provide only those services that the professional accountant in public practice is
competent to perform.
Marketing Professional Services means a professional accountant in public
practice solicits new work through advertising or other forms of marketing, there may
be potential threats to compliance with the fundamental principles. A professional
accountant in public practice should not bring the profession into disrepute when
marketing professional services. The professional accountant in public practice
should be honest and truthful and should not: make exaggerated claims for services
offered, qualifications possessed or experienced gained; or make disparaging
reference to substantiated comparisons to the work of another.

Conceptual Framework
The conceptual framework discussed the flow of the study to be taken. The
study used the systems approach. The system of three (3) frames is composed of
input which went through process or operation and emerged as the output.
INPUT PROCESS OUTPUT

Respondents Profile
Individual Presentation of analysis Level of Compliance in
Civil Status of data gathered Code of Ethics for
Highest through: Professional Accountants
Educational Survey Questionnaires of Five Auditing Firms
Attainment Company visit and (Tardecilla Verdolaga &
Current Observation Co., Sycip, Gorres, Velayo
Position Statistical Analyses & Co., Uy Singson Abella
Years in Present Frequency & Co., Reyes, Tacandong
Position Weighted & Co., and A.E. Jimenez &
Company Mean Co.) in Metro Manila
Years of F-test
Operations Analysis of
Major Clients Variance
Approximate
Number of Significant Difference
s Employees between Respondents
Areas of Service Computation and
tabulation of data gathered Profile and their
Service
Offered using SPSS Software assessment in terms of
Compliance to Code of
Companys Compliance in
Ethics
Integrity, Assessment of the Level of Code of Ethics
Objectivity Compliance in Code of
And Ethics for Professional
Independence Accountants of Five
Professional Auditing Firms (Tardecilla
Competence and Verdolaga & Co., Sycip,
Due Care Gorres, Velayo & Co., Uy
Singson Abella & Co.,
Confidentiality
Reyes, Tacandong & Co.,
Professional Problems encountered
and A.E. Jimenez & Co.)
Behavior and identified
in Metro Manila
Marketing
Professional
Services
Professional
Appointment and
Conflict of Interest
Problems Encountered FEEDBACK
Figure1. Research Paradigm

The first frame presents the input of the study which contains the respondents
profile as to individual and as to company, it also includes level of compliance to
Code of Ethics for Professional Accountants in the Philippines, and problems
encountered.
The second frame presents the process of the study which contains the
methods and procedures which are the distribution of survey questionnaires,
company visit and observation, unstructured interviews, and the application of
statistical analyses to analyze the gathered data.
The third frame presents the output of the study which contains the policy
recommendations that the researchers suggested for the improvement of the
accounting ethics applied to the company with regards to the elements as required
by the Code of Ethics and the problems encountered.
The arrows present the workflow of information in the research process. The
feedback loop connects the output to the process involved as well as to the input. It
makes the system continuous.
Statement of the Problem
This study aims to assess the level of compliance in the Code of Ethics
for Professional Accountants in the Philippines of auditing firms in Metro Manila. This
study specifically seeks answers to the following questions:
1. What is the Respondents Profile
1.1 What is the individual respondents profile?

1.1.1 Highest Educational Attainment
1.1.2 Current Position
1.1.3 Department
1.1.4 Number of Years in Present Position
1.1.5 Number of Years Working in the Firm
1.2 What is the respondents profile as to companys perspective in
terms of the following:
1.2.1 Years in Operations
1.2.2 Major Clients
1.2.3 Number of Employees
1.2.4 Areas of Service
1.2.5 Service Offered
2. What is the evaluation of the Level of compliance in the Code of Ethics
for Professional Accountants in the Philippines of auditing firms in Metro Manila in
terms of the following:
2.1 Integrity, Objectivity and Independence
2.2 Professional Competence and Due Care
2.3 Confidentiality
2.4 Professional Behavior and Marketing Professional Services
2.5 Professional Appointment and Conflict of Interest
3. Is there a significant difference in the respondents assessment of the
level of compliance in the Code of Ethics for Professional Accountants in the

Philippines of auditing firms in Metro Manila when they are grouped according to
their profile?
4. What are the problems encountered by the respondents on the level of
compliance in the Code of Ethics for Professional Accountants in the Philippines of
auditing firms in Manila : TardecillaVerdolaga& Co., Sycip, Gorres, Velayo& Co.,
UySingsonAbella& Co., Reyes, Tacandong& Co., and A.E. Jimenez & Co.
5. Is there a significant difference on the problems that the respondents
encountered about the level of compliance in the Code of Ethics for Professional
Accountants in the Philippines of auditing firms in Metro Manila when they are
grouped according to their profile?
Hypothesis
This study will test the following hypotheses at a .05 level of significance:
1. There is no significant difference in the respondents assessment of the
level of compliance in the Code of Ethics for Professional Accountants in the
Philippines of auditing firms in Metro Manila when they are grouped according to
their profile.
2. There is no significant difference on the problems that the respondents
encountered about the level of compliance in the Code of Ethics for Professional
Accountants in the Philippines of auditing firms in Metro Manila when they are
grouped according to their profile.

Scope and Limitation of the Study
This study will look into the perception of the employees of auditing firms in
Metro Manila: TardecillaVerdolaga& Co., Sycip, Gorres, Velayo& Co.,
UySingsonAbella& Co., Reyes, Tacandong& Co., and A.E. Jimenez & Co., on the
firms compliance to the Code of Ethics for Professional Accountants in the
Philippines. It covers the respondents profile as to individual and as to company.
This was done to have an understanding on the level of compliance on Code of
Ethics for Professional Accountants in the Philippines of the company.
The scope of the study includes the Part A and Section 210 and Section 250
Part B of the Code of Ethics of Professional Accountants in the Philippines.
The study will cover auditing firms located within in Metro Manila which are
Tardecilla Verdolaga & Co., Sycip, Gorres, Velayo & Co., Uy Singson Abella & Co.,
Reyes, Tacandong & Co., and A.E. Jimenez & Co. The respondents of the study
were composed of 6 professional accountants per auditing firm.
Respondents are limited to Certified Public Accountants (CPA) employees
within the firm. Questionnaires were administered on September 3, 2015 for A.E.
Jimenez & Co. and retrieved on September 7, 2015, on September 4, 2015 for the
auditing firms: Tardecilla Verdolaga & Co. and Uy Singson Abella & Co., and
retrieved on September 8, 2015 and while for the Sycip, Gorres, Velayo & Co. and
Reyes, Tacandong & Co., questionnaires were sent through email due to the busy
season of these firms hence they cannot accommodate company visits, the email
questionnaires were sent on September 2, 2015 and these firms emailed back on
September 12, 2015.
Much as the researchers wanted that the answers or response be truthful there
is still a possibility of bias that is inherent in conducting this study.
Significance of the Study
This study will give knowledge and contribute additional information to serve
the following individuals, organizations and parties:
Government. This study will serve as a proof that the firm complies with the
Code of Ethics for Professional Accountants in the Philippines and still remains the
transparency with its business transactions and undertakings. Moreover, the study
will serve as an assurance for the government that the firm will be of help in
supporting the exercise of ethical standards.
General Public. This study will uplift the public confidence in accountants
despite the copious accounting scandals that have occurred in different firms and
also within the government.
Board of Partners. This study will help the partners to determine possible
problems regarding the ethical issues exist within the firm and to solve the problems
with urgency. Furthermore, this will aid them in formulating strategies and policies
to improve the companys Code of Ethics for Professional Accountants in the
Philippines.
Management. This study will give the management assurance of the firms
compliance to Code of Ethics for Professional Accountants in the Philippines. This
will enlighten them to identify the areas of the Code of Ethics that the firm fail to
comply with or must furthermore comply with. Likewise, it will help them in
developing strategies to improve the current code of conduct in the firm and
determine policies to understand possible penalty applicable in every unethical
conduct committed.
Clients. This study will increase clients trust and confidence in the firm and will
help build good relationship between them. Moreover, this study will inform them
regarding the companys compliance to the Code of Ethics for Professional
Accountants in the Philippines.
Students. This study will broaden the students knowledge as to what Code of
Ethics for Professional Accountants in the Philippines exist in a firm and as to
whether these ethics are complied with. It will also help in educating students on the
importance of upholding the ethical standards in promoting the profession
Future Researchers. This study will be an effective tool and reference for the
researchers who would desire to make any further relevant study particularly the
Code of Ethics for Professional Accountants in the Philippines of auditing firms.
Definition of Terms
For better understanding and interpretation of this study, the following terms
are operationally defined.

Assessment. This refers to the act of making judgement about something.
Compliance. This refers to the act or process of doing what has been asked
or ordered to do.
Confidentiality. It refers to the professional accountant's respect to the
confidentiality of information acquired during the course of performing professional
services or nondisclosure of such information without proper and specific authority
or unless there is a legal or professional right or duty to disclose. (PICPA, Code of
Ethics, par. 167)
Conflict of Interest. This refers to the circumstances that may give rise to
threats to compliance with the fundamental principles.
Independence. This refers to the independence of mind and in appearance
where the state of mind permits the expression of a conclusion without being
affected by influences that compromise professional judgment, allowing an
individual to act with integrity, and exercise objectivity and professional skepticism
and the avoidance of facts and circumstances that are so significant that a
reasonable and informed third party, having knowledge of all relevant information,
including safeguards applied, would reasonably conclude a firm's, or a member of
the assurance team's, integrity, objectivity or professional skepticism had been
compromised. (PICPA, Code of Ethics, par. 175)
Integrity. This refers to the straightforwardness and honesty in all professional
and business relationships. (PICPA, Code of Ethics, par. 148)

Clients. This refers to the major types of clients which the firm renders its
services which include the government, private entities, private individuals and
general public.
Marketing Professional Services. This refers to the act of soliciting new work
through advertising or other forms of marketing which may bring potential threats to
compliance with the fundamental principles. (PICPA, Code of Ethics, par. 172)
Objectivity. This refers to the act of not allowing bias, conflict of interest or
undue influence of others to override professional or business judgments. (PICPA,
Code of Ethics, par. 148)
Professional Appointment. This refers to the client acceptance, engagement
acceptance and changes in a professional appointment which considers whether
acceptance would create any threats to compliance with the fundamental principles.
(PICPA, Code of Ethics, par. 167)
Professional Behavior. This refers to the act of compliance with relevant laws
and regulations and refraining from any conduct which might bring discredit to the
profession. (PICPA, Code of Ethics, par. 149)
Professional Competence and Due Care. This refers to the continuing duty
to maintain professional knowledge and skill at the level required to ensure that a
client or employer receives competent professional service based on current
developments in practice, legislation and techniques. (PICPA, Code of Ethics, par.
148)
CHAPTER 2
REVIEW OF RELATED LITERATURE
FOREIGN LITERATURE
As stated in the book Business Ethics in publication of the Good Governance
Program, a business ethics program is designed to establish standards and
procedures to prevent and detect violations of the trust put in employees. However,
at the heart of a business ethics program is the desire of owners and managers to
foster the commitment of their employees to the welfare of the enterprise as a whole.
Fostering this sense of loyalty and commitment among employees and agents may
be the most effective way in which a business ethics program protects the enterprise
from disloyal employees.
In the book The Ethical Enterprise Doing the Right Ways, Today and Tomorrow
(2006), they had discussed that businesses view ethics as having a big impact on
their brands and reputations as well as on customer trust and investor confidence.
In other words, business ethics isnt only about doing the right thing or even
avoiding the kind of scandals that can utterly devastate a company. Its about good
business. And as they defined, business ethics are principles and standards that
determine acceptable conduct in business organizations. However, business ethics
is not specific into which it originally came from but whenever there is a research
about business ethics, it usually focuses on the scandals that happened in the 20th
century to now. When asked about the reasons companies run businesses in an
ethical manner, respondents top choice was protection of brand and reputation.
The second thing to run business ethics is the reason was that it is the right thing to
do. This implies that many respondents are not just seeing ethics from a pragmatic
business point of view but from a perspective influenced by notions of morality and
values.
The book also mentioned how the business ethics influence todays
organizations, what best-in-class ethics programs and practices look like and how
business ethics may evolve over the course of the next ten years. Some of their
findings are: the number one reason for running an ethical business, today and in
the future, is protecting a companys reputation. ; maintaining an ethical business
environment has become more important and more challenging in todays fast-
changing global marketplace ; the pressure to meet unrealistic business deadlines
or objectives is the factor most likely to cause people to compromise ethical
standards in companies; business scandals have had a major impact on business
ethics issues in recent years but, in the future, globalization and competition will be
the top business drivers of ethics; as technologies grow ever more powerful and
pervasive, they will raise difficult ethical questions with which companies will have
to deal; establishing codes of conduct and training programs are seen as the most
important corporate practices for contributing toward an ethical culture. Also
important are ombudsmen to provide confidential and informal guidance and
helplines to officially report malfeasance.

As cited in the book Business Ethics and Social Responsibility, professional
codes of ethics are formalized rules and standards that describe what a company
expects of its employees. So if the firm doesnt have these rules and standards, it is
difficult for the employees what conduct is acceptable within the company. And
without such rules and standards, employees may base decisions on how their
peers and superiors behave. Codes of ethics, policies on ethics, and ethics training
programs advance ethical behavior because they prescribe which activities are
acceptable and which are not, and they limit the opportunity for misconduct by
providing punishments for violations of the rules and standards. The enforcement of
such codes and policies through rewards and punishments increases the
acceptance of ethical standards by employees. In the survey conducted by the US
Ethics Resource Center on attitudes toward and knowledge of ethics programs, it
indicated that employees personal ethics improve when their organization has a
comprehensive ethics training program. Furthermore, the research conducted found
that individuals in companies that have ethics training programs believe that their
business ethics have improved during the course of their careers. These findings
suggest that people do bring a set of personal values into an organization, and,
further, that organizational pressures affect not only how individuals conduct
themselves within the organization but also can improve their personal ethics
outside of work.
LOCAL LITERATURE
In the book Business Ethics and Social Responsibility, business ethics is
defined as the study of what is the right and wrong human behavior and conduct in
business. It is a study of perceptions of people about morality, moral norms, moral
rules, and ethical principles as they apply to peoples and institutions in business. It
is the evaluation, analysis and questioning of ethical standards, policies, moral
norms, and ethical theories that managers and decision makers use in resolving
moral issues and ethical dilemmas affecting business.
There are always certain good practices and questionable or wrong practices
or activities in business. However, it depends to the objective or motive of ones
entrepreneur: you respect the common interest through being loyal to your interest
of serving right and fair while you disrespect the interest of all for your own personal
interest and selfishness. (Roa, 2012)
Business Ethics and Social Responsibility in Philippine Perspective (2014)
discussed how ethics influence the character of individuals and organizations. Ethics
is derived from the Greek word ethikos which means having to do with character.
People trust and tend to do business with professionals and organizations that
perform their tasks on the principle of ethics. Thus, when individuals and businesses
conform to it, it strengthens their reputation. It creates a strong public image which
builds long term relationships that leads to continual loyalty and attracts new
investors. Since ethics instructs to avoid all that is wrong and evil, proper
implementation of ethics prevents legal actions against illegal and objectionable
activities.
Sedanto & Gabunales (2014) mentioned in the article Paradigm Shift:
Changing the Country One Step at a Time, a question laid out by Integrity Initiative,
Incorporated. Provided that in todays world where ethics is a handicap, can good
business mean clean business? Integrity Initiative, Inc. is a private sector-led
institution spearheading a campaign dedicated to strengthen ethical standards of
society by operating on the principles of inclusion and collective action. This goal
can be achieved by bringing together the best corporate values and practices to set
new standards, which will be beneficial to producers and consumers alike. Integrity
Initiative believes that creating a unified standard on integrity will initiate change from
within the business sector and gradually expand to society as a whole. By starting
with the efforts of a few organizations that wanted to change societys negative
norms into a positive culture, the campaign eventually spread out within the business
sector as this is where money used to conduct unethical practices originate and
corruption is also rampant.
Kong (2012) discussed in his article Business Ethics is Not an Afterthought
that todays world seems to be deceiving. Good things and bad can be tweeted,
blogged or spread against business organizations no matter how big or powerful.
Thus, many are being watchful with what they would share. People cry out for
authenticity and for authentic leadership. The only way people will give the
permission to lead them is when a trust relationship is built with them. Thats why
business ethics is not just an afterthought. It should be the norm, in every level of
every shape of corporate structure.
FOREIGN STUDIES
According to a study titled The impact of ethics education and religiosity on the
cognitive moral development of senior accounting and business students in higher
education accountants have an important role to play in the public sphere because
their actions have an impact on others. Users of financial report, especially decision
makers, expect that professional accountants are highly competent, reliable, and
objective in their job. (Burks, 2006)
Cited in a study titled The Ethical Rules of Auditing and the Impact of
Compliance with the Ethical Rules on Auditing Quality the professional conduct
represents a set of ethical rules and virtues which are binding to all the individuals
and groups who work in the society, through their performance to their duties and
crafts. These rules of morals and ethics are essential for the existence and continuity
of societies. Therefore, due to the importance of professional ethics and conducts,
and to empower the professionals to perform their profession fully in sincerity,
subjective, and integrity, the organizers of the profession legislated the laws,
regulations and principles of the professional conducts. These rules usually include
credibility , honesty, integrity, loyalty , respect and a sense of responsibility and the
concern for the benefit of others, caution, justice and adherence to the laws and
regulations. (Al qtaish, et. al, 2010)

The study titled The collapse of some international companies and their impact
on the accounting environment mentioned the reason of the fall of Enron Company
and its Auditors, Arthur Anderson Company. Enron did not adhere to the
measurement mechanisms and related disclosure of specified targets companies,
combined with the collusion its auditors, Arthur Anderson, by not reporting that and
made clear reports. The verification revealed that Arthur Anderson used to carry out
double works; the external auditor of Enron and its financial consultant. Furthermore,
the auditors, Arthur Anderson, represent the Internal Control department of the
company; i.e. the auditors were mere employees, not independent, for Enron Co.
leading them to follow such unethical conduct.
What happened to Enron Company and their auditors, Arthur Anderson, was
not due to the default of the international accounting criteria or auditing criteria, but
the problem falls in the ethics of the profession itself. Other such factors that have
led to fraudulent accounting cases include: pressure on senior management to meet
goals, autocratic management systems, aggressive accounting practices and poor
systems of internal control. (Al-Qashi, 2005)
A COSO's mission statement was stated in a study titled A need for ethics in
accounting, it stated that it aims to develop "comprehensive frameworks and
guidance on enterprise risk management, internal control and fraud deterrence
designed to improve organization performance and governance and to reduce the
extent of fraud in organizations" (Rebich, 2013)

In a study titled The Extent of Physical Education Teachers Compliance with
the Professional Code of ethics and Conduct in Tanzania says that the term
profession has its roots in the Latin word profess, meaning to be an expert in some
skills or field of knowledge. However, in daily language, it is generally used to mean
an activity for which one is paid as opposed to doing voluntarily.
Basing on different conceptions of professionalism this study have drawn some
common characteristics of professionalism that include a service to society, implying
an ethical and moral commitment to clients; a body of scholarly knowledge that
forms the basis of the entitlement to practice, engagement in practical action, hence
the need to enact knowledge in practice, the importance of experience in developing
practice, hence the need to learn by reflecting on ones practice and outcome, and
the development of professional community that aggregates and shares knowledge
and develops professional code of ethics and conduct.
This study has cited different authors that have different definitions of ethics.
One author has defined ethics as the one that refers to morals, values, and beliefs
of individuals, family or society while another author says that ethics is interested in
shaping and improving the communication and behavior of people. (Mabagala,
2013)
Stated in the study titled Comparing Teacher and Administrator Perspectives
on Multiple Dimensions of Teacher Professionalism professional ethics is the
entire set of general regulations considering the jobs performed by the members of
a profession in an ethical way and complied with by most of the members. They
conducted a study on teachers perspectives on professionalism. Focus group
interview with elementary school teachers was used to collect data. Their results
indicated that teachers conceptualization of professionalism matched many of the
descriptions on teacher professionalism and effectiveness. They noted that teachers
understood that professionalism is exhibited in many ways and encompasses both
attitudes and behaviors. These include: character, commitment to change and
continuous improvement, subject knowledge, pedagogical knowledge and
obligations and working relationships beyond the classroom. It also code of ethics
as a written document produced by a professional association, occupational
regulatory body, or other professional body with the stated aim of guiding the
practitioners who are members, protecting service users and safeguarding the
reputation of the profession. (Tichenor & Tichenor, 2009)
In the study titled Evaluation of the professional preparation and certification
of athletics coaches in Kenya it emphasized that the code of ethics provides the
framework and values upon which professionals base their practice. According to
him the values an individual has (or has not) influence all decisions the person
makes. Although every country may have its distinctive design or model as regards
the respective code of ethics or conduct, in many countries the key components or
principles are commitment of the members of the profession in their relationships to
students, colleagues, parents, guardians, the profession, professional association,
employer and the state. The main objectives of the professional code ethics and
conduct are to enhance commitment, dedication and efficiency of service among

members of the profession. In summarizing the functions of codes of ethics, He
contends that: in addition to the protection of clients, codes provide guidance
about how to act and how to make ethical decisions, either through encouraging
ethical awareness and reflection or through explicit rules. Codes create and maintain
professional identity and status through the explicit statement of the core purpose,
key ethical principles, the kinds of qualities expected of people who belong to the
profession and the kinds of conduct required. Finally, codes provide professional
regulation through requiring members of a professional group to adhere to the code
and using it for disciplinary purposes in cases of misconduct. (Mwisukha, 2006)
Anangisye and Barrett (2005) conducted a study titled Teachers Compliance
with the Professional Code of Ethics and Conduct to identify the teachers views on
professionalism and on conduct. The study was qualitative and utilized a semi-
structured interview, documentary review and focus group discussion with teachers,
District Education Officers, school inspectors, and officers from the Prevention of
Corruption Bureau. Their findings indicated that there was widespread of corruption
including examination leakage/cheating and mismanagement of school resources.
LOCAL STUDIES
A study conducted by Racelis (2010) titled Developing A Virtue Ethics Scale:
Exploratory Survey of Philippine Managers stated that there is a need to
continuously debate ethics and values, especially since these impact the direction
that the business community will take in the years to come. In turn, the results may
provide the evidence that there is a need for further training in ethical sensitivity on
the part of managers and employees because in the first few years of the twenty-
first century, the corporate world has come under increasing pressure to behave in
an ethically responsible manner. In particular, accountability failures have led to
bankruptcies and restatements of financial statements that have harmed countless
shareholders, employees, pensioners, and other stakeholders. These failures have
created a crisis of investor confidence and caused stock markets around the world
to decline by billions of dollars.
It was emphasized in a study titled On the Nature of Ethics for Teachers that
the proponents of a code of ethics for teachers hold fast to the view that teachers
are exemplars of morality. This is based on an instance when educators were asked
about how they practice values, surprisingly, almost half of their answers were not
related to teaching and learning methods. They believed that they express values
through their own attitudes, and their moral attitudes affect the moral education of
their pupils. Role modeling, in this sense, goes beyond the four walls of the
classroom. Education and morality are connected through the moral considerations
of educative activity, and that teachers role in moral education is to produce good
men. In order to do so, teachers invariably take on role modeling whether
consciously or subconsciously and whether inside or outside the classroom. It is
through role modeling that teachers become moral agents. (Caslib, 2014)
A study titled Professionalization of Adult Educators: The Philippine
Experience discussed the three components of the concept of professionalization

which was yielded from a focus group discussion (FGD), an open-ended
questionnaire on professionalization, a phone and face to face interaction with some
officials of higher education institutions like the National Network of Normal Schools
(3NS), NGOs and PRC and PRB members and Philippine Education for All
literatures. It is a process, has standards and with definite goals. As a process, it
suggests a systematic procedure that allows entry to the profession of the adult
educator through a variety of capacity building activities/programs and other
professional requirements and continuing programs. What comes with the process
is the standards set by a professional body to guarantee quality assurance, in terms
of delivery of adult education activities and qualifications of the adult educator, such
as competence (knowledge, skills, attitude, disposition, professional ethical values
and positive work values), expertise in the profession, advocacy and spirit of
volunteerism. The third component of professionalization is its definite goal which is
to enhance the competence (knowledge, skills, attitude, values and ethics) to ensure
the desired intent of adult education in the Philippines which are the following: (a)
achieve a 50% improvement on level of adult literacy by 2015 especially for women
and equitable access to basic and continuing education for all adults; (b) to realize
functional literacy and life skills by 2015; (c) reduce poverty by half in 2015 and (d)
improve practitioners experience, knowledge, skills and attitude as they enter
professional development. In the Philippines, the above is directly linked with the
Educational for All (EFA) goals of UNESCO by way of the new concept of Quality of
Education anchored on functionality. The new function of functional literacy is

equated with the notion of life skills/lifelong learning rooted in the four pillars of
education articulated by Delors Commission. (Gines, 2013)
SYNTHESIS
With todays fast-changing global marketplace and various economic issues, it
is difficult to determine if a good business can mean a clean business. Numerous
business scandals alarmed the public, professionals and stakeholders. One of the
most alarming business scandals is the fall of Enron Company and its auditors,
Arthur Anderson Company. Their fall was not because of insufficiency of accounting
and auditing standards but the insufficient application of ethics in the profession. The
corporate world has come under increasing pressure to behave in an ethically
responsible manner. Failures particularly in lack of accountability have led to
bankruptcies and restatements of financial statements that have harmed countless
shareholders, employees, pensioners, and other stakeholders. These failures have
created a crisis of investor confidence and caused stock markets around the world
to decline by billions of dollars. The need for authenticity and authentic leadership
became a necessity and the only way to address this is to gain the trust and
confidence of the people. This is how ethics in businesses have been developed
and given emphasis. It was then considered not just an afterthought. It should be
the practice and norm that shapes in every level of corporate structure.
The corporate world is not the only one that gives emphasis in ethics but also
the different profession in the society. Profession is derived from the Latin word
profess which means to be an expert in some skills or field of knowledge. A
professional need to be a servant to the society, able to imply ethical and moral
commitment to clients, enacts knowledge in practice and reflects ones practice and
outcome in the development of professional community that aggregates and shares
knowledge and develops professional code of ethics and conduct.
Professional ethics is the entire set of general regulations considering the jobs
performed by the members of a profession in an ethical way and complied with by
most of the members. The professional conduct depicts a set of ethical rules and
virtues which are binding to all the individuals and groups who work in the society.
These rules of morals and ethics are essential for the existence and continuity of
societies.
To guide the professionals and practitioners, protect service users and
safeguard the reputation of profession, professional association, occupational
regulatory body, or other professional body produced the code of ethics. It is a
written document that provides the formalized rules, standards, framework and
values upon which professionals base their practice. It helps to provide limit of
misconduct. It serves as a professional regulation through requiring members of a
professional group to adhere to the code and using it for disciplinary purposes in
cases of misconduct. Thus, without it, it would be difficult for the professionals to
determine which conduct is acceptable and the right thing to do.

The professional code of ethics has the main objectives of enhancing
commitment, dedication and efficiency of servicing among the members of the
profession. In addition with the objectives of providing guidance about how to act
and how to make ethical decisions, the codes aims for the protection of clients either
through encouraging ethical awareness and reflection or through explicit rules.
Through the explicit statement of the core purpose, key ethical principles, the kinds
of qualities expected of people who belong to the profession and the kinds of conduct
required, codes create and maintain professional identity and status. The
establishment of codes of ethics and conduct and training programs are seen as the
most important corporate practices for contributing toward an ethical culture.
With proper implementation and practice, there are lots of advantages that can
be reaped particularly when the objectives of the code of ethics are achieved. Code
of ethics may vary in different countries and profession but the core that holds the
real purpose of it altogether are the commitment of the members of the profession
in their relationships to students, colleagues, parents, guardians, the profession,
professional association, employer and the state. For instance, in the profession of
teachers, code of ethics is also applied because of the view that teachers are
exemplars of morality. Teachers role in moral education is to produce good men.
They shape the society by being a role model with their way of practicing their
values, attitudes, behavior and ethical way of thinking. Thus, making education and
morality connected through the moral considerations of educative activity. In line
with this, their respective professional body established a standard to ensure

professionalism in their professional field that guarantees quality assurance, in terms
of delivery of adult education activities and qualifications of the adult educator, such
as competence (knowledge, skills, attitude, disposition, professional ethical values
and positive work values), expertise in the profession, advocacy and spirit of
volunteerism. Accordingly, accountants as professionals serves as an important role
to play in the public sphere. It is expected that professional accountants are highly
competent, reliable, and objective in their job because their actions have an impact
on others particularly the users of financial report and especially, the decision
makers.
There are always certain good practices and questionable or wrong practices
and activities in business that are inevitable. It is necessary in the corporate world
to determine what is the right and wrong human behavior and conduct in business.
Ethics refers to what is morally good and the right thing to do. Business ethics serves
as a guide to have an understanding in the perceptions of people about morality,
moral norms, moral rules, and ethical principles as they apply to peoples and
institutions in business. It also contributes in shaping and improving the
communication and behavior of people. With ethics in business, managers and
decision makers are able to evaluate, analyze and question the ethical standards,
policies, moral norms, and ethical theories that will help them in resolving moral
issues and ethical dilemmas affecting business.
Organizations and professionals that perform their tasks in conformance with
the principle of ethics have a strong reputation since people are most likely tend to
do business with them. With their application of ethics, they have gain the trust and
confidence of the people and eventually able to build up a strong public image.
Accordingly, with their proper implementation of ethics, they have prevented legal
actions against illegal and objectionable activities since they only do what is morally
good and the right thing to do and avoid all that is wrong and evil which creates long
term relationships that leads to continual loyalty and attracts new investors.
The related literatures and studies above had aided the formulation of the
conceptual framework. They have clearly presented the importance of complying
with the code of ethics in todays business. A common concept for the application of
code of ethics in the corporate world is because of the need to earn the trust and
confidence of the people due to numerous alarming business scandals. Integrating
them could lead to a common denominator of gaining trust and confidence in the
corporate world.
Chapter 3
RESEARCH METHODOLOGY
This chapter deals with the design and procedures undertaken during the
conduct of the study. It includes the method of research, population, sample size,
sampling techniques, description of the respondents of the study, sampling
technique, research instrument, data gathering procedures, and statistical treatment
of data.
Research Method Used
The researchers of the study used the descriptive research method which was
used to gather, describe, measure, analyze and interpret the meaning of the studies
and hypothesis of the study which may develop to further studies in data collection
and investigation of the pre-existing environments present as to the condition of field
of study. Descriptive survey was defined as follows Descriptive research describes
and interprets what is, it reveals conditions on relationships that exist or do not
exist, practices that prevail or do not prevail, beliefs or point of view or attitudes that
are held or are not held, processes that are going on or otherwise, affects that are
being felt or trends that are developing. (Baysa, Geronimo & Salvador, 2008, p.58)
As to performance of the study, the researchers used the definition given for
the reason that the idea of the authors relates on how the research was performed.
The word survey questionnaire signifies the careful examination of data regarding
present conditions. A survey questionnaire is useful in viewing or considering in a
comprehensive way the value of facts and focusing attention in the most important
things to be reported. Descriptive survey method will enable the researchers to
gather information about present existing conditions. When the goal is provide
objective findings about a research, the descriptive method will be used to deliver
factual and accurate systematic description.
As it is used in this research, gathering and treating of data from the survey
questionnaire is composed of individual respondents profile of the members of the
firm, company respondents profile as to companys perspective and their perception
of the firms commitment in compliance as to Code of Ethics.
Population, Sample Size and Sampling Technique
The researchers used non probability sampling by convenience to select
the respondents for this study. The respondents were equally chosen, having six
respondents in each firm.
The samples the researchers have are equally distributed in terms of
respondents per firm to obtain a balanced response.
Description of Respondents
The respondents of the study considered Certified Public Accountants who are
part of the 5 chosen auditing firms. The firms chosen are Tardecilla Verdolaga &
Co., Sycip, Gorres, Velayo & Co., Uy Singson Abella & Co., Reyes, Tacandong &
Co., and A.E. Jimenez & Co.
Research Instrument
In this research, the instruments used are questionnaire, which are necessary
for descriptive method and was applied as a tool in inquiring for the feedback of the
respondents. Contents of the questionnaire was adapted from Code of Ethics of
Certified Public Accountants in the Philippines that includes fundamental principles
which are Integrity, Confidentiality, Professional Behavior, Professional Ethics and
Due Care, Objectivity, Client Acceptance and Marketing Professional Services
which is said to be strictly followed by every member of Philippine Institute of
Certified Public Accountants.
The questionnaire that was provided to the respondents is divided into two
parts. The first part is the respondents profile which is subdivided into two parts, the
individual respondents profile of the members of the firm and the company
respondents profile as to the companys perspective, while the other one is about
the compliance as to the requirements of Part A of Code of Ethics for Certified Public
Accountants in the Philippines. The first subdivided part which is the individual
respondents profile of the members of the firm includes Civil Status, Highest
Educational Attainment, Current Position and Years in Present Position. The second
subdivided part is about the company respondents profile including, Years of
Operations, Major Clients, Approximate Number of Employees, Areas of Service

and Service Offered. While the last part is about the compliance as to Code of Ethics
of the respondents which comprises Integrity, Objectivity, Independence,
Professional Competence and Due Care, Confidentiality, Professional Behavior,
Professional Appointment and Marketing Professional Services.
Likert scale was used to modify the answers of the respondents considering
five options with the corresponding scale. The five options are: (5) Highly Complied;
(4) Complied; (3) Somewhat Complied; (2) Less Complied and (1) Not Complied/Not
Applicable Practice. Respondents will be requested to check the space provided for
each option. The scale value, the range of the weighted and verbal interpretation of
scale intervals are discussed and shown in the Statistical Treatment of Data of this
chapter.
Data Gathering Procedures
The researchers had gone through a series of observation, brainstorming and
readings in constructing their questionnaire so as to develop one which will fit the
study best. The researchers used Survey Questionnaires, Company visit and
Observation, Structured Interview, and different Statistical Analyses.
Statistical Treatment of Data
The data that was collected in this study was organized and classified based
from the research design and the problems formulated. The data was be coded,
tallied and tabulated to facilitate the presentation and interpretation of results using
the following:
1. Frequency and Percentage The percentage and frequency distribution
was used to classify the respondents according to individual respondents variables
and company respondents variables. The frequency was also used to present the
actual response of the respondents to a specific question or item in the
questionnaires.
On the other hand, the percentage of that item was computed by dividing it with
the sample total number of respondents who participated in the survey.
The formula used in the application of this technique is:

% = 100

Where:
% = percentage
f = frequency
N = number of the responses
2. Ranking This is a descriptive measure to describe numerical data in
addition to percentage. Ranking was used in the study for comparative purpose
and for sharing the importance of items analyzed.
3. Weighted Mean It was the statistical tool used in the interpretation of
data and the testing of the .05 hypotheses. It was used to determine the average
responses of the different options provided in the various parts of the survey
questionnaire used. The formula that was used in this statistical technique is:

=

Where:
x = the weighted arithmetic mean
= the sum of all the products of f and x
f = the frequency of each weight
x = the scale value of each
N = number of weights
4. Analysis of Variance (ANOVA) It is also called the F-test. The analysis
of variance (ANOVA) is a method for dividing the variation observed into different
parts, each part assignable to a known source, cause, or factor. The ANOVA was
developed by R.A. Fisher and reported by him in 1923. Simply stated, it is used
when we wish to test the significance of the difference between two or more means
obtained from independent samples. The one way F-test factor ANOVA was used
because there is only one factor being studied as independent variable.
The following formula was used to compute for the F-test ratio:
Sum of Squares:
2 ( 1 )2
= t

Where:
= total sum of squares
2 = total sum of x2
2
( 1 ) = square of total sum of x
n = total number of samples
Sum of Square between:
( 1 )2 ( 1 )2 ( 1 )2 ( 1 )2 ( 1 )2
=

Where:
SSb = sum of square between
X1 = summation of x
n = total number of sample
Sum of Square within:
=
Where:
= sum of square within
= sum of square total
= sum of square between

Degrees of Freedom:
= 1
= - k
Where:
= degrees of freedom between
= degrees of freedom within
Mean Square:
Where:
= mean square between
= sum of square between
= degrees of freedom between
Where:
= mean square within
= sum of square within
=degrees of freedom within

F Ratio:

F=

Where:
F = F-test ratio
= mean square between
= mean square within
After computing the F-test ratio value, decision as to accept or reject the stated
null hypothesis is based on the decision rule below.
Reject hypothesis if the computed F- value is greater than the tabular F-ratio
value, accept if otherwise.
5. Likert Scale A type of psychometric response scale often used in
questionnaires and is the most widely used scale in survey research. When
responding to Likert questionnaire item, respondents will specify their level of
agreement to the statement. A scale of five was used. The scale is named after
Rensis Likert, who published a report describing its use.
The 5 point scale value, the range of the weighted and verbal interpretation of
scale intervals used in interpreting the level of compliance relative to Integrity,
Objectivity and Independence, Professional Competence and Due Care,
Confidentiality, Professional Behavior and Marketing Professional Services, and
Professional Appointment and Conflict of Interest are as follows:

Scale Value Range Verbal Interpretation
5 4.51 5.0 Highly Complied
4 3.51 4.5 Complied
3 2.51 3.5 Somewhat Complied
2 1.51 2.5 Less Complied
1 1.0 1.5 Not Complied
The 10 point scale value, the range of the weighted and verbal interpretation of
scale intervals used in interpreting the problems encountered by the respondents on
the level of Compliance in Code of Ethics for Professional Accountants in the
Philippines of Auditing Firms in Metro Manila are as follows:
Scale Value Range Verbal Interpretation
9 10 8.81-10.0 Highly Serious
78 6.81- 8.0 Serious
56 4.81-6.80 Somewhat Serious
34 2.81- 4.80 Less Serious
12 1.00 - 2.80 Not Serious

Chapter 4
PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA
This chapter shows the data gathered that had undergone statistical treatment.
The tabulated data were presented, analyzed and interpreted in order to answer the
specific questions in the statement of the problem. Analytical Tables were also
presented according to the sequence of specific questions.
1. Profile of the Respondents
1.1 Profile of the Individual Respondents in terms of Highest
Educational Attainment, Current Position, Department, Number of Years
in Present Position and Number of Years Working in the Firm.
Table 1
Frequency and Distribution of Respondents According to Highest
Educational Attainment
Highest Educational Attainment Frequency Percent

Bachelors Degree 30 100.0
Masters Unit 0 0.0
Masters Degree 0 0.0
Doctoral Unit 0 0.0
Doctorate Degree 0 0.0
Total 30 100.0
Table 1 above shows that out of 30 respondents, 30 or 100%of the respondents
are holders of bachelors degree.

Table 2
Frequency and Distribution of Respondents According to Current Position
Current Position Frequency Percent

Associate 18 60.0
Senior Associate 8 26.7
Partner 3 10.0
Junior Auditor 1 3.3
Total 30 100.0
Table 2 above shows that out of the 30 respondents, 18 or 60% of the
respondents are Associates, 8 or 26.7% are Senior Associates, 3 or 10% are
Partners and 1 or 3.3% is a Junior Auditor.
Table 3
Frequency and Distribution of Respondents According to Department
Department Frequency Percent

Audit Department 28 93.3
Managerial Advisory Services Department 0 0.0
Tax Department 0 0.0
Overall operations 2 6.7
Total 30 100.0
Table 3 above shows that out of the 30 respondents, 28 or 93.3% of the
respondents are under the Audit Department and 2 or 6.7% are under the overall
operations.
Table 4
Frequency and Distribution of Respondents According to Number of Years in
Present Position
Number Of Years in Present Position Frequency Percent
2 years and below 23 76.7
More than 2 up to 4 years 7 23.3
Total 30 100.0
respondents are working in their present position for 2 years and below and 7 or
23.3% are working for more than 2 up to 4 years.
Table 5
Frequency and Distribution of Respondents According to Number of Years
Working in the Firm
Number Of Years Working in the Firm Frequency Percent

2 years and below 20 66.7
Total 30 100.0
respondents are working in the firm for 2 years and below, 6 or 20.0% are working
for more than 2 up to 4 years, 3 or 10.0% are working for more than 4 up to 6 years
and 1 or 3.3% are working for more than 6 up to 8 years.
1.2 Profile of Respondents as to Companys Perspective in terms of Years
in Operations, Major Clients, Approximate Number of Employees, Areas of
Service and Services Offered.
Table 6
Frequency and Distribution of Auditing Firms According to Years in
Operations
Years in Operations Frequency Percent

More than 25 years 18 60.0
Total 30 100.0
respondents are operating for more than 5 up to 10 years, 6 or 20.0% are operating
for more than 10 up to 15 years and 18 or 60.0% are operating for more than 25
years.
Table 7
Frequency and Distribution of Auditing Firms According to Major Clients
Major Clients Frequency Percent

Government 0 0.0
Private Entities 30 100.0
General Public 0 0
Private Individuals 0 0.0
Non-Profit Organizations 0 0.0
Others 0 0.0
Total 30 100.0
respondents have private entities as their major clients.
Table 8
Frequency and Distribution of Auditing Firms According to Approximate
Number of Employees
Approximate Number of Employees Frequency Percent

Less than 50 12 40.0
50 up to 100 6 20.0
251 up to 500 6 20.0
More than 1000 6 20.0
Total 30 100.0
Table 8 above shows that out of the 30 respondents from 6 firms, 12 or 40.0%
of the firms have an approximate number of employees of less than 50, 6 or 20.0%
have 50 up to 100, 6 or 20.0% have 251 up to 500, and 6 or 20.0% have more than
1000.
Table 9
Frequency and Distribution of Auditing Firms According to Areas of Service
Areas of Service Frequency Percent

Areas of Service - Metro Manila 24 80.0
Areas of Service Luzon 24 80.0
Areas of Service Visayas 12 40.0
Areas of Service Mindanao 12 40.0
Areas of Service - Middle East 6 20.0
Areas of Service Europe 6 20.0
Areas of Service Asia 6 20.0
Areas of Service Japan 6 20.0
Areas of Service India 6 20.0
Table 9 above shows that out of the 30 respondents from 6 firms, 24 or 80.0%
offers their services in Metro Manila, 24 or 80.0% offers in Luzon, 12 or 40.0% offers
in Visayas, 6 or 20.0% offers in Mindanao, 6 or 20.0% offers in Middle East, 6 or
20.0% offers in Europe, 6 or 20.0% offers in Asia, 6 or 20.0% offers in Japan, and 6
or 20.0% offers in India.

Table 10
Frequency and Distribution of Auditing Firms According to Services Offered
Services Offered Frequency Percent

Service Offered Audit 30 100.0
Service Offered - Agreed Upon Procedure
24 80.0
Services
Service Offered - Compilation of Financial
24 80.0
and Other Information
Service Offered - Tax Services 30 100.0
Service Offered - Management Consulting
24 80.0
or Advisory Services
Service Offered - Accounting and Data
Processing and Information Technology 12 40.0
System Services
Service Offered Outsourcing 6 20.0
Service Offered - International Accounting
6 20.0
Standards Conversions and Advisory
Service Offered - Regulatory Compliance 6 20.0
Service Offered - Due Diligence Work 6 20.0
Service Offered - Fraud and Investigative
6 20.0
Dispute Services
Table 10 above shows that out of the 30 respondents from the 6 firms, 30 or
100.0% of the respondents offers audit services, 24 or 80.0% offers agreed upon
procedure services, 24 or 80.0% offers compilation of financial and other
information, 30 or 100.0% offers tax services, 24 or 80.0% offers management
consulting or advisory services, 12 or 40.0% offers accounting and data processing
and information technology system services, 6 or 20.0% offers outsourcing, 6 or
20.0% offers international accounting standards conversions and advisories, 6 or

20.0% offers regulatory compliance, 6 or 20.0% offers due diligence work and 6 or
20.0% offers fraud and investigative dispute services.
2. Evaluation of the Level of Compliance in Code of Ethics for
Professional Accountants in the Philippines of Auditing Firms in Metro Manila
in Terms of the following: Integrity, Objectivity and Independence,
Professional Competence and Due Care, Confidentiality, Professional
Behavior and Marketing Professional Services, and Professional Appointment
and Conflict of Interest.
The weighted mean was interpreted using the following 5 point Likert scale:
Range Verbal Interpretation
4.51 5.0 Highly Complied
3.51 4.5 Complied
2.51 3.5 Somewhat Complied
1.51 2.5 Less Complied
1.0 1.5 Not Complied

Table 11
Level of Compliance in Code of Ethics In Terms of Integrity, Objectivity and
Independence
Weighted Verbal
Integrity, Objectivity and Independence Mean Interpretation
Rank
Exercises straightforwardness and honesty in all professional business

4.47 Complied 4
relationships.
The firm or members of the firm is not associated with reports, returns,
communication or other information where they believe the information Highly
4.53 3
contains a materially false or misleading statement or information furnished Complied
recklessly and omits or obscure information that would be misleading.
Never allowed bias, conflict of interest or undue influence of others to
4.47 Complied 4
override professional or business judgment.
Provides that reports and statements made by the members of the firm are
result from applying a financial reporting framework for recognition. Highly
4.63 2
Measurement, presentation and disclosure, such as PFRS, to an entitys Complied
financial statement.
Provides that expression of a conclusion without being affected by
influence that compromise professional judgment, allowing individual to act 4.40 Complied 8
with integrity and exercise objectivity and professional skepticism.
Avoidance of facts and circumstances that are so significant that a
reasonable and informed third party, having knowledge of all relevant
Highly
information, including safeguards applied, would reasonably conclude a 4.67 1
Complied
firms, or a member of the assurance teams integrity, objectivity or
professional skepticism had been compromised.
Leadership of the firm that establishes the expectation those members of
4.47 Complied 4
an assurance team will act in public interest.
Policy and procedures to implement and monitor quality control of
4.47 Complied 4
engagements.
Policies and procedures that will enable the identification of interests or
relationships between the firm or members of engagement teams and 4.33 Complied 10
clients
Policies and procedures to prohibit individuals who are not members of an
engagement team from inappropriately influencing the outcome of the 4.33 Complied 12
engagement.
Published policies and procedures to encourage and empower staff to
communicate to senior levels within the firm any issue relating to 4.33 Complied 10
compliance with the fundamental principles that concerns them.
Designating a member of senior management to be responsible for
4.17 Complied 15
overseeing the adequate functioning of the firms quality control system.
Involving an additional professional accountant to review the work done or
4.03 Complied 17
otherwise advise as necessary.
Consulting an independent third party, such as a committee of independent
directors, a professional regulatory board or another professional 3.93 Complied 18
accountant.
Discussing ethical issues with those charged with governance of the client
4.23 Complied 13
the nature of service provided and extend fee charged.
Involving another firm to perform or re-perform of the engagement. 3.80 Complied 19
Rotating senior assurance team personnel. 4.13 Complied 16
Disclosing to those charged with governance of the client the nature of
4.40 Complied 8
service provided and extent of fees charged.
A disciplinary mechanism to promote compliance with policies and
4.23 Complied 13
procedures.
Table 11 above shows that the overall weighted mean is 4.32 with an
interpretation of Complied, out of 19 variables 3 has an interpretation of Highly
Complied which are The firm or members of the firm is not associated with reports,
returns, communication or other information where they believe the information
contains a materially false or misleading statement or information furnished
recklessly and omits or obscure information that would be misleading. obtained a
weighted mean of 4.53 and ranked 3rd based on the weighted mean, Provides that
reports and statements made by the members of the firm are result from applying a
financial reporting framework for recognition., Measurement, presentation and
disclosure, such as PFRS, to an entitys financial statement. (WM=4.63) and ranked
2nd, and Avoidance of facts and circumstances that are so significant that a
reasonable and informed third party, having knowledge of all relevant information,
including safeguards applied, would reasonably conclude a firms, or a member of
the assurance teams integrity, objectivity or professional skepticism had been
compromised. (WM=4.67) and ranked 1st, and 16 variables with an interpretation
of Complied from the variables Exercises straightforwardness and honesty in all
professional business relationships. (WM=4.47) and ranked 4th, Never allowed
bias, conflict of interest or undue influence of others to override professional or
business judgment. (WM=4.47) and ranked 4th, Provides that expression of a
conclusion without being affected by influence that compromise professional
judgment, allowing individual to act with integrity and exercise objectivity and
professional skepticism. (WM=4.40) and ranked 8th,Leadership of the firm that

establishes the expectation those members of an assurance team will act in public
interest. (WM= 4.47) and ranked 4th, Policy and procedures to implement and
monitor quality control of engagements. (WM=4.47) and ranked 4th, Policies and
procedures that will enable the identification of interests or relationships between
the firm or members of engagement teams and clients. (WM=4.33) and ranked
10th, Policies and procedures to prohibit individuals who are not members of an
engagement team from inappropriately influencing the outcome of the engagement.
(WM = 4.33) and ranked 12th, Published policies and procedures to encourage and
empower staff to communicate to senior levels within the firm any issue relating to
compliance with the fundamental principles that concerns them. (WM= 4.33) and
ranked 10th, Designating a member of senior management to be responsible for
overseeing the adequate functioning of the firms quality control system. (WM=4.17)
and ranked 15th, Involving an additional professional accountant to review the work
done or otherwise advise as necessary. (WM=4.03) and ranked 17th, Consulting
an independent third party, such as a committee of independent directors, a
professional regulatory board or another professional accountant.(WM= 3.93) and
ranked 18th, Discussing ethical issues with those charged with governance of the
client the nature of service provided and extend fee charged. (WM=4.23) and
ranked 13th, Involving another firm to perform or re-perform of the engagement.
(WM=3.80) and ranked 19th, Rotating senior assurance team personnel.
(WM=4.13) and ranked 16th, Disclosing to those charged with governance of the
client the nature of service provided and extent of fees charged. (WM= 4.40) and
ranked 8th, and lastly A disciplinary mechanism to promote compliance with policies
and procedures. (WM= 4.23) and ranked 13th.
Table 12
Level of Compliance in Code of Ethics In Terms of Professional Competence
and Due Care
Weighted Verbal
Professional Competence and Due Care Rank
Mean Interpretation
Policy to maintain professional knowledge and skill at
the level required to ensure that clients or employers 4.43 Complied 6
receive competent professional service.
Policy and procedures to act diligently in accordance
with applicable technical and professional standards 4.50 Complied 3
when providing professional services.
Policy and procedures includes that the member of the
firms should make clients and other users of the
professional services aware of the limitations inherent 4.47 Complied 5
in the services to avoid the misinterpretation of an
expression of opinion as an assertion of fact.
Promotes continuing professional development to
Highly
perform competently within the professional 4.67 1
Complied
environments.
Research, analyze and ensure the implementation of Highly
4.57 2
new techniques and changes in accounting standards. Complied
Promotes yearly seminars regarding recent accounting
changes and adapting Information Technology systems 4.50 Complied 3
techniques.
Providing training to maintain the competence of the
4.37 Complied 8
members of the firms with the newest technologies.
Identify problems and adapt changes in requirements
regarding management needs and other auditing 4.37 Complied 8
procedures.
Provision of services in connection with the
assessment, design and implementation of internal
accounting controls and risk management controls are
4.40 Complied 7
not considered to create a threat to independence
provided that firm or network personnel do not perform
management functions.
interpretation of Complied, out of 9 variables 2 have an interpretation of Highly

Complied which are Promotes continuing professional development to perform
competently within the professional environments. obtained a weighted mean of
4.67 and ranked 1st based on the weighted mean, and Research, analyze and
ensure the implementation of new techniques and changes in accounting
standards. (WM=4.57) and ranked 2nd. And 7 variables with an interpretation of
Complied which are "Policy to maintain professional knowledge and skill at the
level required to ensure that clients or employers receive competent professional
service. (WM=4.43) and ranked 6th, Policy and procedures to act diligently in
accordance with applicable technical and professional standards when providing
professional services. (WM=4.50) and ranked 3rd, Promotes yearly seminars
regarding recent accounting changes and adapting Information Technology systems
techniques. (WM=4.50) and ranked 3rd, Providing training to maintain the
competence of the members of the firms with the newest technologies. (WM=4.37)
and ranked 8th, Identify problems and adapt changes in requirements regarding
management needs and other auditing procedures. (WM=4.37) and ranked 8th, and
lastly Provision of services in connection with the assessment, design and
implementation of internal accounting controls and risk management controls are
not considered to create a threat to independence provided that firm or network
personnel do not perform management functions. (WM=4.40) and ranked 7th.

Table 13
Level of Compliance in Code of Ethics In Terms of Confidentiality
Weighted Verbal
Confidentiality Rank
Mean Interpretation
Policy and procedures to refrain from
disclosing outside the firm or employing
organization confidential information acquired
as a result of professional and business 4.27 Complied 8
relationships without proper and specific
authority or unless there is a legal or
professional right or duty to disclose.
Policy and procedures to refrain from using
confidential information acquired as a result of
professional and business relationships to 4.33 Complied 7
their personal advantage or the advantage of
third parties.
Alertness of the members of the firm to the
possibility of inadvertent disclosure,
particularly in circumstances involving long 4.50 Complied 4
association with a business associate or a
close or immediate family member.
Policy and procedure in maintaining
Highly
confidentiality of information disclosed by a 4.57 2
Complied
prospective client or employer.
Considering the need to maintain
confidentiality of information within the firm or 4.33 Complied 5
employing organization.
Taking all reasonable steps to ensure that
staff under the professional accountants
control and persons from whom advice and
4.33 Complied 5
assistance is obtained respect the
professional accountants duty of
confidentiality.
Compliance to the principle of confidentiality
continues even after the end of the Highly
4.63 1
relationships between a professional Complied
accountant and a client or employer.
Ensuring the refrainment of disclosing Highly
4.53 3
confidentiality even in a social environment. Complied
Complied which are Policy and procedure in maintaining confidentiality of
information disclosed by a prospective client or employer. Obtained a weighted
mean of 4.57 ranked 2nd, Compliance to the principle of confidentiality continues
even after the end of the relationships between a professional accountant and a
client or employer. (WM=4.63) and ranked 1st, and Ensuring the refrainment of
disclosing confidentiality even in a social environment. (WM=4.53) and ranked 3rd.
And 5 variables has an interpretation of Complied which are Policy and
procedures to refrain from disclosing outside the firm or employing organization
confidential information acquired as a result of professional and business
relationships without proper and specific authority or unless there is a legal or
professional right or duty to disclose. (WM=4.27) and ranked 8th, Policy and
procedures to refrain from using confidential information acquired as a result of
professional and business relationships to their personal advantage or the
advantage of third parties. (WM=4.33) and ranked 7th, Alertness of the members
of the firm to the possibility of inadvertent disclosure, particularly in circumstances
involving long association with a business associate or a close or immediate family
member. (WM=4.5) and ranked 4th, Considering the need to maintain
confidentiality of information within the firm or employing organization. (WM=4.33)
and ranked 5th, and lastly Taking all reasonable steps to ensure that staff under the
professional accountants control and persons from whom advice and assistance is
obtained respect the professional accountants duty of confidentiality. (WM=4.33)
and ranked 5th.
Table 14
Level of Compliance in Code of Ethics In Terms of Professional Behavior and
Marketing Professional Services
Professional Behavior and Marketing Professional Weighted Verbal

Rank
Services Mean Interpretation
Imposing an obligation to the members of the firm
to comply with relevant laws and regulations and
4.40 Complied 5
avoid any action that may bring discredit to the
profession.
Avoidance of making exaggerated claims for the
services they are able to offer, the qualifications 4.43 Complied 4
they possess, or experience they have gained.
Avoidance of making disparaging references
unsubstantiated comparisons to the work of 4.43 Complied 3
others.
Advertising and publicity in any medium are
acceptable provided that it has the objective the
notification to the public or such sectors of the
public is concerned, of matters of fact in a manner
Highly
that is not false, misleading or deceptive, has 4.57 1
Complied
good taste, professionally dignified and avoid
frequent repetition of, and any undue prominence
being given to the name of the firm or professional
accountant in public practice.
Avoidance of self-laudatory statements, giving so
much emphasis on competitive differences, citing
actual or purported testimonials by third parties 4.37 Complied 6
and use of publishing services in billboard
advertisements in publicizing the firm.
Avoidance of use of name of an international
accounting firm affiliation/correspondence other Highly
4.57 1
than a notation that it is a Complied
member/correspondents firm of that foreign firm.
Avoidance of identifying the name of a client or
items of a clients business in advertising, public
relations or marketing produced to promote his 4.30 Complied 7
practice provided that the client gives its written
consent.
Complied which are Advertising and publicity in any medium are acceptable
provided that it has the objective the notification to the public or such sectors of the
public is concerned, of matters of fact in a manner that is not false, misleading or
deceptive, has good taste, professionally dignified and avoid frequent repetition of,
and any undue prominence being given to the name of the firm or professional
accountant in public practice. obtained a weighted average of 4.57 and ranked 1st
and Avoidance of use of name of an international accounting firm
affiliation/correspondence other than a notation that it is a member/correspondents
firm of that foreign firm. (WM= 4.57) and ranked 1st. And 5 variables have an
interpretation of Complied which are Imposing an obligation to the members of the
firm to comply with relevant laws and regulations and avoid any action that may bring
discredit to the profession. (WM= 4.40) and ranked 5th, Avoidance of making
exaggerated claims for the services they are able to offer, the qualifications they
possess, or experience they have gained. (WM=4.43) and ranked 4th, |Avoidance
of making disparaging references unsubstantiated comparisons to the work of
others. (WM= 4.43) and ranked 3rd, Avoidance of self-laudatory statements, giving
so much emphasis on competitive differences, citing actual or purported testimonials
by third parties and use of publishing services in billboard advertisements in
publicizing the firm. (WM=4.37) and ranked 6th and lastly Avoidance of identifying
the name of a client or items of a clients business in advertising, public relations or

marketing produced to promote his practice provided that the client gives its written
consent. (WM=4.3) and ranked 7th.
Table 15
Level of Compliance in Code of Ethics In Terms of Professional Appointment
and Conflict of Interest
Weighted Verbal
Professional Appointment and Conflict of Interest Rank
Mean Interpretation
When a client appoints a firm in public practice to
perform an engagement, persons other than 4.23 Complied 8
management ratify or approve the appointment.
Considering whether acceptance would create any
threats to compliance with the fundamental 4.47 Complied 1
principles.
Obtaining knowledge and understanding of the
clients, its owners, managers and those
responsible for its governance and business
4.43 Complied 5
activities, or securing the clients commitment to
improve corporate governance practices or internal
controls.
Acquiring an appropriate understanding of the
nature of the clients business, the complexity of its
operations, the specific requirements of the 4.47 Complied 2
engagement and the purpose, nature and scope of
the work to be performed.
Periodical review of recurring client engagements. 4.40 Complied 6
Evaluation of significance of any threats which
includes considering, before accepting or
continuing a client relationship or specific
engagement , whether the members of the 4.43 Complied 3
assurance team has any business interest, or
relationships with the client or a third party that
could give rise to threats.
Policy and procedures in notifying the client of the
firms business interest or activities that may
4.43 Complied 3
represent a conflict of interest, and obtaining their
consent to act on such circumstances.
Use of separate engagement teams 4.27 Complied 7
interpretation of Complied, out of 8 variables 8 or all have an interpretation of

Complied which are When a client appoints a firm in public practice to perform an
engagement, persons other than management ratify or approve the appointment.
obtained a weighted mean of 4.23 and ranked 8th, Considering whether acceptance
would create any threats to compliance with the fundamental principles. (WM= 4.47)
and ranked 1st, Obtaining knowledge and understanding of the clients, its owners,
managers and those responsible for its governance and business activities, or
securing the clients commitment to improve corporate governance practices or
internal controls. (WM=4.43) and ranked 5th, Acquiring an appropriate
understanding of the nature of the clients business, the complexity of its operations,
the specific requirements of the engagement and the purpose, nature and scope of
the work to be performed. (WM=4.47) and ranked 2nd, Periodical review of
recurring client engagements. (WM= 4.40) and ranked 6th, Evaluation of
significance of any threats which includes considering, before accepting or
continuing a client relationship or specific engagement , whether the members of the
assurance team has any business interest, or relationships with the client or a third
party that could give rise to threats. (WM=4.43) and ranked 3rd, Policy and
procedures in notifying the client of the firms business interest or activities that may
represent a conflict of interest, and obtaining their consent to act on such
circumstances. (WM=4.43) and ranked 3rd, and lastly Use of separate
engagement teams. (W=4.27) and ranked 7th.
3. Significant Difference between Respondents Profile and their
assessment in terms of Companys Compliance in Code of Ethics

Table 16
Significant Differences between Respondents Current Position and the
Compliance in Code of Ethics
Current Position Mean F-test P-value Decision Remarks

Associate 4.2895
Integrity, Senior Associate 4.2829 Fail to
Not
Objectivity and Partner 4.4912 .7669 .5230 Reject
Significant
Independence Junior Associate 4.5789 Ho
Total 4.3175
Associate 4.5062
Professional Senior Associate 4.2778 Fail to
Not
Competence Partner 4.6296 1.5156 .2339 Reject
Significant
and Due Care Junior Associate 5.0000 Ho
Total 4.4741
Associate 4.4375
Senior Associate 4.3281 Fail to
Not
Confidentiality Partner 4.5417 1.4765 .2440 Reject
Significant
Junior Associate 5.0000 Ho
Total 4.4375
Professional Associate 4.4048
Behavior and Senior Associate 4.3750 Fail to
Not
Marketing Partner 4.6190 1.3097 .2924 Reject
Significant
Professional Junior Associate 5.0000 Ho
Services Total 4.4381
Associate 4.3542
Professional Senior Associate 4.3594 Fail to
Appointment Partner 4.5000 Not
1.7221 .1870 Reject
and Conflict of Significant
Interest
Total 4.3917
Based on the data gathered and tabulated, Table 16 above shows the summary
of the difference between respondents current position and compliance in code of
ethics of Associates, Senior Associates, Partners and Junior Auditors that discloses
that there is no significant difference on Integrity, Objectivity and Independence that
has an f-test value of .7669 and p-value of .5230, Professional Competence and
Due Care has an f-test value of 1.5156 and p-value .2339, Confidentiality has an f-
test value of 1.4765 and p-value of .2440, Professional Behavior and Marketing
Professional Services has an f-test value of 1.3097 and p-value of .2924,
Professional Appointment and Conflict of Interest with an f-test value of 1.7221 and
p-value of .1870 and problems encountered has an f-test value of 3.3229and p-value
of .0352. Since all p-values were greater than 0.05, the assumed level of
significance, the null hypotheses, was accepted. There was enough evidence to
conclude that four groups of respondents did not significantly differ in their level of
compliance in code of ethics on the indicated variables.
Table 17
Significant Differences between Respondents Department and the
Compliance in Code of Ethics
Department Mean F-test P-value Decision Remarks
Audit
4.2989
Integrity, Department Fail to
Overall Not
Objectivity and 4.5789 1.9523 0.1733 Reject
operations Significant
Independence Ho
Total 4.3175
Audit
4.4563
Professional Department Fail to
Overall Not
Competence 4.7222 0.8379 0.3678 Reject
and Due Care Ho
Total 4.4741
Audit
4.4196
Department Fail to
Overall Not
Confidentiality 4.6875 1.2839 0.2668 Reject
Ho
Total 4.4375
Professional Audit
4.4082
Behavior and Department Fail to
Overall Not
Marketing 4.8571 3.3216 0.0791 Reject
Professional Ho
Audit
Professional 4.3884
Department Fail to
Appointment Overall Not
4.4375 0.0477 0.8287 Reject
and Conflict of operations Significant
Ho
Interest
Total 4.3917
of the difference between respondents department and compliance in code of ethics
of respondents working under the Audit Department and Overall Operations that
discloses that there is no significant difference on Integrity, Objectivity and
Independence that has an f-test value of 1.9523 and p-value of 0.1733, Professional
Competence and Due Care has an f-test value of 0.8379 and p-value 0.3678,
Confidentiality has an f-test value of 1.2839 and p-value of 0.2668, Professional
Behavior and Marketing Professional Services has an f-test value of 3.3216 and p-
value of 0.0791, Professional Appointment and Conflict of Interest with an f-test
value of 0.0477and p-value of 0.8287 and problems encountered has an f-test value
of 0.2478 and p-value of 0.6225. Since all p-values were greater than 0.05, the
assumed level of significance, the null hypotheses, was accepted. There was
enough evidence to conclude that two groups of respondents did not significantly
differ in their level of compliance in code of ethics on the indicated variables.

Table 18
Significant Differences between Respondents Number of Years in Present
Position and the Compliance in Code of Ethics
Number Of
P
Years in Mean F-test Decision Remarks
value
Present Position
2 years and
4.3684
Integrity, below Fail to
More than 2 up Not
Objectivity and 4.1504 3.5877 0.0686 Reject
to 4 years Significant
Independence Ho
Total 4.3175
2 years and
4.5459
Professional below Fail to
More than 2 up Not
Competence 4.2381 3.5298 0.0707 Reject
and Due Care Ho
Total 4.4741
2 years and
4.5054
below
More than 2 up Reject
Confidentiality 4.2143 4.8996 0.0352 Significant
to 4 years Ho
Total 4.4375
Professional 2 years and
4.4410
Behavior and below Fail to
More than 2 up Not
Marketing 4.4286 0.0065 0.9361 Reject
Professional Ho
2 years and
Professional 4.4402
below Fail to
Appointment More than 2 up Not
and Conflict of 4.2321 2.6933 0.1120 Reject
Significant
to 4 years Ho
Interest
Total 4.3917
of the difference between respondents number of years in present position and
compliance in code of ethics of respondents working 2 years and below and more
than 2 up to 4 years that discloses that there is no significant difference on Integrity,
Objectivity and Independence that has an f-test value of 3.5877 and p-value of
0.0686, Professional Competence and Due Care has an f-test value of 3.5298 and
p-value 0.0707, Confidentiality has an f-test value of 4.8996 and p-value of 0.0352,
Professional Behavior and Marketing Professional Services has an f-test value of
0.0065 and p-value of 0.9361, Professional Appointment and Conflict of Interest with
an f-test value of 2.6933 and p-value of 0.1120 and problems encountered has an f-
test value of 0.1654 and p-value of 0.6874. Since all p-values were greater than
0.05, the assumed level of significance, the null hypotheses, was accepted. There
was enough evidence to conclude that two groups of respondents, except
Confidentiality, did not significantly differ in their level of compliance in code of ethics
on the indicated variables.

Table 19
Significant Differences between Respondents Number of Years Working in
the Firm and the Compliance in Code of Ethics
Number Of Years
Mean F-test P-value Decision Remarks
Working in the Firm
2 years and below 4.3579
More than 2 up to 4
4.1404
years
Integrity, More than 4 up to 6
4.2105 Reject
Objectivity and years 3.0760 0.0451 Significant
Ho
Independence More than 6 up to 8
4.8947
years
Total 4.3175

More than 2 up to 4
3.9815
Professional years
More than 4 up to 6 Reject
Competence 4.5926 6.7575 0.0016 Significant
years Ho
and Due Care
More than 6 up to 8
5.0000
years
Total 4.4741
More than 2 up to 4
4.1667
years
More than 4 up to 6 Fail to
4.3333 Not
Confidentiality years 2.9543 0.0511 Reject
Significant
Ho
More than 6 up to 8
4.8750
years
Total 4.4375
More than 2 up to 4
Professional 4.0952
years
Behavior and More than 4 up to 6
4.8571 Reject
Marketing years 5.7483 0.0037 Significant
Ho
Professional More than 6 up to 8
Services 4.8571
years
Total 4.4381
More than 2 up to 4
4.1458
Professional years
More than 4 up to 6 Fail to
Appointment 4.3333 Not
years 2.0343 0.1337 Reject
and Conflict of Significant
Ho
Interest More than 6 up to 8
4.5000
years
Total 4.3917
of the difference between respondents number of years working in the firm and
compliance in code of ethics of respondents working 2 years and below, more than
2 up to 4 years, more than 4 up to 6 years and more than 6 up to 8 years that
discloses that there is significant difference on Integrity, Objectivity and
Independence that has an f-test value of 3.0760 and p-value of 0.0451, Professional
Competence and Due Care has an f-test value of 6.7575 and p-value 0.0016,
Confidentiality has an f-test value of 2.9543 and p-value of 0.0511, Professional
Behavior and Marketing Professional Services has an f-test value of 5.7483 and p-
value of 0.0037, Professional Appointment and Conflict of Interest with an f-test
value of 2.0343 and p-value of 0.1337 and problems encountered has an f-test value
of 3.5559 and p-value of 0.0280. Since all p-values were less than 0.05, except
Professional Appointment and Conflict of Interest, the assumed level of significance,
the null hypotheses, was rejected. There was enough evidence to conclude that four
groups of respondents significantly differ in their level of compliance in code of ethics
on the indicated variables

Table 20
Significant Differences between Respondents Approximate Number of
Employees and the Compliance in Code of Ethics
Approximate
Number of Mean F-test P-value Decision Remarks
Employees
Less than 50 4.2193
Integrity, 50 up to 100 4.4386 Fail to
Objectivity Not
251 up to 500 4.2105 2.3066 0.1001 Reject
and Significant
More than 1000 4.5000 Ho
Independence
Total 4.3175
Less than 50 4.2963
Professional 50 up to 100 4.8333
Reject
Competence 251 up to 500 4.3889 3.2443 0.0381 Significant
Ho
and Due Care More than 1000 4.5556
Total 4.4741
Less than 50 4.3125
50 up to 100 4.7500
Reject
Confidentiality 251 up to 500 4.3542 3.1680 0.0411 Significant
Ho
More than 1000 4.4583
Total 4.4375
Less than 50 4.4167
Professional
Behavior and 50 up to 100 4.5714 Fail to
Not
Marketing 251 up to 500 4.3333 0.4611 0.7118 Reject
Significant
Professional More than 1000 4.4524 Ho
Services
Total 4.4381
Less than 50 4.2708
Professional 50 up to 100 4.5625 Fail to
Appointment Not
251 up to 500 4.3542 1.6764 0.1965 Reject
and Conflict Significant
More than 1000 4.5000 Ho
of Interest
Total 4.3917
of the difference between respondents approximate number of employees and
compliance in code of ethics of firms having employees of less than 50, 50 up to
100, 251 up to 500, and more than 1000 that discloses that there is significant
difference on Integrity, Objectivity and Independence that has an f-test value of
2.3066 and p-value of 0.1001, Professional Competence and Due Care has an f-
test value of 3.2443 and p-value 0.0381, Confidentiality has an f-test value of 3.1680
and p-value of 0.0411, Professional Behavior and Marketing Professional Services
has an f-test value of 0.4611 and p-value of 0.7118, Professional Appointment and
Conflict of Interest with an f-test value of 1.6764 and p-value of 0.1965 and problems
encountered has an f-test value of 14.7202 and p-value of 0.0000. Since all p-values
were greater than 0.05, except Professional Competence and Due Care and
Confidentiality, the assumed level of significance, the null hypotheses, was
accepted. There was enough evidence to conclude that four groups of respondents
did not significantly differ in their level of compliance in code of ethics on the
indicated variables.
4. Level of Seriousness of problems encountered and Significant
Difference between problems encountered and their assessment in terms of
Companys Compliance in Code of Ethics
Range Verbal Interpretation
8.81 - 10 Highly Serious
6.81 - 8.80 Serious
4.81- 6.80 Somewhat Serious
2.81- 4.80 Less Serious
1.00 - 2.80 Not Serious

Table 21
Level of Seriousness of Problems Encountered by Respondents
Weighted Verbal
Problems Encountered Rank
Mean Interpretation
Practiced insufficient time in performing
important duties including completion a report Less
3.60 7
and properly performing test of control or Serious
substantive test.
Improper practiced of accepting client due to
Less
popularity and size without proper investigation 2.93 6
Serious
and analysis of threats.
Lack of disciplinary mechanism to promote Less
4.27 8
compliance with policies and procedures. Serious
Lack of review in accepting recurring client Less
2.93 6
engagement. Serious
Lack of compliance with quality control policies
Less
and procedures designed to provide reasonable 2.90 5
Serious
assurance to specific engagements.
Receiving any form of inducement given that
the accountant was involved in an audit
2.17 Not Serious 1
engagement in the company of someone giving
those gifts.
Lack of inadequate resources and information
2.60 Not Serious 4
for the proper performance of the duties.
Absence of regular peer review and adjustment
Less
of specific program before performing an 3.60 7
Serious
engagement.
Inability to inform the client regarding the scope
of the engagement including the liability and 2.53 Not Serious 3
responsibility of engagement team.
Lack of segregation of duties and standard in
performing specific but relevant task within an 2.40 Not Serious 2
engagement team
interpretation of Less Serious, out of 10 variables 6 have an interpretation of Less
Serious which are Practiced insufficient time in performing important duties
including completion a report and properly performing test of control or substantive

test. obtained a weighted mean of 3.6 and ranked 7th, Improper practiced of
accepting client due to popularity and size without proper investigation and analysis
of threats. (WM=2.93) and ranked 6th, Lack of disciplinary mechanism to promote
compliance with policies and procedures. (WM=4.27) and ranked 8th, Lack of
review in accepting recurring client engagement. (WM=2.93) and ranked 6th, and
Absence of regular peer review and adjustment of specific program before
performing an engagement. (WM=3.60) and ranked 7th, Lack of compliance with
quality control policies and procedures designed to provide reasonable assurance
to specific engagements. (WM=2.90) and ranked 5th, and with the remaining having
an interpretation of Not Serious which are Lack of inadequate resources and
information for the proper performance of the duties. (WM=2.60) and ranked 4th,
Inability to inform the client regarding the scope of the engagement including the
liability and responsibility of engagement team. (WM=2.53) and ranked 3rd, Lack
of segregation of duties and standard in performing specific but relevant task within
an engagement team. (WM=2.40) and ranked 2nd, and Receiving any form of
inducement given that the accountant was involved in an audit engagement in the
company of someone giving those gifts. (WM=2.17) and ranked 1st.

Table 22
Significant Differences between Problems Encountered and Respondents
Profile
F-value / P-
PROBLEMS ENCOUNTERED Mean Decision Remarks
T-value value
Associate 3.2056
Senior Associate 2.3375 Fail to
Current Not
Partner 2.8667 2.3217 0.0985 Reject
Position Significant
Total 2.9933
Audit Department 2.9964 Fail to
Not
Department Overall operations 2.9500 0.0031 0.9557 Reject
Significant
Total 2.9933 Ho
Number Of 2 years and below 2.9913
Fail to
Years More than 2 up to Not
3.0000 0.0003 0.9859 Reject
Present 4 years Significant
Ho
Position Total 2.9933
More than 2 up to
2.7000
Number Of 4 years
Fail to
Years More than 4 up to Not
3.7000 1.6470 0.2029 Reject
Working in 6 years Significant
Ho
the Firm More than 6 up to
1.1000
8 years
Total 2.9933
More than 5 up to
2.6500
10 years
More than 10 up Fail to
Years in 2.8333 Not
to 15 years 0.5362 0.5911 Reject
Operations More than 25 Significant
3.1611 Ho
years
Total 2.9933
Less than 50 2.9583
Approximate 50 up to 100 4.8000
Reject
Number of 251 up to 500 2.6500 72.0414 0.0000 Significant
Ho
Employees More than 1000 1.6000
Total 2.9933
Based on the data gathered and tabulated, Table 22 above shows the
summary of the difference between the problems encountered and the

respondents profile that discloses that there is significant difference on
approximate number of employees that has an f-test value 72.0414 and p-value of
0.0000 while all other variables have no significant difference, current position that
has an f-test value of 2.3217 and p-value of 0.0985, department that has a t-test
value of 0.0031 and p-value of 0.9557,on number of years in present position that
has a t-test value of 0.0003 and a p-value of 0.9859, on number of years working
in the firm that has an f-test value of 1.6470 and p-value of 0.2029, and years in
operations that has an f-test value of 0.5362 and p-value of 0.5911. Since all p-
values were greater than 0.05, except the approximate number of employees, the
assumed level of significance, the null hypotheses, was accepted. There was
enough evidence to conclude that there was no significant difference between
Problems Encountered and Respondents Profile in their level of compliance in
code of ethics on the indicated variables.

Chapter 5
SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS
This chapter presents the summary of findings, conclusions and
recommendations relative to the level of compliance in Code of Ethics for
Professional Accountants in the Philippines of Audit Firms in Metro Manila.
Summary
The study aimed to 1. Present the respondents profile 2. Present the level of
compliance in Code of Ethics, 3. Determine the significant difference of the
respondents level of compliance in Code of Ethics for Professional Accountants
in the Philippines of Audit Firms in Metro Manila, 4. Determine the significant
difference in the problems encountered by the respondents on the level of
compliance in Code of Ethics for Professional Accountants in the Philippines of
Audit Firms in Metro Manila. Various statistical methods were used to answer
objectives. Frequency distribution was used to present the Profile of the Individual
Respondents in terms of Auditing Firm, Highest Educational Attainment, Current
Position, Department, Number of Years in Present Position and Number of Years
Working in the Firm. Mean ratings indicated the level of Compliance in Code of
Ethics relative to Integrity, Objectivity and Independence, Professional
Competence and Due Care, Confidentiality, Professional Behavior and Marketing
Professional Services, and Professional Appointment and Conflict of Interest. F-

test and Analysis of variance determined if there was a significant difference
between Respondents Profile and their assessment in terms of Companys
Compliance in Code of Ethics and Problems Encountered. Lastly, problems were
noted from the perspective of the respondents. These are then presented and
analyze to come up with possible recommendations.
Based on the data and information gathered, the following are the findings
1.1 Profile of the Individual Respondents
All of the respondents are holders of Bachelors Degree in which most of them
are Associates (60%) with a majority working under the Audit Department (93.3%)
and 76.7% are working in their present position for 2 years and below. The maximum
number of respondents is working in the firm for 2 years and below (66.7%).
1.2 Profile of the Respondents as to Companys Perspective
Most of the firms are operating for more than 25 years (60%) providing services
to their major clients, the private entities (100%). Majority of them have an
employees of less than 50 (40%) that gives services in Metro Manila and Luzon
(80%) and which offers Audit and Tax Services (100%).
2. Evaluation of the Level of Compliance in Code of Ethics relative to
Integrity, Objectivity and Independence, Professional Competence and Due
Care, Confidentiality, Professional Behavior and Marketing Professional
Services, and Professional Appointment and Conflict of Interest.

The overall level of compliance in Code of Ethics relative to Integrity,
Objectivity and Independence is 4.32 or with a descriptive interpretation of
Complied, relative to Professional Competence and Due Care is 4.47 (Complied),
Confidentiality is 4.44 (Complied), Professional Behavior and Marketing
Professional Services is 4.44 (Complied), and Professional Appointment and
Conflict of Interest is 4.39 (Complied). These results show that the respondents
representing the firm have complied with the Code of Ethics relative to Integrity,
Objectivity and Independence, Professional Competence and Due Care,
Confidentiality, Professional Behavior and Marketing Professional Services, and
Professional Appointment and Conflict of Interest.
The nine highest in terms of Integrity, Objectivity and Independence are: (1)
Avoidance of facts and circumstances that are so significant that a reasonable and
informed third party, having knowledge of all relevant information, including
safeguards applied, would reasonably conclude a firms, or a member of the
assurance teams integrity, objectivity or professional skepticism had been
compromised., (2) Provides that reports and statements made by the members of
the firm are result from applying a financial reporting framework for recognition.
Measurement, presentation and disclosure, such as PFRS, to an entitys financial
statement., (3) The firm or members of the firm is not associated with reports,
returns, communication or other information where they believe the information
contains a materially false or misleading statement or information furnished
recklessly and omits or obscure information that would be misleading., (4) Exercises
straightforwardness and honesty in all professional business relationships; Never
allowed bias, conflict of interest or undue influence of others to override professional
or business judgment.; Leadership of the firm that establishes the expectation those
members of an assurance team will act in public interest.; and Policy and procedures
to implement and monitor quality control of engagements., (5) Disclosing to those
charged with governance of the client the nature of service provided and extent of
fees charged.; and Provides that expression of a conclusion without being affected
by influence that compromise professional judgment, allowing individual to act with
integrity and exercise objectivity and professional skepticism. The four highest in
terms of Professional Competence and Due Care are: (1) Promotes continuing
professional development to perform competently within the professional
environments, (2) Research, analyze and ensure the implementation of new
techniques and changes in accounting standards, (3) Policy and procedures to act
diligently in accordance with applicable technical and professional standards when
providing professional services, and Promotes yearly seminars regarding recent
accounting changes and adapting Information Technology systems techniques. The
four highest in terms of Confidentiality are: (1) Compliance to the principle of
confidentiality continues even after the end of the relationships between a
professional accountant and a client or employer, (2) Policy and procedure in
maintaining confidentiality of information disclosed by a prospective client or
employer, (3) Ensuring the refrainment of disclosing confidentiality even in a social
environment, and (4) Alertness of the members of the firm to the possibility of
inadvertent disclosure, particularly in circumstances involving long association with
a business associate or a close or immediate family member. The three highest in
terms of Professional Behavior and Marketing Professional Services are: (1)
Advertising and publicity in any medium are acceptable provided that it has the
objective the notification to the public or such sectors of the public is concerned, of
matters of fact in a manner that is not false, misleading or deceptive, has good taste,
professionally dignified and avoid frequent repetition of, and any undue prominence
being given to the name of the firm or professional accountant in public practice, and
Avoidance of use of name of an international accounting firm
affiliation/correspondence other than a notation that it is a member/correspondents
firm of that foreign firm, and (2) Avoidance of making disparaging references
unsubstantiated comparisons to the work of others. And lastly, the four highest in
terms of Professional Appointment and Conflict of Interest are: (1) Considering
whether acceptance would create any threats to compliance with the fundamental
principles, (2) Acquiring an appropriate understanding of the nature of the clients
business, the complexity of its operations, the specific requirements of the
engagement and the purpose, nature and scope of the work to be performed, and
(3) Evaluation of significance of any threats which includes considering, before
accepting or continuing a client relationship or specific engagement , whether the
members of the assurance team has any business interest, or relationships with the
client or a third party that could give rise to threats, and Policy and procedures in
notifying the client of the firms business interest or activities that may represent a
conflict of interest, and obtaining their consent to act on such circumstances.
3. Significant Difference between Respondents Profile and their
assessment in terms of Companys Compliance in Code of Ethics
In almost all variables in the profile of the respondents the p-values after the
f-test and Analysis of Variance Test were all greater than 0.05, therefore accept
the null hypothesis. This indicated that there were no significant differences in the
level of compliance in Code of Ethics. The variables less than 0.05 are (1)
Respondents Number of Years Working in the Firm, and (2) Respondents
Number of Employees therefore rejected the null hypothesis. This was noted to be
significantly different.
4. Problems Encountered and Significant Difference between
problems encountered and respondents profile
The top three problems that were noted to be important based on the level of
seriousness in assessing the level of compliance in Code of Ethics are (1) Lack of
disciplinary mechanism to promote compliance with policies and procedures (WM=
4.27), (2) Practiced insufficient time in performing important duties including
completion a report and properly performing test of control or substantive test
(WM=3.60) and (3) Absence of regular peer review and adjustment of specific
program before performing an engagement (WM=3.60). These were noted to be
important issues that Auditing Firms should take note of.

Conclusions
Based on the foregoing findings, the researchers made the following
conclusions:
1.1 Profile of the Individual Respondents
It can be concluded that all of respondents are holders of Bachelors Degree.
Furthermore, most of them are Associates working under the Audit Department for
2 years and below in their current position and 2 years and below in the firm.
1.2 Profile of the Respondents as to Companys Perspective
Most of the firms are operating for more than 25 years providing services to
their major clients, the private entities. Majority of them have an employees of less
than 50 that gives services in Metro Manila and Luzon and which offers Audit and
Tax Services.
2. Assessment in the Level of Compliance in Code of Ethics relative
to Integrity, Objectivity and Independence, Professional Competence and
Due Care, Confidentiality, Professional Behavior and Marketing Professional
Services, and Professional Appointment and Conflict of Interest.
All the firms, Tardecilla Verdolaga & Co., Sycip, Gorres, Velayo & Co., Uy
Singson Abella & Co., Reyes, Tacandong & Co., and A.E. Jimenez & Co have
complied in Code of Ethics in terms of variables relative to Integrity, Objectivity
and Independence, Professional Competence and Due Care, Confidentiality,

Professional Behavior and Marketing Professional Services, and Professional
Appointment and Conflict of Interest.
3. Level of Seriousness of problems encountered and Significant
Difference between problems encountered and their assessment in terms of
Companys Compliance in Code of Ethics
Majority of the variables were no significant differences in the level of
compliance in Code of Ethics. The variables less than 0.05 are (1) Respondents
Number of Years Working in the Firm, and (2) Respondents Number of Employees
therefore rejected the null hypothesis. This was noted to be significantly different.
4. Overall Level of Compliance in Code of Ethics
It can be concluded that all the firms, Tardecilla Verdolaga & Co., Sycip,
Gorres, Velayo & Co., Uy Singson Abella & Co., Reyes, Tacandong & Co., and
A.E. Jimenez & Co. have complied in Code of Ethics for Professional Accountants
in the Philippines.
5. Problems Encountered
The top three problems that were noted to be important in assessing the level
of compliance in Code of Ethics are (1) Lack of disciplinary mechanism to promote
compliance with policies and procedures, (2) Practiced insufficient time in
performing important duties including completion a report and properly performing
test of control or substantive test and (3) Absence of regular peer review and
adjustment of specific program before performing an engagement. These were
noted to be important issues.

These problems were all significant and should be addressed properly in
order to reduce the occurrence of risk in terms of Auditors Integrity, Objectivity and
Independence, Professional Competence and Due Care, Confidentiality,
Professional Behavior and Marketing Professional Services, and Professional
Appointment and Conflict of Interest. Although risk can always be around, it can
somehow be mitigated.
Recommendations
After a thorough analysis of the data and based on the conclusions drawn,
the researchers made the following recommendations:
Future researchers can select other auditing firms that is not within the
scope of this research for further studies.
Future researchers must retain the variables used in this study for
future evaluation of the compliance in code of ethics of other auditing
firms.
Future researchers must further study the solutions for the problems
encountered by the firms selected in this study to be able to help them
in fully complying in the code of ethics.
Future researchers must further study the variables that had significant
differences on the level of compliance in code of ethics to be
knowledgeable of the reason for the difference.

Much as the researchers wanted that the answers or response be
truthful there is still a possibility of bias that is inherent in conducting this
study, in connection with this, the researchers recommend that in
selecting respondents in an auditing firm to answer the survey
questionnaire, employees having a position of an associate is favored
because they experience the auditing firms problems first hand and they
dont have any reason not to disclose the problems they encounter
unlike the employees having higher positions who have the tendency to
be biased by not disclosing the problems encountered because they
have the reputation to uphold.
The auditing firms must maintain compliance in Code of Ethics of
professional accountants at all times to uphold their credibility.
The government agencies that act as the regulatory body of the auditing
firms must improve the supervision in the compliance in Code of Ethics
of Professional Accountants.
Classify the auditing firms as to size (e.g. big four firms or small firms)
to be able to consider the differences of the auditing firms working
ethics.
Bibliography
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Sedanto, S. & Gabunales, M. (2014). Paradigm Shift: Changing the Country One
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POLYTECHNIC UNIVERSITY OF THE PHILIPPINES 1

THE PROBLEM AND ITS BACKGROUND

Professional ethics is described by AICPA in a journal as a mixture of moral

and practical concepts, with a sprinkling of exhortation to ideal conduct designed to

reduced to rules which are intended to be enforceable, to some extent at least, by

professionals especially in business to be morally because of the expertise they gain

E.B. Cabrera (2013) in her book Public Accountancy Profession: Assurance

Principles, Professional Ethics and Good Governance stated that Professional

ethics goals are to ensure high standards of competence among a groups

the image of the profession and the welfare of the community

always in high standards of competence. It promotes that professionals should

profession. In every profession, especially in accounting profession, integrity and

In accountancy, it includes investors, business management government and the

Professional ethics objective includes regulating and strengthening the

relations of customer, professionals and professions. It acts as a regulator to provide

It also guides them to engage in services with confidentiality and professionally

professionals to their institution.

Code of Ethics for Professional Accountants in the Philippines to be mandatory

followed by Accountants in the Philippines in every engagement they take part

themselves or services they offered to perform. The fundamental principles include

Integrity, Objectivity, Professional Competence and Due Care, Confidentiality and

Professional Appointment and Marketing Professional Services which are written in

quality of performance of professional accountants and preserve the confidence of

the public in the profession.

Accountants in the Philippines of auditing firms in Metro Manila.

Background of the Study

Nowadays, accounting profession where strike internationally and locally in

accounting fraud where discovered within big companies internationally. These

other company experience the same crimes.

Accounting code of ethics are guidelines for a certain management to help

standards. Lack of ethics or incompliance to ethics may affect a whole profession by

losing the public confidence

Zeiger (2015) believed that compliance as to ethics could lead to different

on employee performance. In some cases, employees are so concerned with getting

which often leads to a decrease in performance. Lastly, if a lack of ethics in a

business becomes public knowledge, that business loses credibility.

In accordance to incompliance to accounting code of ethics, ENRON reported

Collar Crime is which is defined as non-violent, financially-based criminal activity

education with regard to employment that is considered to be prominent.

Additionally, WorldCom includes in their reported in 2015, this U.S.-based

telecommunications company was at one time the second-largest long distance

WorldCom executives effectively fudged the company's accounting numbers,

that followed led to massive losses for investors.

Development Assistance Fund (PDAF), together with Philippine Senators Bong

Revilla, Jinggoy Estrada, Juan Ponce Enrile, and other congressmen.

of Code of Ethics for Professional Accountants in the Philippines. The principles

included are Integrity, Objectivity, Independence, Professional Competence and

Due Care, Confidentiality, Professional Behavior and Marketing Professional

Services, Professional Appointment and Conflict of Interest.

covering four months.

condition of public trust and confidence to the profession.

As the acknowledge national association of certified public accountants and as

a member if International Federation of Accountants (IFAC), Philippines Institute of

Certified Public Accountants (PICPA) is committed it the IFACs broad objective of

developing and enhancing is coordinated worldwide accountancy profession

harmonized standards. In working toward this objective, IFAC develops guidance on

it obliged every member of PICPA in following Code of Ethics of Professional

Accountants in the Philippines.

The part of Code of Ethics of Professional Accountants in the Philippines which

A and professional appointment and marketing professional services which are

A distinguishing mark of the accountancy profession is its acceptance of the

responsibility to act in the public interest. Therefore, a professional accountants

responsibility is not exclusively to satisfy the needs of an individual client or