Characteristics of a Profession Mastery of a particular intellectual skill, acquired by training and education. Adherence by its members to a common code of values and conduct established by its administrating body, including maintaining an outlook which is essentially objective; and Acceptance of a duty to society as a whole (usually in return for restrictions in use of a title or in the granting of a qualification). Attributes that make Accountancy a Profession To join the profession, an individual must obtain a degree of BS Accountancy and continue learning through work experience and continuing professional education. The CPA board exams must be passed before the CPA license is given. CPAs adhere to their own Code of Ethics which is mandatory for all members of the profession. Failure to adhere to the Code will usually result in an investigation of the CPAs conduct. CPAs are viewed as guardians of public interest. By providing assurance to the financial statements and other subject matter, they serve as the connecting arm between the financial statements prepared by management and the public. Organizations that Affect the Accountancy Profession Regulatory Government Agencies PRC BOA COA SEC BSP Insurance Commission BIR
Standard setting Bodies
AASC FRSC Auditing & Assurance Standards Council Mission: The promulgation of auditing standards, practices and procedures which shall be generally accepted by the accounting profession in the Philippines AASC Composition 15 regular members (including a chairman) Accredited National Prof. Org. Of CPAs Public Practice 6 Commerce & Industry 1 Academe 1 Government 1 Board of Accountancy 1 Securities & Exchange Commission 1 Commission on Audit 1 Bangko Sentral ng Pilipinas 1 Org. of CPAs in active public practice - 1 AASC - Pronouncements Philippine Standards on Auditing (PSAs) Interpretations of PSAs Philippine Auditing Practice Statements (PAPs) Authority Attached to PSAs and Interpretations Apply to independent examination of financial statements of any entity when conducted for purposes of expressing an opinion thereon. Apply to other related activities of auditors. Apply to material matters Purposes of the Interpretations To provide practice assistance to auditors in implementing the PSAs or to promote good practice. Not intended to have the authority over the PSAs Essential Parts of the PSAs Basic principles and essential procedures (identified in bold type black lettering) Related guidance (explanatory and other materials) Applicability/limitations (part of introductory paragraphs) Bases of PSAs/PAPs Pronouncements of the International Auditing Practices Committee (IAPC) of the International Federation of Accountants (IFAC) International Standards on Auditing (ISAs) International Auditing Practices Statements (IAPS) The International Financial Reporting Standards (IFRS) An effort to improve the financial reporting standards and strengthen the oversight of corporate financial reporting in the years following the 1997 financial crisis. The adoption of the IFRS is assumed to enhance the comparability, reliability and the transparency of corporate financial reporting. The International Accounting Standards Board (IASB) The body in charge of setting the international standards. The interpretative body of the IASB is the International Financial Reporting Interpretations Committee (IFRIC) Financial Reporting Standards Council (FRSC) The FRSC is the accounting standard setting body created by the Professional Regulation Commission (PRC) upon recommendation by the Board of Accountancy (BOA) to assist BOA in carrying out its powers and functions. The main function of FRSC is to establish and improve accounting standards that will be generally accepted in the Philippines FRSC cont The FRSC monitors the technical activities of the IASB and issues Invitations to Comment on exposure drafts or proposed IFRSs. The FRSC also monitors the issuances of the IFRIC of the IASB, which it adopts as Philippine Interpretations. The FRSC issues new releases to announce the issuance of final standards and interpretations, exposure drafts and other matters which are posted in the PICPA website. Composition of FRSC Board of Accountancy 1 Securities and Exchange Commission 1 Bangko Sentral ng Pilipinas 1 Bureau of Internal Revenue 1 Commission on Audit 1 Major organization of preparers and users of financial 1 statements Accredited national professional organization of CPAs: Public practice 2 Commerce and industry 2 Academe or education 2 Government 2 Total 14 Philippine Interpretations Committee (PIC) Formed by the FRSC in August 2006 to assist in establishing and improving financial reporting standards in the Philippines. The primary goal is to issue implementation guidance on PFRSs. Philippine Interpretations Philippine Interpretations IFRIC (these correspond to the Interpretations of International Financial Reporting Interpretations Committee (IFRIC) of the IASB); Philippine Interpretations SIC (these correspond to Interpretations of the Standing Interpretations Committee (SIC) of the IASC); Philippine Interpretations (these are interpretations developed by the Philippine Interpretations Committee) Working Procedures Initial preparation of drafts by workgroups Deliberation en banc on proposed exposure drafts Distribution of approved exposure draft to organizations and persons for comments (three months) Evaluation of comments and suggestions received from exposure and appropriate revision of draft as necessary Issuance of PSA or PAPs Submission to PRC/BOA for final approval Regulation of the Accountancy Profession R. A. 9298 The law regulating the practice of accountancy in the Philippines, known as the Philippine Accountancy of 2004. The Board of Accountancy The body authorized by law to promulgate rules and regulations affecting the practice of the accountancy profession in the Philippines. Regulation of the Accountancy Profession The State recognizes the importance of accountants in nation building and development. Hence, it shall develop and nurture competent, virtuous, productive and well rounded professional accountants whose standards of practice and service shall be excellent, qualitative, world class and globally competitive through inviolable, honest, effective, and credible licensure examinations and through regulatory measures, programs and activities that foster their professional growth and development. R.A. 9298 Objectives The standardization and regulation of accounting education; The examination for registration of certified public accountants; and The supervision, control, and regulation of the practice of accountancy in the Philippines. Scope of Practice Public Accountancy Commerce and industry Education/Academe Government Public Practice A person holding out himself/herself as one skilled in the knowledge, science and practice of accounting, and as a qualified person to render professional services as a CPA; or offering to more than one client, on a fee or otherwise, services such as: Audit Design, installation and review of accounting systems and controls Preparation of income tax returns Commerce & Industry A person involved in decision making requiring professional knowledge in the science of accounting, as well as the accounting aspects of finance and taxation, or when he/she represents his/her employer before govt. agencies on tax and other matters related to accounting; or when such employment requires that the holder thereof must be a CPA. For a business which has a paid-up capital of at least P5,000,000 and/or an annual revenue of at least P10,000,000, duly registered CPAs should occupy any position which requires; Supervising the recording of financial transactions, preparation of financial statements; Coordinating with the external auditors for the audit of such financial statements; and Other related functions Education / Academe A person in an educational institution, which involves teaching of accounting, auditing, management advisory services, finance, business law and taxation, and other technically related subjects. Government A person who holds, or is appointed to, a position in an accounting professional group in government or in a government owned and controlled corporation, including those performing proprietary functions, where decision making requires professional knowledge in the science of accounting, or where civil service eligibility as a CPA is a prerequisite. Board of Accountancy Under the supervision and administrative control of the PRC. Composed of a chairman and 6 members, appointed by the president of the Phils. There are 3 recommendees for each position, from a list of 5 nominees submitted by the APO. Qualifications of BOA members Must be a natural-born citizen and a resident of the Phils. Must be a duly registered CPA with at least 10 years of work experience in any scope of practice of the accountancy. Must be of good moral character and must not have been convicted of any crime of moral turpitude. Qualifications Must not have any interest, directly or indirectly, in any school, college, university, or institution conferring an academic degree necessary for the admission to the practice of accountancy, or CPA review schools. Must not be a director or officer of the APO at the time of his appointment. Term of Office 3 years. Any vacancy occurring within the term of a member shall be filled up for the unexpired portion of the term only. No person who has served 2 consecutive complete terms shall be eligible for reappointment until the lapse of 1 year. Functions and Powers of BOA To prescribe and adopt the rules and regulations necessary for carrying out the provisions of this Act. To supervise the registration, licensure and practice of accountancy in the Phils. To administer oaths in connection with this Act Functions cont To issue, suspend, revoke, or reinstate the Certificate of Registration of the accountancy profession, To adopt an official seal, To prescribe and/or adopt a Code of Ethics for the practice of accountancy. Functions cont To monitor the conditions affecting the practice of accountancy and adopt such measures as may be deemed necessary.
(refer to notes for additional functions)
Grounds for Suspension or Removal of BOA Members Neglect of duty or incompetence Violation or tolerance of any violation of RA 9298 and its IRR or the CPAs Code of Ethics Final judgment of crimes involving moral turpitude; and Manipulation or rigging of the CPAs licensure examination results, disclosure of secret and confidential information in the examination questions prior to the conduct of the said examination or tampering of grades. Annual Report The Board, shall, at the close of each calendar year, submit an annual report to the President of the Philippines through the Commission giving a detailed account of its proceedings and accomplishments during the year and making recommendations for the adoption of measures that will upgrade and improve the conditions affecting the practice of accountancy in the Philippines. The CPA Examination Qualifications of Applicants A Filipino citizen; Of good moral character; A holder of the degree of Bachelor of Science in Accountancy conferred by an institution duly recognized by CHED or other authorized government office; Has not been convicted of any criminal offense involving moral turpitude. Scope of CPA Examination Theory of Accounts Business Law and Taxation Management Services Auditing Theory Auditing Problems Practical Accounting Problems I Practical Accounting Problems II Rating in the CPA Examination To pass the examination, a candidate must obtain a general average of 75%, with no grades lower than 65% in any given subject.. Any candidate who fails in 2 complete CPA Examination shall be disqualified from taking another set of examination unless he/she takes at least 24 units of refresher course. Practice of Accountancy The practice of accountancy shall be in the form of single proprietorship or partnership. A certificate of accreditation shall be issued by the BOA provided that the applicant must have 3 years of meaningful experience including taxation. Prohibition in the Practice of Accountancy No person shall practice accountancy using the title Certified Public Accountant, or use the title CPA unless such person shall have received from the Board a certificate of registration/professional license and be issued a professional identification card. Ownership of Working Papers All working papers, schedules and memoranda made by a CPA and his staff in the course of an examination, including those prepared and submitted by the client, incident to or in the course of an examination, shall be treated confidential and privileged and remain the property of the CPA in the absence of a written agreement between the CPA and the client Accreditation to Practice Public Accountancy CPAs, firms and partnerships of CPAs, engaged in the practice of public accountancy, shall register with the Commission and the Board, such registration to be renewed every 3 years Accredited Professional Organization All registered CPAs shall be united and integrated through their membership in a one and only registered and accredited national professional organization, which shall be registered with the SEC as a nonprofit organization and recognized by the BOA subject to the approval of the PRC. Continuing Professional Education All CPAs shall abide by the requirements, rules and regulations on continuing professional education to be promulgated by the BOA, subject to the approval of the PRC, in coordination with the accredited national professional organization. Foreign Reciprocity A person who is not a citizen of the Philippines shall not be allowed to practice accountancy in the Phils., unless he/she can show proof that the country of which he/she is a citizen also admits citizens of the Phils. to the practice of the same profession without restriction. Coverage of Temporary Permits A foreign CPA called for consultation or for a specific purpose which is essential to the development of the country A foreign CPA engaged as professor, lecturer or critic in fields essential to accountancy education in the Phils. and his/her engagement is confined to teaching only; and A CPA who is an internationally recognized expert or with specialization in any branch of accountancy and his/her service is essential for the advancement of accountancy in the Phils. Penal Provision Any person who shall violate any of the provisions of this Act or any or its IRR, shall, upon conviction, be punished by A fine of not less than P50,000, or By imprisonment of a period not exceeding two years, or Both End of Presentation