Code of Ethics - September, 2017 Full Text

2013 CODE OF ETHICS FOR
CPAs IN THE PHILIPPINES

WITH MODIFICATIONS TO
THE: 2014, 2015 & 2016 IFAC
REVISIONS
Atty. Eranio L. Punsalan, CPA, MBA, LLM

Lecturer, Philippine Institute of Certified Public Accountants (PICPA)
Past President Association of CPAs in Public Practice (ACPAPP)
2015-2018 Chairman, Ethics Board
1
OBJECTIVE:
It is to ensure the continuing education of CPA’s with
the latest trends in the profession brought about by
the issuances and pronouncements of the Board-IFAC,
legislation and regulations/resolutions on the
profession, and for the CPAs to comply with said
requirements.
2
What are ethics codes for?
Codes of ethics increase the probability that people will
behave in certain ways:
• partially by focusing on the character of their actions
and
• partly by focusing on sanctions for violations
Codes of ethics can function as a professional statement. It
expresses the commitments of a person joining a
profession to:
• a specific set of moral standards;
• a clear set of value to which they are expected to
subscribe.
James Q. Wilson, The Moral Sense, N.Y.: The Free Press, 1993
3
The Evolution in Governance And Ethics in the Practice of
Accountancy
BOA
SEC
BSP
CPA
BIR
IC
CHED CDA
4
5
6
7
8
9
10
PICPA is a member of the International Federation of
Accountants (IFAC/Federation), committed to a
coordinated worldwide accountancy profession with
harmonized standards. (IFAC’s 179 members &
associates in 130 countries, representing more than
2.5 million accountants)
8
PICPA, upon signing Statement of
Member’s Obligation (SMO)Nos. 1 - 7,
is obliged to support the work of the
Federation by informing its members
of every pronouncement developed by
the Federation.
12
2.PICPA… SMOs:
SMO 1 - Quality Assurance
SMO 2 - International Education Standards for
Professional Accountants and Other International
Accounting Education Standards Board (IAESB
Guidance)
SMO 3 - International Standards, Related Practice
Statements and Other Papers Issued by the
International Assurance and Auditing Standards Board
(IAASB)
13
2.PICPA… SMOs:
SMO 4 - IESBA Code of Ethics for Professional
Accountants
SMO 5 - International Public Sector Financial Reporting
Standards (IPSAS)
SMO 6 - Investigating and Discipline (I&D)
SMO 7 – International Financial Reporting Standards
(IFRS)
14
The Code of Ethics for Professional Accountants in the
Philippines is based on the revised Code of Ethics for
Professional Accountants developed by the
Federation 2013 and adopted by PRC/BOA in 2015,
pursuant to Professional Regulatory Board of
Acountancy Resolution # 263 .
• Professional accountants refer to persons who are
registered in the PRC as Certified Public
Accountants (CPAs) and who hold a valid certificate
issued by the BOA
• where the domestic laws are in conflict with the
Federation’s Code, the local law shall prevail
Apparent failure to do so may result in an investigation
into the CPA’s conduct.
15
This Code is in three parts
Part A establishes the fundamental principles of

professional ethics for professional accountants and
provides a conceptual framework for applying those
principles.
Part B illustrates how the conceptual framework is to
be applied in specific situations to professional
accountants in public practice
Part C applies to professional accountants in business
16
Self-interest
Threats
Intimidation
Threats
Self-review
Threats
Fundamental Principles
Familiarity
Advocacy Threats
Threats
9
PART A
GENERAL APPLICATION OF THE CODE
100 Introduction and Fundamental Principles

110 Integrity
120 Objectivity
130 Professional Competence and Due Care (Technical
Standards)
140 Confidentiality
150 Professional Behavior
18
SECTION 100
Introduction and Fundamental Principles
A distinguishing mark of the

accountancy profession is its
acceptance of the responsibility to act
in the public interest not exclusively to
satisfy the needs of an individual client
or employer.
19
A professional accountant is required to comply with the
following fundamental principles:
(a) Section 110 - Integrity – straightforward, honest, fair dealing
and truthfulness in all professional and business relationships.
He should not be associated with reports, returns, etc.:

(1) Which contain a materially false or misleading
statement;
(2) Which contain statements or information furnished
recklessly; or
(3) Reports which omit or obscure information required to
be included .
20
(b) Section 120 - Objectivity

A professional accountant should not
allow bias, conflict of interest or undue
influence of others to override
professional or business judgments.
21
(c) Section 130 - Professional Competence and Due
Care
(a) To maintain professional knowledge and skill
at the level required to ensure that clients or
employers receive competent professional service;
and
(b) To act diligently in accordance with applicable
technical and professional standards when
providing professional services.
22
(c) Professional Competence and Due Care …
Professional competence may be divided into two separate
phases:
(a) Attainment of professional competence – high
standard of general education , training and licensure
examination , a period of work experience.;
(b) Maintenance of professional competence - The
maintenance of professional competence through a
continuing program of development.
Note: ensure that those working under the professional

accountant’s authority in a professional capacity have
appropriate training and supervision
23
How our CPD compares among ASEAN
Brunei Per British Commonwealth PAO’s requirements

Cambodia 40 hours per one year
Indonesia
July batch: 289 120 hours per 3 years
October batch: 258
Laos 120 hours per 3 years

Malaysia 120 hours per 3 years
Myanmar 120 hours per 3 years
Philippines
NCR: 46.1%
60 hours per 3 years
Singapore 120 hours per 3 years
Thailand 18 hours per 1 year
Vietnam 40 hours per 1 year
17
PROFESSIONAL REGULATORY BOARD OF
ACCOUNTANCY
RESULOTION 254
Series of 2017
CPD Provider – Any of the following shall constitute

grounds or causes for suspension, cancellation, or non-
renewal of the certificate of accreditation as CPD
provider:
= Charging of unreasonable fees and/or adding any
substantial fees not approved by the CPD Council.
25
Section 5. List of Requirements for accreditation of CPD Program –
5.1 Specific course Objectives stating competencies to be
gained from the program;
5.2 Evaluation tool specific to course objective set;
5.3 Program of Activities showing time/duration of
topics/workshop;
5.4 Resume of Speakers for program applied for, showing
expertise in the topics; show certificates or citations
(if any)
5.5 Current Prof. ID of speaker if registered professional, if
foreigner, current, Special Temporary Permit, if
applicable; and
5.6 Breakdown of expenses for the conduct of the program
26
6.1 EVALUATION FORMS
a. Resource Person
b. Conduct of Seminar
c. Over all Management
Rating scale shall be as follows:
1_ Needs Improvement, 2_ Fair, 3_ Satisfactory, 4_ Very Satisfactory, 5_ Excellent
27
Section 9. Maximum Creditable Units for Self-Directed
and/or lifelong learning . – The maximum creditable
units for self-directed and/or lifelong learning is forty
eight (48) credit units or forty percent (40%) of 120 CPD
units within a compliance period of three (3) years,
which the implementation thereof shall be gradual in the
following period:
Minimum CPD Maximum Credit Units

Year of Renewal Units in a 3- for Self-Directed and/or
year Lifelong Learning
January – June 2017 60 24
July – December 2017 80 32
January – December 2018 100 40
January 2019 - onwards 120 48
28
MAJOR AREA COVERAGE OF THE AREA CREDITS UNITS REQUIRED
A. TECHNICAL COMPETENCE 1. Standards Applicable to
Professional Practice which
includes but not limited to
the following:
a. Current and recent issuance

of the respective area of
practice of the profession
e.g. those from the standard-
setting bodies on;
 Financial Accounting and
Reporting;
 Assurance and Auditing
 Related Practice statements
and interpretations; and
 Pronouncements related to
taxation, depending on area
of practice of the
professional
29
A. TECHNICAL COMPETENCE b. IFAC Pronouncement issued
through IFAC member bodies
2. Laws, Rules and Regulations
affecting Professional Practice
which includes but not limited to:
a. Issuance of
government/regulating
bodies, such as, but not
limited to:
 Professional Regulation
Commission and Board of
Accountancy (which covers
provisions of the Philippine
Accountancy Act & IRR, new
resolutions and regulations
issued by PRC & BOA and
other issuances pertaining to
registration licensing &
professional regulatory
regimes)
30
A. TECHNICAL COMPETENCE  Securities and Exchange
Commissions, Sentral ng
Pilipinas, Insurance
Commissions, Bureau of
Internal Revenue,
Cooperative Development
Authority.
 Commission on Higher
Education and Department
of Education; and
 Commission on Audit,
Department of Budget and
Management Civil Service
Commission, for CPAs in
government sector.
b. ASEAN and other

international treaties affecting
the practice of the Filipino CPAs;
and
31
A. TECHNICAL COMPETENCE a. Other laws and regulations
that govern different forms
of legal entities.
1. Environment of the Practice
which includes Frameworks,
models, best practices,
benchmarks, information
technology advances, tools &
techniques espoused by
professional and other
organizations that affect the
operations & management of
clients & business entities of
the professional.
32
B. PROFESIONAL SKILLS 1. Professional Development
activities that enhance the
CPA’s intellectual,
interpersonal,
communication, personal
and organizational skills,
which includes but not
limited to;
a. Oral & written
communications;
b. Presentation, negotiation &
facilitation skills;
c. Teamwork Enhancement;
d. Personality & social graces;
e. Decision making, leadership,
management & supervision;
33
B. PROFESIONAL SKILLS f. Conflict resolution, cultural
immersion programs,
language learning
programs,
time and resources
management, work or
process innovations and
problem solving skills;
g. For CPAs in the Education

Sector, teaching techniques
and other education-related
CPD learning activities; and
h. Gender development;
34
C. PROFESSIONAL VALUES, a. Code of Ethics for
ETHICS AND ATTITUDES Professional Accountants;
b. Quality standards based on
issuances of bodies affecting
the professional practice;
c. Governance principles and

intervention; and
d. Social responsibility,
principles and interventions.
35
Section 11. Accreditation of CPD Speakers. – There shall be a
process to accredit speakers in order to uplift and
maintain the quality of the content, relevance and
delivery of CPD by all accredited providers.
As a transition, speakers in accredited CPD providers that have
been approved by the CPD Council prior to the effectively of
these guidelines (but will be run thereafter) shall be deemed
as accredited speakers in respect of the said programs.
Required Minimum Units
Year of Renewal Number of Under Required Flexible CPD Required Minimum Units Earned from
CPD Credit Competency Units the Previous Year (s) for License Renewal
Units Areas
January – June 30, 60 40 20 0
2017
July 1- December 80 40 40 0
31, 2017
2018 100 40 60 20 CUs earned in 2017
2019 120 40 80 20 CUs earned in each of the 2
immediately preceding years (2017-2018)
2020-onwards 120 40 80 20 CUs earned in each of the 3
36
(d) Section 140 - Confidentiality

Respect the confidentiality of information acquired as a
result of professional and business relationships and should
not disclose any such information to third parties
(e) Section 150 - Professional Behavior

A professional accountant should comply with relevant laws
and regulations and should avoid any action that discredits
the profession.
37
Conceptual Framework Approach
This Code provides a framework to assist the CPA to

identify, evaluate and respond to threats to compliance
with the fundamental principles. If and where
appropriate, apply safeguards to eliminate the threats
or reduce them to an acceptable level*, such that
compliance with the fundamental principles is not
compromised.
*Acceptable level - A level at which a reasonable and informed third

party would be likely to conclude, weighing all the specific facts and
circumstances available to the professional accountant at that time,
that compliance with the fundamental principles is not
compromised.
38
Conceptual Framework Approach
If a professional accountant cannot implement

appropriate safeguards, he/she should decline or
discontinue the specific professional service involved,
or where necessary resign from the team (in the case of
a CPA in public practice) or the employing {business}
organization (in the case of a CPA in business).
39
SECTIONS
100-Conceptual Framework Approach, 200-Public Practice
290-Independence Audit & Review, 291 Independence Other
Assurance and 300-CPAs in Business
Threats and Safeguards

(a) Self-interest threats, which may occur as a result of the
financial or other interests of a professional accountant or of
an immediate or close family member; ex:
1. A Financial Interest in a client or jointly holding a
financial interest with a client.
2. Contingent Fees relating to an assurance engagement.
40
(b) Self-review threats, a previous judgment needs to be re-

evaluated by the CPA responsible for that judgment; ex:
1. A member of the Assurance Team being, or having
recently been, a director or officer of that client. 2.
Performing a service for a client that directly affects the subject
matter of the assurance engagement.
(c) Advocacy threats, CPA promotes a position or opinion to

the point that subsequent objectivity may be compromised;
ex:
Acting as an advocate on behalf of an assurance client in
litigation or disputes with third parties.
41
(d) Familiarity threats, because of a close relationship, a
CPA becomes too sympathetic to the interests of others;
ex:
1. Accepting gifts or preferential treatments from a client,
unless the value is clearly insignificant.
2. A long association of senior personnel with the
assurance client.
(e) Intimidation threats, CPA may be deterred from acting

objectively by threats, actual or perceived. ex:
Pressure to reduce inappropriately the extent of work
performed in order to reduce fees
42
(a) Safeguards created by the

profession, legislation or regulation;
and
(b) Safeguards in the work
environment.
43
Safeguards created by the profession, legislation or
regulation include, but are not restricted to:
• Educational, training and experience requirements for
entry into the profession.
• Continuing professional development requirements.
• Corporate governance regulations. (SEC Circulars 2 and 6
series of 2002/2009; BSP circular 283 series of 2001 and IC
Circular Letter 31-2005)
• Professional standards.
• Professional or regulatory monitoring and disciplinary
procedures.
• External review by a legally empowered third party of the
reports produced by a professional accountant.
44
Safeguards in the work environment (Firm-wide)
may include:
• stresses the importance of compliance with the
fundamental principles.
• monitor quality control of engagements.
• Documented policies regarding the identification
of threats to compliance with the fundamental
principles, and the application of safeguards.
• Documented internal policies and procedures
requiring compliance with the fundamental
principles.
45
Firm-wide safeguards…
• Involving an additional CPA to review the work
done or otherwise advice as necessary.
• Consulting an independent third party, such as a
professional regulatory body or another CPA.
• Discussing ethical issues with those charged with
governance of the client. Modified by the 2012
and 2014 Revisions, as follows:
46
IESBA Code 2012 Revision (Highlights/Updates)
• 2012 edition contains no changes of substance, however, editorial amendments have

been made
• Amendments:
- “or a subgroup thereof” were added to the term “those charged with
governance…”:
•190.19, 200.13-14, 280.4, 290.28, 290.34-36, 290.38-39, 290.117, 290.133,

290.136, 290.141, 290.153, 290.174, 290.186, 290.195, 290.197-198,
290.222, 291.32-33, 291.112, 291.127, 291.129, 320.5, 340.2, 350.4
- “In complying with requirements…” paragraph wass added to 290.28
6
2014 Changes of substance from 2013 Edition:
1)The definition of the term "those charged with

governance" was revised to align it with International
Standard on Auditing (ISA) 260, Communication with
those charged with governance.
2) To conform with the newly defined term "professional

activity", changes have made to the following paragraphs,
addressing conflicts of interest:
100.5 (c) - the fundamental principle of professional
competence & due care;
8
100.9 - evaluating the significance of threat,
taking into account qualitative and
qualitative factors;
100.12 (b) - self review threat;
120.2 - fundamental principle of Objectivity;
130.1 (b) - to act diligently in accordance with
applicable technical and professional
standards; and
130.6 - shall make aware the clients, employers
or other users of the limitations inherent in
the services or activities.
9
Firm-wide safeguards…
• Disclosing to those charged with governance of the client the nature of
service provided and extent of fees charged.
• Involving another firm to perform or re-perform part of the
engagement.
• Rotating senior assurance team personnel.
• The use of separate engagement teams; and
• Procedures to prevent access to information (e.g., strict physical
separation of such teams, confidential and secure data filing); and
• Clear guidelines for members of the engagement team on issues of
security and confidentiality; and
• The use of confidentiality agreements signed by employees and
partners of the firm; and
• Regular review of the application of safeguards by a senior individual
not involved with relevant client engagements.
50
Safeguards within the Client’s Systems:

• When a client appoints a firm in public practice
to perform an engagement, persons other than
management ratify or approve the
appointment.
• The client has competent employees
• The client has implemented internal procedures
• The client has a corporate governance structure
51
Safeguards, which may be created by the

accounting profession, legislation,
regulation or work environment, include,
but are not restricted to:
well publicized complaints systems
explicitly stated duty to report breaches of
ethical requirements.
52
If, after exhausting all relevant possibilities,
the ethical conflict remains unresolved, the
professional accountant may determine that,
in the circumstances, it is appropriate to
withdraw from the engagement team* or
specific assignment, or to resign altogether
from the engagement, the firm or the
employing {business} organization.
53
PART B
PROFESSIONAL ACCOUNTANTS IN PUBLIC PRACTICE
200 Introduction
210 Professional Appointment
220 Conflicts of Interest
230 Second Opinions
240 Fees and Other Types of Remuneration (fair reflection of
the value of the work performed or to be performed)
250 Marketing Professional Services – Rule on Advertising
260 Gifts and Hospitality
270 Custody of Client Assets
280 Objectivity–All Services
290 Independence– Assurance Engagements
291 (New) Independence – Other Assurance Engagements (2010
Revision) 54
Section 200 - Introduction
A professional accountant in public

practice should not engage in any
business, as a result would be
incompatible with the rendering of
professional services.
55
IESBA Code 2013 Revision (Highlights/Updates)
- Breach of a Requirement of the Code

- Conflicts of Interest
- Definition of “Engagement Team” in the Code
7
SECTION 210 - Client Acceptance
A professional accountant in public practice

should agree to provide only those services
that the professional accountant in public
practice is competent to perform.
57
Engagement Acceptance

should:
• Acquire an appropriate understanding of
the nature of the client’s business
• Acquire knowledge of relevant industries
or subject matters.
58
SECTION 230 - Second Opinions
When asked to provide a second

opinion, seek client permission to
contact the existing accountant,
describing the limitations surrounding
any opinion in communications with the
client and providing the existing
accountant with a copy of the opinion.
59
SECTION 240 - Fees and Other Types
of Remuneration
The fact that one professional accountant

in public practice may quote a fee lower
than another is not in itself unethical.
Contingent fees are widely used for certain
types of non-assurance engagements.
60
Fees and Other Types of Remuneration

may give or receive a referral fee or receive
commission relating to a client, where the
professional accountant in public practice
does not provide the specific service
required.
61
Fees and Other Types of
Remuneration
Established safeguards to eliminate the threats
or reduce them to an acceptable level. Such
safeguards may include:
• Disclosing to the client any arrangements to
pay a referral fee to another professional
accountant for the work referred.
• Disclosing to the client any arrangements to
receive a referral fee for referring the client to
another professional accountant in public
practice.
• Obtaining advance agreement from the client
for commission arrangements in connection
with the sale by a third party of goods or
services to the client. 62
SECTION 250 - Marketing Professional
Services
The professional accountant in public practice should be honest and
truthful and should not:
• Make exaggerated claims; or
• Make disparaging references to unsubstantiated comparisons to
the work of another.
In case of doubt as to the propriety of a proposed form of
advertising, the professional accountant in public practice should
consult with the relevant professional body.
* Requirement/Prohibitions.
Note:
 No code, no matter how severely enforced will make truly bad
people good.*
 When everyone clearly knows the ethical standards of an
organization they are more likely to recognize wrongdoing; and do
something about it*.
 Second, miscreants are often hesitant to commit an unethical act if
they believe that everyone else around them knows it is wrong.
Stuart C. Gilman, Ph.D. – Poverty Reduction and Economic Management, World Bank
63
Section 250 - Rules on Advertising
Reasons for not allowing advertisement in the past
include:
1. advertising can lead to undue competition
between practitioners, …;
2. advertising would encourage a more
commercial approach within the profession …;
3. the cost of advertising would outweigh any
savings which might result from competition,
With the adoption of the new Federation’s
Code of Ethics for Accountants, advertising
in any media, provided it is truthful, is now
allowed:
1. to better educate the public;
2. Truth in advertising must be
verifiable
These rules on advertising
apply to all advertising and
marketing materials in the
media, telephone directory,
roadside, etc., including
Internet and other cyberspace
media.
Grant Thornton – 4000 Smith

Road, Cincinnati, Ohio, USA
KPMG – Bay Adelaide Center

Toronto, Ontario, Canada Ernst & Young – Time Square, New York City
Rules on Advertising and Solicitation
A CPA or CPA firm shall not advertise in a manner
that:
• Brings the Accountancy Profession into disrepute
• Is false in a material particular; or
• Is misleading or deceptive or is likely to mislead
or deceive; or
• Offer a discount, gift or inducement to attract a
person to use the services; or
• Advertise fees or compare fees with other CPAs
or CPA firms
The use of the name of an international

accounting firm affiliation/correspondence
other than a notation that it is a
“member/correspondent firm of that
foreign firm” shall not be allowed so as to
imply that the foreign firm is practicing in
the Philippines.
A CPA or CPA firm may not use the term
“Accredited” or any similar words or
phrases calculated to convey the same
meaning if the claimed board accreditation
(BOA, SEC, BSP, IC or CDA) has expired and
has not been renewed at the time the
advertising in question was published or
broadcast.
No motto, slogan or jingle that is false or
misleading may be used in any
advertisement in the public media.
Since “quality” and “world class” are such

an ethereal concepts to define and even
more difficult to substantiate objectively,
such terms should be avoided in advertising
and marketing materials.
Office signs, signage or directory listing in
the lobby of an office building shall:
• not be more than reasonably necessary
• not be in bad taste
• not be unnecessarily large, conspicuous
or numerous.
• *must not be on premises other than
those in which the practice is located.
Business cards should be of “normal size”,

and contain only the name of the CPA and
his Firm’s name, name of practice, degrees,
address, telephone number, and the
description “CPA”.
Use of business cards must be discreet and
shall be confined to occasions on which it is
proper that he should establish his
professional identity.
SECTION 270 - Custody of Client Assets
A professional accountant in public practice should not
assume custody of client monies or other assets unless
permitted to do so by law …
(a) Keep such assets separately from personal or firm
assets; and
(b) Use such assets only for the purpose for which they
are intended; and
(c) At all times, be ready to account for those assets, and
any income, dividends or gain generated, to any persons
entitled to such accounting; and
(d) Comply with all holding of and accounting for such
assets.
(e) If the assets were found to be derived from illegal
activities, such as money laundering, the CPA must not take
custody:.
73
I
IESBA Code 2010 Revision (Highlights)
• IESBA issued the code clarifying the requirements for all professional accountants and
significantly strengthening the independence of all auditors
• Section 290 contains additional independence provisions when audit/review client is a

public interest entity (PIE)
• Partner rotation of PIEs (290.151) – individual shall not be a key audit partner for more
than seven years
• Section 291 addresses independence requirements for assurance engagements
5
SECTION 290 Independence— Assurance
Engagements
Independence of Mind
allowing an individual to act with integrity, and exercise
objectively and professional skepticism. (Fundamental
Principles)
Independence in Appearance
avoidance of facts and circumstances that are so significant
that a reasonable and informed third party would
reasonably conclude a firm’s, or a member of the assurance
team’s integrity, objectivity or professional skepticism had
been compromised.
75
SECTION 290
INDEPENDENCE―AUDIT AND REVIEW ENGAGEMENTS
Contents Entities Safeguards
PIE Non- AS NS
PIE
Networks and Network Firms

290.13 If a firm is deemed to be a network firm, the firm shall be
independent of the audit clients of the other firms within the network
290.14 … Whether these larger structures create a network depends on the

particular facts and circumstances and does not depend on whether
the firms and entities are legally separate and distinct. For example, a
larger structure may be aimed only at facilitating the referral of work,
which in itself does not meet the criteria necessary to constitute a
network. Alternatively, a larger structure might be such that it is aimed
at co-operation and the firms share a common brand name, a common
system of quality control, or significant professional resources and
consequently is deemed to be a network.
Legend: AS – Allows Safeguards; NS – No Safeguard; PIE-Public Interest Entities
76
SECTION 290
Entities Safeguards
(Modified)Contents
PIE Non- AS NS
PIE
Public Interest Entities

290.25 Section 290 contains additional provisions that reflect ■
the extent of public interest in certain entities. For the purpose of this
section, public interest entities are:
(a) All listed entities; and
(b) Any entity:
(i) Defined by the Securities and Exchange Commission (SEC) and the
Board of Accountancy (BOA)

77
SECTION 290
PIE Non- AS NS
PIE
Public Interest Entities

290.25 Section 290 (b) (i) Defined by SEC and BOA…
Public Interest Entity (PIE) Publicly Accountable Entities (PAE) ■
BOA definition of Public-Interest Entities (PIE) per SEC definition of Publicly-Accountable Entities per
Professional Regulatory Board of Accountancy proposed SRC Rule 68:
Resolution No. 23 Series of 2010: For purposes of the Rule, publicly accountable entities are
Publicly-listed Entities those that meet any of the following criteria:
• Entities which have issued a class of securities listed for • Total assets of more than P350M or total liabilities of
trading on an Exchange more than P250M; or
Other Public-interest Entities but not Listed • Are required to file financial statements under Part II of
• Entities which have sold a class of their securities SRC Rule 68; or
pursuant to a registration under Section 12 of the • Are in the process of filing their financial statements for
Securities Regulation Code. the purpose of issuing any class of instruments in a
• Entities with assets of at least P50 million and having public market; or
200 or more holders each holding at least 100 shares of • Are holders of secondary licenses issued by regulatory
a class of its equity securities as of the first day of the agencies.
issuers’ fiscal year.
• Entities which are in the process of filing their financial
statements for the purpose of issuing any class of
instrument in a public market.
78
SECTION 290
PIE Non- AS NS
PIE
Employment with an Audit Client (290.134) ■
Audit Clients that are Public Interest Entities
290.139 Familiarity or intimidation threats are created when a key audit partner ■ ■
joins the audit client that is a public interest entity as:
(a) A director or officer of the entity; or
(b) An employee in a position to exert significant influence
Independence would be deemed to be compromised if issued audited financial
statements covers a period of less than twelve (12) months

79
SECTION 290
PIE Non- AS NS
PIE
Serving as a Director or Officer of an Audit Client

290.146 If a partner or employee of the firm serves as a director or officer of an ■
audit client, the self-review and self-interest threats created would be so
significant that no safeguards could reduce the threats to an acceptable level.
Accordingly, no partner or employee shall serve as a director or officer of an
audit client.
290.148 If a partner or employee of the firm serves as Company Secretary for an ■

audit client, self-review and advocacy threats are created that would generally
be so significant that no safeguards could reduce the threats to an acceptable
level.
290.149 Performing routine administrative services to support a company ■
secretarial function or providing advice in relation to company secretarial
administration matters does not generally create threats to independence, as
long as client management makes all relevant decisions.

80
SECTION 290
PIE Non-PIE AS NS
Long Association of Senior Personnel… ■

290.151 An individual shall not be a key audit partner for more than seven (7) years.
After such time, the individual shall not be a member of the engagement team
or be a key audit partner for the client for two years.
290.155 When a firm has only a few people with the necessary knowledge ■ ■
and experience to serve as a key audit partner on the audit of a public interest
entity, rotation of key audit partners may not be an available safeguard. Secure
an exemption from partner rotation from the regulators (Board of
Accountancy or BOA)

81
SECTION 290
PIE Non- AS NS
PIE
Management Responsibilities
290.162 Management responsibilities involve leading and directing

an entity, including making significant decisions regarding the
acquisition, deployment and control of human, financial,
physical and intangible resources.

82
2015 Changes of Substance from 2014 Edition:
1) The exception provisions (paragraphs 290.171 and

290.183) that permit an audit firm to provide bookkeeping
and taxation services to Public Interest Entity audit clients
in emergency or other unusual situations have been
withdrawn;
2) Provisions in Management Responsibility have been

strengthened; what constitutes management responsibility
have been provided;
10
3) "Routine or Mechanical“ services
relating to the preparation of
accounting records and financial
statements for audit clients that are not
public interest entities had been
enhanced and clarified;
11
SECTION 290
PIE Non- AS NS
PIE
Valuation Services
290.180 A firm shall not provide valuation services to an audit client that is a ■ ■
public interest entity if the valuations would have a material effect,
separately or in the aggregate, on the financial statements on which
the firm will express an opinion.

85
SECTION 290
PIE Non- AS NS
PIE
Fees-Relative Size (290.220)

290.220 When the total fees from an audit client represent a large proportion of ■
the total fees of the firm expressing the audit opinion, the dependence on
that client and concern about losing the client creates a self-interest or
intimidation threat. The significance of the threat will depend on factors
such as:
• The operating structure of the firm;
• Whether the firm is well established or new; and
• The significance of the client qualitatively and/or quantitatively to the firm.
The significance of the threat shall be evaluated and safeguards applied.
• 290.222 – 15% of the fees for the two (2) consecutive years ■ ■
… the firm shall disclose to those charged with governance
86
SECTION 291
INDEPENDENCE―OTHER ASSURANCE ENGAGEMENTS
Contents
Assurance Engagements
291.12 Assurance Framework, in an assurance engagement the professional
accountant in public practice expresses a conclusion designed to enhance
the degree of confidence of the intended users (other than the
responsible party) about the outcome of the evaluation or measurement
of a subject matter against criteria.
CPA-prepares the report on the accuracy of VAT claimed for refund
CTA-Intended user as admissible evidence; responsible party - the taxpayer-
petitioner
Taxpayer-Petitioner – responsible party
87
SECTION 291
Contents
Assurance Engagements
291.13 “Subject matter information” is used to mean the outcome of the evaluation or
measurement of a subject matter, an assertion about the effectiveness of internal
control (subject matter information) results from applying a framework for
evaluating the effectiveness of internal control, such as COSO1 or CoCo2 , to
internal control, a process.
1 “InternalControl⎯Integrated Framework” The Committee of Sponsoring

Organizations of the Treadway Commission. (Enterprise Risk Management, Internal
Control and Fraud Deterrence)
2 “Guidance on Assessing Control⎯The CoCo Principles” Criteria of Control Board, The
Canadian Institute of Chartered Accountants. (This model builds on COSO; it

describes internal control as actions that foster the best result for an organization)
88
SECTION 291
Contents
Assertion-Based Assurance Engagements
291.18 Majority of assertion-based assurance engagements, the responsible party is

responsible for both the subject matter information and the subject matter.
However, in some engagements, the responsible party may not be responsible for
the subject matter.
Report that an environmental consultant has prepared about a company’s
sustainability practices for distribution to intended users, environmental
consultant is the responsible party for the subject matter information, the
company is responsible for the subject matter (sustainability practices).
1. CPA in Public Practice
2. Consultant – responsible for subject matter information
3. Client – responsible for subject matter sustainability practices
89
PART C
PROFESSIONAL ACCOUNTANTS IN BUSINESS
300 Introduction
310 Potential Conflicts
320 Preparation and Reporting of Information
330 Acting with Sufficient Expertise
340 Financial Interests
350 Inducements
90
SECTION 300 - Introduction (Paradigm Shift)
A professional accountant in business may be a salaried
employee, a partner, director (whether executive or non-
executive), an owner manager, a volunteer or another
working for one or more employing {business}
organizations.
A professional accountant in business has a responsibility to
further the legitimate aims of their employing {business}
organization.
A professional accountant in business is expected to
encourage an ethics-based culture in an employing
{business} organization that emphasizes the importance
that senior management places on ethical behavior.
91
SECTION 310 - Potential Conflict
It arises when the professional accountant lies to, or

otherwise intentionally mislead (including misleading by
remaining silent) others, in particular:
 The auditors of the employing organization; or
 Regulators.
 Must not issue, or otherwise be associated with, a financial or non-
financial report that materially misrepresents the facts, including
statements in connection with, for example:
 The financial statements;
 Tax compliance;
 Legal compliance; or
 Reports required by securities regulators.
92
SECTION 320 - Preparation and Reporting of Information
The professional accountant is expected to present financial

information fully, honestly and professionally.
Financial and non-financial information should be maintained

in a manner that describes clearly the true nature of
business transactions, assets or liabilities, and classifies and
records entries in a timely and proper manner.
Note: PRC/BOA Resolutions 2 – 2016 & 3 – 2016
Submission of Engagement Report; & Accreditation of
CPAs in Commerce & Industry
93
SECTION 350 - Inducement: Receiving Offers
Offers of inducements: gifts, hospitality, preferential
treatment and inappropriate appeals to friendship or
loyalty, may create threats to compliance with the
fundamental principles.
A professional accountant in business should assess the risk
associated with all such offers and consider whether the
following actions should be taken:
(a) Where such offers have been made, immediately inform
higher levels of management or those charged with
governance of the employing organization;
(b) consider seeking legal advice before taking such a step;
and
94
SECTION 350 - Inducement: Making
Offers
A professional accountant in business should

not offer an inducement to improperly
influence professional judgment of a third
party or obtain confidential information.
95
The Purpose of Codes
Codes of ethics are written to guide behavior.
Codes are not designed for “bad” people, but for the persons
who want to act ethically.
The bad person will seldom follow a code, while most people
– welcome ethical guidance in difficult or unclear
situations.
The average person is not grossly immoral but often tempted,
and sometimes confused, by what appears to be a virtuous
path.
Judith Lichtenberg, “What Codes of Ethics Are For?” in Margaret Coady and Sidney Bloch (eds.), Codes of Ethics
and the Professions, Melbourne: Melbourne University Press, 1996, p. 17.
Ethical Issues – Cross Boarder and Tax Service
96
PROFESSIONAL ACCOUNTANTS
IN PUBLIC PRACTICE
Reference Cases
G.R. No. L-11357, May 31, 1962

FELIPE B. OLLADA vs. CENTRAL BANK OF THE PHILIPPINES
- BSP’s Import-Export Department requires CPAs to accredit themselves
before transacting business with said department.
- Monitory Board empowered to set rules and regulations under CB Charter
- An unlawful invasion of the jurisdiction of the Board of Accountancy, (b) in excess
of the powers of the Central Bank and (c) unconstitutional in that it unlawfully
restrained the legitimate pursuit of one's trade.
- The Monetary Board of the Central Bank has authority to prepare and issue such
rules and regulations it may consider necessary for the effective discharge of the
responsibilities and exercise of the powers assigned to it and to the Central Bank
under the provisions of Section 1 (a), Republic Act No. 265.
97
IN PUBLIC PRACTICE
Reference Cases
G.R. No. 175705, July 5, 2010
HAZEL MA. C. ANTOLIN vs. ANTONIETA FORTUNA-IBE
G.R. No. 165036, July 5, 2010
HAZEL MA. C. ANTOLIN vs. ABELARDO T. DOMONDON, JOSE A.
GANGAN, and VIOLETA J. JOSEF
- petitioner compel access to the CPA Board Exams Documents through mandamus
- Access to official records, and to documents, and papers pertaining to transactions, or
decisions, as well to government research data used as basis for policy development, shall be
afforded the citizen.
- “Public concern” like “public interest” is a term that eludes exact definition. Both terms
embrace a broad spectrum of subjects which the public may want to know, either because
these directly affect their lives, or simply because such matters naturally arouse the interest
of an ordinary citizen.
- National board examinations such as the CPA Board Examination are matters of public
concern
- the art and science of Accounting. Remand these case to the RTC for further proceedings
98
IN BUSINESS
Reference Cases
B.M. No. L-68 November 21, 1984

ANNABELLE J. POMPERADA vs. BENJAMIN JOCHICO y PAMA
- CPA fails to meet ethical standards for profession through filing of false Income
Tax Returns.
A.M. No. 2007-02-SC, February 10, 2010

RE: COMPLAINT OF JUDGE ROWENA NIEVES A. TAN FOR LATE REMITTANCE
BY THE SUPREME COURT OF HER TERMINAL LEAVE PAY TO GSIS TO APPLY
FOR PAYMENT OF HER SALARY LOAN TO SAID AGENCY
- Complaint for late payment of GSIS loan,
99
IN BUSINESS
Reference Cases (Conflict of Interest)
A.C. No. 2040, March 4, 1998

IMELDA A. NAKPIL vs. ATTY. CARLOS J. VALDES
- Conflict of interest in the representation is probability, it was respondent’s duty to
inhibit either of his firms from said proceedings to avoid the probability of conflict of
interest.
- Prepared and defended monetary claims against the estate that retained him as its counsel and auditor.
- When a creditor files a claim against an estate, his interest is per se adverse to the estate. As correctly
pointed out by complainant, if she had a claim against her husband's estate, her claim is still adverse and
must be filed in the intestate proceedings.
- Prescinding from these premises, respondent undoubtedly placed his law firm in a position where his loyalty
to his client could be doubted. In the estate proceedings, the duty of respondent's law firm was to contest
the claims of these two creditors (LAW FIRM’S clients) but which claims were prepared by respondent's
accounting firm.
- Even if the claims were valid and did not prejudice the estate, the set-up is still undesirable. The test to
determine whether there is a conflict of interest in the representation is probability, not certainty of conflict.
It was respondent's duty to inhibit either of his firms from said proceedings to avoid the probability of
conflict of interest.
100
IN BUSINESS
Reference Cases
G.R. No. 136266 August 13, 2001

EUTIQUIO A. PELIGRINO vs. PEOPLE OF THE PHILIPPINES
- BIR examiner demanding .5M assessment for medical practitioner without
examining books of accounts.
G.R. Nos. 87186, 87281, 87466 and 87524, April 24, 1992
CAMILO VILLA et. al. vs. SANDIGANBAYAN and PEOPLE OF THE
PHILIPPINES
- Accountant Coinspired to monopolize all requisitions and purchases of
supplies and equipment for Civil Aeronautics Administration in Mactan
International Airport
101
TheEnd
Atty. Eranio “Rene” L. Punsalan, CPA
Philippine Institute of Certified Public Accountants
(PICPA)
39
PROFESSIONAL REGULATORY BOARD OF
ACCOUNTANCY
RESULOTION 254
Series of 2017
CPD Provider – Any of the following shall constitute

grounds or causes for suspension, cancellation, or non-
renewal of the certificate of accreditation as CPD
provider:
= Charging of unreasonable fees and/or adding any
substantial fees not approved by the CPD Council.
103
Section 5. List of Requirements for accreditation of CPD Program –
5.1 Specific course Objectives stating competencies to be
gained from the program;
5.2 Evaluation tool specific to course objective set;
5.3 Program of Activities showing time/duration of
topics/workshop;
5.4 Resume of Speakers for program applied for, showing
expertise in the topics; show certificates or citations
(if any)
5.5 Current Prof. ID of speaker if registered professional, if
foreigner, current, Special Temporary Permit, if
applicable; and
5.6 Breakdown of expenses for the conduct of the program
104
6.1 EVALUATION FORMS
a. Resource Person
b. Conduct of Seminar
c. Over all Management
Rating scale shall be as follows:
1_ Needs Improvement, 2_ Fair, 3_ Satisfactory, 4_ Very Satisfactory, 5_ Excellent
105
Section 9. Maximum Creditable Units for Self-Directed
and/or lifelong learning . – The maximum creditable units
for self-directed and/or lifelong learning is forty eight (48)
credit units or forty percent (40%) of 120 CPD units within
a compliance period of three (3) years, which the
implementation thereof shall be gradual in the following
period:
Maximum Credit Units for
Minimum CPD Units in a 3- Self-Directed and/or Lifelong
year Learning
January – June 2017 60 24
July – December 2017 80 32
January – December 2018 100 40
January 2019 - onwards 120 48
106
A. TECHNICAL COMPETENCE 1. Standards Applicable to
Professional Practice which
includes but not limited to
the following:
a. Current and recent issuance

of the respective area of
practice of the profession
e.g. those from the standard-
setting bodies on;
 Financial Accounting and
Reporting;
 Assurance and Auditing
 Related Practice statements
and interpretations; and
 Pronouncements related to
taxation, depending on area
of practice of the
professional
107
A. TECHNICAL COMPETENCE b. IFAC Pronouncement issued
through IFAC member bodies
2. Laws, Rules and Regulations
affecting Professional Practice
which includes but not limited to:
a. Issuance of
government/regulating
bodies, such as, but not
limited to:
 Professional Regulation
Commission and Board of
Accountancy (which covers
provisions of the Philippine
Accountancy Act & IRR, new
resolutions and regulations
issued by PRC & BOA and
other issuances pertaining to
registration licensing &
professional regulatory
regimes)
108
A. TECHNICAL COMPETENCE  Securities and Exchange
Commissions, Sentral ng
Pilipinas, Insurance
Commissions, Bureau of
Internal Revenue,
Cooperative Development
Authority.
 Commission on Higher
Education and Department
of Education; and
 Commission on Audit,
Department of Budget and
Management Civil Service
Commission, for CPAs in
government sector.
b. ASEAN and other

international treaties affecting
the practice of the Filipino CPAs;
and
109
A. TECHNICAL COMPETENCE a. Other laws and regulations
that govern different forms
of legal entities.
1. Environment of the Practice
which includes Frameworks,
models, best practices,
benchmarks, information
technology advances, tools &
techniques espoused by
professional and other
organizations that affect the
operations & management of
clients & business entities of
the professional.
110
B. PROFESIONAL SKILLS 1. Professional Development
activities that enhance the
CPA’s intellectual,
interpersonal,
communication, personal
and organizational skills,
which includes but not
limited to;
a. Oral & written
communications;
b. Presentation, negotiation &
facilitation skills;
c. Teamwork Enhancement;
d. Personality & social graces;
e. Decision making, leadership,
management & supervision;
111
B. PROFESIONAL SKILLS f. Conflict resolution, cultural
immersion programs,
language learning
programs,
time and resources
management, work or
process innovations and
problem solving skills;
g. For CPAs in the Education

Sector, teaching techniques
and other education-related
CPD learning activities; and
h. Gender development;
112
C. PROFESSIONAL VALUES, a. Code of Ethics for
ETHICS AND ATTITUDES Professional Accountants;
b. Quality standards based on
issuances of bodies affecting
the professional practice;
c. Governance principles and

intervention; and
d. Social responsibility,
principles and interventions.
113
Section 11. Accreditation of CPD Speakers. – There shall be a process to accredit speakers
in order to uplift and maintain the quality of the content, relevance and
delivery of CPD by all accredited providers.
As a transition, speakers in accredited CPD providers that have been approved by the
CPD Council prior to the effectively of these guidelines (but will be run thereafter) shall
be deemed as accredited speakers in respect of the said programs.
Required Minimum Units

Year of Renewal Number of Under Required Flexible CPD Required Minimum Units Earned from
CPD Credit Competency Units the Previous Year (s) for License Renewal
Units Areas
January – June 30, 60 40 20 0
2017
July 1- December 80 40 40 0
31, 2017
2018 100 40 60 20 CUs earned in 2017
20 CUs earned in each of the 2
2019 120 40 80
2020-onwards 120 40 80 20 CUs earned in each of the 3
114
115

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2013 CODE OF ETHICS FOR

CPAs IN THE PHILIPPINES

Atty. Eranio L. Punsalan, CPA, MBA, LLM

Part A establishes the fundamental principles of

100 Introduction and Fundamental Principles

A distinguishing mark of the

He should not be associated with reports, returns, etc.:

(b) Section 120 - Objectivity

Note: ensure that those working under the professional

Brunei Per British Commonwealth PAO’s requirements

Laos 120 hours per 3 years

CPD Provider – Any of the following shall constitute

Minimum CPD Maximum Credit Units

a. Current and recent issuance

b. ASEAN and other

g. For CPAs in the Education

c. Governance principles and

(d) Section 140 - Confidentiality

(e) Section 150 - Professional Behavior

This Code provides a framework to assist the CPA to

*Acceptable level - A level at which a reasonable and informed third

If a professional accountant cannot implement

Threats and Safeguards

(b) Self-review threats, a previous judgment needs to be re-

(c) Advocacy threats, CPA promotes a position or opinion to

(e) Intimidation threats, CPA may be deterred from acting

(a) Safeguards created by the

• 2012 edition contains no changes of substance, however, editorial amendments have

•190.19, 200.13-14, 280.4, 290.28, 290.34-36, 290.38-39, 290.117, 290.133,

- “In complying with requirements…” paragraph wass added to 290.28

1)The definition of the term "those charged with

2) To conform with the newly defined term "professional

Safeguards within the Client’s Systems:

Safeguards, which may be created by the

A professional accountant in public

- Breach of a Requirement of the Code

A professional accountant in public practice

A professional accountant in public practice

When asked to provide a second

The fact that one professional accountant

A professional accountant in public practice

Grant Thornton – 4000 Smith

KPMG – Bay Adelaide Center

The use of the name of an international

Since “quality” and “world class” are such

Business cards should be of “normal size”,

• Section 290 contains additional independence provisions when audit/review client is a

• Section 291 addresses independence requirements for assurance engagements

Contents Entities Safeguards

Networks and Network Firms

290.14 … Whether these larger structures create a network depends on the

Public Interest Entities

Legend: AS – Allows Safeguards; NS – No Safeguard; PIE-Public Interest Entities

Contents Entities Safeguards

Public Interest Entities

Contents Entities Safeguards

Employment with an Audit Client (290.134) ■

Audit Clients that are Public Interest Entities

Legend: AS – Allows Safeguards; NS – No Safeguard; PIE-Public Interest Entities

Contents Entities Safeguards

Serving as a Director or Officer of an Audit Client

290.148 If a partner or employee of the firm serves as Company Secretary for an ■

Legend: AS – Allows Safeguards; NS – No Safeguard; PIE-Public Interest Entities

Contents Entities Safeguards