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THE PUBLIC ACCOUNTING PROFESSION

An occupation or vocation requiring training in
the liberal arts or the sciences and advanced
study in a specialized field.

PROFESSIONS ARE GENERALLY RECOGNIZED AS ELITE
OCCUPATIONAL PROFESSION.

FIVE MAJOR CHARACTERISTIC
1. SYSTEMATIC THEORY underlying theory of accounting
(GAAP and GAAS)

2. PROFESSIONAL AUTHORITY- basis is expertise in the
systematic theory of accounting and auditing

3. COMMUNITY SANCTION admission to profession is
controlled (must satisfy government educational and
experience requirements and pass the licensure exam)
and professional performance judged by standards.

4. REGULATIONS CODE powers and privileges constitute a
monopoly. Code of Ethics prevent abuse

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5. A CULTURE time honoured profession and status of the
profession and the responsibilities that accompany this
status affect his/her behavior.

ORGANIZATIONS THAT AFFECT PUBLIC
ACCOUNTING
A. REGULATORY GOVERNMENT AGENCIES
1. PROFESSIONAL REGULATION COMMISSION (PRC)
administers, implements and enforces the
regulatory policies of the National Government
with respect to the regulation and licensing of
various professions under its jurisdiction.
Has jurisdiction over the regulatory boards.
Derives authority from the PRC Modernization Act
of 2000.

2. BOARD OF ACCOUNTANCY (BOA)
The agency empowered to administer the
Accountancy Law (RA 9298 Phil. Accountancy Act
of 2004)
The only body that may issue and revoke CPA
certificates and grant licenses to practice.



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3 SECURITIES AND EXCHANGE COMMISSION
(SEC)
Regulates the registration and operations of
corporations, partnership and other forms of
associations in the Philippines.

Its overall objective is to assist in providing investors
with reliable information upon which to make
investment decision.

Has considerable influence in setting financial
reporting standards and disclosure requirements as a
result of its authority for specifying reporting
requirements.
SEC has power to establish rules for any CPA
associated with audited financial statements
submitted to it.

4 COMMISSION ON AUDIT (COA)

Audits funds of government units to determine
compliance with existing laws and whether programs
are being conducted efficiently and economically.



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3. PROFESSIONAL ORGANIZATION

PHILIPPINE INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS (PICPA)
Umbrella organization for CPAs

SECTORAL ORGANIZATIONS
A. Association of CPAs in Public Practice
(ACPAPP)
B. Association of CPAs in Education (ACPAE)
C. Association of CPAs in Commerce and Industry
(ACPACI)
D. Government Association of CPAs (GACPA)

4. STANDARD-SETTING BODIES
1. Financial Reporting Standards Council(FRSC)
* assist the BOA in carrying out its powers and
functions as provided by RA 9298
* composed of 15 members
Chairman* 1
Members:
Board of Accountancy 1
SEC 1
BSP 1
BIR 1
A major organization
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composed of preparers
and users of FS 1
COA 1
Sectoral Representative
Public Practice 2
Commerce and Industry 2
Education 2

2 Auditing and Assurance Standards Council (AASC)
An auditing standard setting body.
Composed of 15 members
Chairman (who had been or presently
A senior practitioner in public
Accounting)
Members:
BOA 1
SEC 1
BSP 1
COA 1
Association of CPAs in active
Public practice 1
Sectoral representatives:
Public practice 9
Commerce and industry 1
Education 1
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3 International Federation of Accountants (IFAC)
Approved in Munich in 1977
Membership to IFAC is open to accountancy bodies.
Mission is the development and enhancement of the
profession to enable it to provide services of
consistently high quality in the public interest.
Members of council is elected by each representative
of each member organization.

4 International Accounting Standards Board (IASB)
Based in London began operations in 2001
It is funded by contributions from the major
accounting firms, private financial institutions and
industrial companies throughout the world, central
and development banks, and other international and
professional organizations.
Has 14 board members (12 of whom are full time)
reside in 9 countries and have a variety of functional
backgrounds.
Committed to developing, in the public interest, a
single set of high quality, global accounting standards
that require transparent and comparable information
in general purpose financial statements.
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The board cooperates with national accounting
standard-setters to achieve convergence in
accounting standards around the world.
In April 1, 2001, the IASB assumed from the IASC the
responsibility for setting international accounting
standards.
New standards issued by IASB were designated as
International Financial Reporting Standards.
The board adopted the IAS issued by the former
committee and retained the designation and format
of the Standards.

5 International Auditing Practices Committee (IAPC)
A standing committee of the Council of IFAC
Responsible for the development and issuance on
behalf of the Council
Responsible for the development and issuance on
behalf of the Council, standards and statements on a
variety of audit and attest functions in order to
improve the degree of uniformity of auditing
practices and related services throughout the world.
Issues the International Standards on Auditing (ISAs)
that are to be applied in the audit of financial
statements, audit of other information and related
services

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CPA SERVICES
A. ASSURANCE SERVICES
1. AUDIT
A. Financial Statement Audit
B. Audits of Internal Control Over Financial
Reporting

2. REVIEW
C. Review of Financial Statements
D. Review of Interim Information

3. OTHERS
E. Examination of Prospective Financial
Information
F. CPA Performance Review
G. CPA Risk Advisory

B. NON-ASSURANCE SERVICES (Related
Services)
1. Agreed-Upon Procedures
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2. Compilation of Financial Statements
3. Preparation of Tax Returns & Tax
Consulting
4. Management Consulting
5. Other Advisory Services

REGULATIONS OF THE PUBLIC
ACCOUNTING PRACTICE
Need for Regulations
1. Rendering of Assurance Services
Pertain to independent professional services
designed to improve quality of information, or
its context for decision-making.
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.
Evolved from attestation services, which in turn
evolve from audit

EXPECTATION GAP
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Though auditors historically enjoyed a high
degree of credibility, users of audit reports
expect auditors to detect both intentional and
unintentional material misstatements and to
report when an entity is not likely to survive.
Audits are not designed for these tasks, changes
in audit standards and practices have been
made to better recognize auditors
responsibility for detecting fraudulent financial
reporting and to improve communication of the
work done by the auditor.

A. Public Regulation of the Profession
The PRC through BOA and the Courts of Justice are
responsible for the public regulation of public
accounting practice.
The objective is to protect the investing public from
fraud, gross negligence, and failure to comply with
laws and regulations related to the independent
audit of financial statements.

Auditors found guilty of not complying with the
minimum standards of performance established by
law are subject to penalty such as
a. Payment of damages to those claiming injury
b. Public censure
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c. Injunction
d. Suspension or prohibition from practice before SEC
e. Temporary or permanent loss of license to
practice.

B. Regulation Within the Profession
Setting requirements to ensure that only qualified
people are admitted to the accounting practice.
Establishing Financial Reporting Standards and
standards for accounting and auditing services.
Adopting the Revised Code of Ethics for Professional
Accountants
Developing a program for quality control of public
accounting practice.
Requiring regular, periodic reviews of auditors
compliance with professional standards
Penalizing those found guilty of unacceptable
practices.
Monitoring adequate competition among CPAS

AUTHORITY ATTACHING TO PHILIPPINE STANDARDS
OF AUDITING (PSAs), INTERPRETATIONS AND
STATEMENTS.

1. Pronouncements of AASC are in the form of:
a. Philippine Standards on Quality Control (PSQCs)
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to be applied to all services falling under the
AASCs Engagement Standards

2. Philippine Standards on Auditing (PSAs)
to be applied to audit of historical financial
information.

3. Philippine Standards on Review Engagement
(PSREs)
To be applied in the review of historical
information.

4. Philippine Standards on Assurance Engagement
(PSAEs)
To be applied in assurance engagements dealing
with subject matters other than historical financial
information.

5. Philippine Standards on Related Services (PSRSs)
To be applied to compilation engagements,
engagement to apply agreed-upon procedures to
information and other related services
engagements as specified by the AASC.

6. Philippine Auditing Practice Statements (PAPSs)
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7. Philippine Review Engagement Practice Statements
(PREPSs)
8. Philippine Assurance Engagement Practice
Statements (PAEPSs)
9. Philippine Related Services Practice Statements
(PRSPSs)

The practice statements are issued to provide
interpretive guidance and practical assistance to
professional accountants in implementing PSAs and to
promote good practice.

The Standards
The AASCs Standards contain basic principles and
essential procedures together with related guidance in
the form of explanatory and other material, including
appendices.

The basic principles and essential procedures are to be
understood and applied in the context of the
explanatory and other material that provides guidance
for their application. It is therefore necessary to
consider the whole text of a Standard to understand
and apply the basic principles and essential
procedures.

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The nature of Philippine Standards issued by the AASC
requires professional accountants to exercise
professional judgment in applying them.

In exceptional circumstances, a professional
accountant may judge it necessary to depart from a
basic principle or essential procedure of an Engage-
ment Standard to achieve more effectively the
objective of the engagement. When such a situation
arises, the professional accountant should be prepared
to justify the departure.

R.A 9298 THE ACCOUNTANCY ACT OF 2004
* An act regulating the practice of Accountancy in the
Philippines.

Policy The state recognizing the importance of
accountants in nation building and development,
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 and through inviolable, honest,
effective and credible licensure examinations and
through regulatory measures, programs and
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activities that foster their professional growth and
development.

Objectives
a. The standardization and regulation of
accounting education;
b. The examination for registration of CPAs; and
c. The supervision, control, and regulation of the
practice of accountancy in the Philippines.

Scope of Practice of Accountancy shall include, but
not limited to
1. Practice of Public Accountancy
2. Practice in Commerce and Industry
3. Practice in Commerce and Industry
4. Practice in Government
Professional Regulatory Board Board of
Accountancy
Under the supervision and administrative control
of the Professional Regulation Commission (PRC)
Composed of a chairman and 6 members
appointed by the President of the Philippines from
a list of 3 recommendees for each position, from a
list of 5 nominees from the accredited professional
organization of CPAs.
Qualifications of Members of the Board
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a. Must be natural-born citizen and resident of the
Philippines.
b. Must be a duly registered CPA with at least 10
years of work experience in any of the sector.
c. Must be of good moral character and must not
have been convicted of crimes involving moral
turpitude; and
d. Must not have any pecuniary interest, directly or
Indirectly, in any school, college, university or
institution conferring BSA degree.

Term of Office Chairman and members have a
term of 3 years up to 2 successive complete terms.
Reappointment may be made after lapse of 1 year.
Appointment to fill up vacancy for unexpired term
is not considered as a complete term.

Compensation same as that receive of other
regulatory boards.

Powers and Functions of the Board
a. To prescribe and adopt the rules and regulations
necessary for carrying out the provisions of this
Act;
b. To supervise the registration, licensure and
practice of accountancy in the Philippines;
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c. To administer oaths in connection with the
administration of this Act;
d. To issue, suspend, revoke, reinstate the Certifi-
cate of Registration for the practice of
accountancy
e. To adopt an official seal of the Board;
f. To prescribe and/or adopt a Code of Ethics for
the practice of accountancy;
g. To monitor the conditions affecting the practice
of accountancy and adopt such measures,
including the promulgation of accounting and
auditing standards, rules and regulations and
best practices as may be deemed proper for the
enhancement and maintenance of high
professional, ethical, accounting and auditing
standards, both domestic and international;
h. To conduct an oversight into the quality of audits
of financial statements through a review of te
quality control measures instituted by auditors in
order to ensure compliance with standards;
i. To investigate violations of this act and the rules
and regulations promulgated, to issue summons,
subpoena to violators or witness thereof and
compel their attendance to such investigation or
hearings and production of documents in
connection therewith
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j. To issue a cease and desist order to any person,
association, partnership or corporation engaged
in violation of any provision of this act or any
accounting and auditing standards promulgated
by the Board;
k. To punish for contempt of the Board, both direct
and indirect, in accordance with the pertinent
provisions of and penalties prescribed by the
Rules of Court;
l. To prepare, adopt, issue or amend the syllabi of
the subjects for examinations in consultation
with the academe, determine and prepare
questions for the licensure examination,
administer, correct and release the results of the
examination.
m. To ensure, in coordination with CHED or other
authorized government offices that all higher
educational instruction and offering of
accountancy comply with the policies, standards
and requirements of the course prescribed by
CHED or other authorized government in the
areas of curriculum, faculty, library and facilities;
n. To exercise such powers as may be provided by
law as well as those which may be implied from,
or which are necessary or incidental to the
carrying out of, the express posers granted to the
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Board to achieve the objectives and purpose of
this Act.
Custodianship of records is vested on PRC.
PRC shall designate the secretary of the Board and
shall provide the secretariat and other support
services.
Grounds for Suspension or Removal of Members of
the Board The President of the Philippines, upon
the recommendation of PRC and due process, may
suspend or remove any member on the following
grounds.
a. Neglect of duty or incompetence;
b. Violation or tolerance of any violation of this Act
and its implementing rules and regulations or the
Code of Ethics and the technical and professional
standards of practice for CPAs;
c. Final judgment of crimes involving moral turpitude;
d. Manipulation or rigging of the CPA licensure
examination results, disclosure of secret and
confidential information of exam questions prior to
the conduct of the licensure exam and tampering
of grades.
Examination, Registration and Licensure
All applicants for registration for the pra ctice of
accountancy shall be required to undergo a licensure
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examination to be given by the Board October and
May in Manila, Baguio, Cebu, Iloilo (?) Cagayan de Oro
and Davao.
Qualifications of Applicants for Examinations
a. Is a Filipino citizen
b. Is of good moral character
c. Is a holder of BSA degree conferred by a school,
college, academy or institute duly recognized
and/or accredited by CHED or other authorized
government offices; and
d. Has not been convicted of any criminal offense
involving moral turpitude.
Scope of examination
Theory of Accounts 2 units
Business Law 1 unit
Taxation 1 unit
Management Services 2 units
Auditing Theory 2 units
Auditing Problems 2 units
Practical Accounting Problems I 2 units
Practical Accounting Problems II 2 units
Rating in the Licensure Examination
A candidate must obtain a general average of 75%,
with no grades lower than 65% in any given
subject.
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In the event a candidate obtains a rating of 75%
and above in at least majority of the subjects , he
or she shall take an examination in the remaining
subjects within two (2) years from the preceding
examination. If the candidate fails to obtain at
least a general average of 75% and a rating of at
least 65% in each of the subjects re-examined,
he/she shall be considered as failed in the entire
examination.
Report of Rating ten calendar days after
examination.

Refresher Course
Any candidate who fails in two (2) complete CPA
examination shall be disqualified from taking
another set of examinations unless he/she submits
evidence that he/she enrolled in and completed at
least twenty-four (24) units in subject given in the
licensure examination.






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