DEFINITIONS
Direct financial interest - A financial interest:
In this Code of Ethics for Professional Accountants the following
expressions have the following meanings assigned to them:
1. Advertising - The communication to the public of
information as to the services or skills provided by
professional accountants in public practice with a view to
procuring professional business.
2. Assurance client - The responsible party that is the person
(or persons) who:
a. In a direct reporting engagement, is responsible for the
subject matter; or
b. In an assertion-based engagement, is responsible for the
subject matter information and may be responsible for
the subject matter.
(For an assurance client that is a financial statement audit
client see the definition of financial statement audit client.)
3. Assurance engagement - An engagement in which a
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.
(For guidance on assurance engagements see the Philippine
Framework for Assurance Engagements issued by the
Auditing and Assurance Standards Council which describes
the elements and objectives of an assurance engagement and
identifies engagements to which Philippine Standards on
Auditing (PSAs), Philippine Standards on Review
Engagements (PSREs) and Philippine Standards on
Assurance Engagements (PSAEs) apply.)
4. Assurance team
a. All professionals participating in the assurance
engagement;
b. All others within a firm who can directly influence the
outcome of the assurance engagement, including:
i. those who recommend the compensation of, or
who provide direct supervisory, management or
other oversight of the assurance engagement
partner in connection with the performance of the
assurance engagement. For the purposes of an
audit engagement, this includes those at all
successively senior levels above the lead
engagement partner through the firm’s chief
executive;
ii. those who provide consultation regarding
technical or industry specific issues, transactions
or events for the assurance engagement; and
iii. those who provide quality control for the
assurance engagement; and
c. For the purposes of an audit client, all those within a
network firm who can directly influence the outcome of
the audit engagement.
5. Clearly insignificant - A matter that is deemed to be both
trivial and inconsequential.
6. Close family - A parent, child or sibling, who is not an
immediate family member.
7. Contingent fee - A fee calculated on a predetermined basis
relating to the outcome or result of a transaction or the result
of the work performed. A fee that is established by a court or
other public authority is not a contingent fee.
8.
a. owned directly by and under the control of an
individual or entity (including those managed on a
discretionary basis by others); or
b. beneficially owned through a collective investment
vehicle, estate, trust or other intermediary over which
the individual or entity has control.
9. Director or officer- Those charged with the governance of
an entity, regardless of their title, which may vary from
country to country.
10. Engagement partner - The partner or other person in the
firm who is responsible for the engagement and its
performance, and for the report that is issued on behalf of the
firm, and who, where required, has the appropriate authority
from a professional, legal or regulatory body.
11. Engagement quality control review - A process designed to
provide an objective evaluation, before the report is issued, of
the significant judgments the engagement team made and the
conclusions they reached in formulating the report.
12. Engagement team - All personnel performing an
engagement, including any experts contracted by the firm in
connection with that engagement.
13. Existing accountant - A professional accountant in public
practice currently holding an audit appointment or carrying
out accounting, taxation, consulting or similar professional
services for a client.
14. Financial interest - An interest in an equity or other
security, debenture, loan or other debt instrument of an
entity, including rights and obligations to acquire such an
interest and derivatives directly related to such interest.
15. Financial statements - The balance sheets, income
statements or profit and loss accounts, statements of changes
in financial position (which may be presented in a variety of
ways, for example, as a statement of cash flows or a
statement of fund flows), notes and other statements and
explanatory material which are identified as being part of the
financial statements.
16. Financial statement audit client - An entity in respect of
which a firm conducts a financial statement audit
engagement. When the client is a listed entity, financial
statement audit client will always include its related entities.
17. Financial statement audit engagement - A reasonable
assurance engagement in which a professional accountant in
public practice expresses an opinion whether financial
statements are prepared in all material respects in accordance
with an identified financial reporting framework, such as an
engagement conducted in accordance with Philippine
Standards on Auditing. This includes a Statutory Audit,
which is a financial statement audit required by legislation or
other regulation.
18. Firm
a. A sole proprietor or partnership of professional
accountants;
b. An entity that controls such parties through ownership,
management or other means; and
c. An entity controlled by such parties through ownership,
management or other means.
19. Immediate family - A spouse (or equivalent) or dependent.
20. Independence - Independence is:
a. Independence of mind – the states of mind that permits
the provision of an opinion without being affected by
influences that compromise professional judgment,
allowing an individual to act with integrity, and
exercise objectivity and professional judgment
b. Independence in appearance – the avoidance of facts
and circumstances that are so significant a reasonable
and informed third party, having knowledge of all
relevant information, including any safeguards applied,
would reasonably conclude a firm’s, or a member of the
assurance team’s, integrity, objectivity or professional
skepticism had been compromised.
21. Indirect financial interest - A financial interest beneficially
owned through a collective investment vehicle, estate, trust
or other intermediary over which the individual or entity has
no control.
22. Listed entity - An entity whose shares, stock or debt are
quoted or listed on a recognized stock exchange, or are
marketed under the regulations of a recognized stock
exchange or other equivalent body.
23. Network*- A larger structure:
a. That is aimed at co-operation, and
b. That is clearly aimed at profit or cost sharing or shares
common ownership, control or management, common
quality control policies and procedures, common
business strategy, the use of a common brand-name, or
a significant part of professional resources.
*This definition is to be read in the context of the guidance
provided in paragraphs 290.14-26.
24. Network firm - A firm or entity that belongs to a network.
25. Office - A distinct sub-group, whether organized on
geographical or practice lines.
26. Professional accountant - An individual who holds a valid
certificate issued by the Board of Accountancy (i.e., Certified
Public Accountant), whether he/she be in public practice,
industry, commerce, the public sector or education.
27. Professional accountant in public practice - A sole
proprietor, or each partner or person occupying a position
similar to that of a partner and each staff in a practice
providing professional services to a client irrespective of
their functional classification (e.g., audit, tax or consulting)
and professional accountants in a practice having managerial
responsibilities. This term is also used to refer to a firm of
professional accountants in public practice.
28. Professional services - Services requiring accountancy or
related skills performed by a professional accountant
including accounting, auditing, taxation, management
consulting and financial management services.
29. Publicity - The communication to the public of facts about a
professional accountant which are not designed for the
deliberate promotion of that professional accountant.
30. Related entity - An entity that has any of the following
relationships with the client:
a. An entity that has direct or indirect control over the
client provided the client is material to such entity;
b. An entity with a direct financial interest in the client
provided that such entity has significant influence over
the client and the interest in the client is material to
such entity;
c. An entity over which the client has direct or indirect
control;
d. An entity in which the client, or an entity related to the
client under (c) above, has a direct financial interest that
gives it significant influence over such entity and the
interest is material to the client and its related entity in
(c); and
e. An entity which is under common control with the
client (hereinafter a “sister entity”) provided the sister
entity and the client are both material to the entity that
controls both the client and sister entity.
EFFECTIVE DATE
This Code of Ethics is mandatory for all CPAs and is applicable to
professional services performed in the Philippines on or after June
30, 2008 except for provisions in paragraphs 290.14 to 290.26
which will be effective for reports dated on or after December 31,
2009. Earlier application is encouraged.
R.A. 9298 - SECTION 4 (A) - Definition of Terms
As used in these rules and regulations, the following terms shall be
understood to mean as follows:
1. Accredited National Professional Organization of
Certified Public Accountants or APO – the integrated
national professional organization of Certified Public
Accountants accredited by the Board and the Commission;
2. Act or RA No. 9298 – The Philippine Accountancy Act of
2004 and its subsequent amendments;
3. Board or BOA – the Professional Regulatory Board of
Accountancy of the Philippines created under Republic Act
No. 9298;
4. Certified Public Accountant or CPA – a person who holds
a valid Certificate of Registration and a valid Professional
Identification Card issued by the Commission upon
recommendation by the Board to those who have
satisfactorily complied with all the legal and procedural
requirements for such issuance, including in appropriate
cases, having passed the CPA licensure examination.
5. Certificate of Accreditation – a certificate under seal, issued
by the Commission upon the recommendation by the Board
pursuant to this revised rules and regulation, attesting that
Individual CPAs, including the staff members thereof, Firms,
including the sole proprietors and the staff members thereof
and Partnerships of CPAs including the partners and the staff
members thereof, are duly accredited to practice public
accountancy in the Philippines.
6. Certificate of Registration – a certificate under seal bearing
a registration number, issued to an individual, by the
Commission, upon recommendation by the Board, signifying
that the individual has complied with all the legal and
procedural requirements for such issuance including, in
appropriate cases, having successfully passed the CPA
licensure examination.
7. Code of Ethics for Professional Accountants – the code of
ethics approved by the Commission in December, 2003 per
its PRC Resolution No. 83, Series of 2003 and its subsequent
amendments which contains the norms and principles
governing the practice of the accountancy profession in the
highest standards of ethical conduct.
8. Commission or PRC – the Professional Regulation
Commission of the Philippines created under Republic Act
No. 8981.
9. Firm – an organization engaged in the practice of public
accountancy, consisting of a sole proprietor, either alone or
with one or more staff member(s).

10. Individual CPA – a certified public accountant engaged in

the practice of public accountancy under his/her name, by
himself/herself only or with one or more staff member(s).

11. Implementing Rules and Regulations or IRR – rules and

regulations implementing Republic Act No. 9298 otherwise
known as the Philippine Accountancy Act of 2004.

12. Partnership – a professional partnership engaged in the

practice of public accountancy which is formed in
accordance with Philippine laws, either as a general
partnership or a limited liability partnership, and whether or
not it is registered as such with the Securities and Exchange
Commission (SEC).

13. Philippine Institute of Certified Public Accountant or

PICPA – the integrated national professional organization of
Certified Public Accountants accredited by the Board and the
Commission per PRC Accreditation No. 15 dated October 2,
1975.

14. Professional Identification Card – a card with validity of

three (3) years, bearing the registration number, date of
issuance with an expiry date, due for periodic renewal, duly
signed by the Chairperson of the Commission issued by the
PRC to a registered CPA upon payment of the annual
registration fees for three (3) years.

15. Quality Review –- a study, appraisal, or review by the Board

or its duly authorized representatives, of the quality of audit
of financial statements through a review of the quality control
measures instituted by an Individual CPA, Firm or
Partnership of CPAs engaged in the practice of public
accountancy to ascertain his/her/its compliance with
prescribed professional, ethical and technical standards of
public practice.

16. Sector – is the area of practice of accountancy namely public

accountancy, commerce and industry, academe/education and
government.

17. Staff member – a CPA employed by an Individual CPA,

Firm or Partnership engaged in the practice of public
accountancy as defined in Sec. 1(a) herein, below the rank of
the Individual CPA, sole proprietor or partner as the case
maybe.

18. Syllabi – documents showing the outline embodying topics

and concepts of major subjects prescribed in specific course
of study to serve as the basis for test questions in the CPA
licensure examinations.