MODULE 2: PROFESSIONAL PRACTICE OF ACCOUNTANCY

Professional Practice of Accountancy

Regulation of the Accounting Profession

1. RA 9298 (Philippine Accountancy Act of 2004)

a. Standardization and regulation of accounting education.
b. Examination for registration of CPAs
c. Supervision, control and regulation of the practice of accountancy in the Philippines.

Implementing Rules and Regulations to RA 9298 provides clarifications and guidelines geared
towards the implementation of the Philippine Accountancy Act of 2004.

2. Financial Reporting Standards and Engagement Standards as established by recognized standard-

setting bodies.

3. Revised Code of Ethics for Professional Accountants in the Philippines.

4. Quality Assurance Review (Oversight) Program per BOA Resolution No. 23 Series of 2010

Sectors of Accounting Practice

1. Practice of Public Accountancy (Public Practice)

2. Practice in Commerce and Industry
3. Practice in Education or the Academe
4. Practice in Government

Influential Accounting and Auditing Standard Setting Bodies/Organizations/Regulatory Bodies

Regulatory Government Agencies

1. Professional Regulation Commission (PRC).

The agency that administers implements and enforces regulatory policies of the National
Government with respect to the regulation and licensing of the various professions under its
jurisdiction including the maintenance of professional standards and ethics and the enforcement of
the rules and regulations thereto. It derives its authority form the PRC Modernization Act of 2000.

2. Professional Regulatory Board of Accountancy (BOA)

It is the body that regulates the practice of accountancy in the Philippines and empowered to
administer the Philippine Accountancy Act of 2004 or RA 9298.

a. It is composed of a chairman and six (6) members to be appointed by the President of the Phils.
from a list of three (3) recommendees for each position ranked by the Commission from a list of
five (5) nominees for each position submitted by the APO.
b. The chairman and members of the BOA shall hold office for a term of three (3) years.
c. Any vacancy occurring within the term shall be filled for the unexpired portion of the term only.
No person who has served two (2) successive complete terms as chairman or member shall be
eligible for reappointment as chairman or member until the lapse of one (1) year.
d. Appointment to fill up an unexpired term is not to be construed as a complete term.
e. No person shall serve the BOA for more than twelve (12) years.

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3. Securities and Exchange Commission (SEC)

The government agency that regulates the registration and operations of corporations, partnerships,
and other forms of associations in the Philippines.

a. The SEC has been mandated to implement the Revised Securities Act, the Corporation Code of
the Philippines, the Financing Act, the Investment Houses Act, the Investment Company Act
and other duties that involve registration and submission of financial statements.
b. SEC is composed of a chairman and four (4) commissioners for a term of seven (7) years.

4. Commission on Audit (COA).

This constitutional commission has the power, authority, and duty to examine, audit, and settle all
accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property,
owned or held in trust by, or pertaining to, the government, or any of its subdivisions, agencies, or
instrumentalities, including government-owned or controlled corporations and recommend
measures to improve the efficiency and effectiveness of government operations.

The COA is composed of a chairman and two (2) commissioners. Together they are called the
“Commission Proper” appointed by the President of the Philippines with the consent of Commission
on Appointment for a term of seven (7) years.

5. Bangko Sentral ng Pilipinas (BSP).

The primary objective of this government agency is to maintain price stability conducive to a
balanced and sustainable economic growth. It also aims to promote and preserve monetary
stability and the convertibility of the peso.

The powers and functions of the BSP shall be exercised by the BSP Monetary Board composed of
seven (7) members appointed by the President of the Philippines for a term of six (6) years.

6. Bureau of Internal Revenue

This agency aims to raise revenues for the government through the effective and efficient collection
of taxes, provide quality service to taxpayers and enforce tax laws in an impartial and uniform
manner.

7. Insurance Commission

Its mandate is to regulate and supervise the insurance industry for the promotion of national
interest.

Professional Organizations

5. Philippine Institute of Certified Public Accountants (PICPA)

This is the accredited national professional organization of CPAs in the Philippines (October 2, 1975
SEC Accreditation No. 15). It serves all members in the different sectors of the accounting
profession which include public practice, education, government and commerce and industry,
through a set of technical and social services.

6. Sectoral Organizations
 Association of CPAs in Public Practice (ACPAPP)
 Association of CPAs in Education (ACPAE)
 Association of CPAs in Commerce and Industry (ACPACI)

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 Government Association of CPAs (GACPA)

Standard – Setting Bodies

1. Philippine Financial Reporting Standards Council (PFRSC)

A new standard setting body that is intended to replace the Accounting Standards Council (ASC)
through the Interpreting Rules and Regulations (IRR) of the Philippine Accountancy Act of 2004. It
is responsible for the promulgation of generally accepted accounting principles in the Philippines.

The PFRSC shall be composed of fifteen (15) members with a Chairman who had been or presently
a senior accounting practitioner in any of the scope of accounting practice and fourteen (14)
representatives/members from the following:

Chairman 1
Representatives/Members
a. Board of Accountancy 1
b. Securities and Exchange Commission 1
c. Bangko Sentral ng Pilipinas 1
d. Bureau of Internal Revenue 1
e. A major organization composed of preparers
and users of financial statements 1
f. Commission on Audit 1

g Accredited National Professional Organization of CPAs

Public Practice 2
Commerce and Industry 2
Academe/Education 2
Government 2 8
____ ____
Total 15

2. Auditing and Assurance Standards Council (AASC)

This is also an independent body. Its main task is to define the auditing standards and procedures
that will govern the examination of financial statements and shall guide the members of the
profession in the Philippines.

The AASC shall be composed of seventeen (17) members with a Chairman who had been or
presently a senior practitioner in public accountancy and sixteen (16) representatives/members from
various sectors of the profession:

Chairman 1
Representatives/Members
a. Board of Accountancy 1
b. Securities and Exchange Commission 1
c. Bangko Sentral ng Pilipinas 1

d. An association or organization of CPAs in active

public practice of accountancy 1
f. Commission on Audit 1
g Accredited National Professional Organization of CPAs
Public Practice 9
Commerce and Industry 1
Academe/Education 1 11
Total 17 ***

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*** In 2009, the Board of Accountancy amended the composition of the AASC.
3. International Federation of Accountants (IFAC)
It is the worldwide organization for the accountancy profession. Founded in 1977, it is comprised of
158 members and associates in 123 countries worldwide, representing approximately 2.5 million
accountants in public practice, industry and commerce, the public sector, and education.

Primary activities:
a. Serving the public interest.
b. Contributing to the efficiency of global economy
c. Providing leadership and spokesmanship

4. International Accounting Standards Board (IASB)

This board is began its operations in 2001 and is based in London. It is composed of fourteen
board (14) members of whom are full-time and is 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.

In April 2001, the IASB assumed from the IASC the responsibility for setting international
accounting standards. IASB adopted the IASs issued by the IASC and retained designation and
format of the Standards. New standards issued by the IASB were designated as International
Financial Reporting Standards (IFRS). In December 2003, the IASB issued 15 revised IASs,
withdrew IAS 15, “Information Reflecting the Effects of Changing Prices” and issued IFRS 1 to 5.

5. International Auditing Practices Committee (IAPC)

It is a standing committee of the Council of IFAC and is 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. IASPC issues the International Standards in Auditing (ISAs) that are to be
applied in the audit of financial statements, audit of other information and related services.

Characteristics Which Make Accounting and Auditing a Profession

1. Systematic body of theory 4. Regulative code
2. Professional authority 5. Culture
3. Community sanction

Ranks Within An Accounting Firm

1. Partner 4. Senior
2. Manager 5. Junior or staff assistant
3. Supervisor

Factors That Influence the Setting of Audit Fees

1. Risks involved.
2. Complexity.
3. Time and volume involved.
4. Responsibility involved.
5. Conditions of accounting records and supporting documents.
6. Cooperation to be extended by the client’s staff.

Methods of Setting-Up the Audit Fee

1. Per Diem or hourly rate basis.
2. Flat fee basis (Lump-sum)
3. Maximum fee basis (similar to per diem or hourly rate but a maximum limit is imposed by the
agreement between the client and the auditing firm).

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4. Retainer fee basis (Uniform monthly retainer fee and an additional amount as annual charge upon
submission of the audit report).

Examination, Registration and Licensure

The Certified Public Accountant Examination

All applicants for the registration for the practice of accountancy shall be required to undergo a licensure
examination to be given by the Board in such places and dates as the Commission may designate
subject to compliance with the requirements prescribed by PRC in accordance with RA 8981.

Scope of Examination
a. Theory of Accounts e. Auditing Problems
b. Business Law and Taxation f. Practical Accounting Problems I
c. Management Services g. Practical Accounting Problems II
d. Auditing Theory

Rating in the Licensure Examination

To be qualified as having passed the CPA licensure examination, a candidate must obtain a general
average of seventy five percent (75%), with no grades lower than sixty five percent (65%) in any given
subject. In the event a candidate obtains the rating of seventy five (75%) and above in at least a
majority of the subjects as provided in RA 9298, the candidate shall receive a conditional credit for the
subjects passed, provided, that a candidate shall take the examination in the remaining subjects within
two (2) years from the preceding examination , provided further, that if the candidate fails to obtain at
least a general average of seventy five (75%) and a rating of at least sixty five (65%) in each of the
subjects, the candidate shall be considered failed in the entire examination.

Issuance of Certificate of Registration and Professional Identification Card

A certificate of registration (COR) and professional identification card (PIC) shall be issued to successful
candidates.

The Certificate of Registration shall bear the signature of the chairperson of the Professional
Regulations Commission and the chairman and members of the Board of Accountancy stamped with
official seal of the Commission and of the Board, indicating that the person named therein is entitled to
the practice of the profession with all the privileges appurtenant thereto. The said certificate shall
remain in full force and effect until withdrawn , suspend or revoked in accordance with RA 9298.

The Professional Identification Card (PIC) bearing the registration number, date of issuance, expiry
date, duly signed by the chairperson of the Commission is renewable for every three (3) years.

Limitation of the Practice of Accountancy

Single practitioners and partnerships for the practice of public accountancy shall be registered certified
public accountants in the Philippines.

Continuing Professional Education (CPE Program)

All certified public accountants shall undertake sixty (60) credit units for three (3) years, provided that a
minimum of fifteen (15) credit units shall be earned in each year. Any excess credit unit in one year
may be carried over to the succeeding years within the three-year period. Excess credit units shall not
be carried over to the next three year period except credit units earned for doctoral and master’s
degree.

One credit hour of CPE program activity or source shall be equivalent to one (1) credit unit.

Penal Provision

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Any person who shall violate any of the provisions of RA9298 or any of its implementing rules and
regulations as promulgated by the Board of Accountancy subject to the approval of the Professional
Regulations Commission shall, upon conviction be punished by
a. Fine of not less than Fifty Thousand Pesos (P50,000) or
b. Imprisonment for a period not exceeding two (2) years or both
Rules and Regulations Covering the Accreditation of Accounting Teachers

I. Coverage

The accreditation policy shall apply to all CPAs involved in the teaching of accounting, auditing,
management advisory services, finance (which shall include working capital management, investment
policies, sources of finances for long-term capital projects), business law, taxation, and other technically
related subjects. This policy covers those who teach accounting in the primary, secondary, tertiary and
graduate levels including CPA board review schools/centers that are school-based.

The requirement in Section II, Nos. 2 and 3 below shall not apply to those CPAs already engaged in
teaching as of the date of the effectivity of these rules.

II. Requirements for Accreditation:

The following shall be the requirements for the accreditation of Accounting Teachers:

1. Possession of relevant Master’s degree. Any post-graduate degree program in business, accounting,
taxation, law, education and related fields earned from any graduate school duly recognized by the
Commission on Higher Education (CHED) will qualify for this requirement.

2. Completion of 12 units of relevant education subjects from the CHED recognized schools.

a. For purposes of compliance, the 12 units may be earned either from the undergraduate education
program or from a graduate degree program of any Higher Education Institution (HEI) duly
recognized by CHED. These subjects may include but not limited to the following: Test and
Measurement/ Statistical Concepts for Teachers, Classroom Management Concepts for
Teachers, Curriculum Design Concepts for Teachers, Instructional Materials Preparation, and
Teaching and Learning with Computer based Technologies.

b. The 12 units may also be earned from in-service or in-house trainings on these topics offered by
schools or training centers.

c. The 12 units can also be a combination of in-service trainings and units earned in an
undergraduate or graduate education programs.

d. CPAs who have passed the Teachers Board Exams and are already licensed Professional
Teachers shall be exempt from this requirement.

3. A total of three years meaningful experience in actual accounting work either in the Public Practice,
Commerce and Industry or Government sector.

a. The three years experience is total or cumulative and not necessarily continuing.

b. Meaningful experience shall be considered as satisfactory compliance of this requirement if it is

earned in
i. Commerce and industry and shall include significant involvement in general accounting,
budgeting, tax administration, internal auditing, liaison with external auditors or any other
related functions; or

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ii. Government and shall include significant involvement in general accounting, budgeting, tax
administration, internal auditing, liaison with the Commission on Audit or any other related
functions; and

iii. Public practice and shall include at least one year as audit assistant and at least two years as
auditors in charge of audit engagement covering full audit functions of significant clients.
4. Proof that the CPA has undergone Continuing Professional Education (CPE)

The following shall be the proof of compliance with the CPE:

a. Certification of CPE units from accredited CPE providers issued by the Accredited Professional
Organization, presently, the Philippine Institute of Certified Public Accountants (PICPA), or

b. Certificates of Attendance or other proofs of meaningful participation in other CPE programs as

approved by the PRC/CPE Council upon recommendation of the PICPA of the individual CPA of a
minimum of sixty (60) CPE credit units earned for the past immediate three (3) years which shall
include:

CPE credit units on Updates on Philippine

Financial Reporting Standards (PFRS)
including Interpretations thereof 15 units

CPE credit units on Updates on Philippine

Standards on Auditing (PSA) 5 units

CPE credit units on Updates on subject area

of specialization 10 units

CPE credit units on Taxation 4 units

CPE credit units on Professional Ethics 8 units

CPE credit units on Updates on subject areas

relevant to teacher education 10 units

CPE credit units on relevant laws recently issued

affecting business including recent SEC rulings and
other areas as provided for in the IRR to R.A. 9298 Annex C 8 units

Total required CPE Credits 60 units

provided that a minimum of fifteen (15) credit units shall be earned in each year prior to renewal of
accreditation.

III. Registration:

Individual accounting teachers shall register with the BOA and the PRC in accordance with prescribed
rules and shall not commence to teach until a valid Certificate of Accreditation has been issued.

A. Documentary Requirements
1. Application for accreditation duly accomplished in the form prescribed by the BOA, in three (3)
copies with the required metered documentary stamps. The application for registration shall
contain such information as may be required by the BOA including, but not limited to, the
following matters:

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a. Name of the Individual CPA; telephone and/or facsimile numbers, e-mail address, if any;
Complete home address; The name of the Institution where he is presently connected or
subjects that he intends to teach;
b. Copy of valid CPA Board Certificate (required for initial accreditation);
c. Photocopy of expired Certificate of Accreditation of accounting teachers (required for
renewal of accreditation);
d. Photocopy of valid PRC Identification Card;
e. Certified copy of his diploma/transcript of records of the relevant graduate degree program
earned;
f. Certified copy of the transcript of records of the twelve (12) units of relevant education
courses earned;
g. Certificates of CPE units earned;
h. A sworn statement by the Individual CPA that he has at least three (3) years of meaningful
experience in any of the areas of the practice of accountancy as defined in Section II,
paragraph 3 of these Rules and Regulations. A detailed description of such work experience
should be attached to the sworn statement;
i. Valid NBI clearance;
j. Payment as prescribed accreditation fee in cash, postal money order, manager’s check or
bank draft payable to the Professional Regulation Commission.

2. Any change with respect to the matters enumerated in Section III, paragraph A should be
reported in writing to the BOA, copy furnished the Commission, within sixty (60) days from such
change.

B. The Education Sector of the Accredited Professional Organization which at present is the Philippine
Institute of Certified Public Accountants may be deputized by the BOA to assist in the processing of
accreditation of teachers as provided for in these Rules and Regulations.

C. The BOA shall duly authenticate all applications for accreditation received in proper form, and after
having passed upon such applications, shall recommend to the Commission the approval or denial
thereof not later than sixty (60) days after the receipt of the aforesaid applications in proper form
(i.e. with complete and proper documentary requirements).

D. The Commission shall upon favorable recommendation of the BOA, issue to the applicant the
corresponding Certificate of Accreditation to teach accounting.

IV. Renewal of Certificate of Accreditation:

Unless sooner revoked, cancelled or withdrawn, said Certificate of Accreditation shall be valid for three
(3) years and renewable every three (3) years.

V. Penalty:

Any person who shall violate any of the provisions of this Resolution, shall, upon conviction, be subjected
to the penalties provided in the Accountancy Act of 2004, its Implementing Rules and Regulation (IRR)
and in the Rules and Regulations prescribed by the PRC.

VI. Transitory Provisions:

1. Any tenured/full time/full load faculty member who does not meet the requirements for accreditation
in Section II as of the date of effectivity of these Rules and Regulations may be issued a Provisional
Accreditation which will be valid for a period not exceeding three (3) years unless earlier withdrawn,
revoked, or cancelled for cause by the Board of Accountancy. Provisional Accreditation may be
issued only once and is not renewable.

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2. The requirement shall also apply to (a) CPAs who want to join the teaching profession for the first
time; and (b) Returning teachers who have been teaching for the last five (5) years.

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