LS 1.

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THE PUBLIC ACCOUNTING PROFESSION ENVIRONMENT
RA 9298. ACCOUNTACY ACT 2004
Fundamentals of Auditing and Assurance Services

 Philippine Accounting History

Year Description
Accounting with our trading partners, the Malays, Chinese & Indians were as
AD 980’s simple as exchanging cash or goods

The British colonizers established the first accounting firms

1700s
Americans greatly influenced the accounting practice
1890s
The Accountancy Act 1923 was passed, and the first CPA certificates were
1923 issued.

PICPA was established

1929
The Accountancy Act 1967 was passed.
1967
The Revised Accountancy Law 1975 was passed. PD 692
1975
The Philippine Accountancy of 2004 replaced the Revised Accountancy Law.
2004
RA 9298

 Board of Accountancy
- The Professional Regulatory Board of Accountancy (BOA) has come up with a package of
proposed revisions of Republic Act 9298 (Accountancy Law), which was promulgated way
back in 2004
- In the span of more than 12 years since the passage of the law, there have been several
changes and developments in the accountancy sector, locally and globally, that have
arisen. Thus, the need for the revision of the archaic law of accountants.

 RA 9298. Philippine Accountancy Act of 2004

ARTICLE 1. TITLE, DECLARATION OF POLICY, OBJECTIVE, AND SCOPE OF PRACTICE
Section 2. Declaration of Policy. The State shall develop and nurture competent, virtuous,
productive and well-rounded professional accountants.
- Through inviolable, honest, effective, and credible licensure examinations
- Through regulatory measures, programs and activities that foster their professional
growth and development

Section 3. Objectives. This Act shall provide for and govern:

a. Education. The standardization and regulation of accounting education
b. Examination. The examination for registration of certified public accountants; and
c. Regulation. The supervision, control, and regulation of the practice of accountancy in
the Philippines.
  Republic Act 9298. Six Areas of Revisions:
1. Structural
2. Mandate of the Accountancy Regulatory Office and the BOA
3. Practice of Accountancy
4. Accountancy Examination and Program Matters
5. Special Provisions
6. Penalties and Sanctions

OVERVIEW OF SETTING UP AN ACCOUNTING PUBLIC PRACTICE

o Comply with Continuing Professional Development (CPD) Requirements
 Graduate with a degree in Bachelor of Science in Accountancy
 Successfully pass the CPA Board Examination: registration and license to practice
 Obtain meaningful experience (minimum 3 yrs.)
 Secure accreditation from BOA/PRC and, if necessary, including from BIR, BSP, IC & CDA
 Perform services in accordance with professional standards, ethical, legal and regulatory
requirements

Section 4. Scope of Practice. The practice of accountancy shall include, but not limited to the
following:

(a) Practice of Public Accountancy – shall constitute in a person, be it his/her individual capacity, or as
a partner or as a staff member in an accounting or auditing firm, holding out himself/herself as one skilled in
the knowledge, science and practice of accounting, and as a qualified person to render professional services as
a certified public accountant; or offering or rendering, or both, to more than one client on a fee basis or
otherwise, services such as the audit or verification of financial transaction and accounting records; or the
preparation, signing, or certification for clients of reports of audit, balance sheet, and other financial,
accounting and related schedules, exhibits, statements or reports which are to be used for publication or for
credit purposes, or to be filed with a court or government agency, or to be used for any other purpose; or the
design, installation, and revision of accounting system; or the preparation of income tax returns when related
to accounting procedures; or when he/she represents clients before government agencies on tax and other
matters related to accounting or renders professional assistance in matters relating to accounting procedures
and the recording and presentation of financial facts or data.

(b) Practice and Commerce and Industry – shall constitute in a person involved in decision making
requiring professional knowledge in the science of accounting, or when such employment or position requires
that the holder thereof must be a certified public accountant.

(c) Practice in Education/Academe – shall constitute in a person in an educational institution which

involve teaching of accounting, auditing, management advisory services, finances, business law, taxation and
other technically related subjects: Provided that members of the Integrated Bar of the Philippines may be
allowed to teach business law and taxation subjects.

(d) Practice in the Government – shall constitute in a person who holds or is appointed to, a position
in an accounting professional group in government or in a government-owned and/or controlled corporation
including those performing proprietary functions, where decision making requires professional knowledge in
the science in accounting, or where a civil service eligibility as a certified public accountants is a prerequisite.
ARTICLE 2. PROFESSIONAL REGULATORY BOARD OF ACCOUNTANCY
Regulatory Framework

ARTICLE 3. EXAMINATION, REGISTRATION, AND LICENSURE

BSA Curriculum
- The BSA Curriculum is designed to support
aspiring professional accountants to develop
the appropriate entry-level technical
competence, professional skills, values, ethics
and attitudes to successfully complete their
studies and pass the CPALE

CPALE: Syllabus, Topics, and Schedule

I. Auditing
II. Management Advisory Services
III. Taxation
IV. Regulatory Framework for Business Transactions
V. Financial Accounting and Reporting
VI. Advanced Financial Accounting and Reporting (AFAR)

CPALE Syllabus: Auditing (Effective October 2022 Examination)

 Table of Specifications (TOS) of the 6 New Subjects of BLECPA 1
1. To include the topic Effective Communication to Stakeholders in all the six (6) subjects of
the BLECPA; and
2. To include the topics Code of Ethics for Professional Accountants in the Philippines, RA
9298, and its implementing rule and regulations in the subject Auditing

Practical/Practice/
Subject Theoretical
Competence
Financial Accounting and Reporting 30% 70%
Advanced Financial Accounting and Reporting 30% 70%
Management Advisory Services 30% 70%
Auditing 50% 50%
Taxation 30% 70%
Regulatory Framework for Business Transaction 70% 30%

Section 14. Qualification of Applicants for Examination. Any person applying for examination
shall establish the following requisites to the satisfaction of the Board that he/she:
(a) is a Filipino citizen;
(b) is of good moral character;
(c) is a holder of the degree of Bachelor of Science in Accountancy conferred by a school,
college, academy or institute duly recognized and/or accredited by the CHED or other
authorized government offices; and
(d) has not been convicted of any criminal offense involving moral turpitude.

Section 16. Rating-in the Licensure Examination. To be qualified as having passed the licensure
examination for accountants, 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 percent (75%) and above in at least a majority of
subjects as provided for in this Act, he/she shall receive a conditional credit for the subjects
passed: Provided, That a candidate shall take an 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 percent (75%) and a rating of at least sixty-five percent (65%)
in each of the subjects reexamined, he/she shall be considered as failed in the entire examination.

Section 17. Report of Ratings. The Board shall submit to the Commission the ratings obtained by
each candidate within ten (10) calendar days after the examination, unless extended for just cause
Upon the release of the results of the examination, the Commission shall send by mailing the rating
received by each examinee at his/her given address using the mailing envelope submitted during the
examination.

Section 18. Failing Candidates to Take Refresher Course. Any candidate who fails in two (2)
complete Certified Public Accountant Board Examinations shall be disqualified from taking another
set of examinations unless he/she submits evidence to the satisfaction of the Board that he/she
enrolled in and completed at least twenty-four units of subject given in the licensure examination.

1
BLECPA : Board Licensure Examination for Certified Public Accountants
 For purposes of this Act, the examination in which the candidate was conditioned together
with the removal examination on the subject in which he/she failed shall be counted as one
complete examination.

OTHER LEGAL AND REGULATORY REQUIREMENTS

I. Oath (Sec. 19) – successful candidate of CPALE shall be required to take an oath of
profession before any member of the Board of Accountancy
II. Issuance of Certificates of Registration and Professional Identification Card (Sec. 20) – it
bears the registration number, date of issuance, expiry date, duly signed by the chairperson
of the Commission and renewable every 3 years
III. Identification of Certificate of Registration, Identification Card and Professional Tax
Receipt (PTR)
IV. For CPAs in Public Practice an Accreditation from the Board of Accountancy is required.
Renewal every 3 years.

ARTICLE 4. PRACTICE OF ACCOUNTANCY

ARTICLE 5. PENAL AND FINAL PROVISIONS

 Auditing Firms Organized as Sole Proprietorship or Partnership

 SGV & CO. (Partner of Ernst & Young)
 Navarro Amper & Co. (Partner of Deloitte Touche Tohmatsu Ltd.)
 Isla Lipana & Co. (Partner of PWC)
 R.G. Manabat & Co. (Partner of KPMG)
 Punongbayan & Araullo (Partner of Grant Thornton International Ltd.)
 Roxas Cruz Tagle & Co. (Partner of BDO Global)

 Audit Team
 Audit Partner – concerned about the overall quality of each audit.
- Ultimate responsible for resolving technical matters
- Plan and review all phases of an audit engagement
- Sign the audit report
- Approve the firm’s billing to the client
- Obtain/establish contracts with clients
- Determine office operating policies

 Audit Manager/ Supervisor – administers important aspects of audit engagements,

scheduling the audit work to be done with client, assigning work to audit staff,
supervising staff, and reviewing staff work
- Act as a liaison officer between partners and other members of the
staff
- Discuss with the client, problems regarding the audit
- Exercise direct supervision on seniors in charge of specific audit
- Review working papers and drafts of audit report
- Discuss reports and results of audit with clients
- Take direct charge of training programs
  In-Charge (Senior) Auditor – prepares the audit program for an engagement subject, to
review by the partner, principal, or supervisor
- Assigns particular phases of the audit work to staff and to exercise
direct supervision over them
- Performs certain audit procedures requiring skill and experience
 Compares the current period’s operating results with that of
the preceding year/s for the purpose of noting and
investigating any unusual variations
- Takes up with the client or with the partner or principal, problems or
questions that arise in the course of the audit
- Assembles the working papers in an audit, and prepare a draft of the
report and financial statements for review and approval by the
partner or supervisor
- Reviews the articles of incorporation, by laws, and other non-financial
records
- Verifies the assets and liabilities and the basis of the valuation
- Examines the adequacy of allowances for depreciation, bad debts,
provision for income taxes, etc.

 Staff Auditor – performs various audit procedures and gather audit evidence to use as a
basis for the audit reports
- Performs procedures that relate to a variety of aspects of a client’s
activities
- prepares schedules and reports of findings
- Works on tax returns
- Checks the accuracy of findings and extension on books of accounts and
other records
- Checks the postings of entries from the journal to the ledger
- Examines the vouchers supporting minor adjustments
- Serves as an assistant

 Prohibited Professional Services

In summary, Sarbanes-Oxley prohibits professional services firms from performing any client services
for audit clients in which the auditors may find themselves making management decisions or auditing
their own firm’s work.
Specifically, Sarbanes-Oxley prohibits professional service firms from providing any of the following
services to an audit client:
1. Bookkeeping and related services
2. Design or implementation of financial information systems
3. Appraisal or valuation services
4. Actuarial services
5. Internal audit outsourcing
6. Management or human resources services
7. Investment or broker/dealer services
8. Legal and expert services (unrelated to the audit)
Professional firms may provide client tax services (with some restrictions) and other non-prohibited
services to audit clients if the company’s audit committee has approved them in advance.