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Since 1977

AT.3401 SOLIMAN/UY/AGUILA
Professional Practice of Accountancy MAY 2023

LECTURE NOTES
Practice of Accountancy Board of Accountancy (BOA) under the supervision of
Professional Regulation Commission (PRC). The LECPA is
1. Public Accountancy given over a three-day period twice a year, usually May and
• Skilled in the knowledge, science, and practice of October. It covers six (6) subjects as follows:
accounting and qualified to render professional
services as a CPA. Typical services include: Subject No. of
§ Audit/verification of financial transaction or Items
records. 1. Management Services (MS) 70
§ Preparation, signing, or certification for clients 2. Auditing (AUD) 70
reports of audit and other financial, accounting
and related statements or reports for various 3. Taxation (TAX) 70
purposes. 4. Regulatory Framework for Business 100
§ Design, installation, review and revision of Transactions (RFBT
accounting systems and controls. 5. Financial Accounting and Reporting 70
§ Preparation of income tax returns when related to (FAR)
accounting procedures. 6. Advanced Financial Accounting and 70
§ Representing clients before government agencies Reporting (AFAR)
on tax or accounting matters.
Qualifications to take the LECPA
2. Commerce and Industry
• Involved in the decision-making requiring 1. Filipino citizen.
professional knowledge in accounting and accounting 2. Good moral character.
aspects of finance and taxation. 3. Holder of the degree of Bachelor of Science in
• Represents employer before government agencies on Accountancy (BSA).
tax and accounting matters. 4. Not convicted of any criminal offence involving moral
• Employment or position requires that the holder must turpitude.
be a CPA.
§ For a business or company with a paid-up capital Ratings in the CPA Examination
of at least P5 million and/or an annual revenue of
at least P10 million, registered CPAs should occupy Status Criteria
position which requires (a) supervising the 1. PASSED • General average of at least
recording of financial transactions and preparation 75%, AND
of financial statements, (b) coordinating with • No grades lower than 65% in
external auditors, and (c) other related functions. any given subject.
2. CONDITIONED • Did not meet any or both
3. Education/Academe criteria above but obtained at
• A person in an educational institution which involve least 75% in majority of the
teaching of accounting, auditing, management subjects taken (at least 4
services, accounting aspect of finance, business law, subjects)
tax, and other technically related subjects. • Retake subjects below 75%
• Business law (now RFBT) and tax subjects may be within 2 years from preceding
taught by CPAs and by lawyers. examination.
• The position of either Dean or the department chair 3. FAILED • Did not meet any or both
or its equivalent supervising the BSA program is criteria to pass, AND
deemed to be practice in academe. • Did not obtain at least 75% in
majority of the subjects taken.
4. Government
• Holds or is appointed to a position in an accounting Refresher Course
professional group in government or in a
government-owned and/or controlled corporation, A candidate who fails in 2 complete LECPA is disqualified
including those performing proprietary functions, from taking another set of examinations unless the
where decision making requires professional candidate submits evidence to the satisfaction of the Board
knowledge in the science of accounting, or that the candidate enrolled in and completed a refresher
• Civil service eligibility as a CPA is a prerequisite. course composed of at least 24 units of subjects in LECPA
• A person who passes the LECPA is exempted from from a BOA-accredited educational institution.
taking the Civil Service Exam given by the Civil
Service Commission. Registration and Licensure for the Practice of
Accountancy
The Licensure Examination for Certified Public
Accountants All successful candidates shall take an oath of profession1
and shall receive the following credentials:
The Licensure Examination for Certified Public Accountants
or LECPA is administered by the Professional Regulatory

1
Secure a copy of oath of profession from PRC website.

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Certificate of Professional examination are being offered or conducted, nor shall

Registration (CPA Identification Card he/she be a member of the faculty or administration
Certificate) (PRC ID) thereof at the time of his/her appointment to the BOA.
• Indicates that the • Bears the registration 5. Must not be a Director or Officer of the Accredited
person named therein number, date of National Professional Organization (APO) at the time of
is entitled to the issuance, and expiry his/her appointment.
practice of the date.
profession with all the • Bears the signature of Note: the current APO of Accountancy in the Philippines is
privileges appurtenant the chairperson of the the Philippine Institute of Certified Public Accountants
thereto. PRC. (PICPA)
• Bears the signature of • Must be renewed every
the chairperson of PRC 3 years. Terms of Office
and the chairman and
members of the BOA. The Chairman and members of the BOA shall hold office for
• Valid unless withdrawn, a term of three (3) years. Any vacancy occurring within the
suspended or revoked. term of a member shall be filled up for the unexpired portion
of the term only. No person who has served two (2)
Refusal to Issue CPA Certificate and PRC ID successive complete terms shall be eligible for
reappointment until the lapse of one (1) year. Appointment
1. Convicted of criminal offense involving moral turpitude to fill up the unexpired term is not to be considered as a
2. Guilty of immoral and dishonorable conduct complete term. No person shall serve in the Board for more
3. Has an unsound mind than twelve (12) years.
4. Misrepresented in the LECPA application
The Auditing and Assurance Standards Council
CPA Seal
The Auditing and Assurance Standards Council’s (AASC’s)
All licensed CPAs shall obtain and use a seal of a design mission is “the promulgation of auditing standards,
prescribed by the BOA, bearing the registrant’s name, practices and procedures which shall be generally accepted
registration number and title. The CPA shall provide the by the accounting profession in the Philippines.” The AASC
following information in the documents he/she signs or uses replaced the Auditing Standards and Practices Council
in connection with the practice of profession: (ASPC), which was established by the PICPA and ACPAPP.
It has 15 regular members coming from the following in
• Certificate of Registration and Professional Identification accordance with the IRR to RA 9298 or the Philippine
Card Accountancy Act of 2004:
• Date of issuance and duration of validity. No. of Members
• Professional Tax Receipt (PTR) Number issued by Chairman 1
City/Municipal Treasurer. Board of Accountancy 1
Securities and Exchange Commission 1
Affixing the CPA’s seal and signature is an indication of Bangko Sentral ng Pilipinas 1
compliance by the CPA of the requisite accounting and Commission on Audit 1
auditing standards and rules. Association of CPAs in Public Practice 1
PICPA
Professional Regulatory Board of Accountancy Public Practice 6
Commerce and Industry 1
The Professional Regulatory Board of Accountancy (BOA) is Academe/Education 1
the official government agency empowered to enforce the Government 1
15
provisions of R.A. 9298. It is the administrative supervision
of the Professional Regulation Commission (PRC).
However, per PRC BOA Resolution No. 22 Series of 2020,
Composition the BOA unanimously agreed that the membership in the
AASC be increased from fifteen (15) to eighteen (18) to
The BOA shall be comprised of a Chairman and six (6) include two (2) representatives from the small and medium
members to be appointed by the President of the sized practitioners, a representative from the Insurance
Philippines. The four sectors in the practice of accountancy Commission, and remove the representative from
shall as much as possible be equitably represented in the government. The PRC BOA Resolution was dated July 1,
BOA. The BOA shall elect a vice-chairman from among its 2020 and was published in official gazette on July 9, 2020.
members for a term of one (1) year. Hence, the updated structure of the AASC is as follows:

No. of Members
Qualifications
Chairman 1
Board of Accountancy 1
1. Must be a natural-born citizen and a resident of the Securities and Exchange Commission 1
Philippines. Bangko Sentral ng Pilipinas 1
2. Must be a duly registered CPA with AT LEAST 10 years Insurance Commission 1
of work experience in any scope of practice of Commission on Audit 1
accountancy. Association of CPAs in Public Practice 1
3. Must be of good moral character and must not have PICPA
been convicted of crimes involving moral turpitude. Public Practice 9
4. Must not have any pecuniary interest, directly or Commerce and Industry 1
indirectly, in any school, college, university, or Academe/Education 1
institution conferring an academic degree necessary for 18
admission to the practice of accountancy or where
review classes in preparation for the licensure

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Auditing Standards CPD Credit Units

Standards Application CPAs applying for accreditation to practice accountancy

1. Philippine Standards on • Audit of historical shall be required to comply with one-hundred twenty (120)
Auditing (PSAs) financial information CPD credit units in a compliance period of three (3) years.
2. Philippine Standards on • Review of historical The minimum credit units under the required competence
Review Engagements financial information area is 40 units and the remaining 80 credit units can be
(PSREs) earned under flexible CPD units.
3. Philippine Standards on • Assurance
Assurance engagements dealing Minimum required credit units (40) under the 3 competence
Engagements (PSAEs) with subject matters areas:
other than historical • Competence Area A (Technical Competence) – 30
financial information. CPD units
4. Philippine Standards on • Compilation • Competence Area B (Professional Skills) – 5 CPD
Related Services engagements units
(PSRSs) • Engagements to apply • Competence Area C (Professional Values, Ethics,
agreed-upon Attitudes) – 5 CPD units
procedures to
information All other CPAs renewing their Professional ID Card are
• Other related services required to earn fifteen (15) CPD units under any of the
engagements competence areas. Overseas Filipino Workers (OFWs) are
not covered by the CPD requirement. Newly licensed CPAS
Notes: are not covered by the CPD requirement for their first
renewal cycle.
• PSAs, PSREs, PSAEs, and PSREs are collectively referred
to as the AASC’s Engagement Standards. Per PRBOA Resolution No. 254-2017, revised common
• Philippine Standards on Quality Control (PSQC) are to sources of CPD credit units (CU):
be applied for all services falling under the AASC’s
engagement standards. Seminars/Workshops:
• Philippine Standards are applicable to engagements in Participant Approved CU for program
the Public Sector. Resource Speaker 3 CU per hour
Panelist/Reactor 2 CU per hour
Practice Statements or Practice Notes Facilitator/Moderator 1 CU per hour
CPD Monitor Twice approved CU for program
a. Philippine Practice Statements (now called Philippine In-service training or Maximum of 20 CU for a 12-
Auditing Practice Notes) OJT month period or a fraction thereof
• Provide interpretive guidance and practical Academic track (valid within 5 years after completion):
assistance to professional accountants in Master’s 60 CU upon completion
implementing Philippine Standards and Doctorate 60CU + 30CU upon completion
• Promote good practice. Bachelor of Laws 30CU upon completion +30CU
after passing the Bar exams
b. Professional accountants should be aware of and Professional 10CU per certification
consider Practice Notes applicable to the engagement. Certifications (CMA,
CFA, etc.)
c. A professional accountant who does not consider and Foreign language 10CU per foreign language
apply the guidance included in a relevant Practice Notes certifications
should be prepared to explain how the basic principles Professional chair 15 CU per year
and essential procedures in the AASC’s Engagement Self-directed and/or lifelong learning
Standards addressed by the Practice Notes have been Other activities recommended by CPD Council, BOA, PRC
complied with.

Continuing Professional Development Penalties and Sanctions

Continuing Professional Development (CPD) refers to the
inculcation of advanced knowledge, skills, and ethical values
in a post-licensure specialization or in an interdisciplinary or
multidisciplinary field of study, for assimilation into
professional practice, self-directed research and/or lifelong
learning.
Penalties and sanctions are imposed where the CPAs has
violated the rules prescribed by law, regulation, or the
Code of Ethics such as:
a. Suspension of CPA Certificate,
b. Revocation of CPA Certificate or Cancellation of
temporary/special permit,
c. Payment of fines (not less than P50,000) or
imprisonment (not exceeding 2 years) or both.
Note: Only the court of law can sentence CPA to
imprisonment.

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DISCUSSION QUESTIONS
1. Practice of Public Accountancy shall constitute in a
person:
a. When involved in decision making requiring
professional knowledge in the science of accounting,
as well as the accounting aspects of finance and
taxation or when he/she represents his/her employer
before government agencies on tax and other
matters relating to accounting.
b. When he/she is appointed 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 of accounting
c. When he or she is involved in teaching of accounting,
auditing, management advisory services, accounting
aspect of finance, business law, taxation and other
technically related subjects.
d. When a person is skilled in the knowledge, science
and practice of accounting and as a qualified person
to render professional services as a CPA
2. Which of the following is not a requisite in applying for
the licensure examination for CPAs?
a. Natural-born citizen of the Philippines.
b. Good moral character.
c. Holder of the degree of Bachelor of Science in
Accountancy.
d. Has not been convicted of any criminal offense
involving moral turpitude.
3. The following statements relate to CPA examination
ratings. Which statement is incorrect?
a. To pass the examination, candidates should obtain
a general weighted average of 75% and above, with
no rating in any subject less than 65%.
b. Candidates who obtain a rating of 75% and above
in at least four subjects shall receive a conditional
credit for the subjects passed.
c. Conditioned candidates shall take an examination in
the remaining subject(s) within three years from
the preceding examination.
d. Candidates who fail in two (2) complete CPA
examinations may be allowed to take examinations
a third time provided he or she will comply with Sec.
18 of RA 9298.
4. 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
____ of subject given in the licensure examination.
a. 12 units c. 24 units
b. 21 units d. 60 units
5. The Certificate of Registration issued to successful
examinees
a. Is renewable every three years
b. Is renewable every five years
c. Shall bear the signature of the PRC Chairperson
d. Shall remain in full force and effect until withdrawn,
suspended or revoked.
6. According to Section 20 of RA 9298, a Professional
Identification Card bearing the registration number,
date of issuance, expiry date, duly signed by the
chairperson of the PRC, shall likewise be issued to every
registrant renewable every
a. One (1) year c. Three (3) years
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b. Two (2) years d. Five (5) years
7. The BOA shall refuse the registration of any person who
successfully passed the CPA examinations if, except
a. Convicted by a court of competent jurisdiction of a
criminal offense involving moral turpitude
b. Having an unsound mind
c. Guilty of immoral and dishonorable conduct
d. Conviction for a political offense or for an offense
which shall not disqualify a person from practicing
accountancy.
8. The Continuing Professional Development (CPD)
program mentioned in the IRR shall have the following
objectives, except:
a. To promote the general welfare of the public
b. To provide and ensure the continuous education of
accountancy students with the latest trends in the
profession brought about by modernization and
scientific and technological advancement
c. To raise and maintain the professionals capability
for delivering professional services
d. To attain and maintain the highest standards and
quality in the practice of the profession
9. Which of the following is incorrect regarding CPD
requirements for CPAs?
a. OFWs are not covered by the CPD requirements.
b. Newly licensed CPAs are not covered by the CPD
requirements for their first renewal cycle.
c. CPAs getting BOA accreditation will need 120 units
of CPD training.
d. All other CPAs renewing their Professional ID Card
will need 15 CPD units of training under the
technical competence area.
10. Which of the following is not permitted by law to practice
public accountancy?
a. A corporation whose stockholders are all CPAs
b. A partnership of CPAs
c. A solo practitioner
d. A partnership of CPAs, with some non-CPA staff
11. A meaningful experience shall be considered as
satisfactory compliance with the requirements of
Section 28 if it is earned in academe/education and shall
include teaching for at least three (3) trimesters or two
(2) semesters subjects in either financial accounting,
business law and tax, auditing problems, auditing
theory, financial management and management
services. Provided the accumulated teaching
experience on these subjects shall not be less than
three (3) school years.
A meaningful experience shall be considered as
satisfactory compliance with the requirements of
Section 28 if it is earned in Public Practice and shall
include at least one year as audit assistant and at least
two years as auditor in charge of the audit engagement
covering full audit functions of significant clients.
a. True, False c. False, False
b. False, True d. True, True
12. All registered CPAs whose names appear in the roster
of CPAs shall be united and integrated through their
membership in a one and only registered and accredited
national professional organization of registered and
licensed CPAs, which shall be registered with the SEC as
a nonprofit corporation and recognized by the Board
subject to the approval of the commission.
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TEAM PRTC
CPAs, firms and partnerships of CPAs engaged in the
practice of public accountancy, including partners and
staff members thereof, shall register with the
Commission and the Board.
a. True, False c. False, True
b. False, False d. True, True
13. Which of the following statements concerning the use of
firm or partnership name is incorrect?
a. In the case of an individual CPA, he/she shall do
business under his/her registered name with the
BOA and the PRC and as printed in his/her CPA
certificate.
b. In the case of a firm, it shall do business under its
duly registered and authorized firm name appearing
in the registration documents issued by the
Department of Trade and Industry (DTI) and other
government offices and such firm name shall
include the real name of the sole proprietor as
printed in his/her CPA certificate.
c. In the case of a registered partnership, it shall do
business under its name as indicated in its current
Articles of Partnership and Certificate of
Registration issued by the Securities and Exchange
Commission (SEC).
d. A CPA shall practice only under an individual, firm,
or partnership name in accordance with Philippine
laws and shall not include any fictitious name or is
misleading as to the type of the organization but
may indicate specialization.
14. Under the IRR of RA 9298, if a partner in a two-member
partnership dies, the surviving partner may continue to
practice as an individual under the existing firm title
which includes the deceased partner’s name
a. For a period of time not to exceed five years.
b. For a period of time not to exceed two years.
c. Indefinitely.
d. Until the partnership payout to the deceased
partner’s estate is terminated.
15. Below are names of four CPA firms and pertinent facts
relating to them. Unless otherwise indicated, the
individuals named are CPAs and partners, and there are
no other partners. Which firm name and related facts
indicate a violation of RA 9298 and its IRR?
a. Dee, Lim and Sy, CPAs (Dee died about five years
ago; Lim and Sy are continuing the firm).
b. Cruz and Reyes, CPAs (The name of V. Valdes, CPA,
a third partner, is omitted from the firm name).
c. Gomez and Castro, CPAs (Gomez died about three
years ago; Castro is continuing the firm as a sole
proprietorship).
d. P. Reyes and Co., CPAs (The firm has ten other
partners who are all CPAs).
16. The death or disability of an individual CPA and/or the
dissolution and liquidation of a firm or partnership of
CPAs shall be reported to the BOA not later than _____
days from the date of such death, dissolution or
liquidation.
a. 15 c. 60
b. 30 d. 90
17. The following statements relate to the Board of
Accountancy and its composition. Which statement is
incorrect?
a. The Board consists of a Chairman and six members
b. The Chairman and members are appointed by PRC
upon recommendation of APO
c. The Board shall elect a vice-chairman from among
its members.
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d. The four (4) sectors in the practice of accountancy
shall as much as possible be equitably represented
in the Board
18. Which of the following is incorrect regarding the
qualifications of members of the Board of Accountancy?
a. Must be a natural-born citizen and resident of the
Philippines
b. Must be a duly registered Certified Public
Accountant with at least fifteen (15) years of work
experience in any scope of practice of accountancy
c. Must be of good moral character and must not have
been convicted of crimes involving moral turpitude
d. Must not have any pecuniary interest, directly or
indirectly, in any school, college, university where
review classes in preparation for the licensure
examination are being offered or conducted
19. Which of the following statements is incorrect according
to Section 7 of the Philippine Accountancy Act of 2004
(RA 9298)?
a. The Chairman and the members of the Professional
Regulatory Board of Accountancy (PRBOA) shall
hold office for a term of three (3) years.
b. No person who has served two (2) successive terms
shall be eligible for reappointment until the lapse of
one (1) year.
c. Any vacancy occurring within the term of a member
shall be filled up for the unexpired portion of the
term only.
d. Appointment to fill up an unexpired term is
considered as a complete term.
20. No person shall serve the Professional Regulatory Board
of Accountancy for more than
a. 3 years c. 9 years
b. 6 years d. 12 years
21. The following are the powers, functions and
responsibilities of the Board of Accountancy (also known
as the Board)
a. To prescribe and/or adopt a Code of Ethics for the
practice of accountancy
b. To prescribe and adopt the rules and regulations
necessary for carrying out the provisions of RA 9298
c. 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 which shall strictly be within
the scope of the syllabi of the subjects for
examinations as well as administer, correct and
release the results of the licensure examinations
d. All of the above
22. The creation of FRSC and AASC is intended to assist the
BOA in carrying out its function to
a. To monitor the conditions affecting the practice of
accountancy and adopt such measures, rules and
regulations and best practices as may be deemed
proper for the enhancement and maintenance of
high professional, ethical, accounting and auditing
standards.
b. To supervise the registration, licensure and practice
of accountancy in the Philippines.
c. To prescribe and adopt the rules and regulations
necessary for carrying out the provisions of RA
9298.
d. To prepare, adopt, issue or amend the syllabi of
the subjects for examinations.
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TEAM PRTC
23. This refers to a study, appraisal or review by an
independent QAR Office (QARO) of the quality of audit
of financial statements and the adoption of best
practices through a review of the quality control
measures instituted by CPA Practitioners to ascertain
compliance with prescribed professional, ethical and
technical standards of public practice.
a. Quality Assurance Review (QAR)
b. Continuing Professional Development (CPD)
c. Quality Inspection Review (QIR)
d. Quality Inspection Monitoring (QIM)
24. The International Auditing and Assurance Standards
Board (IAASB) is an independent standard-setting body
that serves the public interest by setting high-quality
international standards for auditing, quality control,
review, other assurance, and related services, and by
facilitating the convergence of international and
national standards.
The IAASB develops and issues, in the public interest
and under its own authority, high-quality auditing and
assurance standards and other pronouncements for use
around the world.
a. True, False
b. False, True
c. True, True
d. False, False
25. The Auditing and Assurance Standards Council (AASC)
is the body authorized to establish and promulgate
generally accepted auditing standards (GAAS) in the
Philippines.
At present, AASC pronouncements are mainly adopted
from the standards and practice statements issued by
the International Auditing and Assurance Standards
Board (IAASB).
a. True, False
b. False, True
c. True, True
d. False, False
26. Which of the following statements about AASC and its
working procedures is incorrect?
a. The AASC’s Standards contain basic principles and
essential procedures together with related guidance
in the form of explanatory and other material,
including appendices.
b. Exposure draft of proposed Philippine Standard or
Practice Statements are widely distributed to
interested organizations and persons for comment,
the period of which is generally not shorter than 90
days.
c. Issuance of exposure drafts requires approval by a
majority of the members of the Council; issuance of
final Philippine Standards and Practice Statements,
as well as interpretations, requires approval of at
least ten members.
d. Each final Philippine Standard and Practice
Statement, as well as interpretations, if deemed
appropriate, shall be submitted to the PRC through
the BOA for approval after which the
pronouncements shall be published in the Official
Gazette. After publication, the AASC
pronouncement becomes operative 15 days from
publication in the Official Gazette.
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27. Which statement is incorrect regarding AASC?
a. The AASC shall be composed of 17 members plus a
chairman
b. The chairman and members of the AASC shall be
appointed by PRC upon the recommendation of BOA
c. The chairman and members of the AASC shall have
a non-renewable term of 3 years
d. The chairman should have been or presently a
senior practitioner in public accountancy
28. Which statement is correct regarding the
pronouncements of AASC?
a. The exposure period allowed for each exposure
draft of auditing and other pronouncements to be
considered by the organizations and persons to
whom it is sent for comment is generally 60 days.
b. Each final standard and statement shall be
submitted to the PRC through the BOA for approval
after which the pronouncements become operative
6 months from publication in the official gazette.
c. Practice Statements will have the same authority as
the Engagement Standards.
d. PSAs issued by AASC are not the only authoritative
source of engagement standards for members of the
accountancy profession in the Philippines.
29. Which statement is(are) incorrect regarding the
pronouncements of AASC?
a. Engagement Standards contain basic principles and
essential procedures together with related guidance
in the form of explanatory and other material.
b. Engagement Standards need only be applied to
material matters.
c. In exceptional circumstances, an auditor may judge
it necessary to depart from a standard in order to
more effectively achieve the objective of an audit.
When such situation arises, the auditor is not
required to justify the departure.
d. All of the above
30. Which of the following is true of Practice Notes?
a. These statements are intended to replace standards
b. These statements are intended to have the
authority of the standards
c. These statements are issued to provide practical
assistance to auditors in implementing the
standards
d. These are form of interpretation issued by the AASC
End of AT.3401
AT.3401