THE CODE OF PROFESSIONAL ETHICS AND THE ACCOUNTANCY LAW

I. THE CODE OF PROFESSIONAL ETHICS

● A distinguishing mark of the accountancy profession is its acceptance
of the responsibility to act in the public interest.
● A professional accountant’s responsibility is not exclusively to satisfy the
needs of an individual client or employer.
● In acting in the public interest, a professional accountant shall observe
and comply with the following “Code of Professional Ethics”

II. FUNDAMENTAL PRINCIPLES

● INTEGRITY
○ To be straightforward and honest in all professional and business
relationships & implies fair dealing and truthfulness.
○ A professional accountant shall not knowingly be associated with
reports, returns, communications, or other information where the
professional accountant believes the information:
■ Contains a materially false or misleading statement
■ Contains statements or information furnished recklessly
■ Omits or obscures information required to be included
where such omission or obscurity would be misleading.
● OBJECTIVITY
○ To not allow bias, conflict of interest, or undue influence of others
to override professional or business judgments
○ A professional accountant shall not perform a professional
service if a circumstance or relationship biases or unduly
influences the accountant’s professional judgment with respect
to that service.
● COMPETENCE AND DUE CARE
○ To maintain professional knowledge and skill at the level required
to ensure that a client or employer receives competent
professional services based on current developments in practice,
legislation, and techniques.
○ To act diligently and in accordance with applicable technical and
professional standards.
○ Competent professional service requires the exercise of sound
judgment in applying professional knowledge and skill in the
performance of such service.
○ Professional competence may be divided into two separate
phases:
■ Attainment of professional competence
■ Maintainance of professional competence
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● PROFESSIONAL BEHAVIOR
○ To comply with relevant laws and regulations and avoid any
action that discredits the profession.
○ In marketing and promoting themselves and their work,
professional accountants shall not bring the profession into
disrepute.
○ Professional accountants shall be honest and truthful and not:
■ Make exaggerated claims for the services they are able to
offer, the qualifications they possess, or the experience
they have gained.
■ Make disparaging references or unsubstantiated
comparisons to the work of others.
● CONFIDENTIALITY
○ To respect the confidentiality of information acquired as a result
of professional and business relationships
○ To not disclose any such information to third parties without
proper and specific authority, unless there is a legal or
professional right or duty to disclose, nor use the information for
the personal advantage of the professional accountant or third
parties.
○ The need to comply with the principle of confidentiality
continues even after the end of relationships between a
professional accountant and a client or employer

EXCEPTION TO THE CONFIDENTIALITY RULE:

● The following are circumstances where professional accountants
may be required to disclose confidential information or when
such disclosure may be appropriate:
○ Disclosure is permitted by law and authorized by the client
or the employer
○ Disclosure is required by the law, for example
■ Production of documents or other provision of
evidence in the course of legal proceedings
■ Disclosure to the appropriate authorities or
infringements of the law that come to light
○ There is a professional duty or right to disclose, when not
prohibited by law:
■ To comply with the quality review of a member
body
■ To respond to an inquiry or investigation by a
member body or regulatory body
THE CODE OF PROFESSIONAL ETHICS AND THE ACCOUNTANCY LAW

■ To protect the professional interests of a

professional accountant in legal proceedings
■ To comply with technical standards and ethics
requirements.

III. THE ACCOUNTANCY LAW

● The Philippine Accountancy Act of 2004 (RA 9298)
○ Declaration of Policy
○ Objectives & Scope of Practice
○ The Professional Regulatory Board of Accountancy Examination
○ Regulation and Licensure
○ Practice of Accountancy Penal and Final Provisions

OBJECTIVES
● The standardization and regulation of accounting education
● The examination for registration of certified public accountants
● The supervision, control, and regulation of the practice of accountancy
in the Philippines

SCOPE OF PRACTICE
● Practice of Public Accountancy
● Practice in Commerce and Industry
● Practice in Education/Academe
● Practice in Government

THE PROFESSIONAL REGULATORY BOARD OF ACCOUNTANCY

● Composed of a chairman and 6 members
● To be appointed by the President of the Philippines from
○ A list of 3 recommendees for each position and ranked by the
Commission
○ From a list of 5 nominees for each position submitted by the
accredited national professional organization of CPA’s

QUALIFICATIONS OF MEMBERS
● Must be a natural-born citizen and a resident of the Philippines
● Must be a duly registered CPA with at least 10 years of work
experience in any scope of practice of accountancy.
● Must be of good moral character and must not have been
convicted of crimes involving moral turpitude
● Must not have any pecuniary interest, directly or indirectly, in any
school, college, university, or institution conferring an academic
degree necessary for admission to the practice of accountancy or
THE CODE OF PROFESSIONAL ETHICS AND THE ACCOUNTANCY LAW

where review classes in preparation for the licensure examination

are being offered or conducted, nor shall he/she be a member of
the faculty or administration thereof at the time of his/her
appointment to the Board.

TERM OF OFFICE
● The Chairman and members of the Board shall hold office for a
term of 3 years.
● Any vacancy occurring within the term of a member shall be
filled up for the unexpired portion of the term only.
● No person who has served 2 successive terms complete terms
shall be eligible for reappointment until the lapse of 1 year
● Appointment to fill up an unexpired term is not to be considered
a complete term

IV. CERTIFIED PUBLIC ACCOUNTANT EXAMINATIONS

● All applicants for registration for the practice of accountancy shall be
required to undergo a licensure examination to be given by the Board.
● Qualifications of Applicants for Examinations:
○ Is a Filipino citizen
○ Is of good moral character
○ 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
○ Has not been convicted of any criminal offense involving moral
turpitude.
● Scope of Examination
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RATING IN THE LICENSURE EXAMINATION

● 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 a rating of 75% and above in at
least a majority of subjects 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 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
reexamined, he/she shall be considered as failed in the
entire examination.