Law of Accountancy.

The countries of the world have become increasingly integrated and

interdependent through trade, global capital flows and the internationalization of the

production process. In addition to economic integration, other forms of social, political and

cultural interactions occur with greater intensity (Ahunwan, 2002). This globalization

increased the need to create a law that would centralize the practice of accounting.

During pre-Spanish period when Filipinos conducted trading activities with

Chinese, Indians and Malays, Philippine accounting has been practiced already in a

primitive way that were based mainly on selling and payment transactions. Later when

the Spaniards came, a new and more systematic form was introduced. The single-entry

system of bookkeeping was practiced by the Spaniards with some Filipino participation.

Due to the colonization in the country, Philippines has been exposed to many

foreign cultures and traditions. Spanish regime brought substantial changes to religion

and government statuses but when it comes to educational system and formalization of

profession, the comparatively short American colonial period has the most significant

influence in the Philippines (Agustin, 1994).

Spanish period in the country did not brought so much improvement when it comes

to accounting. They focused more in religion. In essence, the Spanish educational system

was meant to keep natives faithful, in order to keep the church’s authority over the lives

of the Indios (Dacumos, 2013).

In 1898 the double-entry system became popular and replaced the old Spanish

single-entry. The transition began after the Philippines were ceded to the United States
by Spain in December of 1898. It is significant to note that Philippine accounting practice

varies slightly from other far eastern countries, due to its having American influence (de

la Cruz, 2008).

During the American period, a distinct advantage on education access has been

gained by the Filipinos. Education this time is not only reserved to the privileged. This

access enables Filipinos to be more capable and active on trading with foreign countries.

New business schools began to rise as trade, commerce and agriculture grew with a

corresponding demand for the service of bookkeepers and individuals skilled in

commercial arithmetic. In later years, since the business world is growing, bookkeepers

and skilled individuals in numbers are more in demand and it definitely multiplied their

population but still they were not called professionals. Though they were regularly

employed in commercial houses, they were not considered as engaged in the practice of

accounting as a profession. Although there were some professional English, Scottish and

American accountant immigrants who engaged in the practice of accounting profession

here still they did not share a common standard as to the scope of subject and

responsibility with respect to practice. They were even known or referred to in various

titles, such as public accountants, chartered accountants, certified public accountants,

"contadores publicos autorizados," "auditores autorizados," "peritos mercantiles" and

others (de la Cruz, 2008).

In 1923 the Philippine government finally noticed the need for a formal recognition

of accounting as a profession. The sixth Philippines Legislature gave official recognition

by passing Act No. 3105 on March 17, 1923. As described in the act:
 It is to regulate the practice of public accounting creating a board of

accountancy; providing for examination, for the granting of certificates and

the registration of certified public accountants; for the suspension or

revocation of certificates and for the other purposes.

The law created the Board of Accountancy (BOA) vested with authority to

promulgate rules and regulations, to set professional standards for the accounting

profession practice and to issue certified public accountant certificates to any citizen of

the Philippine Islands or of the United States who have qualified in accordance with the

requirements of the law either by a waiver of the certified public accountant examination

or after passing the same. The Board is composed of chairman and two members. The

first Board of Accountancy was composed of W. W. Larkin as the chairman who worked

out for the passage of the law and Domingo T. Dikit and Felix Tiongson as the members.

Provided in section 5, all candidates obtaining a general average rating of seventy-

five per cent or over shall be entitled to registration as certified public accountants and as

such receive a certificate of registration from the board.

Under Section 7, P50.00 is the fee in the examination that will be taken, and the

registration and issuance of certificate will be P10.00 provided that if ever the candidate

will fail the exam, he or she can take the second exam within the same year without a

fee. The examination covers four subjects namely, Theory of Accounts, Practical

Accounting, Auditing and Commercial Law. All fees that will be collected by the board will

be accumulated in the Insular Treasury. This is a bureau created by the Philippine

Commission headed by William H. Taft which was tasked to receive and disburse public

funds and accounts.

 The law is not just limited to the skills and ability to account business events, it is

also concerned on the efficient ethical and technical standards in the public accounting

profession. As stated in the Section 15:

Any person who shall by himself or in cooperation with another defeat,

deceive, or obstruct any person in the matter of his right of examination by

the Board of Accountancy, or who shall falsely rate, grade, estimate, or report

upon the examination or standing of any person examined by the Board,

or shall aid in so doing, or shall make any false representations relative

thereto or concerning the person or persons examined or who shall use or

furnish any special or secret information for the purpose of improving or

injuring the prospects or chances of any person so examined or to be

examined, or receiving a certificate, shall for each such offense be punished

by a fine not exceeding one thousand pesos, or by imprisonment for a period

not exceeding six months, or both.

Together with that, any candidate for examinations who will pass false information

during application and any person practicing in the Philippine Islands as a Certified Public

Accountant who willfully falsify any report or statements on his work shall be subjected to

the same penalty as in the last preceding paragraph provided.

In August 4, 1967, a new accountancy law was passed by Congress. This is

Republic Act No. 5166. The new law created the Board of Accounting Education

empowered to prescribe necessary collegiate courses that needs to be taken and

employment or apprenticeship requirements for admission to the CPA examination. The

membership of the Board of Accountancy was increased from three to six. The subjects
of the CPA examination were also increased from four to six, the additional subjects being

taxation and management services.

Along with this act, is the qualifications of the examiners stated in the Section 9.

Only citizens of the Philippines are allowed to be appointed as a member of the Board of

Accountancy. He must have a good moral character, a registered Certified Public

Accountant in the country, has ten years accounting work experience and should not be

directly or indirectly connected with any schools.

Section 16 provided that application shall be filed with the Commissioner of Civil

Service accompanied with the fee P60.00 for the exam and P10.00 for the registration

and certificate. If the candidate fails the exam, he can take the exam within two years by

paying P10.00 per 2 units subject and P5.00 per 1 unit subject.

Maintaining the grounds of proceedings against a CPA is still part of this act. It was

discussed in Section 19 specifically, conviction by the court in a criminal offense, immoral

conduct, insanity, fraud in registration, incompetence in practice, addiction to alcohol and

drugs leading to incompetency of practice, unethical advertisement, issuing accountants

certificate without observing the auditing standards, acting as a dummy of unqualified

person and violation of the code of ethics promulgated by the Board of Accountancy.

In May 13, 2004, Republic Act No. 9298 known as the Philippine Accountancy Act

of 2004 has been promulgated. This act is also known as the revised accountancy law.

In the Section 2, it has been declared that the state recognizes the importance of

accountants in nation building and development. Hence, it needs to develop and nurture

competent, virtuous, productive and well-rounded professional accountants.

 The scope of practice has been added as well in the revised law. The accountancy

practice includes public accountancy, commerce and industry, academe ad government.

In the examination, it has 7 subjects, specifically Theory of Accounts, Business Law and

Taxation, Management Services, Auditing Theory, Auditing Problems, Practical

Accounting Problem I and Practical Accounting Problem II.

If any candidate fails in Certified Public Accountant Board Examinations, he/she

shall be disqualified from taking another set of examinations unless he/she submit

evidence to the satisfaction of the board that he/she enrolled in and completed at least

twenty-four (24) units of subject given in the licensure examination. All successful

candidates in the examination shall be required to take an oath of professional and will

be given a certificate of registration and professional identification card.

A lot has happened in our political history and same goes to the history and

enhancement of accounting. The study of accounting history is vital as it allows us to

understand accounting’s past and present and provides insights into the future of

accounting. It also allows us to examine the influence of the emergence of accounting on

individuals, organizations and society over time, and within the economic, political, social

and environmental contexts in which accounting exists (Carnegie and Napier, 2012).