PROFESSIONAL

ACCOUNTANTS
PRC RESOLUTION NO. 83 series of 2003
• Approved by the Commission on December 2003
• Contains subsequent amendments on the norms
and principles governing the practice of
accountancy profession in the highest standards
of ethical conduct.

R.A No. 9298 (Art 2, Sec 9)

• The Professional Regulatory Board of
Accountancy is given the power and
function to prescribe and/or adopt a Code
of Ethics for the practice of accountancy.
 ”For what shall it profit a man, if
he shall gain the whole world, and
lose his own soul?”
Mark 8:36

GENERAL
APPLICATION
To be straight forward
and honest in all
professional and
business relationships –
fair dealing and
truthfulness.
BACK
To not allow bias,
conflict of interest or
undue influence of
others to override
professional or business
judgments.
BACK
To maintain professional
knowledge and skill at the
level required to ensure that
clients or employers receive
competent professional service.

To act diligently in accordance

with applicable technical and
professional standards. BACK
To refrain from disclosing confidential
information acquired as a result of
professional and business relationships
without proper and specific authority to
disclose unless there is a legal or
professional right or duty to disclose.

To refrain from using confidential

information acquired as a result of
professional and business relationships
for personal advantage or the advantage
of third parties. BACK
Obligation to comply
with relevant laws and
regulations and avoid
any action that discredits
the profession.

BACK
 PROFESSIONAL
ACCOUNTANTS IN
PUBLIC PRACTICE
(a) Independence of mind - state of mind that permits
the provision of an opinion without being affected by
influences that compromise professional judgment,
allowing an individual to act with integrity, and exercise
objectivity and professional skepticism.
(b) Independence in appearance - the avoidance of facts
and circumstances that are so significant that a
reasonable and informed third party, having knowledge of
all relevant information, including safeguards applied,
would reasonably conclude a firm’s, or a member of the
assurance team’s, integrity, objectivity or professional
skepticism had been compromised.
“Whatever you do, work at it with all your heart, as working
for the Lord, not for human masters”
Colossians 3:23
THREATS TO INDEPENDENCE SAFEGUARDS
• Self-interest Threat – when a • Safeguards that may
firm or a member of the eliminate or reduce such
assurance team could benefit threats to an acceptable
from a financial interest in, or level fall into three broad
other self-interest conflict with, categories:
an assurance client.
• Safeguards created
• Self-Review Threats – (1) when
by the profession,
any product or judgment of a
previous assurance engagement
legislation or
or non-assurance engagement regulation
needs to be re-evaluated in
reaching conclusions on the • Safeguards within
assurance engagement or (2) the client
when a member of the
assurance team was previously
a director or officer of the
• Safeguards within
assurance client, or was an the firm’s own
employee in a position to exert systems and
direct and significant influence procedure
over the subject matter of the
assurance engagement.
THREATS TO INDEPENDENCE SAFEGUARDS
• Advocacy Threat - when a firm, or a • Safeguards that may
member of the assurance team, eliminate or reduce such
promotes, or may be perceived to threats to an acceptable
promote, an assurance client’s
position or opinion to the point
level fall into three broad
that objectivity may, or may be categories:
perceived to be, compromised. • Safeguards created
• Familiarity Threat - when by virtue by the profession,
of a close relationship with an legislation or
assurance client, its directors,
officers or employees, a firm or a
regulation
member of the assurance team
becomes too sympathetic to the • Safeguards within
client’s interests.
the client
• Intimidation Threat - when a
member of the assurance team may
be deterred from acting objectively • Safeguards within
and exercising professional the firm’s own
skepticism by threats, actual or systems and
perceived, from the directors,
officers or employees of an
procedure
assurance client.
 Starts when the assurance team begins to
perform assurance services and ends when the
assurance report is issued, except when the
assurance engagement is of recurring in nature.

If the assurance engagement is expected

to recur, the period of the assurance
engagement ends with the notification by
either party that the professional relationship
has terminated or the issuance of the final
assurance report, whichever is later.
 A professional accountant who is
asked to provide a second opinion in
public practice shall evaluate the
significance of any threats and apply
safeguards when necessary to eliminate
them or reduce them to an acceptable
level.
 A professional accountant in public
practice may quote whatever fee is deemed
appropriate. The fact that one
professional accountant in public practice
may quote a fee lower than another is not in
itself unethical.

Contingent fees - are widely used for

certain types of non-assurance engagements
but may create a self-interest threat to
objectivity.
 A professional accountant in public
practice shall not bring the profession into
disrepute when marketing professional
services. The professional accountant in
public practice shall be honest and truthful,
and not:
(a) Make exaggerated claims for services
offered, qualifications possessed, or
experience gained.
(b) Make disparaging references or
unsubstantiated comparisons to the work of
another.
 The professional accountants in public
practice shall not assume custody of client
monies or other assets unless permitted to
do so by law and, if so, in compliance with any
additional legal duties imposed on a
professional accountant in public practice
holding such assets.

“Whoever can be trusted with very little can also be

trusted with much, and whoever is dishonest with very
little will also be dishonest with much”
Luke 16:10
 A professional accountant in public practice
entrusted with money or other assets belonging to
others should:
(a) Keep such assets separately from personal or
firm assets
(b) Use such assets only for the purpose for
which they are intended
(c) At all times be ready to account for those
assets and any income, dividends, or gains
generated, to any persons entitled to
such accounting
(d) Comply with all relevant laws and regulations
relevant to the holding of and accounting
for such assets.
 A professional accountant in public practice
entrusted with money or other assets belonging to
others should:
(a) Keep such assets separately from personal or
firm assets
(b) Use such assets only for the purpose for
which they are intended
(c) At all times be ready to account for those
assets and any income, dividends, or gains
generated, to any persons entitled to
such accounting
(d) Comply with all relevant laws and regulations
relevant to the holding of and accounting
for such assets.
Accepting New Assignments
Professional accountants in public practice
should only undertake services which they can
expect to complete with professional competence.
It is essential therefore for the profession in
general and in the interests of their clients that
professional accountants in public practice be
encouraged to obtain advice when appropriate
from those who are competent to provide it.
Superseding Another Professional
Accountant in Public Practice
It is important that a professional accountant
in public practice who is asked to replace another
professional accountant in public practice has the
opportunity to ascertain if there are any
professional reasons why the appointment should
not be accepted. This cannot effectively be done
without direct communication with the existing
accountant.
 Advertising and solicitation by individual
professional accountants in public practice are not
permitted in the Philippines.
Publicity by individual professional accountants in
public practice is acceptable provided:
(a) It has as its object the notification to the
public or such sectors of the public as are
concerned, of matters of fact in a manner
that is not false, misleading or deceptive
(b) It is in good taste
(c) It is professionally dignified
(d) It avoids frequent repetition of, and any
undue prominence being given to the
name of the professional accountant in
public practice.
APPLICABLE TO EMPLOYED
PROFESSIONAL
ACCOUNTANTS
 A professional accountant in business may face
pressure to:
• Act contrary to law or regulation.
• Act contrary to technical or professional standards.
• Facilitate unethical or illegal earnings management
strategies.
• Lie to others, or otherwise intentionally mislead
others
• Issue, or otherwise be associated with, a financial
or non-financial report that materially
misrepresents the facts, including statements
in connection with, for example:
o The financial statements;
o Tax compliance
o Legal compliance;
o Reports required by securities regulators
 A professional accountant in business shall
not intentionally mislead an employer as to
the level of expertise or experience
possessed, nor shall a professional accountant
in business fail to seek appropriate expert
advice and assistance when required.
A professional accountant, particularly one
having authority over others, should allow them
to develop their own judgment in accounting
matters.

An accountant employed in industry, commerce,

the public sector or education may be asked to
undertake significant tasks for which she has not
had sufficient specific training or experience.
Where appropriate expert advice and assistance
should be sought.
A professional accountant is expected to
present financial information fully, honestly and
professionally and so that it will be understood
in its context.