1

CORPORATE SOCIAL RESPONSIBILITY PRACTICES OF SELECTED AUDIT

FIRMS IN MAKATI CITY AND THEIR INFLUENCE TO CPAs INDEPENDENCE

A Thesis
Presented to the Faculty of the College of Business and Management
DE LA SALLE ARANETA UNIVERSITY
Victoneta Ave., Malabon City, Metro Manila

In partial fulfillment of the requirements for the degree of

BACHELOR OF SCIENCE IN ACCOUNTANCY
Major in Accounting

By

CHRISTAL MAE PACOMBABA

ANGELIKA BALINGIT
KEVIN BERNARDINO
AUGUST 2018
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Recommendation Sheet

Researchers: Angelika Balingit

Kevin Bernadino
Christal Mae Pacombaba

College: College of Business and Management

Title: Corporate Social Responsibility Practices of Selected Audit Firms

in Makati City and their Influence to CPAs Independence

Recommending Approval:

_________________________ __________
Dr. Glen De Leon Date
Adviser

Approved by:

_________________________ __________
Prof. Ferdinand Romero Date
Chairperson

_________________________ __________
Dr. Irene Dalog Date
Member

_________________________ __________
Dr. Porfirio Catolico Jr. Date
Member

Recorded by:

_________________________ __________
PIC, Registrar’s Office Date
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Approval Sheet

This Thesis entitled CORPORATE SOCIAL RESPONSIBILITY PRACTICES

OF SELECTED AUDIT FIRMS IN MAKATI CITY AND THEIR INFLUENCE TO
CPAS INDEPENDENCE by ANGELIKA BALINGIT, KEVIN BERNARDINO, and
CHRISTAL MAE PACOMBABA, in partial fulfillment of the requirements for the
degree of BACHELOR OF SCIENCE IN ACCOUNTANCY, has been examined and is
recommended for acceptance and approval for ORAL EXAMINATION.

________________________
Dr. Glen DV. De Leon
Adviser

Panel of Examiners

Approved by the COMMITTEE ON ORAL EXAMINATION with a grade of

________ on August 03, 2017

________________________
Prof. Ferdinand Romero
Chairperson

________________________ ________________________
Dr. Irene Dalog Dr. Porfirio Catolico Jr.
Panel Member Panel Member

Accepted and approved as partial fulfillment of the requirements for the degree of
BACHELOR OF SCIENCE IN ACCOUNTANCY.

____________________ _______________________
Dr. Bernardo N. Sepeda Dr. Carolina D. Ditan
VCAR Dean, College of Business
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Certification of Originality

This is to certify that the research work presented in this Thesis entitled

“CORPORATE SOCIAL RESPONSIBILITY PRACTICES OF SELECTED AUDIT

FIRMS IN MAKATI CITY AND THEIR INFLUENCE TO CPAS INDEPENDENCE”

was prepared and submitted by the researchers to the College of Business and

Management-De La Salle Araneta University in partial fulfillment of the requirements for

the degree, Bachelor of Science in Accountancy. This study contains the original work of

the researchers except those data and information that were taken from other sources with

proper referencing and acknowledgment.

ANGELIKA BALINGIT
Researcher

KEVIN BERNARDINO
Researcher

CHRISTAL MAE PACOMBABA

Researcher
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Acknowledgement

First and foremost, we would like to thank our almighty God for providing us

strength and guidance to go through the challenges and hardship in doing this research

and for the opportunity to learn new things that we may share to the future readers of our

research study.

To our family, for the motivation to do our best and to study hard, for providing

the things we needed and for supporting us in this endeavor, we thank you.

To our supportive adviser, professor and program chair, Dr. Glen De Leon, your

guidance through the past few months mean so much for us. Thank you for giving us

your time whenever we need to consult you. We greatly appreciate the knowledge and

support that you’ve given us all throughout our journey in finishing our thesis.

To our professor in Business Planning and Research, Mr. Jericho John Dalangin,

for always reminding us of the deadline, for teaching us what we need, to enable us to

create our thesis and for always believing that we can finish it, thank you.

To Dr. Nelson Layague, your advices during our revision greatly helped us. To

our panel members, Dr. Porfirio Catolico Jr., Mr. Ferdinand Romero, and Dr. Irene

Dalog, thank you for helping us to improve and develop our research paper. You had

given us ample knowledge where we had learned a lot. You’re guidance means a lot to

us.

To our friends, specifically to Meg, Shiela, AJ, Patrick, and Sydney, for being

there when we needed a good laugh and for supporting us even if they also have their
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own research to finish, it is our pleasure to express our gratitude to all of you. Thank you

for sharing with us the frustrations, load of work, and sleepless nights. We can do this

let’s keep on believing in ourselves.

To our professors, for answering all our inquiries we are grateful for your time

and advices.

Lastly, to all the people we may not be able to mention, but had a big part in our

journey, we are grateful to have you on our side no matter what happens. Thank you for

trusting our ability and in never giving up on us.

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Abstract

TITLE : Corporate Social Responsibility Practices of Selected

Audit Firms in Makati City and their Influence to CPAs
Independence (August 2018)

RESEARCHER : ANGELIKA BALINGIT

KEVIN BERNARDINO
CHRISTAL MAE PACOMBABA

ADVISER : DR. GLEN DE LEON

SCHOOL : De La Salle Araneta University

DEGREE CONFERRED : Bachelor of Science in Accountancy

Currently, a law for mandatory compliance with CSR has yet to be established,

but because of the diversification in the business world and the issues on limitations of

resources, to be used it is a challenge for the organization to sustain and improve their

status in the perspective of the market and the society where they belong. These studies in

the corporate social responsibility implementations of several organizations in the

different industry and audit firms are one of those.

This study aims to assess the level of compliance of selected audit firm in Makati

City to Corporate Social Responsibility practice and it is focused on its influence to one

of the fundamental principle which is independence of Certified Public Accountants

working in the firm. Specifically, it tends to discover if there is a significant relationship

between the level of compliance to CSR of the selected audit firm and the CPAs

Independence. The respondents of the study are Certified Public Accountants working in

the firm regardless of their position and are covered by the Code of Ethics of Professional
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Accountants in the Philippines. The study used descriptive and correlational method and

the population consists of fifteen audit firm in Makati City that belongs to the Group A

SEC Accredited Audit firms. Only ten had given their consent in our study. We had

utilized random sampling method and used one existing and one self-structured survey

questionnaires when we had gathered the data. The statistical treatment that is used in this

study to analyze the data is frequency and percentage in for the demographic profile of

the respondents, weighted mean to find the level of CSR compliance of Group A SEC

Accredited Audit Firms, and five-point Likert Scale to determine the mean of the results.

To identify the significant difference between the two variable t-test was used and

Pearson r for the relationship of the variables. The data were carefully analyzed and

processed. Hence, we reached the conclusion that the firms are fully complied with the

given CSR Practices. Auditor’s agreed that some CSR Practices influence their

independence when threats are considered except in situations where familiarity and

advocacy threat are present. The level of compliance of firms to CSR Practice doesn’t

have significant relationship to the respondents’ independence. Lastly, CSR Practice may

influence the various threats to independence but the respondents didn’t have to consider

the level of compliance to the former.

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Table of Contents

Page

TITLE PAGE ............................................................................................................ 1

RECOMMENDATION SHEET ................................................................................ 2

APPROVAL SHEET ................................................................................................. 3

CERTIFICATION OF ORIGINALITY ..................................................................... 4

ACKNOWLEDGEMENT ......................................................................................... 5

ABSTRACT .............................................................................................................. 7

TABLE OF CONTENTS........................................................................................... 9

LIST OF TABLES .................................................................................................. 11

LIST OF FIGURES ................................................................................................. 12

LIST OF APPENDICES .......................................................................................... 13

CHAPTER

1 The Problem and a Review of Related Literature

Introduction ................................................................................................. 14

Review of Related Literature ........................................................................ 17

Theoretical Framework ................................................................................ 36

Conceptual Framework ................................................................................ 39

Statement of the Problem ............................................................................. 39

Hypotheses .................................................................................................. 41

Scope and Delimitation ................................................................................ 41

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Significance of the Study ............................................................................. 42

Definitions of Terms .................................................................................... 44

2 Methods

Research Locale ........................................................................................... 47

Research Design .......................................................................................... 48

Sampling Technique .................................................................................... 49

Respondents in the Study ............................................................................. 49

Research Instrument ..................................................................................... 49

Data Gathering Procedure ............................................................................ 50

Statistical Treatment .................................................................................... 51

3 Results and Discussion

Result and Analysis ...................................................................................... 54

4 Summary, Conclusion and Recommendation

Summary ..................................................................................................... 63

Conclusion ................................................................................................... 66

Recommendation ......................................................................................... 67

REFERENCES ........................................................................................................ 69

APPENDICES ......................................................................................................... 73

CURRICULUM VITAE .......................................................................................... 94

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List of Tables

Table Page

1 Frequency Distribution of the Respondents’ Profile According

to Gender ..................................................................................................... 54

2 Level of Compliance to CSR Practice .......................................................... 55

3 Perceived Influence of CSR to CPAs Independence ..................................... 56

4 Respondents’ Perception regarding the Level of

Compliance to CSR Practice when Gender is considered.............................. 58

5 Respondents’ Perception regarding CSR Practices of

Audit Firm’s Influence to CPAs Independence when Gender is
considered .................................................................................................... 59

6 The Relationship between the Level of Compliance of Audit Firm to

CSR and the CPAs Independence ................................................................. 61
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List of Figures

Figure Page

1 Pyramid of Corporate Social Responsibility ................................................ 22

2 Three-Tiered Model of CSR ......................................................................... 23

3 Conceptual Framework ............................................................................... 39

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List of Appendices

Appendix Page

A Survey Questionnaire ................................................................................... 73

B Letter to Respondents ................................................................................... 81

C Validation Letter .......................................................................................... 83

D Raw Data ..................................................................................................... 86

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Chapter 1

The Problem and a Review of Related Literature

Introduction

Corporations and other business organizations in the recent years had shown

considerable amount of concern on the welfare of the community where they do business.

The society and the natural environment that surround them, customarily, they focused

more on activities that maximized their return on investment. But now, they are also

engaged in some philanthropic acts. In the past, accounting profession had been satirized

by different sectors of society due to their involvement in the infamous business scandals

like improper disclosure of information to the public being an accomplice in tax

minimization or tax evasion and financial statement fraud that lead to the kiss of death of

renowned businesses like Enron, Lehman Brothers and etc. which resulted in bankruptcy

or litigations, and the development of several auditing and ethical standards that gives

way to the improvement of the accounting profession.

A growing number of studies have been done concerning evolution of the

accounting profession and auditing firms. However, most are concern with compliance

with various accounting and auditing standards, while very little attention has been given

to other significant concept that might become a tool to a more improve and more

objective accounting profession, accounting standards, code of ethics and audit firm this

tool is called corporate social responsibility. In order for our profession to recognize CSR

as an important aspect that must be complied with and to encourage the establishment of
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standardized policies that will govern its implementation in different audit firms, we aim

to communicate the significance and impact of CSR in the public practice and its effect to

the members of the firm through this study.

The business trends nowadays, give challenge to corporations and other business

organizations to sustain and to improve their profitability through good deeds that help

company develop their own goodwill. Incidentally, profit will start multiplying as public

put their credence to the company in appreciation to their social well-being. Corporate

Social Responsibility is defined by the World Bank as "the commitment of business to

behave ethically and to contribute to sustainable economic development by working with

all relevant stakeholders to improve their lives in ways that are good for business.”

Stakeholders are group without support the organization would cease to exist

(Stanford Research Institute, 1963) like customers, employees, shareholders, government,

suppliers, communities, creditors, owners and trade unions, and environment.

It came from the demand of businesses to increase their market value not by short

term profit rates but through the public’s trust by using their image or reputation as an

asset. Furthermore, if the business organization loses public trust the effect on its market

value is quick and drastic because this will result in the decrease of stock price.

CSR is a concept with many explanations, definitions, interpretations and

practices. The way it is understood and implemented differs from each country and

businesses. It is a broad term that covers various societal problems. The absence of a
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universal definition of CSR may be a reason, but whatever its definition maybe, its sole

purpose is to develop change towards sustainability.

CSR has become a trend for the past years internationally, and now, the state

recognizes its importance in business industry in our country. This is the reason that

several bills and laws are presented in the Philippines to empower and encourage

corporations whether domestic or foreign and other business organization to implement

and apply Corporate Social Responsibility. This includes Senate Bill 1239, House Bill

4575, and Volunteerism Act of 2007.

Several corporations and other business organizations has realized the

significance of CSR, they know that their attention must be on both increasing their

profits and being a good corporate citizen. Organizations have been allocating their time

and resources in the formation and implementation of policies for their Corporate Social

Responsibilities.

This research aims to assess the level of compliance that the selected auditing

firm applies in their Corporate Social Responsibility programs and in identifying the

common CSR programs implemented by the selected audit firm and to find out if there

are existing policies governing their CSR programs. This paper focused on assessment of

CSR’s relations or effect to the independence of CPAs working to them.

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Review of Related Literature

History and Definition of Corporate Social Responsibility. Corporate Social

Responsibility or social responsibility can be traced back to the ancient times on the

earliest time of doing trade and commerce of various ancient civilization like the

Egyptians and Sumerians, they felt that proper facilitation of their trade is as important as

taking care of the public’s interest. During the middle ages, lords of the lands were more

concern on getting resources like animals and plants as well as human slave for business

profit, since then the people gain social awareness giving rise to the first consumer

boycotts ever organized in the history of corporations and other business organization. It

happened on 1790 that is led by several social activists that find slave-harvested sugar in

British West Indian Slave Plantations an improper way of doing business (Werther and

Chandler, 2011). This movement largely influence the growth of CSR in the business

industry.

CSR’s concept become popularized during the 19th Century. The year 1953

marked the historical beginning of the modern era of CSR when the book “Social

Responsibilities of the Businessman” was written and published by Howard R. Bowen,

who was known as the father of Corporate Social Responsibility. The book gave way to

the first ever comprehensive discussion of business ethics and social responsibility. It

stated the significance of businesses as center of power, strategic planning and decision

making that in some ways affect the public or the society as a whole. Bowen defined
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CSR as the obligations of the businessmen to make decisions in creating policies that will

lead into actions desirable in terms of objective and values to the company and society.

During the 1960s, CSR become more known through the materialization of

environmental movements. It was this time that people felt that companies were only

concern with profit and they don’t have care for the society and the environment. Its

definition broadened when Keith Davis referred to CSR as results of businessmen’s

decisions and actions which are beyond their economic and technical interest. Davis

created Iron Law of Responsibility that defined social responsibility as proportionate to

social power held by companies, making it a significant foundation in doing business. In

1963, on the book written by Joseph McGuire, he clarified that CSR is not only legal and

economic obligation, but it also includes other responsibilities. This somehow makes a

more modernize definition of CSR where the company is not only liable to the customers

and shareholders but to other stakeholders as well. Volunteerism and CSR are linked

because the latter is when corporations and other organizations voluntarily acknowledge

or realize and accept that they have responsibility beyond their corporate interest.

The concept of CSR in the United States in 1970 was developed in response to

great measure societal changes such as the rise of the civil rights movement, the rise of

consumers and growing anti-war sentiment (Inglehart, 2000), during this year Archie

Carroll’s CSR definition and model become widely known which will be discussed in the

other part of this work. Concepts created in this time were more focused on clarifying
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what exactly where the responsibilities of the corporations and other business

organizations.

Peter Drucker (1984), the grand old man of management theory wrote that in

social responsibility there is an opportunity to turn social problem into economic benefits

for the business. In the United Kingdom, Business in the Community (BITC) was

established in 1982 in response to alleged failures of business against a setting of

increasing unemployment and urban revolting and attempts to assimilate concerns of

societal impacts into business strategy. In Japan, CSR has traditionally been expressed

mostly through employee benefits and environmental commentary. According to research

and existing written reports it was during the late 80s when the famous ice cream

manufacturer, Ben and Jerry’s published the very first social report, which were widely

used today as basis for stakeholders to identify the CSR practices being applied and its

beneficiary.

In line with globalization the continuous development of CSR led to series of

development of various international standards and codes that started to be used in

different industries in the 1990s like ISO14001, SA8000 and GRI. It was in this period

that development of sustainability concepts was massive following the “Earth Summit” in

Rio de Janeiro, where companies learned to shift to voluntary reporting. During this time

corporations and other business organization started to realize the importance of their

public image and reputation in gaining the trust of the people and the need to convince
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the people that they are not only after the profit but also to the safety of the environment

where they belong.

The fall of Enron in 2001, one of the big accounting firm and the multiple

corporate scandals, make the disclosure of the CSRs conducted by the companies

questioned and scrutinized by the public. The need for greater accountability and

transparency has led to the implementation initiatives for CSR and the study of its

impact.

Corporate Social Responsibility was redefined as a way corporations and business

organizations consider the impact of their actions or operations on society (International

Labor Organization, 2007). David Packard, the co-founder of Hewlett-Packard, cited by

Visser (2010), affirms that “People get together and exist as a company so that they are

able to accomplish something collectively, that they could not accomplish separately -

they make a contribution to society.” In 2012, the WBCSD's (The World Business

Council for sustainable Development) suggested the integration of CSR reporting on the

annual reports required to the companies. This gave way to development and growth of

CSR concepts that resulted to different approaches such as corporate social initiative and

corporate citizenship. This supported and encourages the need for adoption of result

based CSR management and the evaluation of CSR implementation and compliance.

Corporations and others business organization has been fully aware that CSR initiatives

and performance are used by the stakeholders as consideration for decision making. CSR
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initiatives and performance were justified by the corporation’s need for a good

reputation, strong public image and high value of stocks.

Corporate social responsibility is a commitment that begins with the exercise of

sound and fair corporate practices (Philippine National Bank), it is having the initiative to

contribute to the country’s sustainable development, respect and promote the well-being

of its various stakeholders and to create value to everything it does.

In general, CSR is agreed to be the way the firm evaluate their decision making,

strategic planning, values, cultures and operation while considering the stakeholders

specifically the environment, community and society at large. It involves acquiring short

term expenses that do not offer an instant financial benefit to the company, but instead

encourage positive social and environmental change

Theories and opposing viewpoints on CSR. Since there is no existing

standardized definition of CSR, several definitions and interpretations have been given by

several scholars, professionals and institutions which resulted in numerous terminologies

frequently used as corresponding when referring to CSR: corporate community

engagement, strategic philanthropy, corporate stewardship, business responsibility,

corporate citizenship, corporate conscience, corporate social performance, social

responsibility and etc. The dilemma now for the businesses is not about what definition to

follow but finding the definition that can be universally applied. The foundation of what

the study is to be the modern definition of CSR based on the first scholars to define it,

Archie Carroll’s “Pyramid of Corporate Social Responsibility.” According to Carroll,

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CSR requires corporate citizens to conduct economically profitable, law abiding, ethical

and socially supportive business or operational activities. He added that being socially

responsible means, that profitability and obedience to the law are foremost conditions

when discussing the firm’s ethics and the extent to which it supports the society in which

it exists with contributions of money, time and talent. She structured different corporate

social responsibilities as a four-layered pyramid model.

Figure 1. Pyramid of Corporate Social Responsibility

According to Carroll and Buchholtz (2003), the pyramid of responsibilities should

be seen as a whole and the parts should not be divided. The base of the pyramid is the

economic responsibilities because profit as a result of economic performance is

mandatory for a business to survive. To become a profitable company, the base of

economic responsibilities is to minimize cost and maximize sales, or make sensible

strategic decisions. Legal Responsibilities, the second layer, depicts that companies have

duty to operate within the legal frameworks (obey the law), established by the
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government, because the law reflects what the society sees as acceptable and

unacceptable. Example of this is paying taxes imposed on them. Ethical responsibilities

are the duty to apply values that are not obligatory but expected by the society to avoid

affecting one’s stakeholder in a negative way. Example of this is preventing false

disclosure of information. The philanthropic responsibilities which at the top of the

pyramid, is the duty to do proactive actions that will create positive impact or impression.

It aims to be a better corporate citizen and develop the quality of life. Corporate

contributions, to support the community by providing programs or engagement in

volunteerism can be example for the philanthropic responsibilities. When the economic

responsibilities are achieved, the others follow, through achieving all that is shown in the

pyramid. A corporation or other business organization become good and responsible

corporate citizen, it becomes a standard that each company must achieve.

Figure 2. Three Tiered Model of CSR

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Committee for Economic Development (CED) outlined a three tiered model of

CSR. This model emphasizes that, by focusing and doing all the things listed within the

rings, a corporation is working within and for the environment where it belongs. The

inner circle, shows that the corporation as a whole is mainly created for profit. The

intermediate circle, is how corporations adjust for the god of the society while being

profitable. Lastly, the outer circle shows that to the country or society as a whole the

corporation is socially responsible and it has the duty to respect, protect and contribute to

its growth.

In contrast to this, the Nobel prize-winning economist Milton Friedman (1970)

argues that the only social responsibility of a business is to increase its business profits.

He contends that if business focuses on generating more profit, it will continually grow.

Thus, having the ability to pay workers’ wages or salaries that could help them and their

families, to pay proper taxes that give revenue to the government, and to operate within

the law. By doing so, it fulfills its role in the society as generator of growth and

employment. However given the situations arising in the present where changes in the

environment occurs that causes scarcity or limitation in resources. Business must

reconsider his view and people being aware of these issues may most likely give criticism

to those who are unaware of their environmental and social responsibility.

In the book “Super capitalism”, its author Robert Reich the former US Ministry of

Labor, during the Clinton administration, denounces CSR as a dangerous diversion that

threatens democracy. Reich criticizes all triumphs in the practice of CSR. He stated that
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CSR is used to cut the cost of companies causing the quality of its product to decrease.

He said that CSR are used to divert the attention of the public on things that are more

significant like political reform. Reich believed that in order for companies to be

virtuous, the process must be taken to the administration and legislation.

Another claim is that CSR is established due to the organizations need to earn

move profit rather than to be ethically responsible corporate citizen. CSR in this

perspective is a strategic tool to achieve economic objectives, increased profit and wealth

creation – maximizing the shareholder value (Garriga & Melé, 2004). The organizations

social, environmental and operational activities are seen as asset that would produce

economic results. This concept makes integration of CSR as an act not voluntary but

rather a strategy required to be implemented for the benefit mostly of the organization

and a little focus where given to the stakeholders. Every social activity is concern with

accumulation of wealth. The economic viewpoint argues that no costly responsibility

action should be undertaken voluntarily (Windsor, 2006).

R. Edward Freeman wrote and published a book about how management can

satisfy the interest of stakeholders entitled: “Strategic Management: A Stakeholder

Approach” where “Stakeholder Theory” was first proposed. This concept tries to answer

the question of which group in the society companies are responsible to. In the traditional

(shareholder) view, the shareholders or stockholders being the owners of the company

have the right to bind the company into an obligation to put their needs first and to

increase value for them. However, the stakeholder theory argues that there are other
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groups or parties involved in the company namely governmental bodies, political groups,

trade associations, trade unions, communities, financiers, suppliers, employees, and

customers. Sometimes competitors are also included as stakeholder.

Amao (2013) gives his focus on the Stakeholder Theory when analyzing CSR. He

divided the stakeholder into two groups: Primary stakeholders, those that greatly and

directly influence and support a company’s operation (Shareholders or owners, creditors,

customers and etc.). Secondary stakeholders on the other hand are those that are the

parties that are indirectly affected by a company’s operation but do not necessarily

influence or support the business or are not directly transacting with the company

(Community or Society).

Juan Miguel Luz (2011), identifies two sets of drivers that shape the dynamics of

CSR: external and internal drivers. External drivers include: 1) laws and regulations. 2)

market forces, and 3) increasing societal demand for companies to improve the manner in

which they operate. The primary internal driver of CSR is an individual behavior. It is

also an operational efficiency and strategy. Regulations are drivers because they require

compliance of the law or rules. Individual behavior driven by integrity should influence

corporate ethical behavior. Market forces are included for they set the standards of

competition between companies. This influences were operational activities of the

company. The demand of the society for a good corporate citizen led to the

implementation of CSR to companies. Companies start with internal drivers as a way to

manage external demand on responsible business practices (Luz, 2011). One of the most
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powerful driver of CSR is obviously globalization, the cross border trade and act of

international organizations like ISO, ILO, UN, GRI and OECD that developed codes,

standards and regulations with regard to conduct of corporate social responsibility had

contributed to the shaping of the CSR we have today. One of disadvantage of

globalization is the rise of multinational and international companies. As they become

more and more powerful, issues of accountability and democratic control are brought

under discussion. This is the space where CSR is becoming more visible.

Another argument against CSR is using as green washing, a practice followed by

organizations in which unsubstantiated or misleading claims are made of the

environmental and social attributes of a product, service or the company as a brand

(Aggrwal & Kadyan, 2014). Green washing practice is implemented to make the

company look more environment-friendly by spending money, time and efforts on

advertising its products as ‘green’, rather than actually reducing its unfavorable impact on

the environment.

According to the research of Brennan and Binney (2008), marketers desire profits

over environmental interests. It is observed that when an environmental disaster happens,

the firms build up their CSR and green advertising schemes to boost their public image.

The issue of green washing has not been effectively handled by the existing

regulatory framework. There are no exact worldwide appropriate standards for preventing

green washing practices.

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CSR Influence to internal stakeholders. Upon compliance to corporate social

responsibility various stakeholders of the organization would undeniably benefit from it.

One of those that would benefit from it are those internal stakeholders specifically the

employees or auditor (members) in the perspective of audit firm. According to a study

conducted by the Center for Creative Leadership’s (CCL), employee volunteerism and

corporate philanthropic initiatives are correlated with employees’ positive perception,

commitment to the organization and to its job. In Deloitte’s 2011 Volunteer Impact

Survey that focus on adult employees, those engaged in workplace volunteerism activities

are more motivated to work for the company and nearly twice likely to be very satisfied

with the progression of their career. On a study by Consultancy Corporate Citizenship

enabling employees to be beneficiary of CSR activities and to participate in charitable

initiatives could deliver returns to organization by reducing training and development

cost.

In a recent independent survey of 800 full-time U.S. workers, aged 18 and older,

when it comes to employment, 94 percent of the respondents stated that it was either

“critical” or “important” that they work for an ethical company. The study also found that

there is a significant decrease in productivity in unethical companies. Among those, 89

percent said their work habits and productivity were seriously affected by it. In terms of

retention, the study found that one in three employed Americans have left a job for

ethical reasons (Workspan Magazine, 2007).

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CSR in Philippines. According to the study of Asian Institute of Management

RVR, Center for Corporate Responsibility about “Corporate Social Responsibility in the

Philippines”, Corporate Social Responsibility is rooted to the Philippine culture (i.e. the

bayanihan concept). The economy’s poor condition emphasizes the need for corporations

to practice CSR and to act as the driving force in the implementation of CSR activities.

Ms. Victoria Gachitorena, the president of the League for Corporate Foundation and

Ayala Foundation, Inc. defines CSR as doing business in a way that responds to the needs

and concerns of the different stakeholders: shareholders, owners, employees, the

customers, the community, the government and the public in general. Then again, the

PBSP, a foundation composed of hundreds of corporations, defines CSR as a business

principle which proposes that the long-term sustainability of business is best served when

profitability and growth are attained alongside the development of communities, the

protection and sustainability of the environment, and the improvement of the people’s

quality of life.

CSR practices in the Philippines are generally established through donations and

activities in corporate foundations. CSR activities are categorized as external and internal

expressions of CSR. The external expressions of CSR, the most known of CSR practices,

are based in community-projects like livelihood programs which made the community

involved in the company’s supply chain. This arrangement is the sole expressions of CSR

in SMEs. Good management is an internal form of CSR Corporations serves the public

by complying with the regulations of the business community. Companies provide job
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opportunities for the unemployed, helping implement the poverty mitigation program of

the Philippines. There are simply too many problems in the economy. PBSP pointed out

that the poor should no longer be the objects of generosity, but must have an equal take

on growth and development. The corporations’ CSR activities should provide decisions

that will help achieve and sustain the economic well-being of the community.

In promoting CSR investment, the Philippine government’s tax code offers CSR

related inducements to corporations. These inducements include the granting of the

following:

 Under Section 29: Limited or full deductibility of contributions or gifts for

income tax purposes

 Under Section 80d: Exemption from the estate tax

 Under Section 94 (a) (3): Exemption from the donor’s tax

In Philippine CSR Expo 2005, PBSP reported that the aid and contributions of

private firms are erratic and short term in nature. Leaders of corporations, the government

and other public organizations, who play a major role in promoting CSR commitment,

decide the degree of CSR involvement of the corporations. If corporate citizenship

would be a tool of public relations to support a corporation’s dominance as an economic

institution, it would be but a way of preserving the status quo, of lending a brand “the

aura of morality.” The addition of CSR into the overall business operations of a company

offers the promise of gaining for it financial and social benefits via new business
 31

opportunities, the strengthening of brands and corporate reputation, a highly reliable

workforce, and public trust and acceptance.

CSR Law in the Philippines. The Philippine House of Representatives approved

a bill institutionalizing corporate social responsibility. The House Bill 4575 "Corporate

Social Responsibility Act of 2011," offers that all local government divisions shall spread

assistance is necessary for business institutions in the implementation of CSR in their

areas of jurisdiction and the Department of Trade and Industry (DTI) is authorized to give

national recognition and awards to business institutions for outstanding, innovative and

world-class CSR-related services, projects and programs.


Senator Manny Villar also proposes House Bill 1239, an act institutionalizing

corporate social responsibility, providing incentives therefore, and for other purposes.

This bill pursues to raise justifiable economic and environment development and

environment protection, by institutionalizing the corporate social responsibility of

domestic or foreign corporations, partnership and other establishment performing

business in the country. All business organizations are authorized to consider the interest

of society by taking responsibility for the impact of their activities on 'customers,

employees, shareholders communities and environment.

CSR-related activities include charitable programs and projects, scientific

research, youth and sports development, cultural and educational promotion, services to

veterans and senior citizens, social welfare, environmental sustainability, health

 32

development, disaster relief assistance and employee and employer related CSR

activities.



CSR Significance to Audit Firm. CSR is an important topic recognized by

organizations as a major business driver and the accountancy profession has a central role

to play in it (ICAEW, 2007). The auditing firm throughout the years tries to integrate in

their management CSR activities which provides both a challenge and opportunity to

them. Audit firms are unusual entities for the reason that the division of ownership and

management, is absent in the partnership structure of the firm for its owners (partners) are

also its senior managers. Another reason is that the accounting related services offered

by the firm like auditing operate within the public interest, therefore there

members/employees are more concern on public good rather than profit. Thus the

profession exists because of a genuine human need (Dellaportas and Davenport, 2008).

An adoption of corporate social responsibility gives the firm one means of serving the

public rather than maximizing their profit; or it signal the commitment of a firm to give

benefits to the society rather than one’s self.

Definition of Audit Firm. Auditing firm are companies that review activities or

business transactions to identify inefficiencies and investigate it for potential fraud or

theft and to ensure compliance with applicable accounting regulations or policies. They

give service that helps client evaluate the accuracy of the reports produce by the latter.
 33

Auditor. Auditor are licensed Certified Public Accountant involved in practice of

public accounting. They may be involving in a private firm’s assurance engagement or as

individual who accepts assurance engagement with client.

Auditor’s Response to CSR. Auditors tend to reduce their fees and lower the

likelihood of issuing going concern opinion for companies that exhibit strong overall

performance in activities pertaining Corporate Social Responsibility. Further study

reveals that auditor sees an organization with honest CSR disclosure as a highly

transparent organization thus reducing audit risk in the engagement. (Chen, Srinidhi,

Tsang & Yu, 2016).

Code of Ethics for Professional Accountants. Because of diverse variety of

accounting services and current corporate fail, has gain awareness to ethical standards

established within the accounting profession. These failures have resulted in a prevalent

neglect for the status of the accounting profession. To avoid deceitful accounting, a

variety of accounting organizations and governments established regulations and

treatment to enhance ethics along with the accounting profession.

According to the International Federation of Accountants (IFAC), they deem that

because of the national differences of culture, language, legal and social systems, the duty

of making detailed ethical requisites is that the member bodies in every country have the

job to execute and implement such requirements. IFAC believes that the distinctiveness

of the accountancy profession is considered internationally because of its attempt to attain

a number of general objectives and observance of certain fundamental principles. IFAC

 34

had considered it necessary to institute an international Code of Ethics for Professional

Accountants to be the basis on which the ethical requirements (code of ethics,

comprehensive rules, guidelines, standards of conducts, etc.) for professional accountants

of different country would be adopted. The code is provided to gain uniformity in the

profession.

The services provided by accountants and auditors require advanced level of

ethics. Having an awareness of ethics can assist accountants and auditors to conquer

ethical problem, even though the company may not get benefit, it will benefit the public

who lean on the accountant or auditor's services.

Gender consideration on the accountancy profession. Statistics shown in

regions of Asia Pacific that majority of participants into the accountancy profession are in

favor of females. It is said that the growing numbers of woman accountants and their

influence among ACCA students and members in Singapore where 75% are estimated to

be female.

The Grant Thornton International Research found that the percentage of women

in senior management is 47% in the Philippines which is the greatest compared to the

global average. According to the international Labor Organization, it said that the ratio of

women to men in executive jobs in the Philippines is the highest in the world.

The Department of Labor and Employment’s Bureau of Labor and Employment

Statistics stated that Filipino women out numbered men in executive positions in recent
 35

years. There are more female than male professionals in accountancy, where

approximately 69% are female.

Male and female brains show differences throughout life this includes anatomical,

functional and biochemical factors. Many factors are concerned in this segregation; one

factor that brought difference is physiological factors along with social norms. Males are

better than females in tests of visual-spatial ability, and mathematical reasoning, whereas

females do well in memory and language use. Moreover, females have different mental

skills at different phases of the menstrual cycle. (Upadhayay & Guragain , 2014)

Asymmetric Ethical Perception of Men and Women. Changes in labor force

led to an increase compassion to issues of diversity and focus on understanding

differences in perceptions, expectations, and values of organizational members. Because

of the number of women in the organization rises, there has been increased interest in

how men and women differ in both behaviorally and perceptually in concern to

organizational issues. It is said that women bring organizations a unique set of managerial

qualities and skills and a unique managerial style than men (Grant, 1988; Loden, 1985).

Some researches indicate that gender differences may carry over men and women’s

fundamental moral structures, value systems and ethical frameworks.

However, Stanga and Turpen (1991) found these gender differences were not

present in ethical judgements surrounding the accounting practices. Also, Derry (1989)

confirms that gender was not associated to reported experiences of moral conflict and
 36

justice orientation and Davis and Welton (1991) found that gender was not a significant

factor in evaluating a person’s ethical perception.

Theoretical Framework

Global Reporting Initiative (GRI) Framework. Widely used because of its ease

of use and integration. It offers a policy to report programs on economic, environmental

and social sustainability compliance that meet the need of diverse stakeholders.

Sustainability reports generated by firms improve the understanding and proper

management of the consequences of corporations’ activities and strategies related to

issues of interest to society. GRI framework provide the stakeholder report that they can

use to assess the significant CSR activities being implemented and if the firm actually has

initiative to comply with existing CSR policies. The GRI guidelines outline categories

and aspects like:

 General Disclosure

a. Firm’s Management, Vision and Mission

b. Business Practice

c. Ethical Leadership

 Environmental sustainability

a. Environment

 Social sustainability

a. Labor Relations

b. Community Relations
 37

c. Education

Stakeholder Theory. Conceptualized by Freeman (1984) in his book, stated that

corporations should give more concern to their key stakeholder group which includes the

employees or members in audit firm’s perspective, customers or clients, suppliers, and

communities. This theory is closely related to CSR in terms of how corporation impacts

their stakeholders. Stakeholder theory suggests that a corporation must undertake social

responsibilities while considering its impact to the interest of the various stakeholders.

Wood and Jones (1995) enumerated three roles of stakeholders to defend the significance

of CSR to the stakeholder and vice versa (1) Stakeholders are the source of expectations

of CSR, (2) Stakeholders experience the impact of CSR, and (3) Stakeholders will make

evaluation of CSR. Employees or CPAs on an audit firm perspective play an important

role in the success or failure of the organization where they belong, in this way they are

likely to be affected by the CSR programs or activities implemented and they might react

differently on their work because of the latter.

Part B- Applicable to Professional Accountants in the Public Practice.

Independence as defined in the Code of Ethics is composed of two concepts namely:

 Independence in mind- occurs when a person provide opinion without being

affected by influences that compromise professional judgment, allowing an

individual exercise objectivity and professional skepticism.

 Independence in appearance- it is the prevention of facts and circumstances that

are so significant that a third party having knowledge of it would conclude that a
 38

firm’s or a member of the assurance team’s professional skepticism, objectivity

and integrity had been compromised.

Threats to Compliance to Independence. The circumstances in which the

professional accountants operate may create threats to their independence. Such threats

fall into one or more of the following categories:

 Self-interest Threat. is the threat that a financial interest, self -interest or other

interest will inappropriately influence the professional accountant’s judgment

because they could benefit from it.

 Self-review Threat. is the threat that a professional accountant will not

objectively evaluate the results of the previous judgment made or service

performed in forming a conclusion about the subject matter of the engagement. It

also occurs when a member of the assurance team

 Advocacy Threat. is the threat that a professional accountant will be deterred

form acting objectively because of actual or perceived pressures, including

attempts to exercise undue influence over the professional accountant.

 Familiarity Threat. occurs when, by virtue of a close relationship with a client,

its directors, officers or employees, a firm or a member of the engagement team

becomes too sympathetic to the client’s interests.

 Intimidation Threat. is the threat that the professional accountant will be

deterred from acting objectively because of actual or perceived pressures,

including attempts to exercise undue influence over the professional accountant.

 39

Conceptual Framework

Figure 3. Conceptual Framework

Statement of the Problem

This study aims to assess the level of compliance of selected audit firm on

corporate social responsibility and to find out its influence to CPA’s independence.

Specifically, the study shall find answers to the following questions:

1. What is the demographic Profile of the respondents with respect to:

1.1. Gender

2. What is the assessed level of compliance of the selected audit firms to corporate

social responsibility in terms of:

2.1. Firms management, Mission and Values

 40

2.2. Business practice

2.3. Ethical leadership

2.4. Labor relations

2.5. Community relations

2.6. Education

2.7. Environment

3. What is the perceive influence of CSR to independence of the respondents in

terms of:

3.1 Self Interest threat

3.2 Self-review threat

3.3 Advocacy threat

3.4 Familiarity threat

3.5 Intimidation threat

4. Is there a significant difference in the respondent’s perceptions on the level of

compliance of CSR when gender is considered?

5. Is there a significant difference in the respondent’s perceptions on the perceived

influence of CSR to CPAs Independence?

6. Is there a significant relationship in the level of compliance of audit firm to CSR

to its perceive influence to CPAs Independence?

 41

Hypotheses

This study postulated the following null hypotheses to satisfy the stated problem

of the study:

 There is no significant relationship between the level of compliance of audit firm

to CSR and the CPAs Independence established on the Part B of the Code of

Ethics of Professional Accountants in the Philippines.

 There is no significant difference in the respondent’s perceptions on the level of

compliance of CSR and on the impact of CSR to the fundamental principle

Independence when their gender is considered.

Scope and Delimitation of the Study

This study was limited only to determine the level of compliance of corporate

social responsibility and its influence to auditors, working among audit firms in Makati

City. It specifically focuses on CSR’s influence or effect to the auditor’s independence

established on the Part B of the Code of Ethics of the Professional Accountants in the

Philippines. The Part B of the Code of ethics describes how conceptual framework

applies to professional accountant in public practice.

The population and respondents of the study were fifteen audit firms in Makati

City, Philippines that belongs to Group A of SEC accredited audit firms.

The questions on the survey assessed the implication of the level of compliance to

CSR practices to the fundamental principle of independence of CPA’s might not identify

and assess all the circumstances that may occur in the accounting practice.
 42

Significance of the Study

This study aims to seek the level of corporate social responsibility compliance of

the audit firms and whether these may influence the fundamental principle of

Independence of CPAs and the audit firm itself. Moreover, the study will benefit the

following sectors:

1. Board of Accountancy. This study is significant to the accounting regulatory

bodies and other professional accountant organizations, because they may use the

data to gain knowledge on whether there are circumstances related to CSR

practices of the company that may influence the ethical standard of the

independent CPA. It may either improve the accountant’s engagement

performance and his professional competence or impair his independence,

integrity and objectivity in making conclusions in the engagement, thus giving the

BOA and other regulatory bodies an idea to improve CSR practice of audit firm

by creating standardized policies that will govern its implementation and then use

it as a tool for improving the profession.

2. The Audit Firms. This study is significant to the organization to respond to the

CSR practices of the company that may affect the ethical values specifically

independence of CPA’s which can also affect the organization’s competitive

edge, brand image and reputation. This study also proves its significance in pre

engagement audits in terms of defining threats and formulating and applying

 43

appropriate safeguards in order eliminate or at least mitigate the risks of the

identified threats.

3. The Audit Clients. This study is significant to the firm’s clients to gain

knowledge about the level of compliance of audit firms in Makati City to the

employee, environment or social welfare CSR. This CSR compliance attracts and

retains investors, clients, and stakeholders. They will be complacent that the

services being rendered by the firms are in high-quality, free from error and that

the organization maintains its objective of being of service to the public

4. The Society. This study is beneficial to them because it will enumerate the firm’s

activities committed to the improvement of the community or the society as a

whole.

5. The Government. The lawmakers would be able to assess the usefulness of

complying to CSR practices and they will have the chance to evaluate the

significance it brought to the firm and the society as a whole leading to the

finalization and creation of the laws that will institutionalize CSR compliance.

6. Business and Accountancy Students. This study is important to students

particularly in business and accountancy students because it gives awareness that

some CSR practices may affect the ethical standards of an independent CPAs.

This study will also serve as a future reference for further studies about CSR.
 44

Definition of Terms

Accounting. The art of recording, classifying, and summarizing in a significant

manner and in terms of money, transactions and events which are, in part at least of

financial character, and interpreting the results thereof (AICPA).

Audit. It is the examination of an entity's accounting records, as well as the

physical inspection of its assets. If performed by a certified public accountant, the CPA

can express an opinion on the fairness of the entity's financial statements.

Audit Firms. It is a firm or entity providing audit and non-audit services. Their

owners are called partners or sole practitioners.

Auditor. They are the members specifically Certified Public Accountants of the

audit firms that gives audit services to the clients. They are covered by the Code of Ethics

of Professional Accountants Part A and Part B.

Board of Accountancy (BOA). An organization created in state statute to assist

the country’s government in the licensing and regulation of the public accounting

profession.

Corporate Social Responsibility. Is the continuing commitment by business to

behave ethically and contribute to economic development while improving the quality of

life of the workforce and their families as well as the local community and society at

large (World Business Council for Sustainable development, 1999).

Code of Ethics of Professional Accountants of the Philippines. Establishes

ethical requirements for professional accountants. It is based on the IFAC Code of Ethics
 45

for Professional Accountants. It is divided into three parts: Part A establishes

fundamental principles of professional ethics and provides a conceptual framework that

professional accountants shall apply. Part B and Part C describe how the conceptual

framework applies in a certain situations and provide examples of appropriate safeguards

that address threats to compliance with fundamental principles. Part B applies to

professional accountants in public practice while Part C applies to professional

accountants in business.

CPAs Independence. Independence in auditing means taking an unbiased

viewpoint in the performance of the examination, in the preparation of the report, in

making professional judgment and in formulating an opinion on an audit engagement or

other circumstances.

Independent CPA. They are certified public accountants (CPAs) or chartered

accountants (CAs) involve in practice of public accounting and they are responsible for

the examination of the financial records and business transactions of a company with

which they are not affiliated with.

Influence. The power or capacity of causing an effect in indirect or intangible

ways.

Perception. It is the way a person sees, notice or understands something.

Philanthropy. The desire to promote the welfare of others, expressed especially

by generous donation of money to good causes.

 46

Acronyms

ISO. International Organization for Standardization

ILO. International Labor Organization

UN. United Nations

GRI. Global Reporting Initiative

OECD. Organization for Economic Co-operation and Development

PBSP. Philippine Business for Social Progress

 47

Chapter 2

Methods

Research Locale

The study was conducted in Makati City, Philippines. The place was selected

because it is the financial center of the Philippines. It has a highest attentiveness of local

and multinational corporations and considered the residing place of many auditing firms.

Makati City is the 17th-largest city in the country and ranked as the 41 st most

densely populated city in the world. It has a total land area of 27.36 square kilometers.

The population of the city is 582, 602 where there are 19,336 living per square kilometers

(Philippine Census 2015). Even though the population is just half a million, the city’s

morning population is likely more than one million because of the estimated 3.7 million

of people who go to the city to work, shop and to look after business during a typical

working day.

The city is surrounded by the north Pasig River facing Mandaluyong City, on the

northeast by Pasig, on the northwest by Manila, on the southeast by the municipality of

Pateros and Taguig and on the southwest by Pasay. The city is divided into 2 districts and

subdivided by 33 barangays. The first district is divided into 20 barangays consist of

Bangkal, Bel-Air, Carmona, Dasmariñas Village, Forbes Park, Kasilawan, La Paz,

Magallanes, Olympia, Palanan, Pio del Pilar, Poblacion, San Antonio, San Isidro, San

Lorenzo, Santa Cruz, Singkamas, Tejeros, Urdaneta, and Valenzuela.

 48

The second district is divided into 12 barangays consist of Cembo, Comembo,

East Rembo, Guadalupe Nuevo, Guadalupe Viejo, Pembo, Pinagkaisahan, Pitogo, Rizal,

South Cembo, West Rembo, Post Proper Northside and Post Proper Southside.

Over 62,000 business enterprises were registered in Makati City which are

engaged in financial services, wholesale/retail services, real estate, and export/import.

The city remains the wealthiest local government unit (LGU) in the Philippines in terms

of income from local sources and on a per capital basis. It is also considered one of the

most renowned shopping centers in Metro Manila with numerous shopping centers, high-

end boutiques, dining restaurants and entertainment facilities surrounding the city

(makati.gov.ph).

Research Design

The researchers used the descriptive-correlational method to evaluate the level of

CSR compliance of selected Group A SEC accredited audit firms.

Calderon (1993) pointed out that the descriptive methods tells “what is”, which

leads to a scientific material about a condition. The descriptive method of research

comprises a certain data gathering procedures on principal conditions and practice or

descriptions of objects, process or persons as they exist for about a certain occurrence.

Correlational research signifies a general approach to research that focuses on

evaluating the co-variation amongst occurring variables. Correlational research is

identifying predictive relationships by using various statistical techniques (Pearson 1880).

 49

Sampling Technique

In determining the number of the respondents for this study, all of the participants

were chosen through random sampling. This sampling method is conducted where each

member of a population has an equal opportunity to become part of the sample. Each

sample from the aggregate population would represent the said population. Ddue to the

nature of respondent’s work, the researchers opted to use random sampling for a smaller

sample size.

Respondents of the Study

The respondents in the study are Certified Public Accountants from fifteen Group

A SEC accredited Audit Firms located in Makati City.

After collecting the questionnaires, the responses had been tallied, computed,

analysed, and recorded. On the other hand, for the personal interviews, most of the

interviewees were given space on the survey questionnaire to write their responses or

additional answers to the questions.

Research Instrument

This study used information and documentation of list of audit firms in Makati

City as of January 2017. The list was obtained from the official list of accredited audit

firms in the Philippines released by the Security and Exchange Commission. The survey-

questionnaire was used to achieve the objective of this study. The first part of the survey

contains the profile of the respondents which consist of the number of years spent in

public practice and the firm’s years of commencement in business. The second part were
 50

adopted from CSR Self-Assessment Handbook for Companies developed by ACONA

Ltd experts. The third part was based on the given threats to independence found in the

Code of Ethics of Professional Accountants in the Philippines, Part B. This survey-

questionnaire was designed using the Likert format with a five-point response scale. A

Likert Scale is a rating scale that entails the subject to specify his or her degree of

agreement or disagreement to a statement. The respondents were given five response

choices in this type of questionnaire. These selections served as the quantification of the

participants' agreement or disagreement and compliance or non-compliance on each

question item.

Chronbach’s Alpha Pre-test

Chronbach’s Alpha Chronbach’s Alpha Based No. of Items

on Standardized Items
.805 .816 20

The survey questionnaire passed the Chronbach’s Alpha Pre-test that construe the

reliability of the questionnaire and promotes that the survey questionnaire that had been

used is accurate.

Some of the survey questionnaires will be sent through electronic mail because of

the nature of the respondent’s work.

Data Gathering Procedure

Before managing the survey instruments, the approval of the Audit Firms in

Makati City to give permission for the survey questions and interviews to be given and
 51

conducted will be held by sending approval letter to their respective email. The letter that

will be sent will let them know that the survey was for academic research purposes only.

The procedure conducted of gathering information of the Corporate Social

Responsibility programs implemented by the firm will held after receiving the approval

letters from them. After gathering information, the interview will be conducted to the

representatives of the firm and the survey questionnaires will be given to the CPA

participants. The survey was created using suitable questions adapted from related

research and individual questions formed by the researchers. Likert scale was used in the

questionnaire to determine if the respondent agreed or disagreed in a statement.

Participants will be given time to respond and then the researchers will collect the

surveys after 3 days.

Statistical Treatment

Chi-square of independence will be used to determine the relationship between

the two independent variables. This statistical treatment was used to find out if there is

any relationship between the levels of CSR Compliance of the auditing firms to the

independence of an independent CPA.

These are the measure used to describe the gathered data from the responses of

the independent CPA’s wherein it is statistically analyzing by means of the following

data:
 52

1. Frequency and Percentage was used to determine the demographic profile of the

independent CPA as to age, gender, years in public practice and of the firm as of

years of commencement of business.

The formula used: P = F/N x 100

Where: P = symbolizes percentage (%)

F = frequency of responses

N = total number of responses/respondents

2. Descriptive method or statistics (weighted mean) was used to find the level of

CSR compliance of Group A SEC Accredited Audit Firms.

Formula: WM = TWS/N

Where: WN = Weighted Mean

TWS = Weighted assigned sum of all weighted scores

obtained by a sample

N = Number of respondents

3. T-test was used to compare the means of two independent groups in order to

determine whether there is a statistical evidence that the associated means are

significantly different.

4. Pearson r was used to correlate the two quantitative variables and the research
hypothesis predicts whether there is a linear relationship between CSR level

compliance and perceive influence to independence.

 53

5. SPSS (Statistical Package for the Social Sciences) was used to generate the

computation of the gathered data using Pearson’s Product-Moment Correlational.

6. Chronbach’s Alpha pre-test (reliability test) was used as for computing the data

gathered as sample and tested for the reliability of the questionnaire.

7. The questionnaires used the five-point Likert Scale to determine the mean of the

results.

Scale used to determine the mean score of 5 point Likert Rating Scale of the level of

compliance of selected audit firm to CSR practices

Numerical Scale Compliance Perceived Threat

4.21 – 5.00 Fully Complied Indeed not a Threat

3.41 – 4.20 Moderately Complied Not a Threat

2.61 – 3.40 Slightly Complied Uncertain

1.81 – 2.60 Complied A Threat

1.00 – 1.80 Not Complied Truly a Threat

 54

Chapter 3

Results and Analysis

This chapter provides summary of results, presentation, analysis, and

representation of the topic “Corporate Social Responsibility Practices of Selected Audit

Firms in Makati City and their Influence to CPAs Independence” based on the data

gathered through survey questionnaires.

Demographic Profile

The demographic profile of the respondent includes the gender of the CPA

respondents in the audit firm. The data are analyzed using frequency, percentage, and

weighted mean.

Table 1

Frequency Distribution of the Respondents’ Profile According to Gender

Variable Frequency Percentage

Male 35 46.1

Female 41 53.9

Total 76 100.00

Table 1 shows the frequency distribution of the respondents according to their

gender. Majority of the 76 respondents are female (N=41, 53.9%) while the remaining are

male (N=35, 46.1%). The result is in line with the findings of the Department of Labor

and Employment that women have steadily been outnumbering men in the executive
 55

profession in the recent years. They find out that there more female than male

professionals in the field of Accountancy, approximately 69%.

Assessment of the Level of Compliance on Corporate Social Responsibility on

Selected Audit Firm. The following data were gathered and analyzed from the survey

conducted with the CPAs of the selected audit firms in the assessment of their

compliance to CSR Practices

Table 2

Level of Compliance to CSR Practice

CSR Practice Category Weighted Standard Descriptive

Mean Deviation Meaning
a. Firms Management, Mission and 4.47 0.47 Fully Complied
Values
b. Business Practice 4.45 0.48 Fully Complied

c. Ethical Leadership 4.43 0.48 Fully Complied

d. Labor Relations 4.54 0.34 Fully Complied

e. Community Relations 4.35 0.54 Fully Complied

f. Education 4.47 0.77 Fully Complied

g. Environment 4.38 0.54 Fully Complied

Overall Weighted Mean 4.44 Fully Complied

(4.21-5.00) Fully Complied; (3.41-4.20) Moderately Complied; (2.61-3.40) Slightly

Complied; (1.81-2.60) Complied; (1.00-1.80) Not Complied

Table 2 illustrates the computed mean and standard deviation of level of

compliance of selected audit firms to CSR Practices in the auditor’s perspective is full

compliance having an overall weighted mean of 4.44. The respondents gave a very good
 56

assessment to the audit firms in terms of involvement of the organization to different

corporate social responsibility practices categories. The respondents confirm in the

survey the truth about the findings of ICAEW (2007) that audit firm throughout the years

had integrated in their management CSR activities which provides both a challenge and

opportunity to them. The findings on the survey conducted by the researcher as shown in

Table 2 also shows that CSR-Related Practices are mainly composed of charitable

programs and projects, educational promotion, environmental sustainability, health

development, disaster relief assistance and employee and employer related CSR activities

(House Bill 1239).

Assessment of the Perceived Influence of Corporate Social Responsibility to CPAs

Independence

Table 3

Perceived Influence of CSR to CPAs Independence

CSR Practices Category Weighted Mean Standard Descriptive

Deviation Meaning
a. Self – interest Threat 4.63 0.36 Indeed not a
Threat
b. Self – review Threat 4.62 0.32 Indeed not a
Threat
c. Advocacy Threat 1.26 0.56 Truly a
Threat
d. Familiarity Threat 3.04 0.47 Uncertain

e. Intimidation Threat 4.75 0.29 Indeed not a

Threat
Overall Weighted Mean 3.66 Not a
Threat
(4.21-5.00) Indeed not a Threat; (3.41-4.20) Not a Threat; (2.61-3.40) Uncertain;
(1.81-2.60) A Threat; (1.00-1.80) Truly a Threat
 57

Table 3 illustrates the computed mean and standard deviation with an overall

weighted mean of 3.66 shows that the CPAs agreed that CSR Practice had an effect to

their independence in terms of some Threats to Independence listed on Part B of Code of

Ethics for Professional Accountants. CSR Practices as shown above had an effect of

reducing or removing the threats to independence namely, Intimidation Threat, Self-

Review Threat and Self-Interest Threats. As indicated in the table auditors are more

likely to avoid engaging in activities that would result in unfair presentation of audit

reports and unfair statement of opinion. The result is in line with the findings that

Auditors tend to reduce their fees and lower the likelihood of issuing going concern

opinion for companies that exhibit strong overall performance in activities pertaining

Corporate Social Responsibility and that auditor sees an organization with honest CSR

disclosure as a highly transparent organization thus reducing audit risk in the engagement

(Chen, Srinidhi, Tsang &Yu, 2016). Some CSR Practices on the other hand makes the

respondent’s feel uncertain as to whether it poses as a threat or not this is Familiarity

Threat where auditor’s relationship, awareness and knowledge on the client are a factor.

This opinion from the respondents is affected by the existing Code of Ethics for

Professional Accountants that ensure that the auditors follow ethical conducts especially

when they are under a client engagement, which is why some agreed that no threats will

arise on the CSR Practices under familiarity threats and some disagreed. Another result

shows that CSR Practices poses as a trigger for an Advocacy Threat to arise. This shows

that the auditors somehow are affected by how their client in an engagement look on the
 58

basis of their reputation, beliefs and ethical practices this is proven in a study conducted

by Works pan Magazine where when it comes to employment, 94 percent of the

respondents said it was either “critical” or “important” that they work for an ethical

company. The study also found a significant decrease in productivity in unethical

companies.

Assessment of Significant Difference between the Respondent’s Perceptions on the

Variables when Gender is considered

Table 4

Respondents’ Perception regarding the Level of Compliance to CSR Practice when

Gender is considered

Variable p-value Decision

Firm Management 0.13 Accept Ho

Business Practice 0.31 Accept Ho

Ethical Leadership 0.26 Accept Ho

Labor Relation 0.45 Accept Ho

Community Relation 0.12 Accept Ho

Education 0.37 Accept Ho

Environment 0.94 Accept Ho

 59

Table 4 illustrates the result from the independent sample t-test, finding shows

that there is no significant difference in the respondent’s perception on level of

compliance to CSR Practices when their gender is considered as stated in the null

hypothesis. This finding is in line with Asymmetric Perception which shows that men and

women are equal when it comes to their opinion of what is ethical in the business

industry.

Table 5

Respondents’ Perception regarding CSR Practices of Audit Firm’s Influence to CPAs

Independence when Gender is considered

Variable p-value Decision

Self-Interest Threat 0.19 Accept Ho

Self-Review Threat 0.04 Reject Ho

Advocacy Threat 0.62 Accept Ho

Familiarity Threat 0.43 Accept Ho

Intimidation Threat 0.37 Accept Ho

Table 5 illustrates the result from the independent sample t-test that there is no

significant difference in the respondent’s perception on the influence of CSR Practices to

their independence when their gender is considered as stated in the null hypothesis which
 60

means that both male and female respondents understand that there is a uniform effect

that the CSR Practices create towards their independence when threats are considered, it

corresponds to one of Code of Ethics purpose which is uniformity in the diversified

profession that gives both male and female same definition and concept of independence

and the threats to it. An exception to this are situations where the respondent’s considered

their own abilities and skills as a professional individual and when their beliefs as human

are considered this is evidenced by the study that shows that male and female brains

show differences throughout life this includes anatomical, functional and biochemical

factors. Many factors are concerned in this segregation; one factor that brought difference

is physiological factors along with social norms. Males are better than females in tests of

visual-spatial ability, and mathematical reasoning, whereas females do well in memory

and language use.

 61

The Significant Relationship of the level of compliance of audit firm to CSR and the

CPAs Independence

Table 6

The Relationship between the Level of Compliance of Audit Firm to CSR and the CPAs

Independence

Variable Self-Interest Self-Review Advocacy Familiarity Intimidation

Threat Threat Threat Threat Threat
p- Decisio p- Decisio p- Decisio p- Decisio p- Decisi
value n value n value n value n value on
Firm .000 S .336 NS .095 NS .074 NS .070 NS
Management
Business .082 NS .967 NS .316 NS .865 NS .308 NS
Practice
Ethical .000 S .615 NS .366 NS .557 NS .095 NS
Leadership
Labor .016 S .450 NS .340 NS .381 NS .511 NS
Relation

Community .000 S .198 NS .440 NS .474 NS .189 NS

Relation
Education .000 S .599 NS .511 NS .010 S .058 NS
Environment - - .975 NS .476 NS .023 S .028 S

S – Significant; NS – Not Significant

Table 6 illustrates that the level of compliance to various category of CSR

implementation’s had a significant relationship and they greatly influence the

respondent’s independence when self-interest threat, intimidation threat and familiarity

threat are considered. An exception to this are the level of compliance to CSR practices

that are implemented through business practices, that doesn’t’ influence any of the

following threats to independence since CSR Practices under this category are activities
 62

that are implemented in the internal and operational control of the firm itself and this

doesn’t have an effect to the threats which are acquired externally. Specifically, levels of

compliance to CSR practices affect how an auditor will react to situations that test his/her

self-interest ideals.

Respondents were positive that if their firm would be able to assure them proper

treatment and full compliance to programs implemented for their benefit, their self-

interest threats would greatly be reduced, this is true in other CSR Practice category. This

is true based on study conducted by the Center for Creative Leadership’s (CCL),

employee volunteerism and corporate philanthropic initiatives are correlated with

employees’ positive perception, commitment to the organization and to its job. Another is

Deloitte’s 2011 Volunteer Impact Survey that focuses on adult employees. It stated that

those engaged in workplace volunteerism activities are more motivated to work for the

company and nearly twice likely to be very satisfied with the progression of their career.

On the other hand, compliance to educational and environmental CSR practices

could pose as influence to the respondent’s familiarity and intimidation threats. Self-

review threats and advocacy threats as answered by our respondents would not be

influence by the level of compliance of CSR Practices of firms.

 63

Chapter 4

Summary, Conclusion and Recommendations

This chapter contains the summary of findings and conclusion based on the results

of the study and its corresponding recommendation.

Summary of Findings

The study assessed the Level of Compliance of Selected Audit Firms in Makati

City to CSR Practices and the formers influence to CPAs Independence.

The study focused on selected audit firm’s corporate social responsibility program

compliance through their Auditor’s perspective but this doesn’t include the determination

of the success and failure of the programs and the process of its implementation. It also

focuses on the effect of the level of compliance of audit firm to the respondent’s

independence but this doesn’t include the measurement of the respondent’s independence

alone. This study is concentrated on the following areas: the profile of the respondents in

terms of gender, level of compliance to CSR based on the given category in chapter 1,

influence of CSR Practices of Audit firms to the respondent’s independence in terms of

the threats to independence given on chapter 1, and the significant relationship between

the two given variables.

The method utilize in this study is descriptive method. Random Sampling was

utilized because of the nature of the respondent’s work. Survey was conducted to gather

and analyze data. The populations consist of 15 selected audit firms in Makati City that

belongs to Category A SEC Accredited Firm, however only 10 firms confirmed their
 64

willingness to be involved in the study. The respondents are random auditors from the

selected audit firm. Majority of the interviewees are Junior Associates of the audit firms.

Survey Questions part 2 was based on “CSR Self-Assessment Handbook for Companies”

developed by ACONA Ltd. Experts and the third part is self-made and validated and is

based on the Code of Ethics of Professional Accountants-Part B.

The statistical treatment utilized in analyzing and interpreting the data gathered

are T-Test, Correlation Pearson r and Weighted mean. Likert Scale was also used in the

survey questionnaire.

From the previous analysis and interpretation based on the problem shown in

Chapter 1, these finding are drawn and presented:

1. The participants of the study had the following demographic profile: In terms of

Gender, 53.9 % (41) of the participants were female while 46.1 % (35) of the

respondents were male gender with a total of 76 respondents.

2. The assessed level of compliance of the selected audit firms to corporate social

responsibility in terms of given categories stated in chapter 1. From the survey

conducted with the auditors, majority of the respondents indicated that the

selected audit firms in Makati City full comply with several CSR Practices under

the category of Firms management, mission and values, business practices, ethical

leadership, labor relations, community relations, education and environment.

They are specifically focused on programs that satisfy and help their employees

especially auditors.
 65

3. The perceive influence of CSR Practice on the independence of the respondents in

terms of the given Threats to Independence.

1. Self Interest threat. Based on the survey, respondents indicated that they

strongly agreed to the thought that CSR Practices help them lessened their

self-interest in the firm and employee programs that benefits them reduce their

risk of being involved in fraud which may be committed when they have

selfish interest to the firm or their client.

2. Self-review threat. Based on the survey, respondents indicated that they

strongly agreed that CSR Practices like programs that improved their technical

skills and abilities help them in reducing the commitment of error in their

works for the client. Programs that benefit them and guide them makes their

work more efficient and effective thus benefitting the clients and the firm

itself

3. Advocacy threat. Based on the survey, respondents indicated that CSR

Practices poses as a trigger to the situations under this threat.

4. Familiarity threat. Based on the survey, respondents indicated that they are

uncertain with the notion that CSR Practices affects their independence

through familiarity threat. They don’t believe that social interactions with the

client and the firm impair nor improve their independence.

5. Intimidation threat. Based on the survey, respondents indicated that they

strongly agreed that firm has programs that protect them from being
 66

intimidated improves their independence. The respondents also would be

more independent when they have ways to avoid conflicts with their

surroundings

4. There is no significant difference between the perception in the Level of

Compliance to CSR Practices and its influence to CPAs independent when their

profile is considered.

5. There is no significant relationship between the level of compliance of audit firm

to CSR and the CPAs Independence when Threats to Independence are considered,

but some aspects in Familiarity Threat, Self-Interest Threat and Intimidation Threat

would most likely affect in some ways.

Conclusion

Based on the findings of this research study, the following are the conclusions

made by the researchers pertinent to the CSR practices of selected audit firm and its

influence to CPA’s independence.

The researchers conclude that the selected audit firms are fully complied with the

following CSR practices, they have programs that are enumerated in their missions and

visions and their programs are mostly for the benefits of their employees and of their

future employees which are the students.

The results also show that there is no significant difference in terms of gender

perception with regard to the study. The male and female CPA respondents have the

same perception as to the compliance of their firm to CSR and its influence to CPA’s
 67

independence except when their personal and selfish intentions are involved. The CPA

respondents, as an independent auditor, think that CSR influence their independence in

some ways when giving opinion in every engagement they perform. It lessens some

threats to independence which can hind the auditor in performing the engagement with

objectivity and integrity and in giving appropriate opinion about the management’s

financial statement assertions except in situations where self-review and advocacy threat

are present. Also through this program, it inculcates to their minds that benefit of the

public must be prioritize and that profit is not their main objective but being of benefit

not limited to their stakeholders.

Recommendation

The researchers recommend the following:

1. To the Board of Accountancy in coordination with the Philippine Institute of

Certified Public Accountants (PICPA) to conduct seminars and trainings for the

auditors to inform them of the effects corporate social responsibility to CPA’s

independence and to create uniformity when it comes to the auditors perspective

of the perceive influence of CSR to the profession.

2. To the audit firms shall evaluate their corporate social responsibility programs

and initiatives. They must assess the factors that may influence their auditor’s

independence in achieving their CSR goals and initiatives. Firms shall have a

standardized responsibility programs and policy to serve as guide in attaining

their goals, objectives, mission and vision without causing threats to their CPA’s
 68

independence. In line with this, the firm must also orient their staffs on the

perceive influence of CSR Practices to the latter.

3. To future researchers who consider to expand the study by selecting a larger

population and a different location in order that the collective contribution of the

studies will help to accountants, auditors and standard setting bodies assess

policies regarding corporate social responsibilities.

 69

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 73

Appendix A

Survey Questionnaire

CORPORATE SOCIAL RESPONSIBILITY PRACTICES OF SELECTED

AUDIT FIRMS IN MAKATI CITY AND THEIR INFLUENCE TO CPA’s

INDEPENDENCE

The study aims to assess the level of compliance of selected audit firm on

corporate social responsibility and to find out its implication to CPA’s independence.

Part 1. Profile
Name of the firm : Years in operation:
Name of the respondent: (Optional) Gender: M F

Part 2. Level of Compliance Instruction: In each category there are items listed
underneath, that are connected to your firm’s CSR activities and you are going to assess
and evaluate how extensive their implementation was using the following level of
compliance. Mark the box of the number that you deemed appropriate for each given
items. Any additional comments or suggestions to the given situations can be written in
the designated remarks section.
5. Fully complied
4. Moderately complied
3. Slightly complied
2. Complied
1. Not complied
 74

Particulars 5 4 3 2 1

A. Firm’s Management, Mission and Values

1. The firm has a management person responsible
for:

a. Social sustainability
b. Business conduct and compliance
c. Environmental sustainability
If no please specify other person in position that
handles CSR activities
2. The firm published Corporate Social
Responsibility (CSR)/ Sustainability Report for
transparency

3. The firm published other reports related to your

CSR enumerated below:
a. Environmental report
b. CSR/Sustainability report integrated in annual
report
If there are other report not mentioned please
specify
4. The firm has training sessions or activities that
help enhance the understanding of each member
of the firm on the CSR they implement
5. The firm established policies that govern CSR
activities and define its commitment to CSR
6. The firm incorporates CSR into their mission and
vision
7. The firm gains commitment for support to CSR
activities from key constituents like partners,
members and other external parties
8. The firm has separate allocation of fund for CSR
implementation.
B Business Practice
1. The firm instills a culture of responsible business
practice throughout the enterprise this include
leading by example and encouraging people who
 75

take responsible action. The latter may involve

special employee or member award schemes
where specific CSR suggestions or innovations
are recognized through awards or bonuses
2. The firm aligns remuneration and disciplinary
actions to promote CSR, for example bonuses for
good behavior, quality assurance service rendered
properly and dismissal procedure for grossly poor
behavior and acts that might discredit the firm
and the profession as well.
C. Ethical Leadership
1. The firm has an existing code of conduct that
prevents:
a. Bribery
b. Corruption
c. Tax Evasion
2 The firm defines clear position on political
contributions and if permitted giving transparent
contributions.
3 Being a leader and advocate for business
engagement into CSR inside and outside the
enterprise
D. Labor Relations
1. The firm has action plans regarding the human
resources and evaluates it on a regular basis.
2. The firm has processes to prevent recurring
problems regarding health and safety issues.
Please specify the CSR activity regarding the
health and safety issues
3. The firm has an effective grievance procedure
wherein they are able to post their concerns and
complaints this includes conflict of interest and
ideas between members.
4. The firm promotes philanthropic/volunteering
activities for the employees/members for them to
interact with the other members of the society.
5. The firm ensures equal career development for
each member of the firm may such as minority
 76

group and women to ensure equal chance to be

candidate for senior roles and fair engagement
load.
6. The firm accepts freedom of association and the
right of collective bargaining for employee.
7. The firm ensures fair and prompt payment and
provides employee benefits.
E. Community Relations
1. The firm has community engagement action plan.
2. The firm engages on regular dialogue with its
stakeholders which include consulting firm
stakeholders at least when the firm takes a
decision that impacts the surrounding community.
3. The firm actively participates in CSR associations
and forums and engages with any local NGO’s to
ensure a mutually-beneficial development agenda
in the community.
4. The firm offers volunteering time, invests in or
supports any local community initiatives which
include pro-bono support, partnerships with
educational institutions, supporting research, etc.
5. The firm supports charities through the
following:
a. Cash Donation for worthy causes
b. Sponsoring event, arts or sports clubs
c. Giving gifts in kind
6. The firm offers apprenticeship schemes to
facilitate skills development within the local
community.
Apprenticeship means a fixed-term position
within the firm in order to foster skills
development for the apprentice.
F. Education
1. The firm is involved in programs that provides
scholarship programs or assistance to the students
of the following:
a. Secondary
b. Tertiary
 77

c. Graduate School
2. The firm organizes or sponsors seminars and
forums.
3. The firm sponsors quiz bees and other academic
competition held by different school organization
and universities.
G. Environment
1. The firm establishes policies that create CSR
activities on environmental concern.
2. The firm integrates waste management within the
organization.
3. The firm promotes reuse and recycle of materials
within the organization.
4. The firm ensures that the employees are aware of
efficient energy and resource used.

5. The firm maintains a monitoring system,

measuring the main environmental impacts,
especially resource usage and carbon emissions.
6. The firm manages localized environmental
pollution including being a good neighbor by
minimizing noise, odor and vibration nuisance.

Part 3. CSR Influence to CPA’s Independence: In each category there are items listed
underneath and you are going to assess and evaluate how your Audit firm’s CSR affects
CPA’s Independence. Mark the box of the number that you deemed appropriate for each
given items. Any additional comments or suggestions to the given situations can be
written in the designated remarks section.
5 – Indeed not a Threat
4 – Not a Threat
3 – Uncertain
2 – A Threat
1 – Truly a Threat
 78

Particulars 5 4 3 2 1

A. Self-Interest Threat

 Labor Relations CSR

1. As an auditor, CSR activities like training and
development guide me to avoid self-interests
conflicts that can lead to unfair presentation of
audit reports.
2. Policies that provides fair and prompt payment to
us, auditors, will help me to prevent having
financial interest to the client.
3. If the audit firm ensures fair client engagement
distribution which gives me opportunity to be
given proper work load, it will prevent me from
developing undue dependence on total fees from
clients.
4. The audit firm helps ensure that the auditor will
receive the engagement fee on a timely basis
prevent contingent fees from arising which may
result to self-interest threat.
B. Self-Review Threat
 Business Practice CSR
1. I am able to learn to admit and correct the wrong
judgments or opinion that I gave if there is a CSR
that promotes honesty within the company.
2. I will be encourage to be more committed to
doing client engagement properly and responsibly
if the audit firm instills a culture of responsible
business practice throughout the organization
3. I will be motivated to work properly and prepare
needed reports for my clients on time when the
firm gives of rewards and bonuses to those who
does their job well and follow code of conducts
and professional standard properly.
 Labor Relations CSR
4. If the audit firm integrates the importance of
having substantial performance in every
 79

engagement through special training and

seminars, I will fully engage myself to do my
work as effectively as needed.
C. Advocacy Threat
 Ethical Leadership CSR
1. If the audit firm becomes a leader and advocate
for business engagement into CSR inside and
outside the enterprise, it will not create a threat to
the firm’s independence as well to mine as its
auditor.
 Community and Environment CSR
2. When an audit firm and the audit client have a
mutually beneficial development agenda
(advocacy), it will not create a threat to the firm’s
independence as well us to mine as part of the
engagement.
3. Having a client with programs that shows that
they are serving the public through foundations,
scholarships and other good deeds makes me
think that they have a good reputation.
4. If I am an advocate of a particular CSR that is
contrary to the nature and operation of my client’s
business, my professional objectivity as an
auditor will not be impaired.
D. Familiarity Threat
 Ethical Leadership CSR
1. I will be discourage to accept money or gifts that
would impair my decisions and professional
judgment if the audit firm has existing code of
conduct that prevents bribery through disciplinary
action like dismissal procedure.
2. If the audit firm has CSR that promotes honesty
within the organization, I will honestly evaluate
myself during answering questionnaire about my
independence provided by the Quality Control
Committee this include disclosing if I have a
close relationship with the client.
 Labor Relations CSR
 80

3. If the firm promotes philanthropic/volunteering

activities for the auditor to interact with the other
members of the society relationships that will be
formed here will not create a threat.
4. If the audit firm is affiliated with other
organization because of CSR programs or
activities it will not impair my independence.
E. Intimidation Threat
 Labor Relations CSR
1 If the audit firm has policies and programs that
protect me as an auditor from intimidation threat
will greatly help me to provide appropriate if
judgment in every engagement.
2. If firm has an effective grievance procedure
wherein we are able to post our concerns and
complaints on client’s engagement I will not be
intimidated client’s threats like being force to
comply with what they want under certain
conditions.
3. I will be discouraged to accept gifts or rewards
from my clients if the firm promotes motivation
programs like incentives or bonuses to us,
auditors.
4. As an auditor, CSR activities like training and
development guide me to avoid conflicts that may
cause the client to intimidate me into doing what
they want in the engagement.
 81

Appendix B

Letter to the Respondents

DE LA SALLE ARANETA UNIVERSITY

Araneta Campus, Victoneta Avenue, Malabon City, Philippines 1476
Tel: 330-91-28 to 33

May __, 2017

_____________________
_____________________
_____________________

Dear Sir/Ma’am,

Greetings of peace!

We are 4th year Accountancy students from De La Salle Araneta University and we are
currently working on our undergraduate accounting research entitled “Corporate Social
Responsibility Practices of Selected Audit Firms in Makati City and their Influence
to CPAs Independence”.

The respondents in our study will be the Board of Accountancy accredited individual
practitioners from Makati City. Your name is included in the January 2017 list of group
A SEC accredited firms and individuals we have found in the PRC website. We are
humbly asking for your help and cooperation to answer the attached questionnaires about
the corporate social responsibility practices of audit firms and its impact to CPAs
independence. We are looking forward to collaborate with you in this study so that there
will be more corporate people who will engage in social responsibility practices.

May I ask your assistance to facilitate my data gathering by answering the attached
questionnaires? Your identity and answers will be treated with extreme confidentiality
and will only be used for academic research purposes. If you have further questions and
clarifications, our email addresses and mobile phone numbers are listed below.
 82

Your collaboration in this survey will be a great help in attaining the desired objectives of
our study. We are hoping for fruitful partnership in this study. Thank you very much for
your time and attention.

Sincerely yours,

ANGELIKA D.L. BALINGIT

angelika.balingit12@gmail.com
+639261725189

KEVIN C. BERNARDINO
kevinbernardino72@gmail.com
+639056791025

CHRISTAL MAE N. PACOMBABA

christalmae.pacombaba25@gmail.com
+639566343302

Noted by:

GLEN dV. DE LEON, CPA, MBA, AFBE, Ph.D.

Research Adviser

JERICO JOHN G. DALANGIN

Subject Adviser

GLEN dV. DE LEON, CPA, MBA, AFBE, Ph.D.

Program Chairman, Accountancy Department

DR. CAROLINA DITAN

Dean , College of Business and Management
 83

Appendix C
84
85
 86

Appendix D

Raw Data

Frequencies

Statistics
Sex
N Valid 76
Missing 0

Sex
Frequency Percent Valid Cumulative
Percent Percent
Valid Male 35 46.1 46.1 46.1
Female 41 53.9 53.9 100.0
Total 76 100.0 100.0
 87

T-Test

Group Statistics
Sex N Mean Std. Deviation Std. Error Mean

Firm Management Male 35 4.5560 .34726 .05870

Female 41 4.3978 .54914 .08576
Business Practice Male 35 4.5143 .47721 .08066
Female 41 4.4024 .47723 .07453
Ethical Leadership Male 35 4.4951 .39949 .06753
Female 41 4.3739 .53363 .08334
Labor Relation Male 35 4.5671 .35699 .06034
Female 41 4.5083 .31725 .04955
Community Relation Male 35 4.4520 .41427 .07002
Female 41 4.2644 .61257 .09567
Education Male 35 4.5523 .47161 .07972
Female 41 4.3983 .95813 .14963
Environment Male 35 4.3766 .55484 .09379
Female 41 4.3868 .52746 .08238
Self Interest Threat Male 35 4.5643 .39919 .06747
Female 41 4.6768 .32232 .05034
Self-Review Threat Male 35 4.5429 .30004 .05072
Female 41 4.6890 .32006 .04999
Advocacy Threat Male 35 1.2929 .64877 .10966
Female 41 1.2256 .48025 .07500
Familiarity Threat Male 35 2.9929 .23861 .04033
Female 41 3.0793 .60838 .09501
Intimidation Threat Male 35 4.7857 .27213 .04600
Female 41 4.7256 .30519 .04766

Independent Samples Test

Levene's t-test for Equality of Means

Test for
Equality
of
Variances
F Si t df Sig. Mean Std. 95%
g. (2- Differe Error Confidence
 88

taile nce Differe Interval of

d) nce the
Difference
Lowe Uppe
r r
Firm Equal 4.86 .03 1.47 74 .146 .15820 .10755 - .3725
Manage varian 8 0 1 .0561 0
ment ces 0
assum
ed
Equal 1.52 68.5 .133 .15820 .10392 - .3655
varian 2 55 .0491 4
ces not 5
assum
ed
Business Equal .227 .63 1.01 74 .312 .11185 .10982 - .3306
Practice varian 5 8 .1069 8
ces 8
assum
ed
Equal 1.01 72.1 .312 .11185 .10982 - .3307
varian 8 41 .1070 7
ces not 8
assum
ed
Ethical Equal .983 .32 1.10 74 .273 .12124 .10971 - .3398
Leadersh varian 5 5 .0973 4
ip ces 6
assum
ed
Equal 1.13 72.8 .262 .12124 .10726 - .3350
varian 0 31 .0925 2
ces not 4
assum
ed
Labor Equal .306 .58 .761 74 .449 .05885 .07735 - .2129
Relation varian 2 .0952 7
ces 7
assum
ed
 89

Equal .754 68.7 .454 .05885 .07808 - .2146

varian 40 .0969 2
ces not 2
assum
ed
Commun Equal .469 .49 1.53 74 .129 .18761 .12214 - .4309
ity varian 6 6 .0557 8
Relation ces 6
assum
ed
Equal 1.58 70.5 .118 .18761 .11856 - .4240
varian 2 26 .0488 3
ces not 1
assum
ed
Educatio Equal 4.61 .03 .865 74 .390 .15399 .17803 - .5087
n varian 7 5 .2007 2
ces 3
assum
ed
Equal .908 60.2 .367 .15399 .16954 - .4931
varian 21 .1851 1
ces not 2
assum
ed
Environ Equal .001 .97 - 74 .934 -.01026 .12432 - .2374
ment varian 6 .083 .2579 6
ces 7
assum
ed
Equal - 70.8 .935 -.01026 .12483 - .2386
varian .082 52 .2591 5
ces not 6
assum
ed
Self Equal 4.92 .03 - 74 .178 -.11254 .08277 - .0523
Interest varian 2 0 1.36 .2774 9
Threat ces 0 8
assum
ed
 90

Equal - 65.2 .186 -.11254 .08418 - .0555

varian 1.33 08 .2806 7
ces not 7 6
assum
ed
Self- Equal .717 .40 - 74 .045 -.14617 .07158 - -
Review varian 0 2.04 .2887 .0035
Threat ces 2 9 5
assum
ed
Equal - 73.3 .044 -.14617 .07121 - -
varian 2.05 26 .2880 .0042
ces not 3 7 6
assum
ed
Advocac Equal 2.49 .11 .518 74 .606 .06725 .12979 - .3258
y Threat varian 9 8 .1913 6
ces 6
assum
ed
Equal .506 61.7 .615 .06725 .13286 - .3328
varian 61 .1983 5
ces not 5
assum
ed
Familiari Equal 11.8 .00 - 74 .432 -.08641 .10946 - .1316
ty Threat varian 50 1 .789 .3045 9
ces 1
assum
ed
Equal - 53.6 .406 -.08641 .10322 - .1205
varian .837 64 .2933 6
ces not 8
assum
ed
Intimidat Equal .263 .60 .899 74 .371 .06010 .06685 - .1933
ion varian 9 .0730 0
Threat ces 9
assum
ed
 91

Equal .907 73.8 .367 .06010 .06624 - .1920

varian 46 .0718 9
ces not 8
assum
ed

Correlations

Descriptive Statistics

Mean Std. Deviation N

Firm Management 4.4707 .47095 76
Business Practice 4.4539 .47734 76
Ethical Leadership 4.4297 .47741 76
Labor Relation 4.5354 .33515 76
Community Relation 4.3508 .53553 76
Education 4.4692 .77227 76
Environment 4.3821 .53662 76
Self Interest Threat 4.6250 .36171 76
Self-Review Threat 4.6217 .31753 76
Advocacy Threat 1.2566 .56121 76
Familiarity Threat 3.0395 .47443 76
Intimidation Threat 4.7533 .29010 76

Correlations

Firm Bus Ethi La Co Ed Env Self Sel Ad Fa Inti

Manage ines cal bor m uc iron Inter f- vo mili mid
ment s Lea Re mu ati men est Re cac arit atio
Pra der lati nit on t Thre vie y y n
ctic ship on y at w Th Thr Thr
e Re Th rea eat eat
lati rea t
on t
Firm Pearson 1 .26 .50 .29 .69 .67 .507* - .19 - .20
Manage Correla 4* 9** 3* 7** 4** *
.11 3 .20 9
ment tion 2 6
Sig. (2- .02 .00 .01 .00 .00 .000 .33 .09 .07 .07
tailed) 1 0 0 0 0 6 5 4 0
 92

N 76 76 76 76 76 76 76 76 76 76 76
Business Pearson .26 1 .31 - .32 .29 .201 .00 - .02 .11
Practice Correla 4* 2** .02 4** 5** 5 .11 0 9
tion 8 6
Sig. (2- .02 .00 .80 .00 .01 .082 .96 .31 .86 .30
tailed) 1 6 7 4 0 7 6 5 8
N 76 76 76 76 76 76 76 76 76 76 76
Ethical Pearson .50 .31 1 .10 .59 .61 .535* - .10 - .19
Leader Correla 9** 2** 8 0** 9** *
.05 5 .06 3
Ship tion 9 8
Sig. (2- .00 .00 .35 .00 .00 .000 .61 .36 .55 .09
tailed) 0 6 5 0 0 5 6 7 5
N 76 76 76 76 76 76 76 76 76 76 76
Labor Pearson .29 - .10 1 .16 .10 .- - - - .07
Relation Correla 3* .02 8 2 4 277* .08 .11 .10 7
tion 8 8 1 2
Sig. (2- .01 .80 .35 .16 .37 .016 .45 .34 .38 .51
tailed) 0 7 5 2 1 0 0 1 1
N 76 76 76 76 76 76 76 76 76 76 76
Commu Pearson .69 .32 .59 .16 1 .73 .491* - .09 - .15
nity Correla 7** 4** 0** 2 6** *
.14 8 .08 2
Relation tion 9 3
Sig. (2- .00 .00 .00 .16 .00 .000 .19 .40 .47 .18
tailed) 0 4 0 2 0 8 0 4 9
N 76 76 76 76 76 76 76 76 76 76 76
Educatio Pearson .67 .29 .61 .10 .73 1 .660* - .07 - .21
n Correla 4** 5** 9** 4 6** *
.06 7 .29 9
tion 1 2*
Sig. (2- .00 .01 .00 .37 .00 .000 .59 .51 .01 .05
tailed) 0 0 0 1 0 9 1 0 8
N 76 76 76 76 76 76 76 76 76 76 76
Environ Pearson .50 .20 .53 .27 .49 .66 1 - .08 - .25
ment Correla 7** 1 5** 7* 1** 0** .00 3 .26 2*
tion 4 1*
Sig. (2- .00 .08 .00 .01 .00 .00 .97 .47 .02 .02
tailed) 0 2 0 6 0 0 5 6 3 8
N 76 76 76 76 76 76 76 76 76 76 76
Self Pearson - .00 - - - - -.004 1 .23 - -
Interest Correla .11 5 .05 .08 .14 .06 6* .31 .03
Threat tion 2 9 8 9 1 2** 9
Sig. (2- .33 .96 .61 .45 .19 .59 .975 .04 .00 .73
tailed) 6 7 5 0 8 9 0 6 9
 93

N 76 76 76 76 76 76 76 76 76 76 76
Self- Pearson .19 - .10 - .09 .07 .083 .23 1 - -
Review Correla 3 .11 5 .11 8 7 6* .22 .01
Threat tion 6 1 0 0
Sig. (2- .09 .31 .36 .34 .40 .51 .476 .04 .05 .93
tailed) 5 6 6 0 0 1 0 7 0
N 76 76 76 76 76 76 76 76 76 76 76
Advocac Pearson - .02 - - - - - - - 1 .23
y Correla .20 0 .06 .10 .08 .29 .261* .31 .22 1*
tion 6 8 2 3 2* 2** 0
Threat Sig. (2- .07 .86 .55 .38 .47 .01 .023 .00 .05 .04
tailed) 4 5 7 1 4 0 6 7 5
N 76 76 76 76 76 76 76 76 76 76 76
Familiar Pearson .20 .11 .19 .07 .15 .21 .252* - - .23 1
ity Correla 9 9 3 7 2 9 .03 .01 1*
Threat tion 9 0
Sig. (2- .07 .30 .09 .51 .18 .05 .028 .73 .93 .04
tailed) 0 8 5 1 9 8 9 0 5
N 76 76 76 76 76 76 76 76 76 76 76
Intimida Pearson - .03 .07 - - - -.187 .21 .18 .17 .07
tion Correla .17 7 8 .15 .17 .18 0 6 4 8
Threat tion 9 0 6 6
Sig. (2- .12 .75 .50 .19 .12 .10 .106 .06 .10 .13 .50
tailed) 1 0 3 5 9 8 8 8 3 4
N 76 76 76 76 76 76 76 76 76 76 76
*. Correlation is significant at the 0.05 level (2-tailed)
**. Correlation is significant at the 0.01 level (2-tailed)
 94

Curriculum Vitae

ANGELIKA DL. BALINGIT

2430 M. De Los Reyes St.

Gen. T. De Leon, Valenzuela City
Contact No: 09261725189
Email Address: angelika.balingit12@gmail.com

EDUCATIONAL BACKGROUND
2014-Present DE LA SALLE ARANETA UNIVERSITY
Victoneta Ave., Malabon City
BS Accountancy

2010-2014 ST. BERNADETTE COLLEGE OF VALENZUELA

Gen. T. De Leon, Valenzuela City
Secondary Education

2004-2010 ST. BERNADETTE COLLEGE OF VALENZUELA

Gen. T. De Leon, Valenzuela City
Primary Education

AFFILIATIONS
2014-Present JUNIOR PHILIPPINE INSTITUTE OF
ACCOUNTANTS
De La Salle Araneta University
 95

Curriculum Vitae

KEVIN C. BERNARDINO

20 Road 1, Galguerra Compound

Gen. T. De Leon, Valenzuela City
Contact No: 09056791025
Email Address: kevinbernardino72@gmail.com

EDUCATIONAL BACKGROUND
2014-Present DE LA SALLE ARANETA UNIVERSITY
Victoneta Ave., Malabon City
BS Accountancy

2010-2014 DE LA SALLE ARANETA UNIVERSITY

Victoneta Ave., Malabon City
Secondary Education

2004-2010 MONTERAS SCHOOL OF VALENZUELA

Gen. T. De Leon, Valenzuela City
Primary Education

AFFILIATIONS
2014-Present JUNIOR PHILIPPINE INSTITUTE OF
ACCOUNTANTS
De La Salle Araneta University
Secondary Education
 96

Curriculum Vitae

CHRISTAL MAE N. PACOMBABA

121 Libis Extension Potrero Malabon City

Contact No: 09566343302
Email Address: christalmae.pacombaba25@gmail.com

EDUCATIONAL BACKGROUND
2014-Present DE LA SALLE ARANETA UNIVERSITY
Victoneta Ave., Malabon City
BS Accountancy

2010-2014 BAESA HIGH SCHOOL

229 Reparo Road, Caloocan City
Secondary Education

2004-2010 BAGONG LOTE ELEMENTARY SCHOOLS

81, BagongLote Street, Barangay Potrero, Malabon City
Primary Education

AFFILIATIONS
2014-Present JUNIOR PHILIPPINE INSTITUTE OF
ACCOUNTANTS
De La Salle Araneta University