Rodriguez, Zyra Denelle M.

A-331 AAPRINCIPLES

REGULATION OF THE PUBLIC ACCOUNTING PRACTICE

1. What are the laws that paved the way towards making Accountancy a

recognized profession? 

According to Business Mirror (2018), the accountancy profession began in

the 1700s but the profession was formally recognized by the Philippine

Government on March 17, 1923. Republic Act 3105 with a title “An Act

Regulating the Practice of Public Accounting; Creating the Board of

Accountancy; Providing for Examination, for the Granting of Certificates, and the

Registration of Certified Public Accountants; for the Suspension or Revocation of

Certificates; and for Other Purposes” was approved by the legislature. Since

then, the Board of Accountancy took over and became the only one with the

authority to issue certificates to qualified applicants who passed the rigorous

board examinations.

Many changes and improvements were made in the provisions of the

Republic Act 3105. In the year 1967, the Republic Act 5166 which is also known

as The Accountancy Act of 1967, was established. Its main objective is to

standardize the rules and regulations of the accounting education, the

examinations to be eligible as an accountant, and the supervision, control, and

regulation of the accountancy profession in the Philippines. By year 1975,

specifically on May 5, 1975, Former President Ferdinand Marcos established the

Revised Accountancy Law or the Presidential Decree 692. The revisions include
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the increase in the members of the Board of Accountancy to 7 members, 1

chairman and 6 members (Professional Regulations Commission, n.d.)

By year 2004, The Philippine Accountancy Act or the Republic Act 9298

which replaced The Revised Accountancy Act of 1975. Until now, the law is in

force and has been subject to many amendments for the improvement of

accountancy regulations in the Philippines. It improves the accounting rules and

regulations and also tackles the appropriation of funds and for other purposes

(Oojeema, 2017). The Republic Act 10912 or The Continuing Development Act of

2016 helps the accountants in their continuous development for their

accreditation in the accountancy profession (Professional Regulatory Board of

Accountancy, 2017).

2. What are the significant provisions in the Accountancy Act that pertains to the

following?

2.1 Accounting Education

Accounting Education is first mentioned in the Section of the

Accountancy Act of 2004, which pertains to the main objectives of the act.

It states that “The act shall provide for and govern; (a) the standardization

and regulation of accounting education…”

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It is also found in the Section 4, which refers to the scope

Accountancy Act of 2004. It includes the practice of accounting education

or academe where it refers to “…a person in an educational institution

which involve teaching of accounting, auditing, management advisory

services, finances, business law, taxation and other technically related

subjects: Provided that members of the Integrated Bar of the Philippines

may be allowed to teach business law and taxation subjects.”

Section 9 to the responsibility of the Board of Accountancy, which is

“…(n) To ensure, in coordination with the Commission on Higher

Education (CHED) or other authorized government offices that all higher

educational instruction and offering of accountancy comply with the

policies, standards and requirements of the course prescribed by CHED or

other authorized government offices in the areas of curriculum, faculty,

library and facilities…”

It is also mentioned in the Section 35, which pertains to the

coverage of special/temporary permits that are granted by the board. In

this section a special/ temporary permit may be issued to “…(b) A foreign

certified public accountant engaged as professor, lecturer or critic in fields

essential to accountancy education in the Philippines and his/her

engagement is confined to teaching only…”.

2.2 Examinations for registration as Certified Public Accountants

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As stated in the Accountancy Act of 2004, the power and authority

to administer the Certified Public Accountant Licensure Examinations is

granted to the Board of Accountancy. In the Section 9, which refers to the

powers of the Board of Accountancy, “The board shall exercise the

following specific powers, functions and responsibilities: … (m) To

prepare, adopt, issue or amend the syllabi of the subjects for examinations

in consultation with the academe, determine and prepare questions for the

licensure examination which shall strictly be within the scope of the syllabi

of the subjects for examinations as well as administer, correct and release

the results of the licensure examinations…”

The Article III of the Act pertains to the examination, registration,

and licensure requirements. In Section 13 of the Accountancy Act of 2004,

“All applicants for registration for the practice of accountancy shall be

required to undergo a licensure to be given by the Board in such places

and dates as the Commission may designate subject to compliance with

the requirements prescribed by the Commission in accordance with

Republic Act No 8981”. It states that to be a registered accountant, the

applicant must pass the licensure examination given by the Board.

In order to take the Board Examinations, the applicant must pass all

the needed requirements which is stated in the Section 14 of Article III as

cited by Cabrera, M. & Cabrera, G. (2020). It states that “Any person

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applying for examination shall establish the following requisites to the

satisfaction of the Board that he/she:

(a) is a Filipino citizen;

(b) is of good moral character;

(c) is a holder of the degree of Bachelor of Science in Accountancy

conferred by a school, college, academy or institute duly

recognized and/or accredited by the CHED or other authorized

government offices; and

(d) has not been convicted of any criminal offense involving moral

turpitude.”

Other Sections of the Article III includes: Section 15, which refers to

the scope of the licensure examination; Section 16 refers to the rating of

the licensure examination, the needed passing percentage to pass the

examination; Section 17, which refers to the report of the ratings to the

Commission; Section 18, which refers to failing candidates of 2

examinations to pass an evidence that they took a 24 unit subjects given

in the examination as a refresher course; Section 19 refers to the oath of

profession to be made in front of a member of the Board and Commission

after presenting proof of qualification; Section 20, which refers to the

issuance of Certificates of Registration and Professional Identification

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Card; Section 21, which refers to the preparation and update of the Board

of the Roster of Certified Public Accountants.

2.3 Supervision, control, and regulation of the practice of Accountancy in

the Philippines

The supervision, control, and regulation of the practice of Accountancy

in the Philippines is the responsibility of the Board of Accountancy. The Board

is composed of a chairman and 6 members. Article II of the Accountancy Act

states the specific powers of the Board and their responsibilities.

Rules regarding the Practice of Accountancy can be found in the

Section IV of the Accountancy Act of 2004 from Section 26 to Section 35. It

pertains to the prohibitions, the rights of the Certified Public Accountants, the

limitations of the practice of Public Accounting, the confidentiality of working

papers, the accredited professional organizations of the profession, the

requirements for the accreditation in the public practice, the Continuing

Professional Education programs, the Accountant’s seal and its uses, the

foreign reciprocity allowing citizens of foreign country to practice in the

Philippines according to Philippine laws, and the coverage of the

Special/Temporary Permits.

3. What are the significant provisions of RA 10912 that has an impact to the

profession?
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Republic Act 10912 or the Continuing Professional Development Act of

2016, refers to “An act mandating and strengthening the Continuing

Professional Development Program for all regulated professions, creating the

Continuing Professional Development Council, and appropriating funds

therefor, and for other related purposes”. The Article II Section 5 of the

Continuing Professional Development Act of 2016 specifies the nature of the

CPD activities whether they are structured and unstructured, as “(a) Formal

learning; (b) Non-formal learning; (c) Informal learning; (d) Self-directed

learning; (e) Online learning activities; and (f) Professional work experience.”

The required units to renew licenses and accreditation and how the credit

units are accredited can be found in the Article III of the Continuing

Professional Development Act of 2016 from sections 10 and 11 tackles,

respectively.

Significant provisions that affect the profession include the Resolution No.

254, series of 2017, which resolves the operational guidance and the Rules

and Regulations of the Continuing Professional Development in the

Accountancy Profession. It states the date of the meetings of the CPD

council, the qualifications and list of requirements to become an accredited

CPD provider, the disqualification of the Board and Commission as a CPD

provider, the grounds for the suspension, cancellation, or non-renewal of the

accreditation of a CPD provider, the list of requirements to accredit a CPD

program, the list of documentation requirements for the CPD completion

report, and the list of CPD activities.

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It also includes the maximum units required for the 3 year compliance, the

maximum units for Self Directed and/or Lifelong Learning, the major areas of

the CPD activities, such as Technical Competence, Professional Skill, and the

Professional Values, Ethics, and Attitude and the required units per area. It

also states the requirements to be an accredited CPD speaker, the CPD unit

requirement per compliance period, the requirements to renew the

Professional Identification Card and the PRBoA accreditation, the rules for

online CPD, and the Quality Assurance Reviews (Professional Regulatory

Board of Accountancy, 2017).

The table below shows the gradual increase of the required units and their

implementation period.

Maximum CPD units in Maximum CPD Credit

a 3-year Compliance Units for Self Directed

Period and/or Lifelong Learning

January – June 2017 60 24
July – December 2017 80 32
January – December 100 40

2018
January 2019 - onwards 120 48

4. What is SRC 68 and how does it affect the practice of public accounting?

SRC 68 or the Securities Regulation Code No. 68 is the general guidance

of the Securities and Exchange Commission regarding the preparation of

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Financial Statements and the Qualifications of Independent Auditors of

organizations registered in the Commission. It consists of two parts: Part I –

General Financial Reporting Requirements and Part II – Additional

Requirements for Issuers of Securities to the Public. This rule has taken effect

on the audited financial statements of businesses starting December 31, 2011

and onwards and on interim financial statements beginning in the first quarter

of 2012 and onwards (Nava, 2019).

The Securities Regulation Code No. 68 states “…the requirements

applicable to the form and content of financial statements required to be filed

with the Commission by corporations which meet the threshold, as follows: a)

Stock corporations with paid-up capital stock of P50,000.00 or more; b) Non-

stock corporations with total assets of P500,000.00 or more, or with gross

annual receipts of P100,000.00 or more; c) Branch offices of stock foreign

corporations with assigned capital in the equivalent amount of P1,000,000.00

or more; d) Branch offices of non-stock corporations with total assets in the

equivalent amount of P1,000,000.00 or more; e) Regional operating

headquarters of foreign corporations with total revenues in the equivalent

amount of P1,000,000.00 or more. (ii) Financial statements of branch offices

of foreign corporations licensed to do business in the Philippines by the

Commission shall comply with the requirements of this Rule unless otherwise

determined by the Commission as not applicable. (iii) Additional requirements

for financial statements of corporations covered under Section 17.2 of the

Securities Regulation Code are set forth under Part II of this Rule”
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The financial statements prepared shall be in accordance with SRC 68,

which acts as the guide of the accountants during compilation engagements.

It will also be the standards that should be used by the independent auditor

on audit engagements. Auditors are accredited according to their specific

groups, Group A, Group B, and Group C. The code states the requirements

for the accreditation of the auditing firms, the report requirements, and the

rules for the independent audit of a company. Both the firm and the

Independent Auditors must be accredited to continue their services. An

example of this rule is the two-year cooling off period of an independent

auditor to a company. The code also states the requirements of the

independent auditors and the firms of the regulated entities for their

accreditation. The accountant must follow all the rules of the Securities and

Exchange Commission in the SRC 68 or a penalty will be given upon the

accountant or the firm (Securities and Exchange Commission, n.d.).

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References

Business Mirror (2018). Accountancy then and now.

https://businessmirror.com.ph/2018/03/18/accountancy-then-and-

now/#:~:text=The%20Philippine%20public%20accounting

%20practices,recognized%20by%20the%20Philippine

%20government.&text=Through%20such%20Act%2C%20the%20Board,issue

%20certificates%20to%20qualified%20applicants.

Cabrera, M.E.B. & Cabrera, G.A.B. (2020). Principles of Auditing and Assurance

Services (2020-2021 ed.). GIC Enterprise & Co., Inc

Continuing Professional Development Act of 2016, R.A. 10912, 16 th Cong. (2016).

Official Gazette.

https://www.officialgazette.gov.ph/downloads/2016/07jul/20160721-RA-10912-

BSA.pdf

De Nava, L. (2018). Revised SRC 68 is now available.

https://laresdenava.wordpress.com/2019/10/07/revised-src-rule-68-is-now-

available/

Philippine Accountancy Act of 2004, R. A. 9298, 12 th Cong. (2004). Official Gazette.

https://www.officialgazette.gov.ph/2004/05/13/republic-act-no-9298/

Oojeema (2017). History of Accounting Timeline.

https://oojeema.com/resources/history-of-accounting-timeline/
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Professional Regulation Commission (n.d.). Practice of Accountancy.

https://www.prc.gov.ph/accountancy#:~:text=On%20December%207%2C

%201925%2C%20Act,3264.

Professional Regulatory Board of Accountancy (2017). Resolution No. 254.

https://www.prc.gov.ph/sites/default/files/2017-254_JMS.pdf

Securities and Exchange Commission (n.d.). SRC Rule 68. https://www.sec.gov.ph/wp-

content/uploads/2019/12/2005Rule_68asAmended.pdf