CHAPTER II

REVIEW OF RELATED LITERATURE

This chapter reviews the relevant literature in order

to closely examine the historical context of Continuing

Professional Development (CPD) and to support the research

questions formulated in this study. The review includes

discussion of CPD, CPD engagement, challenges and influence.

Foreign Studies and Literature

CPD should not be separated from on-going learning or

lifelong learning. For professionals, on-going learning is

important for updating their knowledge and skills in order

to be able to provide a good quality service to the society.

As one of the means of on-going learning, CPD plays a vital

role and has become vital to professional integrity (Young,

1998).

Continuing Professional Development (CPD) was

introduced to the accounting profession around 1980s. In

Australia, the CPA Australia introduced a CPD program to

support lifelong learning in 1981 and the members of the CPA

Australia were required to undertake a minimum of 120 hours

professional development per triennium (CPA Australia,

2015). The Australian Society of Accountants required its

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members to undertake CPD in 1985 and the Law Society of New

South Wales adopted mandatory CPD in 1987 (Grant, 1994).

In the USA, since 1985 the Certified Public Accountants

(CPA) in the state of North Carolina have been required to

undertake 40 hours of CPD each year in order to retain their

practice license (Wessels, 2007). In the UK, CPD became

mandatory for the accounting profession in 1989 with the

introduction of the Companies Act (Paisey & Paisey, 1996;

Paisey & Tarbert, 2007). In Thailand, the Federation of

Accounting Professions introduced the CPD program for its

members in 2004 and the members are required to undertake

nine hours of CPD per annum (Pholkeo, 2013).

For the accounting professionals around the world under

International Federation of Accountants (IFAC), a standard

for CPD was published by IFAC in 2004 and it became

mandatory as of January 1, 2006 and thus acquired its new

rigor and status (Paisey & Terbert, p.382): CPD had

developed from an activity inherent in the profession’s

ethical guidance, to one that was subject to regulation in

specific areas of work.

Continuing Professional Development (CPD)

According to the definition established by the

Construction Industry Council UK and has been adopted by

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International Federation of Accountants (IFAC), Continuing

Professional Development is the systematic maintenance,

improvement and broadening of knowledge and skill and the

development of personal qualities necessary for execution of

professional and technical duties throughout the

practitioner’s working life (IFAC, 2008).

Other than the Chartered Institute of Internal Auditor,

various professional bodies also acknowledge the importance

of Continuing Professional Development. The following are

the definitions and objectives of Continuing Professional

Development put forward by various professional bodies

across the globe:

1.Continuing Professional Development is the means by

which members of respective professions develop, maintain,

improve and broaden their knowledge and skills, ethics and

attitudes, and the competence necessary to uplift the

knowledge required in career development (The Institute of

Chartered Accountants of Sri Lanka, 2011).

2.Continuing Professional Development is the conscious

updating of professional knowledge and the improvement of

professional competence throughout life. It is also a

commitment to being professional, keeping up to date and

continuously seeking to improve (The Institute of Marketing

UK, 2011).
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3.Continuing Professional Development is an ongoing,

structured process designed to maintain and enhance

professional competence. It arises from the changing demands

of a professional role, the desire to improve quality of

services given and the personal ambition of the individual.

It can be achieved through many different types of activity

that and will be shaped by the particular range of

circumstances in which individual operates (CIIA UK, 2011).

Continuing Professional Development is the learning

activities for developing and maintaining the capabilities

of professional accountants to perform competently within

their professional environment (IFAC, 2004). The

professionals’ readiness to stay abreast of changes in their

area of work and remain competent seems to be the main

purpose of CPD (Houle, 1980; Cantor, 2006).Further,

Continuing Professional Development does not only benefit

the professionals as learners but also benefit their clients

due to the improved professional service they are assumed to

be receiving (Griffith, 1985).

Continuing Professional Development is a mechanism that

supports excellence and maintains professional reputation,

for both the individual professional body as a whole.

Moreover, CPD is basically a tool that can help to maintain

the confidence to meet responsibilities (Coen, 2004).

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Continuing Professional Development Engagement

According to Rothwell and Herbert (2007), CPD

engagement is related to individual members’ level of

commitment to their profession. This commitment, shown

through engagement in CPD activities, is necessary in order

to reassure society that professionals continue to be

competent and up-to-date. Continuing Professional

Development engagement across professions has also been

investigated in a number of studies. The following sections

discuss the literature on CPD Engagement for general

professions in terms of levels of participation, preferences

of participation and challenges to participation.

Levels of Participation

Continuing Professional Development is integral to

professional bodies that develop and implement policy that

is adhered to by members of the profession. Therefore,

professionals should undertake CPD activities as required by

the regulatory bodies that enforce the CPD policy.

In order to obtain an insight into the effectiveness of

CPD requirements, including the need for change, the levels

of participation or the amounts of CPD undertaken should be

investigated. CPD at its basic form is aimed to keep the

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professionals up to date in their knowledge and skills and

to remain competent; therefore, a couple of hours of

compulsory attendance for this purpose is a wise requirement

(Segall, 1998; Cantor, 2006).

Preferences of Participation

Ever since formal Continuing Professional Development

became mandatory, learning forms and activities have moved

to a whole new level. According to Dring (2002), the most

common form of Continuing Professional Development is by

events. Within this category are workshops, seminars,

conferences, symposia, study visits and e-learning courses.

Moreover, face-to-face was the most preferred method of

Continuing Professional Development due to the added benefit

of opportunities for networking (Stagnitti et. al., 2005).

Challenges to Participation

Professionals’ participation in Continuing Professional

Development Activities can be hampered by certain

challenges. Such challenges must be first identified in

order to improve Continuing Professional Development for the

professional accountants. Perceptions on Continuing

Professional Development found that participants received

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several challenges to engagement in Continuing Professional

Development activities (Laaksonen et. al., 2009). The

challenges include lack of information, lack of motivation

and lack of time. The lack of time to undertake CPD as a

constraint on learning is a problem that cannot be resolved

easily (Slotte & Tynjala, 2003).

Time, cost, and access were the most frequently cited

barriers to carrying out CPD. Evidently, time pressures at

work, combined with the demands of home and family make

undertaking CPD a difficult task for many. Even if

organizations are willing to fund their employees' CPD, they

often demand that such activities be justified in terms of

specific relevance. Thus people can be constrained in their

development activities to those that are deemed

organizationally worthy and/or are affordable given the

constraints of training budgets. Access to CPD activities

remains a problem for those not living near or in a major

city (Friedman & Phillips, 2001).

Continuing Professional Development Influence

For the purpose of this study, a Continuing

Professional Development influence is defined as

contribution of CPD to the professional advancement of CPAs.

Research into CPD influence will aid CPD providers in

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offering future CPD activities that match the benefit or

outcome expected by the CPD participants.

The literature also suggested that individual could

have a variety of reasons for participating in learning with

a broad distinction often being made between job related or

career development reasons and non-work related reasons such

as personal development (Maguire & Fuller, 1996). Friedman

(2012) explained that there are many different reasons for

undertaking CPD. Although some of the motivations can be

self-interest, there are also altruistic motives such as the

desire to better serve the clients and the general public.

Several possible motivations for undertaking CPD have been

identified in the literature. According to a study by

Friedman (2002), the predominant motivation for undertaking

CPD is professional duty. He further explained that other

motivations can also include: to improve performance in

current role, a requirement from professional or regulatory

bodies, to develop as a person, to further career in

general, to further position with current employer.

Local Studies and Literature

Republic Act No. 10912, otherwise known as the

“Continuing Professional Development 2016”, is an act which

requires CPD as the mandatory requirement for the renewal of

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the Professional Identification Card in the Philippines

(PRC, 2016).

The recently approved issuance and promulgation of the

Board of Accountancy (BOA) Resolution 358-2016, states that

Certified Public Accountants (CPAs) are now required to

comply with the new Continuing Professional Development

(CPD) requirement to renew their license. The requirement to

comply with the 120-unit of CPD over a period of three years

is a requirement of International Education Standard 7 (IES

7).

Institute of Education Sciences prescribes for

completion of at least 120 hours or equivalent learning

units of relevant professional-development activity in each

rolling three-year period, of which 60 hours (or equivalent

learning units) shall be verifiable; completion of at least

20 hours (or equivalent learning units) of relevant

professional-development activity in each year; and

measurement of learning activities to meet the above

requirements.

Thematic Areas of CPD Activities shall be changed to

Competence Areas in order to align with the International

Education Standards. It shall be divided into three major

categories: technical competence, professional skills and

professional values, ethics and attitudes, and which have

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corresponding required verifiable units starting 2017 (PRC,

2016).

Philippine Institute of Certified Public Accountants

(PICPA), the Accredited Integrated Professional Organization

(AIPO) of CPAs in the Philippines, has among its objectives

the promotion and maintenance of high professional and

ethical standards among accountants, the advancement of the

science of accounting and development and improvement of

accountancy education. As a member of the International

Federation of Accountants (IFAC), PICPA has the obligation

to comply with the Statement of Membership Obligations (SMO)

No. 2 entitled “International Education Standards for

Professional Accountants (IES) and Other Pronouncements”.

According to National PICPA President Danilo Principe

(1999), a number of professional activities are carried out

by PICPA throughout the country and the move for continuing

professional development is propelled by the character

envisioned for PICPA. PRC Resolution 2013-774 shows the

Matrix of CPD Activities, based on IES 7, that can be taken

by the Certified Public Accountants.

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