Paragas Mark Kenneth S.

BS Accountancy 3rd year

Auditing Theory
Reaction Paper for the Code of Professional Ethics

Gaining and maintaining the trust of the public is essential in practicing Accounting. The
reason behind for this is that public depend on information produce by professional accountant
for their decision-making regards in the business. Hence, Professional accountant must maintain
public trust and confidence in the accountancy profession. Thus, Accountant must follow the
standards of ethical conduct. The code of ethics has three parts the Part A general application,
and Part B and C for professional accountants in Public Practice. In general, this code of
professional ethics are integrity, objectivity, and concern for the public than self-interest.
However, due to limitation, it is not possible to anticipate all the situations therefore the Code of
Professional Ethics provide framework that serves as a guide of CPA in making decision or
taking actions consisted with the fundamental principle. This framework provides the accountant
to Identify threats to compliance with fundamental principles, Evaluate the significance of
threats identifies and apply safeguard, when necessary, to eliminate the threats or reduce them to
an acceptable level. On the Part B of the code of professional ethics, it gives a guide for
professional accountant in public practice.
In practicing Integrity, professional accountant should be straightforward and hones in
professional and business relationships. The principle of integrity imposes an obligation on all
professional accountants to be straightforward and honest in professional and business
relationships. Integrity also implies fair dealing and truthfulness. A professional accountant
should not be associated with reports, returns, communications or other information where they
believe that the information contains a materially false or misleading statement, contains
statements or information furnished recklessly, or omits or obscures information required to be
included where such omission or obscurity would be misleading. Professional accountant must
be objective, on this principle of objectivity it imposes an obligation on all professional
accountants not to compromise their professional or business judgment because of bias, conflict
of interest or the undue influence of others. A professional accountant may be exposed to
situations that may impair objectivity. It is impracticable to define and prescribe all such
situations. Relationships that bias or unduly influence the professional judgment of the
professional accountant should be avoided.
Moreover, Accountant must be competent were able to performed task properly. The
principle of professional competence and due care imposes the obligations on professional
accountants to maintain professional knowledge and skill at the level required to ensure that
clients or employers receive competent professional service, and to act diligently in accordance
with applicable technical and professional standards when providing professional services. A
competent professional service requires the exercise of sound judgment in applying professional
knowledge and skill in the performance of such service. Professional competence must be
maintained of professional competence requires a continuing awareness and an understanding of
relevant technical professional and business developments. Continuing professional development
develops and maintains the capabilities that enable a professional accountant to perform
competently within the professional environments. Diligence encompasses the responsibility to
act in accordance with the requirements of an assignment, carefully, thoroughly and on a timely
basis. A professional accountant should take steps to ensure that those working under the
professional accountant’s authority in a professional capacity have appropriate training and
supervision. Where appropriate, a professional accountant should make clients, employers or
other users of the professional services aware of limitations inherent in the services to avoid the
misinterpretation of an expression of opinion as an assertion of fact.
Code of ethics also required accountants to practice the confidentiality. The principle of
confidentiality imposes an obligation on professional accountants to refrain from disclosing
outside the firm or employing organization confidential information acquired as a result of
professional and business relationships without proper and specific authority or unless there is a
legal or professional right or duty to disclose and Using confidential information acquired as a
result of professional and business relationships to their personal advantage or the advantage of
third parties. A professional accountant should maintain confidentiality even in a social
environment. The professional accountant should be alert to the possibility of inadvertent
disclosure, particularly in circumstances involving long association with a business associate or a
close or immediate family∗ member. A professional accountant should also maintain
confidentiality of information disclosed by a prospective client or employer. A professional
accountant should also consider the need to maintain confidentiality of information within the
firm or employing organization. A professional accountant should take all reasonable steps to
ensure that staff under the professional accountant’s control and persons from whom advice and
assistance is obtained respect the professional accountant’s duty of confidentiality. The need to
comply with the principle of confidentiality continues even after the end of relationships between
a professional accountant and a client or employer. When a professional accountant changes
employment or acquires a new client, the professional accountant is entitled to use prior
experience. The professional accountant should not, however, use or disclose any confidential
information either acquired or received as a result of a professional or business relationship.
Accountant must practice Professional Behavior. THIS principle of professional behavior
imposes an obligation on professional accountants to comply with relevant laws and regulations
and avoid any action that may bring discredit to the profession. This includes actions which a
reasonable and informed third party, having knowledge of all relevant information, would
conclude negatively affects the good reputation of the profession. In marketing and promoting
themselves and their work, professional accountants should not bring the profession into
disrepute. Professional accountants should be honest and truthful and should not make
exaggerated claims for the services they are able to offer, the qualifications they possess, or
experience they have gained or make disparaging references or unsubstantiated comparisons to
the work of others.
For the PART B of code of ethics, it discusses the conceptual framework that accountant must
apply in public practice. A professional accountant in public practice should not engage in any
business, occupation or activity that impairs or might impair integrity, objectivity or the good
reputation of the profession and as a result would be incompatible with the rendering of
professional services. Compliance with the fundamental principles may potentially be threatened
by a broad range of circumstances. This threat can be categorized by Self-interest, Self-review,
Advocacy, Familiarity and Intimidation. This treat can be minimized by implementing
safeguards. By its definition, Safeguards are action or other measure that may eliminate threats
or reduce them to an acceptable level. The nature of the safeguards to be applied will vary
depending upon the circumstances. Consideration should always be given to what a reasonable
and informed third party having knowledge of all relevant information including safeguards
applied, would reasonably conclude to be unacceptable.
Before accepting a new client relationship, a professional accountant in public practice
should consider whether acceptance would create any threats to compliance with the
fundamental principles. A professional accountant in public practice should agree to provide
only those services that the professional accountant in public practice is competent to perform.
Before accepting a specific client engagement, a professional accountant in public practice
should consider whether acceptance would create any threats to compliance with the
fundamental principles. A professional accountant in public practice who is asked to replace
another professional accountant in public practice, or who is considering tendering for an
engagement currently held by another professional accountant in public practice, should
determine whether there are any reasons, professional or other, for not accepting the engagement,
such as circumstances that threaten compliance with the fundamental principles. A professional
accountant in public practice should take reasonable steps to identify circumstances that could
pose a conflict of interest. Such circumstances may give rise to threats to compliance with the
fundamental principles. Situations where a professional accountant in public practice is asked to
provide a second opinion on the application of accounting, auditing, reporting or other standards
or principles to specific circumstances or transactions by or on behalf of a company or an entity
that is not an existing client may give rise to threats to compliance with the fundamental
principles
When entering into negotiations regarding professional services, a professional
accountant in public practice may quote whatever fee deemed to be appropriate. The fact that one
professional accountant in public practice may quote a fee lower than another is not in itself
unethical. Nevertheless, there may be threats to compliance with the fundamental principles
arising from the level of fees quoted. When a professional accountant in public practice solicits
new work through advertising∗ or other forms of marketing, there may be potential threats to
compliance with the fundamental principles. For example, a self-interest threat to compliance
with the principle of professional behavior is created if services, achievements or products are
marketed in a way that is inconsistent with that principle.
As a young student, learning the code of ethics give me an inspiration to develop my
character and become professional someday. Hence, I can contribute in building a strong
reputation for the professional accountant and gain the trust of public. By this, public user is
confident enough to make a decision in their respective interest. To sum it up, Accountants deal
with the intimate financial details of individuals and organizations. Some have the ability to
execute million-dollar transactions, and others assist with safeguarding retirement funds of cab
drivers and social workers. Ethical codes are the fundamental principles that accounting
professionals choose to abide by to enhance their profession, maintain public trust and
demonstrate honesty and fairness. People who join organizations and secure the credentials to
present themselves to the public as CPAs strive to protect the reputation of the profession. Sadly,
not everyone who works in the accounting field is trustworthy. Daily violations of public and
private trust occur, and resolving ethical dilemmas does not always end favorably. The following
are five areas that deserve the attention of anyone considering working in the accounting
profession. Ethics and independence go hand in hand in the accounting profession. A critical
component of trust is making unbiased decisions and recommendations that benefit the client.
Conflicts of interest, for example, demand exposure under independence guidelines. Benefiting
from the sale of one financial product over another could lead to a bias that skews financial
advice to a client. To remain objective and independent, it is also necessary to ensure that
recommendations are not subject to outside influence. An accountant’s professional judgment is
compromised if they subordinate their judgment to someone else’s.
Paragas Mark Kenneth S.
BS Accountancy 3rd year
Auditing Theory
Reaction Paper for Republic Act No. 9238
The Philippine Accountancy Act of 2004
This act also known as The Philippine Accountancy Act of 2004 provide and regulate the
accounting profession here in Philippines. All certified public accountant shall follow the
requirements, rules and regulation on continuing professional education. This law has created by
Board of Accountancy and approved by Professional Regulation Commission. CPAs, firms, and
partnerships engaged in the practice of public accountancy shall have the necessary accreditation
renewable for the period of three years. The accreditation for public accountancy and accounting
education shall be for a period of three years and in case of failure to renew the same on the
expiration date will entail the payment of surcharges at an amount prescribed by the Board. The
objective of this art. Is to recognizes the importance of accountants in nation building and
development. For this reason, it shall develop and nurture competent, virtuous, productive and
well-rounded professional accountants whose standard of practice and service shall be excellent,
qualitative, world class and globally competitive though inviolable, honest, effective, and
credible licensure examinations and though regulatory measures, programs and activities that
foster their professional growth and development. This act provides the standardization and
regulation of accounting education, the examination of registration of certified public
accountants, and the supervision, control, and regulation of the practice of accountancy in the
Philippines.
As a student, this republic act will serve as my guideline from obtaining my license as a
CPA to practicing my profession. This will remined me that I must practice my accounting
profusion in accordance with this regulation for the future. In order to attained that license, I
must undergo a licensure examination to be given by the Board in such places and dates as the
Commission may be designate subject to compliance with the requirements prescribed by the
Commission. Though it seams hard for me but I have a courage and confident that I can pass the
CPA licensure exam.
According to section 16 “To be qualified as having passed the licensure examination for
accountants, a candidate must obtain a general average of seventy five percent (75%), with no
grade lower than sixty-five percent (65%) in any given subject. In the event a candidate obtains
the rating of seventy-five percent (75%) and above in at least a majority of subjects as provided
for in this Act, he/she shall receive a conditional credit for the subjects passed: Provided, That a
candidate shall take an examination in the remaining subjects within two (2) years from
preceding examination: Provided, further, That if the candidate fails to obtain at least a general
average of seventy-five percent (75%) and a rating of at least sixty-five percent (65%) in each of
the subjects reexamined, he/she shall be considered as failed in the entire examination” I agreed
that 75% will serve as a passing score for the licensure exam. By this, BOA will prevent those
examiners that are not process of being a good professional accountant. Thus, No person shall
practice accountancy in this country, or use the title "Certified Public Accountant", or use the
abbreviated title "CPA" or display or use any title, sign, card, advertisement or other device to
indicate such person practices or offers to practice accountancy, or is a certified public
accountant, unless such person shall have received from the Board a certificate of
registration/Professional license and be issued a professional identification card or a valid
temporary/special permit duly issued to him/her by the Board and the Commission.
As a third-year BS accountancy student, I agree with the passing sore of 75%
rating per subject and waiving of conditional status. For me, it is fair enough that an examinee
should master all the relevant CPALE subjects (MAS, Tax, Auditing, FAR, AFAR,
RFBT) as these subjects are interconnected as a whole. Accountants are not just
formulating reports for a company, a focus of FAR  subject. Accountants are not just
employees of BIR or tax preparers, a focus of taxation subject. Accountants can be
everywhere. Thus, it is crucial that the rating should be 75% per subject to ensure
competitiveness in all areas.
However, for me BOA should first look into the core problems that lead to the
declining rate of passers., it can be attributed to declining of quality instructions, the lack of
quality of students being admitted to the university due to less strict or the absence of retention
policy. It can also be associated to the difficulty of the exam itself. The difficulty of CPA
Licensure Exam could also be attributed to its content according to study . With this,
BOA should first make sure that the content of the exam is aligned with the curriculum or the
instructions of the universities and colleges
As reading this, I notice on sec14 that convicted of any criminal offence involving moral
turpitude are not allowed to take the licensure exam. Giving the fact that every person can
change and capable on becoming a better person, I agree with this because for me it is too risky
to allowed convicted person to take exam which he/she may use the accounting profession into a
fraud doing.
For me this act has to revised because I do not agree on renewing the license every 3
years. I think it is better if they make 5 years validity of license. This is included in sec20. Were
it state that “A certificate of registration shall be issued to examinees who pass the licensure
examination subject to payment of fees prescribed by the Commission. The Certificate of
Registration shall bear the signature of the chairperson of the Commission and the chairman and
members of the Board, stamped with the official seal of the Commission and of the Board,
indicating that the person named therein is entitled to the practice of the profession with all the
privileges appurtenant thereto. The said certificate shall remain in full force and effect until
withdrawn, suspended or revoked in accordance with this Act. A Professional Identification Card
bearing the registration number date of issuance, expiry date, duly signed by the chairperson of
the Commission, shall likewise be issued to every registrant renewable every three (3) years.”
Also, I agreed that all registered certified public accountants whose appear in the roster of
certified public accountants shall be united and integrated though their membership in a one and
only registered and accredited national professional organization of registered and licensed
certified public accountants, which shall be registered with the Securities and Exchange
Commission as a nonprofit corporation and recognized by the Board subject to the approval by
the Commission. The members of the said integrated and accredited national professional
organization shall receive benefits and privileges appurtenant thereto upon payment of required
fees and dues. Membership in the integrated organization shall not be a bar to membership in any
other association of certified public accountants.
It is acceptable for me that any person who shall violate any of the provisions of this Act
or any of its implementing rules and regulations as promulgated by the Board subject to the
approval of the Commission, shall upon conviction, be punished by a fine of not less than Fifty
Thousand Pesos (50,000.00) or by imprisonment for a period not exceeding two (2) years or
both. However, I think the fine should make it higher so that no accountant will try to violate this
law.
For me it is acceptable that any candidate who fails in two (2) complete Certified Public
Accountant Board Examinations shall be disqualified from taking another set of examinations
unless he/she submit evidence to the satisfaction of the Board that he/she enrolled in and
completed at least twenty-four (24) units of subject given in the licensure examination. For
purposes of this Act, the examination in which the candidate was conditioned together with the
removal examination on the subject in which he/she failed shall be counted as one compete
examination.
I think that one of the reasons for the low declining quality of accounting student can be
traced to the lack of efforts of the teachers in low-paying Philippine. In fact, small private
schools offer low salaries in comparison with teachers from public schools.
Instructors/Professors should also be  competent and qualified as they are the ones who
decipher and clarify the ones written in the book to the students. Accounting is not just a
subject that can be understood through reading. It requires practice, analyzation and
understanding in the context of business. to achieve a high-quality education, the areas
that require focus by the institutions (public or private) is the competency of the teachers.

However, agreed that BOA allowed the failed candidates to take refresher course, this
will give hope to the aspiring CPA to continue their dreams. Given that, any candidate who fails
in two (2) complete Certified Public Accountant Board Examinations shall be disqualified from
taking another set of examinations unless he/she submit evidence to the satisfaction of the Board
that he/she enrolled in and completed at least twenty-four (24) units of subject given in the
licensure examination. The purpose of this is for the examination in which the candidate was
conditioned together with the removal examination on the subject in which he/she failed shall be
counted as one compete examination.