Lesson 5 – Practice of Accountancy Profession

Overview:

A Certified Public Accountant (CPA) shall be considered in the practice of his profession,
if the nature and character of his employment whether as an officer or employee in a private
enterprise or educational institution involves decision-making requiring professional knowledge
in the science of accounting or when he represents his private employer before any government
agency on tax matters related to accounting, and such employment or position requires that the
holder thereof must be a CPA; or if he holds or is appointed to a position in the accounting
occupational group in the government or in government-owned or controlled corporations,
including those performing proprietary functions, where a civil service eligibility as a CPA is a
prerequisite.

Learning Objectives:

After studying this lesson, the student should:

 Understand the relevant laws and regulations in the practice of accountancy profession
including its Code of Professional Ethics.
 Know the different sectors in the practice of accountancy profession.
 Familiarize with the regulatory bodies in the practice of accountancy profession.
 Be updated with the latest trends and pronouncements affecting the practice of
accountancy profession.

Course Materials:

Philippine Accountancy Act of 2004 and its IRR, Quality Control Standards,
And Other Pronouncements

Practice of accountancy shall constitute in a person, be it in his individual capacity, or

as a partner or staff member in an accounting or auditing firm, holding out himself as one skilled
in the knowledge, science, and practice of accounting, and as qualified to render professional
services as a certified public accountant; or offering or rendering, or both, to more than one

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client on a fee basis or otherwise, services such as the audit or verification of financial
transactions and accounting records; the preparation, signing, or certification for clients of
reports of audit, balance sheets, and other financial accounting and related schedules, exhibits,
statements, or reports which are to be used for publication or for credit purposes, or to be filed
with a court or government agency, or to be used for any other purpose; the installation and
revision of accounting system, the preparation of income tax returns when related to accounting
procedures; or when he represents clients before government agencies on tax matters related
to accounting or renders professional assistance in matters relating to accounting procedures
and the recording and presentation of financial facts or data.

The Republic Act (RA) 9298, Philippine Accountancy Act, as revised and enacted in
2004, stipulates that the Professional Regulatory Board of Accountancy (BOA), which operates
under the supervision of the Professional Regulation Commission (PRC), is responsible for the
regulation of professional accountants in the Philippines. In accordance with the act, the
practice of accountancy encompasses work in public accountancy, commerce and industry,
education/academe, and government.

The Republic Act (RA) 9298, Philippine Accountancy Act outlines the procedures for
individuals who wish to practice accountancy. Candidates must first pass a licensure
examination administered by the BOA. In order to be eligible to sit for the examination,
applicants must meet the following criteria: (i) be a Filipino citizen; (ii) be of good moral
character; (iii) be 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 Commission on
Higher Education (CHED) or other authorized government offices; and (iv) not been convicted of
any criminal offense.

Upon successfully completing the exam, individuals may be registered with the BOA and
receive a Certificate of Registration from the BOA and a professional identification card issued
by the BOA and the PRC. Once registered with the BOA as Certified Public Accountants
(CPAs), individuals must join an accredited, national professional accountancy organization of
which there is only one in the Philippines—the Philippine Institute of Certified Public
Accountants (PICPA). Finally, candidates must then complete three years of meaningful
practical experience in order to receive a Certificate of Accreditation from the BOA permitting
them to publicly practice. CPAs in Public Practice (auditors) must renew their Certificate of
Accreditation and professional identification card every three years with the BOA and the PRC
and comply with continuing professional development (CPD) requirements.

There are three entities involved in the regulation of professional accountants: the PRC,
the BOA, and PICPA. Their respective responsibilities are as follows.

The PRC operates under the offices of the President of the Philippines and its mandate
is to regulate and supervise the practice of all professionals. The PRC administers the

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examination, accreditation, inspection and monitoring, and CPD procedures of all 43
professional bodies that encompass the fields of health, business, education, social sciences,
engineering and technology and operate under the PRC’s supervision. In turn, the professional
bodies are responsible for governing their respective professions’ practice and ethical
standards. The professional body for accountancy is the BOA.

The BOA, under the Republic Act (RA) 9298, Philippine Accountancy Act, is responsible
for: (i) supervising the registration, licensing, and practice of accountancy in the Philippines; (ii)
maintaining a registry of registered and accredited CPAs; (iii) issuing and renewing Certificates
of Registration and Accreditation; (iv) adopting ethical, accounting and auditing standards,
taking into consideration international standards and generally accepted best practices; (v)
conducting quality assurance (QA) reviews; (vi) investigating violations of rules and regulations
and issuing sanctions; (vi) preparing and issuing the syllabi of the subjects for examinations in
consultation with the academe, preparing questions for the licensing examination; and
administering and releasing the results of the examinations; (vii) ensuring all tertiary educational
providers comply with policies and standards prescribed by the CHED.

No person shall be appointed a member of the Board of Accountancy unless he:

1. Is a citizen of the Philippines;
2. Is of good moral character;
3. Is a duly registered Certified Public Accountant in the Philippines;
4. Has been in the practice of accountancy for at least ten years; and
5. Is not directly or indirectly connected with any school, college, or university
granting degrees that may qualify graduates with such degrees for admission to the
Certified Public Accountant examinations, or with Certified Public Accountant’s Review
School or Institute, nor shall have any pecuniary interest in such school, college, university or
Certified Public Accountant’s Review School or Institute.

In 1975, with the accreditation by the PRC of the PICPA as the bona fide professional
organization representing CPAs in the country, the Board has coordinated with PICPA to further
strengthen the profession. With PICPA, it has worked for the passage of The Accountancy Act
of 1967; the issuance of the Code of Professional Ethics in 1978; the issuance of guidelines in
1987 for the mandatory continuing professional education (CPE) program for CPAs; the
integration of the accounting profession completed in 1987; the biennial oath taking of new
CPAs; standards setting for the profession through membership in the Accounting Standards
Council and the Auditing Standards Practices Council; and the declaration of the Accountancy
Week.

Thirdly, the PICPA is responsible for: (i) promoting and maintaining high professional
and ethical standards among accountants by adopting a Code of Ethics for its members as a
task delegated by the BOA; (ii) developing and improving the accountancy education; (iii)
protecting the CPA designation; and (iv) carrying out the fact-finding component of
investigations upon the delegation and approval of the BOA and the PRC. Under PICPA, there
are four sub-organizations for the different sectors of accountancy profession. These are:

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 1. Association of CPAs in Public Practice (ACPAPP)
2. Association of CPAs in Commerce and Industry (ACPACI)
3. Government Association of CPAs (GACPA)
4. National Association of CPAs in Education (nACPAE)

Finally, auditors of public interest entities are subject to additional requirements. Only
individual external auditors and auditing firms that are accredited by the Securities and
Exchange Commission (SEC) can perform statutory audits of financial statements of publicly
listed SEC-registered entities. They are subject to the QA review system operated by the SEC
and any penalties imposed by the SEC for lack of compliance with professional standards.
Auditors providing services to banks or insurance or cooperatives are required to be accredited
with the Bangko Sentral ng Pilipinas, the Insurance Commission and the Cooperative
Development Authority of the Philippines, respectively.

There is no independent audit oversight authority in the Philippines. As such, auditors

are regulated at the state level by the Professional Regulation Commission (PRC) and the
Professional Regulatory Board of Accountancy (BOA), and at the professional level by the
Philippine Institute of Certified Public Accountants (PICPA). In order to offer auditing services in
the Philippines, individuals must be registered and accredited by the BOA and PRC and be a
member of PICPA.

Quality Assurance

The Professional Regulatory Board of Accountancy (BOA), under the Republic Act 9298,
Philippine Accountancy Act 2004, is responsible for setting quality control standards and
establishing a quality assurance (QA) review system for all auditors while the Securities and
Exchange Commission (SEC) is solely authorized to carry out QA reviews for auditors of listed
companies as per the Securities Regulation Code Rule 68.

The BOA created the Auditing and Assurance Standards Council (AASC) in 2006 in
order to adopt and disseminate applicable quality control standards in the Philippines. The
AASC has adopted the Philippine Standards on Quality Control, which is based on ISQC 1.

In 2010, the BOA established a Quality Assurance Review Office (QARO) and its Quality
Assurance Review Program (QARP), which were approved by the Professional Regulation
Commission. The implementation of the QARP has been planned; however, key personnel that
would carry out the functions of the QARO and the QARP are still being recruited and therefore
no QA reviews have been carried out as of February 2018. Once the QARO is staffed for
operations, it appears that the BOA will utilize a risk-based approach to conduct the reviews and
its overall process will align with SMO 1 requirements.

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 Due to the delay of the BOA’s QARP, the Philippine Institute of Certified Public
Accountants (PICPA) established a voluntary QARP (VQARP) for its members—which includes
all auditors—with the assistance of the World Bank and the Association of Certified Public
Accountants in Public Practice. Guidelines for the voluntary QARP were approved in January
2016 and PICPA began carrying out reviews in April 2016 although it has only been able to
carry out a limited number of inspections due to the voluntary nature of the program. Its VQARP
follows the same methodology as the BOA’s QA system.

Lastly, the SEC operates the SEC Oversight Assurance Review (SOAR) Inspection
program. A SEC Memorandum Circular No. 9 Series of 2017 issued in August 2017 will now
permit the SEC to carry out onsite inspections of audit firms handling audits of listed companies.
Prior to this, the SEC would do a desktop review of listed companies’ audited financial
statements every three years and could impose penalties for material deficiencies. According to
PICPA, the SOAR Inspection Program fulfills the SMO 1 best practices.

Investigation and Discipline

The Professional Regulatory Board of Accountancy (BOA), under the Republic Act 9298,
Philippine Accountancy Act 2004, is responsible for the investigation and discipline (I&D) of any
violations of the accountancy law by any professional accountant. The Professional Regulation
Commission (PRC) is ultimately responsible for approving any sanction recommended by the
BOA.

The BOA and the PRC may delegate the fact-finding component of investigations to the
nationally accredited professional accountancy organization which is the Philippine Institute of
Certified Public Accountants (PICPA). The BOA and PRC may then proceed with adopting
PICPA’s findings and issuing sanctions as it sees fit.

PICPA’s by-laws provide for the establishment of an Ethics Board which may hear and
decide cases on: (i) violations of the PICPA Constitution and By-laws; (ii) a breach of the Code
of Ethics; (iii) infringements of any provisions of the Rules of Professional Conduct of the BOA;
and (iv) a violation of any of the rules provided by the Rules and Regulations of the BOA. The
Ethics Board will forward its decision onto the PICPA Board and the BOA, unless the decision of
the Ethics Board has been appealed to the PICPA Board in which case it is the duty of the
PICPA Board to forward its final decision to the BOA. The BOA may then recommend a
sanction which is approved by the PRC before becoming final.

Lastly, the Securities and Exchange Commission (SEC) is authorized to carry out
investigations and issue penalties for auditors of listed companies as per the Securities
Regulation Code Rule 68. Through a Memorandum of Understanding between the SEC and the

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BOA, the SEC’s findings are also forwarded to the BOA as appropriate given that the BOA
issues and grants licenses to practice auditing.

In 2018, the PICPA carried out an extensive assessment of all three I&D systems
against the SMO 6 components. The information can be found in its 2018 SMO Action Plan and
indicates that a gap remains between linking results of quality assurance (QA) reviews with the
BOA’s and PICPA’s I&D system as only the SEC has an operational QA review system.

Continuing Professional Development

The Republic Act 9298, Philippine Accountancy Act stipulates the initial professional
development requirements for Certified Public Accountants (CPA) in the Philippines. These
include specific education, examination, and practical experience requirements.

The accountancy education programs and CPA examination are regulated by the
Professional Regulation Commission (PRC), the Professional Regulatory Board of Accountancy
(BOA), and the Commission on Higher Education (CHED). Tertiary education providers may
offer accountancy programming that is in line with the requirements prescribed by the CHED
while the examination is offered by the BOA.

The Philippine Institute of Certified Public Accountants (PICPA) reports that the
requirements outlined in the law are in line with the IES requirements. Further, it notes that the
CHED issued several memorandums in 2017 that revise policies for university accountancy
curricula to comply with the competency framework issued by the IAESB.

The law also mandates that CPAs comply with continuing professional development
(CPD) requirements issued by the BOA and approved by the PRC. CPD is required to be
offered in coordination with the accredited national PAO—PICPA—and CPD providers must be
accredited. For these purposes, the PRC has established a CPD Council.

In November 2016, the BOA issued Board Resolution No. 358 Series of 2016,
“Increasing the Required Continuing Professional Development (CPD) Units from Sixty (60) to
One Hundred twenty (120) Credit Units within a Compliance Period of Three (3) Years for all
CPAs and Changing the Thematic Areas to Competence Areas” to align with latest IES
requirements. In July 2017, the BOA issued operational guidelines that made these
requirements effective and by 2019, all CPAs will be required to comply with 120 hours of CPD.

Auditing and Assurance Standards Council

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 The Auditing and Assurance Standards Council (AASC) was created in December 2005,
under the Philippine Accountancy Act of 2004, by the Professional Regulation Commission
upon the recommendation of the Board of Accountancy (BOA). The AASC is tasked to assist
the BOA to establish and promulgate auditing standards in the Philippines. The AASC shall
have 18 regular members with a term of three years, renewable for another term, coming from
the following:

Chairman 1
Board of Accountancy 1
Securities and Exchange Commission 1
Bangko Sentral ng Pilipinas 1
Commission on Audit 1
Association of CPAs in Public Practice 1
Philippine Institute of CPAs:
Public Practice 9
Commerce and Industry 1
Academe/Education 1
Government 1

The AASC has adopted the Philippine Standards on Auditing (PSA) which incorporate
the ISA and pronouncements issued by the IAASB and include additional country-specific
standards to address issues not covered by IAASB pronouncements. In order for the new and
revised PSA to become effective, the standards must be approved by AASC, the BOA,
Professional Regulation Commission, and be published in the official gazette. At the time of the
assessment, the Philippine Institute of Certified Public Accountants reports that the 2016 ISA
have been adopted as PSAs and are applicable in the jurisdiction.

Finally, the AASC has also adopted Philippine Standards on Review Engagements,
Philippine Standards on Assurance Engagements, Philippine Standards on Related Services,
and Philippine Standards on Quality Control which are all based on the IAASB standards.

Financial Reporting Standards Council

The Financial Reporting Standards Council (FRSC) was established by the Professional
Regulatory Commission under the Implementing Rules and Regulations of the Philippine
Accountancy of Act of 2004 to assist the Board of Accountancy in carrying out its power and
function to promulgate accounting standards in the Philippines. The FRSC’s main function is to
establish generally accepted accounting principles in the Philippines.

The FRSC is the successor of the Accounting Standards Council (ASC). The ASC was
created in November 1981 by the Philippine Institute of Certified Public Accountants (PICPA) to

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establish generally accepted accounting principles in the Philippines. The FRSC carries on the
decision made by the ASC to converge Philippine accounting standards with international
accounting standards issued by the International Accounting Standards Board (IASB).

The FRSC consists of who a Chairman and members are appointed by the BOA and
include representatives from the Board of Accountancy (BOA), Securities and Exchange
Commission (SEC), Bangko Sentral ng Pilipinas (BSP), Financial Executives Institute of the
Philippines (FINEX), Commission on Audit (COA) and Philippine Institute of Certified Public
Accountants (PICPA). The FRSC has full discretion in developing and pursuing the technical
agenda for setting accounting standards in the Philippines. Financial support is received
principally from the PICPA Foundation.

The FRSC monitors the technical activities of the IASB and invites comments on
exposure drafts of proposed IFRSs as these are issued by the IASB. When finalized, these are
adopted as Philippine Financial Reporting Standards (PFRSs). The FRSC similarly monitors
issuances of the International Financial Reporting Interpretations Committee (IFRIC) of the
IASB, which it adopts as Philippine Interpretations–IFRIC. PFRSs and Philippine
Interpretations–IFRIC approved for adoption are submitted to the BOA and PRC for approval.

The FRSC formed the Philippine Interpretations Committee (PIC) in August 2006 to
assist the FRSC in establishing and improving financial reporting standards in the Philippines.
The role of the PIC is principally to issue implementation guidance on PFRSs. The PIC
members are appointed by the FRSC and include accountants in public practice, the academe
and regulatory bodies and users of financial statements. The PIC replaced the Interpretations
Committee created by the ASC in 2000.

The FRSC has adopted the IFRS as the Philippine Financial Reporting Standards
(PFRS) with several limited modifications and the PFRS for Small-and Medium-sized Entities
(PFRS for SMEs) which are the IFRS for SMEs without modifications. Recently effective
January 1, 2019, PFRS for Small Entities was implemented.

The PFRS are subject to the approval and pronouncement process of the BOA, PRC,
and the Philippine Securities and Exchange Commission (SEC), which includes issuing
invitations for comments on exposure drafts, adoption of the standard, BOA and PRC approval,
publication in an official gazette, and SEC adoption of the new pronouncement. As of December
2017, the Philippine Institute of Certified Public Accountants reports that the FRSC has adopted
all standards as issued by the IASB such that the PFRS are fully converged with the IFRS.

The SEC has established a three-tier financial reporting framework. Public interest
entities must apply the full PFRS if they meet certain thresholds. SMEs are permitted to use
PFRS for SMEs provided that they do not fall into one of the categories of entities required to
use full PFRS. Finally, micro-sized entities have option to use either income tax basis

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accounting standards effective 31 December 2004 (standards before entities transitioned to
PFRS), or the PFRS for SMEs. In addition, the Bangko Sentral ng Pilipinas (BSP; the
Philippines Central Bank) has required all banks to follow PFRS since 2005.

Future of Accountancy Profession in the Philippines

As the global professional environment unfolds, with the onset of the 21st century,
accountancy continues its trailblazing efforts. It is the first among the Philippine professions to
be included under the World Trade Organization’s (WTO) policy of liberalization of services.
This means that Philippine accountants will be freely competing with in the global playing field
against accountants from other parts of the world and will be able to hold their own. This is due,
in no small measure, to the long and distinguished careers of the country’s accountants, to the
linkages that local firms have forged with the world’s biggest accounting firms, and to the
integrity with which the Board of Accountancy and the Professional Regulation Commission are
now administering a profession that has acquired a global perspective.

CODE OF PROFESSIONAL ETHICS FOR ACCOUNTANTS

While the Professional Regulatory Board of Accountancy (BOA), in accordance with the
Republic Act 9298, Philippine Accountancy Act 2004, is tasked with setting ethical requirements
for the profession, this responsibility has been delegated to the Philippine Institute of Certified
Public Accountants (PICPA) as the national professional accountancy organization accredited
by the Professional Regulation Commission (PRC).

Ethical requirements for professional accountants are approved by PICPA’s Board of

Directors and then submitted to the BOA for adoption and the PRC for approval prior to
application.

In December 2015, the PRC issued Resolution No. 263, which adopted the 2013 IESBA
Code of Ethics without modifications as approved by PICPA.

Subsequently, PICPA indicates that its Board of Directors submitted BOD Resolution
No. 2017-07-08 to the BOA recommending the adoption of the 2016 IESBA Code of Ethics. The
BOA has approved the recommendation with the stipulation that the PRC shall put in place the
appropriate mechanism to implement the Non-compliance with Laws and Regulation (NOCLAR)
standard. Currently as per PICPA website, we are adopting the 2018 edition of Code of Ethics.

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 The Code of Ethics for Professional Accountants were decided to be revised, updated,
and issued by the International Ethics Standards Board for Accountants (IESBA) so that it could
serve as the basis for developing ethics and independent standards for professional
accountants considering the advancing of technologies and new business models in the
industry.

International Ethics Standards Board for Accountants (IESBA) is an independent

standard body that is working for the public interest by setting robust and appropriate
accounting standards including the requirements for professional accountants all over the world,
making as an output the Code of Ethics for Professional Accountants as well as the
International Independent Standard. It has 172 volunteer members from around the world of
which members are appointed by the International Federation of Accountants (IFAC) Board and
is subject to approval of Public Interest Oversight Board (PIOB).

The Newly Revised Code was released in April 2018. The process took a massive
consultation to the stakeholders including the IFAC and SMP Committee. The new design was
easier to navigate, use and enforce. It was also completely rewritten and the requirements are
clearly distinguished from application material making it to promote more the general ethical
behaviors. This Code contains three parts:

A. Part A establishes the fundamental principles of professional ethics for professional

accountants and provides a conceptual framework that professional accountants shall
apply to:
(a) Identify threats to compliance with the fundamental principles;
(b) Evaluate the significance of the threats identified; and
(c) Apply safeguards, when necessary, to eliminate the threats or reduce them to an
acceptable level.

B. Parts B and C describe how the conceptual framework applies in certain situations. They
provide examples of safeguards that may be appropriate to address threats to compliance
with the fundamental principles. They also describe situations where safeguards are not
available to address the threats, and consequently, the circumstance or relationship
creating the threats shall be avoided. Part B applies to professional accountants in public
practice.

C. Part C applies to professional accountants in business.

FUNDAMENTAL PRINCIPLES

1. Integrity

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 The principle of integrity imposes an obligation on all professional accountants to
be straightforward and honest in all professional and business relationships. Integrity
also implies fair dealing and truthfulness.

A professional accountant shall not knowingly be associated with reports,

returns, communications or other information where the professional accountant
believes that the information:
 Contains a materially false or misleading statement
 Contains statements or information furnished recklessly
 Omits or obscures information required to be included where such
omission or obscurity would be misleading.

When a professional accountant becomes aware that the accountant has been
associated with such information, the accountant shall take steps to be disassociated
from that information. A professional accountant will be deemed not to be in breach of
the previous paragraph if the professional accountant provides a modified report in
respect of a matter contained in the previous paragraph.

2. Objectivity

The principle of objectivity 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 shall not perform a professional service if a

circumstance or relationship biases or unduly influences the accountant’s professional
judgment with respect to that service.

3. Professional Competence and Due Care

The principle of professional competence and due care imposes the following
obligations on all professional accountants:

 To maintain professional knowledge and skill at the level required to ensure that
clients or employers receive competent professional service
 To act diligently in accordance with applicable technical and professional
standards when providing professional services.

Competent professional service requires the exercise of sound judgment in

applying professional knowledge and skill in the performance of such service.
Professional competence may be divided into two separate phases:
 Attainment of professional competence

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  Maintenance of professional competence

The maintenance of professional competence requires a continuing awareness

and an understanding of relevant technical, professional, and business developments.
Continuing professional development enables a professional accountant to develop and
maintain the capabilities to perform competently within the professional environment.
Where appropriate, a professional accountant shall make clients, employers, or other
users of the accountant’s professional services aware of the limitations inherent in the
services.

4. Confidentiality

The principle of confidentiality imposes an obligation on all 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
 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:
 shall maintain confidentiality, including in a social environment, being alert to the
possibility of inadvertent disclosure, particularly to a close business associate or
a close or immediate family member.
 shall maintain confidentiality of information disclosed by a prospective client or
employer.
 shall maintain confidentiality of information within the firm or employing
organization.
 shall take 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.

The following are circumstances where professional accountants are or may be

required to disclose confidential information or when such disclosure may be
appropriate:
 Disclosure is permitted by law and is authorized by the client or the employer
 Disclosure is required by law
 There is a professional duty or right to disclose, when not prohibited by law:
 To comply with the quality review of a member body or professional body.
 To respond to an inquiry or investigation by a member body or regulatory
body.

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  To protect the professional interests of a professional accountant in legal
proceeding.
 To comply with technical standards and ethics requirements.

In deciding whether to disclose confidential information, relevant factors to

consider include:
 Whether the interests of all parties, including third parties whose interests may
be affected, could be harmed if the client or employer consents to the disclosure
of information by the professional accountant.
 Whether all the relevant information is known and substantiated, to the extent it
is practicable; when the situation involves unsubstantiated facts, incomplete
information or unsubstantiated conclusions, professional judgment shall be used
in determining the type of disclosure to be made, if any.
 The type of communication that is expected and to whom it is addressed.
 Whether the parties to whom the communication is addressed are appropriate
recipients.

5. Professional Behavior

The principle of professional behavior imposes an obligation on all professional

accountants to comply with relevant laws and regulations and avoid any action that the
professional accountant knows or should know may discredit the profession.

In marketing and promoting themselves and their work, professional accountants shall
not bring the profession into disrepute. Professional accountants shall be honest and
truthful and not:
 Make exaggerated claims for the services they are able to offer, the
qualifications they possess, or experience they have gained
 Make disparaging references or unsubstantiated comparisons to the work of
others.

CONCEPTUAL FRAMEWORK APPROACH

When a professional accountant identifies threats to compliance with the fundamental

principles and, based on an evaluation of those threats, determines that they are not at an
acceptable level, the professional accountant shall determine whether appropriate safeguards
are available and can be applied to eliminate the threats or reduce them to an acceptable level.

A professional accountant shall evaluate any threats to compliance with the fundamental
principles when the professional accountant knows, or could reasonably be expected to know,
of circumstances or relationships that may compromise compliance with the fundamental
principles.

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 A professional accountant shall take qualitative as well as quantitative factors into
account when evaluating the significance of a threat. When applying the conceptual framework,
a professional accountant may encounter situations in which threats cannot be eliminated or
reduced to an acceptable level, either because the threat is too significant or because
appropriate safeguards are not available or cannot be applied. In such situations, the
professional accountant shall decline or discontinue the specific professional service involved
or, when necessary, resign from the engagement (in the case of a professional accountant in
public practice) or the employing organization (in the case of a professional accountant in
business).Depending on the nature and significance of the matter, such an inadvertent violation
may be deemed not to compromise compliance with the fundamental principles provided, once
the violation is discovered, the violation is corrected promptly and any necessary safeguards are
applied.

When a professional accountant encounters unusual circumstances in which the

application of a specific requirement of the Code would result in a disproportionate outcome or
an outcome that may not be in the public interest, it is recommended that the professional
accountant consult with a member body or the relevant regulator.

THREATS AND SAFEGUARDS

I. Self-interest threat – the threat that a financial or other interest will inappropriately
influence the professional accountant’s judgment or behavior.

II. Self-review threat – the threat that a professional accountant will not appropriately
evaluate the results of a previous judgment made or service performed by the
professional accountant, or by another individual within the professional accountant’s
firm or employing organization, on which the accountant will rely when forming a
judgment as part of providing a current service.
III. Advocacy threat – the threat that a professional accountant will promote a client’s or
employer’s position to the point that the professional accountant’s objectivity is
compromised.

IV. Familiarity threat ─ the threat that due to a long or close relationship with a client or
employer, a professional accountant will be too sympathetic to their interests or too
accepting of their work.

V. Intimidation threat – the threat that a professional accountant will be deterred from acting
objectively because of actual or perceived pressures, including attempts to exercise
undue influence over the professional accountant.

Safeguards created by the profession, legislation or regulation include:

a. Educational, training and experience requirements for entry into the profession.
b. Continuing professional development requirements.
c. Corporate governance regulations.
d. Professional standards.
e. Professional or regulatory monitoring and disciplinary procedures.
f. External review by a legally empowered third party of the reports, returns,
communications or information produced by a professional accountant.

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Safeguards in the work environment:
a. Effective, well-publicized complaint systems operated by the employing
organization, the profession, or a regulator, which enable colleagues, employers,
and members of the public to draw attention to unprofessional or unethical
behavior.
b. An explicitly stated duty to report breaches of ethical requirements.

PROFESSIONAL ACCOUNTANTS IN PUBLIC PRACTICE

Professional Appointment

Before accepting a new client relationship, a professional accountant in public practice

shall determine whether acceptance would create any threats to compliance with the
fundamental principles. Where it is not possible to reduce the threats to an acceptable level, the
professional accountant in public practice shall decline to enter into the client relationship.

Conflicts of Interest

A professional accountant in public practice shall take reasonable steps to identify

circumstances that could pose a conflict of interest. Such circumstances may create threats to
compliance with the fundamental principles.

Fees and Other Types of Remuneration

When entering into negotiations regarding professional services, a professional

accountant in public practice may quote whatever fee is deemed appropriate. The fact that one
professional accountant in public practice may quote a fee lower than another is not in itself
unethical.

Independence

Independence comprises:
• Independence of Mind - The state of mind that permits the expression of a conclusion
without being affected by influences that compromise professional judgment, thereby allowing
an individual to act with integrity and exercise objectivity and professional skepticism.
• Independence in Appearance - The avoidance of facts and circumstances that are so
significant that a reasonable and informed third party would be likely to conclude, weighing all
the specific facts and circumstances, that a firm’s, or a member of the audit team’s, integrity,
objectivity or professional skepticism has been compromised.

Documentation

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 Documentation provides evidence of the professional accountant’s judgments in forming
conclusions regarding compliance with independence requirements. The absence of
documentation is not a determinant of whether a firm considered a particular matter nor whether
it is independent.

Engagement Period

Independence from the audit client is required both during the engagement period and
the period covered by the financial statements. The engagement period starts when the audit
team begins to perform audit services. The engagement period ends when the audit report is
issued. When the engagement is of a recurring nature, it ends at the later of the notification by
either party that the professional relationship has terminated or the issuance of the final audit
report.

Financial Interests

Holding a financial interest in an audit client may create a self-interest threat. The
existence and significance of any threat created depends on:
 The role of the person holding the financial interest
 Whether the financial interest is direct or indirect
 The materiality of the financial interest.

Taxation Services

Tax return preparation services involve assisting clients with their tax reporting
obligations by drafting and completing information, including the amount of tax due (usually on
standardized forms) required to be submitted to the applicable tax authorities. Accordingly,
providing such services does not generally create a threat to independence if management
takes responsibility for the returns including any significant judgments made. Preparing
calculations of current and deferred tax liabilities (or assets) for an audit client for the purpose of
preparing accounting entries that will be subsequently audited by the firm creates a self-review
threat. For public entities, unless in emergency situations, the firm shall not prepare tax
calculations of current and deferred tax liabilities (or assets) for the purpose of preparing
accounting entries that are material to the financial statements on which the firm will express an
opinion.

A self-review threat may be created where the advice will affect matters to be reflected in
the financial statements. The significance of any threat shall be evaluated, and safeguards
applied when necessary to eliminate the threat or reduce it to an acceptable level.

An advocacy or self-review threat may be created when the firm represents an audit
client in the resolution of a tax dispute once the tax authorities have notified the client that they

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have rejected the client’s arguments on a particular issue and either the tax authority or the
client is referring the matter for determination in a formal proceeding.

PROFESSIONAL ACCOUNTANTS IN BUSINESS

Potential Conflicts

As a consequence of responsibilities to an employing organization, a professional

accountant in business may be under pressure to act or behave in ways that could create
threats to compliance with the fundamental principles. Such pressure may be explicit or implicit;
it may come from a supervisor, manager, director, or another individual within the employing
organization. The significance of any threats arising from such pressures, such as intimidation
threats, shall be evaluated and safeguards applied when necessary to eliminate them or reduce
them to an acceptable level.

Preparation and Reporting of Information

Professional accountants in business are often involved in the preparation and reporting
of information that may either be made public or used by others inside or outside the employing
organization. A professional accountant in business shall prepare or present such information
fairly, honestly and in accordance with relevant professional standards so that the information
will be understood in its context.

Acting with Sufficient Expertise

A professional accountant in business shall not intentionally mislead an employer as to

the level of expertise or experience possessed, nor shall a professional accountant in business
fail to seek appropriate expert advice and assistance when required.

Financial Interests

Professional accountants in business may have financial interests or may know of

financial interests of immediate or close family members that, in certain circumstances, may
create threats to compliance with the fundamental principles. The significance of any threat shall
be evaluated, and safeguards applied when necessary to eliminate the threat or reduce it to an
acceptable level.

Inducements

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 Offers of inducements may create threats to compliance with the fundamental principles.
When a professional accountant in business or an immediate or close family member is offered
an inducement, the situation shall be evaluated. The existence and significance of any threats
will depend on the nature, value and intent behind the offer. A professional accountant in
business shall not offer an inducement to improperly influence professional judgment of a third
party.

Amendment to Code: Disclosure of Entity’s Non-Compliance in Laws and Regulations

(NOCLAR)

NOCLAR is defined by the new standard as comprising acts of omission or commission,

intentional or unintentional, committed by a client, or by those charged with governance, by
management or by other individuals working for or under the direction of a client which are
contrary to the prevailing laws and regulations.

The non-compliance which the standard addresses is concerned with laws and
regulations which are generally recognized to have a direct effect on the determination of
material amounts and disclosures in the client’s financial statements. It also addresses other
laws and regulations which may be fundamental to the operating aspects of the client’s
business, to its ability to continue its business or to avoid material penalties. It is worth noting
that the standard does not include within its scope any matters that are clearly inconsequential
or any personal misconduct which is unrelated to the business activities of the client or
employer.

The NOCLAR guidance therefore aims to ensure that Professional Accountants (PA)
respond to identified or suspected NOCLAR on a timely basis in order to rectify, remediate or
mitigate its potentially adverse impact on stakeholders and the general public. The increased
emphasis on PAs’ duties and responsibilities in this area should also serve to stimulate
increased reporting of NOCLAR and even to act as a deterrent to non-compliance by audited
entities.

Latest News in Accountancy Profession: Impact of COVID-19 Pandemic to Audit

With the occurrence of an extraordinary event, such as a pandemic or disease outbreak

or a natural disaster, which causes restriction to travel and suspension of business operations,
audit engagement teams may face challenges in conducting the audit of the annual financial
statements (AFS) of Philippine companies with domestic and/or foreign business operations
affected by such extraordinary event, thus AASC issued Philippine Auditing Practice Notes 1
last April 2020 for the relative guidance.

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 Audit teams could face significant challenges completing their audits due to the following
circumstances, including but not limited to the following:

a. Barriers to obtaining the information needed to perform procedures and reach

conclusions;
b. Challenges in obtaining access to the management of components and others, including
legal counsel, management’s or auditor’s experts;
c. Difficulties accessing client premises to perform procedures (e.g., not being able to
observe management’s inventory counts or to physically verify fixed assets after year-end);
d. Audit procedures not providing the anticipated audit evidence, requiring modifications to
the audit approach (e.g. a significant decline in response rates for bank and/or debtor
confirmations);
e. A need to respond to risks of material misstatement arising from limitations on
information and/or management having less time than usual to prepare the financial
information;
f. A need to perform additional audit work to respond to risks of material misstatement
arising from the potential financial effects of the outbreak (e.g. additional procedures to
evaluate the appropriateness of management’s assessment of the entity’s ability to
continue as a going concern); and
g. Impediments to completing the audit as a result of the engagement team having to work
remotely.

The financial reporting impact of an extraordinary event, will depend on facts and
circumstances, including the degree to which an entity’s operations is exposed to the impact of
such event. It is important for audit teams to understand the nature and extent of an entity’s
potential operating or financial exposure to the impact of the event and to consider the potential
impact on financial reporting, in particular, on management’s assessment of the entity’s ability to
continue as a going concern and the potential need for additional disclosures to reflect
uncertainties and potential volatility triggered by the event. Audit teams are required to maintain
professional skepticism and objectively challenge management’s plans and significant
assumptions on events or conditions affecting the entity and its environment, including the
uncertainties associated with the extraordinary event.

Multiple Choice Questions

1. A basic objective of a CPA firm is to provide professional services that conform to

professional standards. Reasonable assurance of achieving this basic objective is provided
through
a. A system of peer review.
b. Continuing professional education.
c. A system of quality controls.

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 d. Compliance with generally accepted reporting standards.

2. The examination by CPAs of a CPA firm’s auditing practices to ascertain compliance with its
quality control system
a. Compliance audit c. Peer review
b. Examination d. Quality control audit

3. Quality control policies and procedures are required to be implemented at

a b c d
Audit firm level Yes Yes No No
Individual audit level Yes No Yes No

4. The following factors affect the nature, timing and extent of an audit firm’s quality control
policies and procedures, except
a b c d
Size and nature of practice Yes Yes No No
Geographic dispersion Yes Yes Yes No
Organization Yes No Yes No
Appropriate cost/benefit considerations Yes Yes No No

5. The firm is to be staffed by personnel who have attained and maintained the technical
standards and professional competence required to enable them to fulfill their responsibilities
with due care is the objective of what quality control policy?
a. Professional Requirements c. Assignment
b. Skills and Competence d. Delegation

6. Which of the following objectives are generally a component of a firm’s quality control?
A. Professional requirements E. Consultation
B. Skills and competence F. Due professional care
C. Assignment G. Monitoring
D. Inspection H. Delegation

a. A, B, C, D, E, F c. A, B, C, E, G, H
b. A, B, C, F, E, G d. B, C, G, F, H

7. Which of the following is not an element of professional requirements as prescribed by

Quality Control Policies for an audit firm?
a. Independence c. Confidentiality
b. Integrity d. Prudence

8. Which of the following is an element of “directing an audit assistant” objective?

a. Identifying in advance the staffing requirements of a particular audit engagement.
b. Informing assistants of their responsibilities and the objectives of the procedures they
are to perform.
c. Resolving any differences in professional judgment between audit personnel.
d. Resolution of differences in audit findings.

9. It involves informing assistants of their responsibilities and the objectives of the procedures
they have to perform:

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 a. Supervision c. Monitoring
b. Directing d. Consultation

10. Which statement is incorrect regarding the Code of Ethics for Professional Accountants in
the
Philippines?
a. Professional accountants refer to persons who are Certified Public Accountants (CPA)
and who hold a valid certificate issued by the Board of Accountancy.
b. Where a national statutory requirement is in conflict with a provision of the IFAC
Code, the IFAC Code requirement prevails.
c. The Code of Ethics for Professional Accountants in the Philippines is mandatory for all
CPAs and is applicable to professional services performed in the Philippines on or after
January 1, 2004.
d. Professional accountants should consider the ethical requirements as the basic
principles which they should follow in performing their work.

11. Which statement is correct regarding the Code of Ethics for Professional Accountants in the
Philippines?
a. Professional accountants refer to persons who are Certified Public Accountants (CPA)
in public practice and who hold a valid certificate issued by the Board of Accountancy.
b. It is practical to establish ethical requirements which apply to all situations and
circumstances that professional accountants may encounter.
c. Professional accountants should consider the ethical requirements as the ideal
principles which they should follow in performing their work.
d. All CPAs are expected to comply with the ethical requirements of the Code and other
ethical requirements that may be adopted and approved by IFAC. Apparent failure to do
so may result in an investigation into the CPA’s conduct.

12. The following definitions from the IFAC Code were modified to consider Philippine regulatory
requirements and circumstances, except
a. Firm c. Professional accountants
b. Accountants in public practice d. Lead engagement partner

13. The following are modifications to the IFAC Code to consider Philippine regulatory
requirements and circumstances, except
a. The period for rotation of the lead engagement partner was changed from five to
seven
years.
b. Advertising and solicitation by individual professional accountants in public practice
were
not permitted in the Philippines.
c. Additional examples relating to anniversaries and websites wherein publicity is
acceptable, as provided in BOA Resolution 19, Series of 2000, were included.
d. Payment and receipt of commissions were not permitted in the Philippines.

14. If the firm is involved in the preparation of accounting records or financial statements and
those financial statements are subsequently the subject matter of an audit engagement of the
firm, this will most likely create
a. Self-interest threat c. Intimidation threat
b. Self-review threat d. Familiarity threat

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15. Assurance team include
a b c d
• All professionals participating in the
assurance engagement Yes Yes Yes Yes
• All others within a firm who can directly
influence the outcome of the assurance
engagement Yes Yes No No
• For the purposes of an audit client, all those
within a network firm who can directly influence
the outcome of the audit engagement Yes No No Yes

16. Financial interest means

a. Any bank account which is used solely for the banking of clients’ monies.
b. Any monies received by a professional accountant in public practice to be held or paid
out on the instruction of the person from whom or on whose behalf they are received.
c. A financial interest beneficially owned through a collective investment vehicle, estate,
trust or other intermediary over which the individual or entity has no control.
d. An interest in an equity or other security, debenture, loan or other debt instrument of
an entity, including rights and obligations to acquire such an interest and derivatives
directly related to such interest.

17. Intimidation threat

a. Is not a threat to independence.
b. Occurs when a member of the assurance team may be deterred from acting
objectively and exercising professional skepticism by threats, actual or perceived, from
the directors, officers or employees of an assurance client.
c. Occurs when, by virtue of a close relationship with an assurance client, its directors,
officers or employees, a firm or a member of the assurance team becomes too
sympathetic to the client’s interests.
d. Occurs when a firm, or a member of the assurance team, promotes, or may be
perceived to promote, an assurance client’s position or opinion to the point that
objectivity may, or may be perceived to be, compromised.

18. Practice in Public Accountancy shall constitute in a person

a. Involved in decision making requiring professional knowledge in the science of
accounting, or when such employment or position requires that the holder thereof must
be a certified public accountant.
b. In an educational institution which involve teaching of accounting, auditing,
management advisory services, finance, business law, taxation, and other technically
related subjects.
c. Who holds, or is appointed to, a position in an accounting professional group in
government or in a government owned and/or controlled corporation, including those
performing proprietary functions, where decision making requires professional
knowledge in the science of accounting.
d. Holding out himself/herself as one skilled in the knowledge, science and practice of
accounting, and as a qualified person to render professional services as a certified
public accountant; or offering or rendering, or both, to more than one client on a fee
basis or otherwise.

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19. Any position in any business or company in the private sector which requires supervising the
recording of financial transactions, preparation of financial statements, coordinating with the
external auditors for the audit of such financial statements and other related functions shall be
occupied only by a duly registered CPA. Provided (choose the incorrect one)
a. That the business or company where the above position exists has a paid-up capital
of at
least P5,000,000 and/or an annual revenue of at least P10,000,000.
b. The above provision shall apply only to persons to be employed after the effectivity of
the
Implementing Rules and Regulations of RA 9298.
c. The above provision shall not result to deprivation of the employment of incumbents to
the position.
d. None of the above.

20. The integrated national professional organization of Certified Public Accountants accredited
by the BOA and the PRC per PRC accreditation No. 15 dated October 2, 1975.
a. Auditing and Assurance Standards Council (AASC)
b. Financial Reporting Standards Council (FRSC)
c. Education Technical Council (ETC)
d. Philippine Institute of Certified Public Accountants (PICPA)

21. As defined in the IRR of RA 9298, it is an organization engaged in the practice of public
accountancy, consisting of sole proprietor, either alone or with one or more staff members.
a. Firm b. Individual CPA c. Partnership d. Sector

22. The following statements relate to the Board of Accountancy. Which statement is correct?
a. The Board consists of a Chairman and six members.
b. The chairman and members are appointed by the President of the Philippines upon
recommendation of PICPA.
c. The Professional Regulation Commission may remove from the Board any member
whose certificate to practice has been removed or suspended.
d. Majority of the board members shall as much as possible be in public practice.

23. The APO shall submit its nominations with complete documentation to the Commission not
later than _____ prior to the expiry of the term of an incumbent chairman or member.
a. 30 days b. 60 days c. 90 days d. 120 days

24. A member of the BOA shall, at the time of his/her appointment, possess the following
qualifications, except
a. Must be a natural-born citizen and resident of the Philippines.
b. Must be a duly registered CPA with more than ten (10) years of work experience in
any scope of practice of accountancy.
c. Must be of good moral character and must not have been convicted of crimes
involving moral turpitude.
d. Must not be a director or officer of the APO at the time of his/her appointment.

25. Which statement is incorrect regarding the term of office of the chairman and the members
of
the Board of Accountancy (BOA)?
a. The Chairman and members of the Board shall hold office for a term of three years.

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 b. No person who has served two (2) successive complete terms shall be eligible for
reappointment until the lapse of one (1) year.
c. A person may serve the BOA for not more than twelve years.
d. A member of the BOA may continuously serve office for more than nine years.

26. The Board shall exercise the following specific powers, functions and responsibilities:
a b c d
• To supervise the registration, licensure and
practice of accountancy Yes Yes Yes Yes
• To issue, suspend, revoke, or reinstate the
Certificate of Registration for the practice of
the accountancy profession Yes No Yes Yes
• To monitor the conditions affecting the practice
of accountancy Yes Yes No Yes
• To conduct an oversight into the quality of
audits of financial statements Yes No Yes No
• To issue a cease or desist order to any
person, association, partnership or corporation
engaged in violation of any provision of the Act Yes Yes No Yes

27. Which of the following is not one of the penalties that can be imposed by the Board of
Accountancy?
a. Fine or imprisonment c. Reprimand
b. Revocation of CPA certificate d. Suspension of CPA certificate

28. The creation of FRSC and AASC is intended to assist the BOA in carrying out its function to
a. To monitor the conditions affecting the practice of accountancy and adopt such
measures, rules and regulations and best practices as may be deemed proper for the
enhancement and maintenance of high professional, ethical, accounting and auditing
standards.
b. To supervise the registration, licensure and practice of accountancy in the Philippines.
c. To prescribe and adopt the rules and regulations necessary for carrying out the
provisions of RA 9298.
d. To prepare, adopt, issue or amend the syllabi of the subjects for examinations.

29. A body that is created to assist the BOA in the attainment of the objective of continuously
upgrading the accountancy education in the Philippines to make the Filipino CPAs globally
competitive.
a. Philippine Institute of Certified Public Accountants (PICPA)
b. Education Technical Council (ETC)
c. Financial Reporting Standards Council (FRSC)
d. Associations of CPAs in Education (ACPAE)

30. The primary responsibility for the prevention and detection of fraud and error rests with
a. The auditor. c. The management of an entity.
b. Those charged with governance. d. Both b and c.

31. When planning and performing audit procedures and evaluating and reporting the results
thereof, the auditor should

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 a. Search for errors that would have a material effect and for fraud that would have
either material or immaterial effect on the financial statements.
b. Consider the risk of misstatements in the financial statements resulting from fraud or
error.
c. Search for fraud that would have a material effect and for errors that would have either
material or immaterial effect on the financial statements.
d. Consider the risk of material misstatements in the financial statements resulting from
fraud or error.

32. The following are examples of error, except

a. A mistake in gathering or processing data from which financial statements are
prepared.
b. An incorrect accounting estimate arising from oversight or misinterpretation of facts.
c. A mistake in the application of accounting principles relating to measurement,
recognition,
classification, presentation, or disclosure.
d. Misrepresentation in the financial statements of events, transactions or other
significant
information.

33. The term “fraud” refers to an intentional act by one or more individuals among management,
those charged with governance, employees, or third parties, involving the use of deception to
obtain an unjust or illegal advantage. Which statement is correct regarding fraud?
a. Auditors make legal determinations of whether fraud has actually occurred.
b. Misstatement of the financial statements may not be the objective of some frauds.
c. Fraud involving one or more members of management or those charged with
governance is
referred to as “employee fraud”.
d. Fraud involving only employees of the entity is referred to as “management fraud”.

34. The types of intentional misstatements that are relevant to the auditor’s consideration of
fraud include
I. Misstatements resulting from fraudulent financial reporting
II. Misstatements resulting from misappropriation of assets
a. I and II b. I only c. II only d. Neither I nor II

35. Fraudulent financial reporting involves intentional misstatements or omissions of amounts or

disclosures in financial statements to deceive financial statement users. Fraudulent financial
reporting least likely involve
a. Deception such as manipulation, falsification, or alteration of accounting records or
supporting documents from which the financial statements are prepared.
b. Misrepresentation in, or intentional omission from, the financial statements of events,
transactions or other significant information.
c. Intentional misapplication of accounting principles relating to measurement,
recognition,
classification, presentation, or disclosure.
d. Embezzling receipts, stealing physical or intangible assets, or causing an entity to pay
for goods and services not received.

36. The primary duty to enforce the provisions of RA 9298 and its IRR rests with

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 a. The PRC c. The PRC and BOA
b. The BOA d. The AASC

37. A meaningful experience shall be considered as satisfactory compliance with the

requirements of Section 28 of RA 9298 if it is earned in (Choose the incorrect one)
a. Commerce and industry and shall include significant involvement in general
accounting, budgeting, tax administration, internal auditing, liaison with external auditors,
representing his/her employer before government agencies on tax and matters related to
accounting or any other related functions.
b. Academe/education and shall include teaching for at least three (3) trimesters or two
(2) semesters subjects in either financial accounting, business law and tax, auditing
problems, auditing theory, financial management and management services.
c. Government and shall include significant involvement in general accounting,
budgeting, tax administration, internal auditing, liaison with the Commission on Audit or
any other related functions.
d. Public practice and shall include at least two years as audit assistant and at least one
year as auditor in charge of audit engagement covering full audit functions of significant
clients.

38. The certified public accountant shall be required to indicate which of the following numbers
on the documents he/she signs, uses or issues in connection with the practice of his/her
profession?
a b c d
• His/her Certificate of Registration Yes Yes Yes No
• Professional Identification Card Yes Yes Yes Yes
• Professional Tax Receipt Yes Yes No Yes
• Telephone Yes No No No

39. The BOA shall not refuse the registration of any person who successfully passed the CPA
examinations if
a. Convicted by a court of competent jurisdiction of a criminal offense involving moral
turpitude
b. Convicted for a political offense.
c. Guilty of immoral and dishonorable conduct
d. None of the above.

40. Which of the following is not one of the grounds for proceedings against a CPA?
a. Gross negligence or incompetence in the practice of his profession.
b. Engaging in public practice while being employed in a private enterprise.
c. Insanity.
d. Immoral or dishonorable conduct.

41. Which of the following is are grounds for suspension or removal of members of BOA?
I. Neglect of duty or incompetence.
II. Violation or tolerance of any violation of the CPA’s Code of Ethics.
III. Final judgment of crimes involving moral turpitude.
IV. Rigging of the certified public accountant’s licensure examination results.

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 a. I, II, III and IV b. I, II and III c. III and IV d. I, III and IV

42. The following statements relate to CPA examination ratings. Which of the following is
incorrect?
a. To pass the examination, candidates should obtain a general weighted average of
75% and above, with no rating in any subject less than 65%.
b. Candidates who obtain a rating of 75% and above in at least four subjects shall
receive a conditional credit for the subjects passed.
c. Candidates who failed in four complete examinations shall no longer be allowed to
take the examinations the fifth time.
d. Conditioned candidates shall take an examination in the remaining subjects within two
years from the preceding examination.

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