ACT 141 Auditing and

Assurance Policies
Module 2: Part 1- Legal and regulatory
framework and standards
Tressa Maye S. Pendang
M2: Auditing Standards/Legal/Regulatory framework
Relevant standards and resource materials to be read for this module (sources on
succeeding slides)
• Phil. Standards on Auditing (PSAs)
• Phil. Standards on Review Engagements (PSREs)
• Phil. Standards on Assurance Engagements (PSAEs)
• Phil. Standards on Related Services (PSRS)
• Phil. Standards on Quality Control (PSQC)
• Philippine Accountancy Act of 2004 or R.A. 9298, IRR for R.A. 9298 and BOA
resolution no. 262 series of 2015

Department of Accountancy
M2: Auditing Standards/Legal/Regulatory framework

Auditing Standards

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M2: Auditing Standards/Legal/Regulatory framework
Overview of the Phases of Auditing
1. Planning Phase – includes activities undertaken prior to acceptance of a client and/or
engagement, planning the audit and ends with the acceptance of engagement letter
by the client
2. Fieldwork – activities after acceptance of engagement letter, including risk
assessment procedures, understanding the client entity, consideration of internal
control, sampling ang audit procedures to gather evidence. These are to be
documented in order to facilitate the auditor make the conclusion to be stated in the
audit report
3. Reporting – based on the evidences gathered in the planning and fieldwork phase, a
written report will prepared and submitted.

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Categories of auditing standards:
1. Philippine Standards on Auditing (PSAs)
2. Philippine Standards on Review Engagements (PSREs)
3. Philippine Standards on Assurance Engagements (PSAEs)
4. Philippine Standards on Related Services (PSRSs)
5. Philippine Standards on Quality Control (PSQCs)

For this module, we will focus on PSAs only. The other standards will be tackled in
other modules

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M2: Auditing Standards/Legal/Regulatory framework
Full list of PSAs
Philippine Framework for Assurance Engagements
Preface to International Standards and Philippine Standards
PSA 120 - Framework of Philippine Standards on Auditing
PSA 200 (Revised and Redrafted) - Overall Objectives of the Independent Auditor and
the Conduct of an Audit in Accordance with International Standards on Auditing
PSA 210 (Redrafted) – Agreeing the Terms of Audit Engagements
PSA 220 (Redrafted) – Quality Control for Audits of Historical Financial Statements
PSA 230 (Redrafted) – Audit Documentation
PSA 240 (Redrafted) – The Auditor’s Responsibility to Consider Fraud in an Audit of
Financial Statements

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Full list of PSAs and others
PSA 250 (Redrafted) – Consideration of Laws and Regulations in an Audit of Financial
Statements
PSA 260 (Revised and Redrafted) – Communication with Those Charged with
Governance
PSA 265 (New) - Communicating Deficiencies in Internal Control to Those Charged
with Governance and Management
PSA 300 (Redrafted) – Planning an Audit of Financial Statements
PSA 315 (Redrafted) – Identifying and Assessing the Risks of Material Misstatement
through Understanding the Entity and Its Environment
PSA 320 (Revised and Redrafted) – Materiality in Planning and Performing an Audit

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Full list of PSAs and others
PSA 330 (Redrafted) – The Auditor's Responses to Assessed Risks
PSA 402 (Revised and Redrafted) – Audit Considerations Relating to Entities Using
Service Organizations
PSA 500 (Redrafted) – Audit Evidence
PSA 501 (Redrafted) – Audit Evidence – Additional Considerations on Specific Items
PSA 505 (Revised and Redrafted) – External Confirmations
PSA 510 (Redrafted) – Initial Audit Engagements-Opening Balances
PSA 520 (Redrafted) – Analytical Procedures
PSA 530 (Redrafted) – Audit Sampling

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Full list of PSAs and others
PSA 540 (Revised and Redrafted) – Auditing Accounting Estimates, Including Fair
Value Accounting Estimates, and Related Disclosures
PSA 550 (Revised and Redrafted) – Related Parties
PSA 560 (Redrafted) – Subsequent Events
PSA 570 (Redrafted) – Going Concern
PSA 580 (Revised and Redrafted)– Written Representations
PSA 600 (Revised and Redrafted) – Special Considerations-Audits of Group Financial
Statements (Including the Work of Component Auditors)
PSA 610 (Redrafted) – Using the Work of Internal Auditors
PSA 620 (Revised and Redrafted) – Using the Work of an Expert

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Full list of PSAs and others
PSA 700 (Redrafted) – The Independent Auditor’s Report on a Complete Set of General
Purpose Financial Statements
PSA 705 (Revised and Redrafted) - Modifications to the Opinion in the Independent
Auditor's Report
PSA 706 (Revised and Redrafted) - Emphasis of Matter Paragraphs and Other Matter
Paragraphs in the Independent Auditor's Report
PSA 710 (Redrafted)– Comparative Information-Corresponding Figures and
Comparative Financial Statements
PSA 720 (Redrafted) – The Auditor's Responsibilities Relating to Other Information in
Documents Containing Audited Financial Statements

Department or Program Title Here

M2: Auditing Standards/Legal/Regulatory framework
Full list of PSAs and others
PSA 800 (Revised and Redrafted) – Special Considerations-Audits of Financial
Statements Prepared in Accordance with Special Purpose Frameworks
PSA 805 (Revised and Redrafted) - Special Considerations-Audits of Single Financial
Statements and Specific Elements, Accounts or Items of a Financial Statement
PSA 810 (Revised and Redrafted) - Engagements to Report on Summary Financial
Statements

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IMPORTANT: There are standards in auditing that have been revised. These are
found on the homepage under the heading “UPDATES on Local Adoption of New
Standards as of September 2016”. This pertains to the ff. specific standards:
1. PSA 610 (Revised 2013) Using the Work of Internal Auditors and Related
Conforming Amendments;
2. PSAE 3410 Assurance Engagements on Greenhouse Gas Statements;
3. PSRS 4410 (Revised) Compilation Engagements; and
4. PSRE 2400 (Revised) Engagements to Review Historical Financial Statements.
5. PSA 260 (Revised), Communication with Those Charged with Governance;
6. PSA 570 (Revised), Going Concern;
7. PSA 700 (Revised), Forming an Opinion and Reporting on Financial Statements;

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Revised (cont.)
8. PSA 701 (Revised), Communicating Key Audit Matters in the Independent Auditor's
Report;
9. PSA 705 (Revised), Modifications to the Opinion in the Independent Auditor's Report;
10. PSA 706 (Revised), Emphasis of Matter Paragraphs and Other Matter Paragraphs in
the Independent Auditor's Report;
11. PSA 720 (Revised), The Auditor's Responsibilities Relating to Other Information.
(cont. next slide)

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Revised (cont.)
12. PSA 800 (Revised), Special Considerations - Audits of Financial Statements
Prepared in Accordance with Special Purpose Frameworks;
13. PSA 805 (Revised), Special Considerations - Audits of Single Financial Statements
and Specific Elements, Accounts or Items of a Financial Statement;
14. PSA 810 (Revised), Engagements to Report on Summary Financial Statements.

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● Sources:
1. R.A. 9298* - https://lawphil.net/statutes/repacts/ra2004/ra_9298_2004.html
2. IRR for R.A. 9298* - https://www.prc.gov.ph/uploaded/documents/IRR_cpa.pdf
3. BOA Resolution* -
https://www.prc.gov.ph/uploaded/documents/PRB_CPA_Reso2015_262_e.pdf
4. 5. PSAs and others - https://aasc.org.ph/downloads/download-home.php
Revised - https://aasc.org.ph/index.php
*uploaded in MOLE

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The Philippine Accountancy Act of 2004

or
Republic Act 9298

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Philippine Accountancy Act of 2004 (R.A. 9298)
Article I - Title, Declaration Of Policy, Objective And Scope Of Practice
Sections 1 - 4
Highlights:
SEC. 2. Declaration of Policy. – The State recognizes the importance of accountants in
nation building and development. Hence, it shall develop and nurture competent,
virtuous, productive and well rounded professional accountants whose standards of
practice and service shall be excellent, qualitative, world class and globally competitive
through inviolable, honest, effective, and credible licensure examinations and through
regulatory measures, programs and activities that foster their professional growth and
development.

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Article I - Title, Declaration Of Policy, Objective And Scope Of Practice
Highlights:
Section 3: Objectives. This Act shall provide for and govern:
(a) The standardization and regulation of accounting education;
(b) The examination for registration of certified public accountants; and
(c) The supervision, control, and regulation of the practice of accountancy in the
Philippines.

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Article I - Title, Declaration Of Policy, Objective And Scope Of Practice
Highlights:
Section 4: Scope of Practice
(a) Practice of Public Accountancy
- Individual, partner or as a staff member in an accounting or auditing firm
- Skilled in the knowledge, science and practice of accounting and as a qualified
person to offering or rendering professional services to one or more clients, as a
certified public accountant such as:
1. Audit or verification of financial transaction and accounting records
2. Preparation, signing, or certification for clients of reports of audit, balance sheet, and
other financial, accounting and reports.

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Article I - Title, Declaration Of Policy, Objective And Scope Of Practice
Highlights:
Section 4: Scope of Practice
(a) Practice of Public Accountancy (cont.)
3. Design, installation, and revision of accounting system
4. Preparation of income tax returns when related to accounting and auditing procedures
5. Represents clients before government agencies on tax and other matters related to
accounting
6. Renders professional assistance in matters relating to accounting procedures and the
recording and presentation of financial facts or data.

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Article I - Title, Declaration Of Policy, Objective And Scope Of Practice
Highlights:
Section 4: Scope of Practice
(b) Practice in Commerce and Industry
- Involved in decision making requiring professional knowledge in the science of
accounting as well as the accounting aspects of finance and taxation; or
- Represents the employer before government agencies on tax and other matters related
to accounting; or
- Employment or position requires that the holder thereof must be a certified public
accountant

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Article I - Title, Declaration Of Policy, Objective And Scope Of Practice
Highlights:
Section 4: Scope of Practice
(c) Practice in Education/Academe
- Person in an educational institution which involve teaching of accounting, auditing,
management advisory services, finance, business law, taxation, and other technically
related subjects
- Members of the Integrated Bar of the Philippines may be allowed to teach business law
and taxation subjects

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Article I - Title, Declaration Of Policy, Objective And Scope Of Practice
Highlights:
Section 4: Scope of Practice
(d) Practice in the Government
- Person 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
- Where a civil service eligibility as a certified public accountant is a prerequisite

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Article II - Professional Regulatory Board of Accountancy
Sections 5-12
Highlights:
Section 5: The Professional Regulatory Board of Accountancy and its
Composition.
- Chairman and six (6) members to be appointed by the President of the
Philippines from a list of three (3) recommendees for each position and
ranked by the Commission
- The Board shall elect a vice-chairman from among its members for a term one (1) year

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Article II - Professional Regulatory Board of Accountancy
Highlights:
Section 6: Qualifications of Members of the Professional Regulatory Board.
(a) Must be a natural-born citizen and a resident of the Philippines;
(b) Must be a duly registered Certified Public Accountant with a least 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; and
(d) Must not have any pecuniary interest, directly or indirectly, in any school, college,
university or institution conferring an academic degree…etc

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Article II - Professional Regulatory Board of Accountancy
Highlights:
SEC. 7. Term of Office
- The Chairman and members of the Board shall hold office for a term of three (3) years

SEC. 8. Compensation and Allowances of the Board

- Compensation and allowances comparable to that being received by the Chairman and
members of existing regulatory boards under the Commission
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Article II - Professional Regulatory Board of Accountancy
Highlights:
SEC. 9. Powers and Functions of the Board
(a) To prescribe and adopt the rules and regulations necessary for carrying out the
provisions of this Act;
(b) To supervise the registration, licensure and practice of accountancy in the
Philippines;
(c) To administer oaths in connection with the administration of this Act;
(d) To issue, suspend, revoke, or reinstate the Certificate of Registration for the practice
of the accountancy profession;
(e) To adopt an official seal of the Board; 

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Article II - Professional Regulatory Board of Accountancy
Highlights:
SEC. 9. Powers and Functions of the Board
(f) To prescribe and/or adopt a Code of Ethics for the practice of accountancy;
(g) To monitor the conditions affecting the practice of accountancy
(h) To conduct an oversight into the quality of audits of financial statements
(i) To investigate violations of this act and the rules and regulations promulgated
(j) Make such investigations as it deems necessary to determine whether any person has
violated any provisions of this law, any accounting or auditing standard or
rules duly promulgated by the Board
(k) To issue a cease or desist order to any person, association, partnership or corporation
engaged in violation of any provision of this Act
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Article II - Professional Regulatory Board of Accountancy
Highlights:
SEC. 9. Powers and Functions of the Board
(l) To punish for contempt of the Board, both direct and indirect, in accordance with the
pertinent provisions of and penalties prescribed by the Rules of Court 
(m) To prepare, adopt, issue or amend the syllabi of the subjects for
examinations in consultation with the academe, determine and prepare
questions for the licensure examination which shall strictly be within the
scope of the syllabi of the subjects for examinations as well as administer,
correct and release the results of the licensure examinations

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Article II - Professional Regulatory Board of Accountancy
Highlights:
SEC. 9. Powers and Functions of the Board
(n) To ensure, in coordination with the Commission on Higher Education (CHED) or
other authorized government offices that all higher educational instruction and offering
of accountancy comply with the policies, standards and requirements of the course
prescribed by CHED
(o) To exercise such other powers as may be provided by law as well as those which may
be implied

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Article III - Examination, Registration And Licensure
Section 13 - 25
Highlights:
SEC. 13. The Certified Public Accountant Examinations.
– All applicants for registration for the practice of accountancy shall be required
to undergo a licensure examination to be given by the Board in such places
and dates as the Commission may designate

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Article III - Examination, Registration And Licensure
Highlights:
SEC. 14. Qualifications of Applicants for Examinations
(a) is a Filipino citizen;
(b) is of good moral character;
(c) is a holder of the degree of Bachelor of Science in Accountancy duly recognized
and/or accredited by the CHED or other authorized government offices; and
(d) has not been convicted of any criminal offense involving moral turpitude.

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Article III - Examination, Registration And Licensure
Highlights:
SEC. 15. Scope of Examination (revised thru BOA res no 262 series 2015)
(a) Theory of Accounts
(b) Business Law and Taxation
(c) Management Services
(d) Auditing Theory
(e) Auditing Problems
(f) Practical Accounting Problems I
(g) Practical Accounting Problems II 

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Article III - Examination, Registration And Licensure
Highlights:
SEC. 15. Scope of Examination (revised thru BOA res no 262 series 2015)
BOA Res no 262 series of 2015:
From To
1. Theory of Accounts 1. Financial Accounting and Reporting
2. Practical Accounting Problems 1 2. Advanced Financial Accounting and Reporting
3. Practical Accounting Problems 2
4. Management Services 3. Management Advisory Services
5. Auditing Theory 4. Auditing
6. Auditing Problems
7. Business Law and Taxation 5. Taxation
6. Regulatory Framework for Business
Transactions

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Article III - Examination, Registration And Licensure
Highlights:
SEC. 16. Rating in the Licensure Examination.
– 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 grades
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.

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Article III - Examination, Registration And Licensure
Highlights:
SEC. 16. Rating in the Licensure Examination.
- 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.
Examples: Determine whether the examinee passed, failed or is conditional.
1. 100%, 100%, 100%, 100%, 100% and 64%
2. 75%, 75%, 75%, 70%, 70% and 65%
3. 80%, 75%, 70%, 85%, 70% and 65%
4. 75%, 65%, 80%, 85%, 75% and 70%

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Article III - Examination, Registration And Licensure
Highlights:
SEC. 16. Rating in the Licensure Examination.
Examples: Ratings on 6 subjects
1. 100%, 100%, 100%, 100%, 100% and 64% = Total average is 94%, but 1 subject is
less than 65%, so the candidate did not pass that subject. However, average on majority
is above 75% therefore conditional on subjects passed and must retake failed subject
2. 75%, 75%, 75%, 70%, 70% and 65% = Failed (even though no rating below 65%,
total average is only 71.67%, and average on majority is only 73.75% which is less than
75%)

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M2: Auditing Standards/Legal/Regulatory framework
Article III - Examination, Registration And Licensure
Highlights:
SEC. 16. Rating in the Licensure Examination.
Examples: Ratings on 6 subjects
3. 80%, 75%, 70%, 85%, 70% and 65% = Total average is only 74.17%, but average on
majority of 4 subjects is 77.50% and none below 65%. Conditional on subjects passed,
and must retake subjects below 75%.
4. 75%, 65%, 80%, 85%, 75% and 70% = Passed (average is 75%, and none below
65%

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Article III - Examination, Registration And Licensure
Highlights:
SEC. 17. Report of Ratings. – The Board shall submit to the Commission the ratings
obtained by each candidate within ten (10) calendar days after the examination, unless
extended for just cause.
SEC. 18. Failing Candidates to Take Refresher Course
- 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
submits 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.

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Article III - Examination, Registration And Licensure
Highlights:
SEC. 19. Oath. - All successful candidates in the examination shall be required to take
an oath of profession before any member of the Board or before any government official
authorized by the Commission
SEC. 20. Issuance of Certificates of Registration and Professional Identification Card. –
A certificate of registration shall be issued to examinees who pass the licensure
examination subject to payment of fees prescribed by the Commission
- 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.

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Article III - Examination, Registration And Licensure
Highlights:
SEC. 23. Refusal to Issue Certificate of Registration and Professional Identification Card
- The Board shall not register and issue a certificate of registration and professional
identification card to any successful examinee convicted by a court of competent
jurisdiction of a criminal offense involving moral turpitude or guilty of immoral and
dishonorable conduct or to any person of unsound mind.

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Article III - Examination, Registration And Licensure
Highlights:
SEC. 25. Reinstatement, Reissuance and Replacement of Revoked
or Lost Certificates. - The Board may, after the expiration of two (2) years from the date
of revocation of a certificate of registration and upon application and for reasons deemed
proper and sufficient, reinstate the validity of a revoked certificate of registration

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Article IV – Practice of Accountancy
Sections 26 to 35.
Highlights:
SEC. 26. Prohibition in the Practice of Accountancy. - 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 unless
such person shall have received from the Board a certificate of registration/
professional license and be issued a professional identification card.

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Article IV – Practice of Accountancy
Highlights:
SEC. 28. Limitation of the Practice of Public Accountancy.
– Single practitioners and partnerships for the practice of public accountancy shall be
registered certified public accountants in the Philippines.
- A certificate of accreditation shall be issued to certified public accountants in public
practice in accordance with rules and regulations promulgated by the Board

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Article IV – Practice of Accountancy
Highlights:
SEC. 29. Ownership of Working Papers - All working papers,
schedules and memoranda made by a certified public accountant and his staff in the
course of an examination shall be treated confidential and privileged and remain the
property of such certified public accountant in the absence of a written agreement
between the certified public accountant and the client, to the contrary, unless such
documents are required to be produced through subpoena issued by any court.

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Article IV – Practice of Accountancy
Highlights:
SEC. 30. Accredited Professional Organization.- All registered certified public
accountants whose names appear in the roster of certified public accountants shall be
united and integrated through their membership in a one and only registered and
accredited national professional organization.
- APO – Phil. Institute of Certified Public Accountants (PICPA)

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Article IV – Practice of Accountancy
Highlights:
SEC. 31. Accreditation to Practice Public Accountancy. - Certified
public accountants, firms and partnerships of certified public accountants,
engaged in the practice of public accountancy, including partners and staff
members thereof, shall register with the Commission

SEC. 32. Continuing Professional Education (CPE) Program. - All

certified public accountants shall abide by the requirements, rules and
regulations on continuing professional education to be promulgated by the
Board

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Article IV – Practice of Accountancy
Highlights:
SEC. 34. Foreign Reciprocity. – Subjects or citizens of foreign countries may be allowed
to practice Accountancy in the Philippines in accordance with the provisions of existing
laws, international treaty obligations including mutual recognition agreements entered
into by the Philippine government with other countries

SEC. 35. Coverage of Temporary/Special Permits

(a) A foreign certified public accountant called for consultation or for a specific purpose
which, in the judgment of the Board, is essential for the
development of the country.

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Article IV – Practice of Accountancy
Highlights:
SEC. 35. Coverage of Temporary/Special Permits
(b) A foreign certified public accountant engaged as professor, lecturer or critic in fields
essential to accountancy education in the Philippines and his/her engagement is confined
to teaching only
(c) A foreign certified public accountant who is an internationally recognized expert or
with specialization in any branch of accountancy and his/her service is essential for the
advancement of accountancy in the Philippines.

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Article V – Penal and Final Provisions
Section 36 to 44
Highlights:
SEC. 36. Penal Provision. - Any person who shall violate any of the provisions of this
Act or any of its implementing rules and regulations, upon conviction, be punished by a
fine of not less than fifty thousand pesos (P 50,000.00) or by imprisonment for a period
not exceeding two (2) years or both.
SEC. 37. Implementing Rules and Regulations. - Within ninety (90)
days after the effectivity of this Act, the Board shall adopt and promulgate such rules and
regulations to carry out the provisions of this Act and which shall be effective fifteen
(15) days following their publication in the Official Gazette or in any major daily
newspaper of general circulation.
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Article V – Penal and Final Provisions
Section 36 to 44
Highlights:
SEC. 39. Enforcement of the Act. - It shall be the primary duty of the Commission and
the Board to effectively enforce the provisions of this Act. Any person may bring before
the Commission, Board or the aforementioned officers of the law, cases of illegal
practice or violations of this Act committed by any person or party.

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Activity (can qualify for extra points)

Forum on RA 9298
1. Go to MOLE under Module 2 and open Forum on R.A. 9298 or The Philippine
Accountancy Act of 2004 and IRR
2. Click on RA 9298 and IRR under discussion column.
3. Answer 5 out of 10 questions correctly to earn a maximum of 5 points (1 point per
correct answer).
4. The first to answer the bonus question will earn additional points.

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Thank you!

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