THE YEAR THAT WAS
The year 2015 marked the BoA’s successful efforts to uplift the level of profession. In attaining these results, several individuals and organizations have generously contributed their time, effort and resources in the activities of the BoA under its “Expanding Horizons” initiative. Because of their exemplary work, they have attained success and the accolade of the various stakeholders and parties that they interact with. Truly they deserve the honor of being recognized as the movers of the accountancy profession. They will not be named at this time but will properly be acknowledged and given tribute at a more appropriate time.
The year just past resulted in the formulation and the implementation of the six-point Expanding Horizons strategic plan for the accountancy profession. This strategic plan has been finalized last month and will serve as the road map and vision for all accountants in uplifting the standards and level of the accountancy profession.
The strategic plan consists of the following thrusts: 1) Institute quality and governance measures, 2) Effectively regulate the profession, 3) Enhance image and reputation of the accounting professional, 4) Enhance stakeholders’ involvement and cooperation, 5) Institute structural change, and, 6) Provide communication and assistance mechanisms.
In 2015, the major accomplishments in putting in place governance measures include the continued journey towards the Performance Governance System Institutionalization, the forming of the partnership with Integrity Initiative Inc. , the issuance of the updated Code of Ethics, and the governance reform and oversight over the Accredited Professional Organization and various accountancy sectoral organizations.
The quality enhancement measures put into place are the preparation for the implementation of ASEAN Mutual Recognition Arrangement for Accountancy Services, the search for Most Outstanding Expanding Horizon Organization Award, the forging of the partnership with the Association of Chartered Certified Accountants, the renewed quality inspection of accounting schools, the launch of the BoA Internship Program, the launch of the AtTEST Extemporaneous School Team Speaking competition, and the utilization of the ACPA Assessment Tool.
The BoA, in coordination with various government offices and the different accountancy sectoral organizations, implemented several regulatory initiatives. The implementation of the Quality Assurance Review (QAR) on the practicing Certified Public Accountants (CPA) was the focus in 2015. There were several dialogues conducted with the various stakeholders on the QAR and the new rules and regulations for this program have been finalized by the BoA for the approval of the Professional Regulations Commission. The Philippines Institute of CPAs (PICPA) also organized its own voluntary QAR program to prepare for the full blown implementation of the QAR of the BoA.
The BoA effected several measures on the streamlining of administrative investigation process, the posting of the list in the BoA website of CPAs allowed to engage in public practice, and promoting the adoption of Cyber Security measures to secure the vulnerable accountancy platforms of enterprises.
Several regulatory measures were recommended by the BoA that will improve the regulatory environment. These includes the rules on prescribing a Quality Accreditation Checklist; the conduct of verification of the principal place of office of practicing accountants; the requirement for the submission of a Certificate of validation services on the Financial Statements; the submission of Engagement Reports of accredited accountants in public practice; Accreditation of CPAs in commerce and industry; Accreditation of CPA partners and staff; and the delegation of the signing of accreditation papers. These should have been implemented in 2015, but due to the bureaucratic logjam, if not inefficiencies in the PRC, these measures are still pending up to this time. However, it is expected that these will all be put in place in early 2016.
A notable activity of the BoA was its pursuit of a pro-active campaign against erring CPAs. It is clear that the BoA is serious in safeguarding the interest of the general public and the professional CPAs most of whom comply with their obligations and responsibilities and practice the elements of quality work and good governance. The BoA is particularly resolute in detecting and penalizing the erring CPAs whose ill practices not
only give them an unfair advantage over the rest of the CPAs but besmirch the reputation of the entire accountancy profession.
The year 2015 witnessed the launch of several publications on the accountancy sector. The BoA released the first issue of the News Ledger magazine, containing the many activities of the BoA; the Highest Standards Technical Journal, containing articles on relevant accounting issues written by accountants; and the Debit Credit column in the Business Mirror, where accountants take turns in contributing articles of business and accounting issues. These publications gives the opportunity to accountants to publish their literary creations and to showcase their talents and insights.
Project ACCT (accountant) was launched during the Annual National Convention of accountants in Puerto Princesa last November 2015. The audio video (AVP) clip entitled “I am Accountant” was released to an audience of over 3,000 accountants during the event. The AVP aims to enhance the image and reputation of the accountant as well as to promote the pride and self esteem in being accountants.
The accountancy profession was able to get together the various stakeholders and to involve them in various cooperative undertakings. These included the holding of two Accountancy Leaders and Stakeholders Forum; the conduct of dialogues with Affiliated Accountancy Certification Bodies; the tie up with various Developmental Partners, such as the World Bank, ADB and others; the formation of the Council of Accreditation Regulators; the Academic Industry linkages; the Citizens Participatory Audit for CPAs involving the collaboration of the Commission on Audit, Bureau of Customs, PICPA and BoA; discussions on accountancy matters with the Department of Education, Commission on Higher Education (CHED) Technical Education and Skills Development Authority, Cooperative Development Authority , Department of Finance, Securities Exchange Commission (SEC), Bangko Sentral ng Pilipinas, Bureau of Internal Revenue(BIR), and Insurance Commission; and the meetings with the accountancy regulators and professional organizations of other countries.
There was close coordination and team work of the different organizations in the various sectors such as the PICPA, Association of CPAs in Public Practice, Association of CPAs in Commerce and Industry, Government Association of CPAs, National Association of CPAs in Education and the National Federation of Junior Philippine Institute of Accountants.
In the accountancy profession, major structural changes were either initiated or completed during 2015. The CPA Board Examination Syllabi and Subjects were overhauled to make these more relevant and to meet the global standards. The major change here involved the shift to meet the requirements of an Outcome Based Education; the new focus on effective communication; the reduction in the number of Board examination subjects from seven to six; and the introduction of a new subject called “Regulatory Framework for Business Transactions”. These changes will take effect on the May 2016 CPA Board Examination.
The Bachelor of Science in Accountancy (BSA) was also the subject of a major review and recommendation for revision. The CHED and the BoA undertook a review of the existing BSA which was introduced way back in 2007. Finding the need to address the requirements of the current time, industry and profession, important recommendations were formulated. The CHED and BoA reported the need to have four tracks in the accountancy education. These four are the existing BSA leading to the qualification for the taking of the CPA Board Examinations; and three new programs that include the BS Management Accounting BS in Accounting Information Systems, and BS in Internal Audit. The new accounting academic programs are expected to be in place by school year 2018.
Other structural reforms where discussions have started in 2015 are the strengthening of the Small and Medium Practices (SMP), the upward adjustment of the audit threshold, and amendment of the Accountancy Law of 2004.
With the local and global developments, the SMP have to strengthen their organization and practices for them to remain competitive and meet the growing demands of the market and the regulators. Thus, SMPs may need to consider consolidation or merger of practices to cope better in the business environment. The BoA has been discussing how to help the SMPs in this regard.
The audit threshold in the Tax Code prescribes that enterprises with sales exceeding P600,000 in a year are required to have and independent CPA perform audit work on their business. The BoA has formulated a solution which will address this impractical and unreasonable audit threshold presently in place. It has started discussions with the other regulators, including SEC and the BIR, on how this system can be rationalized to benefit all stakeholders, including the small and medium enterprises as well as the regulators.
Finally, Republic Act No. 9892 or the Accountancy Law, which defines the practice and regulation of accountancy in the Philippines, is in dire need of revisions. This law was passed way back in 2004, and the developments in the past years have made it imperative to amend the accountancy law. The BoA has been receiving and compiling suggestions from the various stakeholders on the provisions which can be incorporated in a bill that can be submitted to the next Congress for their consideration. This discussion will go full blast in 2016 to come up with proposals on the amendments that can be submitted to the next Congress.
The accomplishments achieved to date in the profession can be attributed to a great extent to the effective communication and interaction between the BoA and all its constituents and stakeholders. This interaction has been facilitated by the information and communication system that was put in place by BoA for the accountancy sector. This includes the creation of the BoA website (boa.com.ph) , Facebook account (Professional Regulatory Board of Accountancy) twitter account (PRC BoA) , email account (email@example.com) and a Notification alert or release on BoA updates that is sent on a regular basis by email to the concerned parties .
Feedback on the various initiatives and issues confronting the profession are also obtained from the three Sectoral Surveys and the CPA Career Tracking Survey that can be accessed and accomplished online by the respondents. To date, thousands of respondents have taken the surveys which continue to be available for responding in the BoA website.
The BoA has developed a Information Technology (IT) System that will help in the tracking of documents that the regulator handles in the course of its regular work and special projects. This IT system is also geared to process the many information that the BoA receives and requires to come out with inputs to aid the BoA in its decision making and work management functions.
To assist the BoA in its varied activities, many volunteers have joined the Expanding Horizons bandwagon to contribute their ideas and efforts in the many activities and events in the profession. A special project team has been organized with the composition coming from the volunteers and the interns of BoA. Plans for the creation of a Technical and Secretariat Office have been done and submitted to the concerned government office for its consideration.
It is also noteworthy to know that in 2015 a total of 7,630 Certified Public Accountants joined the growing roster of professionals. These new CPAs passed the three licensure examinations given by BoA last year. Feedback from the industry and profession indicates that even this number of new CPAs are inadequate to meet the large market demand for accountants here and abroad.
The seven man Board was finally completed in 2015. The entire BoA, consisting of Chairman Joel Tan-Torres, Vice Chair Gloria Baysa, Hon. Eliseo Aurellado, Hon. Gerard Sanvictores, Hon. Samuel Padilla, Hon. Concordio Qyuisaot, and Hon. Arlyn Villanueva have been cohesively leading the accountancy profession the entire year of 2015.
They were able to attend over 130 conferences, forum, “Meet the Examiners” sessions, dialogues, conventions and other events, locally and abroad, in 2015.
Despite the limited resources of the BoA, a lot of milestones have been achieved have been achieved in 2015. Thanks to the contribution of the many unnamed and selfless individuals and organizations, the projects and activities under the Expanding Horizons initiative of the BoA on behalf of the accountancy profession have been planted and have borne fruits already Truly a very successful Expanding Horizons year.
———————————————————————————————————————————–DRAFT RULES ON FS PREPARATION FOR COMMENTS
The Board of Accountancy (BoA) is asking for comments on the proposed rules on Financial Statements (FS) preparation and the requirement for the Certificate of FS preparation (“Certificate). The draft rules provide, among others, the following:
- Requirement of the attachment to the annual FS of a Certificate on the preparation of Financial Statements and notes to the Financial Statements
- The Certificate shall be prepared only for issuers which/who have gross sales or revenues exceeding ten million pesos (P10,000,000) for a particular accounting year
- The preparation of the FS and disclosure notes is a practice of accountancy in commerce and industry and shall be done only by Certified Public Accountants (“CPAs”)
- The reiteration of the rule that CPAs in public practice are prohibited from preparing or assisting in the preparation of FS and disclosure note of their clients which engaged them to render attest services for the same documents
- The CPAs in public practice who violate this prohibition rule shall be subject to stern sanctions by the Board of Accountancy
- The CPAs preparing the FS and the Certificate shall first be accredited with the Professional Regulatory Board of Accountancy after submitting the necessary application and complying with the Continuing Professional Development (CPD).
- These CPAs should apply for accreditation not later than February 29, 2016 and comply with the CPD requirements not later than June 30, 2016 after signing an affidavit of undertaking to that effect.
DRAFT RULES ON THE ACCREDITATION OF PARTNERS AND STAFF OF FIRMS AND PARTNERSHIP
Section 31 of Republic Act (RA) 9298 provides that individual certified public accountants, firms and partnerships of certified public accountants engaged in the practice of public accountancy, including the partners and staff members thereof, shall register with the Commission and the BoA, such registration to be renewed every three years. As presently implemented, the partners and CPA staff members of partnerships and firms are not being registered or accredited. This provision of law will now be implemented.
In the implementation, all partners and CPA staff members in partnerships and firms have until February 29, 2016 to file their accreditation forms in the Professional Regulatory Commission, and to complete all the Continuing Professional Development (CPD) requirements in the checklist until June 30, 2016, 2016. Those who have yet to complete their CPD requirements are given until June 30, 2016, 2016 to complete these and have to submit the Affidavit of Undertaking together with their accreditation form.
The draft resolution and rules on this are now posted in the BoA website and have been disseminated to the various sectoral organizations, including PICPA, ACPAPP, ACPACI and NACPAE.
UPDATE ON THE QUALITY ASSURANCE REVIEW PROGRAM
Accountancy Stakeholders Forum Tentative Results of Sectoral Surveys as of December 7, 2015
STAKEHOLDERS FORUM Presentation by Atty. Samuel Padilla
Accountancy Stakeholders Forum Program
1st ACCOUNTANCY STAKEHOLDER’s FORUM HELD
A historic event took place in PICPA Shaw last may 18, 2014 when the leaders of the accountancy profession gathered in the !st Accountancy Stakeholder’s Forum (ASF)organized by the Board of Accountancy.
Over 20 participants attended the forum, coming from the 7 sectoral accounting organizations, 2 standards councils, the Big 6 accounting firms and the complete Board of Accountancy. Chairman Joel Tan-Torres discussed the Regional and Local developments in the Accountancy profession and presented the priority projects under the Expanding Horizons(EH) initiative.
“This forum is intended to communicate to the major stakeholders in our profession the global and domestic environment that is or will be confronting our CPAs. Our fellow accountants should be aware on what is forthcoming in the near future and that they should be properly equipped to cope with these developments. The BoA will be there to provide the necessary support to as well as regulatory monitoring of the entire profession,” Chairman Tan-Torres said.
The calendar of events until the end of the year was presented during the forum. The participants were also informed of the point person in the BoA for the various EH projects and sectoral organizations.
PGS Committee Head Normita Villaruz presented the Performance Governance System of the accountancy profession.
The nest meeting of the ASF is scheduled on November 18, 2015.