Law Summary
Declaration of Policy
- State acknowledges the critical role of accountants in national development.
- Seeks to cultivate competent, ethical, productive, and global-level professionals.
- Emphasizes credible licensure exams and regulatory measures for professional growth.
Objectives
- Standardize and regulate accounting education.
- Administer licensure exams for certified public accountants (CPAs).
- Oversee the practice of accountancy in the Philippines.
Scope of Practice
- Public Accountancy: Performing audits, preparing and certifying financial reports, designing accounting systems, representing clients before tax and accounting agencies.
- Commerce and Industry: Decision-making requiring accounting expertise and CPA qualification.
- Education/Academe: Teaching accounting and related disciplines; IBP members may teach business law and taxation.
- Government Practice: Positions requiring CPA qualification in governmental and government-owned corporations.
Professional Regulatory Board of Accountancy (The Board)
- Composed of a chairman and six members appointed by the President.
- Members must be Filipino CPAs with at least 10 years experience, good character, no conflicts of interest with educational institutions.
- Term is 3 years with restrictions on consecutive term limits.
- Board receives compensation similar to other regulatory boards.
Powers and Functions of the Board
- Formulate rules and regulations for the Act's implementation.
- Manage licensure, registration, and regulation of CPAs.
- Issue, suspend, revoke certificates; administer oaths.
- Adopt Code of Ethics and oversee accounting and auditing standards including international standards.
- Investigate violations including examination irregularities; may delegate investigations to professional organizations.
- Issue cease and desist orders against violations.
- Administer licensure examinations and supervise accounting education with CHED.
Administrative Supervision and Secretariat
- Board under administrative supervision of the Professional Regulation Commission (PRC).
- PRC custody of all Board records.
- PRC provides secretariat and support services.
Grounds for Suspension or Removal of Board Members
- Neglect of duty, incompetence.
- Violations of this Act or ethical/professional standards.
- Conviction of crimes involving moral turpitude.
- Examination manipulation or breach of exam secrecy.
Annual Report
- Board submits yearly report to the President through the PRC detailing activities and recommendations to improve accountancy practice.
Licensure Examination
- Applicants must be Filipino, of good moral character, hold a Bachelor of Science in Accountancy from recognized institutions, and have no conviction for crimes involving moral turpitude.
- Exam subjects: Theory of Accounts, Business Law and Taxation, Management Services, Auditing Theory and Problems, Practical Accounting Problems.
- Passing grade: 75% general average with no subject lower than 65%.
- Conditional credits allowed with retake of failed subjects within 2 years.
Examination Rating and Reporting
- Board submits ratings within 10 days after exams.
- Examinees receive individual rating reports by mail.
Refresher Course for Repeat Failures
- Candidates failing two full CPA exams must complete at least 24 units of subjects before retaking exams.
Oath of Profession
- Successful candidates must take an oath before Board members or authorized officials before practice.
Certificate of Registration and Professional ID Card
- Certificates show entitlement to practice and remain valid unless suspended or revoked.
- ID cards are renewable every three years.
Roster of CPAs
- Board maintains and updates a public roster of registered CPAs.
Indication of Registration in Professional Documents
- CPAs must indicate their certificate number, issuance date, validity, and professional tax receipt number on professional documents.
Refusal to Issue Registration
- Refusal grounds include conviction of moral turpitude crimes, immoral conduct, or unsound mind.
- Written reasons must be provided to the applicant.
Suspension and Revocation of Registration
- Grounds include unprofessional conduct, malpractice, violations of the Act, rules, Code of Ethics, or standards.
Reinstatement and Replacement of Certificates
- Revoked certificates may be reinstated after 2 years subject to Board approval.
- Replacement certificates for lost/destroyed licenses may be issued upon fees.
Prohibition in Practice
- Only registered CPAs with valid certificates or permits may practice or use CPA titles.
Vested Rights of Existing CPAs
- Existing CPAs at enactment are automatically registered under this Act.
Limitation on Practice of Public Accountancy
- Only registered CPAs may practice singly or in partnerships.
- Certificate of accreditation requires at least three years relevant experience (with exceptions).
- Corporations may not be registered to practice public accountancy.
Ownership of Working Papers
- Working papers and related records are confidential and owned by the CPA unless agreed otherwise or subpoenaed.
Accredited Professional Organization
- Single national professional organization of CPAs registered as a non-profit and recognized by the Board.
- Membership grants privileges but does not prohibit membership in other CPA associations.
Accreditation to Practice Public Accountancy
- CPAs and firms must register with the PRC and Board, with registrations renewable every 3 years.
Continuing Professional Education (CPE) Program
- Mandatory compliance with CPE requirements enforced by a CPE Council.
- Coordinated with accredited professional organizations or educational institutions.
CPA Seal
- Licensed CPAs must use a prescribed seal with name, registration number, and title.
- The seal is affixed on auditor's reports along with PTR details when used professionally.
Foreign Reciprocity
- Foreign CPAs may practice only if reciprocal privileges are granted by their home countries.
Temporary/Special Permits
- Issued to foreign CPAs for consultations, teaching, or expertise essential to the country.
- Practice limited to specific engagements.
Penal Provision
- Violations punished by fine not less than ₱50,000, imprisonment up to 2 years, or both.
Implementing Rules and Regulations
- To be promulgated within 90 days post-effectivity, subject to approval and public notice.
Interpretation
- Act does not restrict practice of other recognized professions.
Enforcement
- Primary responsibility of Board and PRC.
- Law enforcement agencies must assist.
- DOJ provides legal advisory and support.
- Any person may report illegal practice or violations.
Funding
- Commission chairperson must include Act implementation in budget funded by General Appropriations Act.
Transitory Provisions
- Incumbent Board members continue under prior appointment.
- Accounting graduates allowed to take CPA exams within two years under Board rules.
Separability Clause
- Invalid provisions do not affect the rest of the Act.
Repealing Clause
- Presidential Decree No. 692 and inconsistent laws are repealed or modified accordingly.
Effectivity
- Effective 15 days after publication in Official Gazette or major newspapers.