Legal and professional scope definitions
- Practice of accountancy also includes employment situations where the nature and character of employment involves decision-making requiring professional knowledge in accounting.
- A person is treated as practicing the profession if employment as an officer or employee in a private enterprise or educational institution requires that the holder must be a Certified Public Accountant.
- A person is treated as practicing the profession if he holds or is appointed to a position in the accounting occupational group in government or government-owned or controlled corporations (including proprietary functions) where civil service eligibility as a Certified Public Accountant is a prerequisite.
- A Certified Public Accountant’s professional work for clients includes reports of audit and other accounting reports to be used for publication or credit, filed with courts or government agencies, or used for other purposes.
- The law authorizes the Board of Accountancy and the Professional Regulation Commission to implement and supervise the professional system for CPA practice.
Board of Accountancy: composition and qualifications
- The law establishes the Board of Accountancy with a chairman and six (6) members, appointed by the President of the Philippines upon recommendation of the Professional Regulation Commission.
- The Board elects a vice-chairman from among its members for a term of one year.
- The Chairman presides in all Board meetings; if the Chairman post becomes vacant, the vice-chairman assumes duties until the end of the term or until a Chairman is appointed.
- A person cannot be appointed to the Board unless he is: (a) a Philippine citizen, (b) of good moral character, (c) a duly registered Certified Public Accountant in the Philippines, (d) has at least ten (10) years in the practice of accountancy, and (e) is not directly or indirectly connected with any school/college/university granting qualifying degrees, or with any CPA review school/institute, and has no pecuniary interest in them.
- The law limits board appointments: a person who has served two successive complete terms is ineligible for reappointment until after the lapse of one year, and appointment to fill an unexpired term is not considered a complete term.
Board powers: exams, standards, investigations
- The Board must determine and prescribe minimum requirements leading to admission to the CPA examinations.
- The Board must determine and prepare licensure examination contents, and score and rate examination papers, then submit results to the Commission within two hundred forty (240) days after the last examination day, unless otherwise directed by the Commission.
- The Board must continuously look into conditions affecting the profession and adopt proper measures to enhance and maintain high professional, ethical and technical standards.
- The Board must investigate violations of the Accountancy Law and its implementing rules and regulations and may issue summons, subpoena, and subpoena duces tecum to violators or witnesses and compel attendance for investigations or hearings.
- The Board must promulgate decisions in administrative cases, subject to review by the Commission.
- After due process, the Board may suspend, revoke, or reissue certificates of registration for causes provided by law or by rules and regulations issued for that purpose.
- The Board must perform other functions necessary to implement policies regulating the practice of the profession.
CPA examinations: schedule, admission, and subjects
- The Board determines and prepares the contents of the examinations to qualify Certified Public Accountants, in coordination with the Professional Regulation Commission.
- The Board must conduct the CPA examinations at least once in each calendar year in the Cities of Manila and Cebu.
- If conditions warrant, the Board may conduct examinations in other places upon previous approval of the Professional Regulation Commission.
- No person may be admitted to the CPA examination unless he is: (a) a citizen of the Philippines, (b) at least twenty-one (21) years of age—with an exception allowing applicants below age twenty-one (21) to take the examination; if the applicant passes, the certificate is not issued until the applicant reaches the required age—(c) of good moral character, and (d) a holder of a Bachelor of Science in Commerce or its equivalent from a government-recognized institution under the law.
- Admission is also governed where a candidate failed two complete CPA examinations: the candidate must comply with the examination requirements in Section 13.
- The examinations are written and cover subjects with weight in units (unless otherwise modified by the Board upon approval of the Commission), totaling 14 units and 21 minimum hours:
- Theory of Accounts (2 units, 3 hours minimum)
- Business Law and Taxation (2 units, 3 hours minimum)
- Management Services (2 units, 3 hours minimum)
- Auditing Theory (2 units, 3 hours minimum)
- Auditing Problems (2 units, 3 hours minimum)
- Practical Accounting Problems (2 units, 3 hours minimum)
- The law’s practical accounting coverage includes Practical Accounting I and Practical Accounting II, addressing:
- Practical Accounting I: financial statements and accounting for assets, liabilities, and stockholder’s equity.
- Practical Accounting II: partnership, joint ventures, fire insurance on insured’s books, consignments, installment sales, agencies and branches, business combinations, cost accounting, financial analysis, and government accounting.
Examination results, conditional credits, and disqualification
- A candidate obtaining a general weighted average of seventy-five percent (75%) and above is entitled to registration as a Certified Public Accountant, but the rating in no subject may be less than sixty-five percent (65%).
- A candidate obtaining a rating of seventy-five percent (75%) and above in at least four (4) subjects with a combined weight of eight (8) units receives a conditional credit for passed subjects.
- Candidates with conditional credit must take an examination in the remaining subjects within two years from the preceding examination.
- If the candidate fails to obtain at least a general weighted average of seventy-five percent (75%) and a rating of at least sixty-five percent (65%) in each subject re-examined, the candidate is considered failed in the entire examination.
- Any candidate who fails in two complete CPA board examinations is disqualified from taking another set of examinations unless the candidate submits evidence satisfactory to the Board of Accountancy that he re-enrolled in and completed at least twenty-four (24) units of subjects given in CPA examinations.
- For purposes of this Law, examinations in which the candidate was conditioned, together with the removal examination on the subject in which he failed, count as one complete examination.
Certificates: issuance limits and required form
- The Board of Accountancy issues a certificate of registration as Certified Public Accountant to those who satisfactorily pass the examination or otherwise comply with the Board’s requirements.
- Every certificate of registration must show the full name of the registrant, have a serial number, be signed by all the members of the Board and the Chairman of the Professional Regulation Commission, and be attested by the official seal of the Board.
- A certificate of registration cannot be issued to any candidate who has been convicted by a court of competent jurisdiction of any criminal offense involving moral turpitude, or has been found guilty of immoral or dishonorable conduct after due investigation by the Board of Accountancy, or has been declared of unsound mind.
- Applications must be filed with the Professional Regulation Commission and are subject to payment of fees prescribed by the Professional Regulation Commission.
Ethics rules, secrecy, and administrative process
- Subject to approval by the Professional Regulation Commission, the Board of Accountancy must promulgate rules and regulations and set professional standards for accountancy practice.
- Such rules include a code of professional ethics and security measures to protect the secrecy and integrity of CPA examinations.
- The law establishes grounds for proceedings against a Certified Public Accountant, including:
- Conviction of any criminal offense involving moral turpitude.
- Immoral or dishonorable conduct.
- Insanity.
- Fraud in acquisition of the certificate.
- Gross negligence or incompetence in professional practice.
- Addiction to alcoholic beverages or habit-forming drugs rendering him incompetent.
- False or extravagant or unethical advertisement stating matters other than name, profession, limitation of practice, office and home address.
- Issuing an accountant’s certificate covering clients’ accounts without observing necessary auditing standards.
- Aiding or acting as a dummy of an unqualified or unregistered person to practice accountancy.
- Violation of any provision of the Decree or its rules and regulations.
- Conduct discreditable to the accounting profession.
- Within five (5) days after filing written charges under oath, the respondent Certified Public Accountant must be furnished a copy requiring an answer.
- Administrative investigation is conducted by the Board or its members designated by the Chairman, or by a legal or hearing officer of the Professional Regulation Commission, and the decision is promulgated by a majority of the members of the Board.
- Rules and regulations promulgated by the Professional Regulation Commission govern procedure and conduct of administrative investigation before the Board.
- Respondents are entitled to: representation by counsel, speedy and public hearing, and the right to confront and cross-examine witnesses against them.
- The Board’s decision becomes final after thirty (30) days from receipt by the respondent of a copy of the decision unless an appeal to the Professional Regulation Commission is filed within the same period; the Commission’s decision becomes final.
- The Board may order reinstatement after two (2) years for a CPA whose certificate was revoked if, during that period, the CPA acted in an exemplary manner and committed no illegal, immoral, or dishonorable act.
Criminal offenses, foreign reciprocity, and ownership rules
- The law penalizes acts that defeat, deceive, or obstruct another person’s right of examination, as well as falsifying or misreporting examination grades or rankings, or using special or secret information to improve or injure prospects for examination or certification.
- For each offense under these corrupt exam provisions, the penalty is a fine not exceeding five thousand pesos (PHP 5,000), or imprisonment not exceeding two (2) years, or both.
- The law penalizes knowingly making material false statements in an application for examination, conniving at false statements in certificates accompanying applications, making material false statements in certificates accompanying others’ applications, impersonation or aiding impersonation, false making or forgery of certificates, or attempting fraud or violation of the Decree or its regulations; these acts carry the same penalty as the prior corrupt examination paragraph.
- A person holding out to the public as having received the certificate, or practicing as a Certified Public Accountant, or using “C.P.A.” or similar letters/words without holding the certificate or after being deprived of its use by temporary suspension or revocation must be punished with a fine not exceeding five thousand pesos (PHP 5,000) or imprisonment not exceeding two (2) years, or both, at the Court’s discretion, for each offense.
- Each day that an unauthorized or suspended/revoked person practices or holds himself out as a Certified Public Accountant is deemed a separate offense.
- A foreigner cannot be admitted to the examinations or registered as a Certified Public Accountant unless the foreigner proves in the manner provided by the Professional Regulation Commission that the foreigner’s country allows Philippine citizens to practice accountancy after an examination on terms of strict and absolute equality, including unconditional recognition of prerequisite degrees issued by government-recognized Philippine institutions.
- Working papers, schedules, and memoranda made by a Certified Public Accountant and staff in the course of an examination—including those prepared and submitted by the client—remain the property of the Certified Public Accountant in the absence of a written agreement with the client to the contrary.
- Working papers, schedules, and memoranda cannot be sold, transferred, bequeathed, or otherwise disposed of without the consent of the client (or the client’s heir, personal representatives, or successors) to anyone other than one or more surviving partners or new partners of the Certified Public Accountant.
Practice limits, accreditation, integration, and registration
- All partners in partnerships organized for the practice of public accountancy must be registered Certified Public Accountants in the Philippines.
- The Securities and Exchange Commission Commissioner cannot register a corporation organized for the practice of public accountancy.
- The Professional Regulation Commission must adopt rules to integrate Certified Public Accountants under conditions it sees fit to raise standards and enable discharge of public responsibilities more effectively.
- Certified Public Accountants and firms or partnerships of Certified Public Accountants, including partners and staff members, must register with the Professional Regulation Commission and the Board of Accountancy.
- Registration must be renewed annually on or before September 30 of each year following the date of issuance.
- The Board of Accountancy promulgates rules and regulations, subject to Commission approval, for registration requirements, including the fees and the penalties for violation of those requirements.
Repeals and effectivity
- Republic Act No. 5166 is repealed, and all inconsistent laws, executive orders, administrative orders, rules and regulations, or parts thereof are repealed and modified accordingly.
- The Decree takes effect upon promulgation, except that Section 10, paragraph (e) and Section 13 take effect beginning with the Certified Public Accountant examinations to be given in the year 1976.