Chapter Four

Allowable Forms of Organization

for the Practice of Public
Accountancy

Single proprietorship

Partnerships (General and Limited Liability)

Firm (CPA firm or audit firm)

X Corporation
Well-known CPA Firms in the
Philippines
Corresponding Firm in the
Network Firm
Philippines

Ernst and Young, LLP Sycip, Gorres, Velayo & Co.

PricewaterhouseCoopers
Isla Lipana & Co.
, LLP
Klynveld, Peat, Marwick,
Manabat Sanagustin & Co.
Goerdeler (KPMG), LLP

Grant Thornton, LLP Punongbayan & Araullo

Deloitte (Deloitte Touche

Navarro Delgado Amper & Co.
Tohmatsu)
 Accreditation to Practice
Public Accountancy
Certificate of Accreditation from BOA must be
obtained first

a certificate under seal, issued by the PRC upon

the recommendation by BOA, attesting that
individual CPAs including the staff members,
firms including the proprietors and staff
members and partnerships including the
partners and staff members, are accredited to
practice public accountancy in the Philippines
 Accreditation to Practice
Public Accountancy
A minimum of 3 years of meaningful experience
in any areas of public practice is required

At least 1 year as audit associate

At least 2 years as auditor-in-charge
of audit engagements covering the full
audit functions of significant clients
 Meaningful Experience in
Other Sectors
Sector Meaningful experience shall include:
1. General Accounting, budgeting and tax
administration
2. Internal auditing and liaison with external
Commerce and
auditors
Industry 3. Representing his/her employer before
government agencies on tax matters related to
accounting
Teaching for at least 3 trimesters or 2 semesters
Education or subjects in either financial accounting, business law,
academe tax, auditing problems, auditing theory, financial
management and management services
1. General Accounting, budgeting and tax
Government administration
2. Internal auditing and liaison with COA
 Renewal of Accreditation

Every three years

Requirements:

✓120 CPD Credit units

✓undergo system of quality control

✓Certificate of Good Standing from PICPA

 Quality Review Committee
(QRC)
conduct an oversight into the quality of audits of
financial statements through a review of the
quality control measures instituted by the
individual CPAs, firms or partnerships

Composition: 1 Chairman and 6 representatives

1 BOA

2 PICPA Public Practice Appointed by PRC

1 PICPA Commerce and Industry
3-year term renewable for another term
1 PICPA Academe

1 PICPA Government Chairman must be currently a senior

practitioner in public accountancy
 Quality Review Committee
(QRC)
Powers and Functions
Conduct quality review on applicants for registration to
practice public accountancy and render a report which
shall be attached to the application for registration

Recommend to BOA the revocation of Certificate of

Registration and the professional identification card
who has not observed the quality control measures and
who has not complied with the standards of quality
prescribed

In case that the QRC cannot accomplish its functions,

BOA may conduct the required quality review
Compliance with Government
and Legal Requirements
Registration for Accreditation

- valid for three years

- renewed every 3 years on or before September 30

on the year of expiry

- registration of applicants approved during any

month shall expire on December 31 of the third
year
Compliance with Government
and Legal Requirements
The application of registration of Grace and
Gemma, CPAs was approved on July 31, 2012

Registration shall expire on Dec. 31, 2014

The firm will apply for renewal on or before Sept. 30, 2014
The renewal will be for the 3 years beginning Jan. 1, 2015
The next renewal will be on or before Sept. 30, 2017
The 2nd renewal will be for the 3 years
Jan. 1, 2018
beginning
Compliance with Government
and Legal Requirements

Application for registration shall be

accomplished in the form prescribed by BOA, in
triplicate and duly signed by the applicant
Compliance with Government
and Legal Requirements
RULES IN NAMES

Individual CPA- should be under his/her registered name

with BOA and the PRC as printed on the CPA certificate

Ex. Sophil Hong, CPA

Firms- should be under the duly registered and authorized

name in DTI and such firm name shall include the real
name of the sole proprietor

Ex. Sophil Hong and Associates

Compliance with Government
and Legal Requirements
RULES IN NAMES

Registered partnerships- under the partnership name indicated in the

current Articles of Partnership and certificate issued by SEC

Ex. Ughoc, Carrion, Del Rosario & Co.

No fictitious names

Name should not be misleading or indicate specialization

A partner surviving the death or withdrawal of all other partners

may continue to practice under the partnership name for a period
of not more than 2 years after becoming a sole proprietor
Compliance with Government
and Legal Requirements

LIMITATIONS FOR FOREIGN CPAs

Not allowed (exception: R.A 9298, Sec 34-35)

FIRST-TIME REGISTRANTS

Sworn Statement regarding the three years

meaningful experience
Compliance with Government
and Legal Requirements
AUTHENTICATION AND ACCREDITATION

BOA shall authenticate all applications received in proper

form and recommend to PRC the approval or denial not
later than 60 days after the receipt of application

PRC, issue to the applicant the corresponding Certificate

of Registration to practice public accountancy

Certificate of Registration is valid for three years and

shall be renewable every three years
 Other Considerations

Location and Work Environment

major factor is convenience, accessibility

Technology

office equipment,IT, disaster recovery plans and

backup facilities
 Other Considerations

Hierarchy and Personnel

Partners
10+ years
Manager
6-10 years
Senior Associates
3-6 years
Associate
0-3 years
 Associate
Detailed audit work such as

1. Checking footings and computations

2.Checking short and long extensions

3.Tracing postings to the ledger

4.Performing tracing and vouching procedures

5.Preparing analyses and schedules of accounts

6.Preparing reconciliations

7.Observing physical count of inventories

8.Mailing of confirmation requests and summarizing the results of confirmation

procedures

9.Quality control on audit deliverables, such as proof-reading and effecting corrections

 Senior Associate

More complex audit procedures and

1. Usually draft and finalize audit program

2.Supervise associates and performs review

procedures on work performed by associates

3.Address minor accounting and auditing issues

with clients and audit associates
 Manager

Performs audit procedures and engagement management

1. Prepare the overall audit plan

2.Perform administrative work for several concurrent

engagements

3.Settle major accounting or auditing issues

4.Act as liaison between partners and other team members

5.Usually draft the report for review by the partner

 Partners
Owners of the audit firm

Determine operating policies of the firm

1. Obtain and maintain relationship with clients

2.Discuss with clients the objective and scope of the audit

3.Assume overall responsibility for each engagement

4.Attend client’s meetings to answer questions that may arise in connection with the
audit engagement or the audit report

5.Have the final say on accounting or auditing issues encountered in an engagement

6.Sign the reports and firm correspondence

7.Approve the billings for fees to be given to clients

 Other Considerations

Human Resources

good policy on hiring, professional development and

advancement of its employees

Training

1.In-house training

2. On the job training

3.External training
Advertising and Promotion

Do not bring the profession into disrepute when

making marketing.

Should be honest and truthful and should not:

Make exaggerated claims for services offered,

qualifications possessed or experience gained

Make disparaging references to unsubstantiated

comparisons to the work of another
Advertising and Promotion

SOURCES OF CLIENTS

Referrals

ADVERTISING

Name, telephone number, address and

membership in professional organizations
 Advertising and Promotion

Reasons for not allowing advertisement:

1. can lead to undue competition and decline in

quality of service

2. would encourage a more commercial approach,

reducing clients’ trust in CPAs, increasing
likelihood of CPAs neglecting the ethical duties

3.cost of advertising would outweigh any savings

which might result from competition
 BOA Resolution No. 126,
Series of 2008
1. Objective is to notify the public or such sectors,
matters of fact in a manner that is not false,
misleading or deceptive

2. It is in good taste

3.It is professionally dignified

4.It avoids frequent repetition of and any undue

prominence being given to the name of the firm
 Not allowed

a. Self-laudatory statements

b.Discrediting, disparaging, attacking other firms

c.Referring to, using or citing actual or purported testimonials by third

parties

d.Publishing and comparing fees with other CPAs

e.Giving too much emphasis on competitive differences

f.Using words or phrases which are hard to define and even more
difficult to substantiate objectively

g.Publishing services in billboard advertisements

 Not allowed
Use of name of an international accounting firm affiliation
shall not be allowed other than a notation
“member/correspondent firm of foreign firm”

No firm or CPA practitioner shall identify the name of a

client in advertising except if the client gives its written
consent

No firm or CPA practitioner shall use the term “Accredited”

if the accreditation has expired

All advertisements must have a prior review and approval

in writing by the Risk Management Partner and Managing
Partner
 Awards

publicity should not be used for personal

advantage
 Seeking Employment or
Professional Business

write a letter or make a direct approach

do not publicize for subcontract work that could

be interpreted as seeking professional business
 Directories

can be listed in a directory

name, address, telephone numbers, professional

description, services offered and other necessary
information
Books, Articles, Interviews,
Lectures, Radio, TV
Appearances
name and professional qualifications

name of their organization but shall not give any

information as to the services that firm provides

should not be promotional of themselves or their

firm but should be an objective professional view
of the topic
Training Courses, Seminars

may invite clients, staff or professional

accountants to attend training courses/seminars
 Booklets, Documents
Containing Technical
Information

name of the professional accountants and

technical information for the assistance of staff or
clients may be issued
 Staff Recruitment

vacancies may be communicated through any

medium in which comparable staff vacancies
normally appear

job specification without any promotional

element

no suggestion that the position is superior to

those offered by other firms
Publicity on Behalf of Clients

directed towards the objectives to be achieved for

the client

primarily for staff

Brochures, Firm Directories

may be issued to clients, in response to

unsolicited request, to a non-client

a factual and objectively worded of the services

provided

a directory setting out names of partners, office

addresses, names and addresses of associated
firms
Stationery and Nameplates

Use of “specialist” is not allowed

Only basic info

 Announcements

appropriate newspapers or magazines

establishment of new practice

changes in composition of partnership

alteration in the address of a practice

limited to bare statements of facts

Inclusion of the name of the
CPA in a Document Issued
by a Client

Auditor must advise the client to seek permission

before the publication of the document
 Anniversaries

factual matters regarding the commemoration of

the anniversary without detailed listing of
services

should be done only every five years of

celebration
 Websites

may develop and maintain a website in the

Internet in such length and style may also include
announcements, press releases, publications,
factual information
 Fees and Billing

Flat or fixed fee The client is billed a flat but all-inclusive pre-
basis arranged amount for the entire engagement
Also known as the per diem basis.
Actual time Billing is done on the basis of actual time spent
charges basis by the staff multiplied by the hourly rates
agreed upon
The client is charged on a per diem basis, with
Maximum Fee
the agreement that the total charges will not
basis
exceed a certain agreed maximum amount
The auditor is paid a fixed pre-determined fee
Retainer fee for all services rendered during a designated
basis period of time either on a monthly, semi-annual
or annual basis
 Fees and Billing

Should be a fair reflection of the value of work

skills, knowledge required

level of training and experience of the persons

engaged on the work

time necessarily occupied by each person

degree of responsibility and urgency that the work

entails
Death, Disability, Dissolution
and Liquidation

report to BOA not later than 30 days from the

date of death, dissolution, liquidation

report shall be made in the form of affidavit

failure to notify the BOA shall result to penalties