Revised Rules and Regulations Implementing the Provisions of Sec. 27, Art. III of PD No. 692

September 19, 2002

PROFESSION REGULATORY BOARD OF ACCOUNTANCY RESOLUTION NO. 69-02

THE REVISED RULES AND REGULATIONS IMPLEMENTING THE PROVISIONS OF SECTION 27, ARTICLE III OF PRESIDENTIAL DECREE No. 692, (P.D. NO. 692) OTHERWISE KNOWN AS THE REVISED ACCOUNTANCY LAW, PROVIDING FOR THE REGISTRATION OF INDIVIDUAL CERTIFIED PUBLIC ACCOUNTANTS (CPAs) AND FIRMS OR PARTNERSHIPS OF CPAs ENGAGED IN THE PRACTICE OF PUBLIC ACCOUNTANCY

WHEREAS, Section 27, Article III of P.D. No. 692, provides that Certified Public Accountants (CPAs) and Firms or Partnerships of CPAs, including partners and staff members thereof, shall register with the Professional Regulation Commission and the Board of Accountancy;

WHEREAS, the said Section 27, Article III of P.D. No. 692, further provides that, subject to the approval of the Professional Regulation Commission, the Board of Accountancy shall promulgate rules and regulations for the implementing of the aforesaid registration requirements including the fees and the penalties for violation thereof;

WHEREAS, Section 5, Article II, Par. (c) of P.D. No. 692 provides that one of the functions of the Board of Accountancy is to look from time to time into the conditions affecting the practice of the accountancy profession and whenever necessary, adopt such measures as may be deemed proper for the enhancement and maintenance of high professional, ethical, and technical standards;

WHEREAS, Section 9, Par. (b) of the Republic Act No. 8981 otherwise known as the PRC Modernization Act of 2000, vests upon the various Professional Regulatory Boards including the Board of Accountancy, the power to monitor the conditions affecting the practice of the professions or occupations under their jurisdiction and whenever necessary, to adopt such measures as may be deemed proper for the enhancement of the profession or occupation and/or the maintenance of high professional, ethical, and technical standards;

WHEREAS, the registration of Individual CPAs, including staff members thereof, Firms, including the sole proprietors and staff members thereof and Partnerships of CPAs including the partners and staff members thereof, will enable the Board of Accountancy to formulate and implement rules and regulations more effectively for the enhancement and maintenance of high professional, ethical, and technical standards of the accounting profession;

WHEREAS, there is a need to protect the public against fraud, deception, unethical, unprofessional practices and/or from the consequences of ignorance, incompetence, and incapacity in the practice of public accountancy;

WHEREAS, such registration and monitoring will help the Professional Regulation Commission and the Board of Accountancy to identify and impose corresponding sanctions and penalties on Individual CPAs including staff members thereof and Firms including the sole proprietor and staff members thereof or Partnerships of CPAs, including partners and staff members thereof, who are not authorized by law to practice public accountancy, or who violate the rules and regulations of the Board of Accountancy, or fail to adhere to the professional, ethical, and technical standards of the accounting profession;

NOW, THEREFORE, BE IT RESOLVED as it is hereby resolved, to require the registration of Individual CPAs, including staff members thereof, Firms, including the sole proprietors and staff members thereof and Partnerships of CPAs including the partners and staff members thereof, with the Board of Accountancy and the Professional Regulation Commission, in accordance with Section 27, Article III of P.D. No. 692 and the revised implementing rules and regulations set forth hereunder;

BE IT FURTHER RESOLVED, to promulgate the following revised rules and regulations implementing Section 27, Article III of P.D. 692, governing the practice of public accountancy, providing for the registration of Individual CPAs, including staff members thereof, Firms, including the sole proprietors and staff members thereof and Partnerships of CPAs including the partners and staff members thereof, and prescribing penalties for violation thereof.

ARTICLE I

Definition of Terms

SECTION 1.When used in these revised implementing rules and regulations, the following terms have the meanings indicated:

a. "Practice of public accountancy" means the offering or rendering, or both, to more than one client on a fee basis or otherwise, services such as the audit or verification of financial transaction and accounting records; the preparation, signing, or certification for clients of reports of audit, balance sheet, and other financial, accounting and related schedules, exhibits, statements or reports which are to be used for publication or for credit purposes, or to be filed with a court or government agency, or to be used for any other purpose; the design, installation, and revision of accounting system, the preparation of income tax returns when related to accounting procedures; or when he represents clients before government agencies on tax and other matters related to accounting or renders professional assistance in matters relating to accounting procedures and the recording and presentation of financial facts or data.

b. "Board" means the Board of Accountancy established under Presidential Decree No. 692.

c. "Commission" means the Professional Regulation Commission established/created under Republic Act No. 8981.

d. "Certified Public Accountant (CPA)" means a person who holds a valid certificate of registration (CPA Certificate) and a valid professional identification card issued by the Board and the Commission to those who have satisfactorily passed the CPA licensure examination and complied with all the other legal and procedural requirements thereof.

e. "Individual CPA" means a certified public accountant engaged in the practice of public accountancy under his/her name, by himself/herself only or with one or more staff member(s).

f. "Firm" means an organization engaged in the practice of public accountancy, consisting of a sole proprietor, either alone or with one or more staff member(s).

g. "Partnership" means a professional partnership engaged in the practice of public accountancy whether or not duly registered as such with the Securities and Exchange Commission (SEC).

h. "Staff member" means a CPA employed by an Individual CPA, Firm or Partnership engaged in the practice of public accountancy as defined in Sec. 1 (a) below the rank of the Individual CPA, sole proprietor or partner as the case may be.

i. "Certificate of Registration" means a statement in writing and under seal, issued by the Commission upon the recommendation of the Board pursuant to these revised rules and regulation, attesting that the Individual CPAs, including staff members thereof, Firms, including the sole proprietors and staff members thereof and Partnerships of CPAs including the partners and staff members thereof, is duly registered to practice accountancy in the Philippines.

j. "Quality Review" means a study, appraisal, or review by the Board or its duly authorized representatives, of some or all aspects of the professional work of an Individual CPA, and Firm or Partnership of CPAs engaged in the practice of public accountancy to ascertain his/her/its compliance with prescribed professional, ethical and technical standards of public practice.

ARTICLE II

Registration

SECTION 2.Within ninety (90) days from the effective date of these revised rules and regulations, Individuals CPAs, including staff members thereof, Firms, including the sole proprietors and staff members thereof and Partnerships of CPAs including the partners and staff members thereof who/which are not yet registered under the rules and regulations prescribed by Board Resolution No. 38, Series of 1990, shall register with the Board and the Commission in the manner provided for in Section 4 thereof. On the other hand, Individual CPAs, Firms and Partnership with current and valid registration under the said rules and regulation need to submit only the additional requirements provided in these revised rules and regulations within ninety (90) days from the effective date thereof. The registration shall be valid for a period of three (3) years and may be renewed every three (3) years on or before September 30 on the year of expiry upon compliance of the requirements provided in these revised rules and regulations. The registration of applicants approved during any month of the year shall expire on December 31 on the third year following its approval (i.e. if the application for registration of "ABC and Company CPAs" was approved on July 31, 2002, the registration shall expire on December 31, 2004 and therefore it shall file for renewal on or before September 30, 2004 for the three year period beginning January 1, 2005 and shall apply on or before September 30, 2007 for the next three (3)-year period beginning January 1, 2008 and so forth).

SECTION 3.Individual CPAs, including staff members thereof, Firms, including the sole proprietors and staff members thereof and Partnerships of CPAs including the partners and staff members thereof organized after the effective date of these revised rules and regulations shall register with the Board and the Commission in the manner provided for in Section 4 hereof, and shall not commence the practice of public accountancy until a valid Certificate of Registration has been issued in accordance with Section 8 hereof.

SECTION 4.The application for registration shall be accomplished in the form prescribed by the Board, in triplicate, and duly signed by the applicant Individual CPA, sole proprietor of the applicant Firm or authorized partner of the applicant Partnership. The application form for registration shall contain such information as may be required by the Board including, but not limited to, the following matters:

a. Name of the Individual CPA, Firm or Partnership. In the case of an Individual CPA, he/she shall do business under his registered name with the Board and the Commission and as printed in his/her CPA certificate (i.e. "Juan de la Cruz, CPA."). In the case of Firms, they shall do business under their respective duly registered and authorized Firm name appearing in the registration documents issued by the Department of Trade and Industry (DTI) or any other proper government office(s) and such Firm name shall include the real name of the sole proprietor as printed in his/her CPA certificate (i.e. "Juan de la Cruz and Associates") or other similar Firm names. In the case of registered Partnerships, they shall do business under their respective Partnership names as indicated in their current Articles of Partnership and certificates of registration issued by the Securities and Exchange Commission (SEC) or under the Partnership names as indicated in their current Articles of Partnership in case of unregistered partnerships (i.e. "Cruz, Isidro, Martin, and Company,") or other similar Partnership names.

 A CPA shall not practice under an individual, firm or partnership name which includes any fictitious name, indicates specialization or is misleading as to the type of organization (proprietorship or partnership). However, the name of one or more past partners may be included in the name of a successor partnership. (This means that the name of the successor partnership shall include the name(s) of one or more past partners and one or more current partner(s). Therefore, the name of the successor partnership can not be composed of name(s) of past partners only). A partner surviving the death or withdrawal of all the other partners in a Partnership may continue to practice under the Partnership name for a period of not more than two (2) years after becoming a sole proprietor. (This means that on or before reaching the end of the two (2)-year period, the resulting sole proprietor if he/she continues to practice under a proprietorship form of organization, shall change the old Partnership name to an Individual CPA or Firm name subject to the provision of the first paragraph hereof).

 If the applicant Individual CPA, Firm or Partnership could not comply with the foregoing requirements on Individual CPA, Firm or Partnership name, he/she/it may submit a sworn statement stating the specific reasons thereof and attach it to the application for registration for the information and consideration by the Board and the Commission.

b. Full name(s) of the individual CPA, sole proprietor or partners together with a copy of his/her/their CPA Certificate(s) and current professional identification card(s) issued by the Board and the Commission.

c. Certified copy of the certificate of registration issued by the SEC together with the certified copy of the current Articles of Partnership for registered partnership, or the certified copy of the Articles of Partnership for unregistered partnership or certified copy of the certificate of registration of Firm name with the DTI or other proper government agencies.

d. Complete business and postal address, telephone and/or facsimile numbers, e-mail address, website of principal office including branch(es), sub-offices, if any.

e. Certified copies of all business permits issued by the local and/or national government.

f. Certified copy of the document showing the correspondent relationship, membership or business dealings with foreign CPA firm(s), if any, including complete business and postal address, telephone and/or facsimile numbers, e-mail address and website thereof. The documents shall be comprehensive in scope to describe the nature of the corresponding relationship, membership or business dealings and to indicate the specific terms and conditions thereof including the specific obligation and rights of the foreign CPA over the Filipino CPA and vice-versa. Under no circumstances shall the correspondent relationship, membership or business dealings with foreign CPAs be a scheme for the foreign CPAs to engage in the practice of public accountancy in the Philippines who/which under the present laws are limited to Filipino CPAs (except the authorized foreign CPAs under the foreign reciprocity provision of Section 23 of P.D. No. 692) duly registered with the Board and the Commission. The Individual CPA, sole proprietor of the Firm and managing partner of the Partnership as the case may be shall attach to the application for registration a sworn statement stating that (a) the copy of the aforesaid document showing the correspondent relationship membership, or business dealings with the foreign CPA is the faithful reproduction of its original copy, (b) the foreign CPA is both directly or indirectly (through the Filipino CPA) engaged in the practice of public accountancy in the Philippines, except the authorized foreign CPAs under the foreign reciprocity provision of Section 23, Article III of P.D. No. 692 and (c) the rights and obligation of the parties in specific terms.

g. Name(s) of staff member(s) who are CPAs together with a copy of his/her/their CPA Certificate(s) and professional identification card(s) issued by the Board and the Commission.

h. Change(s) if any, in the organization, structure and/or management of the Individual CPA, Firm or partnership from the last registration.

i. Certified copy of the Code of Good Governance of the Individual CPAs, Firms or Partnerships.

j. Copy of the internal quality review procedures being implemented to ensure compliance with the professional, ethical and technical standards required of the practice of public accountancy. If the Individual CPA, Firm or Partnership had undergone quality assurance review by the Board or its duly authorized representatives, or in any manner pursuant to Sections 14 and 15 hereof, a certified copy of the report of such review shall be attached to the application for registration.

k. Sworn statement by the Individual CPA, sole proprietor of the Firm and managing partner of the Partnership stating that the Individual CPA and Staff member(s) thereof, the sole proprietor and staff member(s) of the Firm, and all the partners and staff member(s) of the Partnership as the case may be, (a) had a meaningful participation in their respective internal quality review process and (b) had undergone adequate and effective training (from organizations duly accredited by the Board or by its duly authorized representatives), on all the current accounting and auditing standards, code of ethics, laws and their implementing rules and regulations, circulars, memoranda, their respective code of good governance and other related documents that are required in the practice of public accountancy to ensure professional, ethical and technical standards, supported with certified copies of certificate(s) of attendance or any proof of meaningful participation in, and proof of adequacy and effectiveness of such training.

l. In the case of an Individual CPA and Firm or Partnership of CPAs registering for the first time, the application for registration shall be accompanied with a sworn statement by the Individual CPA, sole proprietor of the Firm and managing partner of the Partnership stating that the Individual CPA, sole proprietor of the Firm, and all the partners of the Partnership has (have) at least three (3) years of meaningful experience in the scope of work covered in the practice of public accountancy as defined in Section 1(a) hereof and attach to the sworn statement, a detailed description of such work experience of the individual CPA, sole proprietor of the Firm and all the partners of the partnership.

m. Sworn statement by the Individual CPA, sole proprietor of the Firm and managing partner of the Partnership stating that the Individual CPA and all his/her staff member(s), sole proprietor and all the staff member(s) of the Firm, and all partners and staff member (s) of the Partnership (a) are all of good moral character and (b) he/she or they had not been found guilty by a competent court and/or administrative body of any case involving moral turpitude and/or unethical practices and that neither any of them is a defendant in any case of similar nature pending before any competent court and/or administrative agencies supported by a certificate of clearance issued by the proper court, administrative agencies or law enforcement agencies.

 If the Individual CPA or any of his/her staff member(s), or the sole proprietor or any of the staff member(s) of the Firm, or any of the a partners or staff member (s) of the Partnership is a defendant of a case of such nature, the applicant Individual CPA, Firm or Partnership shall attach to the application for registration, a sworn statement by the Individual CPA, sole proprietor of the Firm or managing partner of the Partnership stating that the aforesaid defendant(s) has a valid and material defense and specify them so accordingly in the sworn statement for the information and consideration by the Board and the Commission.

SECTION 5. Any change with respect to the matter enumerated in Section 4 should be reported in writing to the Board, copy furnished the Commission, within sixty (60) days from such change. Renewals of Certificates of Registration shall indicate changes that have taken place since the last registration.

SECTION 6. The Board shall duly authenticate all applications for registration received in proper form, and after having passed upon such applications, shall recommend to the Commission the approval or denial thereof not later than sixty (60) days after the receipt of the aforesaid applications in proper form (i.e. with complete and proper documentary requirements).

SECTION 7. The Individual CPA, Firm or Partnership of CPAs duly registered under these revised rules and regulations shall not have as its owner, sole proprietor, partner or any staff thereof, any foreign CPA unless he/she is qualified to practice in the Philippines under the foreign reciprocity provision of Section 23, Article III of P.D. No. 692 and/or other relevant laws and bilateral and/or multilateral agreement or treaties.

SECTION 8. The Commission shall, upon favorable recommendation of the Board, issue to the applicant the corresponding Certificate of Registration to practice public accountancy. Unless sooner revoked, cancelled or withdrawn, said Certificate of Registration shall be valid for three (3) years subject to the provision of Section 2 hereof, shall be renewable every three (3) years upon payment of the fees in accordance with Section 17, hereof.

ARTICLE III

Voluntary Withdrawal of Registration/Reinstatement

SECTION 9. The Individual CPAs, including staff members thereof, Firms, including the sole proprietors and staff members thereof and Partnerships of CPAs including the partners and staff members thereof, duly registered to engage in the practice of public accountancy may voluntarily withdraw their registration by filing with the Board a petition in writing stating the reason(s) therefor. The petition should be duly authenticated and signed by the Individual CPA or any of his/her staff member, the sole proprietor or any of the staff members thereof or all the partners of the Partnership, or any of them or any of the staff member(s) thereof who are requesting for the voluntary withdrawal of registration.

 

SECTION 10. At the expense of the petitioners, the Board shall publish or cause the publication of the request for withdrawal of registration once in a newspaper of general circulation in the principal place of business of the Individual CPA, Firm or Partnership. If there is no opposition to the petition, the Board shall recommend approval thereof to the Commission. Upon approval, the petitioner's name shall be removed from the roll of Individual CPAs, Firms and Partnerships of duly registered practitioners of public accountancy and the petitioner shall be notified in writing of the withdrawal of the registration.

SECTION 11. Upon receipt from the Board of the written notice of the withdrawal of registration, the petitioner shall cease to engage in the practice of public accountancy.

SECTION 12. The Commission shall publish the list of Individual CPAs, including staff members thereof, Firms, including the sole proprietors and staff members thereof or Partnerships of CPAs including the partners and staff members thereof, whose registration has been cancelled or withdrawn and shall furnish copies of the list to the pertinent government regulatory agencies.

SECTION 13. The Individual CPAs including any of the staff members thereof, Firms, including the sole proprietors and any of the staff members thereof or Partnerships of CPAs including any of the partners and staff members thereof, that had voluntarily withdrawn their registration, may register anew by filing an application in accordance with Section 4 hereof.

ARTICLE IV

Quality Reviews

SECTION 14. The Board shall require as a condition to registration or any renewal thereof for the Individual CPAs, Firms or Partnerships of CPAs to undergo quality reviews in such manner as the Board may specify, provided, however, that any such requirement shall include reasonable provision for compliance by a registrant showing that he/she/it has undergone a satisfactory quality review performed for other purposes which is substantial equivalent to quality reviews and shall be made applicable to all Individuals CPAs, Firms or Partnerships.

SECTION 15. There is hereby created a Quality Review Committee (QRC) to conduct an oversight into the quality of audit of financial statements through a review of the quality control measures instituted by Individual CPAs, Firms or Partnerships in order to ensure compliance with accounting and auditing standards and practices. The QRC shall be composed of the chairman or any member of the Board as Chairman and the members shall be the incumbent President of the Philippine Institute of Certified Public Accountant (PICPA) or its duly designated representative who may be any of the incumbent Vice-Presidents or past PICPA presidents, six (6) representatives of the public practitioners with the rank of Individual CPA, sole proprietor or partner (four members shall come from the big and medium Individual CPAs, Firm or Partnerships and two members shall come from the small Individual CPAs, Firms or Partnerships) and a Commissioner from the Securities and Exchange Commission (SEC) or his duly authorized representative with the rank of at least a director, The QRC shall among other functions (a) conducts quality review on applicants for registration to practice public accountancy and render a report which shall be attached to the application for registration (b) recommends to the Board the revocation of the Certificate of Registration and the professional identification card of an Individual CPA, including any of his/her staff members, Firms, including the sole proprietors and any of his/her staff members and Partnerships of CPAs including the partners and staff members thereof who has not observed the quality control measures and who has not complied with the standards of quality prescribed for the practice of public accountancy. In the event that the QRC cannot accomplish the aforesaid functions for any reason whatsoever, the Board or its duly authorized representatives may conduct the required quality review.

ARTICLE V

Death or Disability of an Individual CPA and Dissolution or Liquidation of a Firm or Partnership of CPAs

SECTION 16. The death or disability of an individual CPA and the dissolution and liquidation of a Firm or Partnership of CPAs shall be reported to the Board by any designated staff members of the Individual CPA, the sole practitioner (or any designated staff member of the Firm in case of the unavailability of the sole practitioner) or managing partner of the Partnership (or any designated partner in case of the unavailability of the managing partner) not later than thirty (30) days from the date of such death, dissolution or liquidation. The report shall be made in the form of an affidavit (in the case of an Individual CPA or a Firm), or by furnishing the Board with a certified copy of the dissolution or liquidation papers filed with the SEC in the case of a Partnership. Failure to notify the Board of such death, dissolution or liquidation shall subject the designated staff member of an Individual CPA, sole proprietor or designated staff member of the Firm or managing partner or designated partner of the Partnership to the penalties provided herein.

ARTICLE VI

Fees and Penalties

SECTION 17. Application for initial registration, renewal and request for reinstatement, shall be subject to the fee of One thousand Pesos (P1,000) or to such an amount as the Commission may prescribe.

SECTION 18.Subject to review by the Commission and depending on the gravity of the offense(s), the Board shall suspend or revoke the CPA Certificate, Certificate of Registration and professional identification card of an Individual CPA, sole proprietor, partner or staff member as the case may be who commits any act that is violative of the CPA Code of Ethics, Revised Accountancy Law, these revised implementing rules and regulations, the circulars, rules or regulations or resolutions of the Board, Commission, SEC or any other regulatory agenc(ies) or any act that does not comply with the professional, ethical and technical standards required of the practice of public accountancy, provided, that if the act or acts committed constitute(s) a criminal offense punishable under Section 22, Article III of P.D. No. 692, and other existing penal laws, the party or parties responsible shall be proceeded against criminally, independent of any action herein provided.

SECTION 19. Violations of these revised implementing rules and regulations shall include, but shall not be limited to the following acts by Individual CPAs, including staff members thereof, Firms, including the sole proprietors and staff members thereof and Partnerships of CPAs including the partners and staff members thereof:

a. Engaging in public accounting practice without first registering with the Board and the Commission.

b. Continuing to engage in the practice of public accountancy after the expiration of the registration.

c. Continuing to engage in the practice of public accountancy after suspension, revocation, or withdrawal of the registration.

d. Giving any false information, data, statistics, reports or other statement which tend to mislead, obstruct, or obscure the registration of an Individual CPA, Firm or Partnership of CPAs under these revised rules and regulations.

e. Giving any misrepresentation to the effect that registration was secured when in truth and in fact, it was not secured.

f. Failure or refusal to undergo quality reviews specified in Sections 14 and 15 hereof.

g. Failure to comply with the requirements provided under Section 4, hereof.

ARTICLE VII

Remission of Fines or Lifting of Sanctions Imposed

SECTION 20. Subject to the approval of the Commission, the Board may, for justifiable reasons, lift the sanctions imposed on Individual CPAs, and/or any staff member thereof, Firms including their sole proprietors and/or any staff members thereof or Partnerships including their partners and/or any staff members thereof.

ARTICLE VIII

Separability Clause, Repealing Provision and Effectivity

SECTION 21. If any provision of these revised rules and regulations or the application of such provision to any person or circumstances is declared invalid or unconstitutional, the remainder of these revised rules and regulations or application of such provisions to other persons or circumstances shall not be affected by such declaration.

SECTION 22. The Board Resolution No. 38, Series of 1990 is hereby expressly repealed and superseded by these revised rules and regulations. Any provision of the Code of Ethics for Certified Public Accountants issued on March 15, 1978, as amended by Board Resolution No. 19, Series of 2000 and all other resolutions, orders and regulations or any parts thereof, which are inconsistent or repugnant with these revised rules and regulations are hereby repealed and/or amended accordingly.

SECTION 23. These revised rules and regulations implementing the registration of Individual CPAs, Firms and Partnership, pursuant to Section 27, Article III of P.D. No. 692 shall, upon approval by the Commission, take effect fifteen (15) days following its complete publication in the Official Gazette or any national newspaper of general circulation whichever comes earlier.

Promulgated in the City of Manila, this 19th day of September, 2002.

(SGD.) EUGENE T. MATEO

Chairman

(SGD.) MA. VIOLETA V. VICENTE Member	(SGD.) SOLITA V. DELANTARMember
(SGD.) JOHN S. BALAMember	(SGD.) FROILAN G. AMPILMember

 

(SGD.) ESTELITA C. AGUIRRE

Member

ATTESTED:

(SGD.) CARLOS G. ALMELORSecretary, Professional Regulation Commission

APPROVED as part of the rules and regulations governing the practice of the public accountancy profession, this _________ day of ________, 2002.

 

(SGD.) ANTONIETA FORTUNA IBEChairperson

 

(SGD.) ALFONSO G. ABAD	(SGD.) AVELINA DE LA REA-TAN
Commissioner	Commissioner