There are several institutional measures that must be changed in the accountancy profession. The profession in the Philippines has been formally put in place way back about 94 years ago with the enactment of the Accountancy Act of 1923, when the Board of Accountancy (BOA) was created and the first set of Certified Public Accountants (CPA) licensure examinations were given. Over the years there have been developments in the country that mandate revisions in the accountancy framework.
These include the upward rationalization of the audit threshold, the establishment of a fully staffed and funded accountancy regulatory office and the revision of the Republic Act 9892 (Accountancy Law of 2004).
The audit threshold rules in the Philippines, as provided for in the National Internal Revenue Code, provide essentially that all enterprises that have annual gross receipts or revenues exceeding P600,000 shall be required to have their financial statements audited by an independent external auditor. There is a need to revise or rationalize this low and outdated threshold requirement that has resulted in undue financial burden to the small enterprises as well as in low quality audit work rendered by external auditors resulting in questioned credibility in these audit reports by regulators, including the Bureau of Internal Revenue, etc. The Department of Finance and the other regulators, including the BOA, have started looking into this matter.
The regulation of the accountancy profession and accountants in the Philippines is presently the sole responsibility of the BOA. The BOA is mandated by law to regulate over 175,000 CPAs presently in the rolls of professionals, as well as give examinations to qualify persons to become CPAs. Annually, the BOA administers the examination to around 20,000 examinees. The BOA is severely handicapped in the performance of its various mandates. It does not have sufficient resources (in terms of budget, personnel, operating systems and tools, etc.) to handle the many requirements of regulation of the profession, including the accreditation, administration of Continuing Professional Development requirements, conduct of Quality Assurance Review, and handling complaints against the accountants and its many stakeholders. Global best practice dictates that a fully staffed and budgeted regulator is key in ensuring the good standing of the profession. Hence, the strengthening of the accountancy regulator should be addressed.
The Accountancy Act of 2004 (accountancy law) has been in place for over 13 years. The environment where the accountancy profession and its many stakeholders operates has undergone so many changes over this period. The BOA has experienced difficulties in pursuing its mandate because of the shortcoming of the obsolete and inadequate provisions of the accountancy law that have been overtaken by the passage of time. Last year the BOA initiated the gathering inputs from its stakeholders in revising the accountancy law to make this more relevant and responsive to the needs of the profession. An updated charter or the law for accountants will go a long way toward uplifting the profession in the Philippines.
Once these measures are put in place, the accountancy profession and the professionals of the Philippines will be able to better address their many important mandates and responsibilities.
Chairman Joel L. Tan-Torres is the chairman of the Professional Regulatory Board of Accountancy. He is a Certified Public Accountant who placed No. 1 in the May 1979 CPA Board Examinations. He is concurrently a tax partner of Reyes Tacandong & Co., CPAs. He was the former Commissioner of the Bureau of Internal Revenue from 2009 to 2010.
This column accepts contributions from accountants, especially articles that are of interest to the accountancy profession, in particular, and to the business community, in general. These can be e-mailed to boa.secretariat.@gmail.com
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