PHILIPPINE ACCOUNTANCY ACT OF 2004

Case Overview and Summary

Summary of the Philippine Accountancy Act of 2004

Declaration of Policy and Objectives (Sections 2-3)
- The State recognizes the importance of accountants in nation-building and development.
- The Act aims to standardize and regulate accounting education, examination and registration of CPAs, and supervision of accountancy practice in the Philippines.

Scope of Practice (Section 4)
- The practice of accountancy includes:
    - Public accountancy (auditing, tax preparation, accounting systems, etc.)
    - Commerce and industry (decision-making requiring accounting knowledge)
    - Education/academe (teaching accounting-related subjects)
    - Government (positions requiring CPA eligibility)

Professional Regulatory Board of Accountancy (Sections 5-12)
- Composition: A Chairman and 6 members appointed by the President
- Qualifications: Filipino citizen, registered CPA with 10 years experience, good moral character, no conflict of interest
- Term: 3 years, maximum of 2 consecutive terms
- Powers and functions include:
    - Prescribe rules and regulations for the practice of accountancy
    - Supervise registration, licensure, and practice of accountancy
    - Issue, suspend, revoke CPA certificates
    - Adopt a Code of Ethics and accounting/auditing standards
    - Conduct oversight on quality of audits
    - Investigate violations and issue cease and desist orders
    - Prepare and administer the CPA licensure examination

Examination, Registration and Licensure (Sections 13-25)
- Applicants must pass the CPA licensure exam covering subjects like accounting, auditing, taxation, etc. (Section 15)
- Passing score: 75% general average, no grade below 65% (Section 16)
- Failing candidates must take a refresher course before re-taking the exam (Section 18)
- Successful examinees must take an oath and will be issued a Certificate of Registration and Professional ID Card (Sections 19-20)
- The Board can refuse, suspend or revoke registration for grounds like conviction of crimes, immoral conduct, etc. (Sections 23-24)

Practice of Accountancy (Sections 26-35)
- Only registered CPAs can practice accountancy or use the CPA title (Section 26)
- Single practitioners and partnerships must be registered CPAs; corporations cannot be formed for public practice (Section 28)
- Working papers remain the property of the CPA unless agreed otherwise (Section 29)
- CPAs must be members of the accredited national professional organization (Section 30)
- CPAs in public practice must register with the Board every 3 years (Section 31)
- CPAs must comply with Continuing Professional Education requirements (Section 32)
- CPAs must obtain and use a prescribed seal on audit reports (Section 33)
- Foreign CPAs may be allowed to practice under international treaties or reciprocity (Section 34)
- Temporary/special permits may be issued to foreign CPAs for consultation, teaching, or expertise (Section 35)

Penal and Final Provisions (Sections 36-44)
- Violations are punishable by a fine of at least ₱50,000 or up to 2 years imprisonment, or both (Section 36)
- The Board shall promulgate implementing rules and regulations within 90 days (Section 37)
- The Commission and Board shall enforce the Act, with assistance from law enforcement agencies (Section 39)
- Funding for implementation shall be included in the annual General Appropriations Act (Section 40)
- Presidential Decree No. 692 (Revised Accountancy Law) is repealed (Section 43)
- The Act takes effect 15 days after publication in the Official Gazette or newspaper (Section 44)