Reaction Paper: The Philippine Accountancy Act of 2004

The Philippine Accountancy Act of 2004, formally known as Republic Act No. 9298, was
enacted to regulate the practice of accountancy in the Philippines, ensuring that the profession
adheres to high standards of competence and ethics. This law addresses aspects of licensure,
practice, and regulation of CPAs in the country for the purpose of safeguarding the public’s
interest or, in other words, for purging the accounting profession. The Act addresses critical
aspects of accountancy, including the creation of a regulatory body (the Board of Accountancy),
the qualifications and requirements for taking the CPA exam, and the responsibilities of licensed
professionals.
Articles 1 to 5 of the Philippine Accountancy Act are the legal basis for these regulations,
particularly the title, purpose, definitions, the creation of the Board, and powers and
qualifications needed for prospective and licensed accountants. These provisions set out such
conditions for professional practice, ethics of professionalism, and the public accountability in
the accountancy discipline.
This reaction paper is a critical analysis of the importance of Articles 1 to 5 of the
Philippine Accountancy Act of 2004. In this paper, I will ponder on the role of those provisions
to the practice and development of accountancy profession in the Philippines as well as weigh
the impact of their provisions to both the aspiring and the current CPAs, and whether those
provisions are bringing the highest value to the profession.
Article I. Title, Declaration of Policy, Objectives and Scope of Practice — focuses on
the place of accountants within a country’s development and seeks to produce a properly skilled
professional cadre that is both ethical and has the capacity to compete in the international market.
The Act provides for the mode of accreditation and regulation of accounting education as well as
the certification and registration of Certified Public Accountants (CPA) in the country and the
regulation of accounting practices in the country. It specifies that the practice of accountancy
includes four main areas: public practice, commerce and industry, academe, and government. By
these measures, the act aims at providing orderly growth and professional advancement of
accountants on the one hand and at the same time maintaining the required standards within the
profession.
Analysis on Article I—One of the most compelling aspects of the law is its emphasis on
maintaining high professional standards.
The focus on providing “excellent, qualitative, world-class, and globally competitive”
training and licensure examinations ensures that aspiring CPAs are well-prepared to meet both
local and international demands. The recognition of the CPA’s role in “nation building” adds a
sense of purpose to the profession and motivates growth and prepares them for various career
paths in public accountancy, commerce, education, and government. This broad scope of practice
offers clear direction and purpose making it more attractive to those interested in contributing to
societal development.
 However, one of the challenges for aspiring CPAs is the significant pressure tied to
passing the licensure examination. The article emphasizes the importance of having "honest,
effective, and credible licensure examinations," which are undoubtedly rigorous and may pose as
a barrier for some candidates. This could create a divide, where only the most prepared and well-
resourced candidates succeed, while others may feel excluded from the profession, thus limiting
opportunities for broader access to this field. Additionally, the restriction on teaching business
law and taxation only to IBP members limits opportunities for CPAs to contribute to education.
For current CPAs, the Act guarantees professional stability and growth across multiple
sectors, but it also increases regulatory burdens that could affect flexibility and add complexity to
daily operations. The compliance demands might be particularly challenging for smaller firms or
independent practitioners.
Overall, while the Act raises the profile of the profession and ensures quality, it may also
create barriers to entry and impose pressures on professionals. Balancing regulation with
accessibility is crucial for maximizing the Act's value to the profession.
Article II. Professional Regulatory Board of Accountancy — outlines the structure,
powers, and responsibilities of the Professional Regulatory Board of Accountancy (PRBOA)
under the Philippine Accountancy Act of 2004. The Board, which operates under the Professional
Regulation Commission, consists of a chairman and six members appointed by the President of
the Philippines. Members must be experienced, registered CPAs with good moral character and
no conflict of interest in academic institutions. The Board’s duties include overseeing the
licensure and practice of accountancy, developing regulations, issuing and revoking certificates,
enforcing ethical standards, and conducting investigations into violations of the law. It also
prepares syllabi for licensure exams and ensures compliance with academic standards. The Board
operates under the Commission's administrative control and must submit an annual report
detailing its activities. Board members may be removed for neglect of duty, violations of the law,
or other serious misconduct.
Analysis on Article II—For aspiring CPAs, the strict qualifications for members of the
PRBoA serve as an assurance that those overseeing their licensure and professional
development are highly experienced and trustworthy.
The oversight of licensure exams, regulation of accountancy education, and the
implementation of ethical standards ensure that the process remains fair, transparent, and
conducive to professional growth. However, some may find the system overly bureaucratic,
potentially creating delays or additional administrative hurdles.
The ability to issue cease-and-desist orders and investigate violations also ensures that
any unethical behavior within the field is addressed swiftly. While these regulations help
safeguard the profession’s integrity, they may also create additional pressure and accountability
for current practitioners, particularly those in leadership roles or those working within firms that
are subject to Board scrutiny.
 A major strength of the provisions is their focus on maintaining high standards, ethical
conduct, and professional accountability. The comprehensive powers of the Board, including the
ability to monitor and enforce ethical standards, provide a strong framework for quality control
in the profession. However, the potential for overregulation, such as the involvement of multiple
agencies and complex procedures for handling violations, could be seen as a challenge for some
practitioners who may feel overwhelmed by the system.

Article III. Examination, Registration and Licensure — discusses the procedures for
examination, registration, and licensure of Certified Public Accountants (CPAs) in the
Philippines. Applicants for the CPA examination must meet qualifications such as being a
Filipino citizen, holding a degree in accountancy, and having good moral character. The licensure
exam covers subjects like accounting theory, business law, auditing, and practical accounting
problems. Candidates must achieve a general average of 75% with no subject grade lower than
65% to pass. If a candidate fails, they must complete additional coursework before reattempting
the exam. Successful candidates are required to take an oath and will receive a certificate of
registration and a professional identification card, valid for three years. The Board has the
authority to suspend or revoke certificates for violations of professional standards or criminal
offenses. Additionally, the Board maintains a roster of registered CPAs and can reinstate revoked
certificates under certain conditions.
Analysis on Article III—While the system is rigorous, its structure adds value by ensuring
public trust and competence in the field of accountancy.
For aspiring professionals, the requirement to pass a licensure exam with a minimum
score and the structured scope of subjects provide a strong foundation for entering the
profession. This rigorous system helps maintain the quality and integrity of the profession,
ensuring that only qualified individuals are allowed to practice.
One significant benefit is the provision for conditional credits for candidates who pass
some subjects but fail others. This flexibility allows aspiring CPAs another opportunity to meet
the full requirements without having to retake the entire exam. However, the requirement to take
a refresher course after failing two exams could be seen as an additional challenge, especially for
those struggling to meet the standards.
For current CPAs, the clear guidelines on the issuance, renewal, and suspension of
professional certificates contribute to maintaining accountability. The power of the Board to
suspend or revoke licenses for violations ensures that ethical standards are upheld, which is
essential for the credibility of the profession. On the flip side, these stringent measures could add
pressure on practitioners to consistently meet high professional and ethical standards.
Article IV. Practice of Accountancy — discusses various regulations regarding the
practice of accountancy in the Philippines. It prohibits individuals from practicing or using titles
like "Certified Public Accountant" (CPA) without proper certification and a professional
identification card issued by the Board. Certified Public Accountants (CPAs) registered before
the enactment of the law will retain their rights under the new regulations. The practice of public
accountancy is limited to certified individuals and firms, with a requirement of at least three
years of experience in public practice for accreditation. It also addresses the ownership of
working papers, which remain the property of the CPA unless otherwise agreed upon with the
client. All CPAs are required to be members of a single accredited national organization, and
must comply with Continuing Professional Education (CPE) requirements. Foreigners may
practice accountancy in the Philippines under specific conditions and with temporary permits.
CPAs must use a prescribed seal for their professional documents, and registration for public
accountancy must be renewed every three years.
Analysis on Article IV—This section brings significant value by ensuring that only
qualified, ethical, and continuously improving professionals can practice accountancy in
the Philippines.
For current CPAs, the provisions offer clear guidelines on maintaining professional
standing. The Continuing Professional Education (CPE) program and accreditation requirements
keep CPAs updated on industry standards and trends, which helps maintain the relevance and
quality of the profession. However, these continuous education requirements could be seen as
burdensome for some, particularly those who already have significant practical experience.
The rules on ownership of working papers and confidentiality are crucial for protecting
both clients and CPAs, ensuring that sensitive information remains secure. The integration of a
national professional organization under the provisions also strengthens the collective voice of
the profession and provides access to support and resources.
However, some may argue that the provisions around foreign reciprocity and special
permits could potentially create room for foreign professionals to compete with local CPAs,
especially in areas where there are already well-qualified Filipino accountants. While this aims to
bring expertise to the country, it may present challenges for local professionals in a competitive
market.
Article V. Penal and Final Provisions — establishes penalties for violations of the Act,
including fines of at least 50,000 pesos or imprisonment for up to two years, or both. The Board
is tasked with adopting implementing rules and regulations within 90 days of the Act’s
enactment. It also clarifies that the Act will not affect the practice of other legally recognized
professions and that the Commission and Board are responsible for enforcing its provisions. Law
enforcement agencies are required to assist in prosecuting violators. The Act’s funding will be
included in the annual budget, and the current Board members will continue serving under the
terms of their previous appointments. Graduates with a degree in accounting may take the CPA
licensure exam within two years of the Act's enactment. The Act also includes provisions for the
repeal of inconsistent laws, a separability clause, and specifies that it will take effect 15 days
after its publication.
The Philippine Accountancy Act of 2004 is instrumental in delivering the professional
direction and development of the Certified Public Accountants (CPAs) of the Philippines.
Analyzing the provisions set out in the article it is possible to understand that the law is valuable
for those who intends to become a CPA as well as those who is already engaged in this activity.
As the provisions themselves provide both risks and possibilities all together they are best
described as a double-edged sword for the profession of law.
Analysis on Article V—For both aspiring and current CPAs, these provisions can have a
significant impact, fostering accountability, legal compliance, and further strengthening the
integrity of the profession.
The penal provision (Section 36) serves as a strong deterrent against unethical practices
or violations of the Act. It ensures that violators of the regulations will face penalties, which can
include hefty fines or imprisonment. This is crucial for maintaining the credibility of the
profession. Aspiring CPAs will likely view this provision as a safeguard to ensure that they enter
a profession that values ethical conduct and discourages malpractice. For current CPAs, it
reinforces the importance of adhering to professional standards and staying up to date with the
law’s requirements.
The provision for the creation of implementing rules and regulations (Section 37) is also
beneficial. It allows for the law to be flexible and adaptive to the evolving nature of the
accountancy profession. This is especially valuable for both aspiring CPAs, who will need to
navigate these rules, and current CPAs, who must continuously comply with regulations that may
change over time. While this flexibility is an advantage, it also places responsibility on the Board
and the Commission to make timely and effective decisions regarding the regulations.
Another important section is the enforcement provision (Section 39), which places the
responsibility of enforcing the Act on the Commission and the Board. It ensures that legal and
law enforcement agencies are involved in cases of illegal practice. Aspiring CPAs will likely
appreciate the assurance that the Board is committed to protecting the integrity of the profession
by addressing illegal practices, while current CPAs must remain vigilant in adhering to the law to
avoid any legal repercussions.
The funding provision (Section 40) is critical in ensuring that the Commission can carry
out the provisions of the Act effectively. This will support the continuous professional
development of CPAs through proper resources and funding for education, examination, and
other administrative functions.
Finally, the transitory provisions (Section 41) offer a smooth transition for those who
have completed accounting degrees before the Act took effect, ensuring that they still have an
opportunity to take the CPA Licensure Examination. This provision is essential for giving
aspiring CPAs a fair chance to enter the profession despite potential changes in requirements.
In terms of the law’s overall value to the profession, these provisions strengthen the
regulatory framework surrounding accountancy practice, ensuring that only those who meet the
legal and ethical standards can practice. While these provisions place a considerable
responsibility on both aspiring and current CPAs to comply with rules and regulations, they
ultimately promote a higher level of professionalism and integrity in the industry, which benefits
both the public and the accounting profession as a whole. However, the emphasis on strict
enforcement and penalties may be seen as a burden by some, especially if there is a lack of
awareness or understanding of the rules. This reinforces the need for clear communication and
ongoing education for all CPAs.
In conclusion, the provisions outlined in the Philippine Accountancy Act of 2004 offer a
robust framework for regulating the practice of accountancy in the Philippines. The legal
safeguards, such as penal provisions, accreditation requirements, and enforcement measures,
ensure the integrity of the profession and provide a clear path for both aspiring and current CPAs
to follow. These regulations are critical for maintaining the highest standards of ethics,
professionalism, and legal compliance, ultimately protecting the public trust in the accountancy
profession.
The Act’s emphasis on continuing professional education, registration, and the authority
of the Board and the Commission demonstrates a forward-thinking approach, ensuring that the
profession stays relevant and adaptable to the evolving demands of the economy and global
standards. While these provisions can be viewed as burdensome, particularly in terms of the
stringent requirements for licensure and the penalties for violations, they ultimately contribute to
a more credible and trustworthy profession.
However, to maximize the effectiveness of the Act, there needs to be a strong focus on
communication and education, particularly for aspiring CPAs, who must be made fully aware of
their responsibilities and the implications of non-compliance. Ongoing support for professional
development, along with transparent implementation of the rules and regulations, is crucial to
ensure that the Act’s provisions are seen as empowering rather than burdensome.
Overall, the Philippine Accountancy Act of 2004 represents a significant step forward in
elevating the standards of accountancy in the country. It provides the legal infrastructure
necessary for maintaining an accountable, ethical, and professional accounting body, but its
success will depend on proper enforcement, education, and continuous adaptation to the evolving
needs of the industry. For both aspiring and current CPAs, it is a call to uphold the highest
standards, ensuring that the profession remains a respected pillar of the business and financial
sectors.
Reaction Paper: The Philippine Accountancy Act of 2004

Prae4 Auditing and Assurance Principles & Specialized Industries

By:

Gregor Arwyn B. Banez

To:

Sir Michael Centino