Presentation Outline

Mutual Recognition Agreement: The

Challenges and Opportunities for CPAs
1

2015 Accountancy Week Celebration

Philippine Institute of Certified Public Accountants
Estelita C. Aguirre
Resource Speaker
July 15, 2015

Objectives of ASEAN and AFA

History of ASEAN Integration
MRA Framework
Basic Features of Implementing MRA
Accounting/Auditing Practices in ASEAN
Countries
Facts and Figures
Challenges

Objectives of ASEAN

Association of Southeast Asian Nations (ASEAN)

To transform ASEAN into a stable, prosperous

and highly competitive region with
Equitable economic development
Reduced poverty and socio-economic
disparities

ASEAN Federation of Accountants (AFA)

AFA Objectives
6

To provide an umbrella organisation for ASEAN

accountants for the further advancement of the

status of the profession in the region.
To establish a medium for closer relations,

regional cooperation, and assistance among

ASEAN accountants

History of ASEAN Integration

7

9th ASEAN Summit in Bali Indonesia (2003):

The declaration of Bali Concord II taking the
ASEAN integration to a higher plane by 2020
12th ASEAN Summit in Cebu (2006) :
Accelerated the establishment of integration
from 2020 to 2015

Roadmap for the ASEAN Community

8

14th ASEAN Summit Chan-Am ( 2009 March 1)

Declaration on the Roadmap for the ASEAN
Community (2009-2015) was signed, including
ASEAN Political-Security Community Blueprint
ASEAN Economic Community Blueprint
ASEAN Socio-Cultural Community Blueprint

ASEAN AGREEMENT

Key Characteristic of AEC

10

Roadmap for an ASEAN Community

(2009-2015)
One vision. One identity. One Community.

With a single market and production base

A highly competitive economic region
A region of equitable development
A region fully integrated into the global
economy

1.
2.
3.
4.

Core Vision of AEC

11

Free

flow of goods
Free flow of services
Free flow of skilled labor
Free flow of investment
Freer flow of capital
Harmonized rules and regulations

Free Flow of
Professional Services
via MRA.

12

ASEAN MRA

ASEAN MRAs for Professionals

13

ASEAN MRA is a multilateral arrangement among

ASEAN countries or bilateral arrangement between
two ASEAN countries to enable professionals
registered in its signatory countries to be equally
recognized in another signatory country

MRA Framework on Accountancy

15

Signed in Chan-Am Thailand

Education
Licenses
Demonstration of Competency
Experience
Compliance with IFAC Standards and Guidelines
Feb 26, 2009

14

Engineering Services
Nursing Services
Architecture
Medicine
Dentistry
Tourism Services
Accountancy Services

Dec 2005
Dec 2006
Nov 2007
Feb 2009
Feb 2009
Nov 2012
Nov 2014

Education
16

The AMS agree that a PPA of an AMS who seeks

recognition in another AMS should have met the
educational requirements in effect in the Country
of Origin. Such individual's educational credentials
may be accepted as having satisfied the
educational requirements of the Host Country's
NAB and/or PRA.

Licenses
17

Where licenses are required from governmental or

regulatory bodies other than the NAB and/or PRA
of each AMS, the AMS shall, subject to their
Domestic Regulations, use their best endeavours
to facilitate the PPA of the other AMS to obtain the
necessary approval.

Experience
19

A PPA seeking recognition shall meet the

experience requirements specified by the Host
Country.

Competencies
18

The AMS recognizes the need to require the PPA

seeking recognition to demonstrate competencies
to assure that the PPA has satisfactory knowledge
of the Domestic Regulations of the Host Country.

IFAC Standards and Guidelines

20

The professional competencies and qualifications

threshold for the practice of accountancy in
ASEAN Member States shall be established,
maintained and upheld according to the IFAC
standards taking into consideration the Domestic
Regulations of each ASEAN Member State.

Building Blocks of

SMOs

(Statements of Membership Obligations)

Implementing MRA on Accountancy Services
22

Signed in Bali Indonesia by

Brunei, Cambodia, Indonesia, Lao PDR,
Malaysia, Myanmar, Singapore, Thailand,
Vietnam and Philippines
November 2015.
21

Basic Features of the Implementing MRA

23

(1) Limited flow of accountancy services. MRA

excludes external audit and other services
that require domestic licensing
(2) Creation of Monitoring Councils
(3) Creation of ACPACC
(4) Recognition of ASEAN Chartered Professional
Accountants (ACPA)
(5) Setting up of an ACPAR
(6) Acceptance of a Recognized Foreign Professional
Accountant (RFPA) by the host country

1st Basic Feature of MRA

24

Limited flow of accountancy services:

MRA Article 3 excludes external audit and other
services that require domestic licensing.

Article 3 Scope
25

3.1 This Arrangement shall cover the provision of

accountancy services covered under Central
Product Classification (hereinafter referred to as
CPC) 862 of the Provisional CPC of the United
Nations, except for signing off of the independent
auditors report and other accountancy services
that requires domestic licensing in ASEAN Member
States.

2nd Basic Feature of MRA

27

Creation of a Monitoring Council (MC) in each

Member State

Article 3 Scope
26

3.2 Notwithstanding paragraph 1, cross-border

movement of Professional Accountants
providing external auditing services and
other accountancy-related services that
requires domestic licensing in ASEAN
Member States may continue to be facilitated
through bilateral and/ or multilateral MRAs
between or among the Member States.

Monitoring Committee (MC)

28

Participating AMS must establish a national MC

MC members are national stakeholders
relevant to the MRA
Functions include developing and maintaining
ACPA application assessment process, and
authorised to certify the qualification and
experience of individual professional accountants

3rd Basic Features of MRA

29

Creation of ASEAN Chartered Professional

Accountants Coordinating Committee
(ACPACC)

4th Basic Feature MRA

31

Recognition of ASEAN Chartered Professional

Accountants (ACPAs)

ACPACC
30

At least one appointed representative from each MC

will compose the ACPACC
Functions include authority to confer ACPA title and
promoting the acceptance of ACPA.
Report progress of work to ASEAN Coordinating
Committee on Services (CCS)

ACPA
32

ASEAN Chartered Professional Accountant

(ACPA) refers to a natural person who is a national of
an ASEAN Member State and is assessed by the
NAB and/or PRA of any participating ASEAN Member
States as being technically, morally, and legally
qualified to undertake professional accountancy
practice.

Qualifications of an ACPA
33

NAB/PRA certification
no record of serious
violation on technical,
professional or ethical
standards for
accountancy practice

5th Basic Features of MRA

Accredited
accountancy
degree/professional
accountancy
examination program

34
Valid professional
registration
certificate in the
Country of Origin
(CO) by NAB/PRA

Comply with
Continuing
Professional
Development
(CPD) policy of
the CO

Setting up of an ASEAN Chartered

Professional Accountants Register (ACPAR)

3 years or more of
relevant post
qualifying
practical
experience within
a 5 year period

ACPAR
35

The ASEAN Chartered Professional Accountant

Register is where all ACPA are emplaced upon
acceptance of the application by the ACPACC and
payment of the necessary fees.

6th Basic Features of MRA

36

(6) Acceptance of a Recognized Foreign Professional

Accountant (RFPA) by the host country through
NAB/PRB

NAB and/or PRA

37

Host Country
39

Country of Origin
38

RFPA
40

A Registered Foreign Professional Accountant (RFPA)

refers to an ACPA who has successfully applied to
and is authorized by the NAB and/or PRA of a Host
Country to work, not in independent practice, but in
collaboration with one or more Professional
Accountant of the Host Country.

Process to Become an ACPA & RFPA

41

NAB/PRA approves
application after
assessment of ACPA
to be permitted to
work as RFPA

MC assesses the
professional
accountant in
accordance with
NAB/PRB rules and
submit to ACPACC

ACPA submits
application to NAB/
PRA (host country)
to become an
RFPA

Responsibility of NAB and/or PRA

42
ACPACC receives and
evaluates application
if applicant has
complied fully with the
requirements

Successful candidates
to pay ACPA
subscription fees to
be listed on the
ACPAR

Practices in the ASEAN

43

Accounting and Auditing Practices

AFA and World Bank Findings

Source: World Bank and AFA Report on

Current Status of the Accounting and Auditing
Profession in ASEAN Countries Sept 2014

Consider application and authorize ACPA to

apply as Registered Foreign Professional
Accountants (RFPA)
Monitor and assess the professional practice
of the RFPA

Current Status of Profession

44

1. Recognition of Foreign Certifications

2. Accounting Education
3. Professional Examination
4. Relevant Practical experience
5. CPD Units
6. Independence and Ethics
7. Accounting Standard Setting
8. Financial Reporting Standards
9. Auditing Standard Setting
10. Quality Assurance and Oversight

1.Recognizes Foreign Certifications

45

2. University Accounting Education

46

Brunei- CPA Australia, ACCA, CCANZ, ICAEW, ICAI

Cambodia- CPA Australia, ACCA, MIA, PICPA, ISCA
Indonesia-MIA
Laos recognize foreign certification subject to test
MalaysiaACCA/ICAEW/CIMA/ICAScotland/ICAIreland,
CAANZ,ICAIndia, CanadaICA,CPA Australia
Myanmar - None
Philippines - None
Singapore- CPA Australia, ACCA, ICAEW w/pathway
Thailand -None
Vietnam ACCA forVAA ; CPA Australia for VACPA

Brunei NA as long as members of ACCA,ICAEW, etc

Cambodia Not clear
Indonesia required
Laos Syllabus to be reviewed to enable certification
Malaysia required
Myanmar required
Philippines - required
Singapore required
Thailand required
Vietnam required

3. Professional Examination

4. Relevant Practical Experience

47

Brunei NA
Cambodia Not clear
Indonesia Yes, IAI and IAPI
Laos Yes, by LICPA and MoF
Malaysia MIA:No Exams for recognised degree;
For unrecognised degree Yes ; for MICPA -Yes
Myanmar Yes
Philippines Yes, by the BOA
Singapore Yes, by ISCA, if no accredited degree
Thailand Yes, by FAP
Vietnam Yes, by the MoF

48

Brunei 3 years
Cambodia 3 years
Indonesia 3 years
Laos 3 years
Malaysia - 3 years
Myanmar - 2 years
Philippines 3 years for public practice only
Singapore 3 years post/5-yrs pre-post qualification
Thailand 3 years
Vietnam 5 years

5. CPD Units
49

Brunei Per British Commonwealth PAOs requirements

Cambodia - 40 hours per one year
Indonesia 120 hours per 3 years
Laos 120 hours per 3 years
Malaysia 120 hours per 3 years
Myanmar 120 hours per 3 years
Philippines 60 hours per 3 years
Singapore 120 hours per 3 years
Thailand 18 hours per 1 year
Vietnam 40 hours per 1 year

6.a Independence & Ethics

50

Brunei IFAC Code of ethics (CoE)

Cambodia KICPAA CoE
Indonesia Various rotation rules/various cooling period
Laos LICPA CoE based IFAC CoE
Malaysia MIA based on IFACs CoE
Myanmar - MAC law in line with IFACs CoE
Philippines Code of Ethics based on 2010 IFACs CoE
Singapore ISCAs is based on IFACs CoE
Thailand Code of Ethics based on 2012 IFACs CoE
Vietnam Code of Ethicsbased on IFACs CoE

6.b Rotation

6.c Cooling Period

51

52

Brunei adopted IFAC Code of Ethics for Banks

Cambodia no mention in CoE; SECC/NBC sets 3 year
Indonesia All audits: Partner - 3 yrs; Audit firm- 6 yrs
Laos Not stated in any legislation
Malaysia Audit partners 5 years; no firm rotation
Myanmar no information
Philippines Audit partners 5 yrs for listed Cos
Singapore listed Cos/Banks -5yrs/KAPs forPIEs -7 yrs
Thailand Audit partners 5 yrs for PIEs
Vietnam No information

Brunei No information
Cambodia NBC silent; SECC 3 years
Indonesia All audits 1 yr; listed Cos- 3 yrs
Laos Not stated in any legislation
Malaysia -Audit partners -2 yrs, banks audit partner-5yrs
Myanmar No information
Philippines Audit Partners 2 yrs
Singapore listed Cos/KAPs for PIEs/other audits 2 yrs
Thailand Audit Partners for PIEs 2 yrs
Vietnam No information

7. Accounting Standard Setting

53

8.a. IFRS
54

Brunei Brunei D. Accounting Standard Council

Cambodia National Accounting Council
Indonesia IAI Financial Accounting Standards Board
Laos Accounting Dept of the MoF
Malaysia Malaysian Accounting Standards Board
Myanmar MAC
PhilippinesPhil Financial Reporting Standards Council
Singapore Accounting Standards Council
Thailand Thai Acctg Standards Setting Committee
Vietnam Ministry of Finance

Brunei IFRS for PIEs since 2014

Cambodia CIFRS for listed, insurance since 2012
Indonesia IFAS based on 2009 IFRS, excl IAS 1,41,15
Laos - IFRS for listed Cos starts 2017
Malaysia MFRS for listed Cos, banks,insurance
Myanmar MFRS for public Cos, financial institutions
Philippines PFRS large/publicly accountable entities
Singapore SFRS for Cos
Thailand TFRS based on 2013 IFRS for PAEs
Vietnam VAS developed based on IFRS

8.b. IFRS for SMEs

9. Auditing Standard Setting

55

56

Brunei Brunei GAAP for Non-PIEs

Cambodia CFRS for SMEs beginning 2010
Indonesia SAK-ETAP for Non-PIEs
Laos LFRS for SMEs beginning 2017
Malaysia Msian Private Entity Reporting Standards
Myanmar MFRS for SMEs adopted
Philippines PFRs for SMEs beginning 2010
Singapore SFRS for qualifying SMEs
Thailand - TFRS for SMEs to start in 2017
Vietnam IFRS for SMEs not adopted yet

Brunei No legally required auditing standards;

Cambodia CISA which is the same as ISA
Indonesia SPAP which is fully consistent with ISA
Laos would promulgate in line with ISA
Malaysia- ISA adopted as MASA
Myanmar ISA adopted as MSA
Philippines ISA adopted as PAS
Singapore ISA adopted as SSA
Thailand ISA translated into Thai with no modification
Vietnam VSA closely aligned with ISA

10. Oversight /Quality Assurance

57

Brunei PAOC/planned for 2014

Cambodia QCC of KICPAA/adopted ISQC in 2010
Indonesia- PPJAP of Supreme Audit Board
Lao PDR MoF in-charge of QAR
Malaysia MIA Practice Review Program for Non-PIEs
auditors; Audit Oversight Board for PIEs auditors
Myanmar - Compliance Review Committee
Philippines BOA; with court injunction deferring QAR
Singapore- ACRA for PIEs/ISCA for non-PIEs
Thailand SEC for listed/FAP for non-listed
Vietnam A Dept of MOF implements QAR

What are the realities?

59

ASEAN today is 10 very different countries at very

different stages of development:
High Income economies Singapore & Brunei
Upper Middle Income economies Malaysia,
Thailand and Indonesia
Lower Middle Income economies Philippines,
Vietnam,Laos and Cambodia
Low Income economy - Myanmar

58

Are we ready for it?

Starting Business in ASEAN

2014
60

3
Singapore
16 Malaysia
85 Lao PDR
91
Thailand
109 Vietnam
137 Brunei Darussalem
170
Philippines
175
Indonesia
184
Cambodia
189 Myanmar

Starting Business in ASEAN

2015
61

Doing Business in ASEAN

2014
62

Singapore
13 Malaysia
85 Lao PDR
75 Thailand
125 Vietnam
137 Brunei Darussalem
161 Philippines
155 Indonesia
184
Cambodia
189 Myanmar

Doing Business in ASEAN

2015
63

1
Singapore
18
Malaysia
26 Thailand
59 Brunei Darussalam
78
Vietnam
95
Philippines
114
Indonesia
137
Cambodia
159
Lao PDR
182
Myanmar

Singapore
6
Malaysia
18 Thailand
59 Brunei Darussalam
99
Vietnam
108
Philippines
120
Indonesia
137
Cambodia
159
Lao PDR
182
Myanmar

Realities in Starting a Business

2014
64

It takes an average of:.

3 procedures & 2 & 1/2 days 3 procedures & 6 days 4 procedures & 17 & 1/2days
10 procedures & 34 days
15 procedures & 35 days 10 procedures & 48 days 6 procedures & 92 days -

Singapore
Malaysia
Thailand
Vietnam
Philippines
Indonesia
Laos

From the Speech of Dato Timothy Ong June 6, 2014 in AIM Manila

Global Competitiveness Market

2014-2015 (144
65 Economies)

Singapore
2
Malaysia
20
Thailand
31
Indonesia
34
Philippines
52
Vietnam
68
Lao PDR
93
Cambodia
95
Myanmar
134
Brunei
Data Not Available
Source: World Economic Forum

Wobblier after
8 years
67
In 2012, after 8 years, Dr. Romulo A. Virola, the

former Secretary-General of the National

Statistical Coordination Board wrote: Statistics
show that there are more bad news than good
news! Eight years ago, we wrote how wobbly we
were compared to our ASEAN neighbors. Sadly,
based on the statistics presented, the Philippines
appears to be even more wobbly.
Note: 2014 FDI figure for Phil is very encouraging
Borrowed from Dr. Ben Dioknos ppt presentation

Wobbly start.
66 Wobbly still?
In September 2004, Statistically Speaking featured
the article, The ASEAN Where Do We Stand? Or
Wobble?. It reported that the Philippines was
somewhere in the middle among the 10 ASEAN
countries for most indicators about kulelat among the
original ASEAN members (Indonesia, Philippines
Thailand, Malaysia, and Singapore but still generally ahead of
the Plus Five (Myanmar, Brunei, Lao PDR Cambodia and
Vietnam). The said article promised that, six years

from now, we will find out if we could walk straight or if

our feet continued to wobble and our minds had
started to boggle.
Borrowed from Dr. Ben Dioknos ppt presentation

Foreign Direct Investments Trend

68

Foreign Direct
Investment
69

Singapore

Indonesia Thailand

2012 60,980 19,138 10,699

Malaysia

Vietnam

Foreign Direct
Investment
70

Philippine

Philippines

Cambodia

Myanmar

Laos PDR

Brunei

9,400

8,368

2,797

2012

2,797

1557

1,354

294

865

2013 56,138 18,443 12,999 12,297

8,900

3,859

2013

3,859

1,274

2,621

427

726

2014 72,098 22,276 11,538 10,714

9,200

6,200

2014

6,200

1,726

946

913

568

6.8%

4.6%

Share

4.6%

1.3%

0.7%

0.7%

0.4%

Share

53% 16.4%

8.5%

7.9%

Source: ASEAN Foreign Direct Investment Database as of 26 May, 2015

Per Capita GDP

Purchasing71Power Parity
Country
Indonesia

72

Rank in the World

Rank in ASEAN

GDP (Per Capita)

102

$10,641

Thailand

82

$14,354

Malaysia

51

$24,654

Singapore

$82,762

Philippines

119

$ 6,962

Vietnam

126

$ 5,635

Source: All figures are from IMF 2014 published in April 2015

Source: ASEAN Foreign Direct Investment Database as of 26 May, 2015

The Challenges . . .

Challenges73 for ASEAN

Implementation of MRAs
Harmonization of qualifications of professionals

through AQRF

Commitment to achieve the free flow of trade in

services by 2015 as outlined in the AEC Blueprint.

Need to enhance its effort on services facilitation

and cooperation activities, to complement the

liberalization efforts.

Challenges for75 AFA Members

Accelerating compliance with IFAC SMOs
Providing quality CPD seminars and
workshops for accountants
Bringing back the public confidence in the
audited financial statements through effective
implementation of QAR
Advocacy to push reforms in respective
government to improve the ranking in doing
business

Challenges
for AFA
74
Providing assistance to ASEAN member bodies

on capacity building of accountants through

exchange of knowledge and best practices

Coordinate with each member bodies to

update the information contained in

(1) The AFAs Easy Guide to Setting up
Accountancy Practices in ASEAN Countries; and
(2) The 2014 AFA World Bank Report on
Accountancy and Auditing Practices in ASEAN

Challenges for AFA Member-Bodies

Compliance with IFAC SMOs (as of Oct 6, 2014)
Brunei Darussalam (BICPA)
Cambodia (KICPAA)
Indonesia (IAI)
Laos PDR (LICPA)
Malaysia (MIA )
Myanmar (MICPA)
Philippines (PICPA)
Singapore (ISCA)
Thailand (FAP)
Vietnam (VAA)

Oct 2013
Aug 2014
May 2013
In progress
Nov 2013
In progress
Jan 2014
Jul 2012
Feb 2014
Nov 2012
76

Membership of AFA Member Bodies

As of October 1, 2014

Membership of Member Bodies

77
As of October
1,2014
MemberBodies
Nodies
BICPA
IAI

Regular

Provisional

Junior

Student

Corporate/

Members

Members

Members

Members

Firms

49

78
Total

17920

BICPA 58

3703

49

258

KICPAA - 258

155

LICPA

176

176

30,994

30,994

595

595

22,072

22072

PICPA 22,072

ISCA

28069

28069

ISCA - 28,869

FAP

64635

64635

FAP-

64,635

VAA

8,000

8,000

VAA -

6,000

MICPA
PICPA

TOAL

173465

29

34

21732

21,732

KICPAA

MIA

20

109

58

IAI-

3703

34

158

LICPA -

176

MIA - 30,994
MICPA -

595

177389

Challenges for
Government
79
Harmonizing and streamlining of processes and
procedures
Improving of standing in the World Bank Survey
in starting and doing business in the country
Improving standing in FDI Confidence Index
For BOA - operationalizing the Monitoring Council
and providing guidance in raising the bar for
Filipino CPAs to become globally competitive

Challenges for
Accountants
80
Proper implementation of the international
accounting standards
Effective implementation of the International
Auditing Standards in the conduct of audit
Compliance with CPD, using the PICPA CPD
Competency Framework based on IEAS
Production of credible and reliable FSs
Levelling up to become globally competititve

81

End
of
Presentation
ait.ecaguirre@gmail.com