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UpdatesUpdates fromfrom thethe ProfessionalProfessional RegulatoryRegulatory BoardBoard ofof AccountancyAccountancy

Regulatory Board Board of of Accountancy Accountancy Hon. Ma. Elenita B. Cabrera Vice Chairman, PRBOA Accounting
Regulatory Board Board of of Accountancy Accountancy Hon. Ma. Elenita B. Cabrera Vice Chairman, PRBOA Accounting
Regulatory Board Board of of Accountancy Accountancy Hon. Ma. Elenita B. Cabrera Vice Chairman, PRBOA Accounting

Hon. Ma. Elenita B. Cabrera

Vice Chairman, PRBOA

Accounting Teachers’ Conference General Santos City April 19, 2010

Presentation Coverage

I. BSA Curriculum

II. Accounting Teachers Accreditation

III. CPA Licensure Board Examinations

IV. The Quality Assurance Review (Oversight) Program

On the BSA Curriculum

On the BSA Curriculum 3
On the BSA Curriculum 3
On the BSA Curriculum 3

On the Accounting Teacher Accreditation

On the Accounting Teacher Accreditation 4
On the Accounting Teacher Accreditation 4
On the Accounting Teacher Accreditation 4

On the CPA Board Examinations

On the CPA Board Examinations 5
On the CPA Board Examinations 5
On the CPA Board Examinations 5

Current Composition of the Board of Accountancy

Chairman:

Hon. Eugene T. Mateo

Vice Chairman:

Hon. Ma. Elenita B. Cabrera

Members:

Hon. Rufo R. Mendoza

 

Hon. Luis A. Cañete

 

Hon. Jose S. Tayag, Jr.

BOARD OF ACCOUNTANCY Memorandum

TO

:

All Schools, Colleges and Universities offering BSA Program, CPA Review Centers and Examinees in the October 2010 and subsequent CPA Licensure Examination

FROM

:

Eugene T. Mateo, Chairman, Board of Accountancy

SUBJECT :

Philippine Accounting Standards (PASs), Philippine Financial Reporting Standards (PFRSs), Philippine Standards on Auditing (PSAs), Philippine Standards on Quality Control (PSQCs), Philippine Auditing Practice Statements (PAPSs), Philippine Standards on Review Engagements (PSREs), Philippine Standards on Assurance Engagements (PSAEs), Philippine Standards on Related Services (PSRSs) to be covered in the October 2010 and subsequent Certified Public Accountants (CPA) Licensure Examination

DATE

: February 15, 2010

7

We wish to inform you that the following will be included in the October 2010 CPA Licensure Examination.

Philippine Accounting Standards (PASs) and Philippine Financial Reporting Standards (PFRSs) (Including ALL Related SIC, IFRIC and PIC Interpretations and CONSEQUENTIAL AMENDMENTS as a result of the revision of PASs and PFRSs) Approved as of January 31, 2010

NO.

TITLE

 

Introduction to PFRS (approved in January

2007)

 

Preface to PFRSs (approved in January 2007)

 

Framework for the Preparation and Presentation of Financial Statements (approved in January

2007)

8

NO.

TITLE

PAS 1

Presentation of Financial Statements (Revised

 

2007) (effective January 1, 2009)

PAS 2

Inventories

PAS 7

Cash Flow Statements

PAS 8

Accounting Policies, Changes in Accounting Estimates and Errors

PAS 10

Events After the Balance Sheet Date

PAS 11

Construction Contracts

PAS 12

Income Taxes

PAS 16

Property, Plant and Equipment

PAS 17

Leases

PAS 18

Revenue

PAS 19

Employee Benefits

NO.

TITLE

PAS 20

Accounting for Government Grants and

 

Disclosure of Government Assistance

PAS 21

The Effects of Changes in Foreign Exchange Rates

PAS 23

Borrowing Costs (Revised 2007) (effective January 1, 2009)

PAS 24

Related Party Disclosures

PAS 26

Accounting and Reporting by Retirement Benefit Plans

PAS 27

Consolidated and Separate Financial Statements (revised 2008)

PAS 28

Investments in Associates

PAS 29

Financial Reporting in Hyperinflationary Economies

NO.

TITLE

PAS 31

Interest in Joint Ventures

PAS 32

Financial Instruments: Disclosure and Presentation

PAS 33

Earnings Per Share

PAS 34

Interim Financial Reporting

PAS 36

Impairment of Assets

PAS 37

Provisions, Contingent Liabilities and Contingent Assets

PAS 38

Intangible Assets

PAS 39

Financial Instruments: Recognition and Measurement

PAS 40

Investment Property

PAS 41

Agriculture

NO.

TITLE

PFRS 1

First-Time Adoption of Philippine Reporting

 

Standards

PFRS 2

Share-Based Payment

PFRS 3

Business Combination (revised 2008)

PFRS 4

Insurance Contracts

PFRS 5

Non-Current Assets Held for Sale and Discontinued Operations

PFRS 6

Exploration for and Evaluation of Mineral Resources

PFRS 7

Financial Instruments: Disclosures

PFRS 8

Operating Segments (effective January 1,

2009)

 

PFRS for SMEs

Interpretations

TITLE

 

Preface to Interpretations

SIC 7

Introduction to the Euro

SIC 10

Government Assistance No Specific Relation to Operating Activities

SIC 12

Consolidation Special Purpose Entities

 

Amendment to Interpretation SIC 12 Scope of SIC 12: Special Purpose Entities

SIC 13

Jointly Controlled Entities Non-Monetary Contributions by Venturers

SIC 15

Operating Leases Incentives

SIC 21

Income Taxes Recovery of Revalued Non- Depreciable Assets

Interpretations

TITLE

SIC 25

Income Taxes Changes in Tax Status of an Enterprise or its Shareholders

SIC 27

Evaluating the Substance of Transactions Involving the Legal Form of a Lease

SIC 29

Disclosure Service Concession Arrangements

SIC 31

Revenue Barter Transactions Involving Advertising Services

SIC 32

Intangible Assets Web Site Costs

Interpretations

TITLE

IFRIC 1

Changes in Existing Decommissioning, Restoration and Similar Liabilities

IFRIC 2

MembersShares in Co-operative Entities and Similar Instruments

IFRIC 4

Determining Whether an Arrangement Contains a Lease

IFRIC 5

Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds

IFRIC 6

Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment

IFRIC 7

Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economics

Interpretations

TITLE

IFRIC 8

 
 

Scope of IFRS 2

IFRIC 9

Reassessment of Embedded Derivatives

IFRIC 10

Interim Financial Reporting and Impairment

IFRIC 11

IFRS 2Group and Treasury Share Transactions

IFRIC 12

Service Concession Arrangements

IFRIC 13

Customer Loyalty Programmes

IFRIC 14

PAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

IFRIC 15

Agreements for the Construction of Real Estate

 

IFRIC 16

Hedges of a Net Investment in a Foreign Operation

IFRIC 17

Distributions of Non-cash Assets to Owners

IFRIC 18

Transfers of Assets from Customers

 

16

PHILIPPINEPHILIPPINE INTERPRETATIONSINTERPRETATIONS COMMITTEECOMMITTEE (PIC)(PIC) QUESTIONSQUESTIONS ANDAND ANSWERSANSWERS ((Q&AsQ&As))

Q&A No. 2006 01 PAS 18, Appendix, paragraph 9Revenue recognition for sales of property units under pre-completion contracts

Q&A No. 2006 02 PAS 27.10(d) Clarification of criteria for exemption from presenting consolidated financial statement

Q&A No. 2007 01 (revised) PAS 1.103(a) - Basis of Preparation of Financial Statements If an Entity Has Not Applied PFRSs in Full

Q&A No. 2007 03 PAS 40.27 - Valuation of Bank Real and Other Properties Acquired (ROPA)

Q&A No. 2007 04 PAS 101.7 - Application of Criteria for a Qualifying NPAE (superseded by BOA Resolution No. 23 series of 2010)

Q&A No. 2008 02 PAS 20.43 - Accounting for government loans with low

interest rates under the amendments to PAS 20

Q&A No. 2009 01 Framework, paragraph 23 and PAS 1.23 - Financial statements prepared on a basis other than going concern

PSQCsPSQCs,, Framework,Framework, PSAsPSAs,, PAPSsPAPSs,, PSREsPSREs,, PSAEsPSAEs,, PSRSsPSRSs Approved as of January 31, 2010

NO.

TITLE

Preface (Dec. 2006)

Preface to the International Standards on Quality Control, Auditing, Review, Other Assurance and Related Services and Preface to the Philippine Standards on Quality Control, Auditing, Review, Other Assurance and Related Services

-

Philippine Framework for Assurance Engagements

-

Glossary of Terms (December 2002) [amended by PSA 220 (Revised)]

 

NO.

TITLE

Philippine Standard on Quality Control (PSQC)

 

1

Quality Control for Firms That Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements

(Redrafted)

Philippine Standards on Auditing (PSAs)

 

120

Framework of Philippine Standards on Auditing

 

200

Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Philippine Standards on Auditing

(Revised and Redrafted)

210

(Redrafted)

Agreeing the Terms of Audit Engagements

220

(Redrafted)

Quality Control for an Audit of Financial Statements

230

(Redrafted)

Audit Documentation

 

NO.

TITLE

Philippine Standards on Auditing (PSAs)

 

240

(Redrafted)

The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements

250

(Redrafted)

Consideration of Laws and Regulations in an Audit of Financial Statements

260 (Revised and Redrafted)

Communication with Those Charged with Governance

 

265

Communicating Deficiencies in Internal Control to Those Charged with Governance and Management

300

(Redrafted)

Planning an Audit of Financial Statements

 

315

Identifying and Assessing the Risks of Material Misstatements Through Understanding the Entity and Its Environment

 

(Redrafted)

 

NO.

TITLE

320

(Revised

 

and Redrafted)

Materiality in Planning and Performing an Audit

330

(Redrafted)

The Auditors Responses to Assessed Risks

402

(Revised

Audit Considerations Relating to an Entity Using a Service Organization

and Redrafted)

450

(Revised

Evaluation of Misstatements Identified during the Audit

and Redrafted)

500 (Revised)

Audit Evidence

501

(Redrafted)

Audit Evidence Specific Considerations for Selected Items

505

(Revised

External Confirmations

and Redrafted)

510

(Redrafted)

Initial Engagements Opening Balances

520

(Redrafted)

Analytical Procedures

NO.

TITLE

530

(Redrafted)

Audit Sampling

540

(Revised and Redrafted)

Auditing Accounting Estimates, Including Fair Value Accounting Estimates and Related Disclosures

545

Auditing Fair Value Measurements and Disclosures

550

(Revised and Redrafted)

Related Parties

560

(Redrafted)

Subsequent Events

570

(Redrafted)

Going Concern

580

(Revised and Redrafted)

Written Representations

600

(Revised and Redrafted)

Special Considerations Audits of Group Financial Statements (Including the Work of Component Auditors)

610

(Redrafted)

Using the Work of Internal Auditors

 

NO.

TITLE

620

(Revised

Using the Work of an Auditor's Expert

and Redrafted)

 
 

700

Forming an Opinion and Reporting on Financial Statements

 

(Redrafted)

705

(Revised

Modifications to the Opinion in the Independent Auditor's Report

 

and Redrafted)

706

(Revised

Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor's Report

 

and Redrafted)

 

710

Comparative Information - Corresponding Figures and Comparative Financial Statements

(Redrafted)

 

720

The Auditor s Responsibility in Relation to Other Information in Documents Containing Audited Financial Statements

 

(Redrafted)

800 (Revised and Redrafted)

Special Considerations - Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks

 

NO.

TITLE

805

(Revised

 

and

Special Considerations - Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement

Redrafted)

810

(Revised

Engagements to Report on Summary Financial Statements

 

and

Redrafted)

 

Philippine Auditing Practice Statements (PAPSs)

 
 

1000

Inter-Bank Confirmation Procedures

 

1000Ph

Audit Evidence – Practical Problems in an Audit of Financial Statements

 

1001Ph

Guidance in Dealing with “Tentative Financial Statements”*

 

1002Ph

The Auditor’s Report on General Purpose Financial Statements Prepared in Accordance with a Philippine Financial Reporting Framework Other Than PFRS

25

NO.

TITLE

1003Ph

Guidance in Dealing with Reports Required by the SEC

 

Relating to Increase in Capital Stock of a Corporation

1004

The Relationship Between Bangko Sentral ng Pilipinas

(BSP) and BanksExternal Auditors

1005

The Special Consideration in the Audit of Small Entities

(Revised)

1006

Audits of the Financial Statements of Banks

1010

The Consideration of Environmental Matters in the Audit of Financial Statements

1012

Auditing Derivative Financial Instruments [amended by PSA 220 (Revised)]

1013

Electronic Commerce Effect on the Audit of Financial Statements

1014

Reporting by Auditors on Compliance with International Financial Reporting Standards

NO.

TITLE

Philippine Standards on Review Engagements (PSREs)

 

2400

Engagements to Review Financial Statements (amended in 2008)

2410

Review of Interim Financial Information Performed by the Independent Auditor of the Entity (amended in

2008)

Philippine Standards on Assurance Engagements (PSAEs)

 

3000

Assurance Engagements Other Than Audits or Reviews of Historical Financial Information

(Revised)

3400

The Examination of Prospective Financial Information (previously PSA 810)

Philippine Standards on Related Services (PSRSs)

 

4400

Engagements to Perform Agreed-Upon Procedures Regarding Financial Information (previously PSA 920)

4410

Engagements to Compile Financial Information (previously PSA 930)

27

Revised Code of Ethics for Professional Accountants in the Philippines (effective June 30, 2008)

Rules on Advertising and Promotion for the Practice of Accountancy in the Philippines (effective August 9, 2008)

Rules and Regulations for the Accreditation of Accounting Teachers (effective June 20, 2008)

The new standards / rules and regulations are available at

www.prboa.com

www.aasc.org.ph

www.picpa.com.ph

Please be guided accordingly.

Insights on the CPA Exams Results based on Items Analysis

Management Services

Very satisfactory performance

(1) cost-volume profit relationship involving determination of contribution margin, incremental sales to bring in additional income in a multi-product firm; (2) capital budgeting problems applying the net present value concept; and (3) simple cash budgeting and flexible budgeting problems.

Insights on the CPA Exams Results based on Items Analysis

Management Services

Unsatisfactory performance

(1) financing decisions such as availment of loan with balloon payment and sources of financing short-term requirement; (2) cost classification (e.g., period costs) and cost behavior; (3) decision making (such as processing further or selling as is a product; increasing investment on inventory); (4) use of balanced scorecard; (5) application of basic economic concepts in decision making such as effect of change in exchange rate of foreign currency, cost of doing business, and effect of increase in government purchases or expenditures on marginal propensity to consume out of disposable income.

Insights on the CPA Exams Results based on Items Analysis

Auditing Theory

Good results

(1) overview of auditing; (2) objectives, evidence, and working papers; (3) professional practice; (4) internal control; and (5) professional responsibilities.

Insights on the CPA Exams Results based on Items Analysis

Auditing Theory

Poor performance

(1) completing the audit; (2) electronic data processing/computerized audit; (3) audit process; (4) audit sampling; (5) audit reports; and (6) other services and reports.

Insights on the CPA Exams Results based on Items Analysis

Auditing Problems

Good results

(1) financial statement presentation for companies with incomplete accounting data and will need reconstruction of account balances; (2) conversion of cash basis to accrual basis of accounting; and (3) financial statement presentation and classification and determination of adjusted net income.

Insights on the CPA Exams Results based on Items Analysis

Auditing Problems

Poor results

(1) auditing cash flows from investing activities; (2) auditing impairment loss in goodwill and other intangible assets; (3) auditing shareholders’ equity accounts; (4) adjusting liability accounts; and (5) auditing capitalized cost of equipment constructed for own use.

Insights on the CPA Exams Results based on Items Analysis

Practical Accounting I

Good outcome

(1) determination of correct inventory balance; (2) accounting for purchase of investment in available for sale equity shares; (3) application of current value accounting in land; (4) recording the purchase of property and equipment; and (5) reporting cash flows from operations.

Insights on the CPA Exams Results based on Items Analysis

Practical Accounting I

Poor performance

(1) computation of accrued interest in bonds payable; (2) determination of pension expense; (3) determination of effect of errors on net income; (4) accounting for impairment loss on receivables and loans; (5) accounting for deferred taxes; (6) computation of diluted earnings per share where there are options and convertible securities; and (7) financial statement classification of liabilities.

Insights on the CPA Exams Results based on Items Analysis

Practical Accounting II

Good performance

(1) accounting for foreign exchange transactions; (2) accounting for investment of partners in a partnership; (3) spoilage cost classification; (4) accounting for commercial franchise; and (5) accounting for construction contract costs.

Insights on the CPA Exams Results based on Items Analysis

Practical Accounting II

Poor performance

(1) accounting for investment in equity securities, using the equity method; (2) application of purchase method in business combination; (3) accounting for joint costs in process costing system; (4) application of proportionate method in consolidation; and (5) distribution of partnership profit where the remaining distributable profit is insufficient to meet interest on capital of partners.

Insights on the CPA Exams Results based on Items Analysis

Theory of Accounts Good performance

(1)

accounting and financial accounting

(2)

concepts; accounting process;

(3)

accounting for assets; and

(4)

accounting for liabilities.

Insights on the CPA Exams Results based on Items Analysis

Theory of Accounts

Poor Performance

(1) income recognition; and (2) financial statement presentation

Insights on the CPA Exams Results based on Items Analysis

Business Law

Good performance

(1) obligations and contracts; (2) partnership; (3) pledge and mortgages; and (4) sales and agency

Insights on the CPA Exams Results based on Items Analysis

Business Law

Poor performance

(1) corporation law; and (2) negotiable instruments

Insights on the CPA Exams Results based on Items Analysis

Taxation

Good results

(1) principles of taxation; (2) community tax; (3) interests and surcharges and compromise penalty (4) income tax; (5) value-added tax; (6) percentage tax; and (7) transfer tax

Insights on the CPA Exams Results based on Items Analysis

Taxation

Examinees performed better in Taxation than in Business Law.

The QAR Program of the Board of Accountancy

The QAR Program of the Board of Accountancy 46
The QAR Program of the Board of Accountancy 46
The QAR Program of the Board of Accountancy 46

WHAT IS QUALITY ASSURANCE REVIEW (QAR)?

A study, appraisal or review

by the BOA or its duly authorized representative

of the quality of audit of financial statements (FS) by CPA public practitioners

through a review of the quality control (QC) measures the CPA instituted in his practice

to ascertain compliance with prescribed professional, ethical and technical standards of public practice.

WHAT IS QUALITY ASSURANCE REVIEW’S RELEVANCE TO ACCOUNTING TEACHERS?

Accounting Teachers who are concurrently in public practice

Accounting Teachers who may want to become Quality Assurance Reviewers or Audit Inspectors

QAR Program would be part of the BSA Curriculum and CPA Licensure Examinations

BASIS FOR QAR REQUIREMENT

Legal

RA 9298, The Philippine Accountancy Act of 2004

- BOA is “to conduct an oversight into the quality of audits of FS through a review of the QC measures instituted by auditors in order to ensure compliance with accounting and auditing standards and practices”

Professional Regulatory Board of Accountancy Resolution No. 23, Series of 2010, Revision of the Rules and Regulations for the Conduct by the Professional Regulatory Board of Accountancy of Oversight into the Quality of Audits of Financial Statements

- Revision of Resolution No. 88, Series of 2009

BASIS FOR QAR REQUIREMENT

Professional

Quality Control and Auditing Standards

- PSQC 1, Quality Control for Firms that Perform Audits and Review of Financial Statements, and Other Assurance and Related Services Engagement

- PSA 220, Quality Control for an Audit of Financial Statements

IFAC Statement of Membership Obligations (SMO) No. 1 on Quality Assurance Review

“Where government, regulators or other appointed authorities perform any of the functions covered in this statement,” PICPA as a member body of IFAC, “should use its best endeavors to encourage those responsible for those functions to follow this SMO in implementing them, and assist them in that implementation where appropriate”

PARTIES IN THE IMPLEMENTATION

BOA - Mandated under RA 9298 to implement the QAR

Council for Accreditation and Quality Control of Practicing CPAs

BOA coordinates with and may seek assistance from this Council in the proper implementation of the QAR

Council created under a MOA dated August 12, 2009 by the BOA, SEC, BSP and IC

Quality Assurance Review Department (QARD)

Tasked to implement the QAR

Under supervision of the QAR Executive Committee

PARTIES IN THE IMPLEMENTATION

Quality Assurance Review Executive Committee

Tasked to set policies and supervise the operation of the QARD

Consists of 2 BOA and 1 PICPA representatives

CPA Practitioners or Individual CPA, Firm or Partnership of CPAs engaged in Public Accountancy

Mandated to enroll in the QAR Program as a prerequisite to accreditation or renewal for accreditation.

ROLE OF BOA

Assumes full responsibility in the discharge of the oversight function

Sets operating and other implementation policies

Organizes the QAR Department and ensures its independence

Compliance and monitoring

Implementation

ROLE OF PICPA

Representation in the QAR Executive Committee

Enters into contract of service for personnel

Assists in personnel hiring

Assists in developing operating system and procedures

Provides infrastructure/facilities

QARD office – 4 th floor (office and space)

Office furniture and fixtures

Laptops

Telephones/local area network

Training rooms, when needed

QUALITY ASSURANCE REVIEW ORGANIZATION

COUNCIL FOR ACCREDITATION AND QUALITY CONTROL OF PRACTICING CPAs

( CREATED UNDER MOA DATED AUG 12, 2009 , EXECUTED BY BOA, SEC, BSP AND IC )

AUG 12, 2009 , EXECUTED BY BOA, SEC, BSP AND IC ) BOARD OF ACCOUNTANCY QAR

BOARD OF ACCOUNTANCY QAR EXECUTIVE COMMITTEE

ORGANIZE THE QARD OPERATING & OTHER POLICIES INDEPENDENCE OF QARD COMPLIANCE AND MONITORING IMPLEMENTATION QAR REPORTS CERTIFICATE OF QA COMPLIANCE ANNUAL REPORTS

QUALITY ASSURANCE REVIEW DEPARTMENT

QARD HEAD

(CONCURRENTLY , THE CHIEF INSPECTOR FOR GENERAL MANAGEMENT)

CHIEF INSPECTOR AUDIT INSPECTION & ASSISTANTS

CHIEF OF ADMINISTRATION ADMINISTRATION & ASSISTANTS

QAR PLAN SPECIFIC QAR INSPECTION PLAN QAR INSPECTION REPORT QAR CERTIFICATE QAR ANNUAL REPORT QAR TRAINING IMPLEMENTATION OF QAR POLICIES

ADMINISTRATION ENROLLMENT OF CPAs FUND CUSTODY RECEIPTS & DISBURSEMENTS RECORD KEEPING COMMUNICATION & PROMOTION

55

QAR EXECUTIVE COMMITTEE

Responsibility and Authority (BOA Resolution No. 23, Series of 2010, Section 5)

Full power and authority to set policies and to supervise the operation of QARD

Composition (Sections 5 and 6).

Chairman and Vice-Chairman of the Board or their alternate from any of the incumbent members of the Board

President of the APO or his alternate from any of the incumbent members of Board

QAR EXECUTIVE COMMITTEE

Term of Office.

Co-terminus with their respective term in the BOA/APO not to exceed three (3) years.

Qualification Requirements.

Should possess high degree of competence and objectivity

Should not be in active practice of public accountancy during their incumbency in the QAR Executive Committee.

QUALIFICATIONS OF QARD PERSONNEL

Chief Inspector/Chief of Administration/Staff Auditors

Of good moral character

Not guilty of violating any professional ,ethical or financial and auditing standards or any accounting or reporting related regulations

Good oral/written communications skills

QUALIFICATIONS OF QARD PERSONNEL

Additional requirements

Chief Inspector : with current CPA license; senior manager /partner with publicly listed clients; independent from auditee; with 10 years audit experience

Chief of Administration: 5 years administration work experience in supervisory capacity; independent from auditee

Staff auditor: with current CPA license; 5 years auditor or financial accounting or auditing teacher in a CHED recognized educational institution or an accountant with corporate financial reporting or internal auditing function; has not been terminated due to incompetence

THE QAR PROGRAM

Coverage

All CPAs in the public accounting sector (an individual practitioner, a firm or a partnership)

Mandatory coverage

Enrollment in the QAR program is a pre-requisite for accreditation or renewal of accreditation by BOA

The CPA registration category should be stated in the certificate of accreditation.

Enrollment - Shall be considered by the BOA as compliance with the requirement of mandatory coverage.

GUIDELINES FOR QAR PROGRAM

QARD - shall conduct the QAR Program, under the oversight responsibility of the Board

Frequency of registration

QAR registration is good only for one year

Renewable annually, as long as the CPA practitioner:

- issues audit reports on the FS of clients, and

- has not been the subject of sanctions and penalties imposed by the BOA for violation of the provisions of these rules and regulations.

Precondition to new and subsequent accreditation

Enrollment is precondition to new and subsequent accreditation

Requires continuous compliance and registration, otherwise it can be a subject of fines and other penalties.

61

GUIDELINES FOR QAR PROGRAM

Registration categories - in accordance with the following risk categories and the respective share in the QAR program (annual charge)

Category A – Registration for CPA practitioners handling clients that use full IFRS/PFRS and public-interest entities (listed and not- listed but with public accountability). This category is further broken down into 6 sub categories:

Category

CPA Practitioners with:

Annual Charge

A (1)

over 50 listed clients

350,000

A (2)

over 25 to 49 listed clients

250,000

A (3)

1 to 25 listed clients

200,000

A (4)

50 or more non listed clients

150,000

A (5)

over 25 to 49 non listed clients

100,000

62

A (6)

1 to 25 non listed clients

50,000

GUIDELINES FOR QAR PROGRAM

Registration categories

Category B – Registration for CPA practitioners handling clients that use IFRS/PFRS for small and medium-sized entities (SMEs) This category is further broken down into 4 sub categories:

Category

CPA Practitioners with:

Annual Charge

B

(1)

over 200 clients

40,000

B

(2)

101 to 200 clients

25,000

B

(3)

51 to 100 clients

15,000

B

(4)

1 to 50 clients

8,000

Registration fees - may be subject to adjustment in the succeeding years depending on the practitioners’ share in the expected expense of the QAR Program which should not be construed as limiting the scope of QAR that may be conducted by the QAR Department or Audit Inspection Unit (AIU).

63

GUIDELINES FOR QAR PROGRAM

One registration category

A CPA practitioner can only register in one category (highest sub-category) division.

A CPA practitioner registered under category B can not audit companies that use full PFRS, unless he upgrades his registration to category A; same is true with the other sub-categories.

Information required for application of annual registration (initial and renewal)

Number of clients, classified as to public interest entities using full PFRS / PFRS for SMEs (under oath) to determine practitioner’s appropriate category

Application must be signed by the CPA, or the managing director / head of the firm of partnership

- The signatory shall be liable administratively or criminally for any misrepresentations made under oath.

64

GUIDELINES FOR QAR PROGRAM

Penalties - the registration rules may provide for penalties provided:

They do not exceed the penalties under these rules and regulations;

BOA is not precluded from imposing the appropriate penalties under the Philippine Accountancy Act of 2004 .

Confidentiality - Information obtained, work and reports of the AIU:

Strictly confidential and not to be divulged

Except only for purposes of determining whether or not to impose sanctions for violation of these rules and regulations or upon order of a court of competent jurisdiction

GUIDELINES FOR QAR PROGRAM

General penalties and sanctions

Fine of not less than Php50,000.00, or

Imprisonment for a period not exceeding 2 years, or both, without prejudice to the imposition of administrative penalties of warning, admonition, fine, suspension or cancellation of the professional license as a CPA.

Administrative penalties and sanctions

Fines imposed on the APO for failure to comply with the requirements, for any violation of the rules:

1st offense, Php 1,000.00/day of violation / noncompliance 2nd offense, Php 2,000.00/day of violation / noncompliance 3rd offense, Php 4,000.00/day of violation / noncompliance

- Continuing violation - Sufficient ground for suspension and eventual rescission by the BOA of the recognition it granted to the APO.

66

GUIDELINES FOR QAR PROGRAM

Administrative penalties and sanctions

Fines for failure or refusal to timely submit proof of current registration:

Offense

/

per day of delay

Category

1 st

2 nd

3 rd

A1 to A3

1,500

3,000

9,000

A4 to A6

1,000

2,000

6,000

B1 to B2

500

1,000

2,000

B3 to B4

200

500

1,000

- Failure to submit prescribed documents and to settle penalty constitutes sufficient ground for suspension and revocation of accreditation after due notice and hearing .

The first to third offenses must have been committed within the period of 4 years computed from the time of the imposition of the penalty for the first offense.

THANK YOU!