Updates from the

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

Accounting Teachers’ Conference

General Santos City
April 19, 2010

1
Presentation Coverage
I. BSA Curriculum
II. Accounting Teachers Accreditation
III. CPA Licensure Board Examinations
IV. The Quality Assurance Review
(Oversight) Program

2
On the BSA Curriculum

3
 On the Accounting
Teacher Accreditation

4
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.

6
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

9
 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
10
 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

11
 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

12
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

13
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

14
Interpretations TITLE
IFRIC 1 Changes in Existing Decommissioning,
Restoration and Similar Liabilities
IFRIC 2 Members’ Shares 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
15
Interpretations TITLE
IFRIC 8 Scope of IFRS 2
IFRIC 9 Reassessment of Embedded Derivatives
IFRIC 10 Interim Financial Reporting and Impairment
IFRIC 11 IFRS 2—Group 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
PHILIPPINE INTERPRETATIONS COMMITTEE (PIC)
QUESTIONS AND ANSWERS (Q&As)

Q&A No. 2006 – 01

PAS 18, Appendix, paragraph 9–Revenue 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)

17
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

18
PSQCs, Framework, PSAs, PAPSs, PSREs, PSAEs, PSRSs
Approved as of January 31, 2010

NO. TITLE
Preface Preface to the International Standards on Quality
(Dec. 2006) 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)]

19
 NO. TITLE

Philippine Standard on Quality Control (PSQC)

1 Quality Control for Firms That Perform Audits
(Redrafted) and Reviews of Financial Statements, and Other
Assurance and Related Services Engagements
Philippine Standards on Auditing (PSAs)
120 Framework of Philippine Standards on Auditing
200 Overall Objectives of the Independent Auditor
(Revised and and the Conduct of an Audit in Accordance with
Redrafted) Philippine Standards on Auditing
210 (Redrafted) Agreeing the Terms of Audit Engagements

220 (Redrafted) Quality Control for an Audit of Financial

Statements
230 (Redrafted) Audit Documentation
20
 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 Communication with Those Charged with
and Redrafted) 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
(Redrafted) Misstatements Through Understanding the Entity
and Its Environment
21
 NO. TITLE
320 (Revised Materiality in Planning and Performing an Audit
and Redrafted)
330 (Redrafted) The Auditor’s Responses to Assessed Risks
402 (Revised Audit Considerations Relating to an Entity Using a
and Redrafted) Service Organization
450 (Revised Evaluation of Misstatements Identified during the
and Redrafted) Audit
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

22
 NO. TITLE
530 (Redrafted) Audit Sampling
540 (Revised and Auditing Accounting Estimates, Including Fair
Redrafted) Value Accounting Estimates and Related
Disclosures
545 Auditing Fair Value Measurements and Disclosures
550 (Revised and Related Parties
Redrafted)
560 (Redrafted) Subsequent Events
570 (Redrafted) Going Concern
580 (Revised and Written Representations
Redrafted)
600 (Revised and Special Considerations – Audits of Group Financial
Redrafted) Statements (Including the Work of Component
Auditors)
610 (Redrafted) Using the Work of Internal Auditors
23
 NO. TITLE
620 (Revised Using the Work of an Auditor's Expert
and Redrafted)
700 Forming an Opinion and Reporting on Financial
(Redrafted) Statements
705 (Revised Modifications to the Opinion in the Independent
and Redrafted) Auditor's Report
706 (Revised Emphasis of Matter Paragraphs and Other Matter
and Redrafted) Paragraphs in the Independent Auditor's Report
710 Comparative Information - Corresponding Figures and
(Redrafted) Comparative Financial Statements
720 The Auditor’s Responsibility in Relation to Other
(Redrafted) Information in Documents Containing Audited
Financial Statements
800 (Revised Special Considerations - Audits of Financial
and Redrafted) Statements Prepared in Accordance with Special
Purpose Frameworks
24
 NO. TITLE
805 (Revised Special Considerations - Audits of Single Financial
and Statements and Specific Elements, Accounts or Items
Redrafted) of a Financial Statement
810 (Revised Engagements to Report on Summary Financial
and Statements
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 Banks’ External 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
26
 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
(Revised) of Historical Financial Information
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)
28
The new standards / rules and regulations are available at

www.prboa.com
www.aasc.org.ph
www.picpa.com.ph

Please be guided accordingly.

29
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.

30
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.
31
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.

32
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.

33
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.

34
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.

35
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.

36
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.

37
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.

38
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.

39
Insights on the CPA Exams Results
based on Items Analysis
Theory of Accounts
 Good performance
(1) accounting and financial accounting
concepts;
(2) accounting process;
(3) accounting for assets; and
(4) accounting for liabilities.

40
Insights on the CPA Exams Results
based on Items Analysis
Theory of Accounts
 Poor Performance
(1) income recognition; and
(2) financial statement presentation

41
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

42
Insights on the CPA Exams Results
based on Items Analysis
Business Law
 Poor performance
(1) corporation law; and
(2) negotiable instruments

43
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
44
Insights on the CPA Exams Results
based on Items Analysis
Taxation
 Examinees performed better in Taxation
than in Business Law.

45
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.

47
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

48
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

49
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”
50
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
51
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.

52
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

53
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 – 4th floor (office and space)
 Office furniture and fixtures
 Laptops
 Telephones/local area network
 Training rooms, when needed

54
QUALITY ASSURANCE REVIEW
ORGANIZATION
BOARD OF ACCOUNTANCY                   
COUNCIL FOR ACCREDITATION AND  QAR  EXECUTIVE COMMITTEE
QUALITY CONTROL OF PRACTICING CPAs
•ORGANIZE THE QARD
( CREATED UNDER MOA DATED AUG 12, 2009 ,  •OPERATING & OTHER POLICIES
EXECUTED BY BOA, SEC, BSP AND IC ) •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 CHIEF OF ADMINISTRATION
AUDIT INSPECTION  & ASSISTANTS ADMINISTRATION & ASSISTANTS

QAR PLAN ADMINISTRATION
SPECIFIC QAR INSPECTION PLAN ENROLLMENT OF CPAs
QAR INSPECTION REPORT FUND CUSTODY
QAR CERTIFICATE RECEIPTS & DISBURSEMENTS
QAR ANNUAL REPORT RECORD KEEPING
QAR TRAINING COMMUNICATION & PROMOTION 55
IMPLEMENTATION OF QAR POLICIES
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

56
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.

57
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

58
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
59
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.
60
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
61
penalties.
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 100,00062
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 Unit63
(AIU).
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

65
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 66
recognition it granted to the APO.
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 1st 2nd 3rd

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.
67
THANK YOU!

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