Professional Documents
Culture Documents
INTRODUCTION, PARAGRAPH 16
• It is modified to list the sources of technical and professional standards in the Philippines as follows:
- Board of Accountancy/PRC;
- SEC;
- Auditing Standards and Practices Council;
- Accounting Standards Council; and
- Relevant legislation.
• Word “corporation” was deleted from Definitions.
- A corporate form for the professional practice of accountancy not allowed in the Philippines.
• Professional accountants: the phrase “who are CPAs and who hold valid certificate issued by the
Board of Accountancy” was added.
• The phrase “a sole proprietor” was added to Professional Accountants in public practice.
• Period of rotation of lead engagement partner was changed from 7 to 5 years.
INTRODUCTION
• It discusses the rationale for the adoption of the Code.
• It contains IFAC’s belief that the identity of the accountancy profession is characterized worldwide by –
- Its endeavor to achieve a number of common objectives; and
- Its observance of certain fundamental principles for that purpose.
• It is intended to serve as a model on which to base national ethical guidance.
• It will be the basis on which the ethical requirements (code of ethics, detailed rules, guidelines,
standards of conducts) for professional accountants in each country should be founded.
• It discusses how IFAC’s role of –
- Providing guidance;
- Providing continuity of efforts; and
- Promoting harmonization
- saw the need to establish an international Code of Ethics for
Professional Accountants as basis in each member country.
• Unless a limitation is specifically stated, the objectives and fundamental principles are equally valid for
all professional accountants, whether they be in public practice, industry, commerce, the public sector
or education.
• Characteristics distinguishing a profession:
- Mastery of a particular intellectual skill, acquired by training and education;
- Adherence by its members to a common code of values and conduct established by its
administering body, including maintaining an outlook which is essentially objective; and
- Acceptance of a duty to society as a whole.
• To ensure the highest quality of performance and to maintain public confidence in the profession,
PICPA has adopted the IFAC Code of Ethics (with certain modifications).
TAX PRACTICE
*The CPA must put forward the best position in favor of a client, or an employer, provided the service is
rendered with professional competence, does not in any way impair integrity, objectivity, and consistent
with the law.
*Tax advice or opinions of material consequences given to a client or an employer should not hold out
to a client or an employer the assurance that the tax return prepared and the tax advice offered are
beyond challenge. Instead, the professional accountant should ensure that the client or the employer
are aware of the limitations attaching to tax advice and services so that they do not misinterpret an
expression of opinion as an assertion of fact and should be recorded, either in the form of a letter or in a
memorandum for the files.
*The CPA must not be associated with any return if:
- contains a false or misleading statement;
- contains information furnished recklessly or without any real knowledge of whether they are
true or false;
-omits or obscures info required to be submitted and such omission or obscurity would mislead
the revenue authorities.
DEFINITIONS
• Audit client: When the audit client is a listed entity, audit client will always include its related entities.
• Audit Engagement: An assurance engagement to provide a high level of assurance that financial
statements are free of material misstatement, such as an engagement in accordance with Phil standards
on auditing. It includes a statutory audit which is an audit required by national legislation.
• Assurance team: Includes others who can directly influence the outcome of the assurance
engagement such as:
- Those who recommend compensation;
- Those who provide direct supervisory, management or oversight of the assurance engagement
partner;
- Those providing technical or industry specific support;
- Those who provide quality control for the assurance engagement; and
- All those within a network firm who can directly influence the outcome of the audit.
• Firm covers
- A sole practitioner, partnership of professional accountants;
- An entity that controls such parties; and
- An entity controlled by such parties.
• Network firm:
- An entity under common control, ownership or management with the firm or any entity that a
reasonable and informed third party having knowledge of all relevant info; and
- Would reasonably conclude as being part of the firm nationally or internationally.
• Professional services: any service requiring accountancy or related skills performed by a professional
accountant including accounting, auditing, taxation, management consulting and financial management
services.
• Directors and officers: Those charged with the governance of an entity, regardless of their title.
• Publicity: Communication to the public of facts about the prof acct which are not designed for the
deliberate promotion of that professional accountant.
• Advertising: Communication to the public with a view to procuring professional business. (Sec 8
independence)
APPROACH TO INDEPENDENCE
This section takes into account threats to independence, accepted safeguards and public interest. Firms
and members of the assurance teams have an obligation to identify and evaluate circumstances and
relationships that create threats to independence and to take appropriate action to eliminate these
threats or to reduce them to an acceptable level by the application of the safeguards.
THREATS TO INDEPENDENCE
• Self-interest threats
• Self-review threats
• Advocacy threat
• Familiarity threat
• Intimidation threat
SECTION 10 – FEES
• Professional fees – fair reflection of the value of professional services performed, takes into account:
- Skill and knowledge required;
- Level of training and experience;
- Time spent by each person engaged; and
- Degree of responsibility performing services entails.
• Commissions – payment and receipt not allowed.
Differences in view about the correct judgment on accounting or ethical matters should normally be
raised and resolved within the org, initially with the employee’s immediate superior and possibly
thereafter, where disagreement on ethical issue remains, with higher levels of management or non-
executive directors.
If employed accountants cannot resolve any material issue involving a conflict between their employers
and their professional requirements, they may, after exhausting all other relevant possibilities, have no
other recourse but to consider resignation.
From the lecture of Atty. Eranio L. Punsalan, Chairman, Ethics Board, Philippine Institute of Certified Public Accountants; “The New Code of
Ethics for CPA’s”; 20 March 2007.