Republic of the Phil

HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila-

Fifteenth Congress
First Regular Session

HOUSE BILL NO. 1381

Introduced by Honorable Ramon “Red” H. Durano VI

EXPLANATORY NOTE

The accounting profession in the Philippines has grown tremendously,
not only in terms of membership, but in scope of activities for the last 47 years
since its official recognition through Act No. 3108, the law which created the
Board of Accountancy, on March 17, 1923,. Since then, several amendatory
legislations had been passed. The most recent is Republic Act No. 9298, the
Revised Accountancy Act of 2004.

Over the years, the accounting profession has attained progress in
comparison with other professions in the country and gained the confidence
and respect of all sectors of the society.

However, in the recent past, our attention was captured by the
scandals which rocked corporations worldwide, and these scandals brought to
fore the crucial role played by accountants and auditors in curbing corporate
abuses. In the United States, the corporate industry disclosed series of
abuses perpetrated by top ranking officials of well-established corporations.
Firms such as Enron, Andersen and World Com had been accused and found
guilty of engaging in illegal activities such as using partnerships to hide losses
and selling company stocks while preventing employees from unloading their
shares; acting as consultants while serving as its auditor, defrauding investors
by using their respective companies as personal piggy banks.

In the Philippines, we had our share of scandals such as the BW
Resources and educational pre-need companies including Pacific Plans and
College Assurance Plans, which have long defied public trust and confidence
due to mismanagement of their respective funds and resources. The GSIS
and SSS are likewise being questioned in terms of their capability to sustain
funds to pay back their members.


It is also apparent that large sums of money that are expended by
unscrupulous businessmen for alleged “kickbacks” to government officials
would not go unnoticed if auditors are zealous in the performance of their
functions. There could be no other source for these “kickbacks” than the
revenues derived from government contracts which should have been
properly reported. It is of interest to inquire into the “bona fides” of the auditors
who gave their ‘imprimatur’ to the financial statements of firms who have
contracts with the government.

The traditional trust reposed upon audited financial statements has
been shattered and it affects to a large extent savings and investments not to
mention a large chunk of tax revenues. The trust has to be reinstituted
through the creation of new institutions that will not only enhance the practice
of the profession but will plug the loopholes in the regulatory framework.

“Who audits the auditors?” is often a question that is asked within the
circles of auditors themselves.

The question has already been answered by some developed
countries who have taken the forefront in creating a credible entity that will
conduct a Quality Assurance Review (QAR) of the manner by which the
auditing firms perform their statutory duties, their review of the financial status
and reports of the entities they are auditing. Added credibility is obtained if the
entity is independent, meaning accountable and reporting only to the public. In
the USA this entity is called the Public Company Accounting Oversight Board;
in the UK it is called the Professional Oversight Board of Accountancy; in
Canada it is called the Canadian Public Accountability Board. Each of these
entities was created to meet the requirements of their country's law and the
needs of their accounting profession. So too in the Philippines, the credible
entity should fit our existing laws and meet the specific needs of the Philippine
accounting profession.

Under the present law, RA 9298, one of the powers of the Board of
Accountancy is to conduct an oversight into the quality of audits of financial
statements through a review of the quality control measures instituted by
auditors in order to ensure compliance with accounting and auditing standards
and practices (Sec. 9h).

Considering the present financial crisis and its impact on the Philippine
economy, as well as the collateral damage upon investment and employment
opportunities that may arise out of any accounting and auditing scandal that
may rock the profession, it is now opportune to have a second look at the
powers of the Board of Accountancy. It should be provided with more tools in
its kit of regulatory powers, ability to impose sanctions in order to ensure
compliance, grant of measures of fiscal autonomy to enable it to effectively
shield the country from any future accounting and auditing scandals.

In so doing, we have not only “put the license in order’ in so far as the
accounting profession is concerned, but we have put in place a mechanism to
strengthen investor protection. This will reinvigorate the investments climate


as investor confidence sets in and this will propel the economy to higher
levels of growth.

In view of the foregoing, approval of this bill is urgently sought.

RAMOW “RED” H. DURANO VI


Republic of the Philippines
HOUSE OF REPRESENTATIVES
‘Quezon City, Metro Manila

Fifteenth Congress
First Regular Session

HOUSE BILL NO. 1381

Introduced by Honorable Ramon “Red” H. Durano VI

AN ACT
ENHANCING THE PRACTICE OF ACCOUNTANCY IN THE PHILIPPINES,
CREATING FOR THE PURPOSE THE ACCREDITATION AND QUALITY
ASSURANCE REVIEW COUNCIL, THEREBY AMENDING REPUBLIC ACT NO.
9505, KNOWN AS THE “PHILIPPINE ACCOUNTANCY ACT OF 2004”,
APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

ARTICLE!

TITLE, DECLARATION OF POLICY, OBJECTIVE
AND SCOPE OF PRACTICE

XXX

SEC. 1. Section 2 is hereby amended to include another paragraph, to read
as follows:

“SEC. 2. Declaration of Policy. -

XXX
THE STATE LIKEWISE PROMOTES THE VALUE OF CREDIBLE AUDITS
OF FINANCIAL REPORTS IN ORDER TO BOOST THE NATION'S CONFIDENCE
AND RELIANCE ON AUDITORS. THIS SHALL ENCOURAGE INVESTMENTS,
BOTH FOREIGN AND LOCAL, MINIMIZE GRAFT AND CORRUPTION, AND


ENHANCE REVENUE COLLECTIONS THAT ARE VITAL TO PROVIDING
EMPLOYMENT OPPORTUNITIES AND CREATING AN ENVIRONMENT
CONDUCIVE TO ECONOMIC DEVELOPMENT AND GROWTH”.

SEC. 2. Section 3 of the same Act is amended to read as follows:

“SEC. 3. Objectives. - This Act shall provide for and govern:

[a. The standardization and regulation of accounting education;]

A

THE IMPROVEMENT OF THE INTEGRITY, COMPETENCE AND
TRANSPARENCY OF PROFESSIONAL ACTIVITIES IN THE PRACTICE OF
ACCOUNTANCY IN THE PHILIPPINES;

{[b. The examination of registration of certified public accountants;]

B.

THE PROMOTION OF HIGH QUALITY REPORTING OF FINANCIAL AND
NON-FINANCIAL INFORMATION BY CERTIFIED PUBLIC ACCOUNTANTS
THROUGH THE QUALITY ASSURANCE REVIEW OF ALL SOLE
PRACTITIONERS, PARTNERS OR MEMBERS OF AUDITING FIRMS IN
THEIR PERFORMANCE OF THE AUDIT FUNCTION THUS ENHANCING
THE CREDIBILITY OF FINANCIAL REPORTING;

[c. The supervision, control, and regulation of the practice of accountancy in the
Philippines}

c.

THE PROMOTION OF THE HIGHEST STANDARDS AMONG CERTIFIED
PUBLIC ACCOUNTANTS THUS IMPROVING THE QUALITY OF
ACCOUNTING AND AUDIT SERVICES AND OTHER FUNCTIONS
PERFORMED BY CERTIFIED PUBLIC ACCOUNTANTS;

THE STANDARDIZATION AND REGULATION OF ACCOUNTING
EDUCATION;

THE EXAMINATION FOR REGISTRATION OF CERTIFIED PUBLIC
ACCOUNTANTS AND THEIR ACCREDITATION TO PRACTICE THEIR
PROFESSION THROUGHOUT THE PHILIPPINES BEFORE ANY PRIVATE
ENTITY OR GOVERNMENT REGULATORY BODY;


F. THE SUPERVISION, CONTROL, AND REGULATION OF THE PRACTICE OF
ACCOUNTANCY IN THE PHILIPPINES; AND

G. THE PROMOTION OF THE DEVELOPMENT OF THE ACCOUNTANCY
PROFESSION’.

SEC. 3. Section 4 (a) is amended to include another paragraph, to read as
follows:

“SEC. 4. Scope of Practice. - The practice of accountancy shall include,
but not limited to, the following:

a. XXX

THE SUPERVISION AND MANAGEMENT OF PERSONS, FIRMS OR
PARTNERSHIPS ENGAGED IN THE PRACTICE OF PUBLIC ACCOUNTANCY
SHALL BE CONSIDERED ALSO AS PRACTICE OF PUBLIC ACCOUNTANCY.

ARTICLE It
PROFESSIONAL REGULATORY BOARD OF ACCOUNTANCY

SEC. 4. Section 9 of the same Act is hereby amended as follows:

“SEC. 9, Powers and Functions of the Board. - The Board shall exercise
the following specific powers, functions and responsibilities:

XXX

XXX

XXX
d. To issue, suspend, revoke, reinstate the Certificate of Registration for the
practice of the accountancy profession AS WELL AS THE ACCREDITATION FOR
ACCOUNTANTS IN THE PRACTICE OF ACCOUNTANCY IN ALL SECTORS;

XXX

XXX
g. To monitor the conditions affecting the practice of accountancy and adopt
such measures, including promulgation of, AND ENSURING COMPLIANCE WITH,


accounting and auditing standards, rules and regulations and best practices as may
be deemed proper for the enhancement and maintenance of high professional,
ethical, accounting and [auditing] ASSURANCE standards: PROVIDED, That
domestic accounting and [auditingJASSURANCE standards, rules and regulations
shall include the international accounting and [auditing] ASSURANCE standards, and
generally accepted best practices;

h To conduct an oversight into the quality of audits of financial
statements through [a review of the quality control measures instituted by auditors in
order to ensure compliance with the accounting and auditing standards and
practices] THE ACCREDITATION AND QUALITY ASSURANCE REVIEW COUNCIL,
IN ORDER TO DETERMINE WHETHER A SOLE PRACTITIONER OR AN AUDIT
PARTNER OR A STAFF MEMBER IS SUBJECT TO OR THE FIRM HAS AN
ADEQUATE SYSTEM OF QUALITY CONTROL, OR IS IN COMPLIANCE WITH
SUCH SYSTEM, AND HAS ADHERED TO PROFESSIONAL STANDARDS AND
PRACTICES, AS WELL AS WITH REGULATORY AND LEGAL REQUIREMENTS IN
ONGOING ENGAGEMENTS; :

XXX

J. The Board may, motu propio in its discretion, OR UPON VERIFIED
COMPLAINT, make such investigations as it deems necessary to determine whether
any person has violated any provisions of this law, any accounting or (auditing)
ASSURANCE standard or rules duly promulgated by the Board as part of the rules
governing the practice of accountancy AS WELL AS TO IMPOSE THE
ADMINISTRATIVE PENALTIES THAT MAY BE PRESCRIBED BY
ADMINISTRATIVE BODIES IN GENERAL, AS WELL AS THOSE THAT ARE
PROVIDED FOR UNDER THIS ACT;

k. To issue a cease or desist order to any person, associations, partnership or
corporation engaged in violation of any provision of this Act, any accounting or
[auditing] ASSURANCE standards or rules duly promulgated by the Board as part of
the rules governing the practice of accountancy in the Philippines;

XXX
XXX


n. To ensure, in coordination with the Commission on Higher Education (CHED)
‘or other authorized govemment offices that all higher educational instruction and
offering of accountancy comply with the policies, standards and requirements of the
course prescribed by CHED or other authorized government offices in the areas of
curriculum, faculty, library and facilities; [and]

©. TO RECOMMEND LEGISLATION THAT WOULD FURTHER THE
OBJECTIVES OF THIS ACT SPECIFICALLY ON MATTERS RELATING TO
FINANCIAL AND NON-FINANCIAL REPORTING, ACCOUNTING AND AUDITING;
AND

fo P. XXX

ARTICLE Ili
EXAMINATION, REGISTRATION AND LICENSURE

SEC. 5. Section 21 is hereby amended to read as follows:

“SEC, 21. Roster of Certified Public Accountants. —- [A] AN
ALPHABETICAL roster showing the names and place of business of all registered
certified public accountants, THEIR CERTIFICATES OF REGISTRATION
NUMBERS AND DATES OF REGISTRATION, THE LATEST DATE OF PAYMENT
OF THE REQUIRED RENEWAL FEES shall be prepared and updated by the Board,
‘and copies thereof shall be made available to any party as may be deemed
necessary[.], PROVIDED, THAT GOVERNMENT OFFICES SHALL NOT BE
SUBJECT TO ANY PAYMENT FOR SECURING A COPY OF THE ROSTER, AND
THAT THIS ROSTER SHALL BE UPDATED ONCE EVERY TWO (2) YEARS. THE
BOARD MAY, AT ITS OPTION, POST THE ROSTER OVER THE INTERNET *.

SEC. 6. Section 25 of the same Act is amended to read as follows:

“SEC. 25. Reinstatement, Reissuance and Replacement of Revoked or
Lost Certificates. - The Board may, after the expiration of [two (2)] THREE (3)
years from the date of revocation of a certificate of registration and upon application
and for reasons deemed proper and sufficient, reinstate the vaiidity of a revoked
certificate of registration and in so doing, may, in its discretion, exempt the applicant
from taking another examination”.


XXX

ARTICLE IV
PRACTICE OF ACCOUNTANCY

XXX
XXX

SEC. 7. Section 28 is hereby amended to read as follows:

“SEC. 28. Limitation of the Practice of Public Accountancy. - Single
practitioners and partnerships for the practice of public accountancy shall be
registered certified public accountants in the Philippines: Provided, That from the
effectivity of this Act, a certificate of accreditation shall be issued to certified public
accountants in public practice only upon showing, in accordance with rules and
regulations promulgated by the Board, UPON THE RECOMMENDATION OF THE
ACCREDITATION AND QUALITY ASSURANCE REVIEW COUNCIL, and approved
by the Commission, that such registrant has acquired a minimum of three (3) years
meaningful experience in any of the areas of public practice including taxation:
Provided, further, That this requirement shall not apply to those already granted a
certificate of accreditation prior to the effectivity of this Act [.] : PROVIDED,
FURTHER, THAT THE CERTIFIED PUBLIC ACCOUNTANTS MAY, FOR THE
PURPOSE OF THE PRACTICE OF THE ACCOUNTANCY PROFESSION, FORM A
LIMITED LIABILITY PARTNERSHIP, WHOSE MEMBERSHIP SHALL NOT BE
LESS THAN FIVE (5) CERTIFIED PUBLIC ACCOUNTANTS, WHOSE INDIVIDUAL
LIABILITY DOES NOT EXCEED THE MINIMUM CAPITAL CONTRIBUTION OF
ONE HUNDRED THOUSAND PESOS (P 100,000.00) EACH, UNLESS A HIGHER
AMOUNT OF CAPITAL CONTRIBUTION AND LIABILITY IS PROVIDED FOR IN
THE ARTICLES OF CO-PARTNERSHIP, SUBJECT TO THE LIABILITIES OF
CERTIFIED PUBLIC ACCOUNTANTS UNDER THE PROVISION OF THE
SECURITIES REGULATION CODE, AND THAT THERE WOULD BE UNLIMITED
LIABILITY IF THE DAMAGE WAS CAUSED BY THE LIMITED LIABILITY
PARTNERSHIP THROUGH FRAUD OR VIOLATION OF ANY EXISTING LAW:
PROVIDED, FURTHER, THAT THE SECURITIES AND EXCHANGE COMMISSION
SHALL NOT REGISTER ANY PARTNERSHIP THAT SHALL ENGAGE IN THE
PRACTICE OF PUBLIC ACCOUNTANCY WITHOUT THE PRIOR APPROVAL OF


THE BOARD, AND PROVIDED, FINALLY, THAT [.] the Securities and Exchange
Commission shall not register any corporation organized for the practice of public
accountancy.

SEC. 8. Insert a new section after Section 28 of the same Act, to be
designated as Section 29 and renumber succeeding sections. The new section shall
read as follows:

“SEC. 29. CREATION OF THE ACCREDITATION AND QUALITY
ASSURANCE REVIEW COUNCIL (AQARC). - A. THERE IS HEREBY CREATED,
AS AN INDEPENDENT BODY SUBJECT ONLY TO THE ADMINISTRATIVE
SUPERVISION OF THE BOARD, TO BE KNOWN AS THE ACCREDITATION AND
QUALITY ASSURANCE REVIEW COUNCIL, WHOSE PURPOSES AND DUTIES
SHALL INCLUDE THE FOLLOWING:

1. TO REVIEW APPLICATIONS FOR ACCREDITATION TO
PRACTICE ACCOUNTANCY, BEFORE ANY REGULATORY
BODY IN THE PHILIPPINES, SUCH AS THE SECURITIES AND
EXCHANGE COMMISSION (SEC), THE BANGKO SENTRAL NG
PILIPINAS (BSP), THE INSURANCE COMMISSION (IC) AND
THE BUREAU OF INTERNAL REVENUE (BIR), AND TO
RECOMMEND THE APPROVAL OF SUCH APPLICATIONS TO
THE BOARD, PROVIDED, THAT ONLY DULY ACCREDITED
CERTIFIED PUBLIC ACCOUNTANTS MAY BE ALLOWED TO
APPEAR AND REPRESENT CLIENTS BEFORE THE
AFORESAID BODIES ON ANY MATTER REQUIRING THE
EXPERTISE OF A CERTIFIED PUBLIC ACCOUNTANT IN
ACCOUNTING AND ASSURANCE;

UW TO RECOMMEND THE ACCREDITATION OF CPAs IN PUBLIC
PRACTICE UPON COMPLIANCE WITH THE IMPLEMENTING
RULES AND REGULATIONS OF THE BOARD;

i TO PROMOTE, PUBLICLY AND PROACTIVELY, HIGH
QUALITY EXTERNAL AUDITS;


vi.

vil.

vil.

THROUGH ITS AUDIT INSPECTION UNIT (AIU), TO MONITOR
THE QUALITY OF AUDITS AND IMPLEMENT THE QUALITY
ASSURANCE REVIEW (QAR) PLAN FOR THE YEAR;

TO RECOMMEND TO THE BOARD THE APPROVAL OF THE
QUALITY ASSURANCE REVIEW (QAR) PLAN FOR THE YEAR,
WHICH MAY BE APPROVED BY THE BOARD WITHOUT
REFERRAL TO THE COMMISSION;

TO OBTAIN INDEPENDENT TECHNICAL ADVICE ON THE
SUBJECT OF QUALITY ASSURANCE WHEN NEEDED AND
APPROPRIATE;

TO RECEIVE AND EVALUATE THE REPORTS AND
RECOMMENDATIONS OF THE AiU, AND SUBMIT THEM TO
THE BOARD FOR SUCH ACTION AS MAY BE NECESSARY
UNDER THE PREMISES, INCLUDING THE IMPOSITION OF
ADMINISTRATIVE SANCTIONS, IN ACCORDANCE WITH THE
IMPLEMENTING RULES AND REGULATIONS TO BE
PROMULGATED IN ACCORDANCE WITH THIS AGT, AND THE
PUBLICATION OF THE DETAILS OF THE VIOLATIONS TO
SERVE AS A WARNING TO THE GENERAL PUBLIC AND TO
THF MEMBERS OF THE ACCOUNTANCY PROFESSION;

TO PREPARE AN ANNUAL REPORT TO BE ISSUED BY THE
BOARD TO BOTH HOUSES OF CONGRESS SHOWING THE
ACTIVITIES OF THE AQARG WITH APPROPRIATE
RECOMMENDATIONS FOR ANY ACTION THAT MAY BE
UNDERTAKEN BY CONGRESS INCLUDING PROPOSED
LEGISLATION OR AMENDMENTS TO EXISTING LEGISLATION
ON THE MATTER OF PROTECTING THE INTEGRITY OF
AUDITS OF FINANCIAL STATEMENTS.

8. THE FOLLOWING ARE THE MEMBERS OF THE AQARC WHO SHAI! AIL RE
REGISTERED CERTIFIED PUBLIC ACCOUNTANTS, EXCEPT THE
REPRESENTATIVE FROM THE BUSINESS COMMUNITY WHO NEED NOT
RE A CERTIFIFD PUBLIC ACCOUNTANT: PROVIDED, THAT NO MEMBER


SHALL BE FINANCIALLY OR OTHERWISE INTERESTED IN AN AUDIT FIRM
THAT MAY BE SUBJECT TO THE QUALITY ASSURANCE REVIEW,
WHETHER DIRECTLY OR INDIRECTLY, PROVIDED, FURTHER, THAT NO
MEMBER SHALL BE RELATED WITHIN THE FOURTH CIVIL DEGREE OF
CONSANGUINITY OR AFFINITY WITH ANY SOLE PRACTITIONER,
PARTNER, OR STAFF MEMBER OF ANY FIRM THAT IS THE SUBJECT OF
THE QUALITY ASSURANCE REVIEW BY THE COUNCIL:

ib CHAIRMAN — A PERSON FROM THE BUSINESS COMMUNITY
WITH KNOWN INTEGRITY AND PROBITY, PREFERABLY THE
INCUMBENT PRESIDENT OR CHAIRMAN OF ANY OF THE
NATIONAL CHAMBERS OF COMMERCE AND INDUSTRY IN
THE PHILIPPINES, WHO SHALL BE INVITED BY THE BOARD,
TO SERVE A TERM THAT IS CO-TERMINOUS WITH HIS TERM
AS PRESIDENT OR CHAIRMAN OF THE NATIONAL CHAMBER
OF COMMERCE OR INDUSTRY HE REPRESENTS;

Ul, VICE-CHAIRMAN — THE CHAIRMAN OF THE BOARD, OR ANY
OF HIS DESIGNATED ALTERNATE FROM ANY MEMBER OF
THE BOARD SHALL BE THE VICE-CHAIRMAN OF THE
ACCREDITATION AND QUALITY ASSURANCE REVIEW
COUNGIL, WHOSE TERM AS VICE-CHAIRMAN SHOULD BE
CO-TERMINOUS WITH HIS TERM AS A MEMBER OF THE
BOARD;

mM. MEMBERS —
A. ONE DESIGNEE EACH FROM THE SEC, BSP, BIR,
Ic, THE ACCREDITED PROFESSIONAL
ORGANIZATION FOR. CPAs, THE PHILIPPINE
STOCK EXCHANGE (PSE) AND THE CHIEF
INSPECTOR OF THE AUDIT INSPECTION UNIT.

C. THERE SHALL BE CREATED AN AUDIT INSPECTION UNIT WHIGH
SHALL BE ATTACHED TO THE ACCREDITATION AND QUALITY ASSURANCE
REVIEW COUNCIL. THE AIU SHALL ASSIST THE COUNCIL IN EFFECTUATING
ITS DUTIES AND RESPONSIBILITIES. THE COMPOSITION, DUTIES AND
RESPONSIBILITIES OF THE AIU SHALL BE DEPENDENT UPON THE NEEDS OF


THE COUNCIL WHICH THE BOARD, UPON RECOMMENDATION OF THE
COUNCIL, SHALL DETERMINE FROM TIME TO TIME. ITS MEMBERS SHALL BE
ENGAGED ON A CONSULTANCY BASIS SUBJECT TO SUCH TERMS AND
COMPENSATION AS MAY BE AGREED UPON AND SUBJECT TO
REIMBURSEMENT OF ACTUAL COSTS AND EXPENSES. THE MEMBERS OF
THE AIU SHALL ALL BE REGISTERED CERTIFIED PUBLIC ACCOUNTANTS
WITH AT LEAST FIVE (5) YEARS EXPERIENCE AS AN AUDITOR, AND MUST
NOT BE FINANCIALLY OR OTHERWISE INTERESTED IN AN AUDIT FIRM THAT
MAY BE SUBJECT TO QUALITY ASSURANCE REVIEW, NOR RELATED TO ANY
SOLE PRACTITIONER, STAFF MEMBER, OR PARTNER OF ANY FIRM WITHIN
THE FOURTH DEGREE OF CONSANGUINITY OR AFFINITY.

D, THAT THE MEMBERS OF THE BOARD, THE AQARC AND THE AIU SHALL
NOT BE LIABLE TO ANY PERSON, WHETHER NATURAL OR JURIDICAL, FOR
DAMAGES, ACTUAL, MORAL OR OTHERWISE, FOR ANY ACT RESULTING
FROM THE PERFORMANCE OF THEIR DUTIES AND FUNCTIONS UNDER THIS
ACT, EXCEPT ONLY IF THEY ARE SHOWN TO BE GROSSLY NEGLIGENT OR
HAVE ACTED IN BAD FAITH OR HAVE VIOLATED THE LAWS AND RULES THAT
ARE APPLICABLE TO PUBLIC OFFICERS AND EMPLOYEES, SUCH AS BUT
NOT LIMITED TO THE CODE OF ETHICAL CONDUCT FOR PUBLIC OFFICERS,
‘AND ANTI-GRAFT AND CORRUPT PRACTICES ACT”.

SEC. 9. Section 29 of the same Act is hereby amended to read as follows:

“SEC. [29] 31. Ownership of Working Papers. - All working papers,
Schedules and memoranda made by a certified public accountant and his staf in the
course of an examination, including those prepared and submitted by the client,
incident to or in the course of an examination, by such certified public accountant,
except reports submitted by a certified public accountant to a client shall be treated
confidential and privileged and remain the property of such certified public
accountant in the absence of a written agreement between the certified public
accountant and the client, to the contrary , unless such documents are required to be
produced through subpoena issued by any court, tribunal, or government regulatory
or administrative body [] INCLUDING THE ACCREDITATION AND QUALITY
ASSURANCE REVIEW COUNCIL CREATED UNDER THIS ACT’.

‘SEC. 10. Section 30 is hereby amended to read as follows:


“SEC. [30]31. Accredited Professional Organization. - All registered
certified public accountants whose names appear in the rostet of certified public
accountants shall be united and integrated tivough their membership in a one and
only registered and accredited national professional organization of registered and
licensed certified public accountants, which shall be registered with the Securities
and Exchange Commission as a non-profit corporation and recognized by the Board,
Subject to the approval of the Commission. [The members of the said integrated and
acoredited national professional organization shall receive benefits and privileges
appurtenant thereto upon payment of required fees and dues.) THE PRESENT
ACCREDITED PROFESSIONAL ORGANIZATION SHALL BE THE ACCREDITED
PROFESSIONAL ORGANIZATION RECOGNIZED UNDER THIS ACT UNTIL
REPLACED IN ACCORDANCE WITH THE RULES AND REGULATIONS
PROMULGATED BY THE COMMISSION. ALL CERTIFIED PUBLIC
ACCOUNTANTS WHO REGISTERED AS SUCH AS OF THE EFFECTIVITY OF
THIS ACT, WHETHER PRACTICING THEIR PROFESSION OR NOT, ARE
AUTOMATICALLY MEMBERS OF THE ACCREDITED PROFESSIONAL
ORGANIZATION. ALL THOSE WHO ARE ISSUED THEIR CERTIFICATES OF
REGISTRATION AS CERTIFIED PUBLIC ACCOUNTANTS ARE ALSO
AUTOMATICALLY MEMBERS OF THE ACCREDITED PROFESSIONAL
ORGANIZATION. MEMBERSHIP IN GOOD STANDING IN THE SAID
INTEGRATED AND ACCREDITED NATIONAL PROFESSIONAL ORGANIZATION
SHALL BE MANDATORY AND A PRE-REQUISITE FOR THE RENEWAL OF THE
PROFESSIONAL IDENTIFICATION CARD. THEY SHALL RECEIVE BENEFITS
AND PRIVILEGES APPURTENANT THERETO UPON PAYMENT OF REQUIRED
FEES AND DUES. FAILURE TO PAY THE REQUIRED ASSOCIATION DUES
SHALL RESULT TO SUSPENSION OR CANCELLATION OF THE REGISTRATION
OF ANY CERTIFIED PUBLIC ACCOUNTANT AFTER THE REQUISITE DUE
PROCESS. Membership in the integrated organization shall not be a bar to
membership in any other association of certified public accountants".

SEC. 11. Section 31 of the same Act is hereby amended as follows:

“SEC. [31] 32. Accreditation to Practice Public Accountancy. - Certified
Public accountants, firms and partnership of certified public accountants, engaged in
the practice of public accountancy, including partners and staff members thereof,
shall register with the Commission and the Board, UPON THE FAVORABLE
RECOMMENDATION OF THE AQARC, such registration to be renewed every three
(3) years, SUBJECT TO SUCH RECOMMENDATION; Provided, That subject to the


approval of the Commission, the Board shall promulgate rules and regulations for the
implementation of registration requirements including the fees and penalties for
violation thereof’.

SEC. 12. Section 32 of the same Act is hereby amended to read as follows:

“SEC. [32] 33. Continuing Professional Education (CPE) Program. - All
certified public accountants REQUIRED TO UNDERGO A CONTINUING
PROFESSIONAL EDUCATION (CPE) shall abide by the requirements, rules and
regulations on continuing professional education to be promulgated by the Board,
subject to the approval of the Commission, in coordination with the accredited
national professional organization of certified public accountants or any duly
accredited educational institutions. For this purpose, a CPE council is hereby
created to implement the CPE program’.

SEC. 13. Section 33 is hereby amended to read as follows:

“SEC. [33] 34. SEAL AND USE OF SEAL. - All licensed certified public
accountants shall obtain and use a seal of a design prescribed by the Board bearing
the registrant's name, registration number and title. THE INDIVIDUAL SEAL OF A
LICENSED CERTIFIED PUBLIC ACCOUNTANT SHALL REQUIRE THE
APPROVAL OF THE BOARD IN ORDER TO BE VALID. The auditor's reports shall
be stamped with the said seal, indicating therein his/her CPA LICENSE NUMBER,
ACCREDITATION NUMBER IF ANY AND DATE OF EXPIRATION, current
Professional Tax Receipt (PTR) number, date/place of payment when filed with
government authorities, {or when used professionally] THE CPA'S OFFICE
ADDRESS WHICH MUST NOT BE A POST OFFICE BOX NUMBER, AND THE
CPE COMPLIANCE AND THE ISSUING BODY; PROVIDED, THAT AUDIT
REPORTS AND OTHER DOCUMENTS THAT ARE TO BE SIGNED BY LICENSED
CERTIFIED PUBLIC ACCOUNTANTS ARE NOT VALID AND DO NOT HAVE
PROBATIVE VALUE IF NOT PROPERLY SEALED AND DO NOT CONTAIN THE
FOREGOING INFORMATION’.

SEC. 14. Section 34 of the same Act is hereby amended to read as follows:
“SEC. [34] 35. Foreign Reciprocity. - Subject or citizen of foreign countries

may be allowed to practice accountancy in the Philippines in accordance with the
Provisions of existing law, international treaty obligations including mutual recognition


agreements entered into by the Philippine government with other countries. A
person who is not a citizen of the Philippines shall not be allowed to practice
accountancy in the Philippines unless he/she can prove, in the manner provided by
the Rules of Court that, by specific provision of law, the country of which he/she is a
citizen, subject or national admits citizens of the Philippines to the practice of the
same profession without ANY IMMIGRATION OR VISA restrictionS ON THE FREE
ENTRY INTO SUCH COUNTRY OF CITIZENS OF THE PHILIPPINES WHO
INTEND TO PRACTICE THE ACCOUNTANCY PROFESSION’.

XXX

ARTICLE V
PENAL AND FINAL PROVISIONS

SEC. 15. Section 36 is amended to read as follows:

“SEC. [36] 37. Penal Provision. - Any person who shall violate any of the
provisions of this Act or any of its implementing rules and regulations as promulgated
by the Board subject to the approval of the Commission, shall upon conviction be
Punished [by a fine of not less than Fifty Thousand Pesos (P50,000.00) or by
imprisonment for a period not exceeding two (2) years or both] IN THE FOLLOWING
MANNER:

FIRST OFFENSE. A FINE OF NOT LESS THAN ONE HUNDRED
THOUSAND PESOS (P100,000.00) OR BY IMPRISONMENT FOR A PERIOD OF
NOT LESS THAN SIX (6) YEARS OR BOTH FINE AND IMPRISONMENT AT THE
DISCRETION OF THE COURT. CERTIFIED PUBLIC ACCOUNTANTS WHO ARE
FOUND GUILTY OF THE ABOVE VIOLATIONS .SHALL, IN ADDITION, BE
AUTOMATICALLY SUSPENDED FROM PRACTICING THEIR PROFESSION FOR
A PERIOD NOT EXCEEDING THREE (3) YEARS FROM DATE OF CONVICTION;

SECOND OFFENSE. COMMITTED WITHIN TWO (2) YEARS FROM
COMMISSION OF THE FIRST OFFENSE AS FOUND IN THE JUDGMENT OF
CONVICTION FOR THE FIRST OFFENSE: A FINE OF NOT LESS THAN THREE
HUNDRED THOUSAND PESOS (300,000.00) OR BY IMPRISONMENT FOR A
PERIOD OF NOT LESS THAN EIGHT (8) YEARS OR BOTH FINE AND
IMPRISONMENT AT THE DISCRETION OF THE COURT. CERTIFIED PUBLIC
ACCOUNTANTS WHO ARE FOUND GUILTY OF THE ABOVE VIOLATIONS


SHALL, IN ADDITION, BE AUTOMATICALLY SUSPENDED FROM PRACTICING
THEIR PROFESSION FOR A PERIOD NOT EXCEEDING FIVE (5) YEARS FROM
DATE OF CONVICTION;

THIRD AND SUCEEDING OFFENSES. COMMITTED WITHIN TWO (2)
YEARS FROM COMMISSION OF THE SECOND OFFENSE AS FOUND IN THE
JUDGMENT OF CONVICTION FOR THE SECOND OFFENSE. A FINE OF NOT
LESS THAN FIVE HUNDRED THOUSAND PESOS (P500,000.00) AND
IMPRISONMENT OF NOT LESS THAN EIGHT (8) YEARS. CERTIFIED PUBLIC
ACCOUNTANTS WHO ARE FOUND GUILTY OF THE ABOVE VIOLATIONS
SHALL, IN ADDITION, BE FOREVER DEBARRED FROM PRACTICING THEIR
PROFESSION’. .

SEC. 16. Section 40 of the same Act is hereby amended to read as follows:

“SEC. [40]41. Funding Provision. - The chairperson of the Professional
Regulation Commission shall immediately include the Commission's programs the
implementation of this Act, the funding of which shall be included in the annual
General Appropriations Act.

THE SUM OF TWENTY FIVE MILLION PESOS (P25,000,000.00) IS
HEREBY IMMEDIATELY APPROPRIATED AND A CONTINUING APPROPRIATION
OF TWENTY MILLION (P20,000,000.00) ANNUALLY TO BE PART OF THE
PROVISIONS OF THE GENERAL APPROPRIATIONS ACT WHICH SHALL BE
EXPENDED EXCLUSIVELY FOR THE IMPLEMENTATION OF THE PROVISIONS
OF THIS ACT WITH REGARD TO THE OPERATION OF THE ACCREDITATION
AND QUALITY ASSURANCE REVIEW COUNCIL AND THE AUDIT INSPECTION
UNIT, SUBJECT TO THE USUAL COMMISSION ON AUDIT RULES AND
REGULATIONS; PROVIDED, THAT THE BOARD MAY DETERMINE
REASONABLE FEES TO BE COLLECTED FOR THE ACCREDITATION OF
CERTIFIED PUBLIC ACCOUNTANTS AND FOR MONITORING THE QUALITY OF
AUDITS WHICH AMOUNTS SHALL BE USED EXCLUSIVELY FOR THE
OPERATION OF THE BOARD; PROVIDED, FURTHER, THAT ALL
EXPENDITURES OF THE BOARD SHALL BE SUBJECT TO THE USUAL
COMMISSION ON AUDIT RULES AND REGULATIONS; PROVIDED FINALLY,
THAT ANY UNEXPENDED SURPLUS FOR ANY GIVEN YEAR SHALL
AUTOMATICALLY REVERT TO THE GENERAL FUND OF THE GOVERNMENT”.


SECTION 17. Section 41 of the same Act is hereby amended to read as
follows:

“SEC. [41]42. Transitory Provision. - The incumbent chairman and
members of the Board shall continue to serve in their respective positions under the
terms for they have been appointed under [Presidential Decree No. 692] REPUBLIC
ACT NO. 9298, THE PHILIPPINE ACCOUNTANCY LAW OF 2004 without the need
of new appointments: PROVIDED, THAT APPOINTMENTS UNDER THIS ACT
SHALL BE CONSIDERED AS FIRST TIME APPOINTMENTS FOR PURPOSES OF
APPLYING SECTION 7 OF THIS ACT".

[All graduates with a Bachelors Degree, major in Accounting shall be allowed
to take the CPA Licensure Examination within two (2) years from the effectivity of this
Act under the rules and regulations to be promulgated by the Board subject to the
approval by the Commission]

XXX

Approved,