There is a perception, especially for MSMEs, that audited financial statements are primarily for the use of the BIR. As such, the objective of most enterprises is to disclose as little as possible to avoid or minimize any findings by BIR to avoid taxes or assessments. III. ROSC A&A 2006 The last ROSC A&A was completed in the Philippines in 2006, and since then the country has made progress in addressing its recommendations to develop its legal framework, standards, and institutions to foster reliable and efficient financial reporting. The table below summarizes the primary recommendations in the 2006 ROSC and developments in the Philippines since then. Recommendation Implementation status Actions taken A&A standards Training on preparing IFRS/IAS-based financial statements for various stakeholders. Fully Implemented IFRS/IAS was fully adopted in 2005. Trainings and the required literature are available to all practitioners. Establish an oversight body to coordinate the quality control programs of the various Stakeholders (SEC, BSP, IC, BOA and PICPA) and provide appropriate transparency in carrying out the quality control function. Partially Implemented A Council for Accreditation and Quality Control of Practicing CPAs (“Council”) was created under a Memorandum of Agreement executed on August 12, 2009, by BOA, SEC, BSP, and IC. The oversight body would establish the objectives and policies such as the companies to be covered by quality control review and the nature and extent of work to be done but progress has been quite limited. Set up quality control review teams of full time qualified professionals who report directly to the oversight body. The oversight body should be able to recruit qualified personnel with commensurate compensation. Limited progress to date Various quality assurance inspection program initiatives are underway but efforts are fragmented and teams are not expected to report directly to the oversight body. Design quality control procedures appropriate to audit firms to be reviewed. Limited progress to date Although some progress has been made, a mandatory quality assurance inspection program is not yet operational. Capacity to implement A&A requirements
Funding source of oversight body State Budget The Audit Oversight Board collects the following fees: 5,000 Malaysian ringgit for registration of an individual auditor as a registered auditor 5,000 Malaysian ringgit for an existing registered individual auditor who wish to continue to be registered with Audit Oversight Boardin the current year 5,000 Malaysian ringgit for the application for recognition of a foreign audit firm as a recognized auditor Capital expenditure and all other operational costs of Audit Oversight Board including the cost of inspections are funded by the SC. Statutory fees payable under the Acts administered by ACRA (including filing and registration fees for business entities and from provision of information services related to such entities) The SEC start-up fund was provided by the Ministry of Finance and the Bank of Thailand. Ongoing operations are funded through a levy on market participants, mainly the Stock Exchange of Thailand, listed companies, market intermediaries i.e. brokers and and asset management companies. Scope of coverage of inspections (auditors of PIEs only, all auditors, other) All Auditors of PIEs and schedule funds All Auditors of securities issuers and entities under SEC supervision (listed companies, market intermediaries, asset management companies, and collective investment schemes)
ANNEX 6: Covered Entities Minimum qualifications CPD or training Required track record Primary certification/ accreditation Validity Period Accreditation fee Board of Accountancy All auditable entities. Three years of meaningful experience in any areas of public practice including taxation 120 units in three years - PRC Certificate 3 years 1,500 pesos for sole practitioner / 2,000 pesos for firm Bureau of Internal Revenue Corporations, companies, partnerships, persons (proprietorships) whose gross quarterly sales, earnings, receipts, output exceed 150,000 pesos quarterly. CPA of good standing with current professional license from the PRC. At least six hours per year or a total of 18 hours for the three years of CPE in taxation from training/seminars conducted by the BIR or by private institutions. - BOA Certificate of Registration 3 years 500 pesos /year
Securities and Exchange Commission Group A At least five years experience in external audit as in-charge, manager or partner or its equivalent. Audit practice should have adequate policies and procedures related to the element of a system of quality control provided under PSA 220, PSQC 1, and amendments; reflected in Quality Assurance Manual. 60 units of training and seminars on the following topics within the last three years: 15 units on PFRS, 15 units on PSA, 18 units on Taxation, 8 units on Professional Ethics, and 4 units on relevant laws and recent issues affecting business or other areas relevant to the practice of accountancy. For renewal, 90 units for the last three years with the additional units on topics relevant to the companies under the category which the auditor is accredited (e.g., SRC, Financing Company Act). Minimum of five corporate clients with total assets of at least 50 million pesos each. BOA Accreditation 3 years 5,000 pesos for sole practitioner / 20,000 pesos for firm Group B Minimum of three corporate clients with total assets of at least 20 million pesos each. 3,000 pesos for sole practitioner / 15,000 pesos for firm Group C Minimum of three corporate clients with total assets of at least 5 million pesos each. 2,000 pesos for sole practitioner / 5,000 pesos for firm Group D Minimum of one corporate client with total assets of at least 5 million pesos; or a minimum of five clients regardless of the amount of total assets. 2,000 pesos for sole practitioner / 5,000 pesos for firm
Bangko Sentral ng Pilipinas Category A At least five years of audit experience as associate, partner, lead partner, concurring partner, or At least 30 hours in addition to the BOA's prescribed training hours, in subjects like IFRS, ISA, corporate governance, taxation, code of ethics, regulatory requirements of SEC, IC, and BSP or other government agencies, and other topics relevant to the practice. Minimum of five corporate clients with total assets of at least 50 million pesos each. BOA Accreditation 3 years 2,000 pesos for sole practitioner / 5,000 pesos for firm Category B Minimum of three corporate clients with total assets of at least 25 million pesos each. Category C Minimum of three corporate clients with total assets of at least 5 million pesos each. Insurance Commission GROUP A: (a) Insurance companies; (b) Reinsurance companies; and (c) Mutual Benefit Associations. At least five years experience in external audit as in-charge, manager, or partner or its equivalent. Auditor must have adequate established quality assurance procedures applicable to the type of entities covered by the accreditation. For those with no specific audit experience, at least 40 hours in insurance/reinsurance accounting/auditing seminars; and for renewal, at least 36 hours seminar for the last three years, all conducted by the Institute of Internal Auditors Philippines or other organization recognized by the IC. No less than 2 years of specific audit experience on type of entity covered. BOA Accreditation 3 years 2,000 pesos for sole practitioner / 5,000 pesos for firm Group B (a) Insurance and reinsurance brokers; (b) General agents; and (c) Trust for charitable uses.
Cooperative Development Authority All cooperatives. - Minimum 24 hours of training with topics on Standard Chart of Accounts, Financial Reporting Standards for Cooperatives, Philippine Cooperative Code, Rules and regulations issued by the CDA, etc. - BOA Registration 3 years 2,000 pesos for sole practitioner / 5,000 pesos for firm National Electrification Administration Electric Cooperatives. Engaged in public accounting for at least three years. Audit Team must have at least a senior partner and five key audit staff composed of managers and auditors who are CPAs. - - BOA and BIR Accreditation 3 years 15,000 pesos Energy Regulatory Commission Distribution Utilities. At least five years experience in performing external audit services. - No outstanding complaints with the BOA, PRC, SEC, and any other government agencies involving professional conduct. BOA Accreditation 3 years 3,000 pesos for sole practitioner / 10,000 pesos for firm