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Auditing Theory RA 9298

Bachelor of Science in Accountancy (Polytechnic University of the Philippines)

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Republic of the Philippines

Congress of the Philippines
Metro Manila

Twelfth Congress
Third Regular Session

Begun and held in Metro Manila, on Monday, the twenty-eight day of July, two thousand three.

Republic Act No. 9298 May 13, 2004

AN ACT REGULATING THE PRACTICE OF ACCOUNTANCY IN THE PHILIPPINES, REPEALING FOR THE
PURPOSE PRESIDENTIAL DECREE NO. 692, OTHERWISE KNOWN AS THE REVISED ACCOUNTANCY LAW,
APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES

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

Section 1. Shorts Title. - This act shall be known as the "Philippine Accountancy Act of 2004"

Section 2. Declaration of Policy. - The State recognizes the importance of accountants in nation building and
development. Hence, it shall develop and nurture competent, virtuous, productive and well rounded professional
accountants whose standard of practice and service shall be excellent, qualitative, world class and globally
competitive though inviolable, honest, effective, and credible licensure examinations and though regulatory
measures, programs and activities that foster their professional growth and development.

Section 3. Objectives. - This Act shall provide and govern:

The standardization and regulation of accounting education;

The examination of registration of certified public accountants; and

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

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

(a) Practice of Public Accountancy - shall constitute a person, be it his/her individual capacity, or as a staff member
in an accounting or auditing firm, holding out himself/herself as one skilled in the knowledge, science and practice of
accounting, and as a qualified person to render professional services as a certified public accountant; or offering or
rendering, or both or more than one client on a fee basis or otherwise, services as such as the audit or verification of
financial transaction and accounting records; or the preparation, signing, or certification for clients of reports of audit,
balance sheet, and other financial, accounting and related schedules, exhibits, statement of reports which are to be
used for publication or for credit purposes, or to be filed with a court or government agency, or to be used for any
other purposes; or to design, installation, and revision of accounting system; or the preparation of income tax
returns when related to accounting procedures; or when he/she represent clients before government agencies on
tax and other matters relating to accounting or render professional assistance in matters relating to accounting
procedures and the recording and presentation of financial facts or data.

(b) Practice in Commerce and Industry - shall constitute in a person involved in decision making requiring
professional knowledge in the science of accounting, or when such employment or position requires that the holder
thereof must be a certified public accountant.

(c) Practice in Education/Academe - shall constitute in a person in an educational institution which involve teaching
of accounting, auditing, management advisory services, fiancé, business law, taxation and other technically related

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subject: Provided, That members of the Integrated Bar of the Philippines may be allowed to teach business law and
taxation subjects.

(d) Practice in Government - shall constitute in a person who holds, or is appointed to, a position in an accounting
professional group in government or in an government-owned and/or controlled corporation, including those
performing proprietary functions, where decision making requires professional knowledge in the science of
accounting, or where a civil service eligibility as a certified public accountant is a prerequisite.

ARTICLE II

PROFESSIONAL REGULATORY BOARD OF ACCOUNTANCY

Section 5. The Professional Regulatory Board of Accountancy and its Composition. - The Professional
Regulatory Board of Accountancy, hereinafter referred to as Board, under the supervision and administrative control
of the Professional Regulation Commission, hereinafter referred to as the Commission, shall be composed of a
Chairman and six (6) members to be appointed by the President of the Philippines from a list of three (3)
recommendees for each position and ranked by the Commission from a list of five (5) nominees for each position
submitted by the accredited national professional organization of certified public accountant. The Board shall elect a
vice-chairman from among each members for a term of one (1) year. The chairman shall preside in all meetings of
the Boards and in the event of a vacancy in the office of the chairman, the vice-chairman shall assume such duties
and responsibilities until such time as a chairman is appointed.

Section 6. Qualifications of a members of the Professional Regulatory Board. - A member of the Board shall,
at the time of his/her appointment, posses the following qualifications:

Must be a natural-born citizen and a resident of the Philippines;

Must be a duly registered Certified Public Accountant with at least ten (10) years of work experience in any scope of
practice of accountancy;

Must be a good moral character and must not have been convicted of crimes involving moral turpitude; and

Must not have any pecuniary interest, directly or indirectly, in any school, college, university or institution conferring
an academic degree necessary for admission to the practice of accountancy or where review classes in preparation
for the licensure examination are being offered or conducted, nor shall he/she be a member of the faculty or
administration thereof at a time of his/her appointment to the Board.

Section 7. Term of Office. - The Chairman and Members of the Board shall hold office for a term of three (3) years.
Any vacancy occurring within the term of a member shall be filled up for the unexpired portion of the term only. No
person who has served two (2) successive complete terms shall be eligible for reappointment until the lapse of one
(1) year. Appointment to fill up an expired term is not to be considered as a complete term.

Section 8. Compensation and Allowances of the Board. - The chairman and the members of the Board shall
receive compensation and allowances comparable to that being received by the chairman and members of existing
regulatory boards under the Commission as provided for in the General Appropriate Act.

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

To prescribed and adopt the rules and regulations necessary for carrying out the provisions of this Act;

To supervise the registration, licensure and practice of accountancy in the Philippines;

To administer oaths in connection with the administration of this Act;

To issue, suspend, revoke, reinstate the Certificate of Registration for the practice of the accountancy profession;

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To adopt an official seal of the Board;

To prescribe and/or adopt a Code of Ethics for the practice of accountancy;

To monitor the conditions affecting the practice of accountancy and adopt such measures, including promulgation of
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 standards: That domestic
accounting and auditing standards rules and regulations shall include the international accounting and auditing
standards, and generally accepted best practices;

To conduct an oversight into the quality of audits of financial statements though a review of the quality control
measures instituted by auditors in order to ensure compliance with the accounting and auditing standards and
practices,

To investigate violations of this act and the rules and regulations promulgated hereunder and for the purpose, to
issue summons, subpoena and subpoena ad testificandum and subpoena duces tecum to violator or witness
thereof and compel their documents in connection therewith: Provided, That the Board upon approval of the
Commission may, subject to such rules and regulations that may be promulgated to implement this section,
delegate the fact-finding aspect of such investigations to the accredited national professional organization of
certified public accountant: Provided, further, That the Board and/or the Commission may adopt their findings of fact
as may be seems fit;\

The Board may, muto propio in its discretion, may such investigations as it deem necessary to determine whether
any person has violated any provisions of this law, any accounting or auditing standard or rules duly promulgated by
the Board as part of the rules governing the practice of accountancy;

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 standards or rules of duly promulgated by the Board as part of the
rules governing the practice of accountancy in the Philippines;

To punish for contempt of the Board, both direct and indirect, in accordance with the pertinent provision of and
penalties prescribed by the Rules of Court;

To prepare, adopt, issue or amend the syllabi of the subjects for examinations in consultation with the academe,
determine and prepare questions for the licensure examination which shall strictly be within the scope of the syllabi
of the subjects for examinations as well as administer, correct and release the result of the licensure examinations;

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

To exercise such other powers as may be provided by law as well as those which may be implied from, or which are
necessary or incidental to the carrying out of, the express powers granted to the Board to achieve the objectives
and purposes of this Act.

The policies resolution, rules and regulations issued or promulgated by the Board shall be subject to review and
approval of the Commission. However, the Board's decisions, resolutions or orders rendered in the administrative
cases shall be subject to review only if on appeal.

Section 10. Administrative Supervisions of the Board, Custodian of its Records, Secretariat and Support
Services. - The Board shall be under the administrative supervision of the Commission. All records of the Board,
including applications for examination and administrative and other investigative cases conduced by the Board shall
be under the custody of the Commission. The Commission shall designate the secretary of the Board and shall
provide the secretariat and other support services to implement the provisions of this Act.

Section 11. Grounds for Supervision or Removal of Members of the Board. - The President of the Philippines,
upon the recommendation of the Commission, after the giving the concerned member an opportunity to defend

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himself in proper administrative investigation to be conducted by he Commission, may suspend or remove any
member of the following grounds:

Neglect of Duty or incompetence;

Violation or tolerance of any violation of this Act and it's implementation rules and regulations or the Certified Public
Accountant's Code of Ethics and the technical and professional standards of practice for certified public accountant;

Final judgment of crimes involving moral turpitude; and

Manipulation or rigging of the certified public accountant's licensure examination results, disclosure of secret and
confidential information in the examination questions prior to the conduct of the said examination or tampering of
grades.

Section 12. Annual Report. - The Board shall, at the close of each calendar year, submit an annual report to the
President of the Philippines though the Commission giving the detailed account of its proceedings and
accomplishment during the year and making recommendations for the adoption of measures that will upgrade and
improve the conditions affecting the practice of accountancy in the Philippines.

ARTICLE III

EXAMINATION, REGISTRATION AND LICENSURE

Section 13. The Certified Public Accountant Examinations. - All applicants for registration for the practice of
accountancy shall be required to undergo a licensure examination to be given by the Board in such places and
dates as the Commission may be designate subject to compliance with the requirements prescribed by the
Commission in accordance with Republic Act No. 8981.

Section 14. Qualifications of Applicant for Examinations. - Any person applying for examination shall establish
the following requisites to the satisfaction of the Board that he/she:

is a Filipino citizen;

is of good moral character;

is a holder of the degree of Bachelor of Science in Accountancy conferred by the school, college, academy or
institute duly recognized and/or accredited by the CHED or other authorized government offices; and

has not been convicted of any criminal offence involving moral turpitude.

Section 15. Scope of Examination. - The licensure examination for certified public accountants shall cover, but are
not limited to, the following subjects:

Theory of Accounts

Business Law and Taxation

Management Services

Auditing Theory

Auditing Problems

Practical Accounting Problem I

Practical Accounting Problem II

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The Board, subject to the approval of the Commission, may revise or exclude any of the subjects and their syllabi,
and add new ones as the need arises.

Section 16. Rating in the Licensure Examination. - To be qualified as having passed the licensure examination
for accountants, a candidate must obtain a general average of seventy five percent (75%), with no grade lower than
sixty-five percent (65%) in any given subject. In the event a candidate obtains the rating of seventy-five percent
(75%) and above in at least a majority of subjects as provided for in this Act, he/she shall receive a conditional credit
for the subjects passed: Provided, That a candidate shall take an examination in the remaining subjects within two
(2) years from preceding examination: Provided, further, That if the candidate fails to obtain at least a general
average of seventy-five percent (75%) and a rating of at least sixty-five percent (65%) in each of the subjects
reexamined, he/she shall be considered as failed in the entire examination.

Section 17. Report of Rating. - The Board shall submit to the Commission the rating obtained by each candidate
within ten (10) calendar days after the examination, unless extended for just cause. Upon the release of the results
of the examination, the Commission shall send by mailing the rating received by each examinee at his/her given
address using the mailing envelop submitted during the examination.

Section 18. Failing Candidates to Take Refresher Course. - Any candidate who fails in two (2) complete Certified
Public Accountant Board Examinations shall be disqualified from taking another set of examinations unless he/she
submit evidence to the satisfaction of the Board that he/she enrolled in and completed at least twenty-four (24) units
of subject given in the licensure examination.

For purposes of this Act, the examination in which the candidate was conditioned together with the removal
examination on the subject in which he/she failed shall be counted as one compete examination.

Section 19. Oath. - All successful candidates in the examination shall required to take an oath of professional
before any member of the Board or before any government official authorized of the Commission or any person
authorized by law to administer oaths upon presentation of proof of his/her qualification, prior to entering upon the
practice of the profession.

Section 20. Issuance of Certificate of Registration and Professional Identification Card. - A certificate of
registration shall be issued to examinees who pass the licensure examination subject to payment of fees prescribed
by the Commission. The Certificate of Registration shall bear the signature of the chairperson of the Commission
and the chairman and members of the Board, stamped with the official seal of the Commission and of the Board,
indicating that the person named therein is entitled to the practice of the profession with all the privileges
appurtenant thereto. The said certificate shall remain in full force and effect until withdrawn, suspended or revoked
in accordance with this Act.

A Professional Identification Card bearing the registration number date of issuance, expiry date, duly signed by the
chairperson of the Commission, shall likewise be issued to every registrant renewable every three (3) years.

Section 21. Roster of Certified Public Accountant. - A roster showing the names and place of business of all
registered certified public accountants shall be prepared and updated by the Board, and copies thereof shall be
made available to any party as may deemed necessary.

Section 22. Indication of Certificate of Registration, Identification Card and Professional Tax Receipt. - The
certified public Accountant shall be required to indicate his/her certificate of registration number and date of
issuance, the duration of validity, including the Professional Tax Receipt number on the documents he/she signs,
uses or issues in connection with the practice of his/her profession.

Section 23. Refusal to Issue Certificate of Registration and Professional Identification Card. - The Board shall
not register and issue a certificate of registration and professional identification Card to any successful examinee
convicted by the court of competent jurisdiction of a criminal offence involving moral turpitude or guilty of immoral
and dishonorable conduct to any person or unsound mind. In the event of refusal to issue certificate for any reason,
the Board shall give the applicant a written statement setting forth the reasons for such action, which statement shall
be incorporated in the record of the Board.

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Section 24. Suspension and Revocation of Certificate of Registration and Professional Identification Card
and Cancellation of Special Permit. - The Board shall have the power, upon the notice and hearing, to suspend or
revoke the practitioner's certificate of registration and professional identification card or suspend his/her from the
practice of his/her profession or cancel his/her special permit for any of the causes or ground mentioned under
Section 23 of this Act or any of the provisions of this Act, and its implementing rules and regulations, the certified
Public Accountant's Code of Ethics and the technical and professional standards of practice for certified public
accountants.

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

A new certificate of registration to replace lost, destroyed, or mutilated certificate/license may be issued, subject to
the rules and promulgated by the Board and the Commission, upon the payment of the required fees.

ARTICLE IV

PRACTICE OF ACCOUTANCY

Section 26. Prohibition in the Practice of Accountancy. - No person shall practice accountancy in this country, or
use the title "Certified Public Accountant", or use the abbreviated title "CPA" or display or use any title, sign, card,
advertisement or other device to indicate such person practices or offers to practice accountancy, or is a certified
public accountant, unless such person shall have received from the Board a certificate of registration/Professional
license and be issued a professional identification card or a valid temporary/special permit duly issued to him/her by
the Board and the Commission.

Section 27. Vested Rights. - Certified Public Accountants Registered When This Law is Passed. - All certified
public accountants registered at the time this law takes effect shall automatically be registered under the provisions
hereof, subject, however, to the provisions herein set forth as to future requirements. Certificate of
Registration/Professional license held by such persons in good standing shall have the same license force and
effect as though issued after the passage of this Act.

Section 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 accountant in public practice
only upon showing, in accordance with rules and regulations promulgated by the Board 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: Provide, further, that this requirement shall not apply to those already
granted a certificate of accreditation prior to the effectivity of this Act. The Security and Exchange Commission shall
not register any corporation organized for the practice of public accountancy.

Section 29. Ownership of Working Papers. - All working papers, schedules and memoranda made by a certified
public accountant and his staff 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 though subpoena issued by any
court, tribunal, or government regulatory or administrative body.

Section 30. Accredited Professional Organization. - All registered certified public accountants whose appear in
the roster of certified public accountants shall be united and integrated though 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 nonprofit corporation and recognized
by the Board subject to the approval by the Commission. The members of the said integrated and accredited
national professional organization shall receives benefits and privileges appurtenant thereto upon payment of
required fees and dues. Membership in the integrated organization shall not be a bar to membership in any other
association of certified public accountants.

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Section 31. Accreditation to Practice Public Accountancy. - Certified public accountants, firms and partnerships
of certified public accountants, engaged in the practice of public accountancy, including partners and staff members
thereof, shall registered with the Commission and the Board, such registration to be renewed every three (3) years:
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.

Section 32. Continuing Professional Education (CPE) Program. - All certified public accountants 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 institutional. For this purpose, a CPE Council is
hereby created to implement the CPE program.

Section 33. Seal and Use of Seal. - All license 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 auditors reports shall be
stamped with the said seal, indicating therein his/her current Professional Tax Receipt (PTR) number, date/place of
payment when filed with government authorities or when used professionally.

Section 34. Foreign Reciprocity. - Subject or citizen of foreign countries may be allowed to practice accountancy
in the Philippines in accordance with the provisions of existing laws, international treaty obligations including mutual
recognition agreement entered into by the Philippines 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, specific provision of law country of which he/she is a citizen, subject
or national admits citizens of the Philippines to the practice of the same profession without restriction.

Section 35. Coverage of Temporary/Special Permits. - Special/temporary permit may be issued by the Board
subject to the approval of the Commission and payment of the fees the latter has prescribed and charged thereof to
the following persons:

A foreign certified public accountant called for consultation or for specific purpose which, in the judgment of the
Board, is essential for the development of the country: Provided, That his/her practice shall be limited only for the
particular work that he/she is being engaged: Provided, further, That there is no Filipino certified public accountant
qualified for such consultation or specific purposes;

A foreign certified public accountant engaged as professor, lecturer or critic in fields essential to accountancy
education in the Philippines and his/her engagement is confined to teaching only; and

A foreign certified public accountant who is an internationally recognized expect or with specialization in any branch
of accountancy and his/her service is essential for the advancement of accountancy in the Philippines.

ARTICLE V

PENAL AND FIINAL PROVISIONS

Section 36. 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 (50,000.00) or by imprisonment for a
period not exceeding two (2) years or both.

Section 37. Implementing Rules and Regulations. - Within Ninety (90) days after the effectivity of this Act, the
Board, subject to the approval of the Commission and in coordination with the accredited national professional
organization of certified public accountants, shall adopt and promulgate such rules and regulations to carry out the
provisions of this Act and which shall be effective Fifteen (15) days following their publication in the Official Gazette
or in any of the major daily newspaper of general circulation.

Section 38. Interpretation of this Act. - Nothing in this Act shall be construed to effect or prevent the practice or
any other legally recognized profession.

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Section 39. Enforcement of this Act. - It shall be primary duty of the Commission and the Board to effectivity
enforce the provisions of this Act. All duly constituted law enforcement agencies and officers of national, provincial,
city or municipal government or of any political subdivision thereof, shall upon the call or request of the Commission
or the Board, render assistance in enforcing the provisions of this Act and to prosecute any person violating the
provisions of the same. The Secretary of Justice or his duly designated representative shall act as legal adviser to
the Commission and the Board and shall render legal assistance as may be necessary in carrying out the provisions
of this Act.

Any person may bring before the Commission, Board of the aforementioned officers of the law, cases of illegal
practice or violations of this Act committed by any person or party.

The Board shall assist the Commission in filing the appropriate charges though the concerned prosecution office in
accordance with law and Rules of Court.

Section 40. 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.

Section 41. 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, without
the need of new appointments.

All graduates with 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.

Section 42. Separability Clause. - If any clause, provisions, paragraph or parts thereof shall be declared
unconstitutional or invalid, such judgment shall not affect, invalidate or impair any other part hereof, but shall be
merely confined to the clause, provisions, paragraph or part directly involved in the controversy in which such
judgment has been rendered.

Section 43. Repealing Clause. - Presidential Decree No. 692 is hereby repealed and all other laws, orders, rules
and regulations or resolutions or part/s thereof inconsistent with the provisions of this Act are hereby repealed or
modified accordingly.

Section 44. Effectivity. - This Act shall take effect after Fifteen (15) days following its publication in the Official
Gazette or in any major daily newspaper of general circulation.

Approved,

FRANKLIN DRILON JOSE DE VENECIA JR.

President of the Senate Speaker of the House of Representatives

This Act which is consolidation of Senate Bill No. 2748 and House Bill No. 6678 was finally passed by the Senate
and the House of the Representatives on February 6, 2004 and February 7, 2004, respectively.

OSCAR G. YABES ROBERTO P. NAZARENO

Secretary of Senate Secretary General
House of Represenatives

Approved: May 13, 2004

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GLORIA MACAPAGAL-ARROYO
President of the Philippines

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