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13 Pangonilo, Mark Stanley M.

ACCTG. 505 (12:30-1:30 W D604)


THE IMPACT OF THE ASEAN INTEGRATION TO THE
ACCOUNTANCY PROFESSION IN THE PHILIPPINES
As we enter the era of globalization, we often encounter difficulties in terms
of adjusting to the global needs . Businesses in our country are greatly affected
because they are at the forefront in the markets . Markets become interconnected,
investors gain a more sophisticated worldview, and foreign investments become
more expansive. Competitions are also increasing because of cross border offerings
of businesses and companies situated here and abroad . Local businesses need not
only think of what to offer in the local market but also think of what to offer in
foreign markets, for them to penetrate and make a statement or mark in that
market. And because of this, the need of one regulating body arose .
The member states of the ASEAN ambitiously adopted a goal of forming the
ASEAN Economic Community (AEC), similar to that of the European Union (EU) . The
ASEAN Integration will take place in the latter part 2015 . The target goals of the
integration were crystallized in the AEC Blueprint of 2007, signed by the Heads of
the Governments of the ASEAN member countries . With this integration, member
states of the ASEAN will be able to trade goods and services without barriers .
In the Philippines, the K-12 program is a step being undertaken by the
Department of Education to be able to keep the countrys educational program at
par with that of the other member countries . Also, quality of the curriculum, the
universities and colleges itself, and students in the intermediate level were also
being monitored for assurance purposes . The school year of some schools, colleges
and universities were also changed from June-May school year to August-July school
year.
In relation to the ASEAN Economic Integration, the Board of Accountancy
(BOA) released a statement dated September 24, 2014 regarding the ASEAN Mutual
Recognition Arrangement (MRA) on accountancy services . The MRA is an agreement
among the ten ASEAN member countries to facilitate the mobility of accredited
accountancy professionals within the ASEAN region . The MRA will allow Filipino
accountants to practice their profession in any ASEAN member state provided
certain qualifications in the MRA are met.

This is also the same case for accounting professionals from other ASEAN
member-countries

wanting

to

practice

in

the

Philippines .

Should

this

be

implemented in the country, Filipino accountants in the Philippines may be exposed


to additional opportunities as well as risks/threats . Aside from this, the MRA can help
in maintaining open communication among ASEAN countries to promote adoption of
best practice on standards and qualifications of accounting professionals . The
Philippines was not able to sign the agreement on the day of the meeting but was
able to sign on a later date.
Because of this integration, the demand for accountants in the whole will be
higher compared to the demand without the integration itself . The Board of
Accountancy is strictly monitoring and implementing the guidelines for proper
training and development of the profession in the country .
In the Accreditation of Certified Public Accountants in Public Practices general
assembly last June of 2014, Donnies Alas, president of the ACPAPP, said that the
Filipino accountants must prepare for the integration by undergoing quality review
in order to meet international standards . He cited a past study conducted by the
Asian Development Bank (ADB), which showed that the quality of practice among
Filipino CPAs is below par. Because of this, the ADB also commissioned a study on
how to raise the standards of practice of Filipino CPAs .
In 2005, government regulator Securities and Exchange Commission (SEC)
adopted the International Financial Reporting Standards (IFRSs), which is being
strictly implemented by 85 countries. Because of this adoption, Alas stated that the
quality of the work of Filipino CPAs as well as their presentation will be in
accordance with the standards provided for in the IFRSs . He also noted that Filipino
CPAs should stay strong and competitive amid the many challenges, including the
imposition of various policies by government regulators such as the SEC and the
Bureau of Internal Revenue.
Because of this changes, many of the Filipino CPAs are facing problems . To
address this issue, the ACPAPP has been conducting regular seminars and training
to help their members upgrade their skills to meet international standards . He also
expressed confidence that Filipino CPAs would benefit from the impending ASEAN
Integration.
With the forthcoming integration, Filipino CPAs can work and practice their
profession in ASEAN member countries provided they meet the international
standards. That is why, Alas also added, they are conducting an upgrade in the

practice of Accountancy in the country. Filipino CPAs are of big advantage because
of their fluency in speaking English, making them good communicators and also
trainings in country are of good quality. Because of these trainings, some Filipino
CPAs choose working abroad after finishing trainings and acquiring of required
certifications.
One certification a CPA in a member country must possess before practicing
Accountancy in other member or host country is the ASEAN Chartered Professional
Accountant (ACPA) certification. An ASEAN Chartered Professional refers to a natural
person who is a national of an ASEAN member state and is assessed by the National
Accountancy Body (NAB) and/or Professional Regulatory Authority (PRA).
The MRA Framework on Accountancy Services Article III states that the ASEAN
Member States hereby recognize that education, licenses, demonstration of
competencies and experience may be the principal elements considered in granting
mutual recognition. In this article, a Practicing Professional Accountant (PPA) in a
member state must possess the proper education equivalent to that of the host
country, the government-required licenses, competencies assuring knowledge of
the

host

countrys

regulation,

experience

requirement

needed

and

an

understanding of the International Federation of Accountants (IFAC) Standards and


Guidelines.
Upon qualifying, an ACPA must register to the ACPA Register (ACPAR) of the
host country, provided the said ACPA paid the necessary fees. Once registered to
the ACPAR, an ACPA can now practice in the host country, provided he has
knowledge of the domestic regulations the said host country.
Basically, almost every study conducted for the accountancy profession
states that education and understanding of regulations in each country will be the
key to the success of this integration, in this manner, for the accountancy
profession. In an article on the Business Mirror by Eliseo A. Aurellado, he stated that
the Board of Accountancy (BOA), under the chairmanship of Joel Tan Torres, has
adopted Expanding Horizons as its theme to engage all stakeholders in crafting an
appropriate program of education and continuing professional development for the
accountants. I believe that the current developments in the ASEAN region and in our
own country have raised the need for greater competitiveness and collaboration.
There is also clamor for good governance, transparency and accountability. The
accountant of today has to be equipped with the right mind-set and the proper tools
for him or her to be a relevant force in a dynamic and challenging business
environment.

Mr. Torres has presented a BOA road map that lists down certain projects
strategies that are important to the development of the accountancy profession in
all sectorspublic practice, commerce and industry, education and government.
The proposed projects/strategies in the Education sector address four categories,
Blueprint (for the curriculum); Production (for the twin factors of accounting school
and accounting teachers); Product (for the student); and Certification (for the
Certified Public Accountant, or CPA, licensure examination).
In the Education sector, it is worth defining the goal and objective in terms of
the desired product that comes out of our accountancy program. Mr. Torres believe
that a CPA should graduate a competent, ethically grounded and globally
competitive accounting professional. Competence is something that is basic for a
professional. However, there could be a mismatch between what we think he or she
should be good at versus what the business community demands. Ethical behavior
is the buzzword of today, given all the scams and scandals in our society. But how
do we inculcate ethical behavior so that even in the face of temptation our
professionals are expected to do what is right? With the advent of a borderless
economy, where goods and services are beginning to enjoy free flow across
international boundaries, such as what the ASEAN integration is envisioned to bring
about, how do we stand in the face of such competition? Are our graduates
prepared for the competition to follow? Or do we resort to protective mechanisms to
shield our future professionals? I think we have to engage in a dialogue on what we
want the product of our accountancy program will be and the kind of accountant he
or she will become.
The first project or strategy indicated in the road map concerns the Blueprint,
which is a review of the accounting curriculum. The present accountancy curriculum
features 210 units as a minimum requirement, but some schools offer programs
that reach up to 265 units. As of this writing, the Commission on Higher Education
Technical Council has crafted a proposed accountancy curriculum that has 165
units, since some business subjects have been transferred to the senior high school
under the K to 12 Program.
The next strategy is the Production Strategy. The first Production strategy is
conducting regular assessments of accounting schools. The BOA have an obligation
to regulate the conduct and to monitor the performance of accounting schools. The
yardstick that we have been using all these years to gauge the performance of
accounting schools is their passing rate in the CPA licensure examination. The CPA
license has been the accepted mark of quality. However, given a scenario where not
all accountants go for public practice, are there other criteria that can be considered
to gauge the performance of accounting schools? How about the number of

graduates who land jobs in other sectors of accountancy services? What positions of
responsibility are they holding?
The second Production strategy is the posting of performance metrics of
accounting schools. A public posting is designed to inform the hopeful student
which school would be the best for him or her. But how will academe react to this
move? What performance metrics would be relevant?
The third Production strategy is the accreditation of accounting teachers. How
do we enhance the accreditation of accounting teachers? What criteria should be
followed? What kind of support is needed for accreditation? The value of having
good accounting teachers cannot be underestimated, because it is a key factor in
the performance of students.
Following the Production Strategy is the Product Strategy. The first Product
strategy is instilling in the accounting students the skills and values of ethical
conduct, analytical thinking, effective communication and use of technology. While
this strategy addresses the student, his or her growth and development is, in fact, a
function of the curriculum and the teacher.
Ethical conduct normally has its roots in kindergarten and in the elementary
grades. We grew up with such slogans as Honesty is the best policy and
Cleanliness is next to Godliness. These values are normally carried over into our
later years. Nowadays we talk a lot about good governance and accountability. But
there may be a disconnect between what we say and what we do. So how do we
train our future accountants to behave ethically? How are these ethical values
reinforced at the undergraduate level?
Critical thinking is another desirable skill. While the accountancy profession
lives by standards, there are gray areas that beg for critical thinking and
interpretation. How do we ensure that our future accountants are equipped with the
skill to analyze something objectively and come up with a reasonable response?
Good communication skills, both written and oral, are important in our
profession. English is still the business language spoken, and some schools have put
up English-only zones on their campuses to force their students to speak the
language

in

clear

and

grammatically

correct

sentences.

Likewise,

English

composition is a desirable output and school curricula still retain courses on this
subject. But sometimes the intended communication skill is not apparent in the
workplace when the accountant finds himself or herself preparing accounting

reports. How do we train our accounting students to speak and write effectively in
English, our second language?
Finally, on the technology aspect, it may be a crying need now for the future
accountant to have a practical or working knowledge of specific accounting software
products and solutions, which are regularly being used by commerce and industry.
Also, knowledge in auditing software might be helpful, especially when the future
accountant chooses a career in public practice. Perhaps, it may be timely for
schools to include these software products and solutions in their curriculum or tie up
with independent training schools to provide this working knowledge. Certainly, the
future job prospects would be better if they are already skilled in the use of
accounting software.
The next strategic area is the engagement of students in accountancy-related
issues. The Junior Philippine Institute of Accountants student organization appears
to be a logical vehicle for the advancement of accounting knowledge and practices
to benefit future accountants.
Perhaps, the most important aspect of student engagement should be his or
her apprenticeship in an accredited institution. How should this apprenticeship be
institutionalized? How should commerce and industry be engaged to provide this
valuable experience? In some professions, a two-year work experience is required to
be able to take a licensure examination. Perhaps, in the accounting curriculum
leading to public practice, the final year may include a more lengthy on-the-job
training to complement the review for the licensure examination.
Finally, the last strategy is the Certification Strategy. The formulation of the
CPA licensure examination and its administration have been a big part of the job of
the BOA. The strategies proposed are the regular review of the syllabus and the
subjects to be included in the examination, and the enhancement of the
administration of the examination. Understandably, many schools are dependent on
the CPA licensure examination results to bolster their credibility as a learning
institution. This fixation has led to scandals in the past, which hopefully has been
eliminated by this time with more controls exercised at the Professional Regulation
Commission. However, there are still ways of improving the conduct of the licensure
examination in terms of content, technology and administration.
In the middle of 2015, the BOA proposed a change of the subjects from the
usual seven subjects to only six subjects. However, the BOA is still waiting for the
approval of such changes from the PRC. If approved, the said changes will take
place in the May 2016 examinations.

The current BOA has adopted a consultative stance in its approach to


educating the future accountant. There may be a need to explore new methods of
learning accountancy, given the technological developments and requirements of
business enterprises. The old ways may no longer suffice. The accountancy
profession may need to evolve from its traditional role of financial information
processing and reporting into one that is more responsive to addressing the wider
functional demands of business. All accountants in the education sector are
encouraged to partner with BOA in addressing the concerns that face us as we
endeavor to raise the bar in response to the evolving challenges to the profession.
As we near the integration, I think that the Filipino CPAs are in the stage of
completing the preparations for the said integration. The said preparations are
being undertaken by different sectors in the profession, spearheaded by the Board
of Accountancy. The profession in the country will benefit from the integration
because of the inflow of human resources and knowledge from other member
countries to our country. It will be a good chance for the profession to uplift its
standing and have benchmarking procedures to cope up and be at par of that of the
other member countries in the region. I could foresee a probable change in the way
we will be practicing in our country, but will still be guided by local regulations
regardless of the change. The profession, however, will not be prejudiced because
of the reservations stated in the MRA.
References:
ABARCA, Josephine (2014, February 10). One Region, One Accounting Framework.
Retrieved from http://www.sgv.ph/one-economic-region-one-accounting-frameworkby-josephine-adrienne-a-abarca-february-10-2014/
ASEAN

Integration

Monitoring

Report

(2013) .

Retrieved

from

http://www.asean.org/images/resources/2014/Feb/association%20of%20southeast
%20asian%20nations%20asean%20integration%20monitoring%20report%20%20a
%20joint%20report%20by%20the%20asean%20secretariat%20and%20the
%20world%20bank%20english.pdf
ASEAN Mutual Recognition Arrangement Framework on Accountancy Services.
Retrieved

from

http://www.asean.org/index.php/communities/asean-economic-

community/item/asean-mutual-recognition-arrangement-framework-onaccountancy-services-3
AURELLADO, Eliseo (2015, October 12). Expanding the horizons of the accountant.
Retrieved

from

accountant-2/

http://www.businessmirror.com.ph/expanding-the-horizons-of-the-

DUEAS, Lorlaine (2015, February 18). Ms. Cindy Ortiz talks about the ASEAN
Integration 2015. Retrieved from http://ssc .edu.ph/ssc_news/ms-cindy-ortiz-talksabout-the-asean-integration-2015/
HORARIO, Ritchie (2014, June 24). Filipino accountants gear toward ASEAN
integration.

Retrieved

fromhttp://www.manilatimes.net/filipino-accountants-gear-

toward-asean-integration/106484/
MIRANDA, Wilma (2014, August 6). ASEAN INTEGRATION ON PROFESSIONAL
SERVICES. Retrieved from http://anzcham.com/asean-integration-on-professionalservices/
REDOR, Melissa Anne (2014, October). ASEAN Integration and the Mutual
Recognition

Arrangement

on

Accountancy

Services.

Retrieved

http://www.redoremerson.com/archives/asean-integration-accountancyservices.html

from

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