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CHAPTER 1: PROFESSIONAL PRACTICE OF ACCOUNTANCY b) Practice in Commerce & Industry – decision making

requiring professional knowledge of CPA


Role of Professional Accountants in the Economy
c) Practice in Education/Academe – teaching accounting
 Provide accurate, reliable info among parties related subjects
interested
 Allocate limited capital resources for goods and d) Practice in Government – working in gov’t agencies and
services with great demand GOCCs where decision making requiring professional
 Investors rely on the FI provided knowledge of CPA
 Management of an organization
Requirements to Enter Accountancy Profession
 Credibility added by independent auditor reduces
decision maker’s risk A. BSA degree holder – produce competent and ethical
professional; shall cover the ff:
Accountancy as Profession
I. Professional Accounting Education
5 Major Characteristics of Ideal Profession
1. Accounting, Finance and Related Knowledge
(Ernest Greenwood – Attributes of a Profession)
2. Organizational and Business Knowledge
a) Systematic Theory – accounting theory – FAR and AP/AT 3. Information Technology, Knowledge and Competencies

b) Professional Authority – gives professional judgment on II. Professional Skills and General Education
what is good and right for the client using professional 1. Professional Skills
expertise a) Intellectual – abstract logical thinking & critical analysis
b) Technical & Functional – decision modeling & risk analysis
c) Community Sanction – admission to CPA profession is c) Personal – self-management
controlled by authorities – obtaining license. d) Interpersonal & Communication – being team player
CPAs are responsible to their actions
2. General Education – encourage lifelong learning
d) Regulations Code – Rules of Professional Conduct/Code of a) Human Behavior c) Art Appreciation
Ethics are established b) History d) Making value judgment
profession is granted powers of monopoly
III. Professional Values, Ethics, and Attitude
e) Culture – status affects one’s behavior in the society 1. Values and Attitudes – commitment to
professional culture developed by formal (Code of a) Public Interest and Social Responsibility
Ethics) and informal rules b) Continual Improvement
c) Reliability, Responsibility, Timeliness, & Respect
Code of Ethics - Profession is a:
d) Laws & Regulation
a) mastery of intellectual skill
b) adherence of members to common code of values 2. Professional Ethics
c) acceptance of duty in society a) Nature of Ethics
b) Difference with detailed rules
Professional Accountant – an individual who holds license
c) Compliance with fundamental ethical principles
from BOA
d) Professional behavior and compliance with standards
a) PA in Public Practice – irrespective of functional
e) Concepts of independence, skepticism, accountability, and
accountant in classification in a firm; audit, tax, MAS
public expectations
b) PA in Business – executive or non-executive f) Ethics and profession
capacity; commerce & industry, education, government g) Ethics and law
h) Ethics in relation to business and good governance
Scope of Practice i) Ethics and the individual PA
a) Public Accountancy – person holding knowledge science of j) Consequences of unethical behavior
accounting and qualified person to render professional B) CPALE Passer – RA 9298, Art 11, Sec 13-18
services as CPA on a fee basis
1) Audit of financial transactions and accounting records; I. Qualifications
2) Preparation, signing, or certification for financial schedules; a) Filipino
3) Exhibits reports used for publication or to be filed in court b) Good Moral Character
or gov’t agency; c) BSA degree holder
4) Design, installation, revision of accounting system; d) Never convicted of any criminal offense – moral turpitude
5) Preparation of ITR and representing clients on tax matters.
II. Scope of Exam – PRC BOA Resolution No. 262, Series of a) IT Systems for FAR including current relevant
2015; Published: 02/22/2016; Effective: 03/09/2016 issues
a) FAR b) AFAR c) MAS
b) frameworks for evaluating controls and assessing
d) Taxation b) Auditing c) RFBT
risks
III. Rating
II. Practical Experiences
a) GWA of at least 75%; no grades lower than 65% per subject
1. Complete long & intensive period of practical experience in
– PASSED
auditing area before being an audit professional
b) GWA of at least 75% and majority of subjects; grades lower 2. Practical experience contributes to competency; period of
than 65% in minority of subjects – CONDITIONAL experience permits them to:
candidate shall take failed subjects within 2 years a) apply knowledge and skills
candidate shall obtain at least 75% in the b) develop and demonstrate required competence
conditioned subject
Competency Requirements – Business
c) GWA lower than 65%; grades lower than 65% - FAILED a) Intellectual
b) Technical & Functional
C) Other Legal and Regulatory Requirement
c) Personal
I. Oath – CPALE passer shall take oath of profession d) Interpersonal & Communication
II. Issuance of Certificates of Registration and Professional ID e) organizational and business management skills
1. CoR – bears signature of commission and Board members
5 Areas that PA’s mindset needs to embrace:
2. Professional ID – bears registration number, date of ID
a) Professionalism and Ethical Behavior – upholding Code of
issuance and expiry, signed by commission chairperson;
Ethics
renewable every 3 years
b) Professional Judgment – quick and intuitive decision
III. Indication of CoR, Prof ID, Professional Tax Receipt
making with evidence-based decisions
always indicated in every document CPA signs
c) Organizational & Environmental Awareness – performance
Developing Capabilities and Competence considers economic, environmental & social; supporting
further education and development needs of management
to cope with rapidly changing environment; CPAs must be d) Investor and Wider Stakeholder Focus – lead in managing
competent to be recognized relationship with investors and funders
a) Advance Professional Education @ academic institutions e) Change, Uncertainty, Complexity – adapt & apply
b) OJT and Experience programs professional skills to ambiguous information
c) Off the job training
Changes in Accounting which makes it Globalized
d) CPD courses and activities
a) Global Harmonization of Accounting Standards – PFRS
PA in Public Practice – bound by accounting standards as adopted IFRS for uniform accounting – singles set of HQ
public interest is concerned standards that increase market efficiency and reduce cost of
PA in Business – management, accounting based business capital
analysis b) Expanded Accountability – includes public reports for
internal purposes
Competency Requirements – Public Practice c) More detailed reporting – demand for more current info
I. Knowledge Content d) Increased Risk Reporting – demand for risk based info
1. Audit of Historical Financial Information @ advanced level e) Global Audit Standards – harmonize auditing standards due
a) best practice in audit including current relevant to public’s expectation:
issues 1. find fraud
b) International Standards on Auditing and 2. enforce accounting principles by IASB
International Auditing Practice Statements (IAPS) 3. neutral to users
c) any other applicable laws 4. cost effective audits
2. FAR @ advanced level
a) FAR process and practices including current CPA Horizons 2025: A Road Map to the Future
relevant issues conducted by AICPA, 2011
b) IFRS released and published on Journal of Accountancy, Dec 2011
c) any other applicable laws a) Core Purpose: “Making sense of changing and complex
3. IT world”
b) Core Values: substantially unchanged
c) Core Competencies: reflected 21st century
d) Core Service: due to diversity – no longer representative
of profession

10 Insights and Direction


1. Technology – understand and leverage to deliver superior
services.
2. Pre-certification and Lifelong Learning – evolve and
develop educational framework to keep pace with changing
dynamics of business
3. Worldwide Profession – position CPA as premiere of
accounting and finance profession
4. Pride in the Profession – encourage pride and values in CPA
world
5. Trusted Attester – preservation of role
6. Trusted Advisor – promotion of this role
7. Market Permissions – leverage strength of profession to
expand
8. Marketplace – address continual change
9. Value Proposition – increase visibility of profession’s value
by demonstrating core values to multiple areas of business
and society
10. Demographic Shifts – continue to offer opportunities that
enhance appeal and be proactive

Core Values and Competencies


I. Core Values – essentials and beliefs which retains unique
character
a) Integrity – honesty and complying with standards of ethics
b) Competence – high level of expertise and knowledge
c) Lifelong Learning – continuous pursuing new and broad
skills and knowledge
d) Objectivity – free of personal bias and conflicts of interest
e) Commitment to Excellence – delivering exemplary, HQ
services
f) Relevance to Global Marketplace – meeting ever-changing
needs of world

II. Core Competencies – unique combination of skills,


knowledge, & technology which gives competitive advantage
a) Communication Skills – exchanging reliable and meaningful
info
b) Leadership Skills – influencing and motivating others to
facilitate change and achieve excellence
c) Critical-Thinking and Problem-Solving Skills – evaluating
facts, challenging assumptions, and applying judgement to
develop solutions
d) Anticipating and Serving Evolving Needs – identifying
strategic decisions and opportunities to meet needs of people
e) Synthesizing Intelligence to Insight – connecting data,
performing analysis for better business decision making
f) Integration and Collaboration – building strategic alliance to
provide multidisciplinary solutions