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Chan Robles Virtual Law Library
PRESIDENTIAL DECREE NO. 692
PRESIDENTIAL DECREE NO. 692 - THE
REVISED ACCOUNTANCY LAW
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chanroblesvirtualawlibrary
I,
FERDINAND E. MARCOS, President of the Philippines, by virtue of the
powers vested in me by the Constitution, do hereby decree and order the
following as part of the law of the land:cralaw:red
Section 1. Short Title. — This Decree shall be known
and cited as "The Revised Accountancy Law".
ARTICLE I
Objectives and Definitions
Section 2. Objectives. — This Decree provides for and
shall govern:cralaw:red
a) The standardization and regulations of accounting
education;chanroblesvirtualawlibrary
b) The examination for registration of certified
public accountants; and
c) The supervision, control, and regulation of the
practice of accountancy in the Philippines.
Section 3. Practice of Accountancy, Defined. —
Practice of accountancy shall constitute in a person, be it in his
individual capacity, or as a partner or staff member in an accounting
or auditing firm, holding out himself as one skilled in the knowledge,
science, and practice of accounting, and as qualified to render
professional services as a certified public accountant; or offering or
rendering, or both, to more than one client on a fee basis or
otherwise, services such as the audit or verification of financial
transactions and accounting records; the preparation, signing, or
certification for clients of reports of audit, balance sheets, and
other financial accounting and related schedules, exhibits, statements,
or 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 purpose; the installation and revision of accounting system, the
preparation of income tax returns when related to accounting
procedures; or when he represents clients before government agencies on
tax matters related to accounting or renders professional assistance in
matters relating to accounting procedures and the recording and
presentation of financial facts or data. chanroblesvirtualawlibrary
A Certified Public Accountant shall be considered in the practice of
his profession, if the nature and character of his employment whether
an officer or employee in a private enterprise or educational
institution involves decision-making requiring professional knowledge
in the science of accounting or when he represents his private employer
before any government agency on tax matters related to accounting, and
such employment or position requires that the holder thereof must be a
Certified Public Accountant; or if he holds or is appointed to a
position in the accounting occupational group in the government or in
government-owned or controlled corporations, including those performing
proprietary functions, where a civil service eligibility as a Certified
Public Accountant is a prerequisite.
ARTICLE II
The Board of Accountancy
Section 4. The Board of Accountancy and its
composition. — The Board of Accountancy shall be composed of a chairman
and six (6) members to be appointed by the President of the Philippines
upon recommendation of the Professional Regulation Commission.
The Board shall elect a vice-chairman from among its members for a term
of one year. The Chairman shall preside in all meetings of the Board
and in the event of a vacancy in the office of the Chairman, the
vice-chairman shall assume such duties and responsibilities until the
end of the term or until such time as a Chairman is appointed.
Section 5. Functions of the Board of Accountancy. —
The Board of Accountancy shall have the following functions:cralaw:red
a) To determine and prescribe minimum requirements
leading to the admission of candidates to the certified public
accountant's examinations; chanroblesvirtualawlibrary
b) To determine and prepare the contents of licensure
examinations; score and rate the examination papers and submit the
results thereof to the Commission within two hundred forty (240) days
after the last examination day unless otherwise directed by the
Commission;chanroblesvirtualawlibrary
c) To look from time to time into the conditions
affecting the practice of the accountancy profession and whenever
necessary, adopt such measures as may be deemed proper for the
enhancement and the maintenance of high professional, ethical and
technical standards;chanroblesvirtualawlibrary
d) To investigate violations of the Accountancy Law
and the rules and regulations promulgated thereunder and for this
purpose to issue summons, subpoena and subpoena duces tecum to
violators or witnesses thereof and compel their attendance to such
investigation or hearings;chanroblesvirtualawlibrary
e) To promulgate decisions on such administrative
cases subject to review by the Commission;chanroblesvirtualawlibrary
f) After due process, to suspend, revoke, or reissue
certificates of registration for causes provided for by law or by the
rules and regulations promulgated therefor;chanroblesvirtualawlibrary
g) To perform such other functions and duties as may
be deemed necessary to effectively implement policies with respect to
the regulation and practice of the profession.
Section 6. Qualification of Board Members. — No
person shall be appointed a member of the Board of Accountancy unless
he:cralaw:red
a) is a citizen of the Philippines;chanroblesvirtualawlibrary
b) is of good moral character;chanroblesvirtualawlibrary
c) is a duly registered Certified Public Accountant
in the Philippines;chanroblesvirtualawlibrary
d) has been in the practice of accountancy for at
least ten years; and
e) is not directly or indirectly connected with any
school, college, or university granting degrees that may qualify
graduates with such degrees for admission to the Certified Public
Accountant examinations, or with Certified Public Accountant's Review
School or Institute, nor shall have any pecuniary interest in such
school, college, university or Certified Public Accountant's Review
School or Institute.
Section 7. Tenure of Office and Compensation of
Members. — The Chairman and members of the Board of Accountancy shall
hold office for three years: Provided, That the first and second, third
and fourth, and fifth and sixth members and the chairman appointed
under this law shall serve for one, two and three years, respectively;
Provided, further, That the incumbent members of the Board of
Accountancy shall serve for their unexpired terms of office or until
their successors shall have been appointed and qualified. Vacancies
shall be filled by appointments for the unexpired terms only. No person
who has served two successive complete terms shall be eligible for
reappointment until after the lapse of one year. Appointment to fill an
unexpired term is not to be considered as a complete term. chanroblesvirtualawlibrary
Each member shall receive as compensation a fee not exceeding fifteen
pesos for each candidate examined and a per diem not less than ten
pesos for each day of attendance in administrative investigations and
ocular inspections lasting not less than one hour at a time; Provided,
That the total compensation of the chairman or members shall be at such
rates as may be provided for in the general appropriation decree for
participating in all examinations given during the fiscal year.
Section 8. Suspension or removal of a Member of the
Board. — The Professional Regulation Commission shall recommend to the
President of the Philippines the removal from the Board of any member
whose certificate to practice has been revoked or suspended, and may,
after hearing, recommend to the President the removal of any member of
the Board for neglect of duty or incompetence or other just cause.
Section 9. The Certified Public Accountant
Examination. — The Board of Accountancy shall determine and prepare the
contents of examinations to qualify Certified Public Accountants. The
Board of Accountancy, in coordination with the Professional Regulation
Commission, shall conduct the examinations at least once in each
calendar year in the Cities of Manila and Cebu: Provided, however, That
if conditions warrant, the Board may upon previous approval of the
Professional Regulation Commission, conduct the examinations in other
places.
Section 10. Admission Requirements for Examinations.
— No person shall be admitted to the examination unless he is:cralaw:red
a) a citizen of the Philippines;chanroblesvirtualawlibrary
b) at least twenty-one years of age: Provided,
however, That an applicant below twenty-one years of age may be allowed
to take the examinations and in case he passes the examinations shall
not be issued the certificate until he reaches the required age; chanroblesvirtualawlibrary
c) of good moral character;chanroblesvirtualawlibrary
d) a holder of the degree of Bachelor of Science in
Commerce or its equivalent from any institution of learning recognized
by the government in accordance with the provisions of this Decree; and
e) in case of a candidate who has failed two complete
certified public accountant's examinations, he shall have complied with
the requirements for examinations as provided under Section 13 of this
Decree.
Section 11. Scope of Examinations. — The examinations
shall be in writing and shall cover the following subjects with the
corresponding weight in units unless otherwise modified by the Board
upon approval of the Professional regulation Commission.
Subjects Weights in Minimum
Units Hours
Theory of Accounts 2 3
Business Law and Taxation 2 3
Management Services 2 3
Auditing Theory 2 3
Auditing Problems 2 3
Practical Accounting Problems I 2 3
Practical Accounting Problems II 2
3
———— ————chanroblesvirtualawlibrary
TOTAL 14 21
The contents and coverage of these subjects shall be in accordance with
the outline or syllabus prepared and issued by the Board of Accountancy
containing the following:cralaw:red
Theory of Accounts. — Accounting terminology, accounting principles and
procedures, classification of accounts, valuation of assets and
liabilities, income determination, developments in the science of
accountancy, etc.
Business Law and Taxation. — One-Half on the subject of business law
covering obligation and contracts, partnerships and corporations,
negotiable instruments and other phases of the legal framework of
business, and the other half on taxation dealing on income tax,
business taxes, transfer taxes, and other taxes affecting accounting
practice.
Management Services. — Principles and procedures, methods and
techniques involved in management consulting services that may be
rendered by Certified Public Accountants in areas such as managerial
accounting, planning and control operations, design and appraisal of
accounting systems, and financial-management related services.
Auditing Theory. — Auditing concepts, auditing standards, internal
control, auditing procedures and techniques, and the short-form audit
report.
Auditing Problems. — Problems on the application of auditing standards,
techniques and procedures, preparation of working papers, completion of
the audit, and preparation of audit report.
Practical Accounting I. — Problems concerning financial statements and
accounting for assets, liabilities and stockholder's equity.
Practical Accounting II. — Problems pertaining to partnership, joint
ventures, fire insurance on the insured's books, consignments,
installment sales, agencies and branches, business combinations, cost
accounting, financial analysis, and government accounting. chanroblesvirtualawlibrary
Section 12. Examination Rating. — A candidate for the
examination obtaining a general weighted average of seventy-five
percent and above shall be entitled to registration as certified public
accountant and as such shall receive a certificate of registration from
the Board of Accountancy, Provided, That is no case should the rating
on any subject be less than sixty-five percent. In the event a
candidate obtains the rating of seventy-five percent and above in at
least four (4) subjects having a combined weight of eight (8) units as
provided for in this Act, he shall receive a conditional credit for the
subjects passed: Provided, However, That such candidates shall take an
examination in the remaining subjects within two years from the
preceding examination: Provided, further, That if the candidate fails
to obtain at least a general weighted average of seventy-five percent
and a rating of at least sixty-five percent in each of the subjects
re-examined, he shall be considered as failed in the entire examination.
Section 13. Failing candidates to take refresher
course. — Any candidate who fails in two complete Certified Public
Accountant board examinations shall be disqualified from taking another
set of examinations unless he submits evidence to the satisfaction of
the Board of Accountancy that he has enrolled in and completed at least
twenty-four units of subjects given in Certified Public Accountant
Examinations.
For purposes, of this Law, the examinations in which the candidate was
conditioned together with the removal examination on the subject in
which he failed shall be counted as one complete examination.
Section 14. Certificate of Registration. — A
certificate of registration as Certified Public Accountant shall be
issued by the Board of Accountancy to those who have satisfactorily
passed the examination prescribed herein or otherwise complied with the
requirements of the Board. chanroblesvirtualawlibrary
All certificates of registration shall show the full name of the
registrant, shall have a serial number, and shall be signed by all the
members of the Board and the Chairman of the Professional Regulation
Commission and attested by the official seal of the Board.
A certificate of registration shall not be issued to any candidate who
has been convicted by a court of competent jurisdiction of any criminal
offense involving moral turpitude, or has been found guilty of immoral
or dishonorable conduct after due investigation by the Board of
Accountancy, or has been declared to be of unsound mind.
Section 15. Fees. — All applications must be filed
with the Professional Regulation Commission and shall be subject to the
payment of fees prescribed by the Professional Regulation Commission.
Section 16. Rules and Regulations of the Board of
Accountancy. — Subject to the approval of the Professional Regulation
Commission, the Board of Accountancy shall promulgate rules and
regulations and set professional standards for the practice of
accountancy. Such rules shall include a code of professional ethics and
security measures to protect the secrecy and integrity of the
examinations.
ARTICLE III
Administrative Proceedings, Penal and Other Provisions
Section 17. Grounds for proceedings against a
Certified Public Accountant. — Any of the following shall be sufficient
ground for proceeding against a Certified Public Accountant:cralaw:red
a) Conviction by a court of competent jurisdiction of
any criminal offense involving moral turpitude;chanroblesvirtualawlibrary
b) Immoral or dishonorable conduct; chanroblesvirtualawlibrary
c) Insanity;chanroblesvirtualawlibrary
d) Fraud in the acquisition of the certificate of
registration;chanroblesvirtualawlibrary
e) Gross negligence or incompetence in the practice
of his profession;chanroblesvirtualawlibrary
f) Addiction to alcoholic beverages or to any
habit-forming drugs rendering him incompetent to practice his
profession;chanroblesvirtualawlibrary
g) False or extravagant or unethical advertisement
wherein other things than his name, profession, limitation of practice,
office and home address are mentioned;chanroblesvirtualawlibrary
h) Issuing an accountant's certificate covering the
examination of the client's accounts without observing the necessary
auditing standards;chanroblesvirtualawlibrary
i) Aiding or acting as a dummy of an unqualified or
unregistered person to practice accountancy;chanroblesvirtualawlibrary
j) Violation of any provision of this Decree and the
rules and regulations promulgated thereunder.
k) Conduct discreditable to the accounting profession.
Section 18. Administrative Investigation. — Within
five days after the filing of written charges under oaths, respondent
Certified Public Accountant shall be furnished a copy thereof requiring
him to answer the same.
The administrative investigation shall be conducted by the Board of
Accountancy or any of its members as may designated by the Chairman, or
may be conducted by a legal or hearing officer of the Professional
Regulation Commission: Provided, However, That the decision shall be
promulgated by a majority of the members of the Board.
The rules and regulations promulgated by the Professional Regulation
Commission pursuant to its rule making power shall govern the procedure
and conduct of administrative investigation before the Board.
Section 19. Rights of Respondents. — The respondent
Certified Public Accountant shall be entitled to be represented by
counsel, to have a speedy and public hearing, and to confront and to
cross-examine witnesses against him.
Section 20. Appeal from Judgment. — The decision of
the Board of Accountancy shall become final thirty (30) days after
receipt by the respondent of a copy of the decision, unless during the
same period, he has appealed to the Professional Regulation Commission,
whose decision shall be final.
Section 21. Reinstatement. — After two years, the
Board of Accountancy may order the reinstatement of certified public
accountant whose certificate of registration has been revoked, if the
respondent, during this period, has acted in an exemplary manner and
has not committed any illegal, immoral or dishonorable act.
Section 22. Criminal Offenses. — Any person who shall
be himself or in cooperation with another defeat, deceive, or obstruct
any person in the matter of his right of examination by the Board of
Accountancy, or who shall falsely rate, grade, estimate, or report upon
the examination or standing of any person examined by the Board of
Accountancy, or shalld in so doing, or shall make any false
representation relative thereto or concerning the person or persons
examined or who shall use or furnish any special or secret information
for the purpose of improving or injuring the prospects or chances of
any person so examined or to be examined or receiving a certificate,
shall for each offense be punished with a fine not exceeding five
thousand pesos, or by imprisonment for a period not exceeding two years
or both. chanroblesvirtualawlibrary
Any person who shall knowingly make any material false statement in his
application for examination, or who shall connive at any false
statement made in any certificate which may accompany his application,
or who shall make any material false statement in any certificate to
accompany the application for examination of any person, or who shall
impersonate any other person or permit ord in any manner other persons
to impersonate him in connection with any examination or application
for examination, or who shall falsely make or forge any certificate in
connection with his application, or who shall commit to attempt to
commit any fraud, or violation in any manner the provisions of this
Decree or any regulations promulgated under the provisions hereof, ord
in so doing, shall be subject to the same penalty as in the preceding
paragraph provided.
Any person who represent himself to the public as having received a
certificate as provided in this Decree, or shall assume to practice as
Certified Public Accountant or use the abbreviated title "C.P.A." or
any similar words or letters to indicate that the person using the same
is a Certified Public Accountant, without having received such
certified public accountant certificate or having received such
certificate, has been thereafter deprived of the use of the same by
temporary suspension or revocation shall be punished with a fine in a
sum not exceeding five thousand pesos or by imprisonment for a period
not exceeding two years, or both, at the discretion of the Court, for
each such offense, and each day that such person shall so practice or
hold himself out as a certified public accountant shall be deemed a
separate offense.
Section 23. Foreign Reciprocity. — No foreigner shall
be admitted to the examinations or be registered as Certified Public
Accountant under this Decree unless he proves in the manner provided
for by the Professional Regulation Commission that, by specific
provisions of law, the country of which he is a citizen, subject, or
national, allows citizens of the Philippines to the practice of
accountancy profession after an examination on terms of strict and
absolute equality with the citizens, subjects or nationals of said
country, including the unconditional recognition of prerequisite
degrees issued by institutions of learning duly recognized by the
Government of the Republic of the Philippines. chanroblesvirtualawlibrary
Section 24. Ownership of Working Papers, etc. — 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
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. However, no such working papers,
schedules, and memoranda shall be sold, transferred or bequeathed or
disposed of in any manner without the consent of the client, his heir,
personal representatives or successors to anyone other than one or more
surviving partners or new partners of such certified public accountant.
Section 25. Limitation on the Practice of Public
Accountancy. — Hereafter, all partners of partnership organized for the
practice of public accountancy shall be registered certified public
accountants in the Philippines. The Commissioner of the Securities and
Exchange Commission shall not register any corporation organized for
the practice of public accountancy.
Section 26. Integration of the Accountancy
Profession. — The Professional Regulation Commission shall adopt rules
to effect the integration of Certified Public Accountants under such
conditions as it shall see fit in order to raise the standards of the
profession and enable it to discharge its public responsibilities more
effectively. chanroblesvirtualawlibrary
Section 27. Accreditation to Practice Public
Accountancy. — Certified Public Accountants and firms or partnerships
of certified public accountants, including partners and staff members
thereof shall register with the Professional Regulation Commission and
the Board of Accountancy, such registration to be renewed annually on
or before September 30 of each year following the date of issuance.
Subject to the approval of the Professional Regulation Commission, the
Board of Accountancy shall promulgate rules and regulations for the
implementation of registration requirements, including the fees and the
penalties for violation thereof.
Section 28. Repealing Clause. — Republic Act No. 5166
is hereby repealed and all laws, executive orders, administrative
orders, rules and regulations, or parts thereof inconsistent with the
provisions of this Decree are also hereby repealed and modified
accordingly.
Section 29. Effectivity. — This Decree shall take
effect upon promulgation, except as provided in Section 10, paragraph
(e) and Section 13 which shall take effect beginning with the Certified
Public Accountant examinations to be given in the year 1976.
Done in the City of Manila,
this 5th day of May, in the year of Our Lord, nineteen hundred and
seventy-five.
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