I was invited as speaker to the CPA (interchangeably used to mean Certified Public Accountant or Chartered Professional Accountant) Public Practitioners sectoral forum, which was part of the Annual National Convention (ANC) of the Philippine Institute of CPAs (PICPA) held last month in Davao City. More than 4,500 CPAs throughout the country attended the PICPA ANC, , coming from four sectors: education, commerce and industry, government and public practice).
I was requested to speak about “Assessing the Readiness of Filipino CPAs to level up to the Asean and World Accountancy Practice.” I spoke in the Public Practice sector forum with the CPAs as my audience. The Filipino CPAs referred to in my topic and in this article are limited to CPAs in Public Practice, who are also known as CPA practitioners.
My topic would seem very boring because it was supposedly highly technical. It was also forward-looking because it was about something yet to happen in the current accountancy landscape of Filipino CPAs. But of course, we can take steps now to prepare for every Filipino CPA to level up to the standards of Asean Chartered Professional Accountant and eventually, World Chartered Professional Accountant.
The Asean CPA came to the fore two years ago when the Asean Mutual Recognition Arrangement on Accountancy Services (Asean MRA) was signed by the 10 member states on November 13, 2014. However, I do not know anybody to date (a CPA from the Philippines, Brunei, Cambodia, Laos, Thailand, Myanmar and Vietnam; or a chartered accountant from Singapore and Malaysia; or a registered accountant from Indonesia) who aspired and finally became an Asean CPA. This is so because the Asean member states are still preparing and making an assessment of the readiness for the eventual implementation of the Asean MRA.
In performing their respective country-specific readiness assessment, the member states have considered seven areas: (1)
Responsible institution—each of the Asean member states must establish its respective responsible national accountancy body and the Professional Regulatory Authority; (2) Statute – this pertains to the laws relating to the accountancy services; (3) Degree requirement – it is the level of academic achievement at a degree delivered by a recognized educational institution; (4) Professional examination – this is a requirement for licensure examinations; (5) Practical experience – the Asean regional benchmark requires three years of practical experience; (6) Continuing professional development or CPD – this assessment requires 120 CPD hours over a three-year period to maintain the CPA registration; and (7) The Code of Ethics for professional accountants.
For the Philippines, we have passed all the foregoing seven assessments, except for Number 6: the CPD requirement. Hence, the Philippines, or the Filipino CPAs, are not yet ready to “level up” as an Asean CPA at this time. We have not met the 120-hour CPD requirement over a three-year period. At present, we are only in partial compliance because we have completed only 60 hours of the CPD requirement to date. I am glad to note, though, that our Board of Accountancy (BOA) is already addressing this matter, with the issuance of a BOA Resolution last June 2016 mandating all Filipino CPAs to acquire as many as 120 CPD hours over a three-year period. I understand that the BOA is now in its final stage of crafting the implementing guidelines that would require a transition period, so that, hopefully, by 2019, Aseanwill allow us to ultimately comply and pass this assessment.
Likewise, I do not think Filipino CPAs are ready to “level up” as World CPAs at this time. I will tell you why.
The International Federation of Accountants (IFAC) is a worldwide organization of national accounting associations and other groups interested in accounting matters. PICPA, being our accredited national accounting association of Filipino CPAs, is a member of IFAC and its membership requires PICPA to follow what they call the Statement of Membership Obligations (SMO). IFAC, so far, had issued seven SMOs namely: (1) SMO on Quality Assurance Review or QAR; (2) SMO on International Education Standards; (3) SMO on International Assurance and Auditing Standards; (4) SMO on International Ethics Standard Board of Accountants Code of Ethics; (5) SMO on International Public Sector Financial Reporting Standards; (6) SMO on Investigation and Discipline; and (7) SMO on International Financial Reporting Standards.
Currently, PICPA, working with the BOA, has complied with these seven SMOs, except for one: SMO No. 1 on QAR. Our BOA tried to comply with SMO NO. 1 but because of a court injunction, BOA was unable to implement its own QAR Program, which correspondingly affected the quality enhancement program for the Philippine Accountancy Practice that we certainly need if we want to “level up” and become globally competitive.
However, it is not at all without hope. I am glad that there are recent positive developments about this QAR, including the dismissal of the injunction case. Our BOA can now move forward with its QAR Program. Moreover, in another parallel positive development, our Securities and Exchange Commission (SEC) has also released for comments the draft of its own QAR program, its “Guidelines on the Implementation of the SEC Oversight Assurance Review Inspection program.” Our QAR Program is back on track.
In summary, the prospect of Filipino CPAs leveling up as Asean CPAs and as World CPAs may not be happening now, but certainly that chance will come. The Philippines and the other Asean member states, as well as the Filipino CPAs, are preparing for it.
For the Philippines, with the united strength of BOA and PICPA, we need to “push” for (1) CPD compliance for Professional Excellence of Filipino CPAs to level up into becoming Asean CPAs; and (2) for QAR for Global Competitiveness to level up to that of the World CPA standards.
By then, Filipino CPAs will proudly have three CPA titles to their name.
Jun Cuaresma is the Managing Partner & COO, and Audit & Assurance Division Head of P&A Grant Thornton. P&A Grant Thornton is one of the leading Audit, Tax, Advisory, and Outsourcing firm in the Philippines, with 21 Partners and over 800 staff members.