The Board of Accountancy in the 100 years of the accounting profession beyond milestones and trivia

MARCH 17, 2022 marked the groundbreaking of the launch, preparation, and campaign for the grand celebration for the Centenary of Accounting Profession in the Philippines, exactly one year prior to the actual date of the Philippine Accountancy’s mother-of-events in the past hundred years.

The theme: “Celebrating the Past, Transforming the Present. Shaping the Future.”

Who else would be at the helm of this unprecedented event but the Professional Regulatory Board of Accountancy (PR-BoA), in cooperation with the Philippine Institute of Certified Public Accountants (Picpa), the PRC Accredited Integrated Professional Organization (AIPO) of Filipino accountants, along with the four sectoral organizations for accountancy namely: Association of Certified Public Accountants for Commerce and Industry (ACPACI), Association of Certified Public Accountants for Public Practice (ACPAPP), the National Association of Certified Public Accountants in Education (nACPAE) and the Government Association of Certified Public Accountants (Gacpa).

One hundred years of the Accountancy Profession in the country, certainly, a big story worthy of the front page and center stage. All the milestone events for a hundred years, the changes and transformations, the growing statistics, the improving structures and the enhancement of tools of the profession, the improvement of system efficiency with the modernization and digitization of methods and standards, the introduction and immersion of the accounting students and professionals to new knowledge, skills and technologies, not to forget the long list of prominent figures and personalities who at some point within the centennial, have been given recognition for their contributions to the advancement of the profession and to the progress of our country. The exciting, exhilarating journey for a hundred years would indeed be a long but great story to tell.

Accounting is one such profession that spans most disciplines, as in the modern world, trade and cash flow is the bloodline of entities and industries, and where money and financial management is involved, accounting weaves the thread of the story. In our country, at the center of it all would be the powerhouse of the accountancy profession, the Professional Regulatory Board of Accountancy, PR-BoA or simply BOA to accountants.

From the 1923 until the present, BoA’s roles are defined in the laws promulgated by the Commonwealth (Commonwealth Act), the Congress (Republic Acts) or by the President (Presidential Decree during the Martial Law). In all of those promulgations, only one thing is consistent: the three main objectives of the accountancy law which are to provide for and to govern the standardization and regulation of (1) the accounting education; (2) the examination for registration of certified public accountants; and (3) the general supervision, control, and regulation of the practice of accountancy in the Philippines.

Relative to this, BoA is also in charge of promulgating Board Resolutions and implementing rules and regulations connected to the practice of accountancy, in accordance with PRC’s resolutions and directives. Further, BoA also investigates violations of the Accountancy Laws and the Accountancy Code of Ethics currently in effect and, after due process, it may suspend, revoke or reissue the professional license of the concerned accounting professional.

Secondly, BoA ensures the level of competency of the accounting professionals and the quality of accounting education in the country is at par with the global standards, by prescribing and determining the minimum requirements for the CPA examination. The members of BoA formulate and prepare the questions in the CPA Licensure Examination (CPALE) which they administer face-to-face in Manila and other cities at least once every calendar year, except during the pandemic from 2020 to 2021, the CPALE was suspended for health and safety reasons.

Finally and holistically, BoA sets the direction and guides in shaping the future of the practice of the profession, particularly in embracing new trends and concepts like sustainability/ green accounting, ESG (environment, social and governance) factors, digitalization and digital explosion, and such others. The Board also weighs in on whether the changes could impact, affect, and or enhance the accountancy as a whole and finds ways on how the CPAs can adapt and thrive in the presence of these innovations.

Indeed, BoA is the law enfleshed, without which the legislative and institutional framework of the accountancy profession would never have materialized from the drawing board.

It is therefore but imperative to take a look closer at the changes in and developments of the laws that prescribed the existence and functions of BoA through the years, its roles and the milestones of its journey as the driver of the wagon in the one hundred years of the profession.

Accountancy in the Philippines, Pre-BoA Period

In the 1700s, the short British occupation of Manila between 1762 to 1764 brought to the Philippines public accountancy practice which was considerably a “level up” from the crude trading documentation tools and methods during the pre-Spanish and Spanish period. Thereafter, even after the British occupation when Manila was returned by England to the Spanish Crown, the foreign accountants contracted by the British stayed on to service foreign firms in the Manila, but still there was no local government agency that regulated their services and practices.

By the 1920s, the country started to have local accountants but not certified by or in the country as there still was no regulatory agency in place. Actually, the very first Filipino accountant, Vicente Fabella finished his Bachelor in Commerce at the Northwestern University and got his certification as a public accountant from the state of Wisconsin, USA in 1915. He returned to the Philippines in 1916, became an educator at University of the Philippines in accounting and auditing and in the same year, he opened his own accounting firm, the first Filipino Accounting Firm “Vicente Fabella and Company”. In 1919, he founded and was President of the Far Eastern College of Accountants, Commerce and Finance which he renamed Jose Rizal College in 1922 until it was granted university status in 2000, so it is now known as the Jose Rizal University of Mandaluyong City.

Act 3105: The Accountancy Act of 1923, the establishment of BoA

March 17, 1923 is the monumental day during the Sixth Philippine Legislature when Act 3105, the Accountancy Act of 1923 was approved and became a law. It is the formalization of the accountancy practice as a lawfully recognized profession, with the creation of the three-member Board of Accountancy. Under this act, BOA is assigned to determine qualifications of persons applying for certificates, make rules for the examination of the same, and finally, issue certificates allowing the person to practice as a public accountant and be identified as a Certified Public Accountant.

The first CPA Licensure exam was administered by BOA in May 1932 and the scope concentrated only on four accounting subjects: Theory of Accounts, Practical Accounting, Auditing and Commercial Law. At this point until 1948, there were less than a hundred examinees, and it was quite amazing to know that the highest percentage of passing were pre-war, during the war and right after the war: 61 percent in 1942 (20 out of 33 passed the exam), 55 percent in 1943 (16 candidates out of 29 passed) and 50 percent in 1945 (12 out of 24) passed, respectively.

RA 5166: The Accountancy Act of 1967: Relevant amendments to the Accountancy Act of 1923

Commonwealth Act 342 as approved in the 1st National Assembly on June 22, 1938 made a few amendments to some sections of Act 3105, but it was Republic Act 5166, the Accountancy Act of 1967 that made the noteworthy changes to the provisions of the previous law, such as the creation of the Board of Accounting Education which is a separate entity from the Board of Accountancy: the Board of Accounting Education being the one to prescribe collegiate courses for the degree BS in Commerce while the Board of Accountancy, BOA shall be the one to promulgate necessary rules and regulations, and set professional standards for the practice of accountancy. This law also prescribed that the Board of Directors of the National Professional Organization, the Philippine Institute of Certified Public Accountants shall be the one to recommend 15 CPAs from which the President of the Philippines will choose and appoint the chairman and five members of BoA – a total of six which is double of the three-member BoA prescribed in 1923. The law also set the CPA Examination now to include more topics: Theory of Accounts, Business Law and Taxation, Management Services, Auditing Theory, Auditing Problems, and Practical Accounting Problems.

PD 692 Revised Accountancy Law 1975: BoA under PRC, Martial Law Era

The Revised Accountancy Law 1975 under Presidential Decree 692 repealed and replaced the Accountancy Act of 1967. Most of the provisions of the Accountancy Act of 1967 were retained, but it placed the Board of Accountancy under the Professional Regulation Commission, a consequence to the creation of the Commission on June 22, 1973 by Presidential Decree No 223. In 1974, Filipino registered professionals were entered into a computerized database and in 1975, PRC started issuing computer-printed registration cards to the registered professionals, CPAs included. Under this PD, the composition of the Board was also increased from six to seven: the chairman who is appointed by the President of the Philippines and six members who will elect the vice-chairman from among them.

RA 9298 Philippine Accountancy Act of 2004

For the first time, the sectors of accountancy were cast a spotlight in this law, specifying and defining the scope of accountancy practices: public practice, commerce and industry, education/academe and government, thus marking the dawn of a new era of accountancy where recognition of accountancy sectors have led to professional distinction and inclusion and to the integration of the profession.

Accounting is one such profession that spans most disciplines, as in the MODERN WORLD, TRADE AND CASH flOW IS the bloodline of entities and industries, AND WHERE MONEY AND fiNANCIAL management is involved, accounting weaves the thread of the story.

Powers and functions of the BoA were also expanded and expounded, with provisions added such as the Board’s “adoption of a Code of Ethics,” “conduct of an oversight into the quality of audits of financial statement through a review of the quality control measures instituted by auditors in order to ensure compliance with the accounting and auditing standards and practices,” “prepare, adopt, issue or amend the syllabi of the subjects for examinations in consultation with the academe,” to list a few of BoA’s explicitly defined duties and obligations to perform.

The New Era: Peeking at the new amendments to RA 9298 Accountancy Act of 2004

In 2021, BoA has started conducting public consultations proposing amendments to the Accountancy act of 2004 as part of its campaign to strengthen the practice of accountancy in the Philippines. There are about 17 proposed revisions to the Act, from the definition of the practice of accountancy to the powers and authority of BoA and more. The most controversial provision in the draft proposal is perhaps where an examinee is required to undergo a minimum of two years of diversified professional experience before taking the licensure exam; something which accounting students and their parents are opposed to. With the vast range of impact and feedback of so many involved stakeholders of the profession to consider, this proposal has seemingly returned back to the drawing board for further reconstruction before it would be able to genuinely and fully cater to the needs and demands of the many, if not most entities concerned.

Deliverables and Achievements: What BoA has so far accomplished and wants to accomplish

With all of BoA’s expected and law-prescribed functions, BoA has prevailed through the years, delivering above and beyond the black and white prescription of the laws. With the collaboration of PICPA, the national professional organization of CPAs, BoA has worked for the passage of the Accountancy Act of 1967, the issuance of the Code of Professional Ethics in 1978, the issuance of the guidelines for the Continuing Professional Education (CPE) in 1987, the twice a year oathtaking of new CPAs, the declaration of the Accountancy Week Celebration as a law, and the standards setting through membership in the Accounting Standards Council (ASC) and the Auditing Standards Practices Council (ASPC).

Here are some other most noteworthy, more recent accomplishments of the Board of Accountancy on top of their usual functions and roles:

• Prescription of a standardized and common baccalaureate degree, Bachelor of Science in Accountancy, with the support of DECS • Regulation of CPA Firms and partnerships by registration with both the PRC and the Board of Accountancy

• Requirement of CPAs in civil service, with the Civil Service Commissionto make sure that only CPAs can be appointed as accountants and auditors or to hold allied positions in government

• Full computerization of the CPA Licensure exams which made possible the fast (2-day) release of exam results • Adoption of the Continuing Professional Education (CPE) requirement for CPAs as prescribed by the American Institute of CPAs (AICPA), which was later increased in the BOA Resolution 358 S 2016, from 60 to 120 CPD units to align with the IES

• First among all other Philippine professions included in the policy of liberalization of services under the World Trade Organization • Under the Asean Mutual Recognition Arrangement, PRC, BoA and PICPA have collaborated and joined forces to comprise the Asean Monitoring Committee on Professional Accountancy Services of the Philippines (AMCPASP), involved in the receiving, reviewing, and processing applications of CPAs to be registered as Asean Chartered Professional Accountants (ACPA) and be able to practice borderless accounting amongst Asean Region and amongst MRA member states. • The Philippine Qualification Framework-Career Progression and Specialization Program (PQFCPSP) for Accountancy which aims to strengthen the Continuing Professional Development Program for the accountants through levelling and descriptive categorization of the accounting professionals’ experiential exposures with the descriptors aligned with the globally accepted classifications, thereby recommending to them appropriate CPD programs that will enhance the experiences and learning of said professional and readying them to glocal (colloquial for “global and local”) and borderless practice of accountancy

• Creation of the PQF-CPSP Credit Accumulation and Transfer System (CPSP-CATS) Committee for the Board of Accountancy to assist the COA CPD Council on the implementation of CPSP and CATS.

BOA: A hundred years hence. celebrating the “now”

With a hundred years’ worth of changes and transformations, adaptations and revisions, additions and creations, there may not be enough space for piling up the documentation of the events and activities, milestones and what else to spotlight. The evening of March 17, 2023 may not be enough to call and award the Most Notable CPAs of the centenary, if we will just look back hard to every figure, every face and every name of the big and small luminaries who have contributed their time and expertise towards moving the profession forward.

A hundred years hence, and seemingly, the things to do is just as long a list as it was a hundred years ago. Truth is, beyond the statistics and the trivia notes of the BoA centennial compendium, the celebration is not about the history nor the destination, but more about the triumphant inner thoughts about the now that we are: the transformations now that we are becoming, and the challenges now that we are overcoming.

BoA has journeyed through the century with laurels on its head.

Let this event be every Filipino CPA’s sweet time to savor this crown of glory,

No resting on laurels, though.