Philippine Accountancy Act of 2004 Presented to: DLSU - Revdevt

Philippine Accountancy Act of 2004 Presented to DLSU - Revdevt by: Mr. Francis H. Villamin January , 2015

Philippine Accountancy Act of 2004

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Republic Act 9298 is known as Philippine Accountancy Act of 2004

Repealed PD 692 known as Revised Accountancy Law Objectives: The standardization and regulation of accounting education. The examination for registration of certified public accountants. The supervision, control and regulation of the practice of accountancy in the Philippines.


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Practice of Public Accountancy: - One who in his individual capacity, or as a partner or a staff member in an accounting or auditing firm - Holding himself/herself as one skilled in the knowledge, science and practice of accounting, and as a qualified person to render professional services as a CPA, or offering or rendering, or both, to more than one client on a fee basis, or otherwise, services such as: 1) 2) 3) 4)

audit or verification of financial transactions and accounting records preparation, signing or certification for client of reports of audit design, installation, review and revision of accounting system represent s his/her client before government agencies on matters related to accounting 5) rendition of professional assistance relating to accounting procedures and the recording and presentation of financial facts or data. Philippine Accountancy Act of 2004

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Practice in Commerce and Industry: -

One who is involved in decision making requiring professional knowledge in the science of accounting, as well as the accounting aspects of finance or taxation

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One who represents his/her employer before government agencies on tax and other matters related to accounting

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One when such employment or position requires the holder to be a CPA involved in supervision of recording of financial transactions, preparation of financial statements, coordination with external auditors for f/s audit provided that the business or company where such position exists has paid –up capital of at least P5M &/or annual revenue of at least P10M provided that it shall apply to persons to be employed after the effectivity of IRR & provided finally, it shall not deprive employment of incumbents to this position.


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Practice in Education/Academe: - One who is in an educational institution which involve teaching of accounting, auditing, management advisory services, accounting aspect of finance, business law and taxation, and other related subjects Provided that members of the Integrated Bar of the Phils. (IBP) may be allowed to teach law and taxation subjects, Provided further that the position of either the dean or department chairman or its equivalent that supervises the BSA program of an educational institution is deemed to be in practice of accountancy in the academe/education and therefore must be occupied only by CPA.


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Practice in Government: - One who holds or is appointed to, a position in an accounting professional group in government or in a government-owned and/or controlled corporation, including those performing proprietary functions, where decision making requires professional knowledge in the science of accounting - One where a civil service eligibility as a CPA is a prerequisite.


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Professional Regulatory Board of Accountancy (under the supervision and administrative control of the

Professional Regulation Commission) Composed of a Chairman and six (6) members to be appointed by the President of the Republic of the Philippines from a list of three (3) recommendees and ranked by PRC from a list of five (5) nominees. Term of office – 3 years renewable for another term, lapse of one (1) year. No person shall serve the Board for more than twelve (12) years. . t Philippine Accountancy Act of 2004

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Professional Regulatory Board of Accountancy Qualifications of the members of the Board: • • • • •

Must be a natural –born citizen and a resident of the Phils. Must be a duly registered CPA with at least ten (10) years work experience in any scope of practice of accountancy Must be of good moral character and must not have been convicted of crimes involving moral turpitude. Must not have any pecuniary interest in any school, college, university or institution offering academic degree Must not be a director or officer of APO at the time of appointment


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Powers and Functions of the Board:

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1. To prescribe and adopt the rules and regulations necessary for carrying out the provisions of this Act. 2. To supervise the registration, licensure and practice of accountancy in the Philippines. 3. To administer oaths in connection with the administration of this Act. 4. To adopt an official seal of the Board. 5. To monitor the conditions affecting the practice of accountancy in the Philippines.


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6. To issue, suspend, revoke or reinstate the Certificate of Registration for the practice of accountancy. 7. To prescribe and/or adopt a Code of Ethics for the practice of accountancy. 8. To conduct an oversight into the quality of audits of financial statements through a review of the quality control measures. 9. To investigate violations of this Act and the rules and regulations promulgated hereunder and for this purpose, to issue summons to violators. 10. To issue a cease or desist order to any person, association, partnership or corporation engaged in violation of any provision of RA 9298, any accounting or auditing standards promulgated by the Board.


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11. To punish for contempt of the Board, both direct or indirect, in accordance with the pertinent provisions of and penalties prescribed by the Rules of Court. 12. To prepare, adopt, issue or amend the syllabi of the subjects for examinations in consultation with the academe, determine and prepare questions for the licensure examination as well as, administer, correct and release the results of the licensure examination. 13. To ensure, in coordination with the Commission on Higher Education (CHED) or other authorized government offices, that all higher educational instruction and offering of accountancy, including accounting review centers and/or CPE providers offering accounting seminars, comply with the policies, standards and requirements of the course prescribed by CHED or other authorized government officer of CPE Council as the case may be.


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Grounds for Suspension or Removal of Members of the Board: 1. Neglect of duty or incompetence. 2. Violation or tolerance of any violation of this Act and its implementing rules and regulations or the Certified Public Accountant’s Code of Ethical and technical and professional standards of the practice for certified public accountants. 3. Final judgment of crimes involving moral turpitude. 4. Manipulation or rigging of the certified public accountant’s licensure examination in the examination questions prior to the conduct of the said examination or tampering of grades.


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Financial Reporting Standards Council (FRSC) - Accounting standard setting body - Composed of 15 members with a Chairman, who had been or previously a senior accounting practitioner in any scope of accounting practice and fourteen (14) representatives from the following: (a) Board of Accountancy …………………….. 1 (b) Securities and Exchange Commission …….. 1 (c ) Bangko Sentral ng Pilipinas ……………….. 1 (d) Bureau of Internal Revenue ………………. 1 (d) An major organization composed of preparers and users of f/s ……… 1 (f) Commission on Audit .………………………. 1 (g) Accredited National Professional Organization of CPAs Public Practice……………….. 2 Commerce and Industry ……... 2 Academe/Education ………… 2 Government …………………. 2 8 ---------Total 14 === Philippine Accountancy Act of 2004

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Auditing and Assurance Standards Council (AASC) - Auditing standard setting body - Composed of 17 members with a Chairman, who had been or previously a senior practitioner in public accountancy and sixteen (16) representatives from the following: (a) Board of Accountancy …………………….. 1 (b) Securities and Exchange Commission …….. 1 (c ) Bangko Sentral ng Pilipinas ……………….. 1 (d) An association or organization of CPAs in active public practice of accountancy ……… 1 (f) Commission on Audit .………………………. 1 (g) Accredited National Professional Organization of CPAs Public Practice……………….. 9 Commerce and Industry ……... 1 Academe/Education ………… 1 ----11 ----Total 16 === Philippine Accountancy Act of 2004

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Education Technical Council (ETC) - Created by PRC upon recommendation of BOA - Assist the Board in the attainment of the objective of continuously upgrading the accountancy education in the Philippines to make the Filipino CPAs globally competitive. - Composed of seven (7) members with a Chairman, who had or been presently a senior accounting practitioner in the academe/education and six (6) representatives from the following: (a) Board of Accountancy …………………….. 1 (b) Accredited National Professional Organization of CPAs Public Practice……………….. 1 Commerce and Industry ……... 1 Academe/Education ………… 2 Government …………………. 1 5 ---------Total 6 === - Term is three (3) years renewable for another term. Philippine Accountancy Act of 2004

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Education Technical Council (ETC) -

Functions:

(a) Determine a minimum standard curriculum for the study of accountancy to be implemented in all schools offering accountancy as an undergraduate degree. (b) Establish teaching standards, including the qualifications of members of the faculty of schools and colleges of accountancy. (c) Monitor the progress of the program on the study of accountancy and undertaking measures for the attainment of a high quality of accountancy education in the country. (d) Evaluate periodically the performance of educational institutions offering accountancy education.


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Examination, Registration and Licensure The Certified Public Accountant Examination

Qualifications of applicants for examination: 1. Is a Filipino citizen. 2. Is of good moral character. 3. Is a holder of the degree of Bachelor of Science in Accountancy conferred by a school, college, academy or institute duly recognized and/or accredited by CHED or other authorized government offices. 4. Has not been convicted of any criminal offense involving moral turpitude. Philippine Accountancy Act of 2004

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Examination, Registration and Licensure The Certified Public Accountant Examination

Documents for submission: 1. Certificate of Live Birth in National Statistics Office (NSO) Security Paper. 2. Marriage Contract in NSO Security Paper. 3. College Diploma with indication therein of the date of graduation and Special Order Number unless it is not required. 4. Baccalaureate Transcript of Records with indication therein of date of graduation and Special Order Number unless it is not required. 5. National Bureau of Investigation (NBI) Clearance. 6. Other documents that the Board may require. Philippine Accountancy Act of 2004

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Scope of Examination: 1. Theory of Accounts

2. Business Law and Taxation 3. Management Services 4. Auditing Theory

5. Auditing Problems 6. Practical Accounting Problems 1 7. Practical Accounting Problems 2


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Rating in the Licensure Examination: Passing –

a weighted general average of seventy five percent (75%), with no grade lower than sixty five percent (65%) in any given subject.

Conditional – a weighted average of seventy five percent (75%) and above in at least majority of subjects. Failed –

a weighted average of below seventy five (75%).


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Report of Rating: - The Board shall submit to the Commission the ratings obtained

by each candidate within ten (10) days after the examination, unless extended for just cause.


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Failing candidates to take refresher course Any candidate who fails in two (2) complete CPA Board Examination shall be disqualified from taking another set of examinations unless he/she enrolled in and completed at least “twenty four” (24) units of subject given in the licensure examination.


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Oath All successful candidates in the examination shall be required to take an oath of profession before any member of the Board or any government official authorized by the Commission or any person authorized by law to administer oath upon presentation of proof of his/her qualification, prior to entering upon the practice of the profession.


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Certificate of Registration and

Professional Identification Card Shall bear the signature of the Chairperson of the Commission and the chairman and members of the Board, including that person named therein is entitled to the practice of the profession with all the privileges appurtenant thereto.


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Indication of Certificate of Registration, Professional Identification Card and Professional Tax Receipt - COR No. & PIC No. with - Date of Issuance and the Duration of Validity including PTR No. which the City/Municipal Treasurer has issued to CPA


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Refusal to issue Certificate of Registration and Professional Identification Card Convicted by a court of competent jurisdiction of a criminal offense involving moral turpitude or guilty of immoral and dishonorable conduct

Any person of unsound mind.


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Suspension and Revocation of Certificates of Registration and Professional Identification Card

1. Unprofessional or unethical conduct. 2. Malpractice 3. Violation of any provisions of RA9298


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Reinstatement, Reissuance and Replacement of Revoked or Lost Certificates

The Board may, after the expiration of two (2) years from the date of revocation and for reasons deemed proper and sufficient, reinstate the validity of a revoked certificate of registration and in so doing, may, in its discretion, exempt the applicant from taking another examination.


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Limitation of the Practice of Public Accountancy

Single practitioners Partnerships


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Meaningful Experience: (a) Commerce and industry

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Significant involvement in general accounting, budgeting, tax administration, internal auditing, liaison with external auditors, representing his/her employer before government agencies on tax and matters related to accounting or any other related functions.

(b) Academe/Education -

Teaching for at least three (3) trimesters or two (2) semesters ,

subjects in either financial accounting, business law and management services


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Meaningful Experience: (c) Government -

Significant involvement in general accounting, budgeting and tax administration, internal auditing, liaison with Commission on Audit or any other related functions.

(d) Public Practice - One year as audit assistant and at least two years as auditor in charge covering full audit functions of significant clients.


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Ownership of Working Papers All working papers, schedules and memoranda made by a CPA and his staff in the course of an examination, including those prepared and submitted by the client, incident to or in the course of examination, by such CPA, except reports submitted by a certified public accountant to a client shall be treated confidential and privileged and remain the property of such CPA in the absence of written agreement between the CPA and the client, to the contrary, unless such documents are required to be produced through subpoena issued by any court, tribunal or governmental regulatory or administrative body in accordance with Philippine laws.


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Seal and Use of Seal Circular in form with a smaller circle within and in the upper portion of the space between the circles shall be engraved the name of the individual CPA, firm and the signing partner of the partnership and in the middle of the smaller circle shall be engraved the letters “CPA”.


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Accredited Professional Organization Philippine Institute of Certified Public Accountants (PICPA) - recognized by SEC as APO on October 2, 1975 (Accreditation No. 15)

Requirements:

1) Establishment for the benefit and welfare of CPAs 2) Open membership to all registered CPAs without discrimination 3) Sectoral membership in the public practice, commerce & industry, academe/education and government.


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Renewal for Accreditation - Once every three (3) years after the date of Resolution granting the petition for re-accreditation and the issuance of said Certificate upon submission of the requirements. Cancellation for Accreditation

1) It has ceased to possess any of the qualifications for accreditation 2) It no longer serves the best interest of the CPAs.

3) It did not achieve its plan to enlist into active membership within three (3) years, majority of the CPAs in the practice of accountancy.


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Cancellation for Accreditation 4) It has committed acts inimical to its members and to the profession.

5) It has not renewed its certificate of accreditation after a lapse of an unreasonable period for the date of its scheduled renewal. 6) It has not submitted the required audited financial statements.


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Accreditation in the Practice of Public Accountancy Registration – valid for three (3) years from the date application for accreditation is approved.

Renewal

- on or before September 30 on the year of expiry upon compliance of the requirements.


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Accreditation in the Practice of Public Accountancy e.g. If the application of registration of ABC Co., CPAs was approved on April 12, 2014, the registration shall expire on December 31, 2016

and therefore, it shall file for renewal on or before September 30, 2016 for the three year period beginning January 1, 2017.


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Accreditation in the Practice of Public Accountancy Registered Name: 1) Name of an individual as printed in his/her CPA certificate. 2) Firm – firm name appearing in the registration documents issued by DTI or any other proper government offices.

3) Partnership – partnership name as indicated in the current Articles of Partnership and certificates of registration issued by SEC.


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Accreditation in the Practice of Public Accountancy A CPA shall practice only under an individual firm or partnership name allowed in accordance with Philippine laws and shall not include any fictitious name, indicate specialization or is misleading as to the type of organization (proprietorship or partnership).


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Voluntary Withdrawal of Registration/Reinstatement - Filing with the Board a petition in writing stating the reason(s). - Should be duly authenticated and signed by the individual CPA or any of his/her staff member, the sole proprietor or any of the staff members or all the partners of the Partnership, or any of them or any of the staff member(s) who are requesting for the voluntary withdrawal of registration.


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Voluntary Withdrawal of Registration/Reinstatement

- The Board shall publish the request of the withdrawal of registration in the principal place/business of the Individual CPA, Firm or Partnership. - If there is no opposition to the petition, the Board shall recommend approval to the Commission. - Upon approval, the petitioner’s name shall be removed from the roll of Individual CPAs, Firms and Partnerships of duly registered practitioners of public accountancy and the petitioner shall be notified in writing of the withdrawal of registration. Philippine Accountancy Act of 2004

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Quality Review -

Quality Review Committee (QRC) is a body created by BOA upon approval of PRC to conduct an oversight into the quality of audit of financial statements through a review of the quality control measures instituted by Individual CPAs, Firms or Partnerships in order to ensure compliance with accounting and auditing standards and practices.

- QRC shall be composed of a seven (7) member body with a chairman, who had been or presently a senior practitioner in public accountancy and six representatives from BOA (1) and Accredited National Professional Organization (5); (2) ACCPAPP, (1) ACPAE, (1) ACPACI, (1) GACPA.


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Quality Review Committee Functions: 1) Conduct quality review on applicants for registration to practice public accountancy and render a report which shall be attached to the application for registration. 2) Recommend to the Board the revocation of the Certificate of Registration (COR) and Professional Identification Card (PIC) of an Individual CPA, including any of his/her staff members, Firms including the sole proprietors and any of his/her staff members.


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Death or Disability of an Individual CPA & Dissolution or Liquidation of a Firm or Partnership of CPAs -

Reported to the Board not later than thirty (30) days from the date of such death, dissolution or liquidation.

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The report shall be in the form of an affidavit or by furnishing the Board with the certified copy of the dissolution or liquidation papers filed with SEC in the case of Partnership.

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Failure to report shall be subjected to penalties.


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Foreign Reciprocity Subjects or citizens of foreign countries may be allowed to practice Accountancy in the Philippines in accordance with the provisions of existing laws, international treaty obligations including mutual recognition agreements entered into by the Philippine government with other countries.


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Coverage of Temporary/Special Permits 1) A foreign CPA called for consultation or for a specific purpose, which in the judgment of the Board, is essential for the development of the country, provided, that his/her practice shall be limited only for the particular work that he/she is being engaged, provided further, that there is no Filipino CPA qualified for such consultation or specific purpose. 2) A foreign CPA engaged as professor, lecturer, or critic in fields essential to accountancy education in the Phils. and his/her engagement is confined to teaching only.


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Coverage of Temporary/Special Permits 3) A foreign CPA who is internationally recognized expert or with specialization in any branch of accountancy and his/her service is essential for the advancement of accountancy in the Philippines.


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Penal Provision Fine of not less than fifty thousand pesos (50,000) or by Imprisonment for a period not exceeding two (2) years or Both


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Continuing Professional Education

(CPE) Program


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Continuing Professional Education

- Refers to the inculcation, assimilation and acquisition of knowledge, skills, proficiency and ethical and moral values, after the initial registration of a professional that raise and enhance the professional’s technical skills and competence.


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CPE Program Objectives:

1) To provide and ensure the continuous education of a registered professional with the latest trends in the profession brought about by modernization and scientific and technological advancements. 2) To raise and maintain the professional’s capability for delivering professional services.

3) To attain and maintain the highest standards and quality in the practice of his profession. 4) To promote the general welfare of the public.


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PRC CPE Council

- Created by BOA upon approval of PRC - Composed of chairperson and two (2) members. - The chairperson shall be chosen from among the members of the Board by the members themselves. - The first member shall be president or in his/her capacity, any officer chosen by the Board of Directors of PICPA.

- The second member shall be president or in his/her capacity, any officer of the organization of deans or department heads of schools, colleges or universities offering the degree requiring licensure examination. Philippine Accountancy Act of 2004

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PRC CPE Council Powers and Functions: 1) Accept, evaluate and approve applications for accreditation of CPE providers. 2) Accept, evaluate and approve applications for accreditation of CPE programs, activities or sources as to their relevance to the profession and determine the number of CPE credit units to be earned on the basis of the contents of the program, activity or source submitted by the CPE providers. 3) Accept, evaluate and approve applications for exemptions from CPE requirements. 4) Monitor the implementation by the CPE providers of their programs, activities or sources. Philippine Accountancy Act of 2004

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PRC CPE Council

Powers and Functions: 5) Assess periodically and upgrade criteria for accreditation of CPE providers and CPE programs, activities or sources. 6) Perform such other related functions that may be incidental to implementation of the CPE programs or policies.


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Programs, Activities and Sources for Accreditation and Equivalent Credit Units 1) Seminars

2) Conventions 3) Masteral Degree

4) Doctoral Degree 5) Authorship 6) Self-Directed Learning Package 7) Post Graduate/In-Service Training 8) Resource Speaker


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Programs, Activities and Sources for Accreditation and Equivalent Credit Units 9)

Peer Reviewer

10) CPE Provider 11) CPE Programs, Activities or Sources


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Sixty (60) credit units for three (3) years, provided that a minimum of fifteen (15) credit units shall be earned in each year. Any excess credit units in one year may

be carried over to the succeeding years within the three-year period. Excess credit units earned shall not be carried over to the next three-year period except

credit units earned for doctoral and master’s degrees. Philippine Accountancy Act of 2004

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Exemptions from CPE Requirements

Permanent Exemption: - reaching the age of 65 years old. Upon

Temporary Exemption: Practicing his/her profession or furthering his/her studies abroad provided that he/she has been out of the

country for at least two (2) years immediately prior to the date of renewal. Philippine Accountancy Act of 2004

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Goal is reached only if the distance is traveled. Good luck & God bless.


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Philippine Accountancy Act of 2004 Presented to: DLSU - Revdevt

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