Code of Ethics for

Professional
Accountants in the
Philippines
2018 Code of Ethics for Professional Accountants in the Philippines. (Based on the 2016 IFAC
Code of Ethics issued by International Ethics Standards Board of Accountants (IESBA) –
effective February 20, 2018.

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Objectives of Code of
Professional Ethics

1) to ensure high standards of competence among a

group’s member,
2) to regulate and strengthen their relationships, and
3) to promote and protect the image of the profession
and the welfare of the community.

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Common Characteristics of Professions
(a) Responsibility to serve the public
The CPA is a representative of the public-creditors,
stockholders, consumers, employees, and others – in the
financial reporting process. The role of the independent attester
is to ensure that information is fair to all parties.
(b) Complex body of knowledge
Any practitioner or student of accounting has only to look at the
abundance of authoritative pronouncements governing financial
reports to realize that accounting is a complex body of
knowledge.
(c ) Standards of Admission to the Profession
Attaining license to practice as a CPA requires an individual to
meet minimum standards for education and experience.
(d) Need for Public Confidence
To the CPA, public confidence is of special significance. The
CPA’s product is credibility. Without public confidence in the
attestor, the attest function serves no useful purpose.
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 Part A. - establishes the fundamental
principles of professional ethics for
professional accountants and provides
a conceptual framework for applying
those principles. This also provides
guidance on fundamental ethical
principles.

Part B and C - illustrate

how conceptual framework is to Part B. - applies
Code of Ethics for be applied in specific situations. to professional
Professional It provides examples of accountants in
Accountants in the safeguards that may be public practice.
appropriate to address threats
Philippines to compliance with the
fundamental principles and also
provides examples of situations
where safeguards are not
available to address the threats
and consequently the activity or Part C. -
relationship creating the threats applies to
should be avoided. professional
accountants in
business.
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 Integrity
A professional accountant should be straightforward and
Part A honest in all professional and business relationships.

Objectivity
A professional accountant should not allow bias, conflict of
interest or undue influence of others to override
professional or business judgments.

Professional Competence and Due Care

A professional accountant has a continuing duty to
Fundamental maintain professional knowledge and skill at the level
required . He should act diligently and in accordance with

Principles applicable technical and professional standards when

providing professional services.

Confidentiality
A professional accountant should respect the
confidentiality of information acquired as a result of
professional and business relationships and should not
disclose any such information to third parties.

Professional Behavior
A professional accountant should comply with relevant
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laws and regulations and should avoid any action that
discredits the profession.
 Self-interest threats
Part A-Fundamental occur as a result of the financial or other interests of a
professional accountant or of an immediate or close
Principles family member.

Self-review threats
occur when a previous judgment needs to be re-evaluated
by the professional accountant responsible for that
judgment.

Advocacy threats
Threats and occur when a professional accountant promotes a position
or opinion to the point that subsequent objectivity may be
Safeguards compromised.

Familiarity threats
occur when because of a close relationship, a
professional accountant becomes too sympathetic to the
interests of others.

Intimidation threats
occur when a professional accountant may be deterred
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from acting objectively by threats, actual or perceived.
 RELEVANT FACTS
Part A - Fundamental
Principles

ETHICAL ISSUES INVOLVED

Parts of the
Resolution Process FUNDAMENTAL PRINCIPLES
RELATED TO THE MATTER
to be considered by IN QUESTION
CPA in case of
Ethical Conflicts
ESTABLISHED INTERNAL
PROCEDURES

ALTERNATIVE COURSES 7OF

ACTION
 Acquiring an appropriate understanding of the
nature of the client’s business, the complexity of its
Part B – Professional operations and the nature and scope of work to be
Accountants in Public Practice performed.

Acquiring knowledge of relevant industries or subject

matters.

Processing or obtaining experience with relevant

Safeguards used by regulatory or reporting requirements.

CPAs in public Assigning sufficient staff with the necessary

practice to eliminate competencies.

or reduce the
Using experts where necessary.
threats to an
acceptable level
Agreeing on a realistic time frame for the
performance of the engagement.

Complying with quality control policies and

procedures designed to provide reasonable
assurance that specific engagements
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only when they can be performed completely.
 Notifying the client of the firm’s

Part B – Professional
business interest or activities that
may represent a conflict of interest,
Accountants in Public Practice and obtaining their consent to act in
such circumstances; or

Safeguards applied Notifying all known relevant parties

by CPAs in case of that the professional accountant in
public practice is acting for two or
conflicts of interests more parties in respect of a matter
where their respective interests are
in conflict, and obtaining their
consent to so act; or

Notifying the client that the

professional accountant in public
practice does not act exclusively
for any one client in the provision
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of proposed services.
 Factors to be taken into
Part B-CPAs in Public Practice account in connection with
fees charged for assurance
engagements:
Making the client
aware of the
terms of the
engagement the skill and knowledge
and, in required for the type of work
particular, the involved.
basis on which
Safeguards
fees are charged the level of training and
adopted by and which experience of the persons
CPAs as to the services are necessarily engaged on the
level of fees covered by the work
quoted and the quoted fee.
services to
which it applies the time necessarily
Assigning occupied by each person
appropriate time engaged on the work
and qualified
staff to the task.
the degree of
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responsibility and urgency
that the work entails.
 Keep such assets
Part B – Professional separately from personal
Accountants in Public Practice or firm assets.

Use such assets only for

the purpose for which they
are intended.
Safeguards applied
by CPAs in the At all times, be ready to
custody of client account for those assets,
assets and any income,
dividends or gain
generated, to any persons
entitled to such
accounting.

Comply with all holding of

and accounting for such
assets.
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 Withdrawing from the
Part B – Professional engagement team.
Accountants in Public Practice

Supervisory procedures.

Safeguards applied
Terminating the financial or
by CPAs in the business relationship giving rise
fundamental to the threat.
principle of
Discussing the issue with higher
objectivity levels of management within the
firm.

Discussing the issue with those

charged with governance of the
client.
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 Independence in Mind
The state of mind that permits the
expression of a conclusion
without being affected by
influences that compromise
professional judgment, allowing
an individual to act with integrity,
and exercise objectivity and
professional skepticism.

Independence Independence in Appearance

The avoidance of facts and
circumstances that are so
significant that a reasonable and
informed third party, having
knowledge of all relevant
information, including safeguards
applied, would reasonably
conclude a firm’s, or a member of
the assurance team’s integrity,
objectivity or professional
skepticism had been compromised.
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Assertion-based Assurance Engagements

In an assertion-based assurance
engagement, the evaluation or
measurement of the subject
matter is performed by the
responsible party, and the subject
matter information is in the form
of an assertion by the responsible
party that is made available to the
intended users.
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Direct Reporting Assurance
Engagements

In a direct reporting assurance engagement,

the professional accountant in public
practice either directly performs the
evaluation or measurement of the
subject matter, or obtains a
representation from the responsible
party that has performed the evaluation
or measurement that is not available to
the intended users. The subject matter
information is provided to the intended
users in the assurance report.
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 Part C - Professional Accountants Obtaining additional advice or
training.
in Business

Ensuring that there is adequate

time available for performing the
relevant duties.

Safeguards applied
Obtaining assistance from
by CPAs in someone with necessary expertise.
business when
acting with
Sufficient Expertise
Consulting, where appropriate,
with:
•Superiors within the employing
organization;
•Independent experts; or
•A relevant professional
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 Definitions
Advertising
The communication to the public of information as to
the services or skills provided by professional
accountants in public practice with a view to
procuring professional business.

Assurance client
The responsible party that is the person (or persons)
who:
(a) In a direct reporting engagement, is responsible
for the subject matter; or
(b) In an assertion-based engagement, is
responsible for the subject matter
information and may be responsible for the
subject matter.

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Definitions (continued…)
Assurance engagement
An engagement in which a professional accountant in
public practice expresses a conclusion designed to
enhance the degree of confidence of the intended
users other than the responsible party about the
outcome of the evaluation or measurement of a
subject matter against criteria.

Assurance team
(a) All professionals participating in the assurance
engagements;
(b) All others within a firm who can directly influence
the outcome of the assurance engagement.
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 Definitions (continued…)
Clearly insignificant
A matter that is deemed to be both trivial and
inconsequential.

Close family
A parent, child or sibling, who is not an immediate
family member.

Contingent fee
A fee calculated on a predetermined basis relating to
the outcome or result of a transaction or the result of
the work performed.
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 Definitions (continued…)
Direct financial interests
A financial interest:
- owned directly by and under the control of an individual or
entity; or
- beneficially owned through a collective investment
vehicle, estate, trust or other intermediary over which
individual or entity has control.

Director or officer
Those charged with the governance of an entity, regardless
of their title, which may vary from country to country.

Engagement partner
The partner or other person in the firm who is responsible
for the engagement and its performance, and for the report
that is issued on behalf of the firm, and who, where
required, has the appropriate authority from a professional,
legal or regulatory body.
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 Definitions (continued…)
Engagement quality control review
A process designed to provide an objective evaluation,
before the report is issued, of the significant judgments
the engagement team made and the conclusions they
reached in formulating the report.

Engagement team
All personnel performing an engagement, including any
experts contracted by the firm in connection with that
engagement.

Existing accountant
A professional accountant in public practice currently
holding an audit appointment or carrying out accounting,
taxation, consulting or similar professional services for a
client.
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 Definitions (continued…)
Financial interest
An interest in an equity or other security,
debenture, loan or other debt instrument or an
entity, including rights and obligations to
acquire such an interest and derivatives directly
related to such interest.

Financial statements
The balance sheets, income statements or
profits and loss accounts, statements of changes
in financial position, notes and other statements
and explanatory material which are identified as
being part of the FS.
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 Definitions (continued…)
Financial statement audit client
An entity in respect of which a firm conducts a financial
statement audit engagement.

Financial statement audit engagement

A reasonable assurance engagement in which a
professional accountant in public practice expresses an
opinion whether the FS are prepared in all material
respects in accordance with an identified financial
reporting framework.

Immediate family
A spouse (or equivalent) or dependent
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 Definitions (continued…)
Listed entity
An entity whose shares, stock or debt are quoted or
listed on a recognized stock exchange, or are
marketed under the regulations of a recognized stock
exchange or other equivalent body.

Network
A larger structure:
(a) That is aimed at co-operation, and
(b) That is clearly aimed at profit or cost sharing or
shares common ownership, control or management,
common quality control policies and procedures,
common business strategy, the use of a common
brand-name, or a significant part of professional
resources.
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 Definitions (continued…)
Network firm
A firm or entity that belongs to a network.

Office
A distinct sub-group, whether organized on a
geographical or practice lines.

Professional accountant
An individual who holds a valid certificate issued by
the Board of Accountancy, whether he/she be in
public practice, industry, commerce, the public
sector or education.
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 Definitions (continued…)
Professional accountant in public practice
A sole proprietorship or each partner or person
occupying a position similar to that of a partner and
each staff in a practice providing professional
services to a client irrespective of their functional
classification and professional accountants in a
practice having managerial responsibilities.

Professional services
Services requiring accountancy or related skills
performed by a professional accountant including
accounting, auditing, taxation, management
consulting and financial management services.
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 Definitions (continued…)
Publicity
The communication to the public of facts about a
professional accountant which are not designed for
the deliberate promotion of that professional
accountant.

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The following shall not be allowed
on advertising and promotions for
the practice of accountancy in the
Philippines:
a. Self-laudatory statements
b. Discrediting, disparaging, or attacking other firms or CPA
practitioners
c. Referring to, using or citing actual or purported
testimonials by third parties
d. Publishing and comparing fees with other CPAs or CPA
firms or comparing those services with those provided by
another firm or CPA practitioner
e. Giving too much emphasis on competitive differences
f. Using words or phrases which are hard to define and even
more difficult to substantiate objectively
g. Publishing services in billboard (e.g., tarpaulin,
streamers, etc.)
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 The following examples are illustrative of
circumstances in which publicity is acceptable:
a. Awards
b. Professional accountants seeking employment or professional business
c. Directories
d. Books, articles, interviews, lectures, radio and television appearances
e. Training courses, seminars, etc.
f. Booklets and documents containing technical information
g. Staff recruitment
h. Publicity on behalf of client
i. Brochures and firm directories
j. Stationery and nameplates
k. Announcements
l. Inclusion of the name of the professional accountant in public practice in a
document issued by client
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