CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS

IN THE PHILIPPINES
CONTENTS
PREFACE
PART A: GENERAL APPLICATION OF THE CODE
100 Introduction and Fundamental Principle
110 Inte!rit"
1#0 O$%ecti&it"
1'0 Pro(eional Competence and Due Care
1)0 Con(identialit"
1*0 Pro(eional +e,a&ior
PART +: PROFE--IONAL ACCO.NTANT- IN P.+LIC PRACTICE
#00 Introduction
#10 Pro(eional Appointment
##0 Con(lict o( Interet
#'0 -econd Opinion
#)0 Fee and Ot,er T"pe o( Remuneration
#*0 /ar0etin! Pro(eional -er&ice
#10 Gi(t and Hopitalit"
#20 Cutod" o( Client Aet
#30 O$%ecti&it"4All -er&ice
#50 Independence4 Aurance En!a!ement
PART C: PROFE--IONAL ACCO.NTANT- IN +.-INE--
'00 Introduction
'10 Potential Con(lict
'#0 Preparation and Reportin! o( In(ormation
''0 Actin! 6it, -u((icient E7pertie
')0 Financial Interet
'*0 Inducement
DEFINITION-
EFFECTI8E DATE
2 Code of Ethics for Professional Accountants in the Philippines
PREFACE TO THE CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS
IN THE PHILIPPINES
T,i pre(ace and t,e accompan"in! Code o( Et,ic (or Pro(eional Accountant in t,e P,ilippine ,a&e
$een appro&ed $" t,e +oard o( Director o( t,e dul" accredited pro(eional or!ani9ation: t,e P,ilippine
Intitute o( Certi(ied Pu$lic Accountant ;PICPA< recommended (or adoption $" t,e +oard o( Accountanc"
;+OA< and appro&al o( t,e Pro(eional Re!ulation Commiion ;PRC< a part o( t,e rule and re!ulation
o( t,e +OA (or t,e practice o( t,e accountanc" pro(eion=
1= PICPA a a mem$er o( t,e International Federation o( Accountant ;IFAC< i committed to t,e
IFAC> $road o$%ecti&e o( de&elopin! and en,ancin! a coordinated 6orld6ide accountanc"
pro(eion 6it, ,armoni9ed tandard= In 6or0in! to6ard t,i o$%ecti&e: IFAC de&elop !uidance
on et,ic (or pro(eional accountant=
#= A a condition o( it mem$er,ip: PICPA i o$li!ed to upport t,e 6or0 o( IFAC $" in(ormin! it
mem$er o( e&er" pronouncement de&eloped $" IFAC: and to 6or0 to6ard implementation:
6,en and to t,e e7tent poi$le: under local circumtance: o( all t,ee pronouncement=
'= T,e accompan"in! Code o( Et,ic (or Pro(eional Accountant in t,e P,ilippine i $aed on t,e
re&ied Code o( Et,ic (or Pro(eional Accountant de&eloped $" IFAC ;#001 re&iion<=
Pro(eional accountant re(er to peron 6,o are re!itered in t,e PRC a Certi(ied Pu$lic
Accountant ;CPA< and 6,o ,old a &alid certi(icate iued $" t,e +OA: 6,et,er t,e" $e in
pu$lic practice ;includin! partner,ip or ole proprietor,ip<: commerce and indutr": t,e
!o&ernment or education= In t,e (e6 intance 6,ere t,e dometic la6 are in con(lict 6it, t,e
IFAC Code: t,e local la6 ,all pre&ail ;e=!= t,e pro,i$ition on t,e practice o( accountanc" t,rou!,
corporate (orm<=
)= T,e re&ied Code alo con(orm to t,e ne6l" iued P,ilippine -tandard on Auditin!: nota$l" t,e
P,ilippine Frame6or0 (or Aurance En!a!ement: iued $" t,e Auditin! and Aurance
-tandard Council: and de(inition contained in t,e P,ilippine -tandard on ?ualit" Control
;I-?C< 1: ?ualit" Control (or Firm t,at Per(orm Audit and Re&ie6 o( Hitorical Financial
In(ormation: and Ot,er Aurance Related -er&ice En!a!ement=
*= T,i Code o( Et,ic i mandator" (or all CPA and i applica$le to pro(eional er&ice
per(ormed in t,e P,ilippine on or a(ter @une '0: #003 e7cept (or pro&iion in para!rap, #50=1)
to #50=#1 6,ic, 6ill $e e((ecti&e (or report dated on or a(ter Decem$er '1: #005=
1= An e7planator" (ore6ord 6ill $e iued on t,e tatu o( eac, additional IFAC pronouncement on
Et,ic= T,e e7planator" (ore6ord 6ill indicate 6,ic, additional pronouncement on Et,ic i
adopted in t,e P,ilippine and i( not adopted: t,e reaon t,ere(ore ,all $e tated=
2= All CPA are e7pected to compl" 6it, t,e et,ical reAuirement o( t,i Code and ot,er et,ical
reAuirement t,at ma" $e adopted and appro&ed $" IFAC= Apparent (ailure to do o ma" reult in
an in&eti!ation into t,e CPA> conduct=
3= It i impractical to eta$li, et,ical reAuirement 6,ic, appl" to all ituation and circumtance
t,at pro(eional accountant ma" encounter= T,ere(ore: pro(eional accountant ,ould conider
t,e et,ical reAuirement a t,e $aic principle 6,ic, t,e" ,ould (ollo6 in per(ormin! t,eir 6or0=
Code of Ethics for Professional Accountants in the Philippines 3
Modifications to the IFAC Code
T,e (ollo6in! c,an!e ,a&e $een made to t,e Re&ied IFAC Code to conider P,ilippine re!ulator"
reAuirement and circumtance:
Fundamental Principle: Para!rap, 100=);c<
T,e ection on Pro(eional Competence and due care 6a modi(ied to lit t,e ource o( tec,nical
and pro(eional tandard in t,e P,ilippine a (ollo6:
+oard o( Accountanc" ;+OA< B Pro(eional Re!ulation Commiion ;PRC<
-ecuritie and E7c,an!e Commiion ;-EC<
Financial Reportin! -tandard Council ;FR-C<
Auditin! and Aurance -tandard Council ;AA-C<
Rele&ant le!ilation
Pro(eional Competence and Due Care: Para!rap, 1'0=#
T,e (ollo6in! i added to t,i para!rap,:
CT,e attainment o( pro(eional competence reAuire initiall" a ,i!, tandard o( !eneral education
(ollo6ed $" peci(ic education: trainin! and e7amination in pro(eionall" rele&ant u$%ect: and
6,et,er precri$ed or not: a period o( 6or0 e7perience= T,i ,ould $e t,e normal pattern o(
de&elopment (or a pro(eional accountant=D
Fee and Ot,er T"pe o( Remuneration: Para!rap, #)0=#
To pro&ide additional !uidance: t,e (ollo6in! i added to t,i para!rap,:
CFee c,ar!ed (or aurance en!a!ement ,ould $e a (air re(lection o( t,e &alue o( t,e 6or0
in&ol&ed and ,ould ta0e into account: amon! ot,er:
;a< t,e 0ill and 0no6led!e reAuired (or t,e t"pe o( 6or0 in&ol&edE
;$< t,e le&el o( trainin! and e7perience o( t,e peron necearil" en!a!ed on t,e 6or0E
;c< t,e time necearil" occupied $" eac, peron en!a!ed on t,e 6or0E and
;d< t,e de!ree o( reponi$ilit" and ur!enc" t,at t,e 6or0 entail=D
Independence 4 Aurance En!a!ement: Para!rap, #50=#
T,i para!rap, 6a modi(ied to ma0e re(erence to t,e P,ilippine Frame6or0 (or Aurance
En!a!ement iued $" t,e Auditin! and Aurance -tandard Council: P,ilippine -tandard on
Auditin! ;P-A<: P,ilippine -tandard on Re&ie6 En!a!ement ;P-RE< and P,ilippine
-tandard on Aurance En!a!ement ;P-AE<=
Independence 4 Aurance En!a!ement: Para!rap, #50=)
T,i para!rap, 6a modi(ied to ma0e re(erence to t,e P,ilippine Financial Reportin! -tandard=
Net6or0 and Net6or0 Firm: Para!rap, #50=1)
T,e 6ord CcorporationD 6a deleted $ecaue a corporate (orm (or t,e pro(eional practice o(
accountanc" i not allo6ed in t,e P,ilippine=
4 Code of Ethics for Professional Accountants in the Philippines
Loan and Guarantee: Para!rap, #50=1#2
-ince t,e +an!0o -entral n! Pilipina ;+-P< rule are more trin!ent: t,e lat entence o( t,i
para!rap, i modi(ied a (ollo6:
CE7ample o( uc, loan include credit card o$li!ation 6,ic, are normall" a&aila$le to ot,er
credit card ,older and (ull" ecured car loan and ,ouin! loan 6,ic, are not pat due=D
Financial -tatement Audit Client T,at are Lited Entitie: Para!rap, #50=1*);a<
T,e period (or rotation o( t,e en!a!ement partner 6a c,an!ed (rom e&en to (i&e "ear=
Preparin! Accountin! Record and Financial -tatement: Para!rap, #50=113
T,i para!rap, 6a modi(ied to ma0e re(erence to t,e P,ilippine Financial Reportin! -tandard=
Pro&iion o( Internal Audit -er&ice to Financial -tatement Audit Client: Para!rap, #50=13#
T,i para!rap, 6a modi(ied to ma0e re(erence to t,e P,ilippine -tandard on Auditin!=
-ection #50 Interpretation: Interpretation #00*F01
T,e t,ird para!rap, 6a modi(ied to ma0e re(erence to t,e P,ilippine Frame6or0 (or Aurance
En!a!ement iued $" t,e Auditin! and Aurance -tandard Council=
De(inition
Aurance en!a!ement: T,e econd para!rap, 6a modi(ied to ma0e re(erence to t,e P,ilippine
Frame6or0 (or Aurance En!a!ement iued $" t,e Auditin! and Aurance -tandard
Council: P,ilippine -tandard on Auditin!: P,ilippine -tandard on Re&ie6 En!a!ement and
P,ilippine -tandard on Aurance En!a!ement=
Financial tatement audit en!a!ement: T,e de(inition 6a modi(ied to ma0e re(erence to t,e
P,ilippine -tandard on Auditin!=
Firm: T,e 6ord CcorporationD 6a deleted (rom t,e de(inition $ecaue a corporate (orm (or t,e
pro(eional practice o( accountanc" i not allo6ed in t,e P,ilippine=
Pro(eional accountant: T,e de(inition 6a c,an!ed to: CAn indi&idual 6,o ,old a &alid
certi(icate iued $" t,e +oard o( Accountanc" ;i=e=: Certi(ied Pu$lic Accountant<: 6,et,er
,eB,e $e in pu$lic practice: indutr": commerce: t,e pu$lic ector or education=D
Code of Ethics for Professional Accountants in the Philippines
PART A! "ENERAL APPLICATION OF THE CODE
100 Introduction and Fundamental Principle
110 Inte!rit"
1#0 O$%ecti&it"
1'0 Pro(eional Competence and Due Care
1)0 Con(identialit"
1*0 Pro(eional +e,a&ior
SECTION #$$
Int%od&ction and F&nda'enta( P%inci)(es
100=1 A ditin!ui,in! mar0 o( t,e accountanc" pro(eion i it acceptance o( t,e reponi$ilit" to act
in t,e pu$lic interet= T,ere(ore: a )%ofessiona( accountant>
*
reponi$ilit" i not e7clui&el" to
ati(" t,e need o( an indi+id&a( client or emplo"er= In actin! in t,e pu$lic interet a
pro(eional accountant ,ould o$er&e and compl" 6it, t,e et,ical reAuirement o( t,i Code=
100=# T,i Code i in t,ree part= Part A eta$li,e t,e (undamental principle o( pro(eional et,ic
(or pro(eional accountant and pro&ide a conceptual (rame6or0 (or appl"in! t,oe principle=
T,e conceptual (rame6or0 pro&ide !uidance on (undamental et,ical principle= Pro(eional
accountant are reAuired to appl" t,i conceptual (rame6or0 to identi(" t,reat to compliance 6it,
t,e (undamental principle: to e&aluate t,eir i!ni(icance and: i( uc, t,reat are ot,er t,an clearl"
insi,nificant
*
G to appl" a(e!uard to eliminate t,em or reduce t,em to an accepta$le le&el uc,
t,at compliance 6it, t,e (undamental principle i not compromied=
100=' Part + and C illutrate ,o6 t,e conceptual (rame6or0 i to $e applied in peci(ic ituation= It
pro&ide e7ample o( a(e!uard t,at ma" $e appropriate to addre t,reat to compliance 6it,
t,e (undamental principle and alo pro&ide e7ample o( ituation 6,ere a(e!uard are not
a&aila$le to addre t,e t,reat and coneAuentl" t,e acti&it" or relation,ip creatin! t,e t,reat
,ould $e a&oided= Part + applie to pro(eional acco&ntants in )&-(ic )%actice.
*
Part C applie
to )%ofessiona( acco&ntants in -&siness. Pro(eional accountant in pu$lic practice ma" alo
(ind t,e !uidance in Part C rele&ant to t,eir particular circumtance=
F&nda'enta( P%inci)(es
100=) A pro(eional accountant i reAuired to compl" 6it, t,e (ollo6in! (undamental principle:
;a< Integrity
A pro(eional accountant ,ould $e trai!,t(or6ard and ,onet in all pro(eional and
$uine relation,ip=
;$< Objectivity
A pro(eional accountant ,ould not allo6 $ia: con(lict o( interet or undue in(luence o(
ot,er to o&erride pro(eional or $uine %ud!ment=
H -ee De(inition=