Setting Up and Maintaining an Accounting Practice OUTLINE

Setting Up and Maintaining an Accounting Practice

OUTLINE Ø Accreditation • Forms • Basic Requirement • Renewal Ø Government and Legal Requirements Ø Other Considerations Ø Advertising and Promotion Ø Fees and Billing Ø Death, Disability, Dissolution and Liquidation

Forms Ø Single Proprietorship Ø Partnership – General or Limited Liability Partnership

Basic Requirement Ø 3 years of meaningful experience • Public practice – 1 year as audit assistant and 2 years as auditor-in-charge • Commerce and Industry - general accounting, budgeting and tax administration, internal auditing and liaison with external auditors, representative on matters related to tax and accounting • Education or Academe – 3 or 2 semesters teaching accountancy subjects and accumulated 3 years of teaching experience • Government - general accounting, budgeting and tax administration, internal auditing and liaison with external auditors, other related functions Sole proprietors/Partners and staff members are duly accredited to practice public accountancy (Sworn Statement + details)

Basic Requirement Ø Continuing Professional Development • PRC/BOA - 60 credit units of Continuing Professional Development Thematic Areas of Professional Development Enabling Laws, Rules and Regulations • • Units 6 Standards Applicable to Professional Practice 24 Ethical, Governance and Quality Principles 10 Environment of the Practice 10 Development of the Person as Professional 10 Total 60 BIR -18 CPD units on taxation SEC – public listed clients and public interest entity clients

Renewal Ø Renewal – 3 years period Ø Quality Review Council – 1 Chairman (senior practitioner in public practice) and 6 members (1 BOA, 2 Public Practice, 1 Academe, 1 Commerce and Industry, 1 Government) Functions • Conduct quality review and render a report • Recommend revocation of certificate of registration and license BOA – 60 days > PRC – certificate of registration > valid for 3 years

Government and Legal Requirements Ø Rules on Name • Sole proprietor Individual – registered name with BOA and PRC (Juan De La Cruz, CPA) Firm – real name of the sole proprietor, name registered in DTI (Juan De La Cruz and Associates) • Partnership – names indicated in Articles of partnership and certificate of registration or Articles of Partnership (Cruz, Isidro, Martin and Company) • No fictitious name, indicating specialization, misleading as to type of organization • In case of dissolution (death/withdrawal) of partnership – surviving partner may use the name for 2 years

Government and Legal Requirements Ø Limitations on Foreign CPAs • Correspondent relationship, membership or business dealings with foreign CPAs be a scheme foreign CPAs to engage in public practice • Cannot be an owner/partner Exceptions: Section 34 and 35

Other Considerations Ø Location and Work Environment – Accessibility to the CPA, staff and clients Ø Technology – efficiency, effectiveness and risk management, disaster recovery plan and back up facilities Ø Hierarchy of personnel – Associate, Senior Associate, Manager and Proprietor/Partner Ø Human Resource – hiring, professional development and advancement ( in-house training, OJT, external training programs)

Advertising and Promotion Ø NAME, ADDRESS, CONTACT NUMBER and Membership in Professional Organization Reason for not allowing advertisement Ø Undue competition and may cause decline in the quality of service Ø Encourage a more commercial approach Ø Costly and may be borne ultimately by clients Ø To level the playing field for new practitioners

Advertising and Promotion BOA No. 126 Series of 2008 – because of revised code of ethics for professional accountants of IFAC Advertising and publicity in any medium are acceptable provided: Ø Not false, misleading or deceptive Ø In good taste Ø Professionally dignified Ø Avoids frequent repetition of, and any undue prominence being given to the name of the firm or professional accountant in public practice

Advertising and Promotion Not allowed Ø Self-laudatory statements Ø Discrediting, disparaging or attacking other firms or CPA practitioners Ø Referring to, using or citing actual or purported testimonials Ø Publishing and comparing fees and services Ø Giving too much emphasis on competitive difference Ø Using words or phrases that is hard to define and substantiate objectively Ø Publishing services in billboard advertisements

Advertising and Promotion Other reminders Ø Member/correspondent firm of that foreign firm Ø Cannot cite its client or items of a client’s business unless with written consent Ø Cannot use the word or similar words as “accredited” when the accreditation has expired Ø All advertisements must have prior review and approval in writing by the Risk Management Partner or Managing Partner or its equivalent

Advertising and Promotion Other reminders Ø Awards – not make use of any appointments or activities for professional advantage Ø Subcontracting – write/approach directly Ø Directories – contact details and services offered Ø Books, Articles, Interviews, Lecture, Radio and Television – name, qualifications, name of organization but not the services, messages should not be promotional of themselves nor of their firm but an objective professional view of the topic under consideration Ø Training Courses, Seminar, Etc – may invite clients, staff or other professional accountants, and only those in response to unsolicited request; undue prominence should not be given to resource person’s name in any booklets or documents used thereof

Advertising and Promotion Other reminders Ø Booklets and Documents containing technical information Ø Staff recruitment – may published and mention some services offered but not seek/solicit a client Ø Publicity on behalf of clients – publicity is directed towards the objectives to be achieved for the client Ø Brochures and Firm directories - to clients or in response to unsolicited request, to a non-client; services provided & directories Ø Stationery and Nameplates – a designation of any services provided by the practice as being specialist nature should not be permitted Ø Announcements – establishment of a new practice, changes in the composition of a partnership or any alteration in the address of a practice

Advertising and Promotion Other reminders Ø Inclusion of the Name of the CPA in Public Practice in a Document Issued by a Client Ø Anniversaries – every 5 years of celebration; achievements and their contributions to the nation building but without detailed listing of services Ø Website – announcements, press releases, publications, factual information including brief listing of services

Fees and Billing Considerations Ø Skill and knowledge needed Ø Level of training and experience Ø Time Ø Degree of responsibility and urgency

Fees and Billing Methods Ø Flat or fixed basis Ø Actual time charges basis Ø Maximum fee basis Ø Retainer fee basis

Death, Disability, Dissolution and Liquidation Should be reported by the designated staff member or managing partner not later than 30 days in the form of affidavit/certified copy of the dissolution/liquidation papers filed with SEC

Thank you =)