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New BOA requirement for FS preparers – are you ready?

Financial statements says a lot about our business. By reading them, users will be able to know the financial position and performance, among others of the company. In the Philippines, primary users of the financial statements, aside from the owners, are the government agencies such as the Bureau of Internal Revenue (BIR), Securities and Exchange Commission (SEC) and other regulatory bodies.

Issuance of Resolution No. 03, Series of 2016

The accounting profession is regulated by the Board of Accountancy (BOA). Recently, BOA issued Resolution No. 03, Series of 2016, that will change how companies are preparing their financial statements. Currently, there are some companies, specially the and medium-sized companies, who either have non-CPA and/or non-BOA-accredited accountants preparing their financial statements or letting their auditors prepare their financial statements.

This caused the issuance of the BOA of the resolution. The resolution provides, among others:

  1. Requirement of the attachment to the annual financial statement (FS) of a Certificate on the compilationservices for the preparation of FS and notes to the FS.
  2. The Certificate shall be prepared only for issuers which/who have gross sales or revenues exceeding ten million pesos (P10,000,000) for a particular accounting year.
  3. The preparation of the FS and disclosure notes is a practice of accountancy in commerce and industry and shall be done only by Certified Public Accountants (“CPAs”).
  4. The reiteration of the rule that CPAs in public practice are prohibited from preparing or assisting in the preparation of FS and disclosure note of their clients which engaged them to render attest services for the samedocuments.
  5. The CPAs in public practice  who violate this prohibition rule shall be subject to stern sanctions by the Board of Accountancy.
  6. The CPAs rendering the compilation services for the preparation of the FS and signing the Certificate shall first be accredited with the Professional Regulatory Board of Accountancy after submitting the necessary application and complying with the Continuing Professional Development (CPD) requirements.
  7. These CPAs should apply for accreditation not later than February 29, 2016 and comply with the CPDrequirements not later than June  30, 2016 after signing an affidavit of undertaking to that effect.
  8. The rules shall apply for the FS pertaining to year 2015.

This Resolution shall take effect after fifteen (15) days following its publication in the Official Gazette or in any major daily newspaper of general circulation in the Philippines.

What Can Companies Do?

This is a regulatory requirement and your company needs to comply. Although there are talks about deferring this requirement, it is certain that they will enforce this requirement in the future and your company should be ready for it. The requirements here are simple:

  • That your financial statements are prepared by knowledgeable and competent CPA accredited by the BOA.
  • That the preparer and the auditor of your financial statements should be two separate and independent individuals.

What companies can do is either:

  • Hire a CPA accredited by the BOA in Commerce and Industry
  • Contract with a CPA accredited by the BOA in Public Practice to render Compilation Services for them

How Can We Help You?

We are CPAs accredited by the BOA in Public Practice with meaningful experience in assurance and non-assurance services, including compilation (FS preparation). Let us here from you and we’ll discuss your requirements. Click here to CONTACT US.

Orlando Calundan is a Certified Public Accountant by profession, a blogger by passion, a lawyer by ambition, a giver by affection and a simple guy who wants to make a difference.