There is a perception, especially for MSMEs, that audited financial statements are for primarily the use of the BIR. As such, the objective of most enterprises is to disclose as little as possible to avoid or minimize any findings by BIR to avoid taxes or assessments. III. ROSC A&A 2006 The last ROSC A&A was completed in the Philippines in 2006, and since then the country has made progress in addressing its recommendations to develop its legal framework, standards, and institutions to foster reliable and efficient financial reporting. The table below summarizes the primary recommendations in the 2006 ROSC and developments in the Philippines since then. Implementation Recommendation Actions taken status A&A standards Training on preparing IFRS/IAS-based IFRS/IAS was fully adopted in 2005. Fully financial statements for various Trainings and the required literature are Implemented stakeholders. available to all practitioners. A Council for Accreditation and Quality Control of Practicing CPAs (“Council”) was created under a Memorandum of Establish an oversight body to Agreement executed on August 12, coordinate the quality control 2009, by BOA, SEC, BSP, and IC. programs of the various Partially Stakeholders (SEC, BSP, IC, BOA and The oversight body would establish the Implemented PICPA) and provide appropriate objectives and policies such as the transparency in carrying out the companies to be covered by quality quality control function. control review and the nature and extent of work to be done but progress has been quite limited. Set up quality control review teams Various quality assurance inspection of full time qualified professionals program initiatives are underway but who report directly to the oversight Limited progress efforts are fragmented and teams are body. The oversight body should be to date not expected to report directly to the able to recruit qualified personnel oversight body. with commensurate compensation. Although some progress has been made, Design quality control procedures Limited progress a mandatory quality assurance appropriate to audit firms to be to date inspection program is not yet reviewed. operational. Capacity to implement A&A requirements
There is a perception, especially for MSMEs, that audited financial statements are primarily for the use of the BIR. As such, the objective of most enterprises is to disclose as little as possible to avoid or minimize any findings by BIR to avoid taxes or assessments. III. ROSC A&A 2006 The last ROSC A&A was completed in the Philippines in 2006, and since then the country has made progress in addressing its recommendations to develop its legal framework, standards, and institutions to foster reliable and efficient financial reporting. The table below summarizes the primary recommendations in the 2006 ROSC and developments in the Philippines since then. Recommendation Implementation status Actions taken A&A standards Training on preparing IFRS/IAS-based financial statements for various stakeholders. Fully Implemented IFRS/IAS was fully adopted in 2005. Trainings and the required literature are available to all practitioners. Establish an oversight body to coordinate the quality control programs of the various Stakeholders (SEC, BSP, IC, BOA and PICPA) and provide appropriate transparency in carrying out the quality control function. Partially Implemented A Council for Accreditation and Quality Control of Practicing CPAs (“Council”) was created under a Memorandum of Agreement executed on August 12, 2009, by BOA, SEC, BSP, and IC. The oversight body would establish the objectives and policies such as the companies to be covered by quality control review and the nature and extent of work to be done but progress has been quite limited. Set up quality control review teams of full time qualified professionals who report directly to the oversight body. The oversight body should be able to recruit qualified personnel with commensurate compensation. Limited progress to date Various quality assurance inspection program initiatives are underway but efforts are fragmented and teams are not expected to report directly to the oversight body. Design quality control procedures appropriate to audit firms to be reviewed. Limited progress to date Although some progress has been made, a mandatory quality assurance inspection program is not yet operational. Capacity to implement A&A requirements
120118-REVISED-change-to-PUBLIC-Philippines-ROSC-AA-FINAL.docx