Perceived Gains and Pains of Accreditation in Philippine Public Accountancy Practice

International Journal of Accountancy Research Vol. 1, July-December 2013

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Perceived Gains and Pains of Accreditation

in Philippine Public Accountancy Practice

Rufo R. Mendoza

Philippine Academy of Accountants for Business, Research, and Education

ABSTRACT

This paper surveyed the perception of Certified Public Accountants on the

implementation of an accreditation process that is required before they can engage

in the practice of public accountancy. It examined both the positive side (gains)

and the negative side (pains) of accreditation, its level of importance, and degree

of control. Foremost among the identified gains from accreditation were its

relationship with their professional practice and career development. On the other

hand, the perceived pains include the potential marginalization of the small

practitioners and increase in operating cost of practice. Overall, accreditation was

believed to be really important although it was viewed to be regulatory in nature.

The survey proved that there should also be minor improvements in the current

system of accreditation.

Keywords: accreditation, public accountancy, professional practice, regulatory

measure

INTRODUCTION

Accreditation has become a buzzword in the accountancy profession. Just before a Certified

Public Accountant (CPA) can engage in the practice of public accountancy, he/she has to

undergo an accreditation process with the government regulatory agency, specifically the Board

of Accountancy (BOA). One requirement to pass the accreditation process is the completion of

60 units of Continuing Profession Development (CPD) programs covering different thematic

areas relevant to the professional practice. The providers of these programs necessarily have to

undergo accreditation as provider. At the same time, their program offerings need to be

accredited.

The accreditation in public accountancy has been in place upon the promulgation of the

Philippine Accountancy Act of 2004. It is primarily implemented by the BOA with

administrative support from the Professional Regulation Commission. As of August 31, 2012,

there were 5,105 accredited individuals and firms.


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Practice accreditation is mandatory for CPAs who are intending to engage in public accountancy

since 2005. The certificate of accreditation is supposed to be renewed every three years. Seven

years after the initial implementation of the accreditation process, the issue of whether

accreditation is proper and appropriate still remains alive. Certain camps have doubted the need

for accreditation since CPAs in the Philippines are given the professional certificate and license

after passing a rigorous licensure examination. The thought that the regulatory authority really

intends to control or restrict practices among professionals has come to fore. Obviously, there are

opposing views on the real advantages and disadvantages of accreditation among public

practitioners.

RESEARCH METHOD

In this study, 60 practicing CPAs were surveyed in August 2012 in three places: (a) PICPA

National Office; (b) Far Eastern University – Makati during the conduct of the Second National

Research Forum in Accountancy spearheaded by the Philippine Academy of Accountants for

Business, Research, and Education; and (c) PICPA – Cebu Chapter during the conduct of the

Training of Trainers. Some accomplished survey instruments were also sent back through

electronic mail. In addition to survey, interviews of selected respondents were also conducted.

The survey assessed the level of agreement or disagreement of the respondents on the benefits

(or gains) and the difficulties (or pains) in undergoing the accreditation process using the

following scale: 1 – strongly disagree (SD); 2 – Disagree (D); 3 – Agree (A); and 4 – Strongly

Agree (SA).

The demographic profile in Table 1 shows that the female respondents are greater in number

than the male since they represent 68.33% of the samples. The respondents have varied number

of years in the practice of public accountancy with a great majority (76.66%) having 20 years or

less. Those in the bracket of 11-20 years have the most number, representing 38.33%. This

implies that the practice of public accountancy has gained a relatively higher number of CPAs in

the last two decades.

The highest educational attainment of 46.67% of the respondents is a bachelor’s degree; only

23.33% have graduate degrees. This indicates that those in public practice are not enthusiastic

about taking graduate studies. It could also be inferred that public practitioners have yet to

explore the tools, techniques, and technology which the graduate programs provide and which

could be useful in performing their professional services.

The type of practice of more than three-fourths (76.67%) of the respondents is sole

proprietorship with 40% of them on a part-time basis. It shows that a large number of the

respondents are affiliated with other employment or business, thus it can be inferred that public

practice has not been very rewarding as a full-time endeavor and could not be the sole source of

income among the practitioners. The figures also denote that sole proprietorships are greater in

number than partnerships. This configuration is understandable since the study intends to survey

those who are personally acquiring their accreditation for public practice. And such is true in the

case of sole practitioners.


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Table 1: Demographic Profile of Respondents

Demographic Profile Frequency Per Cent Rank

Gender

Male 19 31.67 2

Female 41 68.33 1

Total 60 100.00

Years in Public Accountancy Practice

5 and below 11 18.33 3

6 – 10 12 20.00 2

11 – 20 23 38.33 1

21 – 30 5 8.33 5

31 – 40 6 10.00 4

Over 40 3 5.00 6

Total 60 100.00

Educational Attainment

Bachelor’s Degree 28 46.67 1

Masteral Units 18 30.00 2

Master’s Degree 12 20.00 3

Doctorate Units 0 -

Doctoral Degree 2 3.33 4

Total 60 100

Type of Public Practice

Part-Time Public Practice 24 40.00 1

Full Time Practice of a Sole Proprietor 22 36.67 2

Partnership with no Foreign Affiliation 14 23.33 3

Partnership with Foreign Affiliation 0 -

Total 60 100.00

Current Position

Sole Proprietor 41 68.33 1

Staff/Associate 2 3.33 4-5

Senior/Supervisor 3 5.00 3

Manager/Director 2 3.33 4-5

Partner 12 20.00 2

Total 60 100.00

Number of Employees in the Practice

10 and below 44 73.33 1

11 – 20 13 21.67 2

21 – 50 1 1.67 4

51 – 100 2 3.33 3

101 – 200 0 -

201 – 300 0 -

Over 300 0 -

Total 60 100.00

Practice Accreditation with Government

Agencies*

Board of Accountancy 58 96.67 1


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Demographic Profile Frequency Per Cent Rank

Securities and Exchange Commission 17 28.33 4

Bangko Sentral ng Pilipinas 5 8.33 5-6

Insurance Commission 5 8.33 5-6

Bureau of Internal Revenue 45 75.00 2

Cooperative Development Authority 21 35.00 3

*multiple response

On the other hand, in the case of partnership, especially the big ones and those with foreign

affiliation, the accreditation process is undertaken by administrative staff or other groups

primarily responsible for such. As a result, the partners have very limited experience in

processing the documents for accreditation and may not be mindful of the administrative and

procedural intricacies. Again, the greater majority (68.33%) of the respondents are sole

proprietors or the owners of their respective practice.

The number of employees is 10 and below for most respondents (73.33%) and 11 to 20 for a few

of them (21.67%). This indicates the smallness of size of the sole proprietorship.

Almost all (96.67%) of the respondents have accreditation with the BOA; the other two

respondents have their accreditation with BOA for renewal. A relatively large number (75%) is

also accredited by the Bureau of Internal Revenue. On the other hand, only a small percentage

has accreditation with the Bangko Sentral ng Pilipinas and the Insurance Commission.

GAINS OF PUBLIC PRACTICE ACCREDITATION

The survey revealed that the accreditation process has provided "a great deal" of benefits or

advantages to the respondents as shown in the overall mean score of 3.27 (Table 2). This implies

that the accreditation process has been useful to them as a professional and as a public

practitioner.

The most noticeable benefits that accreditation has afforded to the respondents were (a) keeping

updated on current trends, standards, and regulations in the profession (mean score of 3.53); (b)

pursuing continuous quality improvement in practice (mean score of 3.52); (c) enhancing quality

of professional service (mean score of 3.47); (d) enhancing professional reputation (mean score

of 3.47); and (e) building strengths in practice (mean score of 3.42). Most of the aforementioned

benefits are directly related to professional practice - one motivation why the respondents were

vent on undergoing accreditation.

The second set of benefits deal mostly with the career development of the respondents such as

(a) recognizing personal qualifications necessary for career advancement (mean score of 3.37);

(b) providing route or direction to professional development (mean score of 3.35); (c) motivating

the respondents to strive harder in career (mean score of 3.30); (d) improving the reliability and

credibility of audit (mean score of 3.30); and (e) benchmarking skills and competencies against

best practices (mean score of 3.30).


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Table 2: Mean Score of the Perceived Gains of Accreditation

Benefits of Public Practice Accreditation Mean

n=60

Value Rank

Keep the respondent updated on current trends, standards, and

regulations in the profession.

3.53 SA 1

Encourage continuous quality improvement to the respondent’s

practice.

3.52 SA 2

Enhance quality of the respondent’s service to clients. 3.47 SA 3-4

Enhance the respondent’s reputation as a professional. 3.47 SA 3-4

Assist the respondent to build his/her strengths in the practice of public

accountancy.

3.42 SA 5

Recognize the respondent’s personal qualifications necessary for career

advancement.

3.37 SA 6

Provide route or direction to the respondent’s professional

development.

3.35 SA 7

Motivate the respondent to strive harder in his/her career. 3.30 SA 8-10

Improve reliability and credibility of the financial statements audited. 3.30 SA 8-10

Verify the respondent’s skills and competencies against best practices. 3.30 SA 8-10

Ensure that audit is conducted ethically and systematically. 3.25 A 11

Provide protection to clients against possible auditor’s malpractice. 3.23 A 12

Enhance proper documentation and better records in the practice of

public accountancy.

3.20 A 13

Encourage operational policies and procedures to be in place in the

respondent’s practice.

3.18 A 14

Help the respondent identify weaknesses or deficiencies in the practice

of public accountancy.

3.15 A 15

Contribute to winning or gaining audit engagements. 2.87 A 16

Help identify top performers among the practicing CPAs. 2.62 A 17

Grand Mean 3.27 SA

Legend:1.0 – 1.75 (Strongly Disagree); 1.76 – 2.5 (Disagree); 2.51 – 3.25 (Agree); 3.26 – 4.0

(Strongly Agree)

It can be deduced from the foregoing that while accreditation deals directly with the practice or

work of the CPAs, it also affects their career development. In fact, for most CPAs, it is the

practice of profession or their work that primarily defines their career.

The respondents also confirmed that accreditation "always" benefits them by (a) ensuring that

audit is conducted ethically and systematically (mean score of 3.25); (b) providing protection for

the clients against possible malpractices by the auditor (mean score of 3.23); (c) enhancing

proper documentation and better records in the practice (mean score of 3.20); (d) encouraging

operational policies and procedures to be in place (mean score of 3.18); and (e) identifying

weaknesses or deficiencies in the practice (means score of 3.15).

The aspects with the lowest rating were winning or gaining audit engagements (mean score of

2.87) and identifying top performers among the practicing CPAs (mean score of 2.62). It appears


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that the accreditation system has not been of much help in improving the client base. In the same

vein, the accreditation system has not been capable of distinguishing or categorizing the quality

of performance among CPAs.

PAINS OF PUBLIC PRACTICE ACCREDITATION

In the survey results, there are two sides cited regarding the pains or difficulties of the

accreditation system. First, the respondents agreed that accreditation is a painful experience. This

is shown in their agreement that it marginalizes the small practitioners (mean score of 2.70) and

at the same time increases cost of operating a public accountancy practice (mean score of 2.68).

Table 3 has the details.

Table 3: Mean Score of the Perceived Pains or Difficulties of Accreditation

Difficulties or Disadvantages of Accreditation Mean

n=60

Value Rank

Marginalize the small practitioners. 2.70 A 1

Increase cost of operating a public accountancy practice. 2.68 A 2

A duplication of the certificate and license as a CPA. 2.35 D 3

Plainly additional work to the professional CPA. 2.32 D 4

Indicate government distrust to the professional CPA. 2.27 D 5

An obstacle to career progress of a budding CPA. 2.20 D 6

A deterrent for the Mutual Recognition Arrangement (MRA) with

foreign CPAs.

2.12 D 7

A barrier to innovation in public accountancy practice. 1.80 D 8

Grand Mean 2.30 D

Legend:1.0 – 1.75 (Strongly Disagree); 1.76 – 2.5 (Disagree); 2.51 – 3.25 (Agree); 3.26 – 4.0

(Strongly Agree)

The respondents lamented on the current system having the same requirements for both the small

and large practitioners. There has always been a clamor to set different criteria for small

practitioners and those performing audit of publicly listed entities which are always the large

firms.

The increased cost attributed to accreditation has been on the professional development cost as a

result of attending training programs, seminars, conferences, and conventions. The respondents

cited that the accreditation fee is not a significant issue for them.

The other belief is that accreditation is not harmful or damaging; hence, they disagreed that

accreditation is a duplication of the CPA certificate and the license as a CPA (mean score of

2.35) and that it is plainly an additional work to the professional CPA (mean score of 2.32).

The respondents also disagreed that accreditation indicates government distrust to the

professional CPA (means score of 2.27). Their disagreement is even stronger on the thought that

accreditation is (a) an obstacle to career progress of a budding CPA (mean score of 2.20); (b) a


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deterrent for the Mutual Recognition Arrangement with foreign CPAs (mean score of 2.12); and

(c) a barrier to innovation in public accountancy practice (mean score of 1.80). Along these

areas, the respondents largely have positive outlook about accreditation.

OVERALL ASSESSMENT OF THE ACCREDITATION SYSTEM

By and large, the respondents perceived the accreditation system as "really important" as

revealed by 53.33% result (Table 4). This implies that the system has been positively accepted

by the respondents despite certain pains or difficulties in undertaking the same.

Table 4: Assessment on the Overall Importance of Accreditation

Level of Importance N = 60 %

Not At All Important 1 1.67

Slightly Important 8 13.33

Really Important 32 53.33

Very Important 19 31.67

Total 60 100

The respondents cited the following reasons for considering the accreditation system as really

important: (1) It is a means to weed out practitioners without solid practice background; (2) It

compels the practitioners to update themselves on the current developments in the profession; (3)

It enhances the quality of rendering professional services; (4) It standardizes the practice; and (5)

It rectifies the wrong perception on CPAs.

The great majority (61.67%) of respondents also viewed accreditation as regulatory while a

quarter (25%) looked at it as guiding (Table 5). Very few considered it as developmental and

restrictive. So, while the respondents regard the system as important, they still believe it to be

controlling to a large extent. The context of accreditation as developmental is taken from the fact

that it mandates CPAs to further enhance their competency. Thus, the developmental aspect of

accreditation remains to be the CPD component.

Table 5: Assessment on the Degree of Control of Accreditation

Description Based on Degree of Control n = 60 %

Developmental 4 6.67

Guiding 15 25

Regulatory 37 61.67

Restrictive 4 6.67

Total 60 100

There should also be minor improvements in the current system of accreditation as expressed by

55% of the respondents (Table 6). This is primarily in the aspect of providing feedback to


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application and reducing the processing time. In addition, the improvement should also be in the

differentiation of criteria and fee between small and large firms.

The other improvement area cited by the respondents deals with the synchronized accreditation

system in the whole accountancy profession with the BOA accreditation as the primary or

foundation and the accreditation in other government agencies as the secondary accreditation.

This suggestion espouses the need to build on the BOA accreditation and not to duplicate the

same in other agencies. For instance, CPD credits required by BOA need not be submitted to

other agencies for the same reason or purpose.

Table 6: Assessment on the Extent of Adjustments for the Accreditation System

Extent of Adjustments N = 60 %

Should be Discontinued 0 0

Should Have Major Revisions 17 28.33

Should Have Minor Improvements 33 55.00

Should Be Continued As It Is 10 6.67

Total 60 100

CONCLUSIONS AND RECOMMENDATIONS

The respondents agreed that the accreditation system has provided them a "great deal" of benefits

or gains. Their disagreement on certain disadvantages of accreditation confirms that they have

positive outlook in the system. However, it is necessary that further studies be conducted to

document specific cases where accreditation has been beneficial and where such benefits are

valued or quantified. It is also important to come up with conceptual and operational frameworks

on how the accreditation system works and benefits the professionals.

The topic of improvement in the system brings to the open the real intent of accreditation system

as an entry requirement to practice or as a measurement of practice quality. The entry

requirement as a purpose means that accreditation should focus on the competence of the CPA to

perform the job required in public accountancy practice. Thus, the concern in evaluating the

application is on the knowledge and skills of the prospective practitioner. This points to the issue

that competency is a function of certification and licensing and not of accreditation. It goes

without saying that accreditation should focus on practice performance and not on competence or

knowledge alone. It should focus on quality of work, performance outcomes, and identification

of practice knowledge. In essence, there should be criteria or standards of practice performance.

In addition, professional behavior should also have specific set of measurable outcomes.

The following methods of practice performance measurement are recommended either as an

individual mechanism or a combination: submission of work samples during application and

evaluation of the same; self-review by the practitioner, based on a standard set of criteria or

performance measures; peer review; and quality assurance review by an independent oversight

body.


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REFERENCES

Republic Act No. 9298. The Philippine Accountancy Law of 2004. Philippines: Professional

Regulation Commission. Retrieved from http://www.prboa.com/web/acclaw00.htm#top

Rules and Regulations Implementing Republic Act No. 9298: Professional Regulation

Commission. Retrieved from http://www.prboa.com/web/accirr00.htm#top

____________________

Dr. Rufo R. Mendoza, a Certified Public Accountant, is currently the Vice-Chair of the Professional

Regulatory Board of Accountancy. He is also the President of the Philippine Academy of Accountants for

Business, Research, and Education. He has a PhD degree in Community Development and Agribusiness

Management and a Master in Management, major in Development Management both from the University

of the Philippines Los Baños. He is a Program Director and Associate Professor in Public Finance at the

Asian Institute of Management. Previously, he taught in the graduate school of three leading universities

in the country: Institute of Development Management and Governance of the University of the Philippines

Los Baños for seven years and Faculty of Management and Development Studies of UP Open University

for six years; School of Government of the Ateneo de Manila University for seven years; and De La Salle

Lipa Graduate School for ten years. He authored books on Training Design and Execution for

Professionals (2011), Accountancy Research: Theory and Practice (2012), and GLIMPSES: The

Philippine Accountancy Profession at a Glance (2013). He is a Research Fellow in the Royal Institution

of Singapore.

http://www.prboa.com/web/acclaw00.htm#top

http://www.prboa.com/web/accirr00.htm#top

Perceived Gains and Pains of Accreditation in Philippine Public Accountancy Practice

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