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ACCOUNTING SYNTHESIS

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ACCOUNTING SYNTHESIS
Background:
The Philippine was less affected by the Asian and the recent global financial crisis than some other
countries in the region, largely due to better financial management arrangements. Moreover, accountancy is an
elite and respected profession. However, the study conducted by the Asian Development Bank revealed a range of
issues that need attention if accountancy is to maintain its high status and if the Philippines is to successfully attract
investment.
Qualifying as a CPA internationally has four stages: academic, experience, examination and continuing
professional education (CPE). The Philippine CPA title meets international standards and regional norms on the
academic stage but fall short on the other stages. There are three possible implications. First, the recently
established International Federation of Accountants (IFAC) Compliance Committee will be reviewing member
body compliance with IFAC guidelines and standards in the next few years. PICPA will have to explain deviations.
The IFAC compliance committee is responsible for recommending actions to IFAC’s Board and Council when
member bodies fail to comply with guidelines and standards.
Second, International Standards of Accounting and Reporting (ISAR) embarks on a project to benchmark
CPA qualifications from around the world. The “grade” given to a country CPA qualification will be based on
compliance with international guidelines and practices. This grade will directly affect the international standing
and transferability of CPA titles.
Third, as a condition of membership, IFAC member bodies are required to comply with guidelines and
standards. In this respect, IFAC has issued guidance on the procedures to be followed when agreeing on mutual
recognition of qualifications. It appears that the Philippine WTO GATS and Asia Pacific Economic Cooperation
(APEC) negotiation strategy, in relation to accountancy services is to conclude Mutual Recognition Agreements
(MRAs). Under IFAC guidelines member bodies must take education, examination and experience requirements
into account when negotiating MRAs. As a significant exporter of accountancy services, the Philippines appear to
be at a negotiating advantage. The legality of any MRAs that the Philippines concludes with other ASEAN
countries might be open to challenge, from other APEC and WTO members, based on the quality of CPA licensure
procedures.
In order to create an environment that will enable CPA licensure standards to be raised, it is recommended
the introduction of (a) practical experience requirements for CPA licensure, (b) a written component to the CPA
licensure examination, (c) mandatory CPE as a condition of license renewal, and (d) provisional CPA title.
a. Introduce an Experience Prerequisite for the CPA Title
The absence of a practical-experience prerequisite for CPA licensure does not accord with international
standards or regional norms. Philippine accountants can be licensed as CPAs without ever having worked in
accountancy. The effective and fair implementation of this requirement in the Philippine environment poses some
clear challenges; implementation and monitoring arrangements will need to be very carefully designed. It is
recommended that specified practical experience be introduced as a prerequisite requirement for the CPA title.
b. Address CPA Licensure Examination Issues
International guidelines recommend that a significant component of a CPA exam should be written, but the
Philippine CPA licensure examination is entirely multiple choice. This approach was taken deliberately to minimize
serious “leakage” problems in the examination process—it has been extremely effective in this sense. The tension
between minimizing leakage and preparing high quality examinations is also reflected in the quality of examination
questions. Examiners individually prepare one section each, but the other examiners do not review their efforts. The
Microsoft certification approach provides a successful example of how technology can be employed to ensure that
integrity is maintained while examinees are practically tested. This represents an updated approach to that used for
the computerized CPA licensure examination. It is recommended that options for restructuring the CPA licensure
examination be investigated with the objective of (i) introducing a written component into the examination; and (ii)
implementing quality reviews over examination question setting.

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ACCOUNTING SYNTHESIS Background: The Philippine was less affected by the Asian and the recent global financial crisis than some other countries in the region, largely due to better financial management arrangements. Moreover, accountancy is an elite and respected profession. However, the study conducted by the Asian Development Bank revealed a range of issues that need attention if accountancy is to maintain its high status and if the Philippines is to successfully attract investment. Qualifying as a CPA internationally has four stages: academic, experience, examination and continuing ...
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