Module 4 ACC 310 – Audit and Assurance Principle

SETTING UP AND MAINTAINING AN ACCOUNTING PRACTICE

Learning Objectives

After studying this chapter, you should be able to:

1. Enumerate the allowable forms of organization for the practice of public
accountancy in the Philippines.
2. Discuss the requirements to set-up one's own accounting practice
3. Enumerate and discuss the accreditation requirements for CPAS in public practice
4. Define meaningful experience
5. Identify the other considerations in setting up an accounting practice, including the
rules on advertising and promotion.
6. Enumerate the different methods of billing fees to clients.
7. Discuss the reporting responsibilities of CPAs in case of death, disability,
dissolution and liquidation.

Introduction

Republic Act No. 9298 or The Philippines Accountancy Act of 2004 provides that the
following forms of organization are allowed for the practice of public accountancy:
1. Single proprietorships
2. General partnerships and limited liability partnerships

General partnerships and limited liability partnerships the SEC shall not register any
corporation organized for the practice of public accountancy. A Sole proprietor or
partnership of CPAs is known as a firm (CPA firm or audit firm).

CPA firms vary in size, from individual CPAs (sole proprietorships with few or no
employees) to large multi-national auditing firms (with branches in many parts of the
world). The limited liability partnership (LLP) form of organization has been adopted by
most of the large audit firms in the world. Limited liability partnerships afford some
protection for the personal assets of the individual partners.

The largest CPA firms, in terms of number of personnel and in terms of revenues, have
operations in various parts of the world (known as territories). These firms usually have
affiliations or correspondent firms in each country. Some of the well-known CPA firms
currently in the Philippines are shown in Table 4-1 (in no particular order):

Table 4-1
Well-known CPA Firms in the Philippines

Network Firm Correspondent Firm in the Philippines

Ernst and Young, LLP Sycip Gorres Velayo & Co.
PricewaterhouseCoopers, LLP Isla Lipana & Co.
Klynveld, Peat, Marwick, Goerdeler R.G. Manabat & Co.
(KPMG), LLP
Grant Thornton LLP Punongbayan & Araullo
Deloitte (Deloitte Touche Tohmatsu) Navarro Amper & Co.
Navarro Amper & Co.

Accreditation to Practice Public Accountancy

Proprietorships and partnerships must first obtain a Certificate of Accreditation from the
BOA before it can be allowed to practice public accountancy. A minimum of "three (3)
years of meaningful experience in any of the areas of public practice including taxation" is
required before such certificate of accreditation can be obtained. The IRR has clarified
what constitutes "meaningful experience", as reproduced in Table 4-2.

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A certificate of accreditation is a certificate under seal, issued by the PRC upon .the
recommendation by the Professional Regulator Board of Accountancy (PRBOA) pursuant
to the IRR, attesting that individual CPAs, firms, including the sole proprietors and the
staff members thereof and partnerships of CPAS including the partners and the staff
members thereof, are duly accredited to practice public accountancy in the Philippines. The
Board of Accountancy shall promulgate rules and regulations tor the implementation of the
registration requirements including the fees and penalties for violations thereof.

Implementing Rules and Regulations Clarified

The Professional Regulation Commission through the PRBOA Resolution No. 59 Series
of 2012 (i.e., signed April 16, 2012) clarified the rules and regulations on continuing
professional education and accreditation of CPAs in public accountancy and accounting
education. The Resolution states that the term Continuing Professional Development will
be used in lieu of Continuing Professional Education to conform to the provisions of the
International Education Standard No. 7 and the corresponding Framework for International
Education Standards for Professional Accountants; the Continuing Professional Education
Council for Accountancy shall now be called Continuing Professional Development
Council for Accountancy; and the required 60 credit units (120 credit units effective August
6, 2016, per PRC Resolution No. 2016-990 issued last June 23, 2016. The Professional
Regulatory Board of Accountancy, as of November 2016, will still finalize and issue the
resolution for the official breakdown of the 120 credit units) of CPD may be earned by the
individual, professional in any of the three years preceding the year of application for
accreditation for the practice of public accountancy and accounting education.

The 60 units (120 credit units effective August 6, 2016, official breakdown still pending as
of November 2016) of CPD required for accreditation of CPAs in public accountancy and
accounting education 86 shall be distributed among five thematic areas as follows:

Thematic Areas of Professional Development Required Units

Enabling Laws, Rules and Regulations 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
Note: The complete description of the above thematic areas are stated in BOA Resolution 59, Series
of 2012

The application of individual professionals firms and partnerships for the accreditation of
practice in public accountancy and accounting education, and the application for
accreditation of providers and programs related to Continuing Professional Development
shall be submitted by the applicants directly to the appropriate office or division in the PRC
for endorsement to the PRBOA and to the PRC CPD Council for Accountancy
respectively.

In addition to PRBOA accreditation, CPAs in public practice are also required to obtain
accreditation with the Bureau of Internal Revenue submitting at least 18 CPD units on
taxation obtained not more than one year prior to the application for accreditation. CPAs
in public practice who have publicly listed clients and public interest entity clients are
required to obtain accreditation with the Securities and Exchange Commission,

Renewal of Accreditation

The accreditation for public accountancy and accounting education shall be for a period of
three years and in case of failure to renew the same on the expiration date will entail the
payment of surcharges at an amount prescribed by the Board. The PRBOA shall require as

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a Condition to registration or any renewal thereof for the Individual CPAS, Firms or
Partnerships of CPAs to undergo quality review in such manner as the Board may specify.

For this purpose, a Quality Review Committee (QRC) is created to conduct an oversight
into the quality or audits of financial statements through a review of the quality control
measures instituted by individual CPAs, firms or partnerships.

Table 4-2
Meaningful Experience
Sector Meaningful experience shall include:
Public Practice 1. at least one year as audit assistant and
2. at least two years as auditor-in-charge of audit
Commerce and Significant involvement in
Industry 1. general accounting, budgeting and tax administration
2. internal auditing and liaison with external auditors
3. representing his/her employer before government agencies
on tax and matters related to accounting or any other related
functions
Education or the Teaching for at least three (3) trimesters or two (2) semesters
Academe subjects in either financial accounting, business law and tax,
auditing problems, auditing theory, financial management and
management services, provided, that the accumulated teaching
experience on these subjects shall not be less than
three(3) school years
Government Significant involvement in
1. general accounting, budgeting and tax administration
2. internal auditing and liaison with the COA
3. any other related functions

Quality Review Committee (QRC)

The QRC shall assist the BOA in performing a quality review on applicants for registration
to practice public accountancy. The QRC is composed of seven (7) members: a chairman
and six (6) representatives, the breakdown of which is shown below:

Board of Accountancy 1
APO (PICPA)
Public Practice 2
Academe/Education 1
Commerce and Industry 1
Government 1 5
TOTAL 6

All are appointed by the PRC and will serve three year terms, renewable for another term.
The chairman should have been (or must be presently) a senior practitioner in public
accountancy.

Powers and Functions of the QRC

1. Conduct quality review on applicants for registration to practice public accountancy

and render a report which shall be attached to the application for registration.
2. Recommend to the Board the revocation of the Certificate of Registration and the
professional identification card of an Individual CPA, including any of his/her staff
members, firms, including the sole proprietors and any of his/her staff members,
and Partnerships of CPAs including the partners and staff members thereof who has
not observed the quality control measures and who has not complied with the
standards of quality prescribed for the practice of public accountancy.

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In the event that the QRC cannot accomplish the aforesaid functions for any reason
whatsoever the BoA or its duly authorized representatives may conduct the required quality
review.

Compliance with Government and Legal Requirements

Annex B of the IRR Series of 2004 provides guidance on the requirements for accreditation
of CPAs (individuals, firms and partnerships) for the practice of public accountancy. In
summary, the following are the relevant provisions lifted from Annex B:

1. Registration for accreditation shall be valid for a period of three (3) years and may
be renewed every three (3) years on or before September 30 on the year of expiry
upon compliance of the requirements provided in the IRR. The registration of
applicants approved during any month or the year shall expire on December 31 on
the third year following its approval
2. CPAs (individuals, firms, partnerships) shall not commence public practice until a
valid Certificate of Registration has been issued to such CPA(s).
3. The application for registration shall be accomplished in the form prescribed by the
BOA, in triplicate, and duly signed by the applicant CPA.

Rules on Names
1. In the case of an individual CPA, he/she shall do business under his/her registered
name with the BOA and the PRC and as printed on his/her CPA certificate.
Example: Juan de la Cruz, CPA

2. In the case of firms, they shall do business under their respective duly registered
and authorized firm name appearing in the registration documents issued by the
Department of Trade and Industry or any other proper government office(s) and
such firm name shall include the real name of the sole proprietor as printed in
his/her CPA certificate or other similar firm names
Example: Juan de la Cruz and Associates

3. In the case of registered partnerships, they shall do business under their respective
partnership names as indicated in their current Articles of Partnership and
certificates of registration issued by the SEC. In the case of unregistered
partnerships, they shall do business under the partnership names as indicated in
their current articles of partnership
Example: Crz, Isidro, Murtin, amd Company

4. CPAS shall practice only under a name allowed by law and shall not include any
fictitious name, indicates specialization or is misleading as to the type of
organization (proprietorship or partnership).

5. A partner surviving the death or withdrawal of all the other partners in a partnership
may continue to practice under the partnership name fora period of not more than
two (2) years after becoming a sole proprietor.

Limitations for Foreign CPAs

1. Under no circumstances shall the correspondent relationship, membership, or

business dealings with foreign CPAs be a scheme for the foreign CPAs to engage
in the practice of public accountancy in the Philippines who/which under the
present laws are limited to Filipino CPAs (except as provided for in Sections 34
and 35 of RA9298).
2. The Individual CPA, Firm or Partnership of CPAs duly registered under the IRR
shall not have as its owner, sole proprietor, partner, or any staff thereof, any foreign

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CPA, unless he/she qualifies to practice in the Philippines under Sections 34 and
35 of RA No. 9298 and/or other relevant laws and bilateral and/or multilateral
3. Agreement or treaties.

First-Time Registrants

1. In the case of first-time registrants, the application of registration shall be

accompanied with a sworn statement by the Individual CPA, sole proprietor of the
Firm and managing partner of the Partnership, stating that the individual CPA, sole
proprietor of the Firm, and all the partners of the Partnership has (have) at least
three (3) years of meaningful experience in any of the areas of public practice,
including taxation, including an attachment containing the details of such work
experience.

Authentication and Accreditation

1. The BOA shall duly authenticate all applications for registration received in proper
form, and after having passed upon such application, shall recommend to the PRC
the approval or denial thereof not later than sixty (60) days after the, receipt of the
aforementioned applications in proper form.
2. The PRC shall, upon favorable recommendation of the BOA, issue to the applicant
the corresponding Certificate of Registration to practice public accountancy.
3. Unless sooner revoked, canceled or withdrawn, said Certificate of Registration
shall be valid for three (3) years and shall be renewable every three (3) years upon
payment of the fees in accordance with the IRR to RA9298.

Other Considerations

Location and Work Environment

Most of the large CPA firms are centered in the Makati business district. The CPA will
have a business advantage in maintaining an office in centers of Philippine business. A
major factor in deciding on the location is convenience - in terms of accessibility to the
CPA, the staff, and the clients of the CPA.

Technology

While the CPA firm would need relatively simple office equipment (with emphasis on
word processing and printing equipment and photocopy machines), Investing on
information technology will help the CPA gain an advantage over its competitors,
particularly in the areas of efficiency, effectiveness and risk management. Equipment
should be periodically inspected and repaired or replaced as necessary. Disaster recovery
plans and backup facilities would reduce concerns about possible data loss.

Hierarchy of Personnel

The hierarchy of personnel in CPA firms has evolved through the years, but generally, each
firm has four major positions, as follows: Associate (or Junior Associate), Senior
Associate, Manager and Sole Proprietor or Partner. Table 4-3 shows a description ot tne
work performed at each level of a CPA firm.

Human Resources

The firm has to have a good policy on hiring, professional development, and advancement
of its employees. The success of a CPA firm depends largely on the competence and
performance of its employees.

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CPA firm personnel should be trained with a combination of education and work
experience (learning on the job). The following are training methods for personnel in CPA
firms:
1. In-house training. This includes workshops on topics such as: audit procedures,
audit report writing, and responsibilities for fraud and error.
2. On the job training. Under the guidance of a more experienced auditor (such as a
senior associate), newer audit staff are given chances to apply audit concepts,
perform increasingly complex audit procedures, and develop skills in
communication and critical thinking.
3. External training programs This includes attendance at training programs and
modules sponsored by PICPA and other professional organizations of CPAs, such
as the ACPAPP.

Table 4-3
Hierarchy of Personnel in CPA Firms
Position Nature of Work
(Years of
Experience)
Associate Perform detailed audit work, such as:
(0 to 3 1. Checking footings and computations.
years) 2. Checking short and long extensions.
3. Tracing postings to the ledger.
4. Performing tracing and vouching procedures.
5. Preparing analyses and schedules of accounts (schedule
preparation may be delegated to the client)
6. Observing the physical count of inventories.
7. Mailing of confirmation requests and summarizing the results of
confirmation procedures.
8. Quality control on audit deliverables, such as proof reading and
effecting corrections made by more senior personnel
Senior Perform more complex audit procedures, and:
associates 1. Usually draft and finalıze the audit program
(3 to 6 2. Supervise associates and performs review procedures on work
years) performed by associates.
3. Address minor accounting and auditing issues with clients and
audit associates.
Manager Performs audit procedures and engagement management,
(6 to 10 including:
years) 1. Prepare the overall audit plan
2. Perform administrative work for several concurrent engagements
3. Settle major accounting or auditing issues
4. Act as liaison between partners and other team members (partners,
seniors and associates)
5. Usually draft the report for review by the partner
Partners Owners of the audit firm. They determine the operating policies of the
(10+ years) firm. In addition, partners:
1. Obtain and maintain relationship with clients
2. Discuss with clients the objective and scope of the audit
3. Assume overall responsibility for each engagement
4. Attend client's meetings to answer questions that may arise in
connection with the audit engagement or the audit report
5. Have the final say on accounting or auditing issues encountered
in an engagement
6. Sign the reports and firm correspondence (audit report, tax report,
other documents)
7. Approve the billings for fees to be given to clients

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Advertising and Promotion

A CPA in public practice should not bring the profession into disrepute when marketing
professional services. The professional accountant in public practice should be honest and
truthful and should not:
1. Make exaggerated claims for services offered, qualifications possessed or
experience gained; or
2. Make disparaging references to unsubstantiated comparisons to the work of
another.

If the CPA in public practice is in doubt whether a proposed form of marketing is

appropriate, the CPA in public practice should consult with the relevant professional body.

Sources of Clients

The CPA's usual source of clients are referrals from various parties, such as members of
civic and community associations where the CPA actively participates; existing clients who
received satisfactory service; other CPAs by active involvement in professional
organizations, such as the PICPA and sectoral organizations; and other sources, such as
law firms.

Advertising

Any advertising by professional accountants beyond their name, address, telephone

number and membership in professional organizations has been (traditionally Considered
unethical in the Accountancy Profession.

The reasons for not allowing advertisement include:

1. advertising can lead to undue competition between and among practitioners, and
thus may cause a decline in the quality of service;
2. advertising would encourage a more commercial approach within the profession
thus reducing clients' trust in CPAs and also increasing the likelihood of CPAs
neglecting their ethical duties
3. the cost of advertising would outweigh any savings which might result from
competition, and it would be borne ultimately by clients; and small or new
practitioners would be unlikely to have the financial resources to match the
advertising of larger or more established practices.

The rationale behind the prohibition of certain kinds of advertising or advertisements is to

lend dignity to the profession which, unlike ordinary services and merchandise, should not
be peddled in the market place through touting and self-laudatory means.

Recent Developments on Advertising

Due to the expansion of the services provided by the professional accountants and the
inclusion of a provision in the Revised Code of Ethics for Professional Accountants of the
International Federation of Accountants (IFAC) which the Board of Accountancy and the
Professional Regulation Commission have adopted, advertising to the extent that this
provides the public with necessary information about the sole practitioners or professional
partnerships and the services they offer to their clients, the BOA deemed necessary to adopt
rules and regulations covering advertising so as to protect the public interest. Such rules
shall define the parameters within which advertising and promotion may be considered
ethical and hence, permissible.

BOA Resolution No. 126, Series of 2008

Generally, advertising and publicity in any medium are acceptable, provided:

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1. It has as its objective the notification to the public or such sectors of the public as
are concerned, of matters of fact (e.g., name, address, Contact numbers, services
offered) in a manner that is not false, misleading or deceptive;
2. It is in good taste;
3. It is professionally dignified; and
4. It avoids frequent repetition of, and any undue prominence being given to the name
of the firm or professional accountant in public practice.
The following however shall not be allowed:
1. Self-laudatory statements
2. Discrediting, disparaging, or attacking other firms or CPA practitioners
3. Referring to, using or citing actual or purported testimonials by third parties
4. Publishing and comparing fees with other CPAs or CPA firms or comparing those
services with those provided by another firm or CPA practitioner
5. Giving too much emphasis on competitive differences
6. Using words or phrases which are hard to define and even more difficult to
substantiate objectively
7. Publishing services in billboard (e.g., tarpaulin, streamers, etc.) advertisements

The use of the name of an international accounting firm affiliation/correspondence other

than a notation that it is a "member/correspondent firm of that foreign firm" shall not be
allowed so as to imply that the foreign firm is practicing in the Philippines.

No firm or CPA practitioner shall identify the name of a client or items of a client's business
in advertising, public relations or marketing material produced to promote his practice
provided that the client gives its written consent.

No firm or CPA practitioner shall use the term "Accredited" or any similar words or phrases
calculated to convey the same meaning if the claimed accreditation (BOA, SEC, BSP or
IC) has expired.

All advertisements must have prior review and approval in writing by the Risk
Management Partner and Managing Partner or their equivalents.

Examples of Acceptable Publicity

The examples in the pages that follow are illustrative of circumstances in which publicity
is acceptable and the matters to be considered in connection therewith subject always to
the overriding requirements mentioned in the preceding rules.

Awards

It is in the interests of the public and the accountancy profession that any appointment or
other activity of a professional accountant in a matter of national or local importance, or
the award of any distinction to a professional accountant, should receive publicity and that
membership of the professional body should be mentioned. However, the professional
accountant should not make use of any of the aforementioned appointments or activities
for personal professional advantage.

Professional Accountants Seeking Employment or Professional Business

A professional accountant may inform interested parties through any medium that a
partnership or salaried employment of an accountancy nature is being sought. The
professional accountant should not, however, publicize for subcontract work in a manner
which could be interpreted as seeking to procure professional business. Publicity seeking
subcontract work may be acceptable if placed only in the professional press and provided
that neither the accountant's name, address or telephone number appears in the publicity.

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A professional accountant may write a letter or make a direct approach to another

professional accountant when seeking employment or professional business.

Directories

A professional accountant may be listed in a directory. Entries may include name, address,
telephone number, professional description, services offered and any other information
necessary to enable the user of the directory to make contact with the person or organization
to which the entry relates.

Books, Articles, Interviews, Lectures, Radio and Television Appearances

Professional accountants who author b0oks or articles on professional subjects, may state
their name and professional qualifications and give the name of their organization but shall
not give any information as to the services that firm provides. Similar provisions are
applicable to participation by a professional accountant in a lecture, interview or a radio or
television program on a professional subject. What professional accountants write or say,
however, should not be promotional of themselves or their firm but should be an objective
professional view of the topic under consideration. Professional accountants are
responsible for using their best endeavors to ensure that what ultimately goes before the
public complies with these requirements.

Training Courses, Seminars, etc.

A professional accountant may invite clients, staff or other professional accountants to

attend training courses or seminars conducted for the assistance of staff. Other persons
should not be invited to attend such training courses or seminars except in response to an
unsolicited request. The requirement should in no way prevent professional accountants
from providing training services to other professional bodies, associations or educational
institutions which run courses for their members or the public. However, undue
prominence should not be given to the name of a professional accountant in any booklets
or documents issued in connection therewith.

Booklets and Documents Containing Technical Information

Booklets and other documents bearing the name of a professional accountant and giving
technical information for the assistance of staff or clients may be issued to such persons,
other professional accountants or other interested parties.

Staff Recruitment

Genuine vacancies for staff may be communicated to the public through any medium in
which comparable staff vacancies normally appear. The fact that a job specification
necessarily gives some detail as to one or more of the services provided to clients by the
professional accountant in public practice is acceptable but it should not contain any
suggestion that the services offered are superior to those offered by other professional
accountants in public practice as a consequence of size, associations, or for any other
reason.

In publications such as those specifically directed to schools and other places of education
to inform students and graduates of career opportunities in the profession, services offered
to the public may be described in a business-like way. More latitude may also be
permissible in a section of a newspaper devoted to staff vacancies than would be allowed
if the vacancy appeared in a prominent position elsewhere in a newspaper on the grounds
that it would be most unlikely that a potential client would use such media to select a
professional adviser.

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Publicity on Behalf of Clients

A professional accountant in public practice may publicize on behalf of clients, primarily

for staff. However, the professional accountant in public practice should ensure that the
emphasis in the publicity is directed towards the objectives to be achieved for the client.

Brochures and Firm Directories

A professional accountant in public practice may issue to clients or, in response to an

unsolicited request, to a non-client:
1. A factual and objectively worded of the services provided; and
2. A directory setting out names of partners, office addresses and names and address
of associated firms and correspondents.

Stationery and Nameplates

Stationery of professional accountants in public practice should be of an acceptable

professional standard and comply with the requirements of the law and of the member body
concerned as to names of partners, principals and others who participate in the practice,
use of professional descriptions and designator letters, cities or countries where the practice
is represented, logotypes, etc. The designation of any services provided by the practice as
being specialist nature should not be permitted. Similar provisions, where applicable,
should apply to nameplates.

Announcements

Appropriate newspapers or magazines may be used to inform the public of the

establishment of a new practice, of changes in the composition of a partnership of
professional accountants in public practice, or of any alteration in the address of a practice.
Such announcements should be limited to a bare statement of facts and consideration given
to the appropriateness of the area of distribution of the newspaper or magazine and number
of insertions.

Inclusion of the Name of the CPA in Public Practice in a Document Issued by a Client

When a client proposes to publish a report by a professional accountant in public practice

dealing with the client's existing business affairs or in connection with the establishment
of a new business venture, the professional accountant in public practice should take steps
to ensure that the context in which the report is published is not such as might result in the
public being misled as to the nature and meaning of the report. In these circumstances, the
professional accountant in public practice should advise the client that permission should
first be obtained before publication of the document.

Similar consideration should be given to other documents proposed to be issued by a client

containing the name of a professional accountant in public practice acting in an
independent professional capacity. This does not preclude the inclusion of the name of a
professional accountant in public practice in the annual report of a client.

When professional accountants in their private capacity are associated with, or hold in, an
organization, the organization may use their name and professional status on stationery and
other documents. The professional accountant in public practice should ensure that this
information is not used in such a way as might lead the public to believe that there is a
connection with organization in an independent professional capacity.

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Anniversaries

A professional accountant's press and other media releases or announcements or newspaper

supplements, or other similar publications, or other commemorative media, or the holding
of media covered events undertaken only to commemorate their anniversaries in public
practice by informing the public or their achievements or accomplishments in contributing
towards (nation building and in international understanding, goodwill, or relationship or
enhancing the image or standards of the accounting profession do not violate the rules on
advertising and solicitation provided that such announcements or undertakings contains
only factual matters without detailed listing of services. Such undertaking should be done
only every five years of celebration.

Websites

A professional accountant may develop and maintain a website in the Internet in such
suitable length and style which may also include announcements, press releases,
publications and such other necessary and factual information like firm's name,
partners/principals' name and brief description of their educational attainment, brief listing
of services, postal address, telephone, fax and e-mail addresses. Such website should
adhere to the rules previously mentioned.

Fees and Billing

When entering into negotiations regarding professional services, a CPA may quote
whatever fee deemed to be appropriate. The fact that a CPA may quote a fee lower than
/another is not in itself unethical, Fees charged for assurance engagements should be a fair
reflection of the value of the work involved and should take into account, among others:
1. the skill and knowledge required for the type of work involved;
2. the level of training and experience of the persons necessarily engaged on the work;
3. the time necessarily occupied by each person engaged on the work; and
4. the degree of responsibility and urgency that the work entails.

Table 4-4
Methods of Billing Clients
Flat or fixed The client is billed a flat but all-inclusive pre-arranged amount for the
fee basis entire engagement.
Actual Time Also known as the per diem basis. Billing is done on the basis of actual
Charge time spent by the staff' multiplied by the actual time charges basıs hourly
Basis rates agreed upon.
Maximum The client is charged on a per diem basis, with the agreement that the total
fee basis charges will not exceed a certain agreed maximum amount.
Retainer fee The auditor is paid a fixed pre-determined fee for all services rendered
Basis during a designated period of time either on a monthly, semi-annual or
annual basis.

Death, Disability, Dissolution and Liquidation

The death or disability of an Individual CPA and/or the dissolution and liquidation of a
Firm or Partnership of CPAs shall be reported to the BOA by any designated staff member
of the Individual CPA, the sole practitioner (or any designated staff member of the Firm in
case of the unavailability of the sole practitioner) or managing partner of the Partnership
(or any designated partner in case of the unavailability of the managing partner) not later
than thirty (30) days from the date of such death, dissolution or liquidation.

The report shall be made in the form of an affidavit (in the case of an Individual CPA or a
Firm), or by furnishing the BOA with a certified copy of the dissolution or liquidation
papers filed with the SEC in the case of a Partnership.

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Failure to notify the Board of such death, dissolution or liquidation shall subject the
designated staff member of an Individual CPA, sole proprietor or designated staff member
of the Firm or managing partner or designated partner of the Partnership to the penalties
under Annex B of the IRR to RA 9298.

Source:

J.M. Ireneo, S.C. Ireneo, G.R. James. 2018. Audit & Assurance Principle. Manila,
Philippines: La Limariza Printing Corp.

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