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Musings on the amendments of the accountancy law

Fourth part of a series

There are other contentious proposals on the amendment to the Accountancy Act of 2004 (Republic Act 9298 or RA 9298) that the Professional Regulatory Board of Accountancy (BOA) has recently presented.

Section 9 of the draft amendatory bill provides for a marked departure from the present setup of certified public accountant (CPA) board licensure examinees to get a “conditional” rating. Presently, Section 16 of RA 9298 provides that “to be qualified as having passed the licensure examination for accountants, a candidate must obtain a general average of 75 percent, with no grade lower than 65 percent in any given subject. In the event a candidate obtains the rating of 75 percent and above in at least a majority of subjects as provided for in this Act, he/she shall receive a conditional credit for the subjects passed: Provided, That a candidate shall take an examination in the remaining subjects within two  years from preceding examination: Provided, Further, That if the candidate fails to obtain at least a general average of 75 percent and a rating of at least 65 percent in each of the subjects reexamined, he/she shall be considered as failed in the entire examination.”

The proposed amendment of the BOA provides that the rating system will be a “Passed” or “Failed” mark with no numerical rating indicated and the “Conditional” passing being dispensed with. In the past years, the percentage of conditional passers was about 5 percent. These conditional passers have the chance to become full pledged CPAs if they are able to get at least a 75 percent rating when they retake the one or two CPA examination subjects that they failed in their first attempt. If the proposed amendment is effected, examinees who are not able to get at least a 75 percent rating in all their six examination subjects will be considered as having failed the entire examination. As a result, their only recourse to become CPAs is for them to once again take and pass all the subjects in their retake of the examinations.

The BOA and the Professional Regulations Commission have been encountering challenges in administering the licensure examination with the conditional passing set up. The administrative burdens include tracking the list of conditional passers over the two years that they are entitled to do a retake of the subjects that they failed, the processing of the various requirements of the conditional passers, and others. The BOA also argues that the CPA licensure examination with its conditional passing rule is unique from the rest of the professional board examinations where a straightforward pass or fail rule applies.These are worthwhile points for the recommendation of the BOA.

The other proposal of not coming up with numerical ratings of the board examination result needs to be reconsidered. The ratings or grades for each subject of the examination provides much information that the various accountancy stakeholders can use and benefit from. School administrators and teachers may use the information as a gauge on what subjects that they need to focus and improve on their teaching since their graduates and examinees did not fare too well in their CPA exam results. Employers can use this information to assess the competence or expertise of the CPAs applying for employment. The CPA passer is also personally interested in knowing how he/she performed for each of the CPA exam subjects taken.

The reason being cited by the BOA for discarding the numerical rating is that they would like to address what they perceive as the tendency for review centers and educational institutions in using the CPA exam topnotcher rating list in their “marketing” efforts. The BOA notes that with the release of the list of topnotchers, there is a rush among the various learning organizations to broadcast that these achievers were the “products” of their review or learning system.

My take here is that the CPA exam topnotchers deserve to be recognized for their achievement of topping the board exam. The release of such list by the BOA is an essential part of this merit salute to them. I should know: I was the CPA Board topnotcher when I took the exams decades ago.

To be continued.

Joel L. Tan-Torres is the Dean of the University of the Philippines Virata School of Business. Previously, he was the  Commissioner of the Bureau of Internal Revenue, the chairman of the Professional Regulatory Board of Accountancy and partner of Reyes Tacandong & Co. and the SyCip Gorres and Velayo & Co. He is a Certified Public Accountant who garnered No. 1 in the CPA Board Examination of May 1979.

This column accepts articles for publication from the business and academic community. Articles not exceeding 600 words can be e-mailed to jltantorres@up.edu.ph.

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