The spotlight now focuses on the Professional Regulatory Board of Accountancy (BOA) in this ongoing tele-tax-novela series on the Official Receipt (OR) for sale scam. Last March 21, 2023, the BIR filed with the Professional Regulation Commission(PRC) and BoA an administrative complaint for the revocation of license against the Certified Public Accountant (CPA) who was alleged to be part of the syndicate responsible for defrauding the government of substantial sums of unpaid taxes.
This “notarial CPA” irregularly signed the unqualified or clean audit opinions for understated 2021 financial statements of the Mastermind and seller of the fake ORs being sold to unscrupulous business buyers. These buyers in turn used these ghost ORs in padding their tax claims for business deductions and credits for value-added-tax. Presumably, these buyers of ORs also had their own “notarial CPAs” issuing unqualified assessments of their erroneous financial statements. I also note that the CPA employees of these buyers and sellers of the fake ORs may be liable for various irregularities and crimes for conniving with their bosses in recording these fabricated transactions and documents. All these CPAs are a disgrace to their profession and are criminals for abetting the tax evasion practices that they are a part of. They all deserve to be criminally and administratively prosecuted. Calling the attention of the BIR and BOA.
Republic Act 9298 or the Philippine Accountancy Act of 2004 contains the general provision for the professional conduct of CPAs and rules for the suspension or revocation of the Professional license to practice. Section 24 of this Act authorizes the BOA to suspend or withdraw the CPA practitioner’s license to practice for violation of the CPA Code of Ethics and the various technical and professional standards of practice.
These CPAs, whether external auditors or employees of business enterprises, are mandated to follow the various tenets governing their professional conduct. They should exhibit the highest virtues required for their profession, including technical competence, objectivity, independence, and skepticism. They should be instituting and following the appropriate internal control practices and risk management techniques in the course of their work. These CPAs should be primarily accountable to the stakeholders and general public who rely on their work of promoting reliable financial statements. They should not be swayed to follow the dictates of their audit clients and employers, especially if these would violate their professional conduct and ethics.
With the administrative case against the CPA being filed by the BIR, how will the PRC and BOA proceed with determining the guilt of the CPA charged with violating the law and rules?
PRC Resolution 2017-1033(A) provides the rules and procedures. The Legal Service and the BOA will be involved in conducting the preliminary investigation and any subsequent hearings, trials, or any other procedure. The involvement of a BOA member is essential to provide inputs to the lawyers of the PRC as to the technical nuances of the various rules, procedures, and standards governing the conduct of the CPA who was charged. I note that a mandatory conciliation procedure is required so as to encourage the parties to arrive at acceptable solutions and voluntary settlement. If such an outcome fails, a trial will proceed and be conducted by a Board constituted for that purpose. As typical of any similar legal procedure, the resolution of the case can take several years. The only indication of a time frame for this is the provision that the Board shall render a decision within 30 days from the expiration of the period to submit the memoranda of the parties to the Board prior to rendering the decision. This situation can arise after a vigorous and lengthy process and period.
Will this adjudication process in the PRC and BOA be a prolonged episode in this tele-tax-novela? I have my suggestions on how to expedite the process as well as provide BOA institutional reform in this side story of ORs for sale story.
To be continued.
Joel L. Tan-Torres was the former 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. He is now back to his tax practice with his firm JL2T Consulting. He can be contacted at email@example.com.