Part 11
The enforcement actions against erring Certified Public Accountants involved in the fake Official Receipt for sale scam is cascading. On May 22, 2023, the Bureau of Internal Revenue revoked the BIR accreditation of Jennifer Cunanan Roncesvalles, CPA, to practice tax in the BIR. Ms. Roncesvalles is the external auditor who negligently issued the unqualified certificate attesting to the regularity of the financial statements of companies that were criminally charged for selling fake ORs.
This action is on top of the other cases filed previously by the BIR against the CPA last March 2023. These include a criminal case filed with the Department of Justice for violation of the provisions of the National Internal Revenue Code, and an administrative case for the revocation of the CPA professional license filed with the Professional Regulatory Board of Accountancy (BOA).
As a former chairman of the BOA, I fully support these actions against erring CPAs who practice “notarial” services. These CPAs are a disgrace to the accountancy profession for irregularly signing unqualified audit opinions or clean bills of health of the financial reports of their clients without even conducting the appropriate procedures. These notarial CPAs immediately sign these audit certificates within minutes of receipt of their measly audit fees. While other CPA auditors discharging their functions are charging the appropriate amount of professional fees for their work that involves several hours and days, the notarial CPAs are content in collecting fees for as low as P5,000 per signed unqualified audit opinion.
The Accountancy law of 2004 mandates the BOA “to conduct an oversight into the quality of audits of financial statements through a review of the quality control measures instituted by auditors in order to ensure compliance with the accounting and auditing standards and practices.” The BOA is tasked to audit the auditors via the Quality Assurance Review program. These QAR inspections can ferret out which among the CPA external auditors are properly discharging their duties or merely rendering “notarial signing” services.
During my term as BOA chairman, the BOA Resolution 244 Series of 2015 was issued that provided for the revised guidelines and procedures for the conduct of QAR. There were other measures that I initiated to jumpstart the implementation of the QAR. There were several hurdles and challenges that I encountered in the process. The saga of QAR during my term as BOA chairman from 2014 to 2018 was full of twists and turns and will be the subject of my articles in the future.
While the requirement for the implementation of QAR has been in the law since 2004, presently, it is just on its preparatory phase prior to the actual conduct of the QAR inspections. The BOA is still in the pre-start up phase and doing consultations on the revisions of the guidelines, conducting information and training campaigns, hiring of personnel, and a host of other activities. The BOA has targeted the initial set of inspections only by January 1, 2024. More information on the QAR activities can be sourced from https://qaroffice.com/.
Clearly, the BOA’s full implementation of the QAR is long delayed. If the QAR program is in place, the BOA could readily utilize this to support the investigation of the case filed by the BIR against the erring CPA. The BOA could conduct an inspection of the documents and working papers of the charged CPA to ascertain if she has conducted a diligent audit work. The BOA inspection can be focused on the availability and content of the audit working papers. For “notarial” auditors, the absence or lack of substance of the working papers is their weakest link and indicator of no substantive audit work done in their engagements.
The BOA should act resolutely on the case now pending its investigation. With a fast response and securing relevant information from the QAR inspection of the working papers and documents of the CPA, the BOA may be able to identify to the BIR the supporting cast in this riveting Tele-tax-novela.
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 joeltantorress@yahoo.com.