BOA Nullifies Audit Opinions of Erring CPAs – An Epic Fail?

The Board of Accountancy (BOA) sanctioned 21 erring CPAs in public practices due to alleged failure to respond to the show cause letters sent to them to explain why their audit opinions should not be nullified on account of failure to comply with their sworn statements to comply with the deficiency in accreditation requirements following the provisional extension of their BOA accreditation.


To sum up, here’s what happened to the 21 erring CPAs:

  • BOA temporarily extended the effectivity of pending accreditation of CPAs until April 30, 2015 and allowed CPAs to sign and issue audit opinions
  • CPAs executed a sworn declaration that they will specifically comply with all the requirements of accreditation that said deficiency in CPD units should be completed by June 30, 2015
  • CPAs failed to comply with their commitment and to even notify the BOA
  • BOA issued show cause letters
  • CPAs didn’t respond
  • BOA instituted the sanctions (revocation of the provisional accreditation/nullification of issued opinion)

Why are the Accreditation Revoked/Opinions Nullified?

The BOA sanctioned twenty one (21) CPAs in public practice who failed to respond to the show cause letters sent to them explain in writing within fifteen why the audit opinion that they had signed and issued for the financial statements of their client-corporations and filed with the Securities and Exchange Commission and the Bureau of Internal Revenue should not be nullified and considered with no force and effect. Three (3) CPAs have responded and their cases are being evaluated whether or not the same sanctions will be imposed.

Per BOA, records of the Standards and Inspection Division of the Professional Regulation Commission showed that to date the application for the renewal of the accreditation of the affected CPAs were still pending for their failure to comply with their sworn undertaking to complete the deficiency in the number of units mandated in the thematic distribution of Continuing Professional Development (CPD) per Board Resolution No. 59, series of 2012.

The audit opinions of erring CPAs are being nullified because the issuance thereof for failure to comply with the requirements of the provisional accreditation makes such issuance as without legal basis, such having been issued by a CPA without any valid accreditation.

Publication of the Sanction

BOA then published the list of erring “unprofessional” CPAs in public practice in the PRC and BOA website and will be publicized in the various newspapers.  Letters will be sent to the SEC and BIR about the BoA action on the audit opinions of the clients of these erring CPAs.

It’s also posted in PRC BOA’s Facebook account where it created noise specially from some parties affected and some concerned individuals who believe that the names of the erring accountants shouldn’t have published in the first place.

BOA’s intention in publishing it in its website, newspapers and social media is for the public to be reminded to engage only accredited CPAs in public practice whose accreditation are valid.

Per BOA chair Joel Tan-Torres, this BOA action should also send the clear message that companies should only be dealing with professional CPAs who are able to comply with their commitments, thus, hopefully resulting in these “unprofessional” CPAs with fewer clients engaging them.

Issues in the Publication

Netizen raised concerns on publishing the list of sanctioned CPA pointing out the following:

  1. The list is not sanitized before publishing online. There were few people who reacted citing that the list is inaccurate and includes new applicant and don’t even have accreditation. Recall that the issue previously raised is that the accreditation are being revoked and their audit opinions are being nullified. The issue being raised is, how can BOA revoke an accreditation number which is not issued in the first place. If the concerned individuals are telling the truth, then BOA needs to explain why are their names included in the list.
  2. There is no due process given to the CPAs in the list.  I few minority are saying that it’s not ethical for the BOA to do the publication without hearing from the CPAs involved.  BOA explained that they have communicated with the CPAs involved and given them show cause memo. Other netizen however only hear what they want to hear.
  3. Publishing the names is not the right course of action. Some netizen are saying that the list shouldn’t have been published in the first place. They are pointing out that revoking their accreditation is enough and addressing the matter privately is the right way to do it. BOA on the other hand is pointing out that this is a matter of public interest and has the intention of making the public know so that they will not be engaging these CPAs with revoked accreditation.

All arguments makes sense but in cases like this, we should weigh all things and consider which best promotes the interest of the profession.  Regulation is there to prevent abuses and ensure that public interest is protected. BOA on the other hand should ensure that what they publish are accurate to avoid reputation damage for those CPAs whose names should not be there in the first place.

BOA Defense on the Issues

BOA set out the facts and circumstances on the issue of the revocation of provisional accreditation and forthcoming notification of the SEC and the BIR of the nullification of the audit opinions issued by these CPAs:

  1. The 21 CPAs included in the list had all executed a sworn declaration that they will specifically comply with all the requirements of accreditation (whether for the first time or renewal) on or before June 30, 2015.
  2. All these 21 CPAs failed to comply with their commitment and to even notify the BoA the reason for this even after the lapse of more than one and a half month from the deadline.
  3. The BoA issued show cause letters to 24 CPAs to explain within 15 days why the appropriate sanction should not apply. After the lapse of the deadline to respond (which was on August 15), Three (3) CPAs responded and their written explanations are being evaluated. Twemty one (21) CPAs have NOT responded to date.
  4. These 21 CPAs are the ones that the BOA have instituted the sanctions indicated in the letters issued.
  5. The BoA is simply enforcing its mandate of regulating the accountancy profession. Those majority of the CPAs who continue to be true to their profession and who comply with their commitments and obligations will continue to practice without any hindrance and with the full support of the BoA. However, the minority of the CPAs, including these 21 erring CPAs, will have to face to the consequence of their failure to comply with their commitments and obligations.
  6. The accountancy profession and the BOA will be resolute in enforcing what is mandated by the law on these erring CPAs who persist on not mending their ill practices that not only gives them an unfair advantage over the rest but also besmirchs the reputation of our profession.
  7. We also hope that the few CPAs who have posted comments questioning the action of the BOA will now appreciate the reason why this course of action have been taken and will rectify the misleading or misinformed comments that they have posted.

Our Opinion

On a personal note, I believe the intention of BOA for publishing the sanction for the so called “erring” and “unprofessional” CPAs is good. However, BOA failed to exercise due care, in terms of validating the list and connecting with the concerned CPAs first before publishing the list.  While they may have exhausted the means to communicate to those CPAs before the sanction is served, they missed a very basic procedure – they didn’t validate the list.

The fact that there are individuals complaining that they shouldn’t be in the list in the first place because they were never issued with accreditation before and have never opined on any financial statement is an indication that there is something really wrong with the list. This raises more question on the integrity of the list as well as the reliability of internal controls of the BOA. Are there adequate review procedures performed within their processes.

These items also raises question on how competent are BOA personnel in carrying out their jobs. The chairman and the board may came from the most prominent industry players, but how about the people working for them in the background?

In any case, BOA should really look further into the issue, explain to the public what went wrong and properly address the root cause of the issue (and may even mean firing incompetent personnel).

Let us know your thoughts! 🙂

Disclaimer: Opinions expressed in this article are that of the author and information provided are for general conceptual guidance for public information and are not substitute for expert advice. Contact for more information and if you want to avail professional services. Find us on Facebook!

Orlando Calundan is a CPA who has exposures in FS audit of entities in various industries such as real estate, food/restaurants, manufacturing, service organizations and BPOs, automotive, holding/investment companies and more. He also has exposure on internal audit engagements.

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