ASSURANCE PRINCIPLE

Applicable to All Professional Accountants

Integrity and Objectivity

Integrity implies honesty, fair dealing, and truthfulness. Objectivity imposes the
obligation to be fair, intellectually honest, and free of conflicts of interest. Relationships that
allow prejudice, bias, or influence of others to override objectivity should be avoided. Situations
involving the possibility of pressure that would impair objectivity should be avoided.
Professional accountants should neither accept nor offer gifts or entertainment, which might
reasonably be believed to have a significant and improper influence on their professional
judgment or of those with whom they deal. Professional accountants should avoid
circumstances, which would bring their professional standing into disrepute.

Resolution of Ethical Conflicts

Relationships or interest which could adversely influence, impair, or threaten a

professional accountant’s integrity, should be discouraged. A question of divided loyalty may
arise as between professional accountant’s superior, supervisor, manager, or family and the
required technical and/or professional standards of conduct. Conflicts may arise when
published misleading information is to the advantage of the employer or client but which the
professional accountant finds unethical.

To seek a resolution of conflicts arising from significant ethical issues, a professional

accountant should follow the established policies of the client or employing organization. If
those policies do not resolve the ethical conflict, the professional accountant should consider:

a. Reviewing the conflict with the immediate superior or raising the issue to the
next higher level; and
b. Seeking counseling basis with an independent advisor, or with the applicable
accountancy or regulatory body to obtain an understanding of possible courses of
action.

Upon exhausting all levels of internal review and the ethical conflict still exists, the
professional accountant may have no other recourse than to resign. He submits and
information memorandum serious matters, as fraud, to an appropriate external
regulatory or enforcement body (BOA, PRC, SEC)

Professional Competence

Professional accountants should not portray themselves as having expertise or

experience they do not possesses. Professional competence may be divided into two separate
phases: the attainment of professional competence.

The attainment of professional competence requires a high standard of general and

specific education, training, examination in professionally relevant subjects and a period of work
experience, whether prescribed or not. This should be a professional accountant’s normal
pattern of development.

The maintenance of professional competence required a continuing awareness of

development in the accountancy profession, relevant national and international
pronouncements on accounting and auditing; and other relevant regulations and statutory
requirements. The professional accountant should adopt a program designed to ensure quality
control in the performance of professional services consistent with the appropriate national and
international pronouncements.

Confidentiality

Professional accountants have an obligation to respect the confidentiality of information

about a client’s or employer’s affairs acquired in the course of rendering professional services.
The duty of confidentiality continues even after the end of client-accountant professional
relationship. The professional accountant has the obligation to ensure that the staff-under his
control and persons from whom advice and assistance are obtained likewise respect the priiple
of confidentiality.

Confidentiality also requires that the professional accountants should not use nor
appear to use his personal advantage or for the advantage of a third party, information acquired
in the course of performing professional services.

A professional accountant has access to much confidential on information about a

client’s affairs not otherwise disclosed to the public; therefore, he should be relied not to make
unauthorized disclosure to other persons. Confidentiality of information is part of statute or law
and detailed ethical requirements may be determined by Philippine law.

Confidential information may be disclosed by the professional accountant when

disclosure is authorized by the client or employer; or when disclosure is required by law as
evidence in the course of legal proceedings; or when there is a professional duty or right to
disclose
Tax Practice

A professional accountant rendering professional tax service is entitled to put forward

the best position in favor of the client/employer, provided the service is rendered with
professional competence, and is consistent with the law, without impairing his integrity and
objectivity. Doubt may be resolved in favor of the client if there is reasonable support for the
position.

A professional accountant should ensure that the client/employer is aware of the

limitations attached to tax advice and services; the client/employer should not misinterpret an
expression of opinion as an assertion of fact. The professional accountant should advise the
client/employer that the tax returns are properly prepared on the basis of information received
but the responsibility for the contents of the tax returns rests primarily with the client/employer.
Tax advice or opinions of material consequence given to client should be recorded in letter form
or in a memorandum for the files.

A professional accountant should not be associated with tax returns believed to contain
false or misleading statements, or information given without real knowledge whether it is true
or not, returns that omit or obscure information required to be submitted, thus misleading
revenue authorities.

A professional accountant may prepare tax returns involving estimates that are generally
acceptable and reasonable when it is impractical to obtain exact data. He should use supporting
data in confirming information provided, by referring to books and records of business
operations, or client’s returns of prior years, especially when information presented seems
incorrect or incomplete.

A professional accountant who learns of a material error or omission in a tax return of a

prior or of the failure to file required tax returns, should promptly advise the client/employer
and recommend disclosure be made to the revenue authorities. He is not obliged to make this
disclosure. Should client/employer fail to disclose the matter however, the professional
accountant may inform client/employer that he cannot continue rendering service in any
capacity that is consistent with his professional responsibility. If the professional accountant
continues association with client/employer, all reasonable steps must be taken to ansure that
the error is not repeated in subsequent tax returns.

Cross Border Activities

When a professional accountant performs services outside the Philippines and

differences exist between ethical requirements of the two countries, the stricter requirements
should apply; specifically: when the ethical requirements of the country where the services are
performed are less strict than this Code, then the Code of Ethics for Professional Accountants in
the Philippines should apply; when ethical requirements of the country where the services are
performed are stricter than the ethical requirements of this Cod, then the ethical requirements
of the country where the services are being performed should be applied; and when ethical
requirements of this Code are mandatory for services performed outside the country and are
stricter, then this Code should be applied.
Publicity

In marketing or promoting their services, the professional accountants should not use
means that brings the profession into disrepute, nor make exaggerated claims for services
offered, qualifications possessed or experience gained. He should not denigrate the work of
other CPAs. He is not permitted to advertise or solicit in the Philippines nor is he allowed to
advertise in a newspaper or magazine published in a country where advertising is permitted.