University of Nueva Caceres

College of Business and Accountancy

City of Naga

CPAs IN PUBLIC PRACTICE AROUND THE WORLD: A TOUR

A Position Paper Presented to

The Faculty of the College of Business and Accountancy
University of Nueva Caceres
City of Naga

In Partial Fulfillment
of the Requirements for the Degree
BACHELOR OF SCIENCE IN ACCOUNTANCY

Proponents
Barra, Lyra E.
Cezar, Jims L.
Llaban, Mary Grace S.
Padre, Charmaine R.
Ranara, Jolina M.
Ustaris, Salve Regina A.

October 2018
I. TOPIC

This position paper focuses on the public practice

accountants’ inevitable involvement in accounting scandals.

II. INTRODUCTION

The emerging demand for Certified Public Accountants

to work for the public practice sector creates a vast

opportunity for accountants. An opportunity then leads to

business powers being in the hands of accountants. As the

cliché goes, with great power comes great responsibility

yet some of the accountants around the world tend to reject

and forget.

Accounting scandals are inevitable. Why? It is because

the need for a good financial statement matters most than

making a correct one. Businesses tend to tell their

accountants to manipulate records to put up a good image to

attract investors. In the Philippines, the Code of Ethics

for Professional Accountants is utilized to prevent the

aforementioned issues yet some accountants still opt to

grab the opportunity to defraud for the sake of money. And

as we have conducted our research, involvement in scandals

doesn’t only exist in the Philippines. It is also as

rampant in other countries as it is in the Philippines. At

first, we are only curious as to how to be an accountant in

other countries yet as we learn about the major and the

 most expensive accounting scandals around the world, we

decided to put an emphasis on that matter.

What is the reason for this inevitability? And what can we

do about it?

III. REVIEW OF RELATED LITERATURE

There are factors as to why of auditor’s become

susceptible to get involved with accounting scandals. Dr.

Donald Cressey, American penologists that has great

contribution in the studies of white-collar crimes, stated

in his Fraud Model that pressure, opportunity and

rationalization are the driving force that caused auditors

to inevitably become part of an accounting scandal. Makkawi

and Schick (2003) suggest that increased pressure to commit

fraud emanates from increased stock ownership, competition

for investors’ money, increased publication of short-term

financial returns and executive equity-based compensation

resulting into myopic performance focus and pressure to

increase revenue and earnings. In a recent report KPMG

(2011) it is stated that the major motivation for fraud is

personal financial gain and greed being at the center of it

all. Opportunity denotes the incentive to commit fraud

which in general term is weaknesses in internal control

system of the firm, regulatory framework and presence of

management circumventing control. These weaknesses will

give perpetrators the avenue to commit fraud, conceal it

and get away unpunished. A report sponsored by COSO (2010)

revealed that significant number of firms that committed

fraud changed auditors after the end of their clean

published financial statement. Every fraudster has a reason

or justification for fraudulent attitude, according to

Merriam- Webster dictionary (2014), rationalization means

"to think about or describe something (such as behavior) in

a way that explains it, makes it seem proper and more

attractive". Unlike other elements of the fraud triangle,

rationalization is difficult to substantiate because it is

an unseen attitude usually in the mind of the fraudster but

voiced when questioned or caught and sometimes never

spoken.

Vincenzo Bavoso (2012), in his study, “Explaining

Financial Scandals: Corporate Governance, Structured

Finance and the Enlightened Sovereign Control Paradigm”

submitted at the University of Manchester, tackles the

occurrence of modern financial scandal. An analysis of two

sequences of events (the 2001-2003 wave of “accounting

frauds” and the 2007-08 global crisis) is done by

highlighting a number of common denominators emerging from

the case studies (Enron and Parmalat, Northern Rock and

Lehman Brothers) which caused financial instability and

scandals. Thesis contends that the occurrence of financial

crises during the last decade is essentially rooted in two

main problems: a corporate governance, represented by the

lack of effective control systems within large public

firms; and a corporate finance, identified with the

excesses of financial innovation and related abuses of

capital market finance. In particular, the study highlights

the emergence of a control problem over managerial actions,

reflected in the functioning of statute-based directorial

duties and in market-based mechanisms such as compensation

structures.

Blackwell (2018), in his article entitled “Accounting

scandals inevitable” stated that, ‘it’s just luck’ that

Canada has not been hit with a major accounting fraud. It

was also added by the professor at the Richard Ivey School

of Business at the University of Western Ontario named

David Sharp that he doubted that Canadian firms are, on

average, much more rule-abiding in their accounting than

their American counterparts. One key difference is that

Canadian firms are generally smaller than U.S firms so when

scandal or fraud erupts here, it isn’t on the massive scale

of the WorldCom Inc. situation, according to Sharp.

WorldCom revealed that it overstated its profit by billions

of dollars after improperly accounting for $3.85 Billion

(U.S) in costs as capital expenditures. Mr. Sharp said he

wouldn’t be at all surprised if some time soon a few

Canadian firms were discovered to have stretched their

accounting judgments beyond what is generally accepted.

Thomas Allen, a lawyer at Ogilvy Renault in Toronto

who has been involved in Canadian efforts to beef up

accounting standards, also warned that Canadians shouldn’t

be too self-satisfied about the relative dearth of

financial malfeasance. However, according to Al Rosen a

forensic accountant and a perennial critic of Canadian

accounting practices that this has happened repeatedly in

Canada, but not on the same sort of scale as Enron or

WorldCom. Rosen said he personally investigated about 400

accounting negligence cases over the past 15 years. He also

added that, it is inevitable that there will be a big

scandal in Canada that results in the collapse of a major

firm. Another industry player, who didn’t want to be

identified, said the big scandals often start with

companies deciding that they can “stretch” financial rules

a little. Then, “if little things can be stretched, little

things have a habit of growing out of control”.

McCann, Offoha, and Bryant (2015), in a study they’ve

conducted entitled “Student Perceptions of Accounting and

Business Scandals on the Accounting Profession, they

measured whether the business scandals has an impact on

students’ perception and to determine if they are

differentiated by maturity factors. At the end of their

research, students disagree with the statement that

accounting scandals have made the accounting profession

more attractive, as separated by the maturity factor of

age. Students agree that accounting scandals have stressed

the importance of good ethical conduct in the accounting

profession. The study also revealed students are becoming

more informed about business scandals by regularly reading

business publications.

Sheridan (2015) in her article entitled “Number of

Accounting Fraud Cases Continues to Rise” stated that a

recent Cornerstone Research report shows that accounting

fraud cases, either alleged in securities class-action

lawsuits or in enforcement cases brought by the US

Securities and Exchange Commission (SEC), increased sharply

over the past year, due in part to the agency's heightened

focus on accounting-related fraud. The report, Accounting

Class Action Filings and Settlements—2014 Review and

Analysis, shows allegations of accounting fraud surged 47

percent in securities class-action lawsuits last year over

2013. That partly reflects a corresponding 46 percent

increase in accounting fraud enforcement cases brought by

the SEC for the 2013-14 fiscal year that ended Sept. 30.

Andon et al., (2015) on their study entitled “Pathways

to Accountant Fraud: Australian Evidence and Analysis”

highlighted the four distinct pathways to accountant fraud

- crisis responders, opportunity takers, opportunity

seekers and deviance seekers – and the relative

distribution of identified cases among these pathways. It

also identifies the prevalence of gambling, female

offenders, small and medium enterprises as victims, as

factors in fraud, as well as the relatively unsophisticated

methods in much accountant fraud. In addition, it

establishes the importance of situational attitude in

moderating inherent character as it relates to fraudulent

behavior and the variable importance of the fraud triangle

elements across the pathways to accountant fraud.

In an article by Dr. Conchita L. Manabat (2016)

entitled “The accountant and the struggle against fraud and

corruption”, she tackles about Pope Francis’s challenged to

professional accountants to do more in the global fight

against fraud and corruption during the World Congress of

Accountants on 2014. Olivia F. Kirtley, former president of

the International Federation of Accountants, outlined what

the international organization has done to have lasting

 impact on reducing both the supply-and-demand side of fraud

and corruption. She summarized the initiatives focusing on

the following significant items: capacity-building,

governance, public-sector management. She stated that

there’s a need for capacity-building in order to accelerate

the profession’s long-term vision of increasing

professional accountancy capacity in developing countries.

Another significant item stated is in regard with

governance, she highlighted a greater participation in—and

advocacy for—stronger governance across all organizations.

And lastly, for the public-sector management in which she

emphasizes about having a more transparent and complete

public-sector financial information, including use of

International Public Sector Accounting Standards (Ipsas).

Further, Kirtley said, “Serving the public interest is at

the very heart of Ifac’s mission. Combatting fraud and

corruption is clearly a public-interest mission, where our

profession can provide valuable skills and experience.

IV. METHODOLOGY

The proponents conducted an extensive research

regarding public practice accountants employed in other

places abroad namely Australia, Madrid, London, Canada,

South Africa, and New York. Each member of the group was
 assigned a specific country in which he or she will have to

gather necessary information such as qualifications to

become an accountant, professional accounting bodies, major

accounting scandals, and the like. All these data will have

to be summarized to be put in a brochure for final

presentation.

V. DATA GATHERED/FINDINGS

The following are the data gathered from an extensive

research conducted by each proponent based on their

assignment.

1. AUSTRALIA

HOW TO BECOME AN ACCOUNTANT IN AUSTRALIA?

In order to work as an Accountant in Australia, there is a

certain level of experience and study you’ll need to become

qualified and nationally recognized.

 The minimum qualification for entry is a Bachelor Degree in

Accounting, such as a Bachelor of Business with a major in

Accounting. For Institute of Public Accountant requires at

least a Diploma or Advanced Diploma of Accounting

 ACCOUNTING BODIES IN AUSTRALIA

1. Australian Accounting Standards Board (AASB). It is an

Australian Government Agency that develops and maintains

financial reporting standards applicable to entities in the

private and public sector of the Australian economy.

 Australian Accounting Standards and Interpretations

incorporates the International Financial Reporting

Standards (IFRS) and the International Accounting Standard

Boards standards

2. Accounting Professional and Ethical Standards Board

(APESB). An independent, national body that sets out the

code of ethics and professional standards with which

accounting professionals who are members of CPA Australia,

Institute of Chartered Accountants or Institute of Public

Accountants must comply.

3. Australian Securities and Investment Commission (ASIC). It

is an independent Australian government body that acts as

Australia’s corporate regulator. ASIC’s role is to enforce

and regulate company and financial services laws to protect

Australian consumers, investors, and creditors.

PROFESSIONAL ACCOUNTING GOVERNING BODIES IN AUSTRALIA

1. Institute of Chartered Accountants in Australia (ICAA). A

professional accounting body representing Chartered

 Accountants in Australia before it was merged with the

New Zealand Institute of Chartered Accountant to become

Chartered Accountant Australia and New Zealand.

a. Continuing Education. Chartered Accountants continue

their education to ensure they are able to provide

the highest standards of integrity and

professionalism. A Chartered Accountant must

complete a total of 120 hours of Continuing

Professional Education every three years.

b. Ethical Standard. The institute supports the

Accounting Professional and Ethical Standards Board

(APESB). APESB publishes ethics-related standards

that must be followed by accountants in Australia

based on the International Ethics Standards Board

for Accountants (IESBA).

2. CPA Australia. They are one of the world’s largest

accounting bodies with a global membership of 150,000

members working in 120 countries around the world. To

become a member of this program, candidates must hold a

postgraduate award that is recognized by CPA Australia,

and demonstrate competence in the required knowledge

areas and within six-year period, successfully completed

the CPA Program. They must also have three years of

 professional experience in finance, or accounting for

business. To offer public accounting services, CPAs must

also complete CPA Australia’s Public Practice program,

which involves distance learning and a residential

component, and must hold a Public Practice Certificate in

accordance with the CPA Australia’s by laws.

3. Institute of Public Accountant (IPA). The IPA has three

levels of membership, Associate (AIPA), Member (MIPA),

and Fellow (FIPA). An associate membership requires one

to have an Australian Advanced Diploma of Accounting or a

Bachelor’s degree in Accounting that can be Australian or

equivalent in nature. MIPA membership requires Australian

Advanced Diploma of Accounting, two years of pre-IPA

program full-time work experience in accounting or

related fields and a mentored experience program. A FIPA

membership requires 7 year’s MIPA status or equivalent

and 10 years’ experience in accounting the last five

years have to be at a senior level.

FELLOW

MEMBER

ASSOCIATE
 ACCOUNTING STANDARDS

 Australian Accounting Standards (AAS)

 International Financial Reporting Standards

 Conceptual Framework

 Generally Accepted Accounting Principles (GAAP)

DIFFERENCE BETWEEN GAAP AND AAS

DIFFERENCE GAAP AAS
According to AASB
101, an entity
Comparative
should present
financial statements
comparative
are prepared in
information for all
GAAP, but there are
Comparative the amounts that are
certain
Information reported in the
circumstances where
current year
only a single period
financial statements
financial statement
except when the
is prepared.
standards permits
otherwise
Although AASB
There is no specific doesn’t follow a
requirements in the specific layout, it
GAAP to follow a has defined a list
define layout of of minimum line
Layout of Financial financial items that should be
Records statements, but included in the
public companies are financial statements
required to follow and they are less
the requirement of dictatorial as
Regulations compare to the
Regulation
Companies are not Allows the
required to address presentation of
the presentation and financial
Disclosure of disclosure of performance measure
Financial financial under the statement
Performance Measure performance of comprehensive
measures. However, income when that
there are certain information is
regulations of the related to the
 SEC, which require understanding of
the presentation of financial
some headings. performance of the
company.
Focuses on the
Focuses on the power
Consolidation Model controlling
to control.
financial interest
LIFO is not
LIFO is acceptable.
acceptable. Cost of
However there is no
inventories is
clear requirement to
determined by using
Costing Method use a consistent
the retail inventory
formula for the
method for the
inventories that are
retail industry or
similar in nature
standard cost method
Investment Property
is separately
Accounted for not
Investment Property accounted for
separately addressed
according to AASB
140
Revaluation of
intangible asset is
No revaluation is allowed. However,
Revaluation
allowed the standard does
not apply to
goodwill.

TIMELINE OF MAJOR ACCOUNTING SCANDAL

Qintex (1989)

o Qintex CEO Christopher Skase was found to have

improperly used his position to obtain management fees

prior to the $1.5 billion collapse of Qintex including

$700 million unpaid debts. Skase absconded to the

Spanish resort island of Majorca. Spain refused

extradition for 10 years during which time Skase

became a citizen of Dominica.

HIH Insurance (2001)

o In early 2000, after increase in size of the business,

it was determined that the insurance company’s

solvency was marginal, and a small asset price change

could see the insurance company become insolvent. It

did. Director Rodney Adler, CEO Ray Williams and other

were sentenced to prison for fraudulent activity.

One Tel (2001)

o After becoming one of the largest Australian public

companies, losses of $290 million were reported, the

share price crashed, and it entered administration. In

ASIC vs Rich the directors were found not to have been

guilty of negligence.

Bankwest (2008)

o Following the purchase of Bankwest by the Commonwealth

Bank of Australia (CBA), there has been calls for a

royal commission specifically into the conduct of bank

following allegations made the CBA engineered defaults

of Bankwest customers in order to profit from clawback

clauses under the purchase agreement.

China Medical Technologies (2012)

o In 2009, an anonymous letter alleging possible

fraudulent and illegal activities by management since

2007 was sent to KPMG Hong Kong, then CMED’s auditor,

and investigated by law firm Paul Weiss, Rifkind

Wharton and Garrison, Since, 27 July 2012, pursuant to

an Order by the Grand Court of Cayman Islands, CMED

has been under the control of Joint Official

Liquidators. Post-bankruptcy filing, CMED’s liquidator

found itself probing an alleged $355 million insider

fraud. In March 2017, the U.S Department of Justice

criminally indicted the CMED founder and as well as

former Chief Financial Officer, charging them with

securities fraud and wire fraud conspiracy for

stealing more than $400 million from investors as part

of a seven-year scheme.

Fuji Xerox Accounting Scandal (2017)

o Inappropriate accounting practices by Fuji Xerox in

Australia and New Zealand have resulted in a $472

million loss and a series of top-level executives and

board resignations. Fuji Xerox parent FujiFilm

Holdings told the Tokyo Stock Exchange a loss of

NZ$284 million as a result of improper accounting in

 New Zealand has blown out to NZ$472 million after

inappropriate practices were uncovered in Australia as

well.

o Problems have also been revealed closer to home in

Japan, forcing the company to postpone the release of

its annual results. It is also expected to revise past

reported earnings.

o FujiFilm revealed a report from an independent

committee investigating irregularities related to the

overstatement of revenue from photocopier leases at

Fiji Xerox NZ had found Fuji Xerox Australia conducted

similar practices.

o The accumulated impact for the past few years has

become a loss of 37.5 billion yen (NZ$472 million) up

from a previously disclosed 22 billion yen ($284

million).

CONTINUING PROFESSIONAL DEVELOPMENT

As CPA you have these obligations, you need to demonstrate:

 A minimum of 20 hours of CPD activities per year

 A total of 120 units for three-year time period

(triennium). A maximum of 30 hours per triennium can

be claimed for unstructured professional development

with a maximum of 10 hours claimable year.

 Who needs to complete CPD?

 Associate member (ASAs)

 Members (CPAs)

 Fellows (FCPAs)

 Retired members who provide public accounting

services

 Specialist service providers

2. SOUTH AFRICA

Qualifications to become a Professional Accountant

A. Academic requirements

Successfully completed a Bachelor of Commerce

degree, or equivalent, with the following required

core subjects from a SAIPA-accredited tertiary

institution:

 Financial Accounting 3

 Taxation 1

 Auditing 1/Internal Auditing 2/Internal

Control and Code of Ethics

 Corporate Law 1/Commercial Law 2

 Management Accounting

B. Practical requirements

 3-year learnership at a SAIPA Accredited

Training Centre (ATC); or

  6 years of verifiable experience; or

 a completed training program from another

accredited professional accounting body

Professional Evaluation (PE) exam:

The SAIPA Professional Evaluation is a 4-hour

written examination to determine your ability to

integrate your academic knowledge with your practical

experience gained in the workplace. The exam can be

taken twice a year, in various venues around South

Africa, in either May or November, and is part of the

admission process for membership to SAIPA.

Professional Accounting Bodies in South Africa

Professional accounting bodies have the statutory

right to set admission criteria, rules of conduct and

continued education requirements that must be met before a

person is deemed Chartered Association of qualified. As

Institute of Chartered
Management Certified
Accountants Accountants
(CIMA) (ACCA)
South African
Institute of Institute of
Professinal Accounting and
Accountants Commerce (IAC)
(SAIPA)

South African South African

Institute of Institute of
Chartered Government
Accountants Auditors
(SAICA) (SAIGA)

South African Professional Institute of

Institute for Accounting Chartered
Business Secretaries of
Accountants Bodies in South Africa
(SAIBA) South Africa (ICSA)
 government has given regulatory responsibility to these

organizations, they in effect act as Self-Regulating

Organizations (SRO).

The following table provides a comparison of the professional

accounting bodies:

Members Represent

SAICA 32,000 CFOs, FDs, CA, auditors

SAIPA 8,000 General accountants, SME practitioner

CIMA 1,500 Management accountants

IAC 800 General accountants, SME practitioner

ACCA 500 CFOs, FDs, CA, auditors

ICB 3,000 Bookkeepers and entry level

(mostly accountants

students)

SAIBA 2,300 Accounting and financial professionals

Accounting standards

South African Accounting Standards Board

 Official source of local Generally Recognized Accounting

Practice standards.

South Africa

 Accounting standards updates and background information

from Deloitte's IAS Plus service.

Accountancy associations and groups

 Independent Regulatory Board for Auditors (IRBA)

 Institute of Internal Auditors South Africa (IIA SA)

 Public Accountants' and Auditors' Board

 South African Institute of Chartered Accountants (SAICA)

 South African Institute of Professional Accountants (SAIPA)

Comparisons

GRAP v IFRS

 Comparisons of individual Generally Recognized Accounting

Practice (GRAP) standards with IAS and IFRS published by

the Accounting Standards Board (South Africa).

ICAEW contact members

Contact member in South Africa

 ICAEW’s network of Contact Members around the world are a

point of contact for enquiries and act as ambassadors in

promoting ICAEW's strategy and brand in each region.

IFRS adoption

Use of IFRS standards by jurisdiction: South Africa

 Country profile prepared by the IFRS Foundation with notes

on the extent of IFRS application, relevant jurisdictional

authority, IFRS endorsement and translation of standards.

Major Accounting Scandal

On 15 September 2017, KPMG disclosed that an internal

investigation had found shortcomings in the auditing of

companies owned by the prominent Gupta family. The internal

probe revealed that KPMG South Africa had ignored concerns

raised over the integrity and ethics of the Guptas’ business

dealings, and that KPMG should have terminated its client

relationship with the family earlier than March 2016.

Problematic dealings specifically mentioned in the report

included work on the Guptas’ purchase of a coal mine, and the

attendance of a Gupta family wedding by four KPMG partners.

Since 2014, the Guptas have been embroiled in allegations of

having relied on key relationships with the South African

government to influence government appointments and to secure

major state contracts. The family is known to be close personal

friends with South African President Jacob Zuma and to have

engaged in business with one of his sons.

Continuing Professional Education

SAIPA has adopted the IFAC Handbook of the Code of Ethics

for Professional Accountants (IESBA). According to Section 130.3

of the Handbook – “The maintenance of professional competence

requires a continuing awareness and an understanding of relevant

technical, professional and business developments. Continuing

professional development enables a professional accountant to

develop and maintain the capabilities to perform skillfully

within the professional environment.

CPD requirements per member category

Professional Accountant (SA) or Accounting Technician (SA), and
a Tax Practitioner with SARS
Structured hours per year
Tax Ethics Accounting/ Other optional TOTAL
IFRS hours
12 2 4 2 20
Unstructured hours per year 20

Professional Accountant (SA) or Accounting Technician (SA), and

not a Tax Practitioner with SARS
Structured hours per year
Tax Ethics Accounting/ Other optional TOTAL
IFRS hours
4 2 4 10 20
Unstructured hours per year 20

General CoTE member who is not an Accounting Technician (SA) or

Professional Accountant (SA)
Structured hours per year
Tax Ethics Accounting/ Other optional TOTAL
IFRS hours
12 2 4 2 20
Unstructured hours per year 20
3. MADRID

HOW TO BECOME A CPA IN MADRID SPAIN?

OBTAIN B.S DEGREE IN FINANCE OR ACCOUNTING

Education Requirements:

At least one hundred fifty semester hours (two hundred

twenty-five quarter hours) of college education,

including:

 A baccalaureate or higher degree; and

 An accounting major or concentration as defined

as at least:

Twenty-four semester hours (thirty-six quarter hours)

or the equivalent in accounting subjects of which at

least fifteen semester hours must be at the upper

level or graduate level (an upper level course is

defined as a course that frequently carries completion

of a lower level course(s) as a prerequisite); and

Twenty-four semester hours (thirty-six quarter hours)

or the equivalent in business administration subjects

at the undergraduate or graduate level.

Additional Info:

The master's degree in Accounting and Taxation

provides the practical training required to specialize

in the fields of accountancy, taxation and auditing.

In the near future, changes will be introduced as

a result of the harmonization of accounting and tax

regulations in Europe, and the increase in

transparency requirements in all areas. Consequently,

organizations will need experts in this field, with

the skills to adopt the new regulations and rapidly

adapt to the new situation, in a highly competitive

global market.

OBTAIN THE CPA LICENSE

CPA GUIDE:

The Certified Public Accountant (CPA) is a title

given to Accountants who have passed the "Uniform

Certified Public Accountant Examination" and have met

certain education requirements and previous work

experience.

REQUIREMENTS To obtain the title, it is necessary to

comply with educational requirements and previous work

 experience. In addition, it is necessary to pass the

aforementioned exam.

Additional Info:

Accounting qualification in Spain allows holders

to sign off audit reports in accordance with Spanish

law. The certificate requires relevant experience in

an audit practice (usually four years); specific tests

on accounting matters and audit matters followed by a

final examination (auditing/ accounting/ business

case) convoked by any of the three professional audit

associations. The qualification is relatively rare.

GOVERNING BODIES

Instituto de Contabilidad y Auditoria Cuentas (ICAC)

 is an autonomous body of Spain attached to the

Ministry of Economy and Finance, with its own powers

in accounting and the official source of Local

accounting standards and other regulations

 It is regulated by Law 19/1988, of July 12, Audit of

Accounts, Royal Decree 1636/1990, of December 20,

which develops it and Law 44/2002. of November 22,

Measures to Reform the Financial System, which

modifies several articles of Law 19/1988.

FUNCTIONS

Accounting:

Carry out of technical works and proposals of the

General Accounting Plan adapted to the Directives of the

European Union and to the laws and approve the specific

plans adapted to the different sectors of the economic

activity.

To approve, by means of Resolutions, of obligatory

norms related to the development of the General

Accounting Plan, the sectoral adaptations of the same and

elaborate the annual accounts that are considered

convenient for the application of said norms.

Update and improve the accounting planning and propose

to the Minister of Economy and Finance the necessary

regulatory modifications.

Auditing:

Develop the technical audit standards and control the

activity of audit of accounts and the exercise of the

disciplinary power of the auditors of accounts and

societies of audit of accounts.

Other Governing Bodies

• Associacion de Española de Contabilidad y

Administracion de Empresas (AECA)

• Instituto de Censores Jurados de Cuentas (ICJCE)

• Professional Accountants in Spain (PAS)

ACCOUNTING STANDARDS

• International Financial Accounting Standards

(IFRS)

Financial statements must be prepared in

accordance with IFRS Standards. Accounting in

Spain is based on the General Accounting Plan (in

full compliance with IFRS).

• General Accounting Plan (GAP)

With the approval of the General Accounting

Plan by Decree 530/1973, of February 22, Spain

was incorporated into the modern trends on

accounting normalization.

The General Accounting Plan will be

mandatory for all companies, whatever their

legal, individual or corporate form, without

prejudice to those companies that may apply the

General Accounting Plan for Small and Medium

 Enterprises (hereinafter, also General Plan of

Accounting of PYMES).

The General Accounting Plan has a structure

very similar to that of its predecessors in order

to maintain our accounting tradition in all those

aspects that are not to be altered by the

introduction of the new criteria. It is divided

into the following parts:

- Conceptual Framework of Accounting

- Registration and valuation standards

- Annual accounts

- Chart of accounts

- Definitions and accounting relationships

(Introduction,II no. 6)

CONTINUING PROFESSIONAL EDUCATION

Continuing Professional Education (CPE) is required to

maintain the license, which consists of about 40 hours per

year. Many states also require education in Ethics and

other subjects depending on the area in which they work.

License renewal may be required every 1, 2 or 3 years.

MAJOR ACCOUNTING SCANDALS

Pescanova Scandal

Spanish fishing firm Pescanova sank deeper into

scandal as shareholder anger mounted over accounting

failings and the chairman’s undeclared sale of shares in

the period leading up to insolvency proceedings.

Pescanova, a household name in Spain and one of the

world’s largest fishing groups, filed for insolvency on

April 15,2012 on at least 1.5 billion euros (1.3 billion

pounds) of debt run up to fuel expansion before economic

crisis hit its earnings.

Spain’s stock market regulator said in a statement

Tuesday evening that 2012 financial results documents it

has received from the fish-finger maker did not comply

with required accounting standards, possibly opening the

door to sanctions.

The documents, submitted on had not been signed off

by Pescanova board members or auditors, and the firm was

already more than a month beyond an official deadline to

present audited accounts.

The company suspended its auditors BDO and has hired

KPMG to carry out a forensic analysis of its accounts.

 The firm revealed that Chairman Manuel Fernandez de

Sousa had sold half of his 14.4 percent stake in the

firm between December and February, shortly before

starting work on the insolvency process.

Afinsa Boenes and Forum Filat Elico

Eleven former directors of Afinsa Bienes Tangibles

S.A., one of Spain’s biggest stamp companies, were

sentenced to prison July 27 by Spain’s National Court,

following conviction on charges that included criminal

bankruptcy, fraud, and falsification of accounts.

The prison terms, which range from two to 12 years,

were handed down by the court in response to the

officials’ roles in the sale of stamp investments in a

pyramid scheme that siphoned the savings of hundreds of

thousands of investor customers.

Among the officials sentenced was former Afinsa

president Juan Antonio Cano, who was sentenced to 12

years and 10 months.

Banesto

Mario Conde, the former chairman of Banco Espanol de

Credito (Banesto), was brought low with charges of fraud

and embezzlement on a mind-boggling scale. If found

guilty, he faces 35 years' imprisonment.

Conde's dramatic fall follows the near-collapse of

Banesto in late 1993 which precipitated Spain's most

spectacular financial crisis. The huge rescue operation

convulsed the entire Spanish banking system.

A report by the US investigators Kroll Associates in

1992 put his personal fortune at pounds 35m. It described

him as a manipulator, a voracious womaniser, and a

prominent Mason who dabbled in the occult. Suave and

immaculately elegant, his supposed Machiavellianism

inspired admiration and terror.

Conde's magnetic personality filled the Spanish

stage during the country's brief speculative boom

starting in 1985, and he won the respect of everyone who

mattered, including King Juan Carlos. Hailed as the

prototype of the new, classless entrepreneur in modern

Spain, this wheeler-dealer business impresario became, in

the blink of an eye, a top banker.

4. CANADA

HOW DO I BECOME AN ACCOUNTANT IN CANADA?

New Candidates

Accounting Majors in Canada

This is the default route to become CPA in Canada. If

qualified, you will be admitted to the CPA Professional

Education Program (CPA PEP).

Here is the prerequisite for CPA PEP:

Complete a bachelor degree in relevant concentration,

e.g. B. Comm with an accounting major

Complete the prerequisite learning defined in The CPA

Competency Map

Complete at least 120 credit hours or equivalent of

education.

Others

Those who are not qualified for CPA PEP will get into the

CPA Prerequisite Education Program (CPA PREP).

This may include non-accounting majors and

international candidates. This is a bridging program

developed on a nationally basis to help students make up

for the missing accounting courses. The courses are offered

 part-time, through distance learning or in classroom

setting.

PROFESSIONAL ACCOUNTING BODIES IN CANADA

MAJOR ACCOUNTING SCANDALS

Alberta Motor Association (AMA)

A non-profit membership organization serving Alberta

and the Northwest Territories. The organization was

founded with 1, 400 members; original dues were $6.50.

On August 8, 2016 the AMA announced that an

executive was dismissed for cause related to “fraudulent

activity”. The Canadian Broadcasting Corporation reported

the AMA had commenced a lawsuit against the former vice

president of information technology seeking recovery of

$Cdn 8.2 million related to fraudulent invoices

Bausch Health Companies Inc. (formerly Valeant

Pharmaceuticals)

Bausch Health Companies Inc. (formerly Valeant

Pharmaceuticals develops, manufactures, and market a

broad range of pharmaceutical products primarily in the

areas of dermatology, gastrointestinal disorders, eye

health, neurology, and branded generics.

The company was involved in a number of

controversies surrounding drug price hikes and the use of

a specialty pharmacy for the distribution of its drug,

which led to an investigation by the SEC and caused its

stocks price to plummet more then 90 percent from its

peak while its debt surpassed $30 billion.

Obsidian Energy Ltd.

Obsidian Energy Ltd. (previously known as Penn West

Exploration Ltd., Penn West Petroleum and Penn West

Energy Trust) - is a mid-sized Canadian oil and natural

gas production company based in Calgary. Alberta.

Overstated profits amounting to $300 million.

5. LONDON

HOW DO I BECOME AN ACCOUNTANT IN LONDON?

The Accountancy Profession in London can be achieved

through gradual job experience and several licensure exams.

The following are the prerequisites:

For Accounting Technician:

Certificate in Accounting (AAT Level 2)

Prepare you for junior and entry level accounting

roles. And takes 6-12 months to finish.

Diploma in in Accounting and Business (AAT Level

2)

This qualification will prepare a 16-19-year-olds

for junior and entry level accounting roles.

Similar with Certificate in Accounting it also

takes about 6-12 months to finish.

Advanced Diploma in Accounting (AAT Level 3)

This course will you master more complex

accounting disciplines including financial

processes, advanced bookkeeping final accounts

and ethical practices for accountants. Takes 6-12

months to finish the course.

Professional Diploma in Accounting (AAT Level 4)

Cover higher accounting task.

For Certified Chartered Accountants:

This Profession comprises of two-level examination:

Fundamental and Professional Examination. This examination

is offered 4 times a year. There is no definite college

business and accountancy degree required to take the exam,

in fact, a high school graduate can take this examination.

Fundamental examination contains: (Offered to those

examinees who do not have a bachelor degree. Those who

possess a bachelor degree are exempt in taking this

exam.)

 3 GCSEs (General Certificate of Secondary

Education)

 2 A Levels in 5 separate subjects including

Math and English

Professional Examination: (there are 3 categories for

this examination– Applied knowledge, Applied Skills,

Strategic Professional)

 Applied Knowledge covers Accountant in Business,

Management Accounting, Financial Accounting

 Applied Skill covers Corporate Business Law,

Performance Management, Taxation, Financial

Reporting, Audit and Assurance, Financial

 Management.

 Strategic Professional covers essential and optional

subjects.

 Essential (Strategic Business Leader,

Strategic Business Reporting)

 Option (e.g. Advanced FM, Advanced Taxation)

THE GOVERNING BODY

Financial Reporting Council (FRC) Board

This governing body regulates auditors, accountants

and actuaries, and sets the United Kingdom’s Corporate

Governance and Stewardship Codes. They promote transparency

and integrity in business to give investors and others who

rely on company reports audit and high-quality risk

management.

The Board is supported by three governance committees:

 Audit Committee

 Nominations Committee

 Remuneration Committee

Two business committees:

 Codes & Standards Committee

The Codes & Standards Committee is responsible for

advising the FRC Board on corporate governance matters,

including changes to the UK Corporate Governance Code and

the Stewardship Code.

It advises the FRC Board on the Annual Plan and

Budget and FRC strategy - particularly on issues of

corporate governance and stewardship. It pays special

attention to identifying emerging and potential risks to

the quality of corporate governance and stewardship in

the UK. It also approves the issue and maintenance of FRC

taxonomies, including for consultation. It is responsible

for making appointments to the Councils.

 Conduct Committee

Responsible for overseeing the FRC’s work in promoting

high quality corporate reporting. Its responsibilities

include overseeing:

1. Monitoring of Recognized Supervisory and

Recognized Qualifying Bodies

2. Audit Quality Reviews

3. Corporate reporting reviews

4. Professional discipline

5. Oversight of the regulation of accountants and

actuaries
The Corporate Reporting Review Committee

The Corporate Reporting Review (CRR) Committee

comprises the Chair and Deputy Chairs of the

Financial Reporting Review Panel appointed by the

Conduct Committee. The CRR Committee is

responsible for taking all steps delegated to the

CRR Committee under the Conduct Committee

operating procedures for reviewing corporate

reporting including:

1. opening an Inquiry;

2. appointing a Review Group;

3. and if appropriate, referring any matter

to the Conduct Committee to consider

action under one of the FRC’s disciplinary

scheme

Audit Quality Review Committee

The Audit Quality Review (AQR) Committee helps

ensure the consistency and fairness of the FRC’s

audit monitoring work. Its functions include:

1. Providing input on the monitoring strategy and

on the inspection process, including the

quality category guidelines.

 2. Reviewing reports from the Executive that

summarize inspection findings and set out a

rationale for audit quality categories.

3. Providing advice, as requested, regarding

inspection findings and quality categories

where a request for re-consideration has been

received by the Executive.

4. Providing input to audit monitoring public

reports on individual firms.

5. Performing any other functions as shall be

determined by the Conduct Committee from time

to time.

Case Management Committee

The Case Management Committee advises on the

handling of disciplinary cases

And three advisory councils:

 Corporate Reporting

The Corporate Reporting Council is advisory to the

FRC Executive on the development and maintenance of high

quality, effective and proportionate Standards, Guidance,

SORPS and Practice Notes for accounting and narrative

reporting work. In so doing the Council:

1. Provides perspective on the broader landscape

affecting the quality of accounting and narrative

reporting;

2. Advises on the identification of current, emerging and

potential risks to the quality of accounting and

narrative reporting and to the FRC’s responsibilities

and strategic objectives in connection with accounting

and narrative reporting matters.

3. Identifies opportunities to promote the quality of

accounting and narrative reporting through Standards,

Guidance and Statements of Recommended Practice for

accounting and narrative reporting; and

4. Provides advice on accounting and narrative reporting

matters.

 Audit & Assurance

The Audit and Assurance Council is advisory to the

FRC Executive on the development and maintenance of high

quality, effective and proportionate Standards, Guidance,

SORPS and Practice Notes for audit and assurance work. In

so doing the Council:

1. Provides perspective on the broader landscape

affecting the quality of audit and assurance work;

 2. Advises on the identification of current, emerging and

potential risks to the quality of audit and assurance

work and to the FRC’s responsibilities and strategic

objectives in connection with audit and assurance

matters;

3. Identifies opportunities to promote the quality of

audit and assurance work through Standards, Guidance,

Practice Notes and Statements of Recommended Practice

for audit and assurance work; and

4. Provides advice on audit and assurance matters.

 Actuarial

The Actuarial Council is advisory to the FRC Executive

on the development and maintenance of high quality,

effective and proportionate Standards, Guidance and

Statements of Practice for technical actuarial work. In so

doing the Council:

1. Provide perspective on the broader landscape affecting

the quality of actuarial work;

2. Advise on the identification of current, emerging and

potential risks to the quality of actuarial work and to

the FRC’s responsibilities and strategic objectives in

connection with actuarial work;

3. Identify opportunities to promote the quality of

actuarial work through Standards, Guidance and Statements

of Practice for technical actuarial work; and

4. Provide advice on technical actuarial matters.

The FRC Board Structure

ACCOUNTING STANDARDS

• Financial Reporting Standards (FRSs)

• Statements of Standard Accounting Practice (SSAPs)

• FRSSE (Financial Reporting Standard for Smaller Entities)

• Financial Reporting Exposure Drafts (FREDs)

• GAAP

MAJOR ACCOUNTING SCANDALS

TESCO-2014

Three former senior directors at Tesco have been charged with

fraud in relation to a £263m-plus accounting scandal at the

supermarket chain.

Carl Rogberg, the former finance director of Tesco UK,

Christopher Bush, the former managing director of Tesco UK, and

John Scouler, the former commercial director for food, have all

been charged with one count of fraud by abuse of position and

one count of false accounting.

A statement from the Serious Fraud Office said the alleged

activity occurred between February and September 2014.

The three men have been summoned to appear at Westminster

magistrates court on 22 September 2016 and could face up to 10

years in jail if found guilty of fraud by abuse and seven years

for false accounting.

CONTINUING PROFESSIONAL DEVELOPMENT

According to IES (International Education Standard) , each

IFAC member bodies and associates are required to establish

requirements for and methods to measure professional

accountants’ CPD activity from one of the three approaches:

input-based approach, output-based approach or combination.

Output-Based Approaches: require professional

accountants to demonstrate, by way of outcomes, that

they have developed and maintained professional

competence.

Input-Based Approaches: establish an amount of

learning activity for professional accountants to

develop and maintain professional competence:

At least 120 hours (or equivalent learning units)

of relevant professional development activity in

each rolling three-year period, of which 60 hours

(or equivalent learning units) shall be

verifiable;
 Complete at least 20 hours (or equivalent

learning units) of relevant professional

development activity in each year; and

Combination Approaches: combine elements of the input-

and output-based approaches and meet the requirements

of both, as applicable, and as set out in IES 7.

Example of Associations/ Bodies in UK which are members of IFAC:

ACCA (Association of Certified Chartered Accountants) CPD

Policy gives different route on to complete CPD requirements:

Unit route

Complete a total of 40 relevant units of CPD each

year, comprising:

 at least 21 verifiable units

 up to 19 non-verifiable units (general

learning)

Unit route for part-time and semi-retired

Complete 19 units of non-verifiable CPD and set

own level of verifiable CPD.

ACCA Approved Employer route

Follow Approved Employer professional development

approach.

IFAC Body Route

 Complete a predetermined number of hours of

learning or relevant professional development

activity within the rolling period for time of

which a portion could be verifiable.

6.NEW YORK

HOW IS ACCOUNTING IN THE UNITED STATES DIFFERENT FROM

INTERNATIONAL ACCOUNTING?

Despite major efforts by the Financial Accounting Standards

Boards or FASB and the International Accounting Standards Board

or IASB significant differences remain between accounting

practices in the United States and the rest of the world. For

example, companies in the United States are allowed to use last

in, first out or LIFO, as an inventory-costing method, which is

a practice banned in most countries. International practices are

compiled in the International Financial Reporting Standards or

IFRS, as set forth by the ISAB. United states, the FASB releases

statements of financial accounting that, when combined, form the

generally accepted accounting principles or GAAP.

According to the IFRS and US GAAP is “that IFRS provides

much fewer overall details.” Other significant differences

include how comparative financial information is presented, how

the balance sheet and income statements are laid and how debts

are treated.
Inventory Accounting Differences

US GAPP allows LIFO carrying cost of inventory accounting,

while the IFRS explicitly prohibits any company from using LIFO.

Instead, international standards dictate that the same cost

formula must be applied to all inventories of similar nature.

Under GAAP, inventory is carried at the lower of cost or market,

with market being defined as current replacement cost, with some

exceptions. Inventory under IFRS is carried at the lower of cost

or net realizable value, which is the estimated selling price

minus costs of completion and other costs necessary to make a

sale.

Other inventory differences include ho markdowns are

allowed under the retail inventory method or RIM, and how

inventory write-downs are reversed.

Long Lived Assets

GAAP does not allow for assets to be revalued; IFRS allows for

some revaluation based on fair value, as long as it is completed

regularly. The depreciation of long-lived assets is very

uncommon, though technically allowable, under GAAP; it is

required under IFRS if the asset’s components have “differing

patterns of benefit”

Long lived investments assets are separately defined by the

IASB and for on a historical cost basis. In the United States,

the FASB does not have separate definition for property used as

an investment only. Property is only held fro use or held for

sale.

Impairment losses for long lived assets under GAAP are

calculated as the amount of the asset exceeding fair value.

Under IFRS, such assets are calculated as the amount as assets

exceeds “recoverable amount”, or the higher figure between fair

value less costs to sell or value in use.

Required documents for Financial Accounts

Companies that report under IFRS are required to compile

and publish a balance sheet, income statement, changes in equity

document, cash flow FASB requires all of these as well and adds

in statements about comprehensive income.

Rules vs. Principles

GAAP is considered to be rules-based, meaning rules are

made for specific cases and do not necessarily represent a

larger principle. IFRS is principles-based and, in that way,

more consistent. This is one reason the published version of the

IFRS is less than 20% of the size of the published volumes of

GAAP.
TOP 5 ACCOUNTING SCANDALS IN THE PAST DECADES

1. Waste Management Scandal (1998)

Waste Management Inc is a publicly-traded US waste

management company. In 1998, the company’s new CEO, A Maurice

Meyers, and his management team discovered that the company had

reported over $1.7 billion in fake earnings.

The Securities and Exchange Commission (SEC) found the company’s

owner and former CEO, Dean L Buntrock, guilty, along with the

several other top executives. In addition, the SEC fined Waste

Management’s auditor, Arthur Andersen, over $7 million.

2. Enron Scandal (2001)

Enron Corporation was a US energy, commodities, and services

company based out of Houston, Texas. In one of the most

controversial accounting scandals in the past decade, it was

discovered in 2001 that the company had been using accounting

loopholes to hide billions of dollars of bad debts. The scandal

resulted in the shareholders losing over $74 billion as Enron’s

share price collapsed from around $90 to under $1 within a year.

An SEC investigation revealed that the company’s CEO, Jeff

Skillings, and former CEO, Ken Lay, and kept billions of dollars

of debt off the company’s balance sheet. In addition, they had

pressured the company’s auditing firm, Arthur Ardensen, to

ignore the issue. The two were convicted, largely based on the

testimony of former Enron employee Sherron Watkins. However, Lay

died before serving time in prison. Jeff Skillings was sentenced

to 24 years in prison. The scandal led to bankruptcy of Enron

and dissolution of Arthur Andersen. After the fact, the

convictions were as conversely as the company’s collapse had

been shocking, as prosecutor Andrew Weissman indicted not just

individuals, but the entire accounting firm of Arthur Andersen,

effectively putting the company out of business. It was little

consolation to the 20,0000 employees who had lost their job when

the conviction was later overturned.

3. WorldCom Scandal (2002)

WorldCom was an American telecommunications company based

out of Ashburn, Virginia. In 2002, just a year after the Enron

Scandal, it was discovered that WorldCom had inflated it assets

by almost $11 billion making it by far one of the largest

accounting scandals ever.

The company had underreported line costs by capitalizing

instead of expensing then and inflated its revenues by making

false entries. The scandal first came to light when the

company’s internal audit department found almost$3.8 billion in

fraudulent accounts. The company’s CEO Bernie Ebbers, was

sentenced to 25 years in prison for fraud, conspiracy, and

filling false documents. The scandal result in over 30,000 jobs

cuts and over $180 billion in losses by investors.

4. Tyco Scandal (2002)

Tyco International was an American bluechip security

systems company based out of Princeton, New Jersey. In 2002, it

was discovered that CEO Dennis Kozloski and CFO Mark Swartz had

stolen over $150 million from company and inflated the company’s

earnings by over $500 million in their reports. Kozlowski and

Swartz had siphoned off money using unapproved loans and stock

sales. The scandal was discovered when the SE and the office of

the District Attorney of Manhattan carried out investigations

related to certain questionable accounting practices by the

company. Kozloski and SWATZ were both sentenced to 8 to 25 years

in prison, A class action suit forced them pay $2.92 billion to

investors.

5. HealthSouth Scandal (2003)

Health South Corporation is a top US publicly traded

healthcare company based out of Birminghan Alabama. In 2003, it

was discovered that the company had inflated earnings by over

$1.8 billion. The SE had previously been investigating

HealthSouth’s CEO, Richard Schrushy, after he sold $75 million

in stock a day before the company posted a huge loss. Although

charged, Schrushy was acquitted of all 36 counts of accounting

fraud. However, he was found guilty of bribing then Alabama

Governor Don Siegelman and was sentenced to seven years in

prison.

VI. RECOMMENDATION

Based on the data and information gathered, the proponents

recommend that future professional accountants should be given

sufficient briefing and education during their undergraduate

degree as regards accounting scandals and the continuous

involvement of professional accountants to it. Students aiming

to become professional accountants should instill the value of

ethics which is of great necessity to the profession.

In addition to this, professional organizations like

Philippine Institute of Certified Public Accountants (PICPA)

should conduct a timely monitoring of its members to check their

status in their specific workplace so as to maintain a clean and

respectful reputation of the profession. On the other hand,

businesses, companies, and organizations to which professional

accountants are employed should also be reminded that they

should never allow fraud to happen especially with the

assistance of professional accountants just to achieve a

satisfactory outcome of their business.

VII. References

[1]https://www.wits.ac.za/accountancy/why-study/how-do-i-

become-an-accountant/

[2]https://www.saipa.co.za/become-a-member/professional-

accountant-sa/

[3]https://accountingweekly.com/professional-accounting-

bodies-in-south-africa-who-is-who-in-the-zoo/

[4]https://www.saica.co.za/Training/BecomingaCA/tabid/157/l

anguage/en-ZA/Default.aspx

[5]https://www.accountancyage.com/2017/09/27/kpmg-rocked-

south-african-corruption-scandal/

[6]https://www.albany.edu/acc/AccountDptmt/Research/Commonw

ealth/SouthAfrica/Accounting.htm

[7]https://www.sustainalytics.com/sustainblog/auditor-

independence-kpmg-scandal/

[8]https://www.saipa.co.za/continuous-professional-

development-cpd/cpd-requirements/

[9]https://www.researchgate.net/publication/281234071_Stude

nt_Perceptions_of_Accounting_and_Business_Scandals_on_the_A

ccounting_Profession

[10]http: journalofaccountancy
[11]https://en.wikipedia.org

[12]https://www.linkedin.com

[13]https://www.accountingweb.com/aa/standards/number-of-

accounting-fraud-cases-continues-to-rise

[14]https://www.emeraldinsight.com/doi/abs/10.1108/ARJ-

06-2014-0058?mobileUi=0&fullSc=1&journalCode=arj

[15]Vincenzo Bavoso “Explaining Financial Scandals:

Corporate Governance, Structured Finance and the

Enlightened Sovereign Control Paradigm”, University of

Manchester, 2012