In the recent Annual Convention of the Association of Certified Public Accountants in Public Practice (ACPAPP) in Boracay, I was privileged to act as the moderator during the Regulators Forum and one of the speakers was Atty. Emmanuel Y. Artiza (General Accountant of SEC) who tackled an interesting topic which is the accreditation of external auditors in a one-time processing with an expiration of a maximum of 5 years for three forms of accreditation namely – Securities and Exchnage Commission (SEC), Bangko Sentral Ng Pilipinas (BSP) and Insurance Commission (IC).
This is a welcome move by the three financial institutions knowing the time and effort involved for a firm or an external auditor to process their accreditation if done separately for each institution. According to the draft circulars from these institutions, all new applications for inclusion in the List of Accredited External Auditors to audit 2020 financial statements and thereafter shall be filed with the SEC starting January 2020.
Some questions that were asked during the Forum is – what if I am disapproved by SEC, will that mean I will also be disapproved by the other institutions? The answer is “NO” because the auditor will still have a chance to be accredited by BSP and IC if they met the requirements of the latter two institutions.
Another clarification requested is – what if one is presently accredited with SEC, can he still avail of the one-stop-shop for BSP and IC? There will be a chance to avail of one-stop-shop for both BSP and IC even if the entity had already been accredited by SEC since each institution will have different criteria/ requirements to be accredited although all of the three institutions will have the same categories in accrediting external auditors namely – categories A, B and C. The categories will determine what kind of businesses an external auditor is allowed to perform their services.
This is a much welcome move since it will cut the processing time for accreditation. For instance, there are five qualification requirements common to all the three institutions and certain requirements as to number and type of clients audited are also the same requirements for a firm or individual external auditor to be accredited.
Since processing will be done at the SEC office, there is no need to go to BSP or IC offices to process the accreditation. It is a contribution to the governent’s initiative to improve the ease of doing business in the country under the leadership of SEC Chair Emilio B. Aquino. For those outside of Manila this is a big step in helping them accredited since this will streamline the application process. When they go to Manila they only have to go to one place to process their accreditation. There are still many firms, especially outside of Manila, which are not accredited because of the time and effort in processing.
I myself had been planning for so long to be accredited as BSP External Auditor but I always postponed it for the reason that it might take a bulk of my time which I cannot afford to spend. My first job as an auditor was to handle all banks and financial institutions clients in one of the big 4 audit firms in the country and later was able to work in the bank for 12 years before I went full time as an external auditor in our audit firm. Perhaps, this time if the one-stop-shop accreditation will push through, I can finally find the time to process that accreditation.
I understand that in the Philippines there are only a few external auditors accredited versus the number of banks in the country. This is understandable, since aside from the tedious process of being accredited, with the many small banks closed by BSP in the past and even big banks which were closed several years ago, auditors are wary of providing their audit services to these financial institutions. Our banking industry has become stable lately and it can be a good reason for some external auditors to be accredited plus the big factor of a one-stop-shop accreditation. And not only that, the number years of expiration was also increased from three years to a maximum of five years ( but can be made for a shorter period as prescribed by the regulators).
Indeed, we are seeing a future where many audit firms and individual external auditors will be accredited not only with SEC but also with BSP and IC with this ease of being accredited “under one roof.” Hopefully, the quality of the audits will also improve with the auditors making sure they are strictly conforming with the guidelines so their accreditation will be renewed upon expiration.
(Wilma Miranda is a Managing Partner of Inventor, Miranda & Associates, CPAs, Chair of the Media Affairs Committee of FINEX, member of the Board of Directors of KPS Outsourcing, Inc. The views expressed herein do not necessarily reflect the opinion of these institutions.)