The Quality Assurance Review (QAR).

What is QAR Program?

The Quality Assurance Review (QAR ) Program is a step for improving the credibility and reliability of financial statements audited by Philippine auditors, be it done by an individual CPA practitioner or by a large CPA firm. The program was introduced by the Board of Accountancy (BOA) in accordance with the practice of CPAs around the world that is becoming a standard. Aside from that, according to BOA, that it is their legal obligation under the Accountancy law  to ensure compliance with the accounting and auditing standards and practices.   Anyhow, the definition of QAR, for further  clarification, are described below which I came across from the QAR ExeCom classificatory letter.

(a) Definition under the Implementing Rules and Regulations of the Philippine Accountancy Act of 2004, RA9298. Quality Review is a study, appraisal or review by the Board or its duly authorized representatives, of the quality of audit of financial statements through a review of the quality control measures instituted by an Individual CPA, Firm or Partnership of CPAs engaged in the practice of public accountancy to ascertain his/her/its compliance with prescribed professional, ethical and technical standards of public practice.

(b) Definition under International Federation of Accountants (IFAC) Statement of Membership Obligations No. 1 on Quality Assurance: Quality Assurance Review – a review to determine whether the member (i) is subject to(partner) or has (firm) an adequate system of quality control, (ii) is in compliance with such system, and (iii) has adhered to professional standards and regulatory and legal requirements in performing engagements.

Surprisingly, according to BOA, the QAR orientation they’ve conducted last year (2010) posted positive reception.  However, after the orientation, in a number of instances, the QAR program has been questioned by CPAs and PICPA and even its validity.   After that, the QAR-tipuneros/QAR-response was born.  QAR-response is a group of CPAs, mostly from PICPA, whose position is that QAR is an excellent program but what was wrong with it is the structure and implementation specially for the small and individual practitioners.  Like for example, QAR is a pre-requisite for BOA accreditation and renewal.  That QAR is not cheap, its totally expensive.

Anyhow, QAR under BOA Resolution No.88 and 23 will not be implemented soon after RTC branch 128 issued a preliminary injunction.  Meaning, you can apply for BOA accreditation either renewal or otherwise without the QAR.

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7 responses to “The Quality Assurance Review (QAR).”

  1. pidro Avatar
    pidro

    I was dismayed with preliminary injunction issued by the Caloocan RTC. Credibility of Filipino CPAs is more important than money. Indeed a single practitioner CPA can only audit no more 50 clients in order to come up with a credible audit opinion. Many QAR oppositions are engaged in signing and issuing audit certificate without even looking at the petty cash of their clients (most of them have more than 150 clients and this is reality). Right now I can say that many Filipino CPAs are in direct participation in the tax evasion made by their clients. What a shame!

  2. bizone Avatar
    bizone

    Pidro, your feelings are but normal. And I am so grateful that CPAs like you favored the importance of the credibility of Filipino CPAs. I too, is on that stand. Truly, the QAR is an excellent program, no doubt about it, no question too. Even those CPAs opposing it obviously found it excellent. However, as I understood, the questions of those who are against it, is the structure and the details of the how it will be implemented. Perhaps, the court found a sufficient basis from the position paper submitted to them by the QAR-response group that is why a preliminary injunction was issued. Anyhow, that is not our concern anymore because it will always be debatable, a legal battle between lawyers who knows best.

    Anyway, about your given figure, that an individual CPA practitioner can only audit no more than 50 clients for the CPA to issue a credible audit opinion. This point of view is subjective and arguable. Either you can name a few or give examples, still it doesn’t represent the entire practicing CPAs. The 50 clients can be broken down into a fiscal and calendar reporting year that can be easily manageable. Furthermore, since normally individual CPA practitioners accommodate small and medium enterprises then transactions are not that voluminous compare to large corporations. Either way, you can still perform TOR and sampling and are but applicable to both. Furthermore, and for your information, individual CPA practitioners employ audit staffs and bookkeepers as an assistance to the nitty-gritty of audit works. That is why, or maybe perhaps you came up with 150 clients. I do agree that it can be that way. However, it’s not the 150 clients who really count. It’s the professional fee that matters. Ask around and gather information about “how much” then compare it to the QAR fee. Then tell me if it is cheap or otherwise. Thanks.

  3. Peggy Brandom Avatar
    Peggy Brandom

    Can I just say what a relief to search out someone who really is aware of what theyre talking about on the internet. You positively know easy methods to bring an issue to light and make it important. More people have to read this and understand this facet of the story. I cant consider youre no more common since you positively have the gift.

  4. iso 9000 Avatar
    iso 9000

    Hey, very nice site. I came across this on Google, and I am stoked that I did. I will definately be coming back here more often. Wish I could add to the conversation and bring a bit more to the table, but am just taking in as much info as I can at the moment.

  5. joyce Avatar
    joyce

    Since this topic is resurrecting this year, this will not be a problem if there can be established a minimum audit fee required per size of client/s. the corporations here in the phils are NOT willing to pay. unlike in the USA and everywhere else in the world, phil companies think advice should be free and service should be cheap. Even if you send a bill for x amount, the companies still pay the cpa what they want and not what is on the bill.

  6. imelda t. zaragoza Avatar
    imelda t. zaragoza

    Can i enrol in the QAR?

  7. Nestor Velasco Avatar
    Nestor Velasco

    As a practitioner, I am not against QAR, it will diffinitely improve the quality of audit but what I am against with implementation of the QAR Council that was created for this purpose. The following should be answered first by the PRC Board of Accountancy which I believed, is the regulatory arm of this government agency to implement the QAR;

    1. Does it have legal personality? Why collection of fees are deposited to the account of PICPA and the QAR Council will disburse the collection revenue for its operation. Do they have the authority to approved the release of public fund?. What I understand, since this is a government function as a regulatory agency, all fees must be deposited to the account of government which goes to the account of national treasury.
    2. Since this is part of government regulatory function, annual budget for its operation should be approved by the congress and collections should never be used for operation which should be deposited to the account of national treasury first.
    3. Is the QAR being under the PRC BOA, subject to COA audit? Because I asked the officers before, will QAR be audited by COA since it is presumed that its a regulatory arm of this government agency, they could not answer me directly My concern, as CPA, which all of us practitioner is aware of, is the proper internal control system or presence of check and balance which I find it lacking to prevent fraud or irregularities since it is considered a public fund. Furthermore, the officers who will be appointed or hired to implement this regulatory function are susceptible to legal complain ranging from unauthorized disbursement of public funds or technical malversation to unauthorized implementation of public function of its officers which may lead to civil and criminal case of members of QAR. This has been going on for so long why the PRC don’t have initiative to correct it and look for any member of the Congress to sponsor it so that Congress will approved legally before it is implemented.

    nestor

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