The ongoing push to curb or eliminate red tape among government agencies has hit a snag, following the insistence of the Board of Accountancy (BOA) requiring the submission of so-called compilation reports, notwithstanding a Bureau of Internal Revenue (BIR) decision dropping the requirement, the Department of Finance (DOF) said.
According to the DOF, because the BOA insisted the compilation be attached to the audited financial statements despite the new BIR directive, private companies are compelled to hire Certified Public Accountants (CPAs) accredited by the BOA on top of the independent auditor certificate already required by the BIR and the Securities and Exchange Commission (SEC).
Finance Undersecretary Antonette C. Tionko said the submission of income tax return (ITR) compilation reports has proven tedious and costly for small- and medium-size enterprises (SMEs) and could hamper the BIR’s tax-collection drive.
“The BOA’s insistence on requiring the submission of the compilation reports is additional red tape, and could impede the BIR’s ability to collect taxes, especially now that the bureau is streamlining and simplifying processes in time for the submission of income-tax returns and with many tax filers trying to beat this year’s deadline on April 15,” Tionko said.
According to Tionko, the compilation reports cannot be prepared by just any CPA and should be done only by those accredited by the BOA, which requires them to undergo 120 hours of paid seminars each year.
In 2016 the BIR issued Revenue Memorandum Circular (RMC) 21-2016, requiring the submission of the BOA compilation reports, along with the audited financial statements, when filing ITRs beginning December 31, 2016.
However, the circular has already been amended with the issuance of RMC 16-2017 on February 22, which states that only the existing documentary requirements in the filing of ITRs will now be required consistent with the ease of doing business program and streamlining bureaucratic requirements.
“These existing documentary requirements pertain only to the submission of audited financial statements and, in certain cases, an attached audit certificate along with the ITR, and does not include the compilation certificate,” Tionko said.
Still, the BOA, in a resolution, said the requirement is allowed under the Philippine Accountancy Act of 2004 and even warned CPAs to comply with the BOA requirement to avoid sanctions, according to Tionko.
Finance Assistant Secretary Mark Y. Joven also explained the Philippine Chamber of Commerce and Industry (PCCI) also complained before the SEC about the BOA requirement as unnecessary and redundant. Businesses are already required to submit a duly signed statement of management responsibility when filing financial statements.
Besides the PCCI, small accountancy practitioners and the Philippine Institute of Certified Public Accountants have also sought a temporary restraining order against the other requirements on CPAs imposed by the BOA, according to Joven.
The DOF already relayed its concern on the BOA refusal to cooperate with the anti-red-tape campaign to the Professional Regulation Commission, which has supervision over the BOA. Finance Secretary Carlos G. Dominguez III last year appointed Finance Undersecretary Gil S. Beltran as anti-red tape czar, in line with the administrations drive to further cut red tape among government agencies. Rea Cu