Cases Involving Accountants
Individual CPAIn 1979–1997, 170 cases were filed against individual CPAs and one against an accounting firm. No cases were filed against CPAs on the grounds of gross negligence or incompetence in the practice of their profession, issuing an accountant’s certificate covering the examination of client accounts without observing the necessary auditing standards, or conduct discreditable to the accounting profession. But, the SEC has investigated prima facie malpractice cases. Two examples involve Engineering Equipment Incorporated (EEI) and Victorias Milling Company (Vicmico). Both cases centered on material misstatements in the companies’ certified financial statements. In relation to EEI, the SEC wrote “the auditors may have been involved or professionally negligent” and recommended a 1-year suspension of the firm’s accreditation to appearfor clients before the SEC. This recommendation was later overturned and the auditors reportedly fined P50,000 ($1,000). The penalty was not reported in the media. Nor did the PRC or the BOA investigate the auditing firm. As for Vicmico, neither the PRC nor the BOA took action, while the SEC pursued the case. Moreover, in the Vicmico case, the auditing firm later withdrew its audit reports for the financial statements in question. (Cited in: Dyball, Maria Cadiz and Lina J. Valcarcel. 1999. The "Rational" and "Traditional": The Regulation of Accounting in the Philippines. Accounting, Auditing and Accountability Journal. Vol 12(3). pp. 303-327.http://www.adb.org/Documents/Books/Diagnostic_Study_Accounting_Auditing/PHI/prelims.pdf)
Independent Auditor “On November 8, 1982, CASA Montessori International opened Current Account No. 0291-0081-01 with BPI, with CASA’s President Ms. Ma. Carina C. Lebron as one of its authorized signatories.” “In 1991, after conducting an investigation, CASA Montessori discovered that nine (9) of its checks had been encashed by a certain Sonny D. Santos since 1990 in the total amount of P782,000.00, on the following dates and amounts: ‘Check No. Date Amount 1. 839700 April 24, 1990 P43,400.00 2. 839459 Nov. 2, 1990 110,500.00 3. 839609 Oct. 17, 1990 47,723.00 4. 839549 April 7, 1990 90,700.00 5. 839569 Sept. 23, 1990 52,277.00 6. 729149 Mar. 22, 1990 148,000.00 7. 729129 Mar. 16, 1990 51,015.00 8. 839684 Dec. 1, 1990 140,000.00 9. 729034 Mar. 2, 1990 98,985.00 Total -- P 782,600.00 “It turned out that ‘Sonny D. Santos’ with account at BPI’s Greenbelt Branch [was] a fictitious name used by third party Leonardo T. Yabut who worked as external auditor of CASA. Leonardo T. Yabut voluntarily admitted that he forged the signature of Ms. Lebron and encashed the checks. “The PNP Crime Laboratory conducted an examination of the nine (9) checks and concluded that the handwritings thereon compared to the standard signature of Ms. Lebron were not written by the latter. “On March 4, 1991, CASA Montessori filed the Complaint for Collection with Damages against BPI bank praying that the latter be ordered to reinstate the amount of P782,500.00 in the current and savings accounts of CASA Montessori with interest at 6% per annum. (BANK OF THE PHILIPPINE ISLANDS vs. MONTESSORI, G.R. No. 149454. May 28, 2004, PANGANIBAN, J.) |
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