Perseverence and Audacity:
Punongbayan & Araullo, 1988-2008
It’s hard to believe that in the 1920s, there were only 43 registered accountants in the country. Near century’s end, that number had grown to over 100,000. At around this time, in the late 1980s, the accounting and auditing industry had one dominant player in the field.
But in 1988, a small startup changed all that. This new firm was called Punongbayan & Araullo (P&A) after its two founding partners, Benjamin “Ben” Punongbayan and Jose “Joe” Araullo.
It was perhaps fitting that the soft opening of a new CPA practice that many would later call “the firm with a big heart” took place on Valentine’s Day, 1988. A feng-shui master was even called in for the formal opening of the firm the next day. He advised that under no circumstances should Ben and Joe – both known for their punctuality – be at their new office before 10:57 a.m. When the two founding partners finally stepped over the threshold, P&A was officially in business.
Aside from Ben and Joe, six other people joined the firm at the beginning: Cherry Bernaldo, Fred Damian, Ernie Diaz, Bedos Santos, Jun Cuaresma, and a secretary named Malou. But P&A was clearly set up for bigger things. “Even if we were only eight at the time, says Joe, “we built the office to accommodate more than 100 people – the way we looked at it, we were going to be successful.”
P&A did have a very good first year. The practice grew very quickly and made a profit almost immediately. It was the first time a startup was able to challenge the big accounting firms. “We were immediately able to grab the Number 3 spot,” notes Ben.
For a firm so young, P&A has established an impressive record of hiring CPA exam topnotchers. As of July 2007, it had hired 227 topnotchers – 103 among those in the top ten and 124 among the 11th to 20th. Among these topnotchers are five who obtained the No. 1 spot, including Boyet Murcia, the youngest P&A partner.
Also impressive is the record racked up by P&A’s candidates in the Certified Internal Auditor (CIA) examinations, conducted twice a year worldwide by the Institute of Internal Auditors (IIA). From among the successful candidates in each batch, the IIA honors those who obtain the 25 highest scores and awards the William S. Smith Gold Medal to the top scorer. Only five years after it started sponsoring candidates in the CIA examinations, P&A could already boast of five Top 25 awardees, two of whom were recipients of the Gold Medal.
Winning significant engagements
Early on, P&A was able to establish a name, primarily because of its participation in the largest privatization ever undertaken in the Philippines – that of the Metropolitan Waterworks and Sewerage System (MWSS). The firm was contracted by the lead advisor for the privatization project, International Finance Corporation (IFC), to conduct a due diligence audit in 1996 and, in 1997, to also perform a closing audit of the financial statements prior to the turnover of operations to private operators.
Building on the success of the MWSS engagement, P&A would participate in almost all the other major “big ticket” government privatizations—those of the National Power Corporation, Philippine Phosphate Fertilizer Corporation, Philippine Associated Smelting & Refining Corporation, Petron Corporation, and Philippine Airlines.
Other significant engagements would follow. P&A would be appointed as reporting accountants for the initial public offering of local firms and it would perform many acquisition audits or buyer/investor due diligence reviews for specific investors in engagements that involved many named companies.
The business community would soon take notice and the new little CPA firm that could was well on its way to expanding its practice. Offices opened in Davao and Cebu in 1991 and 1992 respectively. In 199
5, a couple more opened in Iloilo and Cagayan de Oro; and in 1997, P&A set up offices in Dasmariñas, Cavite, and General Santos.
Just like family
One of the reasons P&A has succeeded so well and so quickly in a fiercely competitive and often tumultuous business environment has been the personal camaraderie among its partners, managers and staff, and their collective commitment to the firm. In many ways, P&A has operated – and felt like – a family, small enough for everyone to know everyone else, and yet also ambitious enough to be a major player in the accounting profession.
A system of in-house awards has given due recognition to high achievers within the firm. The Founders Award is given to a specific engagement team that gains prestige for the firm, while the Primus Award is given to an individual who excels during a particular fiscal year. These major distinctions are supported by minor but still well-appreciated forms of recognition given at company sportsfests, Christmas parties, and general staff meetings.
A strong training program
Another factor behind P&A’s success is the partners’ attitude towards training. Upper management has always supported an atmosphere of learning, making sure that staff not only have the technical expertise to do the job, but also the service orientation that is the mark of a P&A professional.
Scholarships and secondments are an integral part of P&A’s training program. A coveted rite of passage for the firm’s future leaders, the secondment program is part of the integral growth path of senior staff members to prepare them for their growing responsibilities in a firm that operates in an increasingly global market.
In 19 years, P&A has sent 50 audit and tax professionals for assignment of one-and-a-half to two years’ duration at various offices of Arthur Young (later, Ernst & Young) and Grant Thornton International in the United States, Canada, and New Zealand.
Similarly, an objective in sending future leaders of the firm to attend graduate degree programs at the Asian Institute of Management (AIM), and partners to senior executive development programs here and abroad was for the participants to gain insights into professional experiences outside of public accounting and also the opportunity to meet and learn from executives from different countries.
To date, P&A has sponsored 20 full-time scholars at AIM, six of whom are now partners of the firm.
Thought leadership: valuing ideas
Besides training, the P&A partners are also staunch advocates of thought leadership, as evidenced by the articles and publications the firm has released through the years.
The Anvil Award-winning books, Taxation of Financial Institutions in the Philippines and New Accounting Standards and Income Tax Reporting: A Study of Differences, are good examples of the product of this leadership mentality. P&A is also well recognized for its Accounting Alert booklets, the series of publications on the international accounting standards fully implemented in the Philippines in 2005.
Giving back to society
In 2003, in time for the celebration of P&A’s 15th year anniversary, the firm formalized its corporate social responsibility efforts by establishing the P&A Foundation. Outreach projects, however, started much earlier at P&A. In 1995, a group of young auditors that included now-partner Mailene Sigue-Bisnar and her future husband organized the first staff outreach project – a visit to orphaned and abandoned children at a Quezon City welfare facility. And in 2002, P&A-for-a-Cause (PAUSE) was formally established as a more formal vehicle for the staff’s various projects. Now PAUSE, a staff-driven initiative, is housed under the wings of the P&A Foundation.
A perfect fit
In September 200
2 , P&A separated from its longtime international partner, and soon forged a new alliance with Grant Thornton International. Established in 1980, the UK-headquartered Grant Thornton is a leading global organization of accounting and consulting firms, all independently owned and managed, providing assurance, tax and specialist advice to client companies in over 100 countries.
In January 2003, Grant Thornton accepted P&A as a full-fledged member firm. By doing so, it extended its full support, provided immediate access to its computer-based audit methodology, accepted a number of P&A audit seniors into its international secondment program and, the following year, enrolled a young P&A partner in its International Partners’ Development Program.
On the other hand, with its in-depth local knowledge, P&A put Grant Thornton in a prime position within the Philippine market.
Through this synergistic alliance with Grant Thornton, P&A was able to enhance the quality of its human and technical resources. Grant Thornton also opened more gateways to international business for the Filipino firm with a big heart and equally big ambitions.
However small P&A began, Ben Punongbayan and Joe Araullo had known from the very start that great things lay ahead for the little firm that could. From a pioneering group of seven CPAs and a secretary, P&A now has 19 partners – with Greg Navarro as managing partner and CEO – and a personnel complement of over 600 people. And the firm is showing no signs of slowing down. As Ben put it, “The succeeding generations of P&A leaders, I am sure, will continue to carry on and improve on these success factors and take P&A to becoming the No. 1 accounting firm in this country!”
(As published in The Philippine Star, 19 February 2008)