Philippine Accounting, Bookkeeping, Auditing, Business Risk, BPO and Taxation Review

Launching of BIR’s Oplan Kandado

2009-02-17T15:49:00.000+08:00

THE Bureau of Internal Revenue (BIR) recently issued Revenue Memorandum Order (RMO) 3-2009, launching “Oplan Kandado,” a program that involves the strengthening of BIR’s imposition of prescribed administrative sanctions for non-compliance with certain essential requirements, such as the issuance of receipts, filing of returns, declaration of taxable transactions, taxpayer registration and paying the correct amount of taxes as mandated by the norms/standards of a particular industry or line of business.
The said RMO provides the policies and procedural guidelines in the conduct of surveillance operations and the enforcement of the administrative sanction of suspension and temporary closure of business.

The issuance of invoices and official receipts is among the compliance requirements targeted under the program.

Under the Tax Code of 1997, all persons subject to internal revenue tax are required to issue an invoice for each sale of goods and an official receipt for services rendered valued at P25 or more.
For VAT-registered taxpayers, invoices and official receipts are required for all transactions. Failure to issue invoices/receipts is a ground for suspension of business operations and temporary closure of the business establishment.
Likewise, failure to issue invoices/receipts could also be a basis for assessing undeclared revenues if the revenues declared in the income tax or VAT returns are less than the revenues estimated from the surveillance operations.
The conduct of the surveillance operations may be made in any of the following ways: covert surveillance, overt surveillance or short-duration surveillance.

As a general rule, all surveillance activities shall be covered by mission orders to be issued by the authorized revenue official. No surveillance activities shall be conducted and no apprehension shall be effected unless a mission order has been issued.

Assurance service offered by Philippine accounting/auditing firms

2008-11-04T16:35:00.002+08:00

Assurance service pertains to independent professional services designed to improve the quality of information, or its context, for decision making. In the Philippines, this type of service includes assurances on the reliability of financial and nonfinancial information, business processes and controls, regulatory compliance, and information used in strategic transactions. Based on the foregoing, different practitioners offer not only financial statement audit but also various types of assurance services.

For all Securities & Exchange Commission registered organizations - whether subsidiaries of US domestic registrants or foreign private investors - that need to comply with the requirements of section 404 of the Sarbanes-Oxley Act (SOX), assurance providers offer services to achieve compliance.

The assurance providers attest to the managements assessment of the effectiveness of the company's internal controls over financial reporting and include their findings in the company's annual report to shareholders. Different firms are currently offering SOX compliance to US-listed companies or subsidiaries of foreign companies such as PLDT and Shell.

Another assurance service is due diligence. It is used to investigate and evaluate a business opportunity. It is conducted to confirm that the business is what it appears to be and avoid a bad business transaction. Due diligence is very much helpful during company takeovers or when a company wishes to go public.

Before fully acquiring back Coca-cola Philippines from San Miguel, Coca-cola Atlanta asked an assurance provider to conduct due diligence procedures. Aside from audit, attest services offering different levels of assurance about management's assertions include review and agreed-upon procedures.

IASB issues amendments permitting the reclassification of financial instruments

2008-11-03T12:26:00.002+08:00

Philippine accounting firms which offers audit engagements to various companies should take note of the IASB's issued amendments permitting the reclassification of financial instruments.

The International Accounting Standards Board (IASB) recently issued amendments to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7 Financial Instruments: Disclosures that would permit the reclassification of some financial instruments in rare circumstances.

One of the primary considerations for these amendments is the concern from some sectors of the implications of the fair value measurements of debt securities and loans and receivables that the entities no longer intend to hold for the short term. This is especially relevant in the current economic setting and it is not surprising that the deterioration of the world’s financial markets during the third quarter of this year is cited as a possible example of rare circumstances that will allow reclassification.

The amendments also address the desire of regional and international bodies to reduce the differences between IFRS and US Generally Accepted Accounting Principles (GAAP), as the latter already permit certain reclassifications of financial assets.

The effective date for the amendments is 1 July 2008.

Philippine accounting firms should advise their clients to disclose the above amendments to their respective financial statements.

New SEC deadlines for filing of FS

2008-10-31T14:11:00.004+08:00

The SEC has circulated proposed changes to the deadlines for filing of the Financial Statements (FS) of corporations with fiscal year ending December 31.

The objective is to do away with mass filing on or close to the current single due date.

Every accounting firm/individual CPA should advise their clients of this deadlines to avoid penalty in the future.

The proposed deadlines are staggered based on the last digit of the SEC registration as follows (for 2008 FS to be filed in 2009):

April 6 - 10 1 and 2
April 13 - 17 3 and 4
April 20 - 24 5 and 6
Aptil 27 - May 1 7 and 8
May 4 - 8 9 and 0

Companies whose deadlines are earlier than the April 15 deadline for the filing of the annual income tax return (ITR) should be prepared to file their ITR early since the SEC requires BIR-stamped FS.

Philippine Accounting Firms also affected by stock listing postponements

2008-10-30T07:53:00.002+08:00

Accounting Firms in the Philippines, especially the Big Four, are getting less work these days as various companies put off their capital-raising activities due to the slowing economy.

The economic downfall, which originated from USA, is also now affecting Asia.

Big accounting firms in the Philippines which gets a lot of due diligence fees with regards to their service to top corporations are now suffering a decline in their due diligence engagements this year compared last year.

Due diligence engagements is higher in terms of margin than the audit and accounting/tax service offered by accounting firms.

Philippine Accounting Practices History (Part 1)

2008-10-29T17:34:00.002+08:00

Philippine accounting practices date back to the pre-Spanish period, when Filipinos conducted business with Chinese, Indians and Malays from neighboring countries. These trading activities forced Filipinos to prepare crude accounting records that were based mainly on cash receipts and payments.

The Philippines has, for a significant part of its recent history, been exposed to many foreign cultures and influences. The Spanish brought substantial changes to language and religion.

The first accounting firms were established by the British in the 1700s. However, the comparatively short American colonial period was the most significant in influencing the Philippines’ major institutions—including the educational system and the formalization of the professions.

A number of American businesses established themselves in the Philippines during the 1920s and 1930s. Their activities and requirements influenced the establishment and initial growth period of the public accounting profession. During this time, the passage of the Accountancy Act 1923 created the Board of Accountancy (BOA) and gave it the authority to issue Certified Public Accountant (CPA) certificates. Six years later, the Philippine Institute of Certified Public Accountants (PICPA) was established within the private sector to represent professional interests.

Many of the larger Philippine companies were subsidiaries or branches of American companies—their accounting reflected US practices.

Even after independence, the US maintained close links with the Philippines through trade and investment. These links strongly influenced public and private sector accounting regulation and practices. Until the mid-1990s, private sector accounting standards replicated those of the US (Although PICPA issued pronouncements to cover issues not covered by the US standards—for instance, “Revaluation of Fixed Assets”).

Likewise, the Philippine accounting and auditing regulatory framework is similar to the US framework. It includes both governmental and a supervised form of self-regulation.

Philippine Public Accounting and Auditing Firms

2008-10-29T17:19:00.003+08:00

Professional firms in the Philippines are regulated by the Securities and Exchange Commission
(SEC)—the Board of Accountancy, through the Professional
Regulation Commission (PRC), has recently begun to review and license
accountancy firms.

Accountancy firms cannot be corporations and the
Revised Accountancy Law 1975 requires that all partners of accountancy
firms must be registered Philippine CPAs.

All of the large international accountancy firms such as Ernst & Young, PWC, KPMG etc. are represented in the Philippines.

Hector U. Santos Jr., CPA & Associates

2008-10-29T16:27:00.002+08:00

An accounting firm based in Makati City, Philippines.

Managing partner is Hector U. Santos Jr., former audit manager of SyCip Gorres Velayo & Co. (SGV & Co.) and graduate of University of Makati (Magna Cum Laude and many time accounting quiz champion).

Kindly email us at hecsanjr@yahoo.com should you want us to perform accounting service, tax service, business advisory service, audit service etc. for you.