Be updated on our latest insights

statements (FS) in relation to a resolution by the Board of Accountancy (regulator) requiring the submission of a “certificate” by the CPA preparer of the FS, which should be attached to the audited FS filed with the SEC and the BIR. Just for clarification, the FS preparer is a person separate and distinct from the external auditor. There have been continuing developments regarding the resolution but which do not cure the controversies that initially arose. As a long-standing member of the profession, I feel I have a responsibility to continue to express my thoughts on these persisting issues.

As the April 15 deadline for the filing of annual income tax return (ITR) is drawing near, taxpayers shall once again start flocking towards various revenue district offices (RDO) of the Bureau of Internal Revenue (BIR). It is at this point that taxpayers should be reminded of the rules on those required to file electronically rather than manually. For those required to file electronically, the available electronic platforms of the BIR are: (a) Electronic Filing and Payment System (eFPS); and (2) Electronic BIR Forms Systems (eBIRForms).

When it comes to increasing the value of your business, the old adage rings true: It’s about the journey rather than the destination. Increasing value is an ongoing process—a process that involves the regular assessment of your business’s strengths and weaknesses. The process should ideally lead you to opportunities that allow you to build upon the former, while remedying—or eliminating—the latter. Because you never know when the need for financing—or the decision to sell—may present itself, you should always be searching for new ways to increase your company’s value. While there are obviously external factors that can play a role in how much your business is worth, there are also many things you can control. These may include:

MOST of us are being kept busy by two things—the First Quarter operations report and the tax filing deadline on April 15. And this being the Philippines, we’ll also be engrossed watching and listening to the candidates campaigning for their respective positions. Thus, it is understandable that only a few have given attention to the additional information being required of individual taxpayers for their Income Tax Return for calendar year 2015.

Nowadays, management itself (especially of those companies that are publicly listed) can manifest that it has designed and implemented internal controls related to financial reporting in several ways. Whenever the chairman, CEO, or the president and the chief financial officer sign the Statement of Management Responsibility accompanying a financial statement, they not only take responsibility for the financial statements but also provide assurances that adequate and effective controls were all in place. The Annual Corporate Governance Report (ACGR) issued by the Security and Exchange Commission (SEC) requires disclosure related to the internal control system of the company. Also, the Code of Corporate Governance specifies that companies establish, evaluate and monitor financial reporting controls to ensure the integrity of financial reports. How does one strengthen the financial reporting and internal control process within one’s organization?

For 2016, the Philippines’ national budget is around P3 trillion and the Bureau of Internal Revenue (BIR) is tasked to collect around P2 trillion. Out of the BIR’s total collection target, about P1.243 trillion is expected to come from income taxes. That is how important income taxes are for the country, accounting for around 41% of the national budget. It is interesting to note, however, that a lot of countries are now shifting their focus to indirect tax. The primary reasons behind the global shift to indirect tax are discussed in an article released by Grant Thornton International (Grant Thornton) entitled “Rethinking Tax: The shift to indirect tax,” and I would like to share this article with you.

The lack of attention to the proper and timely accounting of business transactions has significant consequences. Management is not properly guided when making business decisions, resulting in foregone opportunities or bad decisions that could lead to losses. Reliance on cash flow reports or the movements of funds in the company’s bank accounts, which are used as an alternative basis for assessing the business’ position, poses dangers to decision-making. In this scenario, business owners usually fail to consider other critical aspects affecting the business such as contingent liabilities, unrecorded obligations. Likewise, fraudulent transactions within the organization may go undetected when accounting records are not in order.

The Bureau of Internal Revenue (BIR) is continuously intensifying its efforts in collecting taxes. As a result, more taxpayers are receiving Letters of Authority and being subjected to various forms of BIR examination. Therefore, it is recommended that taxpayers prepare for possible tax audits not just by reconciling their books but also of equipping themselves with knowledge on tax laws and regulations, particularly on the due process applicable to tax examinations.