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How should a company go about choosing an external auditor? What factors must it consider in deciding whether a CPA would be able to perform a good audit? The answer to these questions depends on the value that management and the other users place on the audited financial statements. Is audit just needed for regulatory compliance and submission to government agencies? Is it obtained because banks and creditors require it? At face value, these maybe the obvious reasons why businesses undergo an audit. However, good governance and best practices on financial management requires for a good audit to be performed as it attests to the fairness of the information contained in the financial statements and disclosures issued by the company.

As an employer, do you know that your obligation goes beyond remitting your employees’ (plus the employer’s) statutory contributions to various government agencies such as the Social Security System (SSS), Philippine Health Insurance Corp. (PhilHealth) and Home Development and Mutual Fund (HDMF)?

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.

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?

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.

IMF Resident Representative to the Philippines Shanaka Peiris, in a presentation about the country’s economic outlook for 2016 and the opportunities and challenges ahead, he reported about the impressive growth achieved by the economy in recent years. Peiris said the Philippines’ economic fundamentals, such as real GDP growth, inflation rate, current account balance and general government debt, have been improving. Domestic private demand remains strong, supported by OFW remittances and the rapidly growing BPO sector. He also mentioned that the Philippines continues to have favorable endowments such as a huge English-speaking and literate workforce and an expanding domestic market, which now includes the Asean economic community. Indeed, there is great potential for the Philippines to take off economically.

To the veterans, baby boomers, old guards, or the so-called “dinosaurs,” the idea of office work is a 9-to-6 affair that involves sticking to a routine and ticking off tasks designed and intended to meet an organization’s objectives and goals. This “well-oiled machine,” where individual parts function in accordance with a particular template to deliver an intended objective, is a management concept taken from the Industrial Revolution and perhaps, inappropriately adopted by service organizations.

Under the Asean Mutual Recognition Agreement (MRA) on Accountancy Services signed in November 2014, CPAs in the Philippines may be recognized as such in other countries in the region, namely: Brunei Darussalam, Indonesia, Malaysia, Singapore, Thailand, Vietnam, Lao PDR, Burma and Cambodia. Thus, a Filipino CPA may qualify to provide and render accountancy services beyond Philippine borders and across the Asean region.