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Audit approach overview
Our audit approach will allow our client's accounting personnel to make the maximum contribution to the audit effort without compromising their ongoing responsibilities
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Annual and short period audit
At P&A Grant Thornton, we provide annual and short period financial statement audit services that go beyond the normal expectations of our clients. We believe strongly that our best work comes from combining outstanding technical expertise, knowledge and ability with exceptional client-focused service. A team-based approach defined by dedication to partner involvement in all engagements—that’s our service commitment locally and globally. An organization’s financial statements are a reference of choice for a variety of users who are required to make decisions. Whether it is a financial institution, a government agency, creditors, shareholders, or potential buyers, every one of your partners requires financial information that accurately reflects the soundness of your organization.
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Review engagement
A review involves limited investigation with a narrower scope than an audit, and is undertaken for the purpose of providing limited assurance that the management’s representations are in accordance with identified financial reporting standards. Our professionals recognize that in order to conduct a quality financial statement review, it is important to look beyond the accounting entries to the underlying activities and operations that give rise to them.
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Other Related Services
We make it a point to keep our clients abreast of the developments and updates relating to the growing complexities in the accounting world. We offer seminars and trainings on audit- and tax-related matters, such as updates on Accounting Standards, new pronouncements and Bureau of Internal Revenue (BIR) issuances, as well as other developments that affect our clients’ businesses. Participants are entitled to credited units for Continuing Professional Education (CPE), which are required by the Board of Accountancy. CPE is indicative of an individual’s genuine concern for his or her continued growth as a professional. Our team can help in achieving that.
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Tax advisory
Assistance during tax audit/contesting an assessment We assist clients in handling audits by the Bureau of Internal Revenue (BIR), Bureau of Customs (BOC) and local government units (LGUs) in a systematic and efficient manner. We help evaluate the validity of assessments, determine the appropriate documents and analyses to be submitted, prepare protests, and represent clients in meetings and discussions with government agencies. With our knowledge of tax laws and audit procedures, we help safeguard the substantive and procedural rights of taxpayers and prevent unwarranted assessments. Tax opinion and studies We conduct tax studies and provide advice to clients on the tax implications of specific transactions based on relevant laws, regulations, court decisions, rulings, and other relevant issuances. We likewise provide recommendations to address or mitigate tax issues arising from said transactions. Application for tax refund/credit We help clients recover taxes that have been erroneously or excessively paid or withheld through applications for refund or tax credit certificates (TCCs). Applications for refunds or TCCs are recommended for companies that have excess income taxes paid or unutilized creditable withholding taxes as reflected in the final income tax return (ITR), excess unutilized VAT input taxes arising from zero-rated transactions or change in VAT status, unutilized advanced VAT, excise taxes paid on petroleum products sold to tax-exempt entities and international carriers, other national or local taxes erroneously or excessively paid, or penalties imposed without authority.
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Tax compliance
Tax review We evaluate clients’ overall level of compliance with existing laws and regulations; caution them on procedures and practices that expose them to potential tax liabilities; quantify tax exposures, risks and penalties; and advise them on proper course of action and alternative tax-efficient policies and procedures. Tax due diligence review is particularly recommended for companies that are contemplating expansion, mergers and consolidation, acquisitions, change in ownership, or public listing. Expatriate tax services We ensure the proper and efficient compliance of expatriates with their Philippine income tax obligations. Our services include registration and application for Taxpayer Identification Number (TIN), preparation and filing of annual Philippine income tax return, and payment of tax due in the proper venue and within the allowed period. As a value-added service, we respond to Correspondence Audits/Inquiries by the BIR regarding information declared in the tax return. If desired by clients, we also conduct arrival or departure briefings and interviews to apprise the expatriate of his Philippine tax liabilities. Upon a company’s request, we can compute, on an annualized basis, the total withholding tax due from its expatriate during the taxable year and prepare tax equalization and reimbursement calculations in accordance with company policies.
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Corporate services
Assistance for incentives availment We help clients evaluate their qualification for incentives under the Board of Investments, the Philippine Economic Zone Authority, the Subic Bay Metropolitan Authority or other special laws. If clients are qualified, we assist them in applying with the concerned government agency for such incentives. Our assistance covers filing of the application and supporting documents, monitoring the progress of the application, meeting/discussion issues, if any, with regulatory authorities, and securing the approval for such incentives. At the clients’ request, we may also assist in ascertaining their compliance with regulatory requirements (to ensure the continued entitlement to incentives), or in justifying the entitlement to such incentives in the event of a challenge by the BIR or other regulatory agencies. Corporate organization and registration For clients that want to do business in the Philippines, we assist in determining the appropriate and tax-efficient operating business or investment vehicle and structure to address the objectives of the investor, as well as related incorporation issues. We help set up the business and register it with concerned government regulatory agencies, such as the Securities and Exchange Commission, the Bureau of Internal Revenue, the Local Government Unit, the Social Security System and the Bangko Sentral ng Pilipinas. We also assist in notifying and/or securing necessary approvals from government regulatory agencies when there are changes in business activities, business status, or tax-type registration.
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Tax education and advocacy
Tax advocacy We actively participate in consultation and public hearings conducted by the Bureau of Internal Revenue on proposed tax rules and regulations, serving as a bridge between our clients and the BIR. Our advocacy work focuses on clarifying the interpretation of laws and regulations, suggesting measures to increasingly ease tax compliance, and protecting taxpayer’s rights. Tax seminars and training We offer seminars and training on tax-related developments and special issues of interest to taxpayers. Upon request, we provide customized in-house tax training – designed jointly by P&A and the client – that directly addresses the specific issues of the client’s industry and the training needs of its personnel.
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Business risk services
Our business risk services cover a wide range of solutions that assist you in identifying, addressing and monitoring risks in your business. Such solutions include external quality assessments of your Internal Audit activities' conformance with standards as well as evaluating its readiness for such an external assessment. We can also take over your IA function altogether or work alongside you to create more value for your organization. On a higher level, our Enterprise Risk Management methodology can help your organization identify vital strategies and action plans that address key business risks, thereby enabling you to achieve your overall objective of value creation for stakeholders.
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Business consulting services
Our business consulting services are aimed at addressing concerns in your operations, processes and systems. Using our extensive knowledge of various industries, we can take a close look at your business processes as we create solutions that can help you mitigate risks to meet your objectives, promote efficiencies, and beef up controls. This can include analyzing your information technology (IT) applications and infrastructure in order to improve IT governance and strategy, strengthen security, and/or assess business risks and controls related to the use of IT.
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Transaction services
Transaction advisory includes all of our services specifically directed at assisting in investment, mergers and acquisitions, and financing transactions between and among businesses, lenders and governments. Such services include, among others, due diligence reviews, project feasibility studies, financial modelling, model audits and valuation. We are one of the few companies accredited by the Philippine Stock Exchange for the conduct of valuation and issuance of fairness opinions. Our consortium with another Grant Thornton office and a Philippine law office is also one of the fourteen (14) members of the panel of transaction advisers of the Public-Private Partnership Center of the Philippines.
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Forensic advisory
Our forensic advisory services include assessing your vulnerability to fraud and identifying fraud risk factors, and recommending practical solutions to eliminate the gaps. We also provide investigative services to detect and quantify fraud and corruption and to trace assets and data that may have been lost in a fraud event.
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Cyber advisory
Our focus is to help you identify and manage the cyber risks you might be facing within your organization. Our team can provide detailed, actionable insight that incorporates industry best practices and standards to strengthen your cybersecurity position and help you make informed decisions.
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ProActive Hotline
Providing support in preventing and detecting fraud by creating a safe and secure whistleblowing system to promote integrity and honesty in the organisation.
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Accounting services
Accounting services Many multinational companies are setting up their accounting offices in the Philippines. These businesses realize that accounting functions can be standardized across companies around the world and handled by an office halfway across the globe for a fraction of the amount needed to maintain an in-house accounting division. At P&A Grant Thornton, we handle accounting services for several companies from a wide range of industries. Our approach is highly flexible. You may opt to outsource all your accounting functions, or pass on to us choice activities, such as
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Staff augmentation services
Staff Augmentation Services It is a familiar enough scenario: A company suddenly has an urgent need for personnel on a short term, project basis to do accounting or accounting-related work. Considering the short-term nature of the work, it becomes very difficult to find interested candidates. Moreover, companies do not need just anybody, but people with sufficient technical accounting skills. P&A Grant Thornton has a pool of skilled accounting specialists who can fill the gap for companies in such situations. We offer Staff Augmentation services where our staff, under the direction and supervision of the company’s officers, perform accounting and accounting-related work. We have a long list of clients that have benefited from our assistance with the following activities: · Migration from one accounting system to another accounting system · Bank reconciliation for several bank accounts that have not been reconciled for years · Data cleansing, such as reconciliation of balances in subsidiary ledgers of receivables and payables with the general ledger balances · Physical counts of inventories and reconciling the results of the physical count with the accounting records · Count of property and equipment; tagging and reconciliation of the count with the accounting records; and properly setting up the property ledgers · Preparation of schedules and documentary supports and requirements during audits by internal and external parties, including government agencies · Preparation of statements of accounts for certain customers · Acting as accounting personnel while regular accounting staff are on leave This is just a sampling of the services we offer, and we can provide more short-term accounting services on short notice. We can adjust the schedules of our people to fit your work hours and we guarantee high-quality service: Our team is made up of technically competent and properly trained people who are prepared to handle your needs.
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Payroll Processing
More and more companies are beginning to realize the benefits of outsourcing their noncore activities, and the first to be outsourced is usually the payroll function. Payroll is easy to carve out from the rest of the business since it is usually independent of the other activities or functions within the Accounting Department. Payroll processing may look simple, but the process can get complicated, especially as a business expands its manpower. A payroll accountant has to make sure that correct taxes as well as loans of their employees are properly deducted, update the tax status of employees (single, married, no. of dependents, etc.) on a regular basis; monitor work activities during the payroll period (overtimes, sick leaves, vacation leaves, etc.); know which income accounts are taxable or not (de minimis, bonuses within the P82,000 limit, etc.); know the rules and regulations and the latest updates of relevant government agencies (BIR, SSS, Pag-IBIG, PhilHealth, etc.); and ensure that payroll processing and payouts are done on time to avoid employee complaints or dissatisfaction. In addition, the payroll accountant has to ensure that contributions to various government agencies are properly posted to the accounts of the employees. In some companies, payroll processing consumes a significant part of management time: The highest finance or HR officer in the company oftentimes handles management or executive payroll. If payroll is outsourced, the executive officer has better use of his or her time than reviewing or processing the payroll. Moreover, there is the issue of confidentiality – some employees may inadvertently gain access to confidential payroll information when data are lying around during the payroll processing period. Another issue that business owners must watch out for with regard to payroll is fraud. Since the processing of payroll is handled by just one or two trusted persons, oversight may be lax and review may not always be conducted thoroughly, thus fraud happens. P&A Grant Thornton can handle your payroll processing needs so that your management team can focus on your core competencies, enabling you to concentrate on what’s really important to your business . Our team of well-experienced and properly trained professionals can handle your payroll requirements whether you have 10 or 10,000 personnel. In addition to the computation of employees’ pay, P&A Grant Thornton can also provide the following functions under our payroll processing services: Maintain bank accounts exclusively for payroll and payroll-related disbursements Prepare schedules of statutory and internal contributions and obligations File and pay statutory contributions and obligations, manually or electronically Annualize employees’ income tax Provide secure online payslips through our ePayroll facility Handle administration of benefits that needs coordination with government agencies
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Our values
Grant Thornton prides itself on being a values-driven organisation and we have more than 38,500 people in over 130 countries who are passionately committed to these values.
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Global culture
Our people tell us that our global culture is one of the biggest attractions of a career with Grant Thornton.
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At Grant Thornton we believe learning and development opportunities allow you to perform at your best every day. And when you are at your best, we are the best at serving our clients
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One of the biggest attractions of a career with Grant Thornton is the opportunity to work on cross-border projects all over the world.
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Diversity helps us meet the demands of a changing world. We value the fact that our people come from all walks of life and that this diversity of experience and perspective makes our organisation stronger as a result.
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P&A Grant Thornton offers something you can't find anywhere else. This is the opportunity to develop your ideas and thinking while having your efforts recognised from day one. We value the skills and knowledge you bring to Grant Thornton as an experienced professional and look forward to supporting you as you grow you career with our organisation.
Due process in serving tax assessment notices
02 Feb 2021The COVID-19 pandemic has affected the way businesses conduct their day-to-day activities. With the continued threat of the virus and community quarantines in force across the country, most companies have been operating with skeleton workforces, to the extent that often only receptionists and security guards are the only warm bodies present. Such situations could lead to Bureau of Internal Revenue (BIR) notices or letters not being properly served to taxpayers.
It is elementary in tax investigation that when the BIR finds that proper taxes should be assessed, the taxpayer should first be informed in writing of the law and the facts on which the assessment will be made, otherwise, the assessment is void. It is a fundamental principle enshrined in our Constitution that no person shall be deprived of life, liberty or property without due process of law nor shall any person be denied the equal protection of the laws.
VALID MODE OF SERVING ASSESSMENT NOTICE
Revenue Regulations (RR) No. 18-2013 provides for the various modes of serving notice (e.g. Notice of Discrepancy or NoD, Preliminary Assessment Notice or PAN, Final Assessment Notice or FAN, and Final Decision on Disputed Assessment or FDDA) which are personal service, substituted service or by mail.
Personal service is effected by personally delivering a copy thereof to the taxpayer at his registered or known address or wherever he may be found. In case personal service is not practicable, the notice shall be served by substituted service or by mail.
Substituted service can be resorted to when the taxpayer is not present at the registered or known address. The notice may be left at the taxpayer’s registered address, with his clerk or with a person having charge thereof. If the known address is a place where business activity is being conducted, the notice may be left with a clerk or a person having charge thereof. However, if the known address is the place of residence, substituted service can be made by leaving the copy with a person of legal age who is a resident.
If no person is found in the taxpayer’s registered address or known address, the revenue officers concerned are to bring a barangay official and two disinterested witnesses to the address to personally observe and attest to such absence. The notice will be given to the barangay official. Such facts will be contained in the bottom portion of the notice, as well as the names, official position and signatures of the witnesses. The same procedure must be observed when the taxpayer refuses to receive the notice.
Service by mail is done by sending a copy of the notice by registered mail, reputable courier, or ordinary mail, if the registry or reputable courier is not available in the locality of the addressee.
It is also provided that service to the tax agent/practitioner, who is appointed by the taxpayer under circumstances prescribed in the pertinent regulations on accreditation of tax agents, is deemed service to the taxpayer.
PERSONAL SERVICE TO A SECURITY GUARD WHO IS NOT AN EMPLOYEE OF THE TAXPAYER IS INVALID
The personal service of an assessment notice to a security guard who is not an employee of the taxpayer is deemed an invalid service as it was not served upon the taxpayer itself or to its authorized representative. This is what the Court of Tax Appeals (CTA) ruled in one case.
According to the ruling, service by personal delivery strictly requires that the notice must be served only to the taxpayer at his registered or known address or wherever he may be found. On another note, the Court recognized the authority of security guards to receive official notices is confined to situations where the notice is served by registered mail. With regard to the service by registered mail, the postmaster must deliver the notice to the addressee himself or to a person of sufficient discretion to receive the same. In the case, it was considered that a security guard is within the scope of a person of sufficient discretion to receive the registered mail.
The paramount consideration is that the registered mail is delivered to the recipient’s address and received by a person who would be able to appreciate the importance of the papers delivered to him, even if that person is not a subordinate or employee of the recipient or authorized by a special power of attorney.
PERSONAL SERVICE TO AN EMPLOYEE OF A RELATED PARTY IS INVALID
In another case, the assessment notice was served by the BIR to the taxpayer by substituted service because personal service was not practicable. The BIR left the notice with a supposed employee of the taxpayer. However, upon cross-examination of the revenue officer who served the notice, it was determined that the alleged employee of the taxpayer was actually an employee of a related party which is a distinct and separate entity from the taxpayer. As such, the Court invalidated the assessment for failure to properly serve the notice to the taxpayer or his duly authorized representative.
THE NOTICE MUST BE ACTUALLY RECEIVED BY THE TAXPAYER OR HIS AUTHORIZED REPRESENTATIVE
In a recent CTA case, the Court ruled that the BIR’s failure to prove that the PAN was received by the taxpayer renders the assessment void for violation of the taxpayer’s right to due process. The direct denial of the taxpayer on the receipt of the PAN shifts the burden to the BIR to prove that the said letter was actually received.
In this case, the taxpayer argued that the testimonies of the BIR officials were insufficient to prove that he received a copy of the PAN and assuming that he received the letter, he had no personal knowledge that the PAN was actually received by him or his authorized representatives.
The BIR disproves the taxpayer’s allegations by presenting the BIR copy of the PAN, transmittal mailing of the PAN to Manila Central Post office, and the Registry Return Card of Mailing that was duly received by the taxpayer’s alleged authorized representative, a certain person. Relative to the supposed service by registered mail, the BIR also presented the person in charge of mailing, who assumed the position of the staffer who prepared the Transmittal Mailing of the subject PAN.
The Court expressly ruled that while the Registry Return Card proves the fact of mailing, the supposed PAN and the Transmittal Mailing of PAN are insufficient to establish that it was received by the taxpayer. Also, the BIR never presented the staffer, who is the supposed predecessor of the person in charge of mailing and who actually prepared the Transmittal Mailing of the PAN. It was ruled that the person in charge of mailing had no personal knowledge of the preparation of the Transmittal Mailing of the PAN. Thus, it was not sufficiently proven that the PAN was actually received by the taxpayer.
Clearly, the taxpayer’s right to due process was violated because the PAN was not served to him.
In this pandemic, it is a reality that the BIR is facing the challenges of properly serving the assessment notice due to the work-from-home set-up of most companies. However, this does not mean the bureau can disregard the settled rules on proper service of notice. The taxpayer must also be aware of the constitutionally protected right to due process. Tax assessment cases involve lengthy and costly processes, not only for the taxpayer, but also for the government. Thus, these cases can be avoided from reaching our courts when the process of proper service is strictly followed.
Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.
Alexander Querido, Jr. is an associate of the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.
As published in BusinessWorld, dated 02 February 2021
