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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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Learning & development
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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Global talent mobility
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
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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In the community
Many Grant Thornton member firms provide a range of inspirational and generous services to the communities they serve.
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Whether you are starting your career as a graduate or school leaver, P&A Grant Thornton can give you a flying start. We are ambitious. Take the fact that we’re the world’s fastest-growing global accountancy organisation. For our people, that means access to a global organisation and the chance to collaborate with more than 40,000 colleagues around the world. And potentially work in different countries and experience other cultures.
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Experienced hires
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.
Fund-raising through Initial Coin Offering
22 Jan 2019As interest in virtual currencies (VCs), blockchain technology, and initial coin offerings (ICOs) continue to heat up, governments around the world are evaluating the benefits and potential risks of these innovations while considering the regulatory issues surrounding them.
Recognizing that VCs have the potential to revolutionize the delivery of financial services while, at the same time, pose consumer protection and financial stability risks, as well as money laundering and terrorist financing risks, the Bangko Sentral ng Pilipinas (BSP) issued in 2017 a Circular providing guidelines to regulate VCs when used for the delivery of financial services. The BSP Circular focused on VCs as a means for making payments/remittances and required a VC exchange to obtain a Certificate of Registration to operate as a remittance and transfer company.
Following the lead of the BSP, the Securities and Exchange Commission (SEC) issued on Dec. 27, 2018, the proposed Rules and Regulations Governing ICOs (the “Proposed SEC Rules on ICO”), and invited banks, investment houses, the investing public, and other interest parties to submit their comments.
In broad terms, VC refers to a financial value recorded by electronic means, which may be used to pay for goods or services and which may be exchanged reciprocally. A coin is a unit of value employed as a means of exchange within the blockchain. For the Proposed SEC Rules, VC or coin does not include legal tender and electronic money. Also not included are grants of value as part of a rewards program, which cannot be exchanged for legal tender, bank credit, or any digital/crypto asset. Likewise, not included are digital representations of value used within an online game platform.
Under the Proposed SEC Rules, ICOs or token sales are “distributed ledger technology fund-raising operations involving the issuance of tokens in return for cash, other cryptocurrencies or other assets for the purpose of raising money or capital from the general public” to fund a venture, project, or other investment schemes. Once the project reaches a certain stage, “benefits to token holders may include: a) gains through profits or increase in the value of tokens which can be sold if the project is successful; b) voting or governance rights; or c) usage rights.”
The Proposed SEC Rules primarily govern the “conduct of ICOs wherein convertible security tokens are issued by start-ups and/or registered corporations organized in the Philippines, and non-resident foreign start-ups or corporations doing ICOs targeting Filipinos, through online platforms.” While VC or coin are broad terms, the Proposed SEC Rules apply specifically to convertible security tokens. Convertible meaning it is a VC that has an equivalent value in real currency and can be exchanged back and forth for real currency. Security tokens satisfy the definition of securities under the Securities Regulation Code (SRC) and related SEC rules. Security tokens can be in the form of payment tokens (used for the payment of goods and services or as a means of money/value transfer), utility tokens (grants the bearer access to a decentralized platform or service), and/or asset tokens (represent assets or rights thereto, such as a debt or equity claim on the issuer).
In terms of corporate structure, those that wish to conduct an ICO involving security tokens are required to register as a corporation. For non-resident foreign start-ups or corporations, their ability to register security tokens targeting Filipinos is subject to reciprocity and depends on the existence of information sharing arrangements. If the security tokens are already registered in another jurisdiction, the issuer can submit proof thereof and the regulatory framework applicable to it. In the absence of these requirements, the foreign issuer must establish a branch office in the Philippines.
Those who propose to conduct an ICO are required to comply with the following procedures:
1. Not later than 90 days before the pre-sale (i.e., token sale before the main crowd sale), submit to the SEC an initial request assessment with the required attachments for the SEC to determine if the token is security.
More important attachments include the detailed description of the ICO project; proposed whitepaper; and the legal opinion whether the tokens are securities. The description of the ICO project contains the business plan and feasibility of the proposed project. The important contents of the whitepaper include the hard cap (maximum amount of capital that the project aims to raise) and soft cap (minimum amount needed for the project to proceed); use of the proceeds; detailed description of the ICO tokens, such as price/value and the blockchain technology to be used; returns, rights, and other privileges of the tokens; description of the currency or other assets that will be received as payment for the tokens; and description of the investment risks.
2. Within 20 days from the receipt of the initial assessment request (extendible to another 20 days), the SEC determine if the tokens qualify as securities.
3. If the tokens are considered securities, the issuer must register the ICO not later than 45 days before the pre-sale period. For this purpose, the issuer must submit to the SEC a Registration Statement, including a Prospectus.
In addition to the information in the ICO project description and whitepaper, the Registration Statement includes: a) code audit report on the testing of the source code, Know Your Customer (KYC)/Anti-Money Laundering Act (AMLA) framework, and technology risk and security protocols; b) audited financial statements (AFS) with supplementary schedules dated within 135 days from the filing of the prospectus; and c) Manual on Corporate Governance.
More importantly, the issuer is required to contract an independent and reputable escrow agent for keeping the proceeds of the ICO, unless the issuer can prove to the SEC that other mechanisms will be used to satisfy the role of the escrow agent. A copy of the escrow agreement on the conditions and schedule of the release of the proceeds must also be submitted as part of the Registration Statement documents.
4. Upon submitting the complete Registration Statement, the SEC shall conduct an ocular inspection of the office of the issuer and operating system walkthrough of the ICO.
5. After the order of registration and permit to sell is issued, the issuer shall submit within 105 days after each fiscal year (starting from the year of issuance of the permit to sell) reportorial requirements, such as AFS, interim quarterly FS, and semi-annual report on the status of ICO project. The escrow agent is also required to submit a progress report.
While the BSP focused on VC as a means for delivering financial services and making payments/remittances, the SEC is taking a broader view by treating ICOs as an innovative way of raising funds using blockchain and cryptocurrency technology. Essentially, it can be gleaned from the Proposed Rules that the SEC is strongly inclined to consider ICOs as securities and to regulate them as such by requiring Issuers to secure a prior permit to sell and submit voluminous information designed to protect the investing public.
In addition to the United States and the United Kingdom, Singapore and Hong Kong have, in recent years, become hubs for ICOs, according to reports by Fintech News and Consultancy Asia. In a 2017 advisory, the Monetary Authority of Singapore (MAS) clarified that, while it does not regulate virtual currencies, it recognized that a digital token may fall within the definition of “security” under the Singapore Securities and Futures Act (SFA). In this case, issuers would be required to register a prospectus and secure a license before offering such tokens. Moreover, any platform doing secondary trading would have to be a MAS-approved exchange or market operator.
According to MAS, “if the use of a digital token relates to ownership of or interest over an issuer’s assets or property, it could be considered an offer of units in a collective investment scheme; or if the digital token represents a debt owed by an issuer, it may be considered a debenture. In either case, the token would be deemed “securities” under the SFA.
While MAS adopted a similar treatment, it took a more measured and flexible approach by issuing advisories to guide issuers and the investing public alike, instead of passing binding legislation that definitively characterized digital tokens solely as securities.
The Philippine SEC decidedly took a more conservative approach in deeming ICOs as securities and regulating them in a manner similar to initial public offerings (IPOs), even requiring the appointment of an escrow agent to safeguard ICO proceeds. However, there are notable differences between an IPO and an ICO. An ICO specifically caters to start-up projects, while an IPO proponent has to have a minimum track record. An IPO proponent relies on banks, underwriters, and financial advisors. An ICO issuer targets the investor directly and uses blockchain technology precisely to speed up transactions and bypass the usual procedures of banks or investment houses. Funds raised through an ICO are generally used for specific projects, while the proceeds of an IPO are used for the company’s long-term development.
The Philippine SEC clearly recognizes the potential of ICOs as a means to raise capital for start-ups and other small businesses, as well as increasing public participation in capital markets. It is hoped that they continue to monitor future developments in ICOs and be nimble and flexible enough to support innovations in this field by adjusting existing rules and regulations.
With the BSP and SEC at the forefront of formulating rules governing VCs and ICOs, the Bureau of Internal Revenue has demonstrated in recent issuances governing online retailing and ride-sharing services that it, too, can take the cue from other regulators in crafting rules that would address the tax implications of emerging transactions.
Tata Panlilio-Ong is a Director of the Tax Advisory and Compliance Division of P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, advisory, and outsourcing services firms in the Philippines.
As published in BusinessWorld, dated 22 January 2019
