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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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Fresh Graduates
Fresh Graduates
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Students
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.
The first order of business: Local business tax and real property tax
08 Jan 2019As we hit the first month of the year, it is time for another round of renewal and compliance. What better way to start the year than to have a clear mind set of what needs to be accomplished.
Businesses are required to renew their business permits with the local government every year, and for 2019, this is due on or before Jan. 21. Companies need to pay the local business tax, real property tax, and other fees and charges. Because the processing period is short, companies should be aware of the requirements to ensure that the process can be completed within the due date.
LOCAL BUSINESS TAX
All entities doing business are required to pay local business tax (LBT), except for those granted exemption under the Local Government Code (LGC) and special laws. The tax can be paid annually, on or before Jan. 20, or quarterly, within the first 20 days of January and of the first month of each subsequent quarter. Failure to pay the LBT, fees, or charges on time will be subject to a surcharge not exceeding 25% of the amount of taxes, fees, or charges not paid on time and an interest at a rate not exceeding 2% per month of the unpaid taxes, fees, or charges, until such amount is fully paid. However, in no case will the total interest on the unpaid amount or portion thereof exceed 36 months. Since local taxes, fees, and charges accrue on the first day of January of each year, interest on late payments shall be computed from Jan. 1, not from the due date for payment. Failure to pay the LBT means the non-renewal of the business registration, which can be a ground for closure of the establishment by local authorities.
The LBT rate will depend on the local tax code or ordinance enacted by the LGU pursuant to the provisions and limitations of the LGC. Most local tax codes prescribe the annual LBT as a fixed amount, depending on the level of gross sales or receipts. Other rates are set at a percentage of gross sales or receipts. The rates vary depending on the business activity. Hence, an entity can be subject to different rates if it is engaged in several lines of business. If there are new or additional activities undertaken in 2018, confirm with the LGU the LBT rate to be applied.
The LBT for 2019 will initially be based on the gross sales or receipts for 2018. Given that the Audited Financial Statements are not yet available at the time the LBT is due, the taxpayer is required to prepare a Sworn Declaration of its gross sales or receipts for the year 2018. Most LGUs also require presenting VAT returns to countercheck the taxpayer’s declarations. If there is a suspected under declaration of gross sales or receipts, the application shall be tagged by the LGU and may be subject to the examination of books and accounts by the local treasurer after the business renewal period.
The Bureau of Local Government Finance (BLGF), in its Memorandum Circular No. 01-001-2017, enumerated the following items that are not to be included in gross sales or receipts: (a) receipts from the sale of real properties or realty assets, unless one is engaged in buying or selling real estate; (b) determinable discounts at the time of sales, sales returns, excise tax, and VAT; (c) passive income, i.e., interest, dividends, and gains from the sale of shares; and (d) receipts from the printing and/or publishing of books and/or other reading materials prescribed by the Department of Education as school text and reference.
BLGF Memorandum Circular No. 01-001-2017 emphasized that the automatic application of 10 to 15% increase on the previous year’s gross receipts as basis for LBT without legal basis is discouraged. Taxpayers, however, must be aware that this is the practice of some LGUs. The LGU of Quezon City does not mandate an increased LBT payment. Instead, it has announced that entities in the city that would be paying 30% or more LBT, as compared to their payment in 2018, would be exempt from audit for the years 2016, 2017, and 2018 pursuant to Ordinance SP-2780 s 2018.
The BLGF Memorandum Circular also states that the following entities are exempt from paying LBT: (a) Business enterprises certified by the Board of Investments (BOI) as pioneer and non-pioneer for six and four years, respectively, from the date of registration; (b) business that produce, manufacture, refine, distribute, or sell oil, gasoline, and other petroleum products; (c) Cooperatives duly registered with the Cooperative Development Authority; and (d) Philippine Economic Zone Authority (PEZA)-registered enterprises and other Special Economic Zones as may be provided for by the specific Republic Act. However, if the PEZA or BoI-registered entity has income from unregistered activities, it may be required to pay LBT on such income.
Entities exempt from LBT payment are still required to secure a Mayor’s Permit. Regional Operating Headquarters, as well as enterprises registered with PEZA, are exempt from securing a mayor’s permit. However, some LGUs require them to secure a business or mayor’s permit and to pay certain regulatory fees. BoI-registered enterprises, meanwhile, must secure a business or mayor’s permit and pay regulatory fees.
As part of the renewal requirements, businesses should secure a comprehensive general insurance policy. Some LGUs require business entities to secure their insurance from accredited insurance companies. Though this is not a requirement under the law, it is best to check with the LGU to ensure a smooth renewal process.
REAL PROPERTY TAX
Another obligation of entities with the LGU is the payment of real property tax (RPT) imposed on real property, such as land, buildings, and machinery deemed real property, and other improvements. If you have newly acquired real property, machinery, or additional improvements, file with the Local Assessor’s Office a sworn declaration of the value within 60 days from the acquisition, installation, or completion of the property.
RPT accrues on the first day of January of each year, and may be paid annually in full on or before March 31, or in quarterly installments on or before the last day of each quarter. For advance payments, some LGUs grant a discount of as much as 20% of the annual tax due. Check if your LGU provides this discount, so you can decide between paying in full or on installment.
The RPT is based on the assessed value of the property multiplied by the tax rate. For most cities and municipalities, the RPT rate is 2% and 1% of the assessed value for Metro Manila and the provinces, respectively. The assessed property value is the fair market value multiplied by the assessment level. Some cities may have different tax rates, and so it is best to verify your city’s tax rate with the city treasurer’s office.
Late payments will result in an interest of 2% per month to a maximum of 72% for 36 months. While interest stops on the 36th month, non-payment can result in the foreclosure and auction of the tax-delinquent properties, if the LGU decides to do so.
PEZA-registered enterprises under an income tax holiday (ITH) are not exempt from RPT on land and/or buildings, but are exempt from RPT on machinery (considered real property) for three years from acquisition. A PEZA-registered enterprise that has transitioned to the 5% gross income tax (GIT) regime, in lieu of all national and local taxes, is exempt from RPT on land, buildings, or machinery deemed real property, except for RPT on land owned by an economic zone developer. BoI-registered enterprises do not enjoy exemption from RPT.
Quezon City also announced an amnesty for RPT delinquencies for 2018 and prior years if settled not later than Oct. 30, 2019. You may check with your own LGUs if they are also offering an amnesty to save on interest and surcharge on past due taxes.
Be aware of the dates to avoid penalties and interest charges for late payment, and pay early to avoid long queues.
Ed Warren L. Balauag is a manager of the Tax Advisory and Compliance of P&A Grant Thornton.
As published in BusinessWorld, dated 08 January 2019
