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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.
Wish list for tax assessment
30 Jan 2018Everyone has a wish list. The Merriam-Webster Dictionary defines “wish list” as “a list of desired but often realistically unobtainable items.” I have my own long list of wishes for my family, my friends, and my work. Topping off my list are my wishes for my one-year-old daughter: I wish for her to grow up knowing and loving God, to be healthy and be able to live a happy life, regardless of whether she wants to be a certified public accountant or a tax practitioner like me, or a chef like her father. I think she prefers the latter since she likes to play with her kitchen play set. She only likes to scribble on my copy of the Tax Code, the Tax Reform for Acceleration and Inclusion (TRAIN) Law, and draft Revenue Regulations (RRs).
And so the list goes on for my other wishes on my personal life.
As for my tax practice, I have a long wish list. For now, I want to focus on my wishes for tax assessments. Wishes that either have been addressed by the recently passed TRAIN Law and recently issued RR No. 06-2018 or wishes that I hope our lawmakers can address in the succeeding packages of the administration’s tax reform program.
Let me start with a wish already granted. Beginning in the taxable year 2013, taxpayers have been heavily burdened in cases of failure to withhold or erroneous withholding. RR No. 12-2013 promulgated that no deduction will be allowed notwithstanding that the deficiency withholding tax is paid at the time of the audit. Thus, a taxpayer, though merely helping the government in collecting taxes by being its withholding agent, pays deficiency withholding tax and income tax, together with penalties, in case of failure to properly withhold. Let us be thankful that this rule is now revoked.
Pursuant to RR No. 6-2018, deduction from gross income shall be allowed, provided that the deficiency withholding tax is paid even at the time of audit or reinvestigation. Thus, a taxpayer shall no longer be burdened with additional deficiency income tax and corresponding penalties in case of failure to withhold. The taxpayer just has to settle the deficiency withholding tax and corresponding penalties, and the expenses shall be allowed as a deduction for income tax purposes.
Another wish granted relates to the penalty interests in case of failure to pay or remit on time the taxes due.
Prior to the TRAIN Law, every taxpayer who failed to pay their taxes on time was required to pay a deficiency interest of 20% per annum. A delinquency interest of the same rate may also be assessed in case of failure to pay the assessed deficiency tax, surcharge, and deficiency interest on time. Thus, a taxpayer may be in a situation wherein a total of 40% interest will be charged from the date of demand up to the date of payment. Let us be thankful again that these rules were now changed under the TRAIN Law.
Under the TRAIN Law, the deficiency or delinquency interest is now double the legal interest rate for loans as set by the Bangko Sentral ng Pilipinas (BSP). Currently, pursuant to BSP Circular No. 799, the legal rate of interest is at 6%. This makes the penalty interest rate now lower at 12% per annum. This is good for now. However, considering that the rate is now dependent on the legal interest rate set by BSP, this makes the penalty interest rate uncertain. In case the legal interest goes up to 12%, our penalty deficiency interest can go up to 24%, much higher than the 20% which we abhor. To lessen the uncertainty, I hope that this will just be pegged to the legal interest rate only, not double. The taxpayer already pays surcharge and compromise penalties in case of failure to pay taxes on time. Thus, at the most, they should only be required to pay for the cost of money not remitted to the government on time.
On the imposition of delinquency interest, the TRAIN Law now provides that the deficiency and the delinquency interest shall not be imposed simultaneously. Thus, a delinquent taxpayer shall only be required to pay delinquency interest in case of failure to pay on time the amount assessed in the final notice of demand by the Bureau of Internal Revenue (BIR).
While the above rules will certainly ease the burden of taxpayers in case of tax assessments, other items are still pending on my list and on every taxpayer’s wish list.
In every tax assessment, it is every taxpayer’s wish that it be closed as soon as possible. This is to avoid the running of penalty interest which, in certain cases, already exceeds the amount of basic deficiency tax. Thus, I also wish that there be a maximum period when the penalty deficiency interest shall be applied. Just as in the Local Government Code provisions, a period of three years may be set. Setting a maximum period on the imposition of penalty interest protects the taxpayer in case of prolonged tax assessments. With this, a taxpayer shall also no longer be in a position where they seek to settle their supposed deficiency tax based on BIR evaluation just to avoid the running of interest.
This leads me now to my fourth and last wish for tax assessment. I wish that our Tax Code will prohibit issuance of Final Assessment Notices (FAN) with findings exactly the same as those in the Preliminary Assessment Notices (PAN), except when the taxpayer failed to reply to the PAN or failed to properly address the findings in the reply.
Our Tax Code specifically requires the issuance of a PAN prior to the issuance of FAN. However, beginning 2013, RR No. 18-2013 removed the informal conference stage and authorized the BIR to issue the FAN within 15 days from receipt of the reply to PAN. Thus, it has been the practice of the BIR to disregard the taxpayer’s reply to PAN.
We understand the good intention of the BIR to expedite the processing of tax assessments. However, this only leads to an automatic issuance of Final Assessment Notice without considering the taxpayer’s reply to the PAN. The taxpayer is stripped of its right to respond and be heard prior to the issuance of FAN. This is fine in case the assessment is rightful and not based on the misappreciation of facts. In most cases, though, tax assessments are merely based on presumptions with no verification of facts. This puts the taxpayer in a situation of having a multi-million peso and sometimes even billion peso FAN, based alone on the appreciation of facts with no further verification from the taxpayer.
Giving the taxpayer the proper venue to reply and be properly heard of its reconciliation/explanations will certainly help both the taxpayer and the government to have a more effective and efficient tax assessment system. A taxpayer shall no longer be in a situation wherein it does not have any choice but to elevate the case to the Court of Tax Appeals or, worse, just settle it legally or “compromise” at the BIR level to close the tax assessment.
There are pending items in my wish lists that may or may not be granted. Thanks to our lawmakers if these are granted. If not, then let’s just hope that it will all be for the good of the taxpayers and this country. As for my wish for my daughter, I certainly hope that God will grant it, not exactly to be a tax practitioner, but to have a happy life.
Ma. Lourdes Politado-Aclan is a senior manager of the Tax Advisory and Compliance 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 30 January 2018
