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We deliver value-added audit and assurance services to our clients, helping them manage their fiscal responsibilities with prudence and foresight.
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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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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 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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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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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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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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Line Of Sight
Monetary, fiscal policies tightened to aid inflation
Contents
Fare hikes, high food prices, and elevated charges for electricity, gas, and other fuels are some of the immediate effects of inflation to consumers resulting from the ongoing Russian invasion of Ukraine. These are also added effects en route to economic recovery from the COVID-19 pandemic.
Concerns on inflation arose after the Philippine Statistics Authority (PSA) announced that headline inflation still moved at a faster pace of 6.1 percent in June 2022, described as a three-year high since November 2018 (6.1 percent) and October 2018 (6.9 percent). This sets the year-to-date inflation at 4.4 percent against the Bangko Sentral ng Pilipinas’ (BSP) full-year forecast of 5 percent, which was also raised from the initial forecast of 4.6 percent for 2022 and to 4.2 percent instead of 3.9 percent for 2023. BSP Chief Felipe M. Medalla stated that authorities are still assessing further revisions on the inflation forecast for 2022. However, a downward revision on the inflation projections for 2023 and 2024 is likely to be made by the Monetary Board as major contributors to inflation, particularly the prices of transportation and food, subside. For July, inflation was expected to settle between 5.6 percent and 6.4 percent due to the continued hike on both food and non-food commodity groups. Recent data now shows that July’s inflation rate is 6.4 percent, which happens to be the upper range limit. This escalation prompted countermeasures from both monetary and fiscal policies.
The BSP unexpectedly tightened its monetary policy in a surprise off-cycle meeting last July 14, 2022. This brings the key reverse repurchase facility rate at 3.25 percent after the 75 basis points (bps) hike to repress effects from rising wages and fare hikes. Medalla said that the BSP is prepared to exhaust available measures to “manage spillover effects” after the U.S. Federal Reserve raised their own rates by 75 bps with prospects of further increase. The BSP is ready to implement further monetary policy adjustments, signaling to deliver an increase between 25 to 50 bps during its meeting in consideration of the inflation headline for July and gross domestic product (GDP) growth for the second quarter. Analysts stressed that these hikes should be closely monitored to support the depreciating peso and tame inflation without derailing economic growth.
In a statement, former National Economic and Development Authority (NEDA) Socioeconomic Planning Secretary Karl Kendrick T. Chua posited that, “The Russia-Ukraine conflict has disrupted the global supply chain and elevated commodity prices, particularly for fuel. We have seen how a single crisis can set us back, so the Duterte administration has pursued both short- and long-term interventions to increase the resilience of our domestic economy against external shocks.” This comes after NEDA issued Executive Order No. 171 and the government’s implementation of a fuel subsidy program to help ease the impact of global inflationary pressures. These measures, although temporary, are expected to continue as representatives of minority groups call out for the government’s quick response subsidies to ease inflation. BHW Party-List Representative Angelica Natasha Co stated that marginalized individuals and breadwinners are hit hard by rising commodity prices that would not be covered by a minute increase in minimum wages, further adding that programs such as the Libreng Sakay program, Pantawid Pasada Program and cash aid programs, such as the Tulong Panghanapbuhay sa Ating Disadvantaged/Displaced Workers (TUPAD) and the COVID-19 Adjustment Measures Program (CAMP), should be restored and/or maintained to ensure immediate savings and assistance to Filipinos.
Despite continuing pandemic-related disruptions and renewed bottlenecks in global supply chains, economists are still hopeful that there would be continued growth in this part of the region. In an interview by a local paper, Deutsche Bank Chief Executive Officer for Asia Pacific Alexander von zur Muehlen stated that the Association of Southeast Asian Nations (ASEAN) and neighboring parts of Asia will see GDP grow substantially as compared to the rest of the world, indicating that growth opportunities are over proportional and positive for an improved economy in our region. This is supported by PSA data showing a faster-than-expected 8.3 percent growth in the first quarter, basing on the Development Budget Coordination Committee’s target of 6.5 to 7.5 percent GDP growth for 2022.
The extent of these rapid changes is felt more intensely as we wind towards the end of the year. Consumers are expected to cope with fluctuating repercussions of external developments, as well as with domestic shocks brought about by frantic weather changes in the Philippines. Moreover, this would require heightened vigilance in the audit profession, especially for industries that are substantially affected by policy adjustments, as accumulated effects of inflation are foreseen.
As published in Mindanao Times, dated 24 August 2022
Authors
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Wendell Ganhinhin Wendell is a Partner & Head of P&A Grant Thornton’s Cebu Office. P&A Grant Thornton is one of the leading audit, tax, advisory, and outsourcing firms in the Philippines, with 24 Partners and more than 1000 staff members. We’d like to hear from you! Tweet us: @GrantThorntonPH, like us on Facebook: P&A Grant Thornton, and email your comments to pagrantthornton@ph.gt.com. For more information, visit our website: www.grantthornton.com.ph.Follow on LinkedIn
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