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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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THE SENIOR CITIZEN discount privilege has been in focus again recently because of the proposed removal of its 12% vat exemption component as part of the tax reform proposals of the new government.
This piece will not dwell directly on the removal of the VAT exemption but introduce a related issue -- the effect of the senior citizen discount itself in raising prices.
Undoubtedly, the senior citizen discount is a great benefit. I am one of those who have benefited. The discount is 20% on the selling price plus exemption from 12% VAT, or a combined reduction of about 32%, depending upon how the VAT is computed in the invoice. That’s quite a lot.
The discount is permitted on purchase of a number of items, but is mostly availed of in buying medicines and restaurant food. It is available to all senior citizens, age 60 and above, rich and poor.
The discount is not a tax credit on the part of the merchant. Therefore, the merchant has no recourse but to recognize it as an expense in its books.
Being an expense, the discount is definitely considered by the merchant in pricing his goods and consequently increases the price of goods. Of course, the price is subject to competition, but since all competing merchants bear the discount, I consider the discount as competition-neutral and its whole amount is considered in the pricing of goods.
So what is the effect of the discount in the economy?
I still have not come across an empirical study done by an economist on this subject. I hope to attract some economists to do further study and research on this subject, on the basis of the kind of detail that they usually do. Meanwhile, I will do my own qualitative analysis.
There is no doubt that the discount increases the price of goods, and to a significant extent in the case of medicines where probably all eligible persons avail of the privilege. The increase in price affects everybody. A non-senior citizen pays a higher price than he would in a situation where there is no senior citizen discount. The cost of medicines for a baby would be higher. Merchants are expected to allocate the effect of the discount on all goods and will not discriminate between medicines taken by seniors and babies following the usual expense allocation procedure. Senior citizens themselves pay higher prices, too (higher net prices, in this case), so that the 20% rate is partly illusory. Clearly, with these effects of the discount law, the government already interfered in the workings of the market place.
I often hear, be that as it may, we need to take care of the old folks even at the expense of the rest of the population. So what is the fuss all about?
First of all, we need to know which old folks we are helping at the expense of others.
In my view, it is mostly the rich and those can-afford senior citizens who avail of the discount and the VAT exemption that goes with it, and not the poor senior citizens.
Regrettably, I cannot quantify this assertion as there is no available statistics that I can use. But it is a general observation that cannot be denied. In the case of medicine, it is the rich and can-afford senior citizens who can buy the whole range of medicines that they need and in adequate quantity, while the poor tends to buy not enough of what they need to completely heal their sickness and just hope for the workings of nature to complete the healing process.
Moreover, the poor tend to buy cheaper medicines. This condition is much more true in the case of restaurant food. The eating places the poor go to, if and when they do, tend to be neighborhood eateries that do not give the discount. The requirement for giving the discount is complied with by the more organized and not cheap restaurants which are mostly patronized by the rich and can-afford senior citizens.
So, it is fair to say that it is the rich and can-afford citizens who are greatly benefitted by the senior citizen discount privilege. The question then is: Was this the real intent of the law? I would like to believe it was not.
Related to this issue is a concern regarding the formulation of public policy.
Our politicians eagerly pass laws that will make them look benevolent to get them reelected, without making, in some occasions, if not most, an analysis of whether the laws would cause adverse effects to the greater number. Obviously, the senior citizen discount law is one of them.
Had a good analysis been made, there could be found a number of alternatives to the present discount law.
For one, the privilege, including the VAT exemption, could be limited to poor senior citizens who really need help, thereby reducing significantly the adverse effect on prices. Moreover, doing so will achieve, to a significant extent, the removal of the VAT exemption component of the senior citizen discount contained in the current tax proposals.
Or, similarly, confine the privilege, including the VAT exemption, to all poor senior citizens and reduce the discount to the effective rate under the present system and make the resulting amount as a tax credit and therefore removing the adverse effect on prices.
By effective rate, I mean the 20% discount less the upward effect of the discount on prices. This effect can be calculated, but if it is not desired to go through such an effort, the discount can be reduced to an arbitrary amount of, say, 15%, and consequently recognize and remove the effect of the discount in increasing prices. I recognize that this second alternative requires government spending (in effect, the government is paying for the discount), but I believe it will be offset by the savings on VAT exemption of the rich and can-afford senior citizens who will no longer be eligible.
But more than this, treating the discount as a tax credit will remove the adverse effect on prices on all non-senior citizens and therefore reduce the cost of goods, particularly medicines.
There is a third alternative.
Confine the assistance to all poor senior citizens and give it in the form of free medicines as part of an old age benefits program just like those given in other countries. This assistance may include free hospitalization that will replace the partial benefit from the present Philippine Health System.
Indeed, this alternative will help the poor senior citizens a lot more, but it will of course require greater government spending. I will not dwell more on this option as it can be best addressed in any proposed overall program to provide adequate universal health care to all citizens.
Passing legislation must be based on adequate research and analyses to avoid causing needless adverse effects to other sectors of society, especially for proposed laws that have an economic impact. This must be made a standard procedure in our legislative processes and the results of the study made available to the people.
Benjamin R. Punongbayan is the founder of Punongbayan & Araullo, one of the Philippines’ leading auditing firms.
As published in Business World, dated 30 November 2016
