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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 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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What a trade war means for Asia Pacific businesses
06 Aug 2019Asia Pacific businesses are caught in the crossfire of the US-China trade war. No matter how the conflict ends, trade patterns in the region are likely to change permanently and it will be those businesses with the most strategic foresight that stand to benefit.
We are witnessing a new type of global trade war between the US and China, with tariffs levied on products largely for broader policy objectives, most notably to control new technology and influence purchasing. While the conflict had cooled temporarily since June’s G20 meeting in Osaka, when both sides agreed to relaunch trade talks, the eventual outcome remains no clearer.
On the surface, the trade war is taking its toll on the region, compounding broader economic uncertainty and dampening confidence across Asia Pacific (APAC).
Indeed, Grant Thornton’s latest International Business Report (IBR) shows that net optimism among APAC businesses has fallen 8pp since the second half of 2018 and is more than 50% lower than the first half of last year.
Businesses need to think about how they can secure growth in the face of a possible permanent disruption to trade. This requires them to grapple with the challenges of supply chain disruption, transformative technology, and the increase in regulations and compliance that can bar access to new markets.
The trade dispute has a mixed impact across the region
The economic fortunes of countries differ across the region with the trade war affecting separate economies in different ways.
At the frontline of the dispute in Asia is China, which has seen the number of firms reporting economic uncertainty as a constraint on growth nearly double from 32% to 60% since H1 2018. Other Asian countries are also in the line of fire for US tariffs. President Trump has threatened tariffs on Japanese auto imports unless the two countries reach a trade deal, which may also involve a commitment from Japan to build more automotive factories in the US.
Singapore is signalling that it could be in a technical recession, being a trading nation with strong links to China, while deeply entrenched in the current lacklustre phase of the electronics cycle. Economic uncertainty in Singapore has risen to 50% in H1 2019, up from 36% in Q2 2018. The Australian economy is also slowing down with interest rates at historic lows of 1% and the government looking to fuel growth by inward infrastructure investment.
Parts of emerging APAC are benefitting
However, some emerging economies stand to benefit as businesses tactically pivot their manufacturing. Founder and senior board adviser of Grant Thornton Vietnam, Ken Atkinson, says: “Vietnam has already seen an acceleration, due to the shift in manufacturing of items such as garments, footwear and power tools, because of the current trade tensions between the US and China. In the first five months of 2019, Vietnam attracted a record US$ 16.5 billion in new foreign direct investment (FDI) with 30% of that coming from Hong Kong and investments from mainland China increasing.[i] The leading beneficiary of this FDI is, in fact, manufacturing and processing.”
In Indonesia, Tommy David, head of tax at PT Grant Thornton Strategic Consulting, says there is a common belief that the trade war may bring benefits to the country as international businesses looking to relocate production facilities and tap into new sources of supply. Some of the domestic industries could enjoy an uplift, for example furniture, textiles, steel, shoes, smartphones and plastics.
It’s neighbour, Malaysia, is already enjoying such benefits, with manufacturers setting up operations in the country to sidestep tariffs, according to Narendra Jasani, country managing partner of Grant Thornton Malaysia. The timing is fortuitous for Malaysia, which has seen its palm oil and petroleum export revenues hit by lower prices.
In the Philippines, business leaders were more upbeat than anywhere else in the region, with 84% saying they were optimistic about the outlook of the economy. Marivic Españo, chairperson and CEO of P&A Grant Thornton in the Philippines states: “A big driver of growth comes from the digital economy, which is forecast to grow from $5 billion in 2019 to $21 billion by 2025 and the government’s ambitious commitment to infrastructure development powering domestic demand.”[ii]
Identify and reduce risks in the supply chain
The challenge for businesses scaling to meet demand from shifting trade is not only the time it takes to move manufacturing capacity from one country to another but also the issue of the supply chain. Supplier networks in the region are getting increasingly complicated, and sophisticated approaches will be needed to manage these effectively. Businesses are assessing the trade war’s impact on their suppliers as well as their markets. While they may be able to reduce risks by reviewing their customs processes and mapping their supply chain, more fundamental changes may be necessary.
Rodger Flynn, APAC regional head, network capabilities Grant Thornton International says: “You have to evolve. Everything is up for negotiation. You need to ask, how secure are your traditional supply chains? Those relationships with suppliers that may have been forged over many years could be challenged now. So you need to watch the signalling from the major economies, particularly the US.”
Having multiple supply chains is more critical than ever. Until recently, businesses sourcing goods and materials from China typically operated a ‘China plus one’ supply chain strategy, which involved a secondary supplier in a different country in case of disruption. That may no longer be sufficient to keep goods moving.
Flynn says: “The question is how permanent is this trade war going to be and what long-term impacts will it have on the supply chain? If you’ve got your China plus one now, are you going to need a plus two or potentially a plus three but on a smaller scale?”
Dr Tim Klatte, head of Shanghai forensic advisory services at Grant Thornton China, says:
“It is in the best interest of Chinese businesses to focus on the long game and take it slow in terms of US-related investments. Right now, it is especially important for Chinese businesses to recognise that they don’t need to put all of their eggs in one basket. I have seen leading companies already diversifying investment into other geographies. Evidence of investment diversification as a viable option for China is plentiful, and many Chinese businesses have already implemented this strategy.”
Businesses also need to ensure they have the capacity and competencies within their organisation to manage those changing and alternative supply chains. At the same time they need to embrace technologies such as automation of processes to reduce upfront costs, increase efficiency and make good use of data.
Be strategic about the new wave of technology
Technology has become a central problem in the US-China relationship, muddying the distinction between economic competitiveness and national security. This was seen in the US decision to blacklist Huawei earlier this year. The conflict has weighed heavily on the tech and electronics industries of both countries, with no clear sign of how to resolve this.
The APAC region is one of the most advanced when it comes to launching and incubating new technologies, and is leading the development of 5G - a potential game-changer for many businesses in the region. While China’s technology capabilities have advanced at break-neck speed, the US has struggled to keep up.
Despite the trade war, investment in technology expectations in the region shows a mixed picture with most Southeast Asian nations anticipating a significant lift. Indian businesses expect a net increase in tech investment of 75% and Indonesian business a net rise of 74% over the next 12 months. In China tech investment is expected to increase by net 41% and in Malaysia by net 9%, according to the IBR.
Sanjay Sachdev, a partner at Grant Thornton Thailand, says that despite the trade war the region is poised to lead in the next generation of industry – known as 5.0 – which will drive massive change. “The most forward-looking, strategic thinking organisations are going to start investing ahead of the curve,” he explains.
CXA Group is an example of a business focusing on transformative technology to solve a problem. The Singapore-based insurance brokerage helps make insurance affordable to individuals via their employers. It uses a predictive and data intelligence platform to offer employees tailored, health-flexible options from a collection of more than 1,000 products. The aim is to keep employees healthier – warding off chronic diseases such as diabetes, which is rising in the region – and reduce overall premiums, which have spiralled in recent years. CXA has been a runaway success and recently raised US$25 million for further expansion in Asia and later into Europe and North America.
“This trade war is going to bring a huge amount of opportunity to every industry that is quick enough and smart enough to capture it, by making use of smart factories and smart logistics to meet that demand in real-time to support the organisations that need those products. You can’t sit out and wait and see.”
Adopting international regulations broadens access to new markets
As growing APAC businesses become more integrated into global supply chains, buyers in developed economies are increasingly demanding adherence to regulatory compliance and higher standards. In the UK, US and Europe, company officers are more concerned about supply chain practices, because they could face prosecution – in the case of anti-bribery laws, for example – or reputational damage where supplier’s practices fall short of ethical standards.
However, implementing international regulatory requirements is a significant challenge and progress is often slow among businesses in countries that score very poorly on the Corruption Perception Index (CPI). In fact, IBR shows that among business leaders in APAC’s emerging economies, 44% cited regulatory restrictions and complexity as an external barrier to expanding internationally. This is compared to 28% of leaders in developed APAC economies.
Flynn says: “One of the chief reasons Singapore is attractive to the rest of the world is because of its high regulatory standards with an established case law system. It protects IP, has little sovereign risk and has data security legislation in place that mirrors GDPR. People come to Singapore for the ease of doing business.”
Chetan Hans, director – financial reporting advisory services at Grant Thornton Singapore, notes that “other Asian countries can learn from Singapore and should aim to have a business environment that balances regulations with ease of doing business.”
Appealing to rising standards and meeting new regulations within Asia can also provide opportunities for businesses. An example of this is Bubs Australia, which produces a range of infant formula and organic baby food made from Australian goat milk. Following food safety scandals in China, demand for foreign-made goods, particularly in the baby food category, has rocketed. Over the past two years, the company has enjoyed significant sales based on an aggressive expansion strategy in China.[iii]
Businesses should grapple with their long-term strategic challenges
APAC businesses are facing an unprecedented period of change as they seek to navigate a new economic reality. While uncertainty endures, businesses should look to secure future supply chains; harness transformative technology; and tackle some of the international compliance issues to align with broader markets. All of these could reduce risks and provide significant rewards.
As Flynn says: “Businesses need to think about their strategy going forward. There is going to be a permanent disruption to trade and supply chains, and we won’t see a return to the time before.”
Speak to your local Grant Thornton advisor to discuss how to manage these issues for your business.
[i] Vietnam Briefing, June 2019
[ii] Google Temasek [PDF 3.5mb], 2018
[iii] Global data, March 2019
