Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
OF FINANCIAL STATEMENTS
TABLE OF CONTENTS
OBJECTIVES........................................................................................................................................ 4
INSTRUCTIONS ................................................................................................................................... 5
GENERAL REQUIREMENTS
Statement of Managements Responsibility .................................................................................. 9
Auditors Report ........................................................................................................................ 10
Supplemental Written Statement of Auditor .............................................................................. 12
Statement of Financial Position .................................................................................................. 13
Statement of Comprehensive Income ......................................................................................... 14
Statement of Cash Flows ............................................................................................................ 14
Statement of Changes in Equity .................................................................................................. 15
Accounting Policies .................................................................................................................... 15
Notes to Financial Statements .................................................................................................... 16
Retained Earnings ...................................................................................................................... 22
Issuance of Shares of Stock for Non-Cash Consideration .............................................................. 22
Issuance of Shares of Stocks ....................................................................................................... 23
Deposit for Future Stock Subscription ......................................................................................... 23
Capital Deficiency ...................................................................................................................... 24
Amended Audited Financial Statements ..................................................................................... 26
SPECIAL REQUIREMENTS
Listed Companies and Other Issuers of Securities to the Public .................................................... 27
Mutual Fund Companies ............................................................................................................. 33
Broker Dealers of Securities ........................................................................................................ 39
Financing Companies ................................................................................................................... 42
Lending Companies ..................................................................................................................... 46
Investment Houses ...................................................................................................................... 48
Foundations ................................................................................................................................ 51
Non-Stock and Non-Profit Organizations ...................................................................................... 52
FINANCIAL ANALYSIS............................................................................................................................
2|Page
ANNEXES .............................................................................................................................................
Annex A: List of SMEs Exempted from Mandatory Adoption of PFRS for SMEs
Annex B: Statement of Managements Responsibility (SRC Rule 68, as amended)
Annex C: Sample of Auditors Report
Annex D: Supplemental Written Statement of External Auditor
Annex E: Summary of PFRS
Annex F: Disclosure Checklist of PFRS
Annex G: Disclosure Checklist of PFRS for SMEs
Annex H: Statement of Reconciliation of Retained Earnings for Dividend Declaration
Annex I: Sample of Auditors Report (for listed and other issuers of securities to the public)
Annex J: Supplementary Schedules under Part II of the SRC Rule 68, as amended
Annex K: Sample Auditors Report on Supplemental Documents Required Under SRC Rule 68, as
amended
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OBJECTIVES OF EVALUATION
1. To check compliance with the prescribed form and contents
of financial statements;
Corporation Code;
4|Page
INSTRUCTIONS
This Manual shall be used in the evaluation of financial statements
either for regular monitoring of compliance or for special review. This
shall be updated annually taking into consideration the changes in the
accounting standards and regulatory requirements of the Commission.
The operating departments shall set a timeline for each step to
ensure the timeliness, usefulness and relevance of the findings and the
actions to be taken thereon.
The following procedures shall be undertaken in the evaluation of
financial statements:
REGULAR MONITORING
a.
b.
c.
d.
General Requirements
Since the company that maybe subject of a special
review may not be a publicly-accountable entity, the
preliminary evaluation presented in page 7 of this
Manual must be first conducted.
Special Requirements
A retirement fund company is required to submit a complete set of FS if it is registered with the
Commission.
6|Page
Large Corporations
b.
Listed companies;
Mutual funds.
Holders
of
secondary
licenses
issued
by
regulatory
agencies
General
Rule:
All
companies
which
qualify
as
large
7|Page
2. Philippine
3. Other
SCORECARD
GENERAL REQUIREMENTS
A. STATEMENT OF MANAGEMENTS RESPONSIBILITY (SRC RULE 68,
AS AMENDED)
COMPLIANT
Yes
REMARKS
No
Statement of Managements
Responsibility2
a.
Prescribed wordings of
the Statement (See
Annex B)
b.
Signature
of the Chairman of the
Board of
Directors/Trustees
c.
Signature
of Chief Executive
Officer/President
d.
Signature
of Chief Finance
Officer/Treasurer
If provided in the companys by-laws, the Vice-Chairman may sign on behalf of the Chairman or the VicePresident for the President. Since the by-laws do not provide for Vice-Treasurer position, the Treasurer
himself/herself should sign the SMR. (SRC Rule 68, as amended)
For branch or representative offices of foreign corporations, it should be signed by the local manager who
is in charge of the operations within the Philippines. Moreover, the third paragraph of the SMR may be deleted
since the Philippine Branch does not have any local Board of Directors or stockholders. (SRC Rule 68, as amended)
The companys attention should be called, in cases that there are inconsistencies with the stated
signatories in the SMR with that of listed in the companys General Information Sheet (GIS) taking into
consideration the cut-off date stated in the said GIS.
9|Page
REMARKS
No
Auditors Report3
a. Prescribed wordings of
the Auditors Report
Based on Auditing and
Assurance Council
(AASC) Alert No. 001,
Series of 2011 (See
Annex C)
Note:
Based on PSA 700, as
redrafted, the
Managements
Responsibility for the
Financial Statements
paragraph may also read
as follows:
...in accordance with
Philippine Financial
Reporting Standards; this
includes the design,
implementation and
maintenance of internal
control relevant to the
preparation and fair
presentation of financial
statements...
b. The Auditors Report
should cover two-year
comparative report
c. Addressee and complete
address of the
company
The Auditors Report of a Government Owned or Controlled Corporation (GOCC) is signed by the
Commission on Audit (COA)s auditor.
10 | P a g e
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REMARKS
No
Supplemental Written
Statement of External Auditor
(for Stock Corporations)4
a.
Prescribed wordings of
the Statement (See
Annex D)
b.
Signature of external
auditor
c.
Registration/licensing
numbers of the external
auditor
i.
Board of
Accountancy
(BOA)
GOCCs and their subsidiaries are not required to submit a Supplemental Written Statement of Auditor
because their stockholder is the government.
12 | P a g e
ii.
Privileged Tax
Receipt (PTR)
iii.
Professional
Regulation
Commission
(PRC)
iv.
Expiration dates
of the signing
external auditors
licenses and
accreditation
(i.e., BOA
Accreditation,
Issue date of PTR,
and SEC
Accreditation, if
applicable)
REMARKS
No
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REMARKS
No
Statement of Comprehensive
Income5
a.
Comparative two-year
b.
Material
items cross-referred to
notes
c.
Minimum
accounts presented
REMARKS
No
14 | P a g e
REMARKS
No
Statement of Changes in
Equity7
a.
Comparative two-year
b.
Material
items cross-referred to
notes
c.
Minimum
accounts presented
REMARKS
No
15 | P a g e
REMARKS
No
1.
16 | P a g e
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2.
Philippine Financial
Reporting Standards for
Small and Medium-Sized
Entities (PFRS for SMEs)
See Annex G
i. Small and MediumSized Entities
(Section 1)
ii. Concepts and
Pervasive Principles
(Section 2)
iii. Financial
Statement
Presentation
(Section 3)
iv. Statement of
Financial Position
(Section 4)
v. Statement of
19 | P a g e
20 | P a g e
21 | P a g e
REMARKS
No
REMARKS
No
22 | P a g e
REMARKS
No
REMARKS
No
23 | P a g e
REMARKS
No
The company must comply with the three (3) stated requirements to qualify said deposits under
Equity. Otherwise, said deposits should be treated as a liability and considered as Advances from
Stockholders.
9
Paragraph 3. E. (viii) of Part I of the SRC Rule 68, as amended states that the requirements for
corporations with capital deficiency shall not apply to a company due to the following reasons:
a.
The entity is at pre-operating stage and has incurred capital deficiency due to higher preoperating expenses than its initial capitalization. Projected financial statements indicate that it will
generate net income once it starts commercial operations;
b.
Significant losses incurred in prior years but has generated positive results (net income) from
operations over the current period due to developments in the business or regularization of its operation;
c.
An entity has incurred capital deficiency during the current period only due to a significant
adjustment arising from the adoption of new financial reporting framework or occurrence of nonrecurring transaction for the period;
24 | P a g e
d.
Such other cases which the Commission may consider as valid ground for considering
the company as a going concern
10
In case the company fails to present to the external auditor a concrete plan or sufficient supporting
documents to address the capital deficiency, the auditor shall provide an emphasis paragraph indicating that the
company is no longer a going concern and should use liquidation basis in the preparation of its financial
statements
25 | P a g e
REMARKS
No
Requirements on Reissuance of
Financial Statements
a. Auditors Report:
1. The opinion date
should be dated not
earlier than approval
date for re-issuance
by the
Management; and
2. Must include an
emphasis of a matter
paragraph referring
to a note to FS that
more extensively
discusses the reason
for the revision of the
previously issued
financial statements.
b. Notes to FS: Discussion
of the reason and the
quantitative and
qualitative effect of the
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SCORECARD
SPECIAL REQUIREMENTS
A. LISTED COMPANIES AND OTHER ISSUERS OF SECURITIES TO THE
PUBLIC
PART II OF SRC RULE
68, AS AMENDED
COMPLIANT
REMARKS
Yes
No
28 | P a g e
ii.
Prescribed
wordings12 of the
Statement (See
Annex B)
11
If provided in the companys by-laws, the Vice-Chairman may sign on behalf of the Chairman or the VicePresident for the President. Since the by-laws do not provide for Vice-Treasurer position, the Treasurer
himself/herself should sign the SMR.
The companys attention should be called, in cases that there are inconsistencies with the stated
signatories in the SMR with that of listed in the companys General Information Sheet (GIS) taking into
consideration the cut-off date stated in the said GIS.
12
The additional components that are submitted with the companys financial statements, forming part
thereof, should necessarily be covered by the Statement of Managements Responsibility (SMR). Thus, the first
paragraph of the SMR must partly read The management of (name of reporting company) is responsible for the
preparation and fair presentation of the financial statements for the year (s) ended (date), including the additional
components attached therein x x x.
29 | P a g e
Other current
assets
ii.
Other long-term
iii.
investments
iv.
Other assets
v.
Other current
liabilities
vi.
Other long-term
liabilities
Statement of
Reconciliation of
Retained Earnings
for Dividend
Declaration (See
Annex H)
ii.
Notes to FS:
Detailed
description of any
appropriations of
restriction on the
companys
retained earnings
30 | P a g e
The Reconciliation
Schedule should
be covered by a
legal matter
paragraph in the
Auditors Report or
a separate report
of auditor.
l. Submission of the
following schedules: (See
Annex J)
i.
Marketable
Securities (Current
Marketable Equity
Securities and
Other Short-Term
Cash Investments
ii.
Amounts of
Receivable from
Directors, Officers,
Employees,
Related Parties,
and Principal
Stockholders
(Other than
Related parties)
iii.
Non-Current
Marketable Equity
Securities, Other
Long-Term
Investments in
Stocks, and Other
Investments
iv.
Indebtedness of
Unconsolidated
Subsidiaries and
Related parties
v.
vi.
Long-Term Debt
vii.
Indebtedness to
Related Parties
31 | P a g e
ix.
Guarantees of
Securities of Other
Issuers
Capital Stock
m. Additional components
documents required under
SRC Rule 68, as amended:
i. A schedule showing
financial soundness
indicators in two
comparative periods,
as follows: (i)
current/liquidity ratios;
(ii) solvency ratios,
debt-to-equity ratios;
(iii) asset-to-equity
ratios; (iv) interest rate
coverage ratios; (v)
profitability ratios; (vi)
other relevant ratios as
the Commission may
consider necessary;
ii. For listed companies
who belong to a
conglomerate or group
of companies, a map
showing the
relationships between
and among the
company and its
ultimate parent
company, middle
parent, subsidiaries or
co-subsidiaries, and
associates;
32 | P a g e
K)
33 | P a g e
COMPLIANT
Yes
No
REMARKS
a.
Minimum subscribed and
paid-in capital of at least P50
Million
b.
Investment Limitations /
Prohibitions:
i.
Maximum investment in
any single enterprise
shall not exceed an
amount equivalent to
ten percent (10%) of
the investment
companys net asset
value except
obligations of the
Philippine Government
and its instruments
ii.
iii.
Margin purchases of
securities
Commodity futures
contracts
Precious metals
Unlimited liability
investments
34 | P a g e
v.
Treasury notes or
bills, Certificates of
indebtedness issued
by the BSP which
are short term
2.
Philippine
government
securities or bonds,
and the like.
3.
Savings or time
deposits with
government owned
banks or
commercial banks
Total operating
expenses shall not
exceed ten percent
(10%) of its investment
fund or total net worth
as shown in previous
years AFS
vi.
Asset coverage of at
least three hundred
percent (300%) for all
borrowings of the
company
vii.
Computation of Net
Asset Value (NAV)
35 | P a g e
Prescribed wordings of
the Auditors Report
Based on Auditing and
Assurance Council
(AASC) Alert No. 001,
Series of 2011
Note:
Based on PSA 700, as
redrafted, the
Managements Responsibility
for the Financial Statements
paragraph may also read as
follows:
...in accordance with
Philippine Financial Reporting
Standards; this includes the
design, implementation and
maintenance of internal
control relevant to the
preparation and fair
presentation of financial
statements...
1. If registered as issuers
of securities See
Annex I
Acceptable
Opinion:
Unqualified Opinion
Inclusion of a legal
matter paragraph
36 | P a g e
Submission of the
schedules and
supplemental
documents
required for issuers
of securities
enumerated under
items f to h in
Pages 28 to 29.
2. If registered only as a
investment company
See Annex C
ix.
The Statement of
Management
Responsibility (SMR)13
1. Signed under oath
by required
signatories (i.e.,
Chairman of the
Board, CEO, and
CFO)
2. Prescribed
wordings of the
Statement14 (See
Annex B)
13
If provided in the companys by-laws, the Vice-Chairman may sign on behalf of the Chairman or the VicePresident for the President. Since the by-laws do not provide for Vice-Treasurer position, the Treasurer
himself/herself should sign the SMR. (SRC Rule 68, as amended)
The companys attention should be called, in cases that there are inconsistencies with the stated
signatories in the SMR with that of listed in the companys General Information Sheet (GIS) taking into
consideration the cut-off date stated in the said GIS.
14
The additional components that are submitted with the companys financial statements, forming part
thereof, should necessarily be covered by the Statement of Managements Responsibility (SMR). Thus, the first
paragraph of the SMR must partly read The management of (name of reporting company) is responsible for the
37 | P a g e
A schedule
showing financial
soundness
indicators in two
comparative
periods, as follows:
(i) current/liquidity
ratios; (ii) solvency
ratios, debt-toequity ratios; (iii)
asset-to-equity
ratios; (iv) interest
rate coverage
ratios; (v)
profitability ratios;
(vi) other relevant
ratios as the
Commission may
consider necessary
ii.
A schedule, in
table format,
showing in the first
column a list of all
the effective
standards and
interpretations
under the PFRS as
of year-end, and
an indication
opposite each in
the second column
on whether it is
Adopted, Not
adopted or Not
applicable;
preparation and fair presentation of the financial statements for the year (s) ended (date), including the additional
components attached therein x x x.
38 | P a g e
A schedule
showing the
following
information in two
comparative
periods: (i)
percentage of
investment in a
single enterprise to
net asset value; (ii)
total investment of
the fund to the
outstanding
securities of an
investee company;
(iii) total
investments in
liquid or semi-liquid
assets to total
assets; (iv) total
operating
expenses to total
net worth; (v) total
asset to total
borrowings.
C. BROKER-DEALER OF SECURITIES
Implementing Rules and
Regulation (IRR) of SRC
COMPLIANT
Yes
REMARKS
No
39 | P a g e
Annex C)
Note:
Based on PSA 700, as
redrafted, the
Managements
Responsibility for the
Financial Statements
paragraph may also read
as follows:
...in accordance with
Philippine Financial
Reporting Standards; this
includes the design,
implementation and
maintenance of internal
control relevant to the
preparation and fair
presentation of financial
statements...
b.
The
auditing firm and signing
external auditor have a
valid SEC accreditation
under Group B category
c.
Minimum
unimpaired paid up
capital
i.
First-time registrants
and those
acquiring the
business of existing
trading
participants P10 0
Million
ii.
40 | P a g e
d.
Appropriati
on of retained earnings
for reserve fund with
unimpaired paid-up
capital :
i.
ii.
iii.
e.
Submission
of schedules and
compliance with the
requirements of RBCA
f. Maintenance of a
Special Reserve Bank
Account for the
exclusive benefit of
customers
g.
Additional
components required
under SRC Rule 68, as
amended:
i.
A schedule
showing financial
soundness
indicators in two
comparative
periods, as follows:
(i) current/liquidity
ratios; (ii) solvency
41 | P a g e
A schedule, in
table format,
showing in the first
column a list of all
the effective
standards and
interpretations
under the PFRS as
of year-end, and
an indication
opposite each in
the second
column on
whether it is
Adopted, Not
adopted or Not
applicable.
See Annex K)
42 | P a g e
D. FINANCING COMPANIES
Financing Company Act
and IRR
COMPLIANT
Yes
No
REMARKS
Annex C)
Note:
Based on PSA 700, as
redrafted, the Managements
Responsibility for the Financial
Statements paragraph may
also read as follows:
...in accordance with
Philippine Financial Reporting
Standards; this includes the
design, implementation and
maintenance of internal
control relevant to the
preparation and fair
presentation of financial
statements...
i.
43 | P a g e
iii.
iv.
v.
A 100% allowance
for probable losses
should be set up for
past due and
impaired loans as
provided in Section 9
of the Financing
Company Act of
1998.
vi.
Accounts
receivable past
due for 361 days or
more
Approval of the
Commission to be
treated as an
exempt transaction
for issuance or total
outstanding balance
exceeding P50
44 | P a g e
c.
panys Networth
i.
Com
Minimum paid-up
capital of:
P5 Million for
financing
companies
located in other
classes of Cities
ii.
Additional Capital
Requirement for
each branch,
agency extension
office or unit as
follows:
Other classes of
cities P500
Thousand
Municipalities
P250 Thousand
45 | P a g e
46 | P a g e
See Annex K)
E. LENDING COMPANIES
Lending Company Act
and IRR
COMPLIANT
REMARKS
Yes
No
C)
Note:
Based on PSA 700, as
redrafted, the Managements
Responsibility for the Financial
Statements paragraph may
also read as follows:
...in accordance with
Philippine Financial Reporting
Standards; this includes the
design, implementation and
maintenance of internal
control relevant to the
preparation and fair
presentation of financial
statements...
47 | P a g e
ii.
iii.
Municipalities P75
Thousand
f. Additional component
required under SRC Rule 68,
as amended:
48 | P a g e
A schedule, in table
format, showing in the
first column a list of all
the effective
standards and
interpretations under
the PFRS as of yearend, and an
indication opposite
each in the second
column on whether it
is Adopted, Not
adopted or Not
applicable
See Annex K)
F. INVESTMENT HOUSES
Investment Houses Law
and IRR
COMPLIANT
REMARKS
Yes
No
a.
Minimum
initial paid-in capital
i.
Investment Houses
(IH) / Underwriter of
Securities P300 Million
ii.
iii.
Investment Company
Advisers P10 Million
iv.
49 | P a g e
d.
The
auditing firm and signing
partner have a valid SEC
accreditation under Group B
category
e.
Additional
components required under
SRC Rule 68, as amended:
i.
50 | P a g e
Name of related
party;
Description of
transaction;
Total volume /
amount of
transaction for the
year;
Terms and
conditions, such as
maturity date,
security, mode of
payment;
If secured, carrying
amount of asset
used as collateral
ii.
iii.
A schedule, in table
format, showing in the
first column a list of all
the effective standards
and interpretations
under the PFRS as of
year-end, and an
indication opposite
each in the second
column on whether it is
Adopted, Not
adopted or Not
applicable.
51 | P a g e
G. FOUNDATIONS
SEC Memorandum
Circular No. 8, Series of
2006
COMPLIANT
Yes
No
REMARKS
a.
Sworn
Statement of the President
and Treasurer on the
following information:
i.
ii.
Application of funds
with the following
information on
activities
accomplished, ongoing and planned;
Complete name,
address and contact
number of project
officer-in-charge;
Complete address
and contact number
of project office; and
b.
Certificatio
n from the Office of the
Mayor, or the Office of the
Barangay Captain, or the
Head of either the
Department of Social Welfare
and Development or
Department of Health, on the
existence of the subject
52 | P a g e
COMPLIANT
REMARKS
Yes
No
Annex K)
53 | P a g e