A STUDY OF THE PERFORMANCE AND FINANCIAL REPORTING PRACTICES OF

PHILIPPINE GOVERNMENT-OWNED AND/OR CONTROLLED CORPORATIONS

LIGHT RAIL TRANSIT AUTHORITY
ABSTRACT
The evaluation of the financial condition and performance of Government Owned
and Controlled Corporations (GOCCs) is based on the fair presentation of its
financial statements. This research aims to evaluate the quality of the financial
statements of the Light Rail Transportation Authority (LRTA), a Philippine GOCC,
based on the requirements of Generally Accepted Accounting Principles (GAAP) for
the periods covered from years 2009 to 2013. Moreover, this study provides an
overall assessment of the financial condition and performance of the LRTA based on
relevant financial ratios as compared to a benchmark. As a not for profit
organization, the LRTA does not fully comply with the Philippine Financial Reporting
Standards (PFRS) which is the GAAP in the Philippines. Instead, management
evaluates the accounting policies which will lead to more reliable financial
statements. This allows for more flexible recognition criteria for assets, liabilities,
income and expenses, which results to figures that are not fully comparable with
benchmarks. The Commission on Audit (COA) has identified deviations from GAAP
during the periods covered due to the inadequate maintenance of accounting
information, and inappropriate asset and expense recognition. Moreover, the LRTA
has insufficient policies on collection and control of funds appropriated from the
National Government. The LRTA has experienced operating losses consistently for
the period of study. This loss is compensated to arrive at a net income due to
realized and unrealized foreign exchange gains. The LRTA should review and
implement more suitable operational and financial policies in line with its
government mandate. It should ensure safekeeping of accounting records to be able
to provide a more accurate report of its financial condition and performance.