Monday, September 23, 2019

COA flags PSALM’s P15-billion ‘overstated’ account


Updated September 23, 2019, 11:10 AM By Myrna M. Velasco

The Commission on Audit (COA) has flagged state-run Power Sector Assets and Liabilities Management Corporation (PSALM) on P14.950 billion worth of entry that it allegedly “overstated” in its book of accounts and financial records, including P11.18 billion worth of dormant accounts.
The State audit agency primarily questioned “the inclusion of dormant accounts without supporting documents transferred from the NPC (National Power Corporation) books in the amount of P11.18 billion,” which it claimed is contrary to Philippine Public Sector Accounting Standards (PPSAS).
To note, PSALM is the transferee-firm of the assets and liabilities of NPC when its power assets had been privatized and the entire electricity sector had to go through restructuring process as prescribed under the Electric Power Industry Reform Act (EPIRA).
The COA formally raised the questioned financial entries in separate sets of correspondence that it sent to PSALM President Irene Joy B. Garcia and the board of directors of PSALM chaired by Finance Secretary Carlos G. Dominguez III.
The State auditor similarly quizzed PSALM on “the recognition of prepayments pertaining to various creditable withholding taxes in the amount of P1.538 billion,” which had been booked as inter-agency receivables.
COA further emphasized that PSALM also committed “erroneous classification of 12-percent VAT (value added tax) in the amount of P1.487 billion from the sale of the Pantabangan-Masiway and Magat power plants.”
It stressed that such entry “understated the account” because that was booked as “other assets-prepayments” from inter-agency receivables due from national government agencies.
The audit agency likewise indicated that the power firm booked “accruals in the amount of P10.945 billion” under ‘other-payables account’ instead of having these entries as ‘financial liabilities-accounts payable,’ which it said is contrary to the accounting rules set forth by the COA.
It similarly noted that PSALM’s asset-in-trust with NPC account balance amounting to P7.735 billion “remained unreconciled with NPC’s trust liability account balance of P1.346 billion.”
Such “unreconciled entry” then, according to COA, left a variance of P6.390 billion as of its financial review period, which has essentially been “affecting the fair presentation of the account.”
The other important matters tackled by the State auditor in PSALM’s financial report are the “back wages claims” of the NPC Drivers and Mechanic Association (DAMA) for which NPC and PSALM are the respondents; and another one is prepayment concern on concession fees of the National Grid Corporation of the Philippines (NGCP) which is currently pending for arbitration proceedings in Singapore.

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