Newly admitted SGV partners join peers in Barcelona

Advisory partners and principal Charisse Cruz, Marnelli Fullon, Jan Ray Manlapaz and Evert De Bock, Tax partners Leo Leaño, Frances Villamayor and Lee Vivas, Assurance partner Ysmael Acosta and Financial Services Organization partner Juan Carlo Maminta joined new partners from 78 countries in this year’s EY Global New Partner Program in Barcelona, Spain. The program served as a global platform for new partners to discuss the importance of leading with purpose and creating a legacy.

Bravo!

Organizations with happy, passionate and tireless people

SUITS THE C-SUITE By Marnelli Eileen J. Fullon

Business World (01/15/2018 – p.S1/4)

Many of us dream of becoming a hero when we grow up. We want to make a difference. As we grow older, we realize that we do not have superpowers. But, we also realize that we can still make a real difference. Doctors heal the sick; lawyers defend the oppressed; CEOs guide their companies to help solve problems; CFOs ensure businesses are financially sound; CHROs make sure people are taken care of; auditors and consultants can, according to Ernst and Young’s (EY’s) purpose, help build a better working world. The list goes on.

What sets apart successful organizations with highly motivated talent pool? In one word: purpose.

SGV and EY define purpose as “The aspirational reason for being that is grounded in humanity and inspires and calls to action.”

Particularly in today’s business environment where professionals have changing personal and professional goals, it becomes even more crucial for an organization to discover its purpose. Organizations with a clearly defined and disseminated purpose can better inspire their people to connect their own personal purpose with the company’s, guided and sustained by leaders who lead by example, and who make an effort to embed purpose in the way the company does business. More and more, leaders are seeing how providing employees with an environment where they can make a difference clearly leads to having happier people who find real fulfillment in their work.

We can see some examples of how purpose has helped some very successful companies. For example, the purpose that drives one of the world’s largest social media sites is “To give people the power to share and make the world more open and connected.” One airline company states its purpose is to “Connect people to what’s important in their lives through friendly, reliable and low-cost air travel.” One of the world’s largest chain of cafes likewise communicates that its purpose is “To inspire and nurture the human spirit — one person, one cup and one neighborhood at a time.”

A global survey of business executives conducted by the Harvard Business Review Analytic Services and sponsored by EY titled The Business Case for Purpose showed that:

1) Corporate purpose goes beyond financial results;
2) Purpose-driven organizations are believed to have better results;
3) Purpose is viewed as a driver of innovation and transformation; and
4) Purpose is being underleveraged.

This is one of the reasons why SGV/EY embarked on its own purpose journey and is now helping organizations discover and live out their purpose through Purpose-Led Transformation (PLT), which is believed to be vital for an organization to last.

PLT is important not only for the success of the organization, but also to help people enjoy their work lives. Considering how much time most people spend at work each day, it becomes even more important to help employees feel that they are making the most out of their effort beyond basic compensation, and that their hard work is contributing significantly to something bigger than themselves. This is why purpose-driven organizations usually have happy, passionate, and tireless people who are more than glad to go the extra mile in order to make a difference. PLT also inspires people to ignite long-lasting positive change and fuels sustainable growth and innovation, which, in turn, have a positive and cumulative impact on the community.

For most companies, the first step is to clearly define the organization’s purpose. Once defined, the company should then align the organization’s vision, mission, values and behaviors with purpose, which must be communicated to all levels of the organization. This “idea” can be as simple as a call-to-action or as complex as a full manifesto. The important thing is to have a message and purpose that resonates with people, exemplified by the company’s leaders, and clearly integrated into the business model. PLT focuses on behavioral change, on engaging at a human level to influence desired behavior with employees, customers, suppliers, regulators, investors, and the broader public.

The Harvard Business Review survey also indicated that purpose is still being underleveraged by many companies. While 70% of the respondents believe that it is important to integrate purpose into core business functions, only 37% say that their business model and operations are well-aligned with their purpose.

Company leaders are encouraged to realize the importance of having a clear reason for existence beyond the pursuit of market share and profit. This is how management can inspire their people to go beyond their call of duty, and sincerely believe that they are making a difference for the company, the community, the country, and even the world.

With a successful Purpose Led Transformation, your people may find the capacity, opportunity, and drive to become the heroes they may have once aspired to be.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

Marnelli Eileen J. Fullon is a Partner of SGV & Co.

Implementing PFRS 15: Challenges of an accounting change

SUITS THE C-SUITE By Anna Maria Rubi B. Diaz

Business World (01/22/2018)

ON AUG. 15, 2017, the Securities and Exchange Commission approved the adoption of Philippine Financial Reporting Standards (PFRS) 15, Revenue from contracts with customers, which became effective for annual reporting periods beginning on or after Jan. 1, 2018.

Under PFRS 15, an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to. An entity must apply the five-step model to comply with the new revenue recognition standard:

Step 1: Identify the contract(s) with customers
Step 2: Define the performance obligations in each contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation

CHALLENGES
Entities in varying degrees are conducting assessments on the impact of PFRS 15 and are finding that implementing PFRS 15 is challenging. It requires more effort than what was originally anticipated, as they have to reconsider not only its accounting implications, but also its impact on multiple workstreams such as processes, information technology, legal, sales, human resources and investor relations. These areas include:

PROJECT TEAM AND PLANNING
Entities need to form adequate project teams equipped and enabled with the requirements of PFRS 15, since effective project management is crucial to implementation. The assigned project team needs to obtain input from its business functions and stakeholders to plan and implement the PFRS 15 requirements to the various workstreams. Entities need to also ascertain that the conversion project team has adequate and appropriate governance to ensure that key judgments and decisions are appropriately vetted. Some entities find creating project teams to be particularly challenging as they need to confirm that project team members are: 1) competent on PFRS 15 requirements; 2) knowledgeable about the current revenue recognition policy and; 3) well-informed on the business functions and practices.

SETTING THE SCOPE
To determine the initial impact of PFRS 15, entities need to establish its effect on its revenue streams, including a review of its relevant contracts. Some entities have a large volume of non-homogenous contracts. Reviewing them takes a lot of time; thus, entities need to first agree on the scope for the review of these contracts (i.e., by selecting representative contracts for similar product and service offerings) and applying the five-step model to determine the revenue accounting for such contracts. Entities also need to consider additional factors such as geography, sales channels and customer types that could impact revenue streams and related contract provisions. Once the scope is set, entities can apply the requirements of PFRS 15 while considering its impact on their business functions. Thus, entities need to ensure that the scope is appropriate and complete as the assessment of the representative contracts will be the basis of the design and implementation of solutions across workstreams.

SIGNIFICANT JUDGMENTS AND ESTIMATES
PFRS 15 involves significant judgments and estimates since the new model uses broad principles rather than specific guidelines. Examples of areas requiring significant judgments and estimates include:

• Identifying a contract with customer
Entities need to identify when an arrangement will create enforceable rights and obligations as they cannot directly conclude that their current arrangements will pass the criteria of a contract in accordance with PFRS 15. Entities, along with their respective legal teams, will have to revisit the enforceability of other forms of arrangements (e.g., written, oral and implied contracts).

• Identifying performance obligations
Entities cannot directly assume that the deliverables identified in the current revenue standards will be the same as the performance obligations under PFRS 15.

An example of this is the recognition of bundled goods or services. Entities need to identify the promised goods or services within the contract and determine whether these goods or services should be considered collectively within the context of the contract as a single performance obligation. Otherwise, the promised goods or services will have to be treated as distinct and separate performance obligations. Typical questions considered by entities include:

• Is the entity fulfilling a single promise to the customer?

• Do one or more goods or services significantly modify or customize one or more of the other goods or services in the contract?

• Do two or more promised goods or services each significantly affect the other goods or services (i.e., two-way dependency between the promised goods or services)?

Entities will need to understand the facts and circumstances and apply significant judgment to determine whether goods or services are to be combined into one or treated as separate performance obligations.

Another example is the recognition of free goods or services, since PFRS 15 does not limit performance obligations that are explicitly stated in the contract. Implied promises from an entity’s customary business practice (e.g., free goods or services) can be considered performance obligations if these will create a valid expectation that an entity will transfer a good or service to the customer. Entities will need to evaluate whether these free goods or services which were previously treated as marketing incentives may qualify as identified performance obligations in the contract.

VARIABLE CONSIDERATION
Examples of variable considerations are discounts, rebates, refunds, performance bonuses and penalties. Entities that simply recognized these amounts when cash is received will most likely be affected since PFRS 15 requires entities to estimate and update such estimate throughout the term of the contract. Under PFRS 15, recognizing revenue until the product is sold to the customer may no longer be acceptable if the only uncertainty is the variability in pricing; that is, the estimated variable consideration may now be recognized as part of the transaction price. However, there may be cases that the impact under PFRS 15 and legacy guidance (i.e., current revenue standards) will be the same if the estimated revenue will be constrained. Constraining variable consideration prevents over-recognition of revenue (i.e., significant reversal of cumulative revenue will not occur in future periods). Entities need to use significant judgment in constraining variable consideration by considering both the probability and materiality of revenue reversal.

ALLOCATING THE TRANSACTION PRICE
PFRS 15 requires entities to determine the stand-alone selling price of all the performance obligations and allocate the transaction price based on their standalone selling prices. Entities that determined bundled goods or services which should be treated as separate performance obligations under PFRS 15, may find allocating the transaction prices challenging, particularly when the price is not currently observable.

PROCESS FLOWS AND INTERNAL CONTROL
Entities need to revisit whether they will require new/revised process flows and adjust their transaction-level controls to make sure the information used is accurate and built around the framework of sound internal control policies. Entities also need to pinpoint significant assumptions and assess their estimation methods in applying the requirements of PFRS 15. It is also critical that the new/revised processes and controls, significant assumptions and chosen methods are appropriately documented. Documentation may provide sufficient and reliable evidence to regulators and stakeholders that the management has already taken steps to consider the impact of PFRS 15.

Where are you in the journey?

It is clear that implementing an accounting change of this magnitude is a significant challenge. Entities should already be thinking about the impact and implications of PFRS 15, as proactive implementation may overcome unwanted surprises and costly mistakes. Considering the challenges of such an accounting change, how ready are companies to meet such challenges?

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

Anna Maria Rubi B. Diaz is a Senior Director of SGV & Co.

Are employee pension plan payouts taxable?

SUITS THE C-SUITE By Jim R. Macatingrao

Business World (01/29/2018; p. S1/4)

For most employees, pension plans are their post-retirement safety nets, helping ensure that they have enough resources to live comfortably in their golden years. While plans can have different policies and provisions, one common question that arises in taxpayers’ minds is whether their “nest eggs” are subject to income tax?

The proverbial but technical answer is – IT DEPENDS. The taxability of the payouts from employee pension plans depends on a number of factors, including the nature of the payout.

In general, benefits are taxable.

Section 60 (B) of the Philippine Tax Code, as clarified by Revenue Memorandum Circular (RMC) No. 39-14, provides that the entire amount of benefits paid by a pension, stock bonus or profit-sharing plan of any employer for the benefit of employees, is taxable on the part of the employees in the year so distributed.

The same RMC explained that for non-contributory pension plans, the dividends distributed by the pension fund to the covered employees are subject to income tax in the year so distributed. If the employee covered by the pension fund resigned and received benefits from the fund that do not qualify as tax-exempt separation or retirement benefits, the entire amount of benefits received is subject to income tax in the year so distributed.

For contributory pension plans, where the employee also contributes to the plan, the RMC states that dividends distributed to the covered employees do not constitute a return of the employees’ voluntary contributions; hence, they are subject to income tax in the year so distributed.

Return of employee’s personal contributions and retirement benefits may be tax-exempt.

Under RMC No. 39-14, it was made clear that payouts representing a return of an employee’s personal contributions to the fund are not taxable. Retirement benefits may also qualify as exempt from income tax when the conditions under the Tax Code are satisfied.

AN ILLUSTRATION

If an employee contributed a total of P60,000 to the pension fund and upon his resignation received benefits from the fund in the amount of P300,000 that do not qualify as tax-exempt separation or retirement benefits, the P60,000 constitutes a return of his contribution to the fund and is exempt from income tax. However, the P240,000 that the employee received in excess of his contribution (P300,000 less P60,000) is subject to income tax in the year so distributed.

Any income or earnings from investments of the pension fund, such as dividends, are taxable to the employee-member in the year so distributed if the distribution is effected before his retirement from the company. On the other hand, upon the retirement of the employee and in accordance with Section 32 (B) (6) of the Tax Code, the total benefits which the employee shall receive consisting of his personal contributions, the employer’s counterpart contributions and the income of the fund to which the employee is entitled and is distributed to him shall be exempt from income tax. [BIR Ruling DA-(TSF-016) No. 542-08 and BIR Ruling DA No. 377-04]

REQUIREMENTS FOR EXEMPTION

Section 32 (B) (6) of the Tax Code outlines the following requirements for retirement benefits received by officials or employees of private companies to be tax-exempt:

1. The benefits received must be in accordance with a reasonable private benefit plan maintained by the employer;

2. The retiring official or employee must have been in the service of the same employer for at least 10 years and the employee should be at least 50 years old at the time of his retirement; and

3. Such tax exemption privilege on retirement benefits must be availed of by an official or employee only once.

Revenue Regulations (RR) No. 1-68, the Private Retirement Plan Regulations, as amended by RR No. 1-83, specifically requires that before availing of the privileges afforded by pension, gratuity, profit sharing, or stock bonus plans, the employer must first obtain a BIR certification or ruling to the effect that the qualification of the plan for tax exemption has been determined. Thus, it is important that the employer secures from the BIR a certification of qualification or a ruling, which shall then serve as a basis that the company’s retirement plan indeed qualifies as a reasonable retirement plan, which is an essential element for tax exemption.

Likewise, in the absence of any retirement plan, retirement benefits received by employees under Republic Act (RA) No. 7641 are also exempt from income tax under Section (B) (6) of the Tax Code.

RA 7641 provides that any employee may be retired upon reaching the retirement age established in a collective bargaining agreement or other applicable employment contract. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of 60 years or more, but not beyond 65 years which is declared as the compulsory retirement age, and who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one- half (1/2) month salary for every year of service, a fraction of at least 6 months being considered as one whole year.

While the above discussion outlines the possible exemption of payouts from employees’ pension plan, the tax implications on how these payouts will be spent, invested and enjoyed could also prove to be interesting.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

Jim R. Macatingrao is a Tax Partner of SGV & Co.

BPM: Innovating and transforming business

SUITS THE C-SUITE By Erwin D. De Arroz

Business World (02/05/2018 – p.S1/5)

Organizations continually aim to increase profits by reducing costs and increasing efficiency. This has been the mantra since the first wave of process improvement initiatives in the 1970s and 1980s where Total Quality Management, process improvement methods and statistical process control where the leading enablers. However, traditional businesses underwent dramatic changes in the late 1980s due to globalization and the removal of trading barriers. Many organizations reassessed their take on performance improvement and began adopting a process-centric approach called Business Process Management (BPM) to improve their performance and reduce cost.

BPM has evolved significantly since the 1990s (when process reengineering and Six Sigma were all abuzz) and has now reached the stage for the third wave in BPM methods. Organizations today use various long-term strategies such as automation, resource optimization, process standardization and process re-engineering to achieve cost reduction and operating-model effectiveness. All these strategies have processes at their core. Unfortunately, few organizations truly recognize how easily they can reach operational efficiencies through BPM. Every organization has its own business processes that, if left unmanaged, can potentially become complicated. As activities or tasks go from person to person, it can be difficult to keep a high-level perspective on what is actually going on.

On the other hand, technological advancements such as the rise of social media and mobility, demand that businesses transform in order to remain relevant. Hence, companies are under constant pressure to innovate in products and reengineer processes to stay ahead of the competition and earn profits. They must ensure that all operational processes are as effective and efficient as possible with the resources at hand.

It is reassuring to note that more and more companies are acknowledging that BPM is significant to improve efficiencies, reduce cost of service, reduce waste and generate higher revenues. Getting started can feel a bit daunting, but the overarching idea in BPM is to reengineer a business and the underlying processes.

When an organization decides to reengineer a process, the first step is to understand the existing state (or the “as-is” situation). Once the proper functioning of processes is understood and captured, it becomes easier to analyze the process and identify any control gaps, process redundancies and inefficient processes leading to poor customer experience. During this stage, analysts use different techniques (such as Six Sigma, lean and 5S) to identify these gaps. Analysts also perform benchmarking and maturity model analysis to spot improvement areas. Once the gaps are identified, designing the desired state or “to-be” state of the process is done. Once the “to-be” state models are created, the processes are implemented for monitoring. Normally, the “as-is” and “to-be” process models are created in process-modeling tools.

Process modeling links business processes, performance metrics, practices and people skills into a unified structure. Process models integrate the well-known concepts of business process reengineering, benchmarking, process measurement and organizational design into a cross-functional framework. Process models are very effective in improving current business operations and establishing a common language across the firm, and are often used as a foundation for improvement initiatives.

During process modeling, organizations inevitably encounter the following questions:

1. Which processes exist in the organization?
2. Where does the process handshake occur?
3. At what level of detail should these processes be modeled?
4. Who is responsible for the processes and who actually executes them?
5. How many resources are deployed in the processes?

These questions are particularly relevant when an organization has a plethora of process models. Global organizations, for example, typically have tens of thousands of processes running in parallel. Organizations therefore use readily available frameworks — created by consulting, IT and nonprofit organizations — as a reference. These frameworks contain a typical process architecture for an organization in the sector, the definition of a process, activities that should be included in a process, roles and responsibilities, and process measures and benchmarks, among others.

A number of companies have achieved dramatic improvement in economic value driven by BPM. The basic value proposition of BPM is that an organization can process more work while improving quality and reducing the effort. The benefits of BPM for companies can be categorized into the following:

1. Efficiency — Clear and defined end-to-end processes will address inefficiencies and eliminate sources of waste such as manual effort, poor interdepartmental handoffs, and the inability to effectively monitor overall progress.

2. Effectiveness — BPM promotes process effectiveness through the creation of a BPM governance process to manage and oversee the delivery of projects and the realization of business value. Other benefits of greater process effectiveness are the ability to handle exceptions faster and better, the ability to make better decisions, and the ability to execute consistently, which is critical for providing a better customer experience.

3. Agility — In this fast-paced ever evolving environment, organizations need to be nimble and have complete visibility of their processes, which go beyond inputs and outputs and process steps. They need to know who is performing the processes, how to measure the performance of each process, what the potential risks are and how they can be mitigated and controlled. The common factors that affect the performance of an organization such as social, technological, economic, environmental, political, legal and ethical aspects will require companies to be agile in changing or developing its processes. The faster we define and structure the ways of working, the quickly we can bring improvements in customer service and experience.

BPM enables organizations to align business functions with customer needs, and helps executives determine how to deploy, monitor and measure company resources. When properly executed, BPM has the ability to enhance efficiency and productivity, reduce costs, and minimize errors and risk — thereby optimizing results. Implementing best practices in BPM contributes to sound financial management and quantifies how well an organization is succeeding in meeting its goals. A BPM approach will help a business innovate and transform its way to achieving more business value.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

Erwin D. De Arroz is a Senior Director of SGV & Co.

RKC Cluster celebrates Christmas through “My Dream in a Shoebox” campaign

Just before Christmas, Advisory Partner Ryan Gilbert K. Chua (RKC) led his cluster in the My Dream in a Shoebox outreach campaign organized by the Information Technology and Business Process Association of the Philippines (IBPAP) and TeamAsia for the children of San Pedro Calungsod Parish in Muntinlupa. The program is an annual campaign of IBPAP and TeamAsia that aims “to empower underprivileged children to fight poverty through education.”

Volunteers from the RKC cluster, together with the event organizers and members of the San Pedro Calungsod Parish, started the program with a mass held in the parish’s covered gym followed by a series of games, fostering a community of fun and learning. The highlight of the event was the giving of packed lunches and shoeboxes filled with school supplies. RKC cluster, together with other Advisory partners Leonardo J. Matignas, Jr., Joselito E. Lopez and Marnelli Eileen J. Fullon, donated 288 shoeboxes for grade school students.

JFR, JEZ and ACZ participate in the 64th ANMSEC

MG 7 Leader and Business Services Head Jimmy del Rosario, and Assurance Partners Peps Zabat and AZ Zaragoza recently attended the testimonial dinner and awards night of the 64th Annual National Mine Safety and Environment Conference (ANMSEC) held at CAP-John Hay Trade and Cultural Center, Camp John Hay, Baguio City.

The conference, with the theme “Responsible Mining, in the Hearts and Minds of Filipinos,” was spearheaded by the Philippine Mine Safety and Environment Association (PMSEA) in coordination with the Department of Environment and Natural Resources – Mines and Geosciences Bureau, the Chamber of Mines of the Philippines, the Philippine Society of Mining Engineers and other professional organizations.

The highlights of the ANMSEC included a tree planting activity at the Baguio Botanical Garden, a mining exhibit by mining companies and suppliers, a mineral industry symposium and parade, a mine safety field demonstration and field competition, and the Presidential Mineral Industry Environment Award (PMIEA) event.

The program’s guest of honor and keynote speaker was the Secretary of the Department of Environment and Natural Resources (DENR), Roy A. Cimatu. He spoke of the administration’s support for responsible mining, which must be people-oriented and lead to community and environment development.

TAS Managers pass Advanced Financial Modeler exam

TAS Senior Director Smith Lim and TAS Director Jan Michael Saniel successfully passed the recent global Advanced Financial Modeler (AFM) exam. Smith and Mikoy now hold an AFM designation as certified by the Financial Modeling Institute (FMI).

The AFM exam is a rigorous three-hour test of financial modelling skills that cover model construction, worksheet structure, best practices design, prospective financial statements, and scenario creation. FMI describes AFM as a certification focused on the skills required to design and build integrated financial models where participants were given opportunities to demonstrate their modelling proficiency.

Congratulations, Smith and Mikoy!

CGL speaks at DTI’s Blockchain Forum

FSO Advisory Partner Ian Lauron was a guest speaker at the Blockchain Forum organized by the Department of Trade and Industry (DTI) last month. The event was part of a series on the Philippine government’s new inclusive, innovation-led, industrial strategy (i3s) led by DTI Assistant Secretary Dr. Rafaelita M. Aldaba. More than 100 professionals from the public and private sectors attended the forum.

With CGL were other blockchain experts from the industry who shared their opinions and views on the technology powering the controversial cryptocurrency, Bitcoin. The event highlighted the use and benefits of blockchain and distributed ledger technology (DLT), in government. Also discussed were the risks and benefits of the technology and its impact on trade, regulations, and service delivery. Most importantly, the forum talked about how to start using the technology and its future applications in government agencies. CGL spoke on the basics of the blockchain technology and shared some views from the financial industry.

Also in attendance were FSO Advisory Associate Director Ben Simon and Associates Irsyad Stamboel and Daniel Joseph Tan.

SGV hosts Robotics-AI and Inclusive Innovation roundtable

(SGV) recently conducted a roundtable discussion on Robotics–Artificial Intelligence (AI) and Inclusive Innovation. Organized through the collaboration of the Financial Services Organization (FSO) Advisory group and Advisory Performance Improvement (PI), the event was SGV’s second knowledge-sharing activity on Financial Technology (FinTech) following the FinTech Forum held last year. Several company executives and C-suite members from the financial and business process otsourcing (BPO) industries participated in the roundtable.

The event explored robotic process automation (RPA)’s potential and discussed its advantages and possible applications for shared service centers, government supporting institutions, global in-house centers (GICs) and BPOs. It also aimed to introduce AI and machine learning to the audience.

Assurance Partner Janet Paraiso, EY India Head of Robotics and Analytics Kartik Krishnan, FSO Advisory Partner Ian Lauron, DOST Philippine Council for Industry, Energy and Emerging Technology Research and Development Executive Director Dr. Carlos Primo David and FSRM Advisory Partner Francis Lumbres

FSO Advisory Partner Ian Lauron (CGL) opened the meeting and touched upon the opportunities in robotics. He also emphasized the importance of discussing robotics beyond the enterprise perspective and to assess its effect in a nationwide context.

Guest speaker was EY India Head of Robotics and Analytics Kartik Krishnan, who discussed RPA from different standpoints. Some of the key benefits of automation raised were cost reduction, increase in efficiency, compliance and quality, and accelerated innovation and growth.

Department of Science and Technology (DOST) – Philippine Council for Industry, Energy and Emerging Technology Research and Development Executive Director Dr. Carlos Primo David gave updates on the DOST’s projects and programs highlighting the Philippine Government’s Inclusive Innovation initiative. Dr. David also shared DOST’s goal to be part of the next wave of innovation: data, connectivity and intelligence – including the Internet of Things and AI.

The roundtable discussion was organized by CGL, Advisory-PI Partner Kaye Macaisa, and FSO Advisory Associate Irsyad Kautzar Stamboel with the support of FSO Assurance Senior Managers Cathy Biliran and Veronica Arce, and Manager Marco Obias, Advisory-PI Manager Monica Ulila and Senior Associate Wira Mira Paule, and GCR Senior Associate Mark Chiu.

‘Mindful investing’ and strategic asset allocation

SUITS THE C-SUITE By Christian Lauron and Renz Kristofer Cheng

Business World (02/12/2018 – p.S1/4)

Be mindful of where you are headed. This is the Desiderata of the current investing climate, and investors may wish to be reminded of this philosophy. Against a backdrop of increasingly complex business environments, socioeconomic redirection, intensive regulations and disruptive developments, institutions may find it timely to review their investment strategies and asset allocation by conducting a process called Strategic Asset Allocation (SAA).

What is SAA? It is a process whereby investment opportunities and investment vehicles are identified, tested and evaluated, along with the related risks and regulatory requirements. It is a management tool used in establishing the optimal investment portfolio mix and is often conducted simultaneously with asset-liability management and business modelling. It can also be considered a technique for determining the asset mix that optimizes returns, given specific risks taken and general risks faced. It provides a common view for any institution’s boards and management on their current state and allows discussions — from straightforward to spirited — on the direction of their investment strategies. As the risks and regulatory requirements mark the boundaries of the investments, a path is drawn to meet specific investment objectives and mandates. This process of “mindful investing” helps define both the direction and quality of investments that management can take. It answers the question “Where are we headed?”

Typically, the first vital step is to determine the target asset universe — management’s universe of investment opportunities and vehicles or instruments. The granularity of the research entailed to determine such a universe shall depend on the system processing capacity and the desired depth of analysis as set by management. The investment universe could range from familiar assets like bonds, loans and stocks to alternative assets such as property, venture and private equity, to emerging types that have not been understood or embraced by the mainstream financial system.

Once the investment universe is clear, the next step is an assessment of the potential performance of the investments and the portfolio. This involves the analysis of historical data as well as the integration of market predictions to come up with expected risks and returns of the investment. An option is to include an asset liability management exercise where the institution’s liability profile is matched with the asset universe — a procedure that should be helpful for insurers, pension funds and other asset management companies, and even banks with increasingly long-term and development-oriented business models.

Given these considerations, an “efficient frontier” may be drawn using generalized maximization techniques. Each point of the frontier represents a portfolio with a specific mix of assets together with its returns and risks, taking into consideration the economic and business environment, market challenges and regulatory requirements. In developing the risk-return metrics for each investment or asset class, both the historical and expected returns should be evaluated against the investment objectives, while the risks should take an integrated view, covering at least market, liquidity, credit and operational risks, as well as actuarial and solidarity risks (in the case of insurers and pension funds). At this stage, the process of testing against historical results and constraints can inadvertently constrict opportunities, particularly for investments with long-term horizons. To provide a healthy check of the historical review and risk assessment process, the SAA process should always include an investment mandate review and allow asset reallocation only when the medium-term outlook has significantly changed and there is evidence of investment drift.

The final step involves the SAA tool, which can help provide an asset mix that optimizes the return at the current level of risk, and even as well at the maximum level of risk that the institution may take. The SAA process can run with multiple interdependent iterations as newer sets of information and predictions become available. Fast iterations coupled with heuristic evaluations are now possible, as scientific computing power becomes more accessible and with the fusion of the computational and data requirements. The visualized results are then used in board and management discussions for capital allocation and business modelling decisions, hopefully contributing to clarity in strategy and direction.

SAA is viewed not as a step that may be taken but rather as a necessary step for management to test, distill and clarify its investment objectives and mandates, squarely answering the question “Where are we headed?” But there are nuances that we need to consider given the heightened intensity of sociopolitical disruptions, economic realignments, digital innovations, and market dynamism — “where are we headed” is not the same as “where are we going?”

The level of investing complexity has rapidly moved from the purview of risk and volatility to the region of uncertainty and extreme conditions. There is a limit to what we can clarify from direction and in rediscovering objectives. Perhaps the question that we need to start answering now is “Why are we investing?” and using this rationale as a springboard to evolve from mindful to purposeful investing.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

Christian Lauron is a Partner and Renz Kristofer Cheng is a Senior Associate, respectively, of SGV & Co.

Digitalization of government

SUITS THE C-SUITE By Christian Lauron and Irsyad Stamboel

Business World (02/19/2018 – p.S1/4)

(First of two parts)

In almost every industry, “digital” has become the latest buzzword. The scope of digital possibilities is being explored across every business sector, from financial services, health care, to manufacturing, and many others. Given the widespread adoption of digital in business, it would be reasonable to consider the significant benefits that digital can bring to government services and its impact on its constituents.

For some reason, going digital has been on the back burner of government priorities, particularly in developing countries. In fact, few governments in developed and developing countries have attempted to adopt a digital approach in servicing their respective citizens and stakeholders, despite the obvious benefits. One notable example where digital is enhancing government services is in India, which has a national digital identification (ID) called Aadhaar.

The ID system was established for all its residents to promote inclusiveness, and which can be used as an electronic Know-Your-Customer (eKYC) tool to acquire financial products, telecommunication plans, and avail government services. The eKYC cuts significant processing times for the benefit of all parties. While significant investments are needed for governments to digitize some, if not most, of their citizen-servicing mechanisms, the potential benefits that can be reaped cannot be underestimated.

EFFICIENCY AND COST-SAVING

Digitalization typically results in better efficiency. Various institutions have different drivers for digitalization, such as accessibility, cost-cutting, tracking, or even simply for the sake of increasing digital adoption itself. All these will — to a certain extent — lead to efficiency. In the most basic sense, a government agency that wants to go paperless (by transferring all its printed materials into the cloud) will be able to save and share space with other government agencies, as well as reduce its carbon footprint and traffic (e.g. delivery and disposal of supplies). In addition, government officers can save time when looking for specific documents due to digital indexing, which can further enhance productivity. Estonia, for example, claims to have saved 800 years of working time per year as a result of its digital campaign.

Improved social services

Digitalization can potentially improve the citizenry’s quality of life. An example would be renewing one’s driver’s license which could involve traveling to the national transportation agency, filling out forms, and waiting in long queues. The entire process can take hours instead of just minutes if the government transportation agency were to embrace a digital approach. Many processes can be accomplished online.

Promote transparency

Given how most governments are promoting honesty and transparency programs, digitizing transactions can help provide better visibility and clarity. Corruption can occur during cash transactions between citizens and government agencies. Making transactions digital will not only help state auditors monitor cash flow but will also encourage citizens and government agencies to uphold ethical practices. With digital platforms, every transaction can be effectively tracked and be monitored, while at the same time, reducing bureaucracy and corruption.

TECHNOLOGY APPLICATIONS IN DIGITAL GOVERNMENT

Big data and analytics

The main benefit of data analytics in government is to harness the enormous amount of data available, which is often underutilized. By leveraging data analytics, government agencies can speed up their decision making supported by specific data and information.

For example, one application would be to determine peak hours on certain roads to better address traffic management. In Singapore, the use of analytics during peak hours helped successfully implement the Electronic Road Pricing (ERP) program. Singapore’s government claims to have decreased the number of vehicles on the affected roads by 35,000 vehicles and traffic by 13% during peak hours. Additionally, the Singapore government was able to use the proceeds from ERP to improve public transportation and/or subsidize fares to encourage public transportation usage. Indonesia has conducted trials for the similar implementation of ERP in one of its business districts in Jakarta.

Another sample of big data application is establishing industry-specific tax benchmarking systems. The Australian Taxation Office was able to gather about a million tax returns of small and medium-sized enterprises (SME) and used predictive analytics to establish industry-specific financial benchmarks in order to spot any possible discrepancies in the income reported by the firms. The use of predictive analytics in this example is useful for any evaluation-related processes in government agencies that are prone to undervaluation practices.

Robotics Process Automation and Artificial Intelligence

Robotics Process Automation (RPA), which refers not to a physical robot, but to a type of software, is a rules-based process tool used to eliminate swivel chair processes which can cut a significant amount of time compared to regular individuals doing the job. A ‘bot’ may work with greater accuracy and can work 24/7. It can create a document, read instructions from e-mail, transfer a document from a file type to another, input text into specified fields, and other manual, repetitive, and error-prone tasks.

RPA can be implemented in the field of new application processing and customer onboarding. For example, citizens who want to apply for government services for their PhilHealth, SSS, TIN, and Pag-IBIG accounts, need not to go to their sites to enroll. The bot will simply extract information from data submitted online, store them in the defined database, and process them for delivery of their respective IDs (detecting discrepancies, generating unique numbers, printing IDs, and initiating courier delivery order) with little to zero human intervention.

On the other hand, the purpose of artificial intelligence (AI) is to create an intelligent machine that can mimic how humans think. AI has opened the world to new possibilities, and continues to advance and gain popularity. AI may greatly assist governments in fraud detection, services delivery, and decision making among others. AI, combined with RPA, is a powerful tool called Intelligent Automation which improves the capability of the rules-based ‘bots’ to be able to create their own rules, eventually existing without the need of humans to maintain themselves.

One possible application is also to establish intelligent chatbots in various government agencies, which are capable of answering basic queries and performing basic tasks to improve service delivery. This can allow government front liners to focus on doing more complex and value-added tasks, thereby improving workforce satisfaction and resulting in better services. An intelligent bot can be tasked to answer inquiries on tax brackets and rates, schedule appointments, perform rough valuation tariff estimates on customs goods, and engage the citizens by conducting digital surveys.

As an example, the city of Los Angeles, in partnership with Microsoft, introduced a chatbot named CHIP (City Hall Internet Personality) that is able to answer more than 700 queries at the same time. In addition, it has reduced the incoming number of e-mails by 50%, so employees can focus on more complex issues instead of taking the time to respond to each e-mail.

Similarly, the State Government of Mississippi established a chatbot named “Missi” to handle inquiries about hunting and driver’s licenses, and taxes; reducing citizens’ waiting time for queries from an average of 45 minutes into less than 10 minutes.

In the second part of this article, we will discuss more areas where digitalization can create significant impact on government services. We will also look at the current level of digitalization in Philippine government operations.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

Christian G. Lauron is a Partner and Irsyad Stamboel is an Associate of SGV & Co.

FunGolf Tournament goes full swing

SGV recently held a FunGolf Tournament at the Rancho Palos Verdes Golf and Country Club in Mandug, Davao City. SGV partners, clients and friends competed in an 18-hole golf tournament under system 36 rules, in which Mr. Edwin Ledesma of Unifrutti Philippines, Inc. emerged as the overall champion.

SGV partners who took part in the tournament were Chairman and Managing Partner Itos Cruz, Market Group 4 Leader Fame delos Santos, Market Group 8 Leader Jun Torres, EY ASEAN FAAS Leader and Assurance Partner Aris Malantic; Davao, Cagayan de Oro and General Santos City Partner-in-Charge Alvin Pinpin; and Cavite Partner-in-Charge Benjie Villacorte.

SGV hosts seminar on AML and CFT

SGV’s Financial Services Office recently hosted a public seminar on Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) at the Makati Shangri-La Hotel. A number of representatives from different banks, insurance companies and financial institutions attended the seminar.

FSO Leader Vicky Lee Salas opened the seminar and explained the overall objective of the seminar, which was to support the growth and development of AML/CFT knowledge and awareness of the country’s covered entities, which are supervised by the Bangko Sentral ng Pilipinas (BSP), the Securities and Exchange Commission (SEC) and the Insurance Commission (IC).

BSP Deputy Governor Chuchi Fonacier and Anti-Money Laundering Council (AMLC) Secretariat Executive Director Atty. Mel Racela presented enforcement trends, including updates and developments in the local regulatory framework.

EY Hong Kong Senior Director Elizabeth McDonald discussed leading practices and global/regional developments. EY Hong Kong Director Vincent Tang discussed institutional risk assessment (IRA) on money laundering and terrorist financing. SGV Senior Director Veronica Arce presented money laundering and terrorist financing detection typologies and the Asia Pacific Group (APG) 2016 typology report. SGV Financial Services Risk Management (FSRM) Head Christian Lauron discussed the use of analytics and anomaly detection from machine learning to detect money laundering and terrorist financing.

The seminar was a public event organized by the SGV AML Working Group, led by FSO Head and Assurance Partner Vicky Lee Salas and Senior Director Veronica Arce, together with Senior Associate Christopher Yu, and Associates Radelaine Borreta, Charles Agunos, John Henry Pantoja and Elias Botard.

SGV conducts capacity building for rural banks

As part of capacity-building initiatives for rural banks, SGV, in partnership with the Rural Bankers Association of the Philippines (RBAP), recently conducted a two-day seminar on PFRS 9 Financial Instruments and BSP Circulars 855 Guidelines on Sound Credit Risk Management Practices and 908 Agricultural Value Chain Financing Framework at the RBAP’s head office in Intramuros, Manila.

Financial Services Office (FSO) Partner Christian Lauron led the team in discussing the implications of PFRS 9 and Circular 855, as well as the proportionate application of expected credit loss models for rural banks. Joining him as resource speakers were FSO Senior Directors Catherine Biliran and Deofel Usuquen, and Senior Associate Russel Ailes. Aside from the discussions on compliance as espoused by PFRS 9 and Circular 855, Associate Director Ruben Simon discussed Circular 908 as an input to rural banks’ strategic plans to grow their agricultural lending portfolio in support of countryside development. The support team for this initiative includes FSO Senior Associates Lyca Antonio, Fitz Balba and Associate Eduardo Montenegro.

The first leg of a nationwide roadshow series, the event was attended by 47 participants representing 25 rural banks from all over the country. Also present at the seminar were outgoing RBAP President Antonio Pasia, incoming RBAP President Giovanni Gabriento, Rural Bankers Research and Development Foundation (RBRDFI) Executive Director Dennis Pena, and RBRDFI Program Manager Ace Calang.

Risk professionals acquire certifications

Advisory Senior Associate Mc Lein Bagunu recently passed the Certified Information Systems Auditor (CISA) program. Offered by the ISACA, the CISA program is a globally accepted standard of achievement among information systems audit, control and security professionals since its inception in 1978.

Meanwhile, Associate Marylett Gangcuangco recently passed the Certified Internal Auditor (CIA) program. The CIA designation of the Institute of Internal Auditors (IIA) is the only globally recognized certification for internal auditors, and communicates understanding of the IIA’s standards and how to apply them.

Congratulations, Mc and Marylett!

Digitalization of government

SUITS THE C-SUITE By Christian G. Lauron and Irsyad Stamboel

Business World (02/26/2018 – p.S1/5)

(Second of two parts)

In last week’s article, we introduced “digital” as the hot buzzword for businesses in the private sector, but not as much in the public sector or government service. We discussed how some governments have applied digital innovations and the value that these have brought to government services and to the quality of life of their citizens in general.

We will now continue our discussion on the various platforms and areas that government can consider.

DISTRIBUTED LEDGER TECHNOLOGY AND SMART CONTRACT

[In this article, we are interchanging the terms between distributed ledger technology or DLT and Blockchain.]

Digital transformation efforts across government agencies will be ineffective if they are not integrated and connected. Both interoperability and integration are important when completing a digital road map. There must be a common platform or a series of Application Programming Interfaces (APIs) that can integrate IT systems for all government agencies. Distributed Ledger Technology (DLT), which offers a solution for the former, is an immutable database that is shared across institutions with consensus. The technology is another name for the blockchain concept that some of us may have already heard of, which is the same technology powering the bitcoin virtual currency.

DLT can be used to store information, provide timestamps and controllable security log access to see who created, submitted, and modified any information so that no one can access or change data without being logged (not even system administrators). In addition, it can also provide automation/auto execution by a smart contract.

A smart contract refers to a fully automated set of instructions that is capable of facilitating, executing, and enforcing the negotiation or performance of an agreement (i.e. contract) using blockchain technology.

Estonia is the first country to implement a blockchain named KSI to prevent any compromise to its government networks, systems, and data, while at the same time maintaining absolute data privacy. They have implemented blockchain in their legislative system (e-Law) to track who creates, revises, approves, and shows the public drafts of legislation before they eventually become laws and get published in their open legal library online.

The Estonian government also implemented blockchain in its court system (e-Court) enabling paperless proceedings. Claims can be filed online and the court clerk can immediately confirm and assign the date of the hearing with a randomly assigned judge presiding. Evidence, questions, arguments, and answers related to the case can be submitted online, and in simple cases, proceedings may also take place online (decisions and bailouts, if applicable, are posted online) without the need to personally go to a courthouse. Based on reports, this system has dramatically improved Estonia’s judicial system, sped up legal proceedings, and eliminated “under-the-table” practices that may compromise the legal system.

One potential application of DLT and smart contracts for the Philippine government is in the servicing of the conditional cash transfer program (4Ps). DLT can be used to store the beneficiaries’ names, amount of grant entitled, personal information, and household status. Powered together with smart contracts, it can execute regular payments to beneficiaries on its own with little to zero human intervention. At the same time, it can automatically stop the action (transfer of grants) depending on the criteria set by the government (e.g. children reaching certain age limit, deceased beneficiaries, etc.). Any government official who encodes, modifies, or deletes any data will be logged for accountability and security purposes. DLT can also reduce the chance of corrupt practices, such as creating fictitious 4Ps accounts and tampering with personal information, among others.

Second, DLT can be applied to the registration of intellectual property. The patents filed will be immutable, have a clear trail, and can indicate who registered what (even system administrators). With smart contracts, it can automatically publish the patent once it has expired.

Likewise, this feature can be applied by the Land Registration Authority (LRA) to its land ownership registry system. No official can tamper with or modify the records without being identified, and the technology may allow faster and more efficient tracking of who has the economic ownership of the property and its proper value for tax purposes. As a result, data manipulation over gratuities can be minimized and the number of court disputes may decrease.

In the area of customs, DLT, combined with analytics, can achieve seamless automated tariff valuation and/or collection from the importers.

These are but a few of the potentially beneficial applications of DLT in government services.

LOCAL APPLICATIONS

Several proofs of concept (POCs) and prototypes for the technology mentioned above have been created for Philippine organizations. For example, for big data and analytics, a crowdfunding platform has been developed to provide an alternative avenue for low-cost funding for entrepreneurs and SMEs in the agricultural sector. This program was designed to support SMEs (including agribusinesses), which matches SMEs with investors who are deemed a fit with their risk appetite to the nature of the enterprises (seed stage, stable cash flow, governance, etc.).

In other areas, spatial analysis has been used to simulate a path for the proposed Mindanao railway system, one of the priority infrastructure projects of the Duterte government. It considers the spatial relationships between observations and takes into account characteristics based on distance, thus allowing for a more robust and practical analysis of spatial information.

For AI, a chatbot is being developed for basic inquiries on tax information and functions. For blockchain, in the works is a prototype that will aid local government units in handling and issuing business registration permits, which can improve the process and increase efficiency and transparency.

PHILIPPINE GOVERNMENT: CURRENT STATUS

The Philippines has attempted to embrace digital with some success. The former Commission on Information and Communications Technology (now the Department of Information and Communications Technology — DICT) established the Philippine Digital Strategy in 2011, where it envisioned the Philippines as an e-Government which provides greater efficiency and effectiveness in social services delivery, fewer opportunities for corruption, and enhanced transparency for greater citizen engagement. In addition, it aimed to achieve integration and interoperability across all government agencies.

The Bangko Sentral ng Pilipinas (BSP), National Bureau of Investigation (NBI), and the Bureau of Internal Revenue (BIR) are but some agencies that have conducted early adoption of digital tools. The BSP planned to lessen the exchange of cash transactions and promote interoperability among financial institutions by establishing the National Retail Payment System. The NBI made it a necessity for its clearance applicants to provide their details online and choose an appointment time for biometrics enrollment and picture taking. The BIR has been given the support to apply digital in all of its tax administration functions, an initiative that is now legislated in the newly-passed tax reform (TRAIN) law.

CHALLENGES

Traditionally, government agencies are used to working independently from each other. One example is the existence of various types of government identification (ID), all of which are independent of each other. If a person uses his or her government ID to open a bank account, the bank will not necessarily know the person’s tax identification number unless he or she provides it. In other words, there is no integration to provide a single identity to a citizen (e.g. a national ID that will contain all information on the individual including other government IDs) although a bill on a national ID was approved by the House (HB 6221) and is pending for Senate action in the first quarter of 2018.

An efficient and transparent government will not only benefit its citizens, but also have a significant impact on government’s operations. While the immediate benefits will be the notable improvements in public service and quality of life, government should also consider that an efficient and effective digital strategy can only redound into more foreign investment.

While the government is currently enjoying sound economic fundamentals — the economy is one of the fastest-growing in the region — its effects have yet to cascade down to the common Filipino. Perhaps, in alleviating some of the pressing issues closest to the Filipino’s daily life, they will be able to experience a real and measurable difference, which, in many cases, could be as simple as spending less time in road traffic or queuing for government services.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the authors and do not necessarily represent the views of SGV & Co.

Christian G. Lauron is a Partner and Irsyad Stamboel is an Associate of SGV & Co.

Nurturing mothers in the workplace

SUITS THE C-SUITE By Diorella M. Ontimare-Dela Cruz

Business World (03/05/2018 – p.S1/4)

Statistically speaking, women make up more than half of the world’s population and arguably, may have the best ideas in the workplace. If not, at least half of the best ideas, then.

Some of these ideas, however, many never see the light of day because work has become a challenge, especially for married women. The challenge to achieve a work-life balance has been the primary reason why some working mothers leave the corporate world.

At SGV, the Philippine member firm of Ernst & Young (EY), where I work, I appreciate the diverse and inclusive environment where our people can grow and thrive regardless of gender. Half of SGV partners are women, and this proportion is also mirrored throughout the firm, from overall headcount to top management. I want to share my own experiences about how SGV helped me get through the challenges of being a working mother in the workplace.

AN ALTERNATIVE WORK ENVIRONMENT

My first pregnancy was very delicate and I was advised to take a break and rest. However, I still wished to continue working despite my situation. Fortunately, my immediate superiors were very understanding of my case and together we came up with alternative ways for me to complete my tasks.

The advances in technology facilitated the situation and allowed me to fulfill my responsibilities. All I needed were basic tools like a laptop, a telephone and access to a stable Internet connection. I also had the option to utilize social media and other digital platforms to communicate, such as using Skype for business to conduct online meetings with my team or to use e-mail for sending important documentation and other communications.

These tools are very helpful to working mothers, especially in emergency cases like when a child is very sick and needs to be brought to the doctor. One can still deliver work requirements without having to be physically in the office. This alternative helps lighten the worries of a working mother and lets her balance her time more effectively.

BREAST-FEEDING JOURNEY

As a first-time mother, I strove to provide the best for my child and promoted exclusive breast-feeding. After my maternity leave, exclusive breast-feeding required me to express milk every 2-3 hours during work. The firm has an accessible clinic with a comfortable private area where I could do that, with a refrigerator where I can store the output during the day. My superiors also allowed me to spare 10-15 minutes during office hours to express milk. These available facilities in our office greatly helped me get through my breast-feeding journey.

MATERNITY LEAVE/SOLO PARENT’S PRIVILEGES

Republic Act No. 1161, as amended, states that a covered female employee who has paid at least three monthly maternity contributions in the 12-month period preceding the semester of her childbirth, abortion or miscarriage and who is currently employed shall be paid a daily maternity benefit equivalent to 100% of her present basic salary, allowances and other benefits or the cash equivalent of such benefits for 60 days if all the required conditions are met.

In addition, Republic Act No. 8972 or the Solo Parent’s Welfare Act provides for benefits and privileges to solo parents and their children. It aims to develop a comprehensive package of social development and welfare services for solo parents and their children to be carried out by the Department of Social Welfare and Development and various government agencies.

The abovementioned benefits provided by the government also help working mothers and solo parents juggle their family obligations and their work. As a working mother, it is also a great boon to have an employer who can and is willing to assist with official arrangements or requirements, such as notifying and filing claims with the Social Security System.

IMPORTANCE OF SUPPORTING MOTHERS IN THE WORKPLACE

I believe that an organization that supports mothers in the workplace will truly help them unlock their potential, which could engender lasting loyalty and a willingness to stay at work despite the many challenges of trying to balance family life and career.

ACTIVITIES AND RECOGNITION

EY, being a global firm, places a high priority on empowering female leaders and promoting the advancement of women in the workplace. Given this, I hope to one day see the firm organize more events, not only to recognize working mothers, but all working women as well. Such a possible event could be tailored to support and empower the “next gen” of female leaders within various organizations, and provide an opportunity for teams to foster new relationships and develop networking skills. It may even be possible to coordinate with clients to arrange joint employer and client events to support “next gen” female leaders. These may offer excellent opportunities to boost the confidence of female workers and encourage them to achieve more in the workplace.

EQUAL OPPORTUNITY FOR ALL

As a meritocracy, SGV has always given equal importance to all employees, regardless of gender. Women, men and LGBT are given the same opportunities in terms of promotions, salary increases and mobility experiences.

Research has shown that, given equal opportunities, women have a high potential to reach senior management positions. An article from Philippine Institute for Development Studies in November 2017 found that, based on a survey of businesses across different countries, the Philippines ranked as the highest in the proportion of senior management team roles held by women (40%).

In some ways, SGV has also been a trailblazer in this aspect, being one of the earliest Philippine companies to have a female partner (in 1961), and to elect a female chairperson and managing partner (in 1992). In my opinion, having such a parity-based culture embedded in a company’s psyche can significantly boost the morale of women employees.

The firm also let me experience leading projects under our quality and enablement department. These projects helped me broaden my network by having closer interactions with our pool of partners and managers. These also helped me gain a high level of self-achievement, especially when projects were rolled out and successfully concluded. In a sense, this deep exposure to project management also helped me strike a balance between work and family life.

CALL TO ACTION

Companies need to understand the concerns that women face in the workplace. These usually consist of family-related benefits and the challenges of being the primary providers of childcare. Understanding each concern may help guide the design of policies that will assist women, particularly working mothers.

The theme for this year’s International Women’s Day celebrations is #PressforProgress, which is certainly timely given that more and companies need to press forward for positive change for women, and boldly face the challenge of achieving true and inclusive gender equality in the workplace.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.

Diorella M. Ontimare-Dela Cruz is a Senior Director of SGV & Co.

Spotlight on Advisory

Everyone is talking about disruption and transformation these days. But we want to differentiate ourselves by naming the era we are living in as the Transformative Age, which is more positive and impactful. With SGV’s unique position in the market and our relentless focus on exceptional client service, we are better equipped in our journey to becoming the number one consulting brand in this Transformative Age.

Advisory, in simple terms, is providing clients with support or advice in any aspect of their business. We help them in their transformation projects to increase efficiency/security, cut costs, improve customer relationships, address compliance requirements, to name a few. And while the current Advisory structure is composed of 2 sub-service lines—(1) Performance Improvement and (2) Risk—our strategy is to offer our clients with an integrated solution to seamlessly address their requirements.

Some of the things we do include:

· Implementing service and cost improvement initiatives
· Assisting clients in implementing fundamental change in their operations performance to support sales growth, become more cost competitive, minimize risk, and ensure operational resilience
· Embedding a performance management process and culture that unites the business around its core objectives
· Unlocking customer value through organizational and strategic changes
· Helping organizations achieve alignments in finance, IT, and HR
· Supporting complex and large scale program and portfolio management
· Enabling robust and agile risk-aware organizations
· Dealing with cybersecurity and data privacy issues from high-level strategy and governance work to detailed technical operations

Advisory is led by Rossana A Fajardo, who also heads Performance Improvement. SGV Chief Risk Officer Leonardo J Matignas, Jr leads the Risk sub-service line.

SGV eNews will regularly feature Advisory services and solutions as well as team members to showcase the diverse competencies that the service line can provide to clients.

ACM speaks at World Bank IFRS Conference

EY ASEAN Financial Accounting Advisory Services (FAAS) Leader and SGV Assurance Partner Aris Malantic participated as a panelist, representing the Philippine Institute of Certified Public Accountants (PICPA), in the recent World Bank IFRS (International Financial Reporting Standards) Conference, which took place in Vientiane, Lao PDR. Representatives from various accounting organizations all over South East Asia, including PICPA President Atty. Zenaida Alcantara, attended the conference.

Organized by The World Bank in collaboration with the ASEAN Federation of Accountants and the Lao Chamber of Certified Professional Accountants and Auditors, the conference focused on the benefits of IFRS, its implementation across the ASEAN countries, the standards’ link to improved corporate governance, transparency and disclosure by public interest entities, and assistance and support available from the IFRS Foundation. As part of the panelists, ACM provided an overview of the progress of IFRS adoption in the Philippines. He also shared the key lessons learned in the adoption that can be useful to other developing countries preparing for initial adoption of iFRS.