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Financial Documents - The prospective bidder's audited financial statements

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Financial Documents - The prospective bidder's audited financial statements

Post by CincodeMayo on Tue Oct 18, 2016 3:04 pm

Current requirement:

The prospective bidder's audited financial statements, showing, among others, the prospective bidder's total and current assets and liabilities, stamped "received" by the BIR or its duly accredited and authorized institutions, for the preceding calendar year which should not be earlier than two (2) years from the date of bid submission.

Suggested amendment:

The prospective bidder's audited financial statements as attached to the bidder's filed Income Tax Return, for the preceding calendar year which should not be earlier than two (2) years from the date of bid submission, the tax of which should have been paid by the bidder to the BIR. The audited financial statements showing, among others, the prospective bidder's total and current assets and liabilities.Proof of payment of the tax due and payable as found in the Income Tax Return should also be attached. The amounts in the audited financial statements should match those found in the filed Income Tax Return.


Additionally:

The NFCC shall be computed based on the amounts shown in the audited financial statements as attached to the bidder's filed Income Tax Return.

Reason:

The current practice for bidders is to ask the public practitioners/public auditors to bloat up the amounts of income or cash in the financial statements so as to qualify with the requirements with the NFCC. That is, the bidders ask their accountants to falsify the financial statement for them to be qualified to bid.

This is easily done since the current requirement is only to have the financial statements stamped "received" by the BIR.

As a result, bidders, although not financially capable to handle a contract, may be awarded a contract due to falsified audited financial statements.

The financial statements asked from the bidders should be that which is filed with the BIR for annual income tax payment purposes since it would show the actual financial capacity of the bidders. Moreover, it may generate more tax revenues for the GOP since bidders will now be encourage to "declare more" earnings in the income tax returns just to comply with the NFCC requirements of the GPPB.

GPPB. Kindly look into this.

CincodeMayo
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