philippine coconut authority notes to financial...

1

PHILIPPINE COCONUT AUTHORITY NOTES TO FINANCIAL STATEMENTS

(All amounts in Philippine Pesos unless otherwise stated) 1. GENERAL INFORMATION

The Philippine Coconut Authority (PCA) was created on June 30, 1973 by virtue of Presidential Decree No. 232 as amended by P.D. 1468 (or Revised Coconut Industry Code). Its primary objective is to promote the rapid integrated development and growth of the coconut and other palm oil industry in all its aspects and to ensure that the coconut farmers become direct participants in, and beneficiaries of such development and growth. PCA is a public corporation attached to the Department of Agriculture (DA). The corporate powers and functions of the Authority are vested in and exercised by the Board of Directors chaired by the Secretary of the Department of Agriculture with six members. The day to day affairs and operations of the Authority is being managed by the Administrator in accordance with the policies established by the board. The PCA adopts the regionalization scheme except for Regions I, II, III and IV-B which are under the Regional Office in Quezon City and Region IV-A under the Regional Office in Lucena City. It has 12 regional offices, 67 provincial offices, three research centers as well as training and seed production centers headed by a Regional Manager, Provincial Coconut Development Manager and Center Managers, respectively. Total actual manpower complement as of December 31, 2011 was 863consisting of 167 in the Central Office, 105 in Centersand 591in the Regional and Field Offices.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Combination offinancial statements The financial statements are a combination of the 12 regional offices, three research centers, one training center, one coconut production center and that of the Central Office in accordance with PCA’s One Fund Accounting System Manual. All significant intra-fund items and transactions are eliminated in the consolidation.

2.2 Basis of presentation

The financial statements have been prepared in accordance with the NewGovernment Accounting System (NGAS).

2.3 Decentralization of accounting system

The accounting system of PCA regional offices and research/training centers is completely decentralized.

2

2.4 Cash equivalents

Cash equivalents are short-term investments with maturities of three months or less from the date of acquisition.

2.5 Allowance for doubtful accounts

Allowance for doubtful accounts was provided in the books specifically on PCA fees in accordance with Corporate Order No. 2 series of 2002. The policy of providing allowance includes the aging of receivables method of estimating uncollectible accounts. By this method, the accounts are classified according to age from less than two years to over 10 years and provision for the allowance fordoubtful accounts shall be as follows:

Over 10 years 15 percent Over 5 years to 10 years 10 percent Over 2 years to 5 years 5 percent Less than 2 years 0 percent

Any of the following conditions must be present before the accounts shall be considered as uncollectible and qualified for write-off from the books:

a. No response from the debtor after issuance of at least three demand

letters with an interval of three months during the following year;

b. The debtor had been declared bankrupt, insolvent and had ceased operation;

c. The debtor had died and left no assessable property/estate; and

d. The debtor could no longer be located despite reasonable efforts.

Allowance for doubtful accounts was also provided to all receivables such as Receivable-Officers and Employees, National Coconut Improvement Program (NCIP), Small Coconut Farmers Organization (SCFO) and others.

2.6 Inventory valuation

Inventories are valued at cost using the weighted average method. 2.7 Property, plant and equipment

Property, plant and equipment are valued at cost and depreciated quarterly using the straight line method. A residual value equivalent to 10 percent of the acquisition cost/appraised value was deducted before dividing the same by the estimated useful life. This is in compliance to COA Circular 2003-007, on the revised useful life in computing depreciation for government property, plant and equipment which took effect January 1, 2004.

2.8 Recognition of income and expenses

The Authority recognizes income on PCA fees from local and export sales of

3

coconut products on the period of such sales based on the audited reports submitted by oil millers for local sales, and the results of its coordination with the Bureau of Customs and its regional offices for export sales, in accordance with the principle of proper matching of costs against revenues. Similarly, regulatory fees on registration of dealers and traders are recognized on or before December 30 of each year. Expenses are recognized on accrual basis.

2.9 Capitalization policy

The following expenditures are capitalized: � Improvements, additions, extensions or enlargement of existing units;

repainting where such repainting shall be done for the whole building; � Major repairs, otherwise known as “Extraordinary Repairs” of property

which will restore said property to good condition, improve their efficiency and/or extend their useful life to more than a year; and where such repairs amount to not less than P10,000 or at least 25 per cent of the original cost of the property and beginning November 24, 1990 such repairs be at least 40 per cent of the replacement cost of the property.

2.10 Research and development costs

All research and development costs of the three research centers in Albay, Davao and Zamboanga and the training center in Davao are charged to expenses as incurred.

3. CASH AND CASH EQUIVALENTS

This account consists of:

2013 Restated

2012

General Fund 151 (Regulatory fees)

Cash - National Treasury 8,313,735 5,168,852

Cash for Corporate Fund 503 (One Fund)

Cash on Hand

Cash - Collecting Officers 2,897,947 3,770,710

Cash - Disbursing Officers 2,598 -

Petty Cash Fund 186,526 178,077

Cash in National Treasury 5,332,884 11,592,649

Cash in Bank

Local Currency, Current Account 1,221,917,882 699,753,698

Local Currency, Savings Account 273,900,613 268,981,830

Foreign Currency, Savings Account 560,852 25,104

Foreign Currency, Time Deposits 2,113,089 2,006,061

1,506,912,391 986,308,129

Total cash and cash equivalents 1,515,226,126 991,476,981

Particulars

4

In conformity with Philippine Accounting Standard (PAS) 8, the Cash and cash equivalent accounts are restated as follows:

Unrestated amount as of December 31, 2012 Payment of 2012 CNA bonus Payment of disallowance Cancelled payables Interest income on high-yield savings account

1,013,039,517 (21,575,000) 52,345 (43,339) 3,458

Cash and cash equivalent accounts as restated as of December 31, 2012

991,476,981

The Cash in Bank represents Authority’s funds deposited in the Land Bank of the Philippines. It includes short-term investments on high-yield savings accounts to maximize income generation of funds held in trust which are temporarily in custody of the Authority until such time that the amounts will be released for specific purpose or project. Included also in the Cash in Bank account are cash for payment of mandatory obligations due to GSIS, BIR, Pag-IBIG and Philhealth. It also includes fund transfers for the implementation of special projects from government agencies, such as the Department of Agriculture, Department of Agrarian Reform, Department of Science and Technology, Philippine Council for Agriculture, Forestry and Natural Resources Research and Development, Philippine Council for Industry and Energy Research Development, Bureau of Agricultural Research and other Coconut Genetic Resources Network funded projects.

4. RECEIVABLES

This account consists of the following:

2013

Restated

2012

Accounts Receivable 314,120,351 204,693,563

Due from Officers and Employees 594,889 469,962

Interest Receivable 897,421 1,932,899

Due from National Treasury 3,368,823,209 133,209

Due from Nat'l. Gov't. Agencies 6,499,546 165,137

Due from NGOs/POs 528,236 498,377

Due from Regional Offices 27,224,570 9,077,316

Due from Operating/Field Units 150,000 -

Due from Other Funds 2,631,166 3,332,765

Receivables - Disallowances/Charges 134,689,713 134,849,224

Advances to Officers and Employees 403,374 359,533

Other Receivables 26,057,441 32,674,883

Total 3,882,619,916 388,186,868

Less: Allowance for Doubtful Accounts 37,204,776 33,882,393

Total Receivables - net 3,845,415,140 354,304,475

Particulars

5

In conformity with Philippine Accounting Standard (PAS) 8, the Receivables accounts are restated as follows:

Unrestated amount as of December 31, 2012 PCA fee receivable Due from officers and employees Due from regional offices Due from Fund 151 (regulatory fees) Disallowances and other charges Advances to officers and employees Rental income Allowance for bad debts

233,368,477 125,354,420

209 (5,280,147) (12,620) 19,815 5,821 (120,753) 969,253

Receivables accounts as restated as of December 31, 2012

354,304,475

Accounts receivable – PCA Fees and Other receivables are stated at amortized cost less provision for impairment/bad debts. Impairment is considered when there is objective evidence that the Authority will not be able to collect the debts or receivables. Pursuant to Administrative Order No. 01, series of 2011, effective April 1, 2011, PCA fee remittance/collection increased to P0.12/kilo from P0.06, on purchases of copra and/or receipt of copra or copra equivalent of husked nuts/dehusked nuts, fresh young nuts (“buko”) and copra equivalent in other coconut products delivered to the coconut product exporters, oil millers, desiccators or other payors contemplated in Section 3 of aforesaid Order. However, despite the aforementioned Order, several companies particularly the oil millers continue to pay the PCA fee at the old rate of P0.06 instead of the new rate or withhold remittances at the new rate, with the reason that the case of PCOPA (Phil. Coconut Oil Producers Association) versus PCA docketed as Civil Case No. Q-96-27056 is still pending before the Regional Trial Court, Branch 98 of Quezon City. The PCOPA and non-PCOPA members have manifested that they will maintain the status quo that is paying at the old rate, until the PCAOPA case is resolved.

On November 5, 2013, Judge Evelyn Corpus-Cabochan of the Regional Trial Court, National Capital Judicial Region Branch 98, Quezon City, ordered the dismissal of the petition for relief from Judgement for the case between PCOPA and Ben Ibuyan vs. The Honorable Secretary of Agriculture, et.al, Civil Case No. Q-96-27056. With this development, the CISF Department assessed the following companies of the PCA Fee deficiency from .06 to .12 per kilogram in the total amount of Php 217,108,937 in compliance with the amended Rules and Regulations Implementing PD1854 (AO#01-2011). The PCA deficiencies were taken in PCA books through JEV#503-1312-718 in the total amount of Php 217,108,937 as follows:

YEAR PRINCIPAL INTEREST TOTAL

2011 24,217,605 765,058 24,982,663

2012 87,978,669 9,506,253 97,484,922

2013 73,450,917 21,190,435 94,641,352

185,647,191 31,461,746 217,108,937

6

5. INVENTORIES


2013

Restated

2012

Office Supplies Inventory 1,554,526 1,108,393

Accountable Forms Inventory 60,143 102,517

Medical & Laboratory Supplies Inventory 909,718 807,930

Fuel, Oil and Lubricants Inventory 296,646 277,795

Agricultural and Marine Supplies Inventory 179,413,899 155,008,803

Maintenance Supplies Inventory 7,475,698 3,560,129

Garnished/Foreclosed/Confiscated/

Seized Real & Other Tangible Properties - 9,020

Spare Parts Inventory 2,466,054 572,992

Construction Materials Inventory 389,429 499,999

Total Inventories 192,566,113 161,947,578

Particulars

PCA FEE DEFICIENCY:(see NOTE) Principal Interest Penalty Total

Cagayan de Oro Oil 1,818,428.82 398,678.01 4,137.51 2,221,244.34

Cargill Oil Mills 33,974,740.74 5,696,160.97 554.32 39,671,456.03

Catarman Oil Mills 6,666,258.03 1,449,280.91 8,115,538.94

Coco Davao 3,399,175.86 612,091.03 4,011,266.89

Davao Bay Coconut 20,906,597.64 3,419,395.46 24,325,993.10

Dipolog Coconut Oil Mill 6,664,368.08 1,208,525.31 7,872,893.39

Globe Coco Products 5,870,688.12 830,272.52 6,700,960.64

Granexport Mfg. Corp. 22,429,072.80 3,693,763.51 116,983.83 26,239,820.14

Legaspi Oil Co., Inc. 11,319,839.88 1,659,389.31 27,491.23 13,006,720.42

Ndomi International Corp. 149,911.20 24,410.47 174,321.67

New Asia Oil 1,561,151.52 281,417.26 41,519.77 1,884,088.55

New Davao Oil Mill 6,604,199.34 644,582.64 7,248,781.98

Osampo Mfg. Corp. 3,250,983.78 691,486.34 1,251.62 3,943,721.74

Phidco 7,551,718.74 1,386,969.22 24,412.37 8,963,100.33

Samar Coco 5,850,827.28 801,472.47 2,959.63 6,655,259.38

SC Global Coconut Prod. 2,169,659.63 334,233.71 693.56 2,504,586.90

Tacloban Mill 13,187,844.00 2,036,874.04 15,224,718.04

Tantuco Ent. 4,717,070.88 516,679.32 9,996.68 5,243,746.88

Wilmar Edible Oil 18,926,545.68 4,011,800.11 9,428.37 22,947,774.16

Worldventure Commodities 8,628,109.44 1,524,834.18 10,152,943.62

TOTAL 185,647,191.46 31,222,316.79 239,428.89 217,108,937.14

NOTE:

*PCA Deficiency from .06 to .12 per Kilogram

in Compliance with the Amended Rules

and Regulations Implementing PD 1854

(AO# 01-2011)

7

The account of Agricultural Supplies Inventory includes the following:

2013

Restated

2012

Fertilizers (salt) 67,717,198 55,467,698

Coconut Seedlings 38,170,957 6,718,392

Makapuno Seedlings 14,000 -

Coconut Seednuts 43,295,185 67,007,934

Agricultural Chemicals (Inoculants) 365,551 17,235,976

Planting Materials (Intercrops, e.g. corn) 7,237,876 5,150,356

Earwigs 17,285,859 227,000

Other Agricultural Supplies 2,522,521 341,822

Crops and Fruits Inventory 2,804,754 2,859,625

Total 179,413,899 155,008,803

Particulars

In conformity with Philippine Accounting Standard (PAS) 8, the Inventories accounts are restated as follows:

Unrestated amount as of December 31, 2012 Accountable forms Agricultural supplies

173,449,663 (11,000) 11,491,085)

Inventories accounts as restated as of December 31, 2012

161,947,578

For the year 2013, PCA implemented the following projects: 1. Kaanib Enterprise Development Project (KEDP) aims to promote and

institutionalize coconut-based enterprises through an integrated resource-service convergence approach to increase farm productivity and incomes of the small coconut farming communities.

2. Coconut Seedlings Dispersal Project (CSDP) is implemented to cater the demand for coconut seedlings by some private and government sectors (elgl, LGUs, NGOs, GAs) in many parts of the country. This requires the procurement of good quality seednuts and the establishment of communal nurseries for the propagation of coconut seedlings for distribution to identified beneficiaries.

3. Participatory Coconut Planting Project espouses a participatory and incentive-based approach to encourage coconut farmers and would-be-coconut farmers to plant more coconut trees. Under this scheme, participating farmers are tapped to source their own seednuts, sow and propagate them in their own nursery to produce good seedlings of at least 2 feet tall, and transplant them on the field following the PCA recommended good agricultural practices.

4. Salt Fertilization Project is the national distribution as well as the application of agricultural Grade Salt at farm levels intended to boost coconut production and productivity of the coconut industry.

Upon purchase of cocoseednuts/ seedlings and fertilizers, they were taken up in the books as Inventories. The distributions of fertilizers and coconut seednuts to farmers were not fully taken up in the books as Expense account as of December 31, 2013, pending the submission by the provincial offices of the following necessary documents, such as:

8

1) Certificate of Distribution and Application of Agricultural Grade Salt Fertilizer; 2) Master List of Farmer Participants; 3) Provincial/Terminal Reports; 4) Accomplished Acknowledgement Receipt of Farmer-Recipients.

Once these required documents are completely submitted to the Regional Offices, necessary adjusting entries will be made in the books. (See Note 16).

6. PREPAYMENTS


2013

Restated

2012

Prepaid Rent 26,503 61,880

Prepaid Insurance 133,418 142,770

Prepaid Interest 2,388 3,960

Advances to Contractors - -

Deferred Charges 543,083 543,083

Other Prepaid Expenses 20,550 18,426

Guaranty Deposits 989,839 924,189

Total Prepayments 1,715,781 1,694,308

Particulars

7. OTHER CURRENT ASSETS

This account comprises the following:

2013

Restated

2012

Marginal Deposits 58,224 58,224

Deposits on Containers 96,500 99,500

Other Deferred Charges 15,251,196 1,739,125

Total Other Current Assets 15,405,920 1,896,849

Particulars

The increase in other deferred charges account in the amount of 13,512,070 was due to the debit of Inventory of Agricultural inputs and credit to unliquidated obligation (accounts payable) by Region XII for the projects under KAANIB, Fertilization, Coffee/Cacao Intercrops and coconut seedlings dispersal projects. Most of the contracts covering these agricultural inputs chargeable against 2013 appropriations were already issued notices to proceed.

8. INVESTMENTS

2013

Restated

2012

Stocks and Bonds 88,515 88,515

Particulars

This account represents the cost of stock certificates issued by the United Coconut Planters Bank, with a par value of P1.00 per common share.

9

9. PROPERTY, PLANT AND EQUIPMENT

2013

Restated

2012

Property, Plant and Equipment 750,988,992 695,360,672

Less: Accumulated Depreciation 362,568,338 353,872,912

Net Book Value 388,420,654 341,487,760

Particulars

In conformity with Philippine Accounting Standard (PAS) 8, the Property, plant and equipment accounts (net book value) are restated as follows:

Unrestated amount as of December 31, 2012 Depreciation expense

341,628,484 (140,724)

Property, plant and equipment net book value as restated as of December 31, 2012

341,487,760

The account also includes Php 7,506,983 with book value of Php 1,038,013 cost of buildings, vehicles and various equipment in Regional Office No. VIII, Palo, Leyte, damaged by the recent super typhoon Yolanda. As soon as the approval for the relief of accountability is issued by the Commission on Audit, the following PPE accounts will be dropped from the books of accounts in 2014. Cost Book Value

Land Transportation P 5,480,795 P 835,394 Office Equipment 1,896,774 189,677 IT Equipment 55,500 5,550 Other Property, Plant & Equipment 73,915 7,391 Total P 7,506,984 P1,038,013

10. OTHER ASSETS This account comprises the following:

2013

Restated

2012

Work/Breeding/Other Animals 248,204 3,551,133

Other Assets 718,992,752 718,023,019

Total Other Assets 719,240,956 721,574,152

Particulars

In conformity with Philippine Accounting Standard (PAS) 8, the Other Assets accounts are restated as follows:

Unrestated amount as of December 31, 2012 Dropped from the books (Region XIII)

721,692,714 (118,562)

Other Assets accounts as restated as of December 31, 2012

721,574,152

The Management has already requested the Commission on Audit for the write-off of the account balances in the CISF books, based on the following reasons:

10

The high-yield cash account of CISF in the amount of 489,284.05 has already been transferred to Corporate Fund 503 per JEV#503-1301-049 with additional interest income in the amount of 3,457.61 per JEV#503-1312-704. PCA Management has analyzed/evaluated the final disposition of the CISF accounts in the Trial Balance, premised on the reason that persons involved in the collection and management of the fund had either retired or were already deceased, with no proper turnover of accountabilities and necessary records. Based on the results of said evaluation/analysis and due to lack/unavailability of supporting documents which the present accounting personnel could rely on, proper adjusting/closing entries shall be made following the provisions of COA Circular No. 97-001 dated February 5, 1997 Re: Guidelines on the proper disposition/closure of dormant funds and/or accounts of National Government Agencies.

11. ACCOUNTS PAYABLE

This account is composed of the following:

2013

Restated

2012

Accounts Payable 422,493,591 268,975,090

Due to Officers and Employees 2,949,005 1,920,570

Tax Refunds Payable 17,970 30,859

Total Payable Accounts 425,460,566 270,926,519

Particulars

In conformity with Philippine Accounting Standard (PAS) 8, the Accounts Payable accounts are restated as follows:

Unrestated amount as of December 31, 2012 Cancelled vouchers Reversal of accruals

281,304,856 (311,665) (12,018,101)

Accounts Payable accounts as restated as of December 31, 2012

268,975,090

12. INTER-AGENCY PAYABLES

This account is composed of the following:

2013

Restated

2012

Due to National Government Agencies (NGAs)

Due to BIR 6,623,336 2,724,504

Due to GSIS 1,273,645 927,560

Due to PAGIBIG 272,310 140,924

Due to PHILHEALTH 249,808 126,988

Due to Other NGAs 27,261,066 28,340,891

Due to GOCCs 18,361,517 1,080,516

Due to Local Gov't. Units (LGUs) 16,425,206 13,046,318

Total Inter-Agency Payables 70,466,888 46,387,701

Particulars

11

In conformity with Philippine Accounting Standard (PAS) 8, the Inter-agency Payable accounts are restated as follows:

Unrestated amount as of December 31, 2012 Due to National Treasury Due to BIR Due to DA-BAR projects Due to DA-Kaanib Project

46,795,719 (437,882) (5,458) 36,842 (1,520)

Inter-agency accounts as restated as of December 31, 2012

46,387,701

Inter-agency payables account includes liability for mandatory contributions of employees to the Government Service Insurance System (GSIS), Home Development Mutual Fund (Pag-IBIG) and Philippine Health Insurance Corporation (Philhealth). Also recorded under this account are taxes withheld on salaries and other payments for remittance to the Bureau of Internal Revenue (BIR).

Due to other National government agencies(NGAs) includes cash from other government agencies held by PCA for the implementation of the Department of Agriculture’s (DA’s) various special projects such as High-Value Commercial Crop (HVCC), DA-NAFC and DA-BAR programs, and the Dept. of Science and Technology’s (DOST’s) PCAARRD-ICREDEP projects.

Due to Local Government Units (LGUs) represents the shares of the municipalities and baranggays in the permit fees imposed by PCA for every coconut tree cut, remittance of which are made on a quarterly basis.

13. INTRA-AGENCY PAYABLES

2013

Restated

2012

Due to Other Funds

CISF 109,201 310,133

General Fund 101 1,609,512 1,609,512

General Fund 151 6,270,660 6,422,836

General Fund 501 3,863 814,402

Special Fund 201 - (84,000)

SCFDP Fund 401 186,900 186,900

Total Intra-Agency Payables 8,180,136 9,259,783

Particulars

In conformity with Philippine Accounting Standard (PAS) 8, the Intra-agency Payable accounts are restated as follows:

Unrestated amount as of December 31, 2012 General Fund 501 Special Fund 201

9,544,716 (200,933) (84,000)


9,259,783

Intra-agency payables represents the difference between the accountsDue from Regional Offices and Due to Central Office; and Due from other funds and Due to other funds which exist due to the time lag or errors in recording intra-office transactions.

12

14. OTHER PAYABLES


2013

Restated

2012

Guaranty Deposits/Performance Payable 5,251,316 5,129,407

Contractors' Retention Money 6,553,657 7,144,615

Other Payables 15,753,144 17,021,279

Total Other Payables 27,558,117 29,295,301

Particulars

In conformity with Philippine Accounting Standard (PAS) 8, the Other Payables accounts are restated as follows:

Unrestated amount as of December 31, 2012 Guaranty Deposits PCAECCI Special Loan

29,309,805 (14,000) (504)


29,295,301

15. MORTGAGE PAYABLE

2013

Restated

2012

Mortgage Payable 1,955,520 2,859,871

Particulars

This includes the balance of the new loan granted by the Land Bank of the Philippines (LBP) in the amount of P2,793,600 to finance the replacement/modernization of the elevator in the Central Office, payable in three (3) years at 6.5% per annum.

16. DEFERRED CREDITS

2013

Restated

2012

Deferred Credits 88,774,191 70,649,901

Particulars

13

The breakdown of deferred credits are as follows:

This account, together with the inventory account specifically on fertilizers and other agricultural supplies for intercropping, shall be adjusted once the necessary documents, especially the duly accomplished acknowledgmentreceipt of farmer recipients, are completely submitted.

17. GOVERNMENT EQUITY

This account includes a parcel of land located at the Municipality of Alaminos, Laguna with total land area of 48,749 sq. meters, covered by TCT No. (T-12840) T-4759 which was booked up at fair market value amounting to P73,124,000.

18. APPRAISAL CAPITAL Appraisal Capital represents the difference between the original cost and the fair market value as appraised by Cuervo Appraisers, Inc. on August 25, 2004 of the land with a total area of 57,122 square meters of the defunct Desiccated Coconut Rationalization Fund’s real property as enumerated as follows:

Place

Land Area

Cost

Appraised value

Difference

1. Tiaong, Quezon 23,756 square meters 15,389,000 24,498,000 9,109,000 2. San Pablo City 17,332 square meters 15,500,000 24,650,000 9,150,000 3. Lucena City 16,034 square meters 13,500,000 15,096,000 1,596,000

Total

57,122 square meters

44,389,000

64,244,000

19,855,000

Particulars 2013 Restated 2012

Central Office 177,959 117,960

Region IV-A 412,018 1,495,616

IV-B 14,477 12,500

V 20,043,839 26,713,481

VI 272,387 272,387

VII 2,757,942 13,129,641

VIII 41,587,673 18,116,359

IX 776,529 776,529

X 5,068,227 0

XI 357,014 357,014

XII 77,415 1,621,165

XIII 709,354 709,355

Autonomous Region in Muslim Mindanao 0 0

Albay Research Center 1,952,725 1,503,989

Coconut Extension Training Center 184,205 217,148

Davao Research Center 1,350,165 1,517,288

Coconut Seed Production Center 71,991 71,991

Zamboanga Research Center 12,960,268 3,957,479

Total Deferred Credits 88,774,191 70,649,901

14

19. RETAINED EARNINGS

For the year 2013, the Income after Subsidy from the National Government totaled P3,909,273,321. This includes Subsidy for the following which SARO and NCA were received only on December 27, 2013:

� Subsidy for the Coconut Rehabilitation Program of the Yolanda Recovery and Rehabilitaiton Plan amounting to P2,868,690,000; and

� Subsidy for Calamity-related rehabilitation/restoration projects and other priority projects amounting to P500,000,000.

*Breakdown of Prior Year’s Adjustments (Code 684) As of Dec. 31,2013

Retained earnings, January 2013 857,607,538

Net income for 2013 after subsidy, as reported 3,909,273,321

Prior years' adjustment * 100,649,313

Retained earnings as of December 31,2013 4,867,530,172

Account Title Code Amount

Income Accounts

Permit Fees - PCA Fees 605 115,083,110

Cutting Permit Fee (PCA Share-RA8048) 608-2 4,880

Transport Permit Fee 608-3 42,000

Chainsaw Registration Fee 608-4 (12,620)

Other Fees 608-8 45,000

Interest on PCA Fee 609-1 10,103,441

Surcharges on PCA Fee 609-2 167,869

Rent/Lease Income 642 181,933

Interest Income 664 631,071

Sale of Copra 678-1 255,173

Sale of Coco-by-products 678-2 (1,735)

Filing/Certification Fees 678-11 24,500

Others 678-13 12,045

Fines and Penalties - Business and Service Income 679 (53,017)

Gain/Loss on Sale of Disposed Assets 682 20,535

Total Income 126,504,185

Expense Accounts

Salaries and Wages - Regular 701 (39,265)

Personnel Economic Relief Allowance (PERA)711 (301)

Productivity Incentive Allowance 717 (78,000)

Longevity Pay 722 (53)

Overtime and Night Pay 723 (92,442)

Vacation and Sick Leave Benefits 742 (359,204)

Other Personnel Benefits 749 21,473,000

Traveling Expenses (Local) 751 (42,917)

Traveling Expenses (Foreign) 752 (9,152)

Training and Scholarship Expenses 753 (193,895)

Office Supplies Expense 755 (9,366)

Accountable Forms Expenses 756 11,000

15

Medical, Dental and Laboratory Expense 760 (88,033)

Fuel, Oil and Lubricants Expense 761 (3,400)

Fertilizers 762-1 14,088,656

Coconut Seedlings 762-2 2,774,704

Coconut Seednuts 762-3 (2,749,345)

Planting Materials (Intercrop) 762-5 (1,278,800)

Others 762-7 (1,577,076)

Others 762-8 (49,111)

Water Expenses 766 (160)

Electricity Expenses 767 (925)

Telephone Expense - Landline 772 5,680

Telephone Expense - Mobile 773 (15,434)

Internet Expenses 774 (39,367)

Advertising, Promotional & Marketing Expenses 780 8,048

Printing Expenses 781 (480)

Representation Expense 783 (6,888)

Transporation Expense 784 (233,004)

General Services (Emergency Laborers) 795 33,910

Other Professional Services 799 (518)

R/M - Medical, Dental & Laboratory Eqpt. 833 (58,291)

R/M - Land Transport Equipment 841 (17,000)

Donations 878 (1,440,000)

Taxes, Duties and Licenses 891 (2,500)

Taxes, Duties and Licenses - VAT 891-2 166,947

Bad Debts Expense 901 (1,033,306)

Depreciation - Land Improvements 921 (35,058)

Depreciation - Furniture and Fixtures 922 (88,889)

Depreciation - IT Equipment and Software 923 33,377

Depreciation - Machinery 926 111,296

Depreciation - Agricultural and Marine Equipment 927 198,380

Depreciation - Communication Equipment 929 55,654

Depreciation - Other Machineries & Equipment 940 118,562

Depreciation - Motor Vehicles 941 75,420

Cultural and Athletic Expenses 969-1 (129,499)

Duplicating Costs 969-2 (231)

Others 969-6 (3,627,853)

Bank Charges 971 0

Total Expenses 25,854,872

Grand Total 100,649,313

16

20. INCOME This account comprises the following:

2013

(As Restated)

2012

GENERAL AND SERVICE INCOME

Fees, Permits and License Income

Permit (PCA) Fees 246,380,854 269,439,801

Transport Permit Fee 27,019,245 24,855,255

Chainsaw Registration Fee 3,556,670 3,337,206

Cutting Permit Fee 8,986,002 7,218,803

Filing Processing Fee 3,137,755 2,600,965

Seedling Supplier Registration Fees 18,350 72,779

Interest and surcharges on PCA Fee 29,058,980 15,177,698

Surcharges on chainsaw registration fee 686,435 506,483

Kukum Dryer Repayments - 15,000

Inspection Fees 4,090,188 2,420,120

Moisture Meter Fees 269,511 193,487

Registration Fees 10,745,178 8,627,433

Laboratory Analysis Fees 1,461,058 1,046,006

Certificate, Licenses and Processing Fees 55,856 14,244

Fines and Penalties 919,207 231,068

Export Processing Fee 46,080 38,720

Other Fees 5,699,475 3,164,371

Total Fees, permits and licenses 342,130,844 338,959,439

Service Income

Other Service Income

Sale of Copra 4,145,736 8,631,328

Sale of Coco-by-products 2,000,190 967,180

Sale of Coco Seedlings 2,918,425 5,905,323

Sale of Intercrops 408,906 447,906

Sale of Coco Seednuts 5,128,278 7,500,261

Sale of Waste Materials - 149,095

Analysis Fee-PTAL 1,668,741 1,446,169

Filing/Certification Fees 296,380 379,100

Seednuts Replacement 25,191,215 26,501,354

Other Fines and Penalties 1,245,828 128,062

Others 2,219,969 3,722,139

Total Service Income 45,223,668 55,777,917

Other General and Service Income

Proceeds from Confiscated/Seized Goods 280,903 175,788

Reproduction/Xerox Services 31,690 47,812

Dormitory Services 94,583 51,100

Total Other General and Service Income 407,176 274,700

TOTAL GENERAL AND SERVICE INCOME 387,761,688 395,012,057

Particulars

17

In conformity with Philippine Accounting Standard (PAS) 8, the Income accounts are restated as follows:

2013

(As Restated)

2012

BUSINESS INCOME

Rent/Lease Income 26,592,663 26,940,330

TOTAL BUSINESS INCOME 26,592,663 26,940,330

OTHER INCOME

Income from Grants and Donations - 50,286

Interest Income 7,573,016 11,403,970

Gain on Foreign Exchange 100,319

Gain on Sale of Assets 41,325 710,663

TOTAL OTHER INCOME 7,714,660 12,164,919

TOTAL INCOME 422,069,011 434,117,306

Particulars

(As Restated)

2012 Adjustments 2012

GENERAL AND SERVICE INCOME

Fees, permits and licenses

Permit (PCA) fee 154,356,691 115,083,110 269,439,801

Transport permit fee 24,813,255 42,000 24,855,255

Chainsaw registration fee 3,349,826 (12,620) 3,337,206

Cutting permit fee 7,213,923 4,880 7,218,803

Filing processing fee 2,600,965 2,600,965

Seedling supplier registration fee 72,779 72,779

Interest and surcharges on PCA fee 4,906,388 10,271,310 15,177,698

Surcharges on chainsaw registration fee 506,483 506,483

Kukum Dryer Repayments 15,000 15,000

Inspection fees 2,420,120 2,420,120

Moisture Meter Fees 193,487 193,487

Registration Fees 8,627,433 8,627,433

Laboratory Analysis Fees 1,046,006 1,046,006

Certificate, Licenses and Processing Fees 14,244 14,244

Fines and Penalties 231,068 231,069

Export Processing Fee 38,720 38,720

Other Fees 3,119,371 45,000 3,164,371

Total Fees, permits and licenses 213,525,759 125,433,680 338,959,439

PARTICULARS

18

(As Restated)

2012 Adjustments 2012

Service Income

Other Service Income

Sale of Copra 8,376,155 255,173 8,631,328

Sale of Coco-by-products 968,915 (1,735) 967,180

Sale of Coco Seedlings 5,905,323 5,905,323

Sale of Intercrops 447,906 447,906

Sale of Coco Seednuts 7,500,261 7,500,261

Sale of Waste Materials 149,095 149,095

Transfer of Technology - -

Analysis Fee-PTAL 1,446,169 1,446,169

Filing/Certification Fees 354,600 24,500 379,100

Seednuts Replacement 26,501,354 26,501,354

Other Fines and Penalties 181,079 (53,017) 128,062

Others 3,710,094 12,045 3,722,139

Total Service Income 55,540,951 236,966 55,777,917

Other General and Service Income

Proceeds from Confiscated/Seized Goods 175,788 175,788

Reproduction/Xerox Services 47,812 47,812

Dormitory Services 51,100 51,100

Total Other General and Service Income 274,700 274,700

TOTAL GENERAL AND SERVICE INCOME 269,341,410 395,012,057

BUSINESS INCOME

Rent/Lease Income 26,758,397 181,933 26,940,330

26,758,397 181,933 26,940,330

OTHER INCOME

Income from Grants and Donations 50,286 50,286

Interest Income 10,772,899 631,072 11,403,971

Gain on Foreign Exchange -

Gain on Sale of Assets 690,128 20,534 710,662

Other Gains

Total Other Income 11,513,313 651,606 12,164,919

TOTAL INCOME 307,613,120 126,504,185 434,117,306

PARTICULARS

19

21. EXPENSES

The breakdown of this account consists of the following:

2013

(As Restated)

2012

Personal services

Salaries and wages 245,904,192 253,009,243

Other Compensation

Personnel economic relief allowance (PERA) 19,707,643 21,238,605

Representation allowance (RA) 8,486,127 6,715,931

Transportation allowance (TA) 5,453,246 4,073,561

Clothing/Uniform Allowance 4,126,790 4,480,800

Subsistence allowance 21,600 18,976

Productivity Incentive Bonus (PIB) 1,624,000 1,664,000

Anniversary Bonus 2,490,000 -

Productivity Enhancement Incentive (PEI) 4,018,000 4,340,000

Honorarium - -

Longevity pay 882,945 1,076,302

Overtime and night pay 1,860,616 1,216,260

Cash gift 4,125,375 4,453,950

Year-end bonus 20,701,754 21,828,376

Total other compensation 73,498,096 71,106,760

Personnel benefit contributions

Life and retirement insurance contributions 29,516,569 30,433,307

Pag-IBIG contributions 987,313 1,065,750

Philhealth contributions 2,470,741 2,050,338

ECC contributions 992,640 1,065,846

Total personnel benefit contributions 33,967,263 34,615,241

Other personnel benefits

Vacation and sick leave benefits 44,488,614 45,328,381

Counsel allowance 7,500 15,000

Loyalty award 875,000 1,200,000

Per diem of directors 375,200 240,800

Performance-Based Bonus (PBB) - 10,460,500

Others 20,320,000 21,509,385

Total other personnel benefits 66,066,314 78,754,066

Total Personal Services 419,435,865 437,485,310

Particulars

20

2013

(As Restated)

2012

Maintenance and other operating expenses (MOOE)

Traveling expenses

Local 42,358,426 28,641,637

Foreign 507,595 1,409,072

Total traveling expenses 42,866,021 30,050,709

Training and scholarship 27,295,545 15,298,656

Supplies expense

Office supplies 8,081,532 6,331,007

Medical, dental and laboratory expense 3,028,316 1,791,869

Gasoline, oil and lubricants 19,702,939 13,199,343

Agricultural and marine supplies 687,034,891 440,134,979

Textbooks and instructional materials 5,573 -

Accountable forms 462,396 529,390

Other supplies 5,490,900 4,648,709

Total supplies expense 723,806,547 466,635,295

Utility expense

Water 2,118,060 2,579,262

Electricity 17,011,037 17,904,256

Fuel 5,141 2,460

Total utility expense 19,134,238 20,485,977

Communication expense

Postage and deliveries 1,228,448 1,016,691

Telephone/Mobile 7,822,316 6,423,161

Internet 1,000,792 1,109,338

Cable, satellite, telegraph and radio 9,863 20,330

Total communication expense 10,061,418 8,569,520

Membership Dues & Contribution Expenses - 10,500

Awards, prizes and other claims 730,000 460,000

Advertising, promotional and marketing expense 815,624 416,137

Printing expense 1,209,770 683,069

Rent/lease expense 8,373,392 7,898,890

Representation expense 465,005 392,105

Transportation expense 13,718,347 7,481,870

Storage expense - -

Subscription expense 312,090 317,018

Particulars

21

2013

(As Restated)

2012

Professional services

Legal services 54,950 37,350

Auditing services 23,820,650 10,000,000

Consultancy services 1,542,500 624,678

General/janitorial services 72,012,195 48,519,882

Security services 30,503,662 27,574,524

Other professional services 92,571,630 30,184,479

Total professional services 220,505,587 116,940,912

Repairs and maintenance

Buildings and other structures 6,604,422 4,421,173

Other structures 1,029,658 2,114,490

Office equipment 559,578 558,845

Furniture and fixtures 785,013 69,850

IT equipment 167,540 183,682

Machinery 1,202,636 49,284

Agricultural and marine equipment 435,141 575,293

Communication equipment 2,686 -

Medical, dental and laboratory equipment 788,737 (2,756)

Technical and scientific machinery equipment 272,519 138,441

Other machinery and equipment 173,900 223,024

Land transport equipment 6,540,048 4,491,059

Other property, plant and equipment 1,652,620 97,282

Total repairs and maintenance 20,214,498 12,919,666

Extraordinary and miscellaneous expense

Extraordinary expense 1,503,445 1,532,492

Miscellaneous expense 21,254 101,956

Total extraordinary & miscellaneous expenses 1,524,699 1,634,448

Donation 42,799,196 1,653,264

Taxes, duties and premiums

Taxes, duties and licenses 8,753,609 3,237,436

Fidelity bond premiums 615,215 642,031

Building insurance 972,421 811,972

Equipment insurance 943,367 189,217

Vehicle insurance 620,305 791,044

Flood/typhoon insurance - 143,429

Total taxes, duties and premiums 11,904,917 5,815,129

Non-cash expense

Bad debts expense 3,322,383 2,136,598

Depreciation expense 17,938,692 17,548,197

Particulars

22

2013

(As Restated)

2012

Losses - 85,910

Other MOOE

Athletic and social events 2,929,499 1,396,770

Duplication costs 343,434 250,684

Meetings and conferences 2,088,034 930,896

Survey and research expenses 22,344,046 684,835

Staple food expenses -

Others 5,867,447 3,832,780

Total Other MOOE 33,572,459 7,095,965

Total MOOE 352,919,875 146,907,408

Financial expenses

Interest expense 167,330 90,230

Bank charges 7,594 4,193

Other financial charges 54,473 77,279

Total financial expenses 229,397 171,702

Total Expenses 1,620,235,690 1,162,186,849

Particulars

In conformity with Philippine Accounting Standard (PAS) 8, the Expense accounts are restated as follows:

2012 Adjustments

(As Restated)

2012

Personal services

Salaries and wages 253,048,508 (39,265) 253,009,243

Other Compensation

Personnel economic relief allowance (PERA) 21,238,906 (301) 21,238,605

Representation allowance (RA) 6,715,931 6,715,931

Transportation allowance (TA) 4,073,561 4,073,561

Clothing/Uniform Allowance 4,480,800 4,480,800

Subsistence allowance 18,976 18,976

Productivity Incentive Bonus (PIB) 1,742,000 (78,000) 1,664,000

Anniversary Bonus - -

Productivity Enhancement Incentive (PEI) 4,340,000 4,340,000

Honorarium 236,000 236,000

Longevity pay 1,076,354 (53) 1,076,301

Overtime and night pay 1,308,702 (92,442) 1,216,260

Cash gift 4,453,950 4,453,950

Year-end bonus 21,828,376 21,828,376

Total other compensation 71,513,556 (170,796) 71,342,760

Particulars

23

2012 Adjustments

(As Restated)

2012

Personnel benefit contributions

Life and retirement insurance contributions 30,433,307 30,433,307

Pag-IBIG contributions 1,065,750 1,065,750

Philhealth contributions 2,050,338 2,050,338

ECC contributions 1,065,846 1,065,846

Total personnel benefit contributions 34,615,241 - 34,615,241

Other personnel benefits

Vacation and sick leave benefits 45,687,585 (359,204) 45,328,381

Counsel allowance 15,000 15,000

Loyalty award 1,200,000 1,200,000

Per diem of directors 240,800 240,800

Performance-Based Bonus (PBB) 10,460,500 10,460,500

Others 36,385 21,473,000 21,509,385

Total other personnel benefits 57,640,270 21,113,796 78,754,066

Total Personal Services 416,581,575 20,903,735 437,485,310

Maintenance and other operating expenses (MOOE)

Traveling expenses

Local 28,684,554 (42,917) 28,641,637

Foreign 1,418,223 (9,152) 1,409,071

Total traveling expenses 30,102,777 (52,069) 30,050,709

Training and scholarship 15,492,551 (193,895) 15,298,656

Supplies expense

Office supplies 6,340,373 (9,366) 6,331,007

Medical, dental and laboratory expense 1,879,901 (88,033) 1,791,868

Gasoline, oil and lubricants 13,202,743 (3,400) 13,199,343

Agricultural and marine supplies 428,876,839 11,258,140 440,134,979

Accountable forms 518,390 11,000 529,390

Other supplies 4,697,820 (49,111) 4,648,709

Total supplies expense 455,516,066 11,119,230 466,635,296

Utility expense

Water 2,579,422 (160) 2,579,262

Electricity 17,905,181 (925) 17,904,256

Fuel 2,460 2,460

Total utility expense 20,487,063 (1,085) 20,485,978

Communication expense

Postage and deliveries 1,016,691 1,016,691

Telephone/Mobile 6,432,915 (9,754) 6,423,161

Internet 1,148,705 (39,366) 1,109,339

Cable, satellite, telegraph and radio 20,330 20,330

Total communication expense 8,618,641 (49,120) 8,569,521

Particulars

24

2012 Adjustments

(As Restated)

2012

Membership Dues & Contribution Expenses 10,500 10,500

Awards, prizes and other claims 460,000 460,000

Advertising, promotional and marketing expense 408,089 8,048 416,137

Printing expense 683,549 (480) 683,069

Rent/lease expense 7,898,890 7,898,890

Representation expense 398,993 (6,888) 392,105

Transportation expense 7,714,873 (233,004) 7,481,869

Storage expense - -

Subscription expense 317,018 317,018

Professional services

Legal services 37,350 37,350

Auditing services 10,000,000 10,000,000

Consultancy services 624,678 624,678

General/janitorial services 48,485,972 33,910 48,519,882

Security services 27,574,524 27,574,524

Other professional services 30,184,997 (518) 30,184,479

Total professional services 116,907,521 33,392 116,940,913

Repairs and maintenance

Buildings and other structures 4,421,173 4,421,173

Other structures 2,114,490 2,114,490

Office equipment 558,845 558,845

Furniture and fixtures 69,850 69,850

IT equipment 183,682 183,682

Machinery 49,284 49,284

Agricultural and marine equipment 575,293 575,293

Communication equipment - -

Medical, dental and laboratory equipment 55,535 (58,291) (2,756)

Technical and scientific machinery equipment 138,441 138,441

Other machinery and equipment 223,024 223,024

Land transport equipment 4,508,059 (17,000) 4,491,059

Other property, plant and equipment 97,282 97,282

Total repairs and maintenance 12,994,958 (75,291) 12,919,667

Extraordinary and miscellaneous expense

Extraordinary expense 1,532,492 1,532,492

Miscellaneous expense 101,956 101,956

Total extraordinary & miscellaneous expenses 1,634,448 - 1,634,448

Donation 3,093,264 (1,440,000) 1,653,264

Particulars

25

2012 Adjustments

(As Restated)

2012

Taxes, duties and premiums

Taxes, duties and licenses 3,072,989 164,447 3,237,436

Fidelity bond premiums 642,031 642,031

Building insurance 811,972 811,972

Equipment insurance 189,217 189,217

Vehicle insurance 791,044 791,044

Flood/typhoon insurance 143,429 143,429

Total taxes, duties and premiums 5,650,682 164,447 5,815,129

Non-cash expense

Bad debts expense 3,169,904 (1,033,306) 2,136,598

Depreciation expense 17,079,455 468,742 17,548,197

Total non-cash expenses 20,249,359 (564,564) 19,684,795

Losses 85,910 85,910

Other MOOE

Athletic and social events 1,526,269 (129,499) 1,396,770

Duplication costs 250,915 (231) 250,684

Meetings and conferences 930,896 930,896

Survey and research expenses 684,835 684,835

Others 7,460,633 (3,627,853) 3,832,780

Total Other MOOE 10,853,548 (3,757,583) 7,095,965

Total MOOE 719,615,085 4,914,752 724,529,837

Financial expenses

Interest expense 90,230 90,230

Bank charges 4,193 4,193

Other financial charges 77,279 77,279

Total financial expenses 171,702 171,702

Total Expenses 1,136,331,977 25,854,872 1,162,186,849

Particulars

26

22. SUBSIDY INCOME FROM THE NATIONAL GOVERNMENT This represents subsidy from the National Government as follows:

23. RECLASSIFICATION OF ACCOUNTS

Certain accounts in the financial statements were reclassified to conform to the current year’s presentation.

Particulars 2013 2012

Regular Subsidy 233,000,000.00 274,260,000.00

Agricultural Fisheries Modernization Program

MOOE 908,497,000.00

Locally Funded Projects 1,505,750,000.00

Calamity-Related Rehabilitation/Restoration

Projects and Other Priority Projects 500,000,000.00

Coconut Rehabilitation Program of the Yolanda

Recovery & Rehabilitation Plan 2,868,690,000.00

Total Subsidy 5,107,440,000.00 1,182,757,000.00

philippine coconut authority notes to financial...

Documents