BIR Accounting approval process Questions

Hi,

I never encountered such software that you are talking about. I am also an "incorporator" but all throughout our processing with government agencies, we never encountered such thing.

What's the nature of your business? Does it require the use of accounting software?

We just consulted an accountant to do the job for us.

@ Ritzel - Thanks for the response.  I am a bit surprised to hear you have not encountered BIR accredited/approved software or Computerized Accounting System (CAS) as an incorporator here in the Philippines.  This means you or the other incorporators have not/did not review all related BIR Forms pertaining to your corporation, [including BIR Form 1900 - Application for Authority to Adopt Computerized Accounting System or Components Thereof].

When you say, "We just consulted an accountant to do the job for us.", that does not relieve the corporate officer called "treasurer" of the Treasurer's Certification to BIR.  This assumes your corp is a SME and you meet the requirements under SRC RULE 68, Part I, section 2A (ii) (b), which in part states,

"SMEs shall use as their financial reporting framework the Philippine Financial Reporting Standards for SMEs (“PFRS for SMEs”) as adopted by the Commission."

You may also want to review SEC Circular #16 Series of 2013 regarding audited Financial Statements.

Back to the topic - A few years ago, the BIR issued Revenue Regulations (RR) No. 9-2009 (took effect in January 2010) mandating large taxpayers classified under Revenue Regulations No. 1-98 to maintain and/or adopt (in part or whole) Computerized Accounting System (CAS).  Clearly, there is a reason BIR has a Chief of LTAD that is head of the Computerized System Evaluation Team (CSET) for such actions.  The said regulation required the "large" taxpayers who are maintaining their books of account and accounting records in manual form to register their CAS not later than December 31, 2009.  Although we are not considered a "larger" corporation, we intend to remain proactive in most areas of operations.

Well, we declared a cap of 1M only, that's why.
We had a lawyer process all our papers and an accountant for money matters.

Well I guess lawyers/accountants that do all work/thinking for incorporators works for some…..  we prefer to understand the options/rules/limits prior to submittal to SEC.

I'm sorry I couldn't help you with this one.
I'll ask some peeps in business about your concern.

Thanks for your words anyway!  Take care.

Hi.

Have you already found a solution or explanation to your problems?

Thanks.

No clear answer yet.

You may wish to contact Ms Rojanna Castillo, she is a Certified Public Accountant (CPA) has been working as an auditor for some years now.  She is connected to friends that own accounting companies.  Certainly, she can answer your question in relation to computerized accounting system.  Her contact number is + 63 920 959 6462.

Thanks, I will contact her by Friday of this week and have a quick chat.

Did you get any answers to your question that you could share?

I am not sure what the purpose of this legislation is.  I find it bizarre that anyone would keep paper books these days.  I would assume anyone doing significant business would just buy a software package and start using it or hire an employee to set it up and run it.  However, some things are different here.

We are debating whether to go through this application process with Quickbooks for Mac as we use this for our other company outside of the Philippines.  Keeping both computerized and paper (handwritten!) accounts is stupid and tedious.  I don't know if this regulation is just to keep a bunch of local vendors in business or what.

What I have noticed is that few if any businesses in the Philippines do everything by the book -- the way it appears that the authorities would want you to.  Often times actually complying is incredibly laborious.  We try to follow everything but every time we get a glimpse into another business' operations we see how they are cutting corners and leaving tasks undone.  You start to think, hey, am I the fool here?  Why are we making a big deal about compliance?  Then I think that's fine, we'll be safe and they are at risk to any authority or employee who wants to cause trouble and puts their hand out.  At the same time, these other businesses seem to be growing faster because they are not wasting time with this red tape.  Just one of those frustrations.

I think with computerized accounting, this is one of those cases where you only want to go through the process once you are going to be under scrutiny.  In other words, once you have substantial revenue and or profits to report.  I think you can wait a while to get your operations up and running.  In the meantime just use whatever it makes sense for you to use.

Maybe just outsource the whole nonsense to a local auditing firm or accounting firm as others suggest.

One thing I truly recommend is to keep your eye on every Peso or have someone really trusted, perhaps a spouse who does using whatever method works.

@ HeavenlyS,
Thanks for the question and comments…   To run a manual system in 2014/2015 is beyond normal thinking for me.  Additionally, I feel that a computerized system that is Apple OS based will help deter possible hacking and also reduce audit snooping from BIR types..   Few here have knowledge on programming Apple software or modifying it for specific use.  Without getting to detailed, 99.9% of the contacts made on this topic remain clueless as to what I have asked for and only offer their theoretical yet fee based solutions (but are not able to explain their backgrounds regarding Apple OS and Mac based Accounting software).  I will not pay others to teach them how to do what I will burn the hours to do alone, if that is the case.

The QB option you mentioned will not work for me since it is not very flexible and the ability to make customized forms is limited to their predesigned templates, so changes on the Apple QB may or may not stay and are filled with many limits/bugs.  Therefore, finding a set of mods that play nice with the custom BIR mandated accounts and forms needed is not doable with QB. 

At this point, I will most likely look at personally modifying my current version of MYOB to where I duplicate the BIR forms and adjust my COAs to best suit the private corporate plans.  There are sellers of MYOB in Manila but they want to sell older versions and have the buyer pay for the modifications but not own the modified results.  At an estimated P45K + the OLX listed sellers are dreaming.  Additionally, the "authorized" seller in Manila dodged the question regarding which country/year/version many times… finally admitting that what they offer as "new MYOB software" is an "Aussie", 2011(with older version for that year), exclusively modified and installed by their Manila office.

Regarding outsourcing - The main corporate systems/network is currently 100% Apple based (brought from California) and any new server will be 100% Apple based.   All web hosting, CC processing and other https based needs/services will be from the US ISP only.  I have zero wish to try to outsource any internal confidential material to others in the Philippines.  All currencies will be watched and controlled with 2 signatures.

Since I have customized MYOB and developed corporate unique accounts for California corporations, my default position now is to take it a few steps further with "philippine" required BIR forms and merge with my specific "Chart of Accounts".  This position is the most likely way forward since I have the skill set and currently own a lic copy of MYOB (USA ver.).  The process will be a bit labor intense but this is where and how I will overcome the obstacles encountered.

Thanks again for your questions, comments and advice.. take care.

Thank you for your response and pointer to MYOB.

As a software developer myself experiencing the frustrations of getting a multi-country, multi-currency accounting system up and running, I found myself looking at the data models for general ledger.  I have a platform for rapid cloud application development of my own design based on Ruby on Rails and I may just bite the bullet and build my own GL module to complement the other HR and related modules I already have built for my business.  NetSuite (which is BIR approved through a local partner) quoted me US $50k as a typical first-year implementation cost.  And then I think about the costs of integrating my home grown and cloud SaaS tools we have purchased with whatever I get going for an accounting system ...    I can build a lot of software for $50k considering I get development "at cost."  It pains me to think of paying a vendor that much just for the first year!  Thanks again and good luck to you.

I am sure the P50K they gave you did not include "ownership" of the mods and after the first year, your info may be subject to deeper collection activities as they see your growth.  I also made a decision to avoid cloud integration at this time.  I feel a corporate policy on off-site backups are critical but I am still of the mindset that an external hard drive is the safest.  The structure and expanded items in your COA will be key to what drives the form matching after you determine what BIR forms apply in your business.  I also intend to place the labels of "Corporate Proprietary" on nearly all forms, documents and policies/procedures.  As a private corporation here, it will cause the BIR to handle any audits/reviews in a different manor than others. 

I will do all I can to avoid cloud storage here in the PI where there are no standards developed and released regarding:
1. Multitenancy;
2. Authentication, authorization, and access control mechanisms; 
3. Data Ownership &
4. Virtual exploits (via virtualization)

Here is an Intel video that some may find very interesting:  http://www.intel.in/content/www/in/en/c … video.html

Best wishes,  Gary