BIR Ruling [DA-081-98]

March 18, 1998 BIR RULING [DA-081-98] Merrill Lynch Securities Philippines Inc. Unit 19C, Citibank Tower, Citibank Plaza 8741 Paseo de Roxas, Makati City Attention: Ma . Lourdes de Guzman Vice President-Financial Controller Gentlemen : This refers to your letter dated November 24, 1997 stating that Merrill Lynch Securities Philippines, Inc . is currently maintaining two (2) computerized based General Ledger (GL) systems per BIR Permit No. LD-00580-97 dated August 18, 1997; that at the end of each day, after all trade related entries are correctly and properly processed into Securities Management System (SMS), a GL Interface Report is created by SMS Module export function; that both SMS GL and Oracle GL are updated with a report via manual journal import; that a summary journal which captures just the non-trade related movement for the day is created from the Oracle GL and is imported manually into the SMS GL; that regulatory reports for submission to Securities and Exchange Commission and Philippine Stock Exchange were supposed to be produced by SMS Module and MS GL; that while financial statements and regional reporting are produced from SMS Module, the rest are prepared through manual spreadsheet; that the initial concept behind maintaining two (2) GL systems was that you believed SMS GL will be able to provide a complete set of regulatory reporting while Oracle GL on the other hand, was expected to provide the management and financial information; that in practice and with several months of experiencing the functionalities of both systems, you have observed that Oracle has successfully provided you with the information you needed while the SMS GL has failed to come up with the regulatory reports that you expect to produce; and that the company will have the following benefits in keeping only one General Ledger system: casia 1) Redundancy/duplication of daily activity will be eliminated; 2) Your manpower resources will be utilized to the optimum considering that daily workload (i.e., recording in the other GL) will be minimized and be concentrated on more important aspects; 3) Dropping of the other GL will enable you to further streamline Finance policies and procedures; and 4) Maintaining only one GL is already sufficient to be able to meet all your reporting requirements to concerned government agencies, i.e., BIR, SEC, PSE, etc., as well as regional reporting. Based on the foregoing, you would like to request permission to stop using the Excalibur GL system and use only Oracle GL instead for the following reasons: 1) SMS Module has the complete details of trade related transactions and a summary of end of day transactions is recorded twice into Excalibur and Oracle; 2) Both GL's are reconciled manually; and 3) One General Ledger can summarize all accounting transactions. In reply, please be informed that your request is hereby granted subject to the following conditions: aisadc 1) A readable print-out of the information/accounting data should be made available/verifiable; and 2) Diskettes containing records, classification and summary of transactions shall be subject to examination and inspections of internal revenue officers as if they are the traditional books of accounts, in accordance with Section 235 of the Tax Code of 1997. (BIR Ruling No. 084-93 dated March 5, 1993) Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)