Classification of All Government Corporations and Other Entities/Instrumentalities with Corporate Powers as GBEs or Non-GBEs

April 16, 2015 COA CIRCULAR NO. 003-15 TO : All Heads of Government Owned and/or Controlled Corporations; Heads of Finance/Comptrollership/Financial Management Services; Chief Accountants/Heads of Accounting Units; COA Assistant Commissioners, Directors, Supervising Auditors/Audit Team Leaders; and All Others Concerned SUBJECT : Classification of All Government Corporations and Other Entities/Instrumentalities with Corporate Powers as Government Business Enterprises (GBEs) or Non-GBEs for the Purpose of Determining the Applicable Financial Reporting Framework in the Preparation of Their Financial Statements and Prescribing Guidelines Therefor 1.0 Rationale 1.1 To align with International Financial Reporting Standards (IFRS), the Philippine Financial Reporting Standards Council (PFRSC) of the Board of Accountancy of the Philippines, issued starting in CY 2005 a series of pronouncements called the Philippine Financial Reporting Standards (PFRS). 1.2 Since then, the Bangko Sentral ng Pilipinas (BSP) prescribed the adoption by all banks and non-bank financial institutions of the PFRS as their financial reporting framework. The Securities and Exchange Commission (SEC) also adopted the PFRS as part of SEC rules to be followed by all SEC registered entities. 1.3 Likewise, to align with the prevailing international standards and provide quality accounting standards to enhance the quality and uniformity of financial reporting by Philippine public sector entities, thus ensuring accountability, transparency and comparability of financial information with other public sector entities around the world, COA issued Resolution No. 2014-003 dated January 24, 2014 prescribing the adoption of the Philippine Public Sector Accounting Standards (PPSAS) by the National Government Agencies (NGAs), Local Government Units (LGUs) and Government Corporations and entities/instrumentalities which are Non-GBEs. 1.4 In the light of the foregoing developments, there is now a need to classify the different Government Corporations and other entities/instrumentalities with corporate powers as either GBEs or Non-GBEs for the purpose of determining the financial reporting framework applicable thereto. 2.0 Definition of Terms 2.1 Government corporations refer to government-owned or controlled corporations (GOCCs), government financial institutions (GFIs), and government instrumentalities with corporate powers (GICPs)/government corporate entities (GCEs), including their subsidiaries, and water districts. The regional, branch and field offices are component units of the corporation. 2.2 GOCCs refer to any agency organized as a stock or non-stock corporation, vested with functions relating to public needs whether governmental or proprietary in nature, and owned by the Government of the Republic of the Philippines directly or through its instrumentalities either wholly or, where applicable as in the case of stock corporations, to the extent of at least a majority of its outstanding capital stock. The term "GOCC" shall include GICP/GCE and GFI as defined herein. 2.3 GFIs refer to financial institutions or corporations in which the government directly or indirectly owns majority of the capital stock and which are either: (a) registered with or directly supervised by the BSP; or (b) collecting or transacting funds or contributions from the public, and places them in financial instruments or assets such as deposits, loans, bonds and equity including, but not limited to, the Government Service Insurance System and the Social Security System. 2.4 GICPs/GCEs refer to instrumentalities or agencies of the government, which are neither corporations nor agencies integrated within the departmental framework, but vested by law with special functions or jurisdiction, endowed with some if not all corporate powers, administering special funds, and enjoying operational autonomy usually through a charter. AICEDc 2.5 GBEs are government corporations which have all the following characteristics as defined under the pertinent provisions of the International Public Sector Accounting Standards (IPSAS) as adopted under the PPSAS: a.) Is an entity with the power to contract in its own name; b.) Has been assigned the financial and operational authority to carry on a business; c.) Sells goods and services, in the normal course of its business, to other entities at a profit or full cost recovery; d.) Is not reliant on continuing government funding to be a going concern (other than purchases of outputs at arm's length); and e.) Is controlled by a public sector entity. 2.6 GBEs include both trading enterprises, such as utilities, and financial enterprises, such as financial institutions. GBEs are, in substance, no different from entities conducting similar activities in the private sector. GBEs generally operate to make a profit, although some may have limited community service obligations under which they are required to provide some individuals and organizations in the community with goods and services at either no charge or a significantly reduced charge. 1 In addition, GBEs shall also include banks and non-bank financial institutions under the supervision of the BSP and entities registered with the SEC required to adopt PFRS. 2.7 Non-GBEs refer to entities which do not meet all of the above characteristics. 2.8 Public sector entities refer to national, regional, and local governments, and other governmental entities such as agencies, boards, commissions and enterprises. They are typically subject to budgetary limits in the form of appropriations or budget authorizations (or equivalent), which may be given effect through authorizing legislation. 2.9 Small and Medium-sized Entities (SMEs) are corporations that: a.) Have total assets of between P3 Million and P350 Million or total liabilities of between P3 Million and P250 Million; b.) Are not required to file financial statements under Rule 68.1 of the Securities Regulation Code (SRC); c.) Are not in the process of filing their financial statements for the purpose of issuing any class of instruments in a public market; d.) Are not holders of secondary licenses issued by a regulatory agency, such as banks, investment houses, finance companies, insurance companies, securities brokers/dealers, mutual funds and pre-need companies; and e.) Are not public utilities. 3.0 Guidelines and Procedures 3.1 All Government Corporations which fall under the definition of GBEs in paragraph 2.5 hereof, and classified as GBEs (Annex A) shall apply the PFRS pursuant to: (a) paragraph 10 of Preface to IPSAS and the pertinent provisions of applicable IPSAS as adopted in PPSAS 1; (b) BSP Circular 494 series of 2005; and (c) SRC Rules 68 and 68.1, its amendments, and other issuances of the SEC. GOCCs categorized as SMEs in paragraph 2.9 may adopt the PFRS for SMEs pursuant to SEC Notice dated December 11, 2009. 3.2 All other Government Corporations which do not fall under the classification of GBEs as defined in paragraphs 2.5 and 2.6 hereof and classified as Non-GBEs (Annex B) shall apply the PPSAS pursuant to COA Resolution No. 2014-003. 3.3 All GBEs and Non-GBEs in their first-time adoption of PFRS and PPSAS, respectively, shall cause the conversion of their financial statements in accordance with the applicable financial reporting framework herein prescribed. Specific guidelines on the conversion and reconciliation of converted accounts in the financial reporting framework shall be prepared by the Government Accountancy Sector (GAS) in consultation with the Corporate Government Sector (CGS) and the concerned government entities. 3.4 The Revised Chart of Accounts (RCA) prescribed under COA Circular No. 2014-003 dated April 15, 2014 shall be updated by the GAS to include (a) the accounts prescribed by the BSP Financial Reporting Package (FRP) and the pertinent accounts of other GBEs; and (b) pertinent accounts of Non-GBEs. For agencies implementing the electronic-New Government Accounting System (e-NGAS), procedures on the conversion of e-NGAS database to the RCA for NGAS shall be covered by separate guidelines. The Chart of accounts of GOCCs and LGUs and its conversion to the New Chart of Accounts shall, likewise, be covered by separate guidelines. 3.5 The Chief Accountants/Heads of Accounting Units and Budget Officers/Heads of Budget Units of GBEs/Non-GBEs and other concerned offices of all entities covered by this Circular shall be responsible for the proper conversion of the financial statements and reconciliation of the accounts upon their entities' first-time adoption of the PFRS/PPSAS, as applicable, and the separate submission of the copy of the Journal Entry Voucher (JEV) and the Financial Statements and Reports to the COA Auditor and the GAS. 3.6 All Heads of Government Corporations shall oversee the proper conversion of the financial statements of their respective agencies. 4.0 Saving Clause Cases not covered in this Circular shall be referred to the GAS, for resolution. 5.0 Repealing Clause All issuances inconsistent herewith are deemed repealed or amended accordingly. 6.0 Transitory Provision Pending the updating of the Revised Chart of Accounts prescribed by COA to include specific requirements of GBEs and Non-GBEs, the following shall be observed: a.) New accounts prescribed for the implementation of the PPSAS shall be used in accordance with such standards. b.) For PFRS-compliant financial statements, GBEs shall use all applicable accounts prescribed under COA Circular No. 2014-003 and those prescribed by their respective regulatory bodies. c.) Accounts that have not been converted due to issues not settled as of conversion date shall be converted by the Government Corporations to the most appropriate account in the RCA until a supplemental circular or clarification is issued on this matter. 7.0 Effectivity This Circular shall take effect fifteen (15) days after publication in a newspaper of general circulation. SaCDTA (SGD.) HEIDI L. MENDOZA Commissioner Officer-in-Charge (SGD.) JOSE A. FABIA Commissioner ANNEX A List of GOCCs and GFIs Identified as Government Business Enterprises (GBEs) Agency Acronym 1 Bangko Sentral ng Pilipinas BSP 2 Philippine International Convention Center, Inc. PICCI 3 Development Bank of the Philippines DBP 4 Al-Amanah Islamic Investment Bank of the Philippines AIIBP 5 DBP Data Center, Inc. DCI 6 DBP Leasing Corporation DLC 7 DBP Management Corporation DBPMC 8 Land Bank of the Philippines LBP 9 LBP Insurance Brokerage, Inc. LIBI 10 LBP Leasing Corporation LLC 11 Masaganang Sakahan, Inc. MSI 12 LBP Resources and Development Corporation LBRDC 13 People's Credit and Finance Corporation PCFC 14 National Livelihood Development Corporation NLDC 15 Philippine Deposit Insurance Corporation PDIC 16 Philippine Postal Savings Bank, Inc. PPSBI 17 Government Service Insurance System GSIS 18 GSIS Family Bank GFB 19 AFP Retirement and Separation Benefits System AFP-RSBS 20 Southern Utility Management Services, Inc. SUMSI 21 Social Security System SSS 22 Home Development Mutual Fund HDMF/Pag-IBIG Fund 23 National Home Mortgage Finance Corporation NHMFC 24 Social Housing Finance Corporation SHFC 25 Palacio del Gobernador Condominium Corporation PDGCC 26 Home Guaranty Corporation HGC 27 Small Business Corporation SBC 28 Trade and Investment Development Corporation of the TIDCORP Philippines 29 Philippine National Oil Company PNOC 30 PNOC Alternative Fuels Corporation PNOC-AFC 31 PNOC Development & Management Corp. PNOC-DMC 32 PNOC-Exploration Corporation PNOC-EC 33 PNOC Malampaya Production Corporation PNOC-MPC 34 PNOC Renewables Corporation PNOC-RC 35 PNOC Shipping and Transport Corporation PNOC-STC 36 APO Production Unit APU 37 Philippine Ports Authority PPA 38 Bases Conversion and Development Authority BCDA 39 BCDA Management and Holdings, Inc. BMHI 40 North Luzon Railway Corporation NLRC 41 Bataan Technology Park, Inc. BTPI 42 Clark Development Corporation CDC 43 Clark International Airport Corporation CIAC 44 John Hay Management Corporation JHMC 45 Poro Point Management Corporation PPMC 46 Civil Aviation Authority of the Philippines CAAP 47 Philippine Economic Zone Authority PEZA 48 Cagayan Economic Zone Authority CEZA 49 Northeastern Luzon Pacific Coastal Services, Inc. NLPCSI 50 Philippine Reclamation Authority PRA 51 PEA Tollway Corporation PEATC 52 National Development Company NDC 53 Manila Gas Corporation MGC 54 Inter-Island Gas Services, Inc. IIGSI 55 Pinagkaisa Realty Corporation PRC 55 Kamayan Realty Corporation KRC 57 Batangas Land Company, Inc. BLCI 58 GY Real Estate, Inc. GYREI 59 First Cavite Industrial Estate, Inc. FCIEI 60 NDC-Philippine Infrastructure Corporation NPIC 61 Philippine National Construction Corporation PNCC 62 Alabang-Sto. Tomas Development, Inc. ASDI 63 CDCP Farms Corporation CFC 64 DISC Contractors, Builders and General Services, Inc. DCBGSI 65 Tierra Factors Corporation TFC 66 Traffic Control Products Corporation TCPC 67 Manila International Airport Authority MIAA 68 Philippine Aerospace Development Corporation PADC 69 Food Terminal, Inc. FTI 70 NIAConsult, Inc.** NIACI 71 Philippine Sugar Corporation PHILSUCOR 72 Human Settlements Development Corporation* HSDC 73 Philippine Agricultural Development and Commercial PADCC Corporation** 74 ZNAC Rubber Estate Corporation** ZREC 75 National Agribusiness Corporation** NABCOR 76 Philippine Fisheries Development Authority PFDA 77 Natural Resources Development Corporation NRDC 78 Philippine Forest Corporation** PFC 79 Philippine Mining Development Corporation PMDC 80 Philippine Crop Insurance Corporation PCIC 81 Philippine Charity Sweepstakes Office PCSO 82 Philippine Amusement and Gaming Corporation PAGCOR 83 Philippine Retirement Authority PRA 84 Philippine International Trading Corporation PITC 85 PITC-Pharma, Inc. PPI 86 Duty Free Philippines Corporation DFPC 87 Intercontinental Broadcasting Corporation IBC 13 88 Northern Foods Corporation NFC 89 Authority of the Freeport Area of Bataan AFAB 90 Subic Bay Metropolitan Authority SBMA 91 Panay Railways PR 92 Mactan-Cebu International Airport Authority MCIAA 93 Cebu Port Authority CPA 94 Zamboanga City Special Economic Zone Authority ZCSEZA 95 Phivedec Industrial Authority PIA 96 Marawi Resort Hotel, Incorporated MRHI 97 Bukidnon Forest, Inc. BFI 98 PHILJA Development Center, Inc. PDCI 99 All Water Districts WDs * Abolished, winding up ** Under liquidation ANNEX B List of GOCCs and GFIs Identified as Non-Government Business Enterprises (Non-GBEs) Agency Acronym 1 Central Bank-Board of Liquidators CB-BOL 2 Credit Information Corporation CIC 3 LandBank Countryside Development Foundation, Inc. LCDFI 4 Millennium Challenge Account-Philippines MCA-P 5 Occupational Safety and Health Center OSHC 6 Employees Compensation Commission ECC 7 National Housing Authority NHA 8 Philippine National Railways PNR 9 Light Rail Transit Authority LRTA 10 National Power Corporation NPC 11 Power Sector Assets and Liabilities PSALM Management Corporation 12 National Transmission Corporation NTC 13 Local Water Utilities Administration LWUA 14 Metropolitan Waterworks and Sewerage System MWSS 15 National Electrification Administration NEA 16 Philippine Postal Corporation PPC 17 Laguna Lake Development Authority LLDA 18 Tourism Infrastructure and Enterprise Zone Authority TIEZA 19 Corregidor Foundation, Inc. CFI 20 National Food Authority NFA 21 National Irrigation Administration NIA 22 Philippine Coconut Authority PCA 23 Sugar Regulatory Administration SRA 24 National Dairy Authority NDA 25 National Tobacco Administration NTA 26 Quedan and Rural Credit Guarantee Corporation QUEDANCOR 27 Lung Center of the Philippines LCP 28 National Kidney and Transplant Institute NKTI 29 Philippine Children's Medical Center PCMC 30 Philippine Heart Center PHC 31 Veterans Federation of the Philippines VFP 32 Boy Scouts of the Philippines BSoP 33 Overseas Workers Welfare Administration OWWA 34 Tourism Promotions Board TPB 35 Nayong Pilipino Foundation NPF 36 Philippine Health Insurance Corporation PHIC 37 Philippine Institute for Development Studies PIDS 38 Technology Resource Center TRC 39 Philippine Institute of Traditional and PITAHC Alternative Health Care 40 Philippine Center for Economic Development PCED 41 Cottage Industry Technology Center CITC 42 People's Television Network, Inc. PTNI 43 Cultural Center of the Philippines CCP 44 Center for International Trade Expositions and Missions CITEM 45 Development Academy of the Philippines DAP 46 Aurora Pacific Economic Zone and Freeport Authority APECO 47 Subic Clark Alliance Development Corporation SCADC 48 Partido Development Administration PDA 49 Philippine Rice Research Institute PRRI/PhilRice 50 Southern Philippines Development Authority SPDA Footnotes 1. Philippine Public Sector Accounting Standards 1, Presentation of Financial Statements, Paragraph 12, Page 84.