UST AMV – College of Accountancy

Technical Memorandum - Philippine Heart Center (PHC)

UNIVERSITY OF SANTO TOMAS

UST – Alfredo M. Velayo – College of Accountancy
España, Manila

ACC 5118 – AUDITING AND ASSURANCE: SPECIALIZED

INDUSTRIES
TECHNICAL MEMORANDUM ON HEALTHCARE INDUSTRY

PHILIPPINE HEART CENTER (PHC)

Submitted by:
De Guzman, Jevie Jr. M.
Milca, Joaquin Lorenzo T.
Pangilinan, Joshua Kier S.
Perez, Cristian P.
Santos, Paulo Emmanuel S.
4A7

Submitted to:
Mr. Jordan Ramos
September 30, 2022

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I. Introduction
The Philippine Heart Center is only one of the renowned government hospitals in the
Philippines. The heart center was established through Presidential Decree No. 673 and officially
opened on February 14, 1975, in Quezon City. The heart center was initially structured to cater
to patients with heart ailments. The Board of Trustees comprises the Secretary of Health's
chairperson and nine members. Also, the heart center is divided into four (4) departments,
namely: the Hospital Support Services, Medical Services, Education, Training and Research
Services, and Nursing Services, all of which are headed by their respective officers. The
Philippine Heart Center aims to provide comprehensive cardiovascular care accessible to all
people. They also envision upholding high standards in terms of cardiovascular care, which will
aid the Filipinos' health needs. They are engaged in cardiovascular research on avoiding and
controlling cardiovascular diseases. They also provide training and education that will benefit
aspiring heart specialists, medical practitioners, and the public. Presently, the Philippine Heart
Center focuses on improving its facilities to achieve world-class standards and continues to
integrate its human and technological resources to meet the demands of its services which is
in line with the company's vision and objectives (Philippine Heart Center, 2022).

Key Officers:

The following are the key officers of Philippine Heart Center as of 2021:
● Joel M. Abanilla, M.D. - Executive Director
● Josephine M. Guillermo-Lopez, CPA, MBA - Deputy Executive Director for Hospital
Support Services
● Gerardo S. Manzo, M.D. - Deputy Executive Director for Medical Services
● Gilbert C. Vilela, M.D. - Deputy Executive Director for Education, Training and Research
Services
● Criselle M. Galang, RN, DNM - Deputy executive Director for Nursing Services

Organizational Strategy:

As provided in the 2021 Annual Report of PHC, the organization focuses on realizing its
vision and mission, which is to be the leader in cardiovascular care, be competitive globally, and
improve its services to improve the lives of Filipino people. Presently, the Philippine Heart Center
focuses on improving its facilities, properly integrating its human and technological resources to
meet its customers' demands, and improving the quality of its services (Philippine Heart Center,
2022).

Executive Summary:

According to the 2021 Annual Report of PHC, the organization has achieved
accomplishments based on its balanced scorecard which are divided into five parts with different
measures namely: Social Impact, Organization, Internal Process, People Empowerment, and
Fund Resource. The overall accomplishments of PHC have increased to 131.9% which was rated
as outstanding most particularly its fund resource and social impact. Additionally, the organization
has completed nine minor infrastructure projects and still has eight on-going infrastructure

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projects. Overall, PHC has achieved many of its goals despite the challenges provided by the
Covid-19 Pandemic (Philippine Heart Center, 2022).

II. Key Audit Matters

Discuss the most significant KAM based on your professional judgment.

A. Underlying Business Risks:

Philippine Heart Center (PHC) aims to provide quality healthcare services, particularly
to Filipino patients with heart-related ailments and concerns. The company’s vision focuses
on: (1) having the best and most efficient medical services to the public and (2) contributing
to the continuing growth of cardio-vascular research, education, training, and public
information. However, no matter how companies put their utmost efforts in achieving their
objectives, certain factors may still affect and hinder the attainment of these goals (PHC,
n.d.).

COMPLIANCE RISK:
Business risks faced by the company can be wide-ranging and diverse. In the case of
the Philippine Heart Center, the company manages its exposure to various risks, from
financial instruments, its contractual obligations, and the company’s internal and external
environment. These risks are credit, liquidity, interest/market, and operational risk. But upon
examination of their financial information, audits and reviews can expose more concerns
and issues that the company experiences. For 2021, the PHC received a “qualified” audit
opinion from the audit report issued by the Commission on Audit (COA). Among those
included in the basis for COA’s audit opinion was the faithful representation of PHC’s
account Due from Government Corporations – Philippine Health Insurance Corporation
(PhilHealth). This account pertains to hospital charges deducted from customer bills
collected from PhilHealth. COA found that on this account, there was an inclusion of Denied
and Return to Hospital (RTH) Claims, which is not under PhilHealth Circular No. 2019-001
dated January 10, 2019. According to this circular, the total amount of the Denied and RTH
Claims should be excluded from the account balance of Receivable from PhilHealth.

Based on COA’s summary of observations and recommendations, the management

claimed that the responsible departments were still in the process of validating and verifying
the claims. The Accounting Division will reclassify those claims upon completing the
validation process. The PHC may also have the option of filing a Motion for Reconsideration
to the Head Office of PhilHealth to appeal for those Denied and RTH claims. If PhilHealth
grants the appeal, the company should record those claims as an addition to the account
balance of Receivable from PhilHealth. But if PhilHealth denies the appeal, the company
should deduct the total claims from the Receivable account from PhilHealth. But since there
were no updates on the motion filing, PHC needs to exclude the total amount of claims from
the account balance of Receivable from PhilHealth, rendering the account balance reliable,
accurate, and properly valued.

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Based on the information provided, PHC is exposed to compliance risk. This risk
pertains to an organization’s potential exposure to legal penalties and material losses
resulting from its failure to comply with applicable standards and policies imposed by
regulatory bodies of the country (Sales, 2021). As a government hospital, PHC has a duty
to all its stakeholders, including its customers, employees, and the government. The
company was established to do business and provide quality services to the Filipino people,
meeting its organizational goals and objectives while still observing the rules and regulations
applicable to the company. In particular, PHC is exposed to a process risk. This risk pertains
to a company’s failure to follow established procedures to complete specific tasks within a
process. In the case of PHC, they could not follow the guidelines set by PhilHealth Circular
No. 2019-001 about the accounting treatment for Denied and RTH Claims. To mitigate this
type of risk, the organization needs to take specific and accurate measures to ensure that
the whole firm complies with the laws and regulations. Continuous compliance with these
standards will always be a business challenge. But as part of their duty to society,
organizations should take part in identifying, assessing, and mitigating these issues.

OPERATIONAL RISK:
Other accounts found by COA as not faithfully represented in PHC’s financial
statements include the Inventory and Property, Plant, and Equipment (PPE) accounts. For
2021, Philippine Heart Center received a “qualified” audit opinion from COA due to various
observations that may pose significant risks to the audit performed and the company’s
operations. To start, the Inventory account of the company contained several deficiencies
that affected the faithful representation of its balance in the financial statements. Based on
COA’s summary of observations and recommendations, this issue was a reiteration of the
prior years’ observations since PHC did not yet implement previous recommendations.
Firstly, there was a discrepancy between the balances per accounting records and the
physical inventory count stated in the Reports on Physical Count of Inventory (RPCIs),
amounting to ₱ 110.217 million. These discrepancies were due to price adjustments and
differences in recording deliveries of inventory items by the Property and Supply
Management Division (PSMD) and the Accounting Division. Secondly, the company
recorded stock items transferred to income centers and deliveries of non-stock items as
outright expenses in the books. Based on the Supply Adjustment Sheet provided, the
issuance of stock items was recorded as expense, whether or not sold/consumed/utilized.
Likewise, no entry is made to the distribution of non-stock items because these items were
already expensed by accountable personnel upon delivery. Thirdly, PHC still adopts the
periodic inventory system in accounting instead of the perpetual inventory system. This
adoption is inconsistent with the recommendations of COA and the requirements of Section
9, Chapter 8, Volume I of GAM. However, the company has already expressed its plans to
adopt the perpetual inventory system upon completing the computerization of PHC’s
accounting system. PHC needs to adjust these discrepancies and follow the requirements
of the standards to ensure the proper recording, monitoring, presentation, and accountability
over the items forming the inventory account.

On the other hand, the faithful representation of PHC’s Property, Plant, and Equipment

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(PPE) account was not established during the audit. Based on COA’s summary of
observations and recommendations, this issue was also a reiteration of the prior years’
observations since PHC did not yet implement previous recommendations. Firstly, the
account balance recorded in the general ledger and the Report on Physical Count of PPE
had an unaccounted variance of ₱ 15.9 million. This difference was due to the non-
reconciliation of PPE records between the Accounting Division and the Property and Supply
Management Division (PSMD). Management explained that the restrictions of the face-to-
face interactions between personnel contributed to delays in the update and reconciliation.
Secondly, the Accounting Division and the Property and Supply Management Division
(PSMD) were not maintaining PPE Ledger Cards and Property Cards as required by the
Government Accounting Manual and the COA. If PHC may keep these documents, they
were not updated accordingly. Due to these issues, the COA cannot ascertain the faithful
representation of the account balance of PPE.

The company is also exposed to operational risk based on the information provided.
This risk pertains to the company's possible financial or non-financial losses due to
ineffective internal processes, human resources, systems, or external factors that can
disrupt the flow of operations (AuditBoard, 2022). Aside from the company's responsibilities
towards its patients, PHC also has obligations towards the government, particularly in
meeting applicable standards and frameworks in recording, presenting, and reporting its
business activities to its stakeholders. Government-owned and controlled corporations
(GOCCs) must perform business activities in compliance with mandates and standards
imposed by the national government. Complying with these regulations will help these
organizations to function appropriately in their day-to-day business operations. For the
inventory account, COA found that discrepancies between company records and physical
count reports arise due to inconsistencies in the recording. PHC should be aware of any
possible price adjustments in the inventory items. The company should also be consistent
in its accounting for Input VAT since the Accounting Division and Property and Supply
Management Division (PSMD) have different ways of recording. Inventory items should also
be recorded appropriately by the Accounting Division as the cost of supplies when the items
are sold, consumed, and/or utilized. Likewise, PHC must pursue the adoption of the
perpetual inventory system as recommended by the applicable standards. This inventory
system will help the company have a more accurate record of the movement of inventory
items across the whole hospital. Therefore, proper recording, monitoring, and accountability
over these inventory items should be observed by PHC to avoid these issues and
misstatements affecting the company's performance and the COA's audit.

For the PPE account, PHC should always reconcile the physical count and the actual
records of PPE items to arrive at the correct balances. Restrictions in the face-to-face
interactions between personnel from different departments should be managed well by the
company to avoid delays in the business processes, including the reconciliation and
updating of account balances. Lastly, the company should maintain and regularly update
supporting documentation and reports such as the PPE Ledger Cards and Property Cards
to ensure the complete details of PPE items. These changes and uncertainties a company

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may face in conducting business should be handled or managed correctly. Aside from
system failures, operational risk can also depend heavily on human factors, such as human
errors or failures. Holding personnel accountable for these risks will constantly challenge
the company. But as part of their duty in carrying out business operations effectively,
efficiently, and strategically, organizations should take part in identifying, assessing, and
mitigating these issues.

B. Summary of Financial Reporting Requirements:

PHC holds three major affected accounts, namely Receivables, Inventories, and Property,
Plant, and Equipment (PPE). The following is a summary of the financial reporting
requirements of each affected account:

RECEIVABLES:
The accounting for Receivables followed by PHC adheres to the IAS 39. Financial
instruments, such as receivables, are initially measured at their fair value. Receivables
are non-derivative financial assets in which the determinable value of payments is not
specified in the active market (Deloitte, 1970). Hence, after the initial measurement, PHC
subsequently measures Receivables at amortized cost. PHC derecognizes Receivables
after either the expiration or transferring the contractual rights to receive economic
benefits. PHC attempts to reconcile Receivables accounts using supporting schedules
and corresponding aging schedules.

INVENTORIES:
IAS 2 Inventories is followed for the accounting for inventories (Deloitte, 1970a).
Inventory is measured at cost when initially recognized by PHC, but they are stated at the
lower of its cost and net realizable value in subsequent measurements. The cost of
inventory includes:
• The cost of purchases
• Costs of conversion
• Other incurred costs to bring the inventories to their current location and condition
(this includes handling, taxes, and transport, all after deducting the trade
discounts)
The net realizable value of the inventory is the estimated selling price after deducting the
costs of its sale or disposal. PHC recognizes inventories as expenses when either income
is recognized after selling said inventories or inventory items are consumed within the
operations of PHC. PHC follows the required disclosures in its financial statements when
accounting for inventory.

PROPERTY, PLANT, AND EQUIPMENT (PPE):

Accounting for Property, Plant, and Equipment (PPE) follows IAS 16 Property,
Plant, and Equipment. PPE is initially recognized at its cost. Subsequently, PPE items can
be measured using either the cost or revaluation models. The PPE is presented at cost
minus accumulated depreciation (ACCA Global, n.d.). Significant assets classified under

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PPE are assets with estimated useful lifetimes; PHC identifies such assets, and
depreciation is accordingly recorded over its useful life. Unless a different depreciation
method is suitable, PHC’s PPEs will be depreciated using the straight-line depreciation
method. Any maintenance costs are expensed and do not form part of PPE’s carrying
value. PHC performs a Report on the Physical Count of PPE (RPCPPE) to compare the
PPE’s value in the accounting records. PPE is derecognized by PHC when the PPE is
determined to have any further future economic benefits no longer. After deducting the
carrying value from the disposal proceeds, a gain or loss is recognized resulting from the
derecognition of the PPE.

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C. Affected Accounts, Assertions and Related Audit Procedures:

Possible
Possible Controls to Mitigate
Account Assertion Identified Business Risk Specific Audit Procedure Sources of Audit
the Risk
Evidence

Receivables Accuracy and Compliance Risk
Valuation The Philippine Heart Center
failed to comply with the required
documentation and conditions in
the Revised Implementing Rules
and Regulations of Republic Act
No. 7875 or the National Health
Insurance Act (NHIA) of 2013, as
amended by RA Nos. 9241 and
10606, and relevant circulars like
the PhilHealth Circulars 2019-
001, 2019-002, and other
circulars. PhilHealth denied and
returned to PHC reimbursement
claims totaling ₱ 167.838 million.
Therefore, 723 claims amounting
to ₱ 48,809,344 were dismissed,
and 4,142 claims were returned
to the hospital (RTH), amounting
to ₱ 119,029,026. This issue
results in the accumulation of
uncollectibles from PhilHealth
and loss of income on the part of
PHC (Commission on Audit,
2022).
The Philippine Heart Center can Accounts Receivable 1. General
appeal the denied claims and Reconciliation: Ledger
return to hospital (RTH) claims to 1. Confirmation and 2. Notification
PhilHealth until the final appeal validation of claims. Letter from
with the Head Office is denied. 2. Reconcile the general PhilHealth
They should also explore all ledger balance with the
possible remedies to have them confirmed and
reconsidered by PhilHealth and validated claims.
monitor the deadlines set by 3. Perform necessary
PhilHealth for filing claims and adjustments in case of
appeals to ensure collection. any errors and
discrepancies upon
The accounting and billing, and confirmation and
claims division of the Philippine validation of claims.
Heart Center can also assign staff
or personnel to process the
documents and documentation
needed for PhilHealth
reimbursement claims. This
resolution will ensure compliance
and strict adherence with the
existing laws, IIRs, circulars, and
regulations to collect the
reimbursable amounts better.
Aside from that, the staff and
personnel in charge of PhilHealth
should attend training and
seminars regularly so they can
apply the correct practices
concerning processing claims from

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PhilHealth.

The accounting division should

also conduct regular reconciliation
with PhilHealth for the unpaid
claims so that the valuation of the
receivable account is accurate.
Denied and RTH claims should
also be reclassified and separated
from PhilHealth's valid claims.

Inventories Accuracy and Operational Risk These mentioned deficiencies Inventory Reconciliation: 1. Report on
Valuation, The Philippine Heart Center between balances per count and 1. Maintain SLCs and Physical
Completeness (PHC) recorded its Inventories at per book can be reduced (or SCs within the Count of
₱ 300.168 million. However, the outright eliminated) if the Accounting Division Inventories
auditors found a discrepancy Accounting Division of PHC would 2. Reconcile the amounts (RCIPs)
between the balance per book perform its reconciliation recorded in these 2. Supplies
and the Report on Physical Count processes properly. Firstly, the documents with those Ledger Cards
of Inventories (RCPIs), Accounting Division should submitted by the (SLCs)
amounting to ₱ 110.217 million maintain its record of Supplies PSMD 3. Stock Cards
(Commission on Audit, 2022). Ledger Cards (SLCs) and Stock 3. Perform necessary (SCs)
This amount was found missing Cards (SCs). Secondly, it was adjustments in case of
when the actual physical count of observed that the Property and any errors. committed
the company’s inventories was Supply Management Division by said divisions to
conducted. Furthermore, a (PSMD) conducts a monthly count reconcile any
couple of lapses were also of the inventory. The Accounting discrepancy in their
observed on the part of PHC, Division should then compare balances
which led to the book balance of inventory balances within the
its Inventories being rendered SLCs and SCs with the amounts
unascertainable, namely: reported by the PSMD. Lastly, if
errors were committed in quantity,
1. Stocks transferred from the the unit of measurement, or unit
Property and Supply cost, the Accounting Division can
Management Division to notify the PSMD to effect the
various Income Centers, and necessary corrections or
deliveries of non-stock adjustments. These improvements

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supplies were directly to PHC’s inventory reconciliation

accounted as outright processes are essential to avoid
expense in the books even material errors in the recorded
when these supplies were amounts of its inventories.
not sold or consumed;
Regarding the recording of stocks
2. Non-adoption of Perpetual transferred and delivery of non-
Inventory System. stock items as an outright expense
regardless of whether they are
sold/consumed, proper recording,
monitoring, and accountability
should not cease upon mere
transfer of these items from the
PSMD to various Income Centers.
Instead, the PHC should:

1. Discontinue its practice of

recording the mentioned items
as an outright expense,

2. Prepare and maintain

subsidiary accounts of
Inventories for the PSMD and
each of the Income Centers
for proper recording and
monitoring; and,

3. A shift from the current

Periodic Inventory System to a
Perpetual Inventory System.

Property, Accuracy and Operational Risk It is in PHC’s best interest to avoid PPE Reconciliation: 1. General
Plant, and Valuation The balances of PHC’s PPE or rescind the non-verification of its 1. Furnish a copy of Ledger
Equipment accounts carried in General PPE balances in the financial reconciliation 2. Report on the
Ledger (GL) at ₱ 3.601 billion statements by exerting all efforts to report/schedule Physical
were deemed unascertainable account for the variance of ₱ 15.9 2. Account for the Count of PPE

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due to a variance of ₱ 15.9 million
found in the Report on the
Physical Count of PPE
(RPCPPE). Additionally, it was
discovered that appropriate PPE
Ledger Cards (PPELCs) and
Property Cards (PCs) were not
maintained. This malpractice
contradicts Paragraph 27 of
International Public Sector
Accounting Standards 1, Section
42, Chapter 10, Government
Accounting Manual, Volume I and
Commission on Audit Circular
No. 2020-006 dated January 31,
2020 (Commission on Audit,
2022).
million through the submission of a variance of ₱ 15.9 (RCPPE)
reconciliation schedule to the million between the
auditing team. It is also highly General Ledger and
recommended that the PSMD the RCPPE
maintain PCs and the Accounting
Division maintain PPELCs for
complete data about account
balances of the company’s
properties. These controls will add
to the lapses in verification
measures foregone by the
company during the year in
question.
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III. References

ACCA Global. (n.d.). Property, plant and equipment. ACCA.

https://www.accaglobal.com/gb/en/student/exam-support-resources/fundamentals-
exams-study-resources/f7/technical-articles/measure-depreciation1.html

AuditBoard. (2022). What Is Operational Risk Management? The Overview.

https://www.auditboard.com/blog/operational-risk-management/

Commission on Audit. (2022). Philippine Heart Center Annual Audit Report 2021.
https://www.coa.gov.ph/wpfd_file/philippine-heart-center-annual-audit-report-2021/

Deloitte. (1970). IAS 39 — Financial Instruments: Recognition and Measurement. IAS Plus.
https://www.iasplus.com/en/standards/ias/ias39

Deloitte. (1970a). IAS 2 — Inventories. IAS Plus. https://www.iasplus.com/en/standards/ias/ias2

PHC. (n.d.). About PHC. Philippine Heart Center. https://www.phc.gov.ph/about-phc/

Philippine Heart Center (2022). https://www.phc.gov.ph/index.php

Philippine Heart Center (2022). 2021 Annual Report.

https://www.phc.gov.ph/Images/accomplishments/annual_reports/2021/PHC%20Annual
%20Report%202021.pdf

Sales, F. (2021). compliance risk. SearchCIO.

https://www.techtarget.com/searchcio/definition/compliance-risk

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IV. Appendix (Source: Philippine Heart Center Financial Statements, COA)

PHILIPPINE HEART CENTER

STATEMENTS OF FINANCIAL POSITION
As of December 31, 2021, and 2020
(In Philippine Peso)

2020
(As
Note 2021 Restated)
ASSETS

Current assets
Cash and cash
equivalents 6 2,117,403,910 1,707,963,408
Receivables - net 7 902,407,601 654,123,274
Inventories 8 300,167,894 224,755,579
Other current assets 12 5,762,543 7,017,376
Total current assets 3,325,741,948 2,593,859,637

Non-current assets
Receivables - net 7 647,627,401 449,150,841
Investment property 9 215,539,958 215,539,958
Property, plant and
equipment - net 10 3,600,790,204 3,351,747,698
Intangible assets 11 1,191,200 1,191,200
Other non-current
assets 12 69,916,354 65,358,827
Total non-current assets 4,535,065,117 4,082,988,524

TOTAL ASSETS 7,860,807,065 6,676,848,161

LIABILITIES

Current liabilities
Financial liabilities 13 1,012,706,877 607,046,189
Inter-agency payables 14 66,576,008 35,941,418
Trust liabilities 15 540,272,977 556,857,123
Total current liabilities 1,619,555,862 1,199,844,730

Non-current liabilities
Financial liabilities 13 312,255,569 288,361,474
Inter-agency payables 14 17,038,798 17,221,061
Trust liabilities 15 572,068,870 339,386,942
Provisions 16 348,313,315 313,331,073
Total non-current liabilities 1,249,676,552 958,300,550

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TOTAL LIABILITIES 2,869,232,414 2,158,145,280

NET ASSETS (TOTAL ASSETS

LESS TOTAL LIABILITIES) 4,991,574,651 4,518,702,881

NET ASSETS/EQUITY
Accumulated
surplus/(deficit) 27 2,737,252,504 2,264,380,734
Government equity 28 2,254,322,147 2,254,322,147
TOTAL NET ASSETS/EQUITY 4,991,574,651 4,518,702,881

The Notes on pages 11 to 53 form part of these Financial Statements.

PHILIPPINE HEART CENTER

STATEMENTS OF FINANCIAL PERFORMANCE
For the Years Ended December 31, 2021, and 2020
(In Philippine Peso)

2020
Note 2021 (As Restated)

REVENUE
Service and business income 17 2,262,591,908 1,601,243,142
Shares, donations and grants 18 136,213,023 92,384,215
TOTAL REVENUE 2,398,804,931 1,693,627,357

CURRENT OPERATING EXPENSES

Personnel services 19 1,736,650,431 1,704,195,792
Maintenance and other operating expenses 20 1,738,744,876 1,356,763,489
Financial expenses 21 56,405 39,383
Non-cash expenses 22 281,936,430 248,327,064
TOTAL CURRENT OPERATING EXPENSES 3,757,388,142 3,309,325,728

SURPLUS/(DEFICIT) FROM CURRENT

OPERATIONS (1,358,583,211) (1,615,698,371)
Other non-operating income 23.1 21,414,011 38,260,638
Gains 23.2 14,445,817 1,396,790
Losses 23.3 (5,195,559) (10,257,085)
Subsidy from national government 24 1,800,790,712 1,424,023,000
NET SURPLUS / (DEFICIT) FOR THE PERIOD 472,871,770 (162,275,028)

The Notes on pages 11 to 53 form part of these Financial Statements.

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PHILIPPINE HEART CENTER

STATEMENTS OF CHANGES IN NET ASSETS/EQUITY
For the Years Ended December 31, 2021, and 2020
(In Philippine Peso)

Accumulated Surplus/ Government

(Deficit) Equity
Note 27 Note 28 Total

BALANCE AT JANUARY 1, 2020 1,817,110,533 2,254,322,147 4,071,432,680

Changes in Net Assets/Equity

for CY 2020
Add/(Deduct):
Deficit for the period, as restated (162,275,028) (162,275,028)
Prior Period Adjustments 609,545,229 609,545,229
RESTATED BALANCE AT
DECEMBER 31, 2020 2,264,380,734 2,254,322,147 4,518,702,881

Changes in Net Assets/Equity

for CY 2021
Add/(Deduct):
Surplus for the period 472,871,770 472,871,770
BALANCE AT DECEMBER 31,
2021 2,737,252,504 2,254,322,147 4,991,574,651

The Notes on pages 11 to 53 form part of these Financial Statements.

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PHILIPPINE HEART CENTER

STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2021, and 2020
(In Philippine Peso)

2020
Note 2021 As Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Cash inflows
Collection of income/revenue 2,681,058,255 1,957,522,036
Receipt of assistance/subsidy 1,800,790,712 1,424,023,000
Collection of receivables 134,285,742 103,915,538
Total cash inflows 4,616,134,709 3,485,460,574

Cash outflows
Payment of expenses 1,958,879,732 1,751,127,243
Payment of accounts payable 1,898,857,026 1,432,556,258
Remittance of personnel benefit contributions and mandatory
deductions 243,407,573 239,358,303
Total cash outflows 4,101,144,331 3,423,041,804

Net cash provided by/(used in) operating activities 514,990,378 62,418,770

CASH FLOWS FROM INVESTING ACTIVITIES

Cash inflows
Proceeds from sale/disposal of property, plant and equipment 8,025 -
Receipt of interest earned 3,440,686 3,547,366
Total cash inflows 3,448,711 3,547,366

Cash outflows
Purchase of property, plant and equipment 118,651,101 172,646,531
Total cash outflows 118,651,101 172,646,531

Net cash provided by/(used in) investing activities (115,202,390) (169,099,165)

Net increase/(decrease) in cash and cash equivalents 399,787,988 (106,680,395)

Effects of exchange rate changes on cash and cash

equivalents 9,652,514 (8,904,068)

Cash and cash equivalents, January 1 1,707,963,408 1,823,547,871

Cash and cash equivalents, December 31 6 2,117,403,910 1,707,963,408

The Notes on pages 11 to 53 form part of these Financial Statements.

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UST AMV – College of Accountancy
Technical Memorandum - Philippine Heart Center (PHC)

PHILIPPINE HEART CENTER

STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS
FOR THE YEAR ENDED DECEMBER 31, 2021
(In Philippine Peso)

Budgeted Amounts Actual

Particulars Amounts on Difference
Note 29 Comparable Final Budget
Original Final Basis and Actual

RECEIPTS

Service and business

income 2,369,847,000 2,369,847,000 2,262,591,908 107,255,092
Assistance and subsidy 1,861,997,000 1,861,997,000 1,800,790,712 61,206,288
Shares, donations and
grants - - 136,213,023 (136,213,023)
Total receipts 4,231,844,000 4,231,844,000 4,199,595,643 32,248,357

PAYMENTS
Personnel services 2,022,225,000 1,981,205,000 1,736,650,431 244,554,569
Maintenance and other
operating expenses 1,840,823,000 1,816,580,000 1,738,744,876 77,835,124
Capital outlay 368,796,000 368,796,000 118,651,101 250,144,899
Financial expenses - - 56,405 (56,405)
Total payments 4,231,844,000 4,166,581,000 3,594,102,813 572,478,187
NET
RECEIPTS/(PAYMENTS) - 65,263,000 605,492,830 (540,229,830)

The Notes on pages 11 to 53 form part of these Financial Statements.

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