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Bangko Sentral NG Pilipinas Executive Summary 2013
Bangko Sentral NG Pilipinas Executive Summary 2013
INTRODUCTION
The Bangko Sentral ng Pilipinas (BSP) is the central bank of the Republic of the
Philippines. It was established on 03 July 1993 as the country’s independent central
monetary authority, pursuant to Section 20, Article XII of the Philippine Constitution and
Republic Act (R.A.) No. 7653, otherwise known as the New Central Bank Act. Under the
Act, the BSP shall function and operate as an independent and accountable corporate
body in the discharge of its mandated responsibilities concerning money, banking and
credit. The BSP replaced the old Central Bank of the Philippines which was established
on 03 January 1949.
A government corporation with fiscal and administrative autonomy, the BSP is
responsible for maintaining price stability conducive to a balanced and sustainable
growth of the economy; formulating and implementing policy in the areas of money,
banking and credit; and supervising and regulating banks and quasi-banks, including
their subsidiaries and affiliates engaged in allied activities. The BSP also performs the
following functions, all of which relate to its status as the Republic’s central monetary
authority:
• Liquidity management;
• Currency issue;
• Lender of last resort;
• Financial supervision;
• Management of foreign currency reserves; and
• Determination of exchange rate policy.
The Monetary Board, which exercises the powers and functions of the BSP, is
composed of seven members appointed by the President of the Philippines. The seven
members are the Governor, who is the Head of the BSP and the Chairman of the
Monetary Board; a member of the Cabinet to be designated by the President of the
Philippines; and five members who shall come from the private sector, all of whom shall
serve for a term of six years except the cabinet representative who serves at the
pleasure of the President.
The BSP organizational structure is composed of (a) the Executive Management
Services (EMS); (b) three functional sectors, namely: the Monetary Stability Sector, the
Resource Management Sector, and the Supervision and Examination Sector; and (c) the
Security Plant Complex (SPC). A Deputy Governor heads each sector, except for the
EMS which is directly under the Governor and the Security Plant Complex (SPC) which
is headed by an Assistant Governor.
As at 31 December 2013, the Bank had 5,403 personnel complement consisting of
5,033 regular employees and 370 contractuals assigned at the Main Office, SPC, and
regional offices and branches.
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BUDGET UTILIZATION (In million pesos)
2012 Increase/
Particular 2013 (As restated) (Decrease)
Income 56,576.270 65,682.211 (9,105.941)
Expenses 87,226.795 110,305.412 (23,078.617)
Net income (loss) from operations (30,650.525) (44,623.201) 13,972.676
Gain/(Loss) on fluctuations in foreign
exchange rates 5,598.245 (50,375.851) 55,974.096
Net loss for the period (25,052.280) (94,999.052) 69,946.772
SCOPE OF AUDIT
The audit covered the examination, on a test basis, the accounts and financial
transactions of the BSP for the period 01 January to 31 December 2013 in accordance
with the International Standards on Auditing. It also included extent of compliance with
existing laws, rules and regulations, as well as internal policies of BSP. To a limited
extent, the evaluation of the adequacy and effectiveness of systems and procedures of
certain aspects of BSP’s operations was also undertaken.
AUDITOR’S OPINION
The Auditor rendered an unqualified opinion on the fairness of presentation of the
financial statements of BSP for CY 2013 in accordance with applicable Philippine
Financial Reporting Standards and Philippine Accounting Standards (PAS) as aligned
with the International Reporting Standards. However, attention was drawn to Note 2.8.3
to the financial statements which disclosed that as approved by the Monetary Board
effective CY2010, gains/(losses) due to changes in exchange rates are realized only
when the foreign currency is repatriated to local currency or the foreign currency is used
to pay foreign obligations, or upon maturity of a foreign exchange forward or option
contract involving the Philippine Peso. This practice of recognizing realized gains/losses
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on foreign exchange rate fluctuations is generally the industry practice of other central
banks. Moreover, attention was drawn to the same Note 2.8.3 to the financial
statements which disclosed that change in price and exchange rates of financial assets,
liabilities, and derivative instruments are booked under “Revaluation of International
Reserves” account, either as asset (if loss) or liabilities (if gain) in accordance with
Section 45 of R.A. No. 7653.
b. Strictly comply with BIR rulings and regulations. Take extra precaution on the
withholding/set up and remittances of the various taxes to prevent tax deficiencies and
avoid pecuniary losses for the sanctions of violating the BIR rulings and regulations.
Out of the 44 audit recommendations embodied in the prior years’ Annual Audit Reports,
14 were fully implemented, 24 were partially implemented and six were not
implemented.
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