ACYFAR PORTFOLIO

Reflection paper presented to the

Accountancy Department

In partial fulfillment
of the course requirements in
ACYFAR 1

My company:

Millennium Global Holdings, Inc.

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Company Profile
Millennium Global Holdings, Inc. (MG) is a Securities Exchange Commission (SEC)
registered corporation and listed in the Philippine Stock Exchange (PSE). It was first
incorporated back in May 19, 1964, as IPVG Corporation, but was later changed to Millennium
Global Holdings, Inc. on February 18, 2013, when approved by the SEC, alongside changing its
primary purpose as a business to a general holding company.

Millennium Global Holdings, Inc. has two subsidiaries: Millennium Ocean Star
Corporation (MOSC) and Cebu Canning Corporation (C3), each having a 51% share of the
parent company. The former processes seafood and aquaculture products for export and the
latter is engaged in manufacturing, processing, and dealing in pasteurized canned crabmeat,
marine products, and other food products for export. Both are considered to be part of the
industrial or manufacturing sector. (SEC form 17-A, 2022)

The Company’s Mission:

Millennium Global Holdings, Inc. (MG), a holding company with a diverse
business portfolio, is priming for international competitiveness by consistently developing
products and services that meet the quality standards of both domestic and international
markets. The Company cultivates a corporate culture of integrity and empowering
leadership, as well as ensures long–term profitability and enhanced shareholder value.
In doing so, Millennium Global Holdings, Inc. intends to gain recognition in the market for
being a highly professional, ethical, and quality-assured business.

The company’s corporate social responsibility are voluntary activities that drive
Millennium Global Holdings, Inc. to operate in an economic, socially, and environmentally
sustainable manner.

By the end of 2022, Millennium Global Holdings, Inc. employs 368 employees and have
11 members in its board of directors. The current CEO of Millennium Global Holdings, Inc. is
Yang Chi Jen (a.k.a Michael Yang). The current treasurer is Amelia T. Tan and current
Corporate secretary is Lyra Gracia Y. Lipae-Fabella.

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 The board of directors of the company are as follows:
1. Yang Chi Jen (a.k.a Michael Yang)
2. Yeh Hsiu-Yin
3. Hsien-Tzu Yang
4. Willy O. Dizon
5. Maria Soledad C. Lim
6. Nancy T. Golpeo
7. Atty. Ernesto S. Go
8. Amelia T. Tan
9. Aracelli G. Co
10. Maria Luisa T. Wu (Independent)
11. Cristina Hiltrude L. Aganon (Independent)

Logo:

International Accounting Standard-Setting Bodies

The new world order of globalization and interconnectedness that started after World
War 2 and this trend accelerating in the 1980s, led to the necessity and the creation of a single
set of accounting standards. Companies all over the world have opened up to each other,
requiring that both companies understand each other even if they're on the other side of the
globe. Thus, eventually, accountants all over the world recognized the need for a single unified
set of standards and a standard-setting body. Such standards must be applied and interpreted
consistently, to have common disclosures, common delivery systems, and a common approach
to regulatory review and enforcement.

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 In the modern day, organizations like the International Financial Reporting Standards
(IFRS) Foundation and International Accounting Standards Board (IASB), and other related
international organizations have the purpose of providing the accounting profession with a
consistent set of standards, was established. Since then, different countries have set up their
own local organizations that align with the standards set by the IASB.

The aforementioned IASB was established in 2001 and replaced the International
Accounting Standards Committee (IASC) which was established in 1973. The IASB has 14
members. 3 other bodies is responsible for setting the standards, and they are the IFRS
Foundation with 22 members, the IFRS Advisory Council with 40 members, the IFRS
Interpretations Committee with 14 members, and in 2009, a Monitoring Board was formed in
addition to the other 3 bodies. Each governing body has its role with the ultimate goal of a
consistent and high-quality set of standards.

The IASB is the one that ultimately declares new International Financial Reporting
Standards (IFRS) and International Accounting Standards (IAS) and to date, they’ve released
17 IFRS and 34 IAS that are effective. The IFRS Foundation is a public, non-profit organization
that is dedicated to spreading the use of the standards set by the IASB. It also appoints the
members of the IASB. The IFRS Interpretations Committee is the organization giving the proper
interpretation of certain aspects of the standard that may be controversial or ambiguous. To
date, they’ve pronounced 23 interpretations. The purpose of the IFRS Advisory Council, as the
name of the organization suggests, is to advise the IASB, whether it is in setting an agenda,
giving the Board information on standard-setting projects, or just giving advice directly to the
members of the Board or trustees. The Monitoring Board is a more recent formation with the
primary purpose of acting as a bridge between the IFRS Foundation and capital market
authorities to promote the use of the standards set by the IASB and maintain the independence
and transparency of the IFRS Foundation. It also participates in the appointment of IFRS
Foundation trustees.

The creation of such standards goes through a due process taken up by the IASB to
ensure the quality of each standard. First, the Board topics are discussed and identified to
eventually set an agenda. Then after some debate amongst the Board, a discussion paper is
made to be released to the public for comments and feedback. After analyzing and studying the
feedback made by people all over the world, an Exposure Draft is made for public scrutiny once

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again. An Exposure Draft is essentially already a standard that is ready to be declared as such.
Nevertheless, after going through all the comments, criticisms, and feedback, the Board will
once again analyze and redeliberate before declaring a new standard.

The people who are giving comments and are present in every step of setting a new
standard are not limited to accountants, but also lenders, investors, regulators, business
leaders, and the global standard-setting community. This ensures the quality of these standards,
making sure that at every step of the process, the utmost level of scrutiny and diligence is
present.

Conceptual Framework for Financial Reporting

There is a problem in setting standards for financial reporting and accounting, and that is
you cannot account for every situation and have a standard that dictates to a professional
exactly what is to be done. Thus, the Conceptual Framework for Financial Reporting was born.
The Conceptual Framework is a set of concepts that guides the IASB in setting more concrete
standards and for accountants to go to absent a standard. It assists the preparers of financial
reports and the IFRS Interpretations Committee via the assumptions and principles set by the
Conceptual Framework. However, the Conceptual Framework is not a standard and cannot
override established standards and the interpretations made by the IFRS Interpretations
Committee.

Currently, the primary purpose of financial reporting is to provide financial information

about the reporting entity that is useful to present and potential equity investors, lenders, and
other creditors in making decisions about providing resources to the entity. It is important to
know what is the goal of financial reporting, which directly influences the standards.

Financial information must have two fundamental qualities according to the Conceptual
Framework: relevance and faithful representation. Relevance is when the financial information
has the ability to affect the decisions of users of financial reports. Either by being able to confirm
or correct previous judgments or make predictions based on such information. Any information
that has no effect on the decisions of users is deemed immaterial and thus, irrelevant. Faithful
Representation consists of three components: financial information must be neutral, complete,
and free from error. And there are enhancing qualities that further bolster the usefulness of
financial information, however, it cannot make useless information useful. The first of four of the

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enhancing qualities is verifiability. This is the capability of financial information to be confirmed
and come to the same conclusion by 2 or more independent parties who are experts in the field.
Second, comparability, the information is measured and presented in a similar manner to other
entities or to previous periods by the same entity so users can easily compare different financial
information with ease. Third, understandability is the quality of information that lets reasonably
informed users see its significance. (Intermediate Accounting 4th edition, p.57) Lastly, timeliness
is the information being available to users before it loses its capacity to influence their
decision-making.

Under the Conceptual Framework, there are underlying assumptions on how a financial
reporter treats financial information and the entity they’re reporting for. The first is that preparers
of financial reports treat the economic entity as separate from their owners. This assumption,
known as the Economic Entity assumption, can extend to different parts of an entity as well. The
second assumption is that the entity will continue indefinitely, known as the Going Concern
assumption. The preparers of financial reports will make their reports as if the entity will continue
existing long after the reporting date. The third assumption is that financial information is
represented by a monetary unit, called the Monetary Unit assumption. The third assumption is
that there must be periods when reports are due, known as the Periodicity assumption. The
division of time periods may vary depending on the nature of the entity’s economic activity but
all entities that need to report financial information will need to have time periods. The last
assumption is the use of the accrual basis of accounting. This means that recognition and
derecognition of information is done on the period of, and not on receiving a cash receipt.

Philippine Accounting Standard-Setting Bodies

In the Philippines, standard-setting bodies are needed to make accounting practices
uniform throughout the country, and in conformity with the standards set by the aforementioned
international organizations, it has formed its local standard-setting organizations. The Financial
and Sustainability Reporting Standards Council (FSRSC) was established in 2006 and the
standards are known as Philippine Financial Reporting Standards (PFRS) or Philippine
Accounting Standards (PAS). Additionally, the Philippines has its own Interpretations
Committee, the Philippine Interpretations Committee (PIC).

The FSRSC is composed of 18 members currently from various backgrounds and

created the Philippine Sustainability Reporting Committee (PSRC) in October of 2022. The PIc

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was also established by the FSRSC and has 15 representatives.

IAS 1 and Millennium Global Holdings, Inc.

There are three different types of financial statements: consolidated, unconsolidated,
and combined. Consolidated financial statements are those that report the parent company and
subsidiaries are one. Subsidiaries are those with a 50% or higher share of the parent company.
This will be relevant as Millennium Global Holdings, Inc. is a parent company with two
subsidiaries and reports its financial statements as consolidated. Unconsolidated financial
statements are only that of the parent company. And combined financial statements are that of
two entities that do not have a parent-subsidiary relationship.

The main elements of all financial statements are assets, liabilities, equity, revenue or
income, and expenses. Assets are presently controlled economic resources by the entity which
came as a result of past operations. Liabilities are present obligations by an entity to another
entity to transfer economic resource/s and the entity has no way of escaping their obligation.
Equity is the residual assets once liabilities are deducted. Income and revenues increase and
decrease equity, relating to contributions from and of equity claims. Both are equally as
important as assets and liabilities when accounting for them.

The most common and important financial statements that users will look for to assess
an entity’s economic performance are (1) the Statement of Financial Position, (2) the Statement
of Profit or Loss and Statement of Other Comprehensive Income, (3) the Statement of Changes
in Equity, and (4) Statement of Cash Flows. Included are the Notes to Financial Statements,
which are integral in disclosing and justifying the information provided.

Among the dozens of IASs released, IAS 1 is the oldest one, published back in 1974 and
effective the next year after publication. IAS 1 is all about the preparation of financial
statements. This standard governs the financial reporting of profit and non-profit entities alike.
The assumptions laid down before are discussed in this standard. Financial statements must be
presented with the reporting entity’s name, group or individual, the title of the financial
statement, the currency used, levels of rounding such as to the hundredth, thousandth, etc, and
the period of income statement and period ended of the reporting period. Offsetting isn’t allowed
unless IFRS permits the entity to do so, it must be disclosed in the notes.

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 Millennium Global Holdings, Inc. adopts the accounting standards set by the (FSRSC)
and uses them in its financial reporting, as stated in its 2022 annual report. The financial
statements prepared by Millennium Global Holdings, Inc. show its compliance with IAS 1 and
IFRS. As shown by the company disclosing in the notes on their offsets. (Appendix 6.)
Appendices 1 to 3 show the legality and recognition by the SEC and PSE of Millennium Global
Holdings, Inc.. This means that this company is subjected to the financial reporting standards
set by the FSRSC. Their financial statements show their compliance with such standards, as
claimed by them as well. (Appendix 7-9)

The company also reported a risk assessment, financially and on currency. (Appendix
10-11) This shows the company’s care for its stakeholders inside and observers outside the
company. Such reports are important and are in accordance with the IAS 1 as discussed
previously. Millennium Global Holdings, Inc. did not have a sustainability report on 2022 but had
some parts of the 2022 annual report talk about it.

Cash and Cash Equivalents

Cash and cash equivalents is the single most important item reported on the statement
of financial position. Cash is the basic medium of exchange and its ubiquity has been apparent
in various societies for millennia. Entities must have enough cash-on-hand to pay its present
obligations. While cash and cash equivalents have no specific accounting standard of their own,
the statement of cash flows does, IAS 7.

Cash is the most liquid form of current assets, because, if not restricted, are available for
use at any time. Thus, it is presented on top of the statement of financial position, because that
is presented in order of liquidity. Cash equivalents are those current assets that are easily
liquidated into cash. The general rule on cash equivalents being considered cash is maturity
date of such must be three months away from the date of acquisition and its use is not
restricted. Cash that sits idle usually do not appreciate long-term, thus, the need for cash
management arises. Cash and its equivalents must always be moving to grow and effective
management of cash is an important part of any business to have.
When looking at Millennium Global Holdings, Inc.’s statement of financial position, it
shows consistent performance from 2021 to 2022, despite the ongoing pandemic at that time
and the economy only starting to fully open up in 2022. Their other assets remain consistent
from 2021 to 2022 as well. (Appendix 7) Their cash flows also indicate good management of

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their resources as a consistent increase in cash is showcased. (Appendix 9)

Receivables
Receivables are contractual rights of a company to receive the financial assets of
another company. There are two classifications of receivables: trade and non-trade. Trade
receivables are those which arise from the normal operations of the business such as sales,
hence the categorization as ‘trade’. While non-trade receivables arise from other sources. Trade
receivables are considered current assets only if cash is to be realized within the normal
operating cycle or one year, whichever is longer. If it is beyond whichever period is longer, it is
considered a non-current asset. While non-trade receivables are only considered current
assets if cash is to be realized within one year, so if the normal operating cycle is longer, it does
not matter. If non-trade receivables are only realizable beyond one year, it is a non-current
asset. Trade receivables can be further classified into Accounts Receivables and Notes
Receivables. Accounts receivable arise from sales of goods and services while notes receivable
are similar but it is supported by a promissory note. A common example of a note receivable is
loans receivable.

Millennium Global Holdings, Inc. initially measures its trade and other receivables at
transaction price and then at amortized cost using the effective interest rate (EIR) method. Only
objective evidence of receivables being uncollectible will make the company enact its
impairment policy on impairment. (Appendix 12)

The company’s trade and other receivables in 2022 decreased by around 6% of the
amount shown in 2021. This is not inherently a bad thing as receivables are only as good as
they are able to be realized as cash. As the difference between the two periods is not
significant, there is not much to comment on Millennium Global Holdings, Inc. and their trade
and other receivables. Just like cash, managing receivables is just as important and are one
and the same. As realizing cash is what ultimately matters to a receivable. That is why judgment
on receivables by just looking at it from financial statements is naught, it requires a deeper look
into the company’s operations. (Appendix 7)

Investment in Equity Securities and Associates

Investments in equity securities are another form of financial asset. Equity securities are
stock investments issued by other entities. Equity securities may represent The purpose of such

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investments is to earn a profit through the fluctuations in fair values, or in the long-term in the
appreciation of fair values or from dividends. Another purpose is to hold a share of another
company. When an entity purchases 20%-50% of the company’s shares it is considered a joint
venture or an investment in associate. If it is over 50%, it is an investment in subsidiary, like the
subsidiaries of Millennium Global Holdings, Inc. having 51% ownership, giving them control.
While those under 20% or those not considered a significant influence, are either trade or
non-trade securities. If it is non-trade then it could be voted to be categorized and measured as
Fair Value through Other Comprehensive Income (FVOCI). If it is a trading security then it is
categorized and measured as Fair Value through Profit or Loss (FVPL). Any investment that
means gaining 20% or more ownership of a company cannot be preference shares, only
ordinary. Debt securities meanwhile, are any security that represents a creditor relationship with
an entity. Examples of debt securities include bonds, commercial papers, treasury bills,
mortgages, and many more.

Non-trade securities are elected to be either categorized and measured at Fair Value
through Other Comprehensive Income or Fair Value through Profit or Loss. Once a decision is
made, it cannot be revoked. Millennium Global Holdings, Inc. has elected for all its investments
for the year 2022 to not be measured at Fair Value through Profit or Loss. Millennium Global
Holdings, Inc. elects whether an investment is categorized and measured either at Fair Value
through Other Comprehensive Income or Fair Value through Profit or Loss on an
investment-by-investment basis. As of 2022, all investments were elected to be categorized and
measured at FVOCI, with the exception of those measured at amortized cost due to reasons
such as impairment.

Based on the report and the financial statements of Millennium Global Holdings, Inc., it
can be observed that they have limited investment. It does not make distinctions between what
they’ve invested in the financial statements statements. But it can be said that what is shown is
that they have a diversified portfolio. Having significant influence over a company that is
incorporated outside of the country. They have a lot of investments in associates and goodwill,
however, the latter did not increase from the previous year of operations.

Fund and Other Investments

Sinking funds and cash surrender value are long-term investments that are separated
from other investments, such as those laid above. Sinking funds are funds set aside for the

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repayment of a long-term obligation, like bonds payable. It typically involves 3 to 4 parties, the
bonduser, bondholder, bond indenture, and if the company so chooses, a trustee. Sinking funds
are generally classified as non-current assets unless it is settled in a year, which is typically not
the case. The establishment of a sinking fund may be done so voluntarily if the company so
wishes, specifically management. Or it may be mandatory such as when it is required
contractually to protect the interests of creditors. The sinking fund may be administered by the
company directly or by a trustee. When administered by the company, each movement of the
fund is recorded on the period of, while a trustee only periodically sends reports to the company,
and the company only records when it receives such reports.

Cash surrender value is classified as a non-current investment. Cash surrender value is

only recorded after it has accumulated for 3 years. The cash surrender value of the first two
years is credited to retained earnings. Cash surrender value is typically associated with life
insurance. It typically has 4 parties, the insurer, policyholder, insured, and beneficiary. If the
beneficiary is not the company then the company does not record anything. Life insurance
policy comes in two types: whole-life policy, which lasts the entire lifetime of the insured, and the
other one is term policy which only insures the insured for a certain period of time, usually a few
decades. The former has a further categorization of participating and non-participating. The
participating gives you dividends which is relevant for accounting purposes. Non-participating
has none.

Cash surrender value is considered an investment because it is the money the

insurance policyholder receives as a result of cancelation before the policy matures or they
pass away. Some life insurance policies, such as the whole-life insurance policy stated above
accumulate cash premiums that are being paid by the insured. This cash can be appropriated
before it matures by canceling it or when the insured dies.

Throughout the annual report and its financial statements of Millennium Global Holdings,
Inc., there are no funds set aside and categorized as sinking funds. As the notes disclosed, the
cash and cash equivalents are unrestricted. No cash surrender value is also seen in the report
and financial statements. (Appendices 7-9)

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 References

Millennium Global Holdings, Inc.. Millennium Global Holdings, Inc. (2022, December 31).
https://www.millennium-globalholdingsinc.com/

Admin. (2012, August 30). IAS Plus. International Accounting Standards Board (IASB).
https://www.iasplus.com/en/resources/ifrsf/iasb-ifrs-ic/iasb

Yang, M. (n.d.). Millennium Global Holdings, Inc..

https://www.millennium-globalholdingsinc.com/index.php

Financial reports. PSE Edge. (n.d.).

https://edge.pse.com.ph/companyPage/financial_reports_view.do?cmpy_id=105

About the FSRSC - governmental organization in the Philippines. Financial and

Sustainability Reporting Standards Council. (2023, October 18).
https://www.pfsrsc.org/government-organization-about-the-fsrsc

Life Insurance Plans & Benefits Philippines. Buy Insurance Online in the Philippines.
(n.d.). https://kwik.insure/life-insurance

Barone, A. (2023, July 24). What is cash surrender value? how it compares to cash value.
Investopedia. https://www.investopedia.com/terms/c/cashsurrendervalue.asp

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Appendices

Appendix 1.

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Appendix 2.

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Appendix 3.

Appendix 4.

Appendix 5.

Appendix 6.

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Appendix 7.

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Appendix 8

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Appendix 9.

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Appendix 10.

Appendix 11.

Appendix 12.

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