Aldwin P.

Catada 2019-31167

Nature and Scope of Financial Management

Assignment 1
PM 230 – Financial Management in Government

Submitted to:

Maám Tricia C. Ascan

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 An Analysis of the Pag-IBIG Fund Financial Statements for 2020 and 2019
The Home Development Mutual Fund (HDMF) also known as PAGIBIG FUND is a
Philippine Government-controlled corporation that offers affordable housing through financing
and other national saving programs in the Philippines (Philippine Consulate General, 2020).
Every year, I always hear breakthrough achievements on the financial goals of the Pag-IBIG
Fund as I worked for them for nearly four years now. HDMF is always ahead of their
competition since we, the backbone of this institution, have vital roles which make every one of
us accountable for our actions. While our department heads are very tight in checking our work
outputs and making sure that we are doing it correctly under the guidelines provided by the
head office as well as COA guidelines. The COA also is constantly monitoring our documents
such as checks released and bank reconciliation reports which I have handled from previous
years and now. The satisfactory overall compliance of the employees to the HDMF and COA
guidelines made the Pag-IBIG Fund’s financial health stable.

The financial statements posted by the Pag-IBIG Fund are dated the year 2020 since
there are still adjustments made until now on our ledgers, and most of us are still working on the
year-end transactions. The opinion of the auditor on our financial statement is that the
accompanying statements are present fairly and its financial performance, as well as cash flows
for the year, then ended following Philippine Financial Reporting Standards (PFRSs)
(Pagibigfund, 2020). The auditor gave an unqualified opinion which is essentially a clean report.
It tells that the auditor is satisfied with the company's financial reports. It is the one kind of
opinion most companies expect to receive from an independent auditor and reassures investors
in the company that the financial information they have received is presented accurately and
fairly. On the other hand, if the auditor gave a qualified opinion, the auditor has found out that
there is a material issue on the accounting policies but one that does not misrepresent the
factual financial position. Auditors usually qualify reports with statements like "except for the
following adjustments," when they have received not enough information to verify certain
transactions and reports being audited (Investopedia, 2021).

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 https://pagibigfund.gov.ph/CAR/2020%20Annual%20Report%20(Uploaded
%2003%20November%202021).pdf

The Home Development Mutual Fund (HDMF) management or commonly known as

Pag-IBIG Fund is expected to provide and prepare a fair presentation of the financial statements
and the attached schedules for the year ended in 2020 and 2019 in strict compliance with the
prescribed financial reporting framework. The total current assets for 2020 are 670,534,370,166
while in 2019 is 603,387.192,301, so I could see that despite the pandemic’s entry to the year
2020, it didn’t bother the increase of assets in the Pag-IBIG Fund, especially the current assets.

As we can see in the financial statement above, all current assets including
investments, receivables, cash and cash equivalents, and other current assets have significantly
increased from 2019 to 2020 but the non-current assets and non-current assets held for sale
mostly decreased from 2019 to 2020 except the only one increased is the other non-current
assets.

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 https://pagibigfund.gov.ph/CAR/2020%20Annual%20Report%20(Uploaded
%2003%20November%202021).pdf

The equity for the year 2020 is 555,124,104,624 and the unit’s equity came from
retained earnings, cumulative changes in fair value, and member’s equity. In the statements of
comprehensive income, we can see that there is a profit of 31,705,808,424 for the year 2020
and its primary source of income is from service and business income, gains, and other non-
operating income while the expenses came from personnel services, maintenance, and other
operating expenses, financial expenses, and non-cash expenses.

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 https://pagibigfund.gov.ph/CAR/2020%20Annual%20Report%20(Uploaded
%2003%20November%202021).pdf

The statements of cash flow image above comprise the cash flows from operating
activities, cash flow from investing activities, and cash flows from financing activities in the year
2020. The net cash flows from operating activities are negative 50,946,325,741 which means
that they have so much outgoing money for business transactions and services such as
payment of expenses, purchases of equipment, purchase or acquisition of investments, grant of
loans, etc. In the net cash flows from investing activities, we can see that the Pag-IBIG fund has
a positive net cash flow amounting to a positive 20,197,691,905 because the Pag-IBIG Fund
gathered a lot of cash inflows from the sale of investments and lesser purchase of investments.
Lastly, in the cash flows from financing activities, the Pag-IBIG Fund again has a positive net
cash flow and it is mainly because of mandatory member’s contribution for the employees in
private businesses as well as government employees while the cash outflow was only for the
provident benefit claims which are claimed when the employee retire, resign or passed away or

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if the employee’s fund allows a loan against the capital for housing purposes (Allison Jeftha,
2021).

If I were the financial manager for the Pag-IBIG Fund, I would assess my unit’s
financial health overall as acceptable since based on the statements provided, the Pag-IBIG
fund has an unsteady flow of income for 2020 but only a 13% change from the income of 2019
given the pandemic situation while the good thing in 2020 is that there are lesser expenses in
the year 2020 than in 2019 which is around 20%. Also, after reading the cash flows, the Pag-
IBIG Fund have negative net cash flow from operating activities but it doesn’t mean the income
is bad, It just means that the Pag-IBIG Fund has acquired more customers availed for loans for
future potential income and invested a lot in properties to minimize future expenses for rent and
assets which value appreciates in years thereafter.

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 References

Allison Jeftha (2021). MONEY CLINIC: Can I withdraw part of my provident fund to pay
off my debt?. Retrieved from https://www.news24.com/fin24/money/money-clinic-
can-i-withdraw-part-of-my-provident-fund-to-pay-off-my-debt-20211219
Investopedia (2021). What Is an Unqualified Opinion? Retrieved from
https://www.investopedia.com/terms/u/unqualified-opinion.asp
Pagibigfund (2020). Corporate Annual Report 2020. Retrieved from
https://pagibigfund.gov.ph/CAR/2020%20Annual%20Report%20(Uploaded
%2003%20November%202021).pdf
Philippine Consulate General (2020). Pag-IBIG Fund. Retrieved from
https://newyorkpcg.org/pcgny/other-services/pag-ibig-fund/

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