PHARMALLY:
FINANCIAL STATEMENTSANALYSIS
COA probes Pharmallypandemic contracts
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Right to Know, Right Now!Coalition and Citizens'Budget Tracker teams upon a 'financial statementsanalysis' of thecontroversial PharmallyPharmaceuticalCorporation
BREAKING NEWSTUESDAY | 7 September 2021
PHARMALLY:FINANCIAL STATEMENTS ANALYSIS
Jahleel-AN
A. Burao, CPA
John Michael
T. Lava, CPA, US CMA
Executive Summary
We reviewed and evaluated the 2020 Audited Financial Statements ofPharmally Pharmaceutical Corporation (the “Company”). In the course of ourreview, we have noted five (5) high-risk observations and one (1) medium-riskobservation in relation to the contracts awarded to the Company by theProcurement Service-Department of Budget and Management (PS-DBM). Werecommend that the company and the approving officers of the PS-DBM supplyfurther information in response to our findings. Below is the summary ofobservations.AUTHORS
Citizens'
Budget
Tracker
Right to Know,
Right Now! Coalition
WITH
Summary of ObservationsRisk Rating Framework
Our framework for the risk rating criteria is presented below for the purpose of prioritizing our findings. This isour initial assessment of the likelihood and impact of the findings to result in financial losses from undeclaredtax revenues or misuse of funds received from the public, breaches in regulatory compliance requirements,inability to fulfill obligations, and erosion of public trust if no further action will be taken.
ObservationsRisk Rating
Potential under-declaration of input VAT related to purchases amounting toP402.2-MInsufficient contracting capacity Insufficient disclosures and details for Donations that were declared as fullydeductible expensesMissing and incomplete material disclosures in the 2020 Financial StatementsSources of interest expense and foreign exchange gains/losses are notpresented and disclosed in the 2020 Financial StatementsReported amounts cannot be matched in the disclosures
HIGHHIGHHIGHHIGHHIGHMEDIUM
RatingDESCRIPTIONFEATURES
High
Findings that arefundamental to themanagement of riskrepresenting deficiencies inregulatory and reportingcompliance that requires theimmediate attention ofmanagement.
Substantial losses from undeclared/uncollected revenues or misuse ofpublic fundsSerious violation of regulatory requirementsSerious indicators of the company’s inability to operate as a going-concernSerious indicators of the company’s capacity to fulfill contractobligationsGrave non compliance with regulatory and financial reportingstandardsPotential for fraud identifiedThis is a serious risk management issue that if not mitigated, may, with ahigh degree of certainty, lead to:Indicators may include:
Medium
Important findings that areto be resolved bymanagement. Timelyattention is warranted.
Moderate losses from undeclared/uncollected revenues or misuse ofpublic funds.Breaches of regulatory requirementsEarly indicators of the company’s inability to operate as a going-concern.Early indicators of the company’s capacity to fulfill contract obligationsNon compliance with regulatory and financial reporting standards thatcan be remediatedPossibility for fraud existsThis is a risk management issue that could lead to:Indicators may include:
Low
Findings that identify non-compliance with establishedprocedures. Routinemanagement attention iswarranted.
Minor regulatory and compliance findings that are easily remediatedMinor non compliance with procedures/standards that are easilyremediatedThis is a risk management issue, the solution to which may lead to theresolution or further clarification of the findings raised. Risks are limited.Findings (indicators) normally are:
Table 1. Risk Rating Framework