Tuesday, May 15, 2012

Assets (2)

Assets (1)
And so we have statesmen with unbelievable assets and we only get to know about it one scandal at a time.  We lament at how they are becoming rich while the country is poor, and conclude that the people whom we elected are crooks, but we have no way of proving it.

The main problem is that of accountability.  And vigilance.  The impeachment trial, though it has its flaws, is unprecedented in that for the first time, we are demanding an accountability from one of the highest seats of power.  Finally, we are asking not why one is rich, but how one became so.  But the Statements of Assets, Liabilities and Net Worth (SALN) is merely the beginning.

The main flaw of the SALN is that it doesn't paint a whole picture.  Even coupled with the Income Tax Return (ITR), it doesn't say how one has earned, but merely how much one was taxed.  If we want our leaders to give us a full accounting of how and how much they earned, then the way to do it is subject them to the rigors of Accounting.

Any partnership or corporation, for it to be considered a juridical entity, has to be registered with the Securities and Exchange Commission (SEC).  Regardless if its equity is 100K or 100M, if you want your company to be legally recognized, then you have to register.

And once registered, you have to submit annual financial statements, that is: Balance Sheet, which states your assets, liabilities and net worth; Income Statement, which states your income sources and the expenses you've incurred; and Statement of Cash Flows, which states the movement of your cash.  You also have your Notes to the Financial Statements which further clarifies the balances stated in the three reports.

All three reports are interconnected.  The assets you have are used to create income, which in turn you use to pay up your liabilities and other expenses.  These incomes and expenses are commonly in the form of cash, and thus reported as either an inflow or an outflow.

If corporations with net worth as little as a few hundred thousand pesos are required to submit Financial Statements, why not subject our leaders to the same rigor, considering some of them have assets and net worth amounting to hundreds of millions of pesos?  And considering that amount of money they have amassed, it is not quite far-fetched that these people have their personal accountants trailing after them.  

The financial statements, coupled with the ITR, can paint a bigger picture on the earnings and spending of our esteemed leaders.  It will show us how much they are truly earning, and how much of that earnings are taxed.  Furthermore, it will show us how and why their net worth are increasing.  Because honestly, the government pays them measly change, yet they own cash accounts by the millions, which in my mind, truly does not equate.

The question now is how to impose such strict accounting guidelines to these esteemed statesmen when they can't even submit their liquidations on time.  But that is another issue altogether.



  1. Gravity naman ang topic! Muntik na dumugo ilong ko hehehe pero getz ko naman somehow ang punto mo...mahusay bakerboy hihih

    1. @ Mac: Salamat sir! Epistaxis agad, bakit naman? Di ko na nga dinamihan ang accounting terms e. hehe.

      Pero di ba, ang dami nilang pera, kahit ang sweldo nila mas mababa pa sa sahod ng isang VP ng multinational company. By the way, yung last na report ng Ombudsman, P677M daw ang unexplained wealth ni CJ.


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