INTERIM FINANCIAL STATEMENT

Gentlemen:

We previously joined a bidding for a laboratory equipment amounting to P4M. Stated in their Eligibility Requirements item No. 26 was :

Stockholder’s Equity/Capital must be :
a. ABC is P5 Million and below- at least 200% of ABC or P 8 Million
b. ABC is above P5 Million – at least P10 Million

Above equity can be found on the submitted Financial Documents submitted by suppliers. We complied with their requirements but another supplier did not. Financial Statement of the said supplier did not meet the required stockholder equity,but rather they submitted an Interim Financial Statement to support their Financial Statement.

We find it as a violation due to the fact no company submits Interim Audited Financial Statements to BIR. Every corporation submit once a year a final Audited Financial Statement. In short, Interim Financial Statements are not valid unless it is submitted together with the company’s financial statement that was filed and verified accordingly by duly accredited and authorized institutions of our government.


Please advise us. We are writing to the UP-BAC; unfortunately they awarded the contract to that supplier who submitted that unofficial Interim Financial Statement.

Thank you.

I recommend that you state the provision of the law which the BAC failed to follow.

for example you said that the complained bidder failed to submit the audited financial statement stamped received by the BIR.

We are not disqualified sir, we have met the required Stock holder's Equity requirement. The other bidder does not. Instead they submitted an Interim Financial Statement to support their official Financial Statement rceived by the BIR & SEC which contains a lower Stockholders Equity Value. Such Interim Statement we believe are not submitted to the SEC & BIR.

The agency has it's own rules about the StockHolders Equity Requirements other than the required NFCC or credit line.

We prohibit ourselves joining to their other tenders if we are uncapable to meet their required Stockholders equity based on our financial Statement submitted to BIR & SEC to avoid disqualification and with due respect to their own procurement rules.

Please comment.

leighzapanta wrote:We are not disqualified sir, we have met the required Stock holder's Equity requirement. The other bidder does not. Instead they submitted an Interim Financial Statement to support their official Financial Statement rceived by the BIR & SEC which contains a lower Stockholders Equity Value. Such Interim Statement we believe are not submitted to the SEC & BIR.

The agency has it's own rules about the StockHolders Equity Requirements other than the required NFCC or credit line.

We prohibit ourselves joining to their other tenders if we are uncapable to meet their required Stockholders equity based on our financial Statement submitted to BIR & SEC to avoid disqualification and with due respect to their own procurement rules.

Please comment.

Section 23. Eligibility Requirements for the Procurement of Goods and Infrastructure Projects
23.1. For purposes of determining the eligibility of bidders using the criteria stated in
Section 23.5 of this IRR, only the following documents shall be required by the BAC, using the forms prescribed in the Bidding Documents,:
a) xxxx
Financial Documents
v) The prospective bidder’s audited financial statements, showing, among others, the prospective bidder’s total and current assets and liabilities, stamped “received” by the BIR xxxxxx
vi) The prospective bidder’s computation for its Net Financial Contracting Capacity (NFCC) or a commitment from a Universal or Commercial Bank to extend a credit line in favor of the prospective bidder if awarded the contract to be bid (CLC).

From the information you mentioned, two issues are involve here,
1. First,requiring from prospective bidders to have SE/capital of at least 200% of the ABC. If we read carefully the eligibility requirements as provided for in section 23 of the revised IRR, it is not in accordance with that provision.In my personal opinion this additional requirement is restrictive, it means only bidders with 200% or more SE/capital of the ABC are qualified to join the bidding.
2. Second, the submission of the Interim financial Statement to support the official Audited financial statement submitted to the BIR, The basis of the computation of the NFCC will be base on the audited Financial Statement and no other.

As I see it you want your competitor to be disqualified as a bidder for submitting an interim Financial statement.

May I remind you that during bid opening the BAC only check if requirements are complete they do not verify each and every documents until post qualification.

However you may post some questions to the BAC on the issues raised here.

That the bidder did not submit a AFS but an interim financial statement.

"Interim financial statements should be based on the accounting principles employed in the previous year's annual report unless a change has been adopted in the current year. Interim financial statements are typically unaudited. Footnote disclosure is given of seasonality effects. If a fourth quarter is not presented, any significant adjustments to it must be commented upon in the annual report." - Accounting Dictionary

Maybe it`s best to ask accounting major about the difference of both financial statements to give basis for your issues to be raised to the BAC.

SEC SRC 68 and 68.1 as amended Rules and Regulation covering Format and content of Financial Statement.
For those interested to read. Click this link for details
http://www.sec.gov.ph/irr/amended/Notice-Rules-68&68.1-2005.pdf
http://www.sec.gov.ph/irr/amended/RULE68-2005.pdf
http://www.sec.gov.ph/irr/amended/RULE68.1-2005.pdf
http://www.sec.gov.ph/circulars/cy,2009/sec%20memo%20no.%2016,s2009.pdf
or you may read page 24, item 8, its all about Interim Financial Statements

sunriser431 wrote:SEC SRC 68 and 68.1 as amended Rules and Regulation covering Format and content of Financial Statement.
For those interested to read. Click this link for details
http://www.sec.gov.ph/irr/amended/Notice-Rules-68&68.1-2005.pdf
http://www.sec.gov.ph/irr/amended/RULE68-2005.pdf
http://www.sec.gov.ph/irr/amended/RULE68.1-2005.pdf
http://www.sec.gov.ph/circulars/cy,2009/sec%20memo%20no.%2016,s2009.pdf
or you may read page 24, item 8, its all about Interim Financial Statements

Reading the given links in my opinion the AFS and IFS is different from one another. It is better to raise the issues to the BAC. I would recommend to wait until post qualification to question this matter, because post qualification is the only time of verification of submitted documents. During opening a pass/fail non discretionary criteria is the basis of disqualification.

Miss leighzapanta:

Based on your statement the contract has already been awarded. If you have reason to believe that the IFS is not audited and doest not comply with the eligibility requirement then a MFR is in order (if still within the reglamentary period).

As to the SE requirement of twice the ABC however, I share the opinion of the others that this is not a requirement and the PE cannot include this as an additional requirement without opening the possibility of being questioned for tailor fitting the requirement to a particular bidder. the contracting capacity of the bidder is determined by the NFCC or the CLC. the AFS by the way is required in part to verify the computation of the NFCC if opted by the bidder.

charlie brown wrote:Miss leighzapanta:

Based on your statement the contract has already been awarded. If you have reason to believe that the IFS is not audited and doest not comply with the eligibility requirement then a MFR is in order (if still within the reglamentary period).

As to the SE requirement of twice the ABC however, I share the opinion of the others that this is not a requirement and the PE cannot include this as an additional requirement without opening the possibility of being questioned for tailor fitting the requirement to a particular bidder. the contracting capacity of the bidder is determined by the NFCC or the CLC. the AFS by the way is required in part to verify the computation of the NFCC if opted by the bidder.

leighzapanta wrote wrote:
xxxxxxx. Instead they submitted an Interim Financial Statement to support their official Financial Statement rceived by the BIR & SEC which contains a lower Stockholders Equity Value. Such Interim Statement we believe are not submitted to the SEC & BIR.

Please refer to leighzapanta 2nd post, In addition to the official AFS, the bidder also submitted IFS to support the AFS, so to make it appear compliant to the requirement of SE/Capital.

anu ba talaga ate? paki clarify ung facts. pls

Sir WormaixJr,

Our competitor instead submitted an Interim Financial Statement to support their official Financial Statement which contains a lower Stockholders Equity Value. Such Interim Statement we believe are not submitted to the SEC & BIR.

The contract was awarded already.

The fact that we want to file a protest is that the agency violated their own rule, requiring us bidder to submit a Financial Statement with at least 200% of ABC of Stockholder's Equity Value.

I understand that if we checked the RA, there are no rules violated.
We suppose we have the right to know why did they set such requirement then will deviate with it?

The Interim FS is not a requirement under the revised IRR. No additional requirement is to be submitted under Section 23 the term "only" means limited to those enumerated in the IRR.

You can raise the issue to the PE or BAC. If the 1st FS is insufficient additional requirement does not cure the defect of his/her insufficiency. = disqualified.

ah, so if there was submission of AFS then the submission of the IFS was superfluous already.

perhaps the BAC did realize that the SE requirement was not in accord with the law and proceeded to evaluate sans the said requirement. In any case you have the right to ask why it was included in the first place.