2go Restates Financial Statements

Clarice Anne R. Baclas

2GO Restates Financial Statements 2GO Group Inc. is the largest, premier logistics provider in the Philippines. The group owns and operates successful brands such as 2GO Travel, 2GO Freight, 2GO Express, and 2GO Logistics, offering an array of logistics and travel services. 2GO is an integrated transport solutions provider. The Company adopted the brand 2GO as its flagship brand for its three core business units, namely, 2GO Freight, which handles commercial and personal shipping needs; 2GO Travel, which integrates passenger ships and fast ferries through land and sea multimodal transport linkages; and 2GO Supply Chain, which handles logistics, distribution, warehousing, and inventory management. The Company is engaged in the movement of people for passage business and cargo business. The group maintains joint venture partnerships with renowned global supply chain companies such as Kerry ATS Logistics, Hapag Lloyd and Hansa Meyer - ATS Projects. The 2GO name embodies a proud legacy of leadership and service built on 148 years of shipping and logistics experience. According to them, the unique work ethic remains unchanged. Recently, 2GO has undergone special audit conducted by SyCip Gorres Velayo & Co. with the request of the new president and new set of board of directors and it showed that there is alleged inflation of financial statements since 2015. The audit revealed certain accounts in the previously audited financials required restatement, and the new management, with the support and approval of the newly elected members of the audit committee and the board of directors, agreed to restate prior period financial statements to reflect fairly the state of the business. The restatement is a commitment of the new management and board of directors to raise corporate governance standards in the company. The reputation of KPMG RG Manabat & Company is on the line over alleged inflated financial statements of 2GO Group Incorporated, which are now being investigated by the Securities and Exchange Commission. KPMG RG Manabat & Company said it is confident that its audit was in compliance with the Philippine Standards on Auditing. According to them, the standards require that they comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatements. The restated financial results shaved off 90 percent off the company's net income in 2015 to P109.131 million, from P1.08 billion as the 2Go earlier reported. The company also restated its 2016 net income to P344.035 million, or 74 percent lower than the P1.34 billion as reported earlier by the company. 2GO said its first quarter 2017 results should have indicated a net loss of P264.86 million, contrary to an earlier reported net income of P267.562 million. The review conducted by SGV & Co. revealed that the shipping firm had inflated its earnings by P1 billion in the past two years, putting accounting firm KPMG RG Manabat & Company in a bad light. Under the Securities Regulation Code, the SEC is mandated to ensure that investors receive accurate and timely financial and other significant information concerning securities being offered for the sale to the public. Companies with securities registered with SEC as well as those publicly listed are required to disclose annual and quarterly financial reports. These are important documents that investors and stockholders examine when making a business decision to partner with or invest in a company. Rule 68 of the Securities Regulation Code also requires publicly-held companies to file financial reports that are accurate, truthful, and complete and prepared according to a set of Internationally Accepted Principles of Accounting. According to the SEC Chairperson, the financial statements originate from the company’s finance officials hence,  company finance officials will also be held liable aside from external auditors, if proven there is fraudulent misrepresentation, or even deficiencies, meaning that the officials failed to comply with the international financial reporting standard that’s under that’s  under Rule 68. But, the ex-2GO chief said that as a courtesy procedure, when the financial statements audited by an auditor will be restated by another auditor, the current auditor should at least discuss and seek concurrence from the prior auditor which the current auditor has failed to do so.

Clarice Anne R. Baclas

After researching and reading about the accounting scandal that has just recently been talked about I can say, that as an accounting student who’s still in the process of knowing by pieces the standards and accounting in reality, that people dealing with the finance of a certain company should take into consideration the public interest; informed public perception in deciding whether to accept or continue with an engagement or appointment, bearing in mind that the level of the public interest will be greater in larger entities and entities which are in the public eye in honest way possible. Responsibility is not exclusively to satisfy the needs of an individual client or employer. The accounting scandal focused on showing numbers that aren’t true and 2GO have pushed its numbers to make things appear healthier than they actually were which is not the right thing to do. An auditor should be independent from the client company, so that the audit opinion will not be influenced by any relationship between them. The auditors are expected to give an unbiased and honest professional opinion on the financial statements to the shareholders. This issue has a downfall and may be a good side in it; the downfall is that the reputation of 2GO might be at stake due to unethical representation of financial statements. Yet, the good side is that investors will be more secured in making their decisions to invest in the company because of the change in administration and proper audit has been done. Through this issue, I can say that each party involved in this issue is doing their job and accounting issues like this would be an eye opener to other companies to thoroughly check whether there are manipulations going on in their company. Hence, it is unclear whether there are other big accounting shocks hidden away.