IC to audit GSIS, SSS, PhilHealth
The Insurance Commission (IC) on Wednesday, June 29, said it has formed project audit teams for the proper financial accounting of the insurance contracts of the Government Service Insurance System (GSIS), Philippine Health Insurance Corp. (PhilHealth), and the Social Security System (SSS) under the Philippine Financial Reporting Standards 4 (PFRS 4).
The IC said this was to “ensure that the country’s social insurance institutions are adopting the globally accepted (PFRS 4)” upon the order of outgoing Department of Finance (DOF) Secretary Carlos Dominguez III.
“We shall provide the Secretary of Finance the respective final audit reports immediately after the endorsement and approval from the Insurance Commission Executive Committee,” according to IC Commissioner Dennis Funa.
Last December, Dominguez instructed the IC to monitor the 4 PFRS compliance of GSIS, PhilHealth, and the SSS.
On Wednesday, Funa said the audit teams will start auditing GSIS in July, while SSS will be audited in September and PhilHealth in October.
PFRS 4 is the current and interim accounting standard imposed on insurance entities in the Philippines that is based on International Financial Reporting Standards (IFRS).
All local private insurance companies are already using PFRS4 since 2005, said the DOF.
The DOF ordered the IC to audit the three agencies after Dominguez conducted a comprehensive review with the International Monetary Fund last year.
The review “revealed that these institutions were not adopting internationally accepted accounting principles in their financial reporting and management of their social benefit liabilities,” said the DOF.
“With the government social institutions’ full compliance with the PFRS 4, their combined total liability have increased to P9.94 trillion in 2020 from P154 billion in 2019,” it noted. The increase in liabilities is due to the proper booking of their social benefit liabilities under PFRS 4.
When Dominguez ordered the audit, he has said that adopting PFRS 4 will ensure SSS, GSIS and PhilHealth will provide both their management and the national government with an “accurate picture of the funding reality of these institutions.”
The DOF said Dominguez has assured members of SSS, GSIS and PhilHealth that the booking and reporting of the social benefit liabilities under PRFS4 will not affect the cash flow and funding status of these institutions and will meet their short- and long-term obligations.
“To improve the management of the funds and maximize the return on investments in these institutions, the DOF has recommended that these resources be pooled to constitute a sovereign wealth fund, which is the practice of many countries, including Singapore, Japan and Indonesia,” said the DOF.