Together we make things happen - Philippine Ports Authority

N O T E S T O F I N A N C I A L S T A T E M E N T S1. AGENCY BACKGROUNDoVessel Traffic Management SystemThe Philippine Ports Authority (PPA) was created by virtue of PresidentialDecree (PD) No. 505 dated 11 July 1974, revised by substitution on 23December 1975 by PD 857. Its functions are to coordinate, streamline,improve and optimize the planning, development, financing, construction,maintenance and operations of ports or port system for the entire country.Subsequent amendments under Executive Order (EO) Nos. 523 & 546, issuedon 16 November 1978 and 23 July 1979, respectively, as well as Letter ofInstruction (LOI) dated 11 April 1981 further enhanced PPA’s corporatepowers to be more responsive to the requirements of optimum portutilization, development and operation. In Executive Order No. 159 dated13 April 1987, corporate autonomy was reverted to the PPA to insure therapid development of port or the port system directly under it and authoritywas granted to execute port projects under its port program. The PPA isnot exempted from payment of all taxes, duties, fees, imports and othercharges imposed directly or indirectly by the Republic of the Philippines andits instrumentalities.The PPA is a government-owned corporation attached to the Department ofTransportation and Communications for policy and program coordination.The corporate powers of the Authority are vested to its Board of Directorscomposed of eleven (11) members. Its top management is headed by aGeneral Manager and three (3) Assistant Managers, one each for EngineeringServices, for Operations and for Finance and Administrative Services.Delivering the front line services are five (5) Port District Offices (PDOs) andtwenty-three (23) Port Management Offices (PMOs) and about ninety-four(94) Terminals or Satellite ports. A Port District Manager heads each PortDistrict Office, exercising supervision over Port Management Offices that areheaded by PMO Managers.As of December 31, 2008, the PPA has a total of 2,259 employees, composedof 462 Head Office personnel and 1,797 filled positions at the PDOs andPMOs.Major accomplishments of the Authority in CY 2008 comprised of thefollowing:• Billion pesos worth of projects were pursued in line with the PPA’s visionof developing at least 10 ports that would meet international standards.The development of SONA Ports and Roll-ON Roll-OFF (RORO) portswere PPA’s priority on capital expenditures in 2008. Implemented were120 locally funded projects and 18 SONA ports of which 41 and 11,respectively, were completed during the year.• Major Repair and Maintenance Projects involving 61 port facilities, 37 ofwhich were completed while the rest are still on-going.• Implementation of Dredging Projects which covered 21 port areas orchannels under the 2008 PPA Harbor Maintenance Program.oooInternational Ship and Port Facility Security CodeShore Reception FacilityFormulation of Standards for Port Development and Maintenance2. PPA COMPUTERIZATION PROJECTThe Authority in year 2002 embarked into its Management InformationSystem Computerization Project, otherwise known as the PROMPT (ProvidingReliable Operations and Management of Ports Thru Technology). The projectcovers the automation of all aspects of the business processes of the PPA.Components of the project consisting of the Port Operations ManagementSystem (POMS), Real Estate Management System (REMS), and Legal SupportSystem (LSS) were rolled out for use at different offices of the PPA in year2007. The other components of the project are still being developed,namely, Accounting and Financial Management System (AFMS), Projects andEngineering Management System (PEMS), Executive Information System (EIS),and Electronic Procurement (eProc). Management approved the extensionup to the end of August 2009 the delivery by the contractor of the systemcomponents still being developed aside from the upgrading of the existingWAN facilities nationwide.As of December 31, 2008, a total of 628.63 million have been spent forthe project consisting of payments to the UNISYS (solution provider) inthe amount of 376.94 million, to the Economic Development Foundation(consultant) amounting to 96.45 million, costs of various hardware includingsite preparation and installation of 77.38 million, and administrativeexpenses totaling 77.86 million.3. THE NEW GOVERNMENT ACCOUNTING SYSTEMCOA Circular No. 2004-02 dated 29 April 2004 prescribed the Chart of Accountsunder the New Government Accounting System (NGAS) that is required foruse by Government Owned and Controlled Corporations (GOCCs) startingCY 2005. The PPA due to its on-going computerization project recognizedits financial transactions using the PPA Chart of Accounts following thecommercial system of accounting until December 31, 2007.On 19 December 2007, PPA Finance Memorandum Order No. 09-2007was issued ordering compliance with the requirement of the Circular. Theadoption of the NGAS commenced January 1, 2008 with the individualbalances of accounts as of December 31, 2007 reclassified from the PPA Chartof Accounts to the account codes prescribed in the NGAS.• Generation of 6,625.75 million port revenue which was 379.31 millionor 6.07% higher than that of the previous year.• Awarding of contracts to 11 Cargo Handling Operators (CHOs) either thrubidding or renewal of expired contracts.• Implemented the PPA ISO-Quality Management System (QMS) insupport of Executive Order No. 605 dated 23 February 2007. Conductedorientations/trainings/workshops and completed during the year theQuality Procedure Manual covering 12 QMS procedures.• Continued the implementation of the following special projects:ooMIS Computerization ProjectManila North Harbor Modernization Project4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBasis of the Financial StatementsThe Philippine Ports Authority has adopted and consistently applied thePhilippine Government Accounting Standards (PGAS) promulgated by theCommission on Audit per Resolution No. 2006-06. Full adoption of the newPFRS will be done by the Authority in 2009. In the preparation of the CY 2008PPA Combined Financial Statements, the following Philippine AccountingStandards were observed:• PAS 1 Presentation of Financial Statements (FS), financial statementswhich consist of the Balance Sheet, Statement of Income and Expenses,Statement of Changes in Equity, and Statement of Cash Flow; andrelevant Notes to FS which provide for information of significantaccounting policies adopted by the agency, basis of their preparation,and other information necessary for fair presentation thereof.Philippine Ports Authority • Annual Report 20083 9