BIZ BUZZ: SGV in the (harsh) spotlight

With some clarity now starting to emerge about the P48-billion capital spending fiasco that beset PLDT Inc. last week, the question on the minds of many business leaders and market analysts now is how could something like this happen to one of the bluest blue chip firms in the country?

Specifically, how could a budget overrun of, at one point in the crisis said to be as high as P130 billion, escape the hawk-eyed auditors—external and internal—who were supposed to guard against mistakes of this nature?

In particular, scrutiny is now also being directed at SGV & Co. which has been the longtime external auditor of the telecommunications giant. Like PLDT, it is supposedly a blue chip among local and even international auditing firms. It charges top dollar for its services and it is where many young accountants work to earn their stripes in a cutthroat industry.

So how could an auditor like SGV—the best of the best, supposedly—miss capital expenditures of several billions of pesos over, not just one, but many years?

Aren’t there rules about rotating auditors every so often to ensure that corporate auditors are kept on their feet and not become lazy and complacent?

But here’s the thing Biz Buzz heard about the local auditing industry: Other countries mandate a change of audit firms every five years.

In the Philippines, however, we heard one big auditing firm—we won’t say which, but it’s not difficult to guess—supposedly lobbied the Securities and Exchange Commission that the rule shouldn’t be changing audit firms … but changing partners every five years.

Of course, in reality, both partners still belong to one firm and the previous partner still acts as an informal bridge to the client. Plus, a handover from one partner to another doesn’t change the audit team under them.

So there.

Everyone is now asking if SGV will remain PLDT’s external auditor or if it will be changed in the wake of this fiasco. Abangan!

—Daxim L. Lucas

No way but up

There’s no way but up for airlines next year, which is good news for the sector that has been severely battered by the pandemic in the past years as several flights were grounded.

“We are seeing a robust travel demand next year, especially as travelers now become more comfortable with locking their trips ahead of time,” AirAsia Philippines CEO Ricky Isla said.

It helps that mobility restrictions have been lifted and travel protocols have been eased, he explained. To recall, mandatory two-week quarantines were being imposed before as a safety measure. The policy consumed both the passengers’ time and money.

“A more relaxed protocol for international destinations has also set the pace for outbound travel which we expect to pick up next year as we open new exciting destinations,” Isla added.

Next month, air fares are also expected to be cheaper after the regulator brought down the level of allowable fuel surcharge collection by the carriers.

AirAsia recently averted a shutdown in operations after coming up with a settlement agreement with the government in relation to its unpaid P1.14-billion obligation, which includes air navigation charges and concession fees.

—Tyrone Jasper C. Piad