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Covid travel woes bring ₧380-M loss to Duty Free PHL

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DUTY FREE Philippines Corp., a government firm under the Department of Tourism (DOT), racked up a net loss of P379.58 million in 2020, a reversal from its net income of some P470.37 million in 2019.

According to the Commission on Audit (COA), the turnaround in the DFPC’s financial position was “primarily due to the adverse effects of the Covid-19 pandemic to the tourism industry. Nevertheless, DFPC was able to accomplish its target sales of $62 million with its actual sales of $62.49 million, although net sales declined by 72.37 percent” in  2020 from $226.2 million in 2019.

In its audit report sent to DFPC’s Board of Directors dated June 24, 2021, COA recommended, “Management establish strategies that will adapt to the changes in trade and tourism industry to mitigate the effects of the Covid-19 pandemic to the Corporation and continue to observe cost-cutting measures to minimize further losses.” The DOT Secretary chairs the government firm’s board.

DFPC’s stores are located at the Fiesta Mall in Parañaque City; Terminals 1, 2, and 3 of the Ninoy Aquino International Airport Naia in Pasay City; the Mactan International Airport; Davao International Airport; Kalibo International Airport; Clark International Airport in Pampanga; Iloilo International Airport; the New Bacolod (Silay) International Airport in Negros Occidental; and the Luxe outlet in the Mall of Arena area in Pasay.

The government firm had to temporarily close its stores during the enhanced community quarantine from March 17 to May 31, 2020. “However, when the ECQ restrictions were lifted, operations slowly commenced as selected shops were opened on certain days and store hours. Given said circumstances, the initial target sales of $245 million for CY 2020 was adjusted to $62 million,” noted COA.

COA issues ‘qualified opinion’

COA rendered a “qualified opinion” on the financial statements submitted by DFPC for 2020 and 2019, which means the financial information the government firm handed in was limited in scope and there was some issue with how it recorded transactions in its books.

For one, the state auditing agency said DFPC had no supporting documents for bank debits in 2020 and prior years amounting to some P18.92 million, and yet were recognized as Loans and Receivables-Other Trade Receivables from its depository bank, Land Bank of the Philippines. Also, DFPC’s Property, Plant and Equipment account of P1.14 billion as of December 31, 2020 “included unserviceable items” costing some P38.71 million that have been already disposed of that year such as computer equipment and software, fire equipment, furniture and fixtures, ICT equipment, and office equipment.

DFPC also failed to remit 50 percent of its net income in 2019 due to the DOT amounting to P174.13 million as mandated by the Republic Act 9353 (Tourism Act of 2009), “thereby depriving the DOT of funds for its tourism programs and projects.” This was covered, however, by a board decision to defer the remittance of due to the DFPC’s current financial position.

While COA found no unsettled audit charges and suspensions, there were still unsettled audit disallowances totaling P28.65 million as of December 31, 2020. These included disallowed allowances from the 2018 audit covering various travel expenses, and P28.61 million in “car plan benefits of DFPC executives and managers due to non-submission within the reglemantary period of required documents stated in the Notices of Suspension.” There is a pending appeal on the disallowed car plan.

Read full article on BusinessMirror

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