CIRCULAR LETTER NO. CL-2011-012
To: All Banks
Subject: Validation Rules of the BSP for the Financial Reporting Package
In an effort to further assist banks in finalizing the Financial Reporting Package (FRP) for submission to the BSP pursuant to Monetary Board Resolution No. 802 dated 10 June 2010, attached are the validation rules used by the BSP to check and determine whether the entries in the FRP are either balanced and reconciled or cited with mathematical defects requiring correction and the submission of amendments that are subject to penalty in accordance with existing regulations. Same validation rules emanate from the existing Reconciliation Report electronically transmitted by the BSP to banks immediately after the submitted FRP has been processed and validated.
The attached validation rules have the following three (3) components:
1) A User Guide that explains and describes the validation process and the translation of the validation rules in the Reconciliation Report transmitted by the BSP to banks with illustrative samples and references;
2) The Intra Validation Rules in Annex A itemizing the arithmetic formulations in balancing and reconciling the Balance Sheet, Income Statement, and Supporting Schedules of the FRP; and
3) The Inter Validation Rules in Annex B itemizing the arithmetic formulations in reconciling the FRP with other prescribed reports such as the FRP Branch Report, the Quarterly Statement of E-Money Balances and Activity, the FRP for Trust Institutions (FRPTI), the Report on Microfinance Loans, the Consolidated Report on the Utilization of Loanable Funds Generated Which Were Set Aside for Agrarian Reform/Other Agricultural Credits (Agri-Agra Report), the Report on Compliance with Mandatory Credit Allocation Required under R.A. 6977 (MSME Report) and the Published Balance Sheet.
Additional validation rules will be issued through a Circular Letter as future enhancements to the FRP are prescribed or as new formulations are introduced.
Banks may use the aforementioned rules and formulations as reference for internally developing and reinforcing their own validation procedures, systems and controls. Such rules and formulations, however, mainly focus in determining arithmetical consistency of the FRP and are not intended to capture errors arising from significant changes or movements in values reported from one period to another nor misclassification of transactions arising from the misuse of the FRP accounts.
The integrity and quality of the FRP ultimately rests with the bank. Adequate internal controls should be in place to ensure that the information submitted by banks to the BSP is consistent, correct and conforms to the prescribed reporting standards.
NESTOR A. ESPENILLA, JR.
Download: Entire Signed Document
Annex A 1 to 26 | Annex A 27 to 52 | Annex A 53 to 78 | Annex A 79 to 104 | Annex B 1 to 20