FOREIGN SERVICE INSTITUTE

NOTES TO FINANCIAL STATEMENTS

For the Year ended December 31, 2017

1. General/Agency Profile

The Foreign Service Institute (FSI) was established by Presidential Decree (PD) No.
1060 on December 9, 1976 as the career development arm of the Department of
Foreign Affairs (DFA). It was tasked to provide training to personnel of the DFA and
other government agencies assigned to the Philippine Foreign Service Posts. Since
1987, the FSI has been mandated to provide research assistance to the DFA and to
participate in the Department’s planning review process. The Philippine Foreign
Service Act of 1991 (RA No.7157) further specified the FSI’s mandate as follows:

a. To serve as the center for the development and professionalization of the

career foreign service corps;

b. To serve as a research institution for the DFA on issues and problems

relating to foreign policy, such as bilateral issues, and global and regional
strategies; and

c. To serve as the institutional consultant of the DFA on foreign policy matters

as well as in the Department’s development, management, planning and
review processes.

2. Basis of Financial Statements Presentation

The Financial Statements have been prepared in accordance with and comply with the
Philippine Public Sector Accounting Standards (PPSAS) prescribed by the
Commission on Audit (COA) under Resolution No. 2014-003 dated January 24, 2014.

3. Summary of Significant Accounting Policies and Other Information

3.1 The agency uses accrual basis of accounting. All expenses are recognized
when incurred and reported in the financial statement in the period to which
they relate.

3.2 The Modified Obligation System is used to record allotments received and
obligations incurred. Separate registries are maintained to control allotments
and obligations for each class of allotment.

3.3 Property and Equipment are carried at cost less accumulated depreciation.

3.4 The Straight Line Method of depreciation is used in depreciating the Property
and Equipment with estimated useful lives ranging from five to10 years. A

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 residual value computed at 10 percent of the cost of asset is set and
depreciation starts on the second month after acquisition.

3.5 Payable accounts are recognized and recorded in the books of accounts only
upon acceptance of the goods/inventory/other assets and rendition of services
to the Agency.

4. Key Management Personnel

The Board of the FSI is the governing body of the Institute, pursuant to PD
No.1060. The Chairperson is the Secretary of Foreign Affairs, and the members are:
the Chairperson of the Civil Service Commission, the President of the University of
the Philippines, the President of the Development Academy of the Philippines, and the
Director-General (DG) of the FSI.

The Institute is headed by a full-time DG who is seconded from the Senior Chiefs
of Mission in the career foreign service corps. The DG also holds the title of Assistant
Secretary. The Deputy DG who ranks next to the DG is chosen from the academic
community to provide technical assistance to the Institute and its programs. Both are
appointed by the President upon recommendation by the Board of the FSI.

5. Key Management Personnel Remuneration

The DG of the Institute draws his salary from the mother agency, the DFA.

In connection with the actual performance of duties of the DG, the Institute
provides a government motor vehicle, hence, no transportation allowance (TA) is
granted, as per Section 5.2.3 of the National Budget Circular No. 548.

6. Correction of Prior Period Errors

Errors of prior years are corrected by using the Accumulated Surplus/(Deficit)

account. Errors affecting current year’s operation are charged to the current year’s
accounts.

Supporting Information to the Statement of Financial Position

7. Cash and Cash Equivalents

The group of accounts amounting to P8,060,960.86 pertains to the following:

7.1 Petty Cash - the amount P44,302.00 represents the unused balance of cash
as of December 31, 2017.

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 7.2 Cash in Bank-Local Currency, Savings Account of P240,401.54 is
composed of the following:

Particulars Amount (₱)

Collection from sale of bidding documents which will 9,000.00
be used to pay honorarium, overtime pay and other
expenses of the Bids and Awards Committee (BAC)
Advance payment for health insurance from resigned 187,787.01
personnel not covered by a Notice of Disallowance
Advance payment for undelivered journals deducted
from resigned employees’ Terminal Leave Benefit 41,554.76
pending request for write-off
Interest earned 1,859.77
Overdeduction of Pag-ibig contribution to be returned
to employees 200.00
Total 240,401.54

7.3 Cash-Treasury/Agency Deposit, Trust of P7,776,257.32 consists of the

following:

Particulars Amount (₱)

Unused cash allocation for Inter-Agency fund 7,700,103.38
transfers that lapsed at year-end
Return of unused cash advances which were 76,153.94
deposited to the Bureau of the Treasury
Total 7,776,257.32

8. Receivables

The group of Accounts Receivable amounting to P2,013,128.88 consists of the

following:

8.1 Due from NGAs P241,605.90

Amount (₱)
Name of Agency Particulars
2017 2016
DBM Procurement Undelivered supplies 126,905.90 42,650.35
Service
Department of Office rental of Manila 14,700.00 14,700.00
Foreign Affairs Film Center Building
UP Law Center Co-publication of book 100,000.00 100,000.00

Total 241,605.90 157,350.35

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 8.2 Disallowances/Charges P1,625,726.49

Allowances/benefits granted to former FSI 366,325.93

employees which were subsequently disallowed
Unpaid Balance of Health Insurance Disallowance 1,259,400.56
Total 1,625,726.49

8.3 Other Receivables - P145,796.49 is composed of the following:

Particulars Amount (₱)

Receivable from former FSI personnel and resource 5,052.78
persons
Undelivered subscriptions (magazines, journals, 140,743.71
periodicals and other reading materials) from 1995 to
2004
Total 145,796.49

9. Inventories

Office Supplies Inventory of P918,961.43 represents cost of office supplies

purchased/received as of December 31, 2017.

10. Other Current Assets

10.1 Other Prepayments The balance of P366,701.28 represents renewal of

subscriptions to Skycable, magazines and periodicals as of December 31, 2017.

10.2 Other Assets of P85,433.40 represents balance of unserviceable Property, Plant

and Equipment prior to the implementation of GAM.

11. Property, Plant and Equipment

Details for this group of account consist of:

Amount (P)
Description Office Transportation Library Furniture
ICT Equipment Total
Equipment Equipt Books and Fixtures
Carrying Amount, January 1, 2017 1,328,905.69 1,542,705.74 54,364.35 28,394.99 1,792,760.45 4,747,131.22
Additions/Acquisitions 194,284.00 19,250.00 1,264,282.80 1,477,816.80
Total 1,523,189.69 1,542,705.74 73,614.35 28,394.99 3,057,043.25 6,244,948.02
Depreciation (As per Statement of (284,726.22) (224,456.88) (8,601.96) (1,350.00) (453,052.18) (972,187.24)
Financial Performance)
Conversion from Semi-Expendable 68,000.00 68,000.00
Other adjustment – to correct error
in recorded depreciation (current 53,277.00 53,277.00
year)

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 Amount (P)
Description Office Transportation Library Furniture
ICT Equipment Total
Equipment Equipt Books and Fixtures
Other adjustment – to correct error
in recorded depreciation prior year (61,200.00) 37,293.90 (23,906.10)
(Accu. Surplus)
Carrying Amount, December 31, 1,245,263.47 1,318,248.86 65,012.39 27,044.99 2,694,561.97 5,350,131.68
2017 (As per Statement of Financial
Position)
Gross Cost (Asset Account Balance 2,829,599.30 3,101,927.00 265,015.30 233,325.00 4,798,946.62 11,228,813.22
per Statement of Financial Position)
Less : Accumulated Depreciation (1,584,335.83) (1,783,678.14) (200,002.91) (206,280.01) (2,104,384.65) (5,878,681.54)

Carrying Amount, December 31, 1,245,263.47 1,318,248.86 65,012.39 27,044.99 2,694,561.97 5,350,131.68
2017

12. Intangible Assets

Intangible assets pertain to computer software with a carrying amount of P758,471.64,

as presented below:

Amount (₱)
Description
2017 2016
Carrying Amount, January 1 2,508,346.69 2,508,346.69
Add : Acquisitions 166,468.00
Less : Reclassification (87,056.47)
Adjusted Amount 2,587,758.22 2,508,346.69
Less : Accumulated Amortization (1,829,286.58) (1,731,908.46)
Carrying Amount, December 31 758,471.64 776,438.23

13. Financial Liabilities

13.1 Accounts Payable - this account includes the amount due for goods and
services received/rendered and unpaid obligations as of December 31, 2017 to
the following:
Name of Creditor Amount (P)
1. Magazinezone, Inc. 157,100.00
2. Various resource persons of the Institute 9,050.00
3. Various employees of the Institute 1,396,090.59
4. Smart Communications 8,345.64
5. Krznad Trading 200,000.00
6. Sword and Flame Trading 22,070.00
7. DFAMPC 550.00
8. MERALCO 180,061.53
9. SD Leal Graphics 9,000.00
10. Rudy P. Lerios Home Office Delivery Service 5,116.00
11. Gilcor Printing 63,000.00

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 Name of Creditor Amount (P)
12. PLDT 14,666.21
13. Development Academy of the Philippines 56,000.00
14. Megatext 41,671.50
Total 2,162,721.47

13.2 Due to Officers and Employees - The amount of P40,429.00 pertains to the
unclaimed salary and Performance Based Bonus of Carlo Santiago.

14. Inter-Agency Payables

This group of account consists of:

Amount (P)
Particulars
2017 2016
Due to BIR 508,749.83 496,329.99
Due to GSIS 33.29 0.00
Due to Pag-IBIG 5,502.69 5,502.69
Due to NGAs (DFA) 7,096,433.34 20,498,469.69
Due to PhilHealth 25.00 28,712.50
Total 7,610,744.15 21,029,014.87

15. Other Payables

Other Payables account totaling P238,945.81 is composed of the following:

 The amount of P187,787.01 represents advance payment for the health

insurance disallowance made by the Institute’s resigned personnel.

 The amount of P9,000 represents collection from the sale of bidding

documents which will be used to pay honoraria, overtime pay and other
expenses of the Bids and Awards Committee Secretariat, as authorized in
DBM Budget Circular No. 2004-5A dated October 7, 2005.

 The amount of P41,557.76 represents advance payment made by a resigned

employee for undelivered magazines and journals.

 The amount of P601.04 represents over-deduction of GSIS employee share

from salary of resigned employee.

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Supporting Information to the Statement of Financial Performance

16. Service and Business Income consists of:

Amount (P)
Particulars
2017 2016
Income from Printing and Publication 17,700.00 990.00
Interest Income 2,009.14 2,021.26
Other Service Income 30.00 234.00
Total 19,739.14 3,245.26

17. Personnel Services

Amount (P)
Particulars
2017 2016
Salaries and Wages 29,978,525.81 27,872,514.56
Salaries and Wages -Regular 29,408,212.86 27,332,530.99
Salaries and Wages-Casual 570,312.95 539,983.57
Other Compensation 11,175,583.53 13,072,766.86
Personnel Economic Relief Assistance (PERA) 2,134,057.53 2,064,914.40
Representation Allowance (RA) 265,000.00 222,000.00
Transportation Allowance (TA) 256,500.00 222,000.00
Clothing Allowance 450,000.00 450,000.00
Productivity Incentive Allowance
Honoraria 2,584,816.10 2,195,925.56
Year End Bonus 5,029,459.90 4,530,426.90
Cash Gift 455,750.00 446,000.00
Other Bonuses and Allowances 2,697,132.74 2,941,500.00
Personnel Benefit Contributions 4,071,629.28 3,803,749.70
Retirement and Life Insurance Premiums 3,528,966.78 3,282,924.70
Pag-IBIG Contributions 106,500.00 102,700.00
PhilHealth Contributions 329,662.50 315,725.00
Employees Compensation Insurance Premiums 106.500.00 102,400.00
Other Personnel Benefits 3,674,821.17 4,142,526.86
Terminal Leave Benefits 623,755.94 856,896.58
Other Personnel Benefits 3,051,065.23 3,285,630.28
Total Personnel Services 51,597,692.53 48,891,557.98

 Other Bonuses and Allowances totaling P2,697,132.74 consists of:

Particulars Amount (P)

Productivity Enhancement Incentives 435,500.00
Collective Negotiation Agreement 1,036,000.00
Performance Based Bonus 1,225,632.74
Total 2,697,132.74
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  Other Personnel Benefits totaling P3,051,065.23 consists of:

Particulars Amount (P)

Monetization of leave credits 2,796,732.85
Salary incentives and step increment 41,120.63
PRAISE Incentives 130,000.00
Overtime pay 83,211.75
Total 3,051,065.23

18. Maintenance and Other Operating Expenses

Amount (P)
Particulars
2017 2016
Traveling Expenses 934,369.28 1,313,640.88
Traveling Expenses-Local 297,210.48 391,397.64
Travelling Expenses-Foreign 637,158.80 922,243.24
Training and Scholarship Expenses 1,410,679.77 1,677,692.15
Training Expenses 1,410,679.77 1,677,692.15
Supplies and Materials Expenses 1,772,628.07 1,523,676.72
Office Supplies Expenses 637,656.33 1,069,475.79
Accountable Forms Expenses 1,800.00 600.00
Fuel, Oil and Lubricants Expenses 175,464.05 192,822.92
Semi-Expendable Machinery and Equipment Expense 116,320.00 0.00
Semi-Expendable Furniture, Fixtures and Books 841,387.69 257,778.00
Expenses
Other Supplies and Materials Expenses 0.00 3,000.01
Utility Expenses 2,224,539.49 2,067,526.17
Water Expense 442,707.11 322,908.99
Electricity Expense 1,781,832.38 1,744,617.18
Communication Expenses 827,461.82 733,236.70
Postage and Courier Services 6,142.00 1,913.00
Telephone Expense 312,849.43 399,720.37
Internet Subscription Expense 498,387.10 321,520.00
Cable, Satellite, Telegraph and Radio Expense 10,083.29 10,083.33
Confidential, Intelligence and Extraordinary 832,154.02 568,139.44
Expenses
Extraordinary and Miscellaneous Expenses 832,154.02 568,139.44
Professional Services 324,730.36 469,628.15
Consultancy Services 0.00 80,555.56
Other Professional Services 324,730.36 389,072.59
General Services 1,683,890.98 1,772,027.42
Janitorial Services 1,683,890.98 1,772,027.42

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 Amount (P)
Particulars
2017 2016
Repairs and Maintenance 187,133.40 161,657.95
Repair and Maintenance-Buildings and Other 2,165.00 800.00
Structure
Repair and Maintenance-Equipment 77,999.00 64,615.00
Repair and Maintenance-Furniture and Fixtures 0.00 11,130.00
Repair and Maintenance-Motor Vehicles 106,969.40 85,112.95
Taxes, Insurance Premiums and Other Fees 126,057.71 142,063.29
Taxes, Duties and Licenses 5,598.12 8,358.12
Fidelity Bond Premiums 42,232.50 59,844.00
Insurance Expense 78,227.09 73,861.17
Other Maintenance and Operating Expenses 2,326,760.07 2,242,501.96
Advertising Expense 7,800.00
Printing and Publication Expense 646,180.00 461,379.20
Rent/Lease Expenses 1,204,350.00 1,490,266.36
Membership Dues and Contributions to Organizations 10,895.40 36,613.20
Subscription and Cable Expenses 465,334.67 246,443.20
Financial Expenses 601.50 0.00
Other Financial Charges 601.50 0.00
Total Maintenance and Other Operating Expenses 12,651,006.47 12,671,790.83

19. Non-Cash Expenses

Amount (P)
Particulars
2017 2016
Depreciation-Machinery and Equipment 284,726.22 194,324.10
Depreciation-Furniture and Fixtures and Books 9,951.96 8,796.96
Depreciation-ICT Equipment 399,775.18 267,705.74
Depreciation-Transportation Equipment 224,456.88 99,542.46
Amortization-Intangible Assets 99,989.82 43,508.46
Total 1,018,900.06 613,877.72

20. Subsidy from National Government

Amount (P)
Particulars
2017 2016
NCA Received from DBM 60,149,568.00 62,887,738.00
Tax Remittance Advice (TRA) issued to BIR 4,966,321.21 4,648,634.90
Total 65,115,889.21 67,536,372.90
Less : Reversal of Unutilized NCA (1,185,334.83) (2,803,046.04)
Refund of Unused Cash Advances (9,167.66) (165,716.61)

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 Amount (P)
Particulars
2017 2016
Cancelled/stale checks 0.00 (29,371.70)
Refund of clothing allowance (10,000.00) (5,000.00)
Subsidy Income, Net 63,911,386.72 64,533,238.55

21. Accumulated Surplus/(Deficit)

Account balance of P7,500,948.74 consists of transactions with the following details:

Particulars Amount (P)

Accumulated Surplus/(Deficit), beginning 7,670,256.37
Current:
Delivery of subscribed foreign newspapers and magazines (136,331.52)
Disallowance from health insurance per ND#11-001-101-(10)A
dated July 24, 2011 which became final and executory 1,972,680.07
Used portion of subscription to Skycable (14,116.67)
To reverse reclassification of Office Equipment to Semi-
Expendable Office Equipment 6,800.00
To correct erroneous booking of tax refund on resigned
employee’s last salary 3,139.22
To remove from the books long-outstanding Accounts Payable 99,894.75
Adjustment on erroneous computation and recording of
depreciation for ICT Equipment from June to December 2016 37,293.90
Reversal of corresponding amortization of reclassed asset to
subscription expense November to December 2016 2,611.70
To take up payment of expenses from donated funds (68,420.00)
Correction of previous entry to Other Receivable account –
HDMF contribution employee share (100.00)
Excess of NCA issued by DBM over actual amount that lapsed
at the end of 2016 0.55
To correct understatement of Interest earned on Savings
Account for 4Q 2016 0.01
To close the balance of Cash-Treasury/Agency Deposit, Regular (736,286.44)
Net Gain/(Loss) for CY 2017 (1,336,473.20)
Total Current (169,307.63)
Accumulated Surplus/(Deficit), end 7,500,948.74

Supporting Information to the Statement of Cash Flows

22. Receipt of Notice of Cash Allocation (NCA)

Total NCA received from the DBM for CY 2017 was P60,149,568.00 with a total
reversal of P1,185,334.83.

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23. Collection of Income and Revenues

Amount (P)
Particulars
2017 2016
Receipt of Interest Income 2,009.15 2,183.18
Total 2,009.15 2,183.18

24. Inter-Agency Fund Transfer

The Institute received P200,000.00 funding support from the Department of Foreign
Affairs – Office of the Undersecretary for Policy (DFA-OUP) for the participation of
FSI in the 3rd meeting of Council for Security Cooperation in the Asia-Pacific
(CSCAP) Study Group on Marine Environment Protection per Memorandum of
Agreement dated May 3, 2017.

25. Trust Receipts

Amount received as payment for disallowance of resigned personnel amounts to

P138,144.01.

26. Other Receipts

The Other Receipts in the total amount of P62,754.78 is composed of the following:

Amount (P)
Particulars
2017 2016
Receipt of Refund of Unused cash Advance 12,200.02 293,593.42
Receipt from sale of bidding documents 9,000.00 8,000.00
Receipts from sale of Publications 990.00
Receipt of advance payment for undelivered journals 41,554.76 0.00
Receipt of refund for clothing allowance 0.00 5,000.00
Total 62,754.78 307,583.42

27. Remittance to the National Treasury

Amount (P)
Particulars
2017 2016
Settlement of disallowance from health insurance 687,215.63
Refund of unused cash advance 229,639.50
Refund of clothing allowance 5,000.00 5,000.00
Proceeds from sale of FSI publication 990.00
Interest earned on savings account 2,034.04 1,331.97
Balance of proceeds from payment of honoraria to 322.60
BAC members
Total 694,249.67 237,284.07

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28. Payment of expenses represents the following:

Amount (P)
Particulars
2017 2016
Current operating expenses 45,773,264.31 47,112,591.31
Payment of honorarium to BAC members 8,000.00 3,677.40
Total 45,781,264.31 47,116,268.71

29. Cash purchase of Inventories

Amount (P)
Particulars
2017 2016
Cash purchase of Inventories 1,576,823.43 570,744.89
Total 1,576,823.43 570,744.89

30. Grant of Cash Advances

Amount (P)
Particulars
2017 2016
Cash advances granted for travelling and
training-related expenses 386,813.62 731,626.27
Total 386,813.62 731,626.27

31. Payment of Accounts Payable consists of:

Amount (P)
Particulars
2017 2016
Printing and subscription 121,660.77
Electricity 127,249.73
Office Supplies 10,539.43 144,351.68
Water 24,251.50 44,527.49
Telephone 23,532.78 14,672.35
Rent/Lease – photocopying machine 24,700.00 28,687.50
Traveling - Local 1,340.00
Internet 24,375.00
Personnel Benefits 36,167.21
Honoraria 22,455.00 2,250.00
Professional Fee 12,000.00
Extraordinary and Miscellaneous Expenses 7,700.00
Subscription 5,028.37
Total 192,089.29 483,399.52

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32. Remittance of Personnel Benefit Contributions and Mandatory Deductions

Amount (P)
Particulars
2017 2016
Remittance of personnel benefits and mandatory 9,737,971.70 8,240,750.91
deductions to GSIS, HDMF and PhilHealth
Total 9,737,971.70 8,240,750.91

33. Release of Inter Agency Fund Transfer

Amount (P)
Particulars
2017 2016
Cash payment of expenses for special projects 12,550,577.55 10,968,740.55
Return of excess funds to Source Agency
(DFA) for special projects completed 1,193,226.21 0.00
Inter-agency fund transfer for co-publication of
book with UP Law Center - 100,000.00
Total 13,743,803.76 11,068,740.55

34. Reversal of Unutilized and lapsed NCA amounts to P1,185,334.83.

35. Cash Outflows from Investing Activities pertains to purchases of PPE items, as
shown below:

Amount (P)
Particulars
2017 2016
Purchase of ICT and Office Equipment 1,210,825.31 1,879,440.70
Purchase of Transportation Equipment 948,109.44
Purchase of Computer Software 41,605.00
Purchase of Library Books 18,567.43 0.00
Total 1,270,997.74 2,827,550.14

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Supporting Information to the Statement of Comparison of Budget and Actual
Amounts

36. Receipts
Total receipts represent income from printing and publication, interest income and
other service income which are deposited to the BTr.

37. Payments

The total appropriations for the Regular Agency Fund in the amount of
P61,362,377.37 was prepared on cash basis and published as part of RA No.
10924.

The difference between the Final Budget and Actual Amounts of P2,394,570.75
was due to the Unobligated Allotments and Unpaid Obligations, to wit:

Unobligated Unpaid
Particulars Total
Allotments Obligations
Personnel Services 27,698.38 1,405,140.59 1,432,838.97
Maintenance and Other Operating 109,779.90 695,209.38 804,989.28
Expenses
Financial Expenses 2,398.50 - 2,398.50
Capital Outlay 91,972.50 62,371.50 154,344.00
Total 231,849.28 2,162,721.47 2,394,570.75

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