Public Safety Mutual Benefit Fund (PSMBFI) Incorporated (A Non-stock, Not-for-profit organization) Financial Statements As at and for the years ended December 31, 2022 and 2021
Independent Auditor’s Report To the Board of Trustees and Members of Public Safety Mutual Benefit Fund (PSMBFI) Incorporated No. 318-320 Boni Serrano Avenue Corner 1st and 2nd West Streets San Juan City, Philippines Report on the Audits of the Financial Statements Our Opinion In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Public Safety Mutual Benefit Fund (PSMBFI) Incorporated (the “Association”) as at December 31, 2022 and 2021, and its financial performance and its cash flows for the years then ended in accordance with Philippine Financial Reporting Standards (PFRS). What we have audited The financial statements of the Association comprise: • the statements of financial position as at December 31, 2022 and 2021; • the statements of total comprehensive income for the years ended December 31, 2022 and 2021; • the statements of changes in fund balance for the years ended December 31, 2022 and 2021; • the statements of cash flows for the years ended December 31, 2022 and 2021; and • the notes to the financial statements, which include a summary of significant accounting policies. We conducted our audits in accordance with Philippine Standards on Auditing (PSA). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Association in accordance with the Code of Ethics for Professional Accountants in the Philippines (Code of Ethics), together with the ethical requirements that are relevant to our audit of the financial statements in the Philippines, and we have fulfilled our other ethical responsibilities in accordance with these requirements and Code of Ethics.
Independent Auditor’s Report To the Board of Trustees and Members of Public Safety Mutual Benefit Fund (PSMBFI) Incorporated Page 2 Other Information Management is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the financial statements and our auditor’s report thereon. The Annual Report is expected to be made available to us after the date of this auditor's report. Our opinion on the financial statements does not cover the other information and we will not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with PFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Association’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Association or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Association’s financial reporting process.
Independent Auditor’s Report To the Board of Trustees and Members of Public Safety Mutual Benefit Fund (PSMBFI) Incorporated Page 3 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with PSA will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with PSA, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Association’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Association’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Association to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Independent Auditor’s Report To the Board of Trustees and Members of Public Safety Mutual Benefit Fund (PSMBFI) Incorporated Page 4 Report on the Bureau of Internal Revenue Requirements Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information under Bureau of Internal Revenue (BIR) Revenue Regulations Nos. 15-2010 and 34-2020 in Note 18 to the financial statements is presented for the purposes of filing with the BIR and is not a required part of the basic financial statements. Such information is the responsibility of management of the Association. The information has been subjected to the auditing procedures applied in our audits of the basic financial statements. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Isla Lipana & Co. Imelda Dela Vega-Mangundaya Partner CPA Cert. No. 0090670 PTR No. 0024586, issued on January 9, 2023, Makati City SEC A.N. (individual) as general auditors 90670-SEC, Category A; valid to audit 2019 to 2023 financial statements SEC A.N. (firm) as general auditors 0142-SEC, Category A; valid to audit 2020 to 2024 financial statements TIN 152-015-124 BIR A.N. 08-000745-047-2021, issued on November 23, 2021; effective until November 22, 2024 BOA/PRC Reg. No. 0142, effective until November 14, 2025 Makati City April 5, 2023
Statement Required by Section 8-A, Revenue Regulations No. V-1 To the Board of Trustees and Members of Public Safety Mutual Benefit Fund (PSMBFI) Incorporated No. 318 - 320 Boni Serrano Avenue Corner 1st and 2nd West Streets San Juan City, Philippines None of the partners of the firm has any financial interest in Public Safety Mutual Benefit Fund (PSMBFI) Incorporated or any family relationship with its president, managers or principal members. The supplementary information on taxes and licenses is presented in Note 18 to the financial statements. Isla Lipana & Co. Imelda Dela Vega-Mangundaya Partner CPA Cert. No. 0090670 PTR No. 0024586, issued on January 9, 2023, Makati City SEC A.N. (individual) as general auditors 90670-SEC, Category A; valid to audit 2019 to 2023 financial statements SEC A.N. (firm) as general auditors 0142-SEC, Category A; valid to audit 2020 to 2024 financial statements TIN 152-015-124 BIR A.N. 08-000745-047-2021, issued on November 23, 2021; effective until November 22, 2024 BOA/PRC Reg. No. 0142, effective until November 14, 2025 Makati City April 5, 2023
Public Safety Mutual Benefit Fund (PSMBFI) Incorporated Statements of Financial Position December 31, 2022 and 2021 (All amounts in Philippine Peso) 2022 2021 A S S E T S Cash and cash equivalents 2,087,045,364 2,183,023,369 Financial assets at amortized cost, net 18,345,252,609 17,964,019,527 Financial assets at fair value through profit or loss 310,458,177 229,265,271 Investment property, net 2,814,000 2,814,000 Property and equipment, net 312,291,554 264,708,178 Retirement plan asset 27,526,514 35,625,103 Other assets, net 108,538,871 85,903,688 Total assets 21,193,927,089 20,765,359,136 LIABILITIES AND FUND BALANCE Accounts payable and accrued expenses 1,305,372,989 2,665,696,541 Claims payable 176,254,206 321,455,334 Legal policy reserves 592,881,810 522,226,756 Premium deposits 99,990,244 117,825,206 Members’ contributions 5,179,785,721 4,729,413,882 Total liabilities 7,354,284,970 8,356,617,719 Retained surplus Appropriated 7,531,000,945 9,105,535,237 Unappropriated 6,329,849,984 3,324,410,749 Accumulated other comprehensive loss (21,208,810) (21,204,569) Total fund balance 13,839,642,119 12,408,741,417 Total liabilities and fund balance 21,193,927,089 20,765,359,136
Public Safety Mutual Benefit Fund (PSMBFI) Incorporated Statements of Total Comprehensive Income For the years ended December 31, 2022 and 2021 (All amounts in Philippine Peso) 2022 2021 UNDERWRITING INCOME Insurance premiums 1,503,842,237 1,477,585,695 UNDERWRITING EXPENSE Claims expense (352,584,360) (418,661,167) Experience refund (7,561,899) (490,532,697) Increase in legal policy reserves (70,655,054) (39,947,463) NET UNDERWRITING INCOME 1,073,040,924 528,444,368 INTEREST INCOME 1,521,228,730 1,537,438,671 INTEREST EXPENSE (425,141,824) (470,568,083) NET INTEREST INCOME 1,096,086,906 1,066,870,588 PROVISION FOR CREDIT LOSSES (152,635,911) (121,467,080) NET INTEREST INCOME AFTER CREDIT LOSSES 943,450,995 945,403,508 OTHER INCOME Rental income 6,539,717 6,291,484 Fair value changes on financial assets at fair value through profit or loss (10,008,660) (6,067,683) Others 8,089,111 4,597,589 4,620,168 4,821,390 INCOME BEFORE OPERATING EXPENSES 2,021,112,087 1,478,669,266 GENERAL AND ADMINISTRATIVE EXPENSES (589,929,233) (571,873,001) INCOME BEFORE INCOME TAX 1,431,182,854 906,796,265 INCOME TAX EXPENSE (277,911) (579,331) NET INCOME FOR THE YEAR 1,430,904,943 906,216,934 OTHER COMPREHENSIVE INCOME (LOSS) Item that will not be subsequently reclassified to profit or loss Remeasurement (loss) gain on retirement benefit obligation (4,241) 20,070,072 TOTAL OTHER COMPREHENSIVE (LOSS) INCOME (4,241) 20,070,072 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 1,430,900,702 926,287,006