OVERVIEW
Globe Telecommunication is one of the well known and leading providers of
telecommunication services across the Philippines, the company offers a variety of services and
earns its revenues from multiple sources such as Mobile telecommunication, Broadband
Internet, Digital Financial Services like Gcash, Enterprise Solutions, and Entertainment and
Lifestyle Services. Globe positioned itself as one of the largest telecom companies in the nation
that caters to over 54.7 million subscribers which plays a crucial role in connecting individuals
and businesses across the globe.
ORGANIZATIONAL STRUCTURE
Globe Telecom’s corporate framework consists of a board of directors, and several
management committees. The primary shareholders are Ayala Corporation and Singapore
Telecommunications Limited or also known as Singtel. The management’s governance practices
emphasize transparency and accountability together with the Audit and Risk Committee that is
responsible for overseeing financial reporting and risk management.
REGULATORY ENVIRONMENT
Globe Telecom is strictly under the regulation of National Telecommunication
Commission, to ensure adherence to laws such as Public Telecommunication Policy Act and
Mobile Number Portability. It requires licenses such as the Certificate of Public Convenience
and Necessity that allows its operation for its services. The corporate governance structure
comprises an Audit Committee that ensures compliance with statutory and listing requirements
regarding financial reporting. The company uses risk management strategies, to resolve and
deal with compliance issues and legislative adjustments that can affect their operation and
financial disclosures.
INTERNAL CONTROL ENVIRONMENT
The internal control at Globe Telecom was implemented by its Board of Directors to
provide reasonable assurance in achieving the company’s objectives which includes ensuring
efficient operations, reliable financial and management information, as well as compliance with
laws and internal policies.
The Committee is accountable for establishing robust internal control procedures that
are regularly reviewed, documented and approved. These controls are in place to provide levels
of assurance that the resources are safeguarded, prevent fraud, ensure the accuracy of
financial reports, protect information systems and maintain compliance with applicable
regulations. Furthermore, it allows the establishment of a transparent management system
supported by a Procedures and Policies Handbook for the entire organization.
In the case of identified significant control weaknesses, the management must provide
an explanation of their significance and corrective actions that have been taken. Attestations in
respect of the effectiveness of the internal control shall also be obtained from the key
management on an annual basis. Hence, it will evaluate procedures that encourage employees
to raise issues of monetary nature in a discreet manner and investigate such allegations
diligently. The committee has the power to accept new or amended policies within the
committee’s responsibilities.
INFORMATION TECHNOLOGY SYSTEMS
In line with PSA 315, it is important to gain an insight into Globe Telecom’s Information
Technology for purposes of proper evaluation of its operational environment and processes.
Globe employs an advanced IT infrastructure that supports its telecommunications, fintech, and
digital services, employing systems for customer relationship management, billing, data
analytics, and cyber security.
The incorporation of artificial intelligence plays a significant role in enhancing the
company’s operational efficiency and improving decision-making processes. Globe places a
strong emphasis on Data Privacy and security, ensuring compliance with the Data Privacy Act of
2012, and the implementation of comprehensive data protection measures such as regular risk
assessments and establishment of a dedicated security operations center.
Furthermore,
FINANCIAL REPORTING FRAMEWORK
5. Information Technology Systems
Globe relies on advanced IT systems to support its operations, including customer
relationship management (CRM) systems for managing customer interactions, billing
systems for accurate revenue recognition, and data analytics platforms for business
intelligence. The integrity of these systems is vital for ensuring accurate financial
reporting.
6. Financial Reporting Framework
The financial statements of Globe Telecom are prepared in accordance with Philippine
Financial Reporting Standards (PFRS). Key accounting policies include revenue
recognition principles that align with International Financial Reporting Standards (IFRS),
particularly regarding service contracts and asset capitalization for infrastructure
investments.
7. Key Processes
The auditor should focus on several key processes within Globe Telecom:
● Revenue Recognition: Revenue from mobile services is recognized when
services are rendered, while broadband subscription revenues are recognized
over the service period.
● Billing and Collections: The billing process is automated through integrated IT
systems that generate invoices based on usage data. Collections are managed
through various channels including online payments via GCash.
● Customer Service Management: Customer interactions are recorded through
CRM systems that track service requests, complaints, and resolutions.
8. Significant Transactions
Recent significant transactions include Globe's acquisition of telecommunications
assets from San Miguel Corporation, which has implications for financial reporting due
to potential goodwill recognition and integration costs. Additionally, capital
expenditures on network expansion projects are vital for maintaining competitive
service delivery.
9. Management’s Responsibilities
Management at Globe Telecom is responsible for establishing effective internal controls
over financial reporting and ensuring compliance with applicable laws and regulations.
This includes maintaining accurate records and preparing financial statements that
reflect the true state of the company’s financial position.
10. Ongoing Monitoring Activities
Globe Telecom conducts ongoing monitoring activities to assess the effectiveness of
its internal controls. This includes regular audits by the Internal Audit team, which
reports findings to the Audit Committee. Management also engages in self-assessment
activities to foster a culture of compliance and continuous improvement across all
business units. This document provides a comprehensive understanding of Globe
Telecom's entity and processes as required by PSA 315, ensuring that auditors can
effectively assess risks related to material misstatement in the financial statements.
