STATE AUDITORS have ordered Northern Foods Corp. (NFC) to write off receivable accounts worth more than P6.42 million, which have been dormant for over three decades and no longer have supporting documents or records.
The Commission on Audit (CoA), in a decision dated May 31, 2022 but was only released on its website on Tuesday, said the NFC has accounts that have “remained outstanding and non-moving for more than 30 years.”
CoA said the accounts should be written off pursuant to the auditing agency’s guidelines.
The NFC, a government-owned and controlled corporation (GOCC) established in 1984, has been due for dissolution based on a December 2021 order from Malacañang, citing the company’s annual net losses since its founding except in 1989, 1995, and 2010.
The company based in Sarrat, Ilocos Norte is a tomato paste supplier for tomato sauce or ketchup manufacturers, food chains and fish canners in the country.
State auditors also found inconsistencies in the NFC management’s physical count and accounting records of drums and pallets, which makes the computation of the accounts receivable questionable.
“Records of drums and pallets supposed to be in the custody of customers were still not reconciled and contained negative balances, contrary to Paragraph V.4 of CoA Circular No. 80-124 dated Jan. 18, 1980, and Section 58 of PD No. 1445, thus casting doubt as to the existence and reliability of the accounts,” CoA said in its report.
CoA also found the NFC’s loans and interest payable accounts “doubtful,” as variances in the books of creditors showed discrepancies of P62.78 million and P61.36 million, respectively.
Accounts receivable refers to the value of tomato paste sold to customers that remained unpaid while loan receivables cover fertilizers, pesticides, and tomato seeds lent to farmers.
State auditors recommended to collect past due accounts of customers and loans granted to farmers and consider alternative solutions like payments in installment to lessen inactive accounts and gain additional funding.
The technical working group (TWG) that is supposed to handle the NFC’s dissolution has yet to be convened by the Governance Commission for GOCCs.
The TWG will be composed of representatives from the agricultural and budget departments, and the Land Bank (LANDBANK) of the Philippines.
CoA recommended updating the proposed plan of liquidation for the company, including the amount of assets for disposition and liabilities for settlement, and identifying the parties to the liquidation and statement of roles and responsibilities.
As of May 31, last year, 22 employees were retained as skeleton workforce to support the corporation’s liquidation process. — Beatriz Marie D. Cruz