The BOT has overall responsibility for establishing and overseeing the Group's risk management framework. The table below shows the credit quality of the Group's financial assets as of March and 2010 past due but not impaired.
Legal Proceedings
Pending Court Cases as of 1 April 2012
Submission of Matters to a Vote of Security Holders
OPERATIONAL AND FINANCIAL INFORMATION
Market for Registrants Common Equity and Related Stockholders Matters DIVIDENDS DECLARED FOR THE FISCAL YEAR ENDED MARCH 31, 2012
- Test of Liquidity
- Current ratio measures the number of times that the current liabilities could be paid with the available current assets (Adequate: at least 5:1)
- Quick ratio measures the number of times that the current liabilities could be paid with the available quick assets (Adequate: at least 1:1)
- Test of Solvency
- Equity to asset ratio measures the amount of assets provided by the owner relative to the total assets of the company (Adequate: 50% or more)
- Test of Profitability
- Return on total assets measures how well management has used its assets under its control to generate income (Adequate: at least equal to the
- Return on owner’s equity measures how much was earned on the owners’
- Earnings per share measures the net income per share
- Product Standard
- Teaching performance in the University is constantly being monitored to maintain a satisfactory level of excellence. Various incentives are given to
- The Philippine Association of Colleges and Universities Commission on Accreditation (PACUCOA) has granted Certificates of Level III Re-
- Performance of FEU graduates in their respective Board Exams is generally better than the national passing rate with the following board placers
- Market Acceptability
- Below is a schedule of the first semester enrollment for the past 4 years
- Below is a schedule of Entrance and Entrance Merit Scholars for the past 4 years
- The current economic condition may still affect the sales/revenues/income from operations
- There are no known events that would result in any default or acceleration of an obligation
- There are no known events that will trigger direct or contingent financial obligation that may be material to the company
- There are no material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the company with
- There are no sales of Unregistered or Exempt Securities including Recent Issuance of Securities Constituting an Exempt Transaction
- A new school site (FEU Makati Campus) was constructed and opened in June 2010 at the Makati area to offer business courses. Its educational income for the year ended
- There are no significant elements of income or loss from continuing operations
- Seasonal aspects that has material effect on financial statements
Most of the company's current assets were quick assets amounting to P2,348.2 million, which is more than sufficient to cover the company's total liabilities of P576.9 million when they fall due. The company's retained earnings consisted of P975.1 million P975.1 million P975.1 million restricted/adjusted retained earnings and P942.8 million P942.8 million P942.8 million unrestricted/unadjusted retained earnings.
A. Liquidity
Solvency
- Debt to Equity ratio = Total liabilities Total Stockholder's Equity
- Debt to Asset ratio = Total liabilities Total assets
- Equity to Asset ratio = Total Stockholder's Equity Total assets
Profitability
- Return on Owner's Equity = Net Profit
Financial Statements
FAR EASTERN UNIVERSITY
The Far Eastern University, Incorporated March 31, 2012, 2011 and 2010
University, Incorporated, comprising the March and 2010 statements of financial position and statements of comprehensive income, statements of changes in equity and statements of cash flows for each of the years then ended, and a summary of significant accounting policies and other explanatory information. Management is responsible for the preparation and fair presentation of these financial statements in accordance with Philippine Financial Reporting Standards and for such internal control as management determines is necessary for the preparation of the financial statements free from material misstatement, whether due to fraud or error.
Punongbayan BLAraulio
CORPORATE INFORMATION
The University is a private, non-sectarian educational institution comprising the following various institutes offering specific courses, namely the Institute of Arts and Sciences; Institute of Accounting, Business and Finance; Institute for Education; Institute of Architecture and Fine Arts; Institute of Nursing; Institute of Engineering; Institute of Tourism and Hotel Management; Institute of Law; and the Institute for Postgraduate Studies. In 2010, the university established the FEU Makati Campus (Branch) in Makati City (see note 7).
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- Basis of Preparation of Financial Statements
- Adoption of New and Amended PFRS
- Separate Financial Statements and Investments in Subsidiaries, Associate and a Joint Venture
- Financial Assets
- Property and Equipment
- Investment Property
- Financial Liabilities
- Provisions and Contingencies
- Revenue and Expense Recognition
- Leases
- Foreign Currency Transactions
- Impairment of Non-financial Assets
- Employee Benefits (a) Post-employment Benefits
- Deposits Payable
- Trust Funds
- Income Taxes
- Related Party Transactions
- Equity
- Offsetting of Financial Instruments
- Events After the Reporting Period
- Earnings Per Share
Items included in the University's financial statements are valued using the functional currency. Financial assets are recognized when the university becomes a party to the contractual terms of the financial instrument.
SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES
- Critical Management Judgments in Applying Accounting Policies
- Key Sources of Estimation Uncertainty
The carrying values of the University's AFS investments and the amounts of fair value changes recognized on those assets during the years are disclosed in Note 8. The University's policy on estimating the decline in value of non-financial assets is discussed in detail in Note 2.12.
RISK MANAGEMENT OBJECTIVES AND POLICIES
- Interest Rate Risk
- Credit Risk
- Liquidity Risk
- Other Price Risk
The University has overdue but unimpaired accounts receivable at the end of each year. The university's exposure to price risk stems from its investments in equity securities, which are classified as available-for-sale investments in the statements of financial position.
CATEGORIES AND FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES
- Comparison of Carrying Amounts and Fair Values
- Fair Value Hierarchy
The breakdown of the University's FVTPL, AFS investments and liabilities measured at fair value in its March and 2010 financial position is as follows (see Note 8):.
CASH AND CASH EQUIVALENTS
Interest income from liquid assets is presented as part of Financial income in the statement of comprehensive income (see note 16.1). Given the limitation on such an amount of liquid funds, this is included as part of the other current assets account in the statement of financial position (see note 4.2).
RECEIVABLES
The university provides cash advances to support certain operational requirements (such as faculty payroll) for FEFI, FERN College, FECSI, and ICF-CCE, Inc. In connection with the improvements made to the Crans Montana property, the university has made advance payments to contractors amounting to P52.0 million that were outstanding as of March 31, 2010.
AVAILABLE-FOR-SALE INVESTMENTS
Such advances are presented in the statement of financial position for 2010 as part of other short-term assets. Liability Account, while the net fair values of these embedded cross currency swaps as at March 31, 2011 amounting to P8.5 million were presented as financial assets under the FVTPL account in the 2012 and 2011 statements of financial position respectively.
INVESTMENTS IN SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE
In 2012 and 2011, some of the University's AFS investments in debt securities included derivative assets arising from foreign exchange swaps. Analyzes of movements in the book values of the University's investments held by trust banks are presented below.
INVESTMENT PROPERTIES
Of the total amount, P19.6 million was paid in cash and the balance of P6.4 million was settled through advance compensation (see note 19.2). Based on the discounted net future cash flow model, management determined that the total fair value of the investment properties as of March 31, 2012 was P242.2 million.
PROPERTY AND EQUIPMENT
ACCOUNTS PAYABLE AND OTHER LIABILITIES This account consists of
TRUST FUNDS
EDUCATIONAL REVENUES
OPERATING EXPENSES Operating expenses consists of
FINANCE INCOME AND FINANCE COSTS 1 Finance Income
- Finance Costs
EMPLOYEES’ HEALTH, WELFARE AND RETIREMENT FUND
INCOME TAXES
As permitted under the applicable tax rules, the University has the option of claiming either the optional standard deduction of 40% of gross sales or itemized deductions.
RELATED PARTY TRANSACTIONS
- Interest-bearing Advances
- Noninterest-bearing Advances
- Lease of Manila Campus Premises from FRC
- Lease of Makati Campus Premises from FRC
- Lease of Certain Building Floor to FRC
- Lease of Certain Buildings to EAEF
- Management Services
- Key Management Personnel Compensation
The total rental expense charged to operations was P7.7 million in 2012 and P2.6 million in 2011 and is presented as part of rent under administrative expenses. P13.9 million as of March or 2010 and is presented as part of receivables from EAEF under the receivables account in the statements of financial position (see note 7).
EQUITY
- Capital Stock
- Prior Period Adjustments and Reclassification a. Prior period Adjustments
- Retained Earnings
In 2012, the university restated prior years' financial statements to reflect the retroactive change in revenue recognition as a result of the change in accounting policies for trust funds. The University reserves an amount of cash and cash equivalents equal to the outstanding balance of trust funds at the end of each year, presented as part of Other current assets in the balance sheet.
EARNINGS PER SHARE
Unpaid dividends as of March and 2010 are presented as dividends payable under Accounts payable and other liabilities in the balance sheet (see Note 12). The university has no dilutive potential common stock as of March and 2010, hence diluted EPS is the same as common EPS in all years presented.
COMMITMENTS AND CONTINGENCIES
- Operating Lease Commitments – University as Lessee (a) Lease Agreement with FRC
- Legal Claims
- Others
However, the university has reserved part of its retained earnings for the occurrence of such unforeseen circumstances (see Note 20.3). There are other contingencies that arise in the normal course of business that are not accounted for in the university's financial statements.
CAPITAL MANAGEMENT OBJECTIVES, POLICIES AND PROCEDURES
Management believes that any losses arising from these obligations and contingencies will not materially affect the financial statements. However, the University has elected to allocate a general portion of its retained earnings to cover such contingencies (see Note 20.3).
SUPPLEMENTARY INFORMATION REQUIRED BY THE BUREAU OF INTERNAL REVENUE
- Requirements Under Revenue Regulations (RR) 15-2010
- Requirements Under RR 19-2011
The composition of the University's taxable income for the fiscal year ending 31 March 2012 at a special tax rate of 10% mainly consists of tuition and other school fees amounting to P. The details of taxable non-operating and other income in fiscal year 2012 which is subject to special tax rate of 10% is shown below.
Report of Independent Auditors to Accompany SEC Schedules
Philippine Interpretation IFRIC 2 Philippine Interpretation li'RIC 4 Philippine Interpretation ll'RIC 5 Philippine Interpretation li'RIC 6 Philippine Interpretation li'RIC 7. Philippine Interpretation IFRIC 16 Philippine Interpretation li'RIC 17 Philippine Interpretation li'RIC 1HRIC Philippine Interpretation 19.
The Far Eastern University, Incorporated- and Subsidiaries
Basis of Preparation of Consolidated Financial Statements (a) Statement of Compliance with Philippine Financial Reporting Standards
The consolidated financial statements of the Group have been prepared in accordance with the Philippine Financial Reporting Standards (PFRS). Items included in the consolidated financial statements of the Group are valued in the functional currency.
Consolidated Financial Statements and Investments in an Associate and a Joint Venture
The Group's interest in a jointly controlled entity is recognized in the Group's consolidated financial statements using the equity method. The Group's share of the profit or loss of the JV is adjusted for any unrealized profits arising from.
Business Combinations
Financial Assets
Financial assets (other than derivatives and financial instruments originally designated as financial assets with FVTPL) can be. The Group has derivatives (including embedded derivatives such as cross currency swaps) included in this category, which are presented in the consolidated balance sheet as financial assets at fair value through profit or loss.
Real Estate Held-for-sale
All income and expenses, including impairment losses, relating to financial assets recognized in the income statement are presented as part of the financial income or expense statement in the consolidated statement of comprehensive income. Uncompounded interest and other cash flows arising from holding financial assets are recognized in profit or loss as earned, regardless of how the related carrying amount of financial assets is measured.
Property and Equipment
The financial assets cease to be recognized when the contractual rights to receive cash flows from the financial instruments expire, or when the financial assets and all significant risks and rewards associated with ownership have been transferred. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net sales proceeds and the carrying amount of the item) is included in the result in the year in which the item is derecognised.
Investment Property
This includes construction costs, applicable borrowing costs (see note 2.18) and other directly attributable costs to bring the asset to its intended use. Transfer takes place from investment properties when and only when there is a change of use, which is evident from the commencement of owner-occupied housing or the commencement of development with a view to sale.
Financial Liabilities
The transfer to investment properties is carried out when and only when there is a change in use, which is evidenced by the end of ownership, the start of a business lease to another party or the end of construction or development.
Provisions and Contingencies
Similarly, potential inflows of economic benefits to the Group that do not yet meet the recognition criteria for an asset are considered contingent assets and are therefore not recognized in the consolidated financial statements. On the other hand, any reimbursement that the Group is virtually certain to receive from a third party in respect of the liability is recognized as a separate asset that does not exceed the amount of the related provision.
Revenue and Expense Recognition
In those cases where the possible outflow of economic resources as a result of current liabilities is considered impossible or remote, or the estimated amount cannot be measured reliably, no liability is recognized in the consolidated financial statements. Cost and expenses are recognized in profit or loss upon receipt of goods, use of services or on the date they are incurred.
Leases
Foreign Currency Transactions
Impairment of Non-financial Assets
An impairment loss is recognized for the amount by which the carrying amount of the asset or cash-generating unit exceeds the recoverable amount. The impairment loss is charged proportionally to other assets in the cash-generating unit.
Employee Benefits (a) Post-employment Benefits
All assets are subsequently reassessed for indications that a previously recognized impairment loss may no longer exist, and the asset's carrying amount is adjusted to its recoverable amount, resulting in a reversal of the impairment loss.
Deposits Payable
Trust Funds
Borrowing Costs
Income Taxes
Most changes in deferred tax assets or liabilities are recognized as a component of tax expense in profit or loss. It is only changes in deferred tax assets or liabilities that relate to items recognized in other comprehensive income or directly in equity.
Related Parties
Equity
Offsetting of Financial Instruments
Events After the Reporting Period
Earnings Per Share
Segment Reporting
The Group's consolidated financial statements prepared in accordance with PFRS require management to make judgments and estimates that affect amounts reported in the consolidated financial statements and related notes. Valuations and estimates are evaluated on an ongoing basis and are based on historical experience and other factors, including expectations of future events, which are believed to be reasonable under the circumstances.
Critical Judgments in Applying Accounting Policies
The book values of the AFS Group's investments and the amounts of fair value changes recognized over the years on these assets are disclosed in note 9. A description of the group's objectives and policies in managing risks for financial instruments is given in note 4.
Business Segments
Segment Assets and Liabilities
Intersegment Transactions
Analysis of Segment Information
Reconciliation
CASH AND CASH EQUIVALENTS
Given the limitation on such amount of cash, this is included as part of the other current assets account in the consolidated statement of financial position.
RECEIVABLES
March and 2010 are restricted as mandated by the Group's online credit card payment facility with a particular local bank. In relation to the improvements made on the Crans Montana property, the University has made advances to contractors amounting to P52.0 million per March 31, 2010.
AVAILABLE-FOR-SALE INVESTMENTS
These advances are presented as part of the other current assets account in the 2010 consolidated statement of financial position. March 31, 2011 in the amount of 8.5 million PF were presented as financial assets in the FVTPL account in the 2012 and 2011 consolidated statements of financial position, respectively.
REAL ESTATE HELD-FOR-SALE
The related fair value gains or losses are presented as part of Financial Income (Cost) in the 2012 and 2011 consolidated statements of comprehensive income (see Note 19). The net changes in carrying amount of the related interest payable from these cross-currency swaps amounting to P5.6 million and P3.4 million, as of March 31, 2012 and 2011, respectively, are included as part of Finance Costs in the 2012 and 2011 consolidated statements of comprehensive income while the related liability is presented as part of accrued expenses under accounts payable and other liabilities in the 2012 and 2011 consolidated statements of financial position (see Note 14).
INVESTMENTS IN AN ASSOCIATE AND A JOINT VENTURE
- Sale of Investment Property
- Rental Income
- Reclassification
- Fair Values of Investment Property
Total outstanding receivables arising from this transaction amounting to P61.5 million are presented as part of Receivables under the Receivables account in the 2012 consolidated statement of financial position. Total profit recognized from this transaction amounted to P211.6 million and is presented as Gain (Loss) on Sale of Investment Property account in the 2010 consolidated statement of.
ACCOUNTS PAYABLE AND OTHER LIABILITIES
Payable to the contractor represents the amount owed to a construction company for the construction of the FRC building in Silang, Cavite.
NOTES PAYABLE
TRUST FUNDS
TUITION AND OTHER SCHOOL FEES
COSTS AND OPERATING EXPENSES Costs and operating expenses consist of
FINANCE INCOME AND FINANCE COSTS 1 Finance Income
- Finance Costs
EMPLOYEES’ HEALTH, WELFARE AND RETIREMENT FUND
The contributions to this fund are in accordance with the defined contribution determined by the pension board, the sum of the employee contributions and the University of Groningen contributions. The contribution of the employees is 5% of the base salary, while the contribution of the university is equal to 20% of the base salary of the employees.
INCOME TAXES
As a group policy, any contributions paid by the university in recent years and subsequently forfeited due to the termination of covered employees prior to retirement vesting may be used as employer contributions in subsequent years. As there were forfeited contributions paid by the university in previous years that were used for contributions in 2012, pension costs in 2012 were only P19.9 million.
RELATED PARTY TRANSACTIONS
- Noninterest-bearing Advances
- Lease of Campus Premises
- Management Services
- Key Management Personnel Compensation
- Eliminated Intercompany Transactions
Rental income recognized from this transaction was P16.1 million in 2012, P8.9 million in 2011 and P6.7 million in 2010 and is presented as part of the Rent account in the consolidated statements of comprehensive income. The unpaid receivables arising from this transaction amounted to P47.8 million, P18.3 million and P13.9 million from March to 2010 and are shown as part of receivables from EAEF under the receivables account in the consolidated statements of financial position ( see note 8).
