THE BANGKO SENTRAL ng Pilipinas (BSP) has amended its regulations on pawnshops’ reporting standards to improve its supervision over the sector.
“The amendments set forth the Bangko Sentral’s expectations on pawnshops to establish an effective reporting system with adequate governance process that enables the generation and timely submission of reports in accordance with the Bangko Sentral’s reporting standards,” it said in a circular.
Sections of the Manual of Regulations for Non-Bank Financial Institutions will be revised to reflect these amendments, it added.
The amendments include a revised section on the reporting governance framework for pawnshops.
“It is the thrust of the Bangko Sentral to exercise effective supervision over pawnshops. To facilitate such effective supervision, the Bangko Sentral adopts this reporting governance framework for pawnshops.”
The central bank said pawnshops must ensure complete, accurate, consistent, reliable and timely submissions of required information concerning their operation and management, financial condition and results of operations.
“It is incumbent upon the pawnshop proprietor/partner/board of directors and senior management or officers to implement an effective reporting system,” the BSP said.
“Pawnshops are expected to capitalize on available information technology in establishing an effective reporting system that is appropriate for their size and complexity of operations,” it added.
The circular details the reporting standards that pawnshops must comply with. For example, the reporting system must compile all material data across various business services, activities and entities relevant to regulatory reporting and produce regular, on-demand and ad hoc reports required by the BSP, among others.
“An effective reporting system shall include a management information system commensurate to the nature and operational complexity of the pawnshop’s business activities,” it said.
“Pawnshops shall have a true and accurate account, record or statement of their daily transactions,” the BSP added.
These records may include audio, photographic, and video evidence of events, acts or transactions of the pawnshop. These should also include records of communication, be it through oral or written means.
“The making of any false entry or the willful omission of entries relevant to a transaction is a ground for the imposition of administrative sanctions,” it added.
The circular also includes rules on the adoption of the manual of accounts prescribed by the BSP for recording daily transactions, including reportorial and publication requirements.
“The accounting records of pawnshops shall consist of records of original entry and books of final entry. The records of original entry shall consist of pawn tickets, official receipts, vouchers and other supporting documents,” it said. “The books of final entry shall consist of the general ledger, subsidiary ledgers and registers of loans extended and loans paid.”
The central bank also outlined rules for pawnshops’ submission of audited financial statements.
“The Bangko Sentral recognizes that external auditors play a vital role in contributing to the conduct of effective supervision and sustaining the confidence of the public in the financial system. In this light, the regulations on financial audit aim to enhance the quality of information channeled to the supervisory process and ultimately promote fairness, transparency and accuracy in financial reporting.”
Pawnshop operators are also required to report on crimes, whether consummated or attempted, as well as incidents involving material loss, destruction or damage to the pawnshop property, among others, according to the circular.
The circular outlined the sanctions for noncompliance with reporting standards, including erroneous, delayed and unsubmitted reports. The revised guidelines prescribe the monetary penalties for violations, ranging from P60 to P500 per day or per occurrence.
The central bank will likewise assess the quality of a pawnshop’s reporting system to determine the integrity of reports being submitted and the root cause of persistent submission problems, it added. — Luisa Maria Jacinta C. Jocson
