MAPping the Future

The December 31, 2025 financial statements—while technically the focus of the stockholders’ meetings in May or June — now feel like a distant memory. They do not, and cannot, reflect the “war premium” and the stark reality of the Iran conflict that began on February 28, 2026. For the Audit Committee (AudComm), its duty is to provide a bridge between those historical figures and the volatile present, ensuring the company remains a viable, business and human organization made stronger from the crisis.

 

The 2026 Landscape: A Q2 and Year-End Reality Check

 

The declaration of a State of National Energy Emergency has created a landscape defined by scarcity and soaring costs. We saw diesel prices reached staggering heights of ₱107 to ₱134 per liter, while gasoline fluctuates around ₱112 per liter before going down the past few weeks. Approximately 400 to 425 gas stations have shuttered temporarily across the nation because they simply cannot get products to sell. By the end of 2026, inflation might likely exceed the current 4.1%, directly hitting the purchasing power of every Filipino family. With real income for vulnerable households dropping, the cost of doing business has fundamentally shifted. Internal labor stability and external customer demand are both under extreme pressure.

 

Financial Management and Crisis Impact Report

 

Consistent with its enterprise risk mandate, the AudComm should require Management to move beyond retrospective review and provide a forward-looking “Crisis Impact Report”. The Report should critically address areas like:

 

Revenue and Expense Modeling: The company must assess the impact on revenues and identify which expenses are skyrocketing. With logistics and raw material costs expected to rise, the company must evaluate whether to pass these to customers or absorb them. This isn’t just a financial choice; it is a strategic one that considers the absorption capability of customers who are also feeling the pinch.

 

Liquidity and “Cash is King”: Survival depends on liquidity. The AudComm must oversee actions being taken by the company to not only pursue the timely collection of receivables but also to ensure the availability of credit lines. In a credit crunch, the AudComm must confirm that committed facilities are in place to sustain operations.

 

Inventory Risk Management: The focus shifts from “just-in-time” to “just-in-case”. The company must look at inventory not just as a cost, but as supply security. It must evaluate the risk of supply unavailability and the company’s ability to use local substitutes to minimize the high premium of “war imports”. Conversely, for products where demand is expected to drop or disappear, the company should recognize inventory obsolescence provisions. AudComm has to check actions by Management on this regard.

 

Energy Transition to Renewables: Crisis is a catalyst for structural change. It is an opportune time to reengineer processes and transition to crisis – resilient operations. For example, the company should study the replacement of oil-sensitive fixed assets with renewables. This might require a collaborative look at “lease vs. buy” financing that protects the company’s long-term future while recognizing immediate impairment on obsolete equipment. AudComm can help crystallize actions on this matter.

 

Covenant Monitoring and Contract Review: High energy costs directly impact EBITDA and interest coverage ratios. The AudComm should demand monthly stress tests on debt covenants to anticipate potential breaches before they occur. Moreover, many long-term agreements might have become “onerous” as the cost of delivery or fulfillment significantly exceeds agreed contract prices. The AudComm should oversee legal assessments to determine if the crisis constitutes a “Force Majeure” event, allowing for the renegotiation of terms with suppliers or customers.

 

Cybersecurity: Crisis heightens the risk of cyberattacks and fraud on financial infrastructure. The AudComm must ensure the IT disaster recovery plan is stress-tested for worst case scenarios.

 

The Working Environment: Protecting the Human Capital

 

Labor often bears the brunt of the crisis through eroded wages. The company’s HR management response defines the true values of an organization. HR actions may include regular, honest updates on how the crisis is impacting the company. Transparency builds the trust necessary for employees to accept difficult changes, like compressed workweeks. Treating employees with dignity and strategic care during a national emergency isn’t just a moral choice; it’s a business continuity requirement. Support should be practical and empathetic, ranging from allowances or company provided transportation for essential staff when public utility vehicles stop operating.

 

Summary

 

Ultimately, the 2026 energy emergency transcends technical compliance; it is a foundational test of our institutional character. The AudComm’s mandate must now encompass a dual necessity: serving as the unyielding anchor for fiscal survival while acting as the strategic catalyst for resilience and renewal. Yet, its most enduring legacy will not be found in the balance sheets, but in how effectively it protected the human core of the organization amidst the chaos. It is through this synthesis of rigorous discipline and deep empathy that AudComm honors its highest fiduciary duty—to the stockholders, to the employees, and to the public.

 

[The author is member of the Ease of Doing Business Committee of the Management Association of the Philippines (MAP).  He is an ICD Fellow, a Board member and Corporate Treasurer of Color Philippines, Marking Services Philippines and Eagan Services Philippines. He was Chair of the Quality Assurance Review Council of the Board of Accountancy and the Philippine Institute of CPAs. He was a Partner and Head of the Assurance Division of P&A and former President of P&A Grant Thornton Outsourcing Inc. Feedback at <map@map.org.ph> and <jccarpio627@gmail.com>].