PART II - DETAILED FINDINGS AND RECOMMENDATIONS

A. Financial and Compliance Audit 1. T e P!o"ince o# Ne$!o% Occidental #ailed to !econcile& identi#'& and p!ope!l' cla%%i#' (alance% o# a%%et account% totallin$ P1&)*+&+,,&1,-.-.& / ic !ende!% dou(t#ul t e "alidit' o# 0+1 o# t e total a%%et% !eco!ded in t e (oo2% o# account% o# t e LG3 a% at 'ea!-end. The Philippine Government Accounting Standards as promulgated by the Commission on Audit under COA Resolution No. 2 !" ! dated #anuary $%& 2 ! provides& among others& that' 1.3 The books of accounts shall consist of : (a) National Government (NG) books (b) Regular Agenc (RA) books for recor!ing fun!s "ertaining to agenc #s regular o"erations$ an! (c) %ubsi!iar le!gers& 'hich reconcile 'ith general le!ger control accounts such as cash& receivables& inventories& "ro"ert "lant an! e(ui"ment an! "a ables. (t li)e*ise included !elia(ilit' among the +ualitative characteristics o, ,inancial reporting *hich shall be used as guides in the recording o, transactions and preparation o, ,inancial statements& and provided that )financial information is reliable 'hen the (ualit of information assures users that such is free from bias an! error an! faithfull re"resents 'hat it "ur"orts to re"resent. A cursory analysis o, the subsidiary ledger balances comprising the asset accounts o, the various ,unds maintained by the Province o, Negros Occidental sho*s unreconciled balances o, assets that have not been identi,ied and properly classi,ied& amounting to P%&-./&/22&%2 . 0 (refer to Anne*es +,1 to +,-). These balances have been tentatively recorded at the inception o, the implementation o, N"GAS and constitute $/1 o, total assets recorded in the boo)s o, accounts o, the Province. The same renders di,,icult the veri,ication o, accounts considering that records o, transactions in the past years and administrations are not readily available& and the material amounts involved cast doubts on the validity o, the balances o, recorded transactions. 2anagement averred that reconciliation o, balances is an ongoing activity and that a total o, P%-!&-2%&!02.%/ unreconciled balances have been cleaned up during the current year. They undertoo) to give priority to accounts cited in the ,inding& e3cept ,or dormant accounts ,or *hich relevant records cannot be located despite diligent e,,orts. They also admitted that the amount o, Property& Plant 4 5+uipment accounts as recorded in the boo)s o, accounts cannot be reconciled *ith e3isting assets in vie* o, balances

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*hich had long been carried in the boo)s ,or several years *ith no ade+uate brea)do*n or corresponding analysis o, the composition o, said balances. 6e in,ormed management that COA has prescribed reporting re+uirements ,or losses o, documents under COA Circular No. 0$". . dated October %/& %00$. 2oreover& in the case o, the national government& COA had prescribed guidelines in the proper disposition and closure o, dormant ,unds and7or accounts under COA Circular No. 0-" % dated 8ebruary 9& %00-& *hich may li)e*ise serve as a guide ,or the local government similarly situated. 6e recommend that the Provincial Accountant should continue to e,,ect reconciliation o, the balances o, the asset accounts against relevant records& and to record the appropriate ad:ustments to re,lect the correct balances. A comprehensive inventory o, all ;G< assets should also be conducted to determine the actual e3istence and proper valuation o, the same. Such inventory could ascertain and validate discrepancies bet*een the recorded amounts and the actual e3isting assets& *hich in turn could ,orm the basis ,or re+uesting ,rom the Commission Proper authority to *rite"o,, dormant accounts& the e3istence o, *hich can no longer be con,irmed or veri,ied. A list o, available records and e3tent o, validation made on the accounts proposed ,or *rite"o,, and7or ad:ustment should be made& consistent *ith provisions o, COA Circular 0-" %& and in case reconciliation against relevant records is no longer possible since the same can no longer be located& an investigation report narrating the cause=s> o, loss o, the documents or records and pinpointing the o,,icial7s and employee7s liable there,or should be submitted ,or evaluation& pursuant to COA Circular No. 0$". ..

,. T e P!o"ince #ailed to implement e4i%tin$ !ule% and !e$ulation% pe!tainin$ to t e $!antin$& utili5ation and li6uidation o# ca% ad"ance% o# o##icial% and emplo'ee% o# t e LG3& !e%ultin$ in t e unli6uidated ca% ad"ance% amountin$ to P*0&,07&,+7.,- a% at 'ea!-end. COA Circular No. 0-" 2 dated 8ebruary % & %00- contains the ,ollo*ing provisions concerning cash advances' ../ Granting an! 0tili1ation of +ash A!vances ..1 General Gui!elines ..1.2 No a!!itional cash a!vances shall be allo'e! to an official or em"lo ee unless the "revious cash a!vance given to him is first settle! or a "ro"er accounting thereof is ma!e .

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..1.3 A cash a!vance shall be re"orte! on as soon as the "ur"ose for 'hich it 'as given has been serve!. ..1.3 The Accountant shall obligate all cash a!vances grante!. 4e shall see that cash a!vances for a "articular ear are not use! to "a e*"enses of other ears. -./ 5i(ui!ation of +ash A!vances -.1 The A6 shall li(ui!ate his cash a!vance as follo's: -.1.1 %alaries& 7ages& etc. 8 'ithin - !a s after each fifteen (1-) !a 9en! of the month "erio!. -.1.2 :ett 6"erating ;*"enses an! <iel! 6"erating ;*"enses 8 'ithin t'ent (2/) !a s after the en! of the ear$ sub=ect to re"lenishment as necessar !uring the ear. -.1.3 6fficial Travel 8 'ithin si*t (>/) !a s after return to the :hili""ines in case of foreign travel or 'ithin thirt (3/) !a s after return to his "ermanent official station in the case of local travel <ailure of the A6 to li(ui!ate his cash a!vance 'ithin the "rescribe! "erio! shall constitute vali! cause for the 'ithhol!ing of his salar an! the instruction of other sanctions as "rovi!e! for un!er "aragra"hs ?/2.an! ?/.3 hereof. -.@ 7hen a cash a!vance is no longer nee!e! or has not been use! for a "erio! of t'o months& it must be returne! to or refun!e! imme!iatel to the collecting officer. -.3 All cash a!vances shall be full li(ui!ate! at the en! of each ear. ;*ce"t for "ett cash fun!& the A6 shall refun! an une*"en!e! balance to the +ashier9+ollecting 6fficer 'ho 'ill issue the necessar official recei"t. -.? At the start of the ensuing ear& a ne' cash a!vance ma be grante!& "rovi!e! that a list of e*"enses against the "revious cash a!vance is submitte!. 4o'ever& 'hen no li(ui!ation of the "revious cash a!vance is receive! on or before Aanuar 2/& the Accountant shall cause the 'ithhol!ing of the A6#s salar . COA Circular No. 2 ,ollo*ing' 0" 2 dated 2ay %/& 2 0 li)e*ise provided ,or the

..1.3(i*) +ash a!vance for s"ecial time,boun! un!ertaking shall be li(ui!ate! b the accountable officer concerne! 'ithin one month from the !ate the "ur"ose of the cash a!vance 'as accom"lishe!. A revie* o, e3isting balances o, cash advances to o,,icers and employees as o, ?ecember $%& 2 % reveal that .0./1 o, the outstanding balance o, P.$&2$9&2/9.2 pertain to advances granted in 2 0 and earlier years& a clear indicator that rules and regulations governing li+uidation have not been properly implemented (refer to Anne*es B,1 to B,-). 6e li)e*ise noted that additional cash advances *ere granted despite ,ailure on the part o, the o,,icial and7or employee concerned to li+uidate previous advances& *hich

li)e*ise resulted in the undue accumulation o, unli+uidated balances. Several disbursing o,,icers have unli+uidated balances o, petty cash ,unds since 2 !& particularly those pertaining to subsistence and meals o, prisoners. 6e also noted indicators o, errors in recording o, transactions& such as li+uidations *hich do not pertain to any previously recorded cash advances in the subsidiary ledgers& resulting in negative or unusual balances. (naccurate records *ea)en accounting controls over these transactions. 6e observed that $2.21 o, the outstanding balances pertain to transactions recorded in 2 - and earlier years& the bul) o, *hich pertain to reclassi,ied balances on #anuary 2 -. The ,ailure to li+uidate cash advances in accordance *ith the prescribed rules and regulations results the misstatement o, e3penses in the period they *ere actually incurred& as *ell as in the overstatement o, assets and retained earnings accounts. The Provincial Accountant indicated that an annual :oint year"end memo al*ays includes reminders on li+uidation o, cash advances. Nonetheless& all o,,ices should once more be in,ormed o, provisions o, COA Circualr 2 0" 2 pertaining to cash advances& along *ith noti,ication to all employees to li+uidate *ithin ! days all pending cash advances& or *ithholding o, salaries o, concerned employees *ill be e,,ected. Clean up o, negative balances *ill be prioriti@ed. To enhance e,,orts to e,,ect li+uidation& *e advised management to ,urnish as *ell the department heads and division chie,s a listing o, long"outstanding unli+uidated cash advances o, employees under their charge. 6e recommend that the Province should comply *ith the provisions o, COA Circular 0-" 2 and ensure proper granting& utili@ation and li+uidation o, cash advances. The Provincial Accountant should recti,y errors in the recording o, accounts to ensure proper monitoring o, li+uidation o, cash advances and implementation o, e3isting rules and regulations on cash advances& including the *ithholding o, salaries o, accountable o,,icers *ho ,ail to e,,ect prompt li+uidation in accordance *ith e3isting rules and regulations.

$. E4tant p!actice% and p!ocedu!e% o# t e P!o"ince pe!tainin$ to !eceipt% and collection% !e%ulted in dela'ed !emittance% and depo%it% and dela'ed !eco!din$ o# !eceipt% and collection%& t e!e(' /ea2enin$ accountin$ cont!ol% o"e! t e ca% t!an%action% and ultimatel' !e%ultin$ in t e unde!%tatement o# t e (alance% o# ca% & income and !elated account% in t e pe!iodic and 'ea!-end #inancial %tatement% amountin$ to P)&071&0.,.-. in ,--. and P.&0)7&1.*.8, in ,-1-& cont!a!' to t e accountin$ policie% %et #o!t in t e Manual on t e Ne/ Go"e!nment Accountin$ S'%tem.

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The 2anual on the Ne* Government Accounting System =NGAS> ,or ;G<As& Bolume ( set ,orth the accounting plan and policies on collections and deposits. 6e conducted a revie* o, the Reports o, Collections and ?eposits =RC?As> ,or a test period ,rom #anuary to 8ebruary 2 % to determine compliance *ith said policies and procedures and noted the ,ollo*ing' Repo!tin$ o# collection% Sec. 20 o, the 2anual on NGAS provides ,or the ,ollo*ing' Reporting for Collections and DepositsAt the close of each business day& these collectors9tellers shall accom"lish the Re"ort of +ollections an! Be"osits (R+B) in four co"ies. The original an! t'o co"ies& together 'ith the !u"licates of the official recei"ts issue!& shall be submitte! to the treasurer9cashier to 'hom the cash collecte! shall be turne! over Cn case of collectors assigne! to the fiel!& where travel time from their "laces of assignment to the Treasurer#s 6ffice is more than one day& turnover of collections shall be ma!e at least once a week or as soon as the collections reach P5,000 00. Contrary to said procedures& the Provincial TreasurerAs O,,ice ,ailed to establish proper cut"o,, in the reporting o, collections& particularly the preparation o, the Report o, Collections and ?eposit. 6e noted that many collectors do not regularly prepare RC?As at the close o, each business day since several o, these RC?As cover collections spanning a period o, several days. Since RC?As are not prepared by all collectors at the close o, each business day& the corresponding regular daily turn"over o, collections have li)e*ise not been e,,ected by collectors& even *hen the amount held by o,,ice collectors e3ceed the threshold ,or ,ield collectors o, P9& . . As a result& the amounts turned"over to the li+uidating o,,icer& and eventually to the cashier& consist o, a mi3ture o, partial collections spanning over several days instead o, the collections ,or a particular business day& as originally laid out in the accounting plan per NGAS. 9e!i#ication o# !epo!t% and depo%it o# collection% The 2anual on NGAS provides ,or the ,ollo*ing' !ec "0 #erification of Collections and Accountable $orms . 8 The Treasurer9+ashier shall verif the Re"ort of +ollections an! Be"osits$ check the statement of accountable forms as to initial balances on han!& recei"ts& issues an! the en!ing balances on han!$ make a physical count of the accountable forms remaining in the custo! of the collector9teller an! check the same against new balances on hand column. 4e shall in!icate his verification b affi*ing his signature at the back of the tri"licate co" of the last official recei"t issue!. 4e shall count the mone turne! over to him an! sign the certification an! recei"t "ortion of all co"ies of R+B.

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!ec "% Designation of &i'uidating (fficers 8 The Treasurer may !esignate li(ui!ating officers from among the collectors9tellers 'henever necessar . a. +ollectors9tellers shall turn over their collections to their !esignate! li(ui!ating officer. The R+B shall ho'ever be "re"are! in five co"ies b. The li(ui!ating officer shall perform the procedures for the receipt and verification of collections turne! over to him. 4e shall also accom"lish the R+B in four co"ies to summari1e the collections turne! over to him b the collectors9tellers as 'ell as his o'n collections. c. The li(ui!ating officer shall turn over intact the cash collections to the Treasurer9+ashier together 'ith the originals an! t'o co"ies of the R+Bs of collectors9tellers an! the !u"licates of the official recei"ts issue! !ec ") Deposit of Collections 8 The Treasurer9+ashier shall !e"osit intact all his collections as 'ell as all collections turne! over to him b the collectors9tellers 'ith the authori1e! !e"ositor bank daily or not later than the ne*t banking day . 4e shall recor! all !e"osits ma!e in the cashbook an! "re"are the R+B The ,oregoing provisions set ,orth the policy o, e,,ecting deposit o, all collections intact daily =on the same day or at the very least not later than the ne3t ban)ing day> and vesting the responsibility ,or the veri,ication o, the RC?As prepared by the collectors on the Treasurer& Cashier and7or the li+uidating o,,icer7s. 2oreover& in order to ensure that correct balances are re,lected in the ,inancial statements& the daily veri,ication should be implemented concurrently *ith the policy o, preparing daily reports o, all collections ,or a particular day at the close o, said business day. 6e noted that the Provincial Treasurer delegated the veri,ication ,unctions on a separate unit rather than on the li+uidating o,,icer as outlined in the NGAS. 6hile not discounting the value o, creating such a unit& our revie* o, RC?As reveal that this had resulted in ,urther delaying the remittance and recording o, collections in the boo)s o, accounts& instead o, ,acilitating these ,unctions as *as originally intended. 6e also noted that only a single li+uidating o,,icer is made to handle remittances o, all collections =General 8und& G8"55??& Trust 8unds and Special 5ducation 8und> although the regulation allo*s designation o, more than one to ,acilitate the prompt remittance o, collections. 6e li)e*ise observed that the validation do not assure correctness o, the abstract o, collections. (n some o, the abstracts o, collections revie*ed during the period& cross" ,ootings o, the columns do not tally *ith the total collections per RC?. 6e also noted errors in RC?As o, the li+uidating o,,icer consolidating and reporting the collections remitted by the collecting o,,icers. EEDD and Field Collection% The 2anual on NGAS ,urther provides'

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!ec "" Deposit of $ield Collections . 8 +ollections b fiel! collectors shall be remitte! to the +ashier or !esignate! li(ui!ating officer of the fiel! office of the 5G0. 7hen travel !istance of the fiel! office to the local treasur ma e*"ose government fun!s to the risk of loss 'hile in transit& the +ashier or !esignate! li(ui!ating officer ,upon authori+ation by the ,reasurer, may deposit the collections in the authori+ed depository bank near the field office of the &-. . The "roce!ures in re"orting collections an! !e"osits "rescribe! in this +ha"ter shall be observe!. 55?? C Dospitals 8or hospitals operated by the Province& collections and deposits are handled by duly appointed cashiers holding plantilla positions& e3cept ,or t*o hospitals *ith personnel detailed by the Provincial TreasurerAs O,,ice and t*o *ith designated cashiers7collecting o,,icers. (n most hospitals& RC?As are not prepared on a daily basis. The a,orenoted threshold o, P9& . is also not observed. Some hospitals directly deposit collections in authori@ed depository ban)s either in Eacolod City or near their locality. Others e,,ect deposits to the ;and Ean) Eacolod account o, the Province through inter"ban) trans,ers& *hile others still remitted their collections to the li+uidating o,,icer and Cashier based here in Eacolod City. Regardless o, the manner o, remittance or deposit& all cashiers nonetheless still submit the RC? to the li+uidating o,,icer& validating o,,ice and the Cashier ,or eventual consolidation and inclusion in the RC?As prepared by the li+uidating O,,icer and Cashier. The RC?As are thus recorded in the boo)s o, account as o, the date o, such consolidation =regardless o, *hen the collection or deposit is actually made>. The procedure invariably resulted in very much delayed recording o, collections " *e noted instances *hen collections are only recogni@ed in the boo)s three *ee)s a,ter the same had been deposited. 55?? C 2ambu)al and other ,ield collectors No regular cashier is assigned to 2ambu)al. 8ield collectors are instead sent to 2ambu)al to e,,ect collections o, ,ees and revenues earned by the resort *hich easily top the total annual collections o, even the Provincial Dospital in Silay City =*hich has a regular cashier in its plantilla>. 6e noted that ORAs are not issued in strict numerical se+uence& contrary to Sec. -$ o, the Government Accounting and Auditing 2anual *hich provides' /Preparation of official receipts 8 :re,numbere! official recei"ts shall be issue! in strict numerical se(uence RC?As are also not prepared by the collectors on a daily basis& but only to support remittances *hen they report bac) to Eacolod O,,ice. 6e noted that the thresholds o, P9& . as *ell as that on the collectorAs travel time are not implemented. 53cept ,or 2ambu)al& the assignments do not e3ceed %9 )ilometers ,rom the Eacolod O,,ice. None

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o, the assigned areas targeted ,or collection involve travel time o, more than one day =thresholds set under the GAA2 and the 2anual on NGAS>. Remittances by collectors thus vary ,rom one day to one month a,ter the collection is made and ac)no*ledged by issuance o, an o,,icial receipt. Pa!tial Depo%it o# Repo!ted Collection% : Mam(u2al 6e observed that collectors deployed to 2ambu)al are presently allo*ed to deposit collections directly to the ban). 6e noted ho*ever that partial deposits o, collections *ere being made *ithout establishing proper cut"o,, o, transactions& particularly since a single RC? and abstract is prepared covering collections spanning several days and the partial deposits7remittances. Di!ect !emittance% (' client% 6e also noted instances *hen clients are allo*ed to deposit money directly to the account o, the Province. Said collections are receipted only at a much later date and included in RC?As subse+uently prepared& resulting in delayed recording o, income and collections although the transactions are already re,lected in the ban) statements. Di%to!tion% in !epo!ted ca% (alance% The 2anual on NGAS li)e*ise provides' !ec "0 Accounting for Collections and Deposits The Accountant shall !etermine the account classification of the collections covere! b the R+B an! the su""orting "a"ers submitte! b the Treasurer9+ashier an! shall accom"lish the Aournal ;ntr Doucher <nder Sec. %0 o, the 2anual on NGAS& the prescribed method o, accounting ,or ta3es& ,ees& charges and revenues& other than real property ta3es and Share ,rom (nternal Revenue Collections& is cash basisF that is& *hen cash or its e+uivalent is received. Current practices in contrast e3cludes income earned ,or *hich cash is already in the hands o, collectors& and *orse& in the case o, 55??& is in ,act already deposited to the account o, the Province. The delay in remittance o, collections and de,iciencies in the reporting practices and procedures ultimately results in material distortions in the cash balances and related accounts as re,lected in the TreasurerAs O,,ice reports and in the ,inancial statements prepared by the Accounting O,,ice. Cash balances as o, ?ecember $%& 2 0 *ere understated by P-&$9%&$02. 0 *hile the balances as o, ?ecember $%& 2 % *ere understated by P0&$-9&%0..!2 (refer to Anne*es ;,1 to ;,3). ;ea2enin$ o# Inte!nal Cont!ol ?elays in reporting as *ell as inappropriate cut"o,, o, transactions and reporting li)e*ise *ea)en internal control. One o, the o,t"repeated common rules on internal

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control over cash receipts states that )control over cash& inclu!ing remittances through the mails& shoul! be establishe! imme!iatel after it has been receive!$ collections shoul! be ackno'le!ge! 'ith "re,numbere! official recei"ts an! recor!e! "rom"tl an! "ro"erl .E (+6A +ircular No. @@,.3 !ate! Aanuar 31& 1?@@). The presence in the ban) statements o, yet to be accounted receipts and collections either due to delayed reporting o, direct deposits made by hospitals as *ell a delayed ac)no*ledgement o, direct deposits by clients li)e*ise rendered di,,icult the reconciliation o, ban) accounts. Accounting e3plained that preparation o, abstract o, collections is dependent on the Report o, Collections and ?eposits to determine proper account code classi,ication. 2atters li)e timely submission o, reports& supporting documents to collection deposit and recording o, revenues and other related concerns *ere aptly discussed in a :oint meeting o, Accounting and TreasurerAs O,,ice personnel& and similar discussions *ill be ,urther conducted to address the de,iciencies. 6e recommend that management should implement measures to ensure prompt reporting& remittances and deposit o, collections in order to re,lect the correct cash balances in the ,inancial statements' a. Collecting o,,icers should be re+uired to prepare RC?As at the close o, each business day and e,,ect remittance o, their collections daily& particularly *hen collections e3ceed P9& . F b. The Province should consider the designation o, additional li+uidating o,,icers and merging their ,unctions *ith the veri,ication unit& in order to ,acilitate the veri,ication and remittance process. Procedures ,or veri,ication o, receipts should be streamlined to ensure prompt recording and remittance o, collections.F c. The Province should li)e*ise consider the designation o, a regular cashier and7or collecting o,,icers ,or 2ambu)al resort& considering the substantial volume o, cash handled by said enterpriseF d. 5nterprises *ith assigned cashiers =regular or designated> should be re+uired to deposit collections in authori@ed depository ban)s =directly or through inter"ban) trans,ers> to reduce ris) o, loss in transit as *ell as to ensure prompt deposit o, collections. The veri,ied RC?As should be submitted to accounting ,or recording& and the transactions o, the cashiers as accountable o,,icers o, said enterprises should be recorded in their respective cashboo)s. e. The Provincial Accountant and the Provincial Treasurer should conduct :ointly a revie* o, the accounting and reporting policies o, the Province *ith regard to collection& deposit and recording o, revenues& in order to ensure correctness and accuracy o, cash balances in Treasury reports and in the ,inancial statements and to preclude any duplication o, procedures and ,unctions.

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*. A #und t!an%#e! #!om t e Gene!al Fund to t e EEDD on Decem(e! 0-& ,-1- /a% not immediatel' ac2no/led$ed a% collection o# t e EEDD on t e %ame date& !e%ultin$ in t e unde!%tatement o# con%olidated Ca% account% o# t e P!o"ince a% at 'ea!-end (' P 07&71+&)+1.7-. ;EP Chec) No. 29$%%%- covered by ?isbursement Boucher No. % "22!-amounting to P$9&9%/&-/%.9 *as issued on ?ecember $ & 2 % and promptly recorded in the boo)s o, the General 8und as Subsidy to Other 8unds =55??>. The corresponding O,,icial Receipt *as issued and recorded in the 55?? boo)s only on #anuary .& 2 %% *hile the chec) *as deposited only on #anuary 9& 2 %%. The transactions bet*een ,unds maintained by the Province should not have a,,ected the actual over"all cash balance& but since the related transactions are recorded in di,,erent accounting periods& the same resulted in the inadvertent understatement o, Cash accounts o, the Province as at year"end as per consolidated ,inancial statements. To avoid recurrence o, a timing di,,erence bet*een the recording o, the inter",und trans,er and the issuance o, the corresponding receipt& the Accounting O,,ice underta)es to have a close coordination *ith the PTO regarding transactions o, this nature. 6e recommend that the appropriate ad:ustments be recorded in the boo)s as at year"end to correct the understatement o, the Cash accounts& and that hence,orth& transactions involving ,und trans,ers should be simultaneously recogni@ed in the boo)s o, accounts maintained ,or the ,unds involved in said transactions.

7. T e lac2 o# p!ope! !e"ie/ o# t e "alidit' o# !econcilin$ item% in t e (an2 !econciliation %tatement% and monito!in$ o# t ei! di%po%ition (' t e Accountin$ O##ice de%pite indicato!% o# po%%i(le #!audulent t!an%action% amountin$ to P1*&0)+&077.,0 ca%t dou(t% on t e "alidit' o# t e !econciliation p!oce%% and t e accu!ac' o# t e "aluation o# t e ca% account% in t e #inancial %tatement%& in "ie/ o# un!eco!ded ad<u%tment% in t e (oo2% o# account% #o! !econcilin$ item% !e6ui!in$ de(it to ca% amountin$ to P7,&,*,&,-7..1 and ad<u%tment% #o! c!edit% to ca% totallin$ P*.&*80&.-*.00. The National Guidelines on (nternal Control Systems& as circulari@ed in ?E2 Circular ;etter No. 2 /"/ dated October 2$& 2 / and COA 2emorandum 2 0" . dated 8ebruary %!& 2 0& identi,ied t*o elements o, internal control' plan o, organi@ation and coordinated measures and procedures. The guidelines li)e*ise speci,ically listed reconciliation o, ,inancial and non",inancial data among the most common control policies and procedures that are part o, the coordinated measures and procedures that every o,,ice should have'

2-

GO"erating "roce!ures of ever office re(uire that the cash recor!s of the Accounting an! the +ash units shoul! be regularl reconcile!. The recor!s of the !e"ositor banks "ertaining to the cash accounts of an agenc shoul! be reconcile! 'ith the recor!s of the Accounting an! +ash units. This "rocess 'ill !etect errors or frau! either b the bank& the Accounting unit or the +ash unitE COA Circular No. 0!" %% dated October 2& %00! provides ,or the ,ollo*ing general7policy guidelines on the preparation o, ban) reconciliation statements =ERS>' 3.1 The !e"ositor 9servicing banks shall furnish the 5ocal Accountant 'ith the Fank %tatements (F%) inclu!ing !ebit9cre!it memos (BG9+G)& "ai! checks& etc.& 'ithin five (-) !a s after the en! of each month 'hich shall be the basis for the "re"aration of the monthl Fank Reconciliation %tatements. 3.2 The 5ocal Accountants shall 'ithin ten (1/) !a s from recei"t of the Fank %tatements& reconcile the same (F%) 'ith the General 5e!gers (G5) an! "re"are the FR% in five (-) co"ies 3.3 The accountant shall !ra' =ournal vouchers to recor! all vali! reconciling items that re(uire correction in the G5. 6e revie*ed several ban) reconciliation statements submitted by the Accounting O,,ice and noted de,iciencies in the preparation o, the same' %. (nclusion o, several invalid reconciling items& inaccurate and inappropriate labeling& and lac) o, proper details necessary to boo) ad:usting entries (refer to Anne* <,1)F 2. 8ailure to e,,ect correction by the ban)s o, errors and the ad:ustment o, balances ,or unauthori@ed7illegitimate ban) debits and credits to the account(refer to Anne* <,2)F $. 8ailure to ad:ust long outstanding reconciling items to date(refer to Anne* <,3). (nvalid Reconciliation (tems 6e noted several instances o, erroneous listing o, outstanding chec)s *hich *ere carried over several ban) reconciliation statements. The same o,ten had corresponding reconciling items per boo)s that *ere incorrectly presented as unrecorded disbursements& although veri,ication sho*ed proper recording o, the same. There are also instances *hen details o, the actual outstanding chec) di,,ered ,rom that listed in the ban) reconciliation statements& indicating lac) o, proper matching o, entries in the boo)s o, accounts as against that in the ban) statements. 2islabeling o, reconciling items also hindered prompt and correct ad:ustments. 6e observed instances *hen interest and the corresponding *ithholding ta3 are reported as unrecorded deposits and *ithdra*als& *hich also indicate ,ailure to investigate the true nature o, the recorded transactions in the ban) statements.

2/

Several long"outstanding items lac) appropriate details to ,acilitate revie* and to e,,ect ad:ustments& and include these items indicating lac) o, proper reconciliation labeled as unaccounted di,,erences' Reconciling (tems Per Ean) General 8und' PNE = $ 9"/! $"%7 $ 9"9%%/$/"-> ;EP = .22"% %%"92> Reconciling (tems Per Eoo)s General 8und' ?EP = %%2"-.9"2> P -00&0%0.9$ PNE = $ 9"/! $"%7 $ 9"9%%/$/"-> .//&-/$./2 ;EP = .22"% %%"92> 2&2/!&90%.Special 5ducation 8und' ;EP = .22"%% !"!!> ./-&$$2.!0 Trust 8und' ;EP =PR2 4 S?A Earas> 2!&000. Grand Total 8ailure to 5,,ect Correction o, Ean) Statements 6e noted that numerous reconciling items consisting o, alleged ban) errors =*hich *ere not merely due to timing o, the recording o, transactions> had not been corrected to date. The lac) o, proper monitoring o, items re,lected in the ERS had resulted in the accumulation o, these alleged ban) errors amounting to additions o, P29&$%.&00-.!9 as against deductions o, only P%%&2 & -9.-$. This means a potential loss o, P%.&%%.&02%.02& and the probability o, still e,,ecting recti,ication o, errors are remote considering the lapse o, the period set by Eang)o Sentral ng Pilipinas regulations ,or noti,ication to Ean)s ,or any errors in ban) statements. No proper determination o, the nature o, ban) charges is made& resulting in the accumulation o, charges on the ban) account o, the Province at ?EP Haban)alan ,or being dormant over at least %2 months. 2oreover& the Accounting had been using only ,a3ed copies o, the ban) statements and ,ailed to obtain any copy since 8ebruary % & 2 % & thus ,ailing to monitor any additional charges. 6e li)e*ise noted that the PNE had been charging the Province ban) charges ,or allegedly ,ailing to maintain the re+uired balance& but upon veri,ication& the account is actually e3empt. The charges *ere reversed pursuant to representations made in the course o, audit.

$0/& 09.$ $& & .

P$&$0/& 09.$

P$&9-9&209. 9 ./-&$$2.!0 2!&000. P.& /0&!2!.-.

20

8ailure to 5,,ect Ad:ustments Per Eoo)s Contrary to procedures prescribed under COA Circular No. 0!" %%& :ournal vouchers to record valid reconciling items re+uiring ad:ustments per boo)s as re,lected in the ERS are not promptly prepared. This had resulted in the accumulation o, reconciling items re+uiring debit to cash amounting to P92&2.2&2 9.0% *hile ad:ustments ,or credits to cash amounted to P.0&.!$&0 ..$$& resulting in material misstatements in accounts a,,ected by said ad:ustments. The personnel charged *ith preparing the ERS indicated that *hile he determines the reconciling items& he is not charged *ith the preparation o, the conse+uent ad:ustments resulting ,rom his reconciliation. (ndicators o, Possible 8raud The ERS sho*ed Gdeposits in transitI recorded in the boo)s but not ac)no*ledged by the ;and Ean) o, the Philippines =General 8und " ;EP .22"% %%"92>& indicating possible misappropriation o, the same' -7/7%0097227%00/ 07227%000 97% 72 /72$72 P 2$2&!2-. %&!% &0-2. 2&0!..0. / . .& . P%&/9%&$!$.0.

;i)e*ise& the ERS prepared ,or the account maintained at Philippine National Ean) =General 8und" PNE $ 9"/! $%> included various Gdeposits per boo) not ta)en up per ban)I' Current Savings Total P %&9.2& !9.-2 % &0/.&029.9P %2&92!&00%.20

The Accounting O,,ice cited delays in submission o, ban) statements and ,ailure to attach debit and credit advices by the ban)s despite numerous re+uests ,or the same. 8a3ed copies o, ban) statements *ere accepted to ,acilitate timely preparation o, ban) statements. Non"availability o, supporting documents also hindered prompt preparation o, #ournal 5ntry Bouchers ,or ad:ustments. 6e recommend that the Provincial Accountant should implement the provisions o, COA Circular No. 0!" %% and record ad:ustments ,or valid reconciling items as re,lected in the ERS prepared by the Accounting O,,ice. The Province should li)e*ise

ma)e representations to the respective ban)s ,or correction o, ban) errors noted in the ERS. Dence,orth& the ERS submitted to the COA Auditor should be supported by copies o, the #5B recording reconciling items that re+uire correction in the boo)s o, accounts& as *ell as a copy o, the letter to the respective ban) in,orming them o, errors noted in the ERS =other than those resulting ,rom the timing o, recording o, transactions>. <pon receipt o, the ban) statements and prior to actual reconciliation& veri,ication o, supporting paid chec)s& debit memos and credit memos should be made to ensure that debits and credits made in the ban) statements are properly documented by the Ean). The Accounting O,,ice should re+uire ban)s to submit original copies o, the ban) statements& aside ,rom the ,a3ed advanced copies. Cash balances and transactions should be monitored regularly to determine proper use o, the accounts and prevent charges per ESP regulations ,or dormant accounts.

8. T e P!o"ince #ailed to e##ect p!ompt li6uidation% o# #und% !elea%ed to non$o"e!nmental o!$ani5ation%=p!i"ate o!$ani5ation% >NGO=PO?%@ pu!%uant to t e p!o"i%ion% o# COA Ci!cula! ,--)---1 dated Octo(e! ,7& ,--)& !e%ultin$ in t e accumulation o# unli6uidated !elea%e% amountin$ to P1+-&*17&+88.-+ a% at 'ea!end alon$ /it t e con%e6uent unde!%tatement o# e4pen%e% and o"e!%tatement o# a%%et% and !etained ea!nin$%. COA Circular 2 -" % dated October 29& 2 - contains the revised guidelines in the granting& utili@ation& accounting and auditing o, ,unds released to Non"Governmental Organi@ations7PeopleAs Organi@ations =NGOs7POs>. Section 9.. thereo, provides that )'ithin si*t (>/) !a s after the com"letion of the "ro=ect& the NG69:6 shall submit the final <un! 0tili1ation Re"ort certifie! b its Accountant an! a""rove! b its :resi!ent9+hairman to the G6& together 'ith the ins"ection re"ort an! certificate of "ro=ect com"letion ren!ere!9issue! b the G6 authori1e! re"resentative& list of beneficiaries 'ith their acce"tance9ackno'le!gment of the "ro=ect9fun!s9goo!s9services receive!. The vali!it of these !ocuments shall be verifie! b the internal au!itor or e(uivalent official of the G6 in recor!ing the fun! utili1ation in its books of accounts. These !ocuments shall su""ort the li(ui!ation of fun!s grante! to the NG69:6.E Sec. ..9.9 li)e*ise provided that )in case of staggere! fun! releases or ne' fun! release covere! b another G6A& no NG69:6 shall receive a!!itional releases unless an interim <un! 0tili1ation Re"ort of the "revious release certifie! b its Accountant an! a""rove! b its :resi!ent9+hairman is first com"lie! sho'ing a summar of e*"enses an! a status re"ort of the accom"lishment evi!ence! b "ictures. The vali!it of this !ocument shall be verifie! b the internal au!itor or e(uivalent official of the G6.E

$%

Sec. ..9.! ,urther provided that )no NG69:6 shall be a reci"ient of fun!s 'here an of the "rovisions of this +ircular an! the G6A entere! into 'ith the G6 has not been com"lie! 'ith& in an "revious un!ertaking 'ith fun!s allocate! from the G6.E An analysis o, unli+uidated balances o, cash trans,ers to NGO7POAs as at year" end reveals that 0..$01 o, the outstanding balance o, P%.-&-2!& 2$./ pertain to releases made in 2 0 and earlier years& a clear indication that the a,orementioned rules and regulations governing granting and li+uidation o, these accounts have not been properly implemented (refer to Anne*es G,1 to G,3). (n 2 % & the Province released ,und trans,ers to NGO7POAs amounting to P0&0$9&9 . =net o, ad:ustments ,or trans,ers charged to e3penses representing donations to government organi@ations and agencies>& o, *hich only P%&!9 & . have been li+uidated as at year"end. 6e li)e*ise noted that releases in the total amount o, P-&-- & . *ere granted to NGO7POAs *ith outstanding balances to their accounts as o, date o, release& a practice *hich account in part to the accumulation o, unli+uidated balances (refer to Anne* G,.). The Accounting O,,ice indicated that it coordinates closely *ith PP?O in order to determine the status o, those NGOs7POs *ith pending unli+uidated cash advances and their respective terminal reports in order to e,,ect prompt li+uidation. 6e recommend that the Province should implement the provisions o, COA Circular 2 -" % and ensure proper granting& utili@ation and li+uidation o, cash ,und trans,ers. The Provincial Accountant should revie* all outstanding accounts and record ad:ustments ,or trans,ers that actually parta)e o, the nature o, donations rather than that o, pro:ect implementation as contemplated in the regulations. The Province should institute action against NGO7POAs and their o,,icers7organi@ers that ,ailed to implement the programs and pro:ects ,unded by the Provincial government pursuant to the provisions o, the 2emorandum o, Agreement covering these transactions.

). Lac2 o# monito!in$ and p!ope! accountin$ #o! deli"e!ie% o# !ice p!ocu!ed t !ou$ ne$otiated p!ocu!ement #!om t e National Food Admini%t!ation ad !e%ulted in t e mi%%tatement o# t e Due #!om NGA% account& !elated e4pen%e account% and !etained ea!nin$%& a% /ell a% in unaccounted deli"e!ie% o# !ice mo%tl' pe!tainin$ to p!e"iou% pe!iod% / ic amounted to P07&8)8&**0.,8 a% at 'ea!-end. Procurement o, most o, the rice re+uirements o, the Province had been coursed through negotiated procurement *ith the N8A in accordance *ith e3isting government

$2

policy. A purchase order is issued covering each transaction& invariably *ith only the ,ollo*ing terms and conditions' Place o, ?elivery C Pic)"up ?elivery Term C <pon Receipt o, payment Payment Term C C.O.?.

As in the case o, most POAs issued by the Province& delivery dates or schedules o, deliveries are not speci,ied. Pro:ect proposals attached to disbursement vouchers are o, the generic type& *ithout speci,ying time"tables and identi,ying bene,iciaries. Although the above terms and conditions do not call ,or any advances& the amount o, payment to the N8A is charged to the account ?ue ,rom NGAs C N8A instead o, the proper e3pense or asset accounts& as the case may be. 2oreover& said accounting treatment appears to ma)e N8A accountable ,or the payments made to it& *hen its sole responsibility under the P.O. is to ma)e available the rice stoc)s ,or pic)"up by the Province. The P.O. does not speci,y any other responsibility such as ma)ing li+uidation o, ,unds& and rightly so& since N8A in e,,ect received payment ,or its rice stoc)s and not advances sub:ect to li+uidation. 2oreover& *e noted in our revie* o, documents relative to some o, charges to the N8A account that *hile there are many cases o, considerable delay in the release o, chec)s to the N8A& deliveries are usually made *ithin a period o, one *ee) ,rom issuance o, ac)no*ledgement o,,icial receipt by N8A. Clearly& once rice stoc)s are pic)ed up by the Province ,rom the N8A *arehouse& the contractual obligations o, N8A is ,ully ,ul,illed& *hich do not at all *arrant charges to the ?ue 8rom NGAs" N8A account. The accounting procedures employed by the Province& in the absence o, proper monitoring o, deliveries made& had resulted in the accumulation o, the balances to a total o, P$9&!-!&..$.2! still carried in the boo)s o, accounts as at year"end& /$.0.1 o, *hich pertain to previous years (refer to Anne*es 4,1 to 4,2). 2oreover& inasmuch as C.O.?. terms means payment is made only upon delivery& all payments thus ,ar should already have corresponding deliveries o, rice obtained ,rom the N8A& considering that a reasonable period o, time to ma)e these deliveries had transpired. Dence& the total amount can be deemed unaccounted deliveries o, rice stoc)s& and these translates into the e+uivalent o, 2$& .2/ bags =based on the price o, P%&9 . per bag> recorded in the boo)s as still due ,rom N8A over the years. Although all charges are lumped in the N8A account& the same thus actually represent the accountabilities o, various re+uisitioning ;G< personnel charged *ith pro:ect implementation *ho are supposed to utili@e the procured rice as payment ,or services but thus ,ar had ,ailed to present payrolls7distribution sheets duly ac)no*ledged by recipients7bene,iciaries to account ,or the rice deliveries. Another cause ,or concern are discrepancies bet*een +uantities *ithdra*n as indicated in N8A *arehouse stoc) issue ,orms as against the volume o, rice procured per Purchase Order. 6e noted that out o, the total +uantities procured during the test period

$$

totaling % &!!$ bags& only /&0 - *ere *ithdra*n& leaving a balance o, %&-9! bags *hich had not been accounted ,or. (t *ould thus appear that the Province through its re+uisitioning o,,icers7pro:ect implementers ,ailed to ,ully *ithdra* stoc)s ,rom the N8A per P.O. Jet& the Province continued over the years to procure ,rom the N8A rice stoc)s ,or the very same programs and pro:ects& *ithout ,irst determining any outstanding balances ,rom previous purchase orders. (refer to Anne* 4,3) ?e,iciencies in accounting li)e*ise resulted in distortions in the e3pense accounts and conse+uently the retained earnings. 6e noted that *hile the accounts obligated and set up as payables are directly charged to e3penses& those debited to the ?ue ,rom NGAs account are charged to the proper accounts only *hen Re+uests ,or Eoo)ing is made by the Pro:ect implementors. 6e also observed that some payments to N8A *ere directly charged to e3pense& but the subse+uent deliveries o, rice ,rom these purchase orders *ere recorded again& this time as credits to the ?ue ,rom NGAs account and again as charges to the e3pense accounts. The Accounting O,,ice committed to the adoption o, a revised procedure in recording transactions related to procurement o, rice ,rom N8A and its utili@ation. (n a :oint con,erence *ith N8A and ;G< o,,icials& it *as li)e*ise agreed that revisions in the procurement procedures *ill be underta)en based on N8A mar)eting policies in order to ensure proper accounting o, deliveries o, rice as *ell as proper implementation o, pro:ects under the 8ood ,or 6or) Program. 6e recommend that the Provincial Accountant should analy@e the ?ue ,rom NGAs account and reclassi,y charges and credits to the appropriate accounts. N8A *arehouse stoc) issue ,orms should be compared against +uantities procured per P.O.& and i, indeed incomplete deliveries had been made& discrepancies should be reported to N8A along *ith a demand to ma)e good the short,all7unserved purchase orders& i, any. Re+uisitioning Pro:ect implementers should in turn be made to account ,or all rice *ithdra*n per veri,ied N8A *arehouse stoc) issue slips by presenting payrolls7distribution sheets duly ac)no*ledged by recipients. <naccounted deliveries should be charged to the accountability o, Pro:ect implementors. Dence,orth& purchase orders should be supported by schedules o, deliveries& and pro:ect proposals should incorporate time"tables ,or pro:ect implementation and identi,y bene,iciaries& to ,acilitate monitoring o, accountabilities as *ell as accomplishment o, pro:ect ob:ectives.

+. T e O##ice o# t e P!o"incial Accountant #ailed to e##ect p!ompt %u(mi%%ion to t e O##ice o# t e P!o"incial Audito! o# all "ouc e!% i%%ued (' t e P!o"ince& cont!a!' to t e p!o"i%ion% o# Section 1-) o# PD 1**7 and t e Rule% and Re$ulation% on t e Settlement o# Account%.

$.

Section % - o, P. ?. %..9 provides that ) all accountable officers shall ren!er their accounts& submit their vouchers& an! make !e"osits of mone collecte! or hel! b them at such times an! in such manner as shall be "rescribe! in the regulations of the +ommission.E Section -.2.% o, the Rules and Regulations on the Settlement o, Accounts =RRSA> as prescribed ,or use under COA Circular 2 0" ! dated September %9& 2 0 placed the ,ollo*ing responsibility& among others& on the Agency Accountant' The +hief Accountant& bookkee"er an!9or other authori1e! official "erforming accounting an!9or bookkee"ing functions of the au!ite! agenc shall ensure that: a. The re"orts an! su""orting !ocuments b the accountable officers are imme!iatel recor!e! in the books of accounts an! submitte! to the Au!itor 'ithin the first ten (1/) !a s of the ensuing month$ . Section . o, the 2anual on the Ne* Government Accounting System =NGAS> ,or ;G<As& Bolume ( provides that )checks shall be !ra'n onl on !ul a""rove! !isbursement voucherE& *hile Section .2 provides that )the Treasurer shall release the check onl to the "a ee or his !ul authori1e! re"resentative.E 2oreover& Section .. prescribed the ,ollo*ing procedures ,or the recording o, chec) disbursements and submission o, vouchers ,or audit' :R6+;%% i. Recor! check in the +heck Register an! release check to claimant. Recor! !isbursement in +ashbook, +ash in Fank. :re"are Re"ort of +hecks Cssue!. $orward RC1 with D# and supporting documents to Accounting .nit =. :re"are the A;D base! on in!ivi!ual checks9voucher$ sign ):re"are! F E "ortion (a""rove! b +hief Accountant) an! recor! A;D in the +heck Bisbursements Aournal. :ost monthl to the General 5e!ger9%ubsi!iar 5e!gers. k. $orward RC1, D#, supporting documents and 23# to the (ffice of the Auditor. :;R%6N90NCT R;%:6N%CF5; Treasurer

Accounting 0nit

Accountant

The process as described in the 2anual thus places the responsibility on the Treasurer ,or the release o, chec)s to claimants and the submission o, vouchers and supporting documents to the Accountant& *ho is in turn re+uired to record the individual chec)s in the boo)s o, accounts and ultimately ,or*ard all the documents to the Auditor ,or audit. Our revie* o, vouchers submitted by the Province ,or the period ,rom #anuary to August 2 % disclosed that the O,,ice o, the Provincial Accountant have consistently ,ailed to e,,ect the submission o, all vouchers issued and recorded in the boo)s o, accounts o, the Province along *ith the supporting documents. T*o hundred thirty vouchers ,or disbursements in the total amount o, P%%&!--&/-..%- have not been

$9

submitted. 6e li)e*ise noted that ,or /$9 chec)s issued as listed in the RC( ,or the period& only duplicate vouchers *ith no supporting documents amounting to P%/&.2%&$20. % *ere submitted instead o, the original (refer to Anne*es C,1 to C,2). (t also appears that some o, the unaccounted vouchers and documents *ere released by the TreasurerAs O,,ice to the end"users instead o, claimants and have not ,or*arded the same to the O,,ice o, the Provincial Accountant& *ho in turn may have in e,,ect tolerated the practice by recording transactions *ithout re,erence to the original vouchers& both contrary to the procedures described above. The Accounting O,,ice e3plained that to ,acilitate prompt recording o, all disbursements and easy retrieval o, supporting documents& it Grecords and prepares the #5B ,or all disbursement transactions a,ter the Certi,ication o, 8und Availability and signature o, the Provincial Treasurer in the corresponding chec) issued but prior to issuance o, the AccountantAs Advice& approval o, the ?isbursement voucher and signature o, the Governor or his authori@ed signatories in the chec).I The O,,ice& ho*ever& committed to revie* its *or) ,lo*s and per,ormance standards to e,,ect prompt submission o, all paid vouchers to COA. 6e recommend that the Accounting O,,ice should submit all the unaccounted original vouchers and supporting documents to the O,,ice o, the Auditor. 6e li)e*ise recommend that the Provincial Treasurer release chec)s only to claimants and ,or*ard the vouchers and supporting documents to the O,,ice o, the Provincial Accountant in accordance *ith procedures laid out in the 2anual on NGAS.

.. T e P!o"ince o# Ne$!o% Occidental ad e##ected onl' pa!tial %ettlement o# all di%allo/ance% and %u%pen%ion% i%%ued upon t e e##ecti"it' o# t e COA Rule% and Re$ulation% on t e Settlement o# Account%& !educin$ un%ettled (alance% to P1&),*.-- and P87&77,&1+*.7)& !e%pecti"el'& a% at Decem(e! 01& ,-1-. ?uring the year& additional disallo*ances and suspensions amounted to P%&-2.. and to P2&92 . resulting ,rom the audit o, li+uidation o, cash advances. The bul) o, settlements amounting to P.9&%. &..9./9 pertains to suspensions and disallo*ances arising ,rom the audit o, 2 0 transactions& *hich represent only . .-/1 o, the total amount despite ample time granted to comply *ith re+uirements (refer to Anne* A,1). 2anagement in,ormed us that o,,icers held responsible ,or the suspensions *ere duly *arned to e,,ect settlement and comply *ith the re+uirements. 6e recommend that management e,,ect ,ull settlement o, suspensions by submitting the re+uired documentation and e3planations7:usti,ications listed in the notices o, suspension& in order to avoid unnecessary complications arising ,rom suspensions lapsing into disallo*ances.

$!

A. 9alue Fo! Mone' Audit 1-. A !e"ie/ o# t!an%action% pe!tainin$ to t!u%t #und% $!anted (' t e Au!eau o# Po%t a!"e%t Re%ea!c and E4ten%ion >APRE@ #o! t e e%ta(li% ment o# a$!icultu!al t!amline in t e p!o"ince o# Ne$!o% Occidental !e"eal% de#iciencie% in t e implementation o# t e p!o<ect a% /ell a% in t e andlin$& accountin$ and utili5ation o# #und%& !e%ultin$ in t e o"e!c a!$in$ o# admini%t!ati"e co%t% amountin$ to P1&--*&*+-.7- and t e #ailu!e to #ull' implement t e p!o<ect /it in t e pe!iod o# e##ecti"it' o# t e co"e!in$ Memo!andum o# A$!eement >MOA@ a% /ell a% to li6uidate t e #und% !ecei"ed #o! t e pu!po%e to dateB 1-.1 T e P!o"ince t !ou$ t e O##ice o# t e P!o"incial A$!icultu!i%t >OPA@ ad c a!$ed p!o<ect #und% /it e4ce%%i"e admini%t!ati"e co%t% totallin$ P1&1*-&)*-.)8& mo%t o# / ic a!e not !ele"ant to t e P!o<ect& alt ou$ t e MOA p!o"ided #o! admini%t!ati"e and non-di!ect co%t o# onl' 11 o# total p!o<ect co%t amountin$ to P108&,8-.,8C 1-., Onl' one p!o<ect t u% #a! ad (een completed and accepted a% at 'ea!end& /ell (e'ond t e one-'ea! pe!iod o# e##ecti"it' o# t e MOAC Fou! p!o<ect% /e!e all a/a!ded to onl' one cont!acto!& / ile t !ee p!o<ect%& includin$ t/o p!o<ect% %uppo%ed to a"e (een implemented unde! P a%e I& a"e not (een a/a!ded to an' cont!acto! a% o# date o# e4pi!' o# t e MOAC 1-.0 T e amount% !elea%ed (' APRE a% t!u%t #und /e!e not depo%ited in a %epa!ate t!u%t lia(ilit' account in an aut o!i5ed $o"e!nment depo%ito!' (an2& cont!a!' to t e p!o"i%ion% o# t e MOAC 1-.* T e Accountin$ O##ice #ailed to p!ope!l' monito! utili5ation o# #und% to en%u!e t at di%(u!%ement% a!e made onl' #o! t e %peci#ic pu!po%e p!o"ided in t e MOA. Section 0. o, the 2anual on the Ne* Government Accounting System =NGAS> ,or ;G<As& Bolume (& provides that )Trust <un! shall consist of "rivate an! "ublic monies 'hich have officiall come into the "ossession of the local government or of a local government official as trustee& agent or a!ministrator& or 'hich have been receive! as a guarant for the fulfillment of some obligation. A trust fun! shall onl be use! for the s"ecific "ur"ose for 'hich it came into the "ossession of the local government unit.E E4ce%%i"e=3nnece%%a!' Admini%t!ati"e Co%t% Anne3 A o, the 2OA set the administration cost chargeable to the pro:ect at %1 o, total pro:ect cost. This *as also con,irmed by a signatory to the 2OA& Ricardo ;. Cachuela& ?irector (B& Philippine Center ,or Post"harvest ?evelopment and

$-

2echani@ation =,ormerly EPR5>& in his letter dated ?ecember 2/& 2 % . De *rote that )the ma*imum allo'able e*"ense for non,!irect costs un!er the G6A is onl :13>&2>/.2@& or one "ercent (1H) of the total !irect cost. An non,!irect "ro=ect e*"ense in e*cess thereof but relevant to "ro=ect ob=ectives 'oul! re(uire the mutual agreement of the "arties.E To date& the Province through the OPA had charged against Pro:ect 8unds administrative and non"direct costs amounting to P%&%. &-. .-!& the bul) o, *hich are irrelevant to the pro:ect and there,ore not necessary (refer to Anne*es I,1 to I,3). O, the total travelling e3penses o, P2 &% 2.%2& only P%2&$-/.0! *as directly related to the Pro:ect as the same *as incurred in attending the GTechnical Symposium on (mplementation o, Tramline ProgramI held by EPR5. The other trip charged against the pro:ect ,unds *ere underta)en a,ter the e3piration o, the 2OA. Article B provides that the )Gemoran!um of Agreement takes effect on the !ate of the first release of the "ro=ect fun!s an! 'ill be in full force an! effect for the "erio! of one (1) ear until sooner terminate! or e*ten!e! b mutual agreement& in 'riting& b "arties.E Since the EPR5 released the pro:ect ,unds on #une 2.& 2 0& the 2OA e3pired on #une 2.& 2 % in the absence o, amendments to the same. Catering e3penses o, P0.&929. *as incurred by OPA in the conduct o, (nstitutional Capability Euilding Seminars& but *e noted that the participants are not bene,iciaries or groups that avail o, the services provided by the Tramline pro:ects as their baranggays and municipality =Calatrava> *ere not among the chosen sites. Gasoline e3penses amounting to P0!&!9 . represent ,uel consumption o, the OPA ,or the month o, #uly 2 0. The e3amination o, supporting trip tic)ets ,ail to sho* visits to proposed pro:ect sites or any relevance o, the e3penses incurred to the implementation o, the pro:ects. Repairs o, several OPA vehicles amounted to P.!0&.29. . 6e noted that the repairs pertain to damage or *ear and tear on the vehicles sustained prior to implementation o, the pro:ect& and charging the same against pro:ect ,unds simply has no basis. 6e also noted that OPA contracted ,or services o, sta,, personnel through CAPG52 at a total amount o, P.! & $/.!.& ostensibly ,or the implementation o, the Tramline pro:ects. Do*ever& a perusal o, the accomplishment reports attached to the claims sho*ed that the *or) actually accomplished by these personnel pertained to irrigation pro:ects. 2oreover& the personnel *ere hired ,or the period #uly to ?ecember 2 0& *hen the pro:ect is at best on the mere survey and planning phase *hich may e3plain in part the hiring o, engineering aide. This is clearly not the case *ith the ,oremen and pro:ect development o,,icers& particularly since the pro:ects *ere bidded out only in 8ebruary o, the succeeding year and actually implemented starting #une 2 % .

$/

Dela'ed Implementation Article ((( created a Pro:ect 2anagement Committee to oversee the implementation o, the Pro:ect& *hich shall be responsible& among others& ,or approving policies relevant to the implementation o, the pro:ect. Article (B ,urther provides that Gany amendments to this Agreement shall be in *riting duly agreed to and signed by all the parties heretoI. No pro:ect *as implemented as o, the e3piry date o, the 2OA& or one year a,ter it too) e,,ect (refer to Anne* I,.). Only t*o out o, the ,our pro:ects under Phase ( had been implemented& although only the pro:ect at Earangay Cabatangan had been completed& accepted and paid as at year"end. The purchase re+uisitions ,or three pro:ects =2inoyan& Cabatangan and Hapa)lan Pro:ects> *ere obligated only in October 2 0& ,our months a,ter the release o, ,unds and the e,,ectivity o, the 2OA& although the sites and the pro:ect costs have already been determined as o, the signing to the 2OA. Eiddings ,or the three pro:ects *ere conducted only on 8ebruary 2 % =also ,our months later> and a*arded in 2arch& but notices to proceed *ere issued in #uly 2 % =another ,our months> only ,or the 2inoyan and Cabatangan. The Hapa)lan Pro:ect at Silay City has yet to be implemented. The Program o, 6or) ,or the Codcod Pro:ect at ?on Salvador Eenedicto *as revised& and *as signed only during the term o, the ne* governor& indicating that these *ere signed a,ter #une 2 % *hen the 2OA e3pired. 6hile bidding *as conducted in #anuary !& 2 % & no a*ard and notice to proceed had been issued ,or the Pro:ect. T*o pro:ects under Phase (( had been implemented. The PR ,or the Tagu)on Pro:ect *as obligated in October 2 0& but the bidding *as also done only in 8ebruary 2 % and a*arded in 2arch. (ronically& this *as the ,irst pro:ect issued a notice to proceed in #une 2 % & even ahead o, Phase ( pro:ects. The Nailab Pro:ect *as obligated in 2arch 2 % & bidded in #une =$ months later> but the notice to proceed *as issued only in October =. months later>. The Jubo Pro:ect *as obligated and bidded in 2arch 2 % & but no a*ard and notice to proceed had been issued ,or the Pro:ect. The program o, *or) as prepared by the OPA to implement the Pro:ect set aside a large amount o, the ,unds to administrative and non"direct costs beyond limits set in the 2OA. 2oreover& the Nailab Pro:ect at Earangay Ara"al& ;a Carlota City e3ceeded original estimates per 2OA. The deviations and revisions *ere not submitted to the Pro:ect 2anagement Committee ,or approval and to the EPR5 ,or their concurrence. No e3tension o, the 2OA has been proposed or concurred to by EPR5 prior to its e3piration on #une 2.& 2 % .

$0

Dandlin$& Accountin$ and 3tili5ation Article ((.E.$ provides that the Province shall )!e"osit the amount !e"osite! b F:R; as a se"arate trust liabilit account in an authori1e! government !e"ositor bank.E The EPR5 issued on #une 2.& 2 0 ;EP Chec) No. 0 - ,or P/&!%%&2/-. and ;EP Chec) No. $-.$$0 ,or P9&%9%& . representing the ,ull release o, amounts it committed to the Pro:ects under the 2OA. The chec)s *ere not deposited in a separate account but in ;EP account no. .2%"0290"02 maintained by the Province ,or various trust ,unds under its custody& contrary to the said provision o, the 2OA. Section % o, the 2anual on NGAS& Bolume (& provides that )!isbursements from trust fun!s shall be in accor!ance 'ith the s"ecific "ur"ose state! in the trust agreement9a""rove! bu!get bet'een the trustor an! trustee (5G0) as certifie! b the +hief Accountant. The certification on the BD as to e*istence of fun!s hel! in trust shall serve this "ur"ose.E The Accounting O,,ice ,ailed to en,orce limitations provided in the 2OA& particularly since its copy o, the agreement did not include Anne3 A =a copy o, *hich *as provided by the COA Audit Team assigned at Philmech>. (t allo*ed the virtual unilateral amendment o, the 2OA through its reliance solely in the programs o, *or)s prepared by OPA even i, their premises *ere contrary to the provisions o, the 2OA. (t li)e*ise condoned the diversion o, ,unds ,or other ,unctions o, the OPA not related to the Pro:ect by certi,ying vouchers ,or repairs& gasoline consumption& catering& and other e3penses *hich comprise the bul) o, initial disbursements out o, the trust ,unds. Article ((.E.%% provides that the Province shall )li(ui!ate an! return9refun! to the F:R; an amount 'hich remains unuse! or !isallo'e! in au!it u"on the com"letion of au!it.E To date& si3 months a,ter the e3piration o, the 2OA& no li+uidation o, the ,unds trans,erred by EPR5 has been made. (n ,act& travel e3penses *ere charged to the account even i, these pertain to trips underta)en a,ter the 2OA had e3pired. The Accounting O,,ice admitted that it based its monitoring o, utili@ation o, ,unds only on the approved program o, *or)s and 2OA *ithout re,erence to the supporting Anne3 (. The OPA re+uested ,or the e3tension o, the period o, implementation o, pro:ects under the 2OA& as *ell as ,or the ,ormal approval o, increases in administrative cost and con,irmation o, authority to use the cost savings in pro:ect implementation to help de,ray other administrative costs o, the O,,ice& *hich they claim had been verbally allo*ed by EPR5 o,,icials. They also gave assurances that in the ,uture& proper accounting procedures *ill be observed and trust *ill be utili@ed strictly in accordance *ith the provisions o, the 2OA. 6e recommend that the Province should endeavor to complete the implementation o, the pro:ects and li+uidate the ,unds due EPR5.

Program o, *or)s prepared by the Pro:ect implementing o,,ice should indicate speci,ic time"table ,or the pro:ectsF amendments&deviations and e3tensions should bear concurrence o, the ,unding agency and7or the pro:ect management committee& particular *hen these e3tend beyond the e,,ectivity o, the 2OA7trust agreement. The Provincial Accountant should ensure that the program o, *or)s prepared ,or Pro:ects& particularly its ,inancial component& are in con,ormity *ith provisions o, the budget7trust agreement =a ,ile o, *hich should be maintained in the Accounting O,,ice ,or guidance and re,erence>. The O,,ices o, the Provincial Agriculturist and the Provincial Accountant should properly revie* charges and ensure that only costs and e3penses relevant to the speci,ic purpose o, the Pro:ect are charged against trust ,unds& *hile relevant administrative e3penses should never e3ceed limits set under the 2OA. Other unnecessary and irrelevant costs and charges *hich can not be ,unded under the regular budget o, the OPA should be charged to the account o, persons responsible there,or.

.%

PART III - STAT3S OF IMPLEMENTATION OF PRIOR EEARS? A3DIT RECOMMENDATIONS

Audit Observation
%. The Province o, Negros Occidental ,ailed to establish the correctness o, Other (nvestment and 2ar)etable Securities =Account %0->& ;oans Receivable C ;G<s =Account %29> and ;oans Receivable C Others =Account %2!> *ith an aggregate amount P% &%2%&$/0.!..

Re,. Recommendations
The Provincial Accountant should endeavor to clean up the unreconciled %0account to ensure that the investment account is ,airly presented in the Ealance Sheet and to ma)e certain that subsidiary ledgers are correctly provided under the speci,ic account tagging created ,or the purpose. The Provincial Accountant should conduct thorough identi,ication o, loan grantees and ensure that uncollectible accounts are recommended ,or *rite o,,& a,ter submission o, proo, that these accounts are indeed uncollectible and needed to be *ritten o,,. AAR CJ 2 0

2anagement Action
Reconciliation ongoing.

Status o, (mplementation
Partially implemented.

Reason ,or Partial7 Non" (mplementation

2. ?isbursement Bouchers =?Bs> submitted by the Province to the Commission on Audit amounting to P$.&!2$&-!..20 *ere not supported *ith complete documentation in violation o, Section .=!> o, Presidential ?ecree =P.?.> No. %..9& thereby

The Provincial Treasurer should submit as soon as possible original copies o, ?Bs and ORs and other supporting documents to the O,,ice o, the Provincial Accountant *ho shall ,or*ard the same to the Commission on

Some o, the vouchers had been submitted.

Partially complied.

?i,,iculty in completing documentation o, distribution to bene,iciaries.

.2

Audit Observation

Re,. Recommendations

2anagement Action

Status o, (mplementation

Reason ,or Partial7 Non" (mplementation

resulting in Audit to avoid suspensions in post suspensions in post audit. audit and ,or sa,e)eeping in accordance *ith Section .=!> o, P.?. %..9. $. The Province o, Negros Occidental ,ailed to submit *ithin ,ive *or)ing days copies o, government contracts7Purchase Orders =POs> and other supporting documents in the aggregate amount o, P2$&2 &!9%.9 contrary to COA Circular No. 2 0" % dated 8ebruary %2& 2 0& thus& completeness o, documentary re+uirements& de,ects and de,iciencies noted in the audit revie* and evaluation could not be properly and promptly pointed out to management ,or corrective measures. .. Public biddings held by the Province in %2instances ,or the procurement o, goods& services and in,rastructure pro:ects in the aggregate o, P--&/0!&9-2.0 The Provincial Government should comply *ith the provisions o, COA Circular 2 0" % so that timely and e,,icient revie* and evaluation can be done and any de,ects and7or de,iciencies noted are immediately brought to the attention o, the management ,or correction and remedy. 2anagement had been submitting copies o, POAs7contract . Partially implemented. Separate departments submit various supporting documents to procuremen t contracts.

The Province should ensure transparency and competitiveness in all its procurement processes by *idely disseminating in,ormation about procurement contracts so that

6ide Partially dissemination implemented. o, bids is practiced.

Some suppliers are reluctant to :oin biddings due to delays in processing o, claims7

.$

Audit Observation involve the participation o, a lone bidder& contrary to the general principles on government procurement set ,orth under Section $=a> and =b> o, the Revised (mplementing Rules and Regulations =(RR> o, Republic Act =R.A.> No. 0%/. regarding transparency and competitiveness. 9. A revie* o, Ean) Reconciliation Statements on various accounts and ,unds maintained by the Province disclosed the ,ollo*ing de,iciencies' a. ?eposits in Transit amounting to P%&/9%&$!$.0. in the General 8und remained unad:usted in the boo)s o, the Province ,or more than ten =% > years in violation o, Section $.$ o, COA Circular No. 0!" %%. b. <naccounted di,,erence bet*een Eoo) and Ean) balances o, P$& & . ,or

Re,. Recommendations +uali,ied and eligible bidders may participate& in accordance *ith the above"cited provisions o, Revised (mplementing Rules and Regulations =(RR> o, Republic Act =R.A.> No. 0%/..

2anagement Action

Status o, (mplementation

Reason ,or Partial7 Non" (mplementation

The Provincial Accountant and the Provincial Treasurer should reconcile their records& locate and identi,y documents pertaining to discrepancies bet*een boo) and ban) balances& and record appropriate ad:usting entries in the boo)s o, accounts the province and thus ensure the accuracy and reliability o, cash account as presented in the Ealance Sheet.

No ad:ustments had been made.

Not implemented& reiterated.

?i,,iculty in documenting reconciling items.

..

Audit Observation ;EP and P$0/& 09.$ ,or PNE in the total amount o, P$&$0/& 09.$ . c. (tems re+uiring ad:ustments in the Eoo)s in the amount o, P.& /0&!2!.-. are signi,icant amounts described as unaccounted ad:ustments in the ERS. !. (nstructional 2aterials 76or)boo)s printed and paid by the Province in the total amount o, P2&.00&99 . *ere not properly evaluated and duly approved by the ?epartment o, 5ducation =?ep5d> (nstructional 2aterials Council Secretariat =(2CS> in violation o, Chapter . " Section 2.2 and . o, the ?5CS Service 2anual.

Re,. Recommendations

2anagement Action

Status o, (mplementation

Reason ,or Partial7 Non" (mplementation

The Provincial Government thru the ?epartment o, 5ducation =?ep5d> should submit to the (nstructional 2aterials Council Secretariat =(2CS> the said (nstructional 2aterials ,or revie*7evaluation and approval be,ore it *ill be reproduced ,or distribution and use. A list o, recipient"schools duly certi,ied by Principal or authori@ed representative should li)e*ise be submitted by the pro:ect proponents 7implementors to account ,or the distribution o, the boo)s to intended bene,iciaries. -. A cash shortage Appropriate charges o, P/%9&9%!./! *as against 2s. incurred by 2s. Hatherine ?. Jee Hatherine ?. Jee ,or malversation o,

Not implemented.

No (2CS approval had been obtained to date.

Case is pending.

(mplemented.

.9

Audit Observation as revealed in the conduct o, cash e3amination on 8ebruary %%& 2 0& in violation o, Section % 9=2> o, Presidential ?ecree No. %..9 and Article 2%- o, the Revised Penal Code& thereby resulting in the loss o, assets that could have been utili@ed ,or the programs and pro:ects o, the Province. /. The Province o, Negros Occidental ,ailed to collect the amount o, P/0&2$0&%9..99 in loans granted to ;G<s& NGOs7POs and Private 5ntities that could have been used ,or other priority development pro:ects and programs bene,icial to its constituents.

Re,. Recommendations public ,unds should be ,iled. 2s. Jee should be re+uired to restitute the ,ull amount o, P/%9&9%!./!& and the Provincial Governor should cause the *ithholding o, her salaries and bene,its pending ,ull restitution o, the amount.

2anagement Action

Status o, (mplementation

Reason ,or Partial7 Non" (mplementation

The Provincial Treasurer shall install e,,ective and e,,icient control procedures in the identi,ication o, the active borro*ers o, these loans granted to 2PCs and ;G<s. ;i)e*ise& ensure that past"due loans are collected immediately so that they *ill revert bac) to the co,,ers o, the Province to be re" applied to priority pro:ects and programs ,or the bene,it o, its constituents. The Province shall cease to ma)e additional investments or grant additional loans to 2PCs& Private 5ntities and ;G<s in order to preclude

No collection.

Not implemented.

.!

Audit Observation

Re,. Recommendations possible misuse o, government ,unds and utili@e it instead ,or more viable programs and pro:ects bene,icial to the greater ma:ority o, its constituents.

2anagement Action

Status o, (mplementation

Reason ,or Partial7 Non" (mplementation

0. The 2ay %0& 2 0 inspection and evaluation by the Technical Audit Specialist =TAS> o, the Commission on Audit on the procurement o, one =%> unit 2nd hand (su@u Pic)up .3. by the O,,ice o, the Provincial Agriculturist =OPA> revealed the ,ollo*ing de,iciencies' a. Non" operational7de,ectiv e air conditioning system and engine oil lea)age b. The !"months *arranty given to the Province *as in violation to Section !2.% o, Republic Act =R.A.> 0%/.. c. Actual mileage or distance travelled had e3ceeded the allo*able mileage *hich proved the procurement is uneconomical in violation o, Section

The Provincial Agriculturist and other concerned o,,icials involved in the selection and appraisal o, the vehicle should be held accountable ,or ,ailure to implement standard re+uirements in the ac+uisition o, second"hand motor vehicles& *hich omissions rendered disadvantageous to the Province the uneconomical purchase o, ,ully" depreciated (su@u Pic)up& and to e,,ect the re,und o, P99 & . i, the said amount cannot be recovered ,rom the supplier o, the de,ective vehicle.

Amount o, loss ,or ,ailure to apply *arranty is being made.

Partially implemented.

.-

Audit Observation ..% o, National Eudget Circular =NEC> No. ..!A dated #anuary $ & %00/. d. The price amount o, P99 & . had e3ceeded the Appraised <se,ul Balues=A<B> or the Remaining <se,ul Balue =R<B> based on National Eudget Circular =NEC> ?epartment o, Eudget and 2anagement =?E2> and the Commission on Audit =COA> 0/" 9!0A. %. P%2&-.0&-/%..0 or $ .-/1 o, Agricultural& 8ishery and 8orestry 5+uipment =Account 22-> out o, the total amount o, P.%&.2 &99$.!0 remained unidenti,ied& unclassi,ied and unreconciled per boo)s rendering the e3istence o, the account doubt,ul.

Re,. Recommendations

2anagement Action

Status o, (mplementation

Reason ,or Partial7 Non" (mplementation

The Provincial Accountant should e3pedite cleanup o, accounts 22- as *ell as other PP5 accounts *ith unreconciled items. Also& the Accounting O,,ice and General Services O,,ice should reconcile their records to ensure proper identi,ication and classi,ication o, PP5. The OPA and P52O should submit the ?eeds o, ?onation together

AAR CJ 2 /

The Provincial Accountant has started the clean up o, accounts 22-.

Partially implemented.

Only P2.%2 *as not identi,ied& classi,ied and reconciled in the Eoo)s.

2. Si3ty =! > units o, mechanical shredder ac+uired ,rom R< 8oundry

AAR CJ 2 /

?istribution o, shredders *as already covered

Partially implemented.

Some recipients are still not located

./

Audit Observation and 2achine Shop in the aggregate amount o, P%%&%9 & . remained in the boo)s a,ter they *ere distributed to various recipientsF thus& overstating the asset and understating the e3penses.

Re,. Recommendations *ith other supporting documents to the O,,ice o, the Accountant ,or proper treatment o, donations and dropping o, assets in the boo)s& and to the GSO ,or dropping in the property cards. The Accounting O,,ice and GSO should reconcile their records to account ,or the ,our =.> units that *ere not recorded. 6e recommend that the accountable o,,icers li+uidate their cash advances& other*ise& sanctions provided under Sections 9.%.$ o, COA Circular shall be imposed ,or ,ailure to li+uidate said cash advances *ithin the prescribed period that shall constitute a valid cause ,or *ithholding their salary. AAR CJ 2 /

2anagement Action

Status o, (mplementation

Reason ,or Partial7 Non" (mplementation

*ith ?eeds o, ?onation =?O?s>

$. Cash advances o, various accountable o,,icers ,or petty operating e3penses *ith an aggregate amount o, P. !&.%0.%9 remained unli+uidated in violation o, Section ./ o, the 2anual on Ne* Government Accounting K System =NGAS> and COA Circular No. 0-" 2 dated 8ebruary % & %00-& thereby understating the e3penses and overstating the asset account o, the Province.

Only 2erle Garcia *as able to li+uidate her cash advances o, P2 & ,or CJ 2 0. The rest *ere not able to ma)e their li+uidations

Partially implemented.

.0

Audit Observation %.The e3istence and ,airmess o, the presentatation o, ;and account is doubt,ul due to unreconciled balances and unrecorded real properties o, P02& 02&09-.2/ and at least P%//&!/-& 2 . /& respectively.

Re,. Recommendations 6e recommend that the Provincial Accountant e3pedite cleanup o, account 22- as *ell as other PP5 accounts *ith unreconciled items. 6e also recommenend the Provincial Accounting O,,ice and General Services O,,ice reconcile their records to ensure proper identi,ication and classi,ication o, PP5. 6e recommend that the Provincial Accountant match its records *ith GA2 to ensure that inventory o, titles are properly re,lected in the boo)s. The di,,erence o, P%//&!/-& 2 . / shall li)e*ise be ta)en up in the boo)s. 8urther& *e recommend that the Provincial Accountant e3pedite the clean up o, the ;and"Others account =2 %"000>& and reconcile this *ith the records o, GA2 so that any unrecorded di,,erence *ill be

2anagement Action The Province *ill enhance plan to account ;AN?& Clean"up is still on"going

Status o, (mplementation Partially implemented.

Reason ,or Partial7 Non" (mplementation Clean"up o, accounts still ongoing

AA R CJ 2 -

Audit Observation

Re,. Recommendations e,,ected in the boo)s. Also& *e recommend that the Provincial Accountant discontinue the practice o, lumping together the transactions a,,ecting land to ;and C Other Accounts =2 %"000> *ithout proper identi,ication& classi,ication and documentation. ;i)e*ise& *e recommend that the % 9 titled land7lots *ithout proper valuation be re,erred to the AssessorAs O,,ice ,or appraisal. The O,,ice o, the Provincial Accountant shall then record the value o, these properties based on the result o, the appraisal

2anagement Action

Status o, (mplementation

Reason ,or Partial7 Non" (mplementation

2. 8ailure o, the Provincial Accountant and Provincial Treasurer7Cashier to reconcile the cash accounts regularly& resulted in the overstatement o, Cash in Ean)";ocal Currency& Current Account =;CCA> o, P!&29.&2!9.! &

6e recommend that the Provincial Accountant and the Cashier reconcile the cash accounts to re,lect the correct ,igure in the ,inancial statements in order to provide management *ith accurate in,ormation needed ,or sound decision ma)ing.

AA R CJ 2 -

Reconciliatio n and cleaning up o, accounts is still on" going..

Partially implemented.

Cleaning up o, accounts is still on"going..

9%

Audit Observation thereby misstating the 8inancial Statement contrary to Sections -. and %%% o, Presidential ?ecree No. %..9. $. Collection e,,iciency ,or loans granted amounting to about P/-2 ,or livelihood and electri,ication pro:ects *as only about P2 2 or 22.0!1 due to ,ailure o, the grantees to observe the repayment scheme as stipulated in the contract o, agreement and strict supervision and monitoring o, concerned o,,icials& thus& preventing the Province to continue e3tending more credit ,acilities and servicing programs to its constituents.

Re,. Recommendations

2anagement Action

Status o, (mplementation

Reason ,or Partial7 Non" (mplementation

6e recommend that the Provincial O,,ices concerned strictly supervise and monitor the implementation o, the program. The systems and procedures in granting the ,inancial assistance to the less ,ortunate constituents in the depressed areas should be improved. 2ore e,,orts should be e3erted or remedial measures devised to ,acilitate collection o, the loans. ;egal sanctions may also be imposed. 6e recommend that the Provincial TreasurerAs O,,ice =PTO> identi,y the cooperatives and associations *hich no longer e3ist. 8armer"bene,iciaries that *ere already dead should also be determined so that a re+uest ,or condonation on their loans be indorsed to the Sangguniang Panlala*igan ,or

AA R CJ 2 -

The Provincial TreasurerAs O,,ice has prepared ?emand ;etters *ere sent to the borro*ers o, the loan.

Partially implemented.

Reiterated in this yearAs audit ,inding.

92

Audit Observation

Re,. Recommendations resolution and *ill be ,or*arded to the Commission on audit ,or approval and subse+uent *rite"o,, o, the accounts ,rom the boo)s o, the agency. 6e recommend that periodic reconciliation be done bet*een the records o, the PTO and the Accounting so that recording o, repayments and interest income is updated. The (nvestment account should be cleared o, unreconciled items to re,lect is correct balance.

2anagement Action

Status o, (mplementation

Reason ,or Partial7 Non" (mplementation

%. The non" completion o, physical count o, inventories and depreciable assets under Property& Plant and 5+uipment =PP5> and inade+uacy o, related supplies and property ledger cards resulted to the di,,iculty in establishing the ,airness o, presentation o, a,,ected accounts totaling P29&9!$&-$%. 0 and P900&-% &.0-.- & respectively.

(nstruct the (nventory Committee to conduct periodic physical count o, all inventories and PP5 as *ell as to ensure timely submission o, the re+uired Report o, Physical Count o, (nventories =RPC(> and Report o, Physical Count o, Properties& Plant& and 5+uipment =RPCPP5> as scheduled. Re+uire the Provincial Accountant and the GSO to reconcile

AAR CJ 2 !

Clean"up o, accounts still ongoing

Partially implemented.

Clean"up o, accounts still ongoing

9$

Audit Observation

Re,. Recommendations their records and properly identi,y the inventories and depreciable assets under PP5 in order to establish the ,airness to presentation o, the a,,ected accounts in the Ealance Sheet.

2anagement Action

Status o, (mplementation

Reason ,or Partial7 Non" (mplementation

2. Non"recording o, reconciling items ,or the Cash in Ean) C ;ocal Currency& Current Account resulted to an unreconciled di,,erence bet*een the ban) and boo)s in the amount o, P2-&./!&$.!.%9.

?irect the Provincial Accountant to record immediately the reconciling items ,ound in the Ean) Reconciliation Statement. 8urther& secure the lac)ing supporting documents ,rom the Provincial Treasurer in order to e,,ect the necessary ad:ustments in the boo)s. (nstruct the Provincial Treasurer to ,urnish the Accounting ?epartment *ith details relative to dormant accounts and other related transactions so that they are recorded and accounted ,or properly.

AAR CJ 2 !

?ormant accounts have been ta)en care o,. Some accounts *ere closed& *hile others *ere trans,erred to time deposit accounts.

Partially implemented.

Current reconciling items *ere boo)ed up immediately. Still& prior yearsA reconciling items in the ban) *ere not e,,ected& hence& reiterated in this year 2 0 audit ,indings.

$. Non"remittance o, various ;G<As share aggregating P%9&-%.&202. as re+uired under Section 2/!=a> o, the %00% ;ocal

?irect the Provincial Treasurer to comply *ith the provision o, Section 2/! =a> o, the %00% ;ocal Government Code in order ,or the other

AAR CJ 2 !

The Provincial Accountant is hesitant to remit the share to ;G<As due to

Not implemented.

Still un" implemented due to lac) o, supporting documents.

9.

Audit Observation Government Code deprived the concerned bene,iciaries o, the use o, said ,unds ,or their pro:ects.

Re,. Recommendations ;G<s to ma3imi@e the use o, their ,unds in the implementation o, various programs and pro:ects.

2anagement Action lac) o, supporting documents. She promised to implement the recommendat ion as soon as possible by o,,setting the ?ue ,rom and ?ue to Accounts.

Status o, (mplementation

Reason ,or Partial7 Non" (mplementation

%. The Province o, Negros Occidental ,ailed to establish the validity and e3istence o, the Property& Plant and 5+uipment and (nventories in the amount o, P2&%./&%$2&%%-.-/ and P% 0&!$-&0-9.29& respectively& resulting in overstatement in violation o, Section %2. o, the 2anual on the Ne* Government Accounting System ,or ;ocal Government <nit.

%.a> The ;ocal Chie, 53ecutive ensures periodic inventory o, all inventories and PP5 as *ell as prompt submission o, the re+uired Report o, Physical Count o, (nventories =RPC(> and Report o, Physical Count o, Properties& Plant and 5+uipment =RPCPP5> as scheduled. b> The Provincial Accountant e,,ects the necessary trans,er o, Public (n,rastructure to its respective registries to re,lect the correct amount o, PP5 account in the Ealance Sheet. c> The Provincial Accountant reconciles and properly identi,ies the properties in Anne3 GAI to

AA R CJ 2 9

Cleaning up o, accounts is still on" going.

Partially implemented

Cleaning up o, accounts is still on"going.

99

Audit Observation

Re,. Recommendations establish the propriety& validity and e3istence o, (nventories and PP5 accounts as presented in the Ealance Sheet.

2anagement Action

Status o, (mplementation

Reason ,or Partial7 Non" (mplementation

2. The Province o, Negros Occidental ,ailed to cancel various stale chec)s in the General and Special 5ducation 8und in the aggregate amount o, P!&!. & $9.0% *hich resulted in understatement in Cash and Accounts Payable in violation o, Section 90 o, the 2anual on NGAS& Bolume (. $. (nade+uate controls over the grant o, donations to other ;ocal Government <nits =;G<s> and Non" Government Organi@ations =NGOs> *ere observed& thereby& overstating the Property& Plant& and 5+uipment account by P.&/-$&/9$. .

reconciling items& speci,ically the outstanding chec)s ,or more than si3 =!> months be cancelled and reverted to Cash and7or credited to Accounts Payable to ensure correctness o, Cash and Accounts Payable balances in the Ealance Sheet pursuant to above" cited regulation. 6e recommend that the General Services and the Accounting O,,icers should periodically reconcile the donated assets accounts to ensure its correctness based on the AR5& ?eed o, ?onation& or 2OA. (t is also suggested that physical inventory shall be regularly done ,or all donated assets.

AA R CJ 2 9

All stale chec)s ,ound in the possession o, the Cashier are ,or*arded immediately to the Accounting O,,ice ,or cancellation and proper ad:ustment. Eoo)ing up o, accounts is still on process

Partially implemented

Substantial amounts o, chec)s have already been cancelled.

AA R CJ 2 9

Partially implemented

Cleaning up o, accounts is still on"going.

9!

PART I9 - ANNEFES

Ealance Sheet General 8und Special 5ducation 8und Trust 8und Statement o, (ncome and 53penses General 8und Special 5ducation 8und Statement o, Cash 8lo*s General 8und Special 5ducation 8und Trust 8und Statement o, Government 5+uity General 8und Special 5ducation 8und Trust 8und SAAOE G8 55?? S58 Other Anne3es Summary o, <nreconciled Ealances in the Eoo) o, Accounts Summary o, <nreconciled Ealances in the General 8und Proper Summary o, <nreconciled Ealances in the General 8und " 55?? Summary o, <nreconciled Ealances in the Special 5ducation 8und Summary o, <nreconciled Ealances in the Trust 8und Summary o, Aging o, Cash Advances in the Eoo) o, Accounts Aging o, Cash Advances in the General 8und Proper

Anne3 A.% Anne3 A.%.% Anne3 A.%.2

Anne3 A.2 Anne3 A.2.% Anne3 A.$ Anne3 A.$.% Anne3 A.$.2 Anne3 A.. Anne3 A...% Anne3 A...2 Anne3 E.% Anne3 E.2 Anne3 E.$

Anne3 C"% Anne3 C"2 Anne3 C"$ Anne3 C". Anne3 C"9 Anne3 ?"% Anne3 ?"2

9-

Aging o, Cash Advances in the General 8und " 55?? Aging o, Cash Advances in the Special 5ducation 8und Aging o, Cash Advances in the Trust 8und ;ist o, Collecting O,,icers Schedule o, Collections Receipted as o, ?ec. $%& 2 % Eut Recorded in 2 %% Schedule o, Collections Receipted as o, ?ec. $%& 2 0 Eut Recorded in 2 % Summary o, (nvalid7(ncorrectly Presented Reconciling (tems Summary o, <nad:usted Reconciling (tems Ealance Per Ean) Summary o, <nad:usted Reconciling (tems Ealance Per Eoo) Schedule o, ?ue ,rom NGOs7POs Summary C All 8unds Schedule o, ?ue ,rom NGOs7POs " General 8und Schedule o, ?ue ,rom NGOs7POs " Trust 8und Analysis o, Releases"Trans,ers o, 8unds Summary o, <naccounted ?eliveries and Ealances Per Eoo)s C?ue to NGAs Analysis o, ?ue to NGAs C N8A Account ;isting o, <naccounted ?eliveries ;isting o, ?BAs Not Submitted and ?Bs *7o Supporting ?ocuments Summary o, ?BAs Not Submitted7 67o Supporting ?ocuments ?etails o, Suspensions& ?isallo*ances And Charges C All 8unds

Anne3 ?"$ Anne3 ?". Anne3 ?"9 Anne3 5"% Anne3 5"2 Anne3 5"$ Anne3 8"% Anne3 8"2 Anne3 8"$ Anne3 G"% Anne3 G"2 Anne3 G"$ Anne3 G". Anne3 D"% Anne3 D"2 Anne3 D"$ Anne3 ("% Anne3 ("2 Anne3 #"%

9/

Summary o, Pro:ect Costs C 5stablishment O, Agricultural Tramline Summary o, Administrative 53penses Charged To Tramline Pro:ects ?etails o, Administrative 53penses Charged To Tramline Pro:ects Summary o, Pro:ect (mplementation C 5stablishment O, Agricultural Tramline

Anne3 H"% Anne3 H"2 Anne3 H"$ Anne3 H".

90