OBSERVATIONS AND RECOMMENDATIONS I. Financial and Compliance A. Unliquidated Cash Advance of P 2.

9 million

Cash Advances to officers and employees amounting to P2.9 million remained unliquidated at year-end even if the purpose for which they were granted have already been served, contrary to Section 89 of P.D. 1445 and COA Circular No. 97-002 dated February 10, 1997, thereby overstating the receivable account and understating the expense account by the same amount. 1. Section 89 of P.D. 1445 states the limitation on the granting of cash advance: No cash advance shall be given unless for a legally authorized specific purpose. A cash advance shall be reported on and liquidated as soon as the purpose for which it was given has been served. No additional cash advance shall be allowed to any official or employee unless the previous cash advance given to him is first settled or a proper accounting thereof is made. 2. While Sections 5.1.3 and 9.3.2 of COA Circular No. 97-002 dated February 10, 1997 provide that: a. Section 9.3.2 Cash advance for travel shall be liquidated by the official and employee concerned strictly within 30 days after his return to his official station as required under Section 16 of EO 248 as amended; otherwise, payment of salary shall be suspended until he complies therewith. b. Section 5.1.3. xxx Failure of the AO to liquidate his cash advance within the prescribed period shall constitute a valid cause for the withholding of his salary and the instruction of other sanctions as provided for under paragraphs 9.2 and 9.3 hereof.

3. The balance of account Advances to Officers and Employees disclosed unliquidated cash advances of P2,902,414.89 (Annex A) of which the amount of P2,435,036.25 was overdue by more than 31 days to 19 years due to the following: a. granting of new or additional cash advances to ten employees with a total amount of P1,867,894.35 despite non-liquidation of prior cash advances for the period covering from June 10, 1991 to February 6, 2009; b. failure of a former Congressman who was granted a cash advance of P100,000 on June 30, 2000 for his foreign travel, to liquidate the same; 19

c. disallowance in audit of the liquidation of cash advances amounting to P14,352.25 granted to a special disbursing officer due to falsified supporting documents; d. failure of nineteen personnel to liquidate completely their cash advances granted during the period from March 11, 2009 to November 27, 2009; and Particulars

travels PhilSCA- Basa Airbase of PhilSCA committee expenses

TOTAL

Amount local and foreign P200,680.72 engine run-up of 110,350.00 strategic visioning 14,800.00 fact finding 8,000.00 VAB intramurals 73,000.00 P406,830.72 =========

e. failure of four personnel who were granted cash advances totaling P45,958.93 on October 21, 2002, December 2, 2004; March 18, 2005 and September 12, 2008, respectively, to liquidate said cash advances, despite the issuance of demand letters. 4. Management issued demand letters in July 2009 to the accountable officers with outstanding cash advances of P4,766,442.66 as of March 31, 2009 which resulted in the settlement of P1,864,027.77. 5. The non-liquidation of the due and demandable cash advances resulted to the overstatement of the account Advances to Officers and Employees and understatement of the expense accounts by the same amount, thus, AOM No. PhilSCA 09-001 (09) dated February 23, 2010 was issued to management. 6. We recommended that management: Continue withholding the payment of any money due the accountable officers who have not liquidated their cash advances pursuant to Section 9.3.2 of COA Circular No. 97-002 dated February 10, 1997; Continue issuing demand letters to all accountable officers with outstanding cash advances and exert all possible efforts to go after these individuals who have liability to the College;

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Request from COA authority to write off dormant/non-moving accounts in accordance with existing auditing rules and regulations; and Comply strictly with Section 89 of P.D. 1445 and COA Circular No. 97002 in the granting, utilization and liquidation of cash advances.

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7. Management commented that during the tenure of Atty. Carmelita YadaoSison, Officer In-Charge of PhilSCA, fiscal reforms were strictly instituted such as the continuing deduction from the salaries of faculty members and employees with still unsettled cash advances when demand letters proved insufficient to compel full payment and when liquidation could not really be accomplished, apart from the fastidious compliance with and institutionalization of the procedures of Republic Act 9184, otherwise known as the New Procurement Law. That out of the unliquidated cash advances of P5 million in CY 2008, almost P3 million were liquidated. Management also commented that with the newly appointed College President, it will continue the withholding of payment of money due the accountable officers with unliquidated cash advances and that the Accounting Office is already preparing its formal request for the write-off of dormant/nonmoving accounts. 8. The Audit Team is awaiting for the formal request of the College to write-off dormant/non-moving accounts, as this was a reiteration of the Audit Teams recommendation in the previous year. B. Valuation of the Property, Plant and Equipment (PPE)

The existence and valuation of the Property, Plant and Equipment accounts totaling P182.63 million cannot be relied upon due to the inclusion of damaged property worth P2.7 million lost thru fire; the absence of Reports on the Physical Count of Property, Plant and Equipment (RPCPPE) for CYs 2007 to 2009 and the unreconciled account balances of accounting and property records of P19.6 million, P1.6 million and P18.3 million for CYs 2004, 2005 and 2006, respectively. 9. Section 73 of the Government Auditing Code of the Philippines (P.D. 1445) on credit for loss occurring in transit or due to casualty or force majeure states that: When a loss of government funds or property occurs while they are in transit or the loss is caused by fire, theft, or other casualty or force majeure, the officer accountable therefor or having custody thereof shall immediately notify the Commission or the auditor concerned and, within thirty days or such longer period as the Commission or auditor may in the particular case allow, shall present his application for relief, with the available supporting evidence. Whenever warranted by the evidence credit for the loss shall be allowed. An officer who fails to comply with this requirement shall not be relieved of liability or allowed credit for any loss in the settlement of his accounts. 10. Sections 490 and 491 of the Government Accounting and Auditing Manual (GAAM), Volume I, also provide that: 22

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Sec. 490 Physical stock-taking is an indispensable procedure for checking the integrity of property custodianship. In all cases, the physical inventory-taking which is required semi-annually or annually should be regarded with importance. Section 491 Chief of agencies are required to take a physical inventory of all the equipment and supplies belonging to their respective offices at least once a year, unless otherwise determined by the COA Chairman in specific cases. Such inventory shall be made as of December 31 on General Form 41(A) (Appendix 12) and submitted to the Auditor not later than January 31 of each year. xxx. Sec. 491, i (b) All discrepancies between physical and book inventories must be investigated and cleared immediately xxx. 11. The PPE accounts of the College showed a balance of P182,629,560.74 as of December 31, 2009, however, due to the inclusion of damaged property worth P2.7 million lost thru fire, the absence of Reports on the Physical Count of Property, Plant and Equipment (RPCPPE) for CYs 2007 to 2009 and the unreconciled account balances of P19.6 million, P1.6 million and P18.3 million for CYs 2004, 2005 and 2006, respectively, cast doubt on the existence, valuation and validity of said PPE accounts. 12. Verification showed that at about 5:13 pm, Monday, March 23, 2009, a fire razed the 2nd floor of the PhilSCA VAB Furugganan building including a portion of the nearby stage as reported by the Assistant Deputy Commander of the Red Bird Security Agency and Services Inc., PhilSCA Security Detachment in a fire incident report to Dr. Enerico M. Sampang, former President. 13. Likewise, on March 24, 2009, Mr. Edgardo Cruz, Audit Team Member of the Auditing Office conducted an ocular inspection of the destroyed school building and found out that the five rooms located at the 2nd floor of the Furugganan Building were totally razed including all properties inside and a portion of the adjacent stage. 14. Accordingly, management was verbally advised to request relief from property accountability due to loss thru fire of the following:
Particular Furugganan Hall Comfort Room Stage 2 units Sennheiser wireless microphone 3 units Carrier Airconditioner 4.Various Sports Equipment Total Cost P1,597,178.00 100,000.00 575,600.00 67,990.00 End-User PhilSCA PhilSCA PhilSCA Mr. Vicente Macalipay

75,000.00 Engr. Louie Timajo 283,330.00 Ms. Gigi Manaog P2,699,098.00

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15. The formal request for relief from accountability for said properties was not given full attention due to the dismissal from the service of Dr. Enerico M. Sampang, former President of the College, and the fast turnover of key officers in their posts per inquiry from key officers of the agency. 16. Further, the immediately succeeding PhilSCA management also failed to request relief from property accountability. 17. However, despite the absence of an approved relief from property accountability, management pursued its claim with the Government Service Insurance System (GSIS) for insurance indemnity per letter dated April 2, 2009 by the Officer-in-Charge of the college. 18. Thus, the following Fixed Assets accounts as of December 31, 2009 were overstated due to the inclusion of the cost of said fixed assets which were razed by fire.
Account Title Office Buildings School Buildings Office Equipment Communications Equipment. Sports Equipment T OT A L Acct. Code 211 212 221 229 235 Balance as of 12/31/2009 P 5,560,372.00 10,101,472.48 12,125,186.87 994,427.00 214,770.25 P28,996,228.60 Amount Lost Due to Fire P 575,600.00 1,697,178.00 75,000.00 67,990.00 283,330.00 P2,699,098.00
Adjusted Balance as of 12/31/2009

P4,984,772.00 8,404,294.48 12,050,186.87 927,427.00 (68,559.75) P26,298,120.60

19. Moreover, the Colleges Inventory Teams per Travel/Mission Order Nos. 38, 38A dated February 6, 2007 and February 22, 2007, Special Order Nos. 137, 137A, 01 and 227 dated September 10 and 22, both dated 2008 and January 7, 2009, respectively, failed to submit the Reports on the Physical Count of PPE (RPCPPE) in CYs 2007 to 2009, thus affecting the reliability of the PPE accounts of P182.63 million. 20. Likewise, we reiterate the difference between the balances of the RPCPPE with that of the Accounting Office in 2004 to 2006 of negative P19,639,065.22, P1,582,555.62 and P18,364,170.75, which were not yet reconciled by both parties, as follows:
Particulars Per Accounting Records Per Inventory Reports Difference CY 2006 P166,461,786.77 184,825,957.52 (P18,364,170.75) CY 2005 P158,068,500.47 159,651,059.09 ( P 1,582,558.62) CY 2004 P153,491,314.48 173,130,379.70 (P19,639,065.22)

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21. The Audit Team issued AOM No. PhilSCA 2009-003 dated March 1, 2010 to management for their comments. 22. The foregoing practice is indicative of weakness in internal control on asset accountability resulting in inaccurate financial information, and exposing the said assets to possible loss, theft and/or misuse. Had the physical count and reporting on fixed assets been completed, discrepancies could have been easily investigated and reconciled. 23. We recommended that management require :

the concerned accountable officers to prepare and submit to the Commission on Audit a formal request for relief from property accountability for the fixed assets worth P2.7 million lost thru fire pursuant to Section 73 of the Government Auditing Code of the Philippines (P.D.1445). Failure to comply with the above provision will make the accountable officers concerned liable for the loss of property; the Committees created to hasten their work of completing immediately the physical count and inventory reporting on PPE in accordance with Sections 490 and 491 of the GAAM, Volume I; the Accounting Office to reconcile the balances of accounts in the general ledger against the individual subsidiary/property ledger card including the inventory report that will be prepared by the Committees; and the Accounting Office to effect immediately the adjustments after the reconciliation of the said fixed assets accounts .

24. Management submitted the following comments: a. The Accountant had already effected the adjustments of the Fixed Assets accounts after balance sheet date (March 31, 2010) for those properties lost through fire worth P2,699,068.00 as mentioned in the AOM. b. The Accounting Office will continue to reconcile the balances of accounts in the general ledger against the individual subsidiary/property ledger card including the inventory report that will be prepared by the Inventory Team, and effect whatever adjustments are required after the reconciliation of properties is completed.

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c. The current Inventory Team is now completing its inventory assignment.It has already completed the inventory of PhilSCA BASA Air Base, Fernando Air Base and Villamor Air Base. As of report date, the inventory team is at PhilSCA Mactan Benito Ebuen Air Base Campus. d. Rest assured that appropriate request for relief from accountability of the properties burned by fire will be immediately undertaken. 25. The Audit Team found out that the College had already dropped from its books the cost of the school buildings, office, communication and sports equipment lost thru fire in the amount of P2,630,538.25 per JEV No. GJ -10-03007 dated March 31, 2010 without requesting for relief from property accountability from the Commission on Audit. As of report date, we have not received the request for relief from accountability of the College, thus the audit team required the accountant to restore immediately the amount dropped from the books of the College. C. Motor Vehicles

The validity and existence of the Motor Vehicles account balance of P1,053,500 cannot be ascertained due to the unreconciled balance of P868,356 between the accounting and property records since CY 2004. 26. Sections 490 and 491 of the Government and Accounting Manual state that: Physical inventory taking being an indispensable procedure for checking the integrity of property custodianship is to be regularly undertaken and the report shall be properly reconciled with accounting and property records. All discrepancies between physical and book inventories must be investigated and cleared immediately. 27. While COA Circular No. 77-61 dated September 26, 1977 and Section 361 of the GAAM Volume I provide that: All motor vehicles owned by the government should be plainly marked, For Official Use Only (3 inches), under which should be written the corresponding name of the Office operating or using the same. The mark should appear on each side of the motor vehicle. When there is no sufficient space on each side, the same should appear at the back side, the same should appear at the back and on the front just below the windshield of the motor vehicles.

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28. The Motor Vehicles account of the College showed a balance of P1,053,500.00 as of December 31, 2009 per property records consisting of two motor vehicles, namely; Qty. Particulars Acquisition Date 11-13-2000 Acquisition Cost Plate No. P535,500.00 SFU 658 510,000.00 SFR 247 P1,045,500.00 1,053,500.00 P 8,000.00 ==========

1 unit Toyota REVO DLX

1 unit Mitsubishi L-300 FB 01-18-2001 Total property records Total per books Difference or error in recording

29. However, verification of records acquired from the Supply Office and the inventory of motor vehicles found at station as of December 31, 2009, showed four vehicles with a total cost of P1,921,856.30, as follows: Qty. Particular Plate No. TSU 732 SEU 357 SFU 658 Acquisition Cost P478,071.00 398,285.30 535,500.00 Location VAB Campus VAB Campus VAB Campus

1 unit Toyota Tamaraw FX 1 unit Mitsubishi L-300 1 unit Toyota REVO DLX

1 unit Mitsubishi L-300 FB SFR 247 510,000.00 MBEAB Campus Total per physical inventory P1,921,856.30 Total per books as of Dec. 31, 2009 1,053,500.00 Difference P 868,356.30 ============ 30. Further verification disclosed that the balance of the following motor vehicles account in CY 2004 amounted to P1,451,765.00: Acquisition Date 1 unit Toyota REVO DLX 11-13-2000 1 unit Mitsubishi L-300 FB 01-18-2001 Qty. Particular Acquisition Cost P535,500.00 510,000.00 398,285.30 P1,443,785.30 1,451,765.00 P 7,979.70 ========== Plate No. SFU 658 SFR 247 SEU 357

1 unit Mitsubishi L-300 07-17-1995 Total for three vehicles Total per books in 2004 Difference

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31. However, from CYs 2005 up to 2009, the motor vehicles account balance was P1,053,500.00, resulting in an unrecorded amount of P868,356.30. 32. The failure of the Accounting Office and the Supply/Property Office to maintain and update their corresponding Equipment Ledger Cards as well as Property Cards for check and balance cast doubts on the validity, and valuation of the motor vehicles account balance appearing in the financial statements, thus AOM No. PhilSCA 2009-006 dated March 10, 2010 was issued to management. 33. Moreover, inspection of the four motor vehicles showed that these were not marked For Official Use Only and the name of the College was not written on each side of the motor vehicles nor at the back or front of the windshield in violation of COA rules and regulations. 34. We recommended that management : Require the Accounting and Property Offices to reconcile the motor vehicle records and reflect the actual physical inventory of the account pursuant to Sections 490 and 491 of the Government Accounting and Auditing Manual Volume I; and Mark all motor vehicles FOR OFFICIAL USE ONLY.

35. Management commented that the accounting and property offices reflected the actual physical inventory of the motor vehicles as recommended in the AOM. They further commented that the observation of the COA was due to the depreciation of the vehicles, thus, the residual value equivalent to ten percent of the Tamaraw FX acquired in 1995 worth P478,071.00 and AUV vehicles worth P220,000.00 acquired in 1990 were reclassified and recorded under Other Assets to reflect the actual value of these fully depreciated motor vehicles. Similarly, in 2004, the 1997 acquired Mitsubishi L300 with Plate No. SEU 357 stationed in Villamor Air Base Campus was recorded under Other Asset account. Management also commented that all motor vehicles were recorded and taken up in the books of accounts as prescribed under COA Circular No. 2002-02 prior to CY 2004. 36. The Audit Team however, maintains its stand that the difference of P868,356.30 must still be reflected in the books as provided in Section 143 of the New Government Accounting System (NGAS) which describes the Other Assets account as being used to record the value of obsolete and unserviceable assets awaiting final disposition as well as those assets still serviceable but no longer being used. Since the motor vehicles are not yet obsolete and unserviceable and these are still being used, the motor vehicles cannot be classified under Other Assets account but still under Motor Vehicles. The audit team required the accountant to restore immediately the value of the motor vehicles dropped from its books.

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D.

Representation and Transportation Allowances

Nineteen college officials and employees whose positions were not among those entitled to Representation and Transportation Allowances (RATA) were paid P0.787million during CY 2009 out of the Special Trust Fund (STF) contrary to Section 44 of the 2009 General Appropriations Act (GAA), Memorandum Circular (MC) No. 6, series of 2005 of the Civil Service Commission (CSC), National Budget Circular No. 404 dated March 29, 1989 and COA Circular No. 2000-002 dated April 4, 2000, thus, rendering said payments unauthorized and without legal basis. 37. Section 44 of the 2009 GAA enumerates the officials who are entitled to receive RATA at the rates provided therein: National Government Officials a Department Secretary b. Department Undersecretaries c. Department Assistant Secretaries Bureau Directors and Department d. Regional Directors Assistant Bureau Directors, e. Department Assistant Regional Directors, Bureau Regional Directors and Department. Chiefs f. Assistant Bureau Regional Directors Chiefs of Divisions, identified as such g. in the Personal Services Itemization and Plantilla of Personnel Representation Allowance P11,000.00 8,700.00 7,800.00 7,000.00 Transportation Allowance P11,000.00 8,700.00 7,800.00 7,000.00

6,300.00 5,500.00 4,000.00

6,300.00 5,500.00 4,000.00

38. National Budget Circular No. 404 dated March 29, 1989 identifies the SUC officials entitled to RATA and who are considered equivalent to government officials identified in the General Provisions of the General Appropriations Acts (GAAs), except the President and Vice President, who are already covered under NCC Nos. 12 and 12-A. 39. Memorandum Circular (MC) No. 6, series of 2005 of the CSC provides the Guidelines on Designations issued under Resolution No. 05-0157 dated February 7, 2005 which states that Designees can only be designated to positions within the level they are currently occupying. However, Division Chiefs may be designated to perform the duties of third level positions. First level personnel cannot be designated to perform the duties of second level positions.

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40. COA Circular No. 2000-002 dated April 4, 2000 provides the accounting guidelines for the use of income of State Universities and Colleges, treated as STF pursuant to Republic Act 8292 (the Higher Education Modernization Act of 1997). Under the said law, the Board of Regents/Trustees of SUCs are authorized to disburse income from tuition fees and other necessary school charges as well as those generated from the operations of auxiliary and land grants for instruction, research, extension or other programs/projects of the university or college. Section 2.2 thereof further provides that the STF shall be used to augment the maintenance and other operating expenses of the university and to pay authorized allowances and fringe benefits to teachers and students who render services to the school. 41. Per approved plantilla by the Department of Budget and Management (DBM), the following college officials are entitled to RATA. Position SUC President I SUC Vice President Chief, Administrative Officer Salary Grade 27 25 24

42. Audit of the Colleges RATA expenditures for CY 2009, however showed that a total of P787,641.00 was disbursed to pay RATA to the following 19 SUC officials and employees whose positions were not among those expressly authorized in the GAA and/or duly designated by competent/appointing authority to vacant positions entitled therein, nor were considered equivalent to government officials identified in the GAA as required in the aforementioned budget circulars, to wit: Officials/Employees/Level Vice President for Academic Affairs/3 Campus Directors/3 Deans/3 Directors/3 Chief Admin Services/2 No. 3 Salary Grade 19/21 25 15/17/21 12/15/17/22 12/15/18/22 18Level 2 3 2 2 2 2 Rate per Month P7,000/11,000

4 7,000/8,000 7 7,000/8,000 4 7,000/8,000 1 8,000 19 === 43. As shown in the foregoing, almost all the designees were occupying second level positions, except for one faculty who was designated as Vice President for Academic Affairs. Likewise, personnel designated were not Division Chiefs that may be designated to perform the duties of third level positions pursuant to CSC MC. No. 6, s of 2005, thus AOM No. PhilSCA 2009002 (09) dated February 28, 2010 was issued to management for their comments.

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44. Moreover, the payment of RATA was charged against the Special Trust Fund (STF) contrary to COA Circular No. 2000-002 dated April 4, 2000 which provides that only authorized allowances and fringe benefits can be paid out of STF. 45. Further, said payments of RATA were not authorized by the BOT as there was no Board Resolution attached to their claims. 46. In a similar case, the Commission on Audit in its Decision No. 2009-018 dated March 30, 2009, denied the claim of Dr. Renato C. Mabesa, Chief, Human Resource Development Office, University of the Philippines-Los Baos, Laguna for RATA as his position is not authorized in the CY 2002 General Appropriations Act nor is an equivalent rank entitled to RATA as determined by the DBM. Besides, Dr. Mabesa was not designated to a vacant position entitled to RATA. 47. We recommended that management: Require the concerned officials to refund the unauthorized RATA disbursements totalling P0.79 million in the absence of a legal basis to support the payments; Henceforth, comply strictly with Section 44 of the 2009 General Appropriations Act (GAA), National Budget Circular No. 404 dated March 29, 1989 and COA Circular No.2000-002 dated April 4, 2000, respectively, on the payment of RATA.

48. Management commented that Joint Budget and COA Circular No. 64, series of 1998 provides RATA to officials of State Universities and Colleges (SUCs) and that the explanation submitted to justify the grant of RATA and the requirement by COA to the concerned officials whose designations are additional functions as faculty members and administrative personnel to refund the amount be favorably considered so as not to cause undue demoralization on their part but allowed to serve as incentive for performing even better in their additional assignments and designations. 49. The Audit Team however, maintains its stand that the concerned 17 officials who are occupying second level positions cannot be designated to third level positions, thus, they are not entitled to the RATA received. However, division chiefs may be designated to perform the duties of third level positions. Likewise, the Joint Budget and COA Circular No. 64, series of 1998, stated as reference was not submitted for validation purposes. 50. Management further commented and concluded that: The designation of 17 College Officials is in accordance with CSC MC No. 06 s. 2005;

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The position for which these 17 College Officials were designated belong to second level positions and in accordance with afore-cited CSC Circular; The payment of RATA to 17 College Officials subject of an AOM is proper, valid and legal; The source of funds for the RATA of 17 College officials from STF is valid, legal and proper as authorized by COA Resolution No. 2000-002, and There is no reason to disallow in audit the payment of said RATA to 17 College Officials as justification were sufficiently offered and justified for consideration of the Resident Auditor.

51. However, we still maintain our stand that there are two basic requisites to be entitled to RATA under National Compensation Circular (NCC) No. 67 and National Budget Circular (NBC) No. 404, to wit: the recipient must be an officer or employee enumerated in the aforementioned circulars to be entitled to RATA or holding positions equivalent thereof, and actual performance of functions/duties.

These two requirements must be complied with for a valid payment of RATA. Although, recipients actually perform their functions/duties, however, they did not meet the following criteria:
Designated Head of: a. Research b. Extension Service c. Auxiliary Services d. Satellite Campus e. Administrative Unit f. Financial Service g. Student Affairs Services h. Deans of the Graduate Program and Department Heads Criteria Has at least 10 research projects with a total cost of P500,000.00 per annum Has at least 10 extension services with a total cost of P500,000.00 per annum Has a yearly income from its operations of at least Sixty thousand Pesos P60,000.00 and at least seven (7) personnel involved in these income-generating projects. Has complete administrative support staff and other support items and with at least 1,000 students in the tertiary level Has at least seven (7) personnel occupying regular items in the Personal Services Itemization (PSI) Has at least seven (7) personnel occupying regular items in the PSI With at least 4,000 collegiate students May be allowed provided the SUC has different departments/colleges, each one having at least four degree programs with each program differentiated from each other by 33%.

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We also maintained that STF was not the proper source of fund in paying RATA, since, item 4 of NCC No. 67 explicitly provides that: 4. Funding Source In all cases, commutable and reimbursable RATA shall be paid from the amount appropriated for the purpose and other personnel services savings of the agency or project from where the officials and employees covered under this Circular draw their salaries. No one shall be allowed to collect RATA from more than one source. E. Gasoline, Oil and Lubricants (GOL) Expenses

Management failed to establish the reasonableness of the amount of fuel consumed totaling P175,750.68 for CY 2009 contrary to COA Circular 77-61 dated September 26, 1977 due to inadequate data on the trip tickets as well as the absence of the subsidiary ledger, Monthly Report of Fuel Consumption and the Monthly Report of Official Travels for each of the four motor vehicles, thus, the control of the usage of the said vehicles could not be determined. 52. COA Circular No. 77-61 dated September 26, 1977 and Section 361(g) of the Government Accounting and Auditing Manual (GAAM), Volume I, prescribes the use of the Manual on Audit for Fuel Consumption of Government Motor Vehicles, which Item Nos. 2, 4 & 6 on the Specific Rules and Regulations provide that: Monthly Report of Fuel Consumption (MRFC) of government motor transportation (Appendix G) shall be submitted to the Auditor for verification purposes to determine the reasonableness of fuel consumed during the period. The Monthly Report of Fuel Consumption shall be submitted to the Auditor within the first ten days of the succeeding month by the Chief, General Services Division or equivalent. 53. Likewise, Item No.6 of the same circular provides that: At the end of the month, a Monthly Report of Official Travels (MROTs) shall be prepared by the driver concerned summarizing in chronological order his trips for the month.

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54. Item No.2 of the foregoing circular states that: All motor vehicles owned by the government should be plainly marked, For Official Use Only (3 inches), under which should be written the corresponding name of the Office operating or using the same. The mark should appear on each side of the motor vehicle. When there is no sufficient space on each side, the same should appear at the back and on the front just below the windshield of the motor vehicles. 55. Audit of the gasoline, oil and lubricants (GOL) expenses for 2009 of the College showed that a total of P175,750.68 was disbursed for the fuel consumption of its four vehicles as follows: Qty. 1 unit 1 unit 1 unit 1 unit Particular Toyota Tamaraw FX Mitsubishi L-300 Toyota REVO DLX Mitsubishi L-300 FB Plate No. TSU 732 SEU 357 SFU 658 SFR 247

56. However, verification of the GOL disclosed that it does not show how much of the P175,750.68 was spent for each vehicle since there are no equipment ledger cards maintained by the Accounting Office to record claims for each vehicle. 57. Likewise, trip tickets attached to support the claims for reimbursement of gasoline, oil and lubricants were not properly filled up/accomplished as to number of trips undertaken; the quantity of gasoline used; balance in tank and purchased outside. The details of the trips particularly the mileage/time of departure and arrival and the distance traveled per speedometer/odometer reading with the fuel used were also not indicated therein. 58. The MRFCs were not submitted to the Auditor within the first ten days of the succeeding month by the Chief, General Services, to determine the average minimum and maximum gasoline and oil consumption of the four motor vehicles and the reasonableness of the fuel consumed. 59. Further, the use of the motor vehicles were not properly controlled and regulated since the drivers trip tickets were not summarized at the end of the month in the MROTs for audit purposes as required in Section 361(e-1) of the GAAM Vol. I. 60. As a result, the fuel consumption of the government motor transportation and the reasonableness of the fuel consumed during the period were not properly controlled and accounted for through approved Requisition and Issue Voucher, thus AOM No. PhilSCA 2009-005 dated March 10, 2010 was issued to management.

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61. We recommended that management: Require the Chief, General Services, to submit the Monthly Report of Fuel Consumption for each motor vehicle to the Auditor within the first ten days of the succeeding month for audit purposes as required under Section 361 (e-i) of the GAAM Volume I and pertinent provisions of COA Circular No. 77-61 dated September 26, 1977; and Require the drivers of the four motor vehicles to properly accomplish the Daily Trip Ticket and ensure that the same is approved by the authorized officials and signed by the end users/passengers of the motor vehicle, be serially numbered and summarized at the end of the month in a Monthly Report of Official Travels and submitted to COA for audit purposes.

62. Management commented that a rechecking of the breakdown of the gasoline, oil and lubricants by the Accounting Office for CY 2009 showed the itemized computation and reasonableness on the utilization of the motor vehicles; a. The PhilSCAs College Code properly reflects the control on the usage of vehicles. Trip tickets are properly issued by the Office of the Vice-President for Administration and Finance with the corresponding trip ticket number as provided for in the aforementioned Code. As to use of the gasoline, the personnel requesting the vehicle has to use his/her personal money to provide gasoline for the vehicle and later have it reimbursed. The College do not have any gasoline depot so as to enable control of the utilization of gasoline through gas slips. The motor vehicles are now being provided by the PhilSCA Supply Office with a sticker/marking FOR OFFICIAL USE ONLY.

b.

63. The Audit Team reiterates its stand that the College is required to submit the Monthly Report of Fuel Consumption within the first ten days of the succeeding month to the Auditor and the Monthly Report of Official travels at the end of the month in compliance with the foregoing COA Circular. F. Consultancy Services/Legal Services

The College contracted the services of private legal counsels and paid the total amount of P325,000 from six months to two years for legal and consultancy services without the written conformity and acquiescence of the Solicitor General and written concurrence of the Commission on Audit contrary to COA Circular No. 95-011 dated December 4, 1995.

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64. Section 2.2, Art. IX-D of the Constitution, implemented by COA Circular No. 95-011 par. 5, dated December 4, 1995 prohibits the hiring by government agencies and instrumentalities, including government-owned or controlled corporations, of private lawyers to handle their legal cases without the approval of the Solicitor General and concurrence of COA as stated below: Accordingly and pursuant to this Commission's exclusive authority to promulgate accounting and auditing rules and regulations, including for the prevention and disallowance of irregular, unnecessary, excessive, extravagant and/or unconscionable expenditure or uses of public funds and property (Sec. 2-2, Art. IX-D, Constitution), public funds shall not be utilized for payment of the services of a private legal counsel or law firm to represent government agencies in court or to render legal services for them. In the event that such legal services cannot be avoided or is justified under extraordinary or exceptional circumstances, the written conformity and acquiescence of the Solicitor General or the Government Corporate Counsel, as the case may be, and the written concurrence of the Commission on Audit shall first be secured before the hiring or employment of a private lawyer or law firm. 65. In Polloso vs. Gangan, G.R. 140563 dated July 14, 2000, the Supreme Court has affirmed the foregoing requirements and categorically pronounced that the prior concurrence of COA shall first be secured before the hiring or employment of a private lawyer or law firm. To allow the disbursement of public funds to pay for the lawyers services despite absence of requisite consent to his hiring from the OSG or OGCC would precisely be a circumvention of COA Circular No. 86-255 dated April 2, 1986. In any event, it is not the lawyer who is liable to return the money already paid him, rather the same shall be the responsibility of the official concerned. 66. On January 13, 2005, the PhilSCA Board of Trustees (BOT) under BOT Resolution No. 9 series of 2005 approved the hiring of Atty. Anna Corina CruzGillego as Legal Consultant with a professional fee of P10,000.00 per month. 67. Consequently, another BOT Resolution No. 32 series of 2007 was approved on August 28, 2007, increasing the professional fee of Legal Consultant Atty. Gillego from P10,000.00 to P15,000.00 as Special Counsel on legal matters for the College and its Governing Board, hence, she was paid P180,000.00 in CY 2008. 68. However, review of the list of personnel hired on Job Order basis disclosed that Atty. Gillego was issued an appointment as Legal Adviser with a monthly rate of P15,000.00 covering the period from January 5, to June 30, 2009. She was paid the amount of P15,000.00 only which was charged to General Services (797) instead of Legal Services, since there was a change in PhilSCA management 35

69. Likewise, on June 16, 2009, a Contract of Service was made and entered by and between PhilSCA and Atty. Aurora Del Mundo-Velasquez amounting to P20,000.00 per month, covering the period from June 16, to September 30, 2009 and from October 1 to December 31, 2009, for a total of P100,000.00. 70. Further review and examination of the supporting papers attached to the claims of Atty. Corina Cruz-Gillego and Atty. Aurora Del Mundo-Velasquez revealed that the College has not secured the written conformity and acquiescence of the Solicitor General or the Government Corporate Counsel, as the case may be, and the written concurrence of the Commission on Audit in their contracts of services with the College contrary to Section 2.2, Art. IX-D of the Constitution, implemented by COA Circular No. 95-011 dated December 4, 1995. 71. Moreover, analysis of JEV No. 09-11-008 disclosed an error in the transfer of P31,380.00 from Legal Services account to Consultancy Services account because examination of the attachments showed that the expenses were for legal services rendered to the College, thus overstating the consultancy services account by P31,380.00. Thus, AOM No. PhilSCA 2009-007 (09) dated March 15, 2010 was issued to management for their comments 72. We recommended that management: Require the official concerned to return to the College the amount paid to the aforementioned private lawyers who were hired contrary to existing accounting and auditing rules and regulations and Supreme Court jurisprudence; and Require the Accountant to reverse the entry made in JEV No. 0911-008 to correct the consultancy account by P31,380.00.

73. Management commented that it is clearly provided in the Contract of Service of Atty. Velasquez that the functions performed by the Legal Consultant is confined on legal matters involved in the administrative function of the Officer-In-Charge and not to represent the College in any litigation in court which is not contrary or in violation cited in the AOM. It also commented that the reversing of entries are done only when the adjustment is effected in the current year. The following are the functions of Atty. Velasquez: a. Assist the Officer-In-Charge in the formulation of policies/ procedures and programs of PhilSCA in the matter of academics and non-academic issues; Advise the OIC on matters affecting the administration of the institution; Assist/Chair investigation committees on the conduct of investigation and recommend action for approval of the OIC; and Perform such other functions which may be assigned by the OIC. 36

b. c. d.

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74. The Audit Team however, maintains its stand that the payment of retainer fees of private law practitioners who were hired or employed without the prior written conformity and acquiescence by the Solicitor General or the Government Corporate Counsel as well as the written concurrence of the Commission on Audit, is not allowed in audit. The Commission on Audit in its Decision No. 99-163 dated September 28, 1999 is similar to the instant case, where the Auditor of the National Power Corporation-Visayas Regional Center (NPC_VRC), Cebu City disallowed the payment of P283,763.39 for services rendered by Atty. Benemerito A. Satorre, on the grounds that the contract does not have the written conformity and acquiescence of the Solicitor General or the Government Corporate Counsel and the concurrence of COA; It is held in COA Circular 86-255, April 2, 1986 as reiterated in Section 212, Vol. I, GAAM, prohibits the employment by government agencies and instrumentalities, including GOCCs of private lawyers to handle legal cases. The phrase to handle their legal cases stated in the caption of the aforesaid circular is not limited to court cases but also includes other legal services such as documentation, negotiations and counselling. In Agpalo, Statutory Construction, 3rd Ed. p.151, It is an established rule in statutory construction that the particular clause should not be studied as detached and isolated expression, but the whole and every part of the statute must be considered in fixing the meaning of any part of its parts. G. Collective Negotiation Agreement (CNA)

The payment of Collective Negotiation Agreement (CNA) incentive to the members of PhilSCA Non-Teaching Association (PHILSCANTEA) Inc. was not supported with complete documentation and funding source to establish the legality and propriety of the disbursements totaling P0.682 million as required under the Department of Budget and Management (DBM) Circular No. 2006-1 dated February 1, 2006. 75. DBM Budget Circular No. 2006-1 dated February 1, 2006 prescribes the following guidelines on the grant of CNA incentive to employees in government agencies: a. The grant covers rank-and-file government employees whose appointments are permanent, temporary, contractual, or casual in nature, on full-time or part-time basis, and are members of employees organizations accredited by the Civil Service Commission (CSC). Other non-managerial employees who are not members of employees organizations, but may be granted the CNA incentive provided they are assessed and have paid the corresponding agency fees pursuant to Public Sector LaborManagement Council (PSLMC) Resolution No. 1, s. 1993.

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b.

The CNA Incentive shall be paid as a one-time benefit after the end of the year, provided that the planned programs/activities/projects have been implemented and completed in accordance with the performance targets for the year. The following agreements shall be incorporated in a written resolution to be signed by the representatives from the management and the accredited employees organization and noted by the agency head: The guidelines/criteria to be followed in the grant of the CNA Incentive; The total amount of unencumbered savings at the end of the year which were realized out of cost-saving measures identified in the CNAs and supplements thereto, and which were the results of the joint efforts of labor and management; The apportionment of the amounts of savings such as (a) 50 percent for CNA Incentive; (b) 30 percent for improvement of working conditions and other programs and/or to be added as part of the CNA Incentive, as may be agreed upon in the CNA; and (c) 20 percent to be reverted to the General Fund.

c.

d.

The CNA Incentive shall be sourced solely from savings of the released Maintenance and Other Operating Expenses (MOOE) allotments for the year under review. The form of the CNA Incentive shall be simplified and rationalized as follows and shall be consolidated into a single incentive and referred to and collectively paid as such: staple food allowance Relocation allowance SONA bonus Rice subsidy Bonuses other than the year-end benefit Grocery allowance

e.

76. PSLMC, Section 8 of Resolution No. 04, s. 2002, Grant of CNA Incentive for National Government Agencies, State Universities and Colleges and Local Government Units provides that: Should the grant of CNA Incentive be disallowed by the Commission on Audit, the management shall be held personally responsible for the payment thereof.

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77. PSLMC, Section 9 of Resolution No. 04, s. 2002 of the above subject states that: As provided in Section 3, Rule VIII of the Rules and Regulations to Govern the Exercise to Right of Government Employees to Self-Organization, the following are not negotiable: (a) Increase in salary emoluments and other allowances not presently provided for by law; (b) x x x (h) 78. Audit of the December 2009 expenditures showed that the College paid CNA incentive to its 50 personnel totaling P682,000 thru the Payroll Fund account and were credited to their individual Automated Teller Machine (ATM) bank accounts, with details as follows:
Campus/No. of personnel VAB - 36 MBEAB - 5 BAB - 5 FAB - 4 TOTALS - 50 Amount Earned P642,000.00 90,000.00 90,000.00 72,000.00 P894,000.00 Association Dues P36,000.00 5,000.00 5,000.00 4,000.00 P50,000.00 Amount Paid Agency Fee P108,000.00 45,000.00 9,000.00 -0P162,000.00 P498,000.00 40,000.00 76,000.00 68,000.00 P682,000.00

79. The Association dues deducted and collected by the College from the payment of the CNA incentive to its members as shown above were imposed by the Association in accordance with its Constitution and By-laws and pertinent laws. 80. Agency fees were deducted and collected by the College upon representation made by the Association from the payment of the CNA of nonmembers covered by the negotiating unit (PHILSCANTEA INC) and who benefited from the incentives that the Association obtained. 81. The CNA was forged between the College, represented by Mr. Enerico M. Sampang and PHILSCANTEA INC, represented also by its President, Ms. Estrella E. Yago on April 19, 2004. 82. The BOT under Resolution No. 032, series of 2005 approved the CNA of the PHILSCANTEA INC., on January 13, 2005. 83. Verification disclosed that the College paid the CNA incentive without complying with the provisions of Budget Circular No. 2006-1 and PSLMC to establish the propriety and legality of the disbursements, as follows: a. the payment of CNA Incentive was made even before the end of the year as it was paid under check no. 402361 dated December 11, 2009 but there was no computation of the apportioned amounts of savings particularly the 20 percent reversion to the General Fund as it was charged against the Special Trust Fund contrary to the provisions of Budget Circular 2006-1, which requires that the CNA Incentive shall 40

be sourced solely from savings of the released Maintenance and Other Operating Expenses allotments for the year under review; b. there were no supporting documents to show that the planned programs/activities/projects indicated in their agreement with the College were implemented and completed in accordance with the performance targets for the year; and c. part of the CNA incentive was in the form of Laundry Allowance amounting to P1,500.00 per month which is not one of those negotiable as it is not presently provided by law to government employees except to Public Health Workers as mentioned in Section 9 of PSLMC of the CSC. 84. We recommended that management: Submit necessary documents showing compliance with the prescribed policies, procedures and funding source on the grant of CNA incentive pursuant to DBM Budget Circular No. 2006-1 dated February 1, 1006 and CSC PSLMC dated November 14, 2002; and Refrain from paying allowances and incentives, which are not in accordance with existing laws, rules and regulations.

85. Management commented that : 1. PhilSCA Non-Teaching Employees Association, Inc. (PhilSCANTEA) has legal basis for the payment of the C.N.A. Incentives, such as: a. C.N.A agreement between PhilSCANTEA and management was ratified by PhilSCA Board of Trustees in a Resolution No. 032 s. 2005; and b. Administrative Order No. 135 dated December 27, 2005; PSLMC Resolution No. 2 s. 2003 were the legal procedures followed in the payment of C.N.A. benefits. 2. The use of STF fund to pay the benefits of PhilSCANTEA was specifically authorized under COA Resolution No. 2000-002. 3. Programs for reforms, facilities development, and improvement were implemented by the College through labor and management cooperation. 86. We maintain our position that the payment of CNA incentives was not supported by complete documentation and proper funding source in view of their non compliance with DBM Budget Circular No. 2006-1 dated February 1, 2006 which prescribes the guidelines on the grant of CNA incentive to employees in government agencies, to wit 41

a. Two PhilSCA key officials with managerial position and receiving RATA were among those C.N.A. incentive recipients contrary to the requirement that The grant covers rank-and-file government employees whose appointments are permanent, temporary, contractual, or casual in nature, on full-time or part-time basis, and are members of employees organizations accredited by the Civil Service Commission (CSC). b. No performance targets were prepared and submitted in compliance with the provisions that The CNA Incentive shall be paid as a onetime benefit after the end of the year, provided that the planned programs/activities/projects have been implemented and completed in accordance with the performance targets for the year. c. CNA incentives was sourced from Special Trust Fund (STF) of PhilSCA which differ with the rule that The CNA Incentive shall be sourced solely from savings of the released Maintenance and Other Operating Expenses (MOOE) allotments for the year under review. H. Assigning of Excess Teaching load

The practice of assigning more than 12 hours a week teaching load to 108 parttime faculty members resulted in the payment of 24,871 hours of excess loads amounting to P2.96 million which is inconsistent with the College Faculty Workload Manual dated December 2, 2002. 87. Memorandum Circular No. 19, s. 2005 of the Civil Service Commission (CSC) dated November 3, 2005 on the Model Merit Systems for Faculty Members of State Universities and Colleges and Local Colleges and Universities defines part-timer as a teaching staff member who is either occupying a regular plantilla position or hired through a contract of service or a job order, whose work is part-time. (A contract of service or job order part-timer is not a government employee, as his/her service is not considered government service.) 88. While Sections 1 and 3 of Article 60 on the Faculty Workload Manual of the College provide that: Faculty workload shall consist of teaching research, extension work or a combination of teaching and any of several of the following: research, creative teaching and writing, administration, student consultation, extension work, or authorized graduate studies. Part-time members of the faculty shall normally carry a load of not more than twelve (12) hours a week. (underscoring supplied)

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89. The Other Professional Services account of the College showed a balance of P12,889,684.63 as of December 31, 2009. Of this amount, P5,219,036.62 was disbursed for the salaries of 108 part-time faculty members for the first semester of school year 2009-2010 or from June to October 2009. 90. Our audit disclosed that out of the amount disbursed, P2,963,884.00 was paid by the College for the 24,871 hours (Annex B) teaching load which are in excess of the required 12 hours a week teaching load per faculty as follows: Campuses _______ VAB MBEAB BAB FAB Total Excess Load 13,856 3,553 2,142 5,321 24,871 hrs ======== Total amount of Excess Load P 1,695,612.47 409,056.89 246,608.46 612,606.73 P 2,963,884.55 =========== No. of Part-time faculty with Excess Load 57 17 13 21 108 ===

91. Audit showed that a Memorandum of Agreement (MOA) was made and entered by and between PHILSCA, represented by the OIC, Office of the President and the faculty member for the hiring of Part-Time Instructors for the first semester, SY 2009-2010 at an hourly rate and paid on a bi-monthly or monthly basis. 92. The MOA also states That it is understood that this contract does not create an employer-employees relationship between the First Party and the Second Party, that the service rendered hereunder are not considered and will not be accredited as government service, and that the latter is not entitled to benefits enjoyed by the regular personnel of First Party. 93. Verification of the Instructors Loads for the semester under audit disclosed that the different Department Academic Supervisors prepared the teaching load of the part-time instructors, which were attested by the respective Campus Director, recommended for approval by the Vice President for Academic Affairs, and approved by the OIC, Office of the President. 94. The actual teaching load carried by these part-time instructors ranges from 14 to 42 hours per week with an excess load of two to 30 hours per week. 95. Inquiry from the Vice President for Academic Affairs disclosed that management could not prevent the granting of more than 12 hours a week teaching load in order to complement the student enrollees accepted by the College. 96. The foregoing condition of giving teaching load in excess of what is the standard may affect the quality of instruction if not controlled in the end.

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97. We recommended that management revisit its policy on faculty teaching load vis-a-vis its actual implementation to conform with the College Faculty Workload Manual in view of the foregoing condition. 98. Management commented that the Academic Council of the College is currently revisiting its policy on faculty teaching load provided for in the PhilSCA restricting to 12 units the maximum teaching load of part time instructors. This solution was due to lack of regular faculty members to teach as practiced by the past college administration. Even five (5) years ago, this was resorted to address the lack of faculty plantilla items which can not sufficiently respond to the number of enrollees, coupled by the dearth of faculty members having specializations and ratings along aeronautics and aviation courses. The part-time instructors were hired for a piece of work or intermittent job of short duration on semestral basis not exceeding six months. Their payments were funded out of locally generated income derived from the collection and matriculation fees and not from any lump sum appropriation or subsidy given by the government. 99. The Audit Team however, maintains its stand that since the College Faculty Workload Manual has not yet been revised, giving workload to parttimers more than twelve (12) hours a week for the last five years should have been addressed as this was already not in accordance with the provisions of the College Code in order to conform with the increasing number of enrollees accepted as the cause of the excess teaching load. I. Unsettled Disallowance of P365,000.00

Audit disallowance of P365,000.00 remained unsettled due to the failure of persons responsible/liable to take appropriate actions on the noted deficiencies, contrary to Section 7.1.1 of COA Circular No. 2009-006 dated September 15, 2009. 100. Section 7.1.1 of COA Circular 2009-006 dated September 15, 2009 quoted below the primary responsibilities of the Agency Head for the settlement of accounts: 7.1 Responsibility of the Agency Head 7.1.1 The head of agency, who is primarily responsible for all government funds and property pertaining to his agency, shall ensure that: (a) the required financial and other reports and statements are submitted by the concerned agency officials is such form and within the period prescribed by the Commission; (b) the settlement of disallowances and charges is made within the prescribed period; (c) the requirement of transactions suspended in audit are complied with; and (d) appropriate actions are taken on the deficiencies noted as contained in the AOM.

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101. Post-audit of disbursements on the operations of PhilSCA in 2008 resulted in the issuance of the following Notices of Disallowance (ND):
A. ND # 08-001-164-(06) For the payment of additional allowance of Board of Trustees for CY 2006 Check No Date Amount 306201 3/21/2006 34,000.00 306482 4/24/2006 34,000.00 306343 4/7/2006 3,000.00 306663 6/5/2006 34,000.00 306743 6/19/2006 3,000.00 306751 6/23/2006 3,000.00 306990 8/1/2006 34,000.00 320257 8/28/2006 34,000.00 320608 10/11/2006 34,000.00 August 19, 2008 Reason for Disallowance Excess payment of honorarium to the members of the Board of Trustees due to lack of legal basis and contrary to Section 4.4 of Budget Circular No. 2003-0 dated September 29, 2003 which provides that: The members or their representative shall not be allowed higher per diem rates and/or other benefits, whether commutable or reimbursable, in cash or in kind unless specifically authorized by or by Presidential issuances.

213,000.00 ======== B. ND # 08-002-164-(07) For the payment of additional allowance of Board of Trustees for CY 2007 Check No Date Amount 321522 1/24/2007 31,000.00 336550 4/4/2007 31,000.00 337082 6/12/2007 31,000.00 337671 8/24/2007 25,000.00 338259 11/12/2007 34,000.00 October 30, 2008 Reason for Disallowance Excess payment of honorarium to the members of the Board of Trustees due to lack of legal basis and contrary to Section 4.4 of Budget Circular No. 2003-0 dated September 29, 2003 which provides that: The members or their representative shall not be allowed higher per diem rates and/or other benefits, whether commutable or reimbursable, in cash or in kind unless specifically authorized by or by Presidential issuances.

152,000.00 ========

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102. As of December 31, 2009, the total disallowance of P365,000.00 remained unsettled due to the failure of management to take appropriate actions on the noted deficiencies despite issuance of said notices. 103. We recommended that the management should strictly monitor settlement of disallowances as mandated by the COA Circular No. 2009-006 and strictly enforce the provisions therein to ensure prompt settlement of disallowances to avoid accumulation thereof. Gender and Development (GAD) The College failed to allocate five percent of its appropriations and there was no focal person designated, thus the implementation of the programs under the Gender and Development as required under Section 29 of the General Appropriations Act (GAA) of 2009 were not institutionalized and its intended beneficiaries were not served. 104. Pursuant to the Convention on the Elimination of All Forms of discrimination Against Women (CEDAW), the Beijing Platform for Action, the Republic Act 7192 (Women in Development and Nation-building Act), and the Millenium Development Goals (2000-2015), the Framework Plan for Women and the Philippines has committed to pursue womens empowerment and gender equality in the country. 105. In accordance with Executive Order (EO) No. 273 (Approving and Adopting the Philippine Plan for Gender-Responsive Development (PPGD), 1995-2025) agencies are mandated to institutionalized Gender and Development (GAD) in government by incorporating the GAD concerns spelled out in the PPGD in their planning, programming and budgeting processes. It also mandates agencies to incorporate and reflect GAD concerns in their agency performance commitment contracts, annual budget proposals and work and financial plans. 106. Section 29 of the General Provisions of the General Appropriations Act of 2009 (R.A. No. 9498) states that : All departments, including their attached agencies, offices, bureaus, SUCs, GOCCs, LGUs and other instrumentalities shall formulate a Gender and Development (GAD) Plan designed to address gender issues within their concerned sectors or mandate and implement applicable provisions in the CEDAW, x x x x x. The cost of implementing the GAD Plan shall be at least five percent (5%) of the agencys or local governments total FY 2009 budget appropriations.

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107. Section 4.4 of Joint DBM, NEDA and NCRFW Circular No. 2004-1 likewise states that: GAD planning and budgeting shall be observed annually and incorporated in all programming and budgeting exercises of agencies. The GAD activities in the GAD Plan and budget must be included in the agency budget proposal in accordance with the budget call. Agencies shall ensure that the cost of implementing the GAD activities is part of their approved budget. x x x. 108. Verification of the 2009 General Appropriation Act showed that the agency has total budget appropriations of P57,868,750.00, but examination of books of accounts of PhilSCA indicated that no allocation was made for the implementation of the GAD program per Budget Call preparation. 109. Moreover, inquiry with PhilSCA staff revealed that the agency did not make a plan for 2009 GAD program implementation. 110. We recommended that management: give priority to the implementation of the GAD Plan particularly the designation of a focal point chairperson to promote womens empowerment and gender equality; coordinate with the NCRFW in the preparation of the GAD plan in order to mainstream GAD activities with the regular activities of the agency; and comply with the required budget allocation.

Compliance with Tax Laws 111. The amount of P348,125.30 pertains to unremitted amount of taxes withheld from the salaries of officers and employees, suppliers and other parties for the month of December 2009. These were remitted to the Bureau of Internal Revenue in January 2010 per JEV No. GJ-10-01-007 dated January 30, 2010.. 112. Joint Circular No. 1-2000 of the Department of Finance, Department of Budget and Management and the Commission on Audit dated January 3, 2000 as amended by Joint Circular No. 1-2000A of the Department of Finance and the Department of Budget and Management dated July 31, 2001 on the Guidelines in the Remittances of all Taxes Withheld by the National Government Agencies (NGAs) to the Bureau of Internal Revenue

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