Beruflich Dokumente
Kultur Dokumente
COMMISSION ON AUDIT
Commonwealth Avenue, Quezon City
on the
NATIONAL IRRIGATION ADMINISTRATION
(Corporate Fund F501)
EXECUTIVE SUMMARY
INTRODUCTION
Assets
Liabilities
Equity
2012
58,901.918
45,423.443
13,478.475
2011
57,027.932
44,067.167
12,960.765
Increase/Decrease
1,873.986
1,356.276
517.710
Income
Expenses
Net Income (Loss)
2012
4,877.104
3,697.079
1,180.025
2011
2,773.817
3,067.816
(293.999)
Increase/Decrease
2,103.287
629.263
1,474.024
SCOPE OF AUDIT
Our audit covered the operations of NIA Corporate Fund (F501) for the period January
1 to December 31, 2012. The audit involved performing procedures to obtain audit
evidence about the amounts and disclosures in the financial statements. The
procedures selected depended on the auditors judgment, including the assessment of
ii
the risks of material misstatement of the financial statements, whether due to fraud or
error.
AUDITORS OPINION
We rendered a disclaimer of opinion on the fairness of presentation of the financial
statements of NIA-Corporate Fund (F501) for CY 2012.
The existence, valuation and accuracy of the balance of Property, Plant and Equipment
(PPE) account with a net book value of P24.157 billion could not be ascertained due to
inadequacies and deficiencies in accounting and property records, thus affecting the fair
presentation of the account balance in the financial statements.
Accounts Receivable-Irrigation Service Fees (ISF) and Communal Irrigation System
amounting to P17.252 billion was doubtful and unreliable in view of inaccurate/
inadequate accounting records and accounting deficiencies, thus impairing the fair
presentation of the account in the financial statements.
The validity and accuracy of the year-end balance of Cash in Bank account amounting to
P2.037 billion cannot be substantiated due to accounting deficiencies such as
unreconciled balances between subsidiary ledgers of Cash in Bank- Field Office and the
controlling records being maintained by the provincial offices or Irrigation Management
Offices (IMOs); non-maintenance of subsidiary ledgers (SL) for Cash in Bank accounts;
non-preparation of
Bank Reconciliation Statements (BRS) regularly; unreconciled
differences in the comparison of balances per general ledger (GL), SL, bank statements
and cashbook; and non-reconciliation/updating of the GL and SL balances of bank
accounts.
The validity and accuracy of the Government Equity and Retained Earnings accounts
balances totaling P18.027 billion and P(10.030) billion, respectively, could not be
substantiated due to non-submission of supporting documents.
SUMMARY OF SIGNIFICANT AUDIT OBSERVATIONS AND RECOMMENDATIONS
For the above-mentioned observations which caused the disclaimer of opinion, we
recommended the following:
1.
Create a special group/task force to undertake the immediate reconciliation of the
variances between the balance appearing in the Property Inventory Report and the
accounting records and analyze the composition of the Construction-in Progress (CIP)
Irrigation Projects account and reclassify these to their proper PPE account;
2.
Prepare SL for each project which budgetary support was sourced out from the
DBM and record the related expenses incurred per project to properly identify the
balance at any given time;
3.
Maintain/update adequate accounting and property records and conduct periodic
reconciliation between accounting and property records;
4.
Submit a report on the actions taken to address the issue of the unaccounted
firearms in the custody of the Civil Security Affair A-Armorer. Submit copy of the
iii
iv
billion between BTrs records and NIAs records and understatement of liabilities and
operating expenses.
15.1
16.
Land valued at P3.469 billion covered by the Transfer Certificate of Title (TCT)
Nos. 327772 and 260182 is doubtful as the original TCTs cannot be located; the
Inventory Report of Property, Plant and Equipment as of December 31, 2012 did not
include vital information on the subject land such as date/cost of acquisition, total areas
covered and the specific location of the Land. Also, Property Ledger Card was not
maintained for this account.
16.1
vi
TABLE OF CONTENTS
Page
PART I
PART II
Balance Sheet
Income Statement
A.
21
B.
70
2012
2011
4
3a, 5
3b, 6
7
8
2,163,804,055
32,044,394,999
109,107,023
99,851,923
(205,759,007)
34,211,398,993
783,860,377
31,129,537,751
116,647,568
60,518,619
(212,531,065)
31,878,033,250
3c, 9
3d, 10
11
11,224,500
24,157,341,391
521,953,427
24,690,519,318
58,901,918,311
11,224,500
24,537,347,825
601,326,844
25,149,899,169
57,027,932,419
12
13
14
1,053,322,468
13,727,345,307
1,335,293,556
16,115,961,331
716,417,175
13,544,835,257
1,178,909,190
15,440,161,622
15
16
11,506,340,534
17,801,141,052
29,307,481,586
45,423,442,917
13,478,475,394
11,506,340,534
17,120,665,063
28,627,005,597
44,067,167,219
12,960,765,200
58,901,918,311
57,027,932,419
18
EXPENSES
Personal Services
Maintenance and Other Operating Expenses
Financial Expenses
20
21
21
17
NET LOSS
ADD:
SUBSIDY FOR THE IMPLEMENTATION
OF VARIOUS PROJECTS
Budgetary Support - 2.85% General Engineering,
Supervisory and Administrative (GESA)
17
Disbursement Acceleration Program (DAP)
17
Jalaur River Multipurpose Project II
Casecnan Multipurpose Irrigation and Power Project II
Malitubog Maridagao Irrigation Project II
Umayam River Irrigation Project (URIP)
NET INCOME AFTER SUBSIDY FOR THE
IMPLEMENTATION OF VARIOUS PROJECTS/NET LO
2012
2011
1,445,575,656
(94,880,041)
(231,138)
1,350,464,477
162,174,298
20,234,928
1,532,873,703
1,343,420,371
(86,499,709)
(2,772,761)
1,254,147,901
107,974,838
23,188,437
1,385,311,176
33,957,526
324,909,493
14,195,631
480,857,158
154,353
143,666,508
997,740,669
2,530,614,372
750,864,582
149,701,628
9,991,885
116,640
451,440,211
1,362,114,946
2,747,426,122
1,685,012,627
1,643,646,317
366,280,579
3,694,939,523
1,285,194,887
1,779,038,477
152,142
3,064,385,506
1,164,325,151
316,959,384
38,503,691
(2,139,756)
1,637,000
38,000,935
1,126,324,216
24,834,477
(3,430,920)
1,556,519
22,960,076
293,999,308
984,362,420
141,961,796
293,999,308
561,086,580
450,000,000
200,000,000
101,400,000
9,500,000
1,321,986,580
1,180,024,784
293,999,308
Note
Capital Stock
Government
Equity
(Note 18)
5,559,191,864
18,364,174,339
Loss
143,364,587
Property, Plant
and Equipment Public
Infrastructures
18,436,909,556
(293,999,308)
(4,662,707,690)
(41,162,500)
(191,865,000)
(6,850,000)
44,162,317
(293,999,308)
(4,519,343,103)
(41,162,500)
(191,865,000)
(6,850,000)
44,162,317
(447,362,783)
(7,131,186)
(447,362,783)
(7,131,186)
(10,000,000)
(10,000,000)
557,547
(3,150,340)
5,559,191,864
19
18,040,452,164
(1,391,952)
85,845,429
(98,060,409)
(10,638,878,828)
(3,150,340)
12,960,765,200
1,180,024,784
(144,924,943)
1,180,024,784
(146,316,895)
(12,425,578)
(398,000,000)
(12,425,578)
(398,000,000)
(2,181,665)
(2,181,665)
(4,930,419)
(4,930,419)
(18,046,012)
(88,916,510)
98,060,409
(18,046,012)
(3,071,081)
-
87,379
5,559,191,864
Total
(5,486,456,647)
557,547
Retained
Operating
Surplus
18,026,845,232
(10,030,131,383)
87,379
1,006,959
1,006,959
(6,305,746)
(6,305,746)
(41,137,275)
(41,137,275)
(11,339,199)
(11,339,199)
(19,655,058)
(19,655,058)
(77,430,319) 13,478,475,394
2011
2,812,752,976
2,309,880,590
178,938,331
74,484,379
64,532,086
59,842,417
32,208,611
18,353,533
18,194,969
14,517,300
3,094,782,063
34,965,311
46,406,108
110,745,193
13,226,270
2,848,466
257,747,982
27,003,153
56,495,464
6,665,354
2,609,451
(3,042)
(595,575)
(881,615)
(2,588,313)
(4,853,154)
(5,337,279)
(14,572,567)
(18,011,731)
(40,639,168)
(47,100,180)
(64,499,664)
(97,926,420)
(152,812,839)
(202,460,515)
(290,300,378)
(299,950,918)
(312,940,273)
(2,012,286,984)
2,025,219,381
31,453,767
750,639,582
626,927
(13,147)
(1,251,598)
(34,328,864)
(4,828,709)
(1,894,122)
(62,858,306)
(270,072,821)
(12,522,080)
(60,497,051)
(32,339,861)
(300,237,243)
(420,857,997)
(268,918,542)
(3,125,380,499)
(169,060,554)
9,400
(23,900,285)
(168,916,483)
(342,468,335)
(535,275,703)
31,465
(6,850,000)
(4,980,520)
(175,943,184)
(187,742,239)
(110,000,000)
(110,000,000)
2012
783,860,377
1,140,663,170
2,163,804,055
783,860,377
4. CASH
This account includes the following:
Particulars
Cash-Collecting Officers
Working Fund
Petty Cash Fund
Payroll Fund
Cash in Bank Local Currency, Current Account
Cash in Bank Local Currency, Savings Account
Cash in Bank Local Currency, Time Deposits
Cash in Bank Foreign Currency, Time Deposits
2012
102,214,981
18,504,894
1,491,533
4,979,601
1,263,608,401
449,542,107
288,226,079
35,236,459
2011
74,150,943
18,632,744
1,440,158
5,352,362
285,645,969
70,078,947
291,225,599
37,333,655
Total Cash
2,163,804,055
783,860,377
5. RECEIVABLES- NET
This account consists of receivables from the following:
Particulars
Accounts Receivable
Due from Officers and Employees
Due from National Treasury
Due from National Government Agencies (NGAs)
Due from Government Owned and/or Controlled
Corporations (GOCCs)
Due from Local Government Units (LGUs)
Due from Central Office
Due from Regional Offices
Due from Other Funds
Receivables-Disallowances/Charges
Advances to Officers and Employees
Other Receivables
2012
17,251,812,664
14,848,648
(85,059,290)
820,131,364
2011
16,461,603,229
113,076,019
(85,059,290)
810,182,900
13,631,181,642
149,477,543
586,627
492,679,204
195,511,844
11,264,394
7,422,291
332,158,868
32,822,015,799
(777,620,800)
13,572,007,762
157,935,658
1,121,001
492,679,202
35,083,642
14,606,859
5,366,170
263,866,706
31,842,469,858
(712,932,107)
Receivables- Net
32,044,394,999
31,129,537,751
Due from NGAs represents releases to DPWH District Offices for the
construction/rehabilitation of farm to market roads out of the National Development
Company (NDC) loan proceeds.
Due from GOCCs includes receivables from National Power Corporation relative to the
sale of electrical energy generated by the Casecnan Multi-Purpose Irrigation and Power
Project per Power Purchase Agreement dated June 30, 1995 and Supplemental
Agreement dated September 25, 2003.
Due from LGUs comprises releases to local government units, also, out of loan proceeds
from NDC, for the implementation of farm to market road projects.
Due from Regional Offices is the reciprocal account of Due to Central Office which are
both closed at year-end during consolidation of financial statements. However, due to
inadequate reconciliation, the account remains open.
Other Receivables includes claims from accountable officers for cash shortages, claims
for dishonored checks and other miscellaneous contingent assets.
6. INVENTORIES-NET
This account consists of:
Particulars
Merchandise Inventory
Office Supplies Inventory
Gasoline, Oil and Lubricants Inventory
Spare Parts Inventory
Other Supplies Inventory
Allowance for Inventory Variance
2012
64,014,574
45,207,861
247,680
227,249
141,911
109,839,275
(732,252)
2011
72,158,979
45,163,268
43,244
14,329
117,379,820
(732,252)
Inventories-Net
109,107,023
116,647,568
Merchandise Inventory represents collections-in-kind (palay, corn, etc.) from the endusers of irrigation systems and pump sets, which are intended for resale to the National
Food Authority or to other private individuals.
7. PREPAYMENTS
This account consists of:
Particulars
Prepaid Rent
Deposit on Letters of Credit
Advances to Contractors
Deferred Charges
Other Prepaid Expenses
2012
7,547,861
197,088
83,074,111
(120,615)
9,153,478
2011
7,547,861
118,270
46,554,037
(120,615)
6,419,066
Total Prepayments
99,851,923
60,518,619
10
2012
12,620,220
(218,379,227)
2011
5,848,162
(218,379,227)
(205,759,007)
(212,531,065)
2012
11,207,000
1,600
15,900
2011
11,207,000
1,600
15,900
Total Investments
11,224,500
11,224,500
Particulars
Building and
Improvements
Machineries,
Equipment,
Furniture and
Fixtures
Construction in
Progress
(CIP)
Total
24,414,845,401
1,190,884,242
1,848,900,886
9,466,895,946
36,921,526,475
1,283,594
46,293
17,163,719
73,805,406
2,146,444,722
5,325,126
(5,325,126)
2,238,697,441
46,293
-
(851,097)
(7,877,902)
(64,688,089)
(5,352,533)
(64,688,089)
(14,081,532)
24,416,175,288
1,207,196,864
1,920,153,516
11,537,974,920
39,081,500,588
11,285,373,363
229,031,813
869,773,474
12,384,178,650
1,150,941,651
521,953,427
681,560,156
19,107,469
166,417,844
1,336,466,964
521,953,427
681,560,156
13,639,828,597
248,139,282
1,036,191,318
14,924,159,197
10,776,346,691
959,057,582
883,962,198
11,537,974,920
24,157,341,391
13,129,472,038
961,852,429
979,127,412
9,466,895,946
24,537,347,825
Additions:
Additions Trust Fund
Fund Assets
Donations received
CIP Transferred to PPE
CIP Projects Turned
Over to LGUs
Adjustments
December 31, 2012
Less:
Accumulated
Depreciation
(January 1, 2012)
Depreciation Charges
During the Year
Reclass to Other Assets
Adjustments
Land and Land Improvements includes cost of farm to market roads in various Local
Government Units (LGUs), financed out of the P346,000,000 proceeds of loan from NDC.
Land Improvements account refers to the total cost of completed irrigation projects which
have generally redounded to the benefit of the farmers in terms of serviced areas. This
also includes those funded out of appropriations from the National Government through
the DPWH and the DA in 1990 until 1996.
Construction in Progress represents cost of projects implemented out of project funds
directly released to NIA by DBM.
11. OTHER ASSETS
This account consists of work/other animals worth P547,909 in 2012 and 2011 and other
assets in the amount of P521,405,518 in 2012 and P600,778,935 in 2011.
12
12. PAYABLES
This account includes the following:
Particulars
Accounts Payable
Notes Payable
Due to Officers and Employees
Due to National Treasury
2012
483,105,973
128,022
26,216,542
543,871,931
2011
154,103,607
128,022
18,125,251
544,060,295
1,053,322,468
716,417,175
Particulars
Due to BIR
Due to GSIS
Due to Pag-IBIG Fund
Due to PHILHEALTH
Due to Other NGAs
Due to Other GOCCs
Due to LGUs
Due to Central Office
Due to Other Funds
2012
43,643,340
20,411,652
3,709,488
4,369,583
13,133,590,631
143,383,227
11,159,043
60,411,171
306,667,172
2011
37,460,329
19,867,550
2,837,095
4,106,587
13,123,691,144
143,284,276
13,386,225
60,411,171
139,790,880
13,727,345,307
13,544,835,257
Total Payables
Due to Other NGAs represents payables to the Bureau of the Treasury for advances
made to the CE Casecnan Water and Energy Company, Inc. for Guaranteed and Excess
Energy delivery fee per Amended and Restated Casecnan Project Agreement dated June
26, 1995. The account also includes trust receipts from national government agencies
(i.e., DA and DPWH) to finance specific projects or to pay specific obligations, subject to
liquidation to the source agencies.
Due to Other GOCCs pertains to trust receipts from government-owned and/or controlled
corporations to finance specific projects or to pay specific obligations.
14. OTHER LIABILITIES
This account includes the following:
Particulars
Guaranty Deposits Payable
Performance/Bidders Bond Payable
Other Payables
2012
62,458,694
30,054,737
1,242,780,125
2011
62,378,656
24,723,476
1,091,807,058
1,335,293,556
1,178,909,190
13
2012
2011
2,829,468,741
2,829,468,741
3,107,554,082
266,583,721
156,479,931
6,360,086,475
3,107,554,082
266,583,721
156,479,931
6,360,086,475
4,875,000,000
4,875,000,000
139,039,695
139,039,695
83,155,142
49,059,222
271,254,059
83,155,142
49,059,222
271,254,059
11,506,340,534
11,506,340,534
In relation to this, a Memorandum of Agreement (MOA) was entered into by and among
NIA, NDC, DBM, DOF and DA on May 11, 2006 which defines the roles and
responsibilities of the concerned agencies to carry out the said lending activity and the
implementation and monitoring of the project. On the same date, NIA entered into a loan
agreement with NDC for P1 billion as interim financing, as approved under Board
Resolution No. 7375-06 dated April 24, 2006. The loan has a term of six years and bears
a fixed interest rate of 10 per cent per annum plus taxes, payable quarterly in arrears.
In October 2006, NIA availed itself of an additional P2 billion loan from NDC, as approved
by Board Resolution No. 7391-06, series of 2006. Another MOA was executed among
NDC, DBM, DOF and DA for the utilization and repayment of said loan. The terms
include utilization of P1 billion for full payment of the interim loan and P1 billion for
financing NIAs additional requirements for repair and rehabilitation of NIS/CIS including
farm-to-market roads and other projects.
As of December 31, 2012, proceeds from the loan had a remaining balance of
P14,606,880. Breakdown of the fund is shown in the table below.
Particulars
Balance, January 1
Less:
Fund Releases to:
NIA Regional Offices
Refund by LGUs
DPWH
Regional Offices
Refund of Cash Advance
Operating Expenses
Prior Period Errors
2012
31,367,701
2011
27,838,117
6,037,000
(3,562,504)
(122,010)
(46,164)
7,360
10,884,635
16,760,821
(44,840)
77,760
(3,529,584)
Balance, December 31
14,606,880
31,367,701
Funds Maintained in :
Cash in Bank CA
Cash in Bank SA
513,253
14,093,627
17,396,084
13,971,617
Total
14,606,880
31,367,701
Particulars
Deferred Credits
Other Deferred Credits
2012
16,185,432,720
1,615,708,332
2011
14,405,974,881
2,714,690,182
17,801,141,052
17,120,665,063
15
Total
Amount
P 984,362,420
561,086,580
450,000,000
200,000,000
101,400,000
9,500,000
1,321,986,580
P2,306,349,000
Receipts of cash for Disbursement Acceleration Program (DAP) were booked up in Fund
501 since these were released directly to NIA from the Bureau of the Treasury and not
through the Modified Disbursement System (MDS).
18. GOVERNMENT EQUITY
This account represents capital expenditures out of funds released directly to NIA by the
National Government up to 1989 and out of trust funds released to NIA through the DA
and DPWH from 1990 to 1996.
An adjustment amounting to P12,425,578 represents transfer of account from F501-PIDP
to F102-PIDP. The amount of P398,000,000 represents the Collective Negotiation
Agreement (CNA) for the year 2011 of NIA personnel which were set up as Accounts
Payable per MC No. 29, s. 2012. The amounts of P2,181,665 and P4,930,419 represent
ENERCON incentives of NIA-Central Office personnel for CYs 2009, 2010, and 2011 and
the Rice and Transportation Subsidy of NIA-MARIIS personnel for CYs 2009 and 2010,
respectively.
Likewise, the total amount of P77,430,319 represents various adjustments affecting the
Property, Plant and Equipment-Public Infrastructures account of Regions 1, 3, 4A, 7,
CAR and MARIIS.
16
2012
9,437,427
144,372,367
(2,899,893)
(550,708)
(34,906)
(1,193,845)
(473,653)
(2,098,000)
(3,500)
(6,187,937)
(41,600)
20,666,018
26,439
(7,350)
(4,500)
129,433
(292,993)
44,888
(523,029)
4,169
(1,522,241)
(173,579)
(21,005)
258,784
4,558,337
(598,209)
83,868
1,018,350
2,757,898
(312,243,854)
(125,261)
(2,277,472)
(2,315)
808,715
(5,580,969)
2011
(6,686,664)
(7,463,976)
4,349,547
4,834,264
(24,000)
(995,847)
1,054,792
4,869,599
(11,114,993)
27,618
43,188
9,687,784
67,092
(175)
(212,952)
1,622,148
(4,990)
(22,438)
(1,104,912)
(5,284,982)
(240,412)
21,002
(1,127,978)
586,165
2,711,380
(65,036,000)
19,394,747
(4,425,800,184)
1,249
(557,199)
1,082,191
(2,853,415)
(5,154)
(16,297,725)
(14,002,398)
(10,859,475)
17
Particulars
Transfer of FSDE disbursements to F101
Correction of entry crediting Public Infra
instead of Account 684
Corporate Advances for FSDE
Total Correction of Prior Period Errors
2012
(334,600)
2011
-
2,707,831
4,000,000
(146,316,895)
(4,519,343,103)
2012
33,505,960
235,484
366,119
2,418,617
63,176
712,775
61,180
11,472
120,068
2011
12,158,173
1,182,409
124,314
4,528,936
507,971
5,200
8,940
77,565
2,683
29,455
776,448
105,363,071
2,031
449,850
11,975
432,382,847
143,666,508
451,440,211
21. EXPENSES
The account consists of:
Particulars
Personal Services
Salaries and Wages
Life and Retirement Insurance Contributions
Personnel Economic Relief Allowance
Year-End Bonus
Other Bonuses and Allowances
Cash Gift
2012
925,682,868
109,110,942
90,794,425
75,538,581
23,834,686
23,784,084
2011
855,472,504
101,133,190
89,770,286
67,530,930
54,761,957
25,721,445
18
Particulars
Clothing/Uniform Allowance
Other Personnel Benefits
Productivity Incentive Allowance
Representation Allowance
PHILHEALTH Contributions
Transportation Allowance
Terminal Leave Benefits
Pag-IBIG Contributions
ECC Contributions
Additional Compensation Allowance
Retirement Benefits
Longevity Pay
Honoraria
Overtime and Night Pay
Total Personal Services
Maintenance and Other Operating Expenses (MOOE)
Depreciation
Bad Debts
Electricity Expenses
Collection/Viability Bonus
Irrigators' Share
Gasoline, Oil and Lubricants
Repairs and Maintenance - Equipment
Other Supplies Expense
Repairs and Maintenance - Motor Vehicles
Miscellaneous Expenses
Travelling Expenses
Auditing Services
Office Supplies Expense/Supplies and Materials
Repairs and Maintenance-Buildings, Structures
Collection Expenses
Telephone Expenses - Landline
Taxes, Duties and Fees
Training Expenses
Janitorial Services
Representation Expenses
Insurance Expenses
Repairs and Maintenance-Irrigation, Canals and
Laterals
Water Expenses
Telephone Expenses - Mobile
Rent Expenses
Fidelity Bond Premiums
Legal Services
Advertising Expenses
Internet Expenses
Printing and Binding Expenses
Repairs and Maintenance-Artesian Wells,
Reservoirs, etc.
Motorcycle Allowance
General Services
Extraordinary Expenses
2012
19,953,000
139,590,850
8,038,500
8,502,900
9,041,808
7,722,677
218,400,882
4,721,966
4,849,950
2,052,491
1,719,925
3,463,306
3,437,107
4,771,679
1,685,012,627
2011
15,070,900
14,846,354
8,843,000
8,840,400
8,115,361
8,012,146
5,848,078
5,018,524
4,671,336
4,054,884
2,883,675
2,470,990
1,342,505
786,422
1,285,194,887
1,020,916,704
69,745,328
67,797,117
85,440,424
103,351,055
45,174,415
5,048,222
15,312,638
15,691,355
15,557,590
18,109,951
8,493,460
17,885,498
9,240,508
4,425,499
7,414,215
7,274,205
4,135,115
8,718,546
3,432,300
5,006,056
995,866,423
209,833,738
69,197,517
80,522,261
89,140,581
61,778,372
19,885,157
18,939,456
17,089,669
15,350,171
19,199,488
11,135,439
19,809,449
12,474,337
6,536,966
8,095,732
5,624,887
4,614,233
6,780,985
4,527,801
5,207,306
5,674,159
4,412,990
2,737,725
1,209,196
1,369,875
665,688
879,270
1,177,156
1,365,920
10,219,260
5,683,781
2,676,554
1,509,123
1,275,264
1,420,924
421,950
425,110
1,284,504
3,444,150
437,957
254,120
948,103
1,317,817
488,473
613,454
390,623
19
Particulars
Transportation and Delivery Expenses
Accountable Forms Expenses
Rewards and Other Claims
Consulting Services
Postage and Deliveries
Cable, Satellite, Telegraph and Radio Expenses
Subscription Expenses
Membership Dues and Contribution to
Organizations
Other Professional Services
Drugs and Medicines Expenses
Storage Expenses
Medical, Dental and Laboratory Supplies
Expenses
Textbooks and Instructional Materials Expenses
Security Services
Donations
Military and Police Supplies Expenses
Cooking Gas Expenses
Other Maintenance and Operating Expenses
Total Maintenance and Other Operating Expenses
Financial Expenses
Interest Expenses
Bank Charges
Total Financial Expenses
Total Personal Services and MOOE
2012
268,777
1,601,870
430,000
3,329,233
227,477
647,835
1,393,986
2011
381,403
1,285,505
565,000
2,278,372
266,627
161,978
179,694
92,067
96,000
213,439
-
153,481
17,208
136,627
185,479
30,431
17,500
4,447,761
23,000
3,494
68,076,937
1,643,646,317
82,579
110
1,762,436
3,000
1,400
831
62,239,942
1,779,038,477
366,262,468
18,111
366,280,579
49,296
102,846
152,142
3,694,939,523
3,064,385,506
20
1.2
COA Circular No. 80-124 states that physical inventory-taking being an
indispensable procedure for checking the integrity of property custodianship has to be
regularly enforced at least once a year. All inventory reports shall be prepared and shall
be properly reconciled with accounting and inventory records.
1.3
Section 12 of the New Government Accounting System (NGAS) Manual, Volume
I states that the Subsidiary Ledger (SL) is a book of final entry containing the details or
breakdown of the balance of the controlling account appearing in the General Ledger
(GL). Postings to the SL generally come from the source documents. The totals of the
SL balances shall be reconciled with their respective control account regularly or at the
end of each month.
1.4
Section 43 of the same Manual requires that the Accounting Unit shall maintain
Property, Plant and Equipment Ledger Cards for each category of PPE. For check and
balance, the Property and Supply Office/Unit shall maintain Property Cards (PC) for
Property, Plant and Equipment. The balance in quantity per Property Card should
always reconcile with the ledger cards of the Accounting Unit.
1.5
Likewise, Section 491 of the Government Accounting and Auditing Manual
(GAAM), Volume I also provides that all discrepancies between physical and book
inventories must be investigated and cleared immediately, and if necessary written
explanations shall be required from persons responsible.
1.6
Verification of records pertaining to PPE account revealed various inadequacies
and deficiencies in the accounting records and property management system. These
were the same issues identified in prior years which Management was not able to fully
address.
21
Region I
Region III
Region V
Region VI
Region XIII
Amount
(In million pesos)
1.088
Amount not indicated
34.209
46.242
Amount not indicated
Amount not indicated
Deficiency
Completed
irrigation
projects
booked-up under the Constructionin-Progress (CIP) account and
mostly pertain to completed
projects in prior years could not be
accounted for due to the absence
of
subsidiary
ledger
and
insufficiency
of
documents.
Consequently, these were not
adjusted to proper PPE account
and were not provided with
allowance for depreciation; these
were not also reported in the
Physical Count of PPE as these
could not be physically inspected
due to absence of documents to
trace their location.
810.017
660.037
358.987
2,363.556
Region IX
Region VI
2,918.428
Amount not indicated
Region XIII
Central Office
Region I
Region III
UPRIIS
22
Central Office/Regional
Office
Amount
(In million pesos)
Deficiency
made.
Region IX
2,918.428
Region I
Region III
14.931
4.489
Inclusion
of
unserviceable
properties in the PPE account.
Region III
0.112
1.7
23
d.
In NIA Regional Office No. V, the balances of CIP amounting to
P318,619,649 consisting of on-going and completed projects were not properly
identified, thus posing problems in transferring turned over projects to the Public
Infrastructure account. For the year 2008 and prior years, there were no
subsidiary ledgers maintained. This also contained transactions of different
accounts such as National Irrigation System Improvement Project (NISIP), Bicol
Integrated Area Development Project (BIADP), Bicol River Basin Irrigation
Development Project (BRBIDP), Libmanan Cabusao Integrated Development
Project (LCIDP). Balances of completed projects were all merged in the CIPAgency Asset account of Fund 501 Corporate Operating Budget (COB). With the
absence of subsidiary ledgers, there was confusion in the tracing of project
balances and corresponding status. From 2009 to the present, subsidiary
ledgers were already prepared.
1.8
As a result of deficiencies discussed above, the balance of PPE and CIP
accounts presented in the financial statements remained doubtful and cannot be relied
upon.
1.9
24
1.10
This audit issue has been raised in previous years Annual Audit Report.
2.2
Inquiry made with the officers of the Treasury-Cash and Legal Division revealed
that they have no knowledge where the original copies of the TCTs and Deed of Sale
were being kept.
2.3
The inability of NIA to present the original TCT and Deed of Sale violates the
provision of Section 39 of PD No. 1445 which states that:
The Commission shall have the power, for purposes of inspection, to
require the submission of the original of any order, deed, contract, or
other document under which any collection of, or payment from,
government funds may be made, together with any certificate, receipt, or
other evidence in connection therewith.
In the case of deeds to property purchased by any government agency,
the Commission shall require a certificate of title entered in favor of the
government or other evidence satisfactory to it that the title is in the
government.
26
2.7
Management commented that since 2008, the Inventory Report of Land has
been reconciled with the accounting record and that Property Section will continue to
coordinate with the Accounting Division in reconciliation of such records. Moreover,
Management agreed to comply with the recommendations given and will be reflected in
the Annual Inventory Report of PPE for CY 2013.
3.
Various irrigation projects completed since 1996 amounting to P4.962
million recorded under Construction in Progress (CIP) - Agency Assets account
was reclassified to Land Improvements account without proper documentation.
3.1
Audit of the CIP-Agency Assets account disclosed that various irrigation projects
completed since 1996 amounting to P4,961,584,911 were reclassified to the Land
Improvements account under JEV# 501-11-08-710 dated August 31, 2011 without
proper documentation such as:
a.
b.
c.
d.
3.2
3.3
3.4
3.5
We recommended that Management submit immediately all the above cited
documents to support the reclassification of various completed irrigation projects
to the Land Improvements account.
4.
The validity and accuracy of the year-end balance of Cash in Bank account
amounting to P 2.037 billion as of December 31, 2012 cannot be substantiated due
to accounting deficiencies.
4.1
Section 10 of NGAS Manual, Volume II, requires government agencies to
maintain Subsidiary Ledgers (SL) which contains the details or breakdown of the
controlling account appearing in the General Ledger, and to reconcile the SL balances
with their respective control account regularly or at the end of the month.
4.2
Also, Section 74 of PD 1445 requires the head of the agency to see to it that
monthly reconciliation is made between the balance shown in the bank statement and
the balance found in the books of the agency.
4.3
Audit of the Cash in Bank account as of December 31, 2012 disclosed the
following accounting deficiencies that caused difficulty to substantiate the accuracy and
validity of the year-end balance.
a.
In NIA CAR, verification of accounting records in the regional office and
control records of provincial offices revealed that the balances of subsidiary
ledgers of Cash in Bank- Field Office account did not reconcile with the balances
in the controlling records being maintained by the provincial offices or Irrigation
Management Offices (IMOs) totalling P15,084,500.
28
b.
In NIA Regional Office No. III, subsidiary Ledgers were not maintained for
all Cash-in-Bank accounts totalling P45,073,480. Bank Reconciliation Statements
(BRS) were not prepared regularly. It was noted from the submitted bank
reconciliation statements that outstanding reconciling items were not adjusted on
time. Many remained outstanding for several months while the rest ranges from
one to two years. According to the Manager of the Administrative and Finance
Division, it took them some time to adjust the reconciling items because these
were incurred at different IMOs, within the region. Since records were
maintained by the IMOs, the tracing and verification at the regional office was
tedious and longer. However, they are trying their best despite of the limited
personnel to correct and update their bank reconciliation for all accounts. The
delay in the preparation of the BRS prevents the early detection and correction of
errors in the Cash in Bank accounts.
c.
In NIA Regional Office No. V, comparison of cash balance per bank
statements from the Philippine National Bank against the general ledger negative
balance of P52,545,798 resulted in a total negative discrepancy of P76,771,955.
It was alleged that the Accounting Section could not reconcile long existing
reconciling items due to lack of proper documents/details to determine the nature
and propriety of transactions that transpired in prior years and to serve as basis
to draw the required journal entry voucher to adjust these reconciling items in the
books of accounts. The inability of the person concerned to exert best effort to
promptly reconcile accounting/book and bank records, prepare bank
reconciliation statements and record reconciling items in the books of accounts
would continuously present doubtful cash account balance at year end.
d.
In UPRIIS, there were unreconciled differences in the comparison of
balances per general ledger, subsidiary ledger, bank statements and cashbook
due to the following factors:
d.1
d.2
No SL maintained and no BRS prepared for various accounts
reporting year-end balances of P4,327,762;
d.3
Cashbooks not maintained for various accounts with an aggregate
balance of P3,474,752 as of 31 December 2012;
d.4
Book balance used in the preparation of the statement was the
balance of the cashiers cash book instead of the SLs;
d.5
Doubtful reconciling items indicated as unreconciled difference of
prior years in the BRS;
d.6
Prevalence of unrecorded cash transactions on various accounts
which invariably contribute to the inaccuracy of the cash account balance
and warrant appropriate adjustment; and
d.7
11.
29
e.
In NIA Regional Office No. VIII, verification of the Cash in Bank account
revealed that there was still an unidentified discrepancy of P352,095 between the
General Ledger and the Subsidiary Ledger under Fund 501 CARP as of
December 31, 2012, although preliminary reconciliation of the discrepancy had
been made by Management which resulted in a decrease of abnormal/negative
balances from P774,620 in CY 2011 to P352,095 for CY 2012. Furthermore, the
schedule of cash in bank disclosed balances under Fund 501 CARP amounting
to P1,076,136 that remained in the books and still in the process of
reconciliations but respective bank accounts were already closed.
f.
In NIA CARAGA, the correctness of the balance of the Cash in Bank
Local Currency Checking Account (LCCA) and Savings accounts is doubtful due
to non-reconciliation/updating of the GL and SL balances of bank accounts
totalling P39,326,687.
The non-reconciliation of the general ledger and
subsidiary ledger balances resulted in the non-taking up of the valid reconciling
items in the books. Hence, the correct/adjusted balance of the cash account is
not reflected in the financial statements as of year-end.
4.4
4.5
Table No. 2 PVB Current Account balances for Fund 102 transferred to Fund 501
Account
LADP-CAT-A
TGISP-CAT-A
TGISP-CAT-C
ISIP 11
WRDP
Total
Account No.
PVB 01401-000454-4
PVB 01401-000457-1
PVB 01401-000458-0
PVB 01401-000452-6
PVB 01401-000459-1
Date Transferred
December 13, 2007
December 13, 2007
December 13, 2007
December 13, 2007
December 13, 2007
Amount
P
811
277,797
222,640
2,668
7,963
P511,879
b.
LBP Current Accounts maintained for Fund 102 were closed and the
remaining balances were transferred to LBP Current Account No. LBP 18721020-40 of Fund 501 per JEV#102-08-07-344-E as listed below:
31
Table No. 3 LBP Current Account balances for Fund 102 transferred to Fund 501
Account
LADP
LADP
FUND 102-96
TGWIS RP-A
TGWIS RP-C
FUND 102-96
Total
Account No.
LBP 1872-1017-44
LBP 1872-1011-24
LBP 1872-1010-27
LBP 1872-1017-79
LBP 1872-1017-87
PVB 01401-000460-0
Date Transferred
November 29, 2007
November 29, 2007
November 29, 2007
November 29, 2007
November 29, 2007
December 13, 2007
Amount
41,019
40,308
4,758,248
1,088,403
405,644
5,173,958
P11,507,580
5.3
The transfer of unexpended balance of project funds to NIA Corporate Operating
Fund is a gross violation of the following laws, rules, and regulations:
a.
Section 37 of PD No. 1177 which expressly provides that: All moneys
appropriated for functions, activities, projects and programs shall be available
solely for the specific purposes for which these are appropriated.
b.
Section 4 (3) of PD No. 1445 which expressly provides that: Trust funds
shall be available and may be spent only for the specific purpose for which the
trust was created or the funds received.
c.
Article 220, RA No. 3815, Book II of the Revised Penal Code: Illegal use
of public funds or property. Any public officer who shall apply any public fund
or property under his administration to any public use other than for which such
fund or property were appropriated by law or ordinance shall suffer the penalty of
prision correccional in its minimum period or a fine ranging from one-half to the
total of the sum misapplied, if by reason of such misapplication, any damages or
embarrassment shall have resulted to the public service. In either case, the
offender shall also suffer the penalty of temporary special disqualification.
5.4
Despite our previous years audit recommendation, NIA still did not remit the
balances of these project funds to the Bureau of Treasury.
5.5
5.6
Management commented that continuing process of verification, analysis and
reconciliation of all transactions affecting the accounts of concerned special projects is
32
being done to determine the nature of the balances that were transferred to Corporate
Fund.
6.
The unexpended balance of foreign assisted project funds amounting to
P5.140 million exclusive of interest earned which was previously deposited under
Fund 102 account was subsequently transferred to Fund 501 contrary to the
provisions of PD No. 1445. Moreover, this account was still being maintained by
both Fund 501 and Fund 102 as of December 31, 2012.
6.1
Review of the Bank Reconciliation Statement for account PVB-TD61071 under
Fund 501 as of December 31, 2012 disclosed that this account was used to record the
Dollar Time Deposit of the placement made from the unexpended balance of foreignassisted project funds from Fund 102 to Fund 501. However, it was learned that only
the outstanding balance of the fund amounting to P5,139,958 exclusive of the interest
earned of P402,528 was actually transferred to Fund 501 and the corresponding interest
earned was left and still recorded in the books of Fund 102 as December 31, 2012.
6.2
The PVB-Foreign Currency Account is a Corporate Fund account under F-501
and should not be used to record transactions pertaining to the General Fund Account
under F-102 as both Funds maintain separate accounting books and with separate
financial statements/reports. The amount of Time Deposit under Fund 102 was included
as one of the reconciling items in the Bank Reconciliation Statement of Fund 501 as of
December 31, 2012.
6.3
6.4
6.5
Management stated that the amount will be remitted to the Bureau of Treasury
once verification and reconciliation process is completed.
7.
Unrecorded withdrawals/disbursements prior to 1988 amounting to
P151.656 million were treated as reconciling items in the Bank Reconciliation
33
Statements. These disbursements were included in the list of checks issued and
were encashed but have no covering disbursement vouchers or any supporting
documents submitted to the Audit Team.
7.1
Review of the Bank Reconciliation Statement of PNB Current Account No. 268840058-1 as of December 31, 2012 disclosed the existence of long outstanding
reconciling items in the amount of P151,655,662 described as unsupported
disbursements/withdrawals made prior to 1988. Inquiry with the Bookkeeping Section
disclosed that these disbursements were not recorded in the books due to the absence
of any documents supporting the withdrawal. The only document presented was the list
of checks issued with the corresponding amounts but without the names of
payee/recipient. The present personnel assigned to reconcile this account can no longer
locate any document pertaining to these transactions as there was no turn-over of
documents made from the previous personnel who either resigned or retired.
7.2
Further verification revealed that the earliest available Bank Reconciliation
Statement on file with Management was as of 2000 wherein the afore-cited reconciling
items already appeared. Likewise, the Treasury Division could not present the Check
Register for the years prior to 1988.
7.3
7.4
Likewise, Section 43(4) of PD No. 1445 specifically provides that: the auditors
in all auditing units shall have the custody, and be responsible for the safekeeping and
preservation of paid expense vouchers, journal vouchers, stubs of treasury warrants or
checks, reports of collections and disbursements and similar documents together with
their respective supporting papers, under regulations of the Commission.
7.5
The absence of documents to substantiate the withdrawals of P151,655,662,
hampered the verification of these disbursements to determine whether these were used
solely for public purpose. Moreover, validation cannot be done to determine whether
disbursements were duly approved/authorized by the concerned NIA officials.
7.6
7.7
7.8
Management commented that extra effort had been exerted to locate records
pertaining to transactions prior to 1988, but no records have been found.
34
7.9
As an audit rejoinder, the matter will be referred to the Legal Services Sector,
COA, for proper disposition.
8.
Accounts Receivable-Irrigation Service Fees (ISF) and Communal Irrigation
System as of December 31, 2012 amounting to P17.252 billion were doubtful and
unreliable in view of inaccurate/inadequate accounting records and accounting
deficiencies, thus impairing the fair presentation of the account in the financial
statements.
8.1
Section 111(1) PD No. 1445 states that The accounts of the agency shall be
kept in such detail as is necessary to meet its needs and at the same time to be
adequate to furnish the information needed by fiscal or control agencies of the
government.
8.2
Section 114 (2) of PD No. 1445 states that subsidiary records shall be kept
where necessary.
8.3
Audit of the receivable account disclosed the following errors and deficiencies
which affected the validity and accuracy of the reported receivables as of December 31,
2012.
Table No. 4 Deficiencies Noted Affecting the Receivable Account
Regional Office
Region I
Region III
Region V
Region XIII
Amount
(In million pesos)
Amount not indicated
1,620.645
1,027.013
790.036
Deficiency
No subsidiary ledgers were maintained and no
supporting papers were available from which
reconciliation and review could have been made.
Region V
223.151
UPRIIS
Region IX
CIMO
1,178.732
280.155
94.461
22.550
Region VIII
35
Regional Office
Region VIII (a)
(b)
(c)
Amount
(In million pesos)
17.026
24.433
0.684
Deficiency
(a) There were IA loans that were recorded/included
in the GL/SL balance but not included in the Annual
Status of CIS Amortization report submitted by the
field office; (b) There were also IA loans that were
not recorded/included in the GL/SL balance but
included/ reported in the Annual Status of CIS
Amortization report submitted by the field offices; (c)
There were payments of CIS amortizations from
various projects totaling to P684,110 reported/shown
in the Annual Status of CIS Amortization report
submitted by Field Offices but without indicating the
amount of loan. Said projects were not included in
the F-501 subsidiary ledger on Installment Sales
Receivable CIS.
Region I
Region III
Region VI
427.274
626.175
186.301
Region I
429.918
8.4
36
8.5
9.
The validity and accuracy of the account balances of completed projects
included in the Balance Sheet of the Corporate Fund (F501) as of December 31,
2012 amounting to P5.174 billion could not be substantiated due to nonsubmission of supporting documents, financial statements and reports for
review/verification. Likewise, the elimination entries reflected in the consolidated
balance sheet lacked the necessary supporting documents.
9.1
The Consolidated Balance Sheet of the Corporate Fund (F501) as of December
31, 2012 submitted for review included account balances of various completed projects,
as follows:
Table No. 5 Completed Projects Included in the Consolidated Balance Sheet
Project Name
CARP
MMIP I
Assets
P2,759,635,625
184,009,684
Liabilities
P 551,632,177
1,145,042
Equity
P2,208,003,448
182,864,642
37
Project Name
LADP
PDDP
QUAKE-Region 3
QUAKE-UPRIIS
IOSP I Region 3
IOSP I Region 4
IOSP I Region 5
IOSP I Region 9
IOSP I Region 10
IOSP I Region 11
IOSP I Region 12
IOSP I Region 13
IOSP I - UPRIIS
IOSP II Region 4
IOSP II Region 11
CIDP Region 4
BOHOL
LAGUNA Region 4
ALAPASCO Region
PIKIT - IP
ISIP IF
ISIP - Regular
TGISRP
BBMP, et al.
T0TAL
9.2
Assets
7,449,191
104,570,160
13,877,954
36,052,934
76,229,932
98,969,959
50,574,060
35,272,872
18,966,924
67,399,872
65,550,097
38,958,237
111,912,985
63,814,269
54,518,781
51,049,056
321,382,697
379,772,156
786,772
4,314,500
208,495,492
269,329,460
2,576,907
715,662,589
Liabilities
7,449,191
13,472
13,877,954
15,001,354
76,229,932
41,645,315
50,574,060
12,766,470
3,467,539
(356,443)
31,936,955
2,423,012
26,525,782
1,873,974
7,821,889
366,649
133,358,400
338,839,022
786,772
Equity
579,811,756
4,314,500
207,421,534
266,423,651
2,576,907
135,850,833
P5,741,133,165
P1,901,170,041
P3,839,963,124
104,556,688
21,051,580
57,324,644
22,506,402
15,499,385
67,756,315
33,613,142
36,535,225
85,387,203
61,940,295
46,696,892
50,682,407
188,024,297
40,933,134
1,073,958
2,905,809
Account Name
Cash
9,712,471
Percentage to Total
0.17
Receivables
518,900,909
9.04
Inventories
17,218,440
0.30
7,507,734
0.13
11,093,182
0.20
5,176,700,429
90.16
P5,741,133,165
100
Prepayments
Others
Property, Plant and
Equipment
TOTAL
Amount
P
38
9.3
Out of the total Inventories amounting to P17,218,440, P16,682,454 or 97 per
cent represents office supplies inventory of the Balog-Balog Multi-Purpose Project
(BBMP), et. al, IOSP I-Region 5, and ALAPASCO-Region 6 amounting to P16,577,621,
P102,486 and P2,347, respectively; validity of which remained doubtful considering that
these projects were already completed long time ago.
9.4
Interview with the accounting personnel who prepared the Consolidated Balance
Sheet disclosed that these accounts were carried-over balances of completed projects
which continued to be included in the consolidation and could not be closed to the
Central Office books of accounts due to the absence of supporting documents and
financial reports as bases for the adjustments.
9.5
Likewise, the elimination entries in the consolidated balance sheet were not duly
supported and corresponding Journal Entry Vouchers were not submitted to the Audit
Team for review.
9.6
9.7
that:
COA Accounting Circular Letter No. 2007-003 dated January 17, 2007 states
39
c.
Create a special team to undertake the physical inventory of all the
Property, Plant and Equipment of the above completed projects to validate
their actual existence, considering that the total value represented ninety
per cent of the total asset account; and
d.
Submit the Journal Entry Vouchers with supporting documents
relative to the elimination entries appearing in the consolidated balance
sheet.
10.
The validity and accuracy of the balances of Government Equity and
Retained Earnings accounts of P18.027 billion and P(10.030) billion, respectively,
could not be ascertained due to the absence of documents to substantiate the
balances of these accounts as shown in the Statement of Changes in Government
Equity (SCGE).
10.1 Review of SCGE revealed that while the balances of the accounts shown in the
SCGE reconcile with the balances of the accounts shown in the Trial Balance and the
amounts presented in the Notes to Financial Statements, there were no documents to
support the balances of the Government Equity and Retained Earnings accounts of
P18.027 billion and P(10.030) billion, respectively, thus, the validity and accuracy of the
said accounts could not be ascertained.
10.2
that:
COA Accounting Circular Letter No. 2007-003 dated January 17, 2007 states
Active
Inactive
InactiveOthers
Total
P 120,319,542
13,595,591,071
49,179,162
P639,525,891
9,782,165
17,598,480
P 3,311,527
( 749,545)
22,582,028
TOTAL
P13,765,089,775
P666,906,536
P25,144,010
P14,457,140,321
763,156,960
13,604,623,691
89,359,670
11.2 Review of the Statement of Balances as of December 31, 2012 in the Central
Office disclosed the following deficiencies:
41
a.
Subsidiary ledgers for some accounts were not maintained and if
maintained, lacked the necessary information such as complete name/address of
the debtor and date the receivable was granted making it difficult to verify and
analyze said accounts;
b.
c.
Undocumented/dormant accounts/abnormal accounts still existed in the
books; and
d.
Statements of the Accounts Receivable submitted likewise lacked the
necessary information such as complete name/address of the debtor and date
the receivable was granted making it difficult to verify and analyze said accounts.
11.3 In NIA CAR, audit showed that the Due from NGAs, Due from LGUs and Other
Receivables accounts with balances as of December 31, 2012 of P1,115,295, P30,966
and P1,655,587, respectively, have been recorded in the books without supporting
schedules and details. As disclosed in the Notes to Financial Statements, the account
balances are the subject of on-going reconciliation. Inquiry revealed that the account
balances are handed over from previous accounting personnel and remained dormant
for more than a decade already.
11.4 In NIA CARAGA, Due from Others Funds account totaling to P2,595,459
remained uncollected as of December 31, 2012. Due to absence of subsidiary records,
its validity and details such as identity of debtors and the corresponding amount
borrowed could not be established, thus, the collectability of these receivables is
uncertain. Moreover, long outstanding accounts, such as Due from NGAs, Due from
GOCCs, and Receivables - Disallowances/Charges totaling to P202,814 were not
promptly monitored, hence, resulted in the dormancy for years. No documents which
could provide accurate information/details as to the nature of these receivables are
available; thus, they remained unverified for several years. No subsidiary records were
also maintained for these accounts.
11.5
42
11.6 The absence of subsidiary ledger hampered the tracing of transactions in detail
which is necessary in coming up with information concerning past operations and
present condition as basis for proper decision making.
11.7 Since these observations are reiteration of the previous years audit
findings, we strongly recommended that Management:
a.
Assign a permanent employee to perform the regular analysis and
validation of the Due from NGAs/GOCCs and Other Receivable accounts
specifically those dormant and abnormal accounts which continue to exist
for more than 10 years now;
b.
Maintain and regularly update subsidiary ledgers for all accounts to
support the general ledger balances; facilitate the early detection of errors,
expedite adjustments, and determine if total of individual accounts
reconcile with the general ledger;
c.
Create a special task force to enforce collection of past due
accounts, and if warranted, impose legal sanctions to those whose
accounts are material and remained in default for several years now; and
d.
Include in the Statement of Balances all the necessary information
such as name, address of the debtor, date the receivable was granted and
aging of the account.
11.8
12.
Deficiencies and contraventions on the provisions of RA No. 9184,
otherwise known as the Government Procurement Reform Act and the lease
contract between NIA as the lessor and New Kanlaon Construction, Inc. as the
lessee resulted in the understatement of bid security posted by participating
bidders totalling P2.092 million and understatement of the total billed amount for
rental for the period March 1, 2009 to February 28, 2012 amounting to P1.120
million.
12.1 A Lease Agreement was entered into by the NIA and the New Kanlaon
Construction, Inc. whereby the former leases to the latter the 2,508 square meters (sq.
43
m.) portion of NIA real property located at EDSA corner NIA-PDEA Road, NIA Building
Complex, Diliman, Quezon City at P148.88 per square meter per month with escalation
of five per cent per year starting on the fourth year, or a total contract price of
P194,598,603. The Lease Agreement shall be for a period of 25 years to commence on
March 1, 2009 and to expire on February 28, 2034.
a.
Failure to pay the required one year advance rental P4.481 million
12.2 Article XV of the Lease Contract on the Revised Instructions to Interested Parties
states that:
Within five (5) calendar days upon the execution of the Contract, the
lessee shall pay an Advance Rental equivalent to the accumulated rental
for One (1) year.
12.3 Verification disclosed that the New Kanlaon Construction, Inc. did not pay the
required one year advance rental amounting to P4,480,692 supposedly to be paid within
five days upon execution of the contract of lease and to be applied to the first year of the
contract period. Further verification revealed that the total amount of P1,800,000 posted
as bid security by the New Kanlaon Construction, Inc. was totally applied in lieu thereof.
12.4 Moreover, the application of the bid security for the first year rental was only
recorded in the books through Journal Entry Voucher No. 501-10-12-1095 dated
December 31, 2010.
12.5 Article XVI of the Contract of Lease on the Revised Instructions to Interested
Parties clearly states that the bid security shall be forfeited in favour of NIA without need
of court action in cases of the following instances and the winning bidder shall be
disqualified aside from other appropriate sanctions provided under existing laws to be
imposed x x x if the winning bidder fails to pay the 1 year advance rental and the cash
deposit within five (5) calendar days from the execution of the contract. Thus, the bid
security, aside from being understated, should have been forfeited in favour of NIA in
2009 for failure of the New Kanlaon Construction, Inc. as the winning bidder, to pay the
required advance rental equivalent to the accumulated rental for one year amounting to
P4,480,692.
b.
Payment of cash deposit was beyond the five-calendar day period
from the execution of the contract and was recorded as Rent Income in the
books.
12.6 To guarantee the payment of unpaid bills for water consumption, electricity,
telephones and real property taxes on the improvements introduced by the lessee during
the term of the contract, the winning bidder was required under the Revised Instructions
to Interested Parties to post a cash deposit equivalent to the accumulated rental for one
year within five calendar days upon execution of the contract. The Cash deposit is
refundable upon the termination of the Contract of lease after showing proof that taxes
and bills for utilities had been paid by the lessee.
12.7 Records showed that the cash deposit was paid by the New Kanlaon
Construction, Inc. under Official Receipt No. 0101164 dated March 18, 2009 amounting
44
P13,442,077
12,321,904
P 1,120,173
12.10 The understatement of the billed amount of P1,120,173 corresponds to the first
three months of the contract period (March 1 to May 31, 2009) which pertained to the
grace period of three months provided in the contract between NIA and the New
Kanlaon Construction, Inc.
12.11 Section III. Consideration and Manner of Payment of Lease contract, provides
that:
Payment of rental shall commence after a grace period of three months
upon the approval of the contract to give opportune time to the lessee to
secure the necessary clearances and the construction of the building or
structure, or upon the start of operation of the business whichever comes
first.
12.12 It is clear from the above provision that the start date of payment shall be after
three months from the approval of the contract which differs from the start of the contract
period which is March 1, 2009. Section II. Duration of the Lease Agreement provides
that the lease agreement shall be for a period of 25 years to commence on March 1,
2009 and to expire on February 28, 2034. Management may have construed that the
billing period shall only start after the grace period of three months upon approval of the
contract.
45
Applied to
Principal
P1,219,107
341,413
Applied to
Surcharges
P280,893
30,727
627,860
12.15 Thereafter, the New Kanlaon Construction Inc. has been remiss in the payment
of its annual rental of P4,480,692 which accumulated to P17,588,744 inclusive of
surcharges as of December 31, 2012.
12.16 Since we were not favoured with a reply to our audit query dated April 18, 2013
relative to the above matter, we computed the unpaid balance of the account based on
available documents on file and arrived at a total amount due of P17,588,744.
e.
Business establishments operating in the Leased Property which
businesses compete with the NIA Employees Association and the
Employees Cooperative
12.17 Article IV-7 of the lease contract states that, The lessee shall not directly or
indirectly compete with the business of the NIA Employees Association or the
Employees Cooperative. It has been observed, however, that there are establishments
that are operating in the leased area which businesses compete with that of the NIA
Employees Association and the Employees Cooperative.
12.18 Additionally, the line of business of the establishments, such as a restaurant and
convenience store operating in the leased area, apparently differs from the line of
business of the New Kanlaon Construction, Inc. Article IV-4 of the lease contract
provides that, the lessee shall not directly or indirectly sublease, assign, transfer,
convey, mortgage or in any way encumber its rights of lease over the premises or any
portion thereof unless with the prior written consent of the lessor.
46
13.
The existence, validity and accuracy of the balance of Accounts Payable
totaling P483.106 million could not be ascertained due to nonmaintenance/improperly maintained subsidiary ledgers, and existence of
undocumented/dormant accounts and accounts with abnormal balances.
Likewise, the Schedule of Accounts Payable lacked the necessary information
such as complete name/address of the creditor, date when the obligation was
incurred and the age of the account.
47
13.1 Audit of the balance of Accounts Payable account as of December 31, 2012
disclosed the following deficiencies:
Table No.10 Schedule of Accounts Payable with Deficiencies
Central
Office/Regional
Office
Central Office
UPRIIS
Region VIII
Amount of
Accounts Payable
with Deficiency
(In Million pesos)
P343.282
50.023
137.984
Deficiencies
a. Subsidiary ledgers for some accounts were
not maintained and if maintained, lacked the
necessary information such as complete
name/address of the payee and date the
obligation was incurred making it difficult to
verify and analyze said accounts;
b. Accounts payable incurred for more than two
to eight years now were still recorded in the
books;
c. Undocumented/dormant accounts /abnormal
accounts still existed in the books; and
d. Schedule of Accounts payable submitted
lacked the necessary information such as
complete name/address of the creditor and date
the obligation was incurred.
Region V
Cotabato Irrigation
Management Office
(CIMO)
13.2
7.457
8.874
The above practices contravened the following laws, rules and regulations:
a.
b.
DBM-COA Joint Circular No. 99-06 dated November 30, 1999 which
requires the reversion of all (a) documented Accounts Payable (APs) outstanding
for more than two (2) years; and (b) undocumented APs, regardless of the year
they were incurred; and
c.
DBM Circular Letter Nos. 2004-3 and 2004-2 which treat accounts
payable as valid obligations for which goods/services/projects have been
delivered/rendered/completed and accepted.
13.3 The absence of the required documents/information for the detailed review of
accounts hampered the proper verification of the accuracy and reliability of these
Payable accounts. Likewise, the existence of accounts with abnormal (debit) balance
implied that an error was committed in recording the payable.
48
14.
The accuracy and validity of the year-end balance of Other Liabilities
account amounting to P1.335 billion, remained doubtful due to lack of subsidiary
records/documents and the inclusion of various accounts which remained
dormant for more than 19 years now. Likewise, supporting schedules for the
Performance/Bidders Bond Payable and Other Payable accounts to support the
general ledger account balances were not prepared and submitted for audit.
14.1 Audit of the following Other Liabilities accounts as of December 31, 2012
disclosed that the balances appearing in the General Ledgers were doubtful due to the
following deficiencies:
49
a.
Central Office
P 54,248,640
11,863,568
1,023,317,619
6,881,077
102,608
376,163,586
-
P1,089,429,827
P383,183,443
TOTAL
b.
Table No. 12 Other Liabilities account which Remained Dormant for more than 19
years
Account Name
Guaranty Deposits Payable
Trust Liabilities (Due to BIR,
GSIS and PhilHealth)
Due to Central Office
Due to Other NGAs
Other Payables
Central Office
P80,288,690*
2,212,516
4,437,015
17,997,098
227,569
P80,288,690
P24,874,198
TOTAL
* Dormant/Carry-over balance since 1993
c.
Existence of negative (debit) balances without information disclosed in
the Notes to Financial Statements contrary to Section 80 of NGAS Manual which
states that information shall be presented in a way that will facilitate
understanding and avoid erroneous computations. The headings, captions and
amounts shall be supplemented by enough additional data so that their meaning
would be clear and not overshadowed by so much information that matters are
buried in mass trivia.
Central Office
P(62,919,611)
-
TOTAL
P(62,919,611)
P(21,495,197)
50
d.
In the Central Office, Schedule of Guaranty Deposits Payable did not
contain the following details: (i) complete name and address of the contractors,
(ii) dates when the projects started/finished and (iii) aging/status of accounts.
e.
Subsidiary ledgers were not maintained for some accounts or if
maintained, lacked the needed information like reference (Check/DV/JEV No.)
and nature/particulars of the transaction.
14.2 The above practices contravened the provisions of the following law and
government accounting rules and regulations:
a.
b.
Section 12, Volume II of the Manual on the New Government Accounting
System (NGAS), which provides:
The Subsidiary Ledger (SL) is a book of final entry containing the
details or breakdown of the balance of the controlling account appearing
in the General Ledger (GL). The totals of the SL balances shall be
reconciled with their respective control account regularly or at the end of
each month. Schedules shall be prepared periodically to support the
corresponding controlling GL accounts.
14.3 The aforementioned deficiencies such as insufficiency of documents, existence
of dormant accounts and absence of subsidiary ledgers hampered the validation and
verification of the accounts. As such, the validity and accuracy of the balance of Other
Liabilities accounts could not be established.
14.4 Since this is reiteration of the previous years audit observation, we
strongly recommended the following:
a.
Assign a permanent employee who will perform regular analysis,
validation and reconciliation of the Other Liabilities account specifically
those dormant and abnormal accounts which continue to exist for more
than 19 years now;
b.
Maintain and regularly update subsidiary ledgers of the Other
Liabilities accounts for proper
monitoring and to support the general
ledger balances; and
c.
Include in the Schedules all the necessary information such as
complete name and address of the contractors, dates when the projects
started/finished and aging/status of the accounts.
14.5 Management of NIA Central Office explained that the balance of P80,288,690 of
the account Guaranty Deposits Payable as of 1993 could no longer be verified due to
unavailability of record. Likewise, negative balances totalling P62,919,611 as of
December 31, 2012 will be subject for verification and reconciliation. Subsidiary ledgers
were reconstructed and whatever data reflected such as the date of the transactions,
particulars, check no. and amounts were the only data captured from the journal entry
51
vouchers. Additional data required will be posted in the subsidiary ledgers and monthly
statement of account for current transactions.
14.6 Meanwhile, Management of Regional Office No. V commented that the
preparation of schedules supporting the Payables account is on-going. Dormant
accounts are being analyzed and subsidiary ledgers are being updated.
15.
Deficiencies in recording the advances made by the Bureau of Treasury
(BTr) to CE Casecnan Water and Energy Company, Inc. (CECWE, Inc.) for NIA
obligations covered by the Build, Operate and Transfer Contract resulted in a
variance of P46.847 billion between BTrs records and NIAs records and
understatement of liabilities and operating expenses.
Table No. 14 Computation of the Variance/Difference Existing Between the BTr
and NIAs books as of December 31, 2012
Particulars
Per BTrs records
NIA water delivery
NPC energy delivery
Less: Payment by NPC
Net
Total
Advances
P38,375,650,803
34,749,158,119
(24,408,866,629)
10,340,291,490
P48,715,942,293
Interest
P9,687,777,748
3,120,672,280
(1,000,000,000)
2,120,672,280
P11,808,450,028
Total
P48,063,428,551
12,460,963,770
60,524,392,321
13,677,462,696
P46,846,929,625
15.1 The Due to Other NGAs-BTr-Casecnan account represents the advances made
by the BTr to CECWE, Inc. for water and energy delivery fees for the period CY 2002 to
CY 2012 amounting to P48,715,942,293 and the corresponding interest aggregating to
P11,808,450,028, or a total of P60,524,392,321. However, only the amount of
P13,677,462,696 was taken up in the books of NIA, resulting in a difference of
P46,846,929,625.
15.2 Review of the account Due to Other NGAs-BTr-Casecnan account disclosed that
NIA did not record the advances made by the Bureau of the Treasury for the water
delivery fees billed by CE Casecnan. Likewise, examination of NIAs available records
also showed that the variance was due to deficiencies in recording the advances made
by the BTr to CECWE, Inc. for NIA obligations covered by the Build, Operate and
Transfer Contract, as follows:
a.
b.
Incomplete recording of guaranteed energy delivery fee, variable energy
delivery fee and VAT;
c.
Inc.;
52
d.
e.
15.3 It was noted that Management stopped recording the advances made by the BTr
for the payment of guaranteed and variable energy delivery fees since 2009. The nonrecording of the advances resulted in the understatement of liabilities and operating
expenses in the financial statements. Moreover, the non-recording of the advances
contradicts the provision of Section 119 of PD No.1445 which states that all lawful
expenditures and obligations incurred during the year shall be taken up in the accounts
of that year.
15.4 This matter was already the subject of our audit observations for the past two
years but still NIA failed to take up these transactions in their books considering that the
results of NIAs operations for CY 2012 showed a Gross Operating Income of only
P889.032 million whereas the water delivery fee including VAT and interest being
charged to NIA by the BTr for the year amounted to P4.386 billion.
15.5 In a meeting called by the Department of Finance (DOF) on June 6, 2012 to
discuss the above issues with representatives from the BTr, NIA and COA, it was agreed
that NIA book up the advances made by the BTr by debiting Other Investment-CE
Casecnan account and crediting Due to National Treasury accounts. Further, NIA
agreed to book-up the US$97 million upon receipt of the copies of JEVs from BTr to be
used as basis for recording. The NIA Deputy Administrator for Administrative and
Finance Sector in her letter dated October 18, 2012 requested for COAs
concurrence/confirmation on the use of the recommended entries. Said request was
forwarded to COA-BTr on February 25, 2013 for their comment.
15.6
15.7 Management commented that the verification and analysis of energy delivery
fees had been completed and will be reconciled with the BTr before recording in the
books. Water delivery fees, tax reimbursements and other transactions pertaining to
CECWE, Inc. were already recorded in the books by debiting the account Other
Investment-CE Casecnan and crediting the account Due to the National Treasury under
JEV#501-13-04-521A dated April 30, 2013. The use of these accounting entries was
confirmed and concurred by COA in a Memorandum dated April 25, 2013 in reply to
NIAs letter dated October 18, 2012.
53
16.
Deficiencies were noted in the payment for consultancy services
amounting to P6.136 million.
A.
Number
Designation
4
1
1
2
Executive Consultant
Management Consultant
Special Assistant
Special Assistant
Special Assistant
Special Assistant
Special Adviser
1
1
1
Place of Assignment
Honorarium/
Compensation per
Month
P40,000
40,000
30,000
30,000
30,000
30,000
25,000
40,000
54
16.4 Detailed review of the payments for engaging the services of consultants
revealed the following weaknesses:
a.
Payments were merely based on certifications that services were
rendered. These certifications were considered inadequate as these did not state
the deliverables submitted and their conformity with the contractual requirements.
Consider the following:
Table No. 16 Consultancy Fees Paid Based on Certifications of Services
Rendered
Position of
Consultant
Executive
Consultant
Services Required
Prepare concept papers and socio-economic studies on
irrigation and agriculture and other related areas
Irrigation
Historiographic
Consultant
a.1
Certification of services rendered by a consultant stating the
deliverable submitted and their conformity with the contractual
requirements is a vital document that ensures the contract deliverable
was received, evaluated and approved for implementation purposes.
b.
Payments were not supported with Accomplishment Reports from the
consultants detailing the activities undertaken to be substantiated with separate
reports on assessment/analysis made, as well as recommendations of new and
enhanced business practices. These may be attributed to lack of specific and
measurable deliverables in majority of the consultancy contracts.
The
expected/required services from the consultants are incomplete and not
sufficiently detailed. The following examples illustrate the observation:
Table No. 17 Expected/Required Services from the Consultants
Position of
Consultant
Executive
Consultant
Services Required
Render or give proper and necessary advices on policies,
management strategies, on relations among personnel, with other
government instrumentalities and agencies, and with the public in
general.
Provide the Acting Administrator necessary assistance and
support regarding decisions involving agency policies;
Conduct researches and studies on various issues referred by the
Acting Administrator and submit recommendations thereon;
Provide expert advice on policies, programs and strategies;
55
Position of
Consultant
Services Required
Provide necessary expert legal assistance and support regarding
decisions involving agency policies; and
Conduct legal researches, studies
managements guide/reference.
Management
Consultant
or
give
opinions
for
b.
Have had implemented completed contracts, as stated in
their eligibility documents, that are similar in nature and complexity
to the project, as described in Invitation to Apply for Eligibility and
to Bid (IAEB).
d.
Verification disclosed that the amount of P3,039,732 allocated for the
payment of consulting services was not included in the Annual Procurement Plan
(APP) of the agency for CY 2012. This might be attributed to the inability on the
56
d.2
Analysis of the cost implication of engaging the services of
consultants.
16.5 Section 77 of the General Appropriations Act (GAA) for CY 2012 defines an
individual professional consultant as an expert in the field of knowledge or training who
is contracted to render particular outputs or services primarily advisory in nature
requiring highly specialized or technical expertise which cannot be provided by the
regular staff of the agency.
16.6 Item 2 of Annex B, General Principles on Consulting Services, of the Revised
IRR of RA No. 9184, series of 2009 states that:
The Need for Consultants The services of consultants may be engaged
by any procuring entity for government projects or related activities of
such magnitude and/or scope as would require a level of expertise or
attention beyond the optimum in-house capability of the procuring entity
concerned and consistent with the Governments policy not to compete
with the private sector.
B.
Charged to Other Maintenance and Operating Expenses (MOOE)Contractual Services P3.096 million
16.7 The Daily Record of Activities detailing the activities undertaken however were
not substantiated with reports on the result of the required/expected services from the
consultants such as an assessment/evaluation of irrigation operations, as well as
recommendations of strategies to resolve bottlenecks in project execution.
16.8 By virtue of NIA Memorandum Circular No. 47, series of 2011 dated September
19, 2011 which authorized the adoption of the Framework for Project Inspection and
Validation under the NIA Support Program to the Food Staple Sufficiency Roadmap
(FSSR) 2011-2016, another 12 Project Officers were hired as part of the Project
Inspectorate and Advisory Group (PIAG) assigned to handle the Project Inspection and
Validation (PIV) tasks. The primary responsibility of the PIAG was the achievement of
the physical targets of NIA as per FSSR. It is composed of the following members:
Table No. 18 Members of the PIAG Hired in 2012
Number
2
1
1
1
Place of
Assignment
Senior Associate Project Officer Visayas
Senior Associate Project Officer Northern Luzon
Chief Associate Project Officer
Central/Northern
Luzon
Chief Associate Project Officer
Northern Luzon
Designation
Salary per
Month/day
P30,000/mo.
30,000/mo.
40,000/mo.
40,000/mo.
57
Number
Designation
1
1
1
Data Encoder
Chief Associate Project Officer
Senior Associate Project Officer
1
2
1
Place of
Assignment
Visayas
Visayas
Central/Southern
Luzon
Visayas
Northern Luzon
Central/Southern
Luzon
Salary per
Month/day
702.54/day
40,000/mo.
30,000/mo.
30,000/mo.
30,000/mo.
30,000/mo.
16.9 Records showed that in CY 2012, NIA paid a total of P3,096.098 for hiring the
aforementioned consultants for the following services, among others, common to all 12
consultants:
a.
b.
Assess status of irrigation operations and recommend strategies to
increase irrigated area and crop field;
c.
d.
Validate the extent of the generated/restored area irrigated/cultivated right
in the following year; and
e.
Determine bottlenecks in project execution
countermeasures and strategies to resolve the same.
and
recommend
16.10 Review of the sampled disbursements for the remuneration of the consultants
disclosed that these were supported with Certificate of Service and Daily Record of
Activities. The Daily Record of Activities detailing the activities undertaken, however,
were not substantiated with reports on the result of the required/expected services from
the consultants such as on assessment/evaluation of irrigation operations, as well as
recommendations of strategies to resolve bottlenecks in project execution.
16.13 By way of a rejoinder, out of the 11 consultants hired by NIA in 2012, only two
consultants have contracts with specific and measurable deliverables and one of them is
the aforementioned book by Mr. Jesus Ocampo. It is emphasized that payments to
consultants be supported not only by Certificate of services rendered but by proof that
the deliverables have been received, evaluated and approved for implementation by
Management as well.
17.
Payment of the Collective Negotiation Agreement (CNA) Incentives for CY
2012 was not compliant with the related DBM Budget Circulars and therefore
considered irregular as defined in COA Circular No. 85-55A, as amended by COA
Circular No. 2012-003 dated October 29, 2012.
17.1
59
Amount
P13,925,000
2,956,250
950,000
17.3 The term irregular expenditure as defined in COA Circular No. 2012-003 dated
October 29, 2012, signifies an expenditure incurred without adhering to established
rules, regulations, procedural guidelines, policies, principles or practices that have
gained recognition in law.
17.4
from released
a.3.
Proof that actual operating income at least met the targeted
operating income in the approved Corporate Operating Budget for
FY 2012; and
a.4.
Proof that those actual operating expenses were less than the
DBM-approved level of operating expenses in the COB.
60
b.
Require the concerned NIA officers and employees to refund the
CNA Incentive received in excess of the DBM required ceiling of P25,000
per qualified employee.
17.5 Management submitted the following documents in partial compliance with the
above recommendation:
a.
b.
c.
Copy of Consolidated Income Statement for the period ended December
31, 2012.
17.6 Management further included proof that actual operating income at least met the
targeted operating income in the approved COB for FY 2012 and proof that actual
operating expenses were less than the DBM-approved level of operating expenses in
the COB.
17.7 Also, Management cited that the legal basis of the CNA payments was
Administrative Order No. 135 dated December 27, 2005 as allegedly mentioned in COA
Circular No. 2013-003 dated January 30, 2013. They also pointed out that Section 3(b)
of the Public Sector Labor-Management Council (PSLMC) Resolution No. 4, s. 2002 did
not mention any DBM circular.
17.8 By way of rejoinder, Management has yet to submit the duly accomplished Form
I-7 of the IATF MC No. 2012-03 dated November 12, 2012 to be used as basis in
determining whether NIA has accomplished at least 90 per cent of its FY 2012 targets on
the average under the Major Final Outputs (MFOs), and in evaluating NIAs full
compliance with the pre-conditions and conditions set by DBM on the grant of CNA.
17.9 It is noteworthy to mention that the Audit Team has been issuing Notices of
Disallowance for the CNA Incentives granted in excess of the prescribed amount of
P25,000.
18.
Non-recording of the withdrawals of diesel estimated at P5.410 million for
CYs 2011 and 2012 cast doubt on the balance as of December 31, 2012 of the
Other Prepaid Expenses - Gasoline, Oil and Lubricants account in the amount of
P9.144 million. Likewise, government laws, rules and regulations pertaining to the
use of government motor vehicles were not strictly observed by the agency.
18.1 Audit of the Other Prepaid Expenses Gasoline, Oil and Lubricants account
disclosed that advance payments made to Petron Corporation for diesel delivered to NIA
fuel depot and carried out in stock amounted to P2,884,178 and P2,481,113 for CYs
2012 and 2011, respectively. However, subsequent withdrawals from the stock were
not recorded in the books and only the amount of P312,053 representing reimbursement
of gasoline expenses purchased from outside suppliers was booked up. This may be
attributed to the non-coordination between the General Services Division and the
61
50
50
50
50
40
40
40
40
40
40
40
40
Allocation
Liters/Official (Corplan, Legal Services & PAIS)
Liters
Liters
Liters
Liters/140 Liters
(Proj. Planning, Design &
Const. Mgmt. Division/s)
Liters
Liters/180 Liters (EMD, IDD, Systems Mgmt. &
Irrigation Engineering Center Division/s)
Liters/100 Liters (HRD, PPD & GSD)
Liters/100 Liters (Acctg., Budget & Cash Div.)
Liters/Official (CARP-IC, SRIP, IRPEP & PIDP)
Liters/Official (Org. Mgmt. & Field & Opns.)
Liters
b.
Fuel withdrawals in excess of the above allocations were made by some
offices/officials assigned/allowed to use more than one motor vehicle which is
prohibited under COA Circular No. 75-6;
c.
Motor vehicles not included among the official list of NIA-owned vehicles
were allowed to withdraw fuel from stocks in CYs 2011 and 2012 aggregating to
5,219 liters estimated at P240,007;
d.
Three motor vehicles owned by NIA were assigned to officials of the
Department of Agriculture (DA) by way of a Memorandum of Agreement (MOA)
to be used in the performance of their official duties at the DA;
e.
Another vehicle was assigned to one of the members of the NIA Board of
Directors who was also allowed to withdraw gasoline from the NIA depository
contrary to the provisions of Executive Order No. 24;
f.
Fuel consumption of NIA Consult, Inc., CARP-IC, Regional/Field offices
for CYs 2011 and 2012 amounting to P1,398,019 were not billed, for the fuel
withdrawals made during the year, thus, understating the receivable account; and
62
g.
NIA motor vehicles were not plainly marked: FOR OFFICIAL USE
ONLY in violation of COA Circular No. 75-6 dated November 7, 1975.
18.3 The above deficiencies might result to wasteful/unnecessary expenditures for
fuel consumption and exposure to risk of loss of government property.
18.4
18.5 Also, COA Circular No. 75-6 dated November 7, 1975 states that the use of
government vehicles is only allowed for official business and should be authorized by a
trip ticket which contains the destination, purpose and duration of travel, all government
vehicles should be plainly marked: FOR OFFICIAL USE ONLY under which should be
written the corresponding name and location of the office and no government officials or
employee authorized to use any government vehicle shall be allowed to use more than
one motor vehicle.
18.6 Moreover, NIA Office Circular No. 2 series of 2012 dated August 6, 2012
specifically provides that no NIA vehicles shall be allowed to leave the office compound
without a duly approved Transportation Request and no fuel shall be issued to NIA
vehicles without approved Fuel Request duly signed by the requesting
Office/Department/Division concerned and approved by the Manager of the
Administrative Department. However, verification of the records revealed that the above
requirements were not strictly followed.
18.7 Section 12 of Executive Order No. 24 dated February 10, 2011 allows the
members of the Board of Directors to reimburse only the following items and not the use
of government motor vehicles incurred in the performance of official functions: a)
transportation expenses in going to and from the place of meetings; b) travel expenses
during official travel; c) communication expenses; and d) meals during business
meetings.
18.8
63
c.
Ensure strict compliance with the provisions of COA Circular No. 756 on the proper use of government vehicles.
18.9 Management explained that from CYs 2011 and 2012, monthly fuel consumption
reports in liters were submitted by the General Services Division (GSD) to the Office of
the Manager, Equipment Management Division, assuming the same was forwarded to
the Manager, Financial Management Department for liquidation with corresponding
monetary value of fuel withdrawn by the different offices.
18.10 Management also explained that the discrepancy in NIA and COA amount of fuel
consumption for CYs 2011 and 2012 was that, the unit cost of fuel withdrawn from stock
was based on the unit price of diesel fuel delivered by Petron to NIA fuel depot.
18.11 With regard to fuel withdrawal of service vehicles not included among the official
list of NIA-owned vehicles, Management justified that Fuel Request Slips were duly
signed by the Chief of the requesting office prior to validation and approval of the
withdrawal slips by the GSD and the Administrative Department.
18.12. By way of rejoinder, proper coordination among offices on the submission of
required reports on fuel consumption to concerned offices is imperative to ensure proper
recording/reporting of fuel consumption. Additionally, the issuance of duly signed Fuel
Requests Slips to service vehicle not included in the list of NIA-owned vehicles allowed
to withdraw fuel does not rectify/remedy the violation made as this will only increase the
risk of non-compliance.
19.
Non-adherence to pertinent regulations on the granting, utilization and
liquidation of cash advances, insufficient accounting records and absence of
proper monitoring resulted in the accumulation of Due from Officers and
Employees and Advances to Officers and Employees accounts in the amount of
P14.849 million and P7.422 million, respectively, which remained unliquidated or
unsettled as of December 31, 2012.
19.1 Section 89 of PD No.1445 provides that 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. Moreover,
Section 128 of PD No.1445 also provides that any violation of the provisions of Sections
67, 68, 89, 106, and 108 of this Code or any regulation issued by the Commission
implementing these sections, shall be punished by a fine not exceeding one thousand
pesos or by imprisonment not exceeding six (6) months, or both such fine and
imprisonment in the discretion of the court.
19.2
COA Circular No. 97-002 dated February 10, 1997 states that:
Section 5.8 All cash advances shall be fully liquidated at the end of the
year. Except for petty cash fund, the Accountable Officer shall refund any
unexpended balance to the cashier for the issuance of official receipt.
Section 5.9 - At start of the ensuing year, a new cash advance may be
granted, provided that a list of expenses against the previous cash
64
66
Program Activity/Project
1. Conduct Basic GST and Gender Responsive Planning
with IAS Training
2. Leadership Capability and Enhancement Program
3. Series of Fora for Womens Concerns
Womens Livelihood Programs
4. Maintenance of NIA-GAD Corner
5. Attendance to Similar National and International Undertaking
on GAD
6. Regular GAD Focal System Meetings
Sub-Total
Contingency
Total
Amount
P1,080,000
300,000
375,650
5,000
500,000
21,000
2,281,650
228,165
P2,509,815
Program Activity/Project
1. Womens Month (March 16, 2012)
a. Women and the Millimium Development Goal and
the Magna Carta of Women (October 22, 2012)
b. National Radiological Emergency Preparedness
and Response (RADPLAN October 23, 2012)
2. Philvocs Seminar (April 18, 2012)
3. Bureau of Fire Protection (April 19, 2012)
4. Medical and Health Awareness (September 12 and 13, 2012)
5. Typhoon Preparedness and Flood Mitigation (September 14,
2012)
Total
Amount
P 55,130
34,650
5,205
4,711
4,340
15,058
P 119,094
20.2 Sections 2.2 and 2.3 of Joint Circular No. 2012-01 issued by the PCW, NEDA
and DBM mandate that:
Agencies should incorporate and reflect GAD concerns in their agency
performance, commitment contracts, annual budget proposals, and work
and financial plans.
x x x GAD Planning shall be integrated in the regular activities of the
agencies, the cost of implementation of which shall be at least five
percent of their total budgets. The computation and utilization shall be
implemented in accordance with the specific guidelines provided therein.
20.3
20.5 Management commented that they regret their inability to fully implement the
Annual GAD Plan for CY 2012 for the reason that many representatives and members of
the GAD Focal System availed of the early retirement in 2012 under the Rationalization
Plan (RATPLAN). The NIA GAD Focal System shall continue to pursue its plans and
programs by first strengthening its membership.
20.6 To ensure compliance with their targets, Management stated that it shall
implement our recommendations by:
a.
Incorporating in the annual budget proposals the required allocations
necessary to cover the related expenses for the proper implementation of GAD
programs and activities in the different regional, field and project offices;
b.
Formulating strictly programs and activities towards the achievement of
the main objective of their Annual GAD Plan in accordance with the conditions
set forth in Joint Circular No. 2012-01 of PCW, NEDA and DBM; and
c.
Monitoring closely the full implementation of the conduct of GAD
programs and activities to ensure compliance with its targeted accomplishment
for the year.
21.
Taxes withheld and statutory monthly contributions totaling P6.590 million
as of December 31, 2012 were not remitted by the NIA Regional Offices to the
concerned agency/corporations, contrary to laws and government rules and
regulations.
68
21.1 Section 2.8 of BIR Revenue Regulation (RR) No. 2-98 as amended by Section 5
of BIR RR No.10-2008 states that:
In general, the employer shall be responsible for the withholding and
remittance of the correct amount of tax required by deducting and
withholding from the compensation income of his employees. If the
employer fails to withhold and remit the correct amount of tax, such tax
shall be collected from the employer together with the penalties or
additions to the tax otherwise applicable.
21.2
Due to
BIR
P 529,576
880,066
Due to
GSIS
P 339
950,144
Due to
Pag-IBIG
P 18,342
-
Due to
PhilHealth
P 35,819
291,963
Total
P 584,076
2,122,173
69
Regional
office
Region XIII
Total
Due to
BIR
2,876,939
Due to
GSIS
680,769
Due to
Pag-IBIG
272,058
Due to
PhilHealth
53,811
3,883,577
4,286,581
1,631,252
290,400
381,593
6,589,826
Total
21.6 In NIA Region I, the amount remained dormant for several years and
according to the Accountant, said amount was accumulated from Field Offices and no
subsidiary ledgers were maintained for these accounts .
21.7 The issue on unremitted taxes and statutory contributions was raised in previous
years Consolidated Annual Audit Report on NIA Fund 501. Among the reasons cited by
some regional offices were that the balances pertain to prior years and were the subject
of an on-going reconciliation; and due to lack of personnel, more time was requested to
reconcile the withheld and remitted taxes and other contributions.
21.8 We reiterated our prior years recommendations that Management require
the Accounting Section to:
a.
Maintain subsidiary ledgers and reconcile the amount withheld
against the amount remitted every month; and
b.
Analyze the account to determine the cause of the outstanding
balances and remit immediately the contributions found to be unremitted
and make necessary adjustments, if warranted.
21.9
70
1.
We
reiterated
our
prior
years
recommendation that Management:
a. Conduct complete physical count of all Partially implemented
property and submit the Report of
Physical Count of Property, Plant, and
Equipment on semestral or annual basis
as required; reconcile the results of
physical count with property and
accounting records balances and adjust
any noted discrepancy; and duly support
any adjustments/corrections resulting
from their reconciliation with proper
documentation;
b. Maintain and update Subsidiary Partially implemented
Ledgers,
Property/Construction-inProgress ledger cards, stock cards and
other subsidiary records which should be
reconciled with the controlling accounts in
the General Ledger regularly;
c. Reclassify completed projects from Not implemented
71
recommended
that
Not implemented
Reiterated in Part II.A, Observation
and Recommendation No. 2 of the
current report.
72
73
Management
recommended
that
Partially implemented
Reiterated in Part II.A, Observation
and Recommendation No. 15 of the
current report.
Elimination of
namely: Due to
Central Office,
and Due from
consolidation of
reciprocal accounts,
Central Office, Due from
Due to Regional Offices
Regional Offices in the
balance sheet accounts
76
6.
8.
Copies
of
contracts/purchase
orders/contract of lease for equipment
were not submitted to the COA Auditor
within five working days from its
perfection, contrary to COA Circular No.
2009-001.
We recommended that Management:
a. Comply with the provisions of COA Partially implemented
Circular No. 2009-001 and to furnish the
Auditor with a copy of the Purchase
Orders (POs)/Job Orders (JOs)/Contracts/
Contracts of Lease of Equipment and
each of the related supporting documents
within five working days from its execution
for a timely review and evaluation thereof;
78
Financial
statements/reports,
trial
balances, disbursement vouchers (DVs),
Official Receipts (ORs), Journal Entry
Vouchers
(JEVs),
and
other
reports/schedules were not submitted
within the prescribed period, thus
preventing the COA Auditor to perform his
duties and responsibilities without any
delay.
We recommended that Management:
a. Require the Accounting/Bookkeeping Partially implemented
Section to comply strictly with Section 71,
Volume 1 of the NGAS Manual, COA
Circular No.2007-003 and COA Circular
No. 2009-006 to facilitate audit and early
submission of audit reports as required by
the Commission;
b. Require all accountable officers to Partially implemented
submit monthly reports on or before the
deadline set by the regional office to give
time for their consolidation; and
c. Review the distribution of workloads to Partially implemented
ensure timely submission of required
reports.
80