ANNEX A
DOLE – REGION IV-A
Updates/Status of Actions Taken/Management Comments/Compliance/Implementation
On the 2015COA Annual Audit Report and Prior Years Audit Findings and Recommendations
As of June30, 2016
COA Audit Findings / COA Audit Recommendations / Actions Taken/Management Comments/Compliance/Implementation / Timeline / Supporting Documents
Attached / Internal Audit Service (IAS) Validation
Prior Year/s
1. The Administrative Officer V/Cashier withheld cash collections totalling P112,655.00 for the month of January 2014 thereby violating the provisions of COA-MOF Joint Circular No. 1-81 and COA Circular No. 97-002 as regards the intact and daily or not later than the next banking day deposit of collections that could result in mishandling or misuse of government funds. / (1)Relieve the Administrative Officer V/Cashier and transfer her to a position not involving money or property.
(2)Create a fact-finding committee to investigate the reason for the withheld cash collections.
(3)Instruct the Cashier to maximize the amount of collections to be deposited and ensure that all collections are deposited, if possible, before the weekend or a long holiday. /
- A fact finding committee headed by the Assistant Regional Director, this office, was created to review and validate the findings and submit the results/report as soon as the proceedings are complete.
- A memorandum dated 11 November 2014 was issued to the Cashier instructing her to submit an explanation/report regarding the said audit observation memorandum (AOM) and strictly comply with the provisions of COA-MOF Joint Circular No. 1-81 and COA Circular No. 97-002.
- Series of meetings were conducted by the fact finding committee covering the CY 2015 to 2016 to discussed the issues and concerns contained in the audit findings and recommendations, review and re-validate the records/reports issued by the COA Resident Auditor. The results/minutes of the said meetings were already submitted to COA as of April 2016.
- To strengthen internal control with the recommendations made as corrective and preventive measures to address the issues, the Committee will make an alternative measures as basis for the monitoring and evaluation of internal auditing procedures, techniques and accounting controls and to review and appraise controls of systems and procedures and the financial and management records. The detailed guidelines and procedures of this measures will be forwarded to the Committee Chair for further comments before the final report will be issued and submitted to the Regional Director for approval and implementation.
Minutes of Meetings
2. The balances of the current accounts being maintained by DOLE Region IV-A at LBP Parian, Calamba City were overstated by P1,222,257.02 due to the Accountants erroneous treatment of the reconciling items in the Bank Reconciliation Statements contrary to the provisions of GAFMIS Circular Letter No. 2002-001 and the generally accepted accounting principles. / Direct the Accountant III to:
(1)Strictly comply with the provisions of GAFMIS Circular Letter No. 2002-001 and the proper treatment of reconciling items.
(2)Trace the unreconciled differences totaling P(2,921,278.96).
(3)Satisfactorily explain, supported by valid/relevant documents, for the following:
- Unclaimed, cancelled and stale checks being deducted from the balance per bank instead of being added to the balance per books;
- Some stale checks being treated as outstanding checks;
- Two LBP current accounts (i.e., LBP Calamba CA 0542-1053-21 and LBP Parian CA 0542-1056-66) with balances per audit totaling P665,694.18 cannot be traced in the Statement of Financial Position.
- In compliance to GAFMIS Circular Letter No. 2002-001, the management directed the Cashier to prepare the Monthly Check Disbursement Record and Schedule of Unreleased Checks and ensure its timely submission to the Accounting Unit. Consequently, the Accountant is recording the total amount of unreleased checks to the working paper based on the submitted schedule.
- At the end of 2014, entries were prepared per JEV# 2014-12-137 for regular MDS account and JEV# 2014-12-138 for trust accounts (Writ/SPES) to record the recognition of cash equivalent to the unreleased checks and recognition of the appropriate liability account. In January 2015, JEV# 2015-01-002 for regular MDS account and JEV# 2015-01-003 for trust accounts were prepared to reverse the entries made for CY 2014.
- The Accountant noted the unreconciled differences and the proper treatment of the reconciling items, thus, submitted a revised Bank Reconciliation Statement to the Office of the Resident Auditor for review.
- Cancelled/stale checks of the regular MDS account were being deducted from the balance per bank as these checks were previously adjusted to the book balance. The adjustments to the book is in compliance to DBM Circular Letter No. 2013-12 dated November 21, 2013 wherein all notice of cash allocation (NCA) for regular MDS sub-accounts for any month, whether part of the comprehensive releases or constituting additional NCA releases, shall be valid until the last working day of the third month of that quarter. Since the cash allocation for these cancelled/stale checks already lapsed, journal entry adjustments as reflected to the Bank Reconciliation Statements were made.
- For trust accounts, stale checks being treated as outstanding checks were adjusted on the Bank Reconciliation Statement last March 31, 2015.
- The two CA#’s, 0542-1053-21 and 0542-1056-66, are accounts maintained at the LBP for Social Amelioration Program funds intended for the payment of administrative expenses and unclaimed cash bonus. These funds were incorporated in the Statement of Financial Position of the Bureau of Workers with Special Concern (BWSC). As of January 2016, the said SAP funds were already booked up and included in the book of accounts in the financial statement of the Region.
3. The CY 2014 GIP/TUPAD allocation of P80,500,000.00 net of the P805,000.00 or 1% administrative cost, could not be matched with the GIP and TUPAD disbursements of P34,663,325.34 and P43,541,307.16, respectively, due to lack of breakdown of allocation for GIP and TUPAD. Further, the government’s goal of inclusive growth through massive job generation and poverty reduction could have been achieved if an even higher percentage of the CY 2014 lump sum allocation for GIP/TUPAD was disbursed for TUPAD rather than for GIP. / Make proper representation, through channels, with the DOLE Secretary as regards the specific allocations for GIP and TUPAD with recommendation for a higher allocation for TUPAD. /
- With regards to GIP and TUPAD, the utilization of each project is based on the commitment/preference and approved project proposal of the requesting partners/stakeholders from the proponents Local Government Units/National Government Agencies (LGUs/NGAs).
- Likewise, the total allotted fund for the said projects transferred by DOLE-Central Office was through Advice of Disbursement Limit (ADL) and there was no request coming from our office as to segregation of fund.
- The office cannot recommend for higher allocation for any of the two projects. As far as job generation is concerned, TUPAD can generate more jobs since it is a short term project (15-30days). However, for poverty reduction, GIP is more advantageous since this lasts for 3-6 months.
COA Audit Findings / COA Audit Recommendations / Actions Taken/Management Comments/Compliance/
Implementation / Timeline / Supporting Documents
Attached / Internal Audit Service (IAS) Validation
Current Year
1. None of the cash advances granted way back in 2001 up to 2014 totaling P40,466,171.67 was liquidated, while only P764,616.00 or 24% of the current year’s cash advances of P3,155,149.75 was liquidated contrary to Section 5.4 of COA Circular No. 2007-001. Further, the said current year’s cash advances were to eight NGOs/POs for the implementation of livelihood projects despite the lack of some documentary requirements and certain deficiencies in the Memorandum of Agreement contrary to Section 2 of COA Circular No. 2012-001 and Sections 4(6), 85 to 87 of P. D. No. 1445, thus, rendering the propriety and regularity of the transactions doubtful.
2. The “Subsidy from National Government” per books amounting to P256,687,710.24 as of December 31, 2015 was understated by P1,434,025.97 due to the non-recognition of the Tax Remittance Advice for the month of December 2015, among others, contrary to the qualitative characteristics of financial information as regards verifiability and faithful representation. On the other hand, the “Cash – Modified Disbursement System, Regular” was understated by P225,113.34 due to the under-recognition by P125,243.67 of the lapsed NCAs/NTAs for the third quarter, the over-recognition by P53,664.46 of the lapsed NCAs/NTAs for the first and fourth quarters, the under-recognition by P50,000.00 of the NCAs/NTAs received for CY 2015 and the adjustments made by DOLE IV-A regarding the cancellation of ten checks totalling P246,692.57 and the alleged P0.02 understatement of Check No. 511256. / That the Regional Director:
(1)Explore the legal remedies against the NGOs/POs with the outstanding cash advances prior to January 1, 2015.
(2)Ensure the immediate liquidation of the cash advances granted in CY 2015 and onwards through regular monitoring and the prompt issuance of Demand Letters.
(3)Justify why a MOA was entered into by DOLE IV-A with Now Moving for Better Philippines Multi-Purpose Cooperative despite the lack of appropriation in CY 2014 .
(4)Direct the following personnel:
- The Heads of the Provincial Offices
To conduct frequent monitoring of the implementation of the projects by the NGOs/POs so that the problems, if any, may be addressed as early as possible
- The Chief, Technical Support and Services Division (TSSD)
To blacklist the NGOs/POs with prior years’ unliquidated cash advances
- The Chief, Accounting Unit
To ensure that the basic requirements prescribed under existing laws, rules and regulations are complied with before processing claims for payments.
That the Regional Director direct the Accountant III to:
(1)Justify why:
- The TRA amounting to P1,014,233.28 for the month of December 2015 was not recognized in the books of accounts;
- The cancellation of ten checks totalling P246,692.57 was debited to “Subsidy from National Government” instead of “Cash – MDS, Regular”;
- The balance of P675,707.03 re: taxes withheld for the month of March 2015 was filed/remitted on May 4-7, 2015 along with the taxes withheld for the month of April 2015 amounting to P705,117.12 or for a total amount of P1,380,824.15 that lead to the non-computation of the additional penalties of P216,091.60 for the late filing/remittance of the balance of taxes withheld for the month of March 2015;
- The deposits totalling P194,679.35 to the Bureau of the Treasury was recognized as debits to “Subsidy from National Government” instead of “Cash- Treasury/Agency Deposit, Regular”;
- The lapsed NCAs/NTAs for the 3rd quarter amounting to P125,620.14 was recognized as P376.47 or for an understatement of P125,243.67;
- The lapsed NCAs/NTAs for the 1st and 4th quarters totalling P4,442,723.89 were recognized in the total amount of P4,496,388.35 or for an overstatement of P53,664.46;
- The NCAs/NTAs received for CY 2015 totaling P254,770,938.89 was recognized as P254,720,938.89 or for an understatement of P50,000.00; and
- The alleged P0.02 understatement of the Check No. 511256 was debited to “Due to BIR” and credited to “Subsidy from National Government” instead of debiting the same to “Due from Officers and Employees” (since the correct amount of the check should have been P116,741.96 and not P116,741.98) and crediting “Cash-MDS, Regular”.
Laguna Provincial Office
- For this CY 2016, eleven (11) and one (1) livelihood projects on prior years and current year outstanding balances submitted their liquidation reports with a total amount of P4,078,274.07 and P4,920.00 respectively.
- For the period May to June 2016, thirteen (13) proponents/grants amounting to P5,259,844.20 had conducted project monitoring and for this 3rd quarter of 2016, there are eighteen (18) grants for prior years releases amounting to P3,004,923.00 will be scheduled for monitoring.
- As of March 2016, eighty six (86) demand letters had already been made and issued to various proponents.
- One (1) proponent under the name “ EAST & WEST CENTER FOR EXCELLENCE IN TRAINING CORP.” with a total grant amounting to P468,710.00 dated October 23, 2014 has submitted their liquidation last February 2016 and returned the balance of P389,313.01 per OR # 9771804 dated February 11, 2016.
- Another one (1) proponent under the name “CADIWA” with the amount of grant of P300,000.00, issued demand letters for three consecutive times however, ACP did not comply. Thus, we scheduled them for a case conference through a formal communication but it did not prosper. The ACP did not receive the letter since they are no longer occupying the business address indicated.
- Status of unliquidated grants for Due from NGAs/LGUs and NGOs/POs as of June 30, 2016 are stated in the attached reports.
- For item number 11.5 on the detailed observations and recommendations, pertaining to discrepancies of certain relevant data as reflected in the related documents re: New Gumaca Woodcraft Multi-Purpose Cooperative (Annex D), attached are justifications/clarifications to address the observations.
- As of 29 June 2016, three (3) Local Government Units (LGUs) namely, Municipal Gov’t. of Gen. Trias, City Gov’t. of Tagaytay and City Gov’t. of Imus that were granted the amount of P1,962,221.50, P1,007,580.00 and P994,200.00 respectively were monitored. Of which, two (2) submitted their liquidation requirements last 28 March 2016 and one (1) with incomplete documentary requirements waiting for the additional requirements to be submitted (refund of unutilized fund/liquidation report).
- For the period March to June 2016, there are four (4) proponents under BUB and DILP Projects granting the total amount of Nine Million One Hundred Twenty Five Thousand Nine Hundred Ninety Two Pesos & 10/100 (P9,125,992.10) were liquidated. (status of liquidation attached).
This Office is continuously working on for the liquidation of livelihood projects. Additional updates on this effort shall be submitted soonest upon receiving the reports from our Provincial Offices.
- As per instruction of DOLE-Central Office, TRA shall be recognized in the books only upon remittance, that is, on the following month. Therefore, the December 2015 TRA was accounted as “Due to BIR” since it was remitted in the 1st week of January 2016. Recognition of TRA was booked up per JEV# 2016-01-001-03.
- Debiting cash will only be possible if those checks were disbursed under “Cash in Bank-LCCA” and only if the cancellation was made within the same quarter of the year it was issued. Under DBM Circular No. 2013-12 4.0, “Starting January 1, 2014, all NCA crediting to Regular MDS Sub-Accounts for any month, whether part of the comprehensive releases or constituting additional NCA releases, “shall be valid until the last working day of the 3rd month of that quarter”. Cancellation of those checks was debited to “Subsidy from National Government” because its cash allocation was already part of the lapsed NCA and automatically reverted to the National Treasury.
- The deadline of monthly tax remittance was unwillingly and unmindfully forgotten in March 2015. The online remittance was newly handled by the Accountant II and there was no seminar attended yet. When realized that it was past due, the Accountant II immediately proceeded to the Bureau of Internal Revenue to inquire/seek for an advice for the best thing to do. The remittance of a little amount just to minimize the penalty in April and the full remaining amount in May was actually discussed with the BIR personnel without neither objection nor a warn of violation to the National Revenue Code was heard.
- Cash – Treasury / Agency Deposit, Regular is used if the deposit is an Income Account. The amount of P194,679.35 corresponds to the total refund from cash advances, payments from personal call and fines, therefore, cannot be accounted as an Income.
- The said understatement does not account for the reverted cash from MDS Trust Account amounting to P0.33 and P125,244.00 payment for Philstar Daily which was disbursed in September 22, 2015 with Check # 511510. The latter, was cancelled upon finding out in November 2015 that no Advice of Checks was issued. This therefore cannot be accounted as reversion in the third quarter since it was recorded only in November per JEV # 2015-11-138-25.
- The difference of P50,000.00 comprised of two NCA requests for payment of Cash Bond amounting to P25,000.00 each. This was not recognized as NCA/NTA received because it is not a Subsidy from National Government but a Trust Receipt.
- Necessary adjustment will made this CY 2016 for 0.02 understatement of check# 511256.
- Recommended adjusting entry will be used.
Monthly Progress Report for the period May to June 2016
Schedule of Monitoring for the 3rd qtr of 2016
List of LGUs/NGOs POs with issued demand letters
Report from TSSDwith Matrix
Status of unliquidated grants as of June 30, 2016
Memorandum RE: Noted observations in the approved project proposal of New Gumaca Woodcraft Multi-Purpose Coop.
Status of unliquidated funds for LGUs as of June 29, 2016
Status of liquidation of grants for the period March to June 2016
Memorandum No. TSSD E/W-DILP-2016-010
3. The DOLE IV-A remitted on April 17,2015 the amount of P1,127.52 for the alleged taxes withheld for the month of March 2015 instead of P676,834.55 which is penalized under Sections 254 and 255 of the NIRC of 1997. Further, the full remittance of the taxes withheld for the month of March 2015 was made along with the remittance for April 2015. Thus, no computation was made for the additional penalties of P216,091.60 / That the Regional Director, the Accountant III and the Accountant II justify why they should not be held jointly liable for the payment of the remaining penalties of P216,091.60 for the delayed remittance of the full amount of the taxes withheld for the month of March 2015 and also why they should not be charged with the criminal penalties imposed under Sections 254 and 255 of the NIRC of 1997. / No one of us intended to evade the tax in March 2015. Upon realizing the past due remittance for the month, the Accountant II immediately proceeded to the Bureau of Internal Revenue to inquire/seek for an advice for the best thing to do. This, in fact, is an apparent will to abide the law. Also, the action made, that is, the remittance of a little amount just to minimize the penalty in April and the full remaining amount in May was actually discussed with the BIR personnel without neither objection nor a warn of violation to the National Revenue Code was heard. Since full amount was immediately remitted and no single centavo was neither distorted nor lost from the government, and in fact that a fine was already paid from own pockets, an appeal of not imposing another fine is prayed for.
4. DOLE IV-A did not comply with the provisions of COA Circular No. 89-300 in the payment of Extraordinary and Miscellaneous Expenses totaling P117,600.00 to its Regional Director for the period January to December 2015 by basing it on mere certifications. / That the Regional Director submit a detailed list of the expenses incurred, supported by the corresponding receipts and/or other documents evidencing disbursement, that were charged to EME for the period January to December 2015 or a certification specifically stating the purposes of the expenses incurred and the reasons why no receipts can be produced. / All expenses incurred were related in the performance of actual duties as Regional Director such as, but not limited to attending:
- After office meetings to deal with erring labor unions for possible solutions to their demands.
- Meetings with Local Chief Executives (LCEs), Congressional Representatives and other government officials
- Extended meetings with stakeholders and partners in implementation of the Department’s programs
- Occasional meetings with community groups/civil society organizations
- Side meetings and follow-up meetings to advance our agenda in solving disputes/concerns
raised by interested groups
- Expenses incurred as regards to any travel to different provinces
5. Despite the issuance of AOM No. DOLE4A 15-02-101(11-15), the DOLE IV-A’s balance of “Due from NGAs – PS-DBM” as of December 31, 2015 amounting to P42,046.82 was still overstated by P33,572.71 or 396% of the account’s audited balance of P8,474.11 because the Accountant III was not able to recognized the necessary adjustments to the account as of June 30, 2015. / That the Regional Director direct the Accountant III to:
(1)Validate the observations/deficiencies noted and make the necessary adjustments.
(2)Ensure the timely recognition of transactions in the books of accounts based on supporting documents.
(3)Adopt the “Asset Method” in the recognition of supplies delivered and use it consistently.
(4)Hasten the adjustment of the subject account since the related AOMs were duly supported by the necessary documents form DOLE IV-A and PS-DBM. / The Accountant already validated the deficiencies noted by the Auditor andnecessary adjustment will be made this CY 2016 upon completion of supporting documents.
To date, the office is using the Asset Method in recognition of supplies delivered.
Prepared/Submitted by:Certified by: