EXECUTIVE SUMMARY
A. INTRODUCTION
The Professional Regulation Commission (PRC) is the government agency
mandated by law to administer professional examinations to forty-six (46)
professional groups through its implementing arm, the different Professional
Regulatory Boards. Besides the conduct of examinations, PRC is also tasked with
licensing and regulation of professionals pursuant to Presidential Decree (P.D.) 223.
This was later repealed by Republic Act (RA) No. 8981 on December 5, 2000 when
the then President Joseph Estrada signed into law the PRC Modernization Act of
2000, RA 8981, that created a three-man Commission which shall be under the Office
of the President for general direction and coordination.
In CY 2006, Executive Order No. 565-A was issued by the President
redefining the administrative relationship between the Department of Labor and
Employment (DOLE) and the PRC and delegated the presidential power of control to
the Secretary of DOLE.
The PRC is mandated to promote the sustained development of a corps of
competent Filipino professionals, foster internationally recognized and world-class
professional service and practice, and pursue regulatory measures, program and
activities that enhance professional growth and development. The agency also
administers, implements, and enforces the regulatory policies of the national
government with respect to the regulation and licensing of the 46 professions under
its jurisdiction through the Professional Regulatory Boards
The Commission is composed of a three-man body headed by Chairman
Nicolas P. Lapena, Jr. and two Commissioners, Alfredo Y. Po, vice Nilo L. Rosas,
whose term ended in October, 2010 and Antonio S. Adriano, all appointed by the
President. The terms of office of Chairman Lapena and Commissioner Adriano
ended in December 2010. The new Commission Proper is now composed of
Chairperson Teresita R. Manzala, and Commissioners Jennifer Jardin-Manalili and
Alfredo Y. Po. The Commission is assisted by Associate Commissioner Aristogerson
Gesmundo. The PRC has a total personnel complement of 692 distributed to several
divisions, as shown in the following table:
Office
Commission Proper
Licensure Office
Regulation Office
Internal Affairs
Office
Office of Financial
& Adm. Services
Employees
Permanent Casual
39
35
50
1
2
97
1
i
Service
Contractor
5
4
11
1
Job
Order
29
16
32
2
Total
19
31
148
73
55
94
5
Office
Office for
Professional
Teachers
Marine Office
Ten Regional
Offices
Total
Employees
Permanent Casual
12
Service
Contractor
11
Job
Order
9
Total
6
24
35
91
55
230
81
245
692
14
115
364
2
32
The PRC has ten (10) regional offices located in Baguio, Tuguegarao, Lucena,
Legazpi, Iloilo, Tacloban, Cebu, Davao, Cagayan de Oro and Zamboanga. Satellite
offices were established in La Union, Butuan and Pagadian.
B. OPERATIONAL HIGHLIGHTS
For the year 2010, the Agency reported the following accomplishments of
their goals and programs, namely:
Programs/Activities
Target
A. EXAMINATION OF PROFESSIONALS
1. Number
of
applications
with
complete
documentary and qualification requirements
processed and issued in 15 minutes per application
2.
472,620
Accomplish
- ment
462,146
Percentage
(%)
97
Number of qualified examinees tested through
valid and leakage-free licensure examination
458,864
433,832
94
Number of examination results computed,
tabulated and released within an average of less
than four (4) days from the last day of examination
458,864
442,922
96
B. REGULATION OF PROFESSIONALS
1. Number of Administrative
investigations,
hearings, and decisions made to safeguard the
public against erring professionals.
2,652
2,323
87
Number of institutions, schools and industrial
establishments inspected and evaluated to meet
quality standards in the practice of the profession.
438
323
73
Number of Professional Identification Cards and
Certificates
or
Registration/License
of
professional processed and issued within an
average of three (3) days from receipt
543,124
675,220
124
Number of certificates of Competency and
Endorsement processed, evaluated and issued to
qualified and competent Marine Deck and Engine
Officers
49,971
62,103
124
3.
2.
3.
4.
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C. FINANCIAL HIGHLIGHTS
The PRC is authorized to collect fees for examination, registration,
certification and other miscellaneous fees from professionals. Such fees are deposited
to the account of the Bureau of Treasury and recorded as income in the National
Government books. The agency’s programs and projects are funded in the National
Government Budget as indicated in the General Appropriations Act (GAA).
For CY 2010, PRC had an approved budget of P403,909,000.00 per GAA of
2010. Total allotments received amounted to P474,384,192.00 and continuing
appropriations of P52,586,083.19 with obligations incurred of P526,753,452.29,
leaving an unexpended balance of P216,822.90.
The Commission’s assets, liabilities, government equity and sources and
application of funds for CY 2010 with comparative figures for CY 2009 are as
follows:
I. Comparative Financial Position
Particulars
Assets
Liabilities
Government Equity
2010
2009
P 490,236,847.42 P 430,544,275.12
30,358,547.84
17,750,510.85
459,878,299.58
412,793,764.27
Increase(Decrease)
P 59,692,572.30
12,608,036.99
47,084,535.31
II. Sources and Application of Funds
Particulars
2010
2009
Increase
(Decrease)
Subsidy Income from National Gov’t.
P 505,748,177.86
P490,557,206.33
P (15,190,971.53)
Expenses
Personal Services
MOOE
Financial Expenses
Total Expenses
Excess of Income over Expenses
193,885,005.39
206,119,186.17
454,004,191.56
P 51,743,986.30
154,780,456.95
267,698,689.51
507.50
422,479,653.96
P 68,077,552.37
39,104,548.44
(61,579,503.34)
(507.50)
31,524,537.60
P (16,333,566.07)
D. SCOPE OF AUDIT
The audit covered the accounts and operations of the PRC for calendar year
2010. Collections and disbursements for the year were audited using the appropriate
auditing techniques. The objectives of the audit were to ascertain the fairness of
presentation of the accounts in the financial statements, determine the validity and
propriety of the financial transactions and ascertain compliance with laws, rules and
regulations.
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E. INDEPENDENT AUDITOR’S REPORT
The Auditor rendered a qualified opinion on the fairness of presentation of the
financial statements and the results of operations of the Commission as of December
31, 2010 due to the deficiencies noted in audit which are stated in the Independent
Auditor’s Report and discussed in detail in Part II of this report.
F. SUMMARY OF SIGNIFICANT AUDIT OBSERVATIONS AND
RECOMMENDATIONS
Below are the significant observations and corresponding recommendations:
Favorable Observations:
1. The reported monthly collections at the PRC Regional Offices of Cagayan de
Oro, Davao and Iloilo were properly assessed, receipted, and deposited intact to
the authorized government depository banks (AGDBs). Such deposits were
confirmed by the Bureau of Treasury. It was also observed that the Monthly
Reports of Collections were prepared and submitted promptly and there were
neither shortages nor overages in the reported collections handled by the
Accountable Officers in the three regional offices. Regional Office V in Legazpi
exceeded its projected collections of P30,000,000.00 by 30 percent and also
increased actual collections in 2010 by .07 percent over the previous year.
2. As in previous years, the PRC Accounting Division was able to meet the deadline
of February 14, 2011 for the submission of the agency’s Annual Financial
Statements for the year ended, December 31, 2010.
Audit Observations and Recommendations:
3. The delayed deposits as well as under(over) deposits of collections of net amount
of P319,930.00 reflected breakdown in controls over collected funds and noncompliance with Sections 16, 21 and 22, Volume I of the Manual on the New
Government Accounting System (NGAS), thus exposing the collections to
possible loss or misuse. Likewise, the account Cash-Collecting Officers was not
updated regularly by the Accounting Division resulting in an
unadjusted/unreconciled difference of P1,712,767.21 as of December 31, 2010.
(paras. 3-14)
We recommended that Management:
a) require the Officer-in-Charge, Cash Division, to:

seek explanation from the Accountable Officer, who is under his
supervision, on the late and over/under deposits;
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
review the report before signing and forwarding to the Accounting
Division to monitor that all collections are deposited intact or on the
next banking day from collection date; and

establish control measures on the accountabilities of Collecting
Officers and ensure that no (over)/under deposits occur at any given
day/period of collection.
b) require the Officer-in-Charge, Accounting Division, to:

immediately inform the Accountable Officer of the undeposited
collections and cause the correct and updated deposit of such once
deficiencies are noted during the recording in the books of accounts;
and

update the recording of collections and deposits and adjust the
balances in the subsidiary records of the Accountable Officer/s.
c) consider the effects of the deficiencies in the enhancements of its
computerized operating systems.
4. Non-observance of PRC Central Office Cash and Accounting Divisions of the
validating controls on the issuance and use of accountable forms as prescribed in
Section 68 of NGAS Manual, Volume II, and PRC Office Order Nos. 2003-112
and 2008-276 dated August 4, 2003 and May 26, 2008, respectively, renders
doubtful the reliability of reporting and the correctness of balances per inventory
of accountable forms in the Regional Offices of Davao, Tuguegarao and
Baguio/La Union. (paras. 15-27)
We recommended that the:
a) Cash Division

establish the December 31, 2010 balances of all accountable forms on
hand in the regional offices and reconcile the same with all the
shipments/issuances from the Central Office;

trace the source(s) of accountable forms appearing in the regional
reports that are not among those issued/included in the shipments
from the Central Office; and

coordinate with the concerned officials in the regional office on the
submission of complete and correct monthly Reports of
Accountability for Accountable Forms (RAAF).
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b) Accounting Division

ensure that the submitted monthly Abstract of Collections and
Deposits are supported with complete and correct Reports of
Accountability for Accountable Forms (RAAF) as verified by the
Cash Division;

determine the correctness of the data in the reports prior to recording
of collections and deposits in the books of the PRC; and

call the attention of concerned offices/officials on the proper use of
accountable forms, e.g. sequential issuance or FIPO.
c) The PRC Management

create a committee to conduct an investigation on the lapses on reporting of
accountable forms’ receipt and issuance; and

strictly monitor compliance of PRC Office Order Nos. 2003-112, 2008-276
and NGAS Manual, Volume II, on the collections, deposits and Reports of
Accountability for Accountable Forms by the Regional Offices and by the
Cash and Accounting Divisions at the Central Office.
5. Inventories for Supplies/Materials and Accountable Forms with ending balances
per books of P32,112,276.14 iffer with the totals per count reflected in the
Inventory Reports amounting to P10,192,771.16 or a difference of
P21,919,504.98, thus overstating the book balances as of December 31, 2010.
(paras. 28-38)
We recommended that Management require:
a) the Accounting Division to:

pursue/continue the analysis of the Office Supplies and Accountable
Forms Inventory accounts to determine the cause/s of the
discrepancies between the accounting and property records;

cause the adjustment on the Inventory accounts upon determination
of the proper valuation to be taken up in the books of the PRC;

coordinate with the Property and Supply Division for any changes in
processes necessary to reconcile the records of the Accounting and
Property at any one time; and

henceforth, maintain the validity of the Inventory accounts in the
Financial Statements of the PRC.
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b) the Property and Supply Division to:

study/evaluate the inventory requirements of the PRC and eventually
procure within the established requirements to eliminate unnecessary
overstocking, if any;

reconcile its records with Accounting every end of the reporting
period; and

cause the disposal of expired inventories and adjust the Inventory
Report for such deductions.
6. Due to Other NGAs account with an ending balance of P2,751,468.97 as of
December 31, 2010 was not adjusted to reflect the actual fund balances for the
CHED-ESTF and Board of Agriculture projects at PRC after reversion of the
balance amounting to P476,994.13, thus overstating the account balance. (paras.
39-46)
We recommended that Management require the OIC, Accounting Division
to:

determine the details of the remaining amount subject to adjustment in
the account Due to Other NGAs;

adjust the books as of December 31, 2010 for the identified errors in
recording; and

include disclosure on the account Due to Other NGAs as of December 31,
2010 if adjustments are to be taken up in the books in the ensuing year.
7. Disbursement Vouchers (DVs) for 93 transactions covering various payments
worth P5,662,481.63 were not approved prior to check preparation and the same
were recorded as expenses in the Journal Entry Vouchers (JEVs) and the books of
accounts even in the absence of such approval by authorized signatories of the
Commission.(paras. 47-57)
We recommended that Management:

require explanation from the OIC, Accounting Division on the
unapproved DVs;

require the OIC Accounting Division to ensure that all DVs are
forwarded to authorized signatories for approval after accomplishing Box
A;
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
require the Disbursing Officer to prepare checks only for duly approved
DVs;

instruct the authorized signatories to sign checks only on duly approved
DVs;

require the OIC, Accounting Division, to ensure compliance with the
approval of transactions prior to the preparation and approval of
Journal Entry Vouchers (JEVs) of paid transactions; and

ensure compliance of its directive/s on authorized signatories for
disbursement vouchers.
The deficiencies observed in the course of the audit were earlier
communicated through Audit Observation Memorandum (AOM) and discussed in the
exit conference conducted on June 8, 2011 with concerned officials and employees.
Their comments were incorporated in this report, where appropriate. We are pleased
to note their positive responses to the observations and their commitments to
immediately implement the audit recommendations.
G. IMPLEMENTATION OF PRIOR YEAR’S AUDIT RECOMMENDATIONS
The status of implementation of prior year’s audit recommendations embodied
in previous years’ Annual Audit Reports is shown below:
Status of
Implementation
Fully Implemented
Partially Implemented
Not Implemented
Total
No. of Recommendations
2009
4
3
2
9
Prior to 2009
6
6
3
15
Percen
tage
Total
10
9
5
24
41%
38%
21%
100%
The details of the Status of Implementation of Prior Years’ Audit
Recommendations are presented in Part III of this report. Recommendations on the
following audit findings/observations were either partially implemented/not
implemented as of December 31, 2010:
A. Partially Implemented:
Audit Observations
1) Failure of the contractors to complete the four IT contracts/projects totaling
P52,492 million.
2) Difference of P14,618,491.66, between the year end balance of the Account
Due from NGAs-Procurement Services (PS) and the confirmed balance from
Procurement Service-DBM and non/delayed delivery by PS on agency
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3)
4)
5)
6)
7)
8)
9)
procurement, amounting to P6,520,223.01
Four completed and accepted IT projects costing P32,250,281.62 under
Construction in Progress-Agency Asset account were not adjusted to the
proper account
Tangible items with serviceable life of more than one year in the PRC-Main
and RO-Zamboanga City totaling to P4,264,330.87 and P70,643.50,
respectively were not reclassified to the Other Supplies Inventory account.
Segregation of duties and functions was not practiced in eight (8) out of (10)
ROs due to failure of top management officials to formulate stricter controls
particularly on financial operations.
The annual health care insurance of PRC officials/employees secured from
private agency and paid out from the general services allocation in the amount
of P2,090,062.00 lacks legal basis.
Failure to reclassify to the appropriate accounts the erroneous debits to the
Due from National Treasury account in 2005 totaling P1,036,650.00.
IT software and equipment delivered and paid during the year totaling
P40,199,249.16 were erroneously recorded under the Due from NGAs
account instead of the appropriate equipment account.
Of the total unserviceable assets of P24,3556,374.99. only P880,500.00 were
reclassified to Other Assets account.
B. Not Implemented
Audit Observations
1) Unbooked depreciation expense of the Building and Other Machineries and
Equipment valued at P103,510,851.84 and P3,052,782.41, respectively
2) Late approval of 2009 GAD Plan caused the failure of management to
implement the program
3) Nine personnel with Contractual status-“Service Contract” assigned as
collecting officers in the various collecting offices of the Commission
4) Dormant accounts in the total amount of P1,057,824.93 remained non-moving
for more than five years.
5) GAD budget used for regular agency expenditures due to failure to formulate
Gender and Development (GAD) Plan for the current (2008) and previous
years.
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