Republic of the Philippines
COMMISSION ON AUDIT
Commonwealth Avenue, Quezon City
ANNUAL AUDIT REPORT
on the
NATIONAL IRRIGATION ADMINISTRATION
(Corporate Fund – F501)
For the Year Ended December 31, 2012
NATIONAL IRRIGATION ADMINISTRATION
CORPORATE FUND (F501)
ANNUAL AUDIT REPORT FOR CY 2012
EXECUTIVE SUMMARY
INTRODUCTION
The National Irrigation Administration (NIA) was created as a government corporation
under Republic Act (RA) No. 3601 on June 22, 1963 with an authorized capital of P300
million. In 1974, under Presidential Decree (PD) No. 552, the authorized capital was
increased to P2 billion, and later, under PD No. 1702 dated July 18, 1980, it was further
increased to P10 billion. On September 16, 1991, the NIA was transferred to the Office
of the President under Executive Order No. 22. Subsequently, under Administrative
Order No. 17 dated October 14, 1992, it was attached to the Department of Agriculture.
The NIA’s principal function is to develop, maintain and operate irrigation systems. It
assumed the irrigation activities of other government agencies including those of the
Irrigation Service Unit, Presidential Assistance on Community Development. With the
passage of RA No. 6978, otherwise known as “An Act to Promote Rural Development by
Providing for an Accelerated Program within a Ten-Year Period for the Construction of
Irrigation Projects,” its activities was significantly increased to cover the remaining 1.5
million hectares of un-irrigated but irrigable lands nationwide.
It has the following powers and functions pursuant to the provisions of RA No. 3601 and
PD Nos. 552 and 1702:
a.
To investigate, study and develop all available water resource in the country,
primarily for irrigation purposes; to plan, design, construct and/or improve all types of
irrigation projects and appurtenant structures; to operate, maintain and administer all
national irrigation systems; to supervise the operation, maintenance and repair, or;
b.
Otherwise, administer temporarily all communal and pump irrigation systems
constructed, improved and/or repaired wholly or partially with government funds; to
delegate the partial or full management of national irrigation systems to duly organized
cooperatives or associations; and
c.
To charge and collect from the beneficiaries of all irrigation systems constructed
by or under the administration such fees or administrative charges as may be necessary
to cover the cost of operation, maintenance and insurances; and to cover the cost of
construction within a reasonable period of time to the extent consistent with government
policy; to cover funds or portions thereof expended for the construction of communal
irrigation systems, which shall accrue to a special fund for irrigation development.
i
NIA is headed by an Administrator who is assisted by a Senior Deputy Administrator and
supported by Deputy Administrator for Administrative and Finance and Deputy
Administrator for Engineering and Operations. Besides the Central Office, it has 17
Regional Irrigation Offices (RIOs), including the Upper Pampanga River Integrated
Irrigation System (UPRIIS) and the Magat River Integrated Irrigation System (MRIIS), 44
Irrigation Management Offices (IMOs), 16 Project Management Offices (PMOs) and 217
National Irrigation Systems (NIS). A total of 122 irrigation projects are presently
undertaken by the Agency. Of these projects, 15 are foreign-assisted, 105 are locallyfunded (including 15 carry over projects), and two are inter-agency.
As of December 31, 2012, NIA had a personnel complement of 5,280, composed of
3,737 monthly paid and 1,543 daily paid personnel.
The Agency maintains the Corporate Fund (F501) to finance its operations. This consists
mainly of collections of irrigation fees, equipment rentals, pump amortizations, interest
and miscellaneous income such as subsidy income from the national government management fee, income derived from sale of electrical energy, service fee for the
operation and maintenance of non-power components of Hydroelectric Power Plants,
Communal Irrigation Project amortization on principal and equity contribution and
proceeds from sale of property, plant and equipment.
FINANCIAL PROFILE
The NIA Corporate Fund’s financial condition and results of operations are presented
below:
I.
Comparative Financial Condition (in Million pesos)
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
II. Comparative Results of Operation (in Million pesos)
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 auditor’s judgment, including the assessment of
ii
the risks of material misstatement of the financial statements, whether due to fraud or
error.
AUDITOR’S 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
Memorandum Receipts (MRs) of the firearms issued to concerned officers. Failure to
do so should be a valid ground for the filing of the appropriate disciplinary/administrative
action against concerned accountable personnel;
5.
Strictly require the Inventory committee to give priority to the conduct and
completion of the physical count of all PPE items;
6.
Stop the distribution of land in Region III to NIA personnel and elevate the matter
to higher authorities to determine the legality of the program;
7.
Ensure strict adherence to the applicable laws, rules and regulations on PPE to
prevent the incurrence of the deficiencies noted.
8.
Require the Accounting Section to: (i) maintain subsidiary ledgers for receivable
accounts and regularly reconcile the balances with the general ledger balances; (ii)
update recording/posting of transactions at all times; (iii) exert all efforts to reconcile
accounts receivable recorded in the books of the regional office as against the books of
the field offices; and (iv) maintain subsidiary ledgers for accounts receivable per
irrigation association;
9.
Institute appropriate action for dormant accounts and effect adjustments in the
books; request for write-off of outstanding/dormant/uncollectible accounts from COA in
accordance with COA Circular No. 97-001 dated February 5, 1997;
10.
Require the billing personnel and Accounting Section to reconcile regularly
records on receivables;
11.
Require the Regional Accounting Office and the Accounting Processor of the
Provincial Irrigation Management Offices to exhaust all means to reconcile their records
every end of each month to ensure the accuracy of the amounts of accounts receivable
in the books of accounts;
12.
Require the Finance Division to: (i) conduct periodic reconciliation of records for
cash accounts i.e., general ledger and subsidiary records and (ii) properly maintain
subsidiary ledgers and other control records;
13.
Require the Accounting Division to: (i) determine the nature of disparities noted
among the reciprocal cash records and reports and adjust records accordingly; (ii)
perform periodic reconciliation of the GLs, SLs, BRS and cashbooks; (iii) regularly
prepare BRS; (iv) determine the nature and the propriety of the unidentified reconciling
items; and (v) take up in the books the reconciling items with valid documents; and
14.
Cause the immediate submission of the supporting documents of the Retained
Earnings account with complete information as to the nature of adjustments made.
The other significant audit observations and recommendations are as follows:
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
iv
billion between BTr’s records and NIA’s records and understatement of liabilities and
operating expenses.
15.1
We reiterated our previous years’ recommendations that Management:
a.
Exert all efforts to secure copies of JEVs from the BTr pertaining to
advances made for the account of NIA to ensure proper recording in the books;
b.
Record all transactions pertaining to advances made by the BTr since
these are valid obligations; and
c.
Prioritize the immediate reconciliation of
the difference/variance
existing between records of the BTr and NIA to avoid reiteration of the same
observation in the ensuing year.
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
We recommended that Management:
a.
Include in the Inventory Report of Land the details such as, area, location,
acquisition cost, date of acquisition and encumbrance and reconcile the inventory
report with the accounting record;
b.
Maintain property ledger card for the Land account to support the balance
per books of P3.469 billion;
c.
Conduct a thorough investigation to locate the whereabouts of the TCTs
and the Deeds of Sale. Determine the officer/s responsible for their safekeeping
and ensure that these documents are always intact and available for inspection
by the COA; and
d.
Strengthen the existing controls on the custodianship of important
documents to pinpoint responsibility at any given time by assigning a permanent
employee to handle the job.
SUMMARY OF TOTAL AUDIT SUSPENSIONS, DISALLOWANCES AND CHARGES
AS OF YEAR-END
As of December 31, 2012, audit suspensions amounted to P1,423.800 million, audit
disallowances amounted to P110.334 million and charges amounted to P0.218 million
for all funds of NIA.
v
STATUS OF IMPLEMENTATION OF PRIOR YEAR’S AUDIT RECOMMENDATIONS
Of the 43 audit recommendations embodied in the previous year’s Annual Audit Report,
two were fully implemented, 31 were partially implemented and 10 were not
implemented. Details are presented in Part II.B of the Report.
vi
TABLE OF CONTENTS
Page
PART I
PART II
-
-
AUDITED FINANCIAL STATEMENTS
Independent Auditor’s Report
1
Balance Sheet
3
Income Statement
4
Statement of Changes in Equity
5
Statement of Cash Flows
6
Notes to Financial Statements
7
A.
OBSERVATIONS AND RECOMMENDATIONS
21
B.
STATUS OF IMPLEMENTATION OF PRIOR
YEAR’S AUDIT RECOMMENDATIONS
70
PART I – AUDITED FINANCIAL STATEMENTS
PART II – A. OBSERVATIONS AND
RECOMMENDATIONS
B. STATUS OF IMPLEMENTATION
OF PRIOR YEARS’ AUDIT
RECOMMENDATIONS
NATIONAL IRRIGATION ADMINISTRATION
CORPORATE FUND (F501)
BALANCE SHEET
December 31, 2012
(In Philippine Peso)
Note
ASSETS
Current Assets
Cash
Receivables - Net
Inventories - Net
Prepayments
Other Current Assets
Total Current Assets
Non-current Assets
Investments
Property, Plant and Equipment - Net
Other Assets
Total Non-current Assets
TOTAL ASSETS
LIABILITIES AND EQUITY
Current Liabilities
Payables
Inter/Intra-agency Payables
Other Liabilities
Total Current Liabilities
Non-current Liabilities
Long-term Liabilities
Deferred Credits
Total Non-current Liabilities
Total Liabilities
Equity
TOTAL LIABILITIES AND EQUITY
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
The Notes on pages 7 to 20 form part of these financial statements.
NATIONAL IRRIGATION ADMINISTRATION
CORPORATE FUND (F501)
STATEMENT OF INCOME AND EXPENSES
For the Year Ended December 31, 2012
(In Philippine Peso)
Note
INCOME
Operating Income
Irrigation Service Fees (ISF)
10% Discount on ISF
Loss on Sale of Palay
Net Irrigation Service Fees
Rent Income
Fines and Penalties-Service Income
Non-Operating Income
Management Fees
CIP/CIS/RIS Amortization and Equity
Pump Amortization and Equity
Service Fees - Water
Other Fines and Penalties
Miscellaneous Income
EXPENSES
Personal Services
Maintenance and Other Operating Expenses
Financial Expenses
5
20
21
21
LOSS FROM OPERATION
OTHER INCOME (EXPENSE)
Interest Income
Loss on FOREX
Gain on Sale of Assets
LOSS BEFORE SUBSIDY
Subsidy Income from National Government Management Fee
5% Management Fee
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
The Notes on pages 7 to 20 form part of these financial statements.
293,999,308
NATIONAL IRRIGATION ADMINISTRATION
CORPORATE FUND (F501)
STATEMENT OF CHANGES IN EQUITY
For the Year Ended December 31, 2012
(In Philippine Peso)
Note
Balance, January 1, 2011
Capital Stock
Government
Equity
(Note 18)
5,559,191,864
18,364,174,339
Loss
143,364,587
Correction of Prior Period Errors
Adjustments - Field Offices
Set up of CNA for 2010
Dividends to DOF
Income and Expense Summary
Property, Plant and Equipment Public Infrastructures
Transfer of PIDP 501 to Fund 102
Payment of Corporate Advances by
Fund 102 to Fund 501 (MMIP)
Reversal of Unreconciled Reciprocal
Accounts (BBMP)
Transfer of various PPE to Other
Projects (BBMP)
Balance, December 31, 2012
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
Balance, December 31, 2011
Net Income After Subsidy for the
Implementation of Various
Projects
Correction of Prior Period Errors
Transfer of Account from F501
PIDP to F102 PIDP
Set up of CNA for 2011
Payment to the BTr of CNA
charged to Project Funds
instead of COB funds
Set up of ENERCON for CYs
2009, 2010 and 2011
Set up of Rice and Transportation
Subsidy for MARIIS for CYs
2009 and 2010
Income and Expense Summary
Adjustment CAR - NDC
Adjustment of Account 421 MARIIS - NDC
Adjustment Public Infra Region I - NDC
Balance of Account 255-2012
Region 3 closed to Gov't Equity
Completed and turned-over projects
Regions 4A and 7 - NDC
Public Infra Account - CAR - NDC
closed to Government Equity
Public Infra Account - CAR - Regular
closed to Government Equity
Retained
Operating
Surplus
18,026,845,232
(10,030,131,383)
The Notes on pages 7 to 20 form part of these financial statements.
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
NATIONAL IRRIGATION ADMINISTRATION
CORPORATE FUND (F501)
STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2012
(In Philippine Peso)
Note
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Irrigation Users and Other Customers
Receipt of Subsidy from the National Government
Fund Transfer from Other Funds
Receipt of Subsidy from Local Government Units (LGUs)
Other Payables
Trust Deposits
Refund of Cash Advances and Disallowance
Collection of Other Receivables
Interest on Deposits
Prior Period Errors
Cash Received from Other Government-Owned and/or
Controlled Corporations (GOCCs)
Receipt of Management Fee
Receipt of Inter/Intra-Agency Cash Transfer
Bank Charges
Repair/Rehabilitation of Existing Irrigation Facilities
Advances to GOCCs
Advances to LGUs
Payment to Other GOCCs
Refund of Performance/Bidders' Bond
Payment of Guaranty Deposits Payable
Adjustments
Advance Payment to Contractors
Advances to NGAs
Fund Transfer to Other Funds
Cash Advances Granted to Officers and Employees
Due to Officers and Employees
Payment of Accounts Payable
Inter-Agency/Intra-Agency Transfers
Payment of Other Payables
Remittances to BIR, GSIS, Pag-IBIG and PHILHEALTH
Cash Paid to Suppliers, Employees and Others
Net Cash Provided by/(Used in) Operating Activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Sale of Property and Equipment
Dividends to DOF
Office Buildings
Purchase of Office and IT Equipment and Software
Construction in Progress
Net Cash Used in Investing Activities
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of Interest on Loan
Net Cash Provided by/(Used in) Financing Activities
4
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)
CASH, BEGINNING OF YEAR
CASH, END OF YEAR
2012
-
783,860,377
1,140,663,170
2,163,804,055
783,860,377
The Notes on pages 7 to 20 form part of these financial statements.
NATIONAL IRRIGATION ADMINISTRATION
CORPORATE FUND (F501)
NOTES TO FINANCIAL STATEMENTS
(All amounts in Philippine Peso unless otherwise stated)
1. AGENCY BACKGROUND
The National Irrigation Administration (NIA) was formally created as a government
corporation under Republic Act (RA) No. 3601 on June 22, 1963 with an authorized
capital of P300 million. In 1974, under Presidential Decree (PD) No. 552, its
capitalization was increased to P2 billion; under PD No. 1702 dated July 17, 1980, it was
further increased to P10 billion. The capital was to be subscribed and paid for entirely by
the Philippine Government. Section 2, paragraph (b) of PD No. 552 provides NIA’s
sources of operating capital.
The Agency was originally attached to both the Department of Public Works and
Highways (DPWH) and the Department of Agriculture (DA). It was later transferred to the
Office of the President, and subsequently attached to DA under Administrative Order No.
17 dated October 14, 1992.
The principal function of NIA was initially to develop, maintain, operate, improve and
rehabilitate irrigation systems including communal and pump irrigation projects.
However, with the reorganization of the government that occurred after its creation, NIA
also assumed the irrigation activities of other government agencies, including those of the
Irrigation Service Unit of the Presidential Assistance on Community Development.
Thereafter, with the passage on January 24, 1991 of RA No. 6978, otherwise known as
“An Act to Promote Rural Development by providing for an Accelerated Program within a
Ten-Year Period of the Construction of Irrigation Projects,” the activities of NIA were
significantly increased to cover the remaining 1.5 million hectares of un-irrigated but
irrigable land nationwide.
NIA is headed by an Administrator who is assisted by a Senior Deputy Administrator and
supported by Deputy Administrator for Administrative and Finance and Deputy
Administrator for Engineering and Operations. Besides the Central Office, it has 17
Regional Irrigation Offices (RIOs), including the Upper Pampanga River Integrated
Irrigation System (UPRIIS) and the Magat River Integrated Irrigation System (MRIIS), 44
Irrigation Management Offices (IMOs), 16 Project Management Offices (PMOs) and 217
National Irrigation Systems (NIS). A total of 122 irrigation projects are presently
undertaken by the Agency. Of these projects, 15 are foreign-assisted, 105 are locallyfunded (including 15 carry over projects), and two are inter-agency.
The Agency maintains the Corporate Fund (F501) to finance its operations. This consists
mainly of collections of irrigation fees, equipment rentals, pump amortizations, interest
and miscellaneous income such as the five per cent management fee, income derived
from sale of electrical energy, service fee for the operation and maintenance of nonpower components of Hydroelectric Power Plants, Communal Irrigation Project
amortization on principal and equity contribution and proceeds from sale of property,
plant and equipment.
7
2. BASIS OF FINANCIAL STATEMENTS PRESENTATION
The financial statements have been prepared in accordance with State accounting
principles. The combined financial statements include the financial statements of the
Central Office, UPRIIS, MARIIS, RIOs, IMOs/PMOs under the Corporate Operating
Budget and the Irrigation Component of the Comprehensive Agrarian Reform Program
(CARP).
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Allowance for Bad Debts
The Agency sets up allowance for bad debts for all outstanding receivables, except
reciprocal accounts, and for installment receivables based on the aging of accounts at the
rate of one per cent for accounts that are one to 60 days due, two per cent for accounts
that are 61 to 180 days due, three per cent for accounts that are 181 days to one year due,
and five per cent for accounts that are more than one year due.
b. Inventories
Inventories are measured at lower cost or net realizable value. Items for resale, such as
palay, are stated at cost less allowance for inventory variance, which is based on the 56kilogram-rule, i.e., that NIA shall collect 56 kilograms gross weight for every 50 kilograms
net weight paid to compensate for the expected shrinkage, impurity and inferior quality of
the palay being collected.
c. Investments
Long-term investments are valued at cost.
d. Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method at rates ranging from two per
cent to 10 per cent per annum.
Major repairs are capitalized while minor repairs are charged to operations as incurred.
e. Revenue Recognition
Income is taken up on a modified cash basis, i.e., income from space and facilities rental,
bid documents and management fee are taken up on a cash basis, whereas income from
operations is taken up on an accrual basis. Collections-in-kind (palay, corn, etc.) are
recognized as income upon receipt of cash at the time of sale of the palay inventory
received from the farmers.
8
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
Allowance for Bad Debts
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
Accounts Receivable account comprises trade/business receivables from irrigation
service fees. Memorandum Circular (MC) No. 26 dated June 7, 1976 requires annual
adjustment of the account in the books due to increase in the government support price
for palay. MC No. 62 dated December 5, 1977 and MC No. 62-A dated December 22,
1977 grant 10 per cent discount to farmers for payment of irrigation fees on or before due
dates. The account also includes current installment receivables from amortization of
irrigation pumps, communal irrigation systems and motorcycles.
Due from National Treasury is an account maintained with the Bureau of the Treasury
through which foreign loan proceeds are released to NIA. Reconciliation of this account
is still pending with the Bureau of the Treasury. This also includes carried-over balances
of the NIA general and bond funds, which were transferred to the corporate fund in 1983.
9
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
Advances to Contractors comprises of mobilization costs for various projects undertaken
under Fund 501 prior to 1996. Other Prepaid Expenses account represents prepayment
to Procurement Service under the Department of Budget and Management (DBM) and to
Petron Philippines for the delivery of office supplies and gasoline, respectively.
Reconciliation of the Other Prepaid Expenses-Gasoline, Oil and Lubricant account
amounting to P9,144,011 at the NIA-Central Office is on-going to correct/deduct from the
balance fuel withdrawals for the current and previous years.
8. OTHER CURRENT ASSETS
This account consists of:
Particulars
Guaranty Deposits
Other Current Assets
2012
12,620,220
(218,379,227)
2011
5,848,162
(218,379,227)
Total Other Current Assets
(205,759,007)
(212,531,065)
Other Current Assets consists of inactive negative cash in bank-current accounts
transferred to this account in December 1997. It also includes receivables under funds
107, 102 and 101 transferred to the corporate fund without details or breakdown.
9. INVESTMENTS
This account consists of:
Particulars
Investment in Stocks
Investment in Bonds
Other Investments and Marketable Securities
2012
11,207,000
1,600
15,900
2011
11,207,000
1,600
15,900
Total Investments
11,224,500
11,224,500
Investment in Stocks comprises investment in NIA Consult, Inc. (NIACON), a subsidiary
of NIA, amounting to P10 million in the form of drilling rigs and auxiliary equipment with
appraised value of P12,639,022 and cash under Treasury Warrant No. B0481390 dated
October 2, 1980 in the amount of P750,000. Per Board Resolution No. 3791-82,
NIA’s investment in NIACON is up to P10 million only and the excess in the amount of
P3,389,022 is considered as advances and recorded as receivables.
Investment in Stocks also includes investment in Gasifier and Equipment Manufacturing
Corporation (GEMCOR) shares of stocks, 937 shares purchased in 1981 and another
250 shares acquired in 1984 both at P1,000 per share. In 1988, the GEMCOR
privatization plan, which called for its dissolution, was approved. As of audit date, NIA’s
inquiry on the chance of recovering its investment remains unanswered.
Investment in Bonds consists of 25 year-six-percent LBP bonds with various maturity
dates depending on the dates of issue.
11
10. PROPERTY, PLANT AND EQUIPMENT - NET
This account represents:
Particulars
Land and Land
Improvements
Cost: January 1, 2012
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
December 31, 2012
13,639,828,597
248,139,282
1,036,191,318
14,924,159,197
Net Book Value –
December 31, 2012
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
Net Book Value –
December 31, 2011
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
Total Inter/Intra-Agency Payables
13,727,345,307
13,544,835,257
Total Payables
13. INTER/INTRA-AGENCY PAYABLES
This account includes the following:
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
Total Other Liabilities
1,335,293,556
1,178,909,190
13
Guaranty Deposits Payable represents “retention money” from claims of contractors
implementing Agency projects to cover for uncorrected discovered defects and third party
liabilities.
Other Payables includes outstanding personnel allowances and benefits of Central and
Regional Offices. Savings account with negative balances, which have been dormant
since 1989, and miscellaneous trust liabilities are reclassified to this account.
15. LONG-TERM LIABILITIES
This account consists of loans and advances payable to the following:
Particulars
Loans Payable – Domestic and Advances
Payable–National Government Agencies
Asian Development Bank
International Bank for Reconstruction and
Development
Overseas Economic Cooperation Fund
Special Project Implementation Assistance Loan
Loans Payable – NDC
Loans Payable – Foreign
Asian Development Bank
International Bank for Reconstruction and
Development
International Fund for Agricultural Development
Total Long-Term Liabilities
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
Loans Payable – Domestic and Advances Payable to National Government Agencies
represents payments made by the Bureau of the Treasury (BTr) to lending banks in favor
of NIA. The BTr periodically forwards notices of payments to NIA, and serve as basis of
the latter in the recording of advances made by the former. Most of these payments
cover only the interest incurred on loans.
Loans Payable – Foreign represents the proceeds of foreign loan availment usually
evidenced by the lending institution’s payment advice and Bangko Sentral ng Pilipinas
credit advice ticket. Verification as to the nature and status of these payables are ongoing.
The Loans Payable to NDC was an offshoot of the implementation of economic pumppriming projects of the national government, which NIA is involved in, and completion of
NIA’s repair and rehabilitation program of existing national and communal irrigation
systems (NIS/CIS). As the required fund, in the total amount of P3.700 billion, was not
programmed in the proposed 2006 General Appropriations Act, the NIA Board of
Directors authorized the then Agency’s Administrator, under Board Resolution No. 737006, series of 2006 dated March 3, 2006, to negotiate for a loan with NDC.
14
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 NIA’s 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
Total Deferred Credits
17,801,141,052
17,120,665,063
16. DEFERRED CREDITS
This account includes the following:
15
Deferred Credits represents income to be realized upon collection of previously billed
irrigation fees and unearned income on installment sales, equipment rentals and CIS
amortizations.
Other Deferred Credits pertains to miscellaneous liabilities and undistributed collections
converted to the account.
17. SUBSIDY INCOME FROM THE NATIONAL GOVERNMENT
A total of P2,306,349,000 was received as Subsidy from the National Government broken
down as follows:
Particulars
Subsidy for Operations
5% Management fee
Budgetary Support for the implementation of various projects
(Capital Outlay)
2.85% General Engineering, Supervisory and Administrative
Expenses (GESA)
Disbursement Acceleration Program (DAP)
Jalaur River Multipurpose Project II (JRMP II)
Casecnan Multipurpose Irrigation and Power Project II (CMIPP II)
Malitubog-Maridagao Irrigation Project II (MMIP II)
Umayam River Irrigation Project
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
19. CORRECTION OF PRIOR PERIOD ERRORS
This account represents Central and Field Offices prior years’ adjustments as detailed
below:
Particulars
Management Fee
Adjustment on Bad Debts
Prior Year Closing Entry
Power Cost
Disallowance
Reclassification of Unserviceable Equipment
Adjustment of Accounts Payable
Inventory
Bid Documents
Deposits
Prior Year Subsidy to RO
Subsidy from CO
Staple Food Allowance
Subsidy to RO-Remittance
Income
Reconciling Items
Accounts Receivable
Monetization
Cost of Check Booklet
Pag-Ibig
RO Adjustments
Trust Liabilities
Office Supplies
Philhealth
Liquidation of Cash Advance/Equity
Honorarium
Unrecorded Expenses/Disbursements
GSIS
Viability Incentive Grant
Reversion of Accounts Payable
Collections/Remittance
Interest Income
Terminal Leave
CNA
Cancellation of Entry
Depreciation
Telephone
Salaries,Wages/Allowances/Bonuses
Disbursements
Enercon
Bank Charges
CAMEL
Transfer of F501 PIDP to Fund 102
Others
Cancellation of F102 equipment recorded under
F501
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)
20. MISCELLANEOUS INCOME
This account includes income derived from sale of electrical energy generated by the
Casecnan Multi-Purpose Irrigation and Power Project per Power Purchase Agreement
dated June 30, 1995. This also includes service fee for the operation and maintenance of
non-power components of the 100 Mega Watts (MW) Pantabangan Hydroelectric
Power Plant and 12 MW Masiway Hydroelectric Power Plant per Operations and
Maintenance Agreement dated November 13, 2006 and Magat Power Plant Complex per
Operations and Maintenance Agreement dated December 13, 2006.
The account is detailed as follows:
Particulars
Bid Documents
Sale of Goods and Materials
Disallowances
Scrap of Fixed Assets
Income from NIA Housing
Laboratory Analysis – Soil and Water
Payment for Lost Items
Printing/Photocopy/Radio
Hauling/Milling/Drying Fish
Income from National Home Mortgage Finance
Corporation
Contract Price Adjustment
Gain on Sale of Palay
Other Miscellaneous Income
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
Total Miscellaneous Income
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
A. OBSERVATIONS AND RECOMMENDATIONS
1.
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.
1.1
Section 58 of Presidential Decree (PD) No. 1445 states that –
“ x x x The examination and audit of assets shall be performed with a
view to ascertaining their existence, ownership, valuation and
encumbrances as well as the propriety of items composing the respective
asset accounts, determining their agreement with records; proving the
accuracy of such reports; ascertaining if the assets were utilized
economically, efficiently and effectively; and evaluating the adequacy of
controls over the accounts.”
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
Table No. 1 – Deficiencies Noted Affecting PPE account
Central Office/Regional
Office
Central Office
Region I
UPRIIS
Region III
Region VI
Region XIII
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.
Amount not indicated
1.015
20.631
533.989
Amount not indicated
Accounting and property records
were
inadequate
and
not
updated/properly maintained.
810.017
660.037
358.987
2,363.556
Unaccounted difference between
the general ledger balance and
Physical Count of PPE as of yearend as there was no periodic
reconciliation between accounting
and property records.
Region IX
Region VI
2,918.428
Amount not indicated
Physical inventory of property was
not completely conducted.
Region XIII
Amount not indicated
The required annual inventory
taking was not undertaken. It was
observed that Management did not
prioritize the conduct of physical
count early enough to enable the
committee to complete the same
before year end and submit the
report before the deadline. This
also prevented the determination of
the condition of the assets; thereby
appropriate adjustments were not
Central Office
Region I
Region III
UPRIIS
22
Central Office/Regional
Office
Amount
(In million pesos)
Deficiency
made.
Region IX
2,918.428
Depreciation was not provided on
depreciable assets as there were
no PPE Ledger cards which contain
data to be used in the computation.
Region I
Region III
14.931
4.489
Inclusion
of
unserviceable
properties in the PPE account.
Region III
0.112
Disposed pieces of property were
not dropped from PPE accounts.
1.7
Additionally, the following deficiencies were observed:
a.
In the NIA Central Office, the Military and Police Equipment account
amounting to P227,929 listed in the Property Inventory Report (PIR) includes 35
units of pistol, revolvers, riot gun and shotgun, eight of which are defective while
three were reported as returned to stock. However, six out of the 11 units of
firearms reported as defective and returned cannot be presented during
inspection. Likewise, the List of Firearms in the custody of the Civil Security
Affair A-Armorer showed that there were four units not recorded in the books nor
included in the PIR. This was a reiteration of our findings made in CY 2011, and
this Office has not received any reply/report as to what actions have already
been taken by Management to address the above issue.
b.
The amount of the budgetary support from Department of Budget and
Management (DBM) representing five per cent Management Fees and the actual
General, Engineering, Supervisory and Administrative expenses (GESA)
amounting to P84,633,814 were also recorded as CIP-Canals and Laterals
without properly identifying the specific projects they correspond to for the
purpose of reclassifying the same to the proper PPE account once the said
projects are finished.
c.
In NIA Regional Office No. III, despite of the difficulty in recording land
owned by NIA due to incomplete or absence of documents, the Regional Office
was able to subdivide several land at a lot value of P1,023,750, located within the
region, to various Region III and Central Office NIA personnel. The cost of the
land allotted to the personnel was offsetted against the unpaid cost of living
allowance and amelioration allowance differentials. Consequently, the land
which is supposedly owned by NIA now belongs to its personnel through the
“Certificate of Award” issued to them. However, the Chief of the Legal Services
Division at the COA Regional Office opined that NIA has no authority or legal
basis to pursue the housing program for its employees using the alleged unpaid
cost of living allowance due to NIA employees.
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
We recommended that Management:
a.
Create a special group/task force to undertake the immediate
reconciliation of the variance between the balance appearing in the
Property Inventory Report and the accounting records and analyze the
composition of the CIP – Irrigation Projects account and reclassify them to
their proper PPE account;
b.
Prepare subsidiary ledgers for each project where the budgetary
support from DBM was sourced out and record the related expenses
incurred per project to properly identify the balance at any given time;
c.
Maintain/update adequate accounting and property records and
conduct periodic reconciliation between accounting and property records;
d.
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
and copy of the Memorandum Receipts (MRs) of the firearm issued to
concerned officers. Non-submission of the same shall be a valid ground
for the filing of the appropriate disciplinary/administrative action against
him;
e.
Strictly require the Inventory committee to give priority and
complete the physical count of all PPE items;
f.
Stop the distribution of land in Region III to NIA personnel and
elevate the matter to higher authorities to determine the legality of the
program; and
g.
Ensure strict adherence to the applicable laws, rules and regulations
on PPE to prevent the incurrence of the deficiencies noted.
24
1.10
Management gave the following comments:
a.
Central Office commented that regarding the variance of P810.017 million
existing between the balance as of December 31, 2012 of the PPE account
appearing in the accounting records at the Central Office and the PIR, the
Procurement and Property Division (PPD) has provided the Bookkeeping Section
of the Accounting Division with a copy of the PIR for CY 2012. The Bookkeeping
Section is now in the process of updating the Property, Plant and Equipment
Ledger cards (PPELC) and will reconcile this with the PIR.
Also, the
Bookkeeping personnel made a partial reconciliation of the PPE accounts as of
CY 2011 last October 12, 2012 as per letter of the Section Chief of the
Bookkeeping Section.
The Land Improvements account amounting to
P346,124,639 booked-up under Fund 501-NDC representing various liquidations
of advances made to several LGUs was not reflected in the PIR from CYs 20082011. The accumulated cost of various PPE items purchased from CY 2006 to
CY 2011 amounting to P15,770,885 was not also reflected in the PIR for the said
period. A list of these PPE items was given to PPD for their further
verification/inclusion in the PIR. The balance of the Land Improvements account
per accounting records is reconciled with the PIR. Management submitted a
copy of the above-mentioned letter and a copy of the lists of PPE items to be
included in the PIR from CYs 2006 to 2012.
Regarding the unaccounted firearms, physical inventory of firearms was recently
conducted by the Property Section personnel. It was found out that eight out of
11 units of firearms were located in the Stockroom B. Moreover, the three units
were transferred to NIA Region IX, Pagadian City. One out of four units of
firearms in the custody of the Civil Security Affair A-Armorer with serial number
BA702151 is included in the Inventory report under Fund 102. In compliance
with the recommendations of COA, certified xerox copies of Property
Acknowledgement Receipt (PAR) of four units of firearms under the
accountability of the Civil Security Affair A-Armorer were already submitted and
aforementioned firearms will be reflected in the Annual Inventory Report of PPE
for CY 2013.
b.
Region I commented that the PPE ledger cards were already established
since 2007 on purchases of equipment. However, this did not fully address the
discrepancies and inadequacies found in the accounting and property records.
The Inventory and Inspection Report was already forwarded to Central Office and
appraisal thereof is on- going for disposal process.
c.
UPRIIS Management assured that the offices concerned are continuously
working on the reconciliation of PPE records.
Effective 2013, proper
reclassification of PPE shall be made based on the Inspection and Acceptance
Report. In addition, the Engineering Section shall timely provide the Accounting
and Property Sections with the Certificate of Completion of Infrastructure
projects, as basis in reclassifying the CIP account. All property officers were
instructed to coordinate with the Accounting Section, Office of Management Staff
(OMS), for the synchronized reclassification and reconciliation of PPE items.
d.
In Region XIII PPE Subsidiary ledger per IMO is being maintained in the
Regional Office. Preparation of PPE Ledger Card is on-going and a
25
computerized program will be developed to facilitate preparation of PPE ledger
cards. A communication was already issued to NIA field offices to submit Project
Completion Reports and turn over documents for all completed projects. A
committee will be created in the Regional Office to monitor compliance of the
field offices. The formation of new Inventory Committee is on-going to fill up the
vacancy resulting from reassignment/transfer of its former members.
e.
In Region IX, except for Land and Land Improvements, the Inventory
Committee and a representative from COA were able to undertake a physical
count of PPE as required under NIA MC No. 52, s. 2009.
The Agency was unable to provide depreciation for these properties except those
acquired in CY 2006 to present, since they are still in the process of retrieving all
pertinent documents as basis for computing the appropriate amount for
depreciation. PPE Ledger Cards are already maintained and concerned
personnel were tasked to work back for those acquired in CY 2005 and prior
years.
For the Land Improvements, concerned accounting and property personnel were
tasked to retrieve pertinent records and reconcile/update their respective
Property Cards and PPE Ledger cards for the eventual conduct of a physical
count of these assets.
2.
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 area covered and the specific location of the Land. Also,
Property Ledger Card was not maintained for this account.
2.1
This audit issue has been raised in previous year’s 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
“It shall be the duty of the officials or employees concerned including
those in non-government entities under audit, or affected in the audit of
government and non-government entities, to comply promptly with these
requirements. Failure or refusal to do so without justifiable cause shall
constitute a ground for administrative disciplinary action.”
2.4
Thus, the accuracy and validity of the Land account recorded in the books cannot
be ascertained and remained doubtful as of to date.
2.5
Sound internal control dictates that custodianship of important documents such
as TCTs and Deeds of Sale should be properly established to safeguard the assets
against loss or misuse. Furthermore, it is the responsibility of the Head of Agency to
ensure that these control measures are in place and operating effectively.
2.6
We recommended that Management:
a.
Include in the Inventory Report of Land the details such as, area,
location acquisition cost, date of acquisition and encumbrance and
reconcile the inventory report with the accounting record;
b.
Maintain property ledger card for the Land account to support the
balance per books of P3.469 billion as of December 31, 2012;
c.
Conduct a thorough investigation to locate the whereabouts of the
TCTs and the Deeds of Sale. Determine the officer/s responsible for their
safekeeping and ensure that these documents are always intact and
available for inspection by the COA; and
d.
Strengthen the existing control on the custodianship of important
documents to pinpoint responsibility at any given time by assigning a
permanent employee to handle the job.
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.
Final Accomplishment Report;
Certificate of Completion and Acceptance;
Project Completion Reports (CPR); and
Photographs of completed projects, if any.
27
3.2
Section 39.1 of PD No. 1445 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. If an authenticated copy is
needed for record purposes, the copy shall upon demand be furnished.”
3.3
Furthermore, Section 44 of PD No. 1445 also states:
“The auditor shall from time to time conduct a careful and thorough check
and audit of all property or supplies of the agency to which he is
assigned. Such check and audit shall not be confined to a mere
inspection and examination of the pertinent vouchers, inventories, and
other papers but shall include an ocular verification of the existence and
condition of the property or supplies. The recommendation of the auditor
shall be embodied in the proper report.”
3.4
This is a reiteration of prior years’ audit observation.
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
Unreconciled BRS and SL balances of accounts of P9,660;
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 cashier’s 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.
Abnormal balance of P422,640 in PNB Account No. 5186-109000-
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
We recommended that Management:
a.
Require the Finance Division to: (i) conduct periodic reconciliation
of records, i.e., general ledger and subsidiary records; and (ii) properly
maintain subsidiary ledgers and other control records; and
b.
Require the Accounting Division to: (i) determine the nature of
disparities noted among the reciprocal cash records and reports and adjust
records accordingly; (ii) perform periodic reconciliation of the GLs, SLs,
BRS and cashbooks; (iii) regularly prepare bank reconciliation statements;
(iv) determine the nature and propriety of the unidentified reconciling
items; and (v) take up in the books the reconciling items with valid
documents.
4.5
Management gave the following comments:
a.
CAR field offices do not maintain ISF account for ISF collections but are
all deposited in One Way Savings Account maintained in the Regional Office.
The other amounts are due for reconciliation and Management committed to
comply with audit recommendations.
b.
In UPRIIS, adjustments were recorded in the books for the first quarter of
2013 and any identified adjustments during the month will be taken up
immediately. Also, according to Management the staff that started the BRS in
CY 2009 labeled any discrepancy between accounting records and bank
statement as “Unreconciled Differences.” She opined that reconstruction and
adjustments to correct the books would now be impractical due to unavailability
of records. Accounting records were reportedly destroyed by typhoon that hit the
country in the past years.
c.
In Region VIII, the discrepancy of P352,095 between General and
Subsidiary ledgers under Fund 501 CARP is still being reconciled. Reconciliation
30
is quite tedious due to unavailability of some documents/records damaged by
flood, termites and the renovation of the office building.
The Cash in Bank Balance under Fund 501 CARP decreased from P1,076,136 to
P1,013,842 or reduced by six per cent as of March 31, 2013. The same problem
is being encountered in the reconciliation but extra effort is exerted to come up
with the correct balance.
d.
In CARAGA, subsidiary ledgers were maintained for each office. The
reconciliation between the subsidiary ledger balances and general ledger is ongoing.
5.
The balance of the Cash in Bank accounts under the General Fund (F-102)
totaling P12.019 million as of December 31, 2012 included unexpended balance of
special projects funds transferred to Corporate Fund (F-501) amounting to
P11.507 million and P0.512 million, respectively. These fund transfers were never
recorded in the books of accounts of both funds, but continuously appear as
among the reconciling items in the Bank Reconciliation Statements of Corporate
Fund (F-501).
5.1
Review of the Cash accounts under the General Fund disclosed that the Cash in
Bank accounts consisted of unexpended balances of special project funds which were
already transferred from cash accounts of Fund 102 to Corporate Fund (F-501) through
Journal Entry Vouchers (JEVs) supported by Debit Advices. Fund transfers were made
on November 29, 2007 and December 13, 2007 in the amount of P11,507,580 and
P511,879, respectively, totaling to P12,019,459. However, these fund transfers were
never recorded in the books of accounts of both Funds 102 and 501, but continuously
appear as among the reconciling items in the Bank Reconciliation Statements of F-501.
Moreover, these amounts are still included in the Cash in Bank accounts of Fund 102.
5.2
Details of the fund transfers were as follows:
a.
PVB Current Accounts maintained for Fund 102 were closed and the
remaining balances were transferred to LBP Current Account No. 1872-1005-94
of Fund 501 per JEV#102-08-07-377-C as listed below.
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
P
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 year’s audit recommendation, NIA still did not remit the
balances of these project funds to the Bureau of Treasury.
5.5
We reiterated our previous year’s recommendations that Management:
a.
Ensure strict adherence to Section 37 of PD No. 1177 and Section
4(3) of PD No. 1445 and refrain from transferring project funds under
General Fund (F-102) to the Corporate Fund (F-501).
b.
Remit to the Bureau of Treasury the unexpended balances of Fund
102 closed accounts in the total amount of P12,019,459; and
c.
Establish the amount of interest income accruing to the amount
transferred to the Corporate Fund, as this amount forms part of the special
project funds, and likewise remit the same to the Bureau of the Treasury.
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
The above transactions violated the following:
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.”
6.4
We recommended that Management:
a.
Close the Foreign Currency – Time Deposit PVB Account No. 61071
under Fund 501 and remit to the Bureau of Treasury the amount of the
unexpended balance of the foreign-assisted project funds inclusive of
interest; and
b.
Ensure strict adherence to the provisions of Section 37 of PD No.
1177 and Section 4(3) of PD No. 1445.
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
Section 4.6 of PD No. 1445 states that:
“Claims against government funds shall be supported with complete
documentation.”
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
This is a reiteration of our prior year’s audit findings.
7.7
We recommended that Management:
a.
Cause the immediate submission of the disbursement vouchers,
copy of check register/report of checks issued containing the date/number
of the checks, payee and amount together with all the necessary
documents; and
b.
Conduct a thorough investigation to identify persons liable for the
unaccounted disbursements of P151,655,662, and file appropriate legal
actions against the accountable/liable officials, if warranted.
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
There was unreconciled discrepancy between the
general ledger and schedule of aging of accounts
receivable due to the absence of supporting
documents and subsidiary ledgers.
UPRIIS
Region IX
CIMO
1,178.732
280.155
94.461
There was unreconciled discrepancy between the
balance of subsidiary ledgers and schedules of ISF
receivables due, among others, differing valuation
basis used in the assessment of ISF and
presentation of amounts in the Trial balance and
report submitted by the River Irrigation Systems.
Also, the balances between the records of the
provincial irrigation management offices did not
reconcile with those appearing in the general
ledger/subsidiary ledger.
22.550
There were noted discrepancies between the
General/Subsidiary Ledger maintained in the
Regional Office and the Annual Status of Communal
Irrigation System Amortization Reports submitted by
field offices.
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
There are dormant receivables from 10 to more than
40 years that were continuously carried over in the
books.
Region I
429.918
The delayed or non-compliance of turn-over of
documents for accounting purposes caused
inaccuracy of Receivables-Communal Irrigation
System.
There were 77 completed communal
irrigation system/projects with unsubmitted turn-over
documents, thus understating the Receivables
account.
8.4
We recommended that Management:
a.
Require the Accounting Section to: (i) maintain subsidiary ledgers
for receivable accounts and regularly reconcile the balances with the
general ledger balances; (ii) update recording/posting of transactions at all
times; (iii) exert all efforts to reconcile accounts receivable recorded in the
books of the regional office as against the books of the field offices; and
(iv) maintain subsidiary ledgers for accounts receivable per irrigation
association;
b.
Institute appropriate action for dormant accounts and effect
adjustments in the books; request for write-off of outstanding/dormant/
uncollectible accounts from COA in accordance with COA Circular No. 97001 dated February 5, 1997;
c.
Require the billing personnel and Accounting Section to reconcile
regularly records on receivables; and
d.
Require the Regional Accounting Office and the Accounting
Processor of the Provincial Irrigation Management Offices to exhaust all
means to reconcile their records every end of each month to ensure the
accuracy of the amounts of accounts receivable in the books of accounts.
36
8.5
Management gave the following comments:
a.
UPRIIS commented that Division offices billing and accounting sections
are aware of government support price being the basis in the preparation of
Statement of Account. Meanwhile, Management seeks the assistance of NIA
Central Office for the training of billing personnel on the use of ISF computerized
billing system.
b.
In Region VIII, Installment Sales Receivable (CIS) — GL/SL balance
pertains to turned over projects in which total chargeable cost are recorded in the
books while the submitted reports of the field offices are list of all the projects
completed but not all are turned over for technical reasons. Advance amortization
payments are directly credited as income and are deducted from the total
chargeable cost at the time of turnover. Reconciliation of field and regional
offices’ records is yet to be done for CY 2012 transactions.
Management
further agreed to review their monitoring system and adopt an effective measure
in monitoring the amortization payments pertaining to the original cost and the
repair and maintenance cost of the same project. They also gave assurance that
they will keep an amortization table for each project.
c.
In Region IX, the reconciliation of the general ledger with the subsidiary
ledger is usually conducted as of year-end or after every cropping season when
possible. However, for ISF, the billing clerks at field offices have yet to update
their Irrigation Fee Register for CY 2012. NIA is currently developing a
computerized ISF billing system. With the automation of the billing system, timely
reports could be generated at any given time and reconciliation of the records
could be facilitated.
d.
CIMO Management assured to reconcile the records and make the
necessary adjustment in the ensuing year.
e.
In Region XIII, the reconciliation between SL and GL balances is on-going
and necessary adjustments will be made.
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
The Assets account consisted of the following:
Table No. 6 – Percentage of Asset Account to Total Assets
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
Pertinent provisions of PD No. 1445 state that –
Section 111.1 – “The accounts of the agency shall be kept in such detail
as is necessary to meet the needs of the agency and at the same time be
adequate to furnish the information needed by fiscal or control agencies
of the government.”
Section 111.2 – “The highest standards of honesty, objectivity and
consistency shall be observed in the keeping of accounts to safeguard
against inaccurate or misleading information.”
9.7
that:
COA Accounting Circular Letter No. 2007-003 dated January 17, 2007 states
Section 3.1 – “The Chief Accountant/Head of Accounting Unit shall submit
directly to the Government Accountancy and Financial Management
Information System (GAFMIS) Sector, this Commission and Audit Team
Leader (ATL) concerned, the x x x year-end financial statements and
reports/schedules in printed and digital copies on or before February 14
of each year x x x .”
9.8
We recommended that Management:
a.
Assign a permanent employee to perform the analysis and
validation of the accounts of the above completed projects included in the
consolidation of account balances of all the regions and projects
specifically the Office Supplies Inventory recorded under the BBMP, et al.
project amounting to P16.578 million;
b.
Exhaust all possible means to locate the missing books of accounts,
financial statements and reports pertaining to the completed projects and
effect the necessary adjustments to reflect the correct balances of the
affected accounts;
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
Section 3.1 - “The Chief Accountant/Head of Accounting Unit shall submit
directly to the Government Accountancy and Financial Management
Information system (GAFMIS) Sector, this Commission and Audit Team
Leader (ATL)/Auditor concerned, the following year-end financial
statements and reports/schedules in printed and digital copies on or
before February 14 of each year:
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.
p.
Pre-Closing Trial Balance;
Post-Closing Trial Balance;
Detailed and Condensed Statements of Income and
Expenses;
Detailed and Condensed Balance Sheets;
Statement of Changes in Equity;
Statement of Cash Flows (Direct Method);
Notes to Financial Statements;
Statement of Management Responsibility;
Breakdown of Personal Services;
Breakdown of MOOE;
Schedule/Aging of Accounts Payable;
Schedule/Aging of Accounts Receivable;
Breakdown of Domestic/Foreign Loans (indicate whether
these are guaranteed by the National Government);
Schedule of Subsidies Received from National
Government and Other GOCCs (If applicable);
Schedule of Income Taxes Paid; and
Schedule of Dividends Paid
40
Section 4.0 - “Failure of the officials/employees concerned to comply with
the requirements of this Accounting Circular letter shall cause the
automatic suspension of the payment of their salaries and other
emoluments until they have complied therewith. Violation of this provision
for at least three times shall subject offender to administrative disciplinary
action imposed under Section 55, Chapter 10, Title 1.B Book V of
Executive Order No. 292, The Administrative Code of 1987.”
10.3 Section 103, Volume 2 of the Philippine Accounting Standards also
provides that:
“The notes shall disclose the information/additional information required
by IFRS that is not presented on the face of the balance sheet, income
statement, statement of changes in equity or cash flow statement but is
relevant to an understanding of any of them.”
10.4 We recommended that Management cause the immediate submission of
the supporting documents of the Government Equity and Retained Earnings
accounts with complete information as to the nature of adjustments included
therein.
10.5 Management stated that a radio message was sent to the regions/projects
requiring them to submit the related documents for evaluation/verification purposes.
11.
The existence, validity and accuracy of the Due from National Government
Agencies, Due from GOCCs and Other Receivables accounts could not be
ascertained due to non-maintenance/improperly maintained subsidiary ledgers,
existence of dormant accounts and accounts with abnormal balances. Likewise,
the Statement of Balances lacked the necessary information such as complete
name/address of the debtor, date when the receivable was granted and the age of
the account.
11.1 The Statement of Balances of the following accounts as of December 31, 2012
submitted by the Central Office to the Audit Team showed the following information:
Table No. 7 – Breakdown of the Receivable Accounts with Doubtful Validity as of
December 31, 2012
Account Name
Active
Inactive
InactiveOthers
Total
Due from National
Government Agencies
Due from GOCCs
Other Receivables
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
P
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.
Accounts receivable remained uncollected for more than ten years;
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
Sections 111 and 114 of PD No. 1445 state that:
Section 111.1 - “The accounts of the agency shall be kept in such detail
as is necessary to meet the needs of the agency and at the same time be
adequate to furnish the information needed by fiscal or control agencies
of the government.”
Section 111.2 – “The highest standards of honesty, objectivity and
consistency shall be observed in the keeping of accounts to safeguard
against inaccurate or misleading information.”
Section 114(2) - requires the maintenance of subsidiary record where
necessary. It is for the purpose, among others, to keep the accounts of
the agency in such detail as necessary to meet its needs and provide
information needed by fiscal and control agencies of the government.
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
Management gave the following comments:
“Currently, the subsidiary ledgers of Due from National Agencies, Due
from GOCCs and Other Receivables are being maintained and updated.
However, most of these accounts are old accounts that require a lot of
time in the verification and reconciliation process. One of the major
problems being encountered is the unavailability of records. Despite the
barriers that we are facing, some accounts were already adjusted or
corrected. Likewise, inclusion of information such as the address of the
debtor could not be produced for the old accounts and aging of the
account would show a lengthy report as the nature of these transactions
pertains to billing of water, electricity, janitorial, space rental and others
on various dates to tenants and projects. This information are reflected in
their respective subsidiary ledgers. Continuing effort to reconcile and
verify these accounts is being done.”
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
to P4,480,692 and was taken up as Rent Income instead of Other Payables-Trust
account.
12.8 As provided under Article III, paragraph 5 and Article XV, paragraph 3 of the
Lease Contract on the Revised Instructions to Interested Parties, “ x x x in case of pretermination of this contract attributable to an event of default on the part of the LESSEE,
the Cash Deposit shall be forfeited in favour of NIA without a need of court action x x x.”
c.
Understatement of the total billed amount for rental for the period
March 1, 2009 to February 28, 2012 – P1.120 million
12.9 Analysis of the Statement of Account as of November 30, 2011 prepared by the
personnel of the Reconciliation Section-Accounting Division covering the period March
1, 2009 to February 28, 2012 showed that the billed rental for the first year of the
contract was understated by P1,120,173, exclusive of the corresponding understated
surcharges of P537,683 computed as follows:
Table No. 8 – Computation of the Understated Surcharges
Amount of rental for the period March 1, 2009 to
February 28, 2012
(P148.88 x 2,508 sq. m. x 36 months )
Per Statement of Account as of November 30,
2011 (P148.88 x 2,508 sq. m. x 33 months)
Understatement of the billed amount
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
12.13 On the other hand, the aforementioned billing statement showed an
understatement in the computation of surcharges from December 2011 to February
2012 by P134,421, representing surcharge for the unpaid balance for the third year.
d.
Non-payment of annual rental of P4.481 million that accumulated to
P 17.589 million as of December 31, 2012
12.14 Further analysis of the Statement of Account as of November 30, 2011 prepared
by the Reconciliation Section-Accounting Division covering the period March 1, 2009 to
February 28, 2012 revealed that aside from the application of the bid security amounting
to P1,800,000 on the first year of the lease period, the New Kanlaon Construction, Inc.
paid a total of P2,500,000 in 2010 and 2011 where the payments were applied as
follows:
Table No. 9 – Application of Payments made by New Kanlaon Construction, Inc.
Payment
P1,500,000
1,000,000
Applied to
Principal
P1,219,107
341,413
Applied to
Surcharges
P280,893
30,727
627,860
Applicable lease period
March 2009 to February 2010
March 2009 to February 2010
March 2010 to February 2011
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
12.19 We recommended that Management:
a.
Exhaust all legal means to collect total amount due of P17,588,744
from the New Kanlaon Construction, Inc. representing all unpaid amount as
of December 31, 2012;
b.
As additional sanction, forfeit the cash deposit and collect all
previous bills applied to the cash deposit as well as all current bills due
from the New Kanlaon Construction, Inc.; and
c.
Submit written consent or other related document signifying that
NIA has allowed the lessee to sub-lease a portion of the property to other
establishments such as the convenience store and restaurant.
12.20 Management gave the following comments:
a.
Cash deposit inadvertently recorded as rent Income will be reclassified to
Other Payable account.
b.
Recomputation of the total amount billed for the period March 1, 2009 to
February 28, 2010 including surcharges will be undertaken.
c.
The New Kanlaon Construction, Inc. requested for a written consent with
respect to its intended lease agreement with Pilipinas Shell Petroleum
Corporation (Shell Gasoline Station) and to other interested business entities per
its letter dated November 2, 2010. NIA, in its letter dated November 3, 2010
interposed no objection to the intended sublease of the “leased premises” to
Pilipinas Shell and to other prospective sub-lessees provided that New Kanlaon
Construction, Inc., as well as its sub-lessees, will faithfully observe the provisions
provided in Section IV of the Lease Agreement.
d.
As faithful compliance with the provisions under Section IV of the Lease
Agreement, which includes non-competition with the businesses of NIA
Employees Association and the Employees Cooperative, is expressly provided in
the written consent issued by NIA, it appears that New Kanlaon Construction,
Inc. and some of its sub-lessees operating in the leased premises whose
businesses may have competed with that of NIA Employees Association and the
Employees Cooperative, committed a breach of contract. This matter will be
brought to the attention of New Kanlaon Construction, Inc. by the appropriate NIA
office monitoring the implementation of the Lease Agreement.
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
No Schedule of Accounts Payable or no valid
claimants to support the reported balance in the
subsidiary ledger.
The above practices contravened the following laws, rules and regulations:
a.
Section 111 of PD No. 1445 as quoted in paragraph 11.5 above;
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
13.4 Considering that this is a reiteration of the previous years’ audit
observation, we strongly recommended the following:
a.
Assign a permanent employee to perform regular analysis
and
validation of the Accounts Payable specifically those dormant and
abnormal accounts which continue to exist for more than 10 years now;
b.
Maintain and regularly update subsidiary ledgers of the Accounts
Payable for proper monitoring and to support the general ledger balances;
c.
Include in the Schedule of Accounts Payable all the necessary
information such as name, address of the creditor, date the obligation was
incurred and aging of the account;
d.
Provide valid support document for the accounts payable that
lacked documentation; otherwise revert the same to government equity;
and
e.
Ensure that future recognition of accounts payable is based on valid
obligations, supported with competent documents and benchmarked on
NGAS.
13.5
Management gave the following comments:
a.
In Central Office, majority of these accounts existed more than 10 years
ago and the records could no longer be located. Nevertheless, there were some
accounts that were already adjusted or corrected. The continuing process of
reconciliation and verification is being done.
b.
In UPRIIS, the Accounting Section obligated all bid contracts based on
Notice of Award and balances of all on-going projects were recorded as
Accounts Payable ending December 31, 2012; Items taken up as Accounts
payable but already paid as of December 31, 2012 will be adjusted; and
Supporting documents of other payables were attached to the original vouchers
paid in 2013 and to be submitted to COA for post audit.
c.
In CIMO, Management submitted the required documents but these were
incomplete. However, they assured to take appropriate measures to comply with
the audit recommendations.
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.
Lack of subsidiary records/documents/no record of transactions
Table No. 11 – Other Liabilities account which Lack Proper Documentation
Account Name
Guaranty Deposits Payable
Performance/Bidders Bond
Payable
Due to Other NGAs
Due to LGUs
Due to Central Office
Other Payables
Central Office
P 54,248,640
Regional Office No. V
P
36,172
11,863,568
1,023,317,619
6,881,077
102,608
376,163,586
-
P1,089,429,827
P383,183,443
TOTAL
b.
Existence of dormant accounts
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*
Regional Office No. I
P
-
-
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.
Table No. 13 - Other Liabilities account with negative (debit) balances
Account Name
Guaranty Deposits Payable
Due to Pag-ibig
Due to Other GOCCs
Other Payables
Central Office
P(62,919,611)
-
Regional Office No. V
P
(9,359)
(690,632)
(20,795,206)
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.
Section 111 of PD No. 1445 as quoted in paragraph 11.5 above; and
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 BTr’s records and NIA’s records and
understatement of liabilities and operating expenses.
Table No. 14 – Computation of the Variance/Difference Existing Between the BTr
and NIA’s books as of December 31, 2012
Particulars
Per BTr’s 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
Balance per NIA’s books
Variance/Difference
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 NIA’s 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.
Non-recording of water delivery fee and corresponding VAT;
b.
Incomplete recording of guaranteed energy delivery fee, variable energy
delivery fee and VAT;
c.
Inc.;
Non-recording of reimbursement of all taxes and duties paid by CECWE,
52
d.
Non-recording of interest expense on the advances made; and
e.
Difference in foreign exchange rate used in recording.
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 NIA’s 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 COA’s
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
We reiterated our previous years’ recommendations that Management:
a.
Exert extra effort to secure copies of JEVs from the BTr pertaining
to its advances for the account of NIA to ensure proper recording in the
books;
b.
Record all transactions pertaining to the advances made by the
BTr since these are valid obligations; and
c.
Prioritize the immediate reconciliation of the difference/variance
existing between the records of the BTr and NIA to avoid reiteration of the
same observation in the ensuing year.
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
NIA’s letter dated October 18, 2012.
53
16.
Deficiencies were noted in the payment for consultancy services
amounting to P6.136 million.
A.
Charged to Consulting services – P3.040 million
16.1 Audit of Consultancy Services disclosed several deficiencies summarized as
follows:
a.
Propriety of payments for consultancy contracts totaling P3.040 million
cannot be ascertained due to the absence of reports/outputs where the
accomplishments of the consultants can be validated.
b.
Majority of the consultancy contracts lacked specific and measurable
deliverables.
The expected/required services from the consultants are
incomplete and not sufficiently detailed.
c.
Contracts and payments were not monitored to ensure that the work done
met the contractual requirements.
d.
There were no documents to demonstrate that consultancy contracts
were awarded following a competitive bidding process.
e.
The amount of P3.040 million allocated for the payment of consulting
services was not included in the Annual Procurement Plan (APP) of the agency
for CY 2012.
16.2 Normal business practices require that controls are operating to ensure that
payments are in accordance with the terms of the agreement, that proper approvals are
in place before payments are made and that there is evidence that key deliverables are
received.
Additionally, accomplishment/progress reports submitted should provide
sufficient details of the work performed.
16.3 Records showed that a total of 11 consultants were hired by NIA in 2012. Details
follow:
Table No. 15 – Consultants Hired by NIA in 2012
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
Office of the Administrator
Office of the Administrator
Office of the Administrator
Office of the DA Admin & Finance
UPRIIS, Cabanatuan City
Office of the Corporate
Board Secretary
Irrigation Historiographic Office of the Board
Consultant
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
Prepare a conceptual outline of the proposed Book for
evaluation and approval by the concerned assigned official/s
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
management’s guide/reference.
Management
Consultant
or
give
opinions
for
Advise and participate in corporate policy formulation; and
Plan and coordinate researches and studies relative to the
formulation of new corporate policies to improve/enhance
productivity.
The absence of the consultants’ accomplishment reports supported by studies,
researches and policies formulated, among others hampered the effective
monitoring and management of the consultancy agreements as well as
evaluation of the consultant’s performance to determine whether the consultant’s
work is progressing as expected against set timelines and deliverables.
c.
It has been gathered that a Shortlist of Consultants was used as basis for
the selection/hiring of the consultants. However, the Audit Team was not
furnished with a copy of the Shortlist of Consultants and other related documents
such as evaluation sheet of prospective consultants, for review. The evaluation
sheet serves as evidence that different consultants/bidders were considered and
that the consultancy contract was awarded to the bidder with the highest score.
With the non-submission of these documents, there is a possibility that an
evaluation sheet might not have been prepared, thus, there is a risk that
transparency in the selection of consultants might have been compromised.
c.1.
IRR-A, Section 24.1 of the Manual of Procedures for the
Procurement of Consulting Services specifically requires that when the
consulting services involve professions regulated by Philippine laws,
he/she must be a registered professional authorized by the appropriate
regulatory body to practice those professions and allied professions.
c.2.
IRR-A, Section 24.15.1 – Shortlisting - The Procuring Entity must
consider for short listing only those consultants that:
a.
Have been declared eligible by the BAC; and
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
part of Management to conduct a cost-benefit analysis to determine the impact of
engaging the services of consultants. The following factors were not considered
and documented in hiring consultants:
d.1
Availability and experience of its internal staff; and
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 Government’s 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
Senior Associate Project Officer
Senior Associate Project Officer
Senior Associate Project Officer
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.
Validate accomplishment thru field inspection;
b.
Assess status of irrigation operations and recommend strategies to
increase irrigated area and crop field;
c.
Validate contribution of every province to FSSR;
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.
16.11 We recommended that Management:
a.
Ensure strict compliance with the provisions of RA No. 9184 and
other government rules and regulations on the hiring of consultants;
b.
Analyze the cost effectiveness of hiring consultants before a
decision is made to engage their services;
c.
Perform periodic monitoring/oversight in the use of consultants to
determine the extent to which economy, efficiency and effectiveness have
been achieved; and
d.
Exercise prudence in the disbursement/disposition of government
funds and limit expenses to that which are cost effective to the corporation.
58
16.12 Management submitted the following documents in partial compliance to the
required reports/outputs, where the accomplishments of the consultants can be
validated:
a.
Copy of the draft of the book tentatively titled “IRRIGATION: KEY TO
FEEDING THE NATION by Mr. Jesus G. Ocampo; and
b.
Inspection and Validation reports of the various Project Inspectorate and
Advisory Group (PIAG):
b.1.
b.2.
b.3.
Central and Southern Luzon Group;
Northern Luzon Group; and
Visayas Group.
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
Review of the payments for CNA disclosed the following deficiencies:
a.
The CNA Incentive for CY 2012 was paid in advance in December 2012
contrary to Section 4.4.1 of DBM Budget Circular No. 2012-4 dated December
17, 2012 which states that: “The CNA Incentive for the year shall be a one-time
benefit to be granted not earlier than January 15 of the following year.”; and
b.
There were no documents attached to the payroll to support compliance
with the pre-conditions and conditions set forth in DBM Circular on the Grant of
CNA Incentives for FY 2012, as follows:
Sec. 4.1.3. – “ The GOCC or organizational unit has accomplished
at least 90% of its FY 2012 targets on the average, under the
Major Final Outputs (MFOs) as specified in Form A6 of
Memorandum Circular No. 2012-01 dated August 13, 2012,
issued by the Inter-Agency Task Force (IATF) created under AO
No. 25.
Sec. 4.1.5 – “The GOCC or organizational unit has realized
savings from the specific Maintenance and Operating Expenses
(MOOE) enumerated in items 4.3.1 to 4.3.6.”
59
Sec. 7.2.1 – “Actual operating income at least meets the targeted
operating income in the approved Corporate Operating Budget
(COB) for the year.”
Sec. 7.2.2 – “Actual operating expenses are less than the DBMapproved level of operating expenses in the COB as to generate
sufficient source of funds for the payment of the CNA Incentive.”
c.
The CNA incentive exceeded the required ceiling of P25,000 per qualified
employee, contrary to Section 4.2.2 of DBM Circular No. 2012-4 dated December
17, 2012 which provides that “The CNA Incentive for CY 2012 shall not exceed
P25,000 per qualified employee.”
c.1
For instance, NIA Iloilo Guimaras Irrigation Management Office
paid each employee a total of P62,000 CNA incentive for CY 2012 which
is P37,000 more than the required limit set by the DBM
17.2
The following payments for CNA Incentives were made in CY 2012:
Table No. 19 – CNA Incentives paid by the different offices in CY 2012
Central Office/Regional Office
Central Office
Region VI
Negros Occidental Irrigation Management Office
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
We recommended that Management:
a.
Cause the immediate submission of the following documents to be
used in the determination of the propriety of the CNA Incentive payments:
a.1.
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);
a.2.
Computation of actual agency savings
allotments for MOOE for FY 2012;
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.
Copy of computation of savings;
b.
Copy of DBM-approved Corporate Operating Budget for CY 2012; and
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 NIA’s 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
Accounting Division on the proper reporting/recording. We learned that the Monthly
Reports of Fuel Consumption were submitted by the General Services Division to the
Chairman, Energy Conservation of the Engineering Management Department (EMD),
however, the Accounting Division was not furnished said reports.
18.2 Additionally, we noted the following observations in the audit of the Gasoline,
Diesel and Lubricant account:
a.
The recommended fuel allocation per week and the use of shell fleet
cards for fuel consumption as provided in NIA - Office Circular No. 2 dated
August 12, 2012 were not strictly observed during the year, to wit:
Table No. 20 – Recommended Fuel Allocation of the different Offices for 2012
Office
Office of the Administrator & Staff
Office of the Senior Deputy Administrator
Office of the DA for Eng’g. & Operations & Staff
Office of the DA for Adm. & Finance & Staff
Office of the Engineering Dept. - Manager
50
50
50
50
40
Office of the Corporate Board Secretary
Office of the Operations Department - Manager
40
40
Office of the Administrative Department-Manager
Office of the Financial Mgmt. Dept. - Manager
Special Projects – CO Based
Internal Audit Services - Manager
Other Office - COA
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
Section 58 of PD No.1445 states that:
“ x x x The examination and audit of assets shall be performed with a
view to ascertaining their existence, ownership, valuation and
encumbrances as well as the propriety of items composing the respective
asset accounts, determining their agreement with records; proving the
accuracy of such reports; ascertaining if the assets were utilized
economically, efficiently and effectively; and evaluating the adequacy of
controls over the accounts.”
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
We recommended that Management:
a.
Assign a permanent employee to analyze the Gasoline, Oil and
Lubricant Inventory account and see to it that all withdrawals of fuel made
during the year are properly recorded in the books;
b.
Review the recommended fuel allocation embodied in Memorandum
Circular (MC) No. 39 and revise the specific number of liters each
office/official should be entitled to in accordance with the current needs of
the office for proper monitoring and control; and
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
advance is submitted. However, when no liquidation of the previous cash
advance is received on or before January 20, the accountant shall cause
the withholding of the Accountable Officer’s salary.”
Section 8 - “It shall be the responsibility of the Head of the Agency to
ensure the proper granting, utilization and liquidation of all cash advances
in accordance with these rules and regulations.”
19.3 Civil Service Commission (CSC) Resolution No. 040676 dated June 17, 2004,
Rule V, Section 8 – “Failure of an Accountable Officer to render an account in full within
the periods prescribed and after formal demand shall constitute the administrative
offense of Gross Neglect of Duty punishable by dismissal from the service for the first
offense. Full liquidation/settlement/payment of the subject cash advance outside the
given periods shall constitute the offense of Simple Neglect of Duty punishable by
suspension from the service for one (1) month and one day to six (6) months for the first
offense, and dismissal from the service for the second offense.”
19.4 The foregoing rules and regulations were formulated to provide for a more
efficient and effective control over the granting, utilization and liquidation of cash
advances. However, it was observed that these rules were not strictly followed and
implemented based from the financial reports and records submitted, where several
deficiencies were noted. The following examples illustrate our observations:
Central Office
a.
The Advances to Officers and Employees amounting to P984,180 was
classified as that belonging to active and non-active accountable officers totaling
P238,587 and P745,593, respectively, without any basis/explanation for the said
classification. It has been observed that there were unliquidated advances of
accountable officers who are still in service but included among non-active
accountable officers and those who were already resigned/retired were classified
as active accountable officers.
b.
The Statement contained abnormal/negative balances which have
accumulated to a total of P98,704 as of December 31, 2012, an indication that
there was no regular monitoring/reconciliation done to correct/adjust the account.
c.
Various names of offices/agencies appearing among the list of non-active
accountable officers cannot be verified because of the absence of the required
supporting document.
d.
Subsidiary ledgers lacked detailed information such as the complete
name/designation/office of the accountable officers, the date and the nature or
purpose of the cash advance, making it difficult to monitor and issue demand
letters.
Regional Office No. XIII
e.
As of December 31, 2012, cash advances granted to officers and
employees with an aggregate balance of P2,253,897 had remained unliquidated
or unsettled. Most of the long outstanding accounts already aged more than
65
three years and proper accountability can no longer be established or determined
due to absence or insufficient accounting records. Cash advances granted during
the years 2009 and below which remained unliquidated as of year-end were not
supported with complete reference documents, hence cannot be verified. There
were negative unliquidated balances reported on the status of cash advances
submitted by Management which remained not reconciled as of year-end. We
also noted unsettled accounts of retired NIA personnel or personnel who have
transferred to other office.
19.5 Since the above were reiteration of our prior years’ audit observations, we
strongly recommended that Management:
a.
Create a special group/task force to undertake the immediate
analysis and reconciliation of the Advances to Officers and Employees
account;
b.
Impose legal sanctions mandated by law for those accounts that
have remained outstanding and the concerned accountable officers who
are still connected with NIA and exhaust all possible means to locate and
collect the amount due from those who are no longer connected with NIA;
c.
Ensure strict compliance with the applicable laws, rules and
regulations on the grant, utilization and liquidation of cash advances;
d.
Require the Accountant to monitor and strictly enforce the
liquidation of cash advances within the prescribed period and see to it that
no additional cash advance shall be allowed unless the previous ones are
settled or properly accounted for; and
e.
Require the Accounting Section to prepare and maintain complete
and updated subsidiary records for control and monitoring purposes.
19.6 The Regional Office No. XIII Management commented that the recommendations
are well taken. They further commented that there were instructions already given to the
accounting personnel of IMOs for the maintenance/update of subsidiary ledgers at IMO
level with complete details to facilitate reconciliation at the Regional Office.
20. Management did not fully implement the programmed activities and projects
identified in their Annual Gender and Development (GAD) Plan for CY 2012. GAD
Accomplishment Report showed that out of the total allocated amount of P2.510
million, only P0.119 million or 4.76 per cent was utilized in the Central Office, way
below its targeted accomplishment for the year.
20.1
The total approved budget of NIA for CY 2012 amounted to P4,333,906 million
and the amount allocated for the implementation of GAD in the Central Office was only
P2.510 million or .05 per cent and no allocation was made for the regional, field and
project offices contrary to Section 2.3 of Joint Circular No. 2012-01 of the Philippine
Commission for Women (PCW), National Economic and Development Authority (NEDA)
and the Department of Budget and Management (DBM). Details are as follows:
66
Table No. 21 - ANNUAL GAD PLAN AND BUDGET for CY 2012
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 Women’s Concerns
Women’s 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
Table No. 22 – GAD ACCOMPLISHMENT REPORT for CY 2012
Program Activity/Project
1. Women’s 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
Likewise, Section 28 of the General Appropriations Act of 2012 requires that:
67
“All government agencies, local government units, government owned
and controlled corporations, state colleges and universities, and all
instrumentalities of government to allocate at least five percent of their
annual budgets for priority programs and projects or activities that
address issues or women’s concerns.”
20.4
We recommended that Management:
a.
Incorporate in their annual budget proposals the required allocation
necessary to cover the related expenses for the proper implementation of
GAD programs and activities in the different regional, field and project
offices;
b.
Strictly formulate 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.
Closely monitor the full implementation of the conduct of GAD
programs and activities to ensure compliance with its targeted
accomplishment for the year.
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
Section 6 of PD No. 1146 (GSIS Law) provides that:
“It shall be compulsory upon the employer to deduct and withhold each
month from the monthly salary of each employee the contributions
payable by him and to remit the same and its share to the Government
Service Insurance System (GSIS) within ten days of each calendar month
following the month to which the contributions apply.
21.3 Section 20 of Implementing Rules and Regulations of the National Health
Insurance Act of 1995 (RA No. 7875 as amended by RA No. 9241) states that:
“The monthly premium contribution of employed members shall be
remitted by the employer on or before the tenth (10th) calendar day of the
month following the applicable month for which the payment is due and
applicable.
21.4 Section 3 of Rule VII of Implementing Rules and Regulations of RA No. 9679 or
the Home Development Mutual Fund (HDMF) Law of 2009, otherwise known as PagIBIG states that:
“All employers shall remit to the Fund their contributions and the
contributions of their covered employees as well as the latter’s loan
amortizations or payments to the Fund, as provided for under Section 2 of
this Rule, when applicable, within (15) days from the date the same were
collected unless another period is previously agreed upon between the
employer and the Fund, or within such periods as the Fund may prescribe
otherwise.
21.5 As of December 31, 2012, unremitted taxes to the BIR and statutory
contributions to the GSIS, Pag-IBIG and PhilHealth were noted in the following regional
offices:
Table No. 23 – Schedule of Unremitted Taxes to BIR, and Statutory Contributions
Due to BIR, GSIS, and PhilHealth as of December 31, 2012
Regional
office
CAR
Region I
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
Management gave the following comments:
a.
NIA-CAR commented that current withholdings are promptly remitted to
the concerned agencies and the remaining unremitted amounts are from prior
years which are due for reconciliation; and
b.
In NIA Region XIII, recommendations are well taken and reconciliation of
the accounts is now in process.
SUMMARY OF TOTAL AUDIT SUSPENSIONS, DISALLOWANCES AND CHARGES
AS OF YEAR-END
As of December 31, 2012, audit suspensions amounted to P1,423.800 million, audit
disallowances amounted to P110.334 million and charges amounted to P0.218 million
for all funds of NIA.
70
B. STATUS OF IMPLEMENTATION OF PRIOR YEAR’S AUDIT
RECOMMENDATIONS
Of the 43 audit recommendations embodied in the previous year’s Annual Audit Report,
two were fully implemented, 31 were partially implemented and 10 were not
implemented. The summary is shown below.
1.
Observations and Recommendations
The existence, valuation and accuracy of
Property, Plant and Equipment (PPE)
accounts stated at P36,921.526 million as
of December 31, 2011 were not
ascertained due to the non-conduct/nonsubmission of physical inventory report in
some NIA Regional Offices for PPE
totaling P1,230.587 million;
nonpreparation
and
maintenance
of
subsidiary
ledgers
and
property/construction-in-progress ledger
cards totaling P1,520.216 million; nonreconciliation of property and accounting
records with discrepancy amounting to
P2,295.427 million; non-recording of
assets purchased and donated; and nonreclassification of long completed projects
costing P59.103 million to the proper PPE
accounts.
Actions Taken / Comments
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
Observations and Recommendations
Actions Taken / Comments
Construction-in-Progress
(CIP)
to
appropriate PPE accounts with proper Reiterated in Part II.A, Observation
documentation which includes Certificate and Recommendation No. 1 of the
of Completion and Acceptance, Final current report.
Accomplishment Report and Project
Completion Report; and compute the
applicable depreciation expense on these
assets; and
d. Reclassify unserviceable property from Partially implemented
PPE to Other Assets account and attend
to their immediate and proper disposal.
We
further
Management:
recommended
that
a. For UPRIIS, ensure that small tangible Partially implemented
assets are reclassified to inventories and
recorded as expense upon issuance; and
that Property Acknowledgement Receipt
(PAR) on these properties are cancelled
and Inventory Custodian Slip (ICS) are
issued to concerned officials/employees
for monitoring and control purposes;
b. For NIA RO 6, maintain individual cost Not implemented
sheet for each project and coordinate with
the Engineering Department; and direct
the Property Officer/Custodian to facilitate
the conversion of private plates into
government plates and the subject
vehicles be marked “For Official Use
Only” under which the corresponding
name of the Agency or its official logo be
also printed pursuant to COA Circular No.
75-6 dated November 7, 1975; and
c. For NIA Central Office, maintain
property ledger card for Land and submit
schedule to support the balance of the
Land account; and prepare Inventory
Report of Land indicating the details such
as area, location, acquisition cost, date of
acquisition
and
encumbrance
and
reconcile the inventory report with
accounting record. Conduct investigation
to determine the whereabouts of the TCTs
and Deeds of Sale and determine the
officer responsible for its safekeeping and
ensure that these documents are always
Not implemented
Reiterated in Part II.A, Observation
and Recommendation No. 2 of the
current report.
72
Observations and Recommendations
ready to be presented to the Commission
on Audit when requested; and evaluate
the existing control on the custodianship
of important documents to address
weakness observed.
2.
Actions Taken / Comments
The accuracy and validity of Accounts
Receivables with year-end aggregate
balance of P16,461.603 million were not
established due to the absence of
subsidiary ledgers for accounts of
individual farmers and other debtors
totaling
P644.345
million
and
unsupported/undocumented balances of
Accounts Receivable – Irrigator’s Service
Fee (ISF) totaling P953.346 million. Also,
Receivables in NIA RO 1, 12, 13 and CAR
totaling P430.658 million were dormant for
7 to 15 years.
We
reiterated
our
prior
years’
recommendations
that
Management
comply with the rules and regulations and
provisions of law relative to receivable
accounts and:
a. Maintain
subsidiary
ledgers
for Partially implemented
receivable
accounts
and
regularly
reconcile the balances with the GL
balances and update recording/posting of
transactions at all times;
b. Conduct
periodic
reconciliation Partially implemented
between RO and FO receivable records,
and adjust the books, if necessary;
prepare regularly the aging schedules of
receivables and ensure that the balances
of these schedules agree with subsidiary
ledgers, and that the total of these ledgers
tallies with the general ledger balance of
each receivable account; and
c. Request write-off and/or adjustments of Partially implemented
account balances of dormant accounts
from COA in accordance with COA
Circular No. 97-001 dated February 5,
1997; work back on pertinent records to
ascertain their validity; and draw up
necessary adjustments.
73
Observations and Recommendations
Actions Taken / Comments
We further recommend that NIA RO 13, Not implemented
Management cause the recording of
unbooked audit disallowances to its
appropriate fund.
3.
The existence, validity and accuracy of
Cash-in-Bank accounts totaling P684.284
million could not be substantiated due to
non-preparation/updating
of
Bank
Reconciliation Statements (BRS) for
account balances totaling P98.096 million;
non-reconciliation of bank and book
balances with discrepancy totaling
P16.791
million;
non-maintenance/
improperly maintained subsidiary ledgers
for accounts with negative balance of
P151.457 million; existence of dormant
accounts totaling P54.106 million; and
existence of accounts with abnormal
balance of P189.615 million. Likewise,
fund transfers amounting to P12.019
million were made from the General Fund
to the Corporate Fund contrary to Section
37 of PD No.1177 and Section 4 of PD
No.1445. Further, among the reconciling
items for the BRS for December 2011 of
account Philippine National Bank (PNB)
Current
account
were
unrecorded
disbursement prior to 1988 amounting to
151.656
million
which
remained
undocumented.
We recommended that
undertake the following:
Management
a. Ensure strict compliance of Section 74 Partially implemented
of PD No.1445;
b. Conduct periodic reconciliation of Partially implemented
General Ledgers and subsidiary ledgers;
c. Enforce the preparation/ submission of Partially implemented
BRS for all bank accounts on time and
effect
the
necessary
corrections/
adjustments to establish the accuracy of
bank balances;
d. Reconcile the discrepancy existing Partially implemented
between bank records and accounting
records; and promptly verify reconciling
74
Observations and Recommendations
items and effect necessary accounting
adjustments;
Actions Taken / Comments
e. Maintain subsidiary ledgers for all bank Partially implemented
accounts and ensure that general ledger
balance tallies with the total of subsidiary
ledger balances;
f. Strictly adhere to Section 37 of PD No. Partially implemented
1177 and Section 4(3) of PD No. 1445
and refrain from transferring funds from Reiterated in Part II.A, Observation
General Fund to Corporate Fund; and
and Recommendation Nos. 5 and 7
of the current report.
Previously reported/reiterated in the
2010 AAR and 2011 AAR.
g. Conduct investigation of reconciling Not implemented
items in the Bank Reconciliation
statement of PNB Current Account as of
December 31, 2011 which pertained to
unrecorded disbursements prior to 1988
amounting to P151,655,662; identify the
NIA officers accountable therefor and take
appropriate action against them.
We
further
Management:
recommended
that
a. For NIA RO 2, maintain separate bank Fully implemented
account for Fund 501 PIDP and Fund
102 PIDP (PC); and cause the transfer of
the
amount
of
cash
deposits
corresponding to Fund 102 PIDP (PC)
which, at present, is lumped into LBP
Current Account and maintained under
Fund 501 PIDP, and deposit the same in
a separate bank account to be maintained
under Fund 102 PIDP (PC).
b. Limit payments by cash out of the Fully implemented
regular cash advances of the Disbursing
Officer/Cashier to payrolls and some
small amounts of payments only; and
c. For NIA RO 6, direct the Chief Not implemented
Accountant to reconcile the Cash-in-Bank
- Local Currency-Savings Account for the
time deposit and coordinate with the NIA
Central Office on the status of One-way
75
Observations and Recommendations
deposit-Central
Office
for
the
corresponding adjustments since the
actual cash deposits were not in the name
of the NIA Regional Office.
4.
Actions Taken / Comments
The accuracy and validity of the year-end
balance of Due to Other NGAs stated at
P13,123.691 million was not correctly
stated as its sub-account. Due to BTrCasecnan, with a balance of P13,195.785
million showed a huge variance of
P42,179.966 million as compared with the
BTr’s records at P55,303.657 million, with
the variance pertaining to the advances
made by the BTr to California Energy
Casecnan Water and Energy (CECWE)
and the same remained unrecorded in
NIA’s books as at year-end. Likewise,
Inter/Intra-Agency Payables and Other
Payables amounting to P31.836 million
were of doubtful validity due to lack of
subsidiary records and were still dormant
for several years.
a. Record the payables to BTr covering
advances made to CE Casecnan Water
and Energy Company, Inc. and the
corresponding interest thereon, and
reconcile the variance existing between
the BTr’s and NIA’s records;
Partially implemented
Reiterated in Part II.A, Observation
and Recommendation No. 15 of the
current report.
b. Maintain subsidiary ledgers for payable Partially implemented
accounts pursuant to Section 114 (2) of
PD No.1445 and strictly comply with the
provision of Section 12, Manual on NGAS,
Volume II;
c. Provide the necessary documents to Partially implemented
support the entries made to recognize the
Due to NGAs BOT account; and
d. Investigate dormant accounts and Partially implemented
effect
accounting
adjustments,
if
necessary and proper.
5.
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
Observations and Recommendations
resulted in a discrepancy of P492.679
million in receivable and P60.411 million
in payable. These accounts should have
zero balance after elimination, hence, the
accuracy and validity of the reciprocal
accounts was doubtful.
Actions Taken / Comments
We recommended that Management Not implemented
periodically reconcile the reciprocal
accounts and prepare the Statement of
Reconciliation of Reciprocal Accounts at
year-end.
6.
Cash advances totaling P14.973 million
remained outstanding and unliquidated as
of December 31, 2011, contrary to
Section 89 of PD No. 1445 and COA
Circular No. 97-002.
We reiterated our prior years’ advice that
Management strictly comply with the
provisions of Section 89 of PD No.1445
and COA Circular No. 97-002 by
undertaking the following courses of
action:
a. Withhold the salaries of concerned Not implemented
officers and employees who failed to
liquidate their cash advances despite
repeated demand as prescribed in
Section 5.9 of COA Circular No. 97-002;
and for those officers and employees who
were no longer in the service, issue
demand letters, otherwise, file the
necessary appropriate legal action against
them;
b. Stop granting additional cash advances Partially implemented
if the previous cash advance had not yet
been liquidated;
c. Enforce the penal provision in Section Not implemented
128 of PD No. 1445 on violation of the
limitations on cash advance cited in
Section 89 of the same law;
d. Maintain subsidiary ledgers and Partially implemented
regularly reconcile its balances against
controlling account appearing in the Reiterated in Part II.A, Observation
77
Observations and Recommendations
general ledger;
e. Exert diligent efforts to
unliquidated cash advances; and
Actions Taken / Comments
and Recommendation No. 19 of the
current report.
collect Partially implemented
f. Make an analysis of accounts with Partially implemented
negative balances, and make the
necessary accounting adjustments.
7.
Trust liabilities to BIR, GSIS, Pag-IBIG
Fund and Philhealth totaling P37.094
million were not remitted to the concerned
agencies contrary to law and government
rules and regulations.
We
reiterated
our
prior
years’
recommendations that Management:
a. Remit the P37,094,282 within the Partially implemented
prescribed period in compliance with
Section 2.81 of BIR Revenue Regulation
No. 2-98, Section 3.4 of RA No. 8291,
Section 6 of PD No.1146 (GSIS Law),
Section 3 of Rule VII of IRR of RA No.
9679, and Section 20 of IRR of the
National Health Insurance Act of 1995
(RA 7875 as amended by RA 9241); and
b. Maintain subsidiary ledgers and Partially implemented
reconcile the amount withheld against the
amount remitted every month.
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
Observations and Recommendations
and
Actions Taken / Comments
b. Include in the Purchase Orders the Partially implemented
basic information pursuant to COA
Circular No. 96-010, as well as a
certification as to the availability of funds
by the Corporate Accountant.
9.
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.
10. In NIA RO 2, the former Special Collecting
Officer of NIA-BRIS failed to turn over to
the new Special Collecting Officer palay
stock inventory of 216,471.87 kilograms
as of December 31, 2010, or equivalent to
4,810.48 sacks of palay of 45 kilograms
each.
We recommended that Management:
a. Require the Special Collecting Officer Partially implemented
to immediately account for the 216,471.87
kilograms of palay collections, and inform
79
Observations and Recommendations
the NIA Regional Manager about the
accountability of the Special Collecting
Officer which the latter failed or did not
turn over to the new Special Collecting
Officer, who is also the Officer-in-Charge
of the NIA Baua River Irrigation System;
and
Actions Taken / Comments
b. Conduct reconciliation of the balances Partially implemented
of accountability of Special Collecting
Officer for palay collections with that
recorded in the NIA RO2.
11. NIA MARIIS was charged by S.N. Aboitiz
Power (SNAP) the total amount of P6.930
million representing the amortization of
vehicles provided by the latter to selected
officials of NIA MARIIS and NIA Central
Office, without any covering contract or
agreement.
The amortization was
charged against the service fees collected
from SNAP during CYs 2008-2011.
We recommended that Management:
a. Submit the legal basis for the Partially implemented*
transaction such as NIA Board Resolution
authorizing the purchase, contract and * Management admits that there was
other legal documents authorizing the no agreement or terms and conditions
with the SNAP regarding the vehicles
installment purchase; and
payment amortization. The issue was
brought to Central Office. Letter
request was sent to SNAP to donate
the vehicles and refund the payments
made.
b. Create a committee to coordinate with Not implemented
SNAP for a thorough assessment of the
terms, conditions and other peculiarities
on the acquisition of the vehicles.
80