A. INTRODUCTION · Ricojudge Janvier M. Echiverri Undersecretary for External and Legislative Affairs Martin B. Diño Undersecretary for Barangay Affairs Ester A. Aldana Assistant

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EXECUTIVE SUMMARY

A. INTRODUCTION

On December 13, 1990, the Department of the Interior and Local Government

(DILG) was reorganized by virtue of Republic Act No. 6975, otherwise known as the

Department of the Interior and Local Government Act of 1990.

The Department’s function is primarily to assist the President in the exercise of

general supervision over local governments in promoting local autonomy, encouraging

community empowerment and maintaining peace and order and safety. The Department

continuously provides trainings, technical assistance, develops materials and implements

various infrastructure development programs and projects in support to the capability

building efforts of the Local Government Units (LGUs).

The Department is composed of the Office of the Secretary, five staff bureaus, five

line bureaus and 16 regional offices.

Under the present organizational set up, the DILG is headed by a Secretary who is

assisted by seven Undersecretaries and seven Assistant Secretaries. As of December 31,

2019, the key officials in the Department Proper are the following:

Name Designation

Eduardo M. Año Secretary

Marivel C. Sacendoncillo Undersecretary for Local Government

Epimaco V. Densing, III Undersecretary for Operations

Jonathan E. Malaya Undersecretary for Plans, Public Affairs and

Communications

Bernardo C. Florece, Jr. Undersecretary for Peace and Order

Nestor F. Quinsay, Jr. Undersecretary for Public Safety

Ricojudge Janvier M. Echiverri Undersecretary for External and Legislative Affairs

Martin B. Diño Undersecretary for Barangay Affairs

Ester A. Aldana Assistant Secretary for Administration, Finance and

Comptrollership

Francisco R. Cruz Assistant Secretary for Plans and Programs

Florida M. Dijan Assistant Secretary for Human Resource

Development

Roosque B. Calacat Assistant Secretary for Community Participation and

Barangay Affairs

Manuel B. Felix Assistant Secretary for Peace and Order

Marjorie N. Jalosjos Assistant Secretary for Mindanao Affairs and

Special Concerns

Alexander L. Macario Assistant Secretary for Public Safety and Security

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The personnel complement of the Department as of December 31, 2019 totaled to

4,436 consisting of 4,376 permanent employees and 60 contractual personnel of Patrol 117

Commission.

B. OPERATIONAL HIGHLIGHTS

In CY 2019, the following were among the major activities undertaken by the

DILG:

Particulars Targets Accomplishments

Actual %

PEACEFUL, ORDERLY AND SAFE LGUs

STRENTHENING OF PEACE AND ORDER COUNCILS (POCs)

Percentage of POCs audited on

functionality

100% 100% of 1,715 100

Number of ROs provided with skills

enhancement for RPOCs Secretariat

16 ROs 16 ROs 100

Number of Regions assisted on

POPS Plan Updating, POPSP PCMS

Retooling and Guidelines on

Functionality of POCs

16 ROs 16 ROs 100

STRENGTHENING OF ANTI-DRUG ABUSE COUNCIL (ADAC)

No. of ADAC Performance

indicators amended and enhanced

1 1 100

No. of Joint Memorandum Circular

on CDORP with DOH, DDB and

DILG formulated and issued

1 1 100

No. of Regional and Provincial

ADAC Focal persons on ADAC

Functionality Monitoring System

(ADAC-FMS) trained

98 98 100

ANTI-ILLEGAL DRUGS INFORMATION SYSTEM (AIDIS)

Percentage of ICT resources

procured

100% 100% 100

No. of internet leased line for PNP

data Center provided

1 1 100

No. internet DSL/Broadband for

C/Ms PNP Local Stations

660 660 100

No. of personnel from PNP

conducted with Roll-out Database

Build-up

660 820 124

911 EMERGENCY SERVICES

Percentage of emergency calls

responded to and reported to

100% 100% of 54,170

legitimate calls

100

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Actual %

appropriate responders and

accredited Local Call Centers

ENHANCED COMPREHENSIVE LOCAL INTEGRATION COMMAND PROGRAM

No. of Former Rebels provided with

financial assistance

100% 1,102

SOCIALLY-PROTECTIVE LGU

SUPPORT TO LOCAL GOVERNANCE PROGRAM (SLGP)

No. of CSOs participated in CSO

Conference

8,575 38,779 452

No. of LGUs’ citizens trained on

DevLive

1,410 2,010 142

No. of provinces capacitated on

Comprehensive Dev’t Planning

76 76 100

No. of LGUs assessed on LDC

Functionality

1,704 1,704 100

I. Strengthened Government Engagement

No. of PCM CSO conference

facilitated

8,575 25,081 292

No. of municipalities covered by

CSIS

63 63 100

II. Improved Local Development Planning

No. of CBMS trainers on CBMS

modules

108 108 100

No. of Regions/Provinces on CDP

and PDP/CDG Localization

16/76 16/76 100

III. Improved Local Service Delivery

No. of DILG Regional and

provincial personnel oriented of

LDC (PDCs & MDCs) functionality

assessment through SGLG

149 152 102

No. of LGUs assessed/calibrated on

LDC Functionality through SGLG

1,653 1,704 103

ASSISTANCE TO MUNICIPALITIES

No. of LGUs provided with technical

assistance to access financial subsidy

1,373 1,373 100

SALINTUBIG

No. of eligible LGUs provided with

technical assistance to access

financial subsidy

154 154 100

LGUs trained on Orientation on

Program Guidelines

157 157 100

LGUs coached and mentored on

planning and programming, source

29 12 Actual

accomplishment

was conducted by

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Actual %

Validation/confirmation & FS

preparation for FY 2020

WSSPMO, the

remaining balance

to be conducted by

RO

LGUs coached & mentored on FS,

DED and Asset Management in

coordination with the Regional Hubs

50 50 100

Guidelines formulated and

disseminated

1 1 100

LGUs provided with TA by RHUBS

in support to activities related to

SALINTUBIG

63 63 100

CAPACITATING LGUs ON RESETTLEMENT AND GOVERNANCE

Support to LGUs on Sustainable Livelihood Development

Localized Planning Workshop

conducted

12 12 100

RG-SLP Start-up Enterpreneurs and

Livelihood Champions trained

381 198 52

LGUs provided with Resettlement

Governance Assistance Fund

(RGAF)

12 12 100

ACCOUNTABLE, TRANSPARENT, PARTICIPATIVE AND EFFECTIVE

GOVERNANCE

PERFORMANCE-BASED CHALLENGE FUND (PCF) FOR LGUs

LGUs provided with PCF subsidy 100% of

qualified LGUs

100% of 380

LGUs

LGUs awarded with SGLG markers

and recognition plaques

100% of

qualified LGUs

100% of 380

LGUs

LGU projects validated 50 83 166

DECENTRALIZATION AND FEDERALISM PROGRAM

Policy research presented and

validated

3 4 133

Regions capacitated on Assessment

Tool

17 12 Training was

conducted per

Region

Barangays assessed 33,669 22,000 Implementation

was deferred to

2020 due to lack of

time

National and Regional accredited

CSOs

10 11 110

CSO forum/coordination meeting/

coalition building conducted

3 (Luzon,

Visayas &

Mindanao)

3 National CSO

conducted 16

Regional coalition

building

Social Media Interaction produced 420 420 100

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Actual %

CIVIL SOCIETY ORGANIZATION PEOPLES PARTICIPATION PARTNERSHIP

PROGRAM (CSO/PPPP)

Field offices trained on CSIS 77 77 100

LRIs trained 60 60 100

Municipalities covered by CSIS 14 14 100

CSO-PPPP Summit conducted 1 1 100

LUPONG TAGAPAMAYAPA INCENTIVES AWARD (LTIA)

No. of barangays provided with

financial assistance for assessment

and selection of best performing

lupons

40,055 40,055 100

Regional finalist provided with

development grant

58 54 93

National awardees conferred (cash

awards)

12 12 100

BUIDING BUSINESS-FRIENDLY AND COMPETITIVE LGUs

CMs monitored online on the

compliance on BPLS

1,516 1,516 100

LGUs compliant on BPLS standards 1,183 1,221 103

LGUs monitored and assessed

compliance on Building Permit and

Certificate of Occupancy

200 202 101

LGUs trained and oriented on the

integration of barangay clearance in

LGU permitting processes

80 614 767

Advocating Public-Private Partnership (PPP)

Policies developed on lease and

concession

2 1 50

LGUs trained on LGU P4 modalities

and its legalities

101 101 100

Re-engineering of LGU Systems, Operations and Procedures

Policy issued on re-engineering 1 1 100

Field testing conducted on re-

engineering

3 4 133

SUPPORT TO CONDITIONAL MATCHING GRANT TO PROVINCES-CGMP (LGSF)

Monitoring and Evaluation of Provinces’ Implementation of CMGP Projects and Achievement of

Governance Reform Targets

Projects/kms of provincial roads

monitored during implementation

(2016 KALSADA)

29/113.38 29/113.38 100



(2017 CGMP)

148/752.58 144/752.58 97



(2018 CGMP)

204/508.47 204/508.47 100

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Actual %



(2019 CGMP)

218/500 202/436.19 99/87

Provinces monitored on compliance

of 2019 CMGP of fund release

requirement

81 81 100

Provinces evaluated regarding their

implementation of Governance

Reform Target

76 76 100

PROVISION OF TECHNICAL ASSISTANCE TO PROVINCES ON THE

IMPLEMENTATION OF CMGP PROJECTS AND ACHIEVEMENT OF GOVERNANCE

REFORM TARGETS

Provinces provided with TA on their

implementation of CMGP projects 78 78 100

Provinces provided with TA on their

achievement of Governance Reform

Target

78 78 100

Provinces provided with TA on the

preparation of 2020 Fund Release

Requirement

76 76 100

Provinces provided with TA on

local road Mapping through QGIS

38 32 84

Provinces provided with TA on

RBIS

28 43 154

ADVOCACY

Completed LGSF projects

documented

52 19 Documentation

started only in 3rd

quarter

IEC materials printed and produced 7,911 6,000

ENVIRONMENT-PROTECTIVE, CLIMATE CHANGE ADAPTIVE AND DISASTER

RESILIENT

MANILA BAY CLEAN-UP, REHABILITATION AND RESERVATION PROGRAM

Liquid Waste Discharging into Manila Bay in Compliance with Effluent (General Effluent

Standard) and/or Ambient Water Quality with the Water Quality Guidelines

LGUs that conducted inspection and

inventory of Cs/Fs/PHs NCR, R III

and IV-A

178 178 100

LGUs monitoring households with

water connection

178 178 100

Solid Waste Ending Up in Manila Bay Reduced

National/Regional Top Performers

provided with cash incentives

2/5 2/5 100

LGUs validated for National ECA

validation

5 5 100

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Actual %

LGUs provided TA on the updating

of LGUs’ 10 Year Waste

Management Plan

57 44 77

Houses, Structures, construction and Encroachments along easement areas in rivers, waterways,

esteros, lake and bay coastlines within the Manila Bay Region permanently removed

LGUs’ Local Shelter Plan (LSP)

monitored

178 178 100

No. of dialogue with LNB President

under UDHA or RA 7279

conducted

178 178 100

LGUs’ Relocation and Resettlement

Action Plans (ARAP) monitored

178 178 100

LGUs Local Housing Board (LHBs)

monitored

178 178 100

LGUs Local Inter agency

Committees (LIACs) monitored

178 178 100

LGUs Local Council against

Squatting Syndicates and

Professional Squatters (LCASSPS)

monitored

178 178 100

Easements areas monitored 178 178 100

LGUs with cleared areas monitored 178 178 100

OPMBCS properly implemented

LGUs assisted in the monitoring and

enforcing the SC Mandamus

17 17 100

DISATER RISK MANAGEMENT-INSTITUTIONAL STRENTHENING (DRMIS)

Competency Baseline Profile

Survey conducted

4

Technical briefing on Competency

Assessment Result

1

Workshop on crafting the DRR-

CCA Competency Dev’t Plan

1 1 100

STRENGTHENING INTERNAL GOVERNANCE CAPACITY

MITHI PROGRAM

LGU 201 Profile

Elective Local Officials Profile

Database System (ELOPDS)

100% 100% 100

Gender and Development Plan and

Budget Monitoring System

100% 100% 100

Enhancement of Barangay Information

Barangay Officials Profile System 100% 100% 100

Programs and Project Management System

SubayBAYAN Mobile Application 100%

SubayBAYAN Web Application 100%

LAN, WAN AND IP TELEPHONY EXPANSION

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Actual %

Percentage of ICT resources

procured

40% 72% 180

Percentage of ICT software

procured

75% 39% On going

*PCM - provinces, cities, municipalities

C. FINANCIAL HIGHLIGHTS

Particulars 2019

2018

Increase/

(Decrease)

(In thousand pesos)

Financial Position

Assets ₱6,091,758 ₱9,438,310 ₱ (3,346,552)

Liabilities 423,930 468,659 (44,729)

Net Assets/Equity ₱5,667,828 ₱8,969,650 ₱ (3,301,822)

Financial Performance

Total Revenue ₱56,465 ₱91,491 ₱ (35,026)

Total Current Operating

Expenses

5,877,070 5,584,891 292,179

Surplus (Deficit) from Current

Operation

(5,820,605) (5,493,400) 327,205

Net Financial Assistance/

Subsidy

5,726,401 4,895,439 830,962

Other Non-Operating Income (10,955) 128 10,827

Surplus (Deficit) for the Period ₱105,159 ₱597,833 ₱ (492,674)

Sources and Application of Funds

Allotments Received ₱7,718,460 ₱7,285,570 ₱432,890

Obligations Incurred 6,852,652 6,850,948 1,704

Unexpended Allotments ₱ 865,808 ₱434,622 ₱431,186

D. SCOPE OF AUDIT

The audit covered the financial accounts and operations for calendar year 2019 of

the Central Office and the 16 Regional Offices. The report does not include RO No. IV-

B, and VIII due to non-submission of the Auditor’s report at the time of consolidation.

E. INDEPENDENT AUDITOR’S REPORT

The auditor rendered a qualified opinion on the fairness of presentation of the

financial statements of the DILG as of December 31, 2019 due to accounting errors and

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deficiencies which affected the fair presentation of the consolidated financial statements.

(Annexes F-1 & F-2)

F. SUMMARY OF OBSERVATIONS AND RECOMMENDATIONS

1. The accuracy of the Cash in Bank - Local Currency, Current Account (LCCA) balance

of ₱511,769,067.59 as at year-end was doubtful due to: (a) various unadjusted

accounting errors totaling ₱1,645,151.57; (b) non-reconciliation of the book and bank

balances; and (c) inclusion of dormant account amounting to ₱820,404.53. Moreover,

it includes fund balances totaling ₱42,386,226.52 not remitted to the Bureau of the

Treasury (BTr) or to the Source Agency (SA). (Observation No. 1)

We recommended that Management (a) direct the Regional Accountants to coordinate

with the Provincial Bookkeepers to revert long outstanding/stale checks; (b) effect

the necessary adjustment for reconciling items in the agency’s books of accounts;

(c) require the Chief Accountant to prepare the BRS regularly for each account and

submit the same to the Office of the Auditor for verification purposes and consider the

enrollment of the account to LBP we Access to facilitate the generation of bank

statements; (d) require the Regional Accountant in NCR and Region V to determine

the cause of the unreconciled difference and maintain subsidiary ledger for each bank

accounts, particularly the Trust Fund account to determine the cause of discrepancy

and make the necessary adjustment on the errors determined and in Region XI, to

instruct the Provincial Bookkeepers to exert extra efforts in reconciling the bank

balance with the subsidiary ledger’s balance maintained in the Accounting Unit ;

(e) direct the Provincial Director of the DILG, Davao Occidental to close the the bank

account which remained dormant for more than three years and revert the balance to

the Bureau of the Treasury (BTr); and (f) remit all unutilized and excess fund balances

to the BTr or SA.

2. The reliability of the reported balance of Receivable accounts totaling

₱4,507,359,016.29 cannot be ascertained due to discrepancy of ₱79.36 million

between the balances per books of DILG and the Implementing Agencies (IAs); and

net overstatement of ₱81.048 million caused by accounting errors and deficiencies.

Moreover, Management failed to strictly monitor the liquidation of fund transfers

which resulted in the accumulation of a huge balance at year-end.(Observation No. 4)

We recommended and Management agreed to: (a) investigate the discrepancies noted

and make the necessary adjustments, if warranted; (b) coordinate/reconcile with the

IAs relative to the unrecorded liquidations; (c) investigate the veracity of the claim of

the DILG-Provincial Field Office of Ifugao and prepare the necessary adjustment in

the books, if warranted; (d) require the Accounting Section in CAR to make the

necessary adjustment on the erroneous classification of account; (e) in Region V,

prepare the necessary adjustments to correct the balance of the affected accounts in

the financial statements; (f) follow up with the DPWH the final turn-over of the

building so that the appropriate recording of asset and expenses can be effected in the

books; (g) require the Accountant to reclassify the account Due from NGAs-ARMM

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to its appropriate account (Financial Assistance to LGUs); (h) strictly monitor and

enforce the liquidation of fund transfers in accordance with COA Circular No. 94-013

and relevant provisions of the MOA and determine the cause for non-liquidation of

the same; (i) require the IAs to refund the unexpended balance for all completed

undertakings; (j) in Region VII, resubmit the request for write-off of the dormant

balances to COA pursuant to existing regulations.

3. The accuracy of the Inventory accounts totaling ₱6,228,733.11 as at year-end was

unreliable due to: (a) accounting errors amounting to ₱742,417.13; (b) unreconciled

difference between the balances per Accounting and General Services Section records

and Report of Physical Count of Inventories (RCPI); (c) non submission of the

required RPCI; and (d) non-maintenance of Subsidiary Ledger Cards and Stock Cards

contrary to the requirements of GAM for NGAs. (Observation No. 6)

We recommended that Management require the concerned: (a) Accountant to effect

the necessary adjustments on the omissions and errors to correct the reported balances

of the affected inventory and related accounts; (b) Accountant to record all purchases

of supplies and materials under the Inventory account and discontinue the practice of

treating purchases of supplies and materials as outright expenses, except for fuel

expenses and those purchases out of petty cash fund; (c) Accounting Section to

determine the cause/s of discrepancies and adjust accordingly the affected accounts;

(d) Inventory Committee/ (GSS) to prepare and submit the RPCI to the Audit Team;

(e) Accountant to maintain SLC while the Supply Accountable Officer update the SC

to afford the proper reconciliation of records and effect any adjustments, if necessary;

and (f) GSS to determine whether the non-moving inventory items in the SCs are not

yet expired; otherwise, disposed them in accordance with existing regulations.

4. The accuracy and reliability of the Property, Plant and Equipment accounts with

carrying amount of ₱922,451,560.71 as at year-end was doubtful due to error in

recording, misclassification of accounts, unreconciled balances and other deficiencies

which resulted in the net overstatement of ₱5,844,110.19. (Observation No. 7)

We recommended that Management (a) in CO, to resolve the issue of ownership of

the subject land and building; (b) in Region VII, secure the tax declaration to document

the agency’s possession of the land; and appraise the value of the land as base amount

in recording in the books of accounts; (c) require the Accounting Office and Property

Section to conduct periodic reconciliation of their records and prepare the necessary

adjustments, if any; (d) require the Accountant to prepare necessary adjustments for

errors identified for fair presentation of affected accounts; (e) immediately disposed

the unserviceable properties to prevent their further deterioration and decrease in value

and submit the IIRUP to the Office of the Auditor; and (f) require the Accounting and

Supply and General Services Section to keep an updated PPELC, PC and furnish the

COA Office with a copy of the RPCPPE in accordance with COA rules and

regulations.

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5. The reported balance of the liability accounts totaling ₱141,939,540.22 at year-end

was unreliable due to: (a) non-reversion of Accounts Payable totaling ₱1,249,529.85

which have been outstanding for two years; (b) inclusion of accounts payable

amounting to ₱6,414,267.01 with incomplete supporting documents ; (c) inclusion of

unreconciled amounts of ₱4,347,572.07; (d) negative/abnormal balances totaling

₱1,284,292.76; (d) unaccounted balance of ₱2,482,050.31; and (e) outstanding

liability for completed projects/programs totaling ₱471,503.19. Moreover, accounting

errors made in the books of account resulted in the net overstatement of liability

accounts in the amount of ₱6,150,191.84 as at year-end. (Observation No. 9)

We recommended that Management: (a) require the Accountant to revert the Accounts

Payable aged two years to the Accumulated Surplus/Deficit account; (b) require the

concerned Regional/Provincial Offices to submit copies of the supporting documents

to ascertain the validity of the recognized Accounts Payable otherwise, reverse the

entry made; (c) require the Accountant to identify the cause/s and make necessary

adjustments for errors identified, unreconciled amounts, negative balances and

unaccounted balances; (d) require the Accountant to submit liquidation documents or

refund to SAs the unutilized funds for completed projects.

6. The reliability of the reported balance of the Other Assets account amounting to

₱64,209,149.66 as of December 31, 2019 could not be ascertained due to inclusion of

unreconciled items amounting to ₱1,532,868.78 and Construction in Progress-

Infrastructure Assets totaling ₱684,876.80 contrary to Chapter 3, Volume III of the

GAM. Moreover, various unserviceable equipment totaling ₱408,364.25 already

disposed were not reported in the Inventory and Inspection Report of Unserviceable

Property (IIRUP). (Observation No.8 )

We recommended that Management require the Accountant to (a) exert effort to work

back on the unreconciled amount and locate the supporting documents for the CIP-

Infrastructure Assets; and (b) make necessary adjustment on the unserviceable

properties, if already disposed, to arrive at the correct balance of the account.

7. Non-priority projects were funded out of the RAY-DILG funds and monitoring of

subproject implementation was not properly documented contrary to DILG

Memorandum Circular Nos. 2013-150 and 2014-147; thus, there is no reasonable

assurance that subprojects were completed as planned and desired benefits were

derived by the intended beneficiaries. (Observation No. 19)

We recommended that Management submit explanation/justification on the departure

from program guidelines regarding the utilization of the RAY-DILG fund.

8. After five years of implementation of the Bohol Earthquake Assistance (BEA) Project

for the construction of various facilities, out of 1,074 sub-projects, 1,058 were

completed and 16 are still on-going construction contrary to the provisions of DILG

Memorandum Circular No. 68 dated June 3, 2014. Moreover, the amount of

₱579,605,119.00 or 24 percent of ₱2,411,201,045.00. (Observation No. 16)

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We recommended that Management require the LGUs to submit the liquidation

reports on the completed subprojects and determine the causes/reasons for

uncompleted projects despite the grant of extension. If possible, issue a warning on

the cancellation of projects, otherwise require the refund of the unutilized fund.

9. The Informal Settlers Families - Project Management Office (ISF-PMO) failed to

validate and endorse 26,367 beneficiaries of the Interim Shelter Fund contrary to the

provisions of the Memoranda of Agreement with the National Housing Authority

(NHA) and the Presidential Commission for the Urban Poor (PCUP); resulting in

delayed distribution of financial assistance to the Informal Settler Families. (Observation No. 17)

We reiterated our prior years’ recommendation that Management direct the ISF-PMO

to: (a) devise a plan to promptly identify, validate and endorse ISFs to NHA and

PCUP; and (b) coordinate with the NHA and PCUP for the immediate disbursement

of the ₱18,000.00 financial assistance to identified beneficiaries.

10. Sixteen (16) ineligible LGUs were awarded with PCF 2019 incentive in the total

amount of ₱52.8 million; hence, contrary to DILG-MC 2019-202. Data posted at the

PCF website were inconsistent due to: (a) 37 projects from 32 LGUs have no encoded

project from CY 2011 to CY 2017; (b) projects from CY 2012 to 2018 amounting to

₱144,174,907 remained unposted; (c) projects from PCF 2013 and 2014 are still with

on-going status but marked as completed per PCF Accomplishment Report; and

(d) PCF sub-alloted per region was not updated with a total difference of ₱1.62 billion.

Moreover, PCF Accomplishment Reports were not posted online in compliance with

GAA 2019. (Observation No.18 )

We recommended that Management (a) submit explanation why the 16 LGUs were

granted PCF incentive despite being ineligible; (b) make the necessary adjustment on

the inconsistencies found at the PCF website; (c) ensure that the number encoded and

unreported projects by the LGUs are monitored; and (d) upload the necessary files on

the PCF and DILG Website.

11. Various dormant accounts in the Central Office with balances totaling

₱608,395,777.35 aged 10 years and above exists in the books due to unliquidated

fund transfers and cash advances contrary to COA Circular No. 2016-005 dated

December 19, 2016. (Observation No. 5)

We recommended that Management require the Accountant to: (a) exert more effort

to locate the documents and validate the applicable conditions set forth in Section

8.3b of COA Circular No. 2016-005 and file the request for write off of the account;

(b) demand from the accountable the submission of liquidation reports for advances

granted; (c) liquidate the funds received from Source Agency; and (d) remit to the BTr

or refund the unutilized balance from the completed projects to the Source Agency.

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12. Claims totaling ₱5,157,694.21 were paid despite incomplete documentation, contrary

to Sections 4.6 of Presidential Decree (PD) 1445; thereby casting doubt on the

propriety, regularity and validity of the transactions. (Observation No. 13)

We recommended that management to strictly comply with the provisions of Section

4.6 of PD 1445 and COA Circular 2012-001 and ensure that all claims for payments

are properly supported with the required documents.

13. Allotments under Maintenance and Other Operating Expenses (MOOE) amounting to

₱1,252,719.54 were utilized to fund the construction of the DILG Annex Building in

Region II, contrary to the provisions of Section 4(1) of PD 1445, Section 76 of the

General Provisions of the General Appropriations Act for FY 2019. (Observation No.

10 )

We recommended that Management: (a) stop using MOOE to finance the construction

of building and request Capital Outlay instead; and (b) prepare complete Engineering

Designs, Program of Works, Plans and Specifications and Detailed Cost Estimates of

Bill of Materials for the Annex Building under construction and submit the same to

COA.

14. Various deficiencies in the handling of cash accountabilities by the Accountable

Officers; thus, exposing the funds to possible risk of loss or misuse. Moreover the

fidelity bond of the Accountable Officers were not sufficient to cover their

accountabilities or not renewed on time. (Observation No. 2)

We recommended and Management agreed to: (a) stop the practice of allowing

reimbursements particularly those which are not emergency in nature; (b) discontinue

the practice of allowing regular transactions to be paid out of the Petty Cash Fund and

limit the charges to the PCF only for small or petty operating expenses; (c) determine

the accountabilities of AOs in CAR based on the highest monthly disbursement in a

year to ensure that the AOs are sufficiently covered with bond and require the four

AOs to apply for the renewal of bond before its expiration.; In Region VII, (d) we

recommended that Management determine the maximum cash accountability to be

assigned to the DOs before they apply for bond with the BTr and ensure that the bond

of the AO is sufficient to cover his accountabilities.

15. Deficiencies were noted in the granting and liquidation of cash advances which are

not consistent with Section 89 of PD 1445; thus, precluded the timely recording/

recognition of expenses in the books of accounts. (Observation No. 3)

We recommended and Management agreed to (a) require the Accountable Officers to

immediately liquidate the cash advances in accordance with the existing rules and

regulations; and (b) issue demand letters to Accountable Officers with long

outstanding cash advances and cause the withholding of salary in case of failure to

liquidate the same.

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16. The agency entered into contracts of services with hotels, resorts and other service

providers which are either beyond the allowed rate, inessential or with uneconomical

practices in the conduct of events/training, contrary to the provisions of DILG

Circulars No. 2017-03 and 2012-05 dated February 13, 2017 and March 23, 2012,

respectively, which are economically disadvantageous to the government.

(Observation No. 11 )

We recommended that Management in: DILG-Central Office: (a) require the Bids

and Award Committee, the end-user and DILG representative to the contract to submit

explanation why a government facility like the PICC was not considered as venue of

the Post SONA activity and for the two activities conducted outside the office

considering the participants were mostly from the Central Office; and (b) exercise

prudence in government spending by observing the existing guidelines of DILG

trainings, seminars and workshops; in Region XI to: (c) observe caution in government

spending for meals, snacks and refrain from serving unnecessary meals (breakfast and

dinner) considering that the workshop/seminars/meet-ups begin at 8:00am and end

before 5:00pm; (d) direct the Procurement Section to amend its 2020 PPMP and APP

in coordination with the division chiefs concerned to incorporate their annual training

plan with details on the number of participants and name of trainings/seminars to be

conducted with the estimated cost and the mode of procurement to be used; and

(e) prepare attendance sheets that indicate the specific time in and time out in the

morning and in the afternoon to monitor tardiness and absences of participants.

Other equally significant audit observations and recommendations are also noted

and discussed in detail under Part II of this report.

These observations and recommendations were brought to the attention of

concerned officials of the agency in our letter dated July 30, 2020 for further comment.

Management’s views and reactions were considered in the report, where appropriate.

G. STATUS OF IMPLEMENTAION OF PRIOR YEAR’S AUDIT

RECOMMENDATIONS

Of the 22 recommendations contained in the Consolidated Annual Audit Report of

2018, 14 were fully/considered implemented and eight were not implemented. Details are

shown in Part III of this report.

Documents

A. INTRODUCTION · Ricojudge Janvier M. Echiverri Undersecretary for External and Legislative Affairs Martin B. Diño Undersecretary for Barangay Affairs Ester A. Aldana Assistant