Republic of the Philippines COMMISSION ON AUDIT

Commonwealth Avenue, Quezon City

ANNUAL AUDIT REPORT

on the

HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL

For the Year Ended December 31, 2013

i

EXECUTIVE SUMMARY

A. Introduction

The House of Representatives Electoral Tribunal (HRET) was constituted

under Section 17, Article VI of the 1987 Philippine Constitution to act as the sole

judge of all contests relating to the election, returns and qualifications of Members of

the House of Representatives. The major function of the HRET and its principal

program, project and activity is the adjudication of electoral contests involving

Members of the House of Representatives.

B. Financial Highlights

A comparative analysis of the financial condition and allotment and utilization

of funds for the years 2013 and 2012 is presented below:

Financial Condition

Sources and Uses of Funds

Particulars

2013

2012

Increase/

(Decrease)

Allotments Received 155,902,111.80 138,551,688.20 17,350,423.60

Continuing

Appropriations

411,200.00

4,870,311.80

(4,459,111.80)

Total Allotments 156,313,311.80 143,422,000.00 12,891,311.80

Obligations Incurred 155,732,856.33 138,214,961.71 17,517,894.62

Unexpended Balance 580,455.47 5,207,038.29 (4,626,582.82)

The Statement of Allotments, Obligations and Balances for calendar year

2012 is shown in Annex A.

Particulars

2013

2012

Increase/

(Decrease)

Assets 38,550,306.29 18,097,207.69 20,453,098.60

Liabilities 25,508,809.60 13,174,669.93 12,334,139.67

Equity 13,041,496.69 4,922,537.76 8,118,958.93

ii

C. Scope of Audit

An audit was made on the accounts and operations of the HRET for the CY

2013. The audit was aimed to ascertain the propriety of the financial transactions and

determine the fairness of the presentation of the financial statements of the agency.

D. Auditor’s Report

The Auditor rendered an unqualified opinion on the fairness of presentation of

the financial statements of HRET as of December 31, 2013.

E. Audit Observations and Recommendations

The following audit observations and corresponding recommendations were

discussed with management officials concerned during the exit conference on June 2,

2014 and their comments were incorporated in the report, where appropriate:

1. Management failed to furnish the Office of the Auditor copy of purchase orders

within five (5) working days from issuance thereof contrary to COA Circular

No. 2009-001 dated February 12, 2009.

We recommended that Management require the official concerned to comply

with COA Circular No. 2009-001 dated February 12, 2009 on the submission of

a copy of purchase order issued within the reglementary period.

2. The agency did not have programs/projects related to senior citizens and the

differently-abled persons as required under Section 29 of the General

Provisions of the General Appropriations Act (GAA) for CY 2013 (RA 10352).

We recommended that Management prepare programs/projects related to the

senior citizens and differently-abled persons as required in the above cited

GAA provision.

F. Implementation of Prior Years’ Recommendations

Of the four prior years’ audit recommendations, one was implemented and

three were not implemented.

TABLE OF CONTENTS

PART PARTICULARS PAGE

I

Audited Financial Statements

Independent Auditor’s Report

Statement of Management’s Responsibility

for Financial Statements

Balance Sheet

Statement of Income and Expenses

Statement of Cash Flows

Notes to Financial Statements

1

2

3

5

7

9

II

Observations and Recommendations 16

III Status of Implementation of Prior Years’ Audit

Recommendations

20

IV Annexes

22

Statement of Allotments, Obligations and Balances

Breakdown of Expenditure/Obligations Incurred

Obligations Liquidated/Disbursement and Unliquidated

Obligations

PART I

AUDITED FINANCIAL STATEMENTS

PART II

OBSERVATIONS AND RECOMMENDATIONS

PART III

STATUS OF IMPLEMENTATION OF PRIOR YEARS’

AUDIT RECOMMENDATIONS

PART IV

ANNEXES

INDEPENDENT AUDITOR’S REPORT

Honorable Presbitero J. Velasco, Jr.

Chairman

House of Representatives Electoral Tribunal

Quezon City

Pursuant to Section 2, Article IX-D of the Philippine Constitution and pertinent

provisions of the Government Auditing Code of the Philippines (PD 1445), we have

audited the accompanying Balance Sheet of the House of Representatives Electoral

Tribunal as of December 31, 2013 and the related Statements of Income and Expenses

and Cash Flows for the year ended. These financial statements are the responsibility of

the Auditee. Our responsibility is to express an opinion on these financial statements

based on our audit.

We conducted our audit in accordance with generally accepted state auditing

standards. Those standards require that we plan and perform the audit to obtain

reasonable assurance that the financial statements are free from material misstatement/s.

Our audit includes examining, on a test basis, evidence supporting the amounts and

disclosures in the financial statements; assessing the accounting principles used and the

significant estimates made by the auditee, as well as, evaluating the overall financial

statements presentation. We believe that our audit provides reasonable basis for our

opinion.

In our opinion, the financial statements referred to above present fairly, in all

material respects, the financial position of the House of Representatives Electoral

Tribunal as of December 31, 2013, and the results of its operations and its cash flows for

the year then ended in conformity with applicable generally accepted state accounting

principles.

April 15, 2013

Republic of the Philippines

COMMISSION ON AUDIT Commonwealth Avenue, Quezon City

2

Notes 2013 2012

Current Assets

Cash 5

Petty Cash Fund 44,074.09 4,533.30

Cash - National Treasury - MDS 3,918,835.40 2,465,071.44

Cash in Bank - Local Currency, Current Account 17,443,568.42 6,752,698.47

Total Cash 21,406,477.91 9,222,303.21

Receivables 6

Due from NGAs 16,240.92 19,555.32

Advances to Officers and Employees 8,794.89 166,055.64

Total Receivables 25,035.81 185,610.96

Inventories 7

Office Supplies Inventory 549,717.82 221,857.63

Other Supplies Inventory 4,733.60 722.59

Spare Parts Inventory 5,152.00 5,152.00

Total Inventories 559,603.42 227,732.22

Prepayments 8

Other Prepaid Expenses 7,360.00 9,200.00

Other Current Assets 9

Guaranty Deposits 55,209.75 54,709.75

Total Current Assets 22,053,686.89 9,699,556.14

Investments 10

Investments in Stocks 24,500.00 24,500.00

Property, Plant and Equipment 11

Leasehold Improvements, Buildings 3,589,274.21 3,589,274.21

Office Equipment 4,819,687.90 4,592,149.86

HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL

Balance Sheet

As of December 31, 2013

(With comparative figures for CY 2012)

(In Philippine Peso)

ASSETS

3

Notes 2013 2012

Furniture and Fixtures 3,346,751.15 3,006,586.06

IT Equipment and Software 7,655,834.40 8,200,918.40

Library Books 1,177,612.40 1,131,124.30

Communication Equipment 1,110,727.92 1,451,532.92

Firefighting Equipment and Accessories 105,902.85 105,902.85

Other Machineries and Equipment 20,992.20 20,992.20

Motor Vehicles 8,856,142.17 1,945,642.17

Total Property, Plant and Equipment 30,682,925.20 24,044,122.97

Less: Total Accumulated Depreciation 14,534,072.96 15,998,408.57

Property, Plant and Equipment- Net 16,148,852.24 8,045,714.40

Other Assets 12

Other Assets 323,267.16 327,437.15

TOTAL ASSETS 38,550,306.29 18,097,207.69

Current Liabilities 13

Accounts Payable 8,149,778.55 6,338,852.93

Due to Officers and Employees 0.00 5.53

Due to National Treasury 7,004.48 5,899.67

Due to BIR 0.00 0.00

Due to GSIS 3,065.15 4,910.27

Due to Pag-IBIG 912.89 300.00

Due to PhilHealth 312.50 675.00

Performance Bonds Payable 21,000.00 21,000.00

Other Payables 17,326,736.03 6,803,026.53

Total Current Liabilities 25,508,809.60 13,174,669.93

Equity 14

Government Equity, Beginning 4,922,537.76 8,514,558.20

Retained Operating Surplus

Current Operations 8,112,413.62 (3,495,572.86)

Prior Years' Adjustments 6,545.31 (96,447.58)

Total Retained Operating Surplus 8,118,958.93 (3,592,020.44)

Government Equity, End 13,041,496.69 4,922,537.76

TOTAL LIABILITIES AND EQUITY 38,550,306.29 18,097,207.69

LIABILITIES AND EQUITY

See accompanying Notes to Financial Statements

4

9

HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL

Notes to Financial Statements December 31, 2013

1. General/Agency Profile

1.1 The House of Representatives Electoral Tribunal (HRET) was constituted under

the 1987 Constitution (Section 17, Article VI) to act as the sole judge of all

contests relating to the election, returns and qualifications of Members of the

House of Representatives (HREP).

1.2 The major function of the HRET and its principal program/project/activity is the

adjudication of electoral contests involving Members of the HREP. No target is

set for the number of electoral cases to be resolved each year because the

adjudication depends upon the progress of each proceeding strictly followed in

each case.

1.3 The Tribunal is composed of nine members, three of whom are Justices of

Supreme Court and the rest are Members of the HREP. The Senior Justice acts

as the Chairman.

The following are the incumbent officers of the Tribunal Proper as of

December 31, 2013:

Hon. Justice Presbitero J. Velasco, Jr. Chairman

Hon. Justice Diosdado M. Peralta Member

Hon. Justice Lucas P. Bersamin Member

Hon. Congressman Franklin P. Bautista Member

Hon. Congressman Wilfrido Mark Enverga Member

Hon. Congressman Joselito Andrew R. Mendoza Member

Hon. Congressman Jerry P.Trenas Member

Hon. Congresswoman Ma. Theresa B. Bonoan-David Member

Hon. Congressman Luzviminda C. Ilagan Member

1.4 The HRET has a total personnel complement of 124 as of December 31, 2013,

as follows:

Permanent 79

Co-terminus

45

Total 124

10

2. Basis of Financial Statements Presentation

The Financial Statements have been prepared in accordance with generally

accepted state accounting principles and standards.

3. Summary of Significant Accounting Policies

3.1 The Tribunal uses accrual basis of accounting. All expenses are recognized when

incurred and income is reported upon receipt. Income is generally composed of

filing fees, photocopying and certification charges and sale of Transcript of

Stenographic Notes (TSNs), HRET Rules, CDs and Reports of the Tribunal.

3.2 Notice of Cash Allocation (NCA) is recorded in the Regular Agency (RA)

books. The agency does not have authority to use whatever income it receives.

All collections are therefore recorded in the National Government (NG) books

and remitted to the National Treasury.

3.3 The modified obligation system is used to record allotments received and

obligations incurred. Separate registries are maintained to control allotments and

obligations for each class of allotment.

3.4 Petty Cash Fund (PCF) account is maintained under the Imprest System. All

replenishments are directly charged to the expense account. The PCF is not used

to purchase regular inventory items for stock.

3.5 The moving average method is used in the valuation of inventories.

3.6 Supplies and materials purchased are recorded using the Perpetual Inventory

System.

3.7 Property, Plant and Equipment (PPE) are carried at cost less accumulated

depreciation. Regular maintenance, repair and minor replacements are charged

against Maintenance and Other Operating Expenses (MOOE) as they are

incurred.

3.8 Straight Line Method of depreciation is used in depreciating the PPE with

estimated useful lives ranging from 5 to10 years as provided for in COA Circular

No. 2003-07 dated December 11, 2003 and as amended by COA Circular No.

2004-005 dated August 9, 2004. A residual value of 10 per cent of the cost of the

asset is set and depreciation starts on the next month after purchase.

3.9 Payable accounts are recognized and recorded in the books of account only upon

acceptance of the goods/inventory/other assets and rendition of services to the

agency.

11

3.10 Accounts were reclassified to conform with the revised Chart of Accounts per

COA Circular No. 2003-001 dated June 17, 2003 and Updated Description of

Accounts under the NGAS per COA Circular No. 2004-008 dated September 20,

2004.

3.11 Accounts for cash transactions were reclassified in compliance with COA

Accounting Circular No. 2006-001 dated November 9, 2006. Cash Advance for

Payroll recorded as Cash-Disbursing Officers was reclassified to Payroll Fund.

Cash Advance for Special Purpose/Time bound Undertaking recorded as Cash-

Disbursing Officers or as Due from Officers and Employees were also

reclassified to Advances to Officers and Employees.

4. Correction of Fundamental Errors

Fundamental errors of prior years are corrected by using the Prior Years’

Adjustments account. Errors affecting current year’s operation are charged to the

current year’s account.

5. Cash

The Petty Cash Fund of P44,074.09 represents the unliquidated petty cash

advances used for emergency, petty expenses and urgent requirements of the

Tribunal.

The Cash - National Treasury, MDS of P3,918,835.40 represents the balance

of the restored cash equivalent of all unreleased checks at year end.

The Cash in Bank - Local Currency, Current Account of P17,443,568.42 are

deposits of protestants and protestees who are both parties to electoral cases for

expenses incidental to the adjudication of their cases, which are held-in-trust by the

Tribunal.

6. Receivables

Due from NGAs of P16,240.92 consists of prepayments to the Procurement

Service for various office supplies.

Advances to Officers and Employees of P8,794.89 pertains to excess of cash

advances over expenses incurred for travels and other special purposes/time-bound

undertakings embarked on by the HRET officials and employees, which has already

been refunded on the first week of January 2014.

12

7. Inventories

This group of accounts totaling to P559,603.42 includes office supplies and

materials, spare parts, and other supplies inventory on hand as of December 31, 2013.

8. Prepayments

The Other Prepaid Expenses account amounting to P7,360.00 represents

prepayments to Central Book Supply, Inc. for Supreme Court Reports Annotated

(SCRA) Volumes 697 to 700 which have not yet been delivered as of December 31,

2013. They were delivered on January 17, 2014 as per Charge Invoice No. 122998

and Inspection and Acceptance Report (IAR) No. 2014-002 dated January 17, 2014.

9. Other Current Assets

Guaranty Deposits account of P55,209.75 pertains to deposits for PLDT

telephone lines, MWSS water lines, and cellular phones.

10. Investments

Investment in Stocks of P24,500.00 pertains to the investment in PLDT stocks

which are carried at cost in connection with the telephone line for HRET’s use.

11. Plant, Property and Equipment

This group of accounts consists of the following:

Account

Description

Balance

1/01/13

2013

Addition /

(Deduction)

Balance

12/31/13

Accumulated

Depreciation

12/31/13

Net Book

Value

12/31/13

Leasehold Improvement,

Building

P3,589,274.21 P3,589,274.21 P 996,413.84 P2,592,860.37

Office

Equipment

4,592,149.86 227,538.04 4,819,687.90 3,711,728.27 1,107,959.63

Furniture and

Fixtures

3,006,586.06

340,165.09

3,346,751.15

2,323,445.12

1,020,586.03

IT Equipment

and Software 8,200,918.40 (545,084.00) 7,655,834.40 4,582,256.12 3,073,578.28

Library Books 1,131,124.30 46,488.10 1,177,612.40 953,117.80 224,494.60

Communication

Equipment

1,451,532.92

(340,805.00)

1,110,727.92

662,707.64

448,020.28

Firefighting Equipment and

Accessories

105,902.85

105,902.85

88,573.51

17,329.34

13

Account

Description

Balance

1/01/13

2013

Addition / (Deduction)

Balance

12/31/13

Accumulated

Depreciation

12/31/13

Net Book

Value

12/31/13

Other

Machineries and Equipment

20,992.20 20,992.20 17,246.26 3,745.94

Motor Vehicles 1,945,642.17 6,910,500.00 8,856,142.17 1,198,584.40 7,657,557.77

Total P24,044,122.97 P6,638,802.23 P30,682,925.20 P14,534,072.96 P16,148,852.24

12. Other Assets

The Other Assets account of P323,267.16 represents the net book value of

reclassified unserviceable property and equipment with a total acquisition cost of

P3,227,388.16. The said property are no longer utilized and are for disposal.

13. Current Liabilities

This group of accounts consists of the following:

Accounts Payable totaling P8,149,778.55 consists of obligations to various

suppliers arising from the purchase of goods and services. The amount of

P4,056,527.30 represents various accruals made on services rendered and goods

delivered which remained unpaid as of December 31, 2013. The account also

includes the restored cash equivalent of various unreleased checks drawn from the

Cash National Treasury, MDS account of P3,918,835.40, and prior year’s accounts

payable of P174,415.85.

Due to National Treasury of P 7,004.48 represents the unremitted balance of

the interest income earned for the 4th

quarter of 2013 from the HRET Trust Account

maintained at the Land Bank-COA Branch. The said interest income was credited by

the bank on December 27, 2013 and was remitted to the National Treasury in January

2014.

Other Payables amounting to P17,326,736.03 pertains to the cash deposits

made by various Protestants and Protestees for expenses to be incurred in connection

with the adjudication of their cases filed with the Tribunal. The increase in this

account was due mainly to the cash deposits of various parties.

14. Government Equity

The Government Equity account amounting to P13,041,496.69 includes the

Prior Years’ Adjustments account of P 6,545.31, which is a credit balance, pertains to

the net result of prior year’s expenses (debit balance) which were paid this year as

against the reversion of various payable accounts (credit balance) which have

remained outstanding in the books for more than two (2) years.

14

15. Subsidy Income from National Government (SING)

This account includes the following:

NCA received from DBM for operational

requirements

P146,838,862.00

Tax Remittance Advice (TRA) issued to BIR 9,398,274.19

Total P156,237,136.19

Less: Return of Salaries and Cash Advances and

overpayment of Expenses

252,530.39

Reversion of unused NCA 731,486.79

Net SING P155,253,119.01

16. Income and Expenses

As of December 31, 2013, Income and Expenses amounted to P155,253,119.01

and P147,140,705.39, respectively, resulting to an excess of expense over income of

P8,112,413.62.

The increase in Traveling Expenses-Local, Office Supplies Expenses,

Telephone Expenses-Mobile and Representation Expenses accounts is due to the

reimbursement of expenses incurred by the Members of the Tribunal in connection

with the discharge of their functions. The said expenses are covered by Official

Receipts. Moreover, the increase in Office Supplies Expenses account is due to

additional office supplies needed in relation to the new cases filed by various

Protestants.

17. Consultancy Services

The decrease in Consultancy Services of P321,159.23 is due to the decrease in

the total number of months the consultants served the Tribunal, from 206 months in

CY 2012 to 190 months in CY 2013, as shown below:

No. of

Consultants

No. of Months

in Service

Total No. of

Months Served

CY 2013 5 12 60

1 11 11

1 9 9

9 6 54

9 5 45

1 4 4

2 3 6

1 1 1

Total 24 190 months

15

No. of

Consultants

No. of Months

in Service

Total No. of

Months Served

CY 2012 15 12 180

1 11 11

1 7 7

2 2 4

1 4 4

Total 20 206 months

Decrease 16 months

18. Allotments, Obligations and Balances

Total allotments available during the year including allotment in CY 2012

carried over in CY 2013 was P156,313,311.80 while obligations incurred amounted

to P155,732,856.33, details of which are as follows:

Allotment

Class Allotments Obligations Balance

PS P 90,978,196.23 P 90,808,940.76 P 169,255.47

MOOE 55,260,371.18 54,849,171.18 411,200.00

CO 10,074,744.39 10,074,744.39 0.00

Total P156,313,311.80 P155,732,856.33 P580,455.47

The breakdown of Obligations Incurred is as follows:

Obligations Paid P151,676,329.03

Due and Demandable 4,056,527.30

Total P155,732,856.33

For CY 2012, there was no unbooked obligations.

16

OBSERVATIONS AND RECOMMENDATIONS

Non-submission of approved purchase orders

1. Management failed to furnish the Office of the Auditor copy of purchase orders

within five (5) working days from issuance thereof contrary to COA Circular

No. 2009-001 dated February 12, 2009.

1.1 Review of the Purchase Orders attached to disbursement vouchers revealed that

they were not forwarded to the Office of the Auditor within five (5) working days

from issuance thereof. Hereunder are the Purchase Orders not submitted to the

Auditing Unit:

Purchase

Order

No.

Date Supplier Amount Remarks

P.O No. 2013-026

10/25/2013 SI Technologies P 121, 500.00 For IT Equipment (Apple IPOD)

P.O No.

2013-025

10/22/2013 Micro Quadkey’s

Corporation

P 171,480.00 For IT Equipment

(IPAD & Notebook)

P.O No. 2013-024

10/20/2013 Avid Sales Corporation

P 224, 393.00 For IT Equipment

P.O No.

2013-023

10/18/2013 Palces

Manufacturing,

Inc.

P 56,379.60 For Furniture &

Fixtures

P.O. No.

2013-021

10/08/2013 Toyota

Commonwealth

Inc.

P 3,192,400 For Delivery

Equipment (2

Toyota Hi-Ace GL Grandia)

P.O No.

2013-020

9/25/2013 BOC’s Trading

Co., Inc.,

P 334,584.55 For various office

supplies.

P.O. No. 2013-019

07/10/2013 Adecs International

Corporation

P 189,963.00 For various toners/ink cart.

P.O. No.

2013 -018

07/10/2013 Luzon Sales Co.

Inc.,

P 114,542.60 For materials for

repainting of the Office Building

P.O. No.

2013-014

04/17/2013 BOC’s Trading

Co., Inc.,

P 180,522.85 For Supplies.

P.O. No. 2013-013

04/05/2013 Philippine Duplicators. Inc.,

P 60,487.46 For 2 units Manual Punch & Binding

machine.

P.O. No.

2013-012

04/01/2013 Compucare Center P 34,500.00 For 1 unit Printer

USB-Cable.

P.O. No.

2013-011

03/15/2013 Compucare Center P 108,700.00 For assorted toners.

P.O No. 02/08/2013 Maximum P 52,110.00 For IT Equipment &

17

Purchase

Order

No.

Date Supplier Amount Remarks

2013-005 Solutions

Corporation

Software (27 units of

Mcafee Anti-Virus)

P.O. No. 2013-004

01/03/2012 Central book supply

P 44,160.00 For Subscription of SCRA volume 653-

676 (2 copies each)

P.O. No.

2013-003

01/29/2013 Solerex Water

Store Inc.

P 41,472.00 For Purified water

for 2013

P.O. No.

2013-002

01/28/2013 Gadgets in Style

Trading

Corporation

P 386,480.00 For various IT

Equipment (Ipad 4)

1.2 Attention is invited to Section 3.2.1 of COA Circular 2009-001 dated February

12, 2009 which requires the submission of the purchase order:

“A copy of any purchase orders irrespective of amount, and each and

every supporting documents, shall, within five (5) working days from

issuance thereof, be submitted to the auditor concerned.”

1.3 We recommended that Management require the officials concerned to

comply with COA Circular No. 2009-001 on the submission of a copy of

purchase order issued within the reglementary period.

1.4 Management acknowledged their failure to submit Purchase Orders to the Office

of the Auditor within five (5) days from issuance thereof and commented that

starting 2014 they will religiously comply with COA Circular No. 2009-001.

2. Status of Audit Suspensions, Disallowances and Charges (SASDC)

2.1 There was no Audit Suspension and Disallowances for CY 2013.

3. The agency was able to identify, include and attain programs/activities in its

Gender and Development (GAD) plan for CY 2013.

3.1 For CY 2013 the agency spent P451,500 which is 100 percent of the allocated

GAD budget for the year. The following are the GAD projects/activities

accomplished for CY 2013:

Project/Activity Amount

Creation of GAD Focal Point System (GFPS) in FY

2009

No cost

Creation of GAD Technical Working Group (GAD-

TWG) in FY 2013

No cost

18

Project/Activity Amount

Creation of sex disaggregated data of personnel No cost

Revision of Agency Merit Promotion Plan (MPP) for

non-sexist language

No cost

Revisiting of terms of reference on service providers of

security personnel

No cost

GAD Strategic Planning and Budgeting Seminar-

Workshop

450,000.00

Creation of GAD Bulletin 1,500.00

Non-compliance with Budget Requirement for Programs/Projects Related to Senior

Citizens and Differently-Abled Persons

4. The agency did not have programs/projects related to senior citizens and the

differently-abled persons as required under Section 29 of the General Provisions

of the General Appropriations Act for CY 2013 (RA 10352).

4.1 Section 29 of RA 10352 (GAA CY 2013), provides that, “Programs and Project

Related to Senior Citizens and Differently-Abled. All agencies of the government

shall formulate plans, programs and projects intended to address the concerns of

senior citizens and differently-abled persons, insofar as it relates to their

mandated functions, and integrate the same in their regular activities.”

4.2 For CY 2013, the Agency did not prepare any programs/projects related to senior

citizens and differently-abled persons, hence, no disbursements were made.

4.3 We recommended that Management prepare programs/projects related to

the senior citizens and differently-abled persons as required in the above

cited GAA provision.

4.4 Management commented that they already instructed the General Service to

complete the plan for the project as soon as possible, so that the necessary budget

be allocated for the purpose.

5. Compliance with Tax Laws

5.1 In compliance with DOF-DBM-COA Joint Circular 1-200 dated January 3, 2000

and Presidential Memorandum Order No. 219 dated February 13, 1989, taxes

withheld from 2013 disbursements were remitted to the Bureau of Internal

Revenue (BIR) on or before due dates. The total taxes remitted to BIR amounting

to P9,398,274.19 consist of taxes withheld from salaries and expanded and final

taxes withheld from payment of goods and services.

19

6. Compliance with GSIS Premium Deductions and Remittances (RA 8291)

6.1 GSIS Social Insurance and Employees Compensation Fund (SIF and ECIF)

premiums were deducted from salaries of employees and remitted on time to the

GSIS. The Due to GSIS balance of P3,065.15 as of December 31, 2013 was

remitted on January 2014.

20

STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT

RECOMMENDATIONS

Of the four prior years’ audit recommendations, one was implemented and three

were not implemented.

Observations and

Recommendations

Reference

AAR

Page No.

Actions Taken by

Management

Auditor’s

Validation

Results

2012

1. Other Maintenance and

Operating Expenses

amounting to

P28,019,640.21 included

the additional allowance

of P8,856,000 given to

the Members of the

Electoral Tribunal with

no documents to support

the expenditures but only

a certification that the

expenditures that the

amounts were expended

in the performance of the

official duties.

We recommended that

Management

immediately cause the

submission of the

supporting documents

for the liquidation

vouchers for December

2012. Further, strict

compliance with

Section4 (6) of PD 1445

be adhered to for all

transactions of the

HRET starting January

1, 2013.

16-17

Implemented

Liquidation

vouchers of

additional

allowance

of the Chairman

and Members of

the Tribunal are

now supported of

documents that

substantiate the

expenses starting

only April 1,

2013.

Management had

already complied

with Audit

Instruction dated

February 8, 2013

that expenditures

in the form of

additional

allowance

incurred by the

Chairman and

Members of the

Tribunal were

supported by

documents which

includes sales

invoices, official

receipts and

other pertinent

supporting

documents.

21

Observations and

Recommendations

Reference

AAR

Page No.

Actions Taken by

Management

Auditor’s

Validation

Results

2. The agency had no

programs/projects

related to senior citizens

and the differently-

abled persons and did

not allocate at least one

per cent of its budget as

required under Section

29 of the General

Provisions of R.A. No.

10155, GAA for CY

2012.

We recommended that

Management prepare

programs/projects

related to the senior

citizens and differently-

abled persons and

allocate at least one

percent (1%) of its

budget as required in

the GAA provision.

Not implemented

Management had

instructed

the General

Service to

complete the plan

for the project as

soon as possible,

so that the

necessary budget

be allocated for

the purpose.

Management did

not prepare

plans/projects

related to the

senior citizens

and differently-

able persons,

hence no

disbursement

was made.

2011

3. Management was still

using the traditional

cash payroll scheme in

paying the salaries,

allowances and other

personnel benefits of

its officers and

employees instead of

the automated payroll-

thru-bank system, thus,

incurring unnecessary

manpower resources

and exposing payroll

money to risks of

losses through theft or

robbery.

20-21

Not implemented

The HRET has

only 127

employees and

payment of

salaries,

allowances and

other personnel

benefits is more

convenient using

the traditional

cash payroll

scheme.

Management

contended that

using the

Automated Bank

Scheme would

entail much

time queuing at

the bank. And

if they use such

scheme,

employees

assigned at the

Cash

Management

Service will have

no more duties to

perform.

22

Observations and

Recommendations

Reference

AAR

Page No.

Actions Taken by

Management

Auditor’s

Validation

Results

We recommended that

Management consider

adopting payment of

salaries thru automated

bank scheme to

strengthen internal

control on cash and to

promote operational

efficiency. Initiate

arrangements/coordinate

with government

depository bank to

implement the payroll

thru ATM.

Moreover, their

depository bank

is very near the

HRET.

4. The agency has not

created an Internal Audit

Service/Unit contrary to

Administrative Order

Nos. 278 and 70 dated

April 28, 1992 and April

14, 2003, respectively.

We reiterated our

previous recommendation

that Management

organize an IAS pursuant

to Administrative Order

Nos. 278 and 70.

Otherwise, Management

should request an

exemption from the

application of these

regulations.

21

Not implemented

In compliance

with the

provision of

Administrative

Order Nos. 278

and 70, the

Tribunal will

create an IAS to

be supervised by

the Section Chief

of the Accounting

Service, who will

be relieved of her

work in the

Processing Unit.

Management is

considering

implementing the

recommendation

in CY 2014.

An

nex A

23

26

27