Audited Entity Financial Statements · COMMISSION ON AUDIT Commonwealth Ave., Quezon City ANNUAL AUDIT REPORT on the ... CY 2016. The audit was conducted to: a) verify the level of

Audited Entity Financial Statements

The audited entity financial statements are documents owned by the borrower. The views expressed herein do not necessarily represent those of ADB’s Board of Directors, Management, or staff. These documents are made publicly available in accordance with ADB’s Public Communications Policy 2011 and as agreed between ADB and the Department of Social Welfare and Development .

Project Number: 43407-014 Loan Number: 3369 Period covered: 01 January – 31 December 2016

PHI: Social Protection Support Project (Additional Financing)

Prepared by: Department of Social Welfare and Development

For the Asian Development Bank

Republic of the Philippines COMMISSION ON AUDIT

Commonwealth Ave., Quezon City

ANNUAL AUDIT REPORT

on the

DEPARTMENT OF SOCIAL WELFARE AND

DEVELOPMENT

For the Year Ended December 31, 2016

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EXECUTIVE SUMMARY

A. Introduction

The DSWD is mandated to provide assistance to local government units (LGUs),

non-government organizations (NGOs), other national government agencies (NGAs),

people's organizations (POs) and other members of Civil Society in effectively

implementing programs, projects, and services that will alleviate poverty and empower

disadvantaged individuals, families, and communities for an improved quality of life. It

implements statutory and specialized programs which are directly lodged with the

Department.

It is composed of the Central Office (CO) and 16 Field Offices (FOs) in Regions

I-XII, CAR, NCR, and CARAGA. It is headed by Secretary Judy M. Taguiwalo, who is

assisted by three Undersecretaries and six Assistant Secretaries. Each of the 16 FO is

headed by a Regional Director.

For CY 2016, the DSWD personnel complement is 28,026, consisting of 2,794

permanent, 9,592 contractuals, 61 casuals, 14,216 Contracts of Service, and 1,363 Job

Orders, distributed in the CO and 16 FOs.

B. Financial Highlights

The DSWD had a total appropriation of P131,545.679 million as follows:

Particulars Amounts (in million PhP)

CY 2016 CY 2015 Inc./(Dec.)

Current Year’s Appropriation

Regular GAA 109,641.546 107,480.723 2,160.823

Automatic Appropriation 423.973 456.988 (33.015)

Special Purpose Fund 5,503.818 14,911.235 (9,407.417)

Total Current Appropriation 115,569.337 122,848.946 (7,279.609)

Continuing Appropriation 15,976.342 19,708.794 (3,732.452)

Grand Total 131,545.679 142,557.740 (11,012.061)

Obligations incurred 108,535.392 124,091.503 (15,556.111)

Total unobligated balances 23,010.287 18,466.237 4,544.050

Details of the sources and application of funds are presented below.


CY 2016 CY 2015 Inc./(Dec.)

Financial Condition

Assets 97,089.299 112,920.582 (15,831.283)

Liabilities 8,014.521 6,471.330 1,543.191

Government Equity 89,074.778 106,449.252 (17,374.474)

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CY 2016 CY 2015 Inc./(Dec.)

Financial Performance

Sources of Fund

Subsidy from NG - net 31,500.038 70,508.936 (39,008.898)

Other Income 765.780 1,845.651 (1,079.871)

Total Income 32,265.818 72,354.587 (40,088.769)

Application of Fund

PS 5,674.685 5,115.047 559.638

MOOE 9,723.882 10,311.049 (587.167)

FE 414.683 306.297 108.386

Non-Cash Expenses 302.354 300.460 1.894

Total Expenses 16,115.604 16,032.853 82.751

Surplus (Deficit) for the Period 16,150.214 56,321.734 (40,171.520)

C. Scope and Objectives of Audit

The audit covered the accounts and operations of the DSWD CO and 16 FOs for

CY 2016. The audit was conducted to: a) verify the level of assurance that maybe placed

on management’s assertions on the financial statements; (b) recommend agency’s

improvement opportunities, (c) determine the propriety of transactions as well as the

extent of compliance with pertinent laws, rules and regulations, and (d) determine the

extent of implementation of prior year’s audit recommendations.

To a limited extent, program review was also conducted on some

programs/projects of the DSWD aimed at ascertaining the economy, efficiency, and

effectiveness in their implementation.

D. Independent Auditor’s Report

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

financial statements due to material accounting errors and deficiencies noted in the audit,

as shown in the Matrix of the Analysis of Effects of Accounting Errors and Deficiencies

in Annex A, and which are stated in the Independent Auditor’s Report and discussed in

detail in Part II of this report.

E. Significant Observations and Recommendations

Among the audit observations and corresponding recommendations discussed in

Part II of this report, the significant observations are summarized as follows:

1) The CIB-LCCA with a balance of P14.021 billion as of December 31, 2016,

included dormant accounts, trust receipts, donations, excess BAC honoraria,

performance bond, and training fund of P737.811 million that were not remitted to

the National Treasury, depriving the NG of the proper disposition of these funds.

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We recommended and the DSWD Secretary agreed to require the concerned

CO’ and FOs’: (a) Cash Division to remit all trust receipts, donations,

including excess funds from training, and BAC honoraria pursuant to existing

laws; and (b) Accountant to exert efforts to trace back and analyze the

“suspense account” in the CIB - LCCA, identify to which bank account the

same was deposited, and remit the balance to the National Treasury; and

record the validated reconciling items in the books of accounts in order to

reflect the correct balances of the account.

2) Foreign donations of P751.913 million received from the Government of Australia

were without prior clearance and approval by the President of the Philippines and

not deposited with the BTr, thus, the necessary protocol review to ensure that all

donations for projects and programs are in sync with the government funding and

thrusts was bypassed. In the absence of said approval/clearance, disbursements of

P581.158 million is without authority.

We recommended and the DSWD Secretary agreed to henceforth: (a) seek the

clearance and approval of the President upon the recommendation of the DFA

on all donation agreements with foreign governments as well as disbursements

thereof; and (b) remit to the BTr the amounts received in accordance with

Section 35, Chapter 5, Book VI of EO No. 292.

3) Refunds from the LBP conduits of P3.108 billion in CYs 2013 to 2016, representing

unclaimed cash grants of 4Ps beneficiaries for Over-the-Counter (OTC) mode of

payment, were not returned to the BTr.

We reiterated our prior years’ (PY) recommendations and the DSWD

Secretary agreed to: (a) determine the unpaid grants for the previous years

that still needs to be paid and, thereafter, remit to the BTr the excess of the

refunded amount by the conduits; and (b) establish a guideline on the period

for which the cash grants are to be claimed after which, these should be

forfeited in favor of the government to ensure that idle funds are remitted to

the BTr for proper disposition.

4) Account balances of CCT/MCCT beneficiaries of P1.285 billion under the cash

card mode of payment, consisting of 2,646,577 accounts with balances ranging

from P501 to more than P50,000 were not withdrawn from 30 to 2,190 days upon

payout. Moreover, 28,268 accounts with total balance of P140.848 million have no

date of last monetary activity, but still included in the list of beneficiaries. These

tend to show that there is no immediate need for the financial assistance and casting

doubt on the eligibility of the chosen beneficiaries.

We recommended and the DSWD Secretary agreed to require the NPMO to:

(a) fast track the validation and investigation or re-assessment on the eligibility

of concerned beneficiaries and implement delisting of ineligible beneficiaries

immediately; (b) coordinate with the LBP on the results of validation and

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require them to make necessary actions to recover the amount to be remitted

to the Btr; and (c) for cash cards with “No Date of Last Monetary Activity

(DLMA)” status, advise the LBP of the non-renewal of cash cards of said

beneficiaries to ensure that additional expenditures are avoided and limited

government funds are utilized effectively.

5) Cash Advances (CAs) of P2,933.810 million remained unliquidated due to non-

compliance with the provisions of COA Circular No. 97-002 dated February 10,

1997 and DSWD Administrative Order No. 07, series of 2016.

We reiterate our PY recommendations and the DSWD Secretary agreed to

direct the concerned Directors/Accountants to, among others: (a) refrain from

granting CAs to SDOs in excess of their maximum cash accountabilities and

unless the previous CAs granted are fully liquidated; (b) intensify the

monitoring controls on CAs to ensure timely submission of liquidation

documents; and (c) ensure that all fund transfers to CSOs/TVIs are covered

with MOA, which shall be prepared in accordance with the provisions of COA

Circular No. 2007-001.

6) The non-submission of liquidation reports and the release of additional funds to IAs

with outstanding accounts resulted in the accumulation of Due from

NGAs/GOCCs/LGUs amounting to P25,282.064 million.

We reiterated our PY recommendations with modifications and the DSWD

Secretary agreed to direct CO and FO Directors concerned to, among others:

(a) monitor the status and liquidation of fund transfers to IAs and require

them to immediately submit the LRs within the prescribed period per COA

Circular No. 94-013 and refund the unutilized balances of fund transfers for

completed projects, if any; and (b) comply strictly with the guidelines on the

grant, use, and liquidation of fund transfers as well as the provisions of the

MOA with concerned IAs and make a strong representation with IAs’ officials

to submit LRs.

7) The non-liquidation of fund transfers to various NGOs/POs resulted in the minimal

settlements, long outstanding accounts, and accumulation of the account balance of

approximately P7,178.836 million as of year-end, of which 64 per cent or

P4,582.577 million remained unliquidated for more than one year.

We reiterate our PY recommendations and the DSWD Secretary agreed to,

among others, direct:

a) FO Directors and Accountants concerned to: (i) demand regularly from

the NGOs/POs the submission of LRs and refund of unutilized balance, if

any, especially those with long outstanding balances; (ii) strengthen the

monitoring controls on fund transfers to NGOs/POs; and (iii) for

NGOs/POs that are non-existent/non-operational and whose whereabouts

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are unknown, the legal office to institute necessary actions to require the

incorporators to liquidate/refund their accounts;

b) IAS to expedite the evaluation of projects and review of liquidation

documents for the immediate recording of LRs as well as submission

thereof to the COA for post audit; and

c) compel the IOM to submit the original supporting documents to the

liquidations and transmit to the COA to avoid the issuance of a Notice of

Suspension.

8) Payments to the LBP of approximately P97.734 million representing financial

expenses (bank service fees) for CYs 2014 and 2015 lacked the necessary

documents to support the validity of the related transactions.

We recommended and the DSWD Secretary agreed to: (a) direct the Office

concerned to submit the original copies of the MOA, including the

Supplemental MOA, bank debit memos showing the bank account credited,

and official receipts evidencing receipt of payment by the LBP of the bank

services fees charged for 4Ps withdrawals; and (b) submit legal basis on the

charging of P14.00 for every cash card withdrawals made by 4Ps beneficiaries.

9) Some thirteen SPs costing P35.097 million was found to have deficiencies/issues,

due to failure of RPMO/SRPMO as well as project proponents to monitor and

resolve project issues, thus may compromise the efficient and effective use of the

facility and not in keeping with KC-NCDDP Community Empowerment Activity

Cycle and Monitoring and Evaluation Sub-Manual for Program Implementer.

We recommended and the DSWD Secretary agreed to require the concerned

FO ACT/RPMO personnel to, among others, closely monitor, supervise and

provide technical assistance to the BSPMC during project implementation and

immediately correct the defects/deficiencies noted for the full continuity and

functionality of the SPs for the benefits of the intended beneficiaries.

10) Validation of the community grants to BSPMC of P172.341 million showed a

difference of P4.136 million as against the KC-NCDDP report due to deficient

reporting and monitoring mechanism of projects.

We reiterated our PY recommendation that the DSWD Secretary require the

concerned FO to: (a) instruct the ACTs to monitor the status of SPs

implementation within their area of responsibilities and ensure that all

information/reports are accurate, complete, and consistent with Program

standards; and (b) conduct reconciliation of unrecorded community grants in

the KC-NCDDP Report vis-à-vis in the books of BSPMC and ensure that

project reports are validated before this are issued to various stakeholders.

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The foregoing findings and recommendations were discussed with management

officials in an exit conference on May 23, 2017, and their views and comments were

incorporated in the report, where appropriate.

F. Enforcement of Settlement of Suspensions, Disallowances and Charges

The non-compliance with laws, rules and regulations resulted in the total

suspensions and disallowances in the audit of various transactions amounting to

P1,711.660 million and P485.260 million, respectively. Settlements on suspensions and

disallowances were made amounting to P1,502.772 and P3.271, bringing the balances as

of the year amounting to P208.889 million and P481.989 million.

G. Status of Implementation of Prior Years’ Audit Recommendations

Of the 133 prior years’ audit recommendations, 84 were fully implemented, 47

were partially implemented and two were not implemented. The details of these audit

recommendations are shown in Part III of the report.

Management is enjoined to ensure full implementation of all audit

recommendations to improve the financial and operational efficiency of the Agency.

TABLE OF CONTENTS

PART PARTICULARS PAGE

I Audited Financial Statements

Independent Auditor’s Report 1

Statement of Management Responsibility

for Financial Statements 3

Statement of Financial Position 4

Statement of Financial Performance 5

Statement of Changes in Net Asset/Equity 6

Statement of Cash Flows 7

Statement of Comparison of Budget and

Actual Amount 9

Notes to Financial Statements 10

II Observations and Recommendations 57

III Status of Implementation of Prior Year’s Audit

Recommendations 139

IV Annex

Note 2016

ASSETS

Current Assets

Cash and Cash Equivalents 6 P 15,603,773,091.25

Receivables 7 33,461,128,548.60

Inventories 8 2,726,371,194.85

Other Current Assets 12.1 2,937,467,233.03

Total Current Assets 54,728,740,067.73

Non-Current Assets

Property, Plant and Equipment 9 42,239,362,036.81

Biological Assets 10 159,500.00

Intangible Assets 11 71,813,295.24

Other Non-Current Assets12.2,

12.3,

12.4

49,224,378.16

Total Non-Current Assets 42,360,559,210.21

Total Assets 97,089,299,277.94

LIABILITIES

Current Liabilities

Financial Liabilities 13 5,877,908,975.06

Inter-Agency Payables 14 747,180,394.55

Intra-Agency Payables 15 344,338,012.47

Trust Liabilities 16 325,186,430.42

Total Current Liabilities 7,294,613,812.50

Non-Current Liabilities

Trust Liabilities 16 33,557,559.02

Deferred Credits 17 534,300.10

Other Payables 18 685,815,595.39

Total Non-Current Liabilities 719,907,454.51

Total Liabilities 8,014,521,267.01

Total Assets less Total Liabilities 89,074,778,010.93

NET ASSETS/EQUITY

Accumulated Surplus/(Deficit) 89,074,778,010.93

Total Net Assets/Equity P 89,074,778,010.93

This statement should be read in conjunction with the accompanying notes.

DEPARTMENT OF SOCIAL WELFARE AND DEVELO

CONSOLIDATED STATEMENT OF FINANCIAL POS

AS AT DECEMBER 31, 2016

4

2015

20,337,892,740.71

45,351,705,006.77

1,905,551,590.06

3,209,672,083.56

70,804,821,421.10

42,044,955,224.98

159,500.00

29,212,631.39

41,432,946.22

42,115,760,302.59

112,920,581,723.69

4,957,910,860.40

461,065,690.10

113,327,452.67

363,817,590.50

5,896,121,593.67

26,840,744.49

-

548,367,630.23

575,208,374.72

6,471,329,968.39

106,449,251,755.30

106,449,251,755.30

106,449,251,755.30

ELOPMENT

POSITION

5

Note 2016 2015

Revenue

Service and Business Income 19 P 54,814,548.69 52,770,024.62

Shares, Grants and Donations 20 706,932,713.63 1,792,880,798.94

Miscellaneous Income 21 4,033,099.88 -

Total Revenue 765,780,362.20 1,845,650,823.56

Less: Current Operating Expenses

Personnel Services 22 5,674,685,150.20 5,115,046,802.56

Maintenance and Other Operating

Expenses23

9,723,882,452.88 10,311,049,082.22

Financial Expenses 24 414,683,550.00 306,296,608.06

Non-Cash Expenses 25 302,354,375.71 300,460,516.24

Current Operating Expenses 16,115,605,528.79 16,032,853,009.08

Surplus/(Deficit) from Current Operations (15,349,825,166.59) (14,187,202,185.52)

Net Financial Assistance/Subsidy 26 31,397,274,617.78 70,235,856,417.79

Sale of Assets 27.1 - 3,532,404.73

Gains 27.1 302,373,421.28 1,506,481,080.45

Losses 27.2 (199,609,774.95) (1,236,933,723.31)

31,500,038,264.11 70,508,936,179.66

Surplus/(Deficit) for the period P 16,150,213,097.52 56,321,733,994.14


DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT

CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE

FOR THE YEAR ENDED DECEMBER 31, 2016

5


Accumulated Surplus/(Deficit) 2016 2015

Balance at January 1 P 106,449,251,755.30 74,822,948,734.12

Add/(Deduct):

(32,489,184,249.02) (24,557,780,791.27)

Restated Balance 73,960,067,506.28 50,265,167,942.85

Add/(Deduct):

Changes in Net Assets/ Equity for the Calendar Year

Surplus for the period 16,150,213,097.52 56,321,733,994.14

Others (1,035,502,592.87) (137,650,181.69)

Balance at December 31 P 89,074,778,010.93 106,449,251,755.30


Prior Period Adjustment/Unrecorded Income and

Expenses

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS/EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2016

6

2016 2015

Cash Flows From Operating Activities

Cash Inflows

Receipt of Notice of Cash Allocation P 138,441,886,436.10 171,798,168,688.69

Collection of Income/Revenues 988,039,911.21 1,843,390,135.20

Collection of Receivables 204,339,235.15 699,752,394.07

Receipt of Inter-Agency Fund Transfers 153,945,717.81 34,254,441.70

Receipt of Intra-Agency Fund Transfers 7,487,858,255.15 14,004,032,270.63

Trust Receipts 205,886,668.91 34,492,520.45

Other Receipts 1,643,425,812.90 3,293,176,152.42

Adjustments 3,663,999,361.11 11,158,247,503.50

Total Cash Inflows 152,789,381,398.34 202,865,514,106.66

Cash Outflows

Replenishment of Negotiated MDS Checks (for BTr) -

Remittance to National Treasury 1,053,622,130.22 370,038,680.91

Payment of Expenses 13,247,809,983.52 29,032,719,559.34

Purchase of Inventories 1,944,475,606.24 425,403,465.81

Purchase of Consumable Biological Assets - -

Grant of Cash Advances 8,634,046,554.70 13,105,585,029.49

Prepayments 4,336,124.62 1,497,623.48

Refund of Deposits 12,797,157.34 2,257,948.96

Payment of Accounts Payables 2,039,366,687.17 4,056,321,092.81

Remittance of Personnel Benefit Contributions and

Mandatory Deductions 1,248,536,712.09 948,608,490.60

Grant of Financial Assistance/Subsidy 40,098,582,089.42 36,486,978,054.16

Release of Inter-Agency Fund Transfers 16,395,239,746.37 11,887,092,822.69

Release of Intra-Agency Fund Transfers 32,123,988,362.00 52,288,410,971.29

Other Disbursements 3,185,955,189.95 4,342,408,313.94

Reversal of Unutilized NCA - -

Adjustments 37,622,779,786.07 40,957,737,579.09

Total Cash Outflows 157,611,536,129.71 193,905,059,632.57

Net Cash Provided by/(Used in) Operating Activities (4,822,154,731.37) 8,960,454,474.09

Cash Flows from Investing Activities

Cash Inflows

Proceed from Sale/Disposal of Property, Plant and Equipment

Equipment 40,612.50 81,654.65

Total Cash Inflows 40,612.50 81,654.65

Cash Outflows

Purchase/Construction of Property, Plant and Equipment 206,387,051.61 107,552,881.84

Purchase of Intangible Assets 82,590.17 -

Total Cash Outflows 206,469,641.78 107,552,881.84

Net Cash Provided By/(Used In) Investing Activities (206,429,029.28) (107,471,227.19)


CONSOLIDATED STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2016

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2016 2015

Increase/(Decrease) in Cash and Cash Equivalents (5,028,583,760.65) 8,852,983,246.90

294,464,111.19 97,167,465.20

Cash and Cash Equivalents, January 1 20,337,892,740.71 11,387,742,028.61

Cash and Cash Equivalents, December 31 P 15,603,773,091.25 20,337,892,740.71

Effects of Exchange Rate Changes on Cash and

Cash Equivalents

8

10


Notes to Consolidated Financial Statements (Central Office and Regional Offices)

All Fund Clusters

For the year ended December 31, 2016

1. General Information/Agency Profile The financial statements of Department of Social Welfare and Development were authorized for issue on February 14, 2017 as shown in the Statement of Management Responsibility for Financial Statements signed by Director Deseree D. Fajardo, Director for Financial Management Service and Assistant Secretary Rodolfo M. Santos, Officer-in-Charge, Office of the Undersecretary for General Administrative and Support Services Group. On 15 February 1915, upon creation of the Public Welfare Board during the American Regime, the government started to get involved in social welfare. The board was established to coordinate, regulate and supervise social services activities and other charitable works rendered by religious orders and organizations. Finally in 1917, the first government orphanage was established. As a result of several changes by the government in its bureaus and departments, the original Public Welfare Board of the year 1915 became The Department of Social Welfare and Development (DSWD). After which, The Social Welfare Administrator was formally created by virtue of Executive Order No. 396 dated 13 January 1951. Republic Act No. 5416 known as the Social Welfare Act was approved in 1968. It was made into a Department, whose responsibility was to provide comprehensive program of social welfare services designed to ameliorate the living conditions of distressed Filipinos, particularly those who are handicapped by reason of poverty, youth, physical and mental disability, illness and old age, or who are victims of natural calamities including assistance to members of the cultural minorities. With the provision of DSWD Mandate under Executive Order No. 15, DSWD was transformed from the rowing to steering role that usher in the new vision, mission and goals for the Department. The Department’s vision is directed towards the attainment of a “society where the poor, vulnerable and disadvantaged individuals, families and communities are empowered for an improved quality of life”. Towards this end, DSWD will be the world’s standard for the delivery of coordinated social services and social protection for poverty reduction by 2030. In the pursuit of its vision, the DSWD mission is to “develop, implement and coordinate social protection and poverty reduction solutions for and with the poor, vulnerable and disadvantaged”.

1.1 Programs/Projects/Activities

General Administration and Support Services Development of Policies, Plans, and Programs

Formulation and Enhancement for Policies and Plans Programs Development and Promotion Standard-Setting, Licensing, Accreditation and Compliance Monitoring

Capability Building of and Technical Assistance to Intermediaries

PPSAS 1.63(b) PPSAS 14.26 PPSAS 1.150

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Trainings and Capability Building Program of Intermediaries Provision of Technical Assistance and Related Services to Intermediaries

Protection and Promotion of Rights and Welfare of the Poor , Vulnerable and the Disadvantaged Augmentation and Support Services to Intermediaries in their implementation

of Social Welfare and Development Programs and Activities for Distressed and Displaced Individuals, Families and Communities in Especially Difficulty Circumstances including Victims of Disaster and Calamities.

Protection and Rehabilitation Services to Center-Based Constituents

Foreign Assisted Program

KALAHI Additional Financing (Loan No. 7959-PH) - The objective of the project is to empower Local Communities in targeted poor municipalities and selected Urban areas, to achieve improved access to sustainable basic public services and to participate in more inclusive Local Government Unit planning and budgeting. The opening of the loan agreement was on December 3, 2010 and expected to close on May 31, 2014.

KALAHI-CIDSS Millennium Challenge Corporation (MCC) – a project of $120

Million grant by the Millennium Challenge Corporation, an independent Foreign Aid Agency created by the United States Congress to expand the coverage of KALAHI-CIDSS in Luzon and Visayas 187 municipalities with approximately 4,301 barangays from CY 2011-2015. MCC funding will likewise support KALAHI-CIDSS expansion into an additional six poorest provinces in Luzon (Apayao and Palawan) and the Visayas (Aklan, Antique, Guimaras and Negros Oriental).

KALAHI-CIDSS National Community Driven Development Project (NCDDP) -

a poverty alleviation program of the National Government implemented by the DSWD. It is supported by the Philippine Development Plan (2011-2016). Approved on 18 January 2013, it is the expansion into a national scale of the operations of community-driven development (CDD), a strategy that has been tried and proven effective in Kalahi-CIDSS (Kapit-Bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services), the parent project of KC-NCDDP. The development objective of KC-NCDDP is to have barangays/communities of targeted municipalities become empowered to achieve improved access to services and to participate in more inclusive local planning, budgeting, and implementation. KC-NCDDP will also be aligned into a program to support community-driven post-disaster response and development in Typhoon Yolanda-affected municipalities within provinces covered by KC-NCDDP.

Social Welfare and Development Reform Project (SWDRP) - World Bank funded project (Loan 7805-PH) to strengthen the effectiveness of DSWD as a social protection agency to efficiently implement the Pantawid Pamilyang Pilipino Program (the CCT Program) and to expand an efficient and functional National Household Targeting System of social protection programs.

Social Protection Support Project (SPSP) - Asian Development Bank funded

project to increase consumption and utilization of the education and health services among poor households and women by providing resources to expand the coverage and enhance the implementation of the government’s

12

development strategy and social protection reform program. The SPSP is expected to reduce income poverty and non-income poverty in the Project area through the expansion and enhanced implementation of the NHTS-PR and 4Ps Program, and by strengthening gender and indigenous people’s aspects of the 4Ps Program. The SPSP scope will extend to participating provinces, municipalities and cities for sets 2 and 3.

Capacity Development for Social Protection (TA 7586-PHI) – grant funded by

Asian Development Bank for the conduct of Policy Review with media, academe, development partners and non-beneficiaries of the Conditional Cash Transfer (CCT) Program.

Technical Assistance for Strengthened Gender Impacts of Social Protection

(TA 7587-PHI) – This grant is provided by the ADB, from the Gender and development Cooperation Fund, is provided to the Government of the Philippines, thru the DSWD, to increase understanding and knowledge of the gender impact of Pantawid Pamilya; support actions to enhance gender equality and women’s empowerment; and create knowledge products to institutionalize key gender elements and strategies within the CCT Program. The outputs of this TA includes gender audits of the implementation processes and impact of the CCT program; community-driven ad municipal level gender action plans and grants provided to municipalities to operationalize such plans; and knowledge products related to management of gender in the CCT program.

Technical Assistance for Support for Social Protection Reform (TA 7733-PHI)

– This grant is provided by Japan Fund for Poverty Reduction, thru the ADB. The TA will have four outputs: (i) Development of national policy reforms for social protection; (ii) Formulation and implementation of an action plan for rationalization and coordination of social protection programs; (iii) Capacity development of national and local institutions to support the social protection reform agenda; and (iv) Establishment of a referral system and graduation policy for the poor population.

United Nations Children’s Fund (UNICEF) – funded by the UNICEF for

activities relating to the Day Care Workers Consultation Conference, National Capacity Building on Program and Policy Development for ECCD Practitioners, Roll Out Capability Building on Standards for Home Based ECCD, Institutionalization of ECCD Information System and for the Construction of thirty (30) additional Day Care Centers.

UNICEF Emergency Unconditional Cash Transfer (EUCT) to Typhoon

Yolanda Affected Population in Eastern Samar.

UNFPA 7th Country Programme (PHL7U505) – This is a cash assistance / support from UNFPA for increasing capacity of NGAs and LGUs to undertake Gender-Responsive Programming to implement Magna Carta of Women Provisions especially on Reproductive Rights and Gender-Based Violence. The expected output of the 7th Country Programme is the capacity of the government to protect, fulfill, and promote the rights of women and girls, especially the marginalized and mechanisms and/or legal remedies for the protection of women’s and girl’s rights in place and functional.

United Nations World Food Programme (UN WFP) - Development of the

Framework and Early Warning System on Hunger and Food Insecurity

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Mitigation and Strengthening the Social Protection and Social Welfare and Development Programs of DSWD, Harnessing Social Media for Hunger and Food Insecurity Mitigation, and Strengthening the Social Protection and Social Welfare and Development Programs.

UN WFP – emergency cash distribution for the assistance of Typhoon Yolanda victims through the emergency cash transfer (ECT) Top-up Project for additional emergency cash grants to qualified beneficiaries of the Pantawid Pamilyang Pilipino Program of the DSWD’s regular cash grants.

ASEAN ROK (Republic of Korea) Funded Activities:

o Working towards a Cyber Pornography and Cyber Prostitution – Free

Southeast Asia – project funded by ASEAN through the Republic of Korea (ROK) - Special Cooperation Fund (ASEAN ROK). The project aims to educate the public on how computer technology and the internet contribute to the proliferation of cyber pornography and cyber prostitution. At the same time, it also supports the capability of frontline workers to effectively and efficiently deal with the victim-survivors of the phenomena.

o Training Workshop on Strengthening Capacities of Communities,

Practitioners and Policy makers to Address Violence Against Women

o Training Workshop on ASEAN Active Ageing (ACT)

ASEAN Government of Japan (Japan ASEAN Integration Fund) Funded Activities:

o ASEAN Conference for Program Evaluation for Persons with Disabilities (PWD) – This is to provide a venue for ASEAN member States and private organizations to have technical cooperation on best practices and experiences related to provision of auxiliary social services, to evaluate existing PWD programs in the region, to develop new strategies, documents and programs for the improvement of auxiliary social services serving PWDs, and knowledge sharing and development of capacities of development workers to provide training and technical assistance on developing and managing auxiliary services for PWDs.

o Forum on the Promotion of Peace and Development for Internally Displaces Persons (IDPs) brought by Natural Disaster and Internal Conflict within a Country of the ASEAN Member States – This activity shall provide a venue for the participants from ten (10) ASEAN member states to learn from experiences, capacities, and approaches and policies undertaken to address IDPs and to facilitate exchange of information and knowledge in developing and implementing common framework among the ASEAN member states in the rehabilitation and resettlement of IDPs and/or enhancement of existing agreements within ASEAN in Disaster Management and Emergency Response on IDPs.

ASEAN Socio Cultural Community (ASCC) – This is for the conduct of the Philippines Country-Level Assessment for the Midterm Review of the ASCC Blueprint Implementation in order to assess its progress and achievements of

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the ASSC goals, and to provide recommendations towards further enhancing the activities and mechanisms to ensure the effective contribution of the ASCC on the realization of an ASEAN Community by 2015..

Japan Social Development Fund Grant for Community Enterprise Development as Pathway out of Poverty Project (JSDF Grant No. TF012886) – This is a financial assistance provided by Japan under the JSDF, administered by the Worldbank with the objective of improvement of livelihood and quality of life of poor households in the six (6) target municipalities through increased income and access to financial services, development of community-driven enterprises linked to markets, and local economic development support. The project is composed of four (4) parts namely: (A) Community Enterprise and Value Chain Development (Sub-grants); (B) Access to Financial Services; (C) Market Integration and Local Economic Development; and (D) Project Management, Monitoring and Evaluation, and Knowledge Dissemination.

Japan Fund for Poverty Reduction – Assistance for Emergency Assistance

and Early Recovery for Poor Municipalities Affected by Typhoon Yolanda (JFPR Project No. 9175-PHI) – This is a financial assistance provided by Japan under the JFPR administered by Asian Development Bank in the amount not exceeding $20M for the Republic of the Philippines. This will benefit about 1.2 million individuals from 74 municipalities in the region that was hit hardest by Typhoon Yolanda. A certain amount will be used for the rehabilitation projects to be implemented through Kapit-Bisig Laban sa Kahirapan – CIDSS. Kalahi CIDDS targets the speedy rehabilitation of 220 small-scale municipal and community infrastructures in 13 municipalities using the community-driven development a (CDD) strategy, a development approach that focuses on empowering and building up the capacities of citizens and local government units so they will be able to lift own communities out of poverty.

KC NCDDP ADB AF Typhoon Yolanda Multi-Donor Trust Fund (TYMDTF) Grant No. 0472-PHI - This is a financial assistance from the Typhoon Yolanda Multi-Donor Trust Fund (TYMDTF) administered by ADB. The objective of the Project is that Project Provinces and Municipalities achieve improved access to services and infrastructure and participate in more inclusive local disaster risk reduction and management planning, budgeting and implementation.

JSDF Grant on Improving Livelihood Opportunities for Vulnerable Urban

Communities (LVUC) Project - This is a financial assistance provided by Japan under the JSDF, administered by the Worldbank with the objective of improving employment and livelihood opportunities for approximately 3,750 households in targeted urban communities affected by the financial crisis.

ADB Grant are for Integrated People Driven Model Community Project and

various construction of Transitional Shelter Units for families affected by Typhoon Yolanda.

AusAID / World Bank Grant for Preparation of the National Community Driven

Development (CDD) Program – The Government of Australia provided this grant, with the World Bank as the administrator of funds, represented by the Australian Agency for International Development under the Australia-World Bank Philippines Development Trust Fund (TF071200). The objective of the

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grant is to prepare the National CDD Program, with its own objective to empower Local Communities in targeted poor municipalities and selected urban areas, to achieve improved access to sustainable basic public services and to participate in more inclusive local government planning and budgeting. The activities for which the grant is given consist of: (a) preparation analysis; (b) knowledge exchange; and (c) program preparation facilitation and administration.

AusAID / World Bank Co-financing for Kapitbisig Laban sa Kahirapan –

Comprehensive and Integrated Delivery of Social Services (KALAHI-CIDSS) Project – This grant is provided by the Government of Australia, with the World Bank as the administrator of funds, represented by the Australian Agency for International Development under the Australia-World Bank Philippines Development Trust Fund. The objective of the grant is to empower local communities in targeted poor municipalities and selected urban areas, to achieve improved access to sustainable basic public services and to participate in more inclusive local government unit planning and budgeting. The specific activities to be financed by the grant are: (a) carrying out of investment sub-projects specifically related to the construction of day care centers and school buildings / classrooms to meet the needs through provision of sub-grants to barangays; (b) mobilization of community volunteers for the preparation and updating of the program of work and technical plans, as well as the mobilization of local counterpart contributions for the construction and rehabilitation of day care centers and school buildings and classrooms.

Government of Australia (GoA) Department of Foreign Affairs and Trade (DFAT) (formerly AusAID) Technical Assistance Unit of Social Welfare and Development for the Social Protection Reform TA Facility (Agreement Number 58809) - grant funded by Australian Government for DSWD TA Facility as a mechanism for planning, assessing, prioritizing, coordinating and monitoring all donor-supported TA activities relating to DSWD’s social protection reform agenda.

GoA DFAT Assistance on the Provision of Training Program on Bridging

Leadership for Convergence (Agreement Number 61692) – This is an accountable cash grant funded by the Government of Australia for the assistance regarding the provision of a training program on bridging leadership for convergence for the Department. Said training program shall assist field implementers strengthen their knowledge, skills, and aptitudes for creating and implementing collaborative action among the three core social protection programs of the Department; the Pantawid Pamilya, KALAHI-CIDSS, and the SEA-K to maximize their impact on poverty reduction.

GoA DFAT Technical Assistance for the Analysis and Preparatory Work

Supporting the National Community Driven Development in the Autonomous Region in Muslim Mindanao (Agreement Number 65842) – This is an accountable cash grant funded by the Government of Australia to assist the Government of the Philippines with the cost of supporting the NCDD in the ARMM. The purpose of the grant is to adapt the proposed NCDD Project design to the social and political realities and technical experiences of ARMM to develop a project proposal for submission to the Government’s Investment Coordination Committee to support a CDD operation in ARMM.

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GoA DFAT Assistance for Enhancing Conditional Cash Transfer Program Graduation Strategy for Exiting Beneficiaries (Agreement Number 65843) – This is an accountable cash grant funded by the Government of Australia to assist the Government of the Philippines. The assistance has the overarching goal to strengthen the graduation strategy for CCT beneficiaries through the Sustainable Livelihood Program which aims to reduce income poverty in areas with a high concentration of CCT program beneficiaries.

GoA DFAT Agreement No 69734 - This is an accountable cash grant funded

by the Government of Australia to assist the Government of the Philippines in the Enhancement of Pantawid Pamilya Social Accountability.

GoA DFAT Agreement No 70184 - This is an accountable cash grant funded by the Government of Australia to assist the Government of the Philippines in Improving access to Early Learning thru Community-led Approach

AECID-KCNCDDP for Capacity Building for 1000 in community development and disaster risk reduction (DRR) aims to strengthen the capacity of communities and local governments to coordinate, plan, implement and manage programs, projects and activities for local management of disaster reduction.

Other foreign assisted projects which have been transferred to the general fund books includes the following: (1) Early Childhood Development Projects, a six year project that started its operation in year 1998 and ended last February 28, 2006; (2) Japan Social Development Fund – Social Inclusion Project (JSDF-SIP) is a three year complementary grant from the World Bank that was completed on December 31, 2008; (3) Comprehensive Pilot Intervention Plan Against Gender Violence in CARAGA (COPIPAGV13), funded by the Agencia Española de Cooperacion Internacional para el Desarollo (AECID) or Spanish Agency for International Corporation was completed last September 15, 2011; (4) Early Recovery Program for the Typhoon-Affected Bicol Region, funded by the United Nations Development Programme (UNDP), the project has been completed on October 30, 2010; (5) Mitigating the Economic and Psychosocial Impacts of HIV and AIDS, funded by the United Nations Development Programme (UNDP); (6) Care and Support Service for Persons with HIV or AIDS, funded by the United Nations Development Programme (UNDP), is a one year; (7) Access to Justice for the Poor Project, a project funded by the European Commission; (8) National Sector Support for Social Welfare and Development Reform Project (NSSWDRP), a grant from World bank; (9) Philippine Canadian Development Fund (PCDF), a Canadian grant; (10) KALAHI CIDSS Policy Human Resource Development (PHRD), a grant from World Bank; (11) Vulnerable Group Fund; (12) Poder 7 - PODER Y PROSPERIDAD DE COMUNIDAD (Makamasang Tugon-PODER 7) project; (13) AusAID Support for Assessment of Pilot Bottom-up Processes (Agreement Number 63449); and (14) ASEAN ROK Seminar-Workshop on Early Childhood Care and Development (ECCD) Systems Development.

DSWD Central Office registered office address is Constitution Hills, Batasan Pambansa Complex, Main Road, Quezon City, Philippines.

2. Statement of Compliance and Basis of Preparation of Financial Statements

2.1 The financial statements have been prepared in accordance with and comply with the

PPSAS 1.129

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Philippine Public Sector Accounting Standards (PPSAS) issued by the Commission on Audit per COA Resolution No. 2014-003 dated January 24, 2014. The financial statements are presented in Philippine Peso, which is the functional and reporting currency of the DSWD.

2.2 The financial statements have been prepared on the basis of historical cost, unless stated otherwise. The Statement of Cash Flows is prepared using the direct method.

PPSAS 2 PPSAS 6

3. Summary of Significant Accounting Policies

3.1 Basis of accounting The financial statements are prepared on an accrual basis in accordance with the Philippine Public Sector Accounting Standards (PPSAS).

3.2 Financial instruments

a. Financial assets

Initial recognition and measurement

Financial assets within the scope of PPSAS 29 Financial Instruments: Recognition and Measurement are classified as financial assets at fair value through surplus or deficit, loans and receivables as appropriate. The Department of Social Welfare and Development determines the classification of its financial assets at initial recognition. The DSWD's financial assets include cash and other receivables. Subsequent measurement

The subsequent measurement of financial assets depends on their classification. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. Losses arising from impairment are recognized in the surplus or deficit. Derecognition

The DSWD derecognizes a financial asset or, where applicable, a part of a financial asset or part of DSWD of similar financial assets when:

The rights to receive cash flows from the asset have expired or is waived The DSWD has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party; and either: (a) the DSWD has transferred substantially all the risks and rewards of the asset; or (b) the DSWD has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset

PPSAS 1, 6 PPSAS 9.10 PPSAS 30.31 PPSAS 29.10 PPSAS 29.48(a) PPSAS 29.65 PPSAS 29.19 PPSAS 29.20-22

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Impairment of financial assets

The DSWD assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include the following indicators: The debtors or a group of debtors are experiencing significant financial

difficulty; Default or delinquency in interest or principal payments; The probability that debtors will enter bankruptcy or other financial

reorganization; Observable data indicates a measurable decrease in estimated future cash

flows (e.g. changes in arrears or economic conditions that correlate with defaults).

PPSAS 29. 67-68 PPSAS 30. PAG5(f)

b. Financial liabilities Initial recognition and measurement

Financial liabilities within the scope of PPSAS 29 are classified as financial liabilities at fair value through surplus or deficit. The entity determines the classification of its financial liabilities at initial recognition.

The DSWD’s financial liabilities include other payables. Subsequent measurement The measurement of financial liabilities depends on their classification.

PPSAS 29.10

Derecognition

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in surplus or deficit.

PPSAS 29.41

PPSAS 29.43

3.3 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, cash in bank for local and foreign currencies, and treasury/agency accounts.

PPSAS 2.8 PPSAS 2.9 PPSAS 2.56

3.4 Inventories

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Inventory is measured at cost upon initial recognition. To the extent that inventory was received through non-exchange transactions (for no cost or for a nominal cost), the cost of the inventory is its fair value at the date of acquisition. After initial recognition, inventory is measured at the lower of cost and net realizable value. However, to the extent that a class of inventory is distributed or deployed at no charge or for a nominal charge, that class of inventory is measured at the lower of cost and current replacement cost. Net realizable value is the estimated selling price in the ordinary course of operations, less the estimated costs of completion and the estimated costs necessary to make the sale, exchange, or distribution. Inventories are recognized as an expense when deployed for utilization or consumption in the ordinary course of operations of the DSWD.

PPSAS 12.15 PPSAS 12.17 (a) PPSAS 12.35 PPSAS 12.20 PPSAS 12.21 PPSAS 12.9

3.5 Property, Plant and Equipment

Recognition

An item is recognized as property, plant, and equipment (PPE) if it meets the characteristics and recognition criteria as a PPE. The characteristics of PPE are as follows:

tangible items; are held for use in the production or supply of goods or services, for rental to

others, or for administrative purposes; and are expected to be used during more than one reporting period.

An item of PPE is recognized as an asset if:

It is probable that future economic benefits or service potential associated with the item will flow to the entity; and

The cost or fair value of the item can be measured reliably.

PPSAS 17.13 PPSAS 17.14

Measurement at Recognition

An item recognized as property, plant, and equipment is measured at cost. A PPE acquired through non-exchange transaction is measured at its fair value as at the date of acquisition. The cost of the PPE is the cash price equivalent or, for PPE acquired through non-exchange transaction its cost is its fair value as at recognition date. Cost includes the following:

Its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates;

expenditure that is directly attributable to the acquisition of the items; and initial estimate of the costs of dismantling and removing the item and restoring

the site on which it is located, the obligation for which an entity incurs either when the item is acquired, or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period.

PPSAS 17.26 PPSAS 17.27 PPSAS 17.37 PPSAS 17.30

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Measurement After Recognition

After recognition, all property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

PPSAS 17.43 PAG2 of PPSAS 17

When significant parts of property, plant and equipment are required to be replaced at intervals, the DSWD recognizes such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a major repair/replacement is done, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized as expense in surplus or deficit as incurred.


Depreciation Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. The depreciation charge for each period is recognized as expense unless it is included in the cost of another asset.


Initial Recognition of Depreciation Depreciation of an asset begins when it is available for use such as when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. For simplicity and to avoid proportionate computation, the depreciation is for one month if the PPE is available for use on or before the 15th of the month. However, if the PPE is available for use after the 15th of the month, depreciation is for the succeeding month.

PAG3 of PPSAS 17

Depreciation Method Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. The depreciation charge for each period is recognized as expense unless it is included in the cost of another asset. The straight line method of depreciation shall be adopted unless another method is more appropriate for agency operation.

PAG4 of PPSAS 17

Estimated Useful Life The DSWD uses the Schedule on the Estimated Useful Life of PPE by classification prepared by COA.

PAG5 of PPSAS 17

The DSWD uses a residual value equivalent to at least five percent (5%) of the cost of the PPE.

PAG6 of PPSAS 17

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Impairment

An asset’s carrying amount is written down to its recoverable amount, or recoverable service amount, if the asset’s carrying amount is greater than its estimated recoverable service amount.

Derecognition The DSWD derecognizes items of property, plant and equipment and/or any significant part of an asset upon disposal or when no future economic benefits or service potential is expected from its continuing use. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the surplus or deficit when the asset is derecognized.

3.6 Leases

Operating lease Operating leases are leases that do not transfer substantially all the risks and benefits incidental to ownership of the leased item to the DSWD. Operating lease payments are recognized as an operating expense in surplus or deficit on a straight-line basis over the lease term.

DSWD as a lessor

Operating Lease Leases in which the DSWD does not transfer substantially all the risks and benefits of ownership of an asset are classified as operating leases. Rent received from an operating lease is recognized as income on a straight-line basis over the lease term. Contingent rents are recognized as revenue in the period in which they are earned. The depreciation policy for PPE are applied to similar assets leased by the entity.

PPSAS 17.82 PPSAS 17.83 PPSAS 17.86 PPSAS 13.42 PPSAS 13.13 PPSAS 13.63 PPSAS 13.66

3.7 Intangible Assets

Recognition and Measurement

Intangible assets are recognized when the items are identifiable non-monetary assets without physical substance; it is probable that the expected future economic benefits or service potential that are attributable to the assets will flow to the entity; and the cost or fair value of the assets can be measured reliably.

PPSAS 31.26

Intangible assets acquired separately are initially recognized at cost.

PPSAS 31.31

Intangible Assets Acquired through Non-Exchange Transactions

The cost of intangible assets acquired in a non-exchange transaction is their fair value at the date these were acquired.

PPSAS 31. 42-43

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Internally Generated Intangible Assets

Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in surplus or deficit in the period in which the expenditure is incurred.


Recognition of an Expense

Expenditure on an intangible item shall be recognized as an expense when it is incurred unless it forms part of the cost of an intangible asset that meets the recognition criteria of an intangible asset.

Subsequent Measurement The useful life of the intangible assets is assessed as either finite or indefinite. Intangible assets with a finite life is amortized over its useful life:


The straight line method is adopted in the amortization of the expected pattern of consumption of the expected future economic benefits or service potential.

PAG3 of PPSAS 31 PPSAS 31.117

An intangible asset with indefinite useful lives shall not be amortized. PPSAS 31.106

Intangible assets with an indefinite useful life or an intangible asset not yet available for use are assessed for impairment whenever there is an indication that the asset may be impaired.

PPSAS 31.107

The amortization period and the amortization method, for an intangible asset with a finite useful life, are reviewed at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on an intangible asset with a finite life is recognized in surplus or deficit as the expense category that is consistent with the nature of the intangible asset.


Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the surplus or deficit when the asset is derecognized.

PPSAS 31.112

3.8 Changes in accounting policies and estimates The DSWD recognizes the effects of changes in accounting policy retrospectively. The effects of changes in accounting policy are applied prospectively if retrospective application is impractical.

The DSWD recognizes the effects of changes in accounting estimates prospectively by including in surplus or deficit.

The DSWD correct material prior period errors retrospectively in the first set of financial statements authorized for issue after their discovery by:

Restating the comparative amounts for prior period(s) presented in which the error occurred; or

If the error occurred before the earliest prior period presented, restating the opening balances of assets, liabilities and net assets/equity for the earliest prior period presented.

PPSAS 3.27 PPSAS 3.30 PPSAS 3.41 PPSAS 3.47

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3.9 Foreign currency transactions

Transactions in foreign currencies are initially recognized by applying the spot exchange rate between the function currency and the foreign currency at the transaction. At each reporting date:

Foreign currency monetary items are translated using the closing rate; Nonmonetary items that are measured in terms of historical cost in a foreign

currency shall be translated using the exchange rate at the date of the transaction; and

Nonmonetary items that are measured at fair value in a foreign currency shall be translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising (a) on the settlement of monetary items, or (b) on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements, are recognized in surplus or deficit in the period in which they arise, except as those arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation.


3.10 Revenue from non-exchange transactions

Recognition and Measurement of Assets from Non-Exchange Transactions An inflow of resources from a non-exchange transaction, other than services in-kind, that meets the definition of an asset are recognized as an asset if the following criteria are met:

It is probable that the future economic benefits or service potential associated with the asset will flow to the entity; and

The fair value of the asset can be measured reliably. An asset acquired through a non-exchange transaction is initially measured at its fair value as at the date of acquisition.

Recognition Revenue from Non-Exchange Transactions

An inflow of resources from a non-exchange transaction recognized as an asset is recognized as revenue, except to the extent that a liability is also recognized in respect of the same inflow. As DSWD satisfies a present obligation recognized as a liability in respect of an inflow of resources from a non-exchange transaction recognized as an asset, it reduces the carrying amount of the liability recognized and recognize an amount of revenue equal to that reduction.

Measurement of Revenue from Non-Exchange Transactions

Revenue from non-exchange transactions is measured at the amount of the increase in net assets recognized by the entity, unless a corresponding liability is recognized.

PPSAS 23.31 PPSAS 23.42 PPSAS 23.44 PPSAS 23.45 PPSAS 23. 48-49

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Measurement of Liabilities on Initial Recognition from Non-Exchange Transactions

The amount recognized as a liability in a non-exchange transaction is the best estimate of the amount required to settle the present obligation at the reporting date.

Fees and fines not related to taxes

The DSWD recognizes revenues from fees and fines, except those related to taxes, when earned and the asset recognition criteria are met. Other non-exchange revenues were recognized when it is probable that the future economic benefits or service potential associated with the asset will flow to the entity and the fair value of the asset can be measured reliably.


Gifts and Donations

The DSWD recognizes assets and revenue from gifts and donations when it is probable that the future economic benefits or service potential will flow to the entity and the fair value of the assets can be measured reliably. Goods in-kind are recognized as assets when the goods are received, or there is a binding arrangement to receive the goods. If goods in-kind are received without conditions attached, revenue is recognized immediately. If conditions are attached, a liability is recognized, which is reduced and revenue recognized as the conditions are satisfied. On initial recognition, gifts and donations including goods in-kind are measured at their fair value as at the date of acquisition, which were ascertained by reference to an active market, or by appraisal. An appraisal of the value of an asset is normally undertaken by a member of the valuation profession who holds a recognized and relevant professional qualification. For many assets, the fair value are ascertained by reference to quoted prices in an active and liquid market. Transfers The DSWD recognizes an asset in respect of transfers when the transferred resources meet the definition of an asset and satisfy the criteria for recognition as an asset, except those arising from services in-kind. Services in-Kind Services in-kind are not recognized as asset and revenue considering the complexity of the determination of and recognition of asset and revenue and the eventual recognition of expenses. Transfers from other government entities Revenues from non-exchange transactions with other government entities and the related assets are measured at fair value and recognized on obtaining control of the asset (cash, goods, services and property) if the transfer is free from conditions and it is probable that the economic benefits or service potential related to the asset will flow to the DSWD and can be measured reliably.

PPSAS 23.95 PPSAS 23.96 PPSAS 23.97 PPSAS 23.96 PPSAS 23.98 PAG3 of PPSAS 23 PPSAS 23.42 PPSAS 23.44

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3.11 Budget information

The annual budget is prepared on a cash basis and is published in the government website. A separate Statement of Comparison of Budget and Actual Amounts (SCBAA) was prepared since the budget and financial statements were not prepared on comparable basis. The SCBAA was presented showing the original and final budget and the actual amounts on comparable basis to the budget. Explanatory comments are provided in the notes to the annual financial statements.

3.12 Impairment of Non-Financial Assets

Impairment of non-cash-generating assets The DSWD assesses at each reporting date whether there is an indication that a non-cash-generating asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the DSWD estimates the asset’s recoverable service amount. An asset’s recoverable service amount is the higher of the non-cash generating asset’s fair value less costs to sell and its value in use. Where the carrying amount of an asset exceeds its recoverable service amount, the asset is considered impaired and is written down to its recoverable service amount. The DSWD classifies assets as cash-generating assets when those assets are held with the primary objective of generating a commercial return. Therefore, non-cash generating assets would be those assets from which the DSWD does not intend (as its primary objective) to realize a commercial return.

3.13 Employee benefits The employees of DSWD are member of the Government Service Insurance System (GSIS) which provides life and retirement insurance coverage. The DSWD recognizes the undiscounted amount of short term employee benefits, like salaries, wages, bonuses, allowance, etc., as expense and as a liability after deducting the amount paid. The DSWD recognizes expenses for accumulating compensated absences when these were paid (commuted or paid as terminal leave benefits). Unused entitlements that has accumulated at the reporting date were not recognized as expense. Non-accumulating compensated absences, like special leave privileges, were not recognized.

3.14 Measurement uncertainty

The preparation of financial statements in conformity with PPSAS, requires management to make estimates and assumptions that affect the reporting amounts of assets and liabilities, at the date of the financial statements and the reported amounts of the revenues and expenses during the period. Items requiring the use of significant estimates include the useful life of capital assets. Estimates were based on the best information available at the time of preparation of the financial statements and were reviewed annually to reflect new information as it becomes available. Measurement uncertainty exists in these financial statements. Actual results could differ from these estimates.

PPSAS 24 PPSAS 21.26 PPSAS 26.14 PPSAS 26.14

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4. Changes in Accounting Policies DSWD has not adopted any change in Accounting Policies for CY 2015. The 25 PPSAS had been adopted beginning January 1, 2014 as per COA Resolution No. 2014-003 dated January 24, 2014.

5. Prior Period Adjustments

The DSWD has determined transactions relating to the previous year which have cumulative effect on surplus/deficit of the prior year. The description of the prior period adjustments, including peso amount, its effect for each financial statement line item affected in current and prior year, and cumulative effect on opening accumulated surplus/(deficit) in current and prior year, and cumulative effect on surplus/deficit in prior year are shown on this notes to financial statements.

6. Cash and Cash Equivalents

Account Title 2016 2015

Cash - Collecting Officer 28,793,450.03 9,722,546.02

Petty Cash 27,353,211.88 13,677,145.48

Cash in Bank - Local Currency, Current Account 14,021,352,125.86 15,854,481,843.17

Cash in Bank - Local Currency, Savings Account 5,423,268.10 6,674,132.31

Cash in Bank - Foreign Currency, Savings Account 1,458,755,161.19 3,782,058,568.70

Cash - Treasury/Agency Deposit, Trust 62,095,874.19 53,592,590.87

Cash - Modified Disbursement System (MDS), Regular - 617,685,914.16

Total 15,603,773,091.25 20,337,892,740.71

Total collections of the Collecting Officers were all remitted to the National Treasury or with Authorized Government Depository Bank (AGDB) except for the amount of P28,793,158.54 which was deposited/remitted on the first banking day of the ensuing year and the amount of P291.49 in Central Office which is a forwarded balance from prior years.

Petty Cash Fund represents the cash advances granted to bonded officers of the various Centers and Institutions for its petty expenditures. Cash in Bank- Local Currency Account includes the funds that were deposited with Authorized Government Depository Bank (AGDB) in accordance with GAFMIS Circular Letter No. 2003-005 dated November 21, 2003 as follows:

a. Livelihood Revolving Fund - SEA-K Revolving Fund authorized under Republic Act No. 5146 and Administrative Order No. 75 series of 1988

b. Donation Account for Specific Purpose

a. Donation Account - Grants and Donations from various donors intended for disasters, calamities and other purposes/programs/activities as specified by the donors.

c. Foreign Assisted Projects

a. Kalahi-CIDSS National Community Driven Development Project b. Millennium Challenge Corporation Grants c. JSDF: Community Enterprise Development as Pathway Out of Poverty d. Japan Fund for Poverty Reduction

27

e. KC NCDDP ADB AF Typhoon Yolanda Multi-Donor Trust Fund (TYMDTF) Grant No. 0472-PHI

f. DSWD ADB Technical Assistance Grants g. DSWD AUSAID Technical Assistance Unit of SWDRA facility h. DSWD UNWFP Emergency Cash Transfer for Typhoon Yolanda-

Affected Population i. DSWD Building Capacity of Local Government for Poverty Reduction,

Local Governance and Community Driven j. Social Protection Support Project k. Social Welfare and Development Project l. UNFPA 7th Country Programme m. UNICEF Funds

d. Pantawid Pamilyang Pilipino Program (4Ps) grants thru LBP OTC/Conduits

e. Trust Accounts/Funds from National Government Agencies (NGAs)

a. DSWD Miscellaneous Trust Account b. DSWD Socialized Housing Project c. PGMA- Educational Assistance Program d. BAC Honoraria, Payroll Account, Training Fund and Bidders Bonds

Cash in Bank, Local Currency, Savings Account of P5,423,268.10 pertains to Region II received donations from various donors for various Centers and Institutions of the region.

Cash in Bank Foreign Currency Savings Account includes the deposits from Grants and Donations and loan proceeds received by DSWD from the following:

National Community Driven Development Project (NCDDP)–WB and

ADB Social Protection Support Project (SPSP) Social Welfare and Development Reform Project DSWD Foreign Donations ASEAN - Republic of Korea (ROK) Japan ASEAN Integration Fund (JAIF)/Japan Fund

Cash-Treasury/Agency Deposit, Trust includes proceeds from collections of affiliation fees on Civic Welfare Training Service (CWTS) of the National Service Training Program (NSTP), field work/practicum placement fees for social work and other degree courses, care giver trainees and are deposited with the Bureau of the Treasury including collections from LGUs as 1/3 share for cost of care and maintenance of residents confined at Regional Rehabilitation Center for Youth as provided under PD 603 or The Child and Youth Welfare Code.

7. Receivables

7.1 Loans and Accounts Receivables

Accounts 2016 2015

Accounts Receivable 492,872.52 481,523.35

Loans Receivable – Others 39,808,654.57 39,808,654.57

Net Value - Accounts Receivable 40,301,527.09 40,290,177.92

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Accounts Receivable includes P73,103.06 which was a Dormant Account in Central Office reflected in the Books of Accounts since 1987. The Department will retrieve documents to support its request for write-off of this account to the Commission on Audit (COA). Loans Receivables – Others represents assistance to identified beneficiaries under the PGMA Microfinancing and Enterprise Development Program and National Livelihood Support Fund Program.

7.2 Aging/Analysis of Receivables

Accounts Total Not past

due

Past due

< 30 days 30 - 60 days > 60 days

Accounts Receivable 492,872.52 492,872.52

Loans Receivable – Others

39,808,654.57

39,808,654.57

TOTAL 40,301,527.09 40,301,527.09

7.3 Inter-Agency Receivables

Account Name 2016

Current Non-Current Total

Due from National Government Agencies 1,258,756,452.78 - 1,258,756,452.78

Due from Government-Owned and/or Controlled Corporations 8,436,919,810.17

-

8,436,919,810.17

Due from Local Government Units 15,586,388,300.46 - 15,586,388,300.46

Total 25,282,064,563.41 - 25,282,064,563.41

In Central Office, Due from National Government Agencies is broken down as follows:

Name Amount

Issued in CY 2016:

ARMM-4Ps 30,775,684.75

ARMM-SLP 2,120,969.94

ARMM-BUB 34,637,174.25

Bureau of Internal Revenue 2,020.75

Department of Education 500,000.00

Department of Public Works and Highways-QCFED 47,730,309.74

Department of Public Works and Highways-MMFED 6,000,000.00

Department of Public Works and Highways-SMED 17,374,499.73

Philippine Carabao Center 13,324,080.00

DBM Procurement Service 203,188,329.55

Sub-total 355,653,068.71

Issued in CY 2015 and Prior Years:

ARMM 9,491,778.50

Armed Forces of the Philippines – National Dev’t. Support Command (AFP-NADESCOM) 12,137.78

Bureau of Internal Revenue 46,576.24

Pag-Ibig 200.00

Bureau of Treasury 1,280.00

Commission on Higher Education (CHED) 179,746,578.68

Department of Public Works & Highways – CO 132,159,093.90

Department of Public Works & Highways – NCR 50,414,279.60

Department of Public Works & Highways – QCFED 97.68

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Name Amount

Department of Public Works & Highways – SMED 3,463,749.98

National Nutrition Council (NNC) 944,172.65

Philippine Health Insurance Corp. (Philhealth) 975.00

Philippine Information Agency 4,171,252.08

Rizal Experimental Station & Pilot School of Cottage Industries (RESPSCI) 213.90

DBM Procurement Service 32,647,211.58

UP College of Education 409,124.30

DSWD City of Manila 200,000.00

Sub-total 413,708,721.87

GRAND TOTAL 769,361,790.58

The Due from ARMM represents the balance of funds transferred to ARMM for the various regular programs of the Department and funds for the implementation of 4Ps, Social Pension, Sustainable Livelihood System, Supplemental Feeding, Bottom-up Budgeting, Calamity Fund, PAMANA and other support services. A total of 99% or P140,116,149.80 was liquidated from the outstanding balance in CY 2015 while 82% or P315,064,984.08 was liquidated from the funds transferred in the current year. The balance of funds transferred to the Procurement Service (DBM) includes the undelivered goods/items such as computer desktops, laptops and software and other office supplies.

The balance of funds transferred to the Procurement Service (DBM) pertains to the procurement of ordinary or regular office supplies and equipment which are required by Republic act No. 9184, otherwise known as Government Procurement Reform Act, to be procured from Procurement Service (PS). The Department advances amount required for the items based on the Agency Procurement Request. It also includes undelivered goods/items such as computer desktops, laptops and software and other office supplies.

The Due from National Government also includes current transfer of funds to Department of Education for the conduct of Oratorical Contest on Adoption Consciousness Celebration last April 11, 2016 amounting to P500,000.00. During the last quarter of this year, the department had transferred funds to Philippine Carabao Center for the pilot testing of Milk Supplementation for Supplementary Feeding Program in the amount of P13,324,080.00. The balance of funds transferred to Philippine Information Authority (PIA) in the amount of P4,171,252.08 pertains to the production and airing of broadcast materials for media campaign for the Pantawid Pamilyang Pilipino Program. The PIA-Accountant had agreed to submit a duly received fund utilization report or a verified copy of the said report after personal visit conducted to them last July 28, 2016. Last November 21, 2016, the management sent another follow up letter dated to PIA requesting the submission of final liquidation requirements.

The remaining outstanding balance of P12,137.78 for the funds transferred to the Armed Forces of the Philippines – National Development Support Command (AFP-NADESCOM) that is intended for the construction of 108 Day Care Centers (DCC), construction of 100 modified shelters, cash-for-work (CFW) component in the DCC and shelter construction, represents unutilized balance subject for refund The management best effort is to personally require (AFP-NADESCOM) to return the said amount.

The P500 Million funds transferred to the Commission on Higher Education (CHED) represents the Grant-in-aid for Program for Poverty Alleviation for State Universities & Colleges (ISUCs) per Special Release Order No. B11-02264 dated December 22, 2011 with NCA No. BMB-B-11-0023870 released by Department of Budget and Management. The unliquidated balance of P370,310,433.46 from previous year was 51% or P190,563,854.78 liquidated from the

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outstanding balance in CY 2015. Accordingly, the remaining balance of P179,746,578.68 is for submission to CHED-Resident for the verification of expenses subsequently for transmittal to DSWD once completed.

The remaining balance of P944,172.65 for the funds transferred to the National Nutrition Council (NNC) consists of P4 Million for the promotional campaign of good nutrition for the Tindahan Natin Operators and their clients in the priority 2 and 3 provinces in prior years. Last November 23, 2016, a letter was sent to NNC to demand the submission of liquidation report and/or refund of the same. No response was received from said agency as of reporting date.

The balance of funds transferred to Department of Public Works and Highways (DPWH) pertains to the various on-going projects/construction of the Department. 2015 releases of funds include receipt of funds by DPWH-CO for construction of 4-storey building & multipurpose building at DSWD CO and construction of activity centers and Home for the Girls located at DSWD Field Offices in VI, VII and VIII in the amount of P30,000,000.00 and P132,159,093.90, respectively; While, 2016 release of funds to DPWH-QCFED for the construction projects at the Reception and Study Center for Children Compound, Bago Bantay, Quezon City and at DSWD Central Office and DPWH-MMED for the various construction, repair, rehabilitation and improvement of infrastructure at DSWD-SWADCAP has current unliquidated balance of P47,730,407.42 and P6,000,000.00, respectively.

The balance of P17,374,499.73 refers to current fund transfer to Department of Public Works & Highways - South Manila Engineering District for the construction of warehouse H, replacement of existing gates and extension of perimeter fence, improvement of water line system at warehouse G, improvement of drainage and concreting of pavement, concreting of pavement at the back of warehouses A, B, & G with elevated guard house, installation of canopy for loading bays of warehouses A, B, & G located at NROC, which represents the 50% of the total contract agreement of P34,748,999.46.

The unliquidated balance of the Department of Public Works and Highways (DPWH) - South Manila Engineering District amounting to P3,463,749.96 refers to funds transferred in CY 2015 for the major repair/upgrading/improvement/construction of various infrastructure projects in DSWD-NROC, Pasay City.

The liquidation documents pertaining to the remaining balance of UP College of Educations in the amount of P409,124.30 which was already transmitted to the office of the Resident Auditor of UP College of Education was not yet released to the responsible person of the said agency, still, no liquidation report will be submitted to DSWD. We already coordinated with the details of the fund transfer and had provided pertinent documents as well to assist the person facilitating the liquidation report.

In FO-V, Due from National Government Agencies account represents the balance of funds transferred to the Department of Public Works and Highways for the construction of Day Care Centers under the Protective Services Program, and funds transferred to various State Universities and Colleges for the implementation of the Sustainable Livelihood Program and other projects.

In FO-IX, the account includes the following:

Due from 52nd Engineer Brigade-Philippine Army represents balances of fund transferred for the construction of single detached recovery shelters, and septic vaults for the victims of Zamboanga siege in September 2013 and for the construction of perimeter fence at AVRC III, Mampang, Zamboanga City.

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Due from DSWD-ARMM Sulu represents the balance of funds transferred for the various regular programs of the Department for the processing and rehabilitation of regular deportees and training/orientation cost of NHTS-PR ARMM Sulu workers.

Due from DSWD-ARMM Tawi-Tawi represents the balance of fund transferred for Sabah Stand-off displacement, processing and rehabilitation program of regular deportees, implementation for the needs of trafficked victims, expanded-AICS program of ARMM Tawi-Tawi, SFP implementation and construction of Day Care Center at Tubig Basag, Bongao under Sajahatra and administrative cost of different municipalities. Liquidation rate for current year is 25% while previous year is 72%.

Letters have already been sent to concern NGA’s in following-up the submission of liquidation reports in accordance with COA Circular No. 94-013 dated 13 December 1994. In Central Office, Due from GOCCs is broken down as follows:

The balance of P7,658,958,295.33 due from the Land Bank of the Philippines pertains to fund transfers for the over-the-counter payment of cash grants of Pantawid Pamilya beneficiaries as of December 31, 2016 with breakdown as follows:

Year Amount

2015 and prior years 2,025,441,179.65

2016 5,633,517,115.68

TOTAL 7,658,958,295.33

The balance of P10,360,000.00 represents fund transfer to Social Housing and Finance Corporation for the shelter assistance of 148 informal settler families victims of typhoon Sendong in Cagayan de Oro City released in the second quarter of this year 2016.

The funds transferred to People’s Television Network, Inc. (PTNI) and Technology and Livelihood Resource Center (TLRC) in the amounts of P59,678.25 and P23.5 Million pertain to augmentation supports, training of livelihood programs and assistance funded by the PDAF of various legislators. After the various demand letters sent to them, personal follow up was performed to facilitate the submission of liquidation report. Accordingly, the PTNI advise us that they will refund the remaining balance, while the TLRC failed to provide us a response.

The Due from Philippine International Trading Corp. (PITC) in the amount of P171,462,106.95 pertains to unliquidated funds transferred to as procurement agent of the Department to facilitate the emergency purchase of various goods, services and infrastructure projects under the Yolanda Recovery and Rehabilitation Program.

In FO-V, Due from Government-Owned and/or Controlled Corporations represents the balance of funds transferred to the National Food Authority for the implementation of the Supplemental

Name of GOCC Amount

CY 2016

Land Bank of the Philippines 7,658,958,295.33

Social Housing and Finance Corp. 10,360,000.00

Subtotal 7,669,318,295.33

CY 2015 and Prior Years

People’s Television Network, Inc. (PTNI) 59,678.25

Philippine International Trading Corp. (PITC) 171,462,106.95

Technology & Livelihood Resource Center (TLRC) 23,500,000.00

Subtotal 195,021,785.20

Grand Total 7,864,340,080.53

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Feeding Program. According to the National Food Authority Regional Office, they had already returned the unutilized balance to the NFA Central Office, but since such amounts were not yet returned to the DSWD Field Office, the amounts still remain in the books of the latter. In Central Office, the balance of P238,744,741.63 due from Local Government Unit represents current fund releases to PAMANA-BLGU-KALAHI CIDSS as community grants to various barangays which started last September of the current year.

The account Due from LGUs includes the balance of funds transferred to Provincial Government of North Cotabato amounting to P7,569.00 for the implementation of Emergency Operations Philippines- Assistance to Conflict Affected Mindanao (EMOP-ACAM) project, and funds transferred to the Municipality of Guihulgan, Negros Oriental in the amount of P2,564,877.00 and La Libertad, Negros Oriental in the amount of P1,001,925.00 as augmentation for the Cash for Work Program for the 1,422 families affected by earthquake in Region VII.

In Regional Offices, the Due from LGUs pertains to the balance of funds transferred for the implementation of various programs and projects i.e. Social Pension for Indigent Senior Citizens, Supplemental Feeding Program, Sustainable Livelihood Program, various programs under the Bottom-Up Budgeting process, Crisis Intervention Program, shelter assistance and construction of Day Care Center and Senior Citizens Center.

7.4 Intra-Agency Receivables

Account Name 2016

Current Non-Current Total

Due from Central Office 485,000.00 485,000.00

Due from Regional Offices 356,748,517.67 356,748,517.67

Due from Other Funds 42,533,313.06 42,533,313.06

Total 399,766,830.73 399,766,830.73

Due from Central Office of Php 485,000.00 represents FO-III inter-office fund transfer for travelling expenses of reinforced staff during the Mt. Pinatubo operations. This is a dormant account which was followed up thru formal communication to Central office at the beginning of the year, however no response received.

Due from Regional Office issued on prior years represents the funds for the Microfinancing and Enterprise Development Program and National Livelihood Support Fund. This also includes amount transferred to Field Offices for payment of cost of service, financial assistance to DSWD employees affected by Typhoon Yolanda and Magnitude 7.2 Earthquake, funding for the Asia-Pacific Economic Cooperation, for temporary housing assistance for 5,587 family victims of the CY 2013 Zamboanga City siege under the Zamboanga City Roadmap to recovery and

Name of LGU Amount

Granted CY 2014 and Prior Years

Guihulngan, Negros Oriental 2,564,877.00

La Libertad, Negros Oriental 1,001,925.00

Provincial Government of North Cotabato 7,569.00

Provincial Treasurer of Aklan 200.00

Provincial Treasurer of Antique 742.65

Provincial Treasurer of Camarines Sur 1,000.00

Provincial Treasurer of Oriental Mindoro 2,500.00

Provincial Treasurer of Sorsogon 2,000.00

TOTAL 3,580,813.65

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reconstruction plan, and for the Pilot Implementation of Community Managed Road Maintenance Project and these are subject for liquidation by the FOs.

In FO-VI, Due from Regional Offices represents the amount transferred to DSWD Field Offices for the Salaries and other benefits of the Regional Directors. For Director Minda B. Brigoli, this covers the period of 2nd quarter of 2015 and for Director Riduan Hadjimuddin, 1st semester of 2016. Liquidation will be followed up to FOs. Due from Other Funds includes the amount of P38,676,736.90 in FO-IVB which represents transfer of funds/receivable from Cluster 1 to Cluster 6 subject for liquidation in Cluster 1 books. While, the balance pertains to FO-NCR of P3,784,576.16 and FO-X of P72,000.00

7.5 Other Receivables This account consists of the following:

Account Name 2016 2015

Receivables - Disallowances/Charges 19,910,936.73 17,639,531.88

Due from Officers and Employees 3,331,394.73 2,218,010.59

Due from Non-Government Organizations/ People's Organizations 7,178,833,713.84 11,304,242,437.47

Other Receivables 536,919,582.07 70,704,210.78

TOTAL 7,738,995,627.37 11,394,804,190.72

The Account Receivables-Disallowances/Charges represents the disallowance for various types of expenses including Staple Food Incentive (SFI) and Agency Productivity Bonus (APB) given to DSWD Officials and Employees for CY 2000. The disallowances is under appeal by the DSWD employees. Though the disallowance/charge is under appeal, this is being collected from the officials and employees upon retirement, resignation, termination or transfer of office.

In FO-II, the account pertains to receivables from devolved workers since 1990 and the cost of typewriters (overpricing) which was subject to litigation.

In FO-VI, the account corresponds to disallowance of Additional Performance Bonus and the management is settling the charges by requiring the employees and staff by paying monthly thru salary deduction of P100.00. In 2013, in response to the disallowance of Collective Negotiation Agreement Sign-in Bonus of MOA Workers, the office started deducting monthly from Payroll of staff who availed the said bonus. All disallowances are under appeal to COA Commission proper.

In FO-IX, the account represents beginning balance as of Jan 1, 2016 in the amount of P798,215.32 and unsettled CNA disallowance of retired/deceased personnel in the amount of P260,403.00. Full settlement of NFA disallowance was made in CY2016.

The account Due from Officers and Employees in Central Office of P108,952.07 pertains to receivables from officials and employees resulting from overpayment of salaries due to leave without pay and suspension which are being deducted from the monthly payroll.

The Due from NGOs/POs includes funds released to various Non-Government Organizations from CY 2012 and prior years funded from Congressional Initiative, Congressional Development Funds (CDF) and PDAF of various solons. The account also includes transfers to barangay communities for the implementation of KALAHI CIDSS-NCDDP, PAMANA Project and JSDF-CEDED.

Further, Due from NGOs/POs includes fund transfer to International Organization for Migration (IOM) amounting to P244,983,144.21 which was transferred during 2015. These fund transfers

34

are for construction of 700 single-detached Transitional Shelters and WASH Facilities for the Zamboanga Crisis-affected populations and for developing capacity of the Philippines Department of Social Welfare and Development to train families and communities in evacuation preparedness. It also includes construction of transitional shelters for victims of typhoon Yolanda and for Leyte Resettlement sites sustainable water supply. Based on the Department’s query to the Commission on Audit, when COA could not specify any specific rules, laws and regulations to govern the TOF to IOM and in reference to one of its recommendations in AOM No. 2015-025, it had required the submission of IOM liquidation reports in accordance with COA Circular 2007-001. Consequently, the Department have been complying through the on-going validation conducted by the Internal Audit Service on the liquidation reports submitted by IOM. In CARAGA, the accounts includes financial assistance from the Office of the President for the livelihood projects of the two beneficiaries of killed DENR anti-illegal logging enforcers amounting to 420,000.00 and funds released for the regional Implementation as per MOA between DSWD and DepEd for the construction of 605 classrooms for Lumads under KC CCL amounting to 27,087,288.40, both deposited and charged under Trust Fund Account. In FO-I, the account includes the mount of P 500,000.00 fund transfer to Cooperative Bank of Pangasinan that ceased operation sometime in 2004. No liability was recorded in the books of the bank in favour of DSWD.

In FO-II, the accounts includes funds released to non-formal organizations/groups like the Day Care Workers Groups and Parents Federation for Supplementary Feeding Program, MCCT projects, livelihood and KALAHI-CIDSS projects under the BUB.

In Central Office, the account Other Receivables amounting to P4,513,998.91 pertains to advances granted to DSWD employees and officials for official travel or as disbursing officers of the Department. The balances were formerly recorded in account 103- Cash Disbursing Officers; account 123- Due from Officers and Employees; and account 148 - Advances to Officers and Employees. Re-classification of these balances is undertaken due to impossibility of collection from separated employees and collectibles from resigned employees who have not secured clearance for their accountabilities and who cannot be located anymore.

In FO-IX, the account represents receipts from other funds due to checks inadvertently issued under other bank accounts. Reclassification from Account #20101010 was made in the amount of P1,900,000.00 which was then under COA Investigation. Also recorded in this Account is the reconciling items reflected in the Bank Reconciliation Statement checks not taken up by the Agency in the total amount of P8,239,628.96 which is the accountability of the previous cashier, Ms. Aurora Agustin, who absconded last February1997. This is the subject of COA investigation. Undeposited collections of the missing cashier in the amount of P2,647.71 while the amount of P21,000 represents undeposited collections of PSCB sales covering Ms. Malou Dolar's accountability.

In CARAGA, Other Receivables represents receivable from LGUs with RRCY and HFG CICL wards for their one-third share in the said facility’s operations.

In FO-II, the balance of the account Other Receivables pertains to cash advances from devolved workers, AWOL employees of the Agency who were not cleared and those who are already dead. In FO-III, the Account Receivables-Disallowances/Charges amounting to P4, 911,823.11 represents the following:

Staple Food Allowance and Productivity Incentive Bonus given to DSWD officials and employees for CY 2000. This is still under appeal by the DSWD employees.

Hazard Pay given to DSWD-Region III employees for CY 2013.

35

Purchase of rice from NFA PDAF-funded under the sponsorships of Senators Peter and Pia Cayetano

Skills Training Vouchers under the Municipality of Dona Remedios Trinidad, Bulacan for Dressmaking NC II. This account is under appeal but recommended by the previous auditor to be recorded in the books.

In FO-V, the account Other Receivables includes advances granted to former DSWD employees and officials for official travel or as disbursing officers of the Department. Re-classification of these balances were undertaken due to impossibility of collection from separated employees and collectibles from resigned employees who have not secured clearance for their accountabilities and who cannot be located anymore 8. Inventories

Inventory items of the Department include the following:

Accounts

2016

Inventories carried at the lower of cost and net realizable value

Inventories carried at fair

value less cost to sell

Inventory write-down recognized during the

year

Reversal of Inventory write-

down recognized during the year

Inventory Held for Distribution

Carrying Amount, January 1, 2016 1,303,022,641.28 - - -

Additions/Acquisitions during the year 2,648,880,433.13 - - -

Expensed during the year except write-down (1,168,350,351.23) - - -

Adjustments during the year (663,984,777.15) - - -

Write-down during the year (35,551,731.78) - - -

Reversal of Write-down during the year - - - -

Carrying Amount, December 31, 2016 2,084,016,214.25 - - -

Inventory Held for Consumption

Carrying Amount, January 1, 2016 602,528,948.78 - - -

Additions/Acquisitions during the year 420,040,731.94 - - -

Expensed during the year except write-down (389,807,014.68) - - -

Adjustments during the year (1,587,267.10) - - -

Write-down during the year (17,192,734.62) - - -

Reversal of Write-down during the year - - - -

Carrying Amount, December 31, 2016 613,982,664.32 - - -

Semi-Expendable Inventory

Additions/Acquisitions during the year 142,924,095.33 - - -

Adjustments during the year - - - -

Write-down during the year - - - -

Expensed during the year except write-down (114,551,779.05) - - -

Carrying Amount, December 31, 2016 28,372,316.28 - - -

TOTAL CARRYING AMOUNT, DECEMBER 31, 2016 2,726,371,194.85

- - -


Inventory Held for Distribution

Food Supplies for Distribution 52,025,556.89 41,039,306.89

Welfare Goods for Distribution 1,969,334,970.20 1,199,404,247.95

Drugs and Medicines for Distribution - -

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Medical, Dental and Laboratory Supplies for Distribution 31,904,688.47 31,957,924.87

Construction Materials for Distribution 6,577,094.20 6,729,627.08

Property and Equipment for Distribution 36,060.00 12,400.00

Other Supplies and Materials for Distribution 24,137,844.49 23,879,134.49

Sub-total 2,084,016,214.25 1,303,022,641.28

Inventory Held for Consumption

Office Supplies Inventory 194,324,495.58 165,085,422.83

Accountable Forms, Plates and Stickers Inventory 749,782.44 900,804.94

Food Supplies Inventory 170,537,920.68 202,828,054.59

Drugs and Medicines Inventory 2,318,159.06 4,763,197.73

Medical, Dental and Laboratory Supplies Inventory 1,279,966.08 1,189,994.33

Fuel, Oil and Lubricants Inventory 74,012.55 524,385.00

Agricultural and Marine Supplies Inventory 3,400.00 65,200.00

Textbooks and Instructional Materials Inventory 236,495.00 242,586.00

Construction Materials Inventory 5,166,003.10 6,366,698.11

Other Supplies and Materials Inventory 239,292,429.83 220,562,605.25

Sub-total 613,982,664.32 602,528,948.78

Semi Expendable Inventories

Semi-Expendable Machinery 1,680,258.16 -

Semi-Expendable Office Equipment 2,189,417.47 -

Semi-Expendable Information and Communications Technology Equipment 13,511,981.74 -

Semi-Expendable Communications Equipment 516,215.76 -

Semi-Expendable Disaster Response and Rescue Equipment 459,046.00 -

Semi-Expendable Medical Equipment 753,190.00 -

Semi-Expendable Printing Equipment 309,987.50 -

Semi-Expendable Sports Equipment 19,396.38 -

Semi-Expendable Technical and Scientific Equipment 12,208.00 -

Semi-Expendable Other Machinery and Equipment 776,042.04 -

Semi-Expendable Furniture and Fixtures 8,144,573.23 -

Sub-total 28,372,316.28 -

Total-Inventories 2,726,371,194.85 1,905,551,590.06

Food Supplies Inventory consists of the food supplies for the consumption of the residents in various centers and institutions of the regions. In Central Office, the Account Welfare Goods for Distribution was the cost of food supplies used for production of family food packs and non-food supplies for distribution to individuals affected by various calamities, disasters and ground conflicts. This includes the monetized value of donations received prior to the issuance of COA Circular 2014-002 dated April 15, 2014 and from locally purchased inventories out of General Appropriations Act (GAA) amounting to P14,924,718.33 and P906,863,696.27, respectively. There was a submitted Report of Supplies and Materials Issued (RSMI) by National Resources Operations Center (NROC) warehouse for the months of January to June 2016 amounting to P207,182,310.72 already booked-up during the same year. RSMI for the months of July to December 2016 are not yet received and booked-up due to non-submission of the said report to the Accounting Division. Increase in the amount of Welfare Goods for Distribution was due to purchases of relief items for victims of Typhoons Lando, Nona, Ferdie, Karen, Lawin and other calamities that has stricken the Philippines during 2015 and 2016.

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In FO-V, the Account Welfare Goods for Distribution in the amount of P54,386,154.68 and P40,923,104.00 represents the cost of Food and Non-Food Supplies for distribution to individuals affected by various calamities, disasters and ground conflicts for CY 2015 and CY 2016 respectively. These were procured by the DSWD Central Office and were subsequently transferred to the DSWD Field Office V. Although all were already distributed by the Field Office V for its intended beneficiaries, the entire amount is still reflected in the books of account since no report has been submitted to the Accounting Section pertaining to its distribution.

Medical, Dental and Laboratory Supplies for Distribution in the amount of P31,904,688.47 consist of monetized value of donated medicines and other medical, dental and laboratory supplies.

Construction Materials for Distribution in the amount of P6,577,094.20 was the monetized value of donated construction supplies stored at National Resources Operation Center.

The Account Office Supplies Inventory consists of office supplies, printed special forms, IT supplies and janitorial supplies in stockpile.

Drugs and Medicines Inventory consists of purchases for consumption and issuance to end-users.

Medical, Dental and Laboratory Supplies Inventory are purchases for consumption and issuance to end-users.

Construction Materials Inventory consists of cost of painting, carpentry, plumbing and electrical supplies for office repairs and maintenance and other minor constructions of DSWD Central Office.

Other Supplies and Materials Inventory was composed of spare parts purchased for the repair and maintenance of vehicles. The account also includes semi-expendable items and other home-life supplies and needs of the centers and residential care facilities. Increase in the Inventory is due to the reclassification of semi-expendable supplies with cost value below P15,000.00 will be dropped from the inventory account immediately upon receipt of the issuance slip/inventory custodian slip from the Supply Unit.

Semi-Expendable Machinery and Equipment and Furniture, Fixtures and Books are items purchased costing less than P15,000.00 and items reclassified from Property, Plant and Equipment (PPE).

9. Property, Plant and Equipment Property, Plant and Equipment for CY 2016 are summarized as follows:

Particulars Land Land

Improvements Infrastructure

Assets

Buildings and Other

Structures

Machinery and Equipment

Transportation Equipment

Furniture, Fixtures and

Books

Leased Assets

Other Property, Plant and Equipment

Construction in Progress

TOTAL

Carrying Amount, January 1, 2016

40,281,096,121.96

13,917,141.99

200,371.22

579,189,028.45

738,555,911.09

146,448,044.63 95,522,197.46

-

29,822,270.71

160,204,137.47

42,044,955,224.98

Additions/Acquisitions 55,145,874.00 37,050,670.86 322,456.89 106,545,214.90 385,339,562.79 43,143,229.76 4,596,827.17 66,520.00 8,419,788.04 75,861,288.39 716,491,432.80

Adjustments - 117,316.55 - (13,149,653.34) (34,367,350.07) 337,884.46 (45,091,419.27) - (584,585.91) - (92,737,807.58)

Total

40,336,241,995.96

51,085,129.40

522,828.11

672,584,590.01

1,089,528,123.81

189,929,158.85 55,027,605.36

66,520.00 37,657,472.84 236,065,425.86 42,668,708,850.20

Disposals - - - (3,357,848.76) (135,246,101.68) (9,569,237.55) (5,963,085.44) - (114,811.70) - (154,251,085.13)

Depreciation (As per Statement of Financial Performance) -

(4,554,363.41)

(355,536.57)

(49,935,804.13)

(171,062,133.96)

(26,686,451.39)

(12,510,671.34)

-

(9,990,767.46)

-

(275,095,728.26)

Impairment Loss (As per Statement of Financial Performance) -

-

-

- - - -

-

-

- -

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Carrying Amount, December 31, 2016 (As per Statement of Financial Position)

40,336,241,995.96

46,530,765.99

167,291.54

619,290,937.12

783,219,888.17

153,673,469.91

36,553,848.58

66,520.00

27,551,893.68

236,065,425.86

42,239,362,036.81

Gross Cost (Asset Account Balance per Statement of Financial Position)

40,336,241,995.96

60,628,954.60

400,425.89

1,035,207,395.46

1,695,782,274.58

307,329,264.20 88,369,021.84

66,520.00

57,896,202.88

236,065,425.86

43,817,987,481.27

Less : Acc. Depreciation -

(14,098,188.61)

(233,134.35)

(415,916,458.34)

(911,538,932.12)

(153,655,794.29)

(51,815,173.26)

-

(30,324,686.95)

-

(1,577,582,367.92)

Allowance for Impairment -

-

-

-

(1,023,454.29) - -

-

(19,622.25)

-

(1,043,076.54)


40,336,241,995.96

46,530,765.99

167,291.54

619,290,937.12

783,219,888.17

153,673,469.91 36,553,848.58

66,520.00

27,551,893.68

236,065,425.86

42,239,362,036.81

Property, Plant and Equipment is carried at cost less accumulated depreciation. Regular maintenance, repair and minor replacements are charged against Maintenance and Other Operating Expense (MOOE).

Increase in Land account for CY 2016 pertains to FO-VII.

Additions to Land Improvements include site development at DSWD-National Resource Operations Center including access to road network donated by MECO.

Additions to Buildings and Other Structures account include warehouse buildings at DSWD-National Resource Operations Center donated by MECO and completed 3-storey Micro Medium Rise Building and Director's Dormitory transferred from Construction in Progress account.

Machinery and Equipment account includes transactions of Office Equipment, Information and Communication Technology Equipment, Communication Equipment, Construction and Heavy Equipment, Disaster Response and Rescue Equipment, Medical Equipment, Sports Equipment, Technical and Scientific Equipment and Other Machinery and Equipment. Machinery and Equipment that are below the capitalization threshold of P15,000.00 were reclassified into semi-expendable expense or to its appropriate account.

Transactions of Information and Communication Technology Equipment includes purchases amounting to P98,707,660.91, donations from UNICEF amounting to P958,947.56, and transfers to various Field Offices amounting to P105,478,711.11. These transactions include servers, laptops, tablets and digital cameras.

The transactions for Communication Equipment includes purchases amounting to P5,723,260.00 and transfers to Field Offices amounting to P2,726,140.00.

In Central Office, the transactions for Motor Vehicle account in CY 2016 includes Pick up-Toyota Hilux, Wagons-Landrover Defenders and Truck-Toyota Dyna, Flatbed Van that are donations from World Vision Development Foundation, Oxfam and Save the Children Philippines. This account also includes transfer of Isuzu Hi-lander and 1995 Toyota Corolla to Field Office NCR.

In FO-VI, Motor Vehicles includes the donation from the Republic of Botswana of two (2) units of Light Truck Vehicle (Isuzu) worth P1,040,632.90 each. Donation of two other vehicles remains unrecorded due to incomplete documentation; one unit Kawasaki Motorcycle CT 100 worth 44,000.00 and one Ford Everest 4x4 vehicle with list Price of 29,775.00 US dollar. Recently purchased are 1 unit Nissan Navarra 4x4 pick-up of P1,638,173.00 and 1 unit Isuzu D-Max 4x4 Pick-up of P1,516,725.00 from Central Office.

Transactions during CY 2016 for Furniture and Fixtures and Books include purchases of Furniture and Fixtures and dropping in the books due to refund for lost book. Those items that did not met the P15,000.00 threshold were also reclassified as semi-expendable expense or to its appropriate account.

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Other Property, Plant and Equipment includes items not falling under any of the specific classification/PPE accounts.

In Central Office, adjustments amounting to P11,873,582.94 are adjustments to Semi-Expendable Machinery and Equipment that are below the capitalization threshold of P15,000.00 and are reclassified into semi-expendable expense or to its appropriate account.

In compliance with the provision of the Commission on Audit Circular No.2014-002 dated April 15, 2014, the following are the required to be disclosed is the amount of donated equipment during the year amounting to P5,303,411.40. While, in Field Offices VI and CARAGA, donated equipment amounts to P1,040,632.90 and P6,894,802.48, respectively.

Construction in Progress account refers to different unfinished and on-going construction projects of the Department as of December 31, 2016.

10. Biological Assets


Breeding Stocks 90,000.00 90,000.00

Livestock Held for Consumption/Sale/Distribution 69,500.00 69,500.00

Total 159,500.00 159,500.00

Breeding Stocks includes FO-II P49,000.00 purchased of carabao as a result of productivity /livelihood activities (agro-farming) which was a part of rehabilitation of RRCY residents, and FO-XI Breeding stocks of P41,000.00 for cow raising program in the centers.

Livestock Held for Consumption/Sale/Distribution is for FO-XI productivity/livelihood activities in the center and livelihood assets.

11. Intangible Assets Intangible asset of the Department is composed of Computer Software only to wit:

Particulars Computer Software

Carrying Amount, January 1, 2016 29,212,631.39 Additions-Purchased/Acquired thru exchange or non-exchange transaction Adjustments Total Less amortization recognized (As per Statement of Financial Performance)

69,985,977.96 (126,666.66)

99,071,942.69 27,258,647.45


71,813,295.24

Gross Cost (Balance per Statement of Financial Position) 151,989,942.02 Less: Accumulated Amortization (including accumulated impairment loss) 80,176,646.78


71,813,295.24

12. Other Assets

A. Other Current Assets

12.1 Advances

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Advances for Operating Expenses 79,930,682.70 11,628,177.24

Advances for Payroll 74,289.00 7,497,363.97

Advances to Special Disbursing Officer 2,853,887,079.58 3,141,492,498.11

Advances to Officers and Employees 3,575,181.75 49,054,044.24

Total 2,937,467,233.03 3,209,672,083.56

Advances for Operating Expenses represents the amount granted to DSWD Attaches assigned in foreign posts, which include countries like Kingdom of Saudi Arabia, Qatar, Malaysia, Hong Kong, Kuwait, UAE, Jeddah, Abu Dhabi and South Korea. It also includes advances for Negros Island Region from FOs VI and VII.

Advances for Payroll in the amount of P 74,289.00 pertains to FO-II salaries of encoders, enumerators, area supervisors and area coordinators of which , because of its volume and limited supply of checks it was decided to be in the form of cash advance. It is ready for release to different provinces in the region and it will be liquidated in January 2017.

Advances to Special Disbursing Officers are amount granted to DSWD bonded Disbursing Officers both Regular Disbursing Officers and Special Disbursing Officers to be used for special purpose/time-bound activities of the Department.

In Field Offices, the account pertains to advances granted for the provision of grants and assistance for the implementation of various DSWD programs and projects and services.

In Central Office, Advances in the amount of P20,941,999.07 consists of unliquidated balance from cash advances from local and foreign travels in the total amount of P77,381.97; Advances to Special Disbursing Officers (SDOs) and Advances for Operating Expenses in the amount of P1,142,167.08 and P19,722,450.02, respectively. Unexpended/unutilized balance of CA from local and foreign travels was already refunded in January and February 2017. The advances to Social Welfare Attaches posted/detailed in foreign countries as designated SDOs for their operating expenses had already submitted additional liquidation reports after reporting date but were not yet recorded. Said liquidation reports is subject to review and evaluation prior to booking up in the books of accounts. These liquidation reports will be posted in CY 2016.

B. Other Non-Current Assets

12.2 Prepayments


Advances to Contractors 17,210,421.35 4,351,768.67

Prepaid Rent 1,282,168.40 1,307,228.40

Prepaid Registration 17,399.73 74,768.70

Prepaid Insurance 3,735,253.08 2,551,035.86

Other Prepayments 3,835,601.11 5,282,328.44

Total 26,080,843.67 13,567,130.07

Advances to Contractors pertains the amount given in advance to contractors for various projects of the Department based on the contract agreement as an advance payment upon submission of required documents and are repaid by deducting from their respective progress billings.

Prepaid Rent represents advance payment for rental of office space in various Field Offices.

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Prepaid Registration includes payment for LTO Registration of various motor vehicles of the Department. These are adjusted at year-end for the expired portion and are expensed. Prepaid Insurance is payment for insurance of various properties of the Department. These are also adjusted at year-end for the expired portion and are expensed.

Other Prepayments include cash bonds paid to PAL Express (Philippine Airlines) and Cebu Air, Inc. (Cebu Pacific Air) to maintain the credit limit with the said service providers. In FO-IX, the account represents unutilized prepaid electronic load for Pantawid Staff and unliquidated Gasoline for SF monitoring and Greening Projects. It will be liquidated on the first quarter of 2017.

12.3 Deposits


Guaranty Deposits 8,986,435.84 8,677,433.42

Other Deposits 75,080.00 75,080.00

Total 9,061,515.84 8,752,513.42

Guaranty Deposits include payment to various service providers which serves as Custom Facility Deposits, Container Deposits for the release of shipments consigned with the Department, and as guarantee deposits for the procurement of Water, Electricity and Fuel, Oil, and Lubricants with fleet card facility.

12.4 Other Non-Current Assets


Other Assets 14,082,018.65 19,113,302.73

In Central Office, Other Assets are composed of the cost of unserviceable property and equipment subject for disposal and donated equipment awaiting issuance to clients in the amount of P4,675,562.20 and P1,958,016.78, respectively.

13. Financial Liabilities

Account Name

2016 2015

Current Non-

Current Current

Non-Current

Accounts Payable 5,620,698,264.27 - 4,379,327,850.85 -

Due to Officers and Employees 253,893,541.69 - 578,583,009.55 -

Tax Refunds Payable 3,317,169.10 - - -

Total 5,877,908,975.06 - 4,957,910,860.40 -

The Accounts Payable of P5,620,698,264.27 includes unreleased checks subject for reversion on the ensuing year and the balance represents the various claims of creditors as of December 31, 2016.

Due to Officers and Employees consist of unpaid salaries, reimbursement of transportation and per diem and other unpaid claims as of December 31, 2016.

In CARAGA, Due from Officers and Employees composed of P865,094.70, Cash shortage and P18,001.94 unremitted collections of Socorro L. Baricua, Cashier II; and P55,000.00 receivable from employees on excess CNA benefit granted in December 2011.

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14. Inter-Agency Payables

Account Name

2016 2015

Current Non-

Current Current Non-Current

Due to BIR 100,974,676.10 - 84,438,189.21 -

Due to GSIS 4,151,285.32 - 6,415,780.68 -

Due to Pag-IBIG 2,470,455.32 - 631,687.46 -

Due to PhilHealth 2,091,993.75 - 1,060,924.38 -

Due to NGAs 586,719,784.54 - 328,559,938.80 -

Due to GOCCs 9,701,867.01 - 8,351,281.04 -

Due to LGUs 41,070,332.51 - 31,607,888.53 -

Total 747,180,394.55 - 461,065,690.10 -

In Central Office, Due to BIR consists of income tax deducted from employees amounting to P1,515,114.03 and EFPS P2,112,607.07 and are remitted on the ensuing year.

Due to GSIS include Life and Retirement Premium, salary loan, policy loan and ECC and are also for remittance on the ensuing year.

Due to Pag-IBIG comprise of Pag-IBIG Premiums, Multi-Purpose Loan and Housing Loans are also remitted during the first month of the ensuing year.

Due to PhilHealth is the unremitted balance from PhilHealth premiums that are included in the January 2017 remittance.

In Central Office, Due to NGAs consist of the following:

PhP705.00 for remittance to the Commission on Audit (COA) for payment of

photocopied documents; PhP909,861.93 funds received from Department of Interior and Local Government

(DILG) for implementation of Interim Shelter Fund (ISF) Project; PhP434,483,981.68 fund received from Department of Education (DepEd) for the

construction of school buildings in Mindanao; PhP508,903.10 fund received from the Department of Public Works and Highway

(DPWH); PhP58,663,500.00 fund received from National Housing Authority (NHA) for the

Recovery and Reconstruction Plan for the 5,587 families in Zamboanga City; PhP29,825,344.18 fund received from OP-President's Social Fund – PVB; PhP31,114,310.43 fund received from Office of the Presidential Adviser on the Peace

Process (OPAPP);and PhP5,916,059.50 fund received from OP-President Social Fund-LBP.

In Central Office, Due to GOCCs in the amount of P5,622,563.00 are funds received from National Livelihood Support Fund (NLSF), National Home Mortgage Finance Corporation and Landbank of the Philippines. In CARAGA, the account is the difference of amount withheld and remittance to National Home Mortgage Finance Corporation representing collection incentive. The increase for this year pertains to amount withheld from MOA staff salaries and for remittance to Social Security System in the following quarter. 15. Intra-Agency Payables

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Due to Central Office 339,243,932.95 112,058,388.32

Due to Bureaus 12,661.54 -

Due to Regional Offices 1,127,841.82 1,269,064.35

Due to Other Funds 3,953,576.16 -

Total 344,338,012.47 113,327,452.67

Due to Central Office represents the balance funds under PGMA Microfinancing and Enterprise Development Program and National Livelihood Support Fund Program and funds received from beneficiaries of Pantawid Pamilya Program as overpayment of cash grants. This also includes amount transferred to Field Offices for payment of cost of service, financial assistance to DSWD employees affected by Typhoon Yolanda and Magnitude 7.2 Earthquake, funding for the Asia-Pacific Economic Cooperation, for temporary housing assistance for 5,587 family victims of the CY 2013 Zamboanga City siege under the Zamboanga City Roadmap to recovery and reconstruction plan, and for the Pilot Implementation of Community Managed Road Maintenance Project and are subject for liquidation by the FOs.

In CARAGA, it also includes transfer of funds for the regional implementation as per MOA between DSWD and DepEd for the construction of 605 classrooms amounting to P72,475,338.74. Due to Bureaus pertains to FO-CARAGA of P12,661.54 pertaining to the amount withheld from salary for overpayment of expenses and for remittance to BTr. Due to Other Funds pertains to FO-NCR of P3,874,576.16 and FO-IV-B of P169,000.00 pertaining to amount to be transferred to Fund Cluster 1 subject for adjustment. Due to Regional Offices presents the amount transferred to DSWD Field Offices for the salaries and other benefits of the officials reassigned from one region to another.

16. Trust Liabilities


Current Non-Current Current Non-Current

Trust Liabilities 14,670,621.52 - 16,419,314.86 -

Trust Liabilities-Disaster Risk Reduction and Management Fund 310,515,808.90 - 347,398,275.64 -

Guaranty/Security Deposits Payable - 33,047,724.10 - 26,285,997.32

Customers' Deposits Payable - 509,834.92 - 554,747.17

Total 325,186,430.42 33,557,559.02 363,817,590.50 26,840,744.49

Trust Liabilities pertains to FO-VI funds received from UNICEF, RJJWC, RSCWC for various activities and President Social Fund as financial assistance to AFP, PNP and affected DSWD employees by Typhoon Yolanda.


Current Non-Current Current Non-Current

Trust Liabilities-Disaster Risk Reduction and Management Fund 310,515,808.90 - 347,398,275.64 -

Trust Liabilities-Disaster Risk Reduction and Management Fund account was recognized starting July 1, 2014 in accordance with the newly issued COA Circular 2014-002 dated April 15, 2014. This account was used to record the cash donations received, disbursed and/or transferred to DSWD Field Offices. These are summarized as follows:

44

Beginning Balance –January 1, 2016 P 224,450,239.53

Receipts/Refunds-January 1-December 31, 2016 156,242,829.06

Disbursements/Fund Transfers (129,421,576.22)

Add: balance of FOs as of Dec. 2016 59,244,316.53

Ending Balance-December 31, 2016 P 310,515,808.90

The Account Guaranty/Security Deposits Payable and Customers Deposits Payable pertain to cash bond to guarantee performance of the term of contract and participation in bidding. 17. Deferred Credits

Other Deferred Credits pertains to FO I donations received from Philhealth for the construction of nursery in Home for Women with condition that the same must be liquidated within one year.

18. Other Payables

Account Name

2016 2015

Current Non-Current Current Non-

Current

Other Payables 685,815,595.39 548,367,630.23

The Other Payables includes the Revolving Fund for Self Employment Assistance Revolving Settlement Fund (SEA-RSF). This program/project is promoting self-respect and self-reliance to the disadvantage families and individuals by assisting them to engage in to income-producing project through the provisions of the intent free capital loan assistance fund. It also includes amount of bid security and performance bond from the prospective bidder for the procurement of goods and services under public bidding and monthly deductions from employees’ salary for MBA, SWEAP, PROSPER, SSS, health card, and other individual creditors/suppliers.

19. Service and Business Income


Permit Fees 3,525,720.00 3,342,529.22

Registration Fees 235,200.00 72,500.00

Clearance and Certification Fees 10,334,169.00 9,177,200.00

Licensing Fees 2,037,100.00 200,500.00

Supervision and Regulation Enforcement Fees 500.00 -

Verification and Authentication Fees 37,030.00 19,000.00

Processing Fees 1,000.00 10,500.00

Fines and Penalties - Service Income 6,216,755.10 2,524,361.69

Other Service Income 888,811.96 1,130,150.37

School Fees 305,200.00 -

Affiliation Fees - 355,300.00

Rent/Lease Income - 5,000.00

Income from Hostels/Dormitories and Other Like Facilities 1,579,327.50 2,711,076.75

Sales Revenue 305,323.00 -

Interest Income 23,995,815.96 27,226,879.09

Fines and Penalties - Business Income 1,136.85 179,312.94

Other Business Income 5,351,459.32 5,815,714.56

Total 54,814,548.69 52,770,024.62

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Permit Fees pertains to fees collected by the Department for fund raising campaign fee from various registered, licensed and accredited Social Welfare and Development Agency (SWADA) and for duty free entry or facilitation fees.

Clearance and Certification Fees are collections for travel clearance issued to minors travelling abroad alone and/or accompanied by a person other than his/her parents.

Registration Fees pertains to collections for registration and licensing of various accredited Social Welfare and Development Agency (SWDAs).

Verification and Authentication Fees are collections for accreditation fees of various accredited SWDAs.

Interest Income represents income earned from various bank accounts of the Department which were remitted to the Bureau of Treasury.

The account Fines and Penalties - Service Income is the amount charged or being collected by the Department from various contractors/ suppliers for late delivery of goods and services as specified in the Purchase Order.

Affiliation Fees pertains to fees collected for every student or on-the-job trainee under the National Service Training Program-Civic Welfare Training Service.

Income from Hostels/Dormitories and Other Like Facilities represents the amount collected by the department from trainings, seminars, conferences, meetings and other capability-building activities at SWADCAP and Central Office facilities, function rooms and dormitories. This fund as being managed by the Capability Building Bureau in coordination with the Administrative Service is intended for the capability building activities, as well as, improvement and maintenance of the SWADCAP and Central Office dormitory.

Sales revenue includes sales proceeds from items produced by clients out of the productivity activities in centers and institutions.

20. Shares, Grants and Donations


Income from Grants and Donations in Cash 670,896,008.54 1,744,031,810.34

Income from Grants and Donations in Kind 36,036,705.09 48,848,988.60

Total 706,932,713.63 1,792,880,798.94

This account is used to record grants and donations received by the Department. For CY 2016 the Central Office received donated Motor Vehicles from World Vision Development Foundation (WVXDF, Oxfam) and Save the Children's Philippines (SCP) and ICT Equipment's (Lenovo Think Pad Edge E431 and Canon Power Shot A2500) from UNICEF. This account is also used to record grants and donations received as technical assistance and for project implementation from various foreign funding institutions such as the Asian Development Bank, Millennium Challenge Corporation and United Nation agencies. In Central Office, the Income from Grants and Donations in Cash includes the following:

PhP4,412,702.95 grants received from UNFA; PhP561,956,613.85 grants received from MCC; PhP50,440,400.00 grants received from AUSAID;

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PhP13,174,899.62 grants received from UNICEF ECCD; and PhP20,306,442.96 grants received from KC NCDDP AECID.

In Field Offices, the account pertains to donations received from various donors for various centers and institutions of the regions.

21. Miscellaneous Income Miscellaneous Income pertains to proceeds from sales of scrap and waste materials, bid documents for participation in the bidding for the supply and delivery of various goods and services. The account was used interchangeably with other gains account. 22. Personnel Services

22.1 Salaries and Wages


Salaries and Wages - Regular 763,683,727.71 680,646,046.25

Salaries and Wages - Casual/Contractual 3,221,222,291.91 2,838,121,876.52

Total 3,984,906,019.62 3,518,767,922.77

22.2 Other Compensation


Personal Economic Relief Allowance (PERA) 220,846,256.51 211,427,879.49

Representation Allowance (RA) 14,292,367.97 13,498,061.13

Transportation Allowance (TA) 9,178,812.18 10,331,929.51

Clothing/Uniform Allowance 43,632,711.20 45,299,314.15

Subsistence Allowance 31,896,575.27 14,435,715.53

Laundry Allowance 444,654.49 152,566.86

Quarters Allowance 34,000.00 88,825.00

Productivity Incentive Allowance 11,154,864.91 93,558,794.00

Overseas Allowance 23,060,052.95 22,194,202.36

Honoraria 6,920,709.19 7,787,252.62

Hazard Pay 18,154,641.27 1,667,396.33

Longevity Pay 924,220.47 537,519.06

Overtime and Night Pay 21,975,837.12 29,267,802.14

Year End Bonus 395,043,530.33 182,923,870.98

Cash Gift 41,641,075.60 44,277,547.70

Other Bonuses and Allowances 365,671,993.99 559,363,844.18

Total 1,204,872,303.45 1,236,812,521.04

Subsistence Allowance represents the amount paid for the Magna Carta of DSWD Public Social Workers and DSWD Health Workers.

Productivity Incentive Allowance pertains to the Productivity Enhancement Incentive (PEI) given to all DSWD Regular, Casual and Contractual Employees for CY 2016.

Overseas Allowance pertains to the Post Allowances of Social Service Attaches in Malaysia, Kuwait, Qatar, Jeddah, Riyadh, KSA; Abu Dhabi, South Korea & Hong Kong.

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The account Honoraria refers to the cash incentive granted to DSWD Officials & Employees for services rendered in Special Projects in addition to their regular duties.

The account Hazard Pay pertains to other benefits granted to Officials & Employees per Republic Act 9433, an act providing for Magna Carta for Public Social Workers. The RA 9433 states that public social workers and public social welfare and development workers assigned in remote and depressed areas, strife-torn or embattled areas, distressed or isolated stations, mental hospitals, leprosaria, areas declared under a state of calamity or emergency which expose them to great danger, volcanic activity/ eruption, occupational risks or threats to life shall be compensated with hazard allowance equivalent to at least 20% of the monthly basic salary.

Longevity Pay represents the amount paid for DSWD Loyalty Awardees for CY 2016. Other Bonuses and Allowances pertains to the Collective Negotiation Agreement (CNA), a cash incentive given to all DSWD Regular, Casual and Contractual Employees for CY 2016. The increase in Account Year-End Bonus is equivalent to one month basic salary as an additional benefits to Regular and Casual/Contractual officials and employees in accordance with DBM Circular #2016-4 dated April 28, 2016.

The Account Other Bonuses and Allowances pertains to payment of Performance Enhanced Incentive (PEI), Performance Based Bonus (PBB) and CNA to DSWD officials and employees holding regular, casual/contractual positions.

22.3 Employee Future Benefits

The DSWD and its employees contribute to the GSIS in accordance with the Republic Act 8291 dated April 30, 1997. The GSIS administers the plan, including payment of pension benefits to employees to whom the act applies.

22.4 Personnel Benefit Contributions


Retirement and Life Insurance Premiums 309,930,883.74 277,150,795.71

Pag-IBIG Contributions 10,978,972.51 10,744,780.73

PhilHealth Contributions 30,641,203.69 27,768,581.59

Employees Compensation Insurance Premiums 10,799,940.34 10,685,208.00

Total 362,351,000.28 326,349,366.03

Retirement and Life Insurance Premium pertains to the remittances made to the Government Service Insurance System (GSIS) for Life & Retirement Premium Government's share and other payables.

Pag-IBIG Contributions represents remittances to the Home Development Mutual Fund (HDMF) for PAG-IBIG premiums pertaining to government share.

PhilHealth Contributions represents payment of PhilHealth premium for government share.

Employees Compensation Insurance Premiums account refers to the remittances made to recognize the government’s share in premium contributions to the Employees’ Compensation Commission (ECC).

48

22.5 Other Personnel Benefits


Retirement Gratuity - 3,721,043.89

Terminal Leave Benefits 31,174,979.58 15,271,888.70

Other Personnel Benefits 91,380,847.27 14,124,060.13

Total 122,555,826.85 33,116,992.72

Other Personnel Benefits pertains to DSWD Anniversary Bonus given to DSWD Regular, Casual and Contractual Employees for CY 2016 and monetization of leave credits availed by DSWD employees for CY 2016.

23. Maintenance and Other Operating Expenses

23.1 Traveling Expenses


Traveling Expenses - Local 784,829,604.63 926,519,472.58

Traveling Expenses - Foreign 12,959,603.45 8,590,248.08

Total 797,789,208.08 935,109,720.66

Traveling Expenses - Local includes airfare, travel per diems and other related travelling expenses of DSWD Officials and Employees on official business to attend various activities within the country for the period January to December 2016.

Traveling Expenses - Foreign includes airfare, pre-travel allowance, accommodation and daily subsistence allowance of DSWD Officials and Employees during travels on official business to attend various trainings/seminars, consultation meetings for the period January to December 2016. It also includes liquidation of operating expenses by the Disbursing Officer in Foreign Posts.

23.2 Training and Scholarship Expenses


Training Expenses 1,436,643,541.53 1,538,749,955.33

Scholarship Grants/Expenses 403,010.44 183,585.45

Total 1,437,046,551.97 1,538,933,540.78

Training Expenses pertains to payment of honorarium of resource persons, board and lodging and/or hotel accommodation and airfare tickets of participants to various seminar, training - workshops. It also includes course fee and/or registration fees of DSWD Officials and Employees to enhancement training and seminars.

23.3 Supplies and Materials Expenses


Office Supplies Expenses 191,438,107.19 223,957,604.47

Accountable Forms Expenses 3,171,708.08 2,827,786.38

Animal/Zoological Supplies Expenses 15,580.82

Food Supplies Expenses 258,757,362.87 392,886,896.75

Welfare Goods Expenses 908,200,534.43 388,413,189.64

Drugs and Medicines Expenses 18,376,634.09 10,752,025.97

Medical, Dental and Laboratory Supplies Expenses 1,392,453.93 1,492,825.36

49


Fuel, Oil and Lubricants Expenses 33,161,812.53 35,481,205.78

Agricultural and Marine Supplies Expenses 231,459.00 118,384.00

Textbooks and Instructional Materials Expenses - 273,140.00

Semi-Expendable Machinery and Equipment Expenses 89,613,926.40 -

Semi-Expendable Furniture, Fixtures and Books Expenses 24,937,852.65 -

Other Supplies and Materials Expenses 143,427,293.79 174,198,357.61

Total 1,672,709,144.96 1,230,416,996.78

23.4 Utility Expenses


Water Expenses 33,418,011.94 33,779,892.70

Electricity Expenses 92,254,313.04 92,373,022.32

Gas/Heating Expenses 63,384.00

Other Utility Expenses 400.00

Total 125,736,108.98 126,152,915.02

Water Expenses are payments made to Maynilad Water Services, Inc. for the water consumption at DSWD Central Office, NHTO (Mahusay Building), Director's Dormitory and DSWD AHON Center, MIA Road, Pasay City. It also includes payment to Manila Water Company for water consumption of DSWD SWADCAP, Taguig City and DSWD 4Ps Training Center, Bago Bantay, Quezon City. It also includes payment of various Field Offices for water services.

Electricity Expenses are payments made to MERALCO for the electricity consumption at DSWD Central Office, NHTO (Mahusay Building), Director's Dormitory and DSWD AHON Center, MIA Road, Pasay City. It also includes payment to Manila Water Company for water consumption of DSWD SWADCAP, Taguig City and DSWD 4Ps Training Center, Bago Bantay, Quezon City. It also includes payment of various Field Offices for power services.

23.5 Communication Expenses


Postage and Courier Services 29,600,746.87 6,422,631.87

Telephone Expenses 135,616,864.50 151,986,608.51

Internet Subscription Expenses 17,082,541.82 20,006,084.79

Cable, Satellite, Telegraph and Radio Expenses 332,762.14 1,286,421.87

Total 182,632,915.33 179,701,747.04

Postage and Courier Services represents payment made to the Philippine Postal Corporation and LBC Express, Inc, for mailing services of various communications, door-to-door delivery of the Department. It also includes liquidation of Operating Expenses of the different Social Welfare Attache at foreign post.

Telephone Expenses are payments made to the Philippine Long Distance Telephone Company (PLDT) for current charges of DSWD Telephone (Landlines) lines. It also includes mobile expenses made to Globe Telecom, Inc. and Smart Communications, Inc. for Globe Amax and Smart BIZ load services corporate e-loading systems for use of DSWD Officials and Employees who are Globe/Touch Mobile and Smart/Talk and Text subscribers. Also included are reimbursements of individual postpaid lines payments in lieu of prepaid card allocation.

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Internet Subscription Expenses are payments made to Globe Telecommunications, Inc. and Smart Communications for the Wireless Internet Service with Wifi Technology for use of DSWD Executive and Management Committee and for wireless internet subscription of DSWD Central Office. It also includes payment made to iOne Resources, Inc. as secondary internet service provider of DSWD DRRROO and NROC.

23.6 Awards/Rewards and Prizes


Awards/Rewards Expenses 2,081,772.19 1,396,143.21

Prizes 997,694.85 923,336.09

Total 3,079,467.04 2,319,479.30

Awards/Rewards Expenses pertains to cash/monetary award given to best Provincial, LGU or NGO category implementing various DSWD programs and services during the PANATA KO SA BAYAN Awards held at Asian Institute of Management last January 28, 2016. It also includes cash awards and plaques given to awardees during DSWD PRAISE Awards Ceremony last January 29, 2016.

Prizes represents payment made to the winners of the Convergence Rebranding contest, the search for Huwarang Pamilya and Exemplary Child activity of Pantawid Pamilya.

23.7 Extraordinary Expenses


Extraordinary and Miscellaneous Expenses 5,435,096.61 5,620,691.42

Extraordinary and Miscellaneous Expenses - payment of extraordinary and miscellaneous expenses of DSWD Officials for the period January to December 2016.

23.8 Professional Services


Legal Services 3,547,752.74 2,727,362.37

Auditing Services 701,358.09 687,003.79

Consultancy Services 111,013,581.98 128,576,152.75

Other Professional Services 4,248,605,137.94 5,122,977,571.46

Total 4,363,867,830.75 5,254,968,090.37

Legal Services represents payment of counsel's fee of DSWD Legal Service Staff during attendance to various court hearings. It also includes payment to PLDT for current telephone charges of the Office of the Ombudsman and Child Justice League; honorarium for legal services rendered by the Child Justice League and monthly allowance of the Office of the Solicitor General Officials and Personnel for legal services rendered for the period January to December 2016. It also includes retainer’s fee of FOs Attorney for the year during attendance to various court hearings in FOs Centers and Institutions clients

Auditing Services are payments made to PLDT for current charges of DSWD - COA telephone lines. It also includes the procurement of Brother consumables and the delivery of materials for the fabrication of filing cabinets and installation of vinyl tiles at DSWD-COA office.

Consultancy Expenses includes payment to service providers engaged in the development of systems and the program/project consultants.

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Other Professional Services are payments to DSWD hired workers under a Cost of Service Contracts.

23.9 General Services


Janitorial Services 59,310,028.21 43,582,736.20

Security Services 134,501,507.66 121,526,755.21

Other General Services 660,233.41 34,373.50

Total 194,471,769.28 165,143,864.91

Janitorial Services are payment made to Philcare Manpower Services for janitorial services rendered at DSWD Central Office and satellite offices including special, additional and overtime services rendered at DSWD NROC and SWADCAP. It also includes payment of various Field Offices for janitorial services.

Security Services are payments made to Prime Security Agency, Inc. for security services rendered at DSWD Central Office, NROC and RSCC for the period January to December 2016. It also includes payment of various Field Offices for security services.

Other General Services represents payment made for the siphoning of septic tanks and reclogging of sewer lines at the Procurement Service. It also includes payment for the collection, hauling, processing and disposal of residual wastes at the DSWD NROC. It also includes payment for the pest control services rendered at the DSWD-CO and other Satellite Offices for the months of July to September 2016.

23.10 Repairs and Maintenance


Repairs and Maintenance - Land Improvements 63,893.00 174,360.84

Repairs and Maintenance - Infrastructure Assets 37,333.00 -

Repairs and Maintenance - Buildings and Other Structures 67,221,139.68 58,463,247.09

Repairs and Maintenance - Machinery and Equipment 13,948,916.89 11,331,495.78

Repairs and Maintenance - Transportation Equipment 24,500,882.19 20,877,946.60

Repairs and Maintenance - Furniture and Fixtures 1,663,865.31 1,941,845.96

Repairs and Maintenance - Leased Assets Improvements 29,241.04 371,180.00

Repairs and Maintenance - Semi –Expendable Machinery and Equipment 52,900.00 -

Repairs and Maintenance - Other Property, Plant and Equipment 1,034,269.02 1,062,100.18

Total 108,552,440.13 94,222,176.45

23.11 Taxes, Insurance Premiums and Other Fees


Taxes, Duties and Licenses 107,040,005.77 27,153,001.76

Fidelity Bond Premiums 17,716,585.82 15,096,502.24

Insurance Expenses 14,117,678.07 10,989,955.81

Total 138,874,269.66 53,239,459.81

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Taxes, Duties and Licenses represents the release of allotment to cover payment for Customs Duties and Internal Revenues Taxes for the shipment of donated goods received by DSWD. It also includes expenses incurred for registration, renewal of license and smoke emission of vehicles.

Fidelity Bond Premium represent payment of 1.5% fidelity bond premium of Regular Disbursing Officers, Special Disbursing Officers and Approving/Signatory of each Bureau/Service of the Department.

Insurance Expenses pertains to payment to Government Service Insurance System for insurance from fire and other perils for various DSWD buildings and motor vehicles.

23.12 Labor and Wages


Labor and Wages 49,764,150.07 71,063,104.86

Labor and Wages pertains to payment of job orders (JOs) contracts in various Field Offices.

23.13 Other Maintenance and Operating Expenses


Advertising Expenses 17,371,600.76 15,230,545.73

Printing and Publication Expenses 25,343,934.42 146,523,892.07

Representation Expenses 118,969,310.37 121,364,397.61

Transportation and Delivery Expenses 31,810,863.34 12,041,493.14

Rent/Lease Expenses 96,574,698.99 89,080,944.00

Membership Dues and Contributions to Organizations 49,500.00 18,183.92

Subscription Expenses 83,827,838.94 80,043,347.25

Donations 74,557,506.27 136,030.00

Other Maintenance and Operating Expenses 195,418,246.93 189,698,061.10

Total 643,923,500.02 654,136,894.82

Advertising Expenses includes newspaper publication or advertorial for Invitation to Bid for the procurement of goods and services.

Printing and Publication Expenses represents payment made to National Printing Office for the supply, printing and delivery of Household Assessment Forms (HAFs) with stickers for the National Household Assessment of DSWD and Center for Community Journalism and Development Inc for the KC Gender Workshop and Publication of the Gender Coffee table book and Japi Printzone Corporation for the procurement of 9,000 pcs of KC CEAV/Volunteers kits/booklets

Rent Expense pertains to payment of additional offices and equipments in various Field Offices.

Subscription Expenses are payment made to Accent Micro Technologies, Inc. (AMTI) for the Acquisition of Managed Services for DSWD Primary Information and Communication Technology (ICT) Perimeter Security Devices for the period January to December 2016. It also includes payment made to IOne Resources, Inc. for the monthly subscription of IPVPN for the DSWD Field Offices (FO's) for the period January to December 2016, AG Datacom, Inc. For Service Level Agreement for the Virtualized Agreement and anti-virus and Anti-Malware solutions and other service providers for storage solutions and information management. Also included are payments made to JJJ Newspapers & Magazines for newspaper subscription for the DSWD Central Office, DRRROO, NROC and SWADCAP (January to December 2016).

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Donations account pertains to Central Office transfer of PPE items to DSWD-ARMM in the amount of P1,842,246.00, while the balance of P71,746,020.27 pertains to expenses recognized by some FOs upon liquidation of fund transfer for the implementation of DSWD programs/projects. 24. Financial Expenses


Interest Expenses - -

Bank Charges 414,683,550.00 306,295,801.99

Other Financial Charges - 806.07

Total 414,683,550.00 306,296,608.06

The account Bank Charges generally refers to payment and accruals of interbank fees for the funds received by the DSWD from the grantor/donor and for cash card grants advanced by Land Bank of the Philippines (LBP) to other banks for ATM transactions and the bank service fees for over-the-counter payments of cash grants by the LBP conduits for the implementation of the Pantawid Pamilya Program.

25. Non-Cash Expenses

25.1 Depreciation


Depreciation - Land Improvements 4,554,363.41 1,361,029.63

Depreciation - Infrastructure Assets 355,536.57 12,327.84

Depreciation - Buildings and Other Structures 49,935,804.13 34,124,035.70

Depreciation - Machinery and Equipment 171,062,133.96 173,254,600.98

Depreciation - Transportation Equipment 26,686,451.39 21,020,041.26

Depreciation - Furniture, Fixtures and Books 12,510,671.34 16,277,743.05

Depreciation - Other Property, Plant and Equipment 9,990,767.46 4,220,199.57

Total 275,095,728.26 250,269,978.03

The Depreciation for Buildings and Other Structures, Machinery and Equipment, Transportation Equipment, Furniture and Fixtures and Books, Other Property, Plant and Equipment are periodic cost allocation for the wear and tear the Department's PPE.

25.2 Amortization

Particulars 2016 2015

Amortization – Intangible Assets 27,258,647.45 50,017,687.62

Amortization of Intangible Assets are also periodic cost allocation of the Computer Software. 26. Net Financial Assistance/Subsidy

Financial Assistance/Subsidy from NGAs, LGUs, GOCCs


Subsidy from National Government 105,615,250,959.68 126,814,053,481.98

Assistance from Local Government Units 902,968.00 1,412,433.70

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Subsidy from Other Funds 40,100.00 112,899,102.91

Total Financial Assistance/Subsidy 105,616,194,027.68 126,928,365,018.59

Less: Financial Assistance/Subsidy to NGAs, LGUs, GOCCs, NGOs/POs


Subsidy to NGAs

Financial Assistance to NGAs

Financial Assistance to Local Government Units

Financial Assistance to NGOs/POs

Subsidy to Operating Units 1,795,140.07

Subsidy to Other Funds 30,000.00

Subsidies - Others 74,217,094,269.83 56,692,508,600.80

Total Financial Assistance/Subsidy to NGAs, LGUs 74,218,919,409.90 56,692,508,600.80

Net Financial Assistance/Subsidy 31,397,274,617.78 70,235,856,417.79

Subsidy to Operating Unit pertains to the cost of equipment transferred to Negros Island Region (NIR). The account Subsidy from National Government is further broken down as follows:


Receipt of Notice of Cash Allocation (NCA) 106,493,478,189.89 132,801,302,920.06

Tax Remittance Advice (TRA) 1,142,823,047.91 1,040,240,885.52

Non-Cash Availment Authority 106,571,740.00 26,793,579.00

Total 107,742,872,977.80 133,868,337,384.58

Less:

Reversion of Lapsed NCA 2,127,622,018.12 6,859,377,466.19

Refunds 194,906,436.41

Total 2,127,622,018.12 7,054,283,902.60

Total as of December 31, 2016 105,615,250,959.68 126,814,053,481.98

The account Subsidies – Others includes payment of cash grants to the Pantawid Pamilya beneficiaries amounting to P46,923,977,200.00. Out of the total amount, P21,970,681,000.00 were paid to the beneficiaries thru their Cash Card accounts maintained with Land Bank of the Philippines while Php24,953,296,200.00 were paid thru over-the-counter thru LBP Conduits Liquidation.

The account also includes payment of community grants to various barangays for the Kalahi CIDDS project implementation and other grants and financial assistance from various DSWD programs and projects. The receipt of NCA for CY 2016 does not include receipts of NTA of P31,941,606,059.21 and NCA for Trust and other receipts of P6,802,187.00, as presented in the SCF, while in CY 2015, the receipt of NCA per SCF of P171,798,168.688.69 included NTA of P38,992,009,655.63 and receipt of NCA for trust and other receipts of P4,856,113. Reversion of lapsed NCA amounting to P2,127,622,018.12 and P6,859,377,466.19 in CY 2016 and CY 2015 respectively was included/part of the adjustments in the cash outflows which can be found in the Detailed Statement of Cash Flows.

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27. Non-operating Income, Gain, or Losses

27.1 Non-Operating Income/Gain


A. Sale of Assets

Sale of Garnished/ Confiscated/ Abandoned/Seized Goods and Properties

3,532,404.73

B. Gains

Gain on Foreign Exchange (FOREX) 297,437,395.83 1,502,942,769.81

Gain on Sale of Property, Plant and Equipment 10,360.00

Gain on Sale of Biological Assets -

Other Gains 4,936,025.45 3,527,950.64

Total Gains 302,373,421.28 1,506,481,080.45

27.2 Non-Operating Losses


Loss on Foreign Exchange (FOREX) 198,398,984.53 1,236,447,055.37

Loss on Sale of Property, Plant and Equipment 1,210,790.42 3,340.90

Loss on Sale of Assets - 203,746.03

Loss of Assets - 275,222.66

Other Losses - 4,358.35

Total 199,609,774.95 1,236,933,723.31

Gains on Foreign Exchange results from the translation of foreign currency into the presentation currency which the Philippine peso was using the prevailing exchange rate at every end of the period. This is the excess of current exchange rate (closing rate) at the reporting date over the rate initially or previously recognized multiplied by the balance of the foreign currency account.

Loss on Foreign Exchange (FOREX) are results from the translation of foreign currency into the presentation currency which was the Philippine peso using the prevailing exchange rate at every end of the period. This is the excess of the rate initially or previously recognized over current exchange rate (closing rate) at the reporting date multiplied by the balance of the foreign currency account.

Other Gains pertains to proceeds from disposal thru public sale of unserviceable equipment's, motor vehicles, valueless records, scrap/waste materials, rice bags, nylon sacks, cardboard boxes & stretch films core. It also includes fees charged to various registered, licensed and accredited SWDAs for photocopying of documents in accordance with Circular No. 12 Series of 2015. The account also includes payments received from contractors/suppliers for non-refundable fee for bidding documents for participation in the bidding for the supply and delivery of various goods and services.

28. Budget Information The original budget per General Appropriations Act of 2016 is P110,560,165,000.00, including RLIP, while the total budget allocated to the Department, inclusive of Special Allotment Release Order (SARO), Continuing Appropriations and other fund augmentation is P131,545,680,074.49

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The following are the reasons of the variances of P20,985,515,074.49 between the original and the final budget:

Particulars Cluster 1 Cluster 2 Cluster 3 Cluster 4 TOTAL

Difference of Original and Final Budget

18,385,348,152.80

2,375,246,458.69

20,516,413.00

204,404,050.00 20,985,515,074.49

Realignments/ Augmentation

5,623,397,814.00

-

20,516,413.00

204,404,050.00

5,848,318,277.00

Continuing Appropriations

13,601,096,130.80

2,375,246,458.69 - -

15,976,342,589.49

Transfer (839,145,792.00) - - - (839,145,792.00)

TOTAL 18,385,348,152.80 2,375,246,458.69 20,516,413.00 204,404,050.00 20,985,515,074.49

The difference of Final Budget of P131,545,680,074.49 and Actual Amounts of P92,472,529,465.39 resulting to P39,073,150,609.09 is reconciled with the total unobligated allotment and unpaid obligations with breakdown as follows: Unobligated Allotment P23,023,412,600.79 Unpaid Obligations 16,049,738,008.30 Total P39,073,150,609.09 The Actual Amounts of P92,472,529,465.39 represents disbursements under Current and Continuing Appropriations, while payment of accounts payable covering prior year’s obligations was not considered in the presentation of the Statement of Comparison of Budget and Actual Amounts (SCBAA).

29. Related Party Transactions

26.1 Key Management Personnel

The key management personnel of the DSWD are the Head of the Agency, the members of the Executive Committee which consists of the Undersecretaries and the Assistant Secretaries.

26.2 Key Management Personnel Compensation

The aggregate remuneration of members of the governing body and the number of members determined on a fulltime equivalent basis receiving remuneration within this category, are as follows:

Particulars Aggregate Remuneration

Salaries and Wages 10,668,694.63

Other Compensation 3,230,659.09

Personnel Benefit Contributions 1,067,558.27

Other Personnel Benefits 2,339,395.10

Total 17,306,307.09

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PART II - OBSERVATIONS AND RECOMMENDATIONS

A. Financial Audit

Dormant Accounts/Unremitted Funds to the Bureau of Treasury

1. The CIB-LCCA with a balance of P14.021 billion as of December 31, 2016,

included dormant accounts, trust receipts, donations, excess BAC honoraria,

performance bond, and training fund of P737.811 million that were not

remitted to the National Treasury, depriving the NG of the proper disposition

of these funds.

The following laws and regulations govern the deposit of funds to the

National Treasury as well as the reversion and closure of balances of special and

trust receipts accounts:

a. Sections 6,7, 8, and 13 of FY 2016 General Appropriations Act or the GAA

(RA No. 10717) for deposit of cash donations, trust receipts, and any excess

proceeds of training funds with the National Treasury;

b. Sections 6.2 and 8 of DBM Budget Circular (BC) No. 2004-5A dated

October 7, 2005 for any excess of the amount collected for BAC honoraria

and performance bonds and deposits filed or posted by private persons or

entities with the department, among others; and

c. Section 11 for closure and reversion of all balances of special accounts,

fiduciary or trust funds, and revolving funds to the General Fund in any of

the following instances: (i) when there is no legal basis for its creation; (ii)

when their terms have expired; or (iii) when they are no longer necessary for

the attainment of the purposes for which said funds were established.

Likewise, COA Circular No. 2015-001, dated January 29, 2015, on the

reversion to the General Fund of all dormant cash, unauthorized accounts,

unnecessary special and trust funds, and related accounts.

Section 3 of the Circular states, among others, that the Head of the

Accounting Unit shall: (i) conduct thorough analysis of the cash accounts

maintained with an authorized government depository bank (AGDB) that

have remained inactive or those accounts with no transactions other than

periodic bank charges; and (ii) deposit the cash balances to the National

Treasury or return the unutilized balances to Source Agency

(SA)/donors/financing entities in the case of grants or foreign-funded

programs/projects.

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The total balances of the Cash in Bank- Local Currency Current Account

(CIB-LCCA) of P14,021.352 million as of December 31, 2016 included P737.811

million that were supposed to be remitted/deposited with the National Treasury,

instead of with AGDB, contrary to the foregoing rules and regulations. Details is

presented in Table 1.

Table 1. Summary of bank account balances for remittance to BTr

FO Particulars Per Books

(in Million Php)

CO Bidders/ Performance Bond 14.071 DSWD Donations 116.412 e-Donation 0.031 BAC Honoraria (Excess) 5.800 Training Fund (Excess) 10.957 Foreign Donation ($1,000,35 @49.813) 0.050 Self Employment Assistance-Kaunlaran (SEA-K) 14.862 Miscellaneous Trust Account 1.585 VI PGMA Microfinancing Development Program Fund 0.143 All FOs (except VII & XII)

SEA-K Revolving and Settlement Fund 573.660

XIII President’s Social Fund 0.240

TOTAL 737.811

The SEA-K Associations’ (SKAs) account is a revolving fund used for the

collection of loan repayments from members as well as for the grant of new loans to

other organized SKAs. With the issuance of Memorandum Circular (MC) No. 13,

series of 2015, on the Guidelines on the Provision of Seed Capital Fund (SCF), the

SCF released by the DSWD to members of the SKAs is no longer treated as loan

but financial assistance, such that members will pay their loans to the SKAs who

will manage the account for the association and repayment to the DSWD is no

longer required effective June 18, 2015. For loans prior to this date, the

beneficiaries are still required to repay their loans directly to the account opened for

the purpose. With the implementation of MC No. 13, the funds needed to pay the

SCF are sourced from the General Fund, thus, the purpose for which the trust fund

was established is no longer necessary, and the CIB balance of the SEA-K

Revolving and Settlement Fund has to be remitted to the National Treasury so that

the amount could be used for other projects of the government.

In FO XIII, the amount of P240,000.00 corresponds to the amount deposited

by the DSWD-Central Office (CO) for opening of the account intended for

assistance to the nine employees of the DSWD-FO Caraga whose houses were

partially and totally/heavily damaged by Typhoon Pablo, way back in year 2012.

However, said fund was not utilized as intended because the fund was downloaded

late by DSWD CO and assistance to the DSWD employees had already been given

prior to the release of fund.

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The non and/or delayed remittance to the National Treasury of the trust

receipts, cash donations, and the balances for BAC Honoraria and Training Fund,

resulted in large cash deposited in the AGDB of the agency, the amounts of which

could have been used for other projects of the government.

It bears emphasizing that Sections 4 and 5 of the GAA or RA No. 10651

provides that disbursements or expenditures by agencies in violation of the above

requirements shall be void and shall subject the erring officials and employees to

disciplinary actions in accordance with Section 43, Chapter 5 and Section 80,

Chapter 7, Book VI of EO No. 292 and to appropriate criminal action under

existing penal laws.

This has been an observation in the CY 2015 audit report, but Management

had not substantially complied with the recommendation, with only eight bank

accounts closed, of which the amount of P436,242.85 was remitted to the BTr.

Moreover, in CY 2015, we also recommended for Management to direct the

Accountant to exert efforts to trace back and analyze the “suspense account” of

P4.944 million in the CIB-LCCA; determine to which bank account the same was

deposited; and remit the balance to the National Treasury, however, as of to date,

the Accountant was unable to account the same, which has been a result of the

agency’s migration to the e-NGAS in CY 2003, thus rendering the CIB account

balance overstated, due to its non-existence.

Management informed that the suspense account is a beginning balance

from CY 2003 when the e-NGAS was first adopted. The personnel handling said

account already retired and there are no documents available to examine and

reconstruct the same. They shall write letters to the AGDBs to inquire about or

confirm any existing bank accounts under the name of the DSWD and reconcile

with their records/ inventory of bank accounts.

Likewise, in FO VI, the amount of P41,980.46, representing the difference

between the book and bank balances labeled as “for adjustment”, has existed in the

books of accounts since 1993 and had been a recurring audit observation in the

Management Letter (ML) since CY 2012 but not adjusted due to lack of records.

We recommended and the DSWD Secretary agreed to require the

concerned CO’ and FOs’:

a) Cash Division to remit all trust receipts, donations, including excess

funds from training, and BAC honoraria pursuant to existing laws; and

b) Accountant to exert efforts to trace back and analyze the “suspense

account” in the CIB - LCCA, identify to which bank account the same

was deposited, and remit the balance to the National Treasury; and

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record the validated reconciling items in the books of accounts in order

to reflect the correct balances of the account.

Management comment:

The Department shall adhere to COA’s recommendations and henceforth,

the bank accounts for BAC Honoraria and Bidders Performance Bond will be

deposited to the BTr. On the other hand, the training fund, DSWD Donations,

e-donations, and foreign donations shall be maintained, pursuant to Section 10.a of

the CY 2016 GAA and COA Circular No. 2014-002.

Auditor’s Rejoinder:

The CY 2016 GAA explicitly states that cash donations and trust receipts

shall be deposited with the National Treasury. It, likewise, provides that any excess

proceeds of training funds shall be deposited with the National Treasury as income

of the General Fund, thus we maintain our recommendation.

Issues affecting income from Grants and Donations

2. Foreign donations of P751.913 million received from the Government of

Australia were without prior clearance and approval by the President of the

Philippines and not deposited with the BTr, thus, the necessary protocol

review to ensure that all donations for projects and programs are in sync with

the government funding and thrusts was bypassed. In the absence of said

approval/clearance disbursements amounting to P581.158 million is without

authority.

a) No prior clearance/approval of receipt and non-deposit to BTr.

Section 6 of the CY 2016 GAA provides that xxx In case of donation from

foreign governments, acceptance thereof shall be subject to the prior clearance and

approval by the President of the Philippines upon recommendation of the Secretary

of Foreign Affairs.

It further states that the receipts from cash donations and proceeds from sale

of donated commodities shall be deposited with the National Treasury and recorded

as a Special Account in the General Fund and shall be available to the

implementing agency concerned through a Special Budget pursuant to Section 35,

Chapter 5, Book VI of E.O. No. 292.

Article 4 of General Agreement on Development Cooperation (GADC)

between the Government of Australia (GOA) and the Government of the Republic

of the Philippines (GRP) signed on October 28, 1994 provides that the Australian

International Development Assistance Bureau of the Department of Foreign Affairs

and Trade shall be the coordinating authority for the Government of Australia while

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the National Economic and Development Authority (NEDA) shall be the

coordinating authority for the GRP.

In CYs 2014 to 2016, the DSWD, as represented by the Secretary, entered

into an agreement with the GOA, represented by the Department of Foreign Affairs

and Trade (DFAT), for the implementation of the following programs:

Table 2. DFAT program funds not remitted to the BTr

Project Name Year Amount Received (In Million Php)

Improving Access to Early Learning through Community-led Approach 2014

487.954 Social Protection Reforms 52.500 Social Support for Disaster Response

2015 104.247

Social Protection Reforms 56.772

2016 50.440 TOTAL 751.913

The above amounts were recorded as CIB–LCCA and Income from Grant

and Donations-Cash for the respective years of receipt and were directly deposited

to the Land Bank of the Philippines (LBP) for the account of the DSWD as provided

for in the provision for Deposit and Disbursement of GOA funds of the MOA.

While the agreement states that the funding of the said programs was born

out of the terms of the GADC, the insertion of “prior clearance and approval by the

President of the Philippines upon recommendation of the Secretary of Foreign

Affairs” in the GAA suggests certain amendment for compliance of the Philippine

Government that may not necessarily affect previously approved agreements.

Moreover, the Agreement specifies the NEDA to be the coordinating

authority for the GRP but records show that it is the DSWD Secretary who signed

the Direct Funding Agreement, thus not in keeping the Article 4 of the GADC.

The failure of the DSWD to secure prior clearance and approval by the

President of the Philippines upon recommendation of the Secretary of Foreign

Affairs and non-compliant signatory to the Agreement is contrary to established

rules and regulation on donations, thus the process have bypassed necessary

protocol reviews to ensure that all donations for projects and programs are in sync

with the government funding and thrusts.

In addition, the failure of DSWD to remit the donated funds to the BTr may

affect the judicious formulation and implementation of special budgets reflective of

national objectives and to ensure that funds are utilized and operations are

conducted effectively, economically, and efficiently.

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b) Unauthorized Disbursements

Section 6, Paragraph 3, General Provisions of RA No. 10717 or the GAA of

FY 2016 states that: “Disbursements or expenditures by agencies in violation of the

above requirements shall be void and shall subject the erring officials and

employees to disciplinary actions in accordance with Section 43, Chapter 5 and

Section 80, Chapter 7, Book VI of E.O. No. 292, and to appropriate criminal action

under existing penal laws.”

Table 3 summarizes the receipts and disbursements of various DFAT grants

with its corresponding accomplishments pertaining to programs/projects of the

DSWD.

Table 3. Receipts and Disbursements of DFAT Grants

DFAT Grant No. Amounts (in Million PhP)

% Utilized Accomplishment Received Disbursed

70184 Improving Access to Early Learning through Community-led Approach

487.954 466.935 95.69 Of the total funded 374 Sub-Projects (SPs) - 338 SPs (90%) already completed

and directly benefitted 113,754 households;

27 SPs (7%) ongoing implementation; 9 SPs (3%) are yet to start

70013 Support Program for Disaster Response

104.247 57.598 55.25 Construction of one unit Warehouse and various improvements at DSWD National Resource Operations Center (NROC) of P34,748,999.46;

Trainings - Workshop on Inventory and Warehouse Management;

Psychosocial Support Trainings; Manual of operations on Donations,

Logistics, Production and warehouse

management (on-going); Disaster Response Manuals for FOs

(on-going)

70507 Social Protection Reforms

159.712 56.625 35.45 Various Seminars/Trainings/Workshops/ Study/Reports on DSWD’s Social Protection Reforms

Total 751.913 581.158

Verification showed that the purposes of the program/s were given due

accomplishments within the timeframe as evidenced by the above disbursements.

The duration period for DFAT No. 70184 ended in December 2016 while the end-

date for the other two programs will be on December 2017. All grant agreements

were signed by the DSWD Secretary on behalf of the GRP pursuant to the

documents entitled “Subsidiary Arrangement Between the GRP and the GOA –

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Support for the National Disaster Coordinating Council Collective Strengthening of

Community Awareness to Natural Disaster”.

Since there was no presentation of any evidence of the approval of the

President of the Philippines, upon recommendation of DFA Secretary, the

programs/projects enclosed in the agreements entered into by the Agency were

likewise not approved by the Philippine Government, thus making the

disbursements/expenses void ab initio or to be treated as invalid from the outset

pursuant to Section 6 Paragraph 3, General Provisions of RA No. 10717 GAA of

CY 2016.

Management commented that with the Australian Aid, significant gains

have been chalked up in developing the capacities of the DSWD and other

implementers in carrying out the 4Ps and other core social protection programs.

Existing DSWD-DFAT agreements with the direct cash transfer mechanism have

supported, or are supporting about 60 completed, ongoing and pipeline technical

assistance projects intended to enhance service delivery across practically all

programs of the DSWD.

We recommended and the DSWD Secretary agreed to henceforth:

a) Seek the clearance and approval of the President upon the

recommendation of the DFA on all donation agreements with foreign

governments as well as disbursements thereof; and

b) Remit to the BTr the amounts received in accordance with Section 35,

Chapter 5, Book VI of EO No. 292.

Management Comment:

The DSWD has continuing authority to enter into subsidiary agreements

with agencies of the GOA based on the General Agreement on Development

Cooperation (GADC) entered into by the GRP and GOA dated 28 October 1994.

The GADC authorized “agencies, statutory authorities or organizations” of

the GOA and the GRP to “conclude subsidiary arrangements in respect of specific

activities.” Because the DSWD is not aware of any subsequent agreement or

issuance by either the GRP or the GOA revoking this provision, the authority given

by this provision is deemed to be continuing and because the DSWD, as an agency

of the GRP, has an implicit continuing authority to enter into subsidiary agreements

with other agencies of the GOA, it is sufficient compliance with the requirement

under various GAA for “prior clearance and approval of the President of the

Philippines upon recommendation by the Secretary of the Foreign Affairs.”

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Nevertheless, to avoid any misunderstanding or ambiguity, in the future, the

DSWD shall seek explicit approval from the President before accepting donations

from foreign governments.

NEDA is not the only GRP agency that may enter into subsidiary

agreements with the GOA. As previously stated, Article 5.1 for the GADC

authorized “agencies , statutory authorities or organizations” of the GRP to enter

into such subsidiary arrangements. The DSWD is an agency of the GRP and the

Secretary is the head, thus the DSWD Secretary has sufficient authority to sign

DFAT Agreement.

The donor/grantor, the GOA through the DFAT, authorized deposit of the

donated funds into the DSWD accounts, thus DSWD was exempted from remitting

these funds to the BTr.


The GAA is the highest law that establishes the national budget of the

Philippines. It, likewise, provides a system of receipt and utilization of funds to

ensure that this will achieve the purpose and impact the lives of the Filipinos and the

nation as a whole. The latest provisions of the GAA in CY 2014 to 2016 set the

guidelines that should be followed by all officials in the Government to ensure that

the budget/funds are utilized and operations are conducted effectively,

economically, and efficiently, thus we maintain our recommendation.

Understated Cash in Bank

3. CIB-LCCA as well as the related expense/equity and payable accounts is

understated by approximately P26.020 million at year-end due to:

(a) non-reversion of unreleased checks; (b) unadjusted stale checks; and

(c) unrecorded book and bank reconciling items.

a) Non-reversion of unreleased checks – P1.819 million

Section 56, Chapter 19, Volume I of the GAM for NGAs provides the

procedures on handling and accounting for unreleased checks at the end of the year.

Specifically, a JEV shall be prepared to recognize the restoration of the cash

equivalent to the unreleased checks and the recognition of the appropriate

liability/payable account but there shall be no physical cancellation of the checks.

The JEV supporting such restoration shall form part of the supporting document to

the financial statements to be submitted to COA at year end. At the start of the

ensuing year, another JEV shall be drawn to reverse the previous entry made and

recognize the availability of the checks for release. This procedure shall not

apply to account “Cash-Modified Disbursement System (MDS)” since there is

no actual cash with GSBs.

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Unreleased checks of P1.819 million at FO IV-B were not restored to Cash

in Bank as at year end, details as shown in Table 4.

Table 4. Summary of Unreleased Checks (FO IV-B)

Check No. Date Payee Amount

For Payment of Capital Seed fund under SLP Program

385046 - 049 12/14/2016 various payees 970,000.00 For Fund Transfer for Social Pension

382231 - 234 9/7/2016 various municipalities 670,000.00 For Payment of various Expenses

133989; 134345; 134504; 134552

9/1/2016; 11/25/2016; 12/28/2016; 12/29/2016

various payees 179,186.16

Total 1,819,186.16

b) Unadjusted stale checks – P11.345 Million

Section 44, Chapter 6 of GAM Volume I provides that, “Checks may be

cancelled when they become stale, voided, or spoiled. The depository bank

considers a check stale, if it has been outstanding for over six months from date of

issue or as prescribed”.

Included in the CIB are stale checks totaling P11.345 million as of

December 31, 2016, reported by three FOs, to wit:

Table 5. Schedule of Stale Checks

FO Check No./ Date Payee Amount Remarks

IV B 133485

5/26/2016 Padre Ali 10,718.00 -

III Various Various 905,114.31

issued and outstanding for a period of 6 to 36 months but not restored to cash account due to late receipt of the bank statements from the servicing banks and erroneous BRS submitted.

XI Various Various 10,429,193.34

represents financial assistance to beneficiaries and livelihood associations for livelihood programs ranging from P10,000, to more than P100,000 but not released and became stale due to lack of DSWD Accreditation on concerned associations. The issuance of various checks which became stale could have been avoided had there been proper coordination with the DSWD CO on the accreditation of SLP Associations before check preparation.

Total 11,345,025.65

The Accounting Unit in FO III reasoned that she was not able to determine

the stale checks because of the late receipt of the bank statements from the servicing

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banks and admitted that the BRSs submitted were erroneous and revised BRS for

the account will be prepared and submitted.

The non-restoration of unreleased checks to the CIB – LCCA, as well as,

non-cancellation/adjustment of stale checks resulted in the understatement of both

the Cash and related payable accounts by P13.164 million considering that the

corresponding cash balance is still intact with the AGDB.

c) Unrecorded book reconciling items – P12.856 million

The book reconciling items of P12.856 million from CYs 2014 to 2016

pertaining to FO III and CAR bank transactions were not recognized in the books of

accounts as of December 31, 2016, details as shown in Table 6.

Table 6. Breakdown of Unrecorded Reconciling items (in PhP)

FO Book Reconciling Items Amount Remarks

III Dollar deposits converted to peso

216,415.11

The Accountant also stated that the unrecorded reconciling items of P363,014.33 were among the many donations to the agency’s centers and institutions directly deposited by various donors to the bank and remained unrecorded because they could not be traced, matched, or reconciled with the reports submitted by centers and institutions or lack of proper documents and information.

Credit memos 136,599.22 Check deposit 10,000.00

Over remittance of withholding tax (book error)

12,441.60

The reconciling item of P10,178.57 should have been a bank reconciling item because it was the bank which incurred the error but deducted from the book balance. The reconciling item of P2,263.03 for over-remittance of taxes in July 2014 had not been explained.

Sub Total 375,455.93

CAR SEA K - rollback –Feb to Dec 2016 12,109,611.03 Unrecorded as of December 31, 2016

Interest 50,183.17 Error in posting beginning balance (20,724.27) Uncorrected error SWDRP-LP 1,220.00 Cancelled check GTA 340,157.46 Donations for the centers converted to

peso RSCWC ECCD 200.00 Double charging of bank charges.

Sub total 12,480,647.39 Grand Total 12,856,103.32

The non-adjustment of the accounts affected by these reconciling items had

understated, the CIB and Accumulated Surplus/(Deficit) accounts as of December

31, 2016. Further, non-recording of donations resulted in the non-utilization

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thereof which could have redounded to the benefits of the residents of the centers

and institutions.

Likewise, in NCR , FOI, and III, BRS were either submitted late or not

submitted at all due to lack of training/understanding on BRS procedures, and which

is also not in keeping with Section 5, Chapter 21 of the GAM, Volume I.

We recommended and the DSWD Secretary agreed to instruct the

concerned FO Accountants to:

a) make necessary adjustments in the books of accounts for the value of

unreleased and stale checks and unrecorded reconciling items at year

end;

b) conduct regular/monthly reconciliation of recorded book and bank

balances, by preparing the BRS and, thereafter, prepare the necessary

adjusting entries in the books of accounts; and

c) conduct coaching or send the concerned staff to appropriate training on

the procedures and preparation of the BRS.

Unclaimed cash grants not remitted to the BTr

4. Refunds from the LBP conduits of P3.108 billion in CYs 2013 to 2016,

representing unclaimed cash grants of 4Ps beneficiaries for Over-the-Counter

(OTC) mode of payment, were not returned to the BTr.

Section 88, General Provisions of the GAA requires the reversion to the

General Fund of unexpended balances of appropriations authorized in this Act, at

the end of the validity of appropriations provided under Section 65 hereof, and shall

not thereafter be available for expenditure except by subsequent legislative

enactment.

Records showed that as of December 2016, total fund transfers to the LBP

4P’s account amounted to P142,955.201 million, of which processed liquidations

from October 2008 to December 2016 totaled P135,296.242 million, leaving a

balance of P7,658.958 million (Table 20). Included in the said liquidations are

refunds of P4,099.822 million from CYs 2013 to 2016 made by various conduits for

OTC cash grants, however, only the amount of P992.257 million was remitted as of

December 31, 2016. The details of the refund per year is shown in Table 7.

Table 7. Status of Refunds from LBP Conduits

Year Amounts (in Million PhP)

Refund from Conduits Remitted to BTr Balance (Not Remitted)

2011 593.005 (593.005) 2012 248.643 (248.643)

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Year Amounts (in Million PhP)

Refund from Conduits Remitted to BTr Balance (Not Remitted)

2013 491.984 14.702 477.282 2014 1,049.328 33.787 1,015.541 2015 2,532.135 57.112 2,475.023 2016 26.375 45.008 (18.633) Total 4,099.822 992.257 3,107.565

While the DSWD-CO had already remitted the amount of P992.257 million,

the non-remittance to the BTr of the remaining balance of P3,107.565 million,

despite that these funds remained unutilized for more than three years, has deprived

the National Government (NG) of the proper disposition of these funds.

Management, however, informed that there are still unpaid claims from the above

refunds, thus they cannot remit the whole amount refunded.

It may be worthy to note that the Guidelines for the Implementation of the

4Ps has no provision on the period for which the beneficiaries could claim their cash

grants, thus the amount is left idle in the banks for several years now.

We reiterated our prior years’ recommendations and the DSWD

Secretary agreed to:

a) determine the unpaid grants for the previous years that still needs to be

paid and, thereafter, remit to the BTr the excess of the refunded amount

by the conduits; and

b) establish a guideline on the period for which the cash grants are to be

claimed afterwhich, these should be forfeited in favor of the government

to ensure that idle funds are remitted to the BTr for proper disposition.

Management commented that it considered the COA recommendation to set

a period of deadline for which cash grants are to be claimed. Initially, DSWD is

proposing that unclaimed cash grants shall remain only for two years from date of

funding. Upon approval of the proposed policy, the amount of P1,699,127,555.84

shall be remitted to BTr and the amount of P491,923,100 shall be retained in the

account of DSWD pending rescheduling, change of conduit, and validation of

current payables.

Unwithdrawn CCT/MCCT cash card grants

5. Account balances of CCT/MCCT beneficiaries of P1.239 billion under the cash

card mode of payment, consisting of 2,433,518 accounts with balances ranging

from P501 to more than P50,000 that were not withdrawn from 30 to 2,190

days upon payout, tend to show that there is no immediate need for the

financial assistance and casting doubt on the eligibility of the chosen

beneficiaries. Moreover, 28,268 accounts with total balance of P140.848 million

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have no date of last monetary activity, but still included in the list of

beneficiaries.

The 4Ps has two types of cash grants given out to household (HH) -

beneficiaries:

health grant: P500 per HH every month, or a total of P6,000 every year;

education grant: P300 per child every month for ten months, or a total of

P3,000 every year (a HH may register a maximum of three children for the

program)

These cash grants are distributed to the HH-beneficiaries through the LBP

or, if not feasible, through alternate payment schemes, such as Globe G-Cash

remittance and rural bank transactions.

The modes of payment for the CCT cash grants shall be as follows:

a) Cash Card Automated Teller Machine (ATM);

b) Over-the-Counter (OTC); and

c) Other mode of payment which can be done when the areas defined

are not accessible to the Land Bank ATM, for Cash Card mode, and

the Land Bank cannot do offsite payments, for OTC mode.

Further, Section 4.4 of the IRR for the Cash Disbursement for the 4Ps states

that “Cash Card reactivation at the end of the third year shall be subject to a

reactivation fee of One Hundred Pesos (P100.00) for the account of the DSWD”.

Examination of the cash card balances of CCT/MCCT beneficiaries’

accounts with the LBP, Prepaid card, and First Consolidated Bank - Palawan, Bohol,

and Siquijor branches, provided by the LBP, revealed that as of December 31, 2016,

there are 2,674,845 accounts with unwithdrawn balances totaling P1,425,732,419.12,

from 2008 to 2016, as shown in Table 8.

Table 8. Summary of unwithdrawn balances as of CY 2016 (In million PhP)

YEAR

LBP Prepaid Card Total FCB Accounts 312, 501, 502

503 Grand Total

No. of Accounts

Outstanding Balance

No. of Accounts

Outstanding Balance

No. of Accounts

Outstanding Balance

No. of Accounts

Outstanding Balance

2008 - - 0 0 101 0.016 101 0.016

2009 - - 0 0 5,041 4.678 5,041 4.678

2010 - - 0 0 15,405 5.935 15,405 5.935

2011 - - 8 0.029 220,473 88.279 220,481 88.308

2012 - - 67 0.315 222,516 177.775 222,583 178.089

2013 - - 77 0.428 159,120 421.527 159,197 421.956

2014 - - 105 0.464 68,619 113.268 68,724 113.732

2015 20 0.058 139 0.393 83,950 102.280 84,109 102.731

2016 2,525 2.521 0 0.00 1,868,411 366.918 1,870,936 369.438

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YEAR

LBP Prepaid Card Total FCB Accounts 312, 501, 502

503 Grand Total

No. of Accounts

Outstanding Balance

No. of Accounts

Outstanding Balance

No. of Accounts

Outstanding Balance

No. of Accounts

Outstanding Balance

Sub Total 2,545 2.579 396 1.629 2,643,636 1,280.677 2,646,577 1,284.884

no withdrawal since account was opened

9 0.008 311 1.982 27,948 138,858 28,268 140.848

Grand Total 2,554 2.587 707 3.611 2,671,584 1,419.535 2,674,845 1,425.732

Aging showed that 2,433,518 accounts with total balances of P1.239 billion

or 87 percent of the unwithdrawn balances were outstanding from 30 to more than

2,190 days upon payout as shown in Table 9.

Table 9. Aging Schedule of Account Balances from CCT/MCCT Beneficiaries

Mode of Payment 30-2190 days or more

No. of Accounts Outstanding Balance

(in million PhP)

FCB – Bohol 307 1.306 Palawan 73 . 285 Siquijor 16 .038 LBP Prepaid Card 173 .261 Accounts 312,501,502,503 2,432,949 1,236.612 Total 2,433,518 1,238.502

It bears emphasizing that the cash grants are benefits given to the poorest

municipalities and homeless and indigenous people whose economic condition is

equal to or below the provincial poverty threshold to augment their day-to-day

expenses. It is very remarkable, however, that the accounts have significant

unwithdrawn amounts, which gives an impression that the holders of the accounts

are not in dire need of assistance for the education for their children, health needs of

the family, and other basic expenses of a family.

The continuous non-withdrawal of the cash grants only showed that the

holders do not need the financial assistance/cash grant and do not really belong to

the poorest of the poor as well as may not be eligible to be a CCT beneficiary, thus

defeating the purpose of the 4Ps/CCT program to alleviate poverty by improving the

health, nutrition, and the education of the poorest families, homeless, and assistance

to indigenous people.

Moreover, records showed that 28,268 accounts with total outstanding

balance of P140.847 million have no date of last monetary activity or no withdrawals

from date of opening of the accounts, as shown in Table 10.

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Table 10. Summary of accounts with no withdrawal activity

Mode of Payment No. of Accounts Outstanding Balance

FCB -Bohol 219 1.333 Palawan 78 0.553 Siquijor 14 0.095 LBP Prepaid Card 9 0.008 Accounts 312,501,502,503 27,948 138.858

Total 28,268 140.847

Despite the non-movement of these accounts, and the constant report of the

LBP to the DSWD for such occurrence, delisting of the accounts or non-renewal of

the Cash card after the period of three years were still not made, as provided in

Section 4.4 of the IRR for the Cash Disbursement for the 4Ps, to avoid incurrence of

additional reactivation fee every after three years.

This has been a finding in the previous year and to address the matter,

Management conducted field inquiry to affected provinces in FOs I, NCR, VII, VIII,

and ARMM to determine the existence of HHs with non-moving accounts, the

reasons for non-use/non-withdrawal by the HHs, and to recommend remedial actions

to prevent the problem.

A report dated January 31, 2017 was submitted to the National Program

Management Office (NPMO) containing the causes of the problem and the

recommendation of the Group who conducted the validation, but as of December 31,

2016, review of the cash card accounts showed that while there were actions taken to

address this observation, there are still considerable idle funds that could have been

utilized for other government projects had these been remitted to the BTr. Details as

shown in Table 11.

Table 11. Comparison of unwithdrawn balances as of CY 2015 and CY 2016

(Amounts in Million PhP)

Year CY 2015 Accounts CY 2016 Accounts Increase/(Decrease)

Qty Amounts Qty Amounts Qty Amounts

2008 101 0.016 101 0.016

2009 5,151 5.139 5,041 4.678 (110) (0.461)

2010 15,606 6.396 15,405 5.935 (201) (0.461)

2011 223,852 94.34 220,481 88.308 (3,371) (6.032)

2012 227,934 186.601 222,583 178.089 (5,351) (8.512)

2013 167,336 462.737 159,197 421.956 (8,139) (40.781)

2014 76,837 122.693 68,724 113.732 (8,113) (8.961)

2015 1,886,977 235.556 84,109 102.731 (1,802,868) (132.825)

No DLMA 386,435 139.008 28,040 139.515 (358,395) 0.507

Sub Total 2,990,229 1,252.486 803,681 1,054.96 (2,186,548) (197.526)

2016 - - 1,871,155 370.772 1,871,155 370.772

Total 2,990,229 1,252.486 2,674,836 1,425.732 (315,393) 173.246

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NPMO to:

a) fast track the validation and investigation or re-assessment on the

eligibility of concerned beneficiaries and implement delisting of

ineligible beneficiaries immediately;

b) coordinate with the LBP on the results of validation and require them to

make necessary actions to recover the amount to be remitted to the Btr;

and

c) for cash cards with “No Date of Last Monetary Activity (DLMA)”

status, advise the LBP of the non-renewal of cash cards of said

beneficiaries to ensure that additional expenditures are avoided and

limited government funds are utilized effectively.

Management Comments and updates:

The actual number of accounts with balances ranging from P501 to more

than P50,000 that were not withdrawn from 30 to 2,190 days is 194,198 only with

aggregate unwithdrawn cash grants amounting to P1,121,721,207.87. Based on the

initial validation by the Department, 16 percent or 7,129 accounts belong to HHs

who are ineligible from the Program but 75 percent or 33,898 accounts with balances

of P360,641,471.56 are still needed by the concerned HHs. Further, it was observed

that there were operational issues/gaps which resulted in the dormancy/ non-

movement of the accounts.

Initial validation showed the following:

7,072 accounts with outstanding balance of P43,378,639.88 already

withdrawn by beneficiaries;

8,961 accounts with grants amounting to P53,262,772.52 still for

withdrawal. These accounts were reported as claimed, however,

beneficiaries were either unaware that they have unclaimed grants or doesn’t

know how to withdraw;

9,210 cashcards with total balance of P116,638,632.12 lost/stolen/damaged,

hence, due for replacement;

7,129 accounts with balance of P20,573,603.89 due for closure due to

ineligibility or waiver from the program;

4,207 accounts with unwithdrawn grants of P37,280,014.13 inactive but

appealable HH status. Closure of account or release of cash grants shall be

identified once final HH status is updated in the Pantawid Pamilya

Information System; and

88 accounts with total cash grants of P517,088.65 kept by beneficiaries as

savings.

73

As for the remaining 148,876 accounts with grants of P702,709,029.64, the

Department shall fast track the validation, investigation/re-assessment on the

eligibility of concerned beneficiaries.

The DSWD shall coordinate with the LBP on the results of validation and

shall require them to make necessary actions to recover the amount to be remitted to

the BTr corresponding to the accounts for closure. Further, accounts due for

replacement and those requiring transfer of cash grants from old to new accounts

shall be endorsed to the LBP as soon as documents required by the bank are

complete.

Although it is stated in the LBP and DSWD IRR that reactivation fee

amounting to P100 shall be charged to the DSWD by the LBP upon expiration of the

cashcards, it is informed that since the start of the program, no billing for

reactivation fee has been received by the DSWD, thus this provision from the MOA

IRR has never been implemented and no additional expenditure was incurred.

Moreover, the Department shall prioritize the validation of the HHs having

accounts with “no DLMA” status.

Unliquidated Cash Advances (CAs) - P2,933.810 million

6. CAs of P2,933.810 million remained unliquidated due to non-compliance with

the provisions of COA Circular No. 97-002 dated February 10, 1997 and

DSWD Administrative Order No. 07, series of 2016.

COA Circular No. 97-002 dated February 10, 1997 provides, among others:

No additional CAs shall be allowed to any official or employee unless the

previous CA given to him is first settled or a proper accounting thereof is

made;

A CA shall be reported on as soon as the purpose for which it has been

given has been served;

All CAs shall be fully liquidated at the end of each year. Except for Petty

Cash Fund, the Accountable Officer (AO) refund any unexpended balance to

the Cashier/Collecting Officer who will issue the necessary official receipt.

In addition, Section 89 of PD No. 1445 provides, among others, that no CA

shall be given unless for a legally authorized specific purpose.

a) Unliquidated Advances to Special Disbursing Officers (SDOs) – P2,853.88

million

CAs amounting to P2,853.88 million were granted to SDOs for the payment

of various programs and projects, such as Social Pension, Emergency Shelter

Assistance, Cash for Work, Assistance to Individual in Crisis Situation (AICS), and

74

other operating expenses, of which P174.14 million or 6 percent pertains to prior

years that are already past due. Details are presented in Table 12.

Table 12. Breakdown of Unliquidated Advances to SDOs

FO

Account Balance (in Million PhP)

Total Current Past Due

CY 2015 CY 2014 & PYs

CAR 224.644 224.664 - -

I 346.981 341.746 5.235 -

II 676.254 676.139 0.115 -

III 20.629 20.629 - -

IV - A 224.429 222.945 1.484 -

IV - B 104.129 47.928 44.898 11.303

V 391.749 349.337 42.381 .031

VI - - - -

VII 2.726 1.565 1.129 .032

VIII 132.962 75.501 7.011 50.45

IX 325.986 325.978 .00768 -

X 32.668 31.569 1.099 -

XI .032 .032 - -

XII 130.357 129.099 1.258 -

NCR 239.173 231.467 7.666 .04

CO 1.144 1.144 - -

TOTAL 2,853.863 2,679.743 112.284 61.856

174.139 (6%)

As gleaned in Table 12, six percent of outstanding CAs represents past due

accounts that were already expended but not yet liquidated, thus tend to overstate the

recorded receivables account.

The non-liquidation of CAs resulted in non-recording of the appropriate

transactions as they occur as well as the accumulation of unliquidated CAs, thus

exposing government funds to risk of possible losses thru theft or misuse.

Other related observations noted by the audit teams are as follows:

Observations FOs Affected

Common Issues 1. Additional CAs provided despite non-liquidation of

previous CAs II, IV-A, VI, VIII, IX, X, NCR

2. Delays in submission of LRs / Non or Partial liquidation of CAs

CAR, I, IV-B, VIII, IX, X, NCR

3. Unauthorized transfer of CAs to other AOs CAR, I, II, NCR 4. CA’s deposited to personal account of AOs II, X,

75

In FO III, audit of the CAs granted as well as the liquidation of P1.195

million by the AO disclosed that: (a) 214 actual payees were not among those

authorized in the RAO to receive assistance; (b) Cash Assistance Payroll of P28,050,

acknowledged by fifteen authorized payees, not included in the liquidation of P1.195

million; and (c) erasures/alterations in names of beneficiaries in the paid Cash

Assistance Payroll.

Management informed that that there were errors in the submission of

documents and sufficiently explained the deficiencies noted with the submission of

additional documents to support their justifications.

For FO V, CAs for the Sustainable Livelihood Program (SLP) were granted

to SDOs on an average of two months before the start of the activities, thus exposing

government resources to risks of loss or misuse due to accumulation of

accountabilities handled.

We, likewise, noted that in FO IX, CAs of P29,112,258.50 were transferred

to ten CSOs and Technical Vocational Institutes (TVIs) from the CA of the SDOs

without any covering MOA contrary to COA Circular No. 2007-001 dated October

25, 2007 provides the revised guidelines in the granting, utilization, accounting, and

auditing of the funds released to Non-Governmental Organizations/People’s

Organizations (NGOs/POs) and Section 4.5.3 of RA No. 9184 and its revised IRR.

We reiterate our previous year’s recommendations and the DSWD

Secretary agreed to direct the concerned Directors/Accountants to:

a) refrain from granting CAs to SDOs in excess of their maximum cash

accountabilities and unless the previous ones granted to them are fully

liquidated;

b) intensify the monitoring controls on CAs to ensure timely submission of

liquidation documents (FO I);

c) direct the SLP office to submit requests for funding of CA for activities

within a reasonable time prior to the start of the activity/project to

enable timely cash payouts (FO V);

d) ensure that all fund transfers to CSOs/TVIs are covered with MOA,

which shall be prepared in accordance with the provisions of COA

Circular No. 2007-001 (FO IX);

e) instruct the SDOs to immediately close all accounts maintained

purposely for the unused accumulated CAs and return the same to the

coffers of the government to avoid legal impediments (FO X);

76

f) review the existing agency disbursements systems and control processes

to include adequate and proper identification of documents supporting

financial claims and stamping “PAID” by the paymasters on all DVs,

payrolls, and supporting documents after payment to avoid any attempt

to use the same in payment of future claims; and instruct all

paymasters and AOs to avoid erasures and alterations on approved

payrolls/DVs to preserve their validity and reliability (FO III);

g) require the SDOs to submit the necessary documents to support the

liquidations made, and require the Accounting Unit to record

liquidations only when supported with complete documents; and

h) impose sanctions to erring officials and employees who fail to liquidate

their CA as soon as the purpose of thereof has been served. Suspension

of salaries of erring AOs shall be ordered, in accordance with the rules

set forth under Section 9.2 of COA Circular No. 2012-04.

As of March 31, 2017, a total of ₱94.893 million has been liquidated,

leaving a balance of P2,758.987 million. Below are updates on the status of

unliquidated CAs after December 31, 2016:

FO Management Comments and Updates

I Management will adopt/devise a recording/monitoring scheme for every SDO/AO to strengthen/ improve/install effective internal control system on CAs. Also, they pledged to coordinate and synchronize their monitoring/recording to ensure the correctness and validity of all settlements/ liquidations.

CAR During consultations with the program focals, the following concerns were raised as reasons of the delayed liquidation:

a) Difficulty in the coordination and scheduling of payouts with the LGUs; b) Some paymasters have other important activities during the scheduled payout; and c) Incomplete documents from beneficiaries, especially those from far-flung areas.

Moreover, in addition to reminders and demand letters to SDOs, additional controls were put in place so as to compel the SDOs to liquidate on time.

II The Project Development Officers’ (PDOs) depositing of unutilized CAs to their personal bank accounts was corrected and has ordered these to be turned over to the SDOs. Accordingly, those deposited to the personal bank accounts of the PDOs were withdrawn and turned over to the proper SDOs. Thru the initiative of the DSWD FO2 Director, there is a proposed reorganization of the DSWD wherein additional SDOs will be hired as all FOs have the same concern on the lack of permanent employees to be designated as SDOs.

III They had not realized the significance of adequately and appropriately identifying their documents by putting payroll number, indicating the nature of assistance in any payroll and stamping the payroll and its SDs with “PAID”. Thus, it will adhere to the recommendations of the COA Audit Team regarding proper identification of documents.

V They are monitoring the CA of each SDO if they are qualified for subsequent CA according to their bond limit. Each CA has its particular purpose to serve and a lot of programs and activities cannot be catered by the limited number of SDOs. Management will implement measures to minimize the CAs granted to SDOs, such as thru direct procurement from

77


suppliers/training providers instead of payment through cash assistance payroll.

In addition, they will try to facilitate the immediate revalidation of beneficiaries and to request funds only for prioritized projects.

VI, X They will adhere to the Audit Team’s recommendations.

VII Management to send memorandum to Negros Island FO thru the FO Director and require the AO assigned in Negros Island FO to submit her reply on the abovementioned audit observations and recommendations on or before the end of March 2017.

IX Management to send a memo for the SLP Focal Person to prepare schedule of payment or cash programming of projects. Only request for CA pertaining to payment of accounts which will due within two months shall be submitted and processed with the schedule of payment as one of the supporting documents.

MOA will be accomplished to support funds transferred to the TVIs out of the CAs of the SDOs.

b) Unliquidated Advances for Operating Expenses - P79.930 million

Pursuant to Section XIII, paragraph B, of DSWD AO No. 07, Series of

2016, the allocation of monthly MOOE shall be transferred on a quarterly basis and

succeeding releases of MOOE shall be subject to a 75 percent rate of fund utilization

of previous fund transfers and balances as supported with prescribed LRs.

The total outstanding balance of Advances for Operating Expenses as of

December 31, 2016, amounted to P79.930 million, representing advances granted to

AOs to defray operating expenses at operating/field units and in foreign posts. Aging

of the account included the amount of P3.754 million granted in prior years, as

shown in Table 13.

Table 13. Status of Unliquidated CAs for Operating Expenses

FO Total Account

Balance

Amounts by Age (in Million PhP)

Current Year CY 2015 CY 2014 and

PYs

VI 14.978 14.978 - - VII 45.230 45.230 - - CO 19.722 15.968 2.844 0.910 Total 79.930 76.176 2.844 0.910

Past due 3.754

At the CO, the accumulated outstanding advances for operating expenses

amounted to P19.722 million. This represents advances to Social Welfare Attaches

(SWAtts) in various foreign/overseas post, the ages of which are shown in Table 14.

78

Table 14. Summary of Advances for Operating Expenses (Amounts in Million PhP)

Accountable Officers Total

Amount

Cash Advances CY 2016 Unliquidated

Balances

< 30 days

31 - 90 days

91 - 365 days

Total CY

2015 CY

2014

Arang, Josephine (SWA- Jeddah) 1.263 0.000 0.404 0 0.404 0.853 0.006 Bacwaden, Judith Y. (SWA - Qatar) 1.366 0.430 0.000 0 0.430 0.933 0.003 Bonina, Bernard (SWA - Malaysia) 2.187 0.000 2.187 0 2.187 0.000 0.000 Deloria, Maricel (SWA -Riyadh) 4.912 3.080 1.832 0 4.912 0.000 0.000 Dy, Elizabeth L. (SWA - Hongkong) 1.621 1.350 0.000 0 1.350 0.271 0.000 Mendoza, Annie (SWA, Kuwait) 0.629 0.000 0.000 0 0.000 0.000 0.629 Nillas, Isabel S. (SWA - Abu Dhabi) 2.041 1.053 0.000 0.764 1.817 0.000 0.225 Oliva, Nilda (SWA -Kuwait) 1.167 0.000 0.740 0.178 0.918 0.249 0.000 Panganiban, Perlita V. (SWA - Riyadh) 0.747 0.000 0.000 0.162 0.162 0.538 0.047 Razon, Priscilla (Rome, Italy) 2.892 2.892 0.000 0.000 2.892 0.000 0.000 Villanueva, Lucita J. (SWA- South, Korea) 0.897 0.000 0.000 0.897 0.897 0.000 0.000 Total - Advances for Operating Expenses 19.722 8.805 5.163 2.001 15.969 2.844 0.910

Total 91 days and Prior Years 5.754

Out of the total balance of P19,722,450.02, there are still balances from CYs

2014 and 2015, and aged 91 to 365 days, totaling P5,754,705.28, which were not yet

liquidated. Considering the time elapsed, it is presumed that these are already

expended, thus should have been liquidated and recorded to the appropriate

accounts.

The remaining fund balances for CY 2015 of the SWAtts – Malaysia,

Kuwait, and Hongkong were granted authority to be utilized for CY 2016. However,

the balance of SWAtt-Kuwait was not deducted from the 1st quarter of the CY 2016

release due to the delayed submission of liquidation documents, while the SDO at

SWAtt-Jeddah passed away, hence the unliquidated balance. Noteworthy was the

CY 2014 account balance of Annie Mendoza, now assigned as Assistant Director of

FO IV-A of P628,703.67 which, until now, has not been liquidated despite final

demand letter issued by the Accounting Office on November 2, 2016. Section 8 of

CSC Resolution No. 04-0676 dated June 17, 2004 as amended by CSC Resolution

No. 1200103 dated January 12, 2012 provides the administrative liability of AOs

who fail to liquidate their CAs within the period prescribed.

Moreover, review of the individual SLs of the following AOs/SWAs

showed that despite huge amount of outstanding balances, additional transfers were

made in 2017, as shown in Table 15.

Table 15. Additional Cash Advances (In million PhP)

Accountable Officers Balance

December 31, 2016 Grants as of

February 2017

SWA - Qatar 1.366 1.421 SWA - Malaysia 2.187 1.595 SWA-Riyadh 4.9120 0.698 SWA - Hongkong 1.621 0.420 SWA - Abu Dhabi 2.041 1.455

79

Accountable Officers Balance

December 31, 2016 Grants as of

February 2017

SWA-Kuwait 1.167 1.536 Total 13.294 7.125

In FO VI, the accumulation of unliquidated Advances for Operating

Expenses of P14,947,995.57 was due to the grant of additional CA despite the

non-liquidation of the previous CA contrary to the provisions of COA Circular No.

97-002.

The above practice resulted in the accumulation of unliquidated fund

transfers and non-recording of expenses already incurred but not yet reported as of

year-end.

We recommended and the DSWD Secretary agreed to require all

concerned FOs to:

a) strictly observe the provisions of COA Circular No. 97-002 on the grant,

utilization, and liquidation of CAs and ensure monitoring thereof; and

b) liquidate their CAs on time, otherwise, impose administrative sanctions

against them in accordance with the Section 89 of PD No. 1445, COA

Circular No. 97-002, and CSC Resolution No. 04-0676, dated June 17,

2004 as amended by CSC Resolution No. 1200103 dated January 12,

2012.

Management Comments:

At the CO, LRs were submitted in CY 2017, which reduced the balance to

P14,002,357.50. There are also liquidation documents submitted amounting to

P7,180,524.78 which are not yet taken up in the books of accounts pending

submission of some required supporting documents.

For the unliquidated balance of the late SWAtt to Jeddah, Kingdom of Saudi

Arabia, the Management is coordinating with the new SWatt in Jeddah to locate the

documents pertaining to unliquidated CA of the former.

With regards to the unliquidated balance of SWAtts posted in South Korea

and Kuwait, LRs are not yet submitted to FMS-AD, memo dated November 2, 2016

were sent demanding submission of their respective LRs and a final notice to settle

their unliquidated balances was sent to two (2) Attaches' last April 19, 2017,

however, the FMS-Accounting Division have not received their compliance to this

requirement.

On the observation that despite huge amount of outstanding balances,

additional transfers were made in 2017, this is being done so that the operations

overseas are not disrupted. However, the release of funds for the succeeding year is

80

based on the liquidation report and the remaining cash in bank statement balance of

the SWAtt as of December 31, 2016. The remaining cash in bank balance by each

SWAtt are being deducted from the respective first quarter MOOE of the ensuing

year. Therefore, the released of fund for the 1st quarter of 2017 is net of remaining

funds of CY 2016, approved by the Head of office on the utilization of remaining

fund balance.

In addition, the review and compliance process of SWAtt’s liquidation

reports are strenuous considering the distance and the communication process for the

compliance of their lacking documents, hence, hinders the timely submission and

recording of the same.

The Secretary already issued a memorandum to all officials and staff of the

Department, dated May 22, 2017, to immediately settle all accounts and to strictly

enforce the rules on liquidation of CAs starting July 1, 2017, in accordance with

rules and regulations.

Unliquidated Fund Transfers – Due from NGAs/LGUs/GOCCs - P25,282.064 million

7. The non-submission of LRs and the release of additional funds to IAs with

outstanding accounts resulted in the accumulation of Due from

NGAs/GOCCs/LGUs amounting to P25,282.064 million.

COA Circular No. 94-013 dated December 13, 1994 provides the rules and

regulations in the grant, utilization, and liquidation of funds transferred to

implementing agencies (IAs). This is to ensure that the transfer is properly taken up

in the books of the Source Agency (SA) and IA and used only for the intended

purpose and for proper accounting and reporting on the utilization of the funds.

Paragraph 4.6 of said Circular provides that within ten days after the end of

each month/end of the agreed period for the Project, the IA shall submit the Report

of Checks Issued (RCI) and the Report of Disbursement (RD) to report the

utilization of the funds. Paragraph 4.9 further states that the IA shall return to the

SA any unused balance upon completion of the project while Paragraph 5.4 provides

that the SA shall require the IA to submit the reports and furnish the IA with a copy

of the journal entry voucher taking up the expenditures.

a) Due from NGAs P1,258.757 million

Unliquidated fund transfers to various NGAs amounted to P1,258.757

million as of December 31, 2016 of which, P752.798 million or 58 percent have

been outstanding for two years and above, contrary to COA Circular No. 94-013.

81

42%

22%

36%

CY 2016 (1 year and

below)

CY 2015 (2 years)

CY 2014 and PYs (3

years and above)

The balance of the account represents the unutilized portion of the fund

transfers for the implementation of various projects. Aging of the account is shown

in Table 16.

Table 16. Aging Schedule of Due from NGAs

FO

Amounts (in million PhP)

Total

CY 2016 CY 2015 CY 2014 and PYs

(1 year and below)

(2 years) (3 years and

above)

CO 768.69 355.673 168.675 244.346

NCR 129.52 1.042 7.087 121.389

CAR 11.53 0 4.62 6.907

I 0.99 0 0.992 -

II 11.19 9.922 0.1 1.17

III 5.58 2.22 0.732 2.629

IV-A 25.13 3.371 0.429 21.331

IV-B 18.65 2.329 1.2 15.122

V 62.62 54.467 8.152 -

VI 25.48 25.365 0 0.111

VII 55.03 0 40 15.027

VIII 41.27 23.385 0 17.884

IX 50.65 17.841 27.93 4.876

X 22.55 22.187 0.289 0.076

XI 17.56 12.5 5 0.062

XII 12.32 2.658 8.532 1.129

CARAGA 0.00 0 0 -

TOTAL 1,258.757 532.960 273.738 452.059

Aged 2 years and above 725.797

As shown in Table 16, for CY 2016, bulk of the unliquidated balances came

from current year fund transfers of P532.960 million, which is 42 percent of the total

CY 2016 year-end balance as shown in Figure 1:

Figure 1. Aging of Due from NGAs

82

On the other hand, the amount of P725.797 or 58 percent represents fund

transfers which had been outstanding for two years and above.

The details of the reported observations in the audit of fund transfers are as

shown in Table 17.

Table 17. Observations per FOs

DSWD Offices

Unliquidated Balance

(in million PhP) Observations/Remarks

CO 768.694 The accounts of AFP – NADESCOM, NNC, PIA, RESPSCI, UP College of Education and DSWD – City of Manila have no movement in CY 2016 and upon verification, the balances have been outstanding for more than six years already.

Amounts due from PHILHEALTH and DSWD – City of Manila of P975.00 and P200,000.00 were recorded under this account, instead of Due from GOCC and LGU, respectively.

Comparison of balances per books for the Due from NGAs of P750,195,489.25 and results of confirmation from recipients/beneficiaries showed a discrepancy of P101,007,550.37 that resulted in the overstatement of P65,902,198.66 of the account representing liquidations made by the DPWH.

NCR 129.518 CAR 11.527

I 0.992 II 11.192 Consists of fund transfers for the implementation of

sustainable livelihood programs (SLPs) granted to Cagayan State University (CSU) – Sanchez Mira Campus, CSU - Gonzaga Campus, and Department of Trade and Industry (DTI) – FO 02 in CY 2014 as well as to Southern Isabela College of Arts and Trade (SICAT) in CY 2015, and Isabela School of Arts and Trade (ISAT) in CY 2016.

No liquidations were submitted for fund transfers granted to CSU – Sanchez Mira Campus in the amount of P322,971.00 and to CSU – Gonzaga Campus in the amount of P298,901.61, despite that these have been outstanding for more than two years. On the other hand, only the amount of P852,884.97 liquidation for the balance of fund transfer to DTI – FO2 was received in CY 2016.

III 5.581 IV-A 25.131 IV-B 18.651

V 62.618 VI 25.476 Includes funds transferred to Corazon Locsin Montelibano

Memorial Hospital on December 28, 2012 of P200,000.00, which was partially liquidated, leaving a balance of

83

DSWD Offices

Unliquidated Balance

(in million PhP) Observations/Remarks

P110,906.50.

The Accomplishment Report submitted by the SLP, DSWD-FO VI showed that the Skills Training on Food Processing and Food Cart Vending in Ajuy, Iloilo amounting to P889,793.00 which was included in the funds transferred to NIPSC-Estancia, Iloilo, was already completed on November 23, 2016 but not yet liquidated as at year-end.

VII 55.027 VIII 41.269 IX 50.648 Transferred funds to the 52nd Engineer Brigade, Philippine

Army, for the construction of concrete perimeter fence at the Area Vocational Rehabilitation Center, Barangay Mampang costing P7,145,514.00, is 50.03 percent completed as of October 2016.

Construction of single detached recovery shelters, boardwalks, and septic tanks totaling P11,122,630.00 intended for the internally-displaced persons in the Zamboanga siege were already completed and accepted but liquidation documents for the P1,612,848.00 were not yet submitted as of December 31, 2016

X 22.552 XI 17.562 Long due fund transfers of P5,062,160.37 remain

unliquidated for a number of years already.

No liquidation of fund transfers of P5,000,000.00 to the University of Southeastern Philippines since CY 2015.

XII 12.319 CARAGA - TOTAL 1,258.756

Considering the length of time that has elapsed, these receivable accounts

still remain as assets of the SA, where in reality most of the accounts over two years

have already been spent by the IAs concerned, thus affecting the validity of the

receivables account.

We reiterated our prior years’ recommendations with modifications

and the DSWD Secretary agreed to direct the CO and FO Directors concerned

to:

a) monitor the status and liquidation of fund transfers to IAs and require

them to immediately submit the LRs within the prescribed period per

COA Circular No. 94-013 and refund the unutilized balances of fund

transfers for completed projects, if any;

b) reclassify the accounts of PHILHEALTH and DSWD – City of Manila

according to its proper account (CO);

84

c) coordinate with concerned NGAs and reconcile their balances and make

necessary adjustments, especially with the DPWH (CO); and

d) assess the present situation regarding the presence of informal settlers

on the DSWD IX property and employ new strategies to hasten their

relocation so that the perimeter fence project will be completed (FO IX).

Management comments and updates are summarized as follows:

Offices Management Comments

CO A total of P36,086,124.90 from the CY 2016 balance was liquidated as of

April 2017.

Several demand letters were sent to IAs with long-outstanding balance,

reiterating the submission of their LRs in compliance with COA Circular No.

94-013.

a. On May 2, 2017, Management followed up the remaining balances for

refund of AFP – NADESCOM (P12,137.78); NNC (P944,172.65); and

UP College of Education (P409,124.30)

b. Sent letters on April 7, 2014, Nov. 21, 2016, & May 2, 2017 to the PIA

for the liquidation of its balance of P4,171,252.08

II Management has required the SLP staff to do regular monitoring of all SLP

fund transfers so that all unused funds will be immediately refunded after the

implementation of the SLP project/activity.

Also, the DSWD FO2 Director has ordered the FO Program Coordinator of

the SLP and the Accountant to do a validation of the program implementation

for funds transferred to CSU-Gonzaga, CSU-Sanchez Mira, DTI-RO2, and

ISAT which have not fully liquidated. We agreed to their commitment to

submit the necessary reports to the Office of the COA Auditor until March

31, 2017.

VI Management commented that they will adhere to the Audit Team’s

recommendations.

IX The main cause of delay in project completion is the presence of informal

settlers in the DSWD IX property. Series of meetings were conducted by

Management with the City Social Welfare Development Officer (CSWDO)

regarding the transfer of the informal settlers to a resettlement area, which

have shown positive results. To date, there remain only 118 families who

have not yet been relocated.

They also averred that meeting with CSWDO personnel and concerned

informal settlers would be arranged so doable solutions could be agreed upon

and the completion of long delayed projects could be realized. During the

exit conference, Management mentioned that cash assistance will be given to

families once they are relocated to a new site. Informal settlers are given up

to March 15, 2017 to leave the area so that construction of the perimeter fence

can resume.

85

b) Due from GOCCs - P8,436.920 million

The balance of Due from GOCCs of P8,436.920 million included the

amount of P3,550.207 million which were outstanding for two to ten years, with a

difference of P105.406 million per result of confirmation.

The balance represents unliquidated balances of funds transferred to the

different GOCCS for the implementation of various projects. The aging of the

account is shown in Table 18.

Table 18. Aging of Due from GOCCs (in million PhP)

FO Total Current

(1 Year and Below)

CY 2015 CY 2014 and Prior

Remarks

CO 7,864.340 4,404.408 959.839 2,500.093 outstanding for two to ten years CARAGA 0.008 - - 0.008

NCR 271.397 216.231 55.165 -

I 57.103 24.695 32.409 - undelivered items from PITC defeating the purpose to hasten the implementation of project

II 1.246 1.246 - - V 12.730 10.115 - 2.615

VI 89.538 89.538 - -

overstated by P31.693 million due to non-recording of payment of stipend of senior citizens which can be attributed to inadequate monitoring of LRs from the Philippine Postal Corporation, resulting also in the understatement of Subsidies-Others

VII 60.505 60.505 - -

Funds transferred to the NFA with book balance of P25.209 million as of December 31, 2016 did not agree with the NFA-confirmed balance of P39.025 million or a variance of P13.816 million due to lack of monitoring and reconciliation of funds transferred to IAs.

VIII 0.078 - 0.078 - X 10.889 10.889 - - XI 20.441 20.441 - - XII 48.645 48.645 - -

TOTAL 8,436.920 4,886.713 1,047.491 2,502.716

Past Due 3,550.207

As gleaned from the above table, the amount of P3,550.207 or 42.07

percent were outstanding for two to ten years, the bulk of which represents fund

transfers to LBP for cash grants to 4Ps beneficiaries.

Moreover, confirmation of the balances from the IAs showed a discrepancy

of P105.406 million, details shown in Table 19.

86

Table 19. Results of Confirmation

GOCC

Amounts (in Million PhP)

Causes of Discrepancies /Remarks Per Books

Per Confirmation/

validation Difference

CO LBP 7,658.958

No reply PTNI 0.060 SHFC 10.360 10.360 0.000 TL//RC 23.500 23.500 Per confirmation, this was re-

transferred by the TLRC to various NGOs, but no LRs were submitted despite numerous demand letters from the DSWD Accounting Office

PITC 171.462 121.250 50.212 Some deliveries were not recognized/recorded in the books of account

Total CO 7,864.340 131.610 73.712

FO 6

PPC 89.538 57.845 31.694 Discrepancy represents unrecorded payment of stipend to senior citizens

Total 7,953.878 189.455 105.406

For the fund transfers to TLRC, confirmation revealed that the P23.500

million was given to the following Foundations but no LRs were submitted to date:

DV# Payee Amount

Transferred

0120070100001 Kalinga sa Kapwa at Kalikasan Foundation 4.500 012007010079 Kalinga sa Kapwa at Kalikasan Foundation 0.500 0120061201962 Gov. Eunice Guerrero-Cucueco Foundation 3.150 012007010131 Gov. Eunice Guerrero-Cucueco Foundation 0.350 0120061201963 Kaagapay Magpakailanman Foundation 9.000 012007010130 Kaagapay Magpakailanman Foundation 1.000 0120070100198 Kaagapay Magpakailanman Foundation 5.000

Total 23.500

As regard the outstanding balance of P7,864.340 million at the CO, the

amount of P7,658.958 million or 97 percent pertains to CY 2011 to 2016 fund

transfers to the LBP for OTC payments of cash grants for the 4Ps beneficiaries.

Details are shown in Table 20.

Table 20. Balances of Fund Transfers for 4Ps Account (Amounts in million PhP)

Year Fund transfer Liquidation Balance

Unliquidated CY2015 CY 2016 Total

2008 204.873 204.873 - 204.873 -

2009 2,473.797 2,472.552 1.244 2,473.797 -

2010 5,432.093 5,432.078 0.014 5,432.093 -

87

Year Fund transfer Liquidation Balance

Unliquidated CY2015 CY 2016 Total

2011 11,468.591 11,290.717 177.871 11,468.589 0.002

2012 17,772.870 17,419.442 164.867 17,584.309 188.561

2013 20,837.783 18,451.264 318.149 18,769.413 2,068.370

2014 24,600.529 24,197.453 354.938 24,552.391 48.138

2015 30,473.502 25,954.246 3,559.418 29,513.663 959.839

Sub-Totals: 2015

113,264.037 105,422.625 4,576.502 109,999.127 3,264.910

2016 29,691.163 - 25,297.115 25,297.115 4,394.048

Grand Totals 142,955.201 105,422.625 29,873.617 135,296.242 7,658.958

It must be noted that the MOA expressly provided that “LBP shall submit

liquidation documents within five working days from the last date of the scheduled

payout.

The non-liquidation of fund transfers by the IAs resulted in the

accumulation of funds transferred to various GOCCs in the total amount of

₱8,436.920 million. Considering the length of time that elapsed, it is presumed that

the projects for which the funds were transferred had already been completed.

We reiterated our prior years’ recommendations with modifications

and the DSWD Secretary agreed to direct the Accounting Division to:

a) comply strictly with the guidelines on the grant, use, and liquidation of

fund transfers as well as the provisions of the MOA with concerned IAs

and make a strong representation with IAs’ officials to submit LRs;

b) monitor liquidations made by GOCCs for timely recording of the assets

procured and expenses incurred and require the refund of any

unexpended balance;

c) make necessary adjustments in the books of accounts for the

unrecorded deliveries from the PITC; and

d) explore possible legal action against the Foundations which were

recipients of fund transfers through TLRC receivership.



CO Liquidations of P3,165,587,705.01 was recorded from January to April 2017.

The Department has not been remiss in asking IAs to liquidate the amounts

transferred to them. The Department sent letters to the IAs again last May 2, 2017

requesting immediate submission of LRs and to refund any unutilized balance of

the funds transferred to them.

88


The balance of Due from Philhealth was reclassified to Due from GOCCs per JEV

No. 2017-04-010663 dated April 1, 2017, as well as that of DSWD-City of Manila

to Due from LGU per JEV No. 2017-04-011773 dated April 27, 2017 as

recommended by the Commission.

The balance of P195,021,785.20 refers to the outstanding balance of the three IAs

(TLRC, PITC, and Peoples Television Network).

The Department sent the People’s Television Network Inc. a letter dated 1

December 2016 following up the liquidation of the balance of P59,678.25.

As for the TLRC, the Department has also sent several demand letters but to date,

the TLRC has yet to respond. The Department entered into several tripartite MOA

with former Congressmen and the TLRC. These MOA did not authorize the TLRC

to further transfer funds to NGOs. Thus, if the TLRC did transfer funds to NGOs,

the Department did not know of, and did not consent to, such transfers.

Although the outstanding balance of the PITC appears large, this represents only

8.89 percent of the total P1,928,055,660.31 that the Department transferred to the

PITC. More importantly, the PITC has regularly submitted LRs for the amount

transferred to it, the latest of which was received by FMS-Accounting Division on

6 June 2016. The Department, through the Procurement Service, shall coordinate

with the PITC to reconcile the balances in the respective books of accounts of the

Department and of the PITC.

I Management has already written a letter dated February 2, 2017 addressed to Ma.

Lourdes T. Baua, President and CEO of PITC, requesting PITC to expedite the

procurement of the required supplies/commodities/equipment. The agency was

informed that there was a failure of bidding on November 29, 2016 and a

recommendation for re-bid pursuant to Section 35 of Revised IRR of RA No. 9184

was made.

Management assured the team that they will consider all recommendation on the

succeeding procurement transactions of the Department.

VI As of March 6, 2017 the Social Pension Program Unit has already reconciled the

LRs of Philpost amounting to P31,693,500.00 and adjustments will be reflected in

the books in March 2017.

VII There was overstatement in the posting of LRs for NFA accounts which resulted to

variance in the books of NFA. This started since year 2011 and the variance has

accumulated to P13,815,515.55. The reconciliation of this account is ongoing and

adjustments will be made as soon as these are completed to eliminate the variance.

Management assured that there will be regular monitoring not only for NFA

accounts but all accounts of fund transfers especially on updated posting of LRs.

c) Due from LGUs - P15,586.388 million

Funds transferred to various LGUs remained unliquidated due to non-

compliance with the provisions of COA Circular No. 94-013, specifically on the

prompt submission of financial and accomplishments reports to inform on the status

89

0 2000 4000 6000 8000 10000

CY 2014 and prior

CY 2015 (over 1 yr)

CY 2016 (current)

of funded programs and projects, thus resulting in accumulation of unliquidated Due

from LGUs of P15,586.388 million with approximately 41 percent past due.

During the year, DSWD FOs transferred funds to implement various poverty

reduction programs through MOA with LGUs in the various cities/municipalities

contrary to the provisions of COA Circular No. 94-013.

Aging of the account balance showed that of the outstanding balance of fund

transfers to LGUs, approximately 41 per cent or P6,390.42 million of the respective

unliquidated balance were aged over one to ten years as shown in Figure 2 below:

Figure 2. Aging of Fund Transfers by LGUs (in million pesos)

The figure above clearly indicates the increasing trend in terms of funds

transferred to LGUs over the years. The details per Office as well as the relevant

reported observations in the audit of fund transfers are as follows:

DSWD

Offices

Balances

(in million

PhP)

Observations and Remarks

CO 242.326 Represents fund transfers to the different LGUs and barangays

for the implementation of various projects.

Approximately 98.5 percent or P238,744,741.63 represents

releases to 764 barangays in CY 2016 in varied amounts

ranging from P270,000 to P1,350,000 for the implementation

of KC PAMANA community grants which can be completed

within two to three months from the date of fund release. As

of December 31, 2016, only 78 barangays have liquidated

either partially or fully their accounts totaling P20,116,751.15.

Total unliquidated balance and long-outstanding accounts of

P6,442.65, is non-moving since CY 2005 and tagged as a

reclassification entry made in CY 2003.

NCR 209.817 -

CAR 353.538 -

I 626.304 Covers CYs 2008 to 2016 balances. For 2016, out of

90

DSWD

Offices

Balances

(in million

PhP)


P662,134,169.00 transferred to LGUs, approximately 82

percent or P548,043,475.51 remained unliquidated as of

December 31, 2016. The reasons of Management are:

a) complexity of the program/project

b) political intervention, conflict among the administrators,

intra-agency conflict

c) difficulty in the implementation of the project

d) delayed implementation of the project,

e) delayed liquidation

f) failure to adequately monitor the utilization as well as the

liquidation of funds

A review on the account revealed errors or inconsistencies in

the recording of the fund transfers appearing in the trial

balance schedule - LGU account and comparison of some

accounts between the Due from LGU schedule and the

respective reports of each focal person showed discrepancies.

II 495.215 -

III 583.491 -

IV-A 804.015 -

IV-B 572.243 Continous granting of funds despite the failure of the recipient

agencies to immediately liquidate within the prescribed

period.

V 780.123

VI 2,649.851 Approximately 52 percent or P1,377.92 million pertains to

CY 2015 and prior years.

VII 1,522.735

VIII 4,280.904 The bulk of the unliquidated fund transfers as of December

31, 2016 aggregating P3,189,865,769.77 or 68.28 percent

was for Emergency Shelter Assistance (ESA); Social Pension

(SocPen) of P446,246,500.00 or 9.55 percent; Cash for

Building Livelihood Assistance (CBLA) of P310,527,015.00

or 6.65 percent; Cash for Work (CFW) of P272,032,825.00 or

5.82 percent and Supplemental Feeding Program of

P228,933,030.69 and all other programs and projects of the

DSWD FO VIII.

There were series of fund transfers made for SocPen to the

same LGUs even though the previous fund transfer for the

same purpose were not yet liquidated, hence, the unliquidated

fund transfers for this purpose accumulated to an amount

aggregating P445,963,000.00 as of November 30, 2016.

Of the 140 recipients of unliquidated fund transfers, 36

confirmation letters were sent to the IA Auditor for

confirmation/ reconciliation of the account balance. Results of

the confirmation letters sent to the LGUs noted that there were

balances already liquidated by the LGUs of P53,503,721.00

91

DSWD

Offices

Balances

(in million

PhP)


that are still unrecorded in the books of the IA, thus

overstating the account.

The GL of the account showed that the recorded fund

transfers amounted to P2,410,762,508.13 but only

P20,414,400.00 of DVs were submitted to COA, leaving

P2,390,348,108.13 still unsubmitted to the auditor, thus

preventing the conduct of post-audit of the transactions.

A total of P1,524,731.00 remained dormant for ten years, the

amount represents balances of unidentified recipients and

appears to be irregular such that it is not in line with the

programs/activities of the LGUs.

The account balance includes unexplained/unreconciled

adjusting entries of P5.0 million recorded as debit to the

account.

IX 353.067

X 655.503

XI 776.683 Prior year’s fund transfers to 16 municipalities of

P37,582,168.60 for various programs/projects, are 100 per

cent unimplemented, resulting in the non-attainment of the

programs’ objectives and accumulation of unliquidated fund

transfers account balances. These fund transfers were granted

mostly for the implementation of BUB projects involving

P12,280,000.00 and the rest are related to the agency’s regular

programs.

The fund transfer to the Municipality of Pantukan,

Compostela Valley dated November 23, 2015 for e-AICs was

still 100 percent unliquidated for more than a year already,

despite the very minimal amount of only P25,000.00

Fund Transfers to 43 municipalities were granted with

additional funds amounting to P981,489,430.90 for the

implementation of various programs, despite the absence of

liquidation of prior grants.

The highest amount of additional releases and unliquidated

fund transfers were under the Modified Shelter grants of

P328,628,734.26.

The most numbered instances of transferring additional funds

were noted mostly in KALAHI-BUB projects where 37

instances of additional transfers were made amounting to

P53,477,122.50 for 23 municipalities, both from BUB and

regular funds.

There are overlapping fund releases for the Supplementary

Feeding Program amounting to P34,505,382.40 were also

noted, leaving P32,722,396 or 95.17 percent of the

92

DSWD

Offices

Balances

(in million

PhP)


unliquidated total grants. Fourteen (14) additional fund

releases were given despite the absence of full liquidation of

funds.

XII 481.604

CARAGA 198.968 P177,315,274.39 or 89.12 percent represents transferred funds

for the implementation for CY 2016 and P21,652,360.97

represents transferred funds from CY 1997 to 2015 which are

already past due

TOTAL 15,586.387

The above observations and lapses concerning Due from LGUs account also

showed laxity in monitoring of the liquidation of various fund transfers which casted

doubts as to the proper utilization of funds in realization of program objectives.

We reiterated our prior years’ recommendations and the DSWD

Secretary agreed to direct FO Directors concerned to:

a) require LGUs to comply strictly with the provisions of COA Circular

No. 94-013 dated December 13, 1994 on the submission of LRs and

refund the remaining unutilized funds for completed projects, if any;

b) require Accounting and project personnel to monitor status of

implementation and compliance of concerned LGUs with the above

Circular;

c) include timelines on project implementation in the MOA to be able to

impose sanctions against the IAs in case of its failure to implement the

projects as specified in the MOA; (FO XI)

d) ensure that the fund transfer is properly taken up in the books, regular

reconciliation and monitoring on the settlement of fund transfers should

be intensified; (FO I)

e) monitor project implementation to hasten liquidation of various funds

among the different municipalities with multiple program fund

transfers; (FO XI)

f) direct the Accountant to submit the accounts and vouchers and its

lacking supporting documents intact to the Auditor within the period

prescribed by COA rules and regulations (FO VIII); and

g) require the Accountant to review and analyze the account and request

write-off of the balances which are already dormant following the

93

requirements under COA Circular No. 2016-005 dated December 19,

2016. (FO VIII)

Management comments, which included updates on the status of

unliquidated fund transfers after December 31, 2016, are summarized as follows:

Offices Management Comments and Updates

CO The amount of P26,193,450.51 was liquidated from January to April 2017.

Demand letters dated November 23, 2016 were already sent to the following

LGUs: Municipal Government of Taal, Batangas; Municipal Government of

La Libertad, Negros Oriental; City Government of Guihulngan, Negros

Oriental; and Provincial Government of North Cotabato.

With regards to the dormant outstanding balance of due to LGUs amounting

to P6,442.65, the Department will officially request for the write-off to the

Commission.

I Out of the 2015 unliquidated cash advances in the amount of

P694,595,746.45, the amount P539,490,925.99 was liquidated as of December

31, 2016. The errors/lapses made on the multiple entry of the checks/disparity

of the posted amount granted, liquidated and its balances/non posting/non

recording of some of the fund transfers and that they are in the process of

improving the recording/entry of data so that there will be no room for

unintentional errors or omissions.

IV-B Sending of quarterly demand letters is being done regularly and that close

monitoring of all unliquidated fund transfer is being adopted. Project Officers

conducted consultation with project implementers and accountants during

official filed visit to LGUs. They noted also, that LGU project staff and

finance officers were always reminded about the outstanding fund transfer

during program review of the different projects/units (PIR).

VI Created a Team to gather the liquidation reports from LGUs. As of March 14,

2017, the Team was able to collect the liquidation reports amounting to

P1,008,416,525.51 which will be reflected in the books before the end of

March 2017.

It is also proposed that the collection and monitoring of the liquidation reports

be included in the function of the Municipal Action Team (MAT) and the

updated reports will be submitted to COA every quarter.

VIII Already adopted several control measures and monitored fund transfers to

LGUs. Several telephone calls were made by the program staff to remind

LGUs of their outstanding balances. The agency also went down to the LGUs

to provide technical assistance in reconciling and retrieving liquidation

reports. Moreover, demand letters were sent to LGUs with unliquidated

balances.

XI The immediate release of funds from its CO caused its non-implementation

coupled with some impediments, such as logistics, procurement and the like

were also experienced by these municipalities which also affected its non-

liquidation.

Already issued directives to the different municipalities for the full liquidation

94

Offices Management Comments and Updates

of various fund transfers within specific deadlines, on or before 30 June 2017,

otherwise all unexpended funds shall be required for full refund. In the case of

granting additional fund transfers for the BUB projects despite previous

transfer’s outstanding balances. The FO averred that it was allowed by the

then DSWD Secretary in her memorandum dated 14 August 2015. The non-

release of BUB funds to LGUs that have not fully liquidated the funds for the

BUB projects resulted in significant delays in its implementation for CY 2015

projects.

As a rejoinder, the aforementioned contention was however unacceptable

considering that most of these additional grants are pertaining to releases

during the year 2016 and the one stated in the memorandum pertains only for

CY 2015 project implementation. More so that the said memorandum will not

prevail in the succeeding years as it only applies to specific budget year of

2015.

With regards to the overlapping fund releases for the SFP, as per SFP

Omnibus Guidelines, additional funds could be granted if at least 70 per cent

liquidation was made on the previous releases. However, we still observed

less than 70 percent liquidations of previous releases but were still granted

with additional fund transfer. The Municipalities of Maco in Compostela

Valley Province and Sarangani in Davao Occidental were granted with

additional funds amounting to P3,268,746.00 and P880,580.00, despite that

these fund releases were only 57.25 percent and zero percent liquidated,

respectively.

XIII The FO is doing its best to conform to the legal requirements and guidelines

on the liquidation of the account Due from LGUs. However, they are also

committed to serve the poor, vulnerable disadvantaged and the needy with the

end view of ensuring that the benefits due to them will be delivered the

soonest possible time. Thus, they prefer granting advances per program. They

are taking serious efforts to secure liquidation from LGUs for the advances

released. It has been their practice of sending demand letters to LGU with

unliquidated balances. Moreover, the liquidation of advances to LGU is one

of their agenda of discussion in every Account Management Team Meeting

and during Program Review and Evaluation workshops which is attended by

concerned LGU officials. Furthermore, the management has assigned staffs to

conduct monitoring visits and follow-up the LGUs on their submission of the

LRs.

Undelivered Items from PS-DBM

8. Advances to PS-DBM for the procurement of common-use supplies and

materials and equipment included undelivered items of P235.836 million and

P0.769 million for CO and FO V, respectively. Moreover, a discrepancy of

P3.463 million was noted in DSWD-CO and FO XI due to absence of

reconciliation of records between DSWD and PS-DBM.

95

Accounts reconciliation is a control process to ensure that recorded account

balances are correct at the end of an accounting period and for the fair presentation

of accounts in the FS.

The DSWD procures common-use supplies and materials, software and

Property, Plant and Equipment (PPE) from the PS-DBM. Funds for said

requirements are remitted in advance to this agency.

At DSWD-CO, accounting records showed that as of December 31, 2016,

the outstanding balance of the PS-DBM recorded under the Due from NGAs

amounted to P235.83 million. Out of the 2015 and prior years’ advances, a minimal

amount of only P8.648 million or 21 percent have been delivered in 2016, while

P72.948 million or 26 percent of the 2016 advances have been delivered on the

same year. As compared with the confirmed PS-DBM balances, there was a

discrepancy of P3.266 million with the DSWD accounting records. It was observed

that there was no reconciliation of records between the PS-DBM and DSWD-CO.

It is worthy to note that despite the existence of undelivered items in prior

years’ (CY 2015 and below) with a substantial amount of P32.647 million, the

DSWD-CO still transferred funds of P276.137 million to the PS-DBM in CY 2016

for the procurement of desktops, laptops for CO and FOs, Microsoft Premier

Support Services, CoreCAL ALNG LicSAPK MVL UsrCAL, Office Productivity

Tools, and Office Standard Development Software Licenses, among others, with

only a liquidation of P72.948 million, thus delaying implementation of programs

activities of the DSWD CO to the disadvantage of users and stakeholders.

In FO V, undelivered items purchased from the PS-DBM were not

accounted for, which resulted in the misstatement of Due from NGAs and related

expenses of P769,247.54.

For FO XI, confirmation from the PS-DBM disclosed a creditable balance

per record of P240,465.22 as of December 31, 2016 for various procurement

transactions. However, verification of the agency’s accounting records disclosed a

balance of only P43,062.50 which was significantly understated compared to the

PS-DBM records of P240,465.22. Comparative analysis between the records of the

DSWD and DBM- PS disclosed a discrepancy of P197,402.72 mostly from

unaccounted deliveries of procured items from PS-DBM.

We reiterated our previous years’ recommendations and the DSWD

Secretary agreed to direct CO and FO Directors concerned to:

a) instruct the Accountant and the Property Officer to: (i) work closely

with the PS-DBM for the immediate delivery of supplies, materials,

equipment, and other services amounting to P32.647 million; and (ii)

stop the transfer of funds to PS-DBM, instead, offset the balance against

current and future requisitions, if warranted (CO); and

96

b) require the Supply and Property Division to reconcile periodically with

the Finance Division and the PS-DBM regarding the undelivered office

supplies and the discrepancy noted (CO, FO XI).

Management Comment:

At the CO, Advances to PS-DBM has been reduced to P235.495 million. The

FMS-AD and PS is regularly reconciling the records for the outstanding balance.

The DSWD stopped transferring funds to PS-DBM (for CSE procurement) since

2015. The amount transferred for 2016 are for laptop and desktop computers, and

software licenses which have become off-the-shelf at PS-DBM.

In FO IV-B, a total of P3.152 million has been refunded by the PS-DBM on

February 27, 2017 for undelivered supplies and has already been deposited to the

BTr.

Unliquidated Fund transfers to NGOs/POs - P7,178.836 million

9. The non-liquidation of fund transfers to various NGOs/POs resulted in the

minimal settlements, long outstanding accounts, and accumulation of the

account balance of approximately P7,178.836 million as of year-end, of which

64 per cent or P4,582.577 million remained unliquidated for more than one

year.

The Revised Guidelines and Documentary for Common Government

Transactions on Fund Transfers to Non-Government Organizations/Peoples

Organizations (NGOs/POs) prescribed under COA Circular No. 2012-001 dated

June 14, 2012 provides guidelines on fund transfers to NGOs/POs, as well as COA

Circular No. 2007-001 dated October 25, 2007, which states, among others:

Section 5.3 – The signing officials of Government

Organizations (GOs) to the MOA shall cause close monitoring and

inspection of project implementation and verification of financial

records and reports of the NGOs/POs, and shall insure compliance

with the provisions of the MOA and of the COA Circular. Fund

releases are subject to liquidation through submission of Fund

Utilization Reports (FURs).

Section 5.4 – Within sixty (60) days after the completion of

the project, the NGO/PO shall submit the final FUR certified by its

Accountant and approved by its President/Chairman to the GO,

together with the inspection report and certificate of project

completion rendered/issued by the GO authorized representative, list

of beneficiaries with their acceptance/acknowledgment of the

project/ funds/goods/services received. The validity of these

97

documents shall be verified by the internal auditor or equivalent

officials of the GO and shall be the basis of the GO in recording the

fund utilization in its books of accounts. These documents shall

support the liquidation of funds granted to the NGO/PO.

The SL balances of the Receivables-Due from NGOs/POs disclosed

accumulated balance of P7,178.836 million as of December 31, 2016, of which

P4,582.577 million or 64 percent is aged over one year. The details are summarized

in the Table 21.

Table 21. Aging Schedule of Fund Transfers to NGOs/POs

DSWD Offices


CY 2016 Current

CY 2015 (over one year)

CY 2014 and Prior

TOTAL

CO 299.187 200.983 434.871 935.041 NCR - .668 178.774 179.442 CAR 46.203 9.689 2.598 58.490

I 23.494 19.026 .692 43.212 II - .610 .700 1.310 III 168.386 15.255 32.885 216.526

IV-A 36.910 1.868 5.297 44.075 IV-B 102.630 20.420 21.069 144.119

V 230.291 411.724 28.565 670.580 VI 19.500 1,168.284 14.467 1,202.251 VII 6.311 1,680.024 14.270 1,700.605 VIII 449.928 58.430 16.782 525.140 IX 201.854 18.143 .235 220.232 X 641.856 53.040 1.726 696.622 XI 232.136 - .342 232.478 XII 4.667 166.334 .800 171.801

CARAGA 132.907 4.006 - 136.913 Total 2,596.260 3,828.504 754.073 7,178.837

Total Over 1 Yr & Prior % to Grand Total of ₱7,178.837 ₱4,582.577

64%

Below are the observations of DSWD FOs on fund transfers to NGOs/POs:

DSWD

Offices

Balance

12/31/2016 Observations

CO 935.041 Approximately P299.187 million pertains to balances of

current year fund transfers for community grants for the

implementation of KC-PAMANA projects, construction of

JSDF-CDED community service facility like warehouse

with solar dryer, nursery farm, and shelters for typhoon

Yolanda affected families.

The prior years’ balance of P635.854 million pertains to 74

NGOs/POs with balances aged two to more than six years,

with only four (ABS-CBN, ERDAF, IOM, PNRC) that have

98

DSWD

Offices

Balance


reported movements for the year.

A total of 28 NGOS’s with balances of P85.365 million

were long outstanding and dormant for ten years and

beyond.

Out of the 90 NGOs with unliquidated balances of P935.040

million, approximately 27 percent or 24 LRs with total

amount of P462.005 million are with the Internal Audit

Service (IAS). The IAS cited that some liquidations received

are for review/ validation and for submission of lacking

documents from the NGOs/POs.

CAR 58.490 Approximately P1.408 million aged more than three years

were granted to Day Care Parents Associations mostly in the

province of Abra in 2009. As time passed, liquidation of

said funds has become almost impossible due to the

following:

a) the project already finished and there are no more staff in

charge of monitoring liquidation of said funds; and

b) the whereabouts of members of the associations whose

children have long graduated from the day care centers,

are unknown and could not be located despite diligent

efforts.

Approximately P9.689 million and P4.755 million, aged

more than one year to two years and six months to one year,

were granted to KKBs under the Bottom-Up-

Budgeting/Grassroots Participatory Budgeting Process

(GPBP). Implementation of the projects were mostly

supervised and monitored by the municipal government. All

projects have been completed as of August 31, 2016

however, liquidation of the funds was very slow due to the

absence of teams in the provinces to follow up required

documents from the associations.

I 43.212 Majority of the unliquidated funds came from Kalahi BUB

program. The BUB Focal Person claimed that the Barangay

Sub-Project Management Committees (BSPMC) concerned

were authorized/given two years to implement and liquidate

the projects which is not in keeping with Section 5.4 of

COA Circular no. 2007-001 which requires the submission

of FUR, within 60 days after the completion of the project

for the liquidation of funds granted to them.

MOA between the agency and the NGO/POs have no

specific period to liquidate the funds.

IV-B 144.118 Fund transfers of P144.118 million remained unliquidated as

of December 31, 2016 due to non-submission of LR.

XI 232.478 Fund transfers to various NGOs from prior years of P0.342

million were long due/outstanding for more than three years.

Management informed that the concerned NGOs failed to

99

DSWD

Offices

Balance


fully liquidate the fund balances due to problems

encountered in gathering all the documents pertaining to the

said liquidation.

Considering the length of time that has elapsed, the said fund transfers could

have been expended and the appropriate transactions not recognized in the books,

thus may mislead the readers of the FS on the true condition of the account.

We reiterate our previous years’ recommendations and the DSWD

Secretary agreed to direct:

a) FO Directors and Accountants concerned to: (i) demand on a regular

basis from the NGOs/POs the submission of LRs and refund of

unutilized balance, if any, especially those with long-outstanding

balances to comply with the guidelines prescribed under COA Circular

No. 2007-001 and the provisions in the MOA/Agreement; and

(ii) strengthen the monitoring controls on fund transfers to NGOs/POs;

(iii) for NGOs/POs that are non-existent/non-operational and whose

whereabouts are unknown, the legal office to institute necessary

actions to require the incorporators to liquidate/refund their accounts;

(CO)

b) IAS to expedite the evaluation of projects and review of liquidation

documents for the immediate recording of LRs as well as submission to

the COA for post audit; (CO)

c) compel the IOM to submit the original supporting documents to the

liquidations and transmit to the COA pursuant to Section 43 paragraph

(4) of PD No. 1445 to avoid the issuance of a Notice of Suspension; (CO)

d) ensure that necessary provisions such as timelines, responsibility as well

as penalty are included in the MOA with NGOs/POs for accountability

purposes; and

e) assign specific personnel to monitor and follow up FURs from

NGOs/POs.

Management comments, which include updates on the status of unliquidated

fund transfers after December 31, 2016, are summarized as follows:

Fos Management Comments and Updates

CO This has been reduced by a total of P39,488,987.68, which consists of liquidation

and refunds from community grants for the implementation of KC-PAMANA

projects

100

Fos Management Comments and Updates

Further, the following NGOs –

(a) La Paz JSDF – CDED Farmers Association (Agusan del Sur);

(b) San Remigio Producers Cooperative;

(c) Sindangan CDED Farmers Association;

(d) Paracelis Abat Farmers Development; and

(e) Silayan Kalinga Community Development Foundation,

were organized by the Department itself as part of its various programs, specifically

the SLP. The addresses of these NGOs were verified by the SLP National Project

Management Office (NPMO). The SLP-NPMO established the addresses of these

NGOs during the social preparation and community organization stage.

The Department has already sent the letter requiring the IOM to submit original

supporting documents to support its liquidation report.

CAR Project personnel commented that teams previously assigned in the provinces to

monitor the projects were pulled out in 2016 when the projects were completed.

After the pull-out, very minimal follow up has been done on the liquidation of the

funds, hence the past due balances.

Management commented that efforts are being intensified in following up

liquidation of the fund transfers.

I The issue of those unliquidated amounts which were reported as bank charges, the

Accountant will require the BSPMC head a certification that the unliquidated

balances were bank charges for these to be considered as liquidation of the same, in

adherence with the recommendation made by the audit team. Accordingly, all the

Kalahi BUB projects that were enumerated thereto were already liquidated on

December 2016.

IV-B Sending of quarterly demand letters is being done regularly and that close

monitoring of all unliquidated fund transfer is being adopted. Project Officers

conducted consultation with project implementers and accountants during official

filed visit to NGOs/POs.

VI The issue has been raised in the Management Committee meeting and reiterate on

the participation of programs/projects concerned on the monitoring and collection of

liquidation reports of NGOs/POs and the inclusion of necessary provision in the

MOA for accountability purposes.

The CY 2016 fund transfers are with on-going project implementation.

A DSWD Team was created for the monitoring and collection of reports from the

LGUs and will conduct the same activities from NGOs/POs.

Misstated and Unreconciled Inventory Balances - P1,060.326 million

10. The recorded balance of Inventory was overstated by a net amount of P964.568

million due to non-preparation and submission by the Property Office of

RSMIs for the inventory issuances to the Accounting Office for recording.

Moreover, the accuracy and existence of the balance of inventory in five FOs of

P1,647.590 million could not be ascertained due to non-conduct of physical

count, non-maintenance of SL and SLC, prior years balance remained

unchanged, and non-conformity with the perpetual inventory system.

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Section 9, Chapter 8 of GAM Volume I, states that, “supplies and materials

purchased for inventory purpose shall be recorded using the Perpetual Inventory

System, resulting in a more accurate inventory records and a running total for the

cost of goods sold in each period. Regular purchases shall be coursed through the

inventory account and issues thereof shall be recorded as they take place except for

supplies and materials purchased out of PCF for immediate use or on emergency

cases which shall be charged directly to the appropriate expense accounts.”

Section 17 requires, among others, the following Records, Forms and

Reports to be prepared and/or maintained.

a) Supplies Ledger Card (SLC) – shall be used to record materials received,

issued and the balance both in quantity and amount at any time. It shall be

maintained by the Accounting Division/Unit for each kind of supplies and

materials. The IAR, RIS, RSMI, PO and DR serve as the original sources of

information for making entries on the card.

b) Stock Card (SC) – shall be used to record all receipts and issues of supplies

and the balance in quantity at any time. It shall be maintained by the

Property and/or Supply Division/Unit for each item in stock.

c) Report of Supplies and Materials Issued (RSMI) – shall be prepared by the

Property and/or Supply Custodian based on the RIS and shall be used by the

Accounting Division/Unit as basis in preparing the JEV to record the

supplies and materials issued.

d) Report on the Physical Count of Inventories (RPCI) – shall be used to

report the physical count of supplies by type of inventory as at a given date.

It shows the balance of inventory items per card and per count and

shortage/overage, if any.

Section 53 of the GAAM, Volume III, further provides that “accountability

for the custody and use of an asset is to be assigned, maintained and periodic

comparisons shall be made of the existing asset with the recorded accountability

and appropriate action taken on any differences.”

The recorded Inventory as of December 31, 2016 amounted to P2,726.371

million, however, review of the balances per inventory account showed that the

balances of inventories in CO, NCR, FO 4A, and FO X1 differed with those in the

report of physical count, with a total variance of P964.568 million, as shown in

Table 22.

Table 22. Unreconciled Book Balance and Report of Physical Count (in million PhP)

Inventories

Total Remarks/

RPCI Books Difference Some Cause/s of the

Differences

Welfare Goods for Distribution 122.913 965.856 842.943 No RSMI prepared and submitted to Accounting Office

Medical Dental & laboratory supplies for distribution 0.000 31.905 31.905 Construction Materials for Distribution 0.000 6.577 6.577 Office Supplies Inventory 16.312 25.443 9.131

102

Inventories

Total Remarks/

RPCI Books Difference Some Cause/s of the

Differences

Other Supplies and Materials 0.608 49.707 49.099 Drugs and Medicines Inventory 0.088 0.140 0.052

Unrecorded supplies

Medical, Dental & Laboratory Supplies 0.063 0.003 (0.060) Construction Materials Inventory 1.840 1.563 (0.277) Textbooks and Instructional Materials Inventory* 0.000 0.137 0.137

No inventory

Food Supplies for Distribution 0.000 13.842 13.842 Food Supplies Inventory 0.542 11.589 11.047 Accountable and no-Accountable forms invty 0.009 0.184 0.175

semi expendable items 0.883 0.88 (0.003)

Grand Total 143.258 1,107.826 964.568

Moreover, the following observations were noted in the FOs:

FO Inventory

Balance Observation

IV-A 1,033,599

Available records showed that balances from Drugs and Medicines

Inventory, Medical, Dental and Laboratory Supplies Inventory, and

Textbooks and Instructional Materials Inventory remained unchanged

from the Entity’s 2010 balances of ₱.071 million, while the Food

Supplies for Distribution and Other Supplies and Materials Inventory

balances of P61.644 million remained unchanged from the previous

year’s balances. The related purchases and issuances during the year

were not reflected at year-end.

Goods amounting to P13.842 million for distribution to people

affected by calamities/disasters/ground conflicts were erroneously

classified and recorded as food supplies, misstating the Food Supplies

for Distribution and Welfare Goods for Distribution by the same

amount.

V 161.298

The balances of inventory accounts as at year-end included balances

of P64.8 million which remained unchanged for more than three

years as well as unrecorded issuances for welfare goods and non-

conformity with the perpetual inventory system.

Other Supplies and Materials Inventory with a balance for current

year of P0.972 million should have been charged to expense since

these were already issued to end-users.

Welfare Goods for Distribution showed a balance of P95.5M as at

year-end. The Notes to the Financial Statements stated, “Although

all (welfare goods) were already distributed by the Field Office V for

its intended beneficiaries, the entire amount still reflected in the

books of account since no report has been submitted to the

Accounting Section pertaining to its distribution.”

VI 119.159

The Supply Officers assigned at various programs failed to prepare

the RSMI based on RIS, hence, the Accounting Unit has not prepared

Journal Entry Vouchers to record all supplies and materials issued.

Further, RPCI was not submitted at the end of the year as no physical

count of inventories was conducted. The Accounting Unit also failed

to maintain the SLC to support the GL balances and the Supply Unit

do not properly maintain/update their SC, for each type of supplies.

103

FO Inventory

Balance Observation

VIII 274.463

The failure of the Accountant to record the issuance of inventory

items and the non-keeping of records of the accounts likewise with

the Supply Officer where there was no RPCI prepared/submitted and

SC not maintained/updated raised doubts on the correctness and

reliability on the account balances.

The BAC awarded the contract amounting to P13.1 million to

Fortune Group Corporation on the procurement of assorted goods for

stockpiling of commodities and food for work activities on Risk

Reduction Management Program despite that the Net Financial

Contracting Capacity of the winning bidder was below the Agency

Budget of the Contract (ABC) for the Project to be bid thus ineligible

and disqualified to participate in the bidding. Moreover, other

supporting documents to the contract was lacking and deficient.

XI 59.071 Actual physical count of unpacked relief goods and Family Food

Packs showed a shortage of P1,168,987.98 and overage of

P490,012.65 respectively, adversely affecting the validity and

reliability of the welfare goods inventory account

Internal control deficiencies in the management of Inventories:

a) Lapses in the documentation and recording of inventories. SCs

not timely accomplished and the warehouse in-charge does not

keep its own files of delivery receipts and/or charge invoices

which should be the basis in recording the debits to the SCs.

b) Damaged goods and dented canned goods of P19,962.08 were

set aside and excluded from repacking without preparing a

separate report to account for its disposal.

c) The agency’s inefficient warehouse management and inadequate

facilities in storing procured welfare goods resulted in the

difficulty in conducting inventory count.

d) Warehouse was accessible to any person. The repackers just

come and go inside the warehouse without anyone checking

them and their belongings before going in and out. These hired

individuals to do the repacking of Family Food Packs were not

given IDs or name tags for easy identification of repackers from

management personnel. Warehouse is not equipped with CCTV

cameras to capture irregular operation from the inside.

e) Receiving and recording of goods from supplier is done by the

same warehouse personnel contrary to the principle of sound

internal control on the segregation of incompatible duties and

functions.


concerned FO:

a) Property Division to conduct physical count of inventories and

prepare a Report thereon; prepare RSMI and submit to Accounting

unit for recording of issued inventories; (FO VI)

104

b) implement internal control measures to ensure that inventories are

safeguarded from possible wastage and misappropriation; (FO XI)

c) Property and Accounting Divisions to diligently prepare, maintain

and update their Inventory Records, Forms and Reports; (FO IVA,

V , VI, VIII) and

d) Accountants to make the necessary adjustments in the books of

accounts for the understatement/overstatement of inventory

accounts.

Accounting Errors and Other Deficiencies Affecting Balances of PPE Accounts

11. The recorded balance of PPE totaling P42.239 billion was understated by

P568.884 million due to: a) unrecorded PPE found at station; b) unrecorded

donated PPE; and c) Construction in Progress not reclassified to the

appropriate PPE account. Likewise physical count for PPE and reconciliation

of property and accounting records was not conducted to support the balance

and existence of PPE.

a) Unreconciled Balances – P114.653 million

Section 42, Volume I of the GAM, provides that “The Chief Accountant

shall maintain the PPELC for each category of PPE including work and other

animals, livestock etc. The PPELC shall be kept to record promptly the

acquisition, description, custody, estimated useful life, depreciation, impairment

loss, disposal and other information about the asset. For check and balance, the

Property and Supply Office/Unit shall likewise maintain PC for PPE in their

custody to account for the receipt and disposition of the same. The balance per

PC shall be reconciled with PPELC maintained by the Accounting Division/Unit.

They shall be reconciled with other property records like PAR.

Further, Section 38 of Chapter 10 of the Volume I of GAM provides that:

“The entity shall have a periodic physical count of PPE, which shall be done

annually and presented on the Report on the Physical Count of Property, Plant

and Equipment (RPCPPE) as at December 31 of each year. This shall be

submitted to the Auditor concerned not later than January 31 of the following

year. Equipment found at station and losses discovered during the physical count

shall be reported to the Accounting Division/Unit for proper

accounting/recording.”

The recorded PPE as of December 31, 2016 amounted to P42.239 billion.

Review of the property records and RPCPPE however, disclosed a net difference

of P114.653 million, details as shown in Table 23.

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Table 23. Comparison of PPE Balances per Accounting and Property Records

DSWD Offices


Observations Per Books

Per Property

Record/ RPCPPE

Difference

CO 28,459.836 28,822.041 (362.205)

The net difference of P362,205,486.73 can be attributed to the failure of the Accounting Division to record various PPE found at station amounting to P372,022,365.50, misclassification of some PPE, and variance in unit costs.

NCR 357.702 234.457 123.245 Non-maintenance of PC, and un-updated PPELC

IV-B 84.515 73.246 11.269 the Agency did not undertake complete physical count of inventory and did not maintain PPELC

V 165.168 108.486 56.682 The balances of PPE accounts were not adequately supported with reports or records, except for Machineries which had a supporting schedule. The PPELC do not show the beginning balances of PPE. Management’s failure to reconcile the concerned sections’ records raised doubts on the accuracy and existence of the PPE accounts as recorded in the books.

VI 64.739 68.931 (4.192)

PPEs found at station were not recorded in the books. Further, the Accounting Division did not maintain the PPELC while the PCs of Property/Supply Unit were not updated thus, the difference could not be immediately identified and adjustments could not be immediately effected.

VIII 111.662 47.233 64.429 Office Equipment overstated and ICT Equipment understated by P7,160,041.00 and P7,006,545.00

XIII 128.946 132.827 (3.881) No periodic reconciliation made between the PPELCs maintained by the Accounting Division with balances per PC of the Supply Unit.

PPELC used by the Accounting Staff is not the prescribed form per Appendix 70 of GAM Volume II. Likewise, PCs of the Supply unit were not properly and completely accomplished.

Total 29,372.568 29,437.221 (114.653)

The net difference of P114.653 million could have been adjusted has

there been proper reconciliation of records between Accounting and Property

Divisions on a regular basis.

106

The unreconciled differences were likewise attributed to non-conduct or

incomplete of physical count of PPE by above FOs and other accounting errors.

We reiterated our recommendations in prior years for the DSWD

Secretary to require the Accounting and Property Management Divisions to

conduct complete physical count of PPE and undertake the regular

reconciliation of their records and ensure that all discrepancies are

immediately investigated, cleared, and adjusted in either records.

b) Unrecorded PPE Donations – P127.062 million

Section 3, Chapter 10 of the GAM, Volume 1, states “Criteria for

Recognition.

The cost of an item of PPE shall be recognized as assets if, and only if:

a) it is probable that the future economic benefits or service potential

associated with the item will flow to the entity;

b) the cost or fair value of the item can be measured reliably;

c) beneficial ownership and control clearly rest with the government;

d) the asset is used to achieve government objectives; and

e) it meets the capitalization threshold of P15,000.

Under this recognition principle, an entity shall evaluate all its PPE costs

at the time they are incurred. These costs include cost incurred initially to

acquire or construct an item of PPE and costs incurred subsequently to

add to, replace part of, or service the PPE.”

Section 12 further states that, “Cost of PPE acquired through donation

without condition shall be taken up at its fair value at the date it is acquired. All

expenses incurred in connection with the donated asset, such as delivery and

installation costs, shall be included in the amount recognized as asset”.

Moreover, Section 27 states, “PPE gradually loses its ability to provide

service over the course of time. Because of this, its cost needs to be distributed on

a systematic basis over its useful life. The allocated cost is referred to as

depreciation. The depreciation charge for each period shall be recognized as

expense unless it is included in the carrying amount of another asset. For

example, the depreciation of manufacturing plant and equipment is included in

the costs of conversion of inventories. Similarly, depreciation of PPE used for

development activities may be included in the cost of an intangible asset

recognized.”

At DSWD-NCR, titles/deed of donations/presidential proclamation

pertaining to three parcels of Land with total values amounting to P96.019

million, were not yet transferred in the name of the DSWD-NCR, thereby

107

exposing government’s assets to possible adverse claims of interested third

parties.

Likewise, donated buildings amounting to P31.043 million was neither

recorded/ recognized in the FS nor disclosed in the Notes to FS.

The failure of the Accounting Division to record the donated PPE which

have been beneficially owned and used by the NCR rendered the related PPE

accounts and Accumulated Surplus understated. Consequently, the corresponding

depreciation expense were not recognized.


concerned NCR FO to:

a) facilitate the issuance of titles/deeds of donation/presidential

proclamation to the three parcels of land; and

b) record in the books of accounts of DSWD the cost of the donated

buildings to recognize ownership of the donated assets; compute and

recognize the corresponding depreciation; and include in the

RPCPPE the said donated buildings.



CO The Accounting and Property division are currently reconciling the PPE accounts.

Necessary adjustments will be made once reconciliation is completed

II PCs were already established for PPE acquired for the period January to

December 2016.

Committed to establish not later than April 15, 2017 the PCs for PPE acquired

prior to CY 2016 which are included in the RPCPPE.

The properties for disposal which are in the DSWD FO2 have already been

disposed while a proper inventory has been conducted of those properties in the

CV-RRCY and the PDAC has convened for the appropriate mode of disposal.

The opening of sealed canvass was conducted on November 21, 2016. On the

other hand, updated inventory report on the properties in the RSCC and the

RHWC were already submitted. The disposal for the unserviceable properties in

the CVRRCY were already disposed while those in the RSCC and the Regional

Haven have yet to be disposed

VI The reconciliation by the Accounting and Property Unit is on-going.

XIII The non-reconciliation between the books of accounts and RPCPPE was due to

different classification per account code and that, they have just made some

adjustments on February 28, 2017, thru reclassification and by adding some items

that were found out during their finance conference. They further stated that the

audit findings are well taken.

108

c) Completed projects not reclassified to PPE account-P69.800 million

Completed projects with a balance of P69.800 million were not

reclassified to the appropriate PPE account pursuant to Section 8 paragraph (g)

the Government Accounting Manual (GAM) due to non-submission of liquidation

documents by the Contractors.

Section 8 paragraph (g), Chapter 10 of GAM Volume I, states that:

During the construction period, all expenses incurred in relation to

the construction of the PPE shall be taken up in the books as

Construction in Progress (CIP) with the appropriate asset

classification. As soon as the construction is completed, the

“Construction in Progress” account shall be reclassified to the

proper asset account. Likewise, all expenses such as interests,

license fees, etc., during the construction period shall be capitalized.

The balance of Construction in Progress as of December 31, 2016

amounted to P236.065 million. Audit disclosed that in DSWD-CO five projects

with a balance costing P69.800 million were already completed but not recorded

in their proper PPE accounts, thus overstating the CIP and understating the related

PPE accounts by the aggregate amount. The subject CIP are summarized in Table

24.

Table 24. DSWD-CO list of completed projects under CIP (In million PhP)

Name of Project Contractor Contract Period

Contract Price

Fund Transferred

Balance as of

12.31.2016

Status of Completion

Remarks

Repair and Renovation of Elsies Gaches

Dadoy Freight Service & Construction Supply

Jan 7, 2013 to May 7, 2013

1.960 1.690

Completed

Supply and delivery of structured cabling for the new KC building.

Technologies Specialist INC

Payment for the 100% billing was on April 8, 2013

1.287 1.287 1.287 100% Completed

Construction of 3-storey building (4P's Bldg).

Aylan Construction and Trading

Dec 21, 2012 to Dec 18, 2013

55.868

41.930

Completed and being used by the 4Ps Unit

Proposed 3-storey, Micro-MRB (Phase II)

GCI Construction and Development Corporation

1/30/2014-12/3/2015

13.296 13.875 13.296 100% Completed

Construction of 3-storey Bldg FOal Office Ph-1

Dover Construction, INC./Pablo S. Labasbas Const. (J/V)

Completed July 12, 2013

18.272 14.000 11.598 100% Completed

Total Cost of Completed Projects 90.683 69.800

109

Name of Project Contractor Contract Period

Contract Price

Fund Transferred

Balance as of

12.31.2016

Status of Completion

Remarks

Repair/Rehab/Improvement of Roofing at DSWD CO

Ale-J Construction and Trading

May 31, 2016- December 26, 2016

13.034 7.000 4.921 30.34% Should have been completed as of this date. no liquidation yet.

Upgrading of 2nd floor employees dormitory

Ale-J Construction and Trading

May 31, 2016-October 31, 2016

9.506 5.000 1.426 NO data on completion

Pantawid Pamilya Training Center - Phase II

Aylan Construction and Trading

August 11, 2016-

25.666 27.000 3.850 NO data on completion

Will be completed 5/8/2017

Construction of Day Care and Child Minding Center

New Rich General Contractor Services and Trading Co., INC.

May 31, 2016- September 30, 2016

7.128 3.750 1.069 No data on completion

Repair/rehab/improvement of existing powerhouse at Matapat & Magiliw Bldg.

N.C. Aguilar Construction and Supply INC

May 31,2016- August 31, 2016

5.616 3.000 2.453 38.24% Should have been completed as of this date, no liquidation yet.

Total of CIP 151.633 83.520

The total costs of the completed projects were not yet reclassified to the

appropriate PPE account due to non-submission of liquidation documents from

the contractor. Considering that the projects were already completed, accepted,

and already in use, the same should be transferred to the appropriate PPE account

and the corresponding depreciation provided.

Moreover, in FO VI, the balance of CIP per books of P9.566 million and

the Schedule of Construction in Progress submitted by the Property Officer of

P7.793 million has a difference of P1.773 million, thus, casting doubt as to the

accuracy of Construction in Progress balance at year-end.

We recommended and the DSWD Secretary agreed to require the:

a) Engineering Unit to follow up submission of liquidation documents

from the DPWH/Contractors and submit the same to the Accounting

Office for proper recording; (CO)

b) Accounting Division to coordinate with the Engineering Unit to

submit status of all civil works and necessary documentation to

determine the completed projects and effect reclassification from CIP

to appropriate PPE account and thereafter, compute the

corresponding depreciation; (CO) and

110

c) Accounting Division to coordinate with the Property Division to

reconcile the balance of CIP in FOVI.


At the CO, the completed supply and delivery of structured cabling for KC

building, 3-storey 4Ps building, and 3-storey MRB (Phase II) in the total amount

of P56,512,496.45 were transferred to its proper account per JEV Nos. 2017-04-

011810, 04-011838, and 04-01855 all dated April 28, 2017. The repair and

renovation of Elsies Gaches is for transfer of ownership to FO upon completion of

Property Transfer Report. The construction of 3-storey building Regional Office

costing P11.597 million, although completed, documents were not yet submitted

to facilitate the transfer of the last tranche, while all the rest were not yet

completed.

Non-Insurance of PPE-P9.049 million

12. PPE with a book value of P9.049 million were not insured with the GSIS against

damage or loss through theft, fire and other fortuitous events, thus exposing the

agency to possible risk of financial loss due to non-indemnification of property

loss.

Section 5 of RA No. 656, provides that, “the Government, except a

municipal government below first class, is required to insure its properties with the

General Insurance Fund against any insurable risk.”

Further, Administrative Order No. 33, Section 1, requires all heads of

departments, among others, to secure from the General Insurance Fund directly, all

insurances or bonds covering properties, contracts, rights of action and other

insurable risks of their respective offices, including all those in which their

respective offices have an insurable risk and all those in which they have an

insurable interest only. For this purpose, no insurance agent or general agent shall

hereafter be appointed or maintained to represent the General Insurance Fund

and/or the Government Service Insurance System.

Review of insurable PPE of the DSWD disclosed that Buildings and Motor

Vehicles amounting to P9.049 million were not among the PPE insured with the

GSIS, the details of which are shown in Table 25.

Table 25. List of Uninsured PPE

Property Cost

(in million PhP) Remarks

Buildings

DSWD-National Resource Operation Center (NROC) Office Building and Dormitory, semi-concrete, two-storey, 530 sq.m

3.863 Dormitory and Garage concrete 2 storey GI roofing 336.25sq.m. (1991 completion)

1.042

DSWD-Productivity and Skills Capability Building (PSCB) Center, semi-concrete, 1-storey.

0.300

111

Property Cost

(in million PhP) Remarks

DSWD-Day Care Center, semi-concrete, 1-storey. 0.100

3-Storey Micro-MRB 1.652

Sub-Total 6.957

Motor Vehicles

Sedan - Toyota - Corolla Gli 1995 - Chassis # AE101-9540796 Motor # 4A-LO28736 Plate # SEF-549

0.515 Operational

Van - Nissan - Urvan 2.5 Shuttle - Eng # TD25-266229 Plate # SFD 812

0.584 Operational

Pick-up - Ford Ranger - Dual Aircon and CD ready stereo system; power steering, SFK-625.

0.877 Operational

Motorcycle, Kawasaki KLX150, engine type, 4 stroke, SOHC 2 valve, single cylinder, air cooled carburetor

0.115 Operational

Sub-Total 2.091

Grand Total 9.048

The non-inclusion of these assets costing P9.049 million in the insurance

coverage with the GSIS Insurance Fund exposes them to the risk of not being

indemnified or compensated for any damage to, or loss of its property thru theft, in

cases of destruction of property through fire, flood or other force majeure.

In FO II, two units donated motorcycle was insured with a private insurance

company and the GSIS, respectively, and registered in the name of the donor.

In FO VIII, PPE purchased from January to June 2016 were not insured

until the renewal of insurance on June 2017 and insured assets does not include

transportation equipment, buildings and other PPE.


Property Asset Management Division to facilitate the preparation of the list of

all insurable PPEs and get the necessary insurance coverage with the GSIS

under the General Insurance Fund.



CO Four buildings to be included in the application for insurance coverage for the

period May 2017 to May 2018. The MRB insurance shall be shouldered by the

NMLI the beneficiaries. The motor vehicles were already transferred to FOs

II Management, thru the Chief Administrative Officer committed to secure the

Deed of Conveyance from the Department of Public Works and Highways

which is a requirement to facilitate the transfer of Certificate of Registration

from the donors to the DSWD FO2.

Accounting Errors and Deficiencies affecting Accounts Payable-P5.621 billion

112

13. The recorded balance of Accounts Payable of P5.621 billion was overstated by a

net amount of P2.138 billion due to erroneous classifications of payables

transactions and failure to set up accruals of expenses. Moreover, the amount

P194.148 million could not be validated due to incomplete documentation, while

payables aged two years and above were not reverted.

a) Errors and Omissions in the recording of payables

GAM Volume III prescribes the use of Accounts Payable to recognize

receipt of goods or services on account in the normal course of trade and business

operation.

Section 6, Volume I, of the GAM requires that the agency recognize and

present its financial transactions and operations in conformity with the accrual basis

of accounting. Accrual basis as defined in Section 2 of the GAM a basis of

accounting under which transactions and other events are recognized when they

occur (and not only when cash or its equivalent is received or paid). Therefore, the

transaction and events are recognized in the accounting records and recognized in

the financial statements of the periods to which they relate.

Section 98 of Presidential Decree No. 1445 provides that, “The

Commission on Audit, upon notice to the head of the agency concerned, may revert

to the unappropriated surplus of the general fund of the national government, any

unliquidated balance of accounts payable in the books of the national government,

which has been outstanding for two years or more and against which no actual

claims, administrative or judicial, has been filed or which is not covered by

perfected contracts on record.”

Verification of Accounts Payable for CY 2016 disclosed errors and

omissions overstating the account by a net amount of P2,138.482 million as at year

end. Details are shown in Table 26.

Table 26. Various errors affecting Accounts Payable (in million PhP)

FOs Amount

Over/(Under) Observation

Erroneous Classification

CO (2,219.295) Approximately 86 percent of the total payables which pertains to accounts with other national government agencies and government corporations that were recorded under this account instead of Due to NGAs or Due to GOCCs. Double recording of accounts payable overstated the Accounts Payable and Janitorial Services by P9,555,959.83 and P8,859,103.31, respectively, while accumulated surplus/deficit was understated by P696,856.52, as of December 31, 2016.

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FOs Amount

Over/(Under) Observation

V (1.379) Erroneously recorded payable to Due to Philhealth and Due to officers and employees amounting to P273,912.50 and P1,105,432.38 respectively.

VIII (11.462) erroneous entries/ use of Account code

(.038) Unrecorded payment

CARAGA (1.038) erroneous classification of payables to officers and employees

Sub-total (2,233.212)

Unadjusted Staled Checks

IV-B 1.830 Unreleased checks and stale checks were not reverted to AP

Non-Accrual of Expenses at year-end

V 3.362 Unrecorded accruals of various expenses

VI 89.538 non-recognition of unpaid CY 2016 4th Quarter stipend of indigent senior citizens

Total Overstatement (2,138.482) Overstatement of Accounts Payable

In FO V, although there were amounts accrued/recognized as liabilities as at

year-end in the books of accounts, disbursements in January 2017 in the total

amount of P3,362,308.13 were not recognized as Accounts Payable as at year-end.

This amount comprised mainly of cost of training, services of contractual

personnel, travelling, security services, rent, and other expenses.

In FO VI, the unpaid CY 2016 4th quarter stipend of indigent senior citizens

amounting to P89,538,000.00 that was due for distribution in October 2016 was not

recognized as Accounts Payable at year-end, thereby resulting in the

understatement of both the Accounts Payable and Subsidies-Others accounts as of

December 31, 2016.

We recommended that the DSWD Secretary agreed to require the

concerned CO and FO Accountants to:

a) reclassify payables to their appropriate accounts in accordance with

the Revised Charts of Accounts for National Government Agencies,

Volume III of the GAM; and

b) identify and include all items for accrual as liabilities at the end of

each accounting period supported with complete documentation.

b) Unsupported and Unreverted Outstanding Payables

Section 37, paragraph (2), Chapter 2, of the GAM Vol. I states, among

others, that no obligation shall be certified to accounts payable unless the obligation

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is founded on a valid claim that is properly supported by sufficient evidence and

unless there is proper authority for its incurrence.

Likewise, Section 4 paragraph (f) of PD No. 1445, provides that “Claims

against government funds shall be supported with complete documentation”

Moroever, Section 98 of PD No. 1445 provides, among others, that “the

Commission on Audit, upon notice to the head of the agency concerned, may revert

to the unappropriated surplus of the general fund of the national government, any

unliquidated balance of accounts payable in the books of the national government,

which has been outstanding for two years or more and against which no actual

claims, administrative or judicial, has been filed or which is not covered by

perfected contracts on record.”

Verification of the recorded accounts payable totaling P194.148 million for

the five FOs were not supported with complete documentation to establish validity

of the liability and were aged two years and above.


concerned Accountants to: a) comply strictly with the provisions of Section 4

of PD No. 1445 and Section 37 paragraph (b) of the GAM to ensure that

recorded accounts payable are valid and Section 4 paragraph (f) of PD No.

1445; b) make necessary adjustments in the books of accounts to revert the

unsupported/double set up of payable to accumulated surplus/deficit; and

c) examine the aging of accounts payables and prepare JEV to revert back to

the Accumulated Surplus the accounts that have been outstanding for over

two years.

Inadequate Documentation of Bank Service Fees

14. Payments to the LBP of approximately P97.734 million representing financial

expenses (bank service fees) for CYs 2014 and 2015 lacked the necessary

documents to support the validity of the related transactions.

Section 4, item 6, of PD No. 1445 requires all claims against government

funds to be supported with complete documentation.

COA Circular No. 2012-001 on Documentary Requirements for Common

Government Transactions, item no. 12.0, enumerates the documentary

requirements for Financial Expenses: Loan Agreements/MOA together with

supporting documents; statement of account; bank debit memos; and other

supporting documents deemed necessary depending on the nature of the

transaction.

The LBP billed the DSWD the amount of P90.000 million and P66.675,

representing the following expenses incurred by said bank for CY 2014 and 2015,

respectively.

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Table 27. Summary of Billing and Payment

Particulars No. of transactions Amounts (in million PhP)

Remarks 2014 2015 2014 2015

Cash card withdrawals @ a service fee of P14.00 per transaction

5,602,076 2,353,301 78.429 32.946 No Debit memos attached

Billing Statement for the first payable in the amount P90,000,000 was not original

Official Receipt not machine validated

MOA not original

Manpower and Other Expenses

14.817 19.400

Procurement of conduits (3% of ABC)

14.329

Total 5,602,076 2,353,301 93.246 66.675 Less Income from investible 4Ps fund

3.246 -

Total billing 90.000 66.675 Amount Paid 66.489 31.245 Taxes 3.499 1.644

The CY 2014 fees was settled through ADA No. 31131201, dated March 3,

2016, of which the amount of P66.489 million (net of due to BIR) was withdrawn

from the MDS account on March 07, 2016 as evidenced by a bank debit memo,

while the CY 2015 fees was paid through DV No. 16-04-1779 amounting to

P31.244 million (net of tax) dated April 21, 2016 by ADA No. 4-1530-2016 dated

and debited on April 25, 2016.

It is worth to mention that the LBP requires no charges or fees for

withdrawals and balance inquiries from regular LBP ATM clients. However, for

the first six cash card withdrawals successfully made by 4Ps beneficiaries at LBP

ATMs, the DSWD will pay P14.00/transaction. While we noted that the charges

were covered in the MOA between the DSWD and the LBP, it is highly

disadvantageous to the government since regular card holders were not charged

fees for withdrawals from LBP ATMs (regardless of the number of transactions).

We recommended and the DSWD Secretary agreed to:

a) direct the Office concerned to submit the original copies of the MOA,

including the Supplemental MOA, bank debit memos showing the

bank account credited, and official receipts evidencing receipt of

payment by the LBP of the bank services fees charged for 4Ps

withdrawals; and

b) submit legal basis on the charging of P14.00 for every cash card

withdrawals made by 4Ps beneficiaries.

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On March 21, 2017, Management transmitted OR Nos. 0014354 and

0014355, both dated March 10, 2017, amounting to P66,488,708.30 and

P31,244,559.50, respectively. The original MOA was not submitted neither was

there any explanation/justification on the charging of service fees on cash card

withdrawals made by 4Ps beneficiaries.

Other Accounting Errors

15. The procured DSWD Enterprise Data Warehousing and Data Sharing Project

amounting to P8.997 million was recorded as Consultancy Services instead of

Development in Progress – Computer Software understating the balance of the

accounts.

The GAM Revised Chart of accounts prescribes the use of Development

in Progress- Computer Software to recognize the cost of coding, testing and other

costs incurred during the development of computer software. This is credited upon

completion and transfer to “Computer Software” account, and when the asset is

impaired.

On the other hand, Consultancy Services is used to recognize the cost of

services rendered by consultants contracted to perform particular outputs or services

primarily advisory in nature and requiring highly specialized or technical expertise

which cannot be provided by the regular staff of the agency.

Analysis of the Consultancy Services as of December 31, 2016 showed

two disbursements in June and October 2016 as payment for the contract of "Hiring

of Consultancy Services for the DSWD Enterprises Data Warehousing and Data

Sharing Project" in the amounts of P7,997,600.00 and P999,700.00 respectively.

Verification revealed that the purpose of the contract is to deliver a

functional Enterprise Data Architecture specifically designed for DSWD.

Additionally an amendment to the Contract included the following

deliverables/outputs:

a. Consult, design and implement Enterprise Data Architecture

Services for the DSWD Enterprise;

b. Consult design and implement a Pre-Data warehousing and

Data sharing Services for DSWD Enterprise;

c. Installation of a functional conceptual design and approved

implementation plan for a web base data sharing portal that

contains business intelligence and data analytics

The above deliverables define the improvement or development of

database management system that will cater the reporting and analysis of the data

from the different existing systems of DSWD, thus, pursuant to GAM, these are

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development costs that produce a product master, which should not be recognized

as Consultancy Services, but Computer Software as it is expected to yield economic

benefits or service potential to one or more users for number of years, thus should

be capitalized and recorded as Development in Progress- Computer Software in the

meantime that these are not yet completed.

Management commented that the Sybase Solutions Corp was contracted to

perform particular outputs and services which were primarily advisory in nature and

or requiring highly specialized and technical expertise which cannot be provided by

the department’s regular staff. The engagement is more about providing a highly

specialized and technical expertise and did not require the creation of a new

software-by-product since most of the tools used were either existing and/or open

source.

The erroneous classification and recording of the transaction resulted in

the understatement of asset account Computer Software and overstatement of

Consultancy Services, an expense account, by P8,997,300.00.

We recommended that the DSWD Secretary require the Accounting

Unit to make the necessary adjustments in the books of account to correct the

error in the recording of the transactions in compliance with the RCA, Volume

III of the GAM.

Internal Control Deficiencies on Cash Management

A. Weak internal control over check processing and releases

16. The weak internal control in the processing and release of checks, resulted in

the loss of government funds amounting to P867,965.25.

Sound internal control dictates that procedures over disbursements should

be in place and followed to ensure that government funds are safeguarded against

loss or wastage through illegal or improper disposition.

Section 4 paragraph (6) of PD No. 1445 likewise states that, ”Claims

against government funds shall be supported with complete documentation.”

Examination of the BRs, DVs and the corresponding SLs of the

transactions of KC-NCDDP-IBRD for CYs 2015-2016 showed that:

1) A total of fourteen checks was issued to a payee who is not the payee

stated in the approved DVs and SLs and deposited to the Planters

Bank, Tungkong Mangga Bank Account No. 0077900349, as shown in

Table 28.

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Table 28. List of Checks with deficiencies

Check No. Date Payee

Amount Date deposited/

negotiated Remarks

Per DV Per Check

1) 262085 12/01/2015 E-Copy Corp.

Raquel Ramos

P10,674.76 Dec. 16, 2015 No receiving signature

2) 262134 12/16/2015 Melanie L. Sison 103,891.92 Dec. 17, 2015 3) 262046 11/06/2015 Meralco 60,000.00 Nov. 11, 2015

4) 262063 11/16/2015 MCSA Marketing 10,106.91 Nov. 17, 2015 No receiving

signature

5) 262064 11/16/2015 La Breza Hotel 69,174.37 Nov. 17, 2015 No receiving

signature

6) 262301 09/11/2015 - 91,875.00 Sept. 16, 2015 No receiving

signature 7) 261950 09/16/2015 La Breza Hotel 91,875.00 Sept. 28, 2015 8) 261826 07/15/2015 Fog Horn Inc. 111,375.00 Aug. 4, 2015 9) 262345 01/24/2015 - 111,375.00 July 23, 2015

10) 276194 03/08/2016 Maria Ligaya Laura O. Morales

58,305.28 Mar. 10, 2016

11) 262123 12/10/2015 - 60,000.00 Mar. 2, 2016 Blank per Cash

book and Not issued per RCI

12) 276202 03/10/2016 - 60,000.00 Mar. 10, 2016

13) 269208 11/12/2015 DSWD Payroll Account

19,494.77 Nov. 16, 2015

14) 269230 12/15/2015 DSWD Payroll Account

9,817.24 Dec 16, 2015

Total P867,965.25

*With ND issued

2) Seven checks were not supported with the general requirements for

disbursements as prescribed under COA Circular No. 2012-001 (e.g.

CAF, DV), as shown in Table 29.

Table 29. List of Checks without supporting documents

Check Payee Amount

Date deposited /negotiated

Remarks Date No.

Dec. 3, 2015 262099 Melanie L. Sison P103,891.92 Jan. 18, 2016 Appearing to be double payment of Consultancy fees for the period Oct to Nov. 2015 due to the issued Check No. 262134 to Raquel Ramos.

Mar. 14, 2016 276222 Maria Ligaya Laura O. Morales

58,305.28 Mar. 21, 2016 Appearing to be double payment of Consultancy fee for the period Jan. 1-31, 2016, due to the issued Check No. 276194 to Raquel Ramos.

Jan. 24, 2015 262345 Raquel Ramos 111,375.00 July 23, 2015 Without supporting papers/ Not in the series of RAAF/logbook

Sept. 11, 2015 262301 Raquel Ramos 91,875.00 Sept. 16, 2015 Without supporting papers/ Not in the series of RAAF/logbook

Jan. 13, 2016 262221 Meralco 60,000.00 Jan. 15, 2016 Without supporting papers Dec. 10, 2015 262123 Raquel Ramos 60,000.00 Mar. 2, 2016 Without supporting papers Mar. 8, 2016 276202 Raquel Ramos 60,000.00 Mar. 10, 2016 Without supporting papers Total P545,447.20

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3) Check Releasing logbook were not properly accomplished. There were

89 checks issued in the logbook without payee names, amounts and

receiving signatures, thus, not in keeping with sound internal control

policies and also resulted to unaccounted releases of checks vis-à-vis

RAAF.

4) There were sampled checks issued amounting to P2,090,398,121.76

without specific Field Office numbers which resulted to deposit of

Check No. 251201 to LBP Account No. 3122-1024-31 instead of

Account No. 1452-1052-80 of DSWD Field Office 07, thus needed to

return back to the Head Office account for change of payee name. The

subject control weakness resulted to delays in the implementation of

project to the disadvantage of targeted beneficiaries.

In view of the above observations, we issued ND nos. 2016-02-102 (2015)

(NCDDP) dated July 21, 2016 amounting to P660,347.96, 2016-03-102(2015-2016)

(NCDDP) dated August 25, 2016 amounting to P178,305.28 and 2017-01-FAPS

(2015) dated April 27, 2017 amounting to P29,312.01. An appeal was filed with the

Commission on December 19, 2016.

We recommended that the DSWD Secretary require the persons

liable to:

a) refund/recover the amount representing irregular disbursements

amounting to P867,653.25;

b) conduct necessary investigation and initiate legal action against the

erring employees if warranted;

c) revisit/review the current internal control procedures within the FCD

and make the necessary improvements in order to fill-up the loopholes

which has been taken advantage by the perpetrators to accomplish

their illegal acts.

Management commented that the department is seeking reimbursement

form LBP for the total amount of questionable checks. As of this date LBP is still

processing the Department’s claim and the investigation by the NBI is still on-

going. The Department has already taken steps to strengthen its internal control

systems such as preparation of Advice of Checks Issued and Cancelled for all

trust/current accounts, assigning of verified checks and issuance/signing/releasing

of checks.

B. Accountable Forms without money value not accounted in the RAAF

17. Approximately 102 pieces of Accountable Forms (AFs) without money value

representing commercial checks issued by the LBP were not presented upon

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request and were not accounted in the RAAF for CY 2016, thus resulting in the

unauthorized use and loss of government funds amounting to P367,141.92.

Section 17 (k) of the GAM provides that the Report of Accountability for

Accountable Forms (RAAF) to be prepared by the Accountable Officer (AO) to

report on the movement and status of AFs in his/her possession. The AFs include

those with or without face value.

Inventory of checks at the Cash Division on July 12, 2016 showed that the

following checks of the KC-NCDDP-IBRD under LBP Account No. 3122-1024-40,

as summarized in Table 30, were not accounted in the RAAF.

Table 30. Summary of Unaccounted Checks

Check Series Quantity

262099 1 262123 1

262301-262400 100 TOTAL 102

Examination of the Report of Checks Issued for CYs 2014 to 2016

revealed that the above checks were not among the series of checks issued to pay

DSWD expenditures, but four of the above series were processed without

supporting documents and negotiated with the Planters Bank. These are included in

the Notice of Disallowance issued as shown in Table 28.


Accountable Officer (Cashier) to submit justification/explanation of the

unaccounted checks and why it was not reported immediately to proper

authorities.


Justification was submitted dated April 12, 2017 by the Cashier and

informed that in view of the volume of work in the Division, she did not have the

luxury of time to go over every piece of documentation of financial reports

submitted by her staff. Because of this, lapses have been noted in the internal

control on the custodianship of the used and unused checks. Lessons were learned

that all documents/ reports submitted to her office are now being thoroughly

reviewed by Unit Heads and verified by Administrative Officer III and Supervising

Administrative Officer.

With regards to reporting the matter to proper authorities, she informed

that the FMS Director gathered the concerned staff of the Cash Division last April

25, 2016 to discuss the issue and instructed them on the actions to be undertaken.

Upon review of the submitted report of the cash Division by the FMS Director, the

issue was immediately reported to the Office of Undersecretary requesting a

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thorough investigation on the case. Further, DSWD requested the assistance of the

NBI to look into the said negotiated checks that are unaccounted.

C. Undisposed checks of closed accounts

18. Checks of closed accounts are still in the custody of the AO which contributed

to excessive filing of unnecessary documents, thus may be disposed of in

accordance with COA Memorandum No. 87-243-B.

Inventory of checks as of July 12, 2016 disclosed a total of 6,067 checks

from 41 closed accounts that are still in the custody of the AO. Verification with the

bank showed these were accounts with zero balances and closed accounts.

The filing of numerous unusable checks only contribute to unnecessary

accounting and/or inventory of AFs, thus resulting to waste of time and space at the

Cash Division Office. The said records may be disposed per COA Memorandum

No. 87-243-B which provides the authority to Records Management and Archives

Office to dispose of all government records.

We recommended and the DSWD Secretary agreed to direct the AO

to prepare Inventory Report of all checks with closed bank account as of

December 31, 2016 and dispose in accordance with the procedure prescribed

under COA Memorandum No. 87-243-B.

Management Comment:

The Division already conducted the inventory of the unused checks for all

closed accounts in the custody and will conduct disposal procedures in compliance

with the auditor’s recommendation.

Non-elimination of Intra-office Transactions

19. Intra-Office accounts totaling - P744.092 million affected the reliability and

accuracy of the reported account balances in the FS.

PPSAS and GAM Section 8 Paragraph (d) Procedures in the Consolidation

of FS provides, among others, that in order that the consolidated FS may present

financial information about the economic entity as that of a single entity, xxx (d)

Balances, transactions, revenues, and expenses between entities within the

economic entity shall be eliminated in full. Consolidated financial statements shall

be prepared using uniform accounting policies for like transactions and other events

in similar circumstances.

Review of the consolidated FS of the DSWD disclosed that the following

reciprocal accounts were used to record intra-office transactions, which remained

not reconciled and not eliminated during the consolidation of the FSs, thus, defeated

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the purpose of consolidation which is to show the financial condition and results of

operation of the DSWD as a single entity, contrary to the afore-cited regulations. A

summary is shown is Table 31.

Table 31. Summary of Intra-Office Accounts

Account Balance Difference

Due to FO Offices P 1,127,841.82 Due from Central Office 485,000.00 642,841.82 Due from FO Offices 356,748,517.67 Due to Central Office 339,243,932.95 17,504,584.72 Due from Other Funds 42,533,313.06 Due to Other Funds 3,953,576.16 38,579,736.90 Total Difference 56,727,163.44

Aggregate Total of Accounts Affected P 744,092,181.66

We recommended the DSWD Secretary direct the concerned officials

and Accountants to: (i) prepare schedules of the reciprocal accounts and

undertake an analysis, reconciliation and elimination thereof; (ii) correct the

balances of accounts affected after reconciliation; and (iii) thereafter, conduct

regular quarterly reconciliation to immediately rectify any discrepancy and to

show the financial condition and results of operation of the Department as a

single entity.

Management Comment:

The FMS Director commented that the reciprocal accounts being

eliminated are the Subsidy to RO and Subsidy form Central Office (expense and

revenue accounts). The intra-office transactions mentioned in the AOM should not

be eliminated considering that these are real/balance sheet accounts and these are

used (debited/credited) for payment/liquidation of fund transferred. Likewise, the

eNGAS does not automatically eliminate these accounts in the consolidation, unlike

with the reciprocal accounts.


The non-elimination or reconciliation of the reciprocal accounts overstates

the subject accounts in the consolidated FS. In the transfer of funds to regional and

central offices, the accounts that will be retained in the consolidated Financial

Statements (FS) will only be cash and the balances of the reciprocal accounts are

individually accounted in the FS of concerned office/region but eliminated in the

consolidated FS. This should be reconciled first before elimination.

Non-Submission/Delayed Submission of Financial Documents/reports

20. Financial documents particularly DVs, Contracts, and other Financial Reports

in eleven FOs were either not submitted or delayed, precluding verification of

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the agency’s financial transactions and timely audit as aid in Management

decisions and input in enhancing financial accountability.

Financial reports together with supporting documents and schedules as

DVs including its supporting documents, Contracts, POs etc. of 11 Field Offices

were not submitted within the reglamentary period by the Accounting Unit to the

Office of the Auditor, as shown in Table 32.

Table 32. Summary of documents not submitted

Reports Criteria Timelines Remarks

FR Section 60 paragraph b & c, Chapter 19, Volume I of the GAM

10 days after end of month/ quarter

CAR, III, IVA, VIII, X, NCR

DV Section 6.05 of COA Circular No. 95-006 dated May 18, 1995

within ten (10) days from date of receipt of said documents

II, III, V, VIII

PO/ Contracts

Section 3.1.1 of COA Circular No. 2009-001

Within five (5) workings days from the execution of the contract

I, IVA, X, XI, XIII, NCR

The common reason for the delayed or non-submission of the financial

reports and documents were attributed to the lack of personnel and voluminous

transactions of the DSWD due to several programs, projects and activities. While

we noted the predicament of the agency, it is stressed that the submission of

required reports is equally important to ensure that information useful are available

on time for accountability and decision making purposes are available.

The non-submission of the financial reports likewise has hindered the

audit of financial transactions for the year. It has also limited the time for

Management to act on relevant audit observations, if any.


concerned FO Accounting Units to:

a) create a separate team that would cater exclusively to the

recording/checking/monitoring of liquidation documents and

supporting documents submitted by the SDOs since the main/root

cause of the delays are the bulk submissions of said liquidation

documents; (NCR)

b) review the manpower complement of the Financial Management

Division and request for augmentation, if necessary; and

c) comply strictly with the prescribed deadlines on submission of

reports, otherwise impose the withholding of salaries and allowances

of concerned personnel for continuous failure to comply pursuant to

Section 22 of PD No. 1445.

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B. Program Review

Kapit-Bisig Laban sa Kahirapan-National Community-Driven Development Project

For CY 2016, the Audit Team conducted a program review of the Kapit-Bisig

Laban sa Kahirapan-Comprehensive Integrated Delivery of Social Services to assess the

efficiency, economy and effectiveness of project implementation. In compliance with

the KC loan agreement the audit covered physical inspection, evaluation of

sustainability, adequacy of maintenance and monitoring with respect to at least 10

percent of the total sub-projects.

21. As of December 31, 2016, the KC-NCDDP physical accomplishment registered

at 78.99 percent exceeded the 70.00 percent KC-NCDDP Results Framework

per loan agreement, thus the objective of the project to provide target

beneficiaries of improved access to services and infrastructure and to

participate in more inclusive management planning, budgeting and

implementation in their community had been generally achieved.

The Intermediate Outcome Indicators for the CY 2015 per Results

Framework of KC-NCDDP states that, 70 percent of NCDDP community projects

should be completed in accordance with technical plans, schedule and budget.

As of CY 2016 the KALAHI-CIDSS – National Community-Driven

Development Program (NCDDP) has approved Community Grants for the

implementation of Sub-projects with total cost of approximately P20,524.178

million for 19,000 SPs to be implemented nationwide. Per report of

accomplishment submitted by the Project Management Office (PMO), the DSWD

has accomplished 15,009 or 78.99 of its targeted SPs. Details per Region is shown

in Table 33.

Table 33. Financial and Physical Accomplishment

Region Approved Budget per

2015 & 2016 WFP

Target No. of SPs

Completed No. SPs

Balance * % of Accomplishment

Physical Financial

CAR P 396,302,219.73 232 86 146 37.07 P 107,573,430.48 I 108,167,192.93 96 58 38 60.42 48,439,038.83 III 78,071,025.20 22 20 2 90.91 26,093,100.00 IV-A 658,172,691.42 865 766 99 88.55 485,518,433.22 IV-B 1,412,137,644.81 1,247 884 363 70.89 766,367,354.99 V 4,007,697,960.72 1,735 948 787 54.64 1,383,653,697.33 VI 3,020,896,648.16 3,370 3,064 306 90.92 2,064,158,686.16 VII 2,401,948,722.62 1,893 1,450 443 76.60 1,355,646,218.40 NIR 361,249,300.00 903 725 178 80.29 803,585,249.65 VIII 3,289,080,758.00 4,934 4,097 837 83.04 2,257,878,715.13 IX 1,119,159,129.90 1,077 1,038 39 96.38 972,478,595.71 X 1,051,423,133.80 648 341 307 52.62 394,394,529.58

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Region Approved Budget per

2015 & 2016 WFP

Target No. of SPs

Completed No. SPs

Balance * % of Accomplishment

Physical Financial

XI 757,736,093.95 537 356 181 66.29 437,541,005.00 XII 648,905,919.64 385 241 144 62.60 357,544,417.78 CARAGA 1,213,229,825.35 1,056 935 121 88.54 1,047,592,538.03

TOTAL P 20,524,178,266.23 19,000 15,009 3,991 78.99 P12,508,465,010.29

* Includes ongoing and not yet started projects 60.94%

As gleaned from the above table, the program only registered a 60.94

percent financial accomplishment due to the non-downloading of ten percent

project cost, representing contingency fund of some projects.

To validate the above accomplishment, the audit team selected six regions

with materiality as criteria and employed the following audit procedures:

a. Inspection of physical accomplishment of selected SPs;

b. Interviews with the Barangay Sub-Project Management Committee cum

members, Operations and Maintenance group and community-

beneficiaries;

c. Compared balances and information on Technical, financial, and physical

accomplishment reports, and other related documents from the

BSPMC/ACT versus checklist prepared.

The results of validation disclosed that of the total 158 SPs selected, 149

SPs or 84.99 percent was completed, 8 or 5.06 percent on-going and one not yet

started, as shown in Table 34.

Table 34. Validated Status of Projects

As deduced from the table above, the physical accomplishment of the

FOs was 94.30 with a financial accomplishment of 84.99 meeting the 70 percent

target set in the Results Framework of KC-NCDDP, except for FO V which has

only 66.22 percent financial accomplishment. As for the on-going and not yet

started projects vis-à-vis the project cost of 13.71 percent and 1.29 percent,

respectively, are well within the marginal letdown. Interview revealed the following

perennial causes of delays in the implementation of the program:

a) Bad weather condition, especially to communities in the shoreline or

islands;

b) Procurement documents not immediately prepared by the SPMC;

Field Office

Validation Completed On-Going Not Yet Started

No. of SPs

Project Cost No. of SPs

Project Cost Financial

% Physical

%

No. of SPs

Project Cost % No. of SPs

Project Cost

IV- MiMaRoPa 17 14,912,880.35 17 14,912,880.35 100.00 100.00 - - - V 21 41,491,262.98 15 27,475,968.16 66.22 71.42 5 11,640,676.52 28.06 1 2,374,618.30 VI 29 22,586,108.80 27 20,503,170.60 90.77 93.10 2 2,082,938.20 9.22 - - VII 32 26,371,387.16 32 26,371,387.16 100.00 100.00 - - - VIII 27 20,418,190.24 27 20,418,190.24 100.00 100.00 - - - Caraga 32 57,545,877.50 31 46,134,095.50 80.17 96.87 1 11,411,782.00 19.83 - - Total 158 183,325,707.03 149 155,815,692.01 84.99 94.30 8 25,135,396.72 13.71 1 2,374,618.30

126

c) Limited contractors and suppliers within the area and/or their reluctance to

engage in community SP implementation due to costly hauling of

materials especially to far-flung areas, thus the frequent failure of

bidding/canvass; and

d) Reshuffling of project personnel

The period of implementation is from six to nine months from the date of

the release of funds pursuant to Item 3.2 of the Community Empowerment Activity

Cycle.

In Region XI, 29 sub-projects costing P30.837 million have failed to meet

specific targeted completion dates stipulated in the contracts with delayed

implementation ranging from 26 to a maximum of 64 calendar days.

Moreover, funds for approved projects amounting P14.240 million were

not released on time by the FOs, thus contributing to the unaccomplished 3,991 SPs

(Table 35) in CY 2016 and delaying the benefits that the concerned community

could derive therefrom.

While we noted some challenges in the implementation of the SPs, the

completion of the prioritized projects provided the community-beneficiaries access

to basic social services, infrastructures, and other benefits due them, in accordance

with the objective of the project.

We commended the DSWD PMO for exerting efforts to facilitate

competition of targeted projects, however, for the uncompleted SPs, we

recommended that the Management require the concerned RPMO and ACTs

personnel to:

a) monitor regularly the on-going and unimplemented SPs and

determine the causes of delays and address the issues and concerns to

fast track the completion of the SPs;

b) furnish the BSPMCs with the list of good standing contractors and

suppliers and blacklist erring contractors and suppliers;

c) require the BSPMCs to strictly adhere to the KALAHI policy on the

prescribed period for project implementation;

d) fast track the downloading of community grants to BSPMC; and

e) avoid reshuffling of project personnel within the period of project

implementation, if feasible.

22. A total of thirteen SPs costing P35.097 million was found to have

deficiencies/issues, due to failure of RPMO/SRPMO as well as project

127

proponents to monitor and resolve project issues, thus may compromise the

efficient and effective use of the facility and not in keeping with KC-NCDDP

Community Empowerment Activity Cycle and Monitoring and Evaluation

Sub-Manual for Program Implementer.

The Manual requires the Sub-Regional Project Monitoring Officer to

conduct field visits for monitoring of SPs implementation activities. Also, in the M

& E Sub-Manual for Program Implementer, the implementers shall conduct

operations or implementation monitoring to address compliance that focus on

monitoring and assessing if a project, program, or policy is being executed.

During the validation, we noted that thirteen SPs were with deficiencies

that may compromise the efficient and effective use of the facility, details shown in

Table 35.

Table 35. Summary Status of SPs with Deficiencies

No. SP Location Project Cost Deficiencies/ Issues-Management Comment Photos 1)

Construction of one (1) unit Day

Care Center building

San Lucas, Calabanga,

Camarines Sur 799,984.00

Non-operational; Completion of the SPs is already taking more than 17 months ___________________________ SP completed last 12/26/2016

2)

Construction of Evacuation Center cum

Training Center

Brgy I (POB), Gartchitorena, Camarines Sur

2,200,000.00

Non-downloading of P220,000.00 balance; Completion of the SPs is already taking more than 17 months. SP 65% Complete ____________________________ 90 of grants have been downloaded, 99.95% of which have been utilized. SP physical progress is at 91.80%. 3rd tranche request for release (RFR) submitted last April 2017

3)

Construction of Evacuation

Center

Maqueda, Caramoan,

Camarines Sur 2,374,618.30

Non-downloading of P237,461.83 balance; Delayed implementation ____________________________ 90% of the grants downloaded, 93.52% of which have been utilized. Preparation of the RFR for 2nd tranche is on-going. Physical accomplishment is 75%.

4)


Center

Ilawod, Caramoan,


Non-downloading of 237,461.83 balance; Delayed completion. SP 85% Complete ____________________________ 99.86% of grants downloaded have been utilized. Final tranche is in process. Physical accomplishment is 75%

5)

Construction of Grouted Riprap

Santo Domingo, Calabanga,


Non-downloading of 237,461.83 balance; Implementation of SP is already taking 17 months to complete. SP 67.84% ____________________________ SP completed last 3/10/2017

128

No. SP Location Project Cost Deficiencies/ Issues-Management Comment Photos 6)

Improvement of Brgy. Road with Drainage Canal

Tabog, Caramoan,


Non-downloading of 307,640.82 balance; Delayed completion ___________________________ 99.54% of the 90% of the grants downloaded were utilized. Final tranche in process. 82% physical accomplishment.

7)

Community-Managed

construction of a Day Care

Center

Brgy. 8, San Jose, Antique

749,368.00

Non-downloading of P74,406.80 balance; Implementation of SP is already taking 17 months ____________________________ 2nd tranche downloaded last March 29, 2017; Physical status 100% completed to date.

8)

Community-Managed


Center


1,413,277.00

Non-downloading of P140,797.70 balance; Delayed completion 70% complete ____________________________ Community has not requested for release of the fund balance. Current funds able to complete the SP as planned. Physical status 100% completed to date

9)

Construction of 1 Unit Hinatuan

Evacuation Center

Pagtiqui-an (Bitoon), Hinatuan,

Surigao del Sur

14,919,407.00

Case was filed against the Contractor for Breach of Contract; Inability of BSPMC to handle large amount of fund; Implementation of SP is already taking 17 months to complete ____________________________ The Contractor filed Breach of Contract against DSWD Regional Office, LGU of Hinatuan, SDS and BSPMC of Barangay Bitoon, Hinatuan. The hearing last April 25-26 at the Commission Industry Arbitration Commission (CIAC) at Makati City resulted to the submission of Technical resolutions and Legal Memorandum to CIAC on 05/25/2015 as basis to give decision on the case. Accomplishment is 68% with 80.95% financial progress

10)

Community-Managed

Construction Of Evacuation

Center


1,085,283.00

Constructed a Civic Center not in accordance to Program of Works; No Final Inspection Report, Certificate of Completion and Acceptance, no Sub-Project Completion Report ____________________________ Final Inspection Report and SP completion report submitted on 03/03/2017, but not yet updated in the KC website. Certificate of SP completion with turn-over and acceptance are included in the SPCR

11)

First Aid Management Training with Emergency Equipment (Portable

Oxygen Tank and basic

rescue materials)

Cubay South, Bugasong,

Antique 730,100.00

Missing emergency equipment/basic rescue materials; no proper storage; no inventory record ___________________________ Inventory recording was initiated by the project staff and already in place. The barangay replaced the items missing using their disaster funds. The equipment were labeled with control numbers for proper inventory. However the storage is still in the barangay hall.

12)

Health Center/ Birthing Center

Brgy. Pundagitan,

Governor Generoso,

Davao Oriental

1,080,493.00

- Not yet turned over to the Barangay for more than a year.

- Not functional and not yet complete in terms of facilities.

- Not maintained that may lead to the sub-project impairment.

- the Barangay Captain did not accept the sub-project due to failure of the contractor to repair various defects ---------------------------------------------- The noted deficiencies were already addressed by the concerned LGUs through the Area Coordinating Teams and the Volunteers

129

No. SP Location Project Cost Deficiencies/ Issues-Management Comment Photos

13)

Concreting of 0.18 km. Danglag

Barangay Road

Barangay Danglag,

Consolacion, Cebu

1,104,000.00

- Completion date: 02/25/2016 -the location where the completed SP (concreted 0.18 km road) was constructed in an agricultural area surrounded by corn fields and far from the barangay road with no clear entrance and exit points -SP did not served its purpose because said area could not be reached by vehicles because of its rocky and hilly terrain before reaching to the concreted road ___________________________ -The SP in barangay Danglag was implemented based on the approved program of work that went through a process of consultation through barangay assembly. Location accessibility was thoroughly considered before its implementation

-The regional management will seek audience with the barangay council of Barangay Danglag on March 11, 2017 to negotiate for the completion of the roads connecting the SP. -The barangay council submitted a resolution of road ownership and to submit other supporting documents. The RPMO also claimed to have the 8 deeds of donation signed by 4 people who have ownership on parts of the SP.

The failure of RPMO as well as project proponents to monitor and resolve

project issues resulted to the uncorrected and unreported deficiencies in the project

implementation and completion, thus affecting the satisfactory project completion

and maximum utilization of SPs.


concerned FO ACT/RPMO personnel to:

a) closely monitor, supervise and provide technical assistance to the

BSPMC during project implementation and immediately correct the

defects/deficiencies noted for the full continuity and functionality of

the SPs for the benefits of the intended beneficiaries;

b) strictly implement the provision of storage facilities before the

delivery of the construction materials at the site to secure these

materials; and

c) hold accountable the RPMO/ACT/BSPMC who will be found remiss

in the monitoring and evaluation of the SPs.

23. Validation of the community grants to BSPMC of P172.341 million showed a

difference of P4.136 million as against the KC-NCDDP report due to deficient

reporting and monitoring mechanism of projects.

Per Operations Manual of the KC-NCDDP, the ACT will prepare and

submit reports thru the Sub-Regional Program Management Team (SRPMT) to the

RPMO, the Municipal Consolidated Status of Grant Fund Utilization and other

reports. In turn, RPMO will submit to the National Project Monitoring Office every

15th of the following month for the monthly reports and every 25th of the following

quarter for the quarterly reports.

130

Out of the data from the submitted reports, the NPMO prepares national

progress reports and other monitoring reports for submission to the National

Program Director, Human Development and Poverty Reduction Cluster, National

Steering Committee, national oversight agencies, and donor agencies of the

Program.

Comparison of the submitted KC-NCDDP report and the validation result

by the Audit Team revealed unreconciled data, thus cast doubt on the validity and

integrity of the information relayed to various stakeholders.

Validation of the documents in the custody of the BSPMC revealed the

variance of P4.136 million versus the KC-NCDDP report of the NPMO, thus

affecting the accuracy of the balances downloaded to the BSPMC as shown in

Table 36.

Table 36. Comparative Balances of Recorded Community Grants

Region Per BSPMC Per KC Difference

IV- MiMaRoPa P14,856,379.29 13,807,604.75 1,048,774.54 V 40,450,180.38 40,372,671.80 77,508.58 VI 22,046,348.25 21,582,136.79 464,211.46 VII 23,342,222.33 22,393,231.20 948,991.13 VIII 20,266,143.46 20,297,205.51 (31,062.05)

Caraga 51,380,231.81 49,752,646.78 1,627,585.03 Total P172,341,505.52 168,205,496.83 4,136,008.69

The inconsistencies noted in the financial accomplishments per validation

made may affect decision-making process that would ensure efficient and effective

implementation of KC projects.

We reiterated our prior year’s recommendation that the DSWD

Secretary require the concerned FO to:

a) instruct the ACTs to monitor the status of SPs implementation within

their area of responsibilities and ensure that all information/reports

are accurate, complete, and consistent with Program standards; and

b) conduct reconciliation of unrecorded community grants in the KC-

NCDDP Report vis-à-vis in the books of BSPMC and ensure that

project reports are validated before this are issued to various

stakeholders.


Management commented that the difference represents the balance yet to

be released to the concerned BSPMCs, however, DSWD could not make any

release pending the following:

131

0

50

100

150

200

Accredited

O&M Group

O&M Policies

and

Guidelines

Financial

Support to the

SPs

Maintains

Financial

Records

a) the SP’s existing physical and financial progress should have reached

the percentage required; and

b) the BSPMCs or the excess amount to be refunded to DSWD.


Our validation showed that the fund utilized per BSPMC

documents/reports vis a vis the KC Fund Releases Report were not reconciled with

the amount downloaded as of December 31, 2016, thus we maintain our

recommendation.

24. The lack of capacity building initiatives for Operations & Maintenance (O &

M) group and non-compliance with KC post implementation regulations

diminished the efficiency and effectivity of project monitoring and reporting to

ensure sustainability of completed projects.

Pursuant to the program development objective of KC-NCDDP the

Communities in the target municipalities should be empowered to achieve

improved access to basic services and to participate in more inclusive local

planning, budgeting, implementation and disaster risk reduction and management”,

the team validated the sustainability and maintenance of the SPs under the

management of O&M groups.

Among the activities enumerated in the CEAC to capacitate the

communities after project completion are as follows:

a) Accreditation of Organization By-Laws and O&M Policies;

b) Conducts general orientation on operation and maintenance

and forming O&M groups and facilitate planning

workshop;

c) Inter-organization learning forums to encourage exchange

of experiences and learnings, and collective problem

solving support.

The results of interview for validated 149 SPs is provided in the chart

below:

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As can be seen in the above chart, all 149 have an established Financial

Support coming from BLGUs but only 34 O&M Groups were duly accredited, 45

groups with established written policies and guidelines, and none of the validated

O&M maintains Financial records. Interview with the community revealed that

O&M groups were formed after the project completion as part of CEAC activity,

but out of 149 completed SPs, 115 O&M groups are only recognized by the BLGU

and MLGU through the Mutual Partnership Agreement.

The presence or compliance with such data are gauges that these groups

are capable of sustaining or maintaining the SPs to ensure efficient and effective

utilization of the SPs as well as implementation of future projects.


concerned FO:

a) O&M groups thru RPMO/Area Coordinating Team submit necessary

documents (such as Policies and Guidelines) to concerned LGUs for

group accreditation and assistance in the proper utilization and

maintenance of the SPs; and

b) RPMO/ Monitoring and Evaluation Team, ACT to conduct capacity

building initiatives and trainings to ensure that O&M groups are

equipped to manage SPs.

C. Other Compliance Issues

Gender and Development (GAD)

25. The DSWD had substantially implemented GPB with a consolidated budget of

P73,108.363 million, which constitutes 66.17 percent of the total budget of the

agency, with expenditures of P58,315.362 million or 79.76 percent of the total

allocated budget for GAD.

The 2016 GAA or RA No. 10717 requires all government agencies to

allocate at least five percent of their budgets to undertake activities that will address

gender issues within their concerned mandates. The GAD Plan shall be integrated

in the regular activities of the agencies and should relate to poverty alleviation,

economic empowerment especially of marginalized women, protection, promotion

and fulfillment of women’s rights and practice of gender-responsive governance.

For CY 2016, the PCW approved and endorsed the DSWD GAD Plans

and Budget of P73,108.363 million. Table 37 shows the consolidated

accomplishment reports for GAD in CY 2016 submitted to the PCW for review.

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Table 37. Consolidated Accomplishment Reports for GAD in CY 2016 (Amounts in millions PhP)

PAPs Objectives Plans and Programs Accomplishments

Remarks No. Activity Budget No. Activity Expenditure

A. Client-focused 58 178,072,383.00 58 1,054,636,764.06 B. Organization Focused 17 35,503,130.00 16 32,344,282.46 1 GAD activity

unimplemented C. Attributed Programs 2 72,894,788,000.00 2 57,228,381,000.00

GAA Appropriation 77 73,108,363,513.00 76 58,315,362,046.52 Percentage 98.7% 79.76%

We commended the DSWD for its compliance with GAD laws and

regulations and recommended that it continue to provide adequate allocation

of funds for programs and activities that will uplift the gender issues of

employees as well as implementation of the planned programs and activities.

Senior Citizens and Differently-Abled Programs

26. Plans, programs and projects for senior citizens and persons with disability

were integrated in the programmed activities of the Agency with a total budget

of P8,277.447 million, for which P7,564.000 million was obligated, leaving a

balance of P0.713 million.

Section 36 of the General Provisions of RA No. 10717, states, among

others, “All agencies of the government shall formulate plans, programs and

projects intended to address the concerns of senior citizens and persons with

disability, insofar as it relates to their mandated functions , and integrate the same

in their regular activities.

Moreover, “all government infrastructure and facilities, shall provide

architectural or structural features, designs, or facilities that will reasonably

enhance the mobility, safety and welfare of persons with disability pursuant to

Batas Pambansa Blg. 344 or R.A. No. 7277.”

RA No. 7277 of the Magna Carta for PWDs mandates for the

rehabilitation, self-development and self-reliance of disabled persons and their

integration into the mainstream of society and for other purposes. It further defines

the rights and privileges of disabled persons such as equal opportunity for

employment, access to quality education, national Health Program, Auxiliary

Social Services, telecommunications, accessibility (barrier-free environment),

political and civil rights.

As provided under RA No. 9994 or the Expanded Senior Citizens Act of

2010, the Social Pension Program for Indigent Senior Citizens (SPISC) is the major

program of the DSWD, which provide senior citizens entitlement to a monthly

stipend of ₱500.00 effective January 2011.

134

For CY 2016, a total of 1,314,816 senior citizen beneficiaries or 95.56

percent of the target of 1,375,970 was served at the DSWD FOs. The total amount

of P7,564.000 million was obligated for the year from the total allocation of

P8,277.447 million.

On the other hand, community-based programs for persons with disability

were implemented with a total allotment of P11.801 million and obligated a total of

P5.797 million, serving a total of 1,933 PWDs throughout the country.

We commended the DSWD for implementing the expanded coverage

of senior citizens and programs and services for PWDs that greatly helped

address the concerns of the senior citizens and persons with disability.

Compliance with GSIS Remittance

27. For CY 2016, DSWD collected/withheld the amount of P456.400 million for

premiums and loans from employees, with a corresponding remittance of

P463.382 million to the GSIS within the prescribed period in compliance with

RA No. 8291, otherwise known as the “GSIS Act of 1977”.

Section 14, of the Implementing Rules and Regulations (IRR) of RA No.

8291, otherwise known as the Government Service Insurance Systems (GSIS) Act

of 1997 provides, among others, Each government agency shall remit strictly to the

GSIS the employees’ and government agency’s contributions including loan

amortizations (consolidated loans, policy loan, emergency loan, housing loan, and

other loans), premium payments (optional, pre-need and other non-life insurance)

and other amounts due the GSIS within the first ten (10) days of the calendar month

following the month to which the contributions apply.

Except for the unremitted balance of P3.968 million, the DSWD faithfully

adhered to the GSIS Act. The balance of P2.182 million represents net

unremitted balance and negative balances for reconciliation, which are carry

forward balance in prior years and cannot be remitted due to unavailability of

documents/records. Table 38 shows the details per FO.

Table 38. Status of GSIS Collections, Remittances and Balances

FO Beginning Balance

(12/31/15) Collections Remittances Balance Remarks

CO 166,265.42 46,406,517.01 46,277,084.68 295,697.75 No remittance yet CAR (4,790.80) 13,255,714.24 13,250,828.46 94.98 Remitted on February 9, 2017 NCR 0.00 40,542,320.89 40,455,115.00 87,205.89 Erroneous entry, Adjusted on April 2017

I 0.00 40,244,000.35 40,244,000.35 0.00 II

0.00 17,292,379.69 17,294,297.93 (1,918.24) Negative balance of 1,918.24 is an accounting error

III 23,691,949.63 23,691,949.63 0.00 GSIS personal share and loans of employees and Social Insurance Fund premiums as govt shares for CY 2016 amounting P23,691,949.63 and P822,418.46, respectively, were deducted and remitted to the GSIS

135


(12/31/15) Collections Remittances Balance Remarks

IV A 3,320,829.94 41,836,406.01 41,574,204.28 3,583,031.67 Remitted on January 10,2017 IV B

1,834,069.08 17,855,823.81 17,666,624.85 2,023,268.04 Remitted on January 8, 2017 P3,430,379.60

V 166,468.86 49,971,122.37 50,100,634.35 36,956.88 Remitted on Jan 3, 2017 VI 3,499,474.73 65,727,895.43 68,983,596.45 243,773.71 No remittance. For reconciliation VII 0.00 32,610,870.59 32,124,635.04 486,235.55 Remitted January 13, 2017 VIII 0.00 36,707,427.41 37,047,080.25 (339,652.84) For reconciliation IX 598,029.12 39,963,807.76 42,006,325.97 (1,444,489.09) For investigation of negative balance X 23,756.79 51,117,867.84 51,117,867.84 23,756.79 For reconciliation updating and

maintenance of subsidiary ledger XI 2,026,335.82 27,531,681.64 29,125,121.75 432,895.71 Remitted on January 30, 2017 XII 50,017.82 16,561,100.12 16,521,958.00 89,159.94 XIII 484,810.99 26,335,493.53 26,365,287.72 455,016.80 Remitted on January 10,2017

Total 12,165,267.77 587,652,378.32 593,846,612.55 5,971,033.54

We commended the department for its compliance with GSIS laws.

For the unremitted balance, we recommended and the DSWD Secretary

agreed to require the concerned FO Accountant to exert efforts to locate the

documents/records and review, analyze and reconcile the account and remit

the balances, if warranted.

Compliance with Tax Laws

28. The DSWD had complied with BIR regulations No. 1-2013 dated January 23,

2013, with total amount of P918.744 million remitted to the BIR, representing

taxes withheld for CY 2016, and unremitted balances as of year-end remitted

in January 2017. However, in FO V, included in the balance was the long

outstanding unreconciled amount of P3.400 million.

Section 80 (A) of the National Internal Revenue Code, as amended,

provide that the employer shall be liable for the withholding and remittance of the

correct amount of Tax required to be deducted and withheld. Further, it is also

required under Section 79(H) that “on or before the calendar year but prior to the

payment of the compensation for the last payroll period, the employer shall

determine the tax due from each employee on taxable compensation income from

the entire taxable year in accordance with Section 24 (A). The difference between

the tax due from the employee for the entire year and the sum of taxes withheld

from January to November shall either be withheld from his salary in the

succeeding year.

DOF-DBM-COA Joint Circular No. 1-2000 dated January 3, 2000 and

Joint Circular No. 1-2000A dated July 31, 2001 require the remittance of taxes

withheld from employees and government suppliers.

For CY 2016 the DSWD consolidated Tax withheld, remittances and

balance is presented in Table 39.

Table 39. Status of Taxes Withheld, Remitted, and Balance


Tax Withheld Remittance Balance Remarks

136


Tax Withheld Remittance Balance Remarks

CO 2,858,942.13 198,488,892.74 197,720,113.77 3,627,721.10 Remitted P2,076,102.14 in January 2017 and refunded P484,869.87, leaving a balance of P1,066,749.09 for further verification

NCR 11,614,423.90 67,937,943.59 79,516,084.21 36,283.28 remitted on May 2017 CAR 384,643.97 38,189,677.85 37,605,315.38 969,006.44 Remitted P4,352.23 on January 5,

2017, P961,875.56 on January 10, 2017 and P2,778.65 on February 9, 2017.

I 0.00 28,285,593.66 28,285,593.66 0.00 II 3,077,597.58 24,435,121.68 25,855,775.86 1,656,943.40 Remitted a total of P888,537.22 from

March to June 7, 2017. Balance of P768,406.18 as of June 16, 2017

III 3,958,158.22 55,574,170.02 54,902,792.59 4,629,535.65 Remitted P4,192,520.78 on January 5 and 6, 2017

IVA 6,849,014.36 60,754,119.63 59,002,289.01 8,600,844.98 Remitted on January 10, 2017 IVB 2,508,155.14 43,877,457.09 44,866,079.71 1,519,532.52 Remitted on January 10, 2017

P1,210,972.77 V 4,239,522.29 109,079,385.08 109,288,472.97 4,030,434.40 The balance of Due to BIR was

unreliable due to various errors that resulted to under-remittance of taxes withheld by P48,350.20, error in recording liability to GSIS amounting to P21,131.46, and long outstanding unreconciled balance amounting to P3.4 million. Remitted on Jan 13, 2017

VI 10,548,747.14 100,142,826.01 95,511,925.51 15,179,647.64 Taxes withheld were not remitted intact and promptly to the BIR (par. 118-124, CY 2016 ML). Remitted P9.752 million on January 9, 2019 and the balance of P5.428 million is for reconciliation

VII 0.00 72,663,374.53 73,588,530.31 (925,155.78) For reconciliation VIII 8,347,340.72 73,453,427.73 67,551,051.74 14,249,716.71 Remitted P8,171,234.60 on Jan 10,

2017, and the balance is subject for reconciliation

IX 2,804,315.12 81,662,744.34 79,897,723.90 4,569,335.56 Remitted P2,046,090.50 in January 2017 and the amount of P1,688,662.54 is for refund to employees. The old balance of P834,582.52 is for investigation

X 1,006,183.19 86,745,141.55 74,335,178.51 13,416,146.23 Remitted January 10, 2017 XI 1,053,718.18 56,394,132.02 55,927,890.42 1,519,959.78 Remitted on January 9, 2017 XII 0.00 38,602591.58 38,602591.58 0.00 XIII 2,961,196.79 69,575,024.89 70,101,044.79 2,435,176.89 Remitted on January 6, 2017

Total 62,211,958.73 1,205,861,623.99 1,192,558,453.92 75,515,128.80

We commended DSWD for its effort to comply with BIR rules and

regulations, however, for the unremitted balance, we recommended and the

DSWD Secretary agreed to require concerned FOs Accountants to analyze the

account and make necessary adjustments to the books of accounts or remit the

balances to the BTr, if warranted.

Enforcement of Settlement of Suspension/Disallowances/Charges

29. Notices of Suspensions and Disallowances amounting to P208.889 million and

P481.989 million, respectively, remained unsettled at year end, contrary to

Section 9.4 of the 2009 RRSA.

137

The 2009 Rules and Regulations on the Settlement of Accounts (RRSA)

requires that a suspension should be settled within 90 calendar days from receipt of

the Notice of Suspension (NS); otherwise the transaction covered by it shall be

disallowed/charged after the Auditor shall have satisfied himself that such action is

appropriate. Consequently, the Auditor shall issue the corresponding Notices of

Disallowance (ND). The disallowance shall be settled within six months from

receipt of the ND by the persons liable.

The status of audit suspensions and disallowances found in the audit of

various transactions as of December 31, 2016 are summarized in Tables 40 and 41.

Table 40. Status of Notices of Suspensions

(in million PhP)

Field Office

Beginning Balances

Issuance for the

CY 2016

Settlements for the CY

2016

Ending Balance

Remarks

CO 257.266 141.703 270.908 128.062 Settlement under review for NS amounting to P127.62 million fund transfers to NGOs/POs

II 31.156 289.511 247.994 72.673 IV-A 9.632 0.000 9.632 0.000 IVB 1.814 0.000 1.814 0.000 VI 0.000 19.705 18.645 1.060 Suspensions amounting to P1.060 million was settled on

January 2017 VIII 1.531 0.000 0.000 1.531 Settlement of suspended accounts could not be possibly

done as the related records and other documents were washed-out/destroyed during the storm surge caused by the super typhoon Yolanda

X 502.492 453.022 952.287 3.227 XI 0.000 1.466 1.466 0.000

XII 0.000 0.086 0.000 0.086 XIII 2.276 0.000 0.026 2.250

Total 806.167 905.493 1,502.772 208.889

Table 41. Status of Notices of Disallowances (Amounts in Million PhP)

Field Office

Beginning Balances

Issuance Settlements Ending Balance Remarks

403.348 14.756 0.000 418.104 With appeal submitted for evaluation

CAR 0.089 0.000 0.017 0.072

I 0.000 0.000 0.000 0.000 No issuance

II 0.000 3.905 0.608 3.297

III 2.905 2.466 1.316 4.055 There were disallowances amounting to P2,522,270.00 issued prior to the effectivity of the RRSA which had become final and executory, thus recorded as Receivables-Disallowances and Charges. No settlement on these disallowances was made during the year.

IV-A 0.047 0.100 0.047 0.100 The ND issued during the year reflected the payment of retainer lawyer fees amounting to P100,000.00 wherein disbursements were not supported with the contract which require written concurrence of COA in the hiring of legal retainer in this FO 129. As of December 31, 2016, the decision is still under review in the Office of the Commission Proper awaiting final decision.

V 2.623 1.444 0.455 3.612 The settlement pertains to partial

138

Field Office

Beginning Balances

Issuance Settlements Ending Balance Remarks

settlement of one (1) ND. The remaining 36 disallowances are still on appeal.

VI 5.262 0.120 0.042 5.340 P5,240,265.11 is under appeal with the COA and the balance of P100,000.00 is not yet final and executory. ND issued prior to the effectivity of the 2009 RRSA are not included in the above balances but are deemed disallowances which shall continue to be monitored and enforced. As of December 31, 2016, disallowances of P218,100.00 issued prior to the effectivity of the 2009 RRSA remained unsettled.

VII 1.767 0.000 0.000 1.767 Under Fund 101, the unsettled disallowance of P1,463,143.71 pertains to ND issued in prior years that remained unsettled as of December 31, 2016. For KALAHI CIDSS-KKB, total disallowance amounted to P303,814.90 that also pertains to prior years.

VIII 0.364 0.000 0.000 0.364 Settlement of disallowed accounts could not be possibly done as the related records and other documents were washed-out/destroyed during the storm surge caused by the super typhoon Yolanda

IX 0.110 0.000 0.110 0.000 The balance of P110,075.00 was fully paid by the officers and employees concerned during the year

X 0.000 1.636 0.004 1.632

XI 0.000 1.050 0.340 0.710 709,636.24, represents meal allowance of 4Ps beneficiaries attending the Community-Driven Enterprise Development (CDED) process.

XII 0.065 0.000 0.000 0.065

XIII 1.045 0.055 0.332 0.768 ND issued prior to the effectivity of RRSA has a balance of P504,183.60 as of December 31, 2016. 179. The foregoing balances shall continue to be monitored and enforced, pursuant to Section 28.3 of COA Circular No. 2009-006 dated September 15, 2009.

NCR 42.103 0.000 0.000 42.103

Total 459.728 25.532 3.271 481.989

ND/NC/NS issued prior to effectivity of the 2009 RRSA are not included

in the reflected balances but are deemed disallowances/charges, which shall

continue to be enforced in accordance with these Rules as provided under Sec. 28

thereof.

We recommended the DSWD Secretary to:

a) enforce settlement of audit suspensions and disallowances within the

prescribed period in accordance with Sections 9.4 and 10.4 of the 2009

RRSA; and

b) initiate necessary administrative and/or criminal action in case of

unjustified failure/refusal by subordinate officials to effect compliance

139

with the foregoing requirements, pursuant to Section 7.1.2 of 2009

RRSA.

139

STATUS OF IMPLEMENTATION OF PRIOR YEARS’

AUDIT RECOMMENDATIONS

The Auditors have followed up and validated the actions taken by the concerned

DSWD officers and employees in the implementation of the audit recommendations as

contained in the CAAR for the previous years and noted the following:

Status of Implementation No. of Recommendations

Fully Implemented 84

Partially Implemented 47

Not Implemented 2

Total 133

The results of our validation were discussed in the exit conference and

recommended Management continuing corrective/remedial actions to address the issues in

order to fully implement the recommendations on those partially implemented and

unimplemented. The details are as follows:

AUDIT OBSERVATIONS/

RECOMMENDATIONS Ref

MANAGEMENT

COMMENTS/ACTIONS TAKEN

FI

PI

NI

Results of Auditor’s

Validation

CY 2015

Dormant

Accounts/unremitted Funds

to the Bureau of Treasury

1) Dormant and other

unnecessary cash in banks

accounts of P143.095

million were not remitted to

the National Treasury or

returned to the grantor

thus, depriving the source

agencies of the proper

disposition and productive

use of the funds.

Recommendation:

The DSWD Secretary to:

a) Require the Cash

Division to close all

dormant accounts and

remit all trust receipts,

donations, including

excess funds from

training, and BAC

honoraria pursuant to

existing laws; and

CY

2015

CAAR

Page

62

CO - Updates as of March 31, 2017

There are eight bank accounts that

were closed by the Department and

these are as follows:

Account No. Account Name

3122-1015-83 PODER 3 Peso Current Account

3122-1015-24 DSWD-UNDP Care and Support Services for Persons with HIV/AIDS

3122-1019-90 DSWD-Social Protection Strategy Project

3122-1019-15 DSWD Mitigating the Economic and Psychological Impacts of HIV and AIDS

PI

Out of the 16 bank

accounts of CO

recommended for closure,

only eight were closed and

remitted to BTr the

amount of P436,242.85.

Reiterated in this report

under Observation No. 1

page 57.

140

AUDIT OBSERVATIONS/

RECOMMENDATIONS Ref

MANAGEMENT


FI

PI

NI


Validation

b) Direct the Accountant to

exert efforts to trace back

and analyze the

“suspense account” in

the Cash in Bank- LCCA

and to what bank account

the same was deposited

and remit the balance to

the National Treasury;

and record the validated

reconciling items in the

books of accounts in

order to reflect the

correct balances of the

account.

3122-1023-50 DSWD UN-WFP Emergency Cash Transfer for Typhoon Yolanda-Affected Population in 4Ps Areas

3122-1023-26 Give2 Asia Pepsico Foundation FOIV-A Cash for Work Program

3124-7000-34 DSWD-Comprehensive Pilot Intervention Plan Against Gender Violence-Phase 3

3122-1021-48 DSWD Payment Application Secure System for the Bureau of Customs

The following bank accounts will not

be closed due to following reasons:

• The Bidders/Performance Bond

are deposits made by private

individuals and are liability of the

Department which is required to be

immediately returned to contractors

after performance of the undertaking;

• Cash donations for typhoon

Yolanda are still being utilized for the

rehabilitation phase of the calamity

victims;

• BAC Honoraria is maintained

pursuant of 6.2 of DOF-DBM-COA

Permanent Committee Resolution

No. 2005-2;

• Other bank accounts are

maintained with AGDB based on the

MOA; and Training Fund Account is

maintained based on DSWD

memorandum Circular No. 30, Series

of 2004.

Documents needed are not available.

Management through FMS-AD to

exert all efforts to retrieve the needed

documents to reconstruct the data and

reconcile balances.

On the bank reconciling accounts,

adjustments in books of accounts are

already made for the following:

Account No. Account Name Amount JEV No. and Date

3122-1011-09 Training Fund P2,400.00 2016-06-002984 dated June 1, 2016

3122-1016-72 Miscellaneous Trust Account

1,750.00 2016-03-008935 dated March 31, 2016

3122-1016-72 Miscellaneous Trust Account

218,749.00 2016-03-001154 dated March 28, 2016 and 2016-07-003379 dated July 18, 2016

PI

Verified corresponding

JEVs and noted

adjustments for the

reconciling items as

recommended.



page 57.

Overstated Cash-in-Bank

FCSA and Accumulated

Surplus

2) Recorded balance of

Cash in Bank – FCSA of

P3,782.058 million at year-

CY

2015

CAAR

Page

65

141

AUDIT OBSERVATIONS/

RECOMMENDATIONS Ref

MANAGEMENT


FI

PI

NI


Validation

end is overstated by P49.677

million due to inadvertent

exclusion of the balance of

regular agency fund

transferred to the Foreign

Assisted Fund in the

computation of FOREX

gain as of September 30,

2015. Consequently the

Gain on

FOREX/Accumulated

Surplus was overstated by

the same amount.

Recommendation:

Management agreed to direct

the Accountant to make

necessary adjustment to

correct the balances of the

affected accounts.

Adjusted per JEV#2016-04-000729.

FI

Validated the adjustment

made per JEV #2016-04-

000729 dated April 1,

2016 in the amount of

P49.676,660.08 and found

in order.

Unliquidated Cash Advances

(CAs)

3) CAs amounting to

P125.493 million pertaining

to prior years remained

unliquidated as of

December 31, 2015 due to

non-monitoring of

submission of LRs and non-

compliance with COA

Circular No. 97-002 dated

February 10, 1997

3.a) Unliquidated Advances

to Special Disbursing

Officers - ₱3,141.494

million

Recommendation:

The DSWD Secretary to

direct the concerned

Directors/Accountants to:

a) Require all AOs to

liquidate their CAs on

time, otherwise, impose

administrative sanctions

against them in

CY

2015

CAAR

Page

66

The Management continues to

follow-up and require those

Disbursing Officer who had not yet

submitted their liquidation report thru

the issuance of notices/ memoranda.

PI

Unliquidated cash

advances for CY 2015 and

below amounted to P174,142,100.12 or an

equivalent decrease of

142

AUDIT OBSERVATIONS/

RECOMMENDATIONS Ref

MANAGEMENT


FI

PI

NI


Validation

accordance with Section

89 of PD No. 1445, COA

Circular No. 97-002, and

CSC Resolution No. 04-

0676 dated June 17,

2004;

b) Stop the practice of

granting excessive CAs

to SDOs;

c) Require the concerned

SDOs to immediately

submit the necessary

documents to support the

liquidations made,

henceforth, record only

liquidations with

complete supporting

documents (FO II); and

d) Request write-off of

dormant accounts after

exhausting utmost effort

in the liquidation of the

long-outstanding

balances. (FO V and

VIII)

COA's recommendation is duly

noted.

Consolidated

As of December 31, 2016,

P3,576,590,764.34 or 95.36% was

liquidated out of P3,141,492,498.11

(with adjustment of P663,916,789.66)

outstanding cash advances as of Dec.

2015, leaving a balance of

P174,142,100.12

Demand letters were sent to the

concerned Officials and Employees to

submit their liquidation report which

is already due and demandable.

FO VIII. The monitoring of CAs has

been enforced as a result of creation

of Accounting Processing and

Accounting Reporting subsections.

The Accounting has already

submitted necessary documents to

support the liquidations.

No Action.

PI

FI

NI

94.45% decrease due to

liquidations.

The following DSWD

Field Offices still grants

cash advance to SDOs

with previous unliquidated

cash advances. (NCR, II,

V, VI, IX and X)

Verified the adjustments

made due to recording of

unsupported liquidations,

per JEV#2016-03-002625

dated 3/31/2016 and found

in order.



page 73.

3.b)Unliquidated

Advances to Officers

and Employees

₱49.054 million

Recommendation:


require all concerned Offices

to strictly observe COA

Circular No. 97-002 on the

CY

2015

CAAR

Page

69

Consolidated


P4,698,905.29 or 72.05% was

liquidated out of P49,054,044.24

(with adjustment of P41,852,660.17

PI

CY 2015 balance of

P3,141.494 million has

been reduced to P174.14

million in CY 2016 or a

143

AUDIT OBSERVATIONS/

RECOMMENDATIONS Ref

MANAGEMENT


FI

PI

NI


Validation

grant, utilization, and

liquidation of CAs and ensure

monitoring thereof; and

liquidate their CAs on time,

otherwise, impose

administrative sanctions

against them in accordance

with the Section 89 of PD No.

1445, COA Circular No. 97-

002, and CSC Resolution No.

04-0676 dated June 17, 2004.

and refund of P535,639.40)

outstanding cash advances as of Dec

2015, leaving a balance of

P1,822,384.49

Demand letters were sent to the

concerned Officials and Employees to

submit their liquidation report which

is already due and demandable.

total liquidation of

P2,967.354 million or

94.46%.

Unliquidated Fund Transfers

– Due from

NGAs/LGUs/GOCCs and

NGOs/PO

4) Inadequate monitoring

of LRs and release of

additional fund transfers to

IAs with unliquidated

balances resulted in the

accumulation of

outstanding balances of Due

from NGAs/ GOCCs/ LGUs

of ₱1,536.589 million,

P7,361.876 million and

₱24,858.345 million,

respectively.

Approximately 63 percent,

10 percent and 24 percent of

the respective balances are

aged over one (1) to ten (10)

years.

4.a) Due from NGAs

₱1,536.589 million

Recommendation:


a) Direct the concerned

Offices and employees to

strictly comply with

paragraphs 4.6, 4.9 and

5.4 of COA Circular No.

94-013, dated December

13, 1994, on the

liquidation of fund

transfers, otherwise it

must share responsibility

CY

2015C

AAR

Page

70

Consolidated


P27,306,701,564.23 or 78.63% was

liquidated out of P33,755,810,134.70

(with adjustment of

P1,312,487,391.92 and refund of

P341,647,524.78) outstanding cash

advances as of Dec 2015, leaving a

balance of P7,419,948,437.61.

Breakdown as follows:

Sent follow-up and demand letters

and conducted personal visits to

implementing agencies with long

outstanding unliquidated balances.

PI



page 80.

Balance unliquidated for

CY 2015 and below

amounted to

P725,797,556.78 or

52.77% liquidation.

144

AUDIT OBSERVATIONS/

RECOMMENDATIONS Ref

MANAGEMENT


FI

PI

NI


Validation

for the accumulation of

unliquidated accounts;

b) Create a core group to

closely monitor the

liquidation of fund

transfers and require the

IAs to immediately

submit the LRs within

the prescribed period per

COA Circular No. 94-

013 and to refund the

unutilized fund transfers

for completed projects, if

any; and

c) Require the Accounting

Division to verify the

results of confirmation in

the DSWD books and

exert further efforts to

reconcile the DSWD

book balances with those

of the IAs and make

necessary adjustments, if

necessary.

Management has exerted efforts to

monitor liquidations.


reconcile the DSWD book balances

with those of the IAs and make

necessary adjustments as reflected in

the books.

FI

PI

Improved liquidation

percentages with

liquidations amounting to

to P810.789 million or

52.77%.

Initial adjustments to the

accounts were made

amounting to P19 million.

4.b) Due from GOCCs -

₱7,361.876 million

Recommendation:


direct the Accounting

Division to:

a) Adhere strictly to the

guidelines on the grant,

use, and liquidation of

fund transfers as well as

the provisions of the

MOA with concerned

IAs and make strong

representation with its

officials to submit LRs to

liquidate the same; and

b) Monitor liquidations

made by the GOCCS for

timely recording of the

assets procured and

expenses incurred and

CY

2015

CAAR

Page

73

CO

The outstanding balance for Due from

GOCCs as of February 28, 2017 as

follows:

Balance as of December 31, 2015

Liquidation (January 2016 to Feb. 2017)

Balance as of Feb. 28, 2017

P7,020,139,992.55 P6,825,118,207.35 P195,021,785.20

100% 97.22% 2.78%

Sent follow-up letters and scheduled

personal visit to implementing

agencies with long outstanding

unliquidated balances.

PI

FI

Total liquidations and

adjustments for CY 2015

and below amounted to

P7,133,445,715.66 or

96.91%.

Copies of follow-

up/demand letters were

furnished to COA.

145

AUDIT OBSERVATIONS/

RECOMMENDATIONS Ref

MANAGEMENT


FI

PI

NI


Validation

require refund of any

unexpended balance.

4.c) Due from LGUs

₱24,858.345 million

Recommendation:

The DSWD Secretary agreed

to:

a) Require the Accounting

Unit to refrain from

recording liquidation of

fund transfers to LGUs

on SoRDs, which merely

reflect CAs granted to

AOs or those without

specific details of

payments incurred, and

compel the LGUs

concerned to submit

revised SoRDs on

liquidations with

deficiency totaling

P27.203 million and that

subsequent LRs should

show detailed actual

project expenditures (FO

IX); and

b) If sending of

confirmation does not

work, the Accounting

Unit could visit the

different LGUs to

monitor the unliquidated

balances and follow up

the liquidation and/or

request refunds for the

unutilized balances. (FO

XI).

CY

2015

CAAR

Page

77

Sent follow-up letters and scheduled

personal visit to implementing

agencies with long outstanding

unliquidated balances.

Adjustments taken up in the books of

accounts to reflect actual fund

transfers.


enforce liquidations.

PI

FI

Of the total CY 2015 and

earlier balance of

24,858.343 million,

liquidation amounted to

P18,480.909 or 74.34%

Registered a liquidation of

P996,280,003.73 or

68.54% from prior years

balances of

P1,453,677,616.07.

Unliquidated fund transfers

to NGOs/POs

5) The delayed or non-

liquidation of fund

transfers to IAs and the

pending and unrecorded

liquidations with the IAS,

due to: (a) lack of

and/or inappropriate

CY

2015

CAAR

Page

81

Liquidation for CY 2015

and below amounted to

P6,721.67 Million or

59.46 percent of the total

unliquidated balance for

CY 2015.

146

AUDIT OBSERVATIONS/

RECOMMENDATIONS Ref

MANAGEMENT


FI

PI

NI


Validation

documentations submitted;

and/or, (b) inadequate

monitoring of submission of

LRs from the IAs, resulted

in the accumulation of the

balance of the Due from

NGOs/POs amounting to

₱11.304 billion as of year-

end, of which 13 percent or

₱749.064 million pertaining

to CY 2013 and PYs are due

for liquidation.

Recommendation:


direct all FO Directors

concerned to:

a) Strengthen the

monitoring controls on

fund transfers by

creating a core group to

closely monitor the

liquidation of fund

transfers and require the

NGOs/POs to

immediately submit the

LRs within the

prescribed period per

COA Circular No. 2007-

001; send demand letters

to those who fail to

liquidate on time; and

refund the unutilized

fund transfers for

completed projects, if

any;

b) Study the MOA with

NGOs/POs and possibly

include provisions on

control measures,

specifically on the

implementation of

projects and liquidation

of funds, to ensure

project completion as

well as full liquidation of

fund transfers;

Demand letter was issued to NGOs

with unliquidated cash advance.

The Management is not remiss in

sending demand letters to these

NGOs, but after their failure to

respond to our demands, these NGOs

are endorsed to the Department’s

Legal Service (LS) for appropriate

legal action. The LS had forwarded

such case of non-compliance of

NGOs to the Office of the Solicitor

General (OSG) for the initiation of

legal action and appropriate remedies.

Accordingly, the OSG requested

certified true copies of the

Disbursement Vouchers (DVs),

together with the supporting

FI

FI



page 96.

Only accredited

NGOs/POs are tapped for

project implementation

(with the exception of

international agencies).

Noted the actions taken by

Management. Copies of

demand letters, referral to

Legal Office and to OSG

was furnished the –

DSWD COA Office.

147

AUDIT OBSERVATIONS/

RECOMMENDATIONS Ref

MANAGEMENT


FI

PI

NI


Validation

c) Direct the Accountant to

review the propriety of

the dormant Due from

NGOs/POs and request

possible write-off in

accordance with COA

Circular No. 97-001;

d) Direct the ACTs to

require BSPMCs’ strict

compliance on the

prompt submission of

DVs and supporting

documents to the DSWD

FOs to ensure the timely

preparation and

recording of the LRs and

the submission of the

DVs and other related

documents.

e) We also recommended

that the DSWD Secretary

direct the IAS to

facilitate the review of

liquidations, especially

those submitted by the

IOM; and the

Accountant to record

promptly reviewed LRs.

documents of the 13 NGOs/POs

which in return, the Department had

requested from COA said copies of

documents since the original

documents had already been

forwarded for final custody per letters

dated March 9, 2015, March 24, 2015

and July 22, 2015.

Request for write-offs are coursed

through the auditor.

The RPMO has already directed the

ACT/SRPMO on the regular and

prompt submission of DVs and

supporting documents. Disbursement

Vouchers will be subjected to

Municipal Fiduciary Review

Workshop prior to submission to

COA. All NGOs and POs are active

and being monitored by BUB Focal

and BUB hired staff.

IAS has conducted an audit of the

liquidations made by IOM

PI

FI

FI

Only NCR submitted a

request for write-off.

Noted considerable

percentage of liquidation

from FOs.

Certifications on the total

Liquidations from IOM

was made but no

supporting original

documents were attached

to the Certification since

the IOM claims to have an

internal policy that they

keep the original

documents.

Misstated and unreconciled

Inventory balances

6) The recorded balance

of Inventory was overstated

by a net amount of P125.672

million due to: (a) non

preparation and submission

by the Property Office of

CY

2015

CAAR

Page

86

148

AUDIT OBSERVATIONS/

RECOMMENDATIONS Ref

MANAGEMENT


FI

PI

NI


Validation

RSMIs for the inventory

issuances to the Accounting

Office for recording;

(b) recording the supplies

and material purchased

directly as expenses; and

(c) non-recording of

deliveries from the PS-

DBM. Moreover, the

balance of inventory

accounts totaling

P1,066.973 million in some

regions could not be

ascertained either due to

non- conduct of physical

count or non-reconciliation

between books and physical

count with a net difference

of P9.968 billion.

6.a) Misstated Inventory

Balances

Recommendation:

The DSWD Secretary require

the:

a) Property Unit to conduct

physical count of

inventories and prepare a

Report thereon; and

prepare RSMI and

submit the same to

Accounting unit for

recording of issued

inventories; and

b) Accounting Unit to make

the necessary

adjustments in the books

of accounts and to stop

the practice of recording

inventories as direct

expense for purchases of

common used supplies.

Physical Count conducted for CY

2016.

As of December 31, 2016 RSMIs

until December 31, 2015 were

submitted by Procurement Service

and NROO was already booked up.

To account all inventory account to its

appropriate account.

FI

FI

RPCIs were submitted to

the FO auditors in

compliance with the

recommendation.

Various JEVs per FO were

drawn to record the

RSMIs.

Inventory purchases are

recorded to their

appropriate asset accounts.

6.b)Unreconciled

Inventory Balances

Recommendation:

CY

2015

CAAR

Page

89

FO V

PI

149

AUDIT OBSERVATIONS/

RECOMMENDATIONS Ref

MANAGEMENT


FI

PI

NI


Validation


the concerned FOs’ Property

Management and Accounting

Divisions to conduct

reconciliation of their records

and effect adjustments/

corrections, if necessary.

The system is yet to be finalized.

Once finalized, it will be coded by a

programmer and then tested by the

Accounting Section

FO IX

The Inventory team has already

conducted the Physical Count of

Inventory Items last June 2016 with

representative from Accounting Unit

and COA. Accounting recognized

expense only upon issuance of the

RSMI by the Supply Unit.

FO XI

Inventories are already recorded in its

proper account.

CARAGA

Supply and Accounting records

already reconcile with all the RIS

completely submitted to Accounting

Unit.

Validated partial

compliance by FOs.



page 100.

Delayed establishment of a

sound relief goods inventory

system

7) The delayed

establishment of a sound

relief goods inventory

system resulted in the

spoilage of an estimated

P11.895 million worth of

sardines and the non-

recording of P11.752

million to Welfare Goods

for Distribution Inventory

which was erroneously

recorded as Financial

Assistance to NGAs,

resulting in the

misstatement in both

accounts.

Recommendation:

The DSWD Secretary direct

the Property Management

Division to properly comply

with the following:

CY

2015

CAAR

Page

90

FI

150

AUDIT OBSERVATIONS/

RECOMMENDATIONS Ref

MANAGEMENT


FI

PI

NI


Validation

a) Set clear/written

guidelines (or quality control

procedures) concerning the

inspection, acceptance and

remedies in case of discovery

of unwanted items like

spoiled, tampered and/or

dented goods;

b) Monitor strictly the

movement of goods stored at

the warehouse so that those

nearing their expiry date may

be disposed ahead than those

with late expiry dates;

c) Monitor closely the

storage conditions of the

warehouse in consonance to

the required storage

conditions of the relief goods;

NROO practices a return policy

wherein upon discovery of

damaged/spoiled items, the

Department, through its Procurement

Service immediately coordinates with

its supplier (in this case, the Fortune

Group Corporation) for the 100%

replacement of the goods.

Moreover, NROO has drafted a

Manual of Operations which aims to

consolidate best practices,

standardize, and provide

guidelines/systems/processes on the

Department’s disaster relief

operations specifically on the

management of donations, logistics,

production and warehouse, which

includes quality control standard’s

embedded in every process.

The Writeshop for the Finalization of

the Manual of Operations was held in

Mandaluyong City last 13th through

16th of June 2016 and was attended

by NROO, DSWD FOs and CO staff.

In 2016, the NROO conducted several

capacity building activities attended

by participants from all Field Offices,

NROO, VDRC, DReAMB, PS and

AS to ensure that the best practices

are being adapted.

The NROO has strengthened its

internal control procedures/

mechanisms on warehouse

management for proper monitoring

by adhering to principles of First In,

First Out (FIFO), First Expire, First

Out (FEFO); and other good and

established industry practices in

Inventory Management.

In its effort to continuously improve

its operation and have a reliable and

accurate inventory and monitoring of

relief goods which will result to more

efficient delivery of goods to disaster

victims, the Department of Social

Welfare and Development developed

the Relief Goods Inventory

Management Service.

FI

FI

Compliance with the

recommendations were

noted by inspections of

items delivered as

replacement of spoiled or

damage goods.

Per inspection conducted,

packages of relief goods

were labeled expiration

date for easy identification

of those nearing

expiration.

It was validated that

888,066 tins with total cost

of P10,434,775.50 were

replaced by the supplier.

It was observed that the

warehouses at NROC were

provided with

thermometer to monitor

heat and humidity in the

place.

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d) Look into the causes of

the spoilage, leakage or

bulging of the subject

sardines and make the

necessary action (e.g. storage

conditions, blacklisting of

unscrupulous suppliers) to

avoid the same incidents from

happening again; and

e) Conduct investigation on

the alleged tampering of

expiry dates and file

appropriate action against the

Fortune Group, if warranted.

Identified causes of spoilage and

entered into agreement with the

supplier for the replacement of

damaged goods.

FI

FI

It was validated thru

inspection that the spoiled

goods were already

replaced.

Management negotiated

for the return/replacement

of all spoiled sardines and

the supplier complied, thus

no further actions were

taken.

Unreliable balances of PPE

accounts

8) The existence and

accuracy of recorded PPE

of ₱1,711.626 million could

not be fully ascertained due

to: (a) incomplete or non-

conduct of physical count in

two FOs; (b) unreconciled

discrepancies between the

Accounting and Property

records with net difference

of P404.18 million in seven

FOs; and, (c) unrecorded

donated building and

structures from the MECO

and acquisition of motor

vehicle; and non-

reclassification of

completed construction to

appropriate PPE, resulting

in understatement of

P144.142 million.

8.a) Non-conduct of

Physical count and

reconciliation of

records

Recommendation:

CY

2015

CAAR

Page

93

152

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PI

NI


Validation

The DSWD Secretary agreed

to ensure:

a) monitoring of the

regular/periodic physical

count of PPE, and

preparation and

submission of the

RPCPPE to COA for

verification; and

Accounting and Property

Management Divisions

undertake the regular

reconciliation of their

records and ensure that

all discrepancies are

immediately

investigated, cleared and

adjusted in either

records.

COA's recommendation is duly

noted. AS, NIC and FMS will closely

coordinate and monitor items in PPE

to reconcile balances in RPCPPE and

the balances per books of accounts.

FI

PI

FO V which did not

conduct physical count in

CY 2015 but have already

complied in CY 2016.

As per validation, regular

reconciliation was not

done by seven FOs.



page 104.

8.b) Unrecorded/

Misstated PPE

Recommendation:


the:

a) Property Management

Division to request

appraisal of the property

to ascertain the correct

value of the donations by

MECO and include the

same in the list of PPE

for which the Agency is

accountable;

CY

2015

CAAR

Page

95

100% of the noted unrecorded

donated buildings and structures

amounting to P78,012,552.81 is

already recorded in the books of

accounts per JEV No. 2016-03-

008586 and corresponding

adjustment of Depreciation was also

effected per JEV No. 2016-03-

008586 dated March 31, 2016 said

adjustments was already reported in

the Trial Balance as of March 31,

2016, since all the necessary

documents prior to recognition were

already completed (i.e. the Deed of

Donations between the Department

and MECO, dated March 25, 2010 ,

Bills of Materials-Warehouse C and

As-Built Plans, Building and

Electrical Permits). These serve as the

basis on the appraisal and booking of

the donated properties.

FI

PI

Unrecorded PPE donated

by MECO already

recorded under JEV No.

2016-03-008586

amounting to

P78,012,552.81 under JEV

No. 2016-03-008586 dated

March 31, 2016.

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NI


Validation

b) Engineering Office to

monitor on-going and

completed projects and

complete the necessary

documentation upon

completion and furnish

the Accounting Division

for recording; and

c) Accountant to record the

subject PPE and compute

the corresponding

depreciation

expenses/accumulated

depreciation.

Documents pertaining to completed

projects subject of finding in CY 2015

were submitted to Accounting Office.

Completed projects subject of finding

in CY 2015 already recorded to

appropriate PPE accounts

PI

Verified and found that

only two out of the four

completed projects were

transferred to PPE

accounts

Verified recording of two

projects per JEV No.

2016-09-024674 and

2016-05-014530.

Unreliable Balance of

Accounts Payable

9) The recorded balance

of Accounts Payable of

P4,379.327 million is

understated by a net

amount of P16.135 million,

due to: a) failure to set-up

accounts payable for

delivered supplies and

materials; and b) erroneous

classification of payable

transactions. Moreover, the

amount P32.174 million

could not be validated due

to incomplete

documentation.

Recommendation:


a) Procurement Service

(DSWD) to submit

immediately all documents

on delivered supplies and

materials to the Accounting

Division for recording; and

b) Accounting Division to

process/record only those

claims with complete

supporting documents and

make the necessary

CY

2015

CAAR

Page

97

The observation and findings of the

Commission is noted. Procurement

Service and Accounting Division

shall be in close coordination for the

immediate submission of documents

relating to consummated transactions

and deliveries for proper recognition

of payable accounts in the books.

FO IX The Supply Unit immediately

submits to Accounting Unit the

invoices after receiving all the

deliveries.

PI

FI

Validation made showed

that documentation of

Accounts payable are only

done upon request for

payment.

FO IX complied with the

recommendation,

however, for CY 2016, at

the CO payables were set-

up without complete

154

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PI

NI


Validation

adjustments in the books for

the accounts misstated.

documentation, hence

audit finding is reiterated

in this report under

Observation No. 13, page

111.

VALUE FOR MONEY

AUDIT

A. PANTAWID

PAMILYANG

PILIPINO PROGRAM

(4Ps)

10) Deficiencies/gaps in

the 4Ps information system,

such as: a) compliant

beneficiaries excluded/

suspended from payroll;

b) retro payments not

verifiable on Grievance

system and paid only after

two (2) years; and c)

existence of duplicate

entries in the 4Ps payroll

had affected the efficient

implementation of the

program.

10.a) Compliant

beneficiaries

excluded/

suspended from

payroll

Recommendation:


a) implement a

management review

control process which

ensures that all

compliant beneficiaries

are included in the

payroll for the periods

stated in the CV; and,

CY

2015

CAAR

Page

101

CY

2015

CAAR

Page

102

Guidelines on the Computation of

Grants in the Pantawid Pamilyang

Pilipino Program was crafted and

approved to better understand the

basis on computation of grants,

provide guidance to Field Offices and

implementers.

The guidelines will be used as the

reference for computation of grants

per household/client status. The

following conditions were

enumerated in the said guideline: the

conditions for payment; NAPA

generation; payroll computation;

FI

Affected beneficiaries

were reviewed and

validated per report of

validation dated January

29, 2016.

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b) identify the causes of the

exclusion from the

payroll list and make

necessary enhancement

in the system to avoid the

same errors.

release of grants; unclaimed grants;

and for the retroactive payment

process to ensure that the compliant

household beneficiaries of the

program will receive the grants that

are due them.

Current year payment processing is

already being enforced.

FI

The DSWD contracted a

systems consultant to

review the CCT/4Ps

information System.

10.b) Retro payments not

readily verifiable in

the GRS and paid

only after two years

Recommendation:

The NPMO to:

a) strictly comply with the

4Ps operations manual

on processing of

retroactive payment for

eligible beneficiaries

facilitated by the GDD;

and

b) establish a monitoring

mechanism to warrant

timely resolution of

complaints to ensure that

the cash assistance reach

the beneficiaries within

the timelines set and the

much needed cash

assistance is utilized as

intended.

CY

2015

CAAR

Page

104

Retroactive payment module is

locked after the last year’s processing

period.

Retroactive payment processing

schedules are already included in the

CV Timeline. RPMO are urged to

abide by the given timeline

Continued coordination with Finance

the on time processing and release of

payment

PI

PI



review the CCT/4Ps

information System.



review the CCT/4Ps

information System.

10.c) Duplicate names/

entries in the 4Ps

payroll

Recommendation:

The NPMO to:

CY

2015

CAAR

Page

106

156

AUDIT OBSERVATIONS/

RECOMMENDATIONS Ref

MANAGEMENT


FI

PI

NI


Validation

a) conduct a

review/validation of the

beneficiary data and

clean up the

invalid/double

beneficiary entries and

errors to ensure that the

master data is free from

any invalid/duplicate/

multiple records; and

b) enhance the system to

include an embedded

facility that

automatically checks

duplicate/invalid

beneficiary entries to

avoid double payments.

As of February 2017, partial

validation results on 1,253

households out of 1,872 (67%) reveal

that: 842 HHs were verified as unique

and were retained, 411 HHs were

delisted, validated as duplicates.

NPMO is still awaiting validation

result on the remaining 607 HHs from

region ARMM and 12 HHs from

region XII to complete the report.

Also in the 1st quarter of 2015, aside

from the duplicates detected by the

Commission, the program also was

able to detect possible duplicates

which were provided to the regions

for their validation. The program,

through the Beneficiary Data

Management Division (BDMD), was

able to detect 7,801 possible

duplicates households in which 5,101

households retained and 1,004

households were delisted as

duplicates the remaining 1,696

households from region ARMM are

still being validated.

The BDMD also crafted a guidelines

to strengthen deduplication during

registration process. There are two (2)

ways of detecting duplicates, the top-

down approached and the bottom-up

approached both of which are

integrated in the enhanced

Registration Process which was

employed in 2015 to eliminate

duplicities in newly registered

households of the program.

As part of the decentralization efforts,

the BDM Officers in the field were

also trained to detect duplicates using

technologies such as STATA and MS

Excel for a thorough review and

management of the data of the

program down up to the field level.

PI

PI

The DSWD is currently

validating CCT

beneficiaries included in

the audit report and delist

duplicates upon

verification of duplicity.

The validation has

commenced in February

2017.



review the CCT/4Ps

information System.

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Validation

To prevent undue withholding of

grants, only those HHs with identical

monitored children are recommended

for suspension of grants.

11) The account balances

of CCT/MCCT

beneficiaries under the cash

card mode of payment

showed a total of P1.099

billion, consisting of 79,530

accounts with balances

ranging from P2,801 to

P102,200 that were not

withdrawn from 30 to 2,190

days upon payout, thereby

showing that there is no

immediate need for the

financial assistance, and

casting doubt on the

eligibility of the chosen

beneficiaries.

Moreover, 386,435 accounts

with a total balance of

P139.008 million have no

date of last monetary

activity, but still included in

the list of beneficiaries.

Recommendation:

The Secretary to require the

NPMO to:

a) Coordinate with LBP on

the status of cash cards

issued to beneficiaries

and make necessary

actions to recover the

amount to be remitted to

the Btr;

b) Conduct an

investigation/re-

assessment on the

eligibility of concerned

beneficiaries and make

necessary actions based

on the assessments;

CY

2015

CAAR

Page

108

DSWD has coordinated with LBP on

the status of the partial validation of

cash cards accounts. (Letter to LBP

dated April 20, 2016). Succeeding

communication shall be prepared

upon completion of validation.

The DSWD also developed the Cash

Card Account Verification System

(CAVS) in order to fast track the

conduct of validation of all existing

cash card accounts.

PI

PI

DSWD and LBP 4Ps

personnel are currently

reviewing the status of all

cash cards.

Report on validation of

non-moving accounts

submitted by the Risk

Management and Quality

Assurance Division with

recommendations dated

January 31, 2017 covering

the Regions 1, 7, 8,

ARMM, and NCR.

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Validation

c) Intensify monitoring and

follow-up of

beneficiaries by field

personnel and update of

the data base for the non-

compliant/delisted

beneficiaries;

d) The RPMO, Pantawid

Director intensify

validation of all unpaid

beneficiaries and require

the Municipal and

Provincial Links to

promptly report on the

status of beneficiaries so

that changes, if any,

could be effected

immediately to prevent

or minimize the

occurrence of unpaid

grants on OTC and off-

site payments of 4Ps.

A Memorandum to the DSWD

Regional Offices dated June 8, 2016

was prepared to inform the Regional

Offices on the approved guidelines

for the conversion of cash card to

prepaid card together with the user

manual for the CAVS.

NPMO conducted a validation of

non-moving cash card accounts in

Regions I, NCR, VII, VIII, and

ARMM to identify the reasons for

account dormancy and craft a policy

to prevent the same and also to guide

the coordination with concerned

offices within and outside DSWD.

The Regional Offices were also

provide with the list of HHs within

their area with non-moving accounts

for them to validate. The result is now

being consolidated and will be

provided to LBP for appropriate

action.

Prepared follow up memorandum to

the DSWD RO on July 4, 2016 to

remind and instruct the DSWD RO to

use the said verification tool and to

fast track the validation of the said

accounts.

PI

PI


validating CCT


the audit report and delist

ineligible beneficiaries if

warranted.

The validation has


2017.


validating CCT


the audit report through

the conduct of

“Kamustahan”.

The validation has


2017.


under Observation No.5

page 68.

12) Payment of MCCT to

qualified beneficiaries

incurred delays, ranging

from 12 to 15 months, due

to: (a) absence of partner

conduit to service the areas;

(b) lack of capital funds of

conduits; and (c) delayed

processing and release of

checks for MCCT

beneficiaries, thus the

objective to alleviate the

condition of the partner

families was not fully

achieved.

Recommendation:

CY

2015

CAAR

Page

112

159

AUDIT OBSERVATIONS/

RECOMMENDATIONS Ref

MANAGEMENT


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PI

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Validation


National/Regional Project

Management Office the

following:

a) Submit to the Unified

Financial Management

Unit the Notice of

Approve Payroll Action

for the early preparation

and release of MCCT

Cash Grants;

b) Justify the over releases

of Cash Grants to FOs.

Likewise, the DSWD

Management to revisit their

MOA with LBP on

systematic contracting the

services of partner conduits to

address the delayed payment

of cash grants.

Submission of Notice of Approve

Payroll Action for the payment of

grants of MCCT beneficiaries is

submitted in advance to UFMU to

synchronize the payout schedules of

MCCT to RCCT.

The timeline on updating and

compliance monitoring is already

adjusted and synchronized with the

RCCT schedules to facilitate the

utilization of the existing machinery

of the regular CCT.

Releases of cash grants to FOs is

based on the compliance to the

program conditionalities of the

beneficiaries. In the COA AOM,

MCCT target is lower compared with

the total registered. The increase of

the registration is due to inclusion of

disaster afflicted families and

inclusion of additional IP families

which were validated also during the

registration period of IPs in 2014 &

2015

The budget of MCCT particularly for

the grant of MCCT beneficiaries is

sourced from line item of the grant of

Pantawid and within the budget

coverage of the year.

To include contingency plan in the

preparation of the succeeding WFP

considering the un-factored events

which can be covered and included in

MCCT program implementation.

To coordinate with LBP in

identification of partner conduits for

MCCT for timely conduct of payout

to beneficiaries.

FI

FI

FI

Payouts were done in

batches, February, March

and April 2016

corresponding to payroll

period August 2014 to

January 2016.

Validation showed that

Releases covered CY

2014-2015 cash grants.

Additional Conduits were

contracted to facilitate the

pay-outs especially in

ARMM.

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Validation

B. KALAHI CIDSS

13) Low financial

accomplishment rate and

delayed submission of

project accomplishment as

of December 31, 2015,

raised doubts on the

effective implementation of

the KC-NCDDP M&E

System, specifically on the

areas of reporting,

monitoring and evaluating

KALAHI projects.

Recommendation:


require the NPMO/RPMO to

faithfully adhere with the

provisions of the KC M & E

to ensure that the projects are

implemented in accordance

with the approved budget,

project milestones, and

performance expectations.

CY

2015

CAAR

Page

114

The NPMO is currently in the process

of enhancing its Program Information

Management System.

PI

Validation showed that a

software is being

developed to integrate

various components and

streamlining processes in

encoding, data review and

submission.

14) Only 47.39 percent or

272 SPs costing P329.081

million were completed, out

of the 574 SPs validated

with project cost of

P696.591 million, thus short

of the 70 percent KC-

NCDDP Intermediate

Outcome Indicator for CY

2015, due to: (a) lack of

assistance and monitoring

by the ACTs and RPMOs

personnel to the BSPMCs;

and (b) delayed

downloading of community

grants to the BSPMC,

especially the 2nd tranches,

thus may affect the

implementation of SPs

within the agreed

timeframe of five-year and

four-year implementation

period provided in the loan

agreement with the WB and

ADB, respectively.

CY

2015

CAAR

Page

116

161

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RECOMMENDATIONS Ref

MANAGEMENT


FI

PI

NI


Validation

Recommendation:


require the concerned ACTs

and RPMOs personnel to:

a) Monitor regularly all on-

going and

unimplemented SPs and

determine the causes of

delays and address the

issues and concerns to

fast track the completion

of SPs;

b) Require the BSPMCs to

strictly adhere to the

KALAHI policy on the

prescribed period of

project implementation

thru timely submission

of requests for fund

release and supporting

documents and instruct

the BSPMCs to start the

initial procurement

activity while waiting for

the downloading of the

community grants;

c) Fast track the

downloading of

community grants to

BSPMC; and

d) Monitor adequately the

status of SPs

implementation within

their area of

responsibility and ensure

that all

information/reports are

accurate, complete, and

consistent with Program

standards (ACTs).

The RCIS will submit a Tactical plans

to complete the SPs by December

2016. The plan contains detailed

strategies per subprojects to ensure

that completion activities are

undertaken.

NPMO and RPMO will closely (e.g.

weekly) monitor the actions to be

undertaken through field visits and

provision of TA to the SRPMO and

ACTs.

ACTs are instructed to fill-out

properly the geo-tagging web app

(including the reasons for non and

slow moving SPs) in order to provide

necessary assistance/TA

immediately.

SRPMOs and RPMOs to intensify

monitoring of sub-projects during

SPI.

FI

FI

FI

FI

All 574 SPs have been

completed as of December

31, 2016 due to the

monitoring undertaken by

the ACTs.

BSPMCs adhered to the

timely submission of

requests for fund and

noted that there was

increase in the percentage

of completion of SPs for

CY 2016.

Community grants for SPs

validated for CY 2015

were already downloaded

and SPs were completed.

Noted improvement/

fastracking in

downloading of

community grants.

Sustainability Evaluation

as a means to monitor the

status of SP is being

undertaken. Per validation

conducted.

15) SPs costing P9.087

million were with

deficiencies/issues, and not

in keeping with KC-

NCDDP policy guidelines.

Recommendation:

CY

2015

CAAR

Page

119

162

AUDIT OBSERVATIONS/

RECOMMENDATIONS Ref

MANAGEMENT


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PI

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Validation


a) Require the ACT/RPMO

personnel to:

i) Monitor and supervise

closely the SPs and

provide technical

assistance to the

BSPMC during

project

implementation and

immediately correct

the

defects/deficiencies

noted for the full

continuity and

functionality of the

SPs for the benefits of

the intended

beneficiaries;

ii) Make necessary

representations with

the concerned

Barangay Chairman

to address the stop

order and resolve the

issue being raised; and

iii) Implement strictly the

provision of storage

facilities before

delivery of

construction materials

at the site to secure

these materials

b) Hold accountable the

RPMO/ACT who will be

found remiss in the

monitoring and

evaluation of the SPs.

Defects/deficiencies have been fixed.

Defects/deficiencies have been fixed

Defects/deficiencies have been fixed

The RPMO and SPRMO ensure that

the Area Coordinating Teams must

conduct regular re orientation,

coaching and mentoring to the

BSPMC. The ACTs also ensure that

all technical documents and other

supporting documents must be

presented during the Barangay

Assembly and followed by series of

meetings with the volunteers for

transparency and accountability.

Management also ensures that newly

hired staff are well trained and

oriented for them to be capable of

FI

FI

FI

FI

SPs are operational and

useful per validation in CY

2017.

Deficient SPs have been

corrected/resolved per

validation.

Deficient SPs have been

corrected/resolved per

validation.

Necessary actions were

undertaken by conducting

regular meetings with

stakeholders and

concerned barangay

officials was noted.

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Validation

transferring the knowledge, skills and

attitude to the BSPMCs.

16) Community grants

amounting to P217.240

million released to BSPMC

showed a difference of

P48.086 million as against

the KC-NCDDP report,

thus affecting the accuracy

of the reported project

accomplishments to various

stakeholders.

Recommendation:


a) Instruct the ACTs to

monitor properly the

status of SPs

implementation within

their area of

responsibilities and

ensure that all

information/ reports are

accurate, complete, and

consistent with Program

standards;

b) Conduct reconciliation

of unrecorded

community grants in the

KC-NCDDP Report vis-

à-vis in the books of

BSPMCs and ensure that

project reports are

validated before issuance

to stakeholders; and

c) Direct the RPMO/ACT

to conduct final

inspection of the SPs and

prepare the FIR, SPCR,

and CCA and furnish

copy to the barangay

local government and

other stakeholders for

final turn-over of the

SPs.

CY

2015

CAAR

Page

121

Reconciled reports on community

grants from the Community to the

National levels and discrepancies

were reconciled.

FI

FI

FI

CY 2015 already

reconciled but with similar

finding in this report under


124.

CY 2015 already

reconciled but with similar

finding in this report under


124.

SP documents were

prepared and filed. SPs

had turned-over to

appropriate BLGUs.

164

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PI

NI


Validation

17) Validation of 39

association-led SPs costing

₱59.953 million disclosed

non-compliance with the

registration requirements,

as stated in the RWSM,

thus the sustainability of the

projects may not be

assured.

Recommendation:


a) Require the ACT at

DSWD Field Offices to

strictly implement the

provisions of NEDA

Board Resolutions No. 5

series of 1996;

b) Establish a monitoring

mechanism to ensure that

association-led sub-

projects are provided

with guidance and

support in all matters

relating to the projects;

and

c) Revisit the KC Manuals

and provide specific

provisions on ownership

and require all the

validated projects and

similar projects to

establish ownership with

the assistance of Area

Coordinating Teams.

CY

2015

CAAR

Page

124

Coordinated with DILG and secure

guidelines for inclusion in revised

ODM Manual

Tracking of status of community

formation and capability building

assistance and conduct of

Sustainability Evaluation

Monitoring forms were developed

and submitted to M&E for inclusion

in the PIMS database. Status of

compliance of FOs will be tracked as

part of program Review.

Guidance to ACTs on organizational

formation, registration and

strengthening will be provided in the

revised ODM manual.

Provision of guidance on the

following:

a) Ownership of lot for subprojects

prior to construction in the RFP

requirements and Social

Safeguards Manual.

b) Turn-over and Acceptance of

completed subprojects in the

Infrastructure Manual.

c) Conduct of Functionality Audit

to ensure all competed SPs,

especially with tariff, are

operated and maintained by

O&M groups.

FI

FI

FI

Included in the Mutual

Partnership Agreement

executed between the

DSWD, Municipal and

Barangay LGUs and

community associations

NPMOs is continuously

monitoring.

The NPMO is

continuously

upgrading/amending the

Manual as necessary.

165

AUDIT OBSERVATIONS/

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PI

NI


Validation

Manual revision programmed in 2nd

quarter of 2017.

C. Emergency Shelter

Assistance (ESA) Program

I.Core Shelter

Assistance Project

(CSAP)/Modified

Shelter Assistance

Project (MSAP)

18) The Agency registered

a low CSAP

accomplishment of 68.97

percent or 69,003 despite

the full release of funds for

the project due to: (a)

failure to provide LGU

counterpart and to comply

with shelter assistance

requirements; (b) delayed

release of certification as

safe areas by the

MGB/PHILVOCS/

PAGASA; and c) validation

of relocation sites still on-

going, thus, depriving the

victims of disasters benefits

thereof and rendering the

objective of the program

not fully attained.

Recommendation:

The Management to:

a) Enforce the policy on

LGU counterpart and

require the submission

of all documentary

requirements from LGUs

requesting shelter

assistance, before funds

are downloaded to them;

b) Establish an effective

monitoring/validation of

sites to ensure that

projects are implemented

according to plans and

budget;

CY

2015

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Page

128

Monthly monitoring and validation is

being undertaken by the DSWD-FO

Project Management Teams (PMTs)

to ensure timely completion of the

shelter projects.

The selection and replacement

process of beneficiaries are strictly

governed and implemented pursuant

to AO 17, Series of 2010;

A waiver for a disinterested

beneficiary is being issued subject for

replacement under the process

provided by AO 17, Series of 2010;

PI

PI

Status of CSAP as of

December 31, 2016

completed-63,746,

Ongoing-6,415, Not yet

Started- 13,030.

Civil Engineers as PDOs

III have been hired in

Regions with significant

number of shelter projects

closely monitor and

provide technical

166

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c) Conduct inventory of all

modified shelters

distributed to the

victims/ beneficiaries of

Typhoon Pablo to

determine if the actual

occupants were the

lawful owners of the

shelter assistance funded

by the government, and

prepare a contract to be

signed by them, duly

notarized, indicating

therein that MSA shall

not be rented, sold out,

and/or mortgaged and

include a provision on

sanctions for those who

are violators including

those who buy the shelter

which was given as

assistance for the

calamity victims; and

d) Conduct actual inventory

of the shelters which are

not occupied for several

years from its

completion to be

transferred to those who

are assessed to be in need

of assistance.

Sanctions on the mortgage, sale and

rental have been incorporated on the

draft amendments to AO 17, Series of

2010; and

DSWD exerted full effort that

resulted to commitments of the LCE’s

to complete the remaining units in

their respective area of Jurisdiction as

soon as possible. This was done thru

the joint monitoring conducted by

SWAD and other DSWD staffs in the

municipalities.

These guidelines were always

emphasized during the pre-

orientation with the implementing

LGU’s to ensure that CSAP features

are being followed.

As of this time, the DSWD can only

augment P70,000.00 per unit as per

shelter assistance guidelines and

subject to availability of funds. The

LGU’s who signified their interest to

implement the project are fully aware

of their counterpart as stipulated in

the MOA signed by both parties such

as the lot, the additional materials and

hiring of foreman among others. The

beneficiaries are also very much

aware of their roles and

responsibilities as stipulated in the

MOA. However, they cannot work

full time because they need to work in

the farm during the day and some of

them are not skilled in masonry and

carpentry works. In response, the

LGU had to hire a foreman and assign

the Municipal Engineer to assist in the

construction. Other factors in the

delay of the completion is

unavailability of lumber because of

the total log ban and bad weather

condition.

PI

PI

assistance to LGUs in the

project management.


conducting an inventory of

all CSAP projects

nationwide.


conducting an inventory of

all CSAP projects

nationwide.

II. Transitional Shelters

19) The delay in the

construction of transitional

shelters in Regions VIII and

IX, with only 52 percent or

1,410 completed out of

CY

2015

CAAR

Page

134

167

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NI


Validation

2,700 units in Region VIII

and 85 percent overall

completion in Region IX,

deprived the victims of

disaster of immediate

shelter assistance, thus

defeating the very objective

of the project.

a) Transitional Shelter

for typhoon Yolanda

Recommendation:


IP to complete the needed

transitional shelters and

turnover the same to the

intended beneficiaries and

strictly observe compliance

with the established laws,

rules, and regulations on

Fund transfers to IP and

CSAP.

For future projects, we

recommend the DSWD to

include in the MOA with IPs

the standard design and

The delay in the construction of

transitional shelter in Region VIII and

IX are due to the following:

a) Availability of safe location

where the shelter units will be

constructed;

b) Revision of bill of materials due

to changes in the design of the

latrines to adjust/conform to the

actual topographic condition of

the area;

c) Re-validation of target

beneficiaries to ensure no

duplication of shelter assistance;

and

d) The location of the site in FOIX

has been changed, wherein the

original site is too far from the

city and that haulers consume a

lot of time and effort.

The increase in budgetary

requirements is due to the

construction of fish landing at the

transitional sites in Tacloban City, so

the IDPs can pursue their livelihood

on-site and need not to return to the

hazardous coastal areas, as this was

one of the issues raised during the

consultation with the victims of

Typhoon Yolanda on October 31,

2014 and November 1, 2014.

PI

FI

Out of the 2700 units for

construction, only 1,410

units completed in Region

VIII as of December 31,

2016.

Negotiations/meetings

were done to implement

the recommendation were

168

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specifications of shelter

assistance projects to ensure

that the benefits of the shelter

assistance are achieved.

noted per reports

submitted.

b) Transitional Shelter

and Wash Facilities

for the Zamboanga

Crisis-Affected

Population

Recommendation:

The DSWD facilitate the

release of approved funds for

the wash facilities and require

the IP to complete the WASH

facilities and thereafter

turnover the same to the

intended beneficiaries.

Henceforth, the DreamB to:

a) Coordinate closely with

partner LGUs to ensure

that all requirements are

fully complied before the

project is started; and

b) Make careful review of

the work and financial

plan to come up with a

more realistic and

implementable budget.

CY

2015

CAAR

Page

137

The delay in the construction of

transitional shelter in Region IX are

due to the change of location site

wherein the original site is too far

from the city and that haulers

consume a lot of time and effort.

The increase in budgetary

requirements for FO IX is needed to

complete the:

a) Pedestal bracings installation

for the 232 shelter units

b) 36 latrines and bathing cubicles

with laundry area or 12

modules

c) 7 Units - 6 Chamber Septic

tanks

d) approximately 800 LM

Boardwalk including entrance.

FI

FI

Reports submitted showed

that 700 units completed

and verified by the Auditor

thereat.

Negotiations/ meetings

were done to implement

the recommendation with

justifications on the

additional budget.

III. Emergency Shelter

Assistance (ESA)

a) ESA for Typhoon

Yolanda

CY

2015

CAAR

Page

141

169

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Validation

20) The delay in or non-

release of shelter assistance

to 37,870 beneficiaries


million rendered the

objective of the program to

address the emergency and

rehabilitation shelter needs

of families with damaged

houses not fully realized.

Further, no clear and

written policy guidelines

were issued on the

processing period of

documents, from

assessment to release of

fund, thus affecting the

efficient implementation of

the program.

Recommendation:

The DreamB and concerned

FOs to hasten the assessment

and validation of prospective

beneficiaries and include in

the guidelines the time

element in processing the

documents needed in the

grant of ESA to beneficiaries

as well as the corresponding

penalty for non-compliant

LGUs.

All 469,821 target family-

beneficiaries in Region VI under the

Comprehensive Rehabilitation and

Recovery Plan (CRRP) have been

served costing P8.4 billion

immediately upon release of funds

from the DBM in June 2015.

FI

Per reports received, funds

distributed amounted to

P8,356,500,000.00 as of

December 31, 2016.

b) ESA for typhoon Lando

21) Distribution of ESA for

typhoon Lando victims was

delayed by three months

due to delay in the

downloading of fund to the

Regions and in the

assessment and validation

of beneficiaries.

Recommendation:

The Secretary direct the

concerned FOs and DreamB

to closely coordinate and

follow up submission of

documents by LGUs and fast

track the downloading of

CY

2015

CAAR

Page

142

All LGU requests for fund

augmentation for the ESA of 58,737

families have been funded amounting

to P776,210,000.00:

FI

Verified thru SAA the

Downloaded funds

totaling to

P776,210,000.00 as

December 31, 2016.

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Validation

funds, if already available, to

ensure that the objectives of

emergency assistance

program are attained.

a) P24,860,000.00 for CAR for

2,126 families;

b) P396,570,000.00 for Region I for

30,997 families;

c) P315,900,000.00 for Region III

for 26,982 families.

D. SUPPLEMENTAL

FEEDING PROGRAM

Delayed/Non-implementation

of the Supplemental Feeding

Program (SFP)

22) The delayed and/or

non-implementation of the

SFP in seven regions, due to

lapses in program

implementation deprived

children beneficiaries of the

opportunity to improve

their nutritional status and

health condition.

Recommendation:

The Management direct the

concerned FOs to:

a) Instruct the Regional

SFP Focal Person/s to

coordinate closely with

the concerned IPs and

the social worker

counterparts to monitor

monthly the proper and

efficient implementation

of SFP as well as

liquidation of fund

transfers; and

CY

2015

CAAR

Page

145

Actions taken/ activities undertaken

by the Central Office to avoid the

problem enumerated by COA

Auditors:

1) Sent Memorandum to Field

Office to comply with the

recommended actions of the

COA Auditors.

2) Continuous provision of

Technical Assistance to Field

Offices to validate and assess to

status of program

implementation such as fund

utilization, physical and financial

accomplishment, and Nutritional

Status Report.

3) Conducted Work and Financial

Planning Workshop in General

Santos City on March 2016 and

participated by the Regional

Supplementary Feeding Program

Focal Person and

FI

Communications/

Memoranda were sent to

FOs for compliance.

171

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Validation

b) Assess the readiness of

the IP and capacitate

them before any release

of fund for the efficient

and effective

implementation of the

Program.

Nutritionist/Dieticians of 17

DSWD Regional Field Offices

DSWD Field Offices Focal Persons

conducted activities to capacitate the

Local Government Units on the

implementation of the program.

These activities includes following:

1) Consultation Dialogue with

concerned staff of LGU

composed of Municipal

Auditors, COA Auditors, Local

Chief Executive (LCE) and SFP

Focal person.

2) Conducted Program

Implementation Review with

LGUs to discuss and resolve

issues and concerns on the

implementation of SFP.

3) Orientation of SFP implementing

partners on the Amended

Omnibus Guidelines to

implanting partners during social

preparation before the actual

feeding.

4) Capacity building of

implementers and other

stakeholder (MSWDP. And

selected Child Development

Workers) on nutrition related

concerns.

5) Continuous conduct of

monitoring visits and provision

of technical assistance to

FOs/LGUs and random spot

check of day care centers on the

actual feeding.

DSWD Administrative Order No. 4

series of 2016 (Omnibus Guidelines

in the Implementation of the SFP)

was disseminated to MSWDOs

during visits or SWD Forums. The

FI

Seminars, Orientations

were conducted in the

FOs/LGUs to capacitate

the IPs.

172

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Validation

AO was issued to address the program

implementation gaps encountered.

E. Unutilized Cash

Donation

24. Total cash donations

received as of December 31,

2015 for typhoon Yolanda

amounted to ₱1,165.797

million for which ₱217.383

million was disbursed at the

DSWD CO, ₱928.450

million transferred to the

different FOs, and the

balance of ₱19.964 million

remained in CO LBP

Account.

Recommendation:

Management agreed to direct

the FOs concerned to fast

track the immediate release of

assistance to the intended

beneficiaries and/or return the

unutilized amount to DSWD-

CO if not anymore needed.

CY

2015

CAAR

Page

148

Coordination with FOs for the

monthly submission of Liquidation

Reports for Cash Donations for

Typhoon Yolanda.

PI


the amount of P87.097

million is still unliquidated

by the FOs – for

monitoring.

Other Compliance Issues

Enforcement of Settlement of

Suspension/Disallowances/

Charges

25. Notices of Suspensions

and Disallowances


million and P463.195

million, respectively,

remained unsettled at year

end, contrary to Section 9.4

of the 2009 RRSA.

Recommendation:

The Secretary to:

a) Enforce settlement of

audit suspensions and

CY

2015

CAAR

Page

152

CO

As of December 31, 2016

PI

173

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NI


Validation

disallowances within the

prescribed period in

accordance with Sections 9.4

and 10.4 of the 2009 RRSA;

and

b) Initiate necessary

administrative and/or

criminal action in case of

unjustified failure/refusal by

subordinate officials to effect

compliance with the

foregoing requirements,

pursuant to Section 7.1.2 of

2009 RRSA.

An appeal Memorandum was filed

with the Commission Proper.

However, the COA has no action or

response yet on the appeal.

NCR

Two (2) petition for appeal was filed

to Special Audit Office (SAO) dated

June 21 & 23, 2016 while One (1)

petition for review was filled to

Commission proper dated June 30,

2016.

Under appeal.

PI

Review by COA of the

appeal filed by

Management is on-going.

Review by COA of the

appeal filed by

Management is on-going

CY 2014

1) The reported balances

of the accounts in the FSs

were not fairly presented

due to various accounting

errors/ omissions and

deficiencies.

1.a Accounting Errors/

Omissions

Recommendation:

The Secretary to direct the

concerned officials to require

their respective Accountants

to effect the necessary

adjustments on the

omissions/errors and

improper recording of

transactions, as well as the

misclassification of accounts,

to correct the reported

balances of the affected

accounts in the FSs.

CY

2014

CAAR

Page

54

Omissions/Errors had already been

adjusted and classified to its proper

account.

FI

Verified the adjustments

made and found in order.

1.b Accounting

Deficiencies

CY

2014

CAAR

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a) Non-elimination of intra-

office transaction

accounts – P93.578

million

Recommendation:

The Secretary agreed to direct

the concerned officials to

require their Accountants to:

(a) prepare schedules of the

reciprocal accounts and

undertake an analysis,

reconciliation and

elimination thereof; (b)

correct the balances of

accounts affected after

reconciliation; and (c)

thereafter, conduct a regular

quarterly reconciliation to

immediately rectify any

discrepancy and to show the

financial condition and

results of operation of the

Department as a single entity.

Page

59

The intra-office transactions are not

reciprocal accounts, thus, elimination

in the consolidated financial

statements is not required. The

accounts mentioned in the audit

observation are receivables/payables

accounts (inter-office transactions)

subject for liquidation.

.

FI

The necessary adjustments

in the books of accounts

were done and the use of

appropriate accounts are

being effected in the

recording of financial

transactions.

b) Unreliable Cash in Bank,

LCCA account balances

– P1,684.799 million

Recommendation:

The Secretary agreed to

require the Accountants to

regularly prepare the monthly

BRS for all bank accounts to

determine and identify the

reconciling items and

establish the accuracy of the

reported cash in bank

balances.

CY

2014

CAAR

Page

60

BRS is immediately prepared once

bank statement is received,

reconciling items are immediately

adjusted in the books. Issued

reminder to the Accountant and FMU

Chief to comply with COA Circular

92-125A which requires the

“Accountant to prepare the BRS

based on the bank statements from the

bank and submit the same within 15

days after the end of the month to the

Auditor concerned; and immediately

after the items were properly

analyzed and verified, prepare

correcting/adjusting entries for

discrepancies/errors or other

reconciling items requiring

corrections by the agency.

PI

Three (3) FOs still with

similar observation in CY

2016. Not implemented in

FO6, Partially

implemented in NCR, I

FOV, prior year’s

reconciling items were

adjusted and reflected in

the books, however a

similar observation was

issued in 2015 ML which

was also partially

implemented.


under Observation No. 3,

page 64.

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c) Unreliable balances of

receivable accounts –

P6,152.334 million

Recommendation:


Accounting Division to

record the verified

reconciling items in the books

and exert further efforts to

reconcile the book balances

with those of the IAs/ NGOs/

POs and make necessary

adjustments.

CY

2014

CAAR

Page

60

Awaiting validated report from the

Internal Audit Service (IAS) for the

submitted liquidation reports of the

concerned NGOs/POs, original

audited liquidation reports from the

implementing agencies (IAs) and

awaiting liquidation from LBP for

Over-the Counter (OTC) payments of

cash grants for the Pantawid Pamilya.

Some NGOs/POs were referred to

Legal Service for appropriate Legal

Action and accordingly endorsed to

Office of the Solicitor General for the

non-compliance.

PI

The IAS provided updated

list of LRs of NGOs/POs

being validated.



page 96.

d) Unreliable balance of

Inventory accounts –

P1,458.993 million

Recommendation:


the concerned DSWD

officials to require their

respective Accountant and

Property Officer to:

(a) conduct physical count

and prepare the RPCI; (b)

prepare and submit RSMI

regularly to the Accounting

Unit for recording of

issuances of inventories in the

books; and (c) maintain and

update the SLCs and SCs and

thereafter reconcile with the

results of the physical count

to correct and update the

various inventory accounts

balances and establish

management’s assertion of

existence and accuracy in

recording inventories.

CY

2014

CAAR

Page

61

Recommendations were noted and

complied.

PI

Four (4) FOs still with


2016.


under Observation No. 10,

page 100.

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e) Unreliable balances of

PPE accounts – P

1,575.081 million

Recommendation:


the concerned DSWD

officials to: (a) monitor the

regular/periodic physical

count of PPE; (b) prepare the

RPCPPE and submit the same

to the COA Auditor for

verification and to the

Accountant for reconciliation

purposes; (c) maintain and/or

prepare complete and updated

PPELCs and PCs; and

(d) undertake regular

reconciliation of the property

and accounting records and

ensure that all discrepancies

are immediately investigated,

cleared and adjusted in either

record.

CY

2014

CAAR

Page

63

FOs of Property and Asset

Management Section has already

conducted the physical inventory

taking for calendar year 2016 and is

now in the process of reconciling with

Accounting Section.

PI

Three (3) FOs are still with


2016.



page 104.

Funds kept intact in the bank

not remitted to the National

Treasury

2) Trust receipts,

donations, dormant and

unnecessary accounts,

including excess BAC

Honoraria and Training

Fund of P796.660 million

were not remitted to the

National Treasury.

Recommendation:

The Secretary agreed to

require the concerned DSWD

officials to deposit

immediately with the

National Treasury or to the

source/donor agency the trust

receipts, cash donations,

dormant and unnecessary

bank accounts, including the

excess BAC Honoraria and

CY

2014

CAAR

Page

65

The bank account for Building

Capacity of Local Government for

Poverty Reduction was already

closed, six bank accounts were

scheduled for closure, the bank

accounts intended for Bureau of

Customs Pass was referred to the

Disaster Response Assistance and

Management Bureau while six bank

accounts were maintained based on

PI

Five (5) FOs including

OSEC still with similar

observation in CY 2016.



page 57.

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Validation

Training Fund deposited with

AGDB.

the MOA with the Donor/Source

Agency. The Field Offices will

inquire to the BTr and Landbank if

such amounts can be transferred to the

BTr thru ADA.

Inadequate controls on cash

accountabilities

3) Inadequate controls in

handling cash

accountabilities of the

AOs/SDOs and granting of

huge amount of cash

advance without adequate

safeguards exposed

government funds to risk of

loss through theft/robbery

and/or misuse.

Recommendation:



strengthen internal control by

observing the rules and

regulations on the proper

handling, utilization and

liquidation of CAs, as

follows:

a) Consider the reduction of

the CA of the AO in CO

equivalent to one month

requirement and

refund/deposit the excess

of his current PCF to the

Collecting Officer;

b) Require the AO to

replenish CA only once

the total disbursements

have reached 75 percent

of the CA and refund of

the unutilized CA for

more than two (2)

months;

c) Limit the CA to the

actual list/payroll of the

Informal Settlers Fund

(ISF) beneficiaries on a

CY

2014

CAAR

Page

68

Management commented that the

deficiencies were on account that the

Department lacks fiduciary positions

to handle CAs, thus, it resorted to

having the DOs handle the huge

amounts needed to implement

programs and projects. Furthermore,

the Department cannot refuse to

implement programs it was directed

to implement. The DBM

continuously appropriates budget for

programs sought to be implemented

by the Administration. Nevertheless,

the Management will continuously

meet with the RDOs/SDOs to monitor

their compliance with the

Commission’s recommendations.

SDOs are required to submit

accounting of their cash advance

showing their cash on hand and

ensuring that all liquidation are

forwarded to Accounting for

recording before granting another

cash advance. Copy of SO with

maximum cash accountability is

attached to CA to ensure that CA does

not exceed maximum accountability.

Ms. Bumanlag and Ms. Palermo who

act as collecting officer were already

bonded as such.

FI

FI

FI

FOs including OSEC

complied with the

recommendations.

Validation showed that

AOs complied by

liquidating their CAs

above 75% utilization.

Observed that CAs granted

to the AOs are equivalent

to the actual list/payroll of

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per pay-out/pay period

and consider the

possibility of paying the

amount intended for the

ISF beneficiaries through

check instead of cash;

d) Provide the SDOs with

adequate vault/safe and

require the SDO to have

full control of and to

safeguard her CA from

unauthorized access;

e) Refrain from designating

as paymaster those

holding temporary

appointments, as much

as possible, and limit the

granting of CAs to

permanently appointed

officials only;

f) Require all AOs to be

bonded and review the

accountability of the

AOs and ensure that the

bond applied/paid is in

accordance with Annex

C of Treasury Circular

No. 02-2009 to minimize

unnecessary bond

premium incurred/paid

by the Department;

g) Refrain from using the

PCF for transactions

exceeding the limit of

P15,000, which should

be paid by check;

h) Stop the practice of

transferring/turning over

of CA from one AO to

another;

i) Limit the amount of CA

to the actual list/payroll

per pay-out/pay period or

to an amount sufficient

only for one month’s

requirement; and

Vaults have been purchased for use of

Accountable officers

FI

PI

FI

FI

PI

FI

PI

the Informal Settlers for

pay-out.

Observed the use of

portable vaults by AOs

In CY 2016 there are still

Three (3) FOs with similar

observation.

In CY 2016, the DSWD

secured bonds for all

designated AOs.

In CY 2016, it was

observed that AOs no

longer use their PCF for

purchases exceeding

P15,000.00

For CY 2016 it was

observed that Four (4) FOs

have similar observation.

Observed that CAs granted

to the AOs are equivalent

to the actual list/payroll for

4Ps beneficiaries per pay-

out.

179

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Validation

j) Follow strictly the

guidelines prescribed in

the handling, custody

and preparation of the

cashbook.

It was observed that some

FOs have similar

observations in CY 2016.



page 73.

Unserviceable PPE not

disposed of - ₱11.469 million

4) The delayed or non-

disposal of unserviceable

property amounting to

₱11.469 million that were

already beyond economic

repair resulted in their

accumulation and

diminished value due to

prolonged exposure to

natural element.

Recommendation:



require their respective

Property Officers to cause the

immediate disposal of

unserviceable PPE following

the requirements of Section

79 of PD No. 1445 to prevent

further deterioration and to

recover the salvage value

from probable sale of the

asset.

CY

2014

CAAR

Page

82

Management already disposed

subject PPE and regularly conducts

disposal of unserviceable properties.

FI

The Audit staff observed

the conduct of public

bidding and disposal of

unserviceable properties.

Unauthorized, unnecessary

and unsupported payment of

transactions

5) Lapses in the

processing of claims and

weaknesses in the fund

disbursement system

permitted the payments of

transactions which were

supported with insufficient

and improper documents

resulting in

disallowances/suspensions

in post audit.

CY

2014

CAAR

Page

90

.

180

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FI

PI

NI


Validation

Recommendation:

The Secretary require the

Kalahi-CIDSS (KC) National

Program Management Office

(NPMO) and Finance to:

(a) use the KC-AF-LP

according to its intended use;

(b) reimburse KC-AF-LP the

P1.967 million from the

appropriate FAP funds;

(c) adjust/reclassify the

charging of expenses from

KC-AF to the respective or

appropriate funds, as may be

necessary; and (d) direct the

concerned officials of all FOs

and CO to ensure that all

necessary documentation are

submitted and attached before

processing of claims.

Full payment was made to NFA in

consideration of the following:

The office will be able to save

when paid in cash, each bag will

cost only P1,250.00 instead of

P1,350.00. Thus, P84.240

million will yield 67,392 bags

instead of 62,400 bags or savings

of 4,992 bags of rice which is

equivalent to P6.240 million.

Based on the project number of

families to be affected in Region

8, it was anticipated that the

volume of rice was not even

enough to produce the required

600,000 FFPs for Region 8.

Thus, to ensure that there will be

no shortage, they opted to pay in

cash.

The procurement of 4,321 sacks

of NFA rice amounting P5.833

million was charged to standby

funds that would lapse on

December 2014. It was in

anticipation of any disaster

which usually happens on year-

ends as per reasonable patterns of

previous disasters. It was also

this time that most of the LGUs

have no more funds and would

need augmentation from the

national government to respond

to any disaster. Thus, this will

also prepare the FO for any

unforeseen disaster and also

enable the office to preposition

goods in areas to be affected.

PI

A total of P1,866,623.72

has been refunded to KC-

AF-LP from NCDDP on

August 12, 2015 thru

remittance to the Bureau of

Treasury. In the case of

MCC, reimbursement

amounting P33,900.00 is

now in process. The total

amount has been refunded

thru remittance to the BTr

except for the P23,706.04

under JFPR which is

currently processed.

Payment of grants to non-

compliant beneficiaries

6) In FOs IV-A, Xll, CAR,

Caraga and NCR,

approximately 3,649

beneficiaries who are non-

compliant with health and

education conditions of the

program for more than

three times were paid grants

in the total amount of

P4.898 million in CY 2014.

CY

2014

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103

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NI


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Recommendation:

The Secretary direct the

concerned officials to: (a)

subject the 3,649

beneficiaries to GRS to

determine their eligibility to

stay or not in the program;

(b) withhold their grants until

they meet the

conditionalities, if warranted;

and (c) look into the same

conditions in other regions

not included in the sampled

population, for appropriate

action.

Management clarified that these

beneficiaries were paid grants

accordingly either because they had

registered new eligible members for

CVS monitoring or they were

compliant with at least one

conditionality in the latter periods of

2014, due to reasons that are not

entirely their own.

Investigated the compliance history

of these HHs and determined that 124

HHs were non-compliant due to

reasons that are not entirely their own.

Some have been inactive and non-

complying for some periods but were

subsequently reactivated because of

high school expansion. When their 15

– 18 y/o children started complying,

they resumed receiving grants again.

Thus, the program retained these

households.

PI

The DSWD is conducting

its validation through the

“Kamustahan” program.

Incurrence of bank service

fees due to use of over the

counter (OTC) instead of CC

7) Payment of grants thru

OTC to 2,249,852

beneficiaries in 7,402,015

transactions wherein other

beneficiaries in the same

municipality/ barangay/

province were receiving

their grants thru CC,

resulted in the incurrence of

bank service fees of

P214.022 million and

administrative expenses to

include the costs of services

in supervising and

monitoring the OTC pay-

out and submission of LRs

as well as the cost of

documentation required

before and after the pay-

out, such as print-out of

Payrolls, Acknowledgement

Receipts and list of paid/

unpaid beneficiaries.

CY

2014

CAAR

Page

105

182

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PI

NI


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Recommendation:


concerned officials to limit

the payment of grants thru

OTC in areas where ATM

facilities are not yet available

and consider the payment of

grants directly to the

beneficiaries where ATM

facilities are available to save

on bank service charges and

other administrative costs on

the monitoring and reporting

of grants distributed OTC.

Pantawid Pamilya plans to convert

OTC payments of around 400,000

HHs to LBP Prepaid Cards in the 4th

year of 2015 to maximize the

presence of ATM and the Point-of-

Sale (POS) facilities. However, as of

this date, LBP and DSWD is

revisiting its MOA and IRR, one of

the significant revision to the

document is the inclusion of cost/fees

to ATM/POS withdrawals. Also,

NPMO had identified the HH paid

through OTC in areas where LBP

servicing branch is present for proper

consideration.

PI

The DSWD and LBP

already started the use of

prepaid cards in March

2016 prioritizing OTC

beneficiaries in Metro

Manila.

SUPPLEMENTAL

FEEDING PROGRAM

Delayed implementation of

SFP

8) The delayed

implementation as well as

poor coordination and

monitoring between FOs,

DepEd and LGUs, resulted

in the delayed attainment of

the goal to improve and

sustain the nutritional

status of targeted children.

Recommendation:


the FOs concerned to ensure

the proper coordination

among the proponents of the

SFP, particularly with the

NFA, for the prompt delivery

of NFA rice in FO VI and the

LGUs/schools for the timely

implementation of the SFP;

and augment the manpower

requirement of the program in

FO V for efficient and

effective performance.

CY

2014

CAAR

Page

107

Recommendation noted and

implemented.

FI

As per validation by the

Auditors of Region V and

VI, the recommendations

were already complied

with.

A. KALAHI-CIDSS

LCC failed to reach the 80

percent performance target

CY

2014

CAAR

183

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RECOMMENDATIONS Ref

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PI

NI


Validation

9) The 80 percent

performance target of

municipalities that will

provide KALAHI-CIDSS

AF and MCC of 30 percent

LGU Counterpart

Commitment in 2014 was

not attained, which resulted

in the non-funding of other

SPs of the community and

limiting the number of

beneficiaries who could

have availed of the benefits

due from the program.

Recommendation:


the concerned officials to:

a) verify and look into the

Municipalities which do

not comply with the

provisions of the MOA

regarding the 30 percent

LCC in the costs to

ensure the sustainability

and success of the KC

projects;

b) impose sanctions in case

Municipalities

continuously fail to

comply with the

abovementioned

provisions; and

c) improve the reporting

system in the website to

include not only the

committed sub-project

costs but likewise the

actual and detailed costs

to reflect the efficiency

of the project in attaining

its goals.

Page

109

Management will comply in the

future that LCC data should be

included in the reporting system in the

KC website.

FI

FI

PI

Fully implemented in

Central Office and in FOs

VIII, IX, and XI, partially

implemented in FOs VI,

X, and XII.

Municipalities with no

assured LCCs were not

included in the succeeding

implementations.

Observed that the

reporting system in the

website has added

information on detailed

costs and completion of

SBs



page 124.

Delayed/ unimplemented/ not

functional KALAHI-CIDSS

sub-projects

CY

2014

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111

184

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PI

NI


Validation

10) Out of 1,404 prioritized

SPs in FOs CAR, V and VI

amounting to P1,319.726

million, only 470 or 33.47

percent were completed,

with project costs of

P353.693 million. Moreover,

the completed 51 SPs


million were either not

functional or with various

deficiencies/ defects, thus,

limiting the access to basic

social services,

infrastructures as well as

other benefits due the

communities.

Recommendation:

The Secretary agreed to:

a) require the KALAHI-

CIDSS Regional

Monitoring Management

Unit in coordination with

the field personnel to fast

track the completion of

SPs;

b) adopt measures and

institute feedback

mechanism system to

address the issues and

concerns which hinder

the timely completion of

projects; and

c) direct the ACT and

BSPMC to immediately

correct the

defects/deficiencies

noted and closely

coordinate during

planning and pre and

post construction phases.

As of December 31, 2016 all 1,404

prioritized SPs are completed.

FI

FI

FI

Fully implemented in FOs

CAR, V, and VI.

Fully implemented as the

2016 completion rate of

SPs met the 70% project

outcome indicator.

CAR, V and VI SPs were

completed.

B. SOCIAL PENSION

FOR INDIGENT

SENIOR CITIZENS

CY

2014

CAAR

Page

116

185

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RECOMMENDATIONS Ref

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FI

PI

NI


Validation

Delayed and non-payment of

the pension benefits to

indigent senior citizens

11) Out of total 116,637

targeted SPISC

beneficiaries,

approximately 55,496 or 48

per cent failed to claim their

pensions amounting to

P335.738 million as of

December 31, 2014, thereby

defeating the objective of

the program to alleviate the

living condition of indigent

senior citizens.

Recommendation:



a) strictly adhere to existing

rules and regulation in

the grant, utilization and

liquidation of cash

advances;

b) conduct verification,

identification and

monitoring of NHTS

registered/ eligible

senior citizens, in close

coordination with the

Municipal/ City Social

Worker and

Development Officers,

prior to drawing of CAs

and fund transfer to

ensure that only qualified

poor will receive the

grants;

c) instruct the FO VI

Regional Social Pension

Unit (RSPU) to facilitate

the immediate release of

the funds to the LGUs;

d) strictly monitor the

distribution of the senior

The unpaid grants were already paid

and the FOs conducted consultation

dialogue with the LGUs C/MSWDO

and OSCA to collaborate effort with

the Barangay officials, volunteers,

senior citizens organizations and

CSOs to disseminate pay-out

schedules to ensure that the

beneficiaries are informed.

FI

FI

FI

FI


NCR, VI, CARAGA &

XII

DSWD has conducted a

validation of indigent

senior citizens listed in the

beneficiaries in

coordination with LGUs.

Observed that the FOVI

has already released the

funds to concerned LGUs.

Observed that DSWD has

a mechanism to monitor

the distribution of the

funds to ISCs.

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PI

NI


Validation

citizen’s fund to intended

beneficiaries;

e) require the focal person

and the Accountant to

closely monitor and

coordinate with the

LGUs concerned for the

immediate submission of

the LRs/ required

documents to facilitate

the subsequent release of

the social pension

benefits to the intended

beneficiaries; and

f) refund immediately any

excess amount thereof so

as not to hinder

subsequent payments to

beneficiaries.

FI

FI

Observed that DSWD and

LGUs close coordination

to monitor and implement

the social pension pay-out

Observed that DSWD

grants CAs to AOs the

exact amount per payroll.

C. ASSISTANCE TO

INDIVIDUALS IN

CRISIS SITUATIONS

Assistance to individuals in

crisis not in accord with

DSWD guidelines

12) Assistance on burial,

educational and medical

purposes was made direct to

the claimants instead of the

service providers and

instances of payments more

than once in every three

months, contrary to DSWD

Memorandum Circular No.

2 and 15, series of 2014.

Recommendation:


(a) require the concerned

CIUs to pay assistance

beyond P5,000.00 directly to

the service providers and

covered by guarantee letters

to provide some level of

assurance that the amount

will be utilized for its

intended purpose. In cases

CY

2014

CAAR

Page

119

The office had already received

confirmation and willingness of the

Service Providers (4 Hospitals and 7

Funeral Homes) to forge partnership

with the Department. Ceremonial

signing of MOA was done and an

amendments to the guidelines are

currently being reviewed.

FI


II, IV-A, IV-B, IX, X, XI,

CARAGA, partially

implemented in Central

Office and FO VI.

Noted that double

checking is done by

CrIMS software

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NI


Validation

where the issuance of

guarantee letter to a service

provider is not practical, a

justification should be given

by the social worker stating

the reason/s for non-

compliance; (b) double check

the claims for possible

multiple availment of

assistance; and (c) revisit and

amend the guidelines, if

warranted, on circumstances

when a client can avail of

same or multiple assistance

within the given period; and

on allowing the release of

assistance for the transport of

cadaver through CAs, among

others.

COA noted the issuance of

MC No. 1 to amend some

provisions of the

guidelines.

Non-full utilization of AICS

fund

13) Out of the ₱4,090.000

million allocation for AICS

in CO and 16 FOs, only 47

percent or ₱1,855.156

million was disbursed at

year end, despite the

reported beneficiaries

served of 486,912 vis-à-vis

the target of 281,079

beneficiaries.

Recommendation:



formulate other ways and

means to enhance the existing

system in the delivery of

AICS to fast track the

disbursements so that the

mandated function of the

agency in granting assistance

be enjoyed by more than

majority of the poor,

marginalized and

vulnerable/disadvantaged

individuals/families.

CY

2014

CAAR

Page

121

Advocacy activities are being

conducted at the National Level to

include press releases and press

briefings for awareness of the

potential beneficiaries on the program

process.

FI


II, VI, VIII, X, XI,

CARAGA, CO NCR, and

IV.

Procurement and acceptance

deficiencies resulting in

CY

2014

CAAR

188

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PI

NI


Validation

undistributed and expired or

about to expire relief goods

14) The procurement and

acceptance of relief goods

without considering the

absorptive capacity and

condition of the

warehousing facilities and

personnel, available stocks,

shelf life or expiry dates and

the actual needs of FOs

resulted in undistributed

and expired or about to

expire relief goods

amounting to at least

P141.084 million.

Recommendation:


concerned officials to:

a) Consider, among others,

the following factors in

its future procurement

and acceptance of relief

goods to prevent

overstocking and/or

expiration: (i) absorptive

capacity and condition of

the warehousing facility

and personnel to

accommodate procured

items; (ii) availability of

goods prior to the

procurement of

additional relief items

based on the needs of the

disaster affected FOs or

let the FOs do their own

procurement and make

them responsible and

accountable for the

same; and (iii) shelf-life

or expiry date of goods to

be procured and

distributed to recipient

beneficiaries;

b) Formulate distribution

plan in order that the

purpose of “disaster

Page

125

Construction of additional warehouse

at NROC and other FOs were

inaugurated in CY 2016.

FO VII request for additional

warehouse personnel was approved

by the HRDB and currently on

process at FMS.

Enhancement was already

finished and waiting for further

instruction from IMB on the

effectivity of its implementation.

For review of guidelines and

submission of recommendation to the

Secretary.

1) To enhance the mechanized

system at NROC if found

necessary after the dry run

2) To review the quantity

prepositioned goods in the FOs

nearest to NROO considering

the enhanced capacity of its

repacking and storage system.

3) Follow through action on the

request for hiring additional

warehouse personnel.

FI

FI

Construction of additional

warehouse and facilities to

safeguard relief goods

were completed in CY

2016.

Compliance with other

recommendations were

noted through inspection

and observation.

Reports submitted by

DSWD in coordination

with LGUs conducts

189

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RECOMMENDATIONS Ref

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PI

NI


Validation

response/relief” could be

fully served by

transferring food items to

storage area suitable for

storing perishable goods

and fast track the

distribution of these

items.

c) Assign additional

personnel during relief

operations to properly

and collectively

store/pile the goods

received from various

sources to prevent its

immediate

spoilage/deterioration

and to facilitate efficient

monitoring and reporting

of the status of relief

operation; and

d) Observe proper

procurement planning

and monitoring of relief

goods that would aid in

making decision as to the

necessity of procuring

additional relief goods

during disaster relief

operations so that huge

balances of stocks after

each relief operation

could be avoided and to

ensure efficient and

effective delivery of the

relief goods.

4) Follow through action on the

implementation of RGIMS.

Due to the short shelf life, noodles

will no longer be procured and

included in the FFPs composition.

Also, improvements on the

warehousing facilities are already

being undertaken.

FI

FI

meetings to facilitate

distribution during

disasters.

The DSWD has

circularized a Crisis

Communication Manual to

guide the DSWD Central

Office

and its Regional Offices

essential information and

materials that will

assist its staff and other

personnel in handling

communication during

an emergency or crisis.

The DSWD CO

spearheads the

procurement planning for

relief goods to augment

FOs stocks.

Receipt of distributed relief

goods not ascertained

15) There was uncertainty

as to the actual receipt of

FFPs by victims of Typhoon

Ruby/Hagupit in FOs IV-A,

IV-B, VI and XI because the

distribution of the 144,444

FFPs was not supported

with the Relief Distribution

Sheets (RDS). Moreover,

the prescribed forms for

receipt and utilization of

CY

2014

CAAR

Page

132

190

AUDIT OBSERVATIONS/

RECOMMENDATIONS Ref

MANAGEMENT


FI

PI

NI


Validation

disaster relief cash and in-

kind aid/ donations were not

complied by the CO.

Recommendation:


(a) direct the FOs IV-A, IV-

B, VI and XI Management to

require the immediate

submission of the RDS from

the concerned LGUs as proof

of actual receipt of FFPs by

Typhoon Ruby/ Hagupit

affected families; and

(b) require the WMDFD,

DRRMOO personnel to

strictly comply with COA

Circular No. 2014-002 on the

use of prescribed forms for

DRRM inventory

management.

NROO personnel to strictly comply

with COA Circular No. 2014-002 on

the use of prescribed forms for

DRRM inventory Management.

As of December 2015, the RDS from

32 LGUs have already been received

as part of the liquidation on the relief

goods received for Typhoon Ruby

victims. Management is also

continually requesting remaining

LGUs to submit immediately RDS for

subsequent submission to COA.

FI

The prescribed forms for

DRRM inventory

management is now being

used by the NROO

personnel.

It was noted that Report on

Inventories were

submitted by Supply Unit

and Physical Count was

conducted by the

Inventory Committee in

CY 2016

Auditor of DSWD Region

8 received the distribution

sheets prepared and

submitted by

Management.

Delayed and/or non-

completion of Core Shelter

Projects

16) Out of the 12,898 core

shelter units targeted from

2008 to 2014 of the CO and

FOs CAR, III, VI, VIII and

X, only a total of 5,821 or 45

percent were completed

while 6,789 were not yet

completed/started while the

construction of 288 units is

on-going at year-end.

Moreover, some of the

completed units in prior

years remained unoccupied

and some were destroyed by

super typhoon Yolanda in

CY 2013.

Recommendation:

CY

2014

CAAR

Page

137

191

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concerned FO officials to

institute procedures to

expedite the

release/distribution of CSAP

to the prioritized recipients, to

wit:

a) coordinate with the CO

for the immediate release

of the additional CSAP to

pay the remaining

qualified beneficiaries of

the financial assistance

due them;

b) require the LGU officials

to comply with the

committed

responsibilities on

resettlement lots or any

counterpart stipulated in

the MOA prior to

downloading of

assistance so that the

funds will not be tied up

and remained unutilized

for a long period of time;

c) require the LGUs and

implementing NGOs to

immediately return the

unutilized amount and

remit the same to the

BTr; and

d) conduct monitoring on

the actual utilization of

the fund and project

implementation by the

concerned LGU by

requiring the regular

submission of financial

and status report for the

immediate completion of

these CSAP shelters.

Recommendations noted, compliance

on-going.

PI

PI

NI

FI

Per status of

accomplishment as of

December 31, 2016 of the

targeted C/MSAP of 5,037

to be completed for CY

2016, a total of 1,837 has

already been

accomplished.

Coordination between the

DSWD and LGUs

observed per reports

submitted.

Funds are still with the

concerned LGUs.

Periodic monitoring is

being implemented by the

DREAMB per reports

submitted.

D. SELF-EMPLOYMENT

ASSISTANCE-

CY

2014

CAAR

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NI


Validation

KAUNLARAN

PROGRAM

Accumulation of Unpaid

Capital Seed Fund Accounts

under the SEA-K Program

17) The Capital Seed Fund

of the SEA-K program

totaling ₱1,077.789 million,

granted in CY 1994 to 2014,

remained unpaid, for

failure of the beneficiaries

to settle their accounts

within two years from

receipt of the loan. As a

consequence, other

qualified SEA-K

beneficiaries are deprived of

start-up fund, thereby

adversely affecting the

objective to provide

sustainable source of

income to poor families to

establish and self-manage

sustainable community-

based livelihood projects.

Recommendation:



a) Conduct case

conferences on inactive

SKA accounts and exert

extra effort to collect the

same from both active

and inactive SKAs;

b) Impose sanctions against

delinquent member-

beneficiaries;

Page

143

Memorandum Circular (MC) No. 13,

series of 2015, - Guidelines on the

Provision of Seed Capital Fund

(SCF), was issued so that the SCF

released by the DSWD to members of

the SKAs is no longer treated as loan

but financial assistance, the members

will pay their loans to the SKAs who

will manage the account for the

association and repayment to the

DSWD is no longer required effective

June 18, 2015.

FI

FI

FI

It was noted that

Management issued

Memorandum Circular

No. 13 which provides that

the beneficiaries will no

longer repay the amount

provided in the SLP to the

DSWD but to the

association.

DSWD will no longer

impose sanctions in view

of the issuance of MC 13,

it will be the CSOs who

will formulate sanctions

for their members

193

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Validation

c) Require the SLP NPMO

to monitor project

implementation,

consolidate reports and

recommend measures for

issues/difficulties in the

FOs project

implementation;

d) Revisit the feasibility of

project proposals and

consider proposals

geared towards more

relevant progress, such

as food production; and

e) Provide SEA-K

condonation policy for

uncollected rollback to

those affected by

calamities or economic

crisis, which are among

the reasons for their

being inactive, to prevent

the accumulation of the

uncollected balances.

The agency may

benchmark with other

agencies/ institutions

engaged in loaning

business and consider

providing condonation

for uncollected

rollbacks/ repayments.

FI

FI

Noted compliance through

reports submitted by the

SLP NPMO.

Interviewed SLP NPMO

personnel and noted that

amendments on the review

and processing of

proposals will be

circularized.

With the issuance of MC

13, the condonation will be

moot and academic.

Other Compliance Issues

Gender and Development

(GAD)

18) The DSWD GAD Plan

and Budget for CY 2014 of

P2.321 million or 2.79

percent of the agency’s

appropriation for CY 2014

amounting to P83,114.075

million intended to

undertake the client- and

organization’s-focused

activities was not in full

compliance with Joint

Circular No. 2012-01 to

CY

2014

CAAR

Page

147

194

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FI

PI

NI


Validation

address gender issues and

concerns.

Recommendation:


the concerned FO officials to

strictly comply with the

requirements and/or

directives of the Philippine

Commission on Women to

fully implement the activities

that accelerate gender

mainstreaming effort within

the agency.

Recommendations noted.

FI

Validated that GAD

activities were

incorporated in the

Programs of the Agency.

Commended with updates

in CY 2016 CAAR – for

monitoring on CY 2017.

Compliance with GSIS

Remittance

19) For CY 2014, DSWD

remitted a total amount of

P333.246 million for GSIS

premiums in compliance

with RA No. 8291, except

for FOs V and XIII who

failed to consistently remit

within the prescribed period

the required premium

contributions and monthly

loan repayments to the

GSIS by a range of 1-153

days.

Recommendation:


concerned officials to require

the Accounting Unit to

review properly the recorded

GSIS deductions and

remittances and make the

necessary adjustments for the

accounts Due to GSIS, RLIP

and ECIP and to ensure that

the monthly premiums are

accurate/ exact amount of

contributions withheld and

remitted to the GSIS.

CY

2014

CAAR

Page

149

Recommendations noted and will

comply accordingly.

FI

GSIS collections remitted

to GSIS. Commended with

updates in CY 2016

CAAR.

195

AUDIT OBSERVATIONS/

RECOMMENDATIONS Ref

MANAGEMENT


FI

PI

NI


Validation

Compliance with Tax Laws

20) The DSWD offices,

except for FOs V and XI had

remitted in full the total

amount of P774.065 million

to the BIR the withheld

taxes from compensation

and from goods and services

purchased CY2014 with the

balance as of year-end

remitted in January2015.

Recommendation:



require their respective

Accountants to withhold and

remit to the BIR the

appropriate taxes on

compensation, personnel

benefits and additional

compensation.

CY

2014

CAAR

Page

150

Recommendations noted.

FI

Accountants withheld and

remit taxes to BIR.

Commended with updates

in CY 2016 CAAR.

Status of Suspensions and

Disallowances

21) The non-compliance

with laws, rules and

regulations resulted in the

total suspensions and

disallowances in the audit of

various transactions


million as of December 31,

2014, of which P45.965

million was settled, thereby

leaving a balance of

P355.228 million.

Recommendation:


officials concerned to comply

with laws, rules and

regulations to avoid audit

suspensions, disallowances

and charges and to settle the

same within the prescribed

period to prevent their

CY

2014

CAAR

Page

151

Recommendations noted and will

comply accordingly

PI

The concerned DSWD

officials and employees

have already submitted

appeals to COA for PDAF

related transactions.

Reiterated with updates in

this report under

196

AUDIT OBSERVATIONS/

RECOMMENDATIONS Ref

MANAGEMENT


FI

PI

NI


Validation

accumulation to staggering

amounts.

Observation No.27 page

134.

Legend: FI – Fully Implemented; PI – Partially Implemented; NI – Not Implemented

Annex A

Department of Social Welfare and Development

Analysis of the Effect of Misstatements on the Financial Statements

As of December 31, 2016

(Amounts in million PhP)

A. Accounting Errors

Observation

No. Nature of Errors Account/s Affected

Effect to Total

Assets/ Liabilities/

Equity Errors Affecting Asset Accounts:

3 Understatement of CIB – LCCA CIB-LCCA 26.020

7 Unrecorded deliveries from PITC Due from GOCCs 50.212

10 Misstatement of inventories Various accounts 914.356

Welfare goods for distribution

erroneously recorded as food

supplies for distribution

Welfare goods for

Distribution

13.842

Food supplies for

distribution

(13.842)

11 Unrecorded PPE found at station Various accounts 372.022

Unrecorded donated PPE Buildings 31.043

Land 96.019

Completed CIP not reclassified

to PPE account

Buildings 69.800

CIP (69.800)

15 Erroneous entry in the

recognition of asset

Development in

Progress-Computer

Software

8.997

17 Non-elimination of intra-office

accounts

Due from Central

Office

0.485

Due from FO 356.749

Due from Other Funds 42.533

Total Errors Affecting Assets Account 1,898.436

Total Assets 97,089.299

Percentage of Errors to Total Assets 1.96%

Errors Affecting Liability and Equity Accounts:

3 Understatement of CIB – LCCA Accounts Payable 26.020

10 Overstatement of inventories Accumulated

Surplus/Deficit 964.568

11 Understatement of PPE Accumulated

Surplus/Deficit 499.084

13 Misstatement of Accounts

Payable

Accounts Payable (2,138.482)

Various payable

accounts 2,138.482

15 Erroneous entry in the Accumulated 8.997

Annex A

Observation

No. Nature of Errors Account/s Affected

Effect to Total

Assets/ Liabilities/

Equity recognition of asset Surplus/Deficit

17

Non-elimination of intra-office

accounts

Due to Central Office 0.485

Due to FO 356.749

Due to Other Funds 42.533

Total Errors Affecting Liabilities and Equity Accounts 1,898.436

Total Liabilities and Equity 97,089.299

Percentage of Errors to Total Liabilities and Equity 1.96%

B. Accounting and Control Deficiencies

Observation

No. Nature of Errors Account/s Affected Amount Involved

1 Unaccounted Cash –in Bank

LCCA Cash in Bank

4.986

10 Unreliable balance of inventories Various accounts 1,647.590

11 Unreliable balance of PPE Various PPE accounts 103.342

13 Unreliable balance of Accounts

Payable Accounts Payable 194.148

Total Deficiencies 1,950.066

Total Assets 97,089.299

Percentage to Total Assets 2.01%