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EXECUTIVE SUMMARY

A. INTRODUCTION

The Inter-Country Adoption Board (ICAB) was created by virtue of Republic Act (RA) No. 8043 or the Inter-Country Adoption Law on June 7, 1995 which serve as the Central Authority to ensure compliance with the Hague Convention of 1993.

Pursuant to the authority of ICAB under Section 6 (a) of RA No. 8043 and

in accordance with the relevant provisions of RA No. 8552 otherwise known as the “Domestic Adoption Act of 1998” and the provisions of the Hague Convention on Protection of Children and Cooperation in Respect of Inter-country Adoption as well as the United Nations Convention on the Rights of the Child, ICAB promulgated the Implementing Rules and Regulations (IRR) of RA No. 8043 on December 26, 1995 to govern the adoption of a Filipino child abroad. The IRR was amended on March 22, 2004 and March 13, 2007.

The ICAB is an attached agency of the Department of Social Welfare and

Development (DSWD) mandated to be the central authority on matters relating to the foreign adoption placement of Filipino children to applicants who are either former Filipinos or foreigner permanently residing abroad and the policy-making body for purposes of carrying out the provisions of the aforesaid law.

The mission of ICAB is to find permanent families abroad for Filipino

children when there is absolutely no possibility that they can be adopted by families in the Philippines.

The Board is composed of Undersecretary Parisya H. Taradji of DSWD

who acts as Alternate Chairperson and six other members, five of whom are appointed by the President for a non-renewable term of six years. The Board’s implementing arm is the Secretariat, which is headed by an Executive Director where the Operations Division and the Administrative and Finance Divisions are placed.

To carry out its function, the Board has a workforce of twenty four (24)

regular positions, six (6) temporary, ten (10) through placement agency and one (1) hired as Memorandum of Agreement (MOA) or Contract of Service (COS).

B. OPERATIONAL HIGHLIGHTS

The reported major accomplishments for the year are summarized on the next page.

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2012 Programs/Activities/Plans (PAPS) Actual

MFO 1 Policy Formulation and Research

1. Number of policy guidelines formulated/resolution prepared/approved

18

2. Approved USA based foreign adoption agencies (FAA) 51 3. Approved provisional accreditation as Liaison Service Agency 1

MFO 2 Standards Setting, Licensing and Accreditation

1. Worked with international partners 107 2. Monitored international/foreign FAA on compliance with

adoption laws in the Philippines 55

3. Granted to operate as LSA 6 4. Percentage of accredited Foreign Adoption Agencies (FAAs)

monitored for compliance to standards 100%

5. Worked with Child Caring Agencies 99

MFO 3 Inter-country Adoption Placement Services

1. Number of adoption inquiries responded to 1,044 2. Number and percentage of adoption application assessed

within standard time 251

3. Number of applicants approved 254 4. Number of approved applicants matched & approved 342 5. Number and percentage of approved applicants who accepted

child proposals 237

6. Number of approved applicants entrusted with their PAC 308 7. Number of children cleared for inter-country adoption 488 8. Number and percentage of ICA cleared children matched

within timeline 400

9. Number of matched children accepted by PAPs 282 10. Number and percentage of children entrusted to PAPs 364 MFO 4 Capability Building and Advocacy

1. Dialogue and consultative sessions with Association of Child Caring Agencies and other stakeholders

41

2. Briefing session with different embassies/immigration 10 3. Number of training attended by Board/ICPC/Secretariat 41

C. FINANCIAL HIGHLIGHTS

RA 10155, also known as the “GAA of 2012”, provided a total

appropriation of P25,381,000.00 and additional Sub-Allotment Release Order (SARO) of P5,723,241.00 for the operations of the ICAB. The total allotment received for 2012 amounted to P 31,104,241.00. Of this amount, total obligations incurred amounted to P 30,545,896.15 thereby leaving a balance of P558,344.85.

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The ICAB’s assets, liabilities, government equity and sources and application of funds for CY 2012 with comparative figures in CY 2011 are presented as follows:

Particulars

2012

2011 Increase/

(Decrease) A. Financial Condition

Assets P39,850,841.33 P 41,038,564.94 (P 1,187,723.61) Liabilities 15,750,749.85 15,037,850.98 (712,898.87) Government Equity 24,100,091.48 26,000,713.96 1,900,622.48

B.1 Sources of Fund Income 31,564,051.80 28,412,647.42 3,151,404.38

Total Income 31,564,051.80 28,412,647.42 3,151,404.38 B.2 Application of Funds

Personal Services 12,194,561.17 7,896,535.62 4,298,025.55 Maintenance & Other Operating Expenses

19,223,843.77

17,567,053.03

1,656,790.74

Financial Expenses 50.00 100.00 (50.00) Total Expenses 31,418,454.94 25,463,688.65 5,954,766.29 Excess of Income Over Expenses

P 145,596.86

P 2,948,958.77

(P 2,803,361.91)

D. SCOPE OF AUDIT

The audit covered the review of the accounts and operations of ICAB for CY 2012. The objectives of the audit were to ascertain the fairness and reliability of its financial position and the results of operations for the year then ended and to determine whether it adhered to prescribed accounting and auditing laws, rules and regulations.

E. INDEPENDENT AUDITOR’S REPORT ON THE FINANCIAL

STATEMENTS

The Auditor rendered a qualified opinion on the fairness of the presentation of the financial statements of ICAB for CY 2012, due to material exceptions noted in audit, which are shown in Annex A and which are stated in the Independent Auditor’s Report and discussed in detail in Part – II of the report.

F. SUMMARY OF SIGNIFICANT AUDIT OBSERVATIONS AND

RECOMMENDATIONS

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The details of the following observations and recommendations, among others, are discussed in the Part II of the report. We have also discussed with management officials in an exit conference on April 3, 2013, and their views and comments were incorporated in the report, where appropriate.

1. The Due from NGAs account stated at P3,906,048.34 remained dormant and unliquidated for thirteen years due to non-submission of liquidation report by the DPWH-NCR despite completion of the project, thus affecting the fair presentation of the Building and Receivable accounts in the FSs. We recommended that Management write a letter-request to the Director of the DPWH-NCR for the immediate submission of the liquidation documents and official turnover of the building to the ICAB in order to record the construction and renovation cost of the building and credit the Due from NGAs account for accurate and fair presentation in the FSs.

2. Discrepancies totaling P251,649.19 were noted between the accounting records and the Report on Physical Count of Inventories (RPCI) due to the non conduct of periodic reconciliation of records and non-maintenance of the stock cards (SCs) by the property unit as required under the New Government Accounting System. Overstocking and improper segregation of inventories were also noted. We recommended that Management instruct the Administrative Officer to, among others: (i) observe the prescribed three-months requirement in the procurement of supplies to avoid overstocking and non-utilization; (ii) prepare and maintain SCs and always update entries in the SCs for the purpose of monitoring the stock level; (iii) establish a reorder point as basis in procuring supplies; (iv) ensure every item of stock/inventory will not be comingled and are issued on a first in, first out basis to ensure fresh usable items are always available; (v) ensure that the balances in the SCs are regularly checked and reconciled with the balances in the ledger cards of the Accounting Unit; and, (vi) dispose unused ink through public auction.

3. The existence and accuracy of the PPE accounts valued at P19,079,031.27 could not be ascertained due to non-conduct of physical count and the discrepancies between the accounting and property records in the amount of P2,640,983.00 rendering the balances unreliable. We recommended and Management agreed to: (i) create an Inventory Committee to conduct physical count of the ICAB PPE in accordance with Section 490, GAAM, Volume I and to prepare and submit an RPCPPE to establish the accuracy and existence of the recorded balances of the PPE accounts; and, (ii) require the Accountant and Administrative Officer to exert efforts in reconciling their respective records and effect the corresponding adjustments and updating of both records.

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4. Unserviceable properties were not reclassified to Other Assets account, thus overstating and understating the PPE and Other Assets accounts. The failure to dispose these assets that are already beyond repair resulted in their (i) continued deterioration due to prolonged exposure to natural elements; (ii) use of considerable space of the building due to accumulation; and, (iii) deprivation of additional income for the government from the sale thereof.

We recommended and Management agreed that the Administrative Officer: (i) prepare the Inventory and Inspection Report of Unserviceable Property (IIRUP) and submit to the Accountant as basis to reclassify unserviceable PPEs to Other Assets account; and (ii) create an Appraisal and Disposal Committee to undertake appraisal and disposal of unserviceable properties.

5. Discrepancy of P3,553,848.96 between SL and GL balances of Other Payables

account under Fund 108 due to the absence of accounting records summarizing the SL balances for Pre-adoptive Placement Cost (PPC) to support the controlling GL account contrary to the MNGAS. We recommended that the Accounting Unit prepare a schedule of SL balances for PPC to support the controlling GL account balance and thereafter reconcile the SL balance against the GL discrepancy noted by the Audit Team.

6. Unspent amount of fees totaling P5,700,238.18 collected from Prospective Adoptive Parents (PAPs) for PPC remained unreturned to the PAPs contrary to Section 29 of the Amended IRR of RA 8043. We recommended that ICAB Management communicate with the concerned PAPs to facilitate the return of the unspent amount or ask them to donate it instead to the agency.

G. STATUS OF IMPLEMENTATION OF PRIOR YEAR’S AUDIT

RECOMMENDATIONS (PYARs)

The status of implementation of PYARs embodied in the CY 2011 Audit Report is shown below and the details discussed in Part III.

STATUS NUMBER PERCENTAGE Fully Implemented 7 31% Partially Implemented 14 63% Not Implemented 1 6% Total 22 100%

We recommended that Management ensure full implementation of all

PYARs to improve the operational and financial efficiency of the ICAB.