IAnnex A

y Republic of the PhilippinesCommission on Audit

nmonwealth Avenue, Quezon CityOTHS

INDEPENDENT AUDITOR'S REPORT

The Department SecretaryDepartment of Social Welfare and DevelopmentBatasan Hills, Quezon City

We have audited the accompanying financial statements of DSWD-Social Welfare andDevelopment Reform Project, which comprise the statement of financial position as atDecember 31, 2016, and the statement of financial performance, statement of cash flows andstatement of changes in net assets/equity for the year then ended, and a summary ofsignificant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financialstatements in accordance with Philippine Public Sector Accounting Standards, and for suchinternal control as management determines is necessary to enable the preparation of financialstatements that are free from material misstatement, whether due to fraud or error.

1~ Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit.We conducted our audit in accordance with Philippine Public Sector Standards in Auditing.Those standards require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgement, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the entity's preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of theentity's internal control. An audit also includes evaluating the appropiateness of accountingpolicies used and the reasonableness of accounting estimates made by management, as wellas evaluating the overall presentation of the financial statements.

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IWe believe that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion.

Opinion

I In our opinion, the financial statements present fairly, in all material respects the financialposition of the D)SWD-Social WIfare1iid Development Project as of DecembefT,2UT6and of its financial performance, statement of cash flows and statement of net assets/equityfor the year then ended in accordance with Philippine Public Sector Accounting Standards.

I COMMISSION ON AUDIT

I MARILVN B. MIRANOIC-Supervising Audito

June 30, 2017

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Annex B

STATEMENT OF MANAGEMENT'S RESPONSIBILITYFOR FINANCIAL STATEMENTS

SWDRP IBRD Loan No. 7805and 8218

The management of Department of Social Welfare and Development.s responsible for all information and representations contained in theaccompanying Statement of Financial Position as of December 31, 2016 andthe related Statement of Financial Performance, Statement of Cash Flows,Statement of Comparison of Budget and Actual Amounts, Statement ofChanges in Net Assets/Equity and the Notes to Financial Statements for theyear then ended. The financial statements have been prepared in conformitywith the Philippine Public Sector Accounting Standards and generally acceptedstate accounting principles, and reflect amounts that are based on the bestestimates and informed judgment of management with an appropriateconsideration to materiality.

In this regard, management maintains a system of accounting andreporting which provides for the necessary internal controls to ensure thattransactions are properly authorized and recorded, assets are safeguardedagainst unauthorized use or disposition and liabilities are recognized.

DESERE D. FAJARDO ASEC. RODOLFO M. SANTOS, CESO IIIDirector, Financi I Management Service Officer-in-Charge

Office of the Undersecretary for GeneralAdministration and Support Services

Date Signed Date Signed

I DSWD Ccnral Ofice, HAP Road. llnsn PambansA Complex, Cnn:titution 1 ills, Quon City. Philippines 1126Email: uaec:adswd.gov.ph Tel. Nos.: (632)931-HI l tu 07 Telefax: (632) 931-8191

Website: http iwvyw.dswd-gov.ph

IAnnex C

Department of Social Welfare and DevelopmentConsolidated Fund of SWDRPVStatement of Financial Position

As of December 31, 2016

NOTE 2016 2015ASSETS

Current AssetsCash and Cash Equivalents 6 P50,246,977.23 P359,032,031.17Receivables 7 77,040,003.83 31,101.418.42I Inventories 8 40,974,087.44 19,768,350.59Other Current Assets 11 75,836,000.82 198,788,378.52Total Current Assets P 244,097,069.32 P608,690,178.70

Non - Current AssetsProperty, Plant and Equipment 9 P 241,163,390.37 P 391,597,477.45Intangible Assets 10 7,421,588.96 16,023,046.36Other Non-Current Assets 106,999.83Total Non-Current Assets P 248,584,979.33 P 407,727,523.64

ITotal Assets P 492,682,048.65 P1,016,417,702.34

LIABILITIES

Current LiabilitiesFinancial Liabilities 12 P 75,285,250.74 P 420,398,838.61Inter-Agency Payables 13 13,369,855.64 11,456,994.23Intra-Agency Payables 3,784,576.16Trust Liabilities 4,458,740.69 205,343.10Other Payables 14 9,158803.26 24,857,577.73Total Current Liabilities P 106,327,226.49 P456,918,753.67

Total Liabilities P 106,327,226.49 P456,918,753.67

NET ASSETS/EQUITYAccumulated Surplus/(Deficit) P 386,354,822.16 P 559,498,948.67Total Net Assets/Equity R 386,354,822.16 P 559,498,948.67

Total Liabilities and Net P 492,682,048.65 P 1,016,417,702.34Assets/Equity

I2 &7,8,5.4 94038886

IAnnex D

Department of Social Welfare and DevelopmentConsolidated Fund of SWDRP

Statement of Financial PerformanceFor the year ended December 31, 2016

NOTE 2016 2015Revenue

Service and Business Income 15 P 2,548, 036.96 423,449,391.24Other Non-Operating Income 11,216.13

Total Revenue P 2,559, 253.09 P 3,449,391.24

Personnel Services 16 P 1,105,811,707.40 P 1,104,578,154.92

Maintenance and Other OperatingExpenses

Financial Expenses 18 47,480,611.10 27,084,444.10

Non-Cash Expenses 19 91,637,489.07 143,144,928.57

Surplus/(Deficit) from CurrentCurrnt pertin Exenss 1 1,75,545,34.49) W 2,755,,54.3Operations

Net Financial Assistance/Subsidy 20 R 2,149,015,490-28 P 2,428,963,349.35

Gains 21.1 8,139,024.86 82,273,021.13

Losses 21.2 (10,660,074.61) (34,421,668.36)

Surplus(Deficit) for the period P 390,899,349.13 (P 275,392,356.27)

16I115817740 P11458149

175324569I14088920

Annex E

Department of Social Welfare and DevelopmentConsolidated Fund of SWDRP

Statement of Cash FlowsFor the Year Ended December 31, 2016

I 2016 2015Cash Flows From Operating ActivitiesCash Inflows

Receipt of Notice of Cash allocations P 2,686,228,472.87 P 5,249,337,830.81Collection of Income/Revenue 185,528.32 1,654,993.74I Receipt of Intra-Agency Fund Transfers - 1,175,378,136.92Collection of Receivables 972,781.45 347.27Other Receipts 70,280,018.28 4,993,062.96Adjustments 743,174.40 2,584,798,914.49

Total Cash Inflows P 27583409,975.32 P 9016.163,286.18Cash Outflows

Remittance to National Treasury 293,682,206.33 347.27Payment of Expenses 1,647,868,109.19 3,852,343,907.61Purchase of Inventories 40,974,087.44 19,760,050.59Grant of Cash Advances 166,125,735.34 377,207,244.72Payment of Accounts Payable 11,267,901.56Remittance of Personnel Benefits Contributionsand Mandatory Deductions

Gran of inanial ssisanceSub1,6457,868,19.19 3,08,343,9719

Release of Inter-agenc4 Fund Transfers 9,697,040.05I Release of Intra-Agency Fund Transfers - 1,480,444,113.52Other Disbursements 150,649,713.23 963,690,983.69

_Adjustments 46,881,139.97 603,189,022.12Total Cash Outflows R 3,034,516365.78 P 10,444297,717.12Net Cash Provided by (Used in) OperatingExpenses (9 276,106,390.46) 9 1,428,134,430.94)

Cash Flows from Investing ActivitiesCash Outflows

Purchase/Construction of Property Plant and 30,166,546.03Equipment -P 12,994,424.31

Total Cash Outflows P 30,166,546.03 P 12,994,424.31Net Cash Provided by (Used in) Investing P 30,166,546.03)Activities (P 12,994,424.31)Increase(Decrease) in Cash and Cash 9 306,272,936.49)Equivalents WP 1,441,128,855.25)Effect of Exchange Rate Changes on Cash and (2,597,893.45)Cash Equivalents V 47,844,428.75Cash and Cash Equivalents, January 1, 2016 P 359,027,717.17 P 1,752,312,143.67Cash and Cash Equivalents, December 31, 2016 P 50,246,977.23 P 359,027,717.17

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Annex F

IDEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT

Statement of Changes In Net Assets/EquityConsolidated Central and Regional Offices

Consolidated Fund of SWDRPFor the Year Ended December 31, 2016

2016 2015

I Balance at January 1 559498,948,67 2071,266,542.65Add/(Deduct):Changes in Accounting PolicyPrior Period AdjustmentsiUnrecorded Income and Expenses (270,361269.31) (1.236336.144.20)

Restated Balance 28917,679.36 834,930,398.45

Add/(Deduct):

Changes in Net Assets/Equity for Calendar Year

Adjustment of Net Revenue recognized directly in NetAssets/Equity Closing of Cash - TreasurylAgency Deposit -

(293,682,206.33) (39,093.51)Surplus/(Deficit) for the Period 390,899,349.13 (275,392,356.27)

Others

Balance at December 31 386,354,822.16 559,498,948.67

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13 DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT

Social Welfare and Development Reform ProjectNotes to Financial Statements

For the year ended December 31, 2016

L. GENERAL/AGENCY PROFILE

Department of Social Welfare and Development - Social Welfare andDevelopment Reform Project (SWDRP) is a four-year foreign assisted project funded byWorld Bank under Loan Agreement No. 7805 PH dated January 7, 2010 and becameeffective on February 19, 2010. The project aims to strengthen the effectiveness of DSWD asa social protection agency to efficiently implement the Conditional Cash Transfer (CCT)Program and expend an efficient and functional National Household Targeting System onI social protection programs. The project will finance the following three (3) components: (1)

Support to the National Household Targeting System for Poverty Reduction which will beused to better target to the poor key social assistance and social protection programs ofDSWD and other government agencies; (2) Support the Pantawid Pamilyang PilipinoProgram (4Ps) through provision of health and education grants to poor and eligiblehouseholds living in the selected municipalities; (3) Support the strengthening of basicinstitutional capacity of DSWD to undertake policy analysis and strategic planning and theinstallation of a technically sound monitoring and evaluation system.

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 thePhilippine Public Sector Accounting Standards (PPSAS) issued by the Commissionon Audit per COA Resolution No. 2014-003 dated January 24, 2014. The financialstatements are presented in Philippine Peso, which is the functional and reportingcurrency of the DSWD.

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

3. Summary of Significant Accounting Policies

3.1 Basis of accounting

3 The financial statements are prepared on an accrual basis in accordance with thePhilippine Public Sector Accounting Standards (PPSAS).

3.2 Financial instruments

a. Financial assets

Initial recognition and measurement

UFinancial assets within the scope of PPSAS 29 Financial Instruments: Recognitionand Measurement are classified as financial assets at fair value through surplus ordeficit, loans and receivables as appropriate. The Department of Social Welfareand Development determines the classification of its financial assets at initialrecogmition.

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 ordeterminable payments that are not quoted in an active market. After initialmeasurement, such financial assets are subsequently measured at amortized costusing the effective interest method, less impairment. Amortized cost is calculatedby taking into account any discount or premium on acquisition and fees or coststhat are an integral part of the effective interest rate. Losses arising fromimpairment are recognized in the surplus or deficit.

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

The rights to receive cash flows from the asset have expired oris waivedThe DSWD has transferred its rights to receive cash flows fromthe asset or has assumed an obligation to pay the received cashflows in full without material delay to a third party; and either:(a) the DSWD has transferred substantially all the risks andrewards of the asset; or (b) the DSWD has neither transferrednor retained substantially all the risks and rewards of the asset,but has transferred control of the asset.

Impairment offinancial assets

The DSWD assesses at each reporting date whether there is objective evidence thata financial asset or a group of financial assets is impaired. A financial asset or agroup of financial assets is deemed to be impaired if, and only if, there is objectiveevidence of impairment as a result of one or more events that has occurred after theinitial recognition of the asset (an incurred "loss event") and that loss event has animpact on the estimated future cash flows of the financial asset or the group offinancial assets that can be reliably estimated.

Evidence of impairment may include the following indicators:

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I3 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 cashflows (e.g. changes in arrears or economic conditions that correlate withdefaults).

b. Financial liabilities

I3 Initial recognition and measurementFinancial liabilities within the scope of PPSAS 29 are classified as financialliabilities at fair value through surplus or deficit. The entity determines theclassification of its financial liabilities at initial recognition.

The DSWD's financial liabilities include other payables.

The measurement of financial liabilities depends on their classification.

Derecognition

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

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

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.

3.4 Inventories

Inventory is measured at cost upon initial recognition. To the extent that inventorywas received through non-exchange transactions (for no cost or for a nominal cost),I 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 realizablevalue. However, to the extent that a class of inventory is distributed or deployed at no

Icharge or for a nominal charge, that class of inventory is measured at the lower of

cost and current replacement cost.I 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 thesale, exchange, or distribution.Inventories are recognized as an expense when deployed for utilization or

consumption in the ordinary course of operations of the DSWD.

3.5 Property, Plant and Equipment

RecognitionI3 An item is recognized as property, plant, and equipment (PPE) if it meets the characteristicsand recognition criteria as a PPE.The characteristics of PPE are as follows:

*tangibl items;are held for use in the production or supply of goods or services, for rental toothers, 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 withthe item will flow to the entity; and

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

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 dateof acquisition.

The cost of the PPE is the cash price equivalent or, for PPE acquired through non-exchangetransaction 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;0 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 thesite 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 thatperiod.

Measurement After RecognitionAfter recognition, all property, plant and equipment are stated at cost less

accumulated depreciation and impairment losses,

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UWhen significant parts of property, plant and equipment are required to be replaced atintervals, the DSWD recognizes such parts as individual assets with specific usefullives and depreciates them accordingly. Likewise, when a major repair/replacement isdone, its cost is recognized in the carrying amount of the plant and equipment as areplacement if the recognition criteria are satisfied.

All other repair and maintenance costs are recognized as expense in surplus or deficitas incurred

Depreciation

Each part of an item of property, plant, and equipment with a cost that is significant inrelation to the total cost of the item is depreciated separately.

The depreciation charge for each period is recognized as expense unless it is includedin 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 thelocation and condition necessary for it to be capable of operating in the mannerintended by management.

For simplicity and to avoid proportionate computation, the depreciation is for onemonth if the PPE is available for use on or before the 15th of the month. However, ifthe PPE is available for use after the 15th of the month, depreciation is for thesucceeding month.

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

Estimated Useful Life

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

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

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knpairment

An asset's carryIng amount is written down to its recoverable amount, or recoverableservice amount, if the asset's carrying amount is greater than its estimatedrecoverable service amount.

Derecognition

The DSWD derecognizes items of property, plant and equipment and/or anysignificant part of an asset upon disposal or when no future economic benefits orservice potential is expected from its continuing use. Any gain or loss arising onI1 derecognition of the asset (calculated as the difference between the net disposalproceeds and the carrying amount of the asset) is included in the surplus or deficitwhen 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 paymentsare recognized as an operating expense in surplus or deficit on a straight-line basisover the lease term.

I DSWD as a lessor

Operating Lease

Leases in which the DSWD does not transfer substantially all the risks and benefitsof ownership of an asset are classified as operating leases.

Rent received from an operating lease is recognized as income on a straight-line basisover 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.

3.7 Intangible Assets

Recognition and MeasurementIntangible assets are recognized when the items are identifiable non-monetary assetswithout physical substance; it is probable that the expected future economic benefitsor service potential that are attributable to the assets will flow to the entity; and thecost or fair value of the assets can be measured reliably.

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Intangible assets acquired separately are initially recognized at cost.Intangible Assets Acquired through Non-Exchange TransactionsThe cost of intangible assets acquired in a non-exchange transaction is their fair valueat the date these were acquired.

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 isI 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.An intangible asset with indefinite useful lives shall not be amortized.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.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 intangibleasset.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.

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 prospectivelyby 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 earliestprior period presented.

3.9 Foreign currency transactions

Transactions in foreign currencies are initially recognized by applying the spotexchange rate between the function currency and the foreign currency at theI1 transaction.At each reporting date:

* Foreign currency monetary items are translated using the closing rate;I * 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) ontranslating monetary items at rates different from those at which they were translated

on initial recognition during the period or in previous financial statements, arerecognized in surplus or deficit in the period in which they arise, except as thosearising on a monetary item that forms part of a reporting entity's net investment in aforeign operation.

3.JO0Revenue from non-exchange transactions

Recognition and Measurement ofAssets from Non-Exchange TransactionsAn 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, itreduces the carrying amount of the liability recognized and recognize an amount of

revenue equal to that reduction.

Measurement of Revenue from Non-Exchange TransactionsRevenue from non-exchange transactions is measured at the amount of the increase inI3 net assets recognized by the entity, unless a corresponding liability is recognized.

Measurement of Liabilities on Initial Recognition from Non-Exchange TransactionsThe amount recognized as a liability in a non-exchange transaction is the best estimateof the amount required to settle the present obligation at the reporting date.

Fees and fines not related to taxesThe DSWD recognizes revenues from fees and fines, except those related to taxes,when earned and the asset recognition criteria are met.I Other non-exchange revenues were recognized when it is probable that the futureeconomic benefits or service potential associated with the asset will flow to the entityand the fair value of the asset can be measured reliably.

Gifts and DonationsThe DSWD recognizes assets and revenue from gifts and donations when it isprobable that the future economic benefits or service potential will flow to the entityand 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 abinding arrangement to receive the goods. If goods in-kind are received withoutconditions attached, revenue is recognized immediately. If conditions are attached, aliability is recognized, which is reduced and revenue recognized as the conditions aresatisfied.

On initial recognition, gifts and donations including goods in-kind are measured at3 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 normallyundertaken by a member of the valuation profession who holds a recognized andrelevant professional qualification. For many assets, the fair value are ascertained byreference to quoted prices in an active and liquid market.

TransfersThe DSWD recognizes an asset in respect of transfers when the transferred resourcesmeet the definition of an asset and satisfy the criteria for recognition as an asset,except those arising from services in-kind.

Services in-KindServices in-kind are not recognized as asset and revenue considering the complexityof the determination of and recognition of asset and revenue and the eventualrecognition of expenses.

Transfers from other government entitiesRevenues from non-exchange transactions with other government entities and therelated assets are measured at fair value and recognized on obtaining control of theasset (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

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flow to the [Name of Entity] and can be measured reliably.3.11 Budget information

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

3.12Impairment of Non-Financial Assets

3.13 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 annualimpairment testing for an asset is required, the DSWD estimates the asset'srecoverable service amount. An asset's recoverable service amount is the higher ofthe 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, theasset 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 withthe primary objective generating a commercial return. Therefore, non-cash generatingassets would be those assets from which the DSWD does not intend (as its primaryobjective) to realize a commercial return.

3.14 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 afterdeducting the amount paid.

The DSWD recognizes expenses for accumulating compensated absences when thesewere paid (commuted or paid as terminal leave benefits). Unused entitlements thathas accumulated at the reporting date were not recognized as expense. Non-accumulating compensated absences, like special leave privileges, were notrecognized.

3.15Measurement uncertainty

The preparation of financial statements in conformity with PPSAS, requiresmanagement to make estimates and assumptions that affect the reporting amounts ofassets and liabilities, at the date of the financial statements and the reported amountsof 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 ofthe financial statements and were reviewed annually to reflect new information as itbecomes available. Measurement uncertainty exists in these financial statements.Actual results could differ from these estimates.

4. Changes in Accounting Policies1 DSWD has not adopted any change in Accounting Policies for CY 2015. The 25PPSAS had been adopted beginning January 1, 2014 as per COA Resolution No.2014-003 dated January 24, 2014.

5. Prior Period AdjustmentsThe DSWD has determined transactions relating to the previous year which haveI cumulative effect on surplus/deficit of the prior year.The description of the prior period adjustments, including peso amount, its effect foreach financial statement line item affected in current and prior year, and cumulativeeffect on opening accumulated surplus/(deficit) in current and prior year, andcumulative effect on surplus/deficit in prior year are shown on this notes to financialstatements.

6. Cash and Cash Equivalents

Account Name 2016 2015Cash - Collecting Officer 7,220.00 169,099.31Pelty Cash 11,836.00 6,791.25Cash in Bank - Local Currency, Curren 5

50,227,921.23 63,952,584.23AccountCash in Bank - Foreign Currency, Savings 294,899,242.38AccountCash - Treasury/Agency Deposit, TrustL- 4,314.003 Total 50,246,977.23 359,032,031.17

Cash-Collecting Officers includes unremitted collection of income to the Bureau ofTreasury.

Cash in Bank- Local Currency Account includes the funds that were deposited withAuthorized Government Depository Bank (AGDB) in accordance with GAFMISCircular Letter No. 2003-005 dated November 21, 2003:

DSWD Social Welfare and Development Reform Project consist of fund transferfrom Designated Account for the operating requirements of the project.

DSWD Over the Counter (OTC) Set 1 for OTC payments intended for Set Ibeneficiaries which includes 25% funding from GOP and 75% Loan Proceeds.

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ICash in Bank Foreign Currency Savings Account includes the advances andreplenishments to the Designated Account of the Project.

7. Receivables

I 7.1 Inter-Agency Receivables

2016Account Name Current Non-Current Total

Due from National Government 15,335,816,17 15,335,816.17AgenciesDue from Government-Owned 53,573,956.87 53,573,956.87and/or Controlled CorporationsTotal 68,909,773.04 68,909,773.04

7.2 Other Receivables

Account Name 2016 2015Receivables - Disallowances/Charges 1,264,558.94 1264,558.94

1Due from Officers and Employees43086295.0Due from Non-Government Organizations/People'sDue rom ffiers nd m Icees43,078.60 29,519.30

Organizations 298,745.79 4,152,942.04Other Receivables 2,738,210.59 2,673,383.47Total 4,344,593.92 8,120,403.75

The Account Receivables-Disallowances/Charges represents the disallowance forvarious types of expenses given to DSWD Officials and Employees. Thedisallowances are under appeal by the DSWD employees. Though thedisallowance/charge is under appeal, this is being collected from the officials andemployees upon retirement, resignation, termination or transfer of office.

The account Due from Officers and Employees pertains to cash receivables fromofficials and employees resulting from overpayment of salaries due to leave withoutpay which are being deducted from the monthly payroll.

* Due from NGOs/POs pertains to the transfer of fund for the implementation ofModified Conditional Cash Transfer (MCCT).

8. Inventories

Inventory items of the Department include the following:

Account Name 2016 2015Inventories Held for ConsumptionOffice Supplies Inventory 17,359,427.11 13,945,241.70I Fuel, Oil and Lubricants Inventory 1,513.00

IConstruction Materials Inventory 71,101.50 8,300.00Other Supplies and Materials Inventory 11,211,906.83 5,814,808.89Sub-total 28,643,948.44 19,768,350.59Semi-Expendable InventoriesSemi-Expendable Information andCommunications Technology Equipment 12,307,739.00Semi-Expendable Furniture and Fixtures 22,400.00Sub-total 12,330,139.00

40,974,087.44 19,768,350.59

The Account Office Supplies Inventory consists of office supplies, printed special3 forms, IT supplies and janitorial supplies in stockpile of the DSWD Central Office

and Field Offices.

Construction Materials Inventory consists of cost of painting, plumbing and electricalsupplies for office repairs and maintenance and other minor constructions in FieldOffices.

Other Supplies and Materials Inventory includes spare parts purchased for the repairand maintenance of vehicles.

Semi-Expendable Information and Communications Technology Equipment includestablets and printers costing less than P15,000.00 acquired for the use in operations.Semi-Expendable Furniture and Fixtures includes furniture and fixtures acquired lessthan P15,000.00.

9. Property, Plant and Equipment

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

Infrastructure Machineryand Transportation Furniture, Fixtures Othe Praperty, Total

Assets Equipment Equipment and Books I'quipment

Carying Amount, January 1, 2016or Nat book Value 45,349.93 372,756,370.86 8,376,398.94 24,059,758.18 660,599.54 405,898,477.45Additions/Acquisitions 2,900.00 2,900.00

Total 45,349.93 372,759,270.88 8,376,398.94 24.059,758.18 660,599.54 405,901,377.45Less: ____________________________

Disposals/R*classlicatirn (73,93,919,42) (18,262.03) (7,993,947.13) (20,795.24) (82,016,923.82)Depmciation (As perStatement of Financialperfrmance) (33,079.68) (77,822,939.04) (1,946,729.49) (2,755,097.66) (161,217.39) (82,721,063,26)Imponent Loss (As perStatement of FinancialPerformance)

Carrying Amount, December 31,2010 (As per Statement ofFinancial Position) 12,270.25 220,952,412.40 6,409,407.42 13,310,713.39 478,588.91 241,163,390,37Gross Cost (Asset AccountBalance per Statement ofFinancial Position) 245,404,60 581,452,247.54 17,063,329.56 26,735,327.57 1,225,789.12 626,722,098.39Less: Acc Depreciation 233,134.35 (360,499,835.14) (10653,922.14) (13,424,614.18 (747,202.21) (385,558, 708.02

Allooence TorImpairment

Carrying Amount, December 31,2016 (As per Statement ofFinancial Position) 12,270,25 220,952,412.40 6,409,407.42 13,310,713.39 478,586.91 241,163,390.37

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

10. Intangible Assets

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

Accounts Computer TOTALSoftwareCarrying Amount, January 1, 2016 16,023,046.36 16,023,046.36

Additions/Acquisitions 314,968.41 314,968.41Total 16,338,014.77 16,338,014.77I Amortization (As per Statement of FinancialPerformance)

Accounts TOTAL_________________________________ Software _______

AdjustmentsCarrying Amount, December 31, 2016 (As perStatement of Financial Position)Gross Cost (Asset Account Balance per Statementof Financial Position)Less : Acc. Amortization 50,644,291.26 50,644,291.26Carrying Amount, December 31, 2015 (As per

3 Statement of Financial Position)

11. Other Assets

011.1 Advances

Account Name 2016 2015Advances to Special Disbursing Officer 197,076,002.86Advances to Officers and Employees 29,0.9 1,712,375.66-

TTOTAL 297,907.09 198,788,378.52

Advances to Special Disbursing Officers are amount granted to DSWD bondedDisbursing Officers both Regular Disbursing Officers and Special DisbursingOfficers to be used for special purpose/time-bound activities of the Department. InField Offices, this represents cash advanced/granted for the implementation of the 2nd

Round Assessment of the Listahanan representing salaries of the Encoders,Enumerators and Area Supervisors.

1Advances to Officers and Employees includes advances granted to officers andemployees for official travel

I12. Financial Liabilities

2015 2015Account Name Non- Non-

Current current Current Current

Accounts Payable 58,153,623.95 412,777,891.36

Due to Officers andEmployees 17,131,626.79 7,620,947.25

Total 75,285,250.74 420,398,838.61

The Accounts Payable represents various claims of creditors and beneficiaries as ofDecember 31, 2016,

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

13. Inter-Agency Payables

Account Name 2016 2015

I Current Non- Current Non- ICurrent Current

Due to BIR 5,767,635.12 8,764,949.45

Due to GSIS 6,469,333.56 1,945,614.99Due to Pag-IBIG 542,097.08 327,645.49

Health 848, 411,262.30Due to GOCCs 12,045.00 7,522.00Total 13,639,855.64 11,456,994.23

Due to BIR consists of income tax deducted from employees, suppliers andconsultants to be remitted on the ensuing year.

Due to GSIS include Life and Retirement Premium, salary loan, policy loan and ECCand are also remitted during the ensuing year.

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

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

Due to GOCCs pertains to the payroll deduction for the loan amortization ofemployee to the Landbank of the Philippines.

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14. Other Payables

2015 201Account Name Non- Non-

Current CurrentI Current CurrentOther Payables 9,158,803.26 24,857,577.73Total 9,158,803.26 24,857,577.73

Other Payables represents various claims from other individual andcreditors/suppliers.

I 15. Service and Business Income

I Account Name 2016 2015Fines and Penalties - Senvice Income 2,362,508.64 1,787,938.12Interest Income 185,423.34 1,661,293.73Fines and Penalties - Business Income 104.98 159.39Total 2,548,036.98 3,449,391.24

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

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

16. Personnel Services

16.1 Salaries and Wages

SAccount Name 2016 2015Salaries and Wages - Regular 838,144.90 7,960.68Salaries and Wages -_Casual/Contractual 860,173,640.95 833,056,638.803 Total Salaries and Wages 861,011,785.85 833,064,599.48

16.2 Other Compensation

Particulars 2016 2015Personal Economic Relief Allowance (PERA) 44,971,104.79 56,129,804.61Representation Allowance (RA) 272,136.36 404,937.50Transportation Allowance (TA) 251,931.81 403,152.92Clothing/Uniform Allowance 9,371,788.94 11,015,000.00Subsistence Allowance 3,301,850.00 2,795,350.00

-Productivity Incentive Allowance3,538.6 200.0Honoraria 1,6 841,246.91

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IOvertime and Night Pay 834,545.64 1,058,834.89Year End Bonus 58,529,434.73 35,624,026,34Cash Gift 9,962,950.00 8,102,777.53Other Bonuses and Allowances 35,122,136.00 76,081,125.44Total Other Compensation 167,907,227.30 193,076,756.14

The account Subsistence Allowance represents the amount paid for the Magna Cartaof DSWD Public Social Workers and DSWD Health Workers.

I16.3 Personnel Benefit Contributions

I Particulars 2016 2015Retirement and Life Insurance Premiums 64,989,641.04 67,027,995.53Pag-IBIG Contributions 2,465,333.14 2,673,128.78PhilHealthContributions 6,358,407.50 6,501,092.84Employees Compensation InsurancePremiums 2,214,320.91 2,234,582.15Total Personnel Benefit Contributions 76,027,702.59 78,436,799.30

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

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

PhilHealth Contributions represents payment of PhilHealth premium for governmentshare.

17. Maintenance and Other Operating Expenses

17.1 Traveling Expenses

Particulars 2016 2015Traveling Expenses - Local 78,498,298.02 145,050,978.13Total Traveling Expenses 78,498,298.02 145,050,978.13

Traveling Expenses - Local includes airfare, pre-travel allowance, accommodationand daily subsistence allowance of DSWD Officials and Employees during travels onofficial business to attend various trainings/seminars, consultation meetings,validation and monitoring for the period January to December 2016.

17.2 Training and Scholarship Expenses

I Particulars 2016 2015Training Expenses 59,339,163.39 286,714,149.00Total Training and Scholarship Expenses 59,339,163.39 286,714,149.00

Training Expenses consists of payment of honorarium of resource persons, boardand lodging and or hotel accommodation of participants to various seminar, training -workshops.

17.3 Supplies and Materials Expenses

Particulars 2016 2015Office Supplies Expenses 26,045,877.47 28,913,358.05Accountable Forms Expenses 43,000.00Fuel, Oil and Lubricants Expenses 823,955.75 1,227,042.24Semi-Expendable Machinery andEquipmentExpenses 11,236,520.58Semi-Expendable Furniture, Fixtures andBooks Expenses 54,650.00Other Su plies and Materials Expenses 524,061.90 4,862,953.36Total Supplies and Materials Expenses 38,685,065.70 35,046,353.65

17.4 Utility Expenses

Particulars 2016 2015Water Expenses 251,908.99 503,365.11Electricity Expenses 3,652,409.11 3,937,181.19Total Utility Expenses 3,904,318.10 4,440,546.30

Water Expenses are payments made to Water Service Companies for the waterconsumption of DSWD Offices.

Electricity Expenses are payments made to Electric Service Companies for theelectricity consumption of DSWD Offices.

17.5 Communication Expenses

Particulars 2016 2015Postage and Courier Services 278,915.07 393,368.95Telephone Expenses 13,971,103.00 23,690,711.80Intemet Subscription Expenses 1,363,073.39 8,535,563.63Total Communication Expenses 15,613,091.46 32,619,644.38

Postage and Courier Services represents payment made to the Postal Offices formailing services of various communications of the Department.

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Telephone Expenses are payments made to the Distance Telephone Companies forcurrent charges of DSWD Telephone (Landlines) lines. It also includes mobile

expenses made to Globe Telecom, Inc. and Smart Communications, Inc. for GlobeAmax and Smart BIZ load services corporate e-loading systems for use of DSWDOfficials and Employees who are Globe/Touch Mobile and Smart/Talk and Textsubscribers. Also included is reimbursement of individual postpaid lines payments inlieu of prepaid card allocation.

Internet Subscription Expenses are payments made to Globe Telecommunications,Inc. for the wireless internet subscription with Tablet Device for use of DSWD

3 Executive and Management Committee and to Smart Communications, Inc. forwireless internet subscription for DSWD Offices.

17.6 Professional Services

Particulars 2016 2015Consultancy Services 850,000.00 5,827,447.99Other Professional Services 249,144,952.50 784,705,845.74Total Professional Services 249,994,952.50 790,533,293.73

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

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

17.7 General Services

Particulars 2015 2014Janitorial Services 1,121,930.25 955,580.68Security Services 3,114,550.21 2,441,739.31Total Professional Services 4,236,480.46 3,397,319.99

Janitorial Services are payment made to various Agencies for janitorialservices rendered at DSWD Offices and satellite offices.

Security Services are payments made to Various Agencies for securityservices rendered at DSWD Office for the period January to December 2015.

17.8 Repairs and Maintenance

Particulars 2015 2015Repairs and Maintenance - Buildings and 245,982.00 258,523.90I3 Other StructuresRepairs and Maintenance - Machinery and 1,091,601.64 996,554.30Equipment

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IRepairs and Maintenance - Transportation 309,157.46 587,820.77EquipmentRepairs and Maintenance - Furniture and 40,209.50 311,354.06FixturesRepairs and Maintenance - Other 2,064.00Property, Plant and EquipmentTotal Repairs and Maintenance Expenses 1,689,014.60 2,154,253.03

17.9 Taxes, Insurance Premiums and Other Fees

Particulars 2016 2015Taxes, Duties and Licenses 126,179.97Fidelity Bond Premiums 24,750.00 86,362.50Insurance Expenses 83,343.82 70,901.04Total Taxes, Insurance Premiums and Other Fees 108,093.82 283,443.51

Fidelity Bond Premium represents share for the payment of 1.5% fidelity bondpremium of Regular Disbursing Officers, Special Disbursing Officers andApproving/Signatory of each Bureau/Service of the Department.

17.10 Labor and Wages

Particulars 2015 2014Labor and Wages 24,188,975.35 3,049,977.73

Labor and Wages includes payment of salaries of employees hired by theDepartment under job order such as encoders, etc.

17.11 Other Maintenance and Operating Expenses

IParticulars 2016 2015Advertising Expenses 964,519.00 4,265,339.11Printing and Publication Expenses 3,607,030.38 94715,149.24Representation Expenses 19,209,952.22 22,629,558.14Transportation and Delivery Expenses 543,116.59 1,141,816.22Rent/Lease Expenses 7,283,129.39 12,839,145.78Subscription Expenses 4,080.10Donations 591,408.90 55,120.00Other Maintenance and Operating Expenses 19,624,330.16 19,616,819.01Total Other Maintenance and Operating 51,827,566.74 155,262,947.50Expenses _______________

Advertising Expenses includes newspaper publication or advertorial for Invitation to

3 Bid for the procurement of goods and services.

Printing and Publication Expenses includes printing of advocacy materials relative to

Iprogram implementation.

Representation Expenses represents payment of expenses during meetings beingconducted relative to the implementation of Pantawid Pamilya Pilipino Program.

18. Financial Expenses

Account Name 2016 2015Bank Charges 47,480,611.10 27,084,444.10Total 47,480,611.10 27,084,444,10

The account Bank Charges generally refers to payment and accruals of interbank feesfor cash card grants advanced by Land Bank of the Philippines (LBP) to other banksfor ATM transactions and the bank service fees for over-the-counter payments ofcash grants by the LBP conduits for the implementation of the Pantawid Pamilyaprogram.

19. Non-Cash Expenses

19.1 Depreciation

Particulars 2016 2015Depreciation - Infrastructure Assets 33,079.68Depreciation - Machinery and Equipment 77,822,93904 95,706,125.80Depreciation - Transportation Equipment 1,948,729.49 2,455,794.34

Depreciation. - Furniture, Fixtures and Books 2,755,097.66 4,334,250.54

Depreciation - Other Property, Plant andEquipment 161,217.39 221,025.80Total Depreciation 82,721,063.26 102,717,196.48

The Depreciation for Infrastructure Assets, Machinery and Equipment,Transportation Equipment and Furniture, Fixtures and Books are periodic costallocation for the wear and tear the Department's PPE.

I 19.2 AmortizationParticulars 2016 2015

Amortization - Intangible Assets 8,916,425.81 40,427,732.09

Amortization of Intangible Assets are also periodic cost allocation of theComputer Software.

20. Net Financial Assistance/Subsidy

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IFinancial Assistance/Subsidy from NGAs, LGUs, GOCCs

1Particulars 2016 2015Subsidy from National Government 2,686,228,472.87 5,320,613,290.29Total 2,686,228,472.87 5,320,613,290.29

Less: Financial Assistance/Subsidy to NGAs, LGUs, GOCCs, NGOs/POsParticulars 2016 2015

Subsidies - Others 537,212,982.59 2,891,649,940.94Total 537,212,982.59 2,891,649,940.94

Net Financial Assistance/Subsidy 2,149,015,490.28 2,428,963,349.35

The account Subsidy from National Government is further broken down as follows:Particulars Amount

Receipt of Notice of Allocation (NCA) 2,677,259,863.90Tax Remittance Advice (TRA) 8,978,008.97TOTAL 2,686,237,872.87ADDI(DEDUCT):Adjustment (9,400.00

SING Balance 2,686,228,47287

The account Subsidies-Others pertains to payment of cash grants to PantawidPamilya beneficiaries.

21. Non-operating Income, Gain, or Losses

21.1 Non Operating Income/Gain

Particulars 2016 2015Gain on Foreign Exchange (FOREX) 8,138,636.54 82,266,097.11Other Gains 6,924.02

Total Non-Operating IncomelGain 8,138,636.54 82,273,021.13

1 21.2 Non Operating Losses

Particulars 2016 2015Loss on Foreign Exchange (FOREX) (10,646,439.99) (34,421,668.36)Total Non-Operating Losses (10,646,439.99) (34,421,668.36)

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

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