REPUBLIC OF THE PHILIPPINES

COMMISSION ON AUDIT
National Government Sector
Cluster 5-G Education and Employment
Office of the Supervising Auditor
Commonwealth Avenue, Quezon City

April 11, 2016

MR. ANWAR E. GERON

OIC-Provincial Director
Technical Education and Skills Development Authority
Oriental Mindoro Provincial Office
Lumangbayan, Calapan City

Dear Mr. Geron:

Management Letter (ML) on the Audit of the

Technical Education and Skills Development Authority
Oriental Mindoro Provincial Office
for the Calendar Year 2015

1. Pursuant to Section 2, Article IX-D of the Constitution of the Philippines and

Section 43 of Presidential Decree 1445, otherwise known as the Government
Auditing Code of the Philippines, we have audited the accounts and operations of
the Technical Education and Skills Development Authority – Oriental Mindoro
Provincial Office for the period ended December 31, 2015.

2. The audit was conducted in accordance with applicable laws, rules and regulations
and generally accepted auditing standards. Those standards require that we plan
and perform the audit to obtain a reasonable basis for our conclusions.

3. The audit was conducted by the audit team led by Ms. Rosemarie C. Ilagan, State
Auditor IV, audit team member Maria Ginalyn P. Castillo, State Auditing
Examiner II and under the supervision of Ms. Lucila A. Magpantay, State Auditor
IV, OIC- Regional Supervising Auditor, to (a) verify the level of assurance that
may be placed on management’s assertions on the financial statements; (b)
recommended agency improvement opportunities; and (c) determine the extent of
implementation of prior year’s audit recommendedations.

4. The Agency’s financial conditions, results of operations and cash flows as of

December 31, 2015 are shown in the attached audited financial statements
(Annexes A-E).

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5. Deficiencies observed in the course of the audit were earlier communicated
through Audit Observation Memoranda (AOM) and discussed with concerned
officials and employees of TESDA Oriental Mindoro Provincial Office. Their
comments were incorporated in this Management Letter, where appropriate.

A. INTRODUCTION

6. The Technical Education and Skills Development Authority (TESDA) was

established through the enactment of Republic Act No. 7796 otherwise known as
the “Technical Education and Skills Development Act of 1994”, which was signed
into law by President Fidel V. Ramos on August 25, 1994. This act aims to
encourage the full participation of various concerned sectors and mobilize the
industry, labor, local government units and technical-vocational institutions in the
skills development of the country’s human resources.

7. During CY 2015, TESDA Oriental Mindoro Provincial Office was headed by Mr.
Anwar E. Geron as Provincial Director, with office located at First Floor of Luna
Building III, Gov. Infantado St., Calapan City Oriental Mindoro.

8. Major accomplishments of TESDA Oriental Mindoro Provincial Office for CY

2015 are presented as follows:

Percentage
Accom- (%) of
Target
Key Performance Indicator (KPI) plishment Accom-
plishment
TESD Services
 Number of enrolled in TVET programs, all 107
20,026 21,366
delivery modes
 No. of graduates in TVET programs, all
18,065 20,971 116
delivery modes
 No. of employed graduates (TWSP,STEP, all
4,101 2,418 59
TTI Programs
 No. of persons profiled (YP4SC, NCAE, etc) 14,526 6,793 47
TESD Regulation Services
 No. of persons assessed, all delivery modes 12,514 12,301 98
 No. of persons certified, all delivery modes 10,512 10,725 98
Training for Work Scholarship Program
(TWSP)
 Number of TWSP subsidized enrollees 1,474 3,273 222
 Number of TWSP subsidized graduates 1,327 3,552 268
 Number of persons assessed 1,327 3,532 266
 Number of persons certified 1,115 2,497 224
 Number of employed TWSP graduates 863 120 14

9. The total allotments and obligations received by the Agency for CY 2015 and its
unobligated allotments are presented as follows:
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 Category Allotments Obligations Unobligated Allotments
PS P 2,904, 104.50 P 2,904,104.50 P -
MOOE 24,079,080.20 24,039,908.13 39,172.07
TOTAL P 26,983,184.7 P 26,944,012.63 P 39,172.07

10. The Agency’s financial position and performance for CY 2015 with comparative
figures for CY 2014 are presented below:

Increase/
CY 2015 CY 2014
(Decrease)
A. Financial Position
Asset 1,863,640.28 13,927,264.10 (12,063,623.82)
Equity 1,863,640.28 13,927,264.10 (12,063,623.82)

B. Financial Performance
Income 440,300.00 353,950.00 86, 350.00
Expense 41,482,062.85 22,290,993.75 19,191,069.10
Financial Subsidy 27, 326, 544.77 34,249,736.57 (6,923,191.80)
Excess of Income
Over Expenses (13, 715,218.08) 12,312,692.82 (26,027,910.90)
(Deficit)

B. SUMMARY OF RECOMMENDEDATIONS

11. For the significant deficiencies observed in the course of the audit, we
recommended the Management:

a. To require all those concerned to see to it that financial reports, including all
supporting documents are submitted to the Office of the Auditor within the
deadline set to facilitate timely verification thereof and cause the suspension
of salaries of the concerned official/s responsible for submission of various
accounting reports, Official Receipts, Disbursement Vouchers and
supporting documents for failure to submit to the Auditor until they have
complied with the requirements of the Commission.

b. To require the concerned personnel/claimants to submit the necessary

documents to support the claims and instruct the accountant to be vigilant in
the review of supporting documents before processing the claims.

c. To require the concerned officials to submit immediately the required

documents supporting the fuel consumption pursuant to COA Circular No.
77-61 to prevent suspension in audit of the vouchers amounting to P37,

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 715.92 and instruct the agency accountant to refrain from processing claims
with incomplete supporting documents.

d. To coordinate closely with the concerned TVI to prove the authenticity of

the existence of the scholars pursuant to TESDA Circular No. 3 series of
2014 and strictly observe the monitoring and reporting requirements of the
Project Management Office (PMO);

e. To evaluate and monitor the process design adopted by the participating TVI
in the selection of scholars to avoid misrepresentation and ghost scholars
and training as well and see to it that the physical and the financial reports
are accurate, consistent and with actual existence.

f. To ensure that there is proper GAD planning and budgeting conducted

annually and make it a part of all programming and budgeting exercises of
the agency. There should be a proper listing of programs, activities and
projects focused on GAD which shall form part Annual Work and
Financial Plan (WFP) of concerned offices or units within the agency or
department. To assign a GAD focal person who shall coordinate the
preparation of the agency GPB and the GAD AR, monitor its
implementation and report on its results and submit within the prescribed
period the necessary documents to the oversight agencies.

C. DETAILED OBSERVATIONS AND RECOMMENDEDATIONS

Non-submission of accounting reports and supporting documents

Various accounting reports and its supporting documents were not submitted to
the Auditor within the prescribed period as provided under COA Circular No.
95-006 dated May 18, 1995 and COA Circular No. 2009-006 dated September 15,
2009, thereby causing delay in the audit of accounts and management was not
immediately informed of the deficiencies noted if any.

12. COA Circular No. 95-006 dated May18, 1995 provides the guidelines in the
submission of reports, thus:

a. Section 6.03 - Accountable Officers shall submit records, receipts, disbursement,

expenditures, operations and all other transactions, together with the supporting
documents to the Chief Accountants in the manner and within the time frame
prescribed in existing rules and regulations;

b. Section 6.04 - Disbursing Officers in particular shall faithfully comply with

Section 100 of Presidential Decree No. 1445 which require them to render
monthly reports of their transactions pursuant to existing auditing regulations not
later than the fifth day of the ensuing month to the auditor concerned;

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 c. Section 6.05 - The official involved in the daily recording of transactions in the
books of accounts shall turn over the receipts and the disbursement
records with all paid vouchers and documents evidencing the transaction to the
Auditor within ten (10) days from date of receipt of said documents.”

13. Corollary to this, Section 7.2.1(a) of COA Circular No. 2009-006 dated September
15, 2009 provides that “The Chief Accountant, Bookkeeper or other authorized
official performing accounting and/or bookkeeping functions of the audited agency
shall ensure that: (a) the reports and supporting documents submitted by the
accountable officers are immediately recorded in the books of accounts and submitted
to the Auditor within the first ten (10) days of the ensuing month”

14. Evaluation of the Agency’s compliance with the above mentioned regulations
disclosed that the financial statements, reports and transaction documents such as the
journal entry vouchers, disbursement vouchers, official receipts and its related
supporting documents were not submitted to the Office of the Auditor within the
reglementary period as detailed below:

Latest Reports Submitted Transaction Date Date Submitted

Report of Checks Issued & Disbursement Jan-Mar 2015 Jul 21, 2015
Vouchers
Additional Disbursement Vouchers Jan-Feb 2015 Jan 15, 2016
(missing documents)
Additional Disbursement Vouchers Mar 2015 No report submitted
(missing documents)
Report of Checks Issued & Disbursement April 2015 Jan 12, 2016
Vouchers
Report of Checks Issued & Disbursement May-August 2015 Jan 15, 2016
Vouchers
Report of Checks Issued & Disbursement Sept-Nov 2015 Jan 18, 2016
Vouchers
Report of Checks Issued & Disbursement Dec 2015 No report submitted
Vouchers
Journal Entry Vouchers Jan-Dec 2015 No reports submitted
Bank Reconciliation Statements Jan-Dec 2015 No reports submitted
Liquidation Reports Jan-Dec 2015 No reports submitted
Statement of Allotment & Obligation Jan-Dec 2015 No reports submitted
Trial Balance Jan-Dec 2015 No reports submitted
Financial Statements Quarterly 2015 No reports submitted
Monthly Report of Gasoline Consumption Jan-Dec 2015 No reports submitted

15. The delayed preparation and submission of financial reports and transaction
documents to the Office of the Auditor preclude the Audit Team from conducting
timely review and verification of accounts and from informing Management of any
deficiency or error that may be noted during the audit.

16. Relative thereto, provisions under Section 122 of PD 1445 on submission of reports
are quoted hereunder:
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 a. Whenever deemed necessary in the exigencies of the service, the Commission may
under regulations issued by it require the agency heads, chief accountants, budget
officers, cashiers, disbursing officers, administrative or personnel officers, and
other responsible officials of the various agencies to submit trial balances,
physical inventory reports, current plantilla of personnel, and such other reports
as may be necessary for the exercise of its functions.

b. Failure on the part of the officials concerned to submit the documents and reports
mentioned herein shall automatically cause the suspension of payment of their
salaries until they shall have complied with the requirements of the Commission.”

17. We recommended that the Agency Head:

a. require all those concerned to see to it that financial reports, including all
supporting documents are submitted to the Office of the Auditor within the
deadline set to facilitate timely verification thereof.

b. cause the suspension of salaries of the concerned official/s responsible for

submission of various accounting reports, Official Receipts, Disbursement
Vouchers and supporting documents for failure to submit to the Auditor
until they have complied with the requirements of the Commission.

18. The Provincial Director stated that the former provincial accountant was
promoted as Regional Accountant and at the same time was designated as Acting
Accountant (part-time) of the provincial office hence she was not able to prepare
all the needed documents for audit. The management assured that they will
comply promptly with the financial reporting requirements.

Insufficient supporting documents for travel expenses

Travel expenses reimbursements and cash advances paid to officials amounting

to P40,421.72 were not supported with sufficient documents as proof of travel
inconsistent with Section 4(6) of PD 1445 and COA Circular No. 2012-001 dated
June 14, 2012, thereby casting doubts on the validity of the transactions.

19. It is a fundamental principle as provided under Section 4(6) of PD 1445 that claims
against government funds shall be supported with complete documentation.

20. Likewise, COA Circular No. 2012-001 dated June 14, 2012 provides the general
requirements for all types of disbursement. Included therein is the “sufficient and
relevant documents to establish validity of claim”.

21. Upon audit of the Reports of Checks Issued (RCI) for the year 2015, the eleven (11)
vouchers for reimbursement of travel expenses have incomplete documents to
support that travel was consummated. Three (3) vouchers for reimbursement of travel

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 expenses were even missing but were recorded in the RCI. These raised the doubt of
the Audit Team as to the validity of the transactions.

22. We recommended that the Agency Head:

a. require the concerned personnel/claimants to submit the necessary

documents to support the claims;

b. instruct the accountant to be vigilant in the review of supporting

documents before processing the claims.

23. The Management immediately informed the claimants of travel reimbursements

to submit the necessary documents. Further, new acting accountant was advised to
be vigilant in all documents and attachments submitted for processing.

Insufficient supporting documents for fuel consumption

Fuel consumption of the officials amounting to P37,715.92 were not supported

with sufficient documents as prescribed by COA Circular No. 77-61 dated
September 26, 1977 casting doubt on the proper utilization of government motor
vehicle.

24. COA Circular No. 77-61 dated February 10, 1997 provides the necessary documents
to support payments for fuel consumption as follows:

a. XXX….

b. The use of government vehicles should be controlled through properly

accomplished and duly approved Driver’s Trip Tickets which should be serially
numbered, a summary of which shall be made at the end of the month in a
Monthly Report of Official Travels, for audit purposes.

c. Fuel consumption of government motor transportation shall be properly

controlled and accounted for through approved Requisition and Issue Voucher
or equivalent.

d. Monthly Report of Fuel Consumption of government transportation shall be

submitted to the Auditor.

e. All expenses regarding any unauthorized use or misuse of government motor

transportation shall be disallowed in audit.

f. No disbursement voucher for fuel consumption (gasoline and oil) of

government vehicles shall be allowed in audit unless duly supported by
properly accomplished and approved serially numbered driver’s trip tickets.

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25. The Management failed to submit the monthly reports to verify the reasonableness of
the fuel consumption. Driver’s trip tickets were not serially numbered and some were
missing, making it difficult for the Audit Team to track the odometer/speedometer
readings. Some of the disbursements were not supported by properly accomplished
documents.

26. We recommended that the Agency Head:

a. require the concerned officials to submit immediately the required

documents supporting the fuel consumption pursuant to COA Circular No.
77-61 to prevent suspension in audit of the vouchers amounting to P37,
715.92; and

b. instruct the agency accountant to refrain from processing claims with

incomplete supporting documents.

27. The Management assured the audit team that the new accountant will not process
claims with incomplete documents. Furthermore, the Driver’s trip ticket would be
serially numbered for proper monitoring.

Doubtful disbursements to a Technical Vocational Institution

Sixteen disbursement vouchers (DVs) made by the Provincial Office as payment

for training cost and assessment worth P1,463,700.00 allotted to 322 scholars for
one of the Technical Vocational Institutes (Research Institute for Neo- Scholastic
Advancement Inc.) are doubtful being not compliant with TESDA Circular No.
03 series of 2014.

28. TESDA Circular No. 3 series of 2014 provides the following peculiar guidelines in
the conduct of the training and payment of training and assessment cost:

a. Section 5. The TWSP shall be entitled to free training and assessment. The
approved TWSP standard costing for training and assessment shall be applied
strictly. The technical vocational institution shall not exact additional fees (such
as fees for IDs and uniform) from the beneficiaries of this program.

b. Section 10.1. The Provincial and Regional Directors shall ensure that
qualifications being included in the scholarship shall have readily available
accredited assessment center and assessor within the region/province.

c. Section 10.2. To meet the target requirements of competency assessment and

certification, competency assessment shall be mandatory for qualifications with
assessment tools.

d. Section 10.3. The conduct of assessment shall be pre-requisite for payment of

training cost only when assessment centers are readily available and accessible
to the TVIs.

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 e. Section 15. The following acts shall be grounds for the perpetual disqualification
of the TVI and suspension or revocation of the Certificate of Program
Registration (COPR) subject to due process of law:

 Ghost training
 Exaction of unauthorized fees from the graduate
 Falsification, forgery or misrepresentation in the submission by the TVI of
the required reports to TESDA

29. Upon the audit of the sixteen vouchers the team observed the following which raises
the doubt as to the authenticity of some of the scholars that undergone the training:

a. The same picture is used in two different profiles of the trainees which were not
even blood-related and/or a different person’s picture is put in the profile. Some
used too old pictures in the profile which were not in accordance with the
birthdate stated there in.

b. Notarized affidavit of undertaking is submitted months after the training is done

which should be submitted before the start of the training

c. All of the attachments of TVET or e-career profiling are not the Ability and
Interest Profiler Report of the trainee but only the filled out sign-up form to
register to the assessment system.

d. The team conducted inquiry thru phone calls. Out of the 322 scholars, 163 has no
contact number indicated in the profile and 108 could not be reached thru their
stated contact numbers.

e. Two scholars responded that they had not undergone to any training programs
conducted.

f. Four scholars responded that they had not taken the assessment but were listed in
the registry of worker’s assessed as competent and three scholars were not given
assessment.

g. The scholars further stated that they were asked to pay for the assessment fees
and IDs.

30. In view of the foregoing facts, the implementation of the Training for Work
Scholarship Program (TWSP) did not attain its objectives.

31. We recommended that the Agency Head:

a. coordinate closely with the concerned TVI to prove the authenticity of the
existence of the scholars pursuant to TESDA Circular No. 3 series of 2014.

b. strictly observe the monitoring and reporting requirements of the Project

Management Office (PMO);
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 c. evaluate and monitor the process design adopted by the participating TVI in
the selection of scholars to avoid misrepresentation and ghost scholars and
training as well;

d. see to it that the physical and the financial reports are accurate, consistent
and with actual existence.

32. The Management designated a new Scholarship Focal to coordinate closely with the
TVI’s with regards to the implementation of their scholarship programs. The said
focal together with the undersigned shall monitor closely participating agencies/TVI’s
to ensure accurate physical and financial reports.

Implementation of Gender and Development (GAD)

Funds allocated by management for 2015 Gender and Development (GAD)

program cannot be verified due to non-preparation and submission of Annual
GAD Plans and Budget and based on the submitted GAD accomplishment
report only P26,975.00 were utilized which is not the standard allocation of
P1,349,159.24 or 5% of the agency’s total budget appropriations of
P26,983,184.70 as authorized under the General Appropriations Act and in
accordance with PCW-NEDA-DBM Joint Circular No. 2012-01 and COA
Circular No. 2014-001 dated March 18, 2014, thus, GAD activities were not
provided with the appropriate allocation.

33. PCW-NEDA-DBM Circular No. 2012-02 stated the guidelines for the preparation of
Annual Gender and Development (GAD) Plans and Budgets and Accomplishment Reports to
Implement the Magna Carta of Women as follows:

GENERAL GUIDELINES IN GAD PLANNING AND BUDGETING

 GAD planning and budgeting shall be conducted annually as part of all

programming and budgeting exercises of agencies. The PAPs in the GPB
shall be included in the agency budget proposal and they shall be reflected
in the Annual Work and Financial Plan (WFP) of concerned offices or units
within the agency or department.

 The GAD budget, which is the cost of implementing the GAD plan, shall
form part of, and is not in addition to the agencies’ approved budget
.
 Agency GAD Focal Point Systems (GFPS) shall take the lead in
mainstreaming gender in agency PAPs. As such they shall coordinate the
preparation of the agency GPB and the GAD AR, monitor its
implementation and report on its results. In the process, they shall provide
technical assistance to offices or units within their agency on gender
mainstreaming. To enable them to perform their roles, it is important that

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 GFPS members are provided with the required gender capacity, such as the
application of gender analysis tools.

COSTING AND ALLOCATION OF THE GAD BUDGET

 At least five percent (5%) of the total agency budget appropriations

authorized under the annual GAA shall correspond to activities supporting
GAD plans and programs. The GAD budget shall be drawn from the
agency’s maintenance and other operating expenses (MOOE), capital
outlay (CO), and personal services (PS). It is understood that the GAD
budget does not constitute an additional budget over an agency’s total
budget appropriations.

PREPARATION AND SUBMISSION OF GAD ACCOMPLISHMENT REPORTS

 Attached agencies, bureaus, regional offices, constituent units and all others
concerned shall submit their GAD ARs to their central offices. The agency
GFPS shall prepare the annual GAD AR based on the PCW-endorsed GPB
or the GPB adjusted to the approved GAA f. Activities completed until the
end of the year may be included in the final GAD AR of agency submitted to
PCW in January.

34. COA Circular No. 2014-001 dated March 18, 2014 further stated the responsibility
of the audited agency on the submission of the reports as follows:

The Audited agency shall submit a copy of the Annual GAD Plan and Budget
(GPB) to the COA Audit Team assigned to the agency within five (5) working
days front the receipt of the approved plan from the PCW or their mother or
central office, as the case maybe. Likewise, a copy of the corresponding
Accomplishment Report shall be furnished the said Audit Team within five (5)
working days from the end of January of the preceding year.

35. The management failed to submit to the audit team the Annual Gad Plan and
Budget and accomplishment report within the prescribed period. The team cannot
further determine whether the management has conducted relevant GAD related
activities based on the accomplishment report they submitted due to the very low
utilization rate of the supposed to be fund for the projects and activities pertaining
to GAD.

36. We recommended to the Management to:

a. Ensure that there is proper GAD planning and budgeting conducted

annually and make it a part of all programming and budgeting exercises of
the agency. There should be a proper listing of programs, activities and
projects focused on GAD which shall form part Annual Work and
Financial Plan (WFP) of concerned offices or units within the agency or
department;
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 b. Assign a GAD focal person who shall coordinate the preparation of the
agency GPB and the GAD AR, monitor its implementation and report on
its results; and,

c. Submit within the prescribed period the necessary documents to the

oversight agencies.

37. The management ensured that they will conduct proper GAD planning and
budgeting annually with proper listing of programs, activities and projects focused
on GAD. They also assured that a GAD focal person will be assigned who will
coordinate the preparation of the agency GPB and the GAD AR to monitor its
implementation and report its result. They will allocate at least 5% of the agency’s
total budget for the year to implement GAD plan and programs.

Compliance with Tax Laws and Regulations

38. In compliance with the Revenue Memorandum Circular No. 23-2007 dated
March 23, 2007 and BIR Tax Revenue Regulation No. 10-2008 dated July 8,
2008, the tax withheld amounting to P257, 687.71 for compensation taxes and
P37,312.68 for suppliers and services were duly remitted to the Bureau of Internal
Revenue thru TRA within the year.

Projects Funded by Official Development Assistance (ODA)

39. The Agency did not receive funds for Official Development Assistance (ODA)
project for CY 2015.

Unsettled Suspension, Disallowances and Charges

40. For the year 2015, no unsettled audit suspension, disallowance and charge were
noted in TESDA Oriental Mindoro Provincial Office.

D. STATUS OF IMPLEMENTATION OF PRIOR YEAR’S AUDIT

RECOMMENDATIONS

41. We made a follow up on the action taken by the TESDA Regional Office No. IV-
B to implement the recommendations of prior years and noted the following:

Status of Implementation No. of

(if applicable) Recommendations
Fully Implemented 0
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 Partially Implemented 2
Not Implemented 3

42. The results of the validation of the implementation of prior year’s

recommendations are presented in Annex F.

E. ACKNOWLEDGEMENT

43. We wish to express our appreciation to the Management and staff of Technical
Education and Skills Development Authority - Oriental Mindoro Provincial
Office for the cooperation and assistance extended to our audit team during the
audit.

44. We would appreciate receiving your reply, within one month from receipt of this
letter.

Very truly yours,

LUCILA A. MAGPANTAY
State Auditor IV
OIC-Regional Supervising Auditor

Copy Furnished:

The Cluster Director

Cluster 5 – Education and Employment
National Government Sector
Commission Audit
Quezon City

The Supervising Auditor

TESDA Central Office
Taguig City, Metro Manila

The Regional Director

TESDA Regional Office No. IV-B
Calapan City, Or. Mindoro

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The Regional Director
This Regional Office No. IV-B
Quezon City

The Audit Team Leader

TESDA Or. Mdo Provincial Office
Calapan City, Oriental Mindoro

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