Detailed Audit Observations Financial Audit Engagement

PART II
DETAILED AUDIT OBSERVATIONS

FINANCIAL AUDIT ENGAGEMENT
Audit Period: May 2 – 11, 2018
A. AUDIT ON ADVICE OF SUB-ALLOTMENTS (ASA)/CASH TRANSFER, OBLIGATION and DISBURSEMENTS – LOCALLY-FUNDED
PROJECTS
RECOMMENDED ACTIONS / CONCERNED

MANAGEMENT
REF FINDINGS/COMMENTS/ OBSERVATIONS ACTIONS TO BE OFFICIALS/
ACTION PLAN
UNDERTAKEN PERSONNEL
I. ASA / CASH TRANSFER AND DISBURSEMENTS
ASA- A. At RO, copies of ASA received from CO and released to IMOs were duly signed by For RO - RO and IMOs RO:
RO4- authorized officials. However, in all IMOs, the following were observed: - Continue proper practice and will comply with Melody C.
2018 diligent filing of ASA releases. the Calibat
FAS1 1. ASAs on file were incomplete, not arranged per ASA number and not properly recommendation.
labelled. For IMOs – CBIMO:
 In CBIMO, a logbook of all received ASAs is maintained. But it is not - Improve filing system for easy Teresita B. De
chronologically arranged per ASA number and date (Annex 1). referencing and retrieval of Lara
2. No Schedules of ASA were attached to the (yearly) files of ASA. documents.
 In QIMO’s NISRIP file, attached was a handwritten summary list of ASA QIMO:
received and its corresponding Funding Check (FC) amount in a yellow-ruled For RO and all IMOs - Rodrigo L.
paper (Annex 2). - Maintain/update logbook for all Alcance
3. List of Allotments and Sub-Allotments (LASA) / FAR 1-B were not being prepared received ASA according to ASA
and maintained by RO and all IMOs. number and date. LRIMO:
- Prepare printed Schedules Ma. Corazon
(summary) of ASA to be Antonette M.
attached per file folder. Externon
- Prepare and maintain
LASA/FAR 1-B.
ASA- B. Irregularities on the releasing and recording of ASA, Funding Checks (FC), and
RO4- disbursements of project funds were found that, to wit:
2018
FAS1 1. RO takes substantial period from 14 to 167 calendar days to release ASAs to IMOs Starting FY 2017, RO affirms RO:
from the original dates when ASAs are received from CO (Annex 3) as adoption of “one-year validity Engr. Romeo
summarized below: period” of authorized Lopez - RIM
appropriations, thus, it is advised
that timely release of ASAs to Engr. Gloriosa L.
IMOs be practiced to ensure Hernandez
efficient project implementation in
accordance with the approved DM Aurora A.
Program of Works (POWs). Papa
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MANAGEMENT
ACTION PLAN
Pursuant to FY 2018 General

Provisions Section 61, all
authorized appropriations shall be
available for release and
obligation until December 31,
2018. Further, Special Provision
No. 11 (Availability of Subsidy to
GOCCs) was placed under
Conditional Implementation Item
C (Efficient Use of Appropriations)
to be imposed on all government
agencies including GOCCs thru
the President’s Veto Message for
FY 2018.
For RO - Per Ms. Calibat, RO:

- Immediate reconciliation
is the ASA should Melody C.
advised. be recorded Calibat
under QIMO
For QIMO and LRIMO - since the release QIMO:
- Submit reconciled SAOLBs pertains to Rodrigo L.
2. ASA No. 2016-753 dated December 5, 2016 in the amount of P104,262 (Annex 4) within thirty (30) days from honoraria Alcance
intended for LRIMO was inadvertently recorded in the schedule of ASA, cash receipt of this report. allowance in the
released and unfunded under QIMO as of April 30, 2018 (Annex 5) conduct of the LRIMO:
 Said ASA is on file at LRIMO and recorded in its SAOLB (Annex 6). FY 2016 Ma. Corazon
Farmers Antonette M.
Satisfaction Externon
Survey
by the Southern
Luzon State
University
(SLSU).
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MANAGEMENT
ACTION PLAN
For all IMOs - CBIMO:

- Submit written explanation with Teresita B. De
substantial documentations Lara
relative to the excess
disbursements incurred. QIMO:
3. IMOs incurred disbursements against ASA received even without corresponding Rodrigo L.
FCs/cash transfers from RO. And several overdrafts were observed against FC For RO and all IMOs - Alcance
actually received (Annex 7), summarized as follows: - Pursuant to DBM Corporate
Budget Memorandum No. 40 LRIMO:
dated January 3, 2018, FY 2019 Ma. Corazon
will adopt an annual cash-based Antonette M.
budgeting and utilization. Thus, Externon
starting this year, it is suggested
that expenditures should be
charged to its corresponding
cash allocation.
QIMO:
For QIMO and LRIMO - It was agreed Rodrigo L.
- Submit written explanation of during the Exit Alcance
said disbursements. Conference that
staring this year, LRIMO:
4. The 15% cash advance mobilization, under COB-ADA No. 2018-112 dated April 3, For LRIMO - RO and IMOs Ma. Corazon
2018 amounting to P60,158,100 was released to IMOs specifically for ASA Nos. - Systematically program the will practice Antonette M.
2018-100, 101, 112, 114, 121, 122 and 126 totalling to P58,818,334.60 (Annex 8). cash requirements for the cash-based Externon
salaries/ wages of personnel in disbursement in
However, analysis of CY 2018 subsidiary ledgers (SL) revealed that some IMOs the Monthly Disbursement preparation to
incurred and paid disbursements even without released FC for the following ASAs: Program (BED No. 3) pursuant CY 2019 cash-
to DBM Circular Letter No. based budgeting.
2016-9, as amended. The same
shall be automatically Accordingly, per
transferred to IMOs upon receipt CO-FMD’s
of cash allocation from RO. advice, for
2017 obligations
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MANAGEMENT
ACTION PLAN
due for payment

within this year,
submit schedule
of incurred
expenditure a
week after
payment, for
immediate
replenishment.
Nolasco
Practice verification of SL Panganiban
ASA- balances against LDDAP requests (Cashier)
RO4- before release of cash for funding
2018 to avoid overdrafts. Teresita B. De
FAS1 Lara
For RO and all IMOs –
- Start practicing cash-based
disbursement in preparation to
annual cash-based budgeting
C. Procedural lapses and inconsistencies were observed in processing ASA/FC releases starting CY 2019.
and payments, including preparation of forms and supporting documents, such as:
Melody C.
1. Upon receipt of IMO’s List of Due and Demandable Accounts Payable (LDDAP) Comply with the required forms Calibat
requests, SLs were not being verified prior release of cash allotment as affirmed at per GAM Volume II, Appendices
CBIMO where overdrafts were evident per submitted SAOLB as of April 30, 2018 11 (ORS) and 14 (BURS) - Annex
(Annex 11). 13 and Annex 14.
Melody C.
Exercise due diligence in Calibat
encoding of ASA details.
2. Non-compliance of official accounting forms, i.e. Budget Utilization Request and Melody C.
Status (BURS) and Obligation Request and Status (ORS) used by RO do not Exercise due diligence in the Calibat /
contain the Box C (Status of Obligation) portion (Annex 12), per GAM Volume II. preparation of accounting forms
and attaching the complete Cecilia Agawin
supporting documents. (Cashier)
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MANAGEMENT
ACTION PLAN
3. Error in encoding of ASA details such as date, i.e.:

 ASA No. R4A-501-2016-765 LFPs for LRIMO was dated December 7, 2017
instead of December 7, 2016 (Annex 15). For RO - RO:
- Develop and utilize uniform DM Aurora A.
formats of SL and CIP-LC with Papa
4. Relative to ADA/FC released to QIMO for Disbursement Voucher (DV) No. 501- all the necessary details/
18-04-165 LFP amounting to P20,951,531.25, RO failed to attach breakdown of references, for reconciliation Jemmela Anne
the corresponding ASA (Annex 16). purposes. The same shall be V. Masicat
adopted, maintained and
ASA- updated, manually and Reynaria N.
RO4- II. SUBSIDIARY LEDGERS (SL) PREPARATION AND MAINTENANCE electronically, across the region. Tapia
2018 RO and IMOs
FAS2 A. RO and all IMOs maintain SL/control book per ASA for LFP manually. And, the will comply with Melody C.
following were observed: For RO and all IMOs - the Calibat
- Practice regular reconciliation of recommendation.
 In LRIMO, e-copy of Construction-in-Progress Ledger Cards (CIP-LC) for FY 2015- CIP ledger cards and SLs. CBIMO:
2017 LFPs were maintained and updated. The CIP-LC contains a summary of all Teresita B. De
financial transactions in a given month, necessary for proper project monitoring. - Record accurately details and Lara
amounts for comparability of
However, all maintained SLs/control books of IMOs were in different formats, financial reports. QIMO:
(Annex 17) which also lack the basic details that can lead to unreliable reports, Rodrigo L.
delayed processing of progress billings and poor project monitoring, such as: Alcance
 Allotment - SARO Number, Date, Amount, Validity date LRIMO:

 Obligation - BUR/OR Number, Contractor’s name, POW Amount, Contract Ma. Corazon
Amount For RO and all IMOs – Antonette M.
 Funding - ADA Number, Date, Amount Externon
 Disbursement - DV Number, Date, Amount - Prepare and maintain the
required Financial
 In QIMO and LRIMO, SLs were not regularly updated/reconciled. Accountability Reports (FARs)
such as FAR-1, FAR 1-A, FAR
1-B as instructed in GAM
Volume II, Appendices 17, 18
III. STATEMENT OF ALLOTMENT, OBLIGATION, LIQUIDATION AND BALANCES and 19 (Annex 18).
(SAOLB) PREPARATION AND MAINTENANCE
A. All IMOs submit their respective SAOLBs to RO for consolidation. However, reliability
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MANAGEMENT
ACTION PLAN
and comparability of the SAOLBs cannot be ascertained due to the following:
All IMOs – RO:
 Per SAOLB as submitted by IMOs: - Maintain complete and updated Melody C.
files of ADA received from CO Calibat
1. Absence of LASA to verify ASA released to/received by the IMOs. and/or FC released to/received
ASA- by IMOs. CIMO:
RO4- Teresita B. De
2018 Record on the proper SAOLB Lara
FAS3 report the received ASA and QIMO
corresponding FC and Rodrigo L.
2. Absence of FC files in all IMOs to verify cash received from RO. disbursement according to (a) Alcance
GAA year, or (b) year ASAs were LRIMO
received but properly labelled as Ma. Corazon
continuing appropriations. Antonette M.
Externon
Teresita B. De
3. Improper recording/reporting of the 2015 ASAs, FC and disbursement at CBIMO For RO and all IMOs – RO and IMOs Lara
FY 2016 SAOLB (Annex 19). - Conduct reconciliation. Submit will comply with
results of reconciliation to IAS the
within thirty (30) days after recommendation.
receipt of this report. RO:
Melody C.
For QIMO and LRIMO: QIMO has Calibat
- Strict compliance with the submitted the CBIMO:
prescribed timelines in the revised SAOLB Teresita B. De
4. Unreconciled IMO and RO records/reports (Annex 20). submission of updated/ as of April 30, Lara
reconciled SAOLBs to RO for 2018 during the QIMO:
timely consolidation. Exit Conference Rodrigo L.
last May 11, Alcance
2018. LRIMO:
Ma. Corazon
5. Non-preparation and non-submission of updated/reconciled SAOLBs for FY Antonette M.
2018 GAA by QIMO and LRIMO. Externon
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MANAGEMENT
ACTION PLAN
For RO – RO will comply Melody C.

- Exercise due diligence in the with the Calibat
preparation of SAOLB reports. recommendation.
Current and continuing
appropriations (or unobligated Melody C.
allotments of previous year) Calibat
must be reported separately or
properly labelled.
 Per Consolidated SAOLB (by RO):
1. Misleading information such as incorrect label/caption (Annex 21), to wit:
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MANAGEMENT
ACTION PLAN
- Verify disbursement figures per

IMO especially when abnormal
cash balances exist. And
practice implementing cash-
based disbursement. RO:
Melody C.
- Submit to IAS explanation on Calibat
the noted observation within
thirty (30) days from receipt of CBIMO:
2. Abnormal (negative) cash balances exist at IMOs’ reported SAOLBs. But, RO this report. Teresita B. De
consolidated SAOLB report does not reflect such balances casting doubts on Lara
the reliability of the report, such as:
QIMO:
Rodrigo L.
Alcance
LRIMO:
Ma. Corazon
Antonette M.
Externon
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MANAGEMENT
ACTION PLAN
For RO and all IMOs –

- Conduct reconciliation. Submit
ASA- results of reconciliation to IAS
RO4- within thirty (30) days after
2018 receipt of this report. RO:
FAS3 Melody C.
Calibat
CBIMO:
Teresita B. De
Lara
QIMO:
Rodrigo L.
Alcance
LRIMO:
Ma. Corazon
Antonette M.
Externon
B. Unreliability and inconsistencies in the recording and reporting of financial

transactions due to VARIANCES of the ASA and ADA/FC releases, to wit:
1. Total Released and Unreleased ASAs to IMOs (Annex 24):
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MANAGEMENT
ACTION PLAN
For RO and all IMOs–

- Conduct reconciliation. Submit
results of reconciliation to IAS
within thirty (30) days after
receipt of this report.
For RO and all IMOs – RO:

- Strictly comply with GAM and Melody C.
2. Total ADA/FC releases for FY 2016 and 2017 (Annex 25), as shown below: COA-DBM Joint Circular No. Calibat
2014-1. FAR No. 1 shall reflect
 P5,008,649.70 (2016 Budget) - CO (per summary) vs RO (per schedule) the authorized appropriations CBIMO:
 P88,027,651.32 (2016 Budget) - RO (per schedule) vs IMOs (per SAOLB) and adjustments, total Teresita B. De
 P68,509,429.29 (2017 Budget) - RO (per schedule) vs IMOs (per SAOLB) allotments received including Lara
transfers/adjustments, total
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MANAGEMENT
ACTION PLAN
obligations, total disbursements
and the balances of unreleased QIMO:
appropriations, unobligated Rodrigo L.
ASA- allotments, and unpaid Alcance
RO4- obligations of a department/
2018 office/agency by Fund Cluster LRIMO:
FAS3 (i.e. equivalent to old Codes for Ma. Corazon
Fund 101, 102, 151, etc.) and Antonette M.
by allotment class. Externon
For RO –
- Designate an alternate person RO:
to countercheck propriety of the DM Aurora A.
working papers and supporting Papa
documents of LDDAP requests
for funding. Reynaria N.
- Secure electronic files with Tapia
strong password to avoid
modification by other person; Melody C.
and utilize USB or external hard Calibat
drive (to be updated regularly)
for back-up in case of computer
ASA- failures and other factors.
C. Inconsistent SAOLB format as prescribed in GAM and COA-DBM Joint Circular No.
RO4- - Maintain complete files
2014-1 (FAR No. 1) - Guidelines Prescribing the Use of Modified Formats of Budget and
2018 (hardcopy) of the Financial
Financial Accountability Reports.
FAS3 Reports with the corresponding
supporting working papers, for
reference and reconciliation
purposes.
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MANAGEMENT
ACTION PLAN
D. In RO, monitoring of all LFP releases (ASA, FC and disbursements) and consolidation
of SAOLB are being done:
 by a lone person –
 Due to work load, said person is prone to commit lapses and errors such as
misposting of amounts thus, records/reports may be incorrect and becomes
unreliable.
 electronically -
 Although, e-files are easily updated that made monitoring easy, the same are
subject to risks such as accidental deletion, computer failures, and other human
and technological factors.
B. CASH MANAGEMENT AND RELATED MATTERS
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RECOMMENDED ACTIONS/ CONCERNED
MANAGEMENT
ACTION PLAN
I. FREQUENCY OF DEPOSITS
CSH- A. Prompt deposit of collections were observed by all IMO Cashiers except at QIMO In the conduct of duties as For immediate QIMO:
RO4- (Annex 26) to wit: Cashiers, due care is necessary. compliance as Ms. AP
2018-  Shortage of P100.00 on the deposit made on February 26, 2018 due to illegible Strictly comply with: agreed during Nombrefia
FAS1 duplicate copy of OR, mistakenly read as P1,500.00 instead of P1,600.00. The the exit (Acting Cashier)
shortage was deposited the following banking day. a. MC No. 28 s. 1986 on conference held
 P50,000.00 collection on March 28, 2018 (Holy Week) was left vaulted in the Frequency of Deposits. at RO. Regional
cashier’s office during the long holiday break, posing risk. Money was deposited on b. COA Memorandum No. 2013- Irrigation
April 2, 2018. 004 dated July 9, 2013, Item Manager (RIM),
32, “xxx if impracticable, IMO Managers,
deposit shall be made as soon Administrative
as Php 10,000.00 collection and Finance
has been reached.” Manager,
Accounting
Units, Cashiers
and Collection
Representatives
II. CHECK DISBURSEMENT REGISTERS (CDRs)

The following are advised:
A. All IMOs should maintain For immediate CBIMO:
A. CBIMO does not maintain CDRs. Instead CBIMO Cashier assured that as proof of CDRs to: compliance Mr. Nolasco
payees’ claims, DVS were signed. However, few DVs presented for audit in CBIMO  confirm receipt of claims by Panganiban
CSH- were observed to be unsigned (Annex 27). legitimate payees; and (Cashier)
RO4-  for ease of retrieval when
2018- needed.
FAS2
Adhere to COA GAFMIS Circular
Letter No. 2002-001 dated
December 16, 2002 on
modification in the preparation of
the Report of Checks Issued
(RCI) and additional guidelines in
recording and reporting of Check
Disbursements in Section 33 and
34, Volume 1 of the Manual on
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MANAGEMENT
ACTION PLAN
the New Government Accounting
System (NGAS) for National
Government Agencies.
B. Issues on VOID checks were observed:

 No schedules of void checks were prepared nor maintained at all IMOs, per COA B. RO and IMOs must:
GAFMIS Circular Letter No. 2002-001, Section. 2.3.
 Comply with Section 2.3 of For immediate QIMO:
COA GAFMIS Circular Letter compliance Ms. AP
CSH- No. 2002-001. Nombrefia
RO4- (Acting Cashier)
2018-  At QIMO, no stamping of “CANCELLED” on voided checks (Annex 28).  Thoroughly deface all voided NPanganiban
FAS2 or cancelled checks by stated that Mr. RLAlcance
prominently imprinting the cancelled Head Acctg. Unit
word "VOID" or checks were due
"CANCELLED" with a rubber to errors of CBIMO:
stamp across the payee's checks made for Mr. Nolasco
name area. BIR remittances. Panganiban
(Cashier)
 At CBIMO, 52 void checks were recorded in CDR from October 25, 2016 to March  Submit analysis on void To submit
27, 2018 (Annex 29). checks from CY2016- analysis and
CY2017. justification for
voided/cancelled
It is likewise recommended for checks.
management to develop and
install a systematic monitoring and
control of outstanding checks to
deter possibility of rendering such
checks going stale/cancelled.
III. CASH ADVANCES (CAs)
CSH- A. QIMO has an outstanding CA amounting to Php312,520.00 which remained Strictly comply with COA Circular During the exit QIMO
RO4- unliquidated as of December 2017 (Annex 30). No. 97-002 dated February 10, conference, Ms. Myrtle
2018- 1997. RLAlcance Arriola
FAS3 clarified that Php (Cashier)
251,385.00 was
already Mr. RLAlcance
liquidated, only Head, Acctg.
Php 61,115.00 Unit
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MANAGEMENT
ACTION PLAN
remained
outstanding. It is
further agreed
that liquidation
will be submitted
the soonest.
CSH- Liquidation should be made the Mr. Nolasco

RO4- B. CBIMO cashier does not promptly liquidate CAs for cash basis payroll (wages) soonest and submit status within Panganiban
2018- expenses contrary to COA Circular No. 2012-001 which states that “salaries shall be 15 days upon receipt of audit (Cashier)
FAS3 liquidated within 5 days after the end of the pay period.” report.
IV. COLLECTION AND REMITTANCES

A. Current ISFs receivables were collected despite NIA MC 13 s 2017 which states that Strictly comply with NIA MC 13 s. GL Hernandez RO:
“free irrigation service fee shall commence crop year 2017”, summarized below 2017 in lieu of the approved IRR of stated that the RIM Romeo
CSH- (details per Annex 31): RA 10969 on free irrigation service IRR of the law Lopez
RO4- act. has not been
2018- disseminated.
FAS4 The payors are
large scale
developers who
voluntarily walk
in the office to
pay ISF arrears.
Justification be
submitted
regarding the
collection of ISF
despite R.A. No.
10969.
V. PROGRESS BILLING (PB) PROCESSING

A. Weaknesses in internal control in processing payments were observed at IMOs:
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MANAGEMENT
ACTION PLAN
1. Incorrect information printed in the particular explanation of BURS/DVs, to wit: AOs should exercise due diligence GL Hernandez ALL IMOs/RO
CSH-  3R Metal Craft – LRIMO (Annex 32-A) in the evaluation of submitted committed that Accounting Units
RO4-  Project name in the particulars of BUR should be “16 units centrifugal supporting documents for proper
2018- pumps Rodriguez PIP” instead of “procurement, delivery & installation of consistency of information. monitoring/
FAS5 solar power pump w/ accessories” review of
documents will
 Hexamindz Corp – CBIMO (Annex 32-B) be implemented.
 “Package 4” was written as project name instead of “Package 1”.
 NV Avila - ______ (Annex 32-C)

 Percentage of accomplishment indicated in the explanation portion of DV
is “25.94%” which should be “29.54%” per attached SWA.
2. Existence of several alterations and erasures in particulars/explanation portion of In evaluating attachments, AOs Ms. AP ALL IMOs/RO
should exercise due care in Nombrefia Accounting Units
DVs/BURS/OBRS.
issuing and/or preparing Acting Cashier of
accountable forms such as QIMO and
Example:
CSH- DVs/OBRS in order to reduce/ Maria Corazon
RO4- eliminate erasures or alterations of Antonette M.
IMO Description in OBRs Should be Annex
2018- significant information. Further, Externon
Particulars
FAS5 AO shall affix his/her signature on Collection Rep of
LRIMO San Juan RIS Macabling, Diezmo 33-A
every portion wherein erasure/ LRIMO, who are
CBIMO Package 4 Package 1 33-B alteration has been made. responsible in
the preparation
of said
DVs/BURS,
made the
corrections
during the audit
period.
3. The following observations were noted on some PAID DVs and its supporting Comply with the provisions of GL Hernandez
documents, as follows: COA Circular 92-389 dated committed that
 No stamping of “PAID” on some DVs by Cashiers in all IMOs contrary to COA November 3, 1992 stating that all proper
Circular 92-389 dated November 3, 1992 (Annex 34). vouchers and supporting monitoring/
documents should be stamped review of
“PAID” to prevent possible reuse documents will
CSH- and abuse. be implemented.
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MANAGEMENT
ACTION PLAN
RO4-
2018-  Not properly filling up of details (Annex 35) such as: Adhere with the provisions stated
FAS5  Processing date of DV in GAM Vol. II, Appendix 32 Items
 BURS/OBRS number B 3, 5 and 8 in proper filling up of
 Check details and date DVs/BURS.
 Signature of payee in the payment received box
 OR issued by the payee
 Contract Number indicated in the BUR
Exercise due diligence in the
 No stamping of DV number (Annex 36). preparation of forms and reports,
and review the completeness,
correctness and if proper, of the
supporting documents
C. FINANCIAL PROJECT MANAGEMENT AUDIT
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MANAGEMENT
REF FINDINGS/COMMENTS/OBSERVATION ACTIONS TO BE OFFICIALS/
ACTION PLAN
I. PROJECT DISBURSEMENT REVIEW (see attached Table 1)
A. On the preparation and processing of 15% advance mobilization and Progress It is advised that accounting unit GH Fernandez CBIMO:
Billings (PBs), the following were observed: should ascertain conformance with instructed IMO Engr. JC
the following: Chiefs to ensure DeJesus, Sr.
FPM- 1. Lack of appropriate attached supporting documents, to wit: a. Adhere to the minimum that the Engr. A
RO4- requirement set forth in the ITB minimum
2018-  Minimum requirement of equipment was not met as stated in Invitation to Bid and conform with P.D. No. 1445 requirements set Ms. TB De Lara,
FAS1 (ITB), instead picture documentation of materials delivered on site was Section 4, Item 6. out in respective Sr. Acctg Proc A
attached to claim the 15% advance mobilization (Annex 37). b. Submit explanation within 30 ITBs shall be
 List of contractor’s equipment pledged for the contract (1 unit one-bag concrete days upon receipt of this audit met before Mr. Nolasco
mixer) was not certified nor supported the claim. report. releasing 15% Panganiban
c. Conform with the required advance (Cashier)
documents as stated per RA payment on
9184 sec 25.2(b) (viii)(3). mobilization.
Contractor: I.A. Bosque Const. Corp.
FPM- Project Name: Bugaan Communal Irrigation System Proper All IMO Chiefs,
RO4- Contract No.: Contract No. 4AB-RRC-17-021, located at Laurel, Batangas Conform with the following monitoring/ Engineering
2018- provisions in PD No. 1445, review of Units
FAS2 Sections: documents will Accounting Units
2. Failure to review/assess the validity of supporting documents submitted by 4.6 - Claims against government be implemented. and those
contractor in the preparation/payment of DVs such as: funds shall be supported with responsible for
complete documentation. For submission the preparation
 Non-submission of updated PCAB licenses (Annex 38). 4.7 - All laws and regulations of explanation and evaluation of
applicable to financial the soonest. DVs for
Contractor PB No. DV Date PCAB Date transactions shall be faithfully contractors’
RM Adalin Const. 1st 07/26/2017 06/30/2017 adhered to. claims.
2nd 07/31/2017 4.8 - Conform with the generally
3rd 09/04/ 2017 accepted principles and
Markbilt Construction 1st 12/21/2016 06/30/2016 practices of accounting as
2nd 03/13/2017 well as of sound management
and fiscal administration shall
be observed, provided that
they do not contravene
existing laws and regulations.
Conform with RA 9184 Sec.
FPM- 23.1.a.vi. that requires a valid
RO4- PCAB license for contractors to
2018- participate and implement
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MANAGEMENT
ACTION PLAN
FAS3 government infrastructure
projects.
 No attached updated Performance Bonds that coincide with the revised To the engineering/accounting Proper All IMO Chiefs,
contract completion dates (Annex 39). units, for evaluators and monitoring/ Engineering
processors, the following are review of Units
Contractor PB No. Date Performance Bond advised: documents shall Accounting Units
Expiry a. Exert extra care in assessing be implemented. and those
Hexamindz 2nd 12/28/2017 10/27/2017 attached supporting documents responsible for
Corporation to prevent possible risk of error IMO as paying the preparation
C.E. Mercado Const 2 nd
03/06/2018 06/28/2017 and loss. unit of and evaluation of
b. Dates of supporting documents contractors’ DVs for
Markbilt Construction 1s 12/21/2016 09/16/2016 such as PCAB licenses, Surety claims, shall contractors’
2nd 03/13/2017 Bonds, Performance Bond and monitor expiry claims.
FPM- Security Bonds should be dates of licenses
RO4- consistently monitored. and bonds.
2018- c. For project evaluators or
FAS4 reviewers, competency
 No attached updated surety bond (Annex 40) seminar/workshops are
recommended.
Contractor: C.E. Mercado Construction d. Conform with the provisions of
Contract orig. Expiry: Sept. 7, 2017 RA 9184 sec. 39.4 that
Contract revised expiry: March 23, 2018 performance security shall
Surety Bond Expiry: Feb. 27, 2018 remain valid until the issuance
FPM- Date of paid 3rd PB: March 6, 2018 of certificate of final
RO4- acceptance.
2018-
FAS5 Submit explanation/justification for
3. No coverage and execution dates of surety bond for the 15% advance further evaluation/review.
mobilization claims (Annex 41)
Submit the required surety bond
Contractor: Titai General Construction per RA 9184.
Contract No.: 4AC-RRN-18-006 for the Construction of Protection Works for
Plucena River Irrigation System located at Gen. Trias, Cavite
FPM- CBIMO:
RO4- Engr. JC De
2018- 4. No inclusive dates on the approved Statement of Work Accomplished (SWA) Jesus
20
MANAGEMENT
ACTION PLAN
FAS6 attached to some DVs (Annex 42). Sr. Engr. A
Written explanation is Proper Ms. TB De Lara,
5. No signatures of recommending officer/verifier and inspector in the attached necessary and submit the monitoring/ Sr. Acctg Proc A
Certificate of Inspection and Acceptance casting doubt on the legality of the same within 30 days upon review of Mr. Nolasco
transaction: receipt of this audit report. documents shall Panganiban
be implemented. (Cashier)
 1st PB of GVDPM Const. Corp for Molino RIS under contract no. SAC-RRN-17- CBIMO:
150 (Annex 43-A); and Engr. Edwin C.
Nazareno
 1st PB of Magnarich Trading and Const. for the Construction of Diversion Works Sr. Engineer A
of Manalo CIS. Contract No. 4AB-RRC-17-77 (Annex 43-B). Engr. Claudin L.
Abaca
Engr. Asst. B
Engr. Marivic R.
Dinglasan
Engr. A
FPM-
RO4-
2018- II. RESULTS OF AUDIT SAMPLE CONTRACTS
FAS7 A. At LRIMO The following are advised: For submission LRIMO:
1. Contract No.: Bubukal CIS- 6M-RRECIS-CY15, for the construction of 1. Conform with the following of explanation Chief Engr.
protection works, canal lining & structures of Bubukal CIS provisions in PD No. 1445 the soonest Nicasio C.
Contractor: Markbilt Construction Inc. Sections 4.6, 4.7 and 4.8: Pagdanganan Jr.
Contract Amt.: Php 5,399,932.11 “4.6. Claims against government GL Hernandez
funds shall be supported with will make sure Engineering
 Statement of Worked Accomplished/Certificate of Inspection were issued complete documentation. that SWA would Units
prior to request of contractor for payment (Annex 44). 4.7. All laws and regulations bear inclusive Accounting Units
applicable to financial dates, and will and those
PB Date receipt of payment Date of SWA & Certificate of transactions shall be faithfully review responsible for
request by LARIMO Inspection & Acceptance adhered to. contractor’s the preparation
1 st
12/21/2016 12/19/2016 4.8. Conform with the generally documents and evaluation of
2 nd
02/27/2017 02/24/2017 accepted principles and properly. DVs for
practices of accounting as well contractors’
as of sound management and claims.
fiscal administration shall be
observed, provided that they do
not contravene existing laws and
regulations.”
21
MANAGEMENT
ACTION PLAN
2. Check competency of
evaluators/reviewers
2. Contract No.: LFLIS-15M-RRENIS-CY16 responsible in the preparation
Project Name: Laguna Friar Land Irrigation System, Sta. Rosa and Calamba and processing of contractors’
City claims. Otherwise, attendance
Contractor: C.E. Mercado Construction to relevant trainings/seminars
Contract Amt.: Php 14,180,544.84 are necessary.
 Inconsistencies of attached SWA for 1st PB (Annex 45). 3. Submit written explanation/
justification within 30 days upon
Particulars % Accomp Date receipt of this audit report.
SWA 20.95% 04/05/2015
Certificate of Inspection & 23.53% 04/05/2015
Acceptance GL Hernandez CBIMO:
Same amount and date but different Php 2,970,622.72 1. Strict adherence with the only vouched for Chief Engr.
% Accomplishment following provisions in PD No. the 1st PB that Charlie D.
1445, Sections 4.6, 4.7 and 4.8: the contractor Ibarrola
took risk to
B. At CBIMO “4.6.Claims against government commence Engineering
funds shall be supported with construction Units
1. Contract No.: Gen. Aguinaldo-10M-EEEIS/CIS-CY16, for Construction of complete documentation. ahead of Accounting Units
canal lining for Gen. Aguinaldo SIP 4.7. All laws and regulations issuance of NTP. and those
Contractor: T.M.G. General Contractor applicable to financial However, the responsible for
Contract Amt.: Php 9,351,331.50 transactions shall be faithfully succeeding the preparation
adhered to. payments should and evaluation of
4.8. Conform with the generally be explained by DVs for
accepted principles and the concerned contractors’
practices of accounting as well IMO Chief. claims.
as of sound management and
fiscal administration shall be It is advised that Ms. TB De Lara
observed, provided that they do IMO should Sr. Acctg. Proc A
not contravene existing laws write/inform
and regulations.” HOPE(RO) and
request approval
2. Written explanation is to commence
necessary for the processing/ construction
payment of claims with before issuance
22
MANAGEMENT
ACTION PLAN
inconsistencies in the attached of NTP
defective supporting specifying loss
documents. will be borne by
a. PBs were paid despite inconsistencies of the attached supporting documents the contractor in
(Annex 46), as follows: case contract will
not be carried
 Conflicting/contradicting dates of contractor’s requests versus SWA (see out .
above table).
 Letter-requests bear the contract no. Gen. Aguinaldo-10.8M-CIS Extn CY

2015 SIP Phase 3 which should be Gen. Aguinaldo-10M-EEEIS/CIS-
CY16 for 2nd, 3rd and 4th PB (see table below).
Submit explanation within 30 days
upon receipt of this audit report.
 Subject in 1st PB request is “Second” partial billing for contract no. Gen.
Aguinaldo-10M-EEEIS/CIS-CY16 (see table below).
CBIMO:
IMO Chief Engr.
Charlie D.
 For 2nd and 4th PBs, both have same date of Contractor’s request for Ibarrola
payment with incorrect contract name (see table below):
Engineering
PB Request Date Subject Contract No. Amount Units
No. Accounting Units
1st Jan. 19, 2017 2nd & Gen.Aguinaldo- P4,436,295.81 and those
Partial 10M-EEEIS-CY
responsible for
billing 16
2nd Jun 5, 2017 2nd & Gen.Aguinaldo- P1,609,531.49
the preparation
Partial 10.8M-EEEIS- and evaluation of
Billing CY 16 DVs for
3rd Jul. 5, 2017 3rd & Gen.Aguinaldo- P1,236,006.59 contractors’
Partial 10.8M-EEEIS- claims.
Billing CY 16
4th Jun 5, 2017 4th & Gen.Aguinaldo- P2,069,497.61 Ms. TB De Lara
Partial 10.8M-EEEIS- Sr. Acctg Proc A
Billing CY 15
Conform with the provisions in PD

No. 1445, Sections 4.6, 4.7 and
4.8.
23
MANAGEMENT
ACTION PLAN
 Two (2) approved Certificate of Inspection and Acceptance attached, bear

the same financial accomplishment but different dates, % of physical
accomplishment and project descriptions (see table below):
Approved Cert. of % Accomp Amount Project Description of Approved
Insp. & Certificate of Inspection &
Acceptance Date Acceptance
01/17/2016 82.63 P 4,436,295.81 Concrete lining of Calaca SIP
FPM- Submit explanation within 30 days
RO4- 01/17/2017 47.45 P 4,436,295.81 For the Const. of Concrete lining upon receipt of this audit report.
2018- of Gen. Aguinaldo SIP
FAS8 QIMO:
Internal Audit Observation Jaime C. De
Memorandum (IAOM) No. 2018- Jesus
 SWA submitted by the contractor attached to the 1 st billing is 2 nd partial 4A-001 dated June 26, 2018 Acting Division
billing (see Annex 46). (comments and explanations must Manager
be submitted within seven (7) (Former)
C. At QIMO calendar days from receipt of
IAOM). Mr. RLAlcance,
1. Contract No.: 4AQ-CCN-17-096 Sr. Acctg Proc A
Contractor: R.M. Adalin Construction 1 st warning will be
Project Name: Construction of Diversion Works (Protection Works) of Lagnas issued/served to erring Myrtle O. Arriola
River Irrigation System, located at Tiaong, Quezon Officers. Cashier B
Contract Amt.: Php 13,987,593.60
Reynaldo
Crisostomo
Sr. Engineer A
FPM- Auditee agreed All IMO Chiefs,

RO4- The purpose of retention is for to impose or Engineering
2018- warranty of future defects thus, withhold 10% Units
24
MANAGEMENT
ACTION PLAN
FAS9 10% retention must be withheld. retention with Accounting Units
initial claim and those
Conform with the provisions of above 50% and responsible for
III. 10% RETENTIONS WERE NOT WITHHELD Annex E, IRR of R.A. No. 9184: accomplishment. the preparation
Otherwise, and evaluation of
A. Non-withholding of 10% retention from the following contractors with more than 50% Section 6.1: Surety Bond on DVs for
of accomplishment contrary to R.A. No. 9184, Section 6.1 (Annex 47). “xxx if, after 50% completion, the retention will be contractors’
work is satisfactorily done and on required. claims.
Contractor Project Location PB No. % of Accomp schedule, no additional retention
Magna Rich Construction of Rosario, 1st PB 75% shall be made, otherwise the Submit
Trading Diversion Works of Batangas 10% retention shall be imposed explanation by
Manalo CIS using the rate specified xxx.” the concerned
Joerg Builders Construction of Tayabas, 1st PB 78.77% offices.
Diversion Works of Quezon
Dumacaa RIS (Ibia Dam)
Jeff Enterprises Construction of Irrigation Macalelon, 1st PB 74.76%
Section 6.2:
Facilities Package 3 (IF) Quezon
- Canal Structures for “Require release of retention
Macalelon SRIP money upon posting of surety
bond for uncovered defects and
third party liability within a year
after final acceptance.”
25
D. OTHER CONTROL ISSUES

MANAGEMENT
ACTION PLAN
OCI- 1. Unsecured rooms of the Cashiers. Cashier’s room must be Noted ALL IMOs/RO
RO4- appropriately secured to prevent Accounting Units
2018- possible loss of government
FAS1 monies.
OCI- 4. Improper Official Receipt (OR) issuance and recording by the Property Officer of RIO, Due care should be made for Complied RO:
RO4- who issued the following series of OR booklets distributed to IMOs (Annex 48). proper control and monitoring in Mr. Ernesto Cruz
2018- the issuance of ORs. It is Jr.
FAS2 IMO OR NO. DATE suggested that first-in, first-out Supply Officer B
From To (FIFO) Inventory System be
LRIMO 1092500 1093000 10/08/2014 strictly applied.
CBIMO 1093001 1094500 11/14/2014
QIMO 1094501 1095500 07/10/2014
LRIMO 1095501 1097500 10/08/2014
QIMO 1097501 1099000 05/29/2014
CBIMO 1099001 1099500 07/10/2014
LRIMO 1099501 1100000 07/10/2014
FINDINGS/COMMENTS/OBSERVATION RECOMMENDED ACTIONS / MANAGEMENT CONCERNED

26
MANAGEMENT
ACTION PLAN
REF ACTIONS TO BE OFFICIALS/
ACTION PLAN
OCI- 5. No segregation of duties (SOD) necessary in the internal control, to wit:

RO4-
2018-  LRIMO -
FAS3
 Collection Representative (Coll Rep) Maria Corazon Antonette M. Externon was Management should ascertain that AAPapa recalled RO:
designated in-charge of accounting or financial transactions ON TOP of her the personnel responsible for the latest Ms. AAPapa
responsibility as Coll Rep. (Annex 49) – internal control objective on records keeping of an asset (i.e. designation for Admin/Fin.
segregation of duties/safeguarding was not observed. cash) is a different person in internal control Manager
charge of the physical custody of purpose.
the asset.
 Due to voluminous workload since RO-Cashier was also designated as LRIMO Coll Rep should be relieved as It was agreed LRIMO:
Cashier, several reports may not be immediately prepared. accounting personnel, and LRIMO that LRIMO Coll Maria Corazon
Coll Rep may be designated as Rep would be Antonette M.
SCDO of LRIMO to unload utilized as Externon
voluminous responsibility of RO- cashier of
Cashier. LRIMO. RO:
Cecilia Agawin
(Cashier)
OCI- 6. At all IMOs, no complete files of processed DVs and its supporting documents were Due to tedious process of For immediate All IMOs/RO
RO4- retained nor stored properly, since the original documents were already submitted to requesting NIA original documents compliance. Accounting Units
2018- COA. from COA, Accounting Units of
FAS4 region/IMOs should maintain on
file, photocopies of all financial
records, vouchers and its
supporting documents for future
reference.
27

Detailed Audit Observations Financial Audit Engagement

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Detailed Audit Observations Financial Audit Engagement

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PART II

DETAILED AUDIT OBSERVATIONS

RECOMMENDED ACTIONS / CONCERNED

I. ASA / CASH TRANSFER AND DISBURSEMENTS

Pursuant to FY 2018 General

For RO - Per Ms. Calibat, RO:

For all IMOs - CBIMO:

due for payment

3. Error in encoding of ASA details such as date, i.e.:

 Allotment - SARO Number, Date, Amount, Validity date LRIMO:

For RO – RO will comply Melody C.

 Per Consolidated SAOLB (by RO):

1. Misleading information such as incorrect label/caption (Annex 21), to wit:

- Verify disbursement figures per

For RO and all IMOs –

B. Unreliability and inconsistencies in the recording and reporting of financial

1. Total Released and Unreleased ASAs to IMOs (Annex 24):

For RO and all IMOs–

For RO and all IMOs – RO:

B. CASH MANAGEMENT AND RELATED MATTERS

II. CHECK DISBURSEMENT REGISTERS (CDRs)

B. Issues on VOID checks were observed:

CSH- Liquidation should be made the Mr. Nolasco

IV. COLLECTION AND REMITTANCES

V. PROGRESS BILLING (PB) PROCESSING

 NV Avila - ______ (Annex 32-C)

C. FINANCIAL PROJECT MANAGEMENT AUDIT

 Letter-requests bear the contract no. Gen. Aguinaldo-10.8M-CIS Extn CY

Conform with the provisions in PD

 Two (2) approved Certificate of Inspection and Acceptance attached, bear

FPM- Auditee agreed All IMO Chiefs,

RECOMMENDED ACTIONS / CONCERNED

FINDINGS/COMMENTS/OBSERVATION RECOMMENDED ACTIONS / MANAGEMENT CONCERNED

OCI- 5. No segregation of duties (SOD) necessary in the internal control, to wit:

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