EXECUTIVE SUMMARY

A. Introduction

By virtue of Republic Act (RA) 6975, known as “An Act Establishing the
Philippine National Police under a reorganized Department of the Interior and Local
Government and Other Purposes,” a highly effective and competent police force that is
national in scope and civilian in character was established in 1991. Also, as amended
under RA 8551, otherwise known as the Philippine National Police Reform and
Reorganization Act of 1998, the PNP was envisioned to be a community and service
oriented agency responsible for the maintenance of peace and order and public safety.

The Philippine National Police is headed by the PNP Chief Ricardo Cornejo
Marquez from January 1 to June 30, 2016 and Ronald Marapon Dela Rosa from July 1,
2016 to the present.

The PNP Organizational Set-up is composed of the (a) Central Office or the
National Headquarters (NHQ), which houses the offices of the PNP Chief and two
Deputy PNP Chiefs – one for Administration and one for Operations, the Chief
Directorial Staff, who acts as the chief operating officer and who coordinates, supervises
and directs the 12 Directorial Staffs, with the support of 11 Administrative and 13
Operational units; and (b) 18 Police Regional Offices (PROs) nationwide corresponding
to the regional subdivisions of the country to include the NCRPO, PROs 1, 2, 3, 4A
(CALABARZON), 4B (MIMAROPA), 5, 6, 7, 8, 9, 10, 11, 12, 13 (CARAGA), 18,
Cordillera (COR) and ARMM.

The PNP Chief is assisted by (a.) Internal Affairs Service (IAS) to ensure the
operational readiness of the police and investigate infractions of the regulations
committed by members of the PNP: (b.) the Human Rights Affairs Office to promote,
protect and fulfill human rights thru effective institutional & policy development,
capability building, prevention and control of human rights violations and multi-sectoral
cooperation; and (c.) Center for Police Strategy Management to ensure proper
management and monitoring of the agency scorecard, the periodic review and evaluation,
and making necessary adjustments and amendments to our strategy with support of our
National Advisory Group. For police training, human resource development and
continuing education, the Philippine Public Safety College together with the Police
National Training Institute (PNTI) is the premier educational institution of all PNP
personnel. Also, PNTI has direct supervision and administrative control of the Philippine
National Police Academy (PNPA).

For CY 2016, the total manpower complement of PNP is 180,253 out of the
187,730 authorized for CY 2016, broken down as follows:

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 Particulars Authorized Actual Variance
Police Commissioned Officers (PCOs)
Director General to Police Inspector 17,158 12,002 5,156
Police Non-Commissioned Officers (PNCOs)
Senior Police Officer IV to Police Officer 1 157,252 156,470 782
Total Uniformed Personnel 174,410 168,472 5,938
Non-Uniformed Personnel (NUP), Civilian 13,320 11,781 1,539
Total Uniformed and Non-Uniformed Personnel 187,730 180,253 7,477

B. Operational Highlights

Based on the submitted PNP 2016 Accomplishment Reports, the following are the
accomplishments per Major Final Output (MFO) of the agency for the year under audit:

Major Final Outputs (MFO)

Targets Accomplishments
/Performance Indicators
MFO 1:
Crime Prevention and Suppression Services
Number of foot and mobile patrol 12,304,350 11,464,715 Compared to last
operations conducted 5% 2.17% year's
accomplishments
Increase Decrease
Percentage Change in National Index 15.68% 11.24% Higher than the
Crime Rate 5% 31.92% target by 28.32%
Reduction Reduction
Percentage of crime incidents responded 403,835 397,245 Short of its
within 15 minutes 100% 98.37% target by 1.63%
MFO 2:
Crime Investigation Services
Number of crime investigations 802,201 583,774 The actual crime
undertaken reported is
583,774
Percentage of most wanted persons/high 41.04% 15.14% Compared to last
value targets arrested 5% 61.27% year's
accomplishments
Increase Decrease
Percentage of arrested persons within 30 42,337 17,125 59.55% short of
days upon receipt of warrant of arrest 60% 24.27% its target

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C. Financial Highlights

The PNP has an approved budget of P88,513,199,000.00 for CY 2016 with an

appropriation of P75,984,665,000.00 for Personnel Services, P8,700,202,000.00 for
Maintenance and Other Operating Expenses and P3,828,332,000.00 for Capital Outlay.

CY 2016 CY 2015
(Thousands of Pesos) (Thousands of Pesos)
Appropriation P 88,513,199 P 70,763,289
Allotment
DBM
Current Appropriation 128,467,868 118,576,008
Continuing
Appropriation 2,457,487 5,863,787
Other Sources - -
Total Allotment 130,925,355 124,439,795
Total Obligations Incurred 128,897,599 121,684,518
Unexpended Balance P 2,027,756 P 2,755,277

Of the total allotment of P130,925,354,655.72 for CY 2016, 98.45 percent or

P128,897,598,749.88 was obligated/incurred for the following expenditures: (a) 89.85
percent or P115,814,651,081.86 for Personal Services; (b) 6.99 percent or
P9,008,000,459.38 for Maintenance and Other Operating Expenses (MOOE); and 3.16
percent or P4,074,947,208.64 for Capital Outlay (CO), thereby leaving an unexpended
balance of P 2,027,755,905.84 or 1.55 percent.

Sources and applications of fund for calendar year 2016 are as follows:

Obligations Unexpended
Allotment Incurred Balance
(Thousands of (Thousands of (Thousands of
Pesos) Pesos) Pesos)
Total Appro. CY 2016 P 88,513,199
Allotment Received
I. Current Appropriation
A Programs P 87,553,770 P 85,588,322 P 1,965,448
B. Special Purpose Fund 40,783,146 40,757,279 25,867
1 Pension 24,297,794 24,297,794 -
2 Terminal Leave 5,088,772 5,088,772 -
and Retirement
Gratuity Fund

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 Obligations Unexpended
Allotment Incurred Balance
(Thousands of (Thousands of (Thousands of
Pesos) Pesos) Pesos)
3 Miscellaneous 11,197,105 11,197,095 10
Personnel
Benefit Fund
4 Contingent
a. Operations
Services 173,618 173,618 -
b. Health
Services 25,857 - 25,857
C. Automatic Appro. 130,952 130,952 -
Sub-total 128,467,868 126,476,553 1,991,315
II. Continuing Appropriation
A. Programs 2,457,487 2,421,046 36,441
Grand Total P 130,925,355 P 128,897,599 P 2,027,756

The details of the Statement of Allotments, Obligations and Balances are

presented in Annex A.

The PNP’s financial position and performance (in thousand pesos) for calendar
year 2016, are as follows:

CY 2016 CY 2015
Financial Position (Thousands of Pesos) (Thousands of Pesos)
Total Assets P 37,373,821 P 30,705,263
Total Liabilities 3,986,135 5,685,419
Total Net Assets/Equity 33,387,686 25,019,844

Financial Performance CY 2016 CY 2015

Total Revenue P 1,559,345 P 990,223
Total Current Operating
Expenses 125,967,539 116,281,886
Net Financial Assistance
Subsidy 134,216,586 117,966,793
Gains 1,311 5,236
Losses 4,424 3,404
Surplus/(Deficit) P 9,805,279 P 2,676,962

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D. Scope of Audit

The audit covered the operations and financial transactions for calendar year 2016
of the National Headquarters and the 18 Police Regional Offices (PROs) nationwide.

E. Opinion of the Auditor on the Fairness of Presentation of the Financial

Statements

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

financial statements of the Philippine National Police, in view of the accounting errors
and deficiencies shown in the Matrix of Analysis of the Effects on the Misstatements on
the Financial Statements marked as Annex B and enumerated below together with the
recommendations:

1. The gains, losses and receivables pertaining to the lost firearms were not recorded in
the books; hence, resulted in the understatement of receivable accounts and
overstatement of PPE accounts in the financial statements, contrary to Chapter 10
Sections 39 and 41(b) and 41(d) of the Government Accounting Manual (GAM),
Volume 1. Further, lost firearms dropped from the books of accounts based on the
2013 Cost Valuation of PNP Issued and Loaned Firearms and PNP Circular 001-02
dated February 12, 2002 instead of the acquisition cost of the firearms. (Observation
No. 4)

We recommended that Management require: (a) the Accounting Division (AD) to

strictly comply with the provisions of Chapter 10 Sections 39 & 41 of GAM Volume
1 on derecognition of Property Plant and Equipment and the proper accounting on
loss of properties; (b) AD to reflect appropriate adjusting entries to recognize the loss
of firearms in the books based on its acquisition cost and recognize Miscellaneous
Income upon receipt of payment of accountable officers; (c) ensure submission of
Notice of Loss within 30 days as prescribed by GAM, Volume I and PD 1445.

2. Receivables amounting to P1,642,033.40 from tenants (officers and employees) and

private concessionaires of NCRPO Quartering Units for electric consumption were
not recognized in the books due to the absence/deficient billing and recording
policies. (Observation No. 5)

We recommended Management to: (a) require the RHSG to improve their billing and
recording system by maintaining subsidiary records and files of monthly individual
statement of accounts for proper and regular monitoring of accounts; and (b) direct
the Regional Accountant to record the receivables, maintain subsidiary ledgers and
send demand letter to delinquent consumers/tenants.

3. The year-end balance of Due from NGAs PS-DBM of P7,142,087,984.62 does not
reconcile with the PS-DBM Statement of Account – Customers of P6,807,674,109.71

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 due to unrecorded deliveries of P368,471,058.54. Despite unserved Agency
Procurement Request (APRs) a total of P4,111,968,411.72 were transferred during
the year which resulted in the accumulation of fund balance with PS-DBM.
(Observation No. 6)

We reiterated our recommendation that Management: (a) stop transferring funds to

PS-DBM until all APRs have been delivered to maximize the use of funds for other
much needed operational expenses and to avoid accumulations of funds and from
being idle in the account of PS-DBM; (b) require the LSS and Accounting Division to
monitor the deliveries made by PS-DBM to keep tract of the undelivered balance and
coordinate with PS-DBM to reconcile the variance between the balances per PNP
books and PS-DBM Statement of Account - Customers; (c) require the LSS to
furnish the Accounting Division the liquidation documents or delivery receipts of
those items already delivered for recording in the books; and (d) request PS DBM to
refund the balance of APRs with completed deliveries and deposit the amount to the
National Treasury.

4. The accuracy and validity of the Inventory account balance amounting to

Ᵽ1,553,039,660.25 in the National Headquarter (NHQ) is unreliable due to:
a) unrecorded issuances caused by non-preparation and non-submission of Report of
Supplies and Materials Issued (RSMI) at the NHQ, contrary to Chapter 8, Section 17g
of the Government Accounting Manual (GAM), Volume 1 and Letter C and E,
Appendix 64 of GAM for NGAs Volume II; and b) failure to conduct physical count
of inventory in the NHQ and some Police Regional Offices. (Observation No. 7)

We recommended that Management: (a) require the FS-RSPNCO and HSS-SAO to

prepare and submit the RSMI together with the original RIS to the Accounting
Division/Unit as prescribed in Chapter 8, Section 17.g of Government Accounting
Manual (GAM) for National Government Agencies (NGAs) Volume 1 and Letter C
and E, Appendix 64 of GAM for NGAs Volume II; and (b) create an Inventory
Committee to conduct physical count of all Inventory accounts to establish its
existence and to prepare the Report of Physical Count of Inventories (RPCI).

5. The aggregate PPE accounts’ balance is unreliable due to: (a) the discrepancy of
P7,477,468,176.95 between the book balances of accounting records and inventory
report/property records; (b) non-recognition of impairment loss on unserviceable
properties of P121,710,975.30; (c) unrecorded donated equipment amounting to
P158,517,887.14 and property without donated value; (d) improper dropping of
3,452 serviceable firearms worth P58,599,375.50 from the books of accounts in PRO
1, contrary to Section 39, Chapter 10 of Government Accounting Manual (GAM),
Volume I; (e) completed infrastructure projects in PRO 8 recorded under
Construction in Progress account were not transferred to specific PPE account; and
(f) non-disposal of unserviceable properties valued P26,248,964.88. Moreover, the
amount of P46,288,162.14 value of cancelled donated lots in PRO 4A were still
included in the listing of PPE; hence, resulted in the overstatement of the Land
account. (Observation No. 10)

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 We recommended that Management: (a) require the property & accounting division
to strictly prepare/maintain and update PPELCs and PC for effective reconciliation of
PPE accounts; (b) direct the DL and Appraisal Committee to determine the
recoverable service amount from the obsolete, unserviceable, and beyond economic
repair (BER) PPE and recognize appropriate impairment loss to fairly present the PPE
accounts in the financial statements; (c) restore the accounts previously derecognized
from the books of accounts pertaining to the aforesaid firearms; (d) Accountant to
reclassify the cost of completed projects from CIP account to the appropriate Building
account to fairly present these accounts in the FS; and (e) ensure that all the
properties reported in IIRUP be inspected by the Inspection Team and recommend the
proper disposal of the properties in accordance with applicable rules and regulations
on Supply and Property Management Manual and Section 79 of the PD 1445. Instruct
the Chief of the Regional Logistics Division to update the information on the PNP
PRO IVA’s listing of Land.

6. The balance of the Deposit on Letters of Credit (DLC) totaling Ᵽ34,333,162.17 is

unreliable due to inclusion of Ᵽ20,926,978.94 which had been dormant for more than
18 years resulting in the overstatement of the DLC and understatement of the related
expense accounts, contrary to Section 48 of GAAM Volume III. (Observation No.
16)

We recommended that Management: (a) direct the concerned officials to exhaust all
possible means to locate the missing documents and records for the eventual
liquidation of the dormant balances of the account. If efforts provide futile, consider
taking appropriate action for the filing of the request for authority to write off from
the books the balances of the account which could no longer be traced and
substantiated pursuant to DOF, DBM and COA Joint Circular No. 04-2012 dated
September 11, 2012.

F. OTHER SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS

1. Official receipts were not issued in acknowledging cash/checks posted as

performance security, contrary to Sec. 8 General Provisions GAA CY 2016.
Moreover, performance bond posted does not sufficiently cover the one-year
defects liability period contrary to Sections 37.2 and 39.1 of the Revised
Implementing Rules and Regulations (IRR) of RA No. 9184 and GPPB
Resolution No. 012-2005 dated June 30, 2005. (Observation No. 2)

We recommended that Management require the PNP-LSS BAC to forward all cash
or cashier’s/manager’s check issued by winning bidder posted as performance
security to the collecting officer and for the issuance of OR and deposit the same to
the National Treasury as trust receipts under the account of the agency. Likewise,
make the necessary entries in the books of accounts recognizing the liability under
the account Guaranty/Security Deposits Payable upon collection and Cash –

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 Treasury Agency Deposit, Trust. Moreover, (a) ensure that performance security
is posted by the winning bidders at the time of contract signing and the validity
period include the defects liability period which commence from the completion of
the project up to the issuance of the Certificate of Acceptance; (b) faithfully
comply with the provisions of Sections 37 and 39 of the Revised Implementing
Rules and Regulations (IRR) of RA No. 9184 and GPPB Resolution No. 012-2005
dated June 30, 2005 to warrant the integrity of the contract agreement and to assure
the government of a guarantee in case of non-performance of the contractor of its
obligations stipulated in the contract; and (c) require the BAC to request the
winning bidders to post additional performance security to fully cover the defects
liability period of one year.

2. Cashbook of reassigned Disbursing Officer (DO) was not submitted to the

accountant; thus, the mandatory cash examination on her accounts was not
conducted, while newly appointed DO was made to perform her duties without
prior briefing by the Accountant and the Auditor on matters relative to her work as
required under Section 181.a, GAAM Volume I. (Observation No. 3)

We recommended that Management require the Accountable Officer who ceases to

act as such to be subjected to the mandatory cash examination and submit the
cashbook to the Accountant as prescribed under paragraph F.2, Chapter III,
Revised Cash Examination Manual and Section 181.e, Government Accounting
and Auditing Manual Volume I

3. The reliability of the functional test for eligibility and acceptance conducted by
ARMSCOR who is the major stockholder of Armscor Shooting Center, Inc
(ASCI), the supplier of the 119,333 pcs. Shotshell, 12 GA Buck “00”, instead of
the Government Arsenal (GA), Department of National Defense (DND) is
doubtful. (Observation No. 8)

We recommend that Management require the PNP-LSS-BAC to provide

justification and/or explanation why the functional tests were conducted by the
supplier instead of requesting DND Arsenal to conduct the same test.

4. In some Police Regional Offices, the total cash advance of P239,902,913.51

granted for Operating Expenses, Payroll and for Special Disbursing Officers
remained unliquidated as of year-end, of which P1,977,999.00 pertained to CY
2011, contrary to Section 89 of Presidential Decree No. 1445. (Observation No. 9)

We recommended that Management: (a) require the Special Disbursing Officers to

liquidate the cash advances granted within the reglementary period in adherence to
Section 89 of Presidential Decree 1445 and COA Circular No. 97-002 February
10, 1997; (b) require the Special Disbursing Officer to return or refund
immediately the cash advance which are no longer needed or has not been used for
a period of two (2) months as required under Section 5.7 of COA Circular 97-002

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 dated February 10, 1997; and (c) refrain from granting of additional cash advance
when the previous cash advance had not been liquidated;

5. Various equipment and firearms were issued to either the Supply Accountable
Officer (SAO) or the Responsible Supply Police Non-Commissioned Officer
(RSPNCO)/Supply Police Non-Commissioned Officers (PNCOs) and not directly
to the recipient/end user; thus, custodianship or identification of property
accountability could not be established/ascertained. Moreover, Property
Acknowledgment Receipts (PARs) were not renewed/updated every three years,
contrary to Section 21, Chapter 10 of the Government Accounting Manual (GAM),
Volume I. (Observation No. 11)

We recommended Management to: (a) strictly adhere to Section 21, Chapter 10 of

the Government Accounting Manual (GAM), Volume I on the issuance of PAR to
end-user/recipient; (b) require the Property Officer to completely fill in the
required data and information in the PAR/ARE/MR; and (c) require accountable
officers to renew their MRs/AREs regularly and use the new format (PAR)
pursuant to Section 491 of GAAM, Volume I.

6. In PRO7, public funds totaling P534,332,971.15 spent for the construction and
improvements of buildings and field offices/police stations may be wasted due to
absence of absolute ownership by PNP over the lots donated by LGUs, private
persons and other donors (Observation No. 12)

We recommended that Management: (a) direct the Property Officer and other
designated officials of PRO7 to fast tract the submission of necessary documents
to the appropriate office so that title thereto and/or right to occupancy be settled
and adjudicated; preclude future claimants; and (b) make representation from the
Local Government Units (LGU) concerned to amend or execute pure and simple
Deed of Donation in lieu of an onerous or conditional Deed of Donation for
donated properties so that title thereto may be secured from the Register of Deeds
or Land Registration Authority.

7. Construction of Municipal Police Stations (MPS) identified in the Annual

Procurement Plan (APP) for CY 2016 with aggregate costs of P75,618,386.76
were not completed within the target date per extended contract; thus, the benefits
derived from the immediate use of the proposed projects were not achieved; while
in some PROs, almost all of the MPS as well as other projects were delayed or not
completed in violation of the general period of completion of 180 calendar days as
stipulated in the individual Contract Agreements. (Observation No. 13)

We recommended that Management: (a) require the Chief, Regional Engineering

Office that for on-going and future projects, to (i) ensure that implementation are
efficiently carried out within the prescribed period in order to achieve the benefits
derived from the immediate use of the projects; (ii) closely monitor project
accomplishments and immediately address the causes of delay; and (iii) notify

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 defaulting contractors any time during the implementation of the project should
there be deviations in project timeliness; (b) impose liquidated damages to
contractors for breach of contract which shall be at least equal to one-tenth of one
percent (0.001) of the cost of the unperformed portion of the project for every day
of delay; and (c) investigate the reasons for the unreasonable delay in the
implementation of the projects especially those MPS which were already delayed
by more than two years. We further recommend that remedial measures be
undertaken to fast track the completion of the different MPS.

8. Buildings and Other Structures valued at P1,426,386,472.35 were not insured with
the General Insurance Fund of the Government Service Insurance System (GSIS)
despite the mandate of Section 2, of Republic Act 656 dated June 16, 1951 also
known as the Property Insurance Law of the Philippines; hence, any loss and/or
damage of properties due to natural and man-made calamities could not be
indemnified; thus, losing the opportunity of saving the restoration cost of
properties that may be affected. (Observation No. 14)

We recommended that Management: (a) direct the officers concerned to secure

insurance coverage of buildings/properties having insurable interest with the
General Service Insurance System in accordance with the provisions of RA No.
656, Administrative Order No. 133 and COA Circular Nos. 79-112 and 92-390 so
that lost/damaged properties brought about by whatever calamities, may be
indemnified from the insurance claims thus saving government funds for the
restoration thereof; and (b) make representation with PNP Headquarters for the
allocation and release of funds for the insurance of the buildings and other
structures.

9. Perfected contracts including supporting documents relative to the construction of

several buildings and structure totaling P314,914,570.86 were not submitted within
five working days from execution thereof, contrary to Section 3.1.1 and 3.1.2 of
COA Circular 2009-001 dated February 12, 2009. Moreover, procurement of
Military Police and Traffic Supplies and Military Police and Security Equipment in
NHQ and payment of mobilization/repaired/completed infrastructure projects
totaling P309,494,406.75 lacked the required supporting documents delaying the
completion of auditorial review; hence casting doubt on the validity of the
transactions. (Observation No. 15)

We reiterated our prior year’s recommendation that the following courses of action
be taken by Management: (a) to strictly comply on the submission of perfected
contracts together with the complete supporting documents in accordance with
Section 3.1.1 of COA Circular No. 2009-001 dated January 30, 2013 in order to
validate and conduct auditorial review on the completed projects; an (b) require
concerned officials to justify why they should not be held administratively liable
for the persistent failure to submit the complete documents pursuant to COA
Circular No. 2009-001.

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10. Doubtful validity and reliability of the outstanding Payable Account balances of
various creditors due to absence of documents to support the claims, contrary to
Chapter 2, Sec. 37, Chapter 6, Volume I of Government Accounting Manual
(GAM) for National Government Agencies (NGAs), No. 2, Volume III of
Government Accounting Manual (GAM) for National Government Agencies
(NGAs) and Section 4 (6) of PD 1445. (Observation No. 17)

We recommended that the Management: (a) direct the Accountant to locate the
Disbursement Vouchers/Payrolls for the outstanding Payable accounts. If these
payable accounts are found to be no longer payable or without valid claimants
which are two year old or over and/or other undocumented accounts payable
irrespective of age, it should be reverted to unappropriated surplus and funds can
be used to finance various projects and programs: and (b) to recognize Accounts
Payable only when there is already receipt of goods or services delivered/rendered
duly supported with sufficient documents to establish the validity of the claim.

11. Claims for the salaries, collateral allowances and other benefits of the agency for
Calendar Year 2016 in the total amount of P270,942,024.42 were paid through
checks/cash advances granted to Disbursing Officers (DOs) instead of paying
through Automated Teller Machine (ATM), contrary to PNP Memorandum
Circular No. 2014-004 dated February 4, 2014. The failure to completely adopt
the ATM Payroll System indicates weak/inadequate internal control in
safeguarding of funds or cash management and disbursements contrary to Section
32 and 35.b of the GAAM, Volume III. (Observation No. 18)

We recommended that Management strictly adhere to the existing regulations by

adopting the ATM Payroll System in the payment of salaries and other collateral
allowances and benefits, including bonuses in compliance with PNP Memorandum
Circular No. 2014-004 dated February 4, 2014, and or through LDDAP-ADA
pursuant to DBM Circular No. 2013-16 dated December 23, 2013;

12. Procurement of goods and services aggregating P157,668,717.21 were mostly

from the same suppliers and contractors through shopping or small value
procurement instead of through public bidding by bulk purchases, inconsistent
with Sections 10, 48.2, 52.1 of the Revised IRR of RA 9184, thereby cast doubts
on whether the agency availed of the least possible costs on the purchased items.
(Observation No. 19)

We recommended that Management: (a) make comprehensive planning on all

procurement activities by consolidating all similar requisition for similar items for
the year or within the quarter for the purpose of conducting public bidding; and (b)
strengthen its internal controls on compliance with laws, rules and regulation
pursuant to section 3 of GAM Volume 1 and the Revised IRR of RA 9184.

13. Fixed Representation and Transportation Allowance (RATA) for the 1st and 2nd
Qtr for CY 2016 in the total amount of P120,000.00 were paid to two Non-

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 Uniformed Personnel (NUP) instead of commutable/reimbursable type of payment,
contrary to Sections 8.1.1 to 8.1.2 of National Budget Circular (NBC) No. 548
dated May 15, 2013, thus, internal control on the monitoring of payments of
RATA was weak/inadequate due to the erroneous type of grant/payment.
(Observation No. 20)

We recommended the following courses of action be taken by Management:

(a) strictly adhere and enforce the policies relative to the payment of RATA as
mentioned in the guidelines of Implementing Rules and Regulations under
National Budget Circular (NBC) Nos. 546 and 548 dated January 17, 2013 and
May 15, 2013, respectively; and (b) require the concerned personnel to discontinue
the receipt of Fixed/Commutable RATA and provide satisfactory
explanation/justification why both should not be held administratively liable for
the continuous receipt of Fixed/Commutable RATA when both are allowed only to
reimbursement/commutable type of claim.

14. Remittance of funds withheld for Philhealth which balance of Ᵽ17,991,759.06 and
for GSIS of P775,533.99 under account Inter-agency Payables were delayed in
violation to Philhealth Circular No. 0001-2014 and Section 6 of Republic Act No.
8291 or the Government Insurance Act of 1997, that may cause forfeiture of
claims/benefits due the members/employees and depriving the concerned agency
of the timely use of the funds due them. (Observation No. 21)

We recommended Management to: (a) strictly adhere to the Philhealth regulation

on the timely remittance of monthly premium contributions as prescribed in
Philhealth Circular No. 0001-2014; and (b) require the Accounting Division and
Finance Service to reconcile their records in order to determine the prior balances
as to when withheld and review dormant balances to determine the reason for such
and effect the necessary adjustments, if any.

15. The proper presentation and disclosure of the financial statements of the Agency
cannot be ensured due to the failure of the Agency to prepare/submit its financial
statements and trial balances by fund cluster as required by Commission on Audit
(COA) Circular No. 2015-002 dated March 9, 2015. (Observation No. 22)

We recommended that Management require the Acting Chief of the Accounting

Division to: (a) prepare the financial statements and trial balances for each fund
cluster, prospectively, to properly observe the guidelines provided under the
Circular; and (b) provide notice to all PROs by disseminating the guidelines
through information drive and/or seminars on how to prepare the financial
statements and trial balances by fund cluster to have a uniform method of
application.

16. There was no proper turnover of accountabilities between the outgoing and
incoming Disbursing Officer, contrary to Section 77 of Presidential Decree No.
1445. Moreover, the monthly Report of Accountability for Accountable Forms

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 covering the period April 2015 to September 2016 as required under the
Government Accounting Manual was not prepared; thus, prevented the timely
audit/examination of accountabilities of the DO. (Observation No. 23)

We recommended that Management require the outgoing and incoming Disbursing

Officer that the turnover of accountabilities be formalized by accomplishing the
required Invoice and Receipt of Property. Henceforth, ensure that proper turnover
activities are performed for all outgoing and incoming accountable officers as
required by law. Also, require the DO to promptly and regularly submit monthly
Report of Accountability for Accountable Forms for timely audit/examination of
DO’s accountabilities.

17. Disbursement Vouchers and its supporting documents including financial reports
were not submitted to the Office of the Auditor within the required period contrary
to Section 122 of P.D. 1445 and Sections 7.1.1 (a) and 7.2.1 (a) of COA Circular
No. 2009-006 dated September 15, 2009 resulting in delay in the timely review
and audit of transactions. (Observation No. 24)

We recommended that Management require the Regional Accountant to submit the

disbursement vouchers with all its supporting documents and the Report of
Disbursements to the Office of the Auditor within the reglementary period
pursuant to Section 122 of P.D. No. 1445 and that adherence to COA Circular No.
2009-006 dated September 15, 2009 shall be strictly observed.

We have discussed the observations and recommendations with management and

their comments were incorporated in the report where appropriate.

The exit conference with management was conducted on April 18, 2017 at the
Philippine National Police, Multi-Purpose Center, Camp Crame, Quezon City.

G. STATUS OF IMPLEMENTATION OF PRIOR YEAR’S AUDIT

RECOMMENDATIONS

Of the 198 audit recommendations contained in CY 2011 to 2015 Annual Audit

Reports, 77 was fully implemented, 67 was partially implemented, while 54 were not
implemented.

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