EXECUTIVE SUMMARY

A. Introduction

The Bureau of Fisheries and Aquatic Resources (BFAR) is the government agency
responsible for the development, improvement, management and conservation of the
country’s fishery and aquatic resources.

The Congress of the Philippines enacted Republic Act (RA) No. 177 creating the
present Bureau which took effect on July 1, 1947. With the passage of RA No. 8550,
otherwise known as the (Philippine Fisheries Code of 1998), it was reconstituted as a line
bureau of the Department of Agriculture (DA).

The Bureau is presently headed by Commodore Eduardo B. Gongona PCG (Ret.)

Director, and supported by Ms. Drusila Esther E. Bayate, Asst. Director for Research,
Regulations and International Engagement, Mr. Demosthenes R. Escoto, Officer-In-
Charge (OIC) - Assistant Director for Administrative Services and Dr. Juan D.
Albaladejo, Assistant Director for Operations. Tasked to implement the programs in the
regional level are 15 Regional Field Offices (RFOs), each headed by a Regional Director.
Under the six RFOs (II, IV, V, VII and IX) are the six Regional Fisheries Training
Centers (RFTCs). The RFTC of Panabo, Davao del Norte, which is now a National
Mariculture Technology Center (NMTC), was retained under the Bureau’s Central Office
(CO) together with the six Technology Centers under the BFAR CO.

The research arm of the Bureau is the National Fisheries Research and
Development Institute (NFRDI), headed by Dr. Lilian C. Garcia, CESO V, the Interim
Executive Director. It was created by virtue of Section 82 of RA No. 8550, in
recognition of the important role of fisheries research in the development, management,
conservation and protection of the country’s fisheries and aquatic resources.

The Bureau also leads the implementation of the FishCORAL Project, an

International Fund for Agricultural Development (IFAD)-assisted project with the DA as
the executing agency, through the Project Support Coordination Office (PSCO)
supervised by the Project Coordinator.

As of December 31, 2019, BFAR had 1,576 permanent employees complemented

by 4,625 Contract of Service (COS)/job order individuals.

B. Financial Highlights

The Bureau’s financial position, financial performance and sources and application
of funds for Calendar Year (CY) 2019 compared with the previous year are presented in
the next page:
 Financial Position
Assets
Liabilities
Net Asset/Equity
Financial Performance
Revenues
Current Operating Expenses
Surplus/(Deficit) from
Operations
Net Financial Assistance/Subsidy
Sale of Assets
Gains/(Losses)
Surplus/(Deficit) for the period
Sources and Application of Funds
Allotments Received
Obligations Incurred
Unobligated Allotments
2019 2018
(RESTATED)
₱ 11,300,023,615.46 ₱ 9,797,867,487.62
600,233,419.99 1,275,422,011.52
₱ 10,699,790,195.47 ₱ 8,522,445,476.10
₱ 158,834,645.10 ₱ 217,714,963.64
5,061,236,399.38 5,425,558,917.23
Current (4,902,401,754.28) (5,207,843,953.59)
7,236,646,245.83 5,866,501,339.98
36,590.00 1,114,712.43
- (149,936.75)
₱ 2,333,601,366.56 ₱ 659,622,162.07
₱ 6,418,292,742.13 ₱ 6,329,947,210.00
6,054,749,406.31 5,882,536,233.56
₱ 363,543,335.82 ₱ 447,410,976.44

Total allotment of ₱6,418.292 million consists of Current, Automatic, and

Continuing Appropriations amounting to ₱5,885.469 million, ₱90.535 million and
₱442.290 million, respectively.

C. Scope and Objectives of Audit

The audit was conducted to: a) ascertain the level of assurance that may be placed
on the Management’s assertion on the financial statements; b) determine the propriety of
transactions as well as extent of compliance on the applicable laws, rules and regulations;
c) recommend agency’s improvement opportunities; and d) determine the extent of
implications of prior year’s audit recommendations. Moreover, the audit was conducted
in accordance with International Standards of Supreme Audit Institutions (ISSAIs).

The audit covered the accounts and operations of the Bureau for CY 2019 in the
Central Office (CO), NFRDI and RFO Nos. I, II, III, IV-B, V, VI, VII, VIII, IX, X, XI,
XII and CAR. The Audit Team assigned at RFO No. IV-A have not yet submitted the
Management Letter (ML).

D. Independent Auditor’s Report

A qualified opinion was rendered on the fairness of presentation of the CY 2019

financial statements due to various unadjusted accounting errors/omissions and
deficiencies amounting to ₱1,009.588 million which exceeded the materiality level of
₱213.996 million and are discussed in detail in Part II of this report.

E. Significant Audit Observations and Recommendations

1. The BFAR’s overall fund utilization of ₱6.054 billion is 94.34 percent compared to its
appropriation/allotment of ₱6.418 billion, inclusive of the Fisheries Regulatory and
Law Enforcement Program (FRLEP) of ₱2.495 billion appropriation/allotment which

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 registered an 87.88 percent or ₱2.193 billion utilization, leaving an unobligated
amount of ₱0.364 billion due to change of fund source of a foreign assisted project
(FAP) to locally funded project and delayed implementation activities of another FAP.
Moreover, ₱0.024 billion of the FRLEP fund utilization was not in accordance with
the purpose of appropriation/allotment. (Observation No. 1)

We recommended and Management agreed to instruct the:

a) Budget Officers in BFAR CO and RFO XIII to obligate expenditures in

accordance with the approved allotment and intended purpose; and

b) FishCORAL National Project Director to: (i) identify the affected project
activities and the causes of significant delays resulting in the lapsing of FY
2019 automatic appropriation, and resolve any adverse effects thereon; and
(ii) require the RPMO Heads to submit catch up plan to prevent the lapsing of
allotment and non-implementation of planned activities in RPMO BARMM
for the ultimate attainment of the project goals and objectives.

2. BFAR reported a utilization rate of 99.67 percent for CY 2019 from the total NCA
received of ₱7.998 billion, leaving a balance of ₱0.026 billion, of which ₱0.023
billion was reverted to the BTr including ₱0.014 billion for FishCORAL Project.
Moreover, disbursements amounting to ₱0.768 billion in BFAR CO were deficient in
documentation. (Observation No. 2)

We recommended and Management agreed to:

a) ensure that all NCAs received are fully utilized to avoid reversion to BTr; and
disbursements are properly supported with complete documents in
compliance with Section 4 of PD 1445 to avoid suspension of the transaction
in audit; and

b) direct the FishCORAL National Project Director and Project Coordinator to

ensure that the monthly disbursement program matches the actual operating
cash requirements of the project to prevent the lapsing of GPh counterpart
and idleness of Loan and Grant Proceeds.

3. Cash advances for payroll, operating expenses, official local and foreign travels
and special purpose/time-bound undertakings amounting to ₱16.072 million or 20
percent of the cash advances granted during the year amounting to ₱79.517 million
in BFAR CO, NFRDI and six RFOs were not liquidated. Also, there were still
unliquidated cash advances in prior years amounting to ₱6.472 million or 20
percent of prior year’s balance of ₱33.121 million. Moreover, BFAR CO, RFOs
XII and XIII granted additional cash advances even if previous cash advances were
not yet liquidated. (Observation No. 4)

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 We reiterated our prior year’s recommendations and Management agreed to direct
the Heads of the offices concerned to:

a) strictly enforce liquidation of outstanding cash advances within the

prescribed period;

b) send demand letters to the officials and employees concerned and require
them to fully liquidate their cash advances immediately, supported with
complete documentation together with the refund of excess amount of cash
advances, if any and withhold the salaries or any amount due to them, if
they fail to settle their accountabilities until their balances have been fully
liquidated;

c) refrain from processing additional cash advances of Accountable Officers

unless previous ones have been liquidated; and

d) see to it that retiring/resigning/transferring officers and employees who have

outstanding cash advances should not be cleared from money accountability
and issued with an agency’s clearance unless, such cash advances granted to
them are first settled or liquidated.

4. Fund transfers to implementing agencies and NGOs/POs during the year and prior
years amounting to ₱487.850 million and ₱1,777.806 million, respectively,
remained unliquidated as of year-end, contrary to COA Circular No. 94-013 dated
December 31, 1994.(Observation No. 5)

We recommended and Management agreed to direct the:

a) Accountants to coordinate with the IAs and NGOs concerned to submit

liquidation reports/documents of expended fund transfers and return of
unutilized balances for unimplemented/completed projects, if any, and send
demand letters on a periodic basis;

b) Legal Officers to resort to other legal modes of settlement of accountabilities

in case of failure of the IAs and NGOs to settle the fund transfers due for
liquidation;

c) RFOs IX and XI to include in the MOAs with the LGUs the stipulation on
the date when the project should commence with its target date of completion
or the project duration;

d) BFAR CO, RFOs VII, XI, XII and CAR to direct the focal persons to
strengthen coordination with the IAs and regularly monitor projects’ status to
ensure implementation thereof and regularly provide the Accountant updates
on the status of projects’ implementation; and

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 e) FAPs to refrain from granting additional fund transfers unless previous ones
have been liquidated.

5. Dormant cash, unnecessary special and trust funds in BFAR CO and RFOs IV-B
and X amounting to ₱27.163 million were not reverted to the National Treasury as
of year-end, contrary to Section 6 of the Permanent Committee Joint Circular No.
4-2012, dated September 11, 2012, implementing EO No. 431, dated May 30,
2005. (Observation No. 7)

We recommended and Management agreed to instruct the concerned officials of

BFAR CO and RFOs IV-B and X to remit immediately to the Bureau of Treasury
the balance of dormant cash, unnecessary special and trust funds amounting to
₱27.163 million.

The observations and recommendations were communicated to the Management

thru Audit Observation Memoranda (AOMs) and Summary of Audit Observations and
Recommendations (SAOR). Management comments were considered in the report, where
appropriate.

F. Enforcement of Settlement of Accounts

Out of the total audit suspensions and disallowances amounting to ₱332.433 million
and ₱287.156 million, respectively, only ₱54.866 million and ₱7.006 million were
settled, leaving a balance of ₱277.567 million and ₱280.151 million, respectively.

G. Implementation of Prior Years’ Audit Recommendations

Of the 85 prior years’ audit recommendations, 21 were implemented 64 were not

implemented as of December 31, 2019.