Annex 1

BUSINESS PROCESS AUDIT

CYLINDER LOANING AND PULLOUT PROCESS
ROOT CAUSE(S) /
LOOPHOLE(S) IN THE CORPORATE MANAGEMENT
EXISTING INTERNAL AUDIT ACTION STEPS /
BUSINESS CONCERNS PROCESSES/POLICIES RECOMMENDATIONS TIMETABLE
A. NONEXISTENT COMMERCIAL ACCOUNTS
1. Seven (7) out of 91 (8%) accounts were unlocated and can no longer be communicated resulting in Plant Sales Team must: 3 accounts that are
unverified outstanding loaned cylinders totaling 37 x 11KG, and 16 x 50KG with a financial impact of  Coordinate with the unlocated and unreachable
P140,200.00: account and notify them thru phone calls will be
regarding their outstanding subjected to an ocular
LIR FINANCIAL IMPACT loaned cylinders which revisit, then if still unlocated
ACCOUNT NAME STATUS 11KG 50KG 11KG 50KG TOTAL REMARKS shall be subjected to and uncommunicated, for
( charging if not returned. endorsement to Corporate
ADMIRAL MARINE Inactive 30 - 54,000.00) - (54,000.00)   Furthermore, should the Legal Department.
involved customers not Timetable:
BUTCHATAKI (
cooperate, all necessary October 31, 2022
RESTAURANT Inactive - 2 - (9,200.00) 9,200.00)  
data shall be endorsed to
( To establish an account
Corporate Legal
LINAS COMMISSARY Inactive - 1 - (4,600.00) 4,600.00) endorsed to CLD management process that
Department for proper
MESA INASAL ( legal action. will govern the status of the
ERMITA Inactive - 2 - (9,200.00) 9,200.00) endorsed to CLD account (i.e., active,
MESA INASAL ( (1  Create and develop inactive), payment terms,
BUENDIA Inactive - 3 - 13,800.00) 3,800.00) endorsed to CLD standard written business account demographics,
MIKAELA’S FOOD ( ( (3 processes governing the loaned cylinder monitoring,
HUB Inactive 7 4 12,600.00) 18,400.00) 1,000.00) endorsed to CLD cylinder loaning and and frequency of visits to
( (1 pullout process, and the account.
MR. DIMSON CUISINE Inactive - 4 - 18,400.00) 8,400.00)   account management Timetable:
process, for discussion, December 31, 2022
(73,600.00 roll-out, and sign-off to all
TOTAL 37 16 (66,600.00) ) (140,200.00)   concerned. This will serve
as a guide to the
employees and reduce the
possibility of missed steps
and confusion.
Annex 1
BUSINESS PROCESS AUDIT
CYLINDER LOANING AND PULLOUT PROCESS
ROOT CAUSE(S) /
LOOPHOLE(S) IN THE CORPORATE MANAGEMENT
EXISTING INTERNAL AUDIT ACTION STEPS /
BUSINESS CONCERNS PROCESSES/POLICIES RECOMMENDATIONS TIMETABLE
For the preparation of all
2. Two (2) out of 91 (2%) accounts can no longer be located but can still be reached thru phone calls. necessary documents (i.e.,
The phone call inquiry to the said customers revealed that they no longer have information regarding the LIRs, demand letter) to be
outstanding cylinders loaned. This resulted in unverified 13 cylinders in various SKUs with a net financial issued to customers before
impact of P31,800.00 if remains unrecovered, as summarized below: endorsement to CLD for
accounts that are unlocated
LIR FINANCIAL IMPACT but reachable thru phone
ACCOUNT NAME STATUS 11KG 50KG 11KG 50KG TOTAL calls.
(9 Timetable:
JON GAS Inactive 5 2 (9,000.00) ,200.00) (18,200.00) October 31, 2022
(4 (1
SEAFOOD POINT Inactive 5 1 (9,000.00) ,600.00) 3,600.00)

TOTAL 10 3 (18,000.00) (13,800.00) (31,800.00)

Annex 1
BUSINESS PROCESS AUDIT
CYLINDER LOANING AND PULLOUT PROCESS
B. UNACCOUNTED INVENTORY VARIANCES
1. Nine (9) out of 91 (10%) accounts have an inventory shortage totaling 31 cylinders in various SKUs with  Plant Sales Team must: To revisit the accounts. A
a net amount of P109,000.00:  Establish an independent demand letter will be
loaned cylinders prepared for accounts with
LIR ACTUAL VARIANCE FINANCIAL IMPACT monitoring which will be noted inventory shortages,
ACCOUNT NAME STATUS 11KG 50KG 11KG 50KG 11KG 50KG 11KG 50KG TOTAL updated regularly and within 5 days of no action
LEJ LAUNDRY (1 (18 (20,200.0 reconciled with Metal from customers, SLAs must
CAFE Inactive 2 4 1 - (1) (4) ,800.00) ,400.00) 0) Management Department be done.
on a monthly/quarter Timetable:
SAVE 5 (9 (9,200.0
basis. October 31, 2022
TAYUMAN Inactive - 2 - - - (2) - ,200.00) 0)
MAGIC WASH (9 (9,200.0 To establish a written
 Revisit the accounts and
HERBOSA Inactive - 2 - - - (2) - ,200.00) 0) business process that will
retrieve possible loaning
MALABON CITY (1 (4 (6,400.0 and/or pullout govern the cylinder loaning
JAIL (F) Active 1 1 - - (1) (1) ,800.00) ,600.00) 0) documents. Should there and pullout process.
11/88 SHOPPING (1 (1,800.0 be none, both parties Timetable:
MALL Active 1 40 - 40 (1) - ,800.00) - 0) must come up with an December 31, 2022
BALSA (10 (18 (29,200.0 agreement on the
RESTAURANT Active 6 8 - 4 (6) (4) ,800.00) ,400.00) 0) disposition of the noted
FLOATING (1 (1,800.0 inventory variances.
SANCTUARY Active 1 9 - 9 (1) - ,800.00) - 0)
GIYUMMY (27 (27,600.0  Create and develop
RESTAURANT Active - 10 - 4 - (6) - ,600.00) 0) standard written business
JORDANS (3 (3,600.0 processes governing the
CHICKEN Active 2 2 - 2 (2) - ,600.00) - 0) cylinder loaning and
pullout process, for
TOTAL 13 78 1 59 (12) (19) (21,600.00) (87,400.00) (109,000.00)
discussion, roll-out, and
sign-off to all concerned.
This will serve as a guide
to the employees and
reduce the possibility of
missed steps and
confusion.
Annex 1
BUSINESS PROCESS AUDIT
CYLINDER LOANING AND PULLOUT PROCESS

2. Six (6) out of 91 (7%) accounts have an inventory overage totaling eight (8) x 50 KG cylinders with a net amount of
P36,800.00:

FINANCIAL
ACCOUNT NAME STATUS SKU LIR ACTUAL VARIANCE IMPACT
SAVE 5 DON FABIAN
EXT. Active 50KG 2 3 1 4,600.00

SAVE 5 MEYCUAYAN Active 50KG 2 4 2 9,200.00

SAVE SAMAT Active 50KG 2 3 1 4,600.00

1
TOTAL 6 10 4 8,400.00

LOANS
(issuances) PULLOUT FINANCIAL
ACCOUNT NAME STATUS SKU (receipts) VARIANCE IMPACT

FORTUNE STAR Closed 50KG 51 52 1 4,600.00

G.S CAFÉ Closed 50KG 4 6 2 9,200.00

PHIL MARINER Inactive 50KG 129 130 1 4,600.00

18
TOTAL 184 188 4 ,400.00
Annex 1
BUSINESS PROCESS AUDIT
CYLINDER LOANING AND PULLOUT PROCESS
C. LOANED CYLINDERS UNACKNOWLEDGED BY CUSTOMER Plant Sales Team must: To revisit the account to
 Revisit the accounts and present the Loaned Item
One (1) out of 91 (1%) accounts did not acknowledge that there are outstanding loaned cylinders to them. retrieve possible pullout Receipt (LIR) form for them
Per Mr. George Tungpala - Representative of J. O. C. Fabrication, an inactive account, cylinders in their documents. Should there to acknowledge the
premise that CIAD was able to validate which are in various brands and SKUs were owned by them. This be none, both parties outstanding loaned
resulted in unverified loaned cylinders totaling 40 x 11KG and 3 x 22KG with a financial impact of must come up with an cylinders. To issue a
P82,800.00. agreement on the demand letter for the
disposition of the noted outstanding AR and loaned
inventory variances. cylinders.
Timetable:
 Present the Loaned Item October 31, 2022
Receipt (LIR) form which
serves as proof that
cylinders were loaned
and duly acknowledged
by them thru signing the
accountable form.
Annex 1
BUSINESS PROCESS AUDIT
CYLINDER LOANING AND PULLOUT PROCESS
D. UNVERIFIED CYLINDERS DUE TO RELEASING OF LOANED CYLINDERS TO CUSTOMERS AND
AFFILIATE BUSINESS
1. Two (2) out of 91 (2%) accounts were not able to present the outstanding loaned cylinders to them since Plant Sales Team must: To revisit the account and
it was released to their customers, totaling 30 x 11KG and 5 x 50KG cylinders with a net financial impact  Revisit accounts and/or require to document the
of P77,000.00: coordinate with the loaned cylinders to tertiary
business owner to accounts, to be signed by
ACCOUNT LIR RECORDS FINANCIAL IMPACT establish the quantity both parties (i.e., account
NAME STATUS 11KG 50KG 11KG 50KG TOTAL loaned to them. and end-user).
Timetable:
(27,000 (23,000
 Review sub-leasing October 31, 2022
DXL LPG GAS Active 15 5 .00) .00) (50,000.00)
procedures that may be
(27,000 To review sub-leasing
included in the account
XTC TRADING Active 15 - .00) - (27,000.00) procedures if management
management process.
(54,000 (23,000 may accept and include
TOTAL 30 5 .00) .00) (77,000.00) them in the Cylinder
Loaning Process.
 Offer to have a separate Timetable:
2. One (1) out of 91 (1%) accounts were not able to present the outstanding loaned cylinders to them since Loaned Item Receipt December 31, 2022
it was in the custody of their affiliate business as confirmed with A. Lobin, Route Salesman, resulting in (LIR) document for the
unaccounted loaned cylinders of 4 x 11KG with a financial impact of P21,000.00: affiliate business for To revisit the account and
easier monitoring and verify the loaned cylinder to
LIR ACTUAL VARIANCE FINANCIAL IMPACT tracking. the affiliate account.
ACCOUNT NAME STATUS 11KG 50KG 11KG 50KG 11KG 50KG 11KG 50KG TOTAL Furthermore, to discuss if
(7 (13 (21,000.0 for the issuance of new LIR
SAVE 5 BALUT Active 4 7 - 4 (4) (3) ,200.00) ,800.00) 0) forms under the name of
the affiliate business.
Timetable:
October 31, 2022
Annex 1
BUSINESS PROCESS AUDIT
CYLINDER LOANING AND PULLOUT PROCESS
E. EXISTING ACCOUNTS BUT UNVERIFIED LOANED CYLINDERS
1. Five (5) out of 91 (5%) accounts refused to accommodate CIAD, resulting in unverified 18 cylinders in Plant Sales Team must: To revisit accounts with
various SKUs with a financial impact of P73,400.00:  Revisit accounts and/or absence of owner’s
LIR FINANCIAL IMPACT coordinate with the approval, and non-
ACCOUNT NAME STATUS 11KG 22KG 50KG 11KG 22KG 50KG TOTAL account owner to retrieve operating since the
GLERIS FRIDAY (3,600.00 loaned cylinders for non- pandemic.
RESORT* Inactive 2 - - ) - - (3,600.00) operating accounts. To retrieve acknowledged
cylinders loaned from
(1,800.00 (3,600.00
 Request for cylinder customers from inactive
MOE AND BELS* Inactive 1 1 - ) ) - (5,400.00)
pullout for those customers.
LAUNDRY BEST POND (18,400.00 Timetable:
acknowledged loan
FATIMA** Inactive - - 4 - - ) (18,400.00) October 31, 2022
cylinders and inactive
(23,000.00 accounts. Furthermore.
MEREDIAN SHIPPING*** Inactive - - 5 - - ) (23,000.00) both parties must come To establish an account
(23,000.00 up with an agreement on management process that
ROYAL PACIFIC*** Active - - 5 - - ) (23,000.00) the disposition of the will govern the status of the
(5,400.00 (3,600.00 (64,400.00 noted inventory account (i.e., active,
TOTAL 3 1 14 ) ) ) (73,400.00) shortages. inactive), payment terms,
*Absence of owner’s approval account demographics,
**Non-operating since 2019 (pandemic)  Create and develop loaned cylinder monitoring,
***No loaned cylinder per customer representative standard written business and frequency of visits to
processes governing the the account.
2. Two (2) out of 91 (2%) accounts only acknowledged a different quantity of loaned cylinders once cylinder loaning and Timetable:
compared to the LIR records, resulting in a net overage of one (1) 50KG cylinder with a net financial impact pullout process, and December 31, 2022
of P4,600.00: account management
ACKNOWLEDGED FINANCIAL process, for discussion,
ACCOUNT NAME STATUS SKU LIR QUANTITY VARIANCE IMPACT roll-out, and sign-off to all
IRENEO DEL concerned. This will
MUNDO Inactive 50KG 2 1 (1) (4,600.00) serve as a guide to the
GTY ANGELS employees and reduce
CUISINE Active 50KG 2 4 2 9,200.00 the possibility of missed
steps and confusion.
TOTAL 4 5 4,600.00
Annex 1
BUSINESS PROCESS AUDIT
CYLINDER LOANING AND PULLOUT PROCESS
1
F. 15 out of 91 (16%) accounts are with other branded cylinders on customer premise due to new
and secondary/dual suppliers

QTY
Customer Name (50KG) Other Brand Cylinders Remarks
10th Avenue 2 Flame one New Supplier
Save 5 Maypajo 1 2 Flame one Secondary Supplier
1 – Liquigaz / 2- Solane / 1
Balsa sa Niugan 4 Generic Other Supplier
Malabon City Jail (F) 3 Regasco New Supplier
Save 5 MCU 2 Flame one Secondary Supplier
Save 5 Balut 2 Flame one Secondary Supplier
Magic Wash H. Lopez 2 Myt gas New Supplier
Save 5 Tayuman 2 Flame one New Supplier
Save 5 Hermosa 1 2 Flame one New Supplier
Save 5 Sangandaan 2 Flame one Secondary Supplier
Save 5 Earnshaw 4 Flame one New Supplier
Magic Wash Herbosa 3 Myt gas New Supplier
Save 5 Lakandula 2 Flame one New Supplier
Save 5 Dagupan 2 Flame one New Supplier
Lej Laundry Café 3 Pryce gas New Supplier
TOTAL 37    
G. Customer Complaints
Out of 77 accounts visited covering the period of August 9 to 19, 2022, the following complaints were
raised by customers:
 18 accounts (23%) with noted late delivery, wherein 5 accounts of which resulted in runout;
 6 accounts (8%) with pipeline/accessories concerns;
 2 accounts (2%) with delivery team concerns resulting in damages on customer premises;
 5 accounts (6%) with weighing scale concern wherein delivery team has no weighing scale,
defective weighing scale, and/or with no proper weigh out conducted; and
Annex 1
BUSINESS PROCESS AUDIT
CYLINDER LOANING AND PULLOUT PROCESS
 2 accounts (3%) with issues regarding non-issuance of pullout forms
Annex 1
BUSINESS PROCESS AUDIT
CYLINDER LOANING AND PULLOUT PROCESS
H. Procedural lapses in the standard forms and monitoring, but with no financial implications:
1. Inadequate monitoring of loaned cylinders resulting in no check and balance procedures conducted
to validate the accuracy and existence of loaned cylinders declared in the Metal Management
Department’s LIR records.

2. Incomplete Details and Signatories on Loaned Item Receipts (LIR) and Pullout Forms (POF)
Out of 331 LIRs:
 8 (2%) have no Lendee’s Corporate Name / DTI
 11 (3%) have no Lendee’s Store Business
 278 (84%) have no Lendee’s Complete Name
 310 (94%) have no Lendee’s Complete Address
 159 (48%) have no Lendee’s Complete Store Address
 189 (57%) have no Marketing Executive Officer's signature
 59 (18%) have no General Manager's signature
 4 (1%) have no Operations Head's signature
 54 (16%) have no Driver's signature
 110 (33%) have no Helper 2 signature
 13 (4%) have no Authorized Rep. Complete Name
 17 (5%) have LIR has no Authorized Rep. Signature
 139 (42%) have no Owner`s Complete Name
 139 (42%) have no Owner Signature
 125 (38%) have no Contact Details
 226 (68%) have no 226 Email Address
 150 (45%) have no Residential Address of the Owner

Out of 148 POFs:

 85 (57%) have no manual/electronic pull-out form series number
 94 (63%) have no Account Executive Signature
 19 (12%) have no BIVMC Representative Signature
 17 (11%) have no Customer Signature
Annex 1
BUSINESS PROCESS AUDIT
CYLINDER LOANING AND PULLOUT PROCESS
3. Incomplete Pertinent Documents
Upon Checking the LIR documents, we were able to note the following:
 140 out of 141 (99%) overall accounts have no corresponding Customer Information Sheet
(CIS); and
 117 out of 141 (83%) overall accounts are with attached Identification Card (ID) and
Regulatory Compliance/Permits (i.e., DTI, COR, Mayors Permit, Business Permit, etc.)

4. Erroneous Recording in LIR Monitoring (Metal Management Department)

The following erroneous recordings were observed once the LIR monitoring file is compared against
the actual LIR documents:
 Save 5 Masangkay - erroneously recorded 2 x 50KG but should only be one (1) per LIR
document; and
 J.O.C Fabrication - erroneously recorded 3 x 11KG but should have been four (4) per LIR
document

5. Unrecorded Loaned Item Receipt (LIR) and Pull-out Form (POF) (Metal Management Department)
A total of 247 instances totaling to 131 LIRs and 116 POFs were unrecorded to LIR monitoring.

E. OTHER AREAS FOR BP IMPROVEMENT AND ALIGNMENT WITH PARENT COMPANY’S BPP ON
CAPEX