Annex A

List of Significant and Common Audit Observations and Recommendations

I. Significant Audit Observations and Recommendations

1. Deficiencies in the implementation of various programs/ projects, hence,

benefits were not maximized or the objectives were not attained
2. Unimplemented/Partially Implemented/Delayed Implementation of
Infrastructure Projects
3. Other programs implemented/ items procured were unutilized/underutilized/
overstocked/expired/undistributed or inadequately protected
4. Non-sustainability/non-usefulness of projects implemented
5. Unutilized appropriations/unobligated allotments/unused budget/fund
6. Unutilized Notice of Cash Allocations
7. Project funds utilized not for intended purpose
8. Dormant/unutilized funds or unauthorized bank accounts/deposits unreverted to
the BTr or unreturned to Source Agencies
9. Expenses/Disbursements considered non-compliant with existing laws, rules
and regulations
9.a Expenses without legal basis/irregular expenses
9.b Excessive Expenses/disbursements beyond the approved rates
9.c Disbursements lacking or without supporting documents
9.d Other unauthorized/illegal/unnecessary expenses
10. Unrealized or foregone revenue, uncollected or unrecorded income
11. COVID-19-related Programs/ Projects
12. National Task Force to End Local Communist Armed Conflict (NTF-ELCAC)-
Related Audit Observations
13. Typhoon Yolanda-Related Projects
14. Marawi-Related Projects
15. Significant transactions considered non-compliant with existing accounting,
budgeting and other prescribed laws, rules and regulations
15.a Financial Statements not restated
15.b Non-compliance with accounting or budgeting rules, regulations and
issuances
15.b.1 Non-compliance with Accounting rules/regulations/issuances
15.b.2 Non-compliance with Budgeting rules/regulations/issuances
15.c Non-compliance with laws/issuances pertaining to Personnel
16. Non-compliance with R.A. No. 9184 and its Revised IRR
16.a Procurement of goods/services/equipment/major repairs without public
bidding/meeting the requirements for alternative mode of procurement
16.b Procurement of items not included in the Annual Procurement Plan
(APP)
16.c Undocumented/inadequately documented procurement
16.d Delayed or long procurement process inconsistent with GPPB Manual
16.e Bidders not meeting eligibility requirements or inadequate post-
qualification procedures
16.f Non-compliance with rules on bid security, performance security and
warranty requirements
16.g Mobilization fee issued without bond/bank guarantee

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 16.h Splitting of transactions or non-consolidation of transactions
16.i Failure to withhold retention money for infra projects or erroneous
deduction
16.j Unsupported Variation Orders
16.k Non-compliance with posting requirements
16.l Common Use Office Supplies not procured from PS DBM
16.m Non-preparation of Annual Procurement Plan or non-adherence to the
rules on the preparation of APP
16.n Delayed delivery and non-imposition of liquidated damages
16.o Contracts not awarded to the lowest bidder without valid justification
16.p Non-preparation and submission of Procurement Monitoring Report
16.q Approval of payment by BAC Chairman/Members/TWG
16.r Failure to invite observers during the bidding process
16.s Lapses in preparation, approval and/or enforcement of Construction
Safety and Health Program (CSHP)
16.t Lapses in preparation and issuance of MOA, Contract, PO and IAR
16.u Reference to brand names
16.v Requests for time extension not supported with proper documents or
irregularly granted
16.w Violation of prohibition on advance payment
16.x Other practices/deficiencies on procurement not in accordance with RA
No. 9184
17. Other significant observations

II. Common Audit Observations and Recommendations

A. CASH
A.1. Cash Shortages
A.2. Collections not deposited intact/ non-deposit to authorized government
depository bank/ undeposited collections
A.3. Unrecorded/delayed recording of bank accounts/ deposits/ check
disbursements/ refunds/ fund transfers/ reconciling items and other
transactions
A.4. Erroneous/misclassified/incorrect recording of cash transactions;
transactions recorded twice; balances of lapsed NCAs not closed
A.5. Unreconciled, negative, dormant and unaccounted balances and existence of
closed bank accounts
A.6. Other practices/deficiencies or weaknesses/breakdown in internal control
affecting the reliability of the cash balance/s
A.6.a Deficiencies in Petty Cash Fund (PCF) (grant of excessive PCF,
payments of expenses other than petty operating expenses or in
amounts exceeding P15,000.00, non-preparation of PC Vouchers,
non-maintenance of appropriate records and registries, non-
replenishment of PCF, as needed or when disbursements reached 75
percent, among others)
A.6.b Non-compliance with fidelity bond provisions under BTr and COA
issuances
A.6.c Deficiencies in handling official receipts such as frequent
cancellation, use of ORs not for the fund for which it was intended,

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 advanced dating, not duly accomplished ORs, non-issuance of ORs
for collections, among others.
A.6.d Non-cancellation of stale checks/unreleased checks not restored to
Cash account; signed blank checks; dishonored checks; non-disposal
of unused obsolete checks
A.6.e Non-preparation/non-submission of cash reports/records/registries/
SLs; unupdated cashbook/CDR; non-compliance with report format,
etc.
A.6.f No proper turn-over of cash accountability from AOs); CAs granted
to personnel without official designation; CAs transferred or handled
by different employee/AO; Non-segregation of duties; Collecting
officers not properly designated
A.6.g Non-existent internal controls/ internal control breakdowns such as
no review mechanisms, no check-and-balance, non-maintenance of
safe/vault of AOs
A.6.h Other observations pertaining to Cash transactions

B. RECEIVABLES
B.1 Unliquidated fund transfers (FTs)
B.1.a PS-DBM
B.1.b PITC
B.1.c Government Arsenal (GA)
B.1.d Other Agencies (Pls. specify name)
B.2 Unreconciled receivables
B.3 Dormant/long-outstanding/non-moving receivables/uncollected/unsettled
receivables
B.4 Unsupported receivables; lacking information/details/breakdown;
unadjusted receivables; unsubstantiated adjustments
B.5 Erroneous recording of receivables
B.6 Negative/abnormal balances of receivable accounts
B.7 Unrecorded/unbooked receivables
B.8 Non-elimination and unreconciled reciprocal accounts
B.9 Receivables not recognized at net realizable value/ non-recognition of
impairment
B.10 Non-Current Receivables presented in the FS as Current Receivables and
vice-versa
B.11 Other observations affecting the reliability of the Receivables account

C. INVENTORIES
C.1 Unrecorded procurement/issuances/disposal/loss/transfer of inventory/ semi-
expendable property or Report of Materials and Supplies Issued (RSMI)
C.2 Erroneous recording of Inventory transactions/misclassification of
accounts/abnormal or negative balances
C.3 Unaccounted inventory/ semi-expendable property during physical count
C.4 Unsupported/Undocumented Procurement/Issuance/Distribution of
Inventories
C.5 Non- maintenance/updating of Subsidiary Ledger Cards (SLCs) or Stock
Cards (SCs) by the Accounting and Property Offices, respectively, and other
Inventory-related reports

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 C.6 Idle, damaged, obsolete/expired/unserviceable, dormant or non/slow-moving
Inventories; non-conduct of impairment analysis
C.7 Unreconciled with RPCI
C.8 Non-conduct of physical count and/or non-preparation of RPCI
C.9 Non-observance of weighted average method of costing inventories
C.10 Other practices/deficiencies affecting the reliability of the Inventory
accounts

D. PROPERTY, PLANT AND EQUIPMENT (PPE)

D.1 Unrecorded PPE transactions
D.1.a Unrecorded purchases of PPEs
D.1.b Unrecorded donated PPEs received by the Agency
D.1.c Unrecorded disposal of PPEs or lost/destroyed/donated properties to
other agencies
D.2 Erroneous Recording of PPE
D.2.a Misclassification of PPE/erroneous recording of PPE
D.2.b Non-recognition of major repairs as PPE
D.3 Failure to recognize/erroneous recognition of depreciation of PPEs or
non/erroneous provision of impairment loss
D.4 Undocumented/unsupported PPE transactions due to the absence of or failure
to update PPELC and SLCs /Schedules supporting the GLs, or any
accounting records or certificate of ownership
D.5 Undisposed unserviceable properties
D.6 Failure to conduct physical inventory of PPEs/deficiencies in the conduct of
physical inventory
D.7 Unaccounted PPE during physical count
D.8 Failure to insure the PPEs with GSIS GIF or non-compliance with mandatory
requirement of insuring all government property
D.9 Non-preparation/maintenance/ updating or submission of required PPE
reports/records (PLCs, PCs, RPCPPE, PAR, IIRUP, etc.)/PPE not properly
tagged
D.10 Unreconciled PPE balances between Accounting and Property records (GL,
RPCPPE, PPELCs/SLCs and SCs) due to non-conduct of periodic
reconciliation of accounting and property records and failure to update
property and accounting records
D.11 Other practices/deficiencies affecting the reliability of the PPE accounts

E. INVESTMENTS
E.1 Unaccounted/unrecorded acquisition/disposal of Investments
E.2 Unbooked interests earned from Investment in Stocks or losses
E.3 Undocumented/unsupported investments
E.4 Erroneous recording of investments or misclassification of Investment
accounts
E.5 Other practices/deficiencies affecting the reliability of the Investment
accounts

F. BIOLOGICAL/INTANGIBLE ASSETS/OTHER ASSETS

F.1 Unliquidated cash advances (CAs) to officers and employees; granting of
CAs to officers and employees without liquidating previous CAs; and other
lapses in the grant, utilization and monitoring of CAs

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 F.2 Unrecouped Advances to Contractors
F.3 Non-amortization/impairment of Biological/Intangible Assets/Other Assets
or Erroneous amortization/impairment
F.4 Unaccounted Biological/Intangible Assets/Other Assets
F.5 Erroneous recording/ unrecorded Biological/Intangible/Other Assets or
misclassification of accounts
F.6 Negative/abnormal balances
F.7 Dormant/long outstanding cash advances, prepayments and other assets
F.8 Unreconciled balances between the accounts and other accounting/ property
reports
F.9 Lack of supporting documents, records and/or physical count; records not
properly maintained such as Biological Assets Property Cards, Quarterly
Report of Biological Assets, Report of Physical Count
F.10 Non-derecognition of unserviceable Other Assets
F.11 Non-disclosure of required information in the Notes to the Financial
Statements
F.12 Other practices/deficiencies affecting the reliability of the Other Asset
accounts

G. LIABILITIES
G.1 Dormant/long-outstanding/unsupported payables, unidentified liabilities, no
SLs/SLs of payable accounts not maintained, etc.
G.2 Unrecorded/erroneously recorded payables
G.3 Unreconciled GL and SL balances of payable accounts
G.4 Discrepancies between book balances and confirmation results/schedules
G.5 Negative/abnormal payable balances
G.6 Discrepancies between account balance and other reports for liabilities such
as Aging Schedule, Summary Report on the Inter-Agency Payables,
Schedule of Accounts Payable, and other account balances, etc.
G.7 Discrepancies between Budget and Financial Accountability Reports and
Financial Statements for Accounts Payables
G.8 Other practices affecting the reliability of the Payable accounts

H. REVENUES
H.1 Unaccounted/unrecorded/unrealized revenues or income/ Erroneous
recording of revenues/income/misclassification of accounts
H.2 Undocumented or unsupported revenue transactions
H.3 Absence/breakdown of internal control/established system and agency
reports, breakdown of internal controls, hence, the risk of non-collection of
revenues
H.4 Other practices/deficiencies affecting the reliability of the Revenue accounts

I. EXPENSES
I.1 Erroneous recording of expenses or misclassification of accounts
I.2 Unrecorded Expenses
I.3 Non-maintenance of subsidiary ledgers for Expense accounts
I.4 Other practices/deficiencies affecting the reliability of the Expense accounts

J. NON-OBSERVANCE OF CERTAIN LAWS, RULES, AND REGULATIONS

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 J.1 Non-submission of required monthly/quarterly/annual financial
reports/schedules, DVs, ORs, BRSs, etc. within the prescribed timeline
J.2 Non-submission of copies of contracts/POs/JOs, MOAs and IARs within set
timeline and other violations of COA Circular No. 2009-001
J.3 Unsettled Disallowances at year-end
J.4 Unsettled Suspensions at year-end
J.5 Non-compliance with provisions under the Senior Citizen's Act/Differently-
Abled Persons (PWDs)
J.6 Non-compliance with Gender and Development (GAD) requirements under
the GAA and other pertinent laws
J.7 Non-compliance with BIR provisions such as: Failure to withhold taxes, or
delayed or partial remittance of taxes withheld; and Other observations like
over-remittance of taxes, abnormal balances, unaccounted differences/
unreconciled balances and unsubmitted Electronic Tax Remittance Advices
(e-TRAs)/ tax withheld
J.8 Non-compliance with provisions of GSIS law such as delayed remittance of
GSIS contributions and unreconciled account balances/ unidentified
differences, etc.
J.9 Non-compliance with Pag-IBIG Law provision such as delayed remittance
of contributions/ account unreconciled balances.
J.10 Delayed or unremitted PhilHealth contributions; non-deduction of
contributions, etc.
J.11 Non-compliance with Philippine Disaster Risk Reduction and Management
requirements (RA No. 10121)
J.12 Non-compliance with mandatory requirements in the implementation of Post
Entry Modification of Single Administrative Document (SAD) and SAD
Cancellation; Payment Application Secure System Version 5.0; Custom
Modernization and Tariff Act; and Property Insurance Fund
J.13 Non-compliance with the required posting of transparency seal in their
respective websites.
J.14 Non-submission of list of PPAs and other violations of COA Circular No.
2013-004

K. OTHER ACCOUNTS/AREAS COVERED IN AUDIT

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