EXECUTIVE SUMMARY

A. Introduction

The National Nutrition Council (NNC) was created in 1974 by virtue of

Presidential Decree No. 491, otherwise known as the “Nutrition Act of the
Philippines”. The NNC is the country’s policy-making and coordinating body on
nutrition. The Council was reorganized through Executive Order No. 234 s.1987 and
Administrative Order No. 88 s.1988. It was attached to the Department of Health
(DOH) on November 30, 2005. The NNC was instructed to realign its operations to
focus on client-based activities and to address hunger and malnutrition in the context
of Millennium Development Goals (MDG).

As the policy-making and coordinating body on nutrition, the NNC has the
following objectives:

 Formulate national food and nutrition policies and strategies;

 Coordinate the planning, monitoring and evaluation of the national nutrition

program;

 Coordinate the release of funds, loans and grants from government and non-
government organizations; and

 Call on any department, bureau, office, agency and other instrumentalities of

the government for assistance in the form of personnel, facilities and resources
as the need arises.

The Council consists of a Governing Board (GB) composed of representatives

from ten government agencies and three from the private sector. It is chaired by the
Secretary of the DOH, and assisted by a Secretariat headed by Assistant Secretary
Maria-Bernardita T. Flores, Executive Director IV.

There are three (3) technical divisions each headed by a Nutrition Officer
(NO), namely: the Nutrition Policy and Planning Division (NPPD), Nutrition
Surveillance Division (NSD), and Nutrition Information and Education Division
(NIED). The Finance Division (FD) and Administrative Division (AD) are the two
support divisions.

There are 17 Regional Field Offices (RFOs), each headed by Nutrition

Program Coordinator (NPC). The RFOs are under the direct supervision of the Office
of the Executive Director.

As of December 31, 2017 the Council has 111 authorized positions, of which
89 were filled up and it also has 127 JO/MOA personnel or total warm bodies of 216.
B. Financial Highlights

Financial Condition

Particulars CY 2017 CY 2016 Increase (Decrease)

Assets 787,336,376.21 699,155,729.69 88,180,646.52
Liabilities 142,315,161.96 92,834,178.98 49,480,982.98
Net Assets/Equity 645,021,214.25 606,321,550.71 38,699,663.54

Financial Performance

Particulars CY 2017 CY 2016 Increase (Decrease)

Revenue 502,674,200.27 464,448,444.12 38,225,756.15
Expenses 354,706,366.43 266,525,571.93 88,180,794.50
Surplus/(Deficit) 147,967,833.84 197,922,872.19 (49,955,038.35)

Sources and application of funds

Particulars CY 2017 CY 2016 Increase (Decrease)

Allotments 691,867,339.05 552,812,294.65 139,055,044.40
Obligations 618,080,920.92 504,966,983.56 113,113,937.36
Balances 73,786,418.13 47,845,311.09 25.941,107.04

C. Scope of Audit

The audit covered the operations of the NNC for calendar year 2017. It was
conducted to: (a) verify the level of assurance that may be placed on management’s
assertions on the financial statements; (b) recommend agency improvement
opportunities; and (c) determine the extent of implementation of prior years’ audit
recommendations.

D. Independent Auditor’s Report

A qualified opinion was rendered on the financial statements of the NNC as of

December 31, 2017.

E. Summary Of Significant Observations And Recommendations

The significant observations and recommendations, discussed in detail in Part

II of the report are as follows:

1. The National Nutrition Council’s (NNC) Statement of Financial Position as at

December 31, 2017 is not fairly presented due to misstatements in asset accounts

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 amounting to ₱433.001 million, which represents 55 percent of its total assets at
year-end. Due to the significant impact of such misstatements on the reported
balances of the affected accounts, Management’s assertions as to the accuracy,
existence, classification, rights and obligations, and valuation of the said accounts
could not be relied upon.

We recommended and Management agreed to require: a) the Accountant to

immediately facilitate the review of the disbursements reported by the SDOs
of the regional offices and accordingly, record the pertinent transactions in
the subsidiary ledger books; b) the Nutrition Program Coordinator in NNC-
RFO II to produce the supporting documents for the disbursements totaling
P0.309 million, otherwise, this shall be disallowed in audit; and c) the
Accountant and the Chief, Financial and Management Division of the NNC–
CO to immediately stop the practice of downloading cash advances directly
to the personal account of the SDO of NNC-RFO XI, to prevent disallowance
in audit.

2. The Calendar Year (CY) 2016 corresponding figures presented in the CY 2017
Financial Statements (FS) were not restated to reflect prior year errors and
adjustments, which is not in compliance with Section 42(b) and 43, Chapter 19 of
the Government Accounting Manual (GAM), Volume I.

We recommended and Management agreed to require the Accountant to

properly present prior period errors and adjustments by restating the prior
year balances of the affected accounts shown as corresponding figures for the
current year FS in compliance with the requirements of Section 42(b) and 43,
Chapter 19 of the GAM, Volume I.

3. Delay in the submission of financial reports, transaction records, bank

reconciliation statements, and copies of contracts/purchase orders prevented the
conduct of thorough analysis and verification of the accounts and transactions by
the auditors for timely discharge of relevant audit results.

We recommended and Management agreed to require the concerned Office

and the Nutrition Program Coordinators (NPCs) to: a) Closely monitor the
timely submission of financial reports, transaction documents and BRSs and
ensure that these are submitted to the concerned Audit Teams within the
prescribed deadlines; b) Immediately submit the lacking BRSs, transaction
documents, payrolls and contracts/POs for evaluation and audit; and c)
Consider coordinating with the Government Accountancy Sector of the
Commission on Audit for the installation of the e-NGAS and attendance to
relevant trainings.

These observations and recommendations were communicated through Audit

Observations Memorandum and discussed with management officials concerned

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 during the exit conference. Management views and comments were incorporated in
the report, where appropriate.

F. Enforcement of Settlement of Suspensions, Disallowance and Charges

The total audit suspensions, disallowances and charges of prior years as of

December 31, 2017 are summarized below:

Beginning This period Ending

Particulars Balance January 1 to December 31, 2017 Balance
(As at 12/31/2016) NS/ND/NC NSSDC (As at 12/31/2017)
NS 43,825,064.37 0.00 0.00 43,825,064.37
ND 25,719,430.60 0.00 493,723.05 25,225,707.55
NC 0.00 0.00 0.00 0.00
Total 69,544,494.97 0.00 493,723.05 69,050,771.92

G. Status of Implementation of Prior Years’ Audit Recommendations

Out of the total 34 audit recommendations contained in CY 2016

Consolidated Annual Audit Report, there were two (2) fully implemented, 22
partially implemented, and ten (10) not implemented. Details are presented in Part III
of this report.

We enjoin Management to ensure full implementation of all audit

recommendations to improve the financial and operational efficiency of the
Agency.

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