EXECUTIVE SUMMARY

A. Introduction

The Build-Operate and Transfer (BOT) Center was reorganized and renamed as
the Public-Private Partnership Center of the Philippines (PPPCP) by virtue of
Executive Order (EO) No. 8, series of 2010. It was transferred as an attached
agency from the Department of Trade and Industry to the National Economic and
Development Authority (NEDA). The PPPCP shall cover all Public-Private
Partnership (PPP) programs and projects including all the variants or
arrangements under Republic Act (RA) No. 7718, otherwise known as the BOT
Law.

Under EO No. 8, the PPPCP exercises, among others, the following powers and
functions:

a) Conduct project facilitation and assistance to the national implementing

agencies, including government owned and controlled corporations and Local
Government Units (LGUs) in addressing impediments or bottlenecks in the
implementation of PPP programs and projects;

b) Provide advisory services, technical assistance, trainings and capacity

development to agencies/LGUs in PPP project preparation and development;

c) Recommend plans, policies and implementation guidelines related to PPP in

consultation with appropriate oversight committees, implementing agencies,
LGUs and the private sectors;

d) Manage and administer a revolving fund to be known as the Project

Development and Monitoring Facility for the preparation of business case,
pre-feasibility and feasibility studies and tender documents of PPP programs
and projects; and,

e) Perform such other function, which may be critical in expediting and

implementing effectively the PPP programs and projects of the government.

The PPPCP is headed by Executive Director Ferdinand Jesus A. Pecson and has
128 plantilla positions of which 119 are filled-up as at December 31, 2020. One
Contract of Service was hired during the year.

Project Development and Monitoring Facility (PDMF)

The PPPCP manages and administers the PDMF, formerly known as the Project
Development Facility which was established as a revolving fund under EO No.
44, s. 2002.

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 The PDMF fund is used to finance the conduct of business case, pre-feasibility
and feasibility studies and preparation of tender documents of PPP programs and
projects in a timely manner and ensure effective monitoring of PPP project
implementation.

The PDMF Committee, composed of one Undersecretary as Chairman from the

NEDA, two Undersecretaries as Vice-Chairmen from the Department of Finance,
one Undersecretary and one Assistant Secretary as Members from the Department
of Budget and Management and an Executive Director as Member from the
PPPCP, approves applications for PDMF support. Subject to the approval of the
PPP Governing Board, the PDMF Committee is mandated to formulate, prescribe
and recommend policies, procedures and guidelines for the use of the PDMF for
the development of PPP projects and recovery of costs charged to the fund. The
PPPCP also serves as the Secretariat of the PDMF Committee.

B. Financial Highlights

The sources and application of funds, financial position and financial performance
of the PPPCP (General Fund and PDMF), for Calendar Year (CY) 2020 with
corresponding figures for CY 2019, are summarized below:

2019 Increase/
Particulars 2020
(As Restated) (Decrease)
Sources and Application of Funds
Appropriation P 203,053,832.00 P 174,580,506.00 P 28,473,326.00
Regular Appropriation 183,964,800.00 157,334,000.00 26,630,800.00
Special Purpose Fund 15,920,229.00 8,324,611.00 7,595,618.00
Automatic Appropriation 3,168,803.00 8,921,895.00 (5,753,092.00)
Allotment Received 203,053,832.00 174,580,506.00 28,473,326.00
Regular Appropriation 183,964,800.00 157,334,000.00 26,630,800.00
Special Purpose Fund 15,920,229.00 8,324,611.00 7,595,618.00
Automatic Appropriation 3,168,803.00 8,921,895.00 (5,753,092.00)
Obligations Incurred 181,998,859.91 168,696,465.52 13,302,394.39
Regular Appropriation 163,702,818.27 151,453,311.11 12,249,507.16
Special Purpose Fund 15,127,238.78 8,324,611.00 6,802,627.78
Automatic Appropriation 3,168,802.86 8,918,543.41 (5,479,740.55)
Unobligated Balance 21,054,972.09 5,884,040.48 15,170,931.61
Regular Appropriation 20,261,981.73 5,880,688.89 14,381,292.84
Special Purpose Fund 792,990.22 0.00 792,990.22
Automatic Appropriation 0.14 3,351.59 (3,351.45)
Financial Position
Assets 2,642,652,525.91 3,679,126,084.91 (1,036,473,559.00)
Liabilities 57,903,428.16 75,991,497.03 (18,088,068.87)
Net Assets/Equity 2,584,749,097.75 3,603,134,587.88 (1,018,385,490.13)
Financial Performance
Revenue 39,911,793.15 4,983,795.43 34,927,997.72

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 2019 Increase/
Particulars 2020
(As Restated) (Decrease)
Net Assistance/Subsidy 254,998,670.56 200,144,674.30 54,853,996.26
Other Non-Operating Income P 12,850.00 P 0.00 P 12,850.00
Loss on Foreign Exchange (1,917,175.83) (1,687,854.82) (229,321.01)
Sub-Total 293,006,137.88 203,440,614.91 89,565,522.97
Expenses 254,489,907.68 199,654,573.00 54,835,334.68
Surplus/(Deficit) for the Period 38,516,230.20 3,786,041.91 34,730,188.29

The PDMF receives financial support through the Capacity Development

Technical Assistance (TA) administered by the Asian Development Bank (ADB),
under TA No. 7795: Strengthening Public-Private Partnership in the Philippines.
The Philippine Government provides counterpart fund of P300 million as initial
fund to the PDMF under EO No. 8, s. 2010 and subsequently funded through the
annual General Appropriations Act.

The PDMF status of funds as at December 31, 2020 in US dollar is summarized

as follows:

Government
Particulars of the Philippines ADB Total
(GOP)
Total PMDF Funds $ 83,927,751.81 $ 20,500,000.00 $104,427,751.81
Committed/Earmarked Funds (35,371,482.87) (16,329,059.87) (51,700,542.74)
ADB Reserve for Admin and Forex 0.00 (805,909.46) (805,909.46)
Reallocation to the PPP Center’s 0.00 (1,881,808.14) (1,881,808.14)
Capacity Development
Available Funds (PDMF Contribution) 48,556,268.94 1,483,222.53 50,039,491.47
Reflows 20,198,053.67 0.00 20,198,053.67
Committed Funds (2,336,021.21) 0.00 (2,336,021.21)
Available Funds (PDMF Reflows) 17,862,032.46 0.00 17,862,032.46
Total Available Funds $ 66,418,301.40 $ 1,483,222.53 $ 67,901,523.93
Cost Sharing Rate effective
37.50% 62.50% 100%
October 2018

C. Scope and Objectives of the Audit

The audit covered the financial accounts and operations of the PPPCP for CY
2020. The audit was conducted to: (a) verify the level of assurance that may be
placed on management’s assertion on the financial statements; (b) determine the
agency’s compliance with laws, rules and regulations; (c) recommend agency’s
improvement opportunities; and (d) determine the extent of implementation of
prior years’ audit recommendations.

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D. Audit Methodology

We adopted a risk-based audit approached in the audit of the financial statements

(FSs) of PPPCP and in the review of compliance with laws, rules and regulations.
The Audit Team which carried out the audit, among others, (i) examined financial
and accounting procedures adopted by the PPPCP and other relevant
documentation; (ii) assessed internal controls regulating financial operations and
carried out compliance testing for determining the extent of control in operation;
(iii) conducted substantive testing of a representative sample of selected
transactions; (iv) carried out review, on test check basis, of a number of contract
and transactions related to movements in balances of assets, liabilities, revenues
and expenses; and (v) conducted interviews and held discussions with the
concerned officials and staff of the PPPCP.

The results of the audit were communicated to the Head of the Agency and the
concerned officials through the issuance of Audit Observation Memoranda.

E. Independent Auditor’s Report on the Financial Statements

The Auditor rendered an unmodified opinion on the fairness of presentation of the

FSs as at December 31, 2020.

F. Summary of Significant Audit Observations and Recommendations

The audit observations and corresponding recommendations discussed in Part II

of this report are summarized, as follows:

1. Obligations for undelivered services and/or without complete and adequate

supporting documents as at year-end and those based only on Job Order (JO)
contracts totaling P1.105 million and P228,100.00, respectively, were
recognized under Accounts Payable which resulted in the overstatement of
Accounts Payable by P1.333 million and Janitorial Services, Other General
Services, Printing and Publication Expenses, Repairs and Maintenance -
Machinery and Equipment, Office Equipment and Rent/Lease Expenses by
P28,287.63, P114,543.33, P1.107 million, P20,800.00 and P62,150.00
respectively, and the understatement of Accumulated Surplus/(Deficit) by
P1.333 million.

We recommended and Management agreed to require the Chief

Administrative Officer, Finance Division to: (a) ensure that recorded
payables in the books of accounts are for services rendered and goods
delivered, and with complete and appropriate supporting documents; and
(b) establish the validity of obligations/payables, analyze entries made

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 and make the necessary adjustments to correct the balances of the
affected accounts.

2. Erroneous recognition of 22 units of pocket Wi-Fi totaling P55,000.00 under

Telephone Expenses resulted in the overstatement of the said account and the
understatement of Semi-Expendable Communications Equipment, both by the
same amount.

We recommended and Management agreed to require the Chief

Administrative Officer, Finance Division to reclassify the pocket Wi-Fi
totaling P55,000.00 to Semi-Expendable Communications Equipment and
make the corresponding adjustment to Accumulated Surplus/(Deficit).

3. Non-reconciliation and/or non-confirmation of balances of receivables

with/by Implementing Agencies (IAs) under Due from National Government
Agencies, Due from Government-Owned or Controlled Corporations and
Other Receivables totaling P1.095 billion, P176.952 million and P150.964
million, respectively, had precluded the determination of the existence,
completeness and accuracy of the balances of the said accounts at year-end.

We recommended and Management agreed to require the Chief

Administrative Officer, Finance Division to: (a) provide the
Accountant/Finance Officer of the concerned IAs with the details of
receivables and relevant documents to facilitate reconciliation of the
reciprocal accounts between the PPPCP and IAs; (b) follow up the results
of reconciliation with the Accountants/Finance Officers and settlements
thereon; and (c) analyze and verify reconciling items and effect
adjustments, as necessary, based on pertinent documents.

The aforementioned observations and recommendations were discussed with

concerned Management officials and personnel through virtual exit conference on
March 24, 2021. Management’s views and comments were incorporated in the
report, where appropriate.

G. Status of Audit Suspensions, Disallowances and Charges

As at December 31, 2020, the PPPCP’s unsettled disallowances amounted to

P7.218 million. The details are shown in Part II of this report.

H. Status of Implementation of Prior Years’ Audit Recommendations

Out of 18 prior years’ audit recommendations, 14 were implemented and 4 were

not implemented. The details are discussed in Part III of this report.

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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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