EXECUTIVE SUMMARY

A. Introduction

The Housing and Land Use Regulatory Board (HLURB) was reconstituted as
the Human Settlements Adjudication Commission (HSAC), referred to as the
"Commission" by virtue of Section 12, Chapter IV of the Republic Act (RA) No.
11201, otherwise known as the “Department of Human Settlements and Urban
Development Act” which was signed on February 14, 2019 by President Rodrigo
Roa Duterte. The Commission assumes and continues to perform the adjudication
function of HLURB and is attached to the Department of Human Settlements and
Urban Development (DHSUD) for policy, planning and program coordination only.

The Commission shall be guided by the Constitutional provision that affords

all persons the right to a speedy disposition of their cases before all judicial, quasi-
judicial or administrative bodies relating to Real Estate Development, Homeowners
Associations and appeals from decisions of Local and Regional Planning and
Zoning Bodies. HSAC is vested with exclusive and original jurisdiction to hear and
decide cases involving subdivisions, condominiums, memorial parks and similar
real estate developments and transactions, homeowners’ associations, the
implementation of the balanced housing development provision of RA No. 7279 as
amended, and laws and regulations being implemented by DHSUD; and appellate
jurisdiction over decisions of local zoning bodies.

Pursuant to Section 13, Chapter IV of the same RA, the Commission shall be
composed of Commission en banc-Five Commissioners appointed by the President,
and Regional Adjudication Branch (RAB). The Executive Commissioner, chosen
by the President from among the five Commissioners, shall be responsible for the
administration and operations of the Commission, including supervision of
personnel, and shall be assisted by the Executive Clerk of the Commission. On the
other hand, there shall be as many RABs as there are Regional Offices (ROs) of
DHSUD. The President shall appoint as many Regional Adjudicators as may be
necessary upon the recommendation of the Secretary of DHSUD.

The HSAC is presently headed by Executive Commissioner Melzar P. Galicia

and assisted by four Commissioners.

The Commission has 16 operational RABs, as follows:

RAB Coverage
1. RAB-NCR National Capital Region (NCR)
2. RAB-CAR Cordillera Administrative Region (CAR)
3. RAB-I Ilocos Region
4. RAB-II Cagayan Valley
5. RAB-III Central Luzon
6. RAB-IV-A CALABARZON

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 RAB Coverage
7. RAB-IV-B MIMAROPA Region
8. RAB-V Bicol Region
9. RAB-VI Western Visayas
10. RAB-VII Central Visayas
11. RAB-VIII Eastern Visayas
12. RAB-IX Zamboanga Peninsula
13. RAB-X Northern Mindanao
14. RAB-XI Davao Region
15. RAB-XII SOCCSKSARGEN
16. RAB-XIII Caraga

As of December 31, 2022, the Commission had total personnel complement of

413, consisting of 362 filled plantilla positions and 51 Contract of Service
personnel:

Total
Office Plantilla Position Contractual
Personnel
Central Office (CO) 123 10 133
RAB-NCR 23 7 30
RAB-CAR 16 2 18
RAB-I 15 2 17
RAB-II 14 1 15
RAB-III 17 4 21
RAB-IV-A 19 7 26
RAB-IV-B 13 1 14
RAB-V 15 2 17
RAB-VI 13 0 13
RAB-VII 14 2 16
RAB-VIII 14 2 16
RAB-IX 10 3 13
RAB-X 13 2 15
RAB-XI 18 3 21
RAB-XII 13 2 15
RAB-XIII 12 1 13
Total 362 51 413

B. Operational Highlights

The reported agency’s targets and accomplishments for Calendar Year (CY)
2022 are the following:

Organizational Outcomes (OO) / Physical Accomplishments

Baseline
Performance Indicators (PIs) Target Physical Percentage
HUMAN SETTLEMENTS ADJUDICATION PROGRAM
Output Indicators:
1. Percentage of decisions rendered out of
45% 38% 52% 136.84
the total number of cases
2. Percentage of decisions rendered within
sixty (60) days out of the total number of 60%
cases ripe for resolution
3. Percentage of decisions rendered on HOA 60%

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 Organizational Outcomes (OO) / Physical Accomplishments
Baseline
Performance Indicators (PIs) Target Physical Percentage
disputes within sixty (60) days out of the
total number of HOA cases ripe for
resolution
4. Percentage of decisions rendered on real
estate management within nine (90)
59% 46% 77.97
calendar days out of the total number of
cases deemed submitted for decision
5. Percentage of decisions rendered on HOA
disputes within ninety (90) calendar days
57% 48% 84.21
out of the total number of cases deemed
submitted for decision

C. Financial Highlights

The financial position, financial performance and sources and utilization of

funds of the Commission for CY 2022, with the corresponding figures for CY 2021,
are summarized below:

Amount (P)
Particulars 2021
2022
(As Restated)
Financial Position
Assets 1,666,426,766.73 1,592,135,528.44
Liabilities 341,672,457.74 274,310,665.58
Net Assets/Equity 1,324,754,308.99 1,317,824,862.86
Financial Performance
Revenue 13,676,931.60 10,584,409.52
Current Operating Expenses 421,105,896.14 293,665,347.99
Net Financial Assistance/Subsidy 433,964,834.46 306,926,079.03
Miscellaneous Income 99,539.35 133.56
Gains - 30,000.00
Losses - (11,731.93)
Surplus/(Deficit) 26,635,409.27 23,863,542.19
Sources and Utilization of Funds
Appropriations 442,072,454.00 284,452,614.00
Continuing Appropriations 20,599,905.70 46,385,335.54
Allotments 462,672,359.70 330,837,949.54
Obligations Incurred 429,253,273.38 303,533,477.49
Disbursements 422,268,469.43 293,130,994.94
Unobligated Allotment 33,419,086.32 27,304,472.05

The Summary of Appropriations, Allotments, Obligations, Disbursements and

Balances (SAAODB) for CY 2022 is shown in Annex A.

D. Scope of Audit

The audit covered the accounts and operations of the HSAC-Central Office
(CO) and its RABs for CY 2022. It was conducted to: a) ascertain the level of
assurance that may be placed on the Management’s assertions on the financial

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 statements (FSs); 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 implementation of prior
years’ audit recommendations. Moreover, the audit was conducted in accordance
with International Standards of Supreme Audit Institutions (ISSAIs).

E. Opinion of the auditor on the fairness of presentation of the Financial

Statements

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

the consolidated FSs of HSAC as at December 31, 2022.

F. Summary of Significant Observations and Recommendations

The following are the significant audit observations and corresponding

recommendations:

1. In RAB-IV-B, V, and XIII, the balance of Inventory accounts of

P2,486,682.31 was overstated by P172,706.16 due to: (a) misclassification of
the advances to Procurement Service-Department of Budget and Management
(PS-DBM) of P222,087.50 as Semi-Expendable Information Communication
and Technology (ICT) Equipment instead of Due from National Government
Agencies (NGAs); (b) misclassification and non-recording of issuance of
semi-expendable items of P14,299.00; and (c) unrecorded semi-expendable
items of P63,680.34. Moreover, in RAB IV-B and IX, there were
misclassification of various semi-expendable items amounting to
P239,800.00; thus, affecting the fair presentation of the accounts affected,
contrary to Section 6(e), Chapter 19, Volume I of the Government Accounting
Manual (GAM) for NGAs. (Finding No. 1).

We recommended and Management agreed to require the concerned Regional

Accountants of RAB-IX and XIII to prepare the necessary adjusting entries to
correct the errors; and RAB IV-B, IX and XIII to strictly observe the proper
classification of accounts in accordance with the Revised Chart of Accounts.

2. In RAB-NCR and IX, Property, Plant and Equipment’s (PPE) carrying

amount of P3,663,212.82 was understated by P129,574.13 due to: (a) error in
the adjustment of ICT Equipment with carrying amount of P5,600.00; (b)
error of P4,800.11 in the computation of depreciation; (c) non-capitalization
of installation and assembly costs of PPE resulting in the net understatement
of the book balance of Office Equipment by P190,999.02 and (d) erroneous
recording of Semi-Expendable as PPE that overstated the book balance of ICT
Equipment by P71,825.00; thus, affecting the fair presentation of the accounts
affected, contrary to Section 6(e), Chapter 19, Volume I of the GAM for
NGAs. (Finding No. 2).

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 We recommended and Management agreed to instruct the Regional
Accountants of RAB-NCR and IX to ensure the proper recording of
transactions and computation of depreciation to avoid errors; and RAB-IX to
prepare the necessary adjusting entries.

3. In HSAC-CO, the carrying amount of computer software of P844,348.71 was

overstated by P18,296.68 due to: (a) error in the recording of the adjustment
for the expired subscriptions of P23,003.22; and (b) error of P4,706.54 in the
computation of amortization. Moreover, there were errors in the
reclassification of computer software to semi-expendable amounting to
P64,767.74 and in the derecognition of unserviceable computer software
amounting to P68,333.56 which is not yet sold; thus, affecting the fair
presentation of the accounts affected, contrary to Section 6(e), Chapter 19,
Volume I of the GAM for NGAs. (Finding No. 3).

We recommended and Management agreed to instruct the Chief Accountant to

ensure proper recording of adjustments, reclassification, and derecognition
relative to computer software and computation of amortization to avoid errors.

4. In RAB-NCR, the balance of the Accounts Payable account amounting to

P102,622.00 was overstated by P13,582.00 due to misclassification of
Retention Fee amounting to P13,582.00 as Accounts Payable instead of
Guaranty/Security Deposits Payable, contrary to the Revised Chart of
Accounts, Chapter 3, Volume III of the GAM for NGAs; thus, affecting the
fair presentation of the accounts affected, contrary to Section 6(e), Chapter 19,
Volume I of the GAM for NGAs. (Finding No. 4).

We recommended and Management agreed to instruct the RAB-NCR’s

Regional Accountant to ensure proper recording of transactions to avoid errors
in recording.

5. In HSAC-CO, the balance of the Subsidy to Regional Offices/Staff Bureaus

account was understated by P660,785.78 due to: (a) failure to adjust the entry
made in the transfer of semi-expendable PPE items to RABs considering the
adoption of the new capitalization threshold of semi-expendable PPE; and (b)
erroneous recording of the transfer of PPE items to RABs by debiting
Accumulated Surplus/(Deficit) instead of Subsidy to Regional Offices/Staff
Bureaus account; thus, affecting the fair presentation of the accounts affected,
contrary to Section 6(e), Chapter 19, Volume I of the GAM for NGAs.
(Finding No. 5).

We recommended and Management agreed to instruct the Chief Accountant to

ensure that transfer of PPE items to RABs are properly recorded in the books
of accounts.

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6. In RAB-IV-B, V, IX, and XIII, the accuracy of the balance of Inventory
Accounts of P2,787,494.31 as to its existence, completeness, condition, and
accountability could not be ascertained due to: (a) inventory items found
during physical count but no available property and accounting records; (b)
non-preparation and maintenance of prescribed inventory forms, registries,
and reports; and (c) discrepancy between the Report on Physical Count of
Inventories (RPCI) and General Ledger (GL) of P26,875.71, contrary to
Section 17, Chapter 8, Volume I and Appendix 66, Volume II of the GAM for
NGAs and Section 4.7 of the COA Circular 2022-004 dated May 31, 2022.
(Finding No. 6).

We recommended and Management agreed to require the:

a. Property/Supply Officer and Regional Accountant of RAB-IV-B to

conduct reconciliation of available records and locate the documents
pertaining to the three (3) inventory items found but were not recorded,
and prepare the necessary adjusting entry/adjustments in the accounting
and property records;

b. Property/Supply Officer and Regional Accountant of RAB-IV-B, and IX

to prepare and maintain the prescribed inventory forms, registries and
reports;

c. Regional Accountant of RAB-IX to strictly comply with the provision of

COA Circular No. 2022-004 in the issuance of Semi Expendable
Properties; and

d. Regional Accountant and Property Officer of RAB-XIII to regularly

monitor and reconcile their records and prepare the necessary adjustments
on the variance noted.

7. In RAB-NCR, IV-B, IX, X, and XI, the accuracy of the balance of PPE of
P15,237,888.18 as to its existence, completeness, condition, and
accountability could not be ascertained due to: (a) failure to conduct physical
count of PPE; (b) misclassification of ICT Equipment amounting to
P510,010.60 in the Report on Physical Count of Property, Plant and
Equipment (RPCPPE); (c) absence of property tags/stickers in PPE items; (d)
non-preparation and maintenance of Property Cards (PCs) and Property, Plant
and Equipment Ledger Cards (PPELCs); (e) recorded PPE items not included
in the RPCPPE; and (f) discrepancy between the RPCPPE and GL of
P1,178.00, contrary to Sections 38 and 42, Chapter 10, Volume I of the GAM
for NGAs and COA Circular 2020-006 dated January 31, 2020. (Finding No.
7).

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 We recommended and Management agreed to:

a. Create an Inventory Committee that will prepare the Physical Inventory

Plan (PIP), conduct the physical count and prepare the RPCPPE in
accordance with the COA Circular No. 2020-006 and submit the RPCPPE
to the Audit Team (RAB-X);

b. Ensure the strict compliance of the concerned personnel with the COA
Circular No. 2020-006 (RAB-NCR and X);

c. Instruct the Property Officer to attach the property tag/sticker on each PPE
items in accordance with Sections 5.7 and 6.2.5 of COA Circular 2020-
006 (RAB-IV-B and IX);

d. Instruct the Property Officer and Regional Accountant to prepare and

maintain PCs and PPELCs, respectively, for each category of PPE and
ensure periodic reconciliation of their records (RAB-IV-B); and

e. Direct the Property Officer to exert his best efforts to locate the missing
PPEs and coordinate with the Property Officer of DHSUD-XI to
determine the details of its accountabilities (RAB-XI).

8. The balance of the Trust Liabilities account of HSAC-CO, RAB-NCR, VI,

and XI aggregating P140,514,381.31 includes dormant consignation
fees/appeal bonds totaling P53,922,455.61 or 38.38 percent of the outstanding
balance. As a result, the accuracy of the balance of the Trust Liabilities could
not be relied upon. (Finding No. 8).

We recommended and Management agreed to:

a. Instruct the Chairperson of the Committee to continue the analysis,

monitoring and reconciliation of the inventory of cases vis-à-vis the
balance of the cash bond or consignation money received in trust by the
agency and henceforth, provide a copy of its status to the Chief
Accountant to facilitate the reconciliation of its balances with the recorded
Trust Liabilities account (HSAC-CO);

b. Instruct the Chief Accountant to review, analyze, and reconcile the

dormant consignation fees and henceforth, prepare the necessary adjusting
entries (HSAC-CO);

c. Establish guidelines on the monitoring of consignation fees collected by

the agency and the disposition of dormant consignation fees/appeal bond
particularly those with no available documents in accordance with COA
rules and regulations (HSAC-CO);

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 d. Instruct the Accounting Division to facilitate the preparation and
submission of Statement of Account (SOA) together with the List of
Remittances and Utilization Report for the year 2022 and years below to
the Audit Team and Bureau of Treasury (BTr) (HSAC-CO and RAB-
NCR);

e. Coordinate with the Office of the Executive Clerk of the Commission

(OECC) the list of dormant consignation fees to determine the status of the
related cases (RAB-NCR and VI);

f. Instruct the Legal Division to continue the review of dormant consignation

fees and inform the Adjudicators to prepare and issue order of release of
consignation fees/appeal bond once the case is verified that it is resolved
(RAB-NCR);

g. Instruct the Legal Division to provide the Accounting Division with any
updates relative to the review of the dormant consignation fees/appeal
bond such as the status of cases, case number, and official receipt date and
number to complete the information in the subsidiary ledger of the Trust
Liabilities account and to update its record and determine the accuracy of
recorded balance (RAB-NCR);

h. Request assistance from HSAC-CO to ask guidance on the proper

disposition of long outstanding and unverified consignation fees/appeal
bond (RAB-VI);

i. Direct the Regional Accountant to continue the retrieval of available

records to facilitate the review, analysis and reconciliation of the dormant
trust liabilities (RAB-XI);

j. Direct the Housing and Homesite Regulation Officer (HHRO), in

coordination with the Cashier, to maintain a monitoring report or list of
cases with payments of consignation fees/appeal bond (RAB-XI); and

k. Direct the Records Officer to file separately case dockets with

consignation fees/appeal bond to facilitate its retrieval in case a Motion for
release will be filed by the parties (RAB-XI).

9. In HSAC-CO, out of the 461 appealed cases deemed submitted for decision in
CY 2022, 26 appealed cases were not resolved within the prescribed period
incurring delays ranging from one day to 101 days, contrary to Section 121,
Rule 27 of the HSAC Rules of Procedure-En Banc Resolution No. 8, Series of
2021. (Finding No. 9).

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 We recommended and Management agreed to strengthen the monitoring of
the resolution of cases through the following:

a. Amend the HSAC Rules of Procedure and issue guidelines through En-
Banc Resolution on those appealed cases that were elevated late and with
pending incidents particularly the period when to resolve those cases to
avoid delays in the resolution of appealed cases;

b. Instruct the Officer-in-Charge (OIC) of OECC to provide the necessary

action/s to address the reasons/causes of the delayed resolution of cases;

c. Instruct the Head of Human Resource Development Division (HRDD) to

request from the DBM additional plantilla position such as
Attorney/Lawyer; and

d. Ensure that all appealed cases deemed submitted for decision are resolved
within the prescribed period to be compliant with the HSAC Rules of
Procedures on the resolution of cases.

10. In RAB-NCR, I, III, and XI, out of 1,060 cases deemed submitted for
decision, 254 cases were not resolved within the prescribed period incurring
delays ranging from one day to 2,153 days, contrary to Section 54, Rule 14 of
the HSAC Rules of Procedure-En Banc Resolution No. 8, Series of 2021 and
Section 48, Rule 14 of the 2019 Revised HLURB Rules of Procedure-
Resolution No. 980, Series of 2019. (Finding No. 10).

We recommended and Management agreed to strengthen the monitoring of

cases through the following:

RAB-NCR

a. Establish a consolidated database of all cases filed at HSAC-RAB-NCR,

which are handled by each adjudicator, with status report on the progress
of each case based on the HSAC Rules and Procedures to monitor those
cases that needs immediate action such as cases deemed submitted for
decision;

b. Ensure that the monitoring report or database completely and accurately

captures all the necessary details of each case based on the case docket
particularly the date when a case is deemed submitted for decision;

c. Establish guidelines on the farming out of cases and re-raffled cases

particularly the period when to resolve the case and who has the clear
accountability on those cases;

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 d. Evaluate the necessity of hiring additional legal assistant/support staff to
assist the adjudicators of the agency and to handle the database of all cases
filed that will be established; and

e. Ensure that all cases deemed submitted for decision are resolved within
the prescribed period to be compliant with the HSAC Rules of Procedures
on the resolution of cases (RAB-NCR, I, and III).

We further recommended and Management of RAB-XI agreed to direct the

regional adjudicators and HHROs to revisit Memorandum dated February 24,
2022 for the proper interpretation of the reckoning point of the 90-day period
to adjudicate cases.

11. In RAB-I, Mediation proceedings as required in Section 47, Rule 12 of the

HSAC Rules of Procedure-En Banc Resolution No. 8, series of 2021 were not
strictly implemented. (Finding No. 11).

We recommended and Management agreed to conduct mediation proceedings

for both parties to have the possibility of an amicable settlement in
compliance with Section 47, Rule 12 of the HSAC Rules of Procedure-En
Banc Resolution No. 8, Series of 2021

12. In RAB-II, IV-B and XIII, deficiencies in the procurement process were noted
such as: (a) Approved Budget for the Contract (ABC) and significant terms
and conditions were not specified in the Canvass/Request for Quotation
(RFQ); (b) RAB did not require the suppliers to establish warranty for the
procured equipment and semi-expendable items; (c) Bids and Awards
Committee (BAC) did not prepare and/or submit the Annual Procurement
Plan (APP) and Procurement Monitoring Reports (PMRs) to the Government
Procurement and Policy Board (GPPB) within the prescribed period; (d)
publication of advertisement and post-award information in the PhilGEPS
website, agency’s official website and social media platforms were not
complied with; (e) RFQ was provided to the prospective bidders beyond the
deadline for submission and/or on short notice; (f) lack of documentary
requirements of the Lone Bidder, (g) grant of six-month advance payment for
the lease of office space, contrary to the provisions in the 2016 Revised
Implementing Rules and Regulations (IRR) of RA No. 9184, Section 3.2 of
the GPPB Circular No. 02-2020 dated May 20, 2020, GPPB Resolution 09-
2020 dated May 07, 2020, GPPB Circular 01-2021 dated March 04, 2021 and
Section 88 of Presidential Decree (PD) No. 1445. (Finding No. 12).

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 We recommended and Management agreed to:

RAB-II

a. Require the end-users and BAC to indicate the ABC and significant terms
and conditions in the RFQs before sending to the prospective bidders;

b. Submit justification on the non-deduction of one (1) percent retention as

warranty on the purchase of goods. Henceforth, consider requiring the
suppliers or distributors of goods to establish warranty deposit or retain a
part of the contract price for high-valued properties to assure products
delivered are free from any defects;

RAB-IV-B

c. Require the BAC to prepare and submit the PMRs to the GPPB within the
prescribed period;

RAB-XIII

d. Strictly comply with the provisions of the 2016 Revised IRR of RA No.
9184 and GPPB Circular 01-2021 on the publication of advertisement and
post-award information;

e. Require the BAC to send the RFQ to the prospective bidders earlier or on
the same day it was posted on the PhilGEPS’ website;

f. Strictly comply with the provisions of the 2016 Revised IRR of RA No.
9184 and GPPB Resolution 09-2020 particularly during the preliminary
examination of bids and in every stage of procurement;

g. Strictly comply with Section 88 of PD No. 1445 and provisions of the

2016 Revised IRR of RA No. 9184 on the advance payment. Henceforth,
stop the advance payment for office space rental;

h. Require the Budget Officer to ensure that Obligation Request and Status
(ORS) for each disbursement is properly attached, accomplished, and
signed; and

i. Revise the contract and indicate therein the payment terms, which must be
favorable to the government.

13. In RAB-II, IV-B, VII, VIII, and XIII, various expenditures totaling
P491,414.38 comprising of: (a) actual accommodation expenses totaling
P19,449.23 exceeded the allowable per diem rate by P4,929.23; (b) traveling
expenses totaling P5,646.00 and representation expenses of P995.00; (c) Rice

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 Subsidy granted to officials and employees totaling P426,845.15; (d) excess
Extraordinary and Miscellaneous Expenses (EME) of P48,500.00 granted and
paid to official; and (f) representation expenses such as priest stipend and
alcoholic drinks of P4,499.00 were considered irregular, unnecessary, and
excessive pursuant to the COA Circular 2012-003 dated October 29, 2012.
(Finding No. 13).

We recommended and Management agreed to:

RAB-II

a. Require the refund of the excess amount paid of P4,929.23;

b. Ensure that succeeding claims for traveling expense are made in

accordance with Executive Order (EO) No. 77;

RAB-IV-B

c. Strengthen the internal control in the disbursements process by exercising

prudence in all the financial transactions and observe the existing
provisions of laws and regulations on the prevention of unnecessary
expenditures;

RAB-VII and VIII

d. Submit the legal basis on the granting of Rice Subsidy, otherwise stop the
granting of subsidy/allowances without clear legal basis;

RAB-XI

e. Instruct the Special Disbursing Officer to stop avoid the payment of priest
stipend and purchase of liquors; and

RAB-XIII

f. Ensure that claim for EME is given to the official governing the agency’s
day-to-day operation and indicated in the office order allowing such claim.

14. In RAB-IV-A, VI, and XIII, several internal control issues were noted due to
weakness and insufficient internal control system such as: (a) assessment of
collection of administrative fines and execution fees were not supported with
documents as basis of the amount collected; (b) leave cards of 13 employees
were not updated and submitted; and (c) payments of the grant of cash
advances and replenishments of Petty Cash Fund (PCF) were deposited
directly to the personal account of the Accountable Officer, contrary to
Sections 123 and 124 of PD No. 1445, Section 5.2.2 of COA Circular No. 95-

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 007 dated May 30, 1997, and Sections 33 and 38, Chapter 6, Volume I of the
GAM for NGAs. (Finding No. 14).

We recommended and Management agreed to instruct the:

a. Chief Administrative Officer to update and submit the employee leave

cards to the Audit Team for audit (RAB VI);

b. Chief Administrative Officer to regularly update the leave cards of all

regular employees (RAB VI); and

c. Regional Accountant to ensure that all payments of the grant of cash

advances and replenishments of PCF are made through check payable to
the Accountable Officer (RAB XIII).

15. In HSAC-CO, RAB-XI, RAB-XII and XIII, various deficiencies were noted
in the handling of their PCF such as: (a) incomplete/deficient documentation
in the replenishment of petty cash advance; (b) PCF was not replenished
within the required least percentage; and (c) inappropriate utilization, in
violation of the provisions of Chapter 6, Volume I of the GAM for NGAs on
the accounting policies regarding PCF. Moreover, various payments out of
PCF were erroneously recorded at its appropriate accounts. (Finding No. 15).

We recommended and Management agreed to:

HSAC-CO

a. Ensure strict compliance of the accounting policies regarding PCF;

RAB-XI

b. Instruct the Regional Accountant to review the completeness and propriety

of the PCF transactions;

c. Henceforth, return the replenishment of PCF with incomplete documents

to the Petty Cash Fund Custodian (PCFC) for completion, otherwise, do
not process the payments;

RAB-XII and XIII

d. Stop the practice of using PCF for purchases and/or payments of regular
and recurring expenses;

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 RAB-XIII

e. Instruct the PCFC to submit all the lacking documents and strictly comply
with the accounting policies on PCF; and

f. Instruct the Regional Accountant to ensure proper recording of PCF

transactions in its appropriate accounts.

16. In RAB-XIII, the balance of the Office Supplies Inventory account amounting
to P261,679.02 has exceeded the normal two-month requirements of the
region pursuant to Section 27 of the General Provisions (GPs) of RA No.
11639, the General Appropriations Act (GAA) for Fiscal Year (FY) 2022 due
to inadequate procurement planning and non-monitoring of inventory items;
thus, resulting in the overstocking of supplies and may likewise resulted in the
obsolescence or expiry of some inventory items. (Finding No. 16).

We recommended and Management agreed to:

a. Strictly comply with Section 27 of the GPs of GAA for FY 2022 and in
the subsequent GAA containing such provisions; and

b. Require the Supply Officer to closely monitor the movement of

inventories to avoid purchasing office supplies more than the two-month
requirement.

17. In RAB-IV-B, various semi-expendable properties with total amount of

P763,265.00 were not used/utilized since its acquisition date because there
was not enough office space to accommodate/place the said properties, which
signify wastage of government resources and not achieving its intended
benefits contrary to Section 2 of PD No. 1445. (Finding No. 17).

We recommended and Management agreed to direct the Property/Supply

Officer to:

a. Refrain from acquiring/requesting equipment and other properties which

are not currently needed to prevent incurrence of unnecessary
expenditures and further accumulate idle assets; and

b. Coordinate/request with the HSAC-CO for additional space to

accommodate/place those unutilized/unused properties.

18. In HSAC-CO and RAB-NCR, various unserviceable PPE/Semi-expendable

items and computer software reported in the Inventory and Inspection Report
of Unserviceable Property (IIRUP) with total cost of P5,178,343.49 were still
not disposed as of December 31, 2022, contrary to Section 79 of PD No.

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 1445; thus, depriving the government of income that may have been derived
from the sale thereof. (Finding No. 18).

We recommended and Management agreed to instruct the:

HSAC-CO and RAB-NCR

a. Disposal Committee to immediately undertake the disposal of said

unserviceable PPE/Semi-expendable items and computer software in
accordance with Section 79 of PD No. 1445 and the Manual on Disposal
of Government Property to maximize their realizable value; and

b. Henceforth, the Head of General Service Division (GSD)/Property Officer

to furnish the Chief/Regional Accountant with a copy of the fully
accomplished IIRUP as basis for dropping the cost of PPE and computer
software from the books of accounts and update the property records once
disposed.

19. The fidelity bond of the Accountable Officer of RAB-XI was insufficient to
cover its maximum cash accountability contrary to BTr Circular No. 02-2019
and BTr Office Order No. 11-2021; thus, may result in high risk of not being
fully indemnified in case of loss of government funds. (Finding No. 19).

We recommended and Management agreed to ensure that the bond of the

accountable officer is sufficient based on its maximum cash accountability
upon renewal in CY 2023.

20. In RAB-II, IV-B, and VII, various purchases of goods and services and
payment of honorarium aggregating P197,223.42 were made on
reimbursement basis contrary to COA Circular No. 97-002 dated February 10,
1997, resulting in the non-withholding of appropriate tax and risk of not
obtaining the most advantageous price from such purchases. (Finding No. 20).

We recommended and Management agreed to:

RAB-II, IV-B and VII

a. Stop the practice of purchasing goods and services and payment of

honoraria on a reimbursement basis instead make purchases directly from
suppliers/service providers to ensure that taxes are properly withheld;

RAB-II

b. Use the PCF for petty operating expenses; and

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 c. Strictly comply with the modes of procurement as provided in RA No.
9184 to ensure price competitiveness.

21. In RAB-NCR, I, VI, VII, VIII, and XI, various paid Disbursement Vouchers
(DVs) with total amount of P7,470,088.57 and liquidation document of
P5,500.00 were not supported with complete documentation and with
deficiencies in documentation, contrary to Section 4(6) of PD No. 1445 and
COA Circular No. 2012-001; thus, precluding the Audit Team in the timely
review and verification of the validity, propriety, and regularity of the
transactions. (Finding No. 21).

We recommended and Management agreed to require:

a. The Regional Accountant of RAB-NCR, VII and VIII and Chief

Administrative Officer of RAB-VI to facilitate the immediate
preparation/submission of the lacking supporting documents;

b. The Regional Accountant of RAB-NCR, VI, VII and VIII to ensure that
the DVs are supported with complete documentation and with no
deficiencies;

c. The Regional Accountant of RAB-NCR and I to ensure that Purchase

Order (PO) is properly accomplished;

d. Chief Administrative Officer of RAB-VI to regularly review the Daily

Time Records (DTRs) and pertinent attachments and submit it to the
Regional Accountant on time; and

e. Chief Administrative Officer and Regional Accountant of RAB-XI to

conduct proper review of the completeness and propriety of liquidation
documents.

22. In RAB-II, IV-A, IV-B, IX and X, various deficiencies were noted such as: (a)
various monthly financial reports including the supporting documents such as
DVs and Official Receipts (ORs) were submitted late and/or not submitted to
the Audit Team within the prescribed period provided in Section 60, Chapter
19, Volume I of the GAM for NGAs and Section 7 of the COA Circular No.
2009-006 dated September 15, 2009; and (b) perfected POs of P4,747,949.42
were not submitted to the Audit Team within the prescribed period, in
violation of Section 3.2.1 of COA Circular No. 2009-001 dated February 12,
2009. (Finding No. 22).

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 We recommended and the Management agreed to:

RAB-IV-A and IX

a. Require the Regional Accountant to ensure the timely submission of the

monthly financial reports together with the supporting documents to the
Audit Team;

RAB-IX

b. Require the Cashier to prepare the report daily or as necessary to give the
Regional Accountant ample time to review and record these reports;

c. Require the Head of Finance Division to prepare a checklist of

documentary requirements to speed up the processing of transactions
and/or preparation of reports to meet the deadline of submission to the
Audit Team;

RAB-II, IV-B and X

d. Concerned employees to strictly comply with submission of perfected POs

to the Audit Team within the prescribed period together with the
supporting documents;

RAB-IV-B

e. Concerned employees to ensure that POs and Purchase Requests (PRs) are
properly accomplished; and

RAB-X

f. Concerned employees to notify the Audit Team within 24 hours the time
and date of the scheduled deliveries of procured items.

23. The Regional Accountant of RAB-IV-B was not able to prepare and maintain
the Subsidiary Ledger (SL), contrary to Appendix 6, Volume II of the GAM
for NGAs; thus, precluded the reconciliation of the balances with the GL.
(Finding No. 23).

We recommended and Management agreed to require the Regional

Accountant to maintain a complete and detailed SL for all real accounts to
facilitate the analysis and evaluation of the affected GL accounts.

24. The RAB-XII has no adequate storage facilities to safe keep the documents
submitted to the Audit Team; thus, exposing these documents to possible loss,

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 contrary to the provision of Section 101(1) of PD No. 1445 and Section 1.2 of
the COA Circular No. 2013-006. (Finding No. 24).

We recommended and Management agreed to provide adequate storage space

to safe keep the documents submitted to the Audit Team.

The above findings and recommendations were discussed with Management

officials concerned in an exit conference held on May 23, 2022. Management views
and comments were incorporated in the report, where appropriate. The details of the
above observations were discussed in Part II of this report.

G. Status of Audit Suspensions, Disallowances and Charges

In RAB-CAR, the Audit Team issued Notice of Disallowance (ND) No. 2022-
01-101 on August 26, 2022 relative to the overpayment of monthly salary of the
three (3) Contract of Service personnel from the period January 01, 2022 to June
30, 2022 because their absences and undertimes were not deducted accordingly.
Furthermore, a Notice of Suspension (NS) No. 2022-01-101(2021) was issued
relative to the procurement amounting to P30,758.93 which was already settled thru
a Notice of Settlement of Suspension/Disallowance/Charge (NSSDC) No. 22-01-
101 (2021) on December 29, 2022.

There were no other audit suspensions, disallowances and charges issued and
settled for CY 2022.

H. Implementation of Prior Years’ Audit Recommendations

Of the 61 audit recommendations contained in the CYs 2020 and 2021 Annual
Audit Report (AAR) on HSAC, 46 were implemented and 15 were not
implemented.

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