EXECUTIVE SUMMARY

A. Introduction

The National Youth Commission (NYC) was established under Republic Act
(RA) No. 8044, also known as the “Youth in Nation-Building Act” as the policy-
making coordinating body of all youth-related institutions, programs, projects, and
activities of the government.

The objectives of the Agency are to:

(a) provide the leadership in the formulation of policies and in the setting of
priorities and direction of all youth promotion and development programs and
activities;

(b) encourage wide and active participation of the youth in all governmental and
non-governmental programs, projects and activities affecting them;

(c) harness and develop the full potential of the youth as partners in nation-building;
and

(d) supplement government appropriations for youth promotion and development

with funds from other sources.

It is headed by Chairperson and Chief Executive Officer Ronald Gian Carlo

L. Cardema, who is assisted by five Commissioners – three of whom represent Luzon,
Visayas and Mindanao, and two Commissioners-at-Large. The Agency has area
offices in seven regional areas, namely: Baguio City, San Fernando City (Pampanga),
Naga City, Cebu City, Iloilo City, Cagayan de Oro City, Davao City, and Zamboanga
City.

As at December 31, 2022, NYC is complemented by 127 personnel,

composed of 7 Presidential appointees, 78 permanent employees, 12 staffs with co-
terminus/casual status, and 30 Contracts of Service (COS).

B. Operational Highlights

Below are the reported accomplishments of NYC for the Calendar Year (CY)
2022.

Organizational Outcomes/ Physical Physical Percentage of

Performance Indicators Target Accomplishment Accomplishment
Coordination of government actions for the development of the youth improved
Youth Development Program

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 Organizational Outcomes/ Physical Physical Percentage of
Performance Indicators Target Accomplishment Accomplishment
Output Indicators
1. Number of youth policy
advisories and advocacies 15 22 146.67
accomplished
2. Number of youth and 42,036 youth; 46,565 youth;
youth-serving 120 youth- 1,544 youth- 110.77 and
organizations provided serving serving 1,286.67
with technical assistance organizations organizations
3. Number of youth
organizations mobilized 1,000 2,901 290.10
for various advocacies

C. Financial Highlights

The financial position, financial performance, and the sources and utilization
of funds of NYC for CY 2022, with corresponding figures for CY 2021, are
summarized below:

Amount (₱)
Particulars 2021
2022
(As restated)
Financial Position
Assets 5,463,950.78 10,905,615.15
Liabilities 17,106,712.20 13,308,548.20
Net Assets/Equity (11,642,761.42) (2,402,933.05)
Financial Performance
Revenue 329,021.90 18,000.00
Current Operating Expenses 170,292,257.48 128,393,706.78
Net Financial Assistance/Subsidy 162,074,719.07 121,669,250.70
Gains 29,060.84 145,519.54
Surplus/(Deficit) (7,859,455.67) (6,560,936.54)
Sources and Utilization of Funds
Appropriations 184,764,451.98 172,294,720.47
Allotments Received:
Current Year 154,350,544.00 146,406,642.00
Continuing Appropriations 30,413,907.98 25,888,078.47
Obligations Incurred 169,794,385.19 126,955,112.36
Disbursements 148,813,747.87 118,856,370.68
Unobligated Allotments 14,970,066.79 45,339,608.11

The Statement of Appropriations, Allotments, Obligations, Disbursements

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

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D. Scope of Audit

The audit covered the accounts and operations of NYC for the period ended
December 31, 2022. The audit was conducted to: (a) ascertain the level of assurance
that may be placed on the Management’s assertion on the financial statements; (b)
determine the propriety of transactions as well as extent of compliance with pertinent
laws, rules and regulations; (c) recommend agency improvement opportunities; and
(d) determine the extent of implementation of prior year’s audit recommendations.
Moreover, the audit was conducted in accordance with the International Standards of
Supreme Audit Institutions (ISSAIs).

E. Independent Auditor’s Report on the Financial Statements

The Auditor rendered an unmodified opinion on the fairness of presentation of
the financial statements of NYC as at December 31, 2022.

F. Summary of Significant Audit Observations and Recommendations

The following are the significant audit observations and the corresponding
recommendations:

1. Erroneous recognition of Other Supplies and Materials Expenses instead of

Training Expenses for the procured tokens as giveaways to the participants of
trainings, conventions and seminars/workshops conducted by the NYC totaling
₱5,876,634.00. (Paragraph no. 1)

We recommended and Management agreed to direct the Accountant to ensure

that transactions are recorded in the correct account classification pursuant to
2019 Revised Chart of Accounts.

2. The balance of the Due from National Government Agencies (NGAs) account
of NYC as at December 31, 2022 amounting to ₱316,715.69 is doubtful due to
unreconciled balance of ₱932,675.75 between NYC’s and Procurement
Service-Department of Budget Management (PS-DBM) accounting records.
Moreover, complete Subsidiary Ledger (SL) were not provided, precluding
further review of its validity. (Paragraph no. 2)

We reiterated our prior year’s recommendations and Management agreed to

instruct the Chief Accountant to:

a. trace the reference documents relating to the unverified discrepancies

pertaining to prior years transactions to reconcile the balance with PS-DBM
and effect necessary adjustments;

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 b. conduct periodic reconciliation between the NYC Accounting records and
PS-DBM records to eliminate the discrepancy and to immediately act on it;
and

c. maintain complete and updated records of SL for the account to readily

validate the unreconciled balances.

3. The collectability of Other Receivables account totaling ₱138,844.18 which

had not been moving or dormant for more than 16 years up to 24 years could
not be ascertained due to the inadequate monitoring and unavailability of
supporting documents. (Paragraph no. 3)

We recommended and Management agreed to submit the lacking documents to

warrant validity of the request for write-off of account, pursuant to COA
Circular No. 2016-005 dated December 19, 2016.

4. The slow-paced implementation and partial achievement of the target outputs

of the Philippine Anti-Illegal Drugs Strategy (PADS) related projects, in
partnership with the Dangerous Drug Board (DDB) were due to the inadequate
planning, supervision and monitoring of the Project’s implementation.
(Paragraph no. 5)

We recommended and Management agreed to:

a. institute measures to ensure the timely implementation of the programs,

projects, and activities in accordance with the physical targets,
timelines/schedules, and the Work and Financial Plan (WFP);

b. instruct the concerned unit to revise the WFP and the Terms of Reference
if there are changes in the timelines/schedules of the implementation of the
programs;

c. instruct the concerned unit/division to impose sanction to Adrow

Creatives, Inc. for the delayed submission of finalized communication
plan within the set deadline; and

d. instruct the Chief Accountant to submit the liquidation reports within the
prescribed period and record the transactions in the correct accounting
period.

5. Lapses were noted in the administration of Cash Advances and disbursement of

funds such as: (a) non-renewal of expired fidelity bond; (b) excessive fidelity
bond to cover the monthly operating expenses; (c) bills for internet
subscriptions and telephone line expenses were in the name of the AO instead
of the Agency; (d) failure to maintain a Cash Disbursement Record (CDRec)
and Report of Cash Disbursements (RCDisb) to monitor the CAs for special

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 purpose/time-bound undertakings; and (e) Petty Cash Fund (PCF) was
unnecessarily and frequently replenished. (Paragraph no. 6)

We recommended and Management agreed to:

a. instruct the Accounting and Finance Unit and Accountable Officer (AO)
to:

i. monitor the effectivity and expiration dates of fidelity bonds and see to it
that renewal thereof be made before performing duties and responsibilities
as disbursing officer as prescribed under Section 101 of Presidential Decree
(PD) no. 1445 and Section 4.8 of Treasury Circular No. 02-2019; and

ii. adhere to to Section 5.1 of Treasury Circular No. 02-2019 in bonding the
AO to avoid excessive payment of bond premium.

b. instruct the AO to:

i. make representation to the contracting party Globe, Philippines to change

the name of the AO in the Billing Statement under the name of the Office,
the NYC Naga City Area Office to avoid confusion that it was for personal
account of the AO;

ii. maintain the prescribed CDRec and RCDisb or its equivalent to ensure
proper monitoring and recording of CAs; and

iii. consider efficiency and practicality in replenishing the PCF pursuant to

Section 35, Chapter 6, Volume I of the GAM for NGAs and Section 4.3.1
of COA Circular No. 97-002.

6. Lack of regular monitoring and review process in the computation of leave

credit balances resulted in the overpayment of TLB totaling ₱7,125.65. Also,
payment of TLB amounting to P544,377.12 was not supported with proper
documentation as required under Item 5.13 of COA Circular No. 2012-001.
(Paragraph no. 7)

We reiterated our prior year’s recommendations and Management agreed to:

a. undertake necessary actions to correct and recover the amount erroneously

paid to separated employees;

b. instruct the Human Resource Unit to review all leave cards and make the
necessary adjustments to the leave credit balances, if warranted, which
should be duly attested by the employees concerned;

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 c. develop a centralized information system wherein data such as earned leave
credits, used/forfeited leaves, and undertimes are reflected, which can only
be accessed by authorized personnel from the Human Resource Unit, and
that can be made available to all NYC employees for viewing of their
respective leave credit balances; and

d. ensure that all disbursements are properly supported with proper

documentation pursuant to COA Circular No. 2012-001.

7. The validity and propriety of Training Expenses and Travelling Expenses-Local

accounts of NYC amounting to ₱31,397,525.08 and ₱5,427,196.43,
respectively, could not be ascertained, due to: (a) lack of proper planning in the
various activities of NYC resulted in excessive payments for hotel room
reservations totaling ₱1,280,288.40; (b) disbursements of ₱675,842.20 were
processed and paid without complete documentation; and (c) improper
processing of travelling expenses amounting to ₱72,272.00; and (d)
overpayment of per diem totaling ₱2,640.00, contrary to pertinent provisions of
PD No. 1445, COA Circular Nos. 2012-003 and 2012-001, and Executive Order
(EO) No. 77. (Paragraph no. 8)

We recommended and Management agreed to:

e. ensure proper planning and compliance with the guidelines on the

procurement of venues and accommodations for programs, projects and
activities so that only those participants who confirmed their attendance will
be booked;

f. ensure that all disbursements of government funds undergo the proper

channel of review and approval;

g. instruct the concerned employees to:

i. submit the lacking documents to establish the validity of the claims and
ensure that future disbursements are properly/completely documented in
accordance with COA Circular No. 2012-001; and

ii. refund the excess claims received.

8. Of the ₱5,880,234.00 worth of tokens as giveaways to the participants of

trainings, conventions and seminars/workshops conducted by the NYC,
₱1,036,060.00 were considered excessive, including an unaccounted balance of
₱331,707.00. While tokens worth ₱4,844,174.00 were not substantiated by a
list of rightful recipients, which cast doubt on the validity and propriety of the
transactions. In addition, the Agency failed to impose liquidated damages
amounting to ₱9,464.90 for incurred delays in the delivery of eight (8) purchase
orders (POs). (Paragraph no. 9)

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 We recommended that Management:

a. institute measures to regulate and control the funds allocated for the
purchase of tokens/giveaways to avoid possible excessiveness on the
requirements for the program;

b. require the implementing division unit to monitor and document the

distribution of tokens properly and accurately and submit the report to the
Accounting Unit as attachment to the Disbursement Vouchers (DVs);

c. inquire the suppliers, in cases where they anticipate delays in delivery, to

submit justification and a request for an extension of delivery date through
a letter that should be accepted and approved by the Procurement Unit;
otherwise, liquidated damages will be imposed on them; and

d. henceforth, ensure that the terms and conditions indicated in the POs and
contracts are strictly complied with.

9. Deficiencies were noted in the payment of Other Professional Services due to:
(a) personnel hired under COS was designated to position exercising control or
supervision over regular employees and are performing regular functions of the
Agency; and (b) travelling expenses incurred amounting to ₱27,044.68 was not
in accordance with provisions of the COS contract. (Paragraph no. 10)

We recommended that Management require:

a. appoint a regular employee to conduct/provide an independent assessment

and management of risks and the periodic determination of the adequacy of
the processes and controls of the Agency to be assigned in the Management
Unit;

b. strictly adhere to the provisions of Section 7 of COA-DBM JC No. 2, s.

2020 on the limitations in the hiring of personnel under contract of service;
and

c. strictly adhere to the provisions in the contract so as not to commit

unnecessary expenses that will be resulted to disallowance of the
transaction.

The above findings and recommendations were discussed with Management

officials concerned in the exit conference held on March 14, 2023. Management
views and comments were considered in the report, where appropriate. The details
of the above observations were discussed in Part II of this report.

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G. Status of Implementation of Prior Years’ Audit Recommendations

Of the 33 prior years’ audit recommendations, 24 were implemented and 9

remained unimplemented. The details are presented in Part III of this report.

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