EXECUTIVE SUMMARY

A. Introduction

The Intramuros Administration (IA) was created by virtue of Presidential Decree

(PD) No. 1616 dated April 10, 1979 for the purpose of restoring and administering the
development of Intramuros as a monument to the Hispanic period of Philippine History.
Recognizing the IA’s restoration and development as a major historical project of the
government, its charter was amended under PD No. 1748 dated December 10, 1980.

In view of its operation and control of tourist park and attractions, IA became an
attached agency of the then Ministry of Tourism under Executive Order (EO) No. 120
dated January 30, 1987. It remains attached to the Department of Tourism (DOT) by
virtue of Republic Act (RA) No. 9593 issued on May 12, 2009 also known as the
“Tourism Act of 2009.”

The IA envisions to preserve Intramuros as a cultural oasis and model heritage

site, re-awaken a sense of oneness and pride among Filipinos, and ensure partnership
with the Intramuros community for mutual upliftment towards a well-preserved cultural
heritage and enriched visitor experience.

The Board of Administrators is responsible for the policies and activities of the
Administration. The present Administrator reports to the Board and assumes authority as
delegated by the Board.

The agency’s personnel complement of 187 is distributed as follows:

Office/Division Regular Casual Job-Order Total

Office of the Administrator 4 2 12 18
Finance and Administrative Division 18 4 12 34
Cultural Properties Conservation Division 6 22 49 77
Urban Planning and Community
Development Division 8 1 20 29
Tourism Promotions Division 3 0 2 5
Business Management Division 5 7 2 14
Planning and Management Division 9 0 1 10
Total 53 36 98 187

The above offices/divisions assist the Administrator by doing the following

functions towards achieving the Administration’s goals and vision:

1) Finance and Administrative Division (FAD) – responsible for the internal

administrative functions, including property, records, personnel management and
general services. It also provides financial support services including budgeting,
accounting and cash management.

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 2) Cultural Properties Conservation Division (CPCD) – responsible for planning and
undertaking actual restoration, construction, landscaping and maintenance works
related to the walls, fortifications, parks and plazas; archaeological excavation and
documentation; and curatorial and conservation of IA’s museum collections.

3) Urban Planning and Community Development Division (UPCDD) – responsible

for preparing, updating and implementing the Intramuros Development Plan
including (a) formulation of policies, guidelines and regulations covering zoning,
land use, construction and renovation; (b) issuance of building and construction
permits; (c) inspection and monitoring of construction projects and renovation
works; and (d) planning of traffic, garbage collection, water sewerage, power and
other utilities.

4) Tourism Promotions Division (TPD) – responsible for implementing the Tourism

Marketing Plan, public relations and information program of the IA.

5) Business Management Division (BMD) – responsible for managing and

promoting the income-generating facilities owned by the Administration,
undertaking feasibility studies for commercial activities and promoting
investments in commercial ventures in Intramuros.

6) Planning and Management Division (PMD) – responsible for the formulation of

the plans and programs of the Administration, the evaluation and monitoring of
the implementation of projects and activities in support of plans and programs, the
maintenance of database bank to service the operating divisions, the design and
implementation of Management Information System and other relevant corporate
planning functions.

B. Financial Highlights

During the year, the IA was provided with total appropriations and allotments of
P111,655,761.20 and P112,059,761.20, respectively, with total obligations incurred of
P84,891,877.56, leaving an unobligated allotment of P27,167,883.64. The details are as
follows:

Obligations Unobligated
Appropriations Allotments
Source of Funds Incurred Balance
(In PhP)
Current Year
1. Agency Specific Budget
PS 36,712,000.00 39,546,633.00 39,540,027.47 6,605.53
MOOE 43,279,000.00 61,283,296.00 39,784,893.57 21,498,402.43
Capital Outlay 27,970,000.00 7,131,071.00 1,559,004.00 5,572,067.00
Sub-Total 107,961,000.00 107,961,000.00 80,883,925.04 27,077,074.96
2. Automatic Appropriations
RLIP 3,339,000.00 3,339,000.00 3,248,191.32 90,808.68
3. Special Purpose Fund
MPBF 0.00 404,000.00 404,000.00 0.00

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 Obligations Unobligated
Appropriations Allotments
Source of Funds Incurred Balance
(In PhP)
Total Current 111,300,000.00 111,704,000.00 84,536,116.36 27,167,883.64
4. Agency Specific Budget
MOOE 355,761.20 355,761.20 355,761.20 0.00
Total Continuing 355,761.20 355,761.20 355,761.20 0.00
Total 111,655,761.20 112,059,761.20 84,891,877.56 27,167,883.64
Overall Financial Utilization Rate 75.76%

The IA also maintains a Revolving Fund constituted from the revenues generated
from operations and commercial transactions of the agency which is used for expenses
incurred in commercial operations including minor repairs of buildings and other
structures and facilities used directly in its commercial operations. The financial status of
the RF showed a beginning balance of P7,902,189.26 and collections during the year of
P49,281,802.88 or a total balance of P57,183,992.14, of which P49,860,539.73 was
obligated and disbursed during the year, leaving an unutilized balance of P7,323,452.41
as at year-end.

The agency’s financial condition and financial performance for CYs 2021 and
2020 are summarized below:

2020 Increase/
2021
Particular (As Restated) (Decrease) Percentage
(in PhP) (%)
Financial Condition
Assets 387,341,579.19 305,342,859.33 81,998,719.86 26.85
Liabilities 39,116,007.18 34,798,173.23 4,317,833.95 12.41
Accumulated Surplus/(Deficit) 348,225,572.01 270,544,686.10 77,680,885.91 28.71
Financial Performance
Revenue 42,595,979.53 46,759,363.31 (4,163,383.78) (8.90)
Expenses 166,123,108.93 138,105,900.41 28,017,208.52 20.29
Net Financial Assistance/Subsidy 201,221,223.78 53,319,022.83 147,902,200.95 277.39
Surplus/(Deficit) for the period 77,694,094.38 (38,027,514.27) 115,721,608.65 304.31

The significant increase in the Net Financial Assistance/Subsidy is attributed to

the amount received from the Department of Budget and Management amounting to
P100,049,000.00 under NCA-BMB-A-21-0013641 dated October 29, 2021 to cover the
partial payment of the implementation of Strategy for the Inclusive Mainstreaming of
People’s Living Entitlement (SIMPLE) Program intended to a housing-linked modified
conditional cash transfer program for the informal settler families in Intramuros.

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C. Operational Highlights

Hereunder are the IA’s reported targets and actual accomplishments for CY 2021
as validated by the Audit Team:

Organizational Accomplishme
Performance Indicators Targets Variance
Outcomes (OO) nt
OO: Cultural heritage conserved
• Property Quality 100% 100% 0%
Conservation and 1. Percentage of existing
Development sites/structures
Program maintained or
conserved and restored
2. Percentage of existing 35.00% 39.30% 4.30%
artifacts maintained
3. Percentage increase in (64.89%) (48.68%) 16.21%
visitors 84,270 visitors
Quantity: 39 39 0%
4. Number of
sites/structures
maintained
5. Number of artifacts 2,100 2,358 258
maintained
• Commercial Quality: 52% 48% (4%)
Property Leasing 6. Percentage of occupancy 2 occupants
Program of IA commercial
properties
7.Percentage Increase in (61.90%) (85.25%) (23.35%)
occupancy of IA event 613 users
facilities
8. Percentage (27.18%) (36.74%) (9.56%)
increase in revenue
Timeliness: 100% 100% 0%
9. Percentage
of applications for use
of event facilities acted
upon within 24 hours.
Quantity: 20 28 8
10. Number
of promotional
activities i.e., sales
missions, trade fairs,
client calls,
advertisements,
brochures
Financial: 16,282,454 19,251,463.24 2,969,009.24
11. Revenue
generated from leasing
and rental of facilities
OO: Tourism development promoted and visitor experience enriched
• Tourism Quality: (85.24%) (76.33%) 8.91%
Promotions 12. Percentage 165,324
Program increase in visitor visitors
arrivals

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 Organizational Accomplishme
Performance Indicators Targets Variance
Outcomes (OO) nt
Quantity: 28 68 40
13. Number of events held
• Regulatory Quality: 76% 76% 0%
Program 14. Percentage compliance
of building owners to
PD No. 1616
15. Percentage compliance 95% 100% 5%
of permit and clearance
holders
Quantity: 75% 87.08% 12.08%
16. Percentage 23
of establishments and establishments
structures
inspected/audited
17. Number 1,300 1,237 (63)
of building, repair and
other ancillary permits
processed/issued within
3 days

Validation revealed that the agency was able to fully accomplish or even
exceeded its targets in 13 out of the 17 activities under the four Organizational Outcomes,
while four (4) activities registered accomplishments below its targets due to the
limitations/restrictions brought by the Coronavirus Disease (COVID– 19) pandemic.

Moreover, despite the difficulty of holding physical and face-to-face activities

during the quarantine period, the Agency was able to continue its online activities called
Intramuros Learning Session webinars aired in 29 episodes, Araw ng Maynila Lecture
Series, Isip Malaya sa Musika at Sining online concert and other online events held from
January to December 2021 with a view to sustain the tourism promotion program of
Intramuros. It was able to accomplish 68 events in this aspect, which surpassed the target
of 28 events.

D. Scope and Objectives of Audit

The audit covered the accounts and operations of IA for the year ended December
31, 2021. The audit was conducted to (a) verify the level of assurance that may be placed
on Management’s assertions on the financial statements; (b) determine the propriety of
transactions as well as the extent of compliance with applicable laws, rules and
regulations; (c) recommend agency improvement opportunities; and (d) determine the
extent of implementation of prior year’s audit recommendations.

E. Independent Auditor’s Report

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

financial statements of the IA as at December 31, 2021.

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F. Other Significant Observations and Recommendations

Summarized below are the significant observations and recommendations, the

details of which are discussed in Part II of this Report:

1. The reliability, accuracy and completeness of the reported year-end balances of

Inventories and Property, Plant and Equipment (PPE) accounts of P3,523,433.05
and P247,447,242.04, respectively, could not be fully ascertained due to non-
conduct of complete physical inventory counts and unreconciled balances
between the records of the Accounting Section (AS) and the General Services
Section (GSS). Other control gaps on accountability over the assets were also
noted. (Observation No. 1)

On Inventories

a. Incomplete physical inventory count

We recommended and Management agreed to direct the Inventory Team to

explore other feasible means to complete the complete the physical count in the
Maestranza Compound, if any, and accomplish the necessary information in the
RPCI to report on the existence and actual condition of the inventory items.

b. Unreconciled Inventory balances recorded in the books of the Accounting

Section and in the RPCI

We also recommended and Management agreed to direct the AS and the GSS to
conduct periodic reconciliation between the books and the physical count
balances to establish the cause of discrepancies and make the necessary
adjustments thereof.

c. Non-recording in the Supplies Ledger Cards (SLCs) and Stock Cards (SCs) of
purchased supplies and materials recorded as outright expense

We recommended and Management agreed to: a) instruct the AS to record regular

purchases of supplies and materials in the inventory accounts and in the related
expense accounts upon issue thereof pursuant to Section 9, Chapter 8, Volume I
of the GAM for NGAs; and b) direct the AS and the GSS to properly maintain the
SLCs and SCs through timely recording of the receipt and issuance of inventories.

On Property, Plant and Equipment

d. Non-reconciliation between Accounting and Property Records

We recommended and Management agreed to require the AS and the GSS to

reconcile their records periodically in order to correct discrepancies. This is a
reiteration of our prior year’s recommendation and to direct the IA Inventory

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 Committee to identify, locate and account the properties that were not included
during their physical count and to request for assistance as necessary to address
the uncertainty in the location and identification of the PPEs.

e. Lacking required information and unreliable remarks in the Report on the

Physical Count of Property, Plant and Equipment (RPCPPE)

We recommended and Management agreed to require the IA Inventory

Committee to complete all the necessary data/ information in the RPCPPE as
required in Appendix 73, Volume II of the GAM for NGAs and to indicate
appropriate remarks on the condition of the PPEs counted to ascertain their
existence and completeness.

f. Non-renewal of Property Acknowledgement Receipt (PAR)

We reiterated our prior year’s recommendation that Management instruct the GSS
to renew the PAR issued for the issuance of PPE to the end-user every three years
or as necessary.

2. The IA obligated only P84,891,877.56 or 75.76 percent of the total allotments of

P112,059,761.20 received in CY 2021 due to delayed procurement process and
implementation of a project, while it has disbursed P82,372,236.69 or 97.03
percent of its total obligations. Moreover, of the total Notice of Cash Allocations
(NCAs) received amounting to P208,675,000.00, the amount of P195,020,744.12
was utilized as at December 31, 2021 resulting in the reversion to the Bureau of
the Treasury (BTr) of P13,654,255.88 or 6.54 percent thereof. (Observation No.
2)

We recommended that Management fully use the allotments received for the year
and utilize the fund releases through timely implementation of projects/
programs/activities to efficiently and effectively provide the needs of its client.

We also recommended and Management agreed to continuously fast-track the

implementation of projects and activities to ensure efficient management of its
budget and available cash.

3. Out of IA’s 17 planned activities under the four (4) Organizational Outcomes, 13
were fully accomplished while targets in four (4) activities were not achieved due
to the limitations/restrictions brought about by the COVID-19 pandemic.
(Observation No. 3)

We recommended and Management agreed to continuously monitor the

accomplishment of IA’s performance targets taking into consideration the
provision of appropriate strategies amidst challenges posed by the COVID-19
pandemic to attain fully its target accomplishments in the ensuing year.

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4. Out of the total Accounts Receivables of IA amounting to P21,125,235.40,
P14,948,102.15 or 70.76 percent were doubtful of collection due to: a) slow
movement of ongoing court litigations against former tenants/lessees/
concessionaires with unsettled accounts in the total amount of P12,116,036.51;
and b) inability to file appropriate legal charges for the erring and defaulting
concessionaires with unsettled balance of P2,832,065.64. (Observation No. 4)

We recommended and Management agreed to continuously a) monitor the status

of filed cases and exert more effort in demanding and collecting the long-
outstanding receivables without court cases in the earliest possible time for the
best interest of the Administration. This is a reiteration of our prior year’s
recommendation; and b) direct the Business Management Division to exhaust all
possible means to secure information needed to locate the whereabouts of the
tenants/lessees. If warranted, seek the assistance of other government offices that
can provide information needed in serving demand letters and/or may opt to
submit to the Office of the Solicitor General for the filing of cases as deemed
necessary.

5. The Cash in Bank–Local Currency Current Account maintained for Revolving

fund with a balance of P9,222,044.75 includes fund transfers from other
government agencies amounting to P5,957,408.91, which is not in accordance
with Section 14 of PD No. 1616 and EO No. 55, series of 2011. (Observation
No. 5)

We recommended the Management to instruct the Accounting Section to utilize

the newly opened Trust Liability Account to account for fund transfers received in
accordance with EO No. 55, series of 2011 and Chapter 3, Volume III of the
GAM for NGAs.

6. Disbursement vouchers (DVs) totaling P2,563,306.13 and other financial and

accounting reports were not submitted to the Office of the Auditor within the
prescribed period contrary to Section 7.2.1(a) of COA Circular No. 2009-006
dated September 15, 2009 due to incomplete supporting documents, thus, the
regularity, validity, completeness and accuracy of the recorded transactions could
not be readily established. (Observation No. 6)

We recommended and Management agreed to require the concerned officials to

submit regularly to the auditor within 10 days from receipt from the accountable
officers the paid DVs together with supporting documents and other financial and
accounting reports pursuant to Section 7.2.1(a) of COA Circular No. 2009-006.

7. The IA Gender and Development (GAD) Plan and Budget for FY 2021 with eight
plans, programs and activities and a budget of P7,660,202.00 or 7.10 percent of
the agency’s total budget of P107,961,000.00 for its implementation is

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 approved/endorsed by the Philippine Commission on Women (PCW) in
accordance with PCW Memorandum Circular No. 2020-05 dated September 11,
2020. However, the GAD Accomplishment Report (GAR) was submitted to the
Office of the Auditor beyond the deadline set in COA Circular No. 2014-001
dated March 18, 2014. (Observation No. 7)

We commended the Management for allocating more than 5 percent of the

Agency’s budget for the implementation of GAD activities and for the 100
percent implementation of its GAD planned programs and activities. We also
recommended that Management submit GAD Accomplishment Report to the
Office of the Auditor within the prescribed deadline in compliance with Section V
of COA Circular No. 2014-001 dated March 18, 2014.

8. The agency was not able to allocate funds and formulate plans, programs and
projects that will address the concerns of Senior Citizens (SCs) and Persons with
Disabilities (PWDs) required in Section 33 of the General Provisions of FY 2021
GAA or RA No. 11518. (Observation No. 7)

We reiterated our prior year’s recommendation and Management agreed that the
IA focal person in charge with SCs and PWD projects to allocate fund and
formulate plans, programs and projects that are responsive to the needs of SCs
and PWDs and to design or explore new approaches, ways and strategies for its
implementation especially in this time of COVID 19 pandemic in the country.

9. We noted that IA has incurred a total 12 times of delayed in the remittance of

withheld premiums and deducted payment of loans of employees, ranging from 3
days to 12 days during the year contrary to the provisions of RA No. 8291.
(Observation No. 7)

We recommended and Management agreed to continuously comply with the

timely remittance of withheld premiums and employees loan repayments to the
GSIS pursuant to RA No. 8291.

10. The insurance of IA’s physical assets with Net Book Value of P227,356,948.46
only covers up to P219,564,338.99. The team also noted that Works of Arts or
high value antique items in custody of IA amounting to P36,159,000.00 were not
covered by insurance policies. (Observation No. 7)

We reiterated our recommendation that Management continue to make

representation with DBM to allocate funds and incorporating in the annual budget
of the Agency the amount necessary for the appraisal of antique items and to
cover increase in premiums relative to the additional insurance coverage for all of
its insurable assets with the General Insurance Fund of the GSIS to ensure that the
government will be indemnified for any damage or loss of these properties.

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11. IA obtained an insurance for the Commercial Vehicle 2000 Hino with Tramvia
Dropside Body with plate number SFN-295 for CY 2021 under Policy No. MV-
CV-GSISHO-0033839 for the period September 6, 2021 to June 1, 2022 in the
amount of P4,995.60 despite the fact that it is not yet recorded in the books of IA.
(Observation No. 7)

We recommended and Management agreed to instruct the General Services

Section to ensure transfer of ownership of all donated properties with IA. We also
reiterated to implement timely renewal of insurance policies of all Agency’s
insurable properties to avoid any unnecessary losses due to non-indemnification
in the event of direct physical loss or damage from any external cause.

12. Management was not able to enforce settlement of final and executory audit
disallowances of P2,183,887.12 contrary to Sections 7.1 and 7.2 of COA Circular
No. 2009-006 dated September 15, 2009. (Observation No. 8)

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

exhaust all possible means to secure information needed to locate the whereabouts
of the persons liable and enforce settlement of all audit disallowances that are
already final and executory.

The above observations and recommendations were discussed with concerned

Management officials in an exit conference conducted on March 28, 2022 and their
comments were incorporated in this Report, where appropriate.

G. Summary of Total Suspensions, Disallowances and Charges

The audit disallowances recognized in the books of accounts amounted to

P2,471,887.12 of which P288,000.00 was settled/refunded by persons liable during CY
2021, leaving an outstanding balance of P2,183,887.12. There are no outstanding
suspensions and charges as at year-end.

Moreover, out of the total audit disallowances not yet recognized in the books of
accounts pending decision on the appeal and motion for reconsideration filed with the
Director/Commission Proper/Supreme Court amounting to P13,278,175.00., The total
amount of P4,180,279.00 covered under ND No. 2012-01-161-(09) and ND No. 2012-02-
161-(09) both dated May 30, 2012 with the amount of P2,622,668.00 and P1,557,611.00,
respectively, was affirmed with modification by the Supreme Court in GR No. 250785,
June 22, 2021, that petitioners need not refund the disallowed amount. The said decision
was received by the Audit Team on March 09, 2022.

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H. Status of Implementation of Prior Year’s Recommendations

Of the 24 outstanding prior year’s audit recommendations as at January 1, 2021, 13 or

54.17 percent were implemented. The other 11 or 45.83 percent of the recommendations
remained not implemented, of which, nine (9) were reiterated/restated in Part II of this Report.

The details of the 13 implemented audit recommendations and the remaining two (2)
unimplemented audit recommendations which were not reiterated/restated in Part II are
presented in Part III of this Report.

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