The UH, as a special project under the UP System Administration, continues to operate as a separate and distinct entity since 1983 and the results of its financial position and operations, which reflected a gross income of PhP 30.46 million in 2009, remained undisclosed or unreported in the System’s books of accounts thus, affecting the fair presentation of the University System’s consolidated financial statements.
Formerly known as the Philippine Center for Economic Development (PCED) Hostel, the University Hotel was donated to the University of the Philippines (UP).
The Deed of Donation was executed between the PCED and the U.P. through its former President, Senator Edgardo J. Angara on June 10,1983. It involved the conveyance of assets worth PhP 14.6 million including the Hostel building valued then at PhP 10.99 million, but incorporating some conditions, that include among others,”that the Donee assumes any and all the liabilities of the PCED Hostel as shown in the balance sheet, including certain contingent liabilities…”
In view of such donation, the UP was vested with the ownership, management and control of the hotel and its operations. However, its management’s right and privileges were conferred to the Board of Overseers (BOO) created by the University President under Administrative Order (AO) No. 108 on July 14, 1983, as reaffirmed in Section 2 of AO No. FN-03-56 dated October 2003.
The UH continued to operate under the name and authority of UP but apparently as a separate and distinct entity with a separate books of accounts. In effect, the results of its operations were not publicly disclosed/reported in the University System’s books of accounts.
COA's 2009 Consolidated Audited Annual Report (CAAR) disclosed that the UH financial and operation reports were never recorded in the University’s books since 1983 despite the previous years’ audit recommendations for management to take appropriate action to consolidate in the University’s books of accounts the result of the UH operations as well as its financial condition.
For CYs 2009 and 2008, the UH had reported a gross income from operations of PhP 30,457,660.00 and PhP 25,931,701.00, respectively, but these were not reflected in the UP System’s books due to the present set up.
The 2009 CAAR said that U.P. President Emerlinda R. Roman created a committee to review the status of the Hotel under AO No. PERR-07-50 dated June 20, 2007. The committee was tasked to recommend the best course of action that the university should take given the Hotel’s mandate and its current situation as well as the University’s needs and responsibilities. The report was due in July 2007, however, to date COA has not been informed of the committee’s report, if any.
COA said that, “while the efforts exerted by the management and staff of the UH for the maintenance, development and continuous operation of the same are commendable, however, these activities must be governed by applicable government rules and regulations, specially the preparation of required monthly and year-end financial reports, which have to be consolidated with the UP System financial reports.”
“We therefore reiterate our previous recommendation that management require the BOO to submit the financial reports of the UH operations for consolidation in the books of the University System. Further, the UH monthly/year-end financial reports and supporting documents required under government rules and regulations should be submitted regularly to the Commission on Audit (COA) for audit purposes.”
The U.P. Administration has replied that the University faithfully implemented AO 108 issued on July 14, 1983, as in :
“Section 1- Creation and Composition. There is hereby created a Board of Overseers whose compositions shall not exceed 7. They shall serve at the pleasure of the President.”
“Section 3- Income of Hotel. The Board shall recommend to the President the amount or percentage of income that shall be remitted regularly to the Faculty Development Fund.”
“Section 5- Submission of Reports. The Board shall submit a quarterly report to the President through the Vice-President for Planning and Finance. It shall submit a report on the disposition of the Hostel and such other benefits and privileges which it may deem appropriate.”
However, COA stressed that the AO 108 was issued in the meantime that management has not yet come up with a final plan on what to do with the donated property, so as not to interrupt the Hotel operations. Further, more than 20 years had passed, but the succeeding administrations did not bother to introduce possible amendments to the said AO 108 to address the issues on management, operations and financial reporting. “Any law, order or issuance may be subjected to possible amendments when, during the implementation period, provisions therein become irrelevant or unnecessary or are no longer sufficient to address subsequent changes or events,” the COA 2009 CAAR said.
COA also criticized an absence of standard qualification requirements for appointees to the Board of Overseers (BOO) positions.
AO No. 108 dated July 14, 1983, creating the Board of Overseers to manage the University Hotel, and giving its management the power and control, did not clearly specify the qualification requirements of the appointees to the Board that will standardize criteria for eligibility requirement and will govern future selection and appointments to the Board, COA said.
COA said that the UH, since its construction and operation under the PCED and until the time of its donation to the UP in 1983, is a government property. The corporate nature of its function and operation does not change the fact that it is a government property subject to existing applicable rules and regulations of the government.
AO No. 108 creating the BOO as appointed by the President had vested to the Board full powers and control of the UH operations including:
Oversee and supervise the operation of the PCED Hostel;
Undertake or commission studies designed to improve the management and operation of the PCED Hostel and the possible terms in the event of lease or other arrangements;
Promulgate rules and regulations regarding the use of the facilities, the hiring, dismissal and the salaries of its personnel;
Schedule of prices of foods and services of the Hostel, etc. which shall take effect upon the approval of the President;
Enter into contracts in matters relating to the operation and management of the Hostel;
Enter into loan agreement upon the recommendation of the Vice-President for Planning and Finance and the approval of the President;
Determine the name of the Hostel for approval of the President;
Recommend to the Presidential Committee on Campus Planning and Development necessary improvements within the vicinity of the Hostel; and
Performs such other powers and functions as may be assigned to it by the President.
COA said the foregoing powers and functions vested to the BOO more than 20 years ago gave the Board full power and control over the operations of the UH. It was observed that the UP System management had not actively participated nor got involved in the UH’s operations except to acknowledge the 2% share of income it remitted to the System for the Faculty Development Fund.
“The functions given to the BOO covers all vital management and control functions, therefore, it is desirable if the appointees to the Board pass through specific qualifications criteria that will at least consider the expertise, relevant trainings, employment status and tenure of office to standardize eligibility criteria and encourage transparency in the selection process. Moreover, this is to insure proper accountability, responsibility and liability for the management of government funds and property,” COA said.
“We want to stress that we are not undermining the capabilities of the present members of the board, as we acknowledge their competence in turning the Hotel to what it is today. But there is a necessity to establish written or formal rules and regulations with regard to qualification, selection and appointment to insure that future appointments will be guided properly and will be based on established standards,” COA's 2009 CAAR concluded.
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