Continuation of "8. Rizal Technological University"

Though it was founded in 1975 as Rizal Technological Colleges (RTC), the College was converted into the Rizal Technological University (RTU) on October 11, 1997, by virtue of Republic Act No. 8365. RTU is tasked to provide highly professional, scientific, technological and special instructions in the fields of engineering and technology, education, business and entrepreneurial technology and arts and sciences and to the promotion of research, extension and advance studies in its area of specialization.

The Commission on Audit's (COA) 2009 Consolidated Audited Annual Report (CAAR) of RTU found that RTU's income increased from P 359 million in 2008 to P 397 million in 2009 or an increase in P 38 million. Of this, P 25 million  was from the National Government and P 12.7 million was from other income, 

But COA's 2009 CAAR also found the following problems with RTU's usage of the taxpayer's money:

• A misstatement in the Receivables-Disallowances or charges was committed due to the erroneous debit of P5,954,279.25 to the same account for the disallowed Emergency Cost of Living Allowance (ECOLA) which was not yet final and executory, instead of P8,418,620.34, the total amount of the Notice of Disallowance, subject of two the Notices of Finality of Decision (NFD), both dated November 27, 2009 pursuant to COA Circular No. 2009-006, thus, casting doubt on the reliability of the Account Receivables-Disallowances/Charges balance of P5,954,279.25 as at year end.
• COA is asking the RTU Administration to require the Accountant to prepare the journal entry voucher to adjust the Receivables-Disallowances/Charges and henceforth, ensure the accuracy of balances and reliability of the accounting reports pursuant to provisions of the NGAS Manual, Volume III and Section 22 of COA Circular No. 2009-065 dated September 15, 2009; and also to comply strictly with Section 7.2 of COA Circular No. 2009-006 dated September 15, 2009.
• The validity and existence of the Property, Plant and Equipment (PPE) accounts totaling P779.72 million could not be ascertained due to the inclusion of unaccounted/missing properties costing P0.65 million; non-reclassification of unserviceable properties to Other Assets awaiting disposal costing P30.88 million; non-dropping from the books of accounts of disposed properties costing P3.88 million and the incomplete physical inventory of properties hence, unreconciled variance of P46.88 million between the Property and Accounting records existed contrary to sound property management system. 
• COA is correspondingly asking the RTU Administration to formally create an inventory team to complete and submit the physical inventory reports of all properties of the University and reconcile these with the accounting records; identify the accountable persons for the missing/unaccounted properties and require them to settle their accountabilities and/or submit the request for relief from accountability in accordance with Section 73, PD 1445; and require the Accounting Office to prepare a journal entry voucher to reclassify to Other Assets account all unserviceable properties awaiting disposal and drop from the books all disposed properties.
• COA also said the janitorial and sanitation services rendered by RTU-KAWANI Multi-Purpose Cooperative was procured thru negotiation since CY 2002, renewed and extended on a monthly basis thereafter until 2009 with total payment of P49.50 million thereby manifesting conflict of interest as the Cooperative is an association of the University’s employees. Moreover the mode of procurement was contrary to Section 10, Article IV of R.A. 9184 and Section 5 of the Government Procurement Policy Board Resolution No. 24-2007 thus, defeating the procurement principles of transparency and competitiveness.
• COA is recommending that RTU's Administration submit an explanation as to why the procurement of janitorial services was not done thru public bidding;comply strictly with the provisions of R.A. 9184 and its IRR-A regarding procurement of janitorial services; require the RTU-KAWANI Multi-Purpose Cooperative to deliver all the equipment and supplies listed in the Breakdown of Cleaning Supplies and Materials and be duly received by the University.
• Additionally, COA said that RTU's Administration should deduct the amount of Supplies and Materials not delivered by the Service Agency amounting to P25,885.50 from their succeeding payment of Janitorial services; and require the Service Agency to comply with the provisions of the Contract of Janitorial and Sanitation Services efficiently and effectively to avoid sanctions for not complying with the terms and conditions thereof.
• Another problem COA found and pointed out in its 2009 CAAR was the issue of reimbursements of P1.97 million representation and travelling expenses by 74 university personnel which were not supported with sufficient documentation as required under existing government laws, rules and regulations, thus, casting doubts on the legality and validity of those payments.
• COA is asking the RTU Administration to comply strictly with existing laws, rules and regulations on the payment of reimbursable representation and traveling expenses; require the concerned personnel to submit sufficient documents for the aforementioned reimbursements of representation and traveling expenses pursuant to the Government Auditing Code of the Philippines or P.D. No. 1445 to establish the legality and propriety of the disbursements; and submit certificate of appearances of the companies visited complete with telephone numbers and the official stationery of the company visited for confirmation purposes.
• COA also pointed out deficiencies noted in the RTU Administration's procurement of goods worth P47.02 million thru Direct Contracting cast doubts on the regularity of the transactions. COA is asking the RTU Administration to render an explanation on the abovementioned deficiencies for evaluation; and comply strictly with the provisions of RA 9184 and its Implementing Rules and Regulations in the procurement of goods and services.

RTU's governing body is vested in the Board of Regents which is composed of the Dr. Patricia Licuanan, the Chairman of the Commission on Higher Education (CHED) as Chairman, the President of the University as Vice-Chairman, and the Chairmen of the Congressional Committees on Education and Culture, the Director General of the National Economic Development Authority, the representative of the Department of Science and Technology, the President of the Federation of Faculty Associations, the President of the Federation of Student Councils, the President of the Federation of Alumni Association and two prominent citizens as members.

As of December 31, 2009, there were 654 personnel of RTU Main and Pasig campuses. Out of the 654 total workforce, 105 belong to the academe, 168 are part-timers and 381 are administrative support staff.

During the SY 2008-2009 and 2009-2010, a total of 35,373 students were enrolled at RTU Boni Main and Pasig Campuses broken down as follows with 713 Graduate School students and 34,660 undergraduate students.

To return to the main story, click here: Rizal Technological University

Continuation of "7. Philippine State College of Aeronautics"

COA recommended that the PhilSCA Administration ask the concerned accountable officers to prepare and submit to COA a formal request for relief from property accountability for the fixed assets worth P2.7 million lost thru fire pursuant to Section 73 of the Government Auditing Code of the Philippines (P.D.1445). Failure to comply with the above provision will make the accountable officers concerned liable for the loss of property, COA said.

COA also urged the PhilSCA committees created to hasten their work of completing immediately the physical count and inventory reporting on Property, Plant and Equipment in accordance with the provisions of the Government Accounting and Auditing Manual.

COA is also asking the Accounting Office of PhilSCA to reconcile the balances of accounts in the general ledger against the individual subsidiary/property ledger card including the inventory report that will be prepared by the Committees; and to effect immediately the adjustments after the reconciliation of the said fixed assets accounts.

COA said that Cash Advances to officers and employees amounting to P2.9 million remained unliquidated at year-end even if the purpose for which they were granted have already been served, contrary to Section 89 of P.D. 1445 and COA Circular No. 97-002 dated February 10, 1997, thereby overstating the receivable account and understating the expense account by the same amount.

As a result of the unliquidated advances, COA is recommending that the PhilSCA

Continue withholding the payment of any money due to the accountable officers who have not liquidated their cash advances pursuant to Section 9.3.2 of COA Circular No. 97-002 dated February 10, 1997.

Continue issuing demand letters to all accountable officers with outstanding cash advances and exert all possible efforts to go after these individuals who have liability to the College.

Request from COA authority for the write-off of dormant/non-moving accounts in accordance with existing auditing rules and regulations.

Comply strictly with Section 89 of P.D. 1445 and COA Circular No. 97-002 in the granting, utilization and liquidation of cash advances.

COA also said PhilSCA's validity and existence of the Motor Vehicles account balance of P1,053,500.00 cannot be ascertained due to the unreconciled balance of P868,356.00 between the accounting and property records since CY 2004.

COA is recommending that PhilSCA require the Accounting and Property Offices to reconcile the motor vehicle records and reflect the actual physical inventory of the account pursuant to the provisions of GAAM; and mark all motor vehicles “FOR OFFICIAL USE ONLY.”

The 2009 CAAR also said that nineteen college officials and employees whose positions were not among those entitled to Representation and Transportation Allowances (RATA) were paid P0.787 million during CY 2009 out of the Special Trust Fund (STF) contrary to the 2009 General Appropriations Act (GAA), Memorandum Circular (MC) No. 6, series of 2005 of the Civil Service Commission (CSC), National Budget Circular (NBC) No. 404 dated March 29,1989 and COA Circular No. 2000-02 dated April 4, 2000, thus, rendering said payments unauthorized and without legal basis. (paras. 37-51)

COA recommended that the PhilSCA Adminisration require the concerned officials to refund the unauthorized RATA disbursements totalling P0.79 million in the absence of a legal basis to support the payments. Henceforth, all RATA payments should be in accordance with Section 44 of the GAA, NBC 404 dated March 29, 1989 and COA Circular No. 2000-002 dated April 4, 2000, respectively.

The payment of Collective Negotiation Agreement (CNA) incentive to the members of PhilSCA Non-Teaching Association (PHILSCANTEA) Inc., was not supported with complete documentation and funding source to establish the legality and propriety of disbursements totaling P0.682 million as required under the Department of Budget and Management (DBM) Circular No. 2006-1 dated February 1, 2006. (paras. 75-86)

COA recommended that PhilSCA's administration submit necessary documents showing compliance with the prescribed policies, procedures and funding source on the grant of CNA incentive pursuant to DBM Budget Circular No. 2006-1 dated February 1, 2006 and CSC PSLMC dated November 14, 2002; and refrain from paying allowances and incentives, which are not in accordance with existing laws, rules and regulations.

COA said PhilSCA also contracted the services of private legal counsels and paid the total amount of P325,000.00 from six months to two (2) years for legal and consultancy services without the written conformity and consent of the Solicitor General and written concurrence of the Commission on Audit contrary to COA Circular No. 95-011. COA recommended to the PhilSCA Administration to return to itself the amount paid to the aforementioned private lawyers who were hired contrary to existing accounting rules and regulations and Supreme Court jurisprudence; and require the Accountant to reverse the entry made in JEV No. 09-11-008 to correct the consultancy account by P31,380.00.

The 2009 CAAR also said PhilSCA Administrion failed to establish the reasonableness of the amount of fuel consumed totaling P175,750.68 for CY 2009 contrary to COA Circular 77-61 dated September 26, 1977 due to inadequate data on the trip tickets as well as the absence of the subsidiary ledger, Monthly Report of Fuel Consumption and the Monthly Report of Official Travels for each of the four motor vehicles, thus, the control of the usage of the said vehicles could not be determined.

COA is recommending that PhilSCA's Chief of General Services to submit the Monthly Report of Fuel Consumption for each motor vehicle to the Auditor within the first ten days of the succeeding month for audit purposes as required under pursuant to the provisions of the GAAM and pertinent provisions of COA Circular No. 77-61 dated September 26, 1977.

They are also asking PhilSCA Administration to require the drivers of the four motor vehicles to properly accomplish Daily Trip Tickets and ensure that the same is approved by the authorized officials and signed by the end-users or passengers of the motor vehicle, and that this be serially numbered and summarized at the end of the month in a Monthly Report of Official Travels and submitted to the COA for audit purposes.

COA also criticized PhilSCA's practice of assigning more than 12 hours a week teaching load to 108 part-time faculty members resulting in the payment of 24,871 hours of excess loads amounting to P2.96 million which is inconsistent with the College Faculty Workload Manual dated December 2, 2002.

COA is recommending that the PhilSCA Administration revisit its policy on faculty teaching load vis-a-vis its actual implementation tomake sure it conforms with PhilSCA's College Faculty Workload Manual in view of COA's concerns on the matter.

To return to the main story, click here: Philippine State College of Aeronautics

Continuation of "The balances of Cash in Bank Local Currency-Current and Savings Accounts (LCCA & LCSA) of P152.48 million of the UP Manila and Visayas and Foreign Currency Account of $187,674.61 of the UP Manila were misstated"

The 2009 Consolidated Audited Annual Report (CAAR) of COA also pointed out that the balances of Cash in Bank Local Currency-Current Accounts and Savings Accounts (LCCA & LCSA) of P152.48 million of U.P. Manila and Visayas and Foreign Currency Account of $187,674.61 of U.P. Manila were misstated due to unreconciled differences between the books and bank balances amounting to P131.90 million and $104,809.07 respectively, due to the failure of the Accounting Division to prepare and update the bank reconciliation statements (BRS).

In other words, COA is probably being overly polite by referring to the window dressing by the U.P. Administration of its books of accounts as it claims that UP Manila-PGH it was in actual possession of taxpayer funds worth P 142,689,776.86 when it reality the U.P.'s own bank balances for UP Manila-PGH only showed the existence of funds worth P 74,480,379.96 or a staggering variance of P131,790,603.10. Where did this money go? Did university officials dip their hands in the cookie jar one too many times? Perhaps or even perhaps not. However, such endless speculation may be quieted once and for all, if only U.P. officials would simply follow Section 74 of P.D. No. 1445, otherwise known as the State Audit Code of the Philippines, COA said.

P.D. No. 1445 provides that: “At the close of each month, depositories shall report to the agency head, in such form as he may direct, the condition of the agency account standing on their books. The head of the agency shall see to it that reconciliation is made between the balance shown in the report and the balance found in the books of the agency.”

“The reconciliation of cash in bank account balances with bank records provides a periodic determination of the validity of cash balances appearing in the books of the agency concerned. Bank reconciliation statements prepared on a regular and timely basis is an essential control over these cash accounts. The agency accountant shall draw journal vouchers to record all valid reconciling items that require adjustment and correction in the General Ledger

COA's 2009 CAAR also found that U.P. Visayas said that it had at least P 9,787,307.82 in its books, when it reality it had P 9,897,874.82, or a positive variance of P 110,567.00 which, while it might seem like a happy problem, was still problematic from a COA perspective, because it showed that accountants were not practicing sufficient levels of rigor that was in accordance with Generally Accepted Accounting Procedures (GAAP).

In terms of foreign currency holdings, UP Manila-PGH said that it had at least $187,674.61 in its books, but actual bank statements only proved that it was in possession of $292,483.68 or a positive variance of $104,809.07 which again makes it difficult for COA auditors to determine the path of the money trail in terms of where this money comes from and where it is going.

To return to the main story, please click here: http://diliman-diary.blogspot.com/2010/11/breaking-news-coa-releases-2009-audit_05.html

Continuation of State Universities and Colleges are Haunted by COA's 2009 Audits into their Financial Expenditures (A Series of Articles co-located on one (1) continuously updated link): 5. Philippine Normal University

5. Philippine Normal University (continued)

COA recommended that the PNU Administration review its agreement with the MPC, considering that its Memorandum of Agreement (MOA) had already expired; and study the possibility of directly doing service contracts with the stallholders in order to derive rental income for the University.

Other issues highlighted by COA's 2009 CAAR of PNU showed that:

• The PNU Main Campus procured office supplies, construction materials and equipment totaling PhP 11.9 million during the year which were not included in the Annual Procurement Plan (APP) due to poor procurement planning contrary to R.A. 9184.

• COA recommended that the PNU Administration comply strictly with R.A. 9184 regarding procurement planning as failure to comply in future transactions may be disallowed in audit as warranted by the circumstances.

• At the PNU Negros Occidental branch, cash advances amounting to PhP 250,000.00 remained unliquidated at year end due to lack of monitoring contrary to COA Circular No. 97-002 dated February 1, 1997 resulting in the overstating of the receivable account and understating of the related expense accounts. COA recommended that the PNU Administration comply strictly with COA Circular No. 97-002 dated February 1, 1997 regarding the granting, utilization and liquidation of cash advances.

• Out of the total balance of Other Receivables account amounting to PhP 5.7 million at PNU Main Campus, PhP 704 thousand or 12.3 percent remained uncollected for four to ten years as of December 31, 2009, due to poor monitoring of collections from various debtors. COA correspondingly recommended to the PNU Administration to exert extra efforts to collect long outstanding receivables by sending demand letters to its debtors; and effect salary deductions for those employees with outstanding obligations.

• A comparison of the General Ledger balance of Office Supplies Inventory account amounting to PhP 1.34 million as against the physical inventory of PhP 400,000.00 for CY 2009 at the PNU Main Campus, showed a discrepancy of PhP 933,000.00 due to the absence of periodic reconciliation of accounting records against property reports casting doubts on the validity of the said account. 

• COA recommended and the PNU Administration agreed to require the Accountant and Property Officer to exert extra efforts to reconcile their respective records to ensure accuracy of the reported account balances in the financial statements and the Accountant to prepare a journal entry voucher to reflect the correct balance of the account.

• The balances of dues from the Central Office account of PhP 3.5 million and Due to Regional/Branch Offices amounting to PhP 17.7 million appearing in the books of PNU Branches and PNU Main campus, respectively as of the end of the year resulted in a discrepancy of PhP 14.2 million, due to a lack of regular and periodic reconciliation, casting doubts on the validity of the said accounts. 

•  The PNU Administration, upon COA's recommendation, agreed to reconcile the above noted discrepancy on the two reciprocal accounts and henceforth, to conduct regular reconciliation of said accounts to insure the correctness of financial data.

• The Other Payables accounts balance of PhP 46.5 million at PNU Main Campus could not be ascertained as PhP 10 million could not be verified due to the absence of records and the existence of a negative balance amounting to PhP 57,000.00, casting doubts on the existence and validity of the account. This resulted in COA's recommending that the PNU Administration instruct its Accountant to exert extra efforts to look for documents that will identify the nature of the accounts in the subsidiary ledger in the total amount of PhP 10,079,500.91; and review and analyze the accounts with negative balances which may represent excess expenditure over the amount earmarked for the program or project and immediately prepare journal entry vouchers to correct the recording.

COA said the above observations and recommendations were discussed with the PNU Administration whose comments were incorporated in the 2009 CAAR where appropriate.

To return to the main story, click here: Philippine Normal University

Continuation of State Universities and Colleges are Haunted by COA's 2009 Audits into their Financial Expenditures (A Series of Articles co-located on one (1) continuously updated link): 4. Technological University of the Philippines

4. Technological University of the Philippines (continued)

COA recommended that the TUP Administration require the Chief, Finance Services and/or Accountant to prepare the Journal Entry Vouchers to correct the Accounts Payable; and the necessary supporting schedules to validate the account balance.

Other problems pointed out by the 2009 CAAR:

• Ten computer sets donated to the TUP-Main campus, and covered court, and school building funded by the PDAF in the TUP-Cavite campus were not recorded in the books of accounts, thus resulting in the understatement of the Property, Plant and Equipment and Income from Grants and Donations accounts by the value of the assets and contrary to the Government Accounting and Auditing Manual (GAAM).

• COA recommended and the TUP Administration agreed that in the TUP-Main campus, the Head of the IT Department would be required to appraise the donated computers for proper valuation of the PPE account; the Accounting and Property Sections head would be required to record the ten sets of computer donated by the PPTF to TUP-Manila; and GAAM would be strictly complied with.

• An inadequate review by the Accounting Office on the posting of PPE acquisitions in CY 2009 in the books of the TUP-Main campus, resulted in erroneous accounts classification of PhP 2,.5 million, and unrecorded property of PhP 283,192.80, thus affecting the fair presentation of the PPE accounts’ balances in the financial statements.

• COA recommended and the TUP Administration agreed to require the Accountant/Finance Services Chief to analyze and review the accounting entries prepared by staff prior to approval of JEVs and final posting to the ledgers; reconcile accounting records with the property records and make the necessary adjustments; and prepare the correcting/adjusting entries in the books of accounts to reflect accurate account balances in the financial statements.

• In TUP-Cavite campus, procurement of various supplies and materials totaling PhP 3,2 million and repair of its various facilities amounting to P629,317.61 were made thru splitting of Purchase Orders and Job Order contracts, respectively, contrary to the Implementing Rules and Regulations of Republic Act 9184. COA recommended that the TUP Administration strictly stop the practice of splitting contracts and/or Purchase Orders .and adopt public bidding as the general mode of procurement.

• Notices of Suspension amounting to PhP 18.2 million were issued due to non-conformity with the specifications in the P.O. of I.T. Equipment and Software, repairs or renovation of buildings and facilities and non-submission of the Disbursement Vouchers, checks and contracts or documents by the Chief, Finance Services, casting doubts on the propriety, completeness and accuracy of the said disbursements.

• Correspondingly, COA recommended that the TUP Administration require the supplier or contractor to replace or rectify the items delivered which do not conform with the specifications as called for in the POs; the Chief, Finance Services, to immediately submit the required vouchers together with the checks and supporting documents like contract, progress billings, inspection reports, etc. for post-audit and evaluation; the former Bidding and Awards Committee Chair and members to explain their failure to question the supplier during the prequalification phase about the difference in the price quoted for the same items for which delivery was made earlier during the year compared to Prudent Diamond Square Construction Company. The latter was quoted at a much lower unit cost by 52%; and COA also asked the TUP Administration to require the Inspection Committee to explain why the delivered items were accepted despite of their non-conformity with the PO specifications.

• Status of Audit Suspensions/Disallowances and Charges. As of December 31, 2009, the TUP Manila and Cavite campuses had a total unsettled disallowances of PhP 31.4 million and unsettled suspensions of PhP 18.2 million. 

To return to the main story, click here: Technological University of the Philippines

Continuation of State Universities and Colleges are Haunted by COA's 2009 Audits into their Financial Expenditures (A Series of Articles co-located on one (1) continuously updated link): 3. Marikina Polytechnic College

3. Marikina Polytechnic College (continued)

• Prepayments to the PS-DBM for the purchase of commonly used office supplies amounting to PhP 101,415.20 were erroneously recorded as outright expenses, while the deliveries totaling to PhP 94,680.40 were not recorded resulting in the misstatements of Office Supplies Expense account of PhP 101,415.20, Office Supplies Inventory account of PhP 94,680.40 and Due from NGAs account of PhP 6,734.80 as of the end of 2009.

• COA recommended that MPC's accountant prepare the Journal Entry Voucher (JEV) to effect the necessary adjustments in order to reflect the accurate balances of the Office Supplies Expense, Office Supplies Inventory and Due from NGAs accounts; follow strictly the rules and regulations on the proper classification and recording of office supplies as these are procured from, and delivered by the PS and subsequently issued to the requisitioners; and prepare monthly the RSMI to support the JEV for the issued supplies and materials. 

• No depreciation was provided for procured properties during the year amounting to P1.08 million, thus overstating the PPE account by P79,015,15. Likewise, accounts totaling P125,266.00 were misclassified, casting doubts on the reliability of the appropriate PPE accounts. The Diliman Diary also observed that neglecting to factor in depreciation would tend to artificially inflate the amount of “available” balances of MPC. 

• COA recommended that Management require the accountant to prepare a Journal Entry Voucher to effect the proper adjustments of the foregoing errors and to correct the misstatements on the appropriate Property, Plant and Equipment accounts. 

• MPC failed to deduct and withhold Value Added Tax and Expanded Withholding Tax of PhP 143,758.93 and PhP 57,503.57, respectively on payments for security services contrary to the BIR Revenue Regulations Nos. 16-2005 and 30-2003, depriving the government of the use of said funds for its programs and projects.

• As a result of this neglect, COA rrecommended that the MPC Administration require the JAS Security Agency handling them to refund, and cause the immediate remittance to the BIR the amount of P201,262.50 VAT and EWT. Henceforth, require its Accounting Office to comply strictly to the rules and regulations on withholding and the remittances of taxes. 

• MPC's mandate is to be the National Center of Excellence for Higher Professional Teacher and Technical Education and Training, and the Center for Development on Shoe and Leather Craft Industry. It aims to provide quality and relevant education and training for prospective teachers, trainers and technician, and to provide quality research for the development of shoe and leather craft industry.

To return to the main story, click here:
State Universities and Colleges are Haunted by COA's 2009 Audits into their Financial Expenditures (A Series of Articles co-located on one (1) continuously updated link)

Continuation of State Universities and Colleges are Haunted by COA's 2009 Audits into their Financial Expenditures (A Series of Articles co-located on one (1) continuously updated link): 2. Eulogio “Amang” Rodriguez Institute of Science and Technology

2. Eulogio “Amang” Rodriguez Institute of Science and Technology  (continued)

• COA said that the EARIST administration agreed to comply strictly with the provisions of RA 9184 or the regarding funding requirements, modes of procurement and acceptance of deliveries; comply strictly with COA Circular No. 2009-002 dated May 18, 2009 reinstituting selective pre-audit on government transactions; and explain the significant deficiencies noted in audit and submit documents, where applicable.

• The procurement of a Digital Language Laboratory amounting to PhP 8.6 million awarded, supplied and delivered by Mars Laboratory Instrument Center (MLIC) was contrary to RA 9184, Sections 4 and 85 of Presidential Decree No. 1445 (Ordaining and Instituting a Government Auditing Code of the Philippines) and COA Circular No. 85-55A dated September 8, 1985, casting doubts on the validity and regularity of the transaction.

• COA said the EARIST administration agreed to comply strictly with the aforementioned laws, rules and regulations governing procurement of goods, documentation and regularity of transactions; explain the significant deficiencies noted in audit and submit documents, where applicable; explain why the contract was awarded to MLIC which bidded the amount of PhP 8.6 million as against the lowest bid of AMC in the amount of PhP 5.8 million; and explain why the transactions should not be disallowed in audit considering the significant deficiencies noted in audit.

• The payments on the repairs and renovation of the college’s facilities totaling PhP 24.9 million disclosed inadequate supporting documentation required to establish the validity and correctness of the claims against government funds and inadequate accounting and administrative controls in processing and payment of claims contrary to existing laws, rules and regulations. 

COA's 2009 CAAR of EARIST also pointed out that the Business Development Center (BDC) collections of PhP 7.26 million were not deposited promptly and intact with the Philippine National Bank, as these remained in the possession of the Collecting Officer from one to 43 days contrary to existing rules and regulations thereby exposing said funds to possible loss and misuse. The EARIST Administration agreed with COA's recommendation to direct the Collecting Officer to deposit immediately to the PNB the remaining unremitted collections of P9,683.83; and closely monitor the collections and remittances to ensure that collections are promptly remitted to PNB.

The procurement of school and P.E. uniforms amounting to PhP 4.3 million in 2007 and PhP 3.1 million in 2008 by the EARIST Income Generating Project Office (EIGPO) and the corresponding rebates of about PhP 1.1 million thereon were likewise also not recorded in the books of accounts contrary to P.D. 1445, resulting in the understatement of the cash and other related accounts. Likewise, procurement of said uniforms was not in accordance with RA 9184.

COA recommended and the EARIST administration agreed to render an accounting and consolidate all the financial transactions of the EIGPO into the books of accounts and submit thereafter to the Auditor for custody and audit; comply strictly with the provisions of RA 9184; remit to the Bureau of Internal Revenue the taxes withheld from Seed Apparel; and refrain from entering into a contract with official and employees of the Institute to avoid the existence of conflict of interest.

The financial statements of the Institute did not include the PhP 3.53 million total assets, liabilities and government equity as well as the P1.96 million net income of its BDC’s operations which remained unrecorded in its books because the BDC Accountant continuously failed for years to submit the monthly financial reports to the Institute’s Accounting Unit for consolidation. (Paragraphs 82-90)

COA recommended, and the EARIST Administratiion agreed that it would require the BDC Director to remit all collections and all revenues generated by the Center which shall be the source of its funding, such that the funds for the operations of the Center shall be considered fund transfers from the Institute and its releases shall be recorded and accounted in both the books of the Institute and the BDC; require the BDC Director to report as well the Center’s disbursements for recording in the Institute’s books of accounts; and effect the transfer of all bank accounts maintained with private commercial bank to the Institute’s account with its depository bank.

COA also said that the Cash in Bank balance of PhP 47.6 million of EARIST was understated by PhP 1.3 million due to unrecorded transactions of the Institute’s Business Development Center (BDC) and Special Academic Program (SAP); EARIST also suffered from unreconciled variance of PhP 0.3 million between the books and bank balances in the absence of bank reconciliation statements thus, casting doubts on the validity of the cash accounts.

COA recommended that the EARIST Administration require the accountant to prepare a Journal Entry Voucher to record all unrecorded transactions of the BDC and SAP. Likewise, to regularly prepare the bank reconciliation statements of the Cash in Bank for trust and special trust funds to reconcile the cash in bank balances with the bank records.

COA also said the SAP’s estimated receipts of PhP1.4 million and unsupported disbursements of about PhP 2.3 million were not duly accounted for nor taken up in the books of accounts hence, the income or loss from operations cannot be determined for viability and decision making. Moreover, the amount of PhP 102,140.72 appearing in the SAP bank account as of January 31, 2009 was not recorded or ncluded in the cash balance resulting in the understatement of the cash and income accounts’ balances by PhP 1.5 million and expenses by PhP 2.3 million.

Lastly, COA recommended and the EARIST administration agreed to render and submit an accounting of all the receipts and disbursements pertaining to the program together with the disbursement vouchers, payrolls, and Memorandum Receipts for the laptops and printers reportedly disbursed or procured for recording and auditing purposes.

To return to the main story, click here: State Universities and Colleges are Haunted by COA's 2009 Audits into their Financial Expenditures (A Series of Articles co-located on one (1) continuously updated link)

Continuation of State Universities and Colleges are Haunted by COA's 2009 Audits into their Financial Expenditures (A Series of Articles co-located on one (1) continuously updated link): 1. Polytechnic University of the Philippines

1. Polytechnic University of the Philippines (continued)

COA said that PUP officials agreed to “comply strictly with the provisions of COA Circular No. 97-002 dated February 10, 1997 on the grant, utilization and liquidation of cash advances; to issue demand letters to accountable officers with long outstanding cash advances and enforce salary deduction, when necessary to ensure liquidation, and to avoid being reported to appropriate agencies for the filing of charges in accordance with COA Memoranda Nos. 2004-014 dated February 24, 2004 and 2005-074 dated September 15, 2005.” PUP officials also agreed to require the accountable officers with dormant Petty Cash Funds to immediately liquidate said funds in their possessions.

But the procedural lapses in the billing, collection and monitoring of the University’s income generating project’s (IGP) operations resulted in PhP 13 million accumulated receivables, non-recording of PhP 1.7 million thereof and possible losses of PhP 10.8 million due to bad debts from delinquent or absconding concessionaires, hindering the University’s capability to generate additional funds, COA said in its report.

COA recommended that the Business Relations Office furnish the Accounting Office with complete rental contracts issued to concessionaires in all PUP-Branches including subsequent changes; and strictly monitor collections and adopt strict measures by disconnecting utilities of delinquent tenants and coordinate such actions with the Accounting Office.

Likewise, COA required the Accounting Office to: (a) issue billing statements to all concessionaires in the main campus and demand letters to delinquent lessees or tenants and to monitor collections or settlements thereof by maintaining complete and updated subsidiary ledgers; (b) set up receivables as income are realized and to determine and record unbooked receivables

A total of PhP 1.1 million unauthorized expenses for the University Governing Board’s honoraria/per diem was incurred from CY 2004-2009 as payments thereof were in excess of the limit prescribed under DBM Circular No. 2003-6 dated September 29, 2003, COA said.

COA recommended that the PUP administration require the members of the Governing Board refund the honoraria/per diem received in excess of the limit prescribed under DBM Budget Circular Nos.2003-5 and 2003-6; and to adhere strictly to the rates prescribed in the said DBM budget circulars in the payment of honoraria and per diem, as the case may be.

A review of the Student Financial Assistance Program’s (STUFAP) implementation likewise disclosed an absence of records to adequately monitor student borrowers after graduation, hence, affecting the capacity of the University to provide continuous funds to sustain the Program.

COA recommended and management agreed to: (a) revisit the loan agreements entered into with the student borrowers to determine the university official/s responsible of the stipulated repayment period which was not uniformly applied and did not conform to CHED Memorandum Order No. 4, series 2004 which could have contributed to the very low rate of loan repayment; (b) require the STUFAP to maintain and up-date their borrowers’ records and extensively monitor their whereabouts and employment status, and issue demand letters to all student-borrowers and their co-makers/guarantors and to coordinate with their relatives or friends some of whom may be employed in the University to establish the whereabouts of the borrowers/grantees; (c) submit to CHED the required reports as stipulated in the Memorandum of Agreement; and (d) review the provisions of the loan agreements with students and see to it that it includes clear and detailed program implementation, repayment scheme with established dates whey repayment will commence, including the manner of payment to allow other student borrowers to avail of the program.


To return to the main story, click here:
State Universities and Colleges are Haunted by COA's 2009 Audits into their Financial Expenditures (A Series of Articles co-located on one (1) continuously updated link)