Continuation of "The University Hotel (formerly PCED Hostel) as a special project under the UP System Administration"

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.

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: On the issue of conflicts of interest among ranking university officials and university-affiliated foundations

The 2009 CAAR of the U.P. System by COA is highly critical of the U.P. Administration, headed by U.P. President Emerlinda R. Roman for its "inadequate U.P. System Guidelines on U.P.-affiliated foundations." This is especially significant, because COA put the U.P. Foundation on the top of its incomplete list of university affiliated foundations, and the U.P. Foundation itself is headed by none other than President Roman (please click on for a PDF copy of the chapter of the COA report containing the list). The responsibility for the U.P. System's unwillingness to move on several years worth of criticism by COA over the issue of not opening the financial records of these university-affiliated foundations thus begins with the very top management of the U.P. System.

Quoting Section 1, Article XI,  of the 1987 Constitution, COA said that “Public Office is a public trust.  Public Officers must at all times be accountable to the people, serve them with utmost responsibility, integrity, loyalty and efficiency, act with patriotism and justice and lead modest lives.” 

The 2009 CAAR of the U.P. System furthermore quoted Section 63 of Presidential Decree  (PD) No. 1445 which said that, “Except as may otherwise be specifically provided by law or competent authority all moneys and property officially received by a public officer in any capacity or upon any occasion must be accounted for  as  government  funds   and   government   property. Government property shall be taken up in the books of the agency concerned at acquisition cost or appraised value.”

Hanging on by its fingernails onto a legally unsustainable status quo through an inter-year series of delaying tactics, the current U.P. Administration would hardly win a Most Transparent Government Entity of the Year Award in its compliance with COA demands for more transparency by these university-affiliated foundations.

COA said that although these foundations are registered as private institutions, by the nature of its creation, function and purpose, the inclusion of the abbreviated word “UP” in their registered name and using the UP premises as their place of business, however, manifested a conflicting arrangement and raised questions about their legal status as a separate and distinct entity from the UP, which is a government or public entity by its creation and mandated functions.

Last June 20, 2010 the Diliman Diary had earlier written about the close relationship that the U.P. Foundation had with the U.P. President and the equally close relationship the U.P. Business Research Foundation had with the Dean of the College of Business Administration.

The problem is that both the U.P. Foundation and the U.P. Business Research Foundation have been raising millions of pesos, with no independent oversight, using U.P.'s brand name, prestige, personnel and facilities. At a time when U.P.'s 2011 budget has been slashed by an unsympathetic Aquino administration, U.P. needs to make sure that every single peso or unit of foreign currency raised for and on behalf of the U.P. System does not disappear to "systems losses" and this needs an independent oversight mechanism, such as COA (please see: http://diliman-diary.blogspot.com/2010/06/interlocking-directorates-between_20.html).

But these two foundations actually only represent the tip of the iceberg. COA's 2009 CAAR blows the lid wide open on a host of other university-affiliated foundations also operating without proper oversight. COA's 2009 CAAR said that a U.P. Vice President for Development gave them a partial list of 14 university-affiliated foundations in June, 2009 with ranking university officials who served concurrently as ranking officials in these foundations. To download the list, please click on this link: http://tinyurl.com/2vgmk2o.

But political pressure within the university may be too great for a compromised U.P. Administration or its legal department to act quickly and decisively on controlling the activities of these foundations. The Diliman Diary directly contacted the U.P. Administration on this issue, but was quickly rebuffed, as reported on its August 1, 2010 story (please see: http://diliman-diary.blogspot.com/2010/08/coa-updates-diliman-diarys-readers.html).

Nevertheless U.P., in compliance with the previous audit recommendations on the UP- affiliated foundations, has issued a “Guidelines for Recognition of the UP-Affiliated Donor Organizations” with the following information: General Principles, The Need for Guidelines, Criteria for Recognition and the Partial List of Foundations Generally Recognized by UP as Donor Organizations.

COA said the issue on monitoring and transparency of the foundations programs, projects, activities and fund sources that should be regularly reported to the University has not been addressed in the guidelines. The absence of an independent oversight body to monitor the affairs of the foundations would mean giving them full discretion to handle funds supposedly intended for UP as the primary beneficiary, including the generation of revenues without proper reporting and disclosure.

COA said it recognized the foundations’ support and concern to the different activities and programs for the improvement and development of the University in general and the respective Colleges in particular. However, for transparency and accountability, and for the information and protection of the concerned beneficiaries or recipients, proper financial accounting and reporting should be made by these institutions to the UP System.

COA said that it reiterated in the 2009 CAAR (for the Executive Summary please click: http://tinyurl.com/2b3n2sg) its previous recommendations in the 2008 CAAR (for the Executive Summary please click: http://tinyurl.com/22ojh3z), 2007 CAAR (for the Executive Summary please click: http://tinyurl.com/35fp8zb) and 2006 CAAR (for the Executive Summary please click: http://tinyurl.com/38fzubw) that the U.P. Administration formalize once and for all an arrangement through a Memorandum of Agreement with these Foundations by defining the functions and responsibilities of both parties, including how to account and share for the income/revenues earned from their operations.

COA said a policy or guidelines must be established to set the limits and boundaries with respect to the role or participation of the UP employees and officers to any of these Foundations.

Financial transactions entered into by these Foundations for and in behalf of the University must be accounted for and reported to the UP System management and be subjected to the COA review, verification and audit.

The U.P. Administration commented that it will address the conflict of interest issue, such that it will inform the foundations that: no head of unit will become an officer of the foundations; and that Faculty members of the unit serviced by the foundations should comprise only a minority of the Board Membership.

However, the COA report was silent on whether U.P. President Emerlinda R. Roman, who concurrently headed the U.P. Foundation, as stated in the 2009 CAAR, would resign her position within the U.P. Foundation in order to set the example with al the other university-affiliated foundations.

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.


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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)