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Republic of the Philippines

COMMISSION ON AUDIT Commonwealth Ave., Quezon City

ANNUAL AUDIT REPORT

on the

VETERANS FEDERATION OF THE PHILIPPINES

For the Year Ended December 31, 2012

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Veterans Federation of the Philippines Annual Audit Report for CY 2012

EXECUTIVE SUMMARY

Introduction

The Veterans Federation of the Philippines (referred to here as the Federation) was created under Republic Act (RA) No. 2640 on June 18, 1960, as amended by Batasan Pambansa Bilang 35 in pursuant to Article XVI, Section 7 of the 1987 Constitution of the Republic of the Philippines that provides: “xxx that the State shall provide immediate and adequate care, benefits, and other forms of assistance to war veterans and veterans of military campaigns, their surviving spouses and orphans. Funds shall be provided therefore and due consideration shall be given them in the disposition of agricultural land of the public domain and, in appropriate cases, the utilization of natural resources. …”.

The Federation is registered with the Securities and Exchange Commission (SEC) under Registration Number 14966. Its original Articles of Incorporation was registered on 9 February 1959.

The VFP’s mission is generally, constructive involvement in veterans’ affairs,

both in the national and international levels. The programs which VFP carries out to fulfill a wide range of activities and responsibilities include:

a. Organization – The initial efforts in organizing VFP was the unification of veterans throughout the country. The membership slowly dwindled towards the 80’s. When Col. Emmanuel V. de Ocampo took over in 1985 as President, there was practically no palpable organization. Membership was very low and in some areas practically nil. At that time, the VFP was bankrupt and heavily in debt on account of its lack of funding sources. Its properties were non-earning. After two years of reorganization beginning 1985, the VFP managed to regain the membership nationwide.

b. Information and Communication – The VFP maintains a channel of

communication with the general membership thru circulars and memoranda distributed to all Regional Vice Presidents, District and Post Commanders and heads of Charter & Affiliate Organizations. Information campaign is also manifested in various forms, books and information kits, documentary films, historical markers and press releases.

c. Medical and Welfare Services – One of the highly-prioritized needs

addressed by the VFP is health care. It was instrumental in the founding of the VMMC annexes in the cities of Davao, Cebu and Naga. The VFP worked for the creation of Veterans Rehabilitation and Convalescence Center for disabled and convalescent veterans. This has been converted into, and is now known as the Out-Patient Center. Medical assistance program also includes medical mission, direct distribution of medicines to the veterans thru the various District Commanders, construction of pain clinic, hospital walk, renovated private wards and donation of medicines and hospital equipment

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d. Lobby for Relevant Legislation – The lobby work is a means to effect legislative measures in favor of the veterans’ sector. The VFP took part in the preparation of a complete master list of World War II veterans. The complete list of stockholder was provided to the Philippines Veterans Bank by the end of 1964. The list was also used when the Philippine government negotiated to the settlement of certain claims against the United State government covered by the so-called Veterans Claims Settlement Fund in the amount of U.S. $31 million. The VFP continues to support a lobby group in the U.S. to push for legislative reforms for Filipino veterans.

e. Claims assistance – Upon the passage of RA No. 6948 in 1990, an Act

standardizing and upgrading the benefits for military veterans and their dependents, the VFP included in its program a claim-assistance service to expedite the processing of veterans’ applications for pension claims.

f. International Affairs – In keeping with its commitment to support national

and international issues in the interest of peace, the VFP sought membership with the Veterans Confederation of ASEAN countries (VECONAC) and the World Veterans Federation (WVF).The VFP hosted several conferences and sent delegations to international conferences.

VFP Organizational and Functional Structure

The personnel complement of VFP as of December 31, 2012 consisted of the following:

Category/Position

Status

No. of Personnel

President Elected 1

Executive Vice President Elected 1

Executive Board Elected 22

Appointed 3

VFP Officers Co-terminous 10

Employees/staff Regular 23

Contractual/Probationary 1

Total 61

Under the current VFP Constitution and By-laws, the VFP is composed of the

following organic bodies: (1) Supreme Council, (2) Executive Board, (3) Standing Committees, (4) National Headquarters, and (5) Member-organizations. National Officers/Headquarters

a. It is composed of the following:

(1) National President, who shall be the chief executive and

operating officer;

(2) National Executive Vice President and all Vice Presidents.

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b. Principal appointive officers are national officers appointed by the National President, with the concurrence of the Executive Board. These officers are the following:

(1) Secretary General; (2) Treasurer General; (3) Auditor General.

c. The National President may appoint other officers as may be found

necessary in accordance with the organization of the National Headquarters as determined by the Executive Board.

d. The election of National Officers shall be covered by an Election Code

approved by the Supreme Council (VFP Election Code). e. All officers and employees of the National Headquarters may be removed

only for cause in accordance with due process of law. f. All officers and employees performing duties in the National Headquarters

shall be paid a salary and allowances as may be fixed by the Executive Board.

Financial Highlights (In Php)

Particulars 2012 2011

Total Assets 265,766,765 232,581,292

Total Liabilities 16,235,090 41,561,736

Equity 249,531,675 191,019,556

Income 99,516,481 99,483,912

Expenses 52,111,571 93,454,084

VFP Plantilla and Salaries of its Personnel

The VFP’s plantilla of personnel and the salary rates are not yet aligned with the government’s standard positions and classification. The appointment of personnel is signed and issued by the VFP President and does not pass through the Civil Service Commission (CSC) for approval.

The VFP has set aside funds for the retirement of its employees and has formulated guidelines to this effect approved by its Board. The VFP personnel are SSS members. Management, however, intends to work out the conversion of their SSS membership to GSIS.

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VFP Sources of Funds The Revenues of the Federation are derived mostly from the operations of the

VFP Industrial complex, to wit: income from lease of building, lot and condominium rental, road user’s fee/stickers/ID, and interest income from investments.

The other sources of revenue are as follows:

a. Membership dues from the member organizations Membership dues are collected at the rate of P500.00 per year from members who are receiving Old Pension or Pension of Surviving Spouse and P100.00 per year from young veterans who are not yet eligible for old Age Pension. The annual membership due for P500.00 for each member is deducted by the Philippine Veterans Affairs Office (PVAO) based on the written consent of the member receiving an old age pension of surviving spouse. The dues collected are apportioned as follows:

Post Organization - 50%

District organization - 25%

Regional organization - 15%

National organization - 10%

As of the end of the year 2012, the combined membership of the organization under VFP umbrella included the surviving spouse of the veterans.

b. Registration fee of P200 from each fraternal organization or Veterans District upon affiliation.

c. Life membership dues of P5,000.00

d. Donations and contribution, such as donation from Phividec Industrial

Authority (PIA)

e. Other sources as may be raised by the VFP.

Scope of Audit

The audit covered the accounts and operations of the VFP for calendar year 2012. It aimed to ascertain the fairness of the presentation of the financial statements. Our audit was also made to assess the propriety of the financial transactions of VFP in accordance with laws, rules and regulations. Audit Opinion on the VFP Financial Statements We rendered a qualified opinion on the fairness of the presentation of the financial statements of VFP for the year ended December 31, 2012, as discussed in Part II of this Report.

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Summary of Audit Observations and Recommendations Below is a summary of significant audit findings and recommendations with details discussed in Part II of this Report: 1. The correctness and reliability of the Cash balance amounting to P75.10 million

cannot be ensured in view of deficiencies affecting the same. 1.1 Results of bank confirmation on the balances of the Cash in Bank accounts

of VFP as of December 31, 2012 revealed variances amounting P2.30 million thus casting doubt on the reliability of the cash in bank balances aggregating P86.50 million as of December 31, 2012.

We recommended that the Accountant:

a. Analyze transactions on the reported cash accounts which were recorded in the book but not confirmed by the bank as well as those which reflected different balances as of December 31, 2012.

b. Require the Accountant to analyze and trace the nature of the dormant

accounts as well as the history of these accounts and come up with a course of action to clear and ensure the existence of this account.

c. Complete the Bank Reconciliation of all Cash in Bank Accounts. d. Effect adjustments on reconciling items after a thorough review of the bank

reconciliation statements had been done. 1.2 Adjusted book and bank balance of Cash in Bank Account No. 211-3

(General Fund) had a discrepancy of P1.82 million due to inclusion of non-

reconciling items in the Bank Reconciliation Statements (BRS), thus

overstating the Cash in Bank account by the same amount.

We recommended Management to prepare the necessary adjusting entries to

correct the balance of Cash in Bank Account No. 211-3 (General Fund).

1.3 Unrecorded disbursements in payment of VFP transactions amounting to

P16.23 million resulted to understatement of expense account and

overstatement of cash in bank account of the same amount.

We recommended immediate recording of disbursements totalling P16.23 million

in the book of accounts in accordance with PD 1445.

1.4 Eleven Cash in Bank Accounts of VFP were not supported BRS, thus

casting doubts on the validity of the balances as at year end.

We recommended that Management:

a. Prepare the required bank reconciliation statements.

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b. Immediate action on the reported bank accounts not confirmed by the bank. 2. The balance of the Property, Plant and Equipment (PPE) account amounting

P174.40 million with a net book value of P168.90 million as of December 31, 2012 is of doubtful validity due to the absence of subsidiary ledgers, property cards, and sufficient documents to support the value of the building and condominium. In addition, deficiencies and variances were also noted between the accounting records as against the result of the physical inventory as of December 31, 2012.


a. Determine the Fair Market Value of the land based on the result of the survey and independent appraisal;

b. Submit a report on the nature and present status of seven (7) lots which were

reportedly with pending cases; c. Submit a copy of the TCT relative to the lot in Cabanatuan City.

3. Salaries and allowances of VFP officers and employees amounting to P5.75

million were not in accordance with the RA No. 6758, otherwise known as the

“Compensation and Position Classification Act of 1989” and Compensation

System of the DBM.

We recommended that that Management comply immediately with the prescribed

standard rates and stop granting salary increase until such time that their rate is in

accordance with the Salary Standardization Law.

4. There were significant lapses in the granting and settlement of cash advances.

4.1 Excessive Cash Advances amounting to P 4.682 million were granted

resulting in a significant amount of unutilized cash advances of P 1.806

million.


a. Require the accountable officer (AO) to submit a realistic budget proposal (with details and breakdown of expenses) to avoid excessive cash advances and prevent the risk of carrying out a huge amount of money in the hand of the accountable officer.

b. Require the Accountable Officers to liquidate their Cash Advance as soon as

the purpose for which the cash advance was granted is already served.

4.2 Subsequent cash advances (CAs) were granted even when the previous

cash advance/s were not liquidated contrary to the provisions of COA

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Circular 97-002 dated February 10, 1997 and COA Circular 2009-002 dated

May 18, 2009.


a Desist from granting additional cash advances prior to the settlement of

previous advances. The Accountant should monitor the cash advances

granted and liquidations by the accountable officers and issue a certification

on the face of the Cash Advance Disbursement Voucher certifying that the

previous cash advance of the accountable officer was already liquidated.

b. Review the Liquidation Vouchers by the Accountant and its supporting

documents and submit the same immediately to COA

4.3 Unliquidated Cash Advance of three (3) Accountable Officers remained

unsettled as of December 31, 2012 despite two (2) demand letters issued

on July 31 2012 and April 4, 2013. Management has not yet acted on the

settlement of the advances.

We recommended that Management institute proper action that will cause

immediate liquidation of these long outstanding cash advances including the

withholding of salaries of the concerned AOs. It may also file malversation

charge in compliance with Section 9 of COA Circular No. 2012-004 dated

November 28, 2012.

5. Inadequate control over disbursements and failure of Management to withhold

taxes due from the suppliers of medicine resulted to overpayment of P1.80

million.


a. Ensure that all appropriate taxes are withheld from the suppliers and record the same in the book of accounts.

b. Ensure that disbursements are properly controlled, such that these do not exceed

the amount payable by the VFP. c. Demand the immediate and full refund by the suppliers of the remaining amount

due to the VFP.

6. The inability to monitor deadline for remittance of VAT to the BIR caused the

payment of significant amount of penalty amounting P1.02 million.


a. Conduct an investigation on the persons considered responsible for the late payment of said VAT to the BIR.

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b. Ensure that VFP obligations to creditor and other government agencies are paid

on time so as to avoid further penalties and/or charges. c. Explain the said lapses noted.

7. Various procurements which are recurring throughout the calendar year 2012

aggregating P10.27 Million did not undergo public bidding as required under

R.A. 9184, otherwise known as the “Government Procurement Reform Act”.

Recommendations:

This is a reiteration of the previous audit recommendations, therefore a stringent

demand of VPF Management compliance is hereby sought to avoid further audit

disallowance.

a. Comply with the requirements on Public Bidding in the procurement of catering, medicines, security and janitorial services.

b. Justify the absence of the public bidding of the afore-mentioned procurements.

7.1 Advance payment of catering services to VFP Employees Consumer

Cooperative in the name of Estrellita M. Calaquian, amounting P1.80

million without public bidding in violation of Article IV Sec. 10 of Republic

Act 9184 and Section 88 of P.D. 1445.

We recommended that Management comply with the requirement on public

bidding in the procurement of catering services and stop such method of Direct

Contracting and advance payment of services not yet rendered.

Audit Team Composition

The audit was conducted by an Audit Team assigned to audit VFP under Audit Group I – Trading and Promotion Group, composed of the following:

Name Position Designation

Rosalie D. Sarmiento

State Auditor IV

OIC-Supervising Auditor Audit Group D

Pedro P. Pabelonia

State Auditor IV

Audit Team Leader

Evelyn A. Sagun

State Auditor III

Audit Team Member

PART I – AUDITED FINANCIAL STATEMENTS

PART II – A. OBSERVATIONS AND RECOMMENDATIONS

B. STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT RECOMMENDATIONS

INDEPENDENT AUDITOR’S REPORT

THE SUPREME COUNCIL Veterans Federation of the Philippines Gatpuno Villegas St., Manila

We have audited the accompanying financial statements of Veterans Federation of the Philippines (VFP), which comprise the balance sheet as of December 31, 2012, and the statement of income and expense for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with State accounting principles, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Republic of the Philippines COMMISSION ON AUDIT Commonwealth Avenue, Quezon City

Basis for Qualified Opinion

As discussed in Part II-A Observations and Recommendations No. 1, the correctness and reliability of the Cash balance amounting to P75.10 million cannot be ensured in view of deficiencies noted, No. 1.2, eleven cash in bank accounts not supported with bank reconciliation statements, No. 1.4, unrecorded disbursements for payment of VFP transactions amounting to P16.23 million resulted in the understatement of expense account and overstatement of cash in bank account of the same amount, and No. 2, the balance of the Property, Plant and Equipment (PPE) account amounting to P174.4 million with a net book value of P168.90 million as of December 31, 2012 is of doubtful validity due to improper valuation of the land and the absence of subsidiary ledgers, property cards, and sufficient documents to support the value of the building and condominium.

Qualified Opinion In our opinion, except for the effects and the possible effects of the matter described in the Basis for Qualified Opinion paragraphs, the financial statements present fairly, in all material respects the financial position of the VFP as of December 31, 2012 and its financial performance and its cash flows for the year ended in accordance with State accounting principles.

COMMISSION ON AUDIT

OIC Supervising Auditor, Audit Group D Cluster VI, Corporate Government Sector

July 18, 2013

Note 2012 2011

Current Assets

Cash 7 75,100,989 38,386,532

Accounts Receivable 6,657,619 10,333,832

Advances to Officers and Employees 8 1,285,496 1,192,796

Short Term Investments 9 566,307 566,307

Prepayments 204,884 3,144,254

Total Current Assets 83,815,295 53,623,721

Non-Current Assets

Long Term Investment 10 11,396,973 8,258,896

Property Plant and Equipment 11 168,897,413 169,626,471

Other Assets 12 1,657,084 1,072,204

Total Non-Current Assets 181,951,470 178,957,571

TOTAL ASSETS 265,766,765 232,581,292

Current Liabilities

Accounts and Other Payables 13 13,829,566 38,161,092

Other Current Liabilities 14 2,405,524 3,400,644

Total Current Liabilities 16,235,090 41,561,736

Total Liabilities 16,235,090

Fund Balance 15 249,531,675 191,019,556

TOTAL LIABILITIES AND FUND BALANCE 265,766,765 232,581,292

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(See Accompanying Notes to Financial Statements)

LIABILITIES AND FUND BALANCE

VETERANS FEDERATION OF THE PHILIPPINES

BALANCE SHEET

(With Corresponding Figures for 2011)

(In Philippine Peso)

ASSETS

December 31, 2012

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VETERANS FEDERATION OF THE PHILIPPINES Notes to the Financial Statements

(With Corresponding Figures for 2011) (In Philippine Peso)

Note 1: Summary of Significant Accounting Policies 1.1 : Basis of Measurement The accompanying Financial Statements have been prepared on a historical cost basis 1.2 : Statement of Compliance

The Financial Statement have been prepared in accordance with the Philippine Financial Reporting Standard for Small and Medium-Sized Entities issued by the Philippine Financial Reporting Standard Council.

1.3 : Functional and Presentation Currency

The Financial Statement are presented in Philippine Peso, the Company's functional currency. 1.4 : Use of Accounting Judgement and Estimates The preparation of the Financial Statements in the Philippine Financial Reporting Standards for

SMEs requires the management of the Company to make estimates and assumptions that affect the amounts reported in the Financial Statements and accompanying notes. Future events may occur which will cause the assumption used in arriving the estimates to change. The effects of changes in estimates will be reflected in the Financial Statements as they become reasonably determinable. The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Estimated useful life of property, plant and equipment - The company estimated the useful lives of

the property, plant and equipment based on the period over which the property, plant and equipment are expected to be available for use and on the collective assessment of the industry practice, internal technical evaluation and experience with similar assets. The estimated useful lives of property, plant and equipment are reviewed periodically and updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits in the use of the property, plant and equipment and investment properties. However, it is possible that future result of operations could be materially affected by changes in estimates brought about by changes in the factor mentioned above. The amount and timing of recording the depreciation for any period would be affected by changes in these factors and circumstances.

A reduction in the estimated useful lives of the property, plant and equipment would increase the

recorded depreciation and decrease the non-current assets. 1.5 : Cash & Cash Equivalents

Cash comprised cash on hand and demand deposits. Cash equivalents are short term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

1.6 : Trade & Other Receivables

Receivables are recognized and carried at net realizable value in accordance with New Government Accounting System. However, no provision for doubtful accounts were provided for CY 2012 due to inadequate records and the policy regarding this matter has yet to be formulated.

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1.7 : Prepayments Prepayments includes items of goods or services purchased by the company for use in its

operations but not fully consumed at the end of the accounting period. 1.8 : Property, Plant and Equipment Property, Plant and Equipment are stated at cost, excluding the costs of day to day servicing less

accumulated depreciation, amortization and impairment in value. The initial cost of property, plant and equipment except land consists of its purchase price and other

cost directly attributable in bringing the asset to its working condition and location for intended use. Expenditures incurred after the property, plant and equipment have been put into operation, such as repairs and maintenance, are normally charged to income in the year in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property, plant and equipment beyond its originally assessed standard of performance, the expenditures are capitalized as additional costs of property, plant and equipment.

Land is valued using zonal value reference to the measurement by Bureau of Internal Revenue per

square meter of land in their respective location. Due to this measurement the Fund balance account for 2011 compared to the 2010 balance showed a substantial increase in amount.

Depreciation and amortization are calculated on a straight-line basis over the estimated useful lives

of the assets as follows: Asset Type Number of Years Office Equipment 5 years

The useful lives and depreciation and amortization method are reviewed periodically to ensure that the periods and method of depreciation and amortization are consistent with the expected pattern of economic benefits from items of property, plant and equipment. If there is an indication that there has been a significant change in useful life or residual value of an asset, the depreciation of that asset is revised prospectively to reflect the new expectations.

1.9 : Intangible Assets Intangible Assets shall be carried at cost less any accumulated amortization and any accumulated

impairment loss. 1.10 : Impairment of Non-Financial Assets The company assesses at each reporting date whether a non-financial asset may be impaired. If

any such indication exists, or when annual impairment testing is required, the Company makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less cost to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. When carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset. The calculations are corroborated by valuation multiple or other available fair value indicators.

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Impairment losses of assets are recognized in the statement of income in those expense categories consistent with the function of the impaired asset. An assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the recoverableamount is estimated. A previously recognized loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the company's statement of income.

1.11 : Trade & Other Payables Economic obligations arising from purchase of goods and services and those incurred for the

necessary operations of the business are classified under trade and other payable. 1.12 : Revenue Recognition Revenueis recognized to the extent that the economic benefits associated with the transaction will

flow to the company and the amount of revenue can be measured reliably. 1.13 : Employee Benefit Costs Short term employee benefits include items such as: (a) social security, Philippine Health Insurance and PAG-IBIG benefits; (b) non-monetary benefits

(such as medical care, housing, skill upgrade, rice/meal, transportation and others) for current employees.

1.14 : Contingencies Contingent Liabilities are not recognized in the Financial Statements but disclosed unless the

possibility of an outflow of resources embodying economic benefits is probable. A Contingent asset is not recognized in the Financial Statements but disclosed when an inflow of

economic benefits is probable. 1.15 : Subsequent Events Subsequent Events that provide evidence of conditions that existed at balance sheet date are

reflected in the parent company financial statements. Subsequent events are indicative of conditions that arose after balance sheet date are disclosed in the financial statements when material.

1.16 : Income Taxes Current tax assets or liabilities comprise those claims from, or obligations to, fiscal authorities

relating to the current or prior reporting period, that are uncollected or unpaid at the balance sheet date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the year. All changes to current tax assets or liabilities are recognized as a component of tax expense in the income statement. Deferred tax is provided, using the balance sheet liability method on temporary differences at the balance sheet date between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes. Under the balance sheet liability method, with certain exceptions, deferred tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized for all deductible temporary differences and the carryforward of unused tax losses and unused tax credits to the extent that is probable that taxable profit will be available against which the deferred income tax asset can be utilized.

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The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the

period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date. Most changes in deferred tax assets or liabilities are recognized as a component of tax expense in the income statement. Only changes in deferred tax assets or liabilities that relate to a change in value of assets or liabilities that is charged directly to equity are charged or credited directly to equity.

Note 2: Transition to PFRS for SMEs The PFRS for SMEs were adopted on 13 October 2009 by the Philippine Financial Reporting

Standards Council from the International Financial Reporting Standards (IFRS) for Small and Medium Entities (SMEs)issued by the International Accounting Standards Board.In this PFRS for SMEs, many of the principles in Full Philippine Financial Reporting Stardards (PFRS) for recognizing and measuring assets, liabilities, income and expresses have been simplified, topics that are not relevant to SMEs have been omitted, and the required disclosures have been significantly reduced. As the PFRS for SMEs is a stand-alone standard, it includes sections on the concept and pervasive principles that underlie the Financial Statements of SMEs. These concepts address various issues including the objective of financial statements of SMEs, the qualitative characteristics of information contained in those financial statements and general recognition and measurement principles.

Note 3: Rental Income

Rental Income from VFP Industrial Complex 93,901,330 96,929,205

Note 4: Other Income

Condo Rentals/VFP Stalls Income

699,753

370,125

Road Users Fee / Stickers / IDs/ 10% Membership Share 4,031,132

1,657,973

Interest Income

768,526

429,913

Miscellaneous Income

115,740

96,696

Total Other Income 5,615,151 2,554,707

Note 5: General and Administrative Expenses

13th/Christmas/Anniv/Midyr./CashGift

3,072,594

3,786,689

Advertising and Publicity

14,500

-

Allowance of Officers

4,829,062

4,805,355

Allowance - Casual

83,511

222,980

Burial Assistance

1,226,000

883,000

Clothing Allowance

475,167

135,000

Communication and Postage

434,920

499,729

Consultation and Meetings

5,157,594

4,402,252

Donation

7,495

15,000

Leave Adjustments

(51,496)

-

Leave Commutation

25,028

406,085

Legal Fees / Litigation

480,000

270,000

Light and Water

2,207,537

2,333,360

Longevity Pay

24,610

48,450

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Medicines

2,939,370

43,892,229

Membership Dues-VECONAC

26,819

-

Membership Dues-US Lobby

4,844

-

Membership Dues-WVF

104,164

-

Miscellaneous

231,591

52,000

Overtime Pay

1,053,688

1,855,599

Penalties and Other Charges

1,189,525

-

Per Diem / RATA

3,291,000

3,229,628

Repairs and Maintenance

734,432

581,400

Rice Subsidy

582,977 # 525,558

Retirement Pay / Separation Pay

-

1,098,404

Representation Expense

1,578,707

818,348

Road Maintenance Expense-IC

580,888

304,252

Salaries and Wages

5,747,007

5,268,930

Security Services

5,774,588

5,612,404

SSS/PHIC/HDMF Contribution

411,451

260,764

Supplies and Materials

2,143,573

2,541,642

Transportation and Travel

4,053,656

1,973,287

Travel Insurance

543

-

VETERANS WEEK / WWII Events / WWII Anniversary

9,608

4,011,659

VFP-SDAI

2,420,000

2,420,000

Total General and Administrative Expenses 50,864,953 92,254,004

Note 6: Other Expenses

Depreciation

1,246,618

976,863

Contingencies

-

223,217

Total Other Expenses 1,246,618 1,200,080

Note 7: Cash and Other Cash Equivalents

Operating Cash:

Cash on Hand

1,476

-

Petty Cash Fund

-

5,000

Cash in Bank - PVB (211-3)

44,756,814

13,559,683


38,031

38,031


-

-


6,013

6,011


140,400

140,400

Cash in Bank - PNB (035-3)

1,253,162

479,479

Cash in Bank - PNB (116-3)

128

129

Cash in Bank - LBP (307-7)

33,826

33,826

Cash in Bank - BPI (268-3)

65,786

65,786


1,750,999

1,848,196


2,918,103

2,578,166

Total Operating Cash 50,964,738 18,754,707

Time Deposit Appropriated for Membership Dues Payable:


3,172,759

3,125,996


384,938

378,856


863,119

850,611


6,986,196

6,883,649


511,861

8,392,713


-

-


12,217,378

-

Total Time Deposit Appropriated for Membership Dues 24,136,251 19,631,825

Total Cash and Other Cash Equivalents 75,100,989 38,386,532

12

Note 8: Advances to Officers and Employees

Advances - Officers &Emp

798,850

493,850

Advances - OE EDBarrientos

-

24,000

Advances - OE Ebarrientos

-

-

Advances - OE EMBarrientos

-

-

Advances - OE CYBatayola

50,000

50,000

Advances - OE EMCalaquian

-

-

Advances - OE MJCalub

(1,554)

9,446

Advances - OE NLCapili

56,000

80,000

Advances - OE ALCelino

-

-

Advances - OE RCCruzada

-

20,000

Advances - OE MCDelaCruz

1,000

1,000

Advances - OE ACDelMar

266,500

386,500

Advances - OE MDGonzales

-

-

Advances - OE RCGrio

125

125

Advances - OE MSACJordan

-

-

Advances - OE ALPajarillo

1,000

1,000

Advances - OE MTPasag

92,500

115,500

Advances - OE JLQuerubin

-

-

Advances - OE LLResurreccion

-

-

Advances - OE MCLSalem

-

-

Advances - OE JLSantoyo

-

-

Advances - OE JGSarmiento

-

-

Advances - OE NSUsi

-

-

Advances - OE JGRebalde

9,375

9,375

Advances - OE MHSiscar

-

-

Advances - COA - E. Nepomuceno

-

2,000

Advances-EB 11,700 -

Total Advances to Officers and Employees 1,285,496 1,192,796

Note 9: Short Term Investment

PEFTOK

28,220

28,220

AFPSLAI

538,087

538,087

Total Short Term Investment 566,307 566,307

Note 10: Long Term Investment

Retirement Fund 1 (PVB 0036204135110)

10,138,077

7,000,000

Retirement Fund 2 (PVB 1005-00012-1)

1,144,484

1,144,484

Retirement Fund 3

114,412

114,412

Total Long Term Investment 11,396,973 8,258,896

Note 11: Property Plant and Equipment

Land

157,231,670

157,231,670

Building - Star Performance

-

-

Building - Veterans Canteen

904,856

904,856

Condominium Units

11,901,432

11,901,432

Office Equipment

1,797,130

1,574,935

Transportation Equipment

2,121,918

2,121,918

Carport

104,231

104,231

Improvements 342,759 272,330

13

Total Property Plant and Equipment

174,403,996

174,111,372

Less: Accumulated Depreciation 5,506,583 4,484,901

PPE - Net Book Value 168,897,413 169,626,471

Note 12: Other Assets

PLDT

3,500

9,700

PILTEL (Taguig)

7,700

1,500

MERALCO

5,760

5,760

Injunction Bond

660,000

495,000

Commemorative Stamps

284,475

284,475

Other Assets 695,649 275,769

Total Other Assets 1,657,084 1,072,204

Note 13: Accounts and Other Payables

Outstanding Accounts Payable

431,732

431,732

Membership Dues - July 2009

1,775,312

3,755,351

Membership Dues - January, 2010

2,006,025

3,331,088

Membership Dues - July, 2010

1,387,362

1,990,675

Membership Dues - January, 2011

1,835,000

3,146,100


2,009,150

8,671,775

Membership Dues - January 2012

2,345,546

-


2,126,238

-

Medicine Payable - Medcare Asia

(86,799)

7,321,500

Medicine Payable - SyntexPharma

-

9,512,871

Total Accounts and Other Payable 13,829,566 38,161,092

Note 14: Other Current Liabilities

Withholding Tax and VAT Payable

2,340,578

3,345,567

SSS/PHIC/HDMF Premium Payable

32,960

36,908

HDMF/SSS Salary Loan Payable

31,986

18,169

Total Other Current Liabilities 2,405,524 3,400,644

Note 15: Fund Balance

Fund Balance Beginning

191,019,556

203,192,679

Appropriation for Building Fund

-

500,000

Prior Period Adjustments

11,107,209

(18,702,951)

Total Fund Balance Beginning 202,126,765 184,989,728

Net Income 47,404,910 6,029,828

Fund Balance Ending 249,531,675 191,019,556

14

A. OBSERVATIONS AND RECOMMENDATIONS

1. The correctness and reliability of the Cash balance amounting to P75.10 million

cannot be ensured in view of deficiencies affecting the same. 1.1 Our audit of the Cash account disclosed several deficiencies which affect the

correctness and reliability of the balance of P75.10 million. These are discussed below:

1.1.1 Results of bank confirmation on the balances of the Cash in Bank accounts of

VFP as of December 31, 2012 revealed variances amounting P2.30 million thus casting doubt on the reliability of the cash in bank balances aggregating P86.27 million as of December 31, 2012.

1.1.2 Records disclosed that there are twenty (20) existing bank accounts maintained

by VFP with various depository banks which posted an aggregate balance of P86.50 Million as of December 31, 2012. Based on our confirmation with the concerned banks, we obtained the following results:

Account No.

Depository Bank/Branch

Type of account

Balance Confirmed by

Bank as of 12.31.12

Balance per VFP

Book as of 12.31.12

Variance

03601000211-3 PVB Checking P47,062,686.56 P44,756,814.35 P2,305.872.21

251830035-3 PNB Checking Not confirmed 1,253,162.08 -

01401000222-8 PVB Checking 1,750,998.59 1,750,998.59 0

03601000388-6 PVB Checking Not confirmed 2,918,102.68 -

36450804502 PVB Time Deposit 3,173,637.73 3,172,759.06 878.67

36150804688 PVB Time Deposit 385,066.77 384,937.90 128.87

36150804762 PVB Time Deposit 863,412.75 863,119.31 293.44

36150844986 PVB Time Deposit 6,986,435.26 6,986,195.72 239.54

36150805063 PVB Time Deposit 511,908.39 511,861.37 47.02

526-9 PVB Time Deposit 12,221,294.07 12,217,377.58 3,916.49

01401000306-9 PVB Checking Accounts Not confirmed 38,031.07 -

098-1 PVB Checking Accounts Not confirmed -0- -



116-3 PNB Checking Accounts Not confirmed 128.56 -

001210307-7 LBP Checking Accounts Not confirmed 33,826.16 -

268-3 BPI Checking Accounts Not confirmed 65,785.77 -

TOTAL CASH IN BANK ACCOUNT P72,955,440.12 P75,099,511.39 P2,311,376.24

1.1.3 Aside from the 17 bank accounts above, there are three Retirement Funds

maintained by VFP, but only one was confirmed by the Philippine Veterans Bank.

Retirement Fund (Classified as Long Term Investment in the Financial Statements) Balance per above table P72,955,440.12 P75,099,511.39 P2,311,376.24

0036204135110 PVB Retirement Fund(TD) 10,131,512.13 10,138,076.75 (6,564.62)

1005-00012-1 PVB Retirement Fund(TD) Not confirmed 1,144,483.77 -

Retirement Fund 3 Not confirmed 114,412.17 - TOTAL RETIREMENT FUND 10,131,512.13 11,396,972.69 (6,564.62)

GRAND TOTAL P83,086,952.25 P86,497,960.59 P2,304,811.62

15

1.1.4 Our confirmation likewise revealed that various dormant accounts with minimal

balances were also carried over since 2008 up to the present. These checking accounts were not confirmed by the said depository banks, thus casting doubt as to the existence of said cash balances.

Account No.

Depository Bank

Balance as of Dec. 31, 2012

01401000306-9 PVB P 38,031.07

098-1 PVB -0-

076-5 PVB 6,011.19

090-1 PVB 140,400.00

116-3 PNB 128.56

001210307-7 LBP 33,826.16

268-3 BPI 65,785.77

TOTAL P 284,182.75

1.1.5 As shown from the table above, a variance amounted to P2.30 million was

noted. This means that the total cash in bank recorded as of December 31, 2012 is lower than the total deposits confirmed by the bank by P2.30 million. However, there were also balances in bank accounts which were not confirmed by the bank as shown in the table above.

1.1.6 We have noted also that the variance is attributed, among others to the

following: a) The balance of the checking account at PNB with account no. 251830035-3

was not confirmed by PNB Malate. However, a certain regular checking account with Account No. 106146600015 was confirmed by the Philippine National Bank- Taft Avenue Branch, with balance of P3.09 million as of December 31, 2012. This account is subject for further validation by the Management if the same is a similar account as recorded in the book of VFP with account no. 251830035-3.

b) Another account maintained at the PVB-Taguig with account

no. 03601000388-6 with a balance of P2.91 million was not also confirmed by the said bank. This pertains to the VFP’s deposits of the Roads User’s Fee (RUF) collection.

c) The balance of P1.4 million for Retirement Fund with Account No. 1005-

00012-1 was not also confirmed by PVB. This was carried over in the book since 2009. This account was dormant since no transactions were recorded, except in 2009 when there was a decrease from P2.06 million to 1.14 million or a transaction total of P.92 million. Since then, there were no movements for this account. Management should therefore exert effort in tracing the real status of this account and the complete accounting of this aforementioned retirement fund.

d) Another dormant account with a balance of P114,412.17 pertains to the

Retirement Fund No. 3 as classified in the VFP book. This account was not also confirmed by PVB and this balance had been carried over in the books

16

of accounts since 2007. Likewise, there were no movements since there were no transactions related to this account.

1.1.7 Our confirmation likewise revealed that various dormant accounts with minimal

balances were also carried over since 2008 up to the present. These checking accounts were not confirmed by the said depository banks, thus casting doubt as to the existence of said cash balances.

Account No.

Depository Bank

Balance as of Dec. 31, 2012

01401000306-9 PVB P 38,031.07

098-1 PVB -0-

076-5 PVB 6,011.19

090-1 PVB 140,400.00

116-3 PNB 128.56

001210307-7 LBP 33,826.16

268-3 BPI 65,785.77

TOTAL P 284,182.75

1.1.8 We noted that VFP Management, thru its newly hired Accountant is

already conducting bank reconciliation of the foregoing accounts, but as of this writing, said reconciliation has yet to be completed. The bank reconciliation prepared by the Accountant was for the general fund only per Account Number 03601000211-3 in which the beginning balance as of January 2011 has yet to be reconciled with the prior years.

1.1.9 We recommended that the Accountant:

a. Analyze transactions on the reported cash accounts which were

recorded in the book but not confirmed by the bank as well as those which reflected different balances as of December 31, 2012.

b. Verify the nature of the dormant accounts as well as the history of

these accounts and come up with a course of action to clear and ensure the existence of this account.

c. Complete the bank reconciliation for all Cash in Bank Accounts. d. Effect adjustments on reconciling items after a thorough review of the

bank reconciliation statements had been done.

1.1.10 Management informed us that the VFP Accounting Department, in coordination with the Treasury Department is already monitoring and analyzing all the existing bank accounts of the VFP. They signified also their commitment to complete all the bank reconciliations as soon as they are finished with the confirmation of the existence of their accounts with the depository banks. They assured us that they will notify us on the status of their work. Our audit observations were accordingly noted and Management had promised to exert its best effort to avoid the recurrence of the deficiencies.

17

1.2 Eleven (11) Cash in Bank Accounts of VFP were not supported with BRS, thus casting doubts on the validity of the balances as at year end.

1.2.1 As can be gleaned from the table below, the balances per book of the

aforementioned accounts were not reconciled with those of the balances confirmed by the bank as of December 31, 2012. This therefore shows the absence of bank reconciliation the results of which may reveal items which need adjustments to the book and bank balances.

Account No.

Depository Bank

Type of account

Balance Confirmed

by Bank as of 12.31.12

Balance per

VFP Book as of 12.31.12

Variance

251830035-3 PNB Checking Not confirmed P 1,253,162.08

01401000222-8 PVB Checking P 1,750,998.59 1,750,998.59 -0-

03601000388-6 PVB Checking Not confirmed 2,918,102.68

36150804502 PVB Time Deposit 3,173,637.73 3,173,837.73 P (200.00)

36150804688 PVB Time Deposit 385,066.77 384,937.90 128.87

36150804762 PVB Time Deposit 863,412.75 863,119.31 293.44

36150804986 PVB Time Deposit 6,986,435.26 6,988,195.72 (1,760.46)

36150805063 PVB Time Deposit 511,908.39 511,861.37 47.02

36150805269 PVB Time Deposit 12,221,294.07 12,217,377.58 3,916.49

36150805110 PVB Retirement Fund(TD) 10,131,512.13 10,138,076.75 P(6,564.62)

1005-00012-1 PVB Retirement fund (TD) Not confirmed 1,144,483.77 Retirement Fund 3 Dormant/not confirmed P114,412.17

1.2.2 To be given immediate attention are accounts pertaining to the membership dues

which are increasing in number. It was observed that the more the number of accounts are added in the VFP books, the more there are backlogs on bank reconciliation. Although we are cognizant of the effort by the Accountant in attending to the backlogs of accounting reports left by the previous Accountant, nevertheless we believe that similar action be pursued in order to come up of the overall updated reports of VFP.

1.2.3 We suggested that the agency prepare the required BRS and take

immediate action on the reported bank accounts not confirmed by the bank

1.2.4 The Management assured us that the Accounting Department is already working

and analyzing the entire bank reconciliation schedule to address the aforementioned discrepancies. We were requested to compare and reconcile the balances arrived in audit with their records in order to determine the variance

1.3 Adjusted book and bank balance of Cash in Bank Account No. 211-3 (General

Fund) had a discrepancy of P1.82 million due to inclusion of non-reconciling items in the Bank Reconciliation Statements (BRS), thus overstating the Cash in Bank account by the same amount.

1.3.1 Our review of the Bank Reconciliation Statements for Cash in Bank – General

Fund Account revealed a discrepancy of P1.82 million as shown below:

18

Period Per Report Per Audit Variance Bank Reconciliation Adjusted Book/Bank Balance as of Dec. 31, 2011

P13,583,641.14

P12,090,011.00

P(1,493,630.14)

Bank Reconciliation Adjusted Book/Bank Balance as of Dec. 31, 2012

P44,756,814.35

P42,937,194.09

P(1,816,620.26)

1.3.2 Per BRS submitted, the adjusted bank and book balances as of December 31,

2011 is P13.58 million Scrutiny of records disclosed that the adjusted balance of both bank and book was only P12.09 million or a difference of P1.49 million, and this was subsequently increased to P1.81 million by the end of December 2012. Some adjustments made in the BRS were considered non-reconciling items. However, there were some errors which were not taken up as adjustments and there were instances wherein the error is supposed to be reflected in the books but taken up as adjustment in the bank balance.

1.3.3 Adjustment of government payables, liquidation of cash advances and closing of

petty cash funds are entries to be posted in the general ledger and need not be presented in the BRS. Certain errors like deposits made and validated by the bank but not recorded in books were not taken up as adjustments. There were instances wherein error in recording in the books were taken up as bank balance adjustment.

1.3.4 We recommended that the Accounting Office prepare the necessary

adjusting entries to correct the balance of Cash in Bank Account No. 211-3 (General Fund).

1.4 Unrecorded disbursements for payment of VFP transactions amounting to

P16.23 million resulted in the understatement of expense account and overstatement of cash in bank account of the same amount.

PD 1445 provides that:

“Sec.112. Recording of financial transactions. Each government

agency shall record its financial transactions and operations in conformity with generally accepted accounting principles and in accordance with pertinent laws and regulations.

Sec.119. Accounting for obligations and expenditures. All lawful

expenditures and obligations incurred during the year shall be taken up in the accounts of that year”.

1.4.1 Verification revealed that checks issued for payment of various VFP transactions

as evidenced by the checks received by the payees and paid by the bank amounting to P.695million in 2011 and P15.53 million in 2012 or a total of P16.23 million were not recorded as of December 31, 2012. Management asserted that these said disbursements were inadvertently not recorded in these particular years, thus resulting in understatement of expense account and overstatement of cash in bank account of the same amount.

1.4.2 We recommended immediate recording of disbursements totaling P16.23

million in the book of accounts in accordance with PD 1445.

19

1.5 Outstanding checks as of December 31, 2012 included stale checks in the total amount of P493,410.25 and understated the balances of cash in bank and payable accounts. Their inclusion affected the fair presentation of the financial statements and was not in conformity with International Accounting Standards No. 1.

IAS 1.15 Fair presentation and compliance with IFRSs

“Financial statements shall present fairly the financial

position, financial performance and cash flows of an entity. Fair presentation requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expense set out in the Framework. The applicationof IFRSs,with additional disclosure when necessary. Is presumed to result in financial statements that achieve a fair presentation”.

Article 4 Section 87-c of the GAAM provides that:

“Stale checks – A check is considered stale when it is

outstanding for over two (2) years from date of issuance or as prescribed by the government authorized depository banks.”

1.5.1 As a bank policy, checks not presented for payment six months after date of

issue are considered stale. Our review disclosed that the total amount of P493,410.25 checks issued as early as January 2011 became stale. As a result, there was an understatement of cash in bank and accounts payable accounts.

1.5.2 We recommended that Management prepare an accounting entry to revert

the equivalent amount of stale checks to cash in bank account and recognize the appropriate liability accounts in accordance with IAS No. 1 and pursuant to Article 4 Section 87-c of the GAAM.

2. The balance of the Property, Plant and Equipment (PPE) account amounting to

P174.4 million with a net book value of P168.90 million as of December 31, 2012 is of doubtful validity due to the absence of subsidiary ledgers, property cards, and sufficient documents to support the value of the building and condominium. In addition, deficiencies and variances were also noted between the accounting records as against the result of the physical inventory as of December 31, 2012.

2.1 As of December 31, 2012, VFP posted a carrying value of its properties at P168.90

million composed of the following:

PPE

Book Value

Accumulated Depreciation

Net Book Value as of 12.31.12

Land P157,231,670.00 -0- P157,231,670.00

Building-Vet. Canteen 904,856.00 P 570,059.28 334,796.72

Condominium 11,901,432.00 2,856,343.68 9,045,088.32

20

Office Equipment 1,799,854.68 1,063,203.63 736,651.05

Transportation Equip. 2,121,918.00 954,863.28 1,167,054.72

Carport 104,231.00 10,944.36 93,286.64

Improvements 342,759.35 51,168.99 291,590.36

TOTAL P174,406,721.03 P5,506,583.22 P168,900,137.81

2.2 Records disclosed that VFP has twelve (12) lots with an aggregate zonal value of

P157.23 Million and located in Luzon and Mindanao. The land valuation was based on the BIR zonal value as provided in the BIR Website. The said lots are as follows:

Location of Property

Area of Property (in

Square Meter)

Price per Square Meter Zonal Value

Dagupan City, Pangasinan 593 P 49,000.00

P29,057,000.00

Legaspi City 1,186 875.00

1,037,750.00

San Fernando, La Union* 652 750.00

489,000.00

Naga City* 756 4,000.00

3,024,000.00

San Pablo City* 1,092 355.00

387,660.00

Batangas 1,000 8,000.00

8,000,000.00

Cabanatuan City, Nueva Ecija* 1,145 243.00

278,235.00

San Jose, Nueva Ecija* 567 165.00

93,555.00

Tarlac, Tarlac* 480 750.00

360,000.00

Bonifacio Drive, Port Area Mla 3,668.9 27,300.00

100,160,970.00

San Fernando Pampanga* 1,001 1,000.00

1,001,000.00

Davao City 1,779 P 7,500.00 13,324,500.00

TOTAL VALUE OF LAND

-

P157,231,670.00

2.2.1 These lots were all covered with Transfer Certificates of Title (TCT). However,

a lot located at Guimaras which was donated to VFP (no TCT) remained unrecorded. Records also disclosed that seven (7) of these lots (with asterisks) were with pending cases however, no report was submitted to this Office regarding the nature and the present status of these pending cases.

2.2.2 With regard to the valuation of the land, for financial reporting purposes, we quote

hereunder the relevant provision of (IAS) No. 16 regarding the revaluation of an asset as:

IAS 16 par. 31 Revaluation Model

“After recognition as an asset, an item of property, plant and equipment whose fair value can be measured reliably shall be carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated impairment losses”.

21

2.2.3 The zonal value of the BIR used in the revaluation of the land may be more

realistic than the previous book value of the land which was reported only at P19.58 million as compared to P157.23 million using the BIR Zonal value. However, based on the above provision of IAS No. 16, the fair market value (FMV) has to be determined and therefore the land is suppose to be appraised at its fair market value.

2.3 The land improvements amounting P342,759.35 do not include the land improvement turned over by then VFP-Management Development Corporation to VFP such as pavement, fences, and water system constructed at the VFP-IC. This was pointed out in Audit Observation No. 2008-07 dated February 17, 2008. This condition resulted to understatement of the VFP’s asset account.

2.3.1 We suggested that Management:

a. Determine the FMV of the land based on the result of the survey and

independent appraisal; b. Submit report to COA on the nature and present status of seven (7) lots

which were reportedly with pending cases and justification why the lot located in Guimaras which was donated to VFP was not covered with TCT and remained unrecorded in the books of VFP.

2.4 The Veterans building valued at P.904 million and the fifteen (15) condominium units

with an aggregate amount P11.90 Million as recorded in the books were not supported with complete documents to show how the carrying value was determined since the actual acquisition cost of the building was not disclosed. This was pointed out in the previous audit observation in the 2008 audit of VFP. Inquiry revealed that this figure was carried over from the prior years.

Paragraph 7 of the IAS No. 16 also states:

The cost of an item of property, plant and equipment shall be recognized as an asset if, and only if:

a) It is probable that future economic benefits associated with the item will

flow to the entity; and

b) The cost of the item can be measured reliably.

2.4.1 We recommended that Management: a. Gather all necessary documents relative to the determination of the

initial acquisition cost or value of the condominium and veterans building;

b. Properly account for the carrying values of these properties.

2.5 A building named “Star Performance” with a carrying value of P24.29 Million and

located within the VFP-Industrial Complex was sold in 2011. In view of the sale, this

22

amount was dropped from the books. The dropping was not substantiated to establish the validity and regularity of the sale.

2.5.1 We recommended that all pertinent documents to support the dropping of

the Building – Star Performance account be submitted to COA.

2.6 The cost of Office Equipment amounting to P1.80 Million as recorded in the books covered the acquisitions for the years 2008 to 2012 only. Hence, the completeness of the items comprising the Office Equipment account is not assured. No subsidiary records and/or property cards were submitted to show the details of these office equipment, showing among others the following:

a. Name of the office equipment b. Description, c. Date of acquisition d. Acquisition cost e. Location f. Name of accountable officer

2.6.1 The Property Officer, together with the supply staff conducted an inventory of

Office Equipment as of December 31, 2012. 2.6.2 The Inventory Report submitted disclosed only the name and of the property,

and it lacked information as to the location of the property, the acquisition cost, the property number, complete description of the equipment and the present status of the equipment whether in good condition or not. The results of the inventory could not be compared with the records of the Accounting Office, thus reconciliation was hampered.

2.6.3 We recommended that Management require: a. The Property Officer ensure that all acquisition of equipment and

other properties are recorded in the property card or any other alternative records that bears the all relevant information i.e description, cost, date acquired etc. as pointed in the preceding paragraphs.

b. The Property Officer conduct a complete inventory and prepare an

inventory report which contains the items description, property serial number, cost location and end user thereof.

c. The Accounting Office in coordination with the Property Officer

reconcile the results of the inventory count with the accounting records.

2.7 The transportation equipment found during the inventory taking was composed of three

vehicles with a composite value of P6.32 million per record of the Property Officer as evidenced by the Sales Invoices. However, as per accounting records the carrying value of the transportation equipment was pegged only at P2.12 Million as of December 31, 2012 or a variance of P4.2 million.

23

2.7.1 Based on the submitted documents, we have also noted that the following old

vehicles were not found during the inventory taking. Although these vehicles were procured in the past years, the same have yet to be accounted for.

Vehicle Description Plate No. Date Acquired Acq. Cost

1992 Mit. L-300 Versa Van Diesel TJA 796 April 11, 1993 P 501,667.00

Toyota Lite Ace URF-545 No documents 0*

Pregio Van WTY-707 Nov. 28, 2011 P 729,000.00

*(no value of Toyota Lite Ace since no document i.e., sales invoice or other alternative

doc/reports was found/submitted)

2.7.2 We suggested that the agency conduct a reconciliation of the discrepancies for transportation equipment account and account for the missing items.

2.7.3 Management reasoned out that due to the unexpected resignation of the previous

Accountant and in order to establish the timeliness of the Financial Statements, immediate valuation of the PPE, principally the VFP’s lots was needed. Thus, the zonal value instead of fair market value as a substitute in the valuation of land was used because this can immediately be sourced from the web site of the BIR. Likewise, they will submit all the necessary documents to support the validity of the valuation of the PPE as well as the Supplies and Materials accounts of VFP.

2.8 Inadequate records were maintained with regard to the supplies and materials in the

absence of ledger cards or other equivalent records reflecting the receipts and issuances of the item/s. All purchases should be recorded by the Property Officer and the issuances thereof, to arrive at a balance of the supplies and materials at the end of the year. What will remain are the unissued items that are supposed to be counted during the inventory count. Said balances of supplies and materials were not monitored thus the inventory count is just based on the existence of the items, but no record to match whether or not the items counted is equal to the “Should be” balance of the supplies and materials. This condition also affected the reliability of the supplies and materials account

2.8.1 We recommended that Management require the Property Officer:

a. to maintain complete records of all items purchased reflecting among others, the receipts and issuances thereof, and come up with a balance at the end of the year.

b. to summarize all the balances of the items as a basis in conducting the

inventory.

3. VFP received from PVAO membership dues amounting P5,250.00 of the veteran

members or surviving spouse who were already reported as deceased thus casting doubt on the regularity of the transaction.

3.1 The Philippine Veterans Affair’s Office (PVAO) remits to the VFP Five Hundred Pesos

(P500.00) representing the annual membership dues of veteran members or surviving

24

spouse in case of deceased veterans. The said membership dues received by VFP are being distributed by VFP to the various VFP Veterans Organization in the following ratio:

Post Organization 50%

District Organization 25%

Regional Organization 15%

Veterans Federation of the Philippines (VFP) 10%

3.1.1 As can be gleaned from the above table, only 10% of the total membership dues collected goes to VFP which is one of its sources of revenue to be used for its operations.

3.1.2 In our validation of the issues and concern raised by the Post Commander of the

Silang Veterans Post as pointed out in his series of letters, originating on April 24, 2012, we have noted the following:

3.2 VFP received from PVAO the membership dues amounting to P4,000.00 for 16

members who were reported by the Silang Post Commander as deceased as per July 2012 allocation.

3.2.1 The Post Commander disclosed in his letter to the VFP dated April 01, 2013 that

he sent an earlier letter to VFP dated April 24 2012 wherein he informed VFP regarding the death of its sixteen (16) members, together with the copies of their death certificates. His purpose, among others, was to update VFP of the present status of its membership and inform PVAO for the possible curtailment of their pensions and the corresponding deduction of the membership dues. The 16 deceased members hereto referred are the following:

Name: Folder No.: Date of Death

1. Antonio, Crispina Zarris 2011932 17-Sep-11

2. Bejosano, Carmen Vista 5260 22-Oct-10

3. Cortez, Nasaria C. 15051962 26-Nov-07

4. De Sagun, Feleciana Casipit 13043095 8-Aug-04

5. Esquerra, Emelia Javier 5003 23-Aug-08

6. Esmin, Luis Reyes 1304 22-Apr-09

7. Laes, Maria Bayona 1099 863 11-Jun-06

8. Layaban, Cristina Cenot 5082 21-Dec-05

9. Medina, Soledad Francisco 1369 29-Jul-08

10. Nuestro, Pilar Montaoyo 06161962 1-May-07

11. Samuel, Trinidad Benitez 0201 8-May-03

12. Velando, Anastacia P. 1962 6-Apr-09

13. Velazco, Marcelo Gelmo 02019000 14-Jul-11

14. Ame, Corazon Amodente 0777 31-Dec-11 15. De Padua, Constancia T. 0201 3-Mar-12 16. Maloles, Elisa T. 1369 11-Apr-12

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3.2.2 Based on the above information, our review of the records disclosed that indeed these sixteen (16) deceased members were still included in the Silang Post Allocation covering membership dues deduction from PVAO for July 2012. However, we made reservations as to the validity of the date of death as reported by said Post Commander as shown in the table since no copies of the death certificate was made available to us for evaluation.

3.2.3 On other hand, the VFP Secretary General asserted, in his letter addressed to the

Silang Post Commander dated April 27, 2013, that such letter of Silang Post Commander dated April 24, 2012 together with the copies of the death certificate of the sixteen (16) deceased members were not received by them and therefore the same were not submitted to PVAO for the deletion of their names. Likewise, inquiry from the record section of VFP disclosed that the same were not received by them. Although, a photocopy of the Postal Registry Receipt or Acknowledgement Receipt of the Philippine Postal Corporation (PPC) was presented to us by the Chief of the VFP Records Section, we noted that such PPC registry receipt was not signed by the person receiving the alleged letter dated April 24, 2012.

3.2.4 Our inquiry from the Management disclosed that there was no written policy or

regulation directing VFP to submit regularly to PVAO the list of the deceased members including the copy of the death certificates. However, in the spirit of partnership, they asserted that they are submitting the list of deceased veterans submitted to VFP by various Post and District Commanders to serve as input in the revalidation program of PVAO. However, in some instances, the list being submitted to VFP were not always accompanied by the copy of death certificates.

3.2.5 With regard to the deductions for membership dues related to the above-

mentioned 16 deceased veteran members, we noted that the same were apportioned and remitted to the Silang, Cavite Veterans Organizations. The P4,000.00 membership dues (16 members x P250.00) was included in the P22,625.00 (P250.00 x 181 members including the 16 deceased) which was remitted by VFP per check no. 00169010 dated July 27, 2012.

3.2.6 If the abovementioned members were indeed deceased as informed by the

Silang Post Commander, then the VFP should have ceased collecting membership dues pertaining to them.

3.2.7 We recommended that Management :

a. Cause the refund of the amount representing the annual

membership dues of the aforementioned sixteen (16) deceased members and return the same to PVAO.

b. Require the Post/District Commander to submit to VFP a copy of the

death certificates relative the aforementioned deceased members.

3.3 VFP still receives the membership dues amounting P1,250.00 of five of the sixteen deceased veterans who were still included in January 2013 allocations.

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3.3.1 In our effort to monitor the transaction stream of the said reported deceased members, we verified the latest allocation for membership dues as of January 2013. We noted that five (5) deceased veterans were still included in January 2013 allocations for membership dues which were then remitted to the Silang Post per check no. 0002469 dated May 16, 2013. These are the following:

Name: Folder No.: Date of Death

1. Antonio, Crispina Zarris 2011932 17-Sep-11

2. Laes, Maria Bayona 1099 863 11-Jun-06

3. Layaban, Cristina Cenot 5082 21-Dec-05

4. De Padua, Constancia T. 0201 3-Mar-12

5. Maloles, Elisa T. 1369 11-Apr-12

3.3.2 We recommended that Management refund to PVAO P1,250.00 representing

the membership dues of the aforementioned deceased members.

4. Salaries and allowances of VFP officers and employees amounting to P5.75 million

were not in accordance with the RA No. 6758, otherwise known as the “Compensation and Position Classification Act of 1989” and Compensation System of the DBM.

4.1 Salaries and wages –

The compensation and position of VFP employees were not yet aligned with the standardized position classification and salary rates as prescribed under RA 6758 otherwise known as the “Compensation and Position Classification Act of 1989” or the “Salary Standardization Law”. 4.1.1 Said observation was already disclosed in our audit since 2008. The transition

period from 2008 to present is enough whereby VFP should have already complied with the requirements of the DBM, CSC, GSIS and GCG.

4.1.2 Furthermore, the position, classification, and function of the VFP Officers and

Employees vis-à-vis their basic salary rates were not in accordance with the Position Classification and Compensation System (PCCS). Likewise, there were some officers and employees whose basic salaries were beyond the prescribed rates under the Salary Standardization Law based in our review of the table of reference showing the Benchmark Position Schedule of R.A. 6758.

4.1.3 We also noted that despite the fact that VFP’s salary rate is not yet aligned with

the Compensation System of the DBM, it continuously granted 10% increase in basic pay of its Officers and Employees yearly which is in violation not only of R.A. 6758 but also of Executive Order No. 7 issued by Malacanang Palace dated September 8, 2010, to wit:

“Section 9. Moratorium on Increases in Salaries, Allowances,

Incentives and Other Benefits. - Moratorium on increases in the

rates of salaries, and the grant of new increases in the rates of

allowances, incentives and other benefits, except salary adjustments

27

pursuant to Executive Order No. 8011 dated June 17, 2009 and

Executive Order No. 900 dated June23, 2010, are hereby imposed

until specifically authorized by the President.”

4.1.4 The 10% salary increase was based only on Resolution passed by the Supreme Council. No authority from the DBM or Office of the President was sought authorizing such increase in salaries.

4.1.5 We recommended that Management comply immediately with the

prescribed standard rates and stop granting salary increase until such time that their rate is in accordance with the Salary Standardization Law.

4.2 Other benefits granted to Officers and Employees were beyond the authorized

rates as follows:

4.2.1 Clothing allowance - An increase of P4,317.00 from P5,000.00 in 2011 to P9,3717.00 in 2012, on

clothing allowance was granted for every employee. This increase in clothing allowance granted which totaled P340,167.00 in 2012 had no legal basis since under the General Appropriation Act only P5,000.00 per employee is allowed.

4.2.2 Cash Gift – A cash gift of P 9,317.00 per employee was granted on December 2012 which is

beyond the authorized amount of P5,000.00 under Sec.6.1 of DBM Budget Circular No. 2010-1 dated April 28, 2010.

4.2.3 Longevity Pay -

Commencing on the fifth year, an employee is granted P15.00 longevity pay. The grant of P15.00 for every year of service is still enjoyed by employees. Thereby, an additional P180.00 yearly is added to longevity pay.

4.2.4 The above-mentioned increments were paid to employees based also on the

Resolutions passed by the Supreme Council and no other authority from the DBM or from the Office of the President authorizing the said increases in allowances and other benefits.

4.2.5 We recommended that Management stop the grant of longevity pay and any

other increase in allowances and other benefits without the authority from DBM or Office of the President.

4.2.6 The Management justified that since the Federation is still in the process of

preparing its existence to be aligned with the CSC rules and regulations and with the DBM, the rate of their salaries, allowances and other benefits are not yet aligned with the Salary Standardization Law.

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4.2.7 As a rejoinder, VFP Management should exert its best efforts to comply with all the requirements of the CSC, DBM and GCG rules to facilitate and expedite the process of their realignment to a government corporation.

5. Inconsistencies and errors between the data recorded as against the supporting

documents were noted in our audit of disbursements contrary to Sec. 17 of the Philippine Financial Reporting Standards (PFRS) and Sec. 111 of P.D. 1445 otherwise known as the Government Auditing code of the Philippines.

Sec. 17 of PFRS provides: Fair presentation and compliance with Philippine Financial Reporting

Standards (PFRS).

In virtually all circumstances, an entity achieves a fair presentation by compliance with applicable PFRSs. A fair presentation requires an entity:

xxx b. to present information, including accounting policies, in a manner that

provides relevant, reliable, comparable and understandable information.

On the other hand, Section 111 of P.D. 1445 states that:- xxx

1. The highest standards of honesty, objectivity and consistency shall be observed in the keeping of records to safeguard against inaccurate or misleading information.

5.1 Our audit of tax payment to the Bureau of Internal Revenue (BIR) revealed inconsistencies in figure between the amount paid and deposited in the bank as against the amount of the machine validated deposit slip by the bank with net difference of P600,000.00.

5.1.1 In our letter dated August 28, 2013, the audit team confirmed with the BIR

regarding this under-deposit to BIR’s account amounted to P600,000.00, however as of this writing, no reply yet was received from them.

5.1.2 In August 22, 2012, a check amounting to P798,000.00 was drawn in favor of the

BIR representing payment of VAT withheld from tenants for the month of July 2012. Said check was remitted and deposited by VFP to the account of the BIR at the Philippine Veterans Bank-(PVB) Port Area Branch last August 22, 2012.

5.1.3 However, our review of the machine validated deposit slip disclosed that the

amount reflected was only P198,077.44 or a difference of P600,000.00. Such difference should have been communicated immediately with the bank right after the deposit slip was presented to the VFP Accounting. It was only in October

29

2012 that the bank furnished a copy of an abstract of BIR Remittances of the VFP wherein the amount of P.798 million was recorded. However, such record is not a concrete proof that indeed the total amount of P.798 million was actually credited to the account of the BIR since said document does not bear the account number of the BIR for which such deposit was credited.

5.1.4 We recommended that Management secure document or a certification from the BIR showing proof that the full amount of P.798 million has been credited to the account of the BIR.

5.1.5 Management commented that certification of this transaction has already been given by VFP stating that the full figure amounting P.798 million has been remitted to the BIR, however, if the certification of the BIR is still needed, the VFP will still submit said document as soon as possible.

5.1.6 As a rejoinder, we would like to clarify that the document submitted did not reflect the account number of the BIR to ensure that the full amount of P798,077.44 was deposited to the BIR’s account. Thus, the certification is still necessary and should be secured from the BIR.

5.2 The dates of the Official Receipts presented in the reimbursements of the transportation expenses were incongruent with the dates of the occasion when the pertinent Executive Board (EB) meeting were held. In addition, there were some reimbursements that were excessive and inconsistent with Section 340.b of the GAAM, Volume No. 1.

5.2.1 The usual practice of the VFP is to reimburse the Regional Vice President (RVP) and other officers from the regions of their transportation expenses incurred while on official travel to VFP Headquarters. As a matter of policy, no reimbursements shall be made without the necessary Official Receipts and other valid documents to prove that the expenses claimed for reimbursements are indeed relevant and valid.

5.2.2 Our review of the aforesaid reimbursements disclosed that some were supported with Official Receipts whose dates were inconsistent with the period of travel within which the expenses were allegedly incurred. As maybe noted, the dates of the ORs were at least a month after the EB meeting.. Such inconsistencies and lapses would have been avoided had the Accounting Department thoroughly reviewed the supporting documents before the reimbursements were made.

5.2.3 Shown below is a breakdown of sample of reimbursements for travel expenses which were inconsistent in terms of date of Official Receipt and the date of the EB Meeting :

Check

No.

Date

Payee

Official Receipt Nos.

Date of O.R.

Date of EB

Meeting

Amount of

O.R.

203033

1/17/12

M.Respicio

18002;2161730;4802904;92871

12/16/11

1/17/12

P 3,494.41

302043 1/17/12 G. Adalim 081341 12/16/11 1/17/12 2,500.00

203254 2/16/12 G.Adalim 040406;417326 12/16/11 2/16/12 2,818.48

203255 2/16/12 M. Respicio 205767 01/18/12 2/16/12 1,978.73

203504 3/14/12 G.Adalim 40573 02/17/12 3/15/12 2,000.00

TOTAL P12,791.62

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5.2.4 Also, we have noted that some RVPs claimed reimbursement for travel expenses for van rental which was not the normal and/or usual mode of transportation. No concrete document was submitted to show that the amount claimed is reasonable nor was there any justification submitted that would warrant the hiring of vans.

Section 340 paragraph b of GAAM Vol. 1 provides: “As a general rule, only the ordinary public conveyances or customary

modes of transportation shall be used. The use of taxis and chartered trips or special hires of PUs, garage cars, launches, motorboats, sailboats, bancas and other extraordinary means of transportation shall not be allowed unless justified by the prevailing circumstances such as, but not limited to, carrying large amounts of cash, bulky equipment which cannot be conveniently transported through ordinary mode of transportation or important documents, inclement weather, accompanying dignitaries or high government officials, or when time is of the essence (Joint COA-DBM Cir. 86-1,supra).”

5.2.5 Details of the reimbursements representing hiring vans/van rented are as follows:

Check No.

Date

Payee

Amount

PCV 5/20/12 D. Naval P12,095.00

203044 1/17/12 R. Padua 6,500.00

203257 3/16/12 R. Padua 7,500.00

203509 3/15/12 R. Padua 7,300.00

203890 5/17/12 R. Padua 8,000.00

PCV 5/20/12 L. Rili 15,000.00

PCV 3/30/12 A. Banez 8,000.00

PCV 3/30/12 E. Dizon 7,000.00

TOTAL P 59,300.00

5.2.6 Based on the above table, we noted that the amounts claimed for the rental of vehicle by Mr. Padua were even much higher than the cost of his round trip air fare ticket which averaged P2,836.31 only. Likewise, Mr. Rili was reimbursed P15,000.00 based on his letter informing the VFP of his willingness to attend the Supreme Council and thus he incurred transportation expenses amounting to P15,000.00.

5.2.7 In the reimbursement of Mr. Banez & Mr. Dizon, no attendance sheet was

attached to the PCV, only the list of participants without their signatures. It is imperative that an attendance sheet with the corresponding signatures of attendees will be required to all payments of transportation expenses incurred by all districts.

5.2.8 We recommended that Management:

a. Provide a concrete justification for the amount of transportation

expense incurred in the hiring of vans.

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b. Stop granting reimbursements of travel expenses where economical

mode of transportation was not used unless justified by the

circumstances and at reasonable rate.

5.2.9 Management informed us that there were some cases that the date of Official

Receipt presented in the reimbursement of transportation expenses did not jibe with the date of occasion when the EB meeting was held because those reimbursement represents the expenses incurred by the RVPs in going back to their regions.

5.2.10 As a rejoinder, we reiterate that full and correct disclosures should be made on

the reimbursement vouchers reflecting among others, that the said reimbursements pertain to previous travels and reflecting the date and occasions attended by the RVPs.

5.3 Various errors in recording the amounts of disbursements in the Report of Checks

Issued (RCI) and those in checks were noted.

5.3.1 In our review of disbursements, we observed inconsistencies between the amounts of the checks and the amounts recorded in the RCI as follows:

Check No.

Date

Particulars

Amount Recorded Per

RCI

Actual Amount of

Check

224516

9/4/12

Payment of 800 pcs, 475 Ml. ice cream for PMA

P 5,500.00

P132,000.00

224581 9/25/12 Reimbursement of Cash Advance 9,608,350.00 9,608.00

224514 9/4/12 Payment of air conditioned bus to PMA 60,000.00 100,100.00

224554 9/12/12 CA-Travel to Poland 55,000.00 155,000.00

TOTAL P9,728,850.00 P396,708.00

5.3.2 The RCI is considered one of the basic and significant reports that enable the

Accountant and other finance personnel to monitor the breakdown or list of disbursements for a given period. This RCI however, was not properly accomplished such that the report is not signed by the cashier and reviewed by the Accountant as to its accuracy and validity.

5.3.3 We recommended that the Cashier prepare regularly the RCI and reviewed

by the Accountant prior to the recording process to serve as one of the basis in monitoring the cash balance of the VFP.

5.3.4 Management responded that due to the resignation of the previous Accountant,

the review of the accounting procedures including the monitoring of the checks hereto mentioned was delayed. Such review is now being undertaken this current year.

5.3.5 As a rejoinder, we reiterate that the RCI must be prepared by Cashier instead of

the Bookkeeper and thoroughly reviewed by the Accountant.

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6. There were significant lapses in the granting and settlement of cash advances.

6.1 Excessive Cash Advances amounting to P 4.682 million were granted resulting in a significant amount of unutilized cash advances of P 1.806 million.

Presented below are some cash advances granted and the percentages of their utilization:

Accountable Officer

Purpose of Cash Advance

Date

Granted

Total Amount

granted

Amount Utilized

%

Utilized

Amount

Unutilized

%

unutilized

N. Capili PMA visit in Baguio City 11/12/12 P 200,000.00 P 152,831.63 76% P 47,168.37 24%

N. Capili

68th Supreme Council(Transport, Honorarium, & Miscellaneous)

09/03/12

1,282,000.00

795,127.63

62%

486,872.37

38%

J. Rebalde

67th SC Meeting(Transport, Representation, Misc., Per Diem

5/16/12

1,500,000.00

792,836.53

53%

707,163.47

47%

N. Capili Veterans Week (Transport Expenses)

4/3/12

1,700,000.00

1,134,675.90

67%

565,324.10

33%

T O T A L P4,682,000.00 P2,875,471.69 P1,806,528.31

6.1.1 As gleaned from the above, the amounts of cash advances granted were excessive considering the percentage of unutilized cash advance which ranged from 24% to 47%. Although these amounts of unutilized cash advances were refunded in cash as evidenced by official receipts and deposit slips, we are still concerned of the risk of having large amounts of money in the hands of the accountable officers (AO).

6.1.2 In addition, we noted the said amounts that remained with the said AOs were

entrusted to other VFP employees who deposited the same in the bank. We cannot therefore discount the fact that there is an inherent risk in carrying such a huge amount especially since it passed from one hand to another.

6.1.3 Scrutiny of records also disclosed that the excess cash were in the custody of the

AOs from 40-172 days as shown below: (The no. of days delayed was computed from the last day in which the activities were conducted up to the time when the excess cash advances were refunded)

Accountable Officer

Amount of Unutilized

Cash Advance

Last day

of Activities

Excess Cash Advance Deposited

Excess Cash Advance Refunded

No. of days on the hand of the AO

Date

Amount

Deposited by

Date

Amount

N. Capili

47,168.37

9/8/12

-

-

-

11/9/12

P 47,168.37

62 days

N. Capili

486,872.23

11/18/12

11/19/12 12/3/12

200,000.00 150,000.00

MPasag RBaltazar

12/28/12

136,872.37

40 days

J. Rebalde

707,163.47

5/20/12

5/21/12 7/19/12

550,000.00 85,000.00

MPasag RBaltazar

11/9/12

72,163.47

172 days

N. Capili

565,324.10

4/11/12

4/17/12

530,000.00

NCapili

5/30/12

P 44,932.60

49 days

6.1.4 This is in violation to Sec. 4.1 of the COA Circular No. 97-002 dated February 10, 1997 which provides that a cash advance shall be reported on as soon as the purpose for which it was given has been served.

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6.1.5 We recommended the Management:

a. Require the AOs to submit a realistic budget proposal (with details and breakdown of expenses) to avoid excessive cash advances and prevent the risk of carrying out a huge amount of money in the hand of the accountable officer.

b. Require the AOs to liquidate their cash advance as soon as the

purpose for which the cash advance was granted is already served.

6.1.6 Management responded that they would address said recommendations by requiring the AOs to submit better budget proposals to avoid excessive cash advances and prevent the risk of carrying a huge amount of money in their hands. They likewise informed us that the Accounting Office and the Internal Audit Department are always coordinating regarding this matter.

6.2 Subsequent cash advances were granted even when the previous cash advance/s

were not liquidated contrary to the provisions of COA Circular 97-002 dated February 10, 1997 and COA Circular 2009-002 dated May 18, 2009.

6.2.1 Our audit revealed that the AOs were allowed subsequent cash advances even if

his/her previous cash advances were still unliquidated. Such observation was already pointed out in our previous audit; however, the Management still allowed this practice. Such practice is in violation to COA Circular 2009-002 dated May 18, 2009 which states:

4.1.3 (ii) No additional cash advance shall be allowed to any official or employees unless the previous cash advance given to him is first liquidated and accounted for in the books.

6.2.3 The Accountant did not reflect in the Cash Advance Voucher a certification

certifying that the previous cash advance of the concerned AO has already been liquidated. This certification is required before the cash advance voucher is approved by the Accountant. In like manner, the Internal Audit Department has to make necessary review of the Disbursements Voucher to ensure that the audit recommendations insofar as the disbursements are concerned are strictly followed by the Management.

6.2.4 Consider the following:

Accountable

Officer


Date

Granted

Total Amount

granted

Remarks

N. Capili Veterans Week (Transport Expenses) 04/03/12 P1,700,000.00 All these cash advances were granted without liquidating the previous CAs since these were liquidated only in May 23, and May 30, 2013

N. Capili PMA visit in Baguio City 09/03/12 200,000.00

N. Capili 68th Supreme Council (Transport, Hon’m, & Misc.) 11/12/12 1,282,000.00

A.DelMar Veterans Meeting Feb. 7-9, 2012 02/12/12 35,000.00

ADelMar Regional Assembly Region VI Mar. 17-18, 2012 03/12/12 35,000.00

ADelmar Regional Assembly Region VIII June 7, 2012 07/04/12 40,000.00

ADelmar Regional Assembly Region VII July 30-31, 2012 07/23/12 60,000.00

ADelmar Regional Assembly Region XII August 18, 2012 08/14/12 50,000.00

T O T A L P3,402,000.00

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6.2.5 The above table shows a continuous grant of cash advance to the AOs. Our review disclosed that said cash advances were liquidated and recorded in the books only in December 2012, and the liquidation vouchers were submitted for audit in two batches, one on May 23, 2013 and the other one on May 30, 2013, respectively.

6.2.6 We recommended the following:

a. Management should desist from granting additional cash advances prior to the settlement of previous advances. The Accountant should monitor the cash advances granted and liquidations by the accountable officers and issue a certification on the face of the Cash Advance Disbursement Voucher certifying that the previous cash advance of the accountable officer was already liquidated.

b. After reviewing the Liquidations Vouchers and its supporting documents, the Accountant should submit immediately the documents to COA.

6.2.7 Management commented that continuous grant of cash advances occurs due to

concurrent occurrence of VFP’s occasions while having limited number of accountable officers who will draw the cash advance. Furthermore, liquidation of the said cash advances for 2012 were delayed since the priority was made on the requirements of the COA Auditors in completing the Financial Statements for the years 2011 and 2012.

6.2.8 As a rejoinder, the liquidation vouchers pertaining to cash advances of 2012 were

submitted beginning May 23, 2013. The regulation requires liquidations of cash advances as soon as the activity/ies for which the cash advances were given was/were completed. Proper planning and immediate enforcement of liquidations is necessary so that the unliquidated cash advances will not accumulate.

6.3 Unliquidated Cash Advance of three AOs remained unsettled as of December 31,

2012 despite demand letter issued on July 31 2012. Management has not yet acted on the settlement of the advances.

6.3.1 COA Circular No. 2012-004 dated November 28, 2012 requires, among others,

the head of the agencies to demand for immediate liquidation and settlement of all cash advances.

6.3.2 Related to this, we have already issued a notice of demand as contained in our

letter to VFP dated January 10, 2013 with the attached COA Circular No. 2012-004 as well as “Auditor’s Order” to withhold the salary dated June 28, 2013.

6.3.3 However, as of this writing, there are three (3) accountable officers whose cash advances remained unliquidated as shown below:

Accountable Officer


Date Granted

Total Amount

granted

C. Batayola World Federation Meeting (May 15-13,2012)-Georgia 05/08/12 P 150,000.00

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C. Batayola Initial operating fund - SCAP 09/07/12 22,252.36

N. Usi Check up of service vehicle 03/07/11 10,000.00

R. Grio Engine check-up (grandia) 07/20/11 20,000.00

T O T A L P 202,252.36

6.3.4 We recommended that VFP institute proper action that will cause immediate liquidation of these long outstanding cash advances including the withholding of salaries of the concerned AOs. It may also file malversation charge in compliance with Section 9 of COA Circular No. 2012-004 dated November 28, 2012.

6.3.5 Management informed us that the said AOs with unliquidated cash advances were duly notified by the Management to immediately liquidate their outstanding cash advances. Likewise, suspensions of salaries were effected by the Management from the concerned AOs.

6.3.6 As a rejoinder, Management is advised to strictly implement the Auditor’s Order

to withhold the salaries of said accountable officers.

6.4 Bonding of Accountable Officer which was earlier pointed out in our previous audit observation remained not implemented. Likewise, all the accountable officers who were granted cash advances in 2012 were not duly designated disbursing officer with explicit authority by the Head of the Agency in violation to COA Circular No. 97-002 dated February 10, 1997.

Sec. 7 of COA Circular No. 97-002 states: 7.1 Each accountable officer with a total cash accountability of P2,000.00 or

more shall be bonded. The amount of bond shall depend on the total accountability of the officer as fixed by the head of the Agency. An official or employee who has both money and property accountability, shall be bonded only once to cover both accountabilities, but the amount of the bond shall be in accordance with the schedule.

6.4.1 Interview disclosed that the VFP Management already inquired from the Bureau

of the Treasury (BTR) regarding the procedures and requirements in bonding their accountable officers. However, as of this writing, no update regarding the status of said audit recommendations has been provided despite the lapse of time when the audit recommendation was issued in the audit of the 2008 accounts of VFP.

6.4.2 In the year 2012, eleven VFP Officers and employees who were not bonded

were granted cash advances, to wit:

Name of Accountable Officers/Employees

Position by Appointment

2 Antonia C. Del Mar Administrative Officer

3 Noemi Capili Cashier

4 Charlemagne Batayola General Manager-VFP IC

5 Michael Angelo Siscar Treasurer (former Asst.Sec.General)

6 Judith Rebalde Bookkeeper

7 Minerva Pasag Cashier – VFP IC

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8 Rosie Lyn Cruzada Accounting Staff

9 Arvin Celino Former Accountant

10 Manuel Gonzales Property & Supply Officer

11 Raul Grio Driver

12 Noel Usi Driver

6.4.3 The above employees were not duly appointed nor designated as disbursing officer contrary to Sec. 4.1.4 of the same COA Circular which states:

“4.1.4 Only duly appointed or designated disbursing officers

may perform disbursing functions xxx”.

Likewise, Sec. 3.2 thereof also provides: “3.2 Special cash advance are those granted on the explicit

authority of the Head of the Agency only to duly designated disbursing officers or employees xxx”

6.4.4 Furthermore, Ms. Rebalde, a bookkeeper by appointment is not qualified to be

granted cash advances and perform the disbursing and collection tasks due to incompatibility of her functions. One of the principles of internal control is that of separation of incompatible functions i.e., the person in charge of recording and/or bookkeeping shall not be assigned in the disbursements and collections of money due to / from the agency. Likewise, the Accountant is not also authorized to draw the cash advances because he has direct access and control over the accounting records.

6.4.5 We recommended that Management cause the immediate bonding of all

AOs and grant cash advances to those qualified personnel only.

6.4.6 Management notified us that they are still in the process of aligning their existence

with the Department of Budget and Management and so they could not apply yet

for the bonding of accountable officers because they could not submit yet the

requirements required by the BTr in bonding.

7. Inadequate control over disbursements and failure of Management to withhold taxes

due from the suppliers of medicine resulted in overpayment of P1.80 million.

7.1 The VFP purchased medicines from its two major suppliers namely Synthex Pharma and MedCare Asia Inc. on account basis with terms ranging from six months to one year. Payments were on a staggered basis, and the balances of the accounts overlapped. Updating of records and close monitoring thereof is therefore necessary to make sure that the suppliers were not overpaid.

7.2 Our audit of disbursements disclosed that controls over payments was inadequate, if

not lacking, resulting to overpayment of P1.606 million. In addition, the Management failed to deduct withholding taxes amounting to P199,527.68 from the payments to the two suppliers resulting to a total overpayments of P1.805 million. This is shown below:

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Particulars

Synthex Pharma

MedCare Asia Inc.

Total

Purchase Order Numbers 11-110021 & 23 11-110020 & 22

Amount of purchases P 12,620,000.00 P 9,721,500 P22,341,500.00

Total payments made 13,200,000.00 10,747,901.78 23,947,901.78

Total Overpayments 380,000.00 1,026,401.78 1,606,401.78

VAT 112,728.57 86,799.11 199,527.68

Total Overpayments P 692,728.57 P 1,113,200.89 P 1,805,929.46

7.3 Although the said suppliers have refunded a large portion of these overpayments, there still remain balances of P86,799.11 and P2,049.61 for Medcare and Synthex, respectively. The said amount were already due for refund since last quarter of 2012 and the said suppliers were already informed of the balance of the overpayment made by VFP. However, to date, no refund from the said suppliers was made. We are concerned that such procedural lapses should be avoided so that no overpayments will be made in the subsequent transactions.

7.4 We recommended that Management:

a. Ensure that all appropriate taxes are withheld from the suppliers and

record the same in the book of accounts. b. Ensure that disbursements are properly controlled, such that these do

not exceed the amount payable by the VFP. c. Demand the immediate and full refund by the suppliers of the remaining

amount due to the VFP.

7.5 Management commented that due to the unexpected resignation of the previous Accountant, the timing of review of the general accounting procedures including the monitoring of withholding taxes, payment of payables and inventories were delayed. The review of those procedures has been resumed and all corrections were made as an adjustments duly supported with appropriate computations and documentations.

7.6 No inventory account for medicines was set up upon receipt of medicines

because VFP uses the expense method in recording the receipts of medicines.

7.6.1 We have already mentioned this error in recording the medicine account in our previous year’s audit report, and we have recommended that Accounting Department should use the asset method in recording the transactions by debiting the Medicines Inventory account upon receipt of the medicines from the suppliers. The corresponding expense account is debited when the medicines are already issued to the end users or recipients through an inventory adjustment slip together with the copies of the Request and Issue Slip submitted by the Supply Officer. At the end of the year, an inventory count is necessary to account for the balance of medicines in the stock room to be compared with the balance of medicines per book.

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a. Require the Accounting Department to use the Asset Method of recording medicines purchased by debiting the account Inventory-Medicines.

b. Require the Supply Officer to submit regularly to the Accounting Department the Request and Issue Slips covering all issuances of medicines to serve as the basis of the Accountant in the recognition and recording of expense account for medicines.

c. Conduct an inventory count of all supplies and materials including

medicines at the end of the year.

d. Account for and/or compare the balance arrived at in the inventory count and the balance per book of medicines and note any variances.

e. Make a necessary adjusting entry to recognize the amount of

medicines that still remain at year end.

8. The inability to monitor deadline for remittance of VAT to the BIR caused the payment of significant amount of penalty amounting P1.02 million.

8.1 Records disclosed that the VFP issued several checks, all dated September 27, 2012,

to BIR aggregating P4,095,770.21 representing their VAT remittance covering the period from January to June 2012. Such remittances are broken down as follows:

Month Check No. Amount

February 224592 P 1,013,367.69

March 224594 562,006.69

April 224595 696,660.78

May 224596 893,003.33

June 224598 930,731.72

TOTAL P 4,095,770.21

8.2 As shown above, the total payments made to the BIR amounted to P4.09 million, however, per BIR VAT Return prepared by the VFP Accountant, the total amount due to BIR was only P3.08 million. It was learned that the discrepancy represented the penalties of P1.02 million imposed by BIR for late payment. For the two (2) checks nos. 224593 and 224597, the cancelled checks are yet to be submitted.

8.3 The breakdown of penalties are shown below:

Total Monthly VAT

Amount of Tax Due before

Penalty

Penalty Imposed

by the BIR

Total Amount

Paid

January -0- -0- -0-

February P 448,661.85 113,344.84 P 562,006.69

March 743,218.68 270,149.01 1,013,367.69

April 511,507.06 185,153.72 696,660.78

May 668,511.88 224,491.45 893,003.33

June 707,797.97 222,933.75 930,731.72

TOTAL P 3,079,697.44 P1,016,072.77 P4,095,770.21

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8.4 Inquiry disclosed that said penalty was allegedly due to late payment since this tax

should have been paid monthly but was paid late.

8.5 We recommended that Management ensure that their obligations to creditor and other government agencies are paid on time so as to avoid further penalties and/or charges.

8.6 Management commented that said penalty was due to late payment since the tax

which should have been paid monthly was not taken care of by the former accountant

who unexpectedly resigned from VFP. To assure that the case will not be repeated

again, the present accountant delegated some of his work to his staff especially those

concerning payment of government obligations with deadlines. With regard to the

persons responsible for the said deficiency, Management shall locate and investigate

the former Accountant.

8.7 As a rejoinder, we maintain our stand that VFP should conduct investigation on the persons responsible thereof and ensure that VFP obligations to creditors and other government agencies are paid on time so as to avoid further penalties and/or charges.

9. Several deficiencies and/or lapses were noted in the documentation of VFP transactions which is inconsistent with the fundamental principles embodied under P.D. 1445 and COA Circular No. 2012-001 dated June 14, 2012 which enumerated the basic requirements for every type of disbursement.

Sec. 4 of P.D. 1445 states:

“ xxx

4. Fiscal responsibility shall, to the greatest extent, be shared by all those exercising authority over the financial affairs, transactions, and operations of government agency.

5. Disbursements or disposition of government funds or

property shall invariably bear the approval of the proper officials

6. Claims against government funds shall be supported with

complete documentation”.

In our audit of the 2012 disbursements and liquidations, the following deficiencies were noted insofar as documentations is concerned:

9.1. GASOLINE CONSUMPTION

9.1.1 All reimbursements and payments made for the purchase of diesel/gasoline in the

VFP National Headquarters and VFP-Industrial Center in the aggregate amount of P199,385.97 were not supported with trip tickets, thus casting doubt on the validity of the transactions and reflected weak internal control.

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9.1.2 Trip tickets are vital document that show, among others the personnel who used

the vehicle and the destination, the level of gasoline consumption, the appropriateness of trips/travels, the balance in the gas tank, and the proper accounting of gasoline infused to the particular vehicle. This is a tool of management to ensure that all gasoline purchases have been accounted for.

9.1.3 Our review of the reimbursements made for gasoline revealed that the amount

used in payment for gasoline expenses were taken from the petty cash fund of the cashier upon presentation of the invoice and that no other documents were required to establish validity of the payments made. In some instances, the petty cash voucher (PCV) of the VFP National Headquarters was not even completely accomplished, such that the only signatory in the PCV was the driver who requested and received the money. No approval was sought from the concerned Officer being served by the driver, thus casting doubt on the validity of the transaction.


a. Support the reimbursement and/or payment of gasoline/diesel

purchases with trip tickets.

b. Require that PCVs bear the approval of the authorized official for gasoline reimbursements and/or payments.

9.1.5 For this current year, the Management assured that all claims for gasoline

reimbursements/payments will be supported with trip tickets.

9.2. FOOD/MEALS

9.2.1 The expenses incurred for food/meals for P194,890.99 were not supported with attendance sheets and/or guest list, and the purpose or activity thus, casting doubt on the appropriateness and reasonableness of the expense incurred.

9.2.2 In several occasions, PCVs were drawn for payment of various bills of

restaurants and other food establishments. The purpose stated in the PCV were luncheon/ meeting of VFP Officers and staff. No particular activity or agenda has been disclosed, nor the particular occasion been indicated. We could not therefore ascertain the appropriateness of said transactions as well as the reasonableness of the amount of bills since the no. of guests as well as the attendance sheet was not accomplished/disclosed.


a. Support payments of bills rendered by various restaurants and food

centers with attendance sheets or guest list, as well as the disclosure of the activity and/or occasion or the purpose for which such disbursements were made.

b. Submit justification and information as to the nature and purpose of the occasion for which such meal expenses were incurred.

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9.2.4 Management informed us that for the current year, food/meals reimbursements

were already supported by attendance sheet and disclosure of the activity for which such disbursements were made.

9.3 PURCHASES

9.3.1 Various disbursement vouchers were not complete as to the required signatories.

It follows that the transactions were not fully authorized. The supporting documents were not also complete as to signatories i.e. the Purchase Order, Request and Issue Slip, Quotations, Abstract of Canvass, Inspection Report etc. Such a condition manifests laxity in the processing of the transactions.

9.3.2 Management asserted that various purchase documents were not properly

accomplished because of its understaffed department. The canvassing, ordering, and any other purchasing related works cannot be properly handled by one employee, having an immediate demand for supplies in the office. To address the problem, the Federation reorganized the staffing in every department for this year and it added another employee to help work for this section.

9.4 SALARIES AND ALLOWANCES

Some payrolls had no signatures of some employees/payees, thus, casting doubt on whether the amount was actually received by them. The total fund requirements to pay all employees listed in the payrolls was already advanced to the AO, therefore a complete accounting is needed to ensure that the amount of cash advance was actually distributed to the concerned employees. In various instances, the former Accountant drew the cash advance for payment of such salaries, allowances, etc. to VFP Officers and Employees in which the payrolls had incomplete signatures or acknowledgment of the recipient employees.

9.4.1 We recommended that the:

a. Accountant and the Internal Audit Unit thoroughly review the

disbursement and liquidation vouchers as to completeness of supporting documents and signatories.

b. Cashier ensure that the payrolls as well as other supporting documents are signed by the concerned VFP officials and that payments are acknowledged by the intended recipients.

9.4.2 Management commented that the payrolls bearing no signatures would be

corrected starting this year and will address the recommendations regarding the salaries and allowances.

9.5. FINANCIAL CONTRIBUTIONS

9.5.1 The total financial contributions for 2012 amounting P2,419,999.92 to VFP Sons

and Daughters Inc. (VFPSDAI) was supported only by an Acknowledgement Receipt and no other documents whatsoever was presented, thus casting doubt on the legality of the transactions.

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9.5.2 Such issue has already been pointed out in our previous report that such financial

contributions to VFPSDAI is contrary to COA Circular No. 2007-001 dated October 27, 2007 on the grant of government funds to Non-Government Organization/People’s Organizations (NGOs/POOs). However, the Management asserted that VFPSDAI is an organization comparable to an auxiliary Organization of VFP and their services are needed in various activities conducted by the Federation. We still maintain our stand that VFPSDAI is a private organization being registered with the Securities and Exchange Commission. Thus, we recommended in our prior year’s audit report to suspend payment of such contributions to VFPSDAI until all the requirements enumerated in the aforementioned COA Circular are complied with.

9.5.3 We recommended that Management stop payment of said financial

contributions to VFPSDAI unless the requirements under COA Circular 2007-01 are complied with.

9.5.4 Management commented that all documents regarding the status of the existence

and relationship of VFP to VFPSDAI were submitted. VFP would submit the liquidation vouchers of the financial contributions including the statement of cash receipts and expenditures, statement of fund balance and other documents pertinent to support the disbursements for the year 2012.

9.5.5 During the exit conference, we were informed that there was a Memorandum of

Agreement executed by and between VFP and VFPSDAI. They made mention that the mission of VFPSDAI is to give assistance to its members and as such, VFPSDAI is considered as an auxiliary unit of VFP similar to a Veterans Post. However, since VFPSDAI is registered with the SEC, it follows that VFPSDAI is a private entity or a non-government organization. Notwithstanding these views and opinion, we requested VFP to submit a copy of the MOA for further evaluation of our Legal Department.

9.6 HIRING OF PERSONNEL

9.6.1 In the exigency of the service and for the continuity of VFP’s accounting

operation, VFP hired an Accountant effective September 2, 2012 as a replacement of the former Accountant who tendered his resignation last May 31, 2012. A Senior Bookkeeper was also hired last February 16, 2012. Their salaries were not yet based on the appropriate rate based on the Salary Standardization Law. Likewise, the procedure in hiring and the relevant rules and procedures of the Civil Service Commission (CSC) insofar as the hiring and recruitment of government employees is concern was not observed.

9.6.2 First payment of salary to the Accountant and the Senior Bookkeeper were not

supported with a certified true copy of duly approved appointment, Oath of Office, certificate of assumption, SALN, DTRs, etc.

9.6.3 We recommended that Management provide justification on the hiring of

the above-mentioned employees without following the applicable rules and procedures of the CSC.

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9.6.4 Management commented that the VFP hired employees without observing the applicable rules and procedures of the civil service due to the demand of the service as well as for the continuity of VFP’s accounting operation. In addition, VFP is now in the process of preparing its compliance with the CSC.

9.7 FINANCIAL ASSISTANCE – REGIONAL ASSEMBLIES

9.7.1 Disbursements for financial assistance for various Regional Assemblies were

made even without approval of the authorized VFP Officials and the required approved request from the Regional Districts. Likewise, some checks were still made payable in the name of the District Commander instead of the District.

9.7.2 Details of the following financial assistance without approval of the VFP President

and/or VFP authorized official are as follows:

Payee Check No. Date Amount

N. Respecio 204087 June 4, 2012 P 30,000.00

A. Atega 204238 July 2, 2012 30,000.00

I. Pacudan 204291 July 2, 2012 30,000.00

D. Mendoza 204293 July 2, 2012 30,000.00

R. Miranda 204447 Aug.2, 2012 30,000.00

A. Macas 224549 Sept.12,2012 30,000.00

TOTAL P180,000.00

9.7.3 This issue was already pointed out in our previous Audit Observation but still

prevailed in 2012. This deficiency in the documentation has not yet been complied with by VFP in 2012.


a. Require the submission of an approved request for financial

assistance and ensure appropriate approval for payment of financial contributions to regional assemblies in various regions.

b. Ensure that the check is made payable to the name of the District itself.

c. Compliance herewith is enjoined to avoid further audit

suspensions/disallowances

9.7.5 Management informed us that these recommendations would be complied with this current year.

9.8 LIQUIDATION VOUCHER

9.8.1 Liquidation voucher is the document prepared and attached on top of all

documents supporting the liquidations of all cash advances i.e., cash advances for travel, payrolls, and cash advance intended for other activities. It is in this liquidation voucher where the accounting entries including the items of expenses and the corresponding amount are reflected. Such liquidation voucher is of importance because it bears the approval of the concerned officials as to the overall liquidations and the supporting documents attached thereto.

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9.8.2 Our review of the liquidations of cash advance revealed that only a Report of

Disbursements were attached thus, the accounting entries and approval of liquidations by the authorized Official of the Federation was not disclosed.

9.8.3 We recommended that the Accountant prepare the Liquidation Voucher

covering all liquidations made by the accountable officers and observe the provisions of COA Circular No. 2012-001 dated June 14, 2012 pertaining to the “Revised Documentary Requirements for Common Government Transactions” and be guided accordingly.

9.8.4 Management notified the team that liquidation vouchers were already accomplished this current year and the Accounting Department is starting to browse the COA website to search the COA Circulars regarding the “Revised Documentary Requirements for common government transactions.

9.9 Overtime Pay aggregating P.78 million in 2012 was granted with incomplete documentation. Likewise an overpayment of overtime pay to the VFP Administrative Officer and other employees amounting P47,591.37 was also noted in violation of Department of Budget and Management (DBM) Circular No. 3, s. 2001 and DBM Circular No. 10 dated March 29, 1996.

9.9.1 Records disclosed that in 2011, a total of P1.617 million in overtime pay was paid

to VFP employees although the payments were with various deficiencies. Thus, we strongly recommend, among others, that the process in granting overtime pay and the overtime services being rendered by the employees be closely monitored and supervised in order to validate the payment thereof. Although the number of deficiencies were reduced in 2012, there are still some minor lapses in 2012 insofar as the grant of overtime pay is concerned such as:

9.9.2 In several occasions, the Administrative Officer was paid overtime pay

amounting P35,197.23 while on official travel to different regions at various dates, claiming the full number of eight (8) hours for Sundays. Prudent judgment dictates that any officer and employees who are on official travel are not supposed to be granted an overtime pay because all the actual expenses (i.e., transport fare, hotel accommodation, food and other related expenses) incurred are already shouldered by the concerned agency. Besides, any extra hours of service rendered while on official travel is but inherent and impliedly attached to the purpose of the travel. Secondly, nowhere in the guidelines on the granting of travel allowance is it mentioned that an overtime pay is allowed while the employees are on official travel.

9.9.3 Such overpayment is in addition to the overpayment of overtime pay granted to

the same Administrative Officer in year 2011 amounting P26,571.84 which remained unrefunded as of this writing. Therefore, the total amount to be refunded is already accounted for at P61,769.07.

9.9.4 As noted in our review of the disbursement vouchers, most of the employees who

rendered overtime services had no authority duly approved by the authorized

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VFP Officer to render the overtime. Such incomplete documentation is contrary to Item 5 to 7 Sec. 4 of P.D. 1445 which provides:

“5. Disbursements or disposition of government funds or property shall

invariably bear the approval of the proper officials. 6. Claims against government funds shall be supported with complete

documentation. 7. All laws and regulations applicable to financial transactions shall be

faithfully adhered to”. 9.9.5 Likewise, the grant of overtime shall be in consonance with Sec.1. (d) of

Administrative Order No. 103 states:

“Adoption of a scheme that will allow employees rendering overtime to be compensated through time/days off work in lieu of overtime pay, in accordance with guidelines jointly issued by the Department of Budget and Management (DBM) and the Civil Service Commission (CSC).”

9.9.6 Further, CSC and DBM Joint Circular No. 2, series of 2004 provides a uniform

policy on the availment of compensatory time-off, in lieu of overtime pay. 9.9.7 We recommended that the Management:

a. Require the Administrative Officer to refund the amount of P67,690.07 immediately.

b. Submit the necessary supporting documents (see Schedule A) to avoid

audit suspension and/or disallowances. c. Ensure that the subsequent grant of overtime pay is in accordance

with the guidelines set forth under CSC and DBM Joint Circular No. 2, s. 2004 dated October 4, 2004 and Administrative Order No. 103.

d. Ensure the complete documentations on the grant of overtime.

9.9.8 The Management justified that the overtime hours were spent principally in the

accomplishment of backlogs comprising among others, of reports required for audit purposes. In addition, due for various works required in the preparation and celebration of special meetings (Supreme Council, Veterans Week, Annual PMA visit, etc.) which were held on weekends. As part of internal control, the overtime services rendered were duly monitored by the supervising head of each department to ensure proper utilization of these extra hours. We were also informed that there were many tasks related to the transition of the Federation from private to government body.

9.9.9 It was further requested by the Management that since the Federation has

allocated funds which were included in their annual budget for the grant of overtime, that the same be considered by this Office for the payment of extra

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hours subject to the standards set forth under government policies supported with proper and complete documentations.

9.9.10 With regard to overpayment and other documentary requirements, we were

informed by the Accountant that the Administrative Officer and other concerned employee were already notified, and accordingly, all the necessary documents to support the overtime pay will be submitted at the earliest possible.

9.9.11 As a rejoinder, we still maintain our stand that VFP should comply with the above-

mentioned CSC-DBM Joint Circular No. 2 series of 2004.

10. Various procurements which were recurring throughout the calendar year 2012 and aggregating P10.27 Million did not undergo public bidding as required under R.A. 9184, otherwise known as the “Government Procurement Reform Act”.

10.1 VFP continuously availed of the services of the following suppliers/contractors for the

supply of the following services in the year 2012 as shown below: (See attached Schedule A for the details of these expenses)

Expense Item Amount

Security P 5,596,615.67

Janitorial 628,901.88

Catering Services 4,047,170.10

TOTAL P 10,272,687.65

10.2 These services however, were procured under a negotiated mode of procurement. No public bidding was conducted nor was there any canvass made from any available suppliers and contractors. Such issue has already been pointed out in the first audit of the VFP per AOM No. 2008-17 dated June 23, 2011, advising Management to strictly comply with the provision of R.A. 9184 and its IRR, as amended, to attain transparency, accountability, equity, efficiency, and economy in the VFP procurement process.

10.3 Inquiry disclosed that the KORWARVET Security Agency was hired because it has

been serving VFP for quite a long period of time and their performance has already been tested. Likewise, this said security agency is owned and managed by a group of Korean War Veterans. On the other hand, the janitorial (HM57) and the food caterer (Hungry Hunter Restaurant), are also owned by the son of the veterans.

10.4 In R.A. 9184, there is no provision that allows any individual or any business entity

owned by persons closely related to government agency or corporation exempting them from undergoing public bidding and be given preference in any procurement process.

10.5 In like manner, the purchase of medicines from two suppliers did not also undergo

public bidding. This was already pointed out in our prior year Audit Report. Although there were no Purchase Orders issued in the year 2012, the total payments made in the year 2012 amounted to P17.70 Million which is very significant in amount. Therefore, we hereby reiterate our audit recommendation that VFP should comply strictly with the bidding processes and procedures in accordance to the relevant provisions of R.A. 9184.

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10.6 This is a reiteration of the previous audit recommendations, therefore a stringent

demand of VPF Management compliance is hereby sought to avoid further audit disallowance.

10.7 We recommended that Management:

a. Comply with the requirements on Public Bidding in the procurement of

catering, medicines, security and janitorial services.

b. Justify the absence of the public bidding of the afore-mentioned procurements.

10.8 Management commented that as a new body, the Federation is still in process of

transforming its organization and internal procedures including the creation of the Bids

and Awards Committee into government practices. The Accountant informed us that

VFP immediately created the BAC composing of Executive Board and VFP’s Officers

as members for compliance. However, they could not accomplish all the required work

including the bidding process for it is their first time to handle such position. However,

they continue to procure services and goods despite the absence of public bidding to

necessitate the continuance of their operation. They also informed that they amended

the creation of the Bids and Awards Committee this current year.

10.9 With regard to the security services, they further commented that they continuously

availed of the service of their security agency since their performance has already

been tested and trust has already been established.

10.10 As a rejoinder, we maintain our stand that VFP should comply strictly with the pertinent

provision of R.A. 9184, specifically the bidding requirements on all procurements

except those provided under the alternative mode of procurement for as long as the

conditions are met.

10.11 Catering services amounting to P1.94 million were awarded to VFP Employees Consumer without public bidding in violation of Article IV Sec. 10 of Republic Act 9184 and Section 88 of P.D. 1445. In addition, VFP made advance payment of P1.80 million in violation to Sec. 88 of P.D. 1445.

Sec. 10 of R.A. 9184 provides-

“Sec. 10. Competitive Bidding. – All Procurement shall be done through

Competitive Bidding, except as provided for in Article XVI of this Act.” Accordingly, Article XVI of the same Republic Act 9184 states:-

Article XVI – ALTERNATIVE METHOD OF PROCURMENT xxx xxx

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Sec. 53 Negotiated Procurement is a method of procurement of goods, infrastructure projects and consulting services, whereby the procuring entity directly negotiates a contract with a technically, legally and financially capable supplier, contractor or consultant.

10.11.1 Records disclosed that VFP procured such catering services from the VFP

Employees Consumer Cooperative using the above-method of procurement instead of public bidding. However, such method of negotiated procurement is only allowed under the following conditions as set forth under Sec. 53 of the same Article, as follows:

a) Two Failed Biddings. Where there has been failure of public

bidding for the second time as provided in Section 35 of the Act and the IRR;

b) Emergency Cases. In case of imminent danger to life or

property during a state of calamity, or when time is of the essence arising from natural or man-made calamities or other causes where immediate action is necessary to prevent damage to or loss of life or property, or to restore vital public services, infrastructure facilities and other public utilities

10.11.2 The preceding conditions were not met by VFP in resorting to negotiated

procurement since there was no bidding previously conducted for catering services and such was not an emergency case of procurement. Under no circumstance can VFP use the negotiated mode of procuring foods since there were many catering services available in the community. Thus, a competitive bidding is required.

10.11.3 The transactions originated when the VFP Administrative Officer directly

entered into a Sales Agreement with the President of the VFPECC as evidenced by the attached contract agreement. The contract laid down the date of events and/or activities to be undertaken, the projected no. of participants, the corresponding menu and unit cost, thus arriving at the total contract prize.

10.11.4 The total contract price was pegged at P1.94 million as payment for catering

services of the following events:

Title of Event/Occasion

Date

No. of Participants

Price Per Person

Total Amount

Veterans Week Wreathlaying and Opening Ceremony

April 4, 2012

3,500 persons

P260.00 for breakfast & Lunch

P 910,000.00

Corregidor Visit

April 6-7, 2012

500 persons

P540.00 for dinner, breakfast, lunch & 2 snacks

270,000.00

Araw ng Kagitingan

April 9, 2012

2,500 persons 2,000 persons

P100 for breakfast P160 for lunch

570,000.00

Visit to Capas

April 10, 2012

600 persons

P260.00 for breakfast and lunch

156,000.00

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Sunset Ceremony

April 11, 2012

500 persons

P60.00 snack

30,000.00

T O T A L P1,936,000.00

10.11.5 Of the total contract price of P1.936 million, a downpayment was made amounting P1.80 million which was paid to Ms. E. Calaquian per check 203593 dated March 29, 2012.

10.11.6 This downpayment is likewise prohibited under Section 88 of P.D. 1445 which

provides:-

xxx No payment partial or final, shall be made on any such contract except upon a certification by the head of the agency concerned to the effect that the service or supplies and materials have been rendered or delivered in accordance with the terms of the contract and have been duly inspected and accepted.

10.11.7 Based on the foregoing, such payment of catering service to the VFPECC

violated not only the regulations on procurements and advance payment of service, but also the pertinent provisions of P.D. 1445 to wit:

Declaration of Policy. It is the declared policy of the State

that all resources of the government shall be managed, expended or utilized in accordance with law and regulations, and safeguard against loss or wastages through illegal or improper disposition, with a view to ensuring efficiency, economy and effectiveness in the operations of government. The responsibility to take care that such policy is faithfully adhered to rests directly with the chief or head of the government agency concerned.

xxx 7. All laws and regulations applicable to financial transactions

shall be faithfully adhered to. 8. Claims against government funds shall be supported with full

documentations.

10.11.8 The same observation was noted in our 2011 audit and embodied in the 2011 Audit Report. Thus, immediate compliance by VFP Management is enjoined.

10.11.9 We recommended that Management comply with the requirement on

public bidding in the procurement of catering services and stop such method of Direct Contracting and granting of advance payment for services not yet rendered.

10.11.10 Management informed us that the Federation is still working to polish the

procedures of the Bids and Awards Committee. They further informed us that

50

the composition of the BAC was amended to comprise of permanent

employees as members. With regard to the required attendance sheets, the

VFP Accountant asserted that such documents were attached to the

disbursement vouchers.

10.11.11 As an audit rejoinder, we assert our stand that the VFP Cooperative is not

exempted from public bidding and so direct contracting and advance payment

to said cooperative should be stopped.

51

A.2 Status of Audit Disallowances, Charges and Suspensions

During the audit, we issued the following disallowances, suspensions and charges:

a. Notice of Suspensions

NS No.

Date

Particulars

Amount

Status of Implementation

12-001-101-09 &10

April 26, 2012

Payment of VAT without Official Receipt of BIR, and the DV not supported with duly accomplished VAT Return and justification why the check was not made payable to BIR.

1,862,017.34

Notice of Disallowance was already issued

12-003-101-10

April 26, 2012

The Official Receipt attached for the purchase of supplies does not disclose the items purchased that casts doubt on the validity of the transactions

43,238.30

settled

12-004-101-09 & 10

April 26, 2012

The Purchase Orders paid for medicines were not supported with delivery receipts and/or sales invoices.

23,252,180.50

settled

12-005-101-09 & 10

April 26, 2012

The payment made was not supported with Official Receipt

83,273.00

settled

TOTAL

25,886,689.14

b. Notice of Disallowances

ND No.

Date

Particulars

Amount

Status of Mgt. Implementation

12-001-101-09 &10

April 26,2012

Per diem of participant on the seminar held in Metro Manila

36,000.00

unsettled

12-002-101- 09 & 10

April 26, 2012

Unliquidated cash advances despite two(2) demand letters issued. The prescribed period has elapsed.

82,200.00

unsettled

12-003-101-10

April 26, 2012

The items purchased were for personal use/purpose.

7,814.38

unsettled

12-001-101-09 &10

April 26, 2012

Payment of VAT without Official Receipt of BIR, and the DV not supported with duly accomplished VAT Return and justification why the check was not made payable to BIR.

1,862,017.34

Unsettled

TOTAL

1,988,031.72

52

B. STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT RECOMMENDATIONS

Of the 234 audit recommendations embodied in the previous year’s Annual Audit Report, 67 were

implemented, 103 were partially implemented and 64 were not implemented. The summary is shown below.

Observations and Recommendations

Action Taken

A.1 Financial Audit

1. The Veterans Federation of the Philippines (VFP) did not maintain the standard books of accounts, complete procedures of accounting for financial transactions and prepare the standard bank reconciliation statements.

a) Maintain a complete set of books of accounts which include the

general journal and special journals, as well as the general and subsidiary ledgers for proper monitoring of accounts;

b) Record the transactions and events affecting the VFP in accordance

with the State laws, rules and regulations and Philippine Accounting Standards;

c) Reclassify the 2007 VFP-IC transactions in the appropriate income

and expense accounts; d) Revisit the financial transactions with noted discrepancy in the 2007

audited balance and account for the should be balance of the affected accounts; and

e) Prepare the re-stated financial statements.

Implemented

Implemented

Implemented

Not implemented

Not implemented

2. Fund balance as of December 31, 2008 cannot be relied upon due to inconsistencies in accounting reports and records.

Reconcile and account for the correct balance of prior period adjustments

during the period and submit the necessary supporting documents.

Not implemented

3. The opening book balances as of January 1, 2008 were unreliable due to various unrecorded, erroneous and unsubstantiated transactions as a result of inadequate financial records, reports and supporting documents, erroneous bank reconciliations as well as inadequate disclosure.

3.1 Cash in Bank

3.1.1 Unrecorded transactions representing remittances from

(PVAO) and allocations thereof to the VFP districts, regions and posts.

a) Record all receipts and disbursements of membership dues

or special fund in the books of accounts of the VFP National Headquarters; and

b) Prepare every month the bank reconciliation statements for

the bank accounts maintained for the membership dues or special fund.

Implemented

Partially implemented

53


Action Taken

3.1.2 Inadequate records and documents to support the membership dues or special fund transactions.

a) Submit the passbooks and other documents for audit; b) Establish a monitoring system to keep track of the bank

transactions and reconcile these with the supporting documents and records; and

c) Set the necessary policies and procedures to prevent

unaccounted/undocumented transactions, errors and/or unauthorized bank transactions.


Implemented

Implemented

3.1.3 Bank Reconciliation Statements were found erroneous as balances per books and per bank could not be substantiated from submitted documents resulting in unreliable cash in bank account balances maintained with Philippine Veterans Bank.

a) Submit the necessary records and documents for audit; b) Establish a monitoring system to keep track of the bank

transactions and reconcile these with supporting documents and records; and

c) Set the necessary policies and procedures to prevent

unaccounted/undocumented transactions, errors and/or unauthorized bank transactions.


Implemented

Implemented

3.1.4 Bank accounts maintained with the Bank of the Philippine Islands were not in the name of the VFP but in the name of VFP Veterans Management Corporation.

a) Make the necessary courses of action to transfer the bank

accounts in the name of VFP; and b) Prepare adjusting entry to include the cash in bank balance

of P9,351.00


Implemented

3.1.5 Understatement by P8.691 million of three time deposit accounts maintained with PVB-Taguig having a total of P22.861 million per books and P31.552 million total balance per bank, and unreconciled variance of P0.373 million between the balance of Cash in Bank current account No. 211-3 of P5.964 million per books and the balance of P6.338 million per banks as of September 30, 2010.

Require the immediate reconciliation of bank and book records

and adjust the books accordingly.


3.1.6 Unrecorded four bank accounts with balances per banks totaling P3.573 Million as of September 30, 2010.

VFP Accountant should cause immediate verification of the cash


54


Action Taken

in bank accounts confirmed by the bank but not recorded in the books, and accordingly take appropriate and immediate action thereof.

3.2 Advances to Officers and Employees

3.2.1 The validity of the 2007 balance amounting to P543,931.00 could not be ascertained due to discrepancies in the balance of cash advance totaling P1.972 million and non- presentation/submission of the journal vouchers and documents supporting the adjustments of P669,743.23 in year 2007.

a) Re-visit the financial records and supporting documents and

account for the valid transactions/unrecorded outstanding official/personnel cash advances granted to its officers and employees as of December 31, 2007;

b) Submit the details, journal vouchers and supporting documents of the adjustments made in February 2007; and

c) Prepare the necessary adjusting journal entries to correct

the beginning balance of the advances to officers and employees and other affected accounts as of January 1, 2008.

3.2.2 The existence, accuracy and completeness of the balance of

Advances and Loans to Officers and Employees account amounting P2.46 million as September 30, 2010 could not be ascertained in the absence of subsidiary record.

Require the Accounting Department to exert extra effort in establishing the balances of the cash advances and loan of the VFP Officers and employees.

Not implemented

Not implemented Not implemented

Implemented

3.3 Short-term Investments

3.3.1 Management failed to present the appropriate documents to support the ending balance of investment account amounting to P488,555.08.

a) Gather the necessary information and documents on the

investments with PEFTOK, PLDT, PILTEL and MERALCO and determine the value of investments as at December 31, 2007; and

b) Prepare adjusting entries to correct the value of Investments

account.


Not implemented

3.3.2 Investment with PVB under Account Nos. 1015-80541-1 and PVB 1005-00012-1 with book balances totaling P2.935 million were not confirmed by the bank as of September 30, 2010.

Immediately conduct verification with the PVB on the status of the above Retirement Funds and accordingly take appropriate action.


55


Action Taken

3.3.3 The short and long term investments were erroneously classified in the opening balances.

a) Establish a written policy on the accounting treatment of

investments and the retirement fund.

b) Reclassify investment in AFPSLAI from short-term investment to cash and cash equivalents.

Implemented

Not implemented

3.4 Property and Equipment

3.4.1 Management failed to present the appropriate records, ledgers and documents to support the balance of property and equipment account amounting to P54.93 million.

Record the property and equipment account transactions promptly in the books of accounts, including the accumulated depreciation and depreciation expense for each month and prepare the necessary adjusting journal entries.


3.4.2 Management failed to present the appropriate records and documents to support the carrying value of the buildings and condominium units amounting to P33.9 million.

Re-visit the documents and records pertinent to the buildings and condominium units, events and financial transactions; and prepare the necessary adjusting journal entries.


3.4.3 Management failed to recognize the cost of land and office building improvements in the VFP-Industrial Complex.

a) Review the records and documents relative to the

transactions with the VFP-Management Development Corporation and submit the proof of office space ownership;

b) Identify the structures, land and office improvement

constructed by the VFP-MDC and prepare a list or schedule; and

c) Determine the value, estimated useful life and carrying value

of the improvements based on the records and documents, and prepare the necessary adjusting journal entries

Not implemented

Not implemented .

Not implemented

3.4.4 Management failed to account for and disclose relevant information relative to the Property, Plant and Equipment - Land account.

a) Re-visit the VFP policy on property and equipment in

consonance with PAS 16 and relevance of PAS 20 to the parcels of land in Taguig City and Davao City;

b) Account for the parcels of land mentioned in the letter of the

former VFP President and gather the necessary information, records and documents on the said property and VFP status of ownership;



56


Action Taken

c) Submit the list of property comprising the Land account of

P19.6 million, copy of Deed of Absolute Sale of the property in Lucena City and the result of the action taken in b); and

d) Re-visit the disclosures on the Property and Equipment-Land

account in the notes to the 2007 audited financial statements and consider the appropriate information that should be disclosed in accordance with PAS 16 and 20.



3.4.5 No documentation on the sale of building in VFP IC with proceeds of P5.5 million.

a) Submit documentation on the sale of the VFP building at VFP-

IC; and

b) Conduct verification on the closure of the receivable account and require submission of documents supporting the book entries for audit.

Not implemented

Not implemented

3.5 Accounts Payable and Other Payables

3.5.1 The accounts receivables and investment were offset against the accounts payable.

Prepare the necessary adjusting journal entries to recognize appropriately each of the financial transaction, in accordance with the provision of PAS 1.

Implemented

3.5.2 There was discrepancy in the reported balance in VAT and Withholding Tax Payable of approximately P150,000.

a) Account for the VAT and withholding tax payable and

reconcile the discrepancy noted; and

b) Prepare the necessary adjusting journal entries to correct the balance as of December 31, 2007.

Implemented

Not implemented

4. Receivable and accrued income from rent of lot, condominium units and interest in 2007 were not recognized in the book.

a) Establish a written policy on the adoption of the accrual basis of

accounting in accordance with PAS I and other pronouncements and related standards;

b) Record the receivables and accrued income in the books of accounts

in accordance with relevant PAS; and

c) Establish policy on the evaluation and recognition of doubtful account and prepare a meaningful aging of Account Receivable.

Partially implemented Implemented


5. Various discrepancies, unaccounted balances, unrecorded transactions and accounting errors in the Cash on Hand and in Banks account cast doubt on the reliability of reported balance amounting to P6.48 million.

57


Action Taken

5.1 Certain cash transactions were directly recorded in the monthly

trial balance but not recorded in the journal entry vouchers and were recorded at net of withholding tax.

Discontinue the practice of recording transactions directly in the trial balance by preparing duly approved journal entry vouchers for the financial transactions before recording the same in the books of accounts.

Implemented

5.2 Unrecorded Cash in Bank transactions amounting to P115,874.41 understated the account balance by the same amount.

Account for the discrepancy amounting to P115,874.41 and present

the relevant reports and documents.

Not implemented

5.3 Unaccounted credits, cash deposits and balances of cash on hand and cash in bank accounts totaling P4.589 million due to non preparation of monthly bank reconciliation statements, non maintenance of required set books of accounts and non documentation of the accounts’ transactions resulted in uncertainty of the account balance.

a) Account for the discrepancy of P4,588,554.77 and submit relevant

records and documents; and b) Comply with Sec. 74 and 112 of PD 1445 and Section 4 of NGAS

Manual Volume I through the preparation and maintenance of the required set books of accounts and reports, such as the cash receipt journal, report of collections and deposits and Bank Reconciliation Statements.

Not implemented


5.4 Discrepancies were noted between the transactions recorded in the Cash Receipt Book and Working Trial Balance for the month of October 2008 and the cash deposits made in the same month to PVB Account amounting to P148,302.00.

Monitor the daily collections and deposits and prepare/maintain the required set books earlier mentioned.

Implemented

5.5 No Report of Collection and Deposits and Cash Receipt Journal maintained to record the collection of lease rental payments from VFP- IC.

a) Prepare a monthly report of collection and deposits to record

collections from the VFP-IC and record the same in the Cash Receipt Journal; and

b) Monitor the daily collections and deposits.

Implemented

Implemented

5.6 Unreconciled discrepancy amounting to P4.440 million between the balance of the PVB per balance sheet of P5.423 million and the balance per bank statements of P6.508 million as at year end. The records and documents submitted for audit showed a balance of only P0.982 million.

58


Action Taken

Account for the discrepancy and submit relevant records and documents.

Not implemented

6. Provision for annual depreciation amounting to P0.456million for the Isuzu fire truck for CY 2008 was not recognized.

a) Revisit prior years’ transactions and make the necessary adjusting

entries; and

b) Adopt the useful life of PPE as presented in Annex A of COA Circular No. 2003-007 and provide a residual value equivalent to 10% of the acquisition cost as provided in Section 4.0 of the said COA Circular.

Implemented

Implemented

7. The revenue process and recognition adopted by the VFP resulted in unaccounted and unrecorded unpaid lease rentals.

a) Establish written accounting policies to adopt, among others, the

accrual basis of accounting in accordance with the NGAS, Framework for the Preparation and Presentation of Financial Statements, PAS 1 and other PAS pronouncements and related standards;

b) Record the receivables and accrued income in the books of accounts

in accordance with relevant NGAS and PAS pronouncements;

c) Establish policies on the evaluation and recognition of doubtful accounts;

d) Prepare a complete and meaningful aging of accounts receivable, to

include among others, the analysis and classification of accounts as current or past due with length of period the accounts were past due;

e) Prepare journal entries to recognize accrual of income from the rental of condominium units, VFP-IC operation, interest income from bank deposits and allowance for doubtful accounts, when appropriate, and re-state the 2007 financial statements.

Implemented

Implemented

Implemented

Implemented

Implemented

8. Ninety (90) percent of the remittances from PVAO amounting to P28,458,675 and its allocation to the VFP regions, districts and posts amounting to P25,289,802.00 were not recorded in the books of accounts, resulting in the understatement of the cash account, net of allocation, by P3,168,873.00.

a) Set up a Trust Liability account for the receipt of membership dues

from the PVAO;

b) Record the ninety percent of the PVAO remittance as debit to Cash in Bank account - Special Fund and credit to Trust Liability account – Special Fund; and

c) Record distribution to regions, districts and posts by debiting the Trust

Liability account and crediting Cash in Bank account.

Implemented

Implemented

Implemented

9. The fund transfers to and from the Special Fund representing the membership dues received from the PVAO were not restricted to the

59


Action Taken

allocation/distribution to its intended recipients.

a) Establish policies to safeguard the receipt of membership dues; ensure disbursements are only for the intended purpose and distributed shares are in accordance with the established allocation rates to the VFP regions, districts and posts;

b) Monitor the fund’s investment in term placements and its transfer to

the PVB-Alta Vista bank account in preparation for its allocation; and c) Prepare the bank reconciliation statements every month.




10. Remittance from PVAO and deposit thereof under Special Fund showed discrepancy of P10.271 million which remained unaccounted.

a) Account for the discrepancy in the Special Fund transactions

amounting P10,271,250.00;

b) Maintain only one cash in bank account for the Special/Trust Fund where all deposits and disbursements pertaining thereto be made; and

c) Prepare the Bank Reconciliation Statement every month.

Not implemented

Partially implemented Partially implemented

11. The disbursements from the Discretionary Fund Account was not in accordance with Section 4 of Presidential Decree No. 1445.

a) Formulate policies on the grant and utilization of Discretionary Fund,

as defined/classified in COA Circular No. 2006-001 dated January 3, 2006 and appropriate funds intended for the extraordinary and miscellaneous expenses; and

b) Establish accounting policies in line with government accounting and

auditing rules and regulations which will serve as guide in accounting and reporting for the VFP financial transactions.

Not implemented

Implemented

12. The validity of the reported year-end balance of Medicines Expense aggregating P13,168,724 was doubtful due to various deficiencies in the supporting documents, financial records and reports.

12.1 There was an unaccounted difference of P600,000 between the

balance of Medicines Expense account per Disbursement Book and per Financial Statements. Account for the difference of P600,000 in the Medicines Expense account per Trial Balance and Disbursements Book as of December 31, 2008.


12.2 Purchase Orders were issued only after medicines were received from suppliers and with one reference number issued to two different suppliers.

a) Submit written explanation for failure to execute the Purchase

Order as the legal basis of the financial transaction prior to delivery and payment; and


60


Action Taken

b) Execute Purchase Orders or any form of contract or agreement prior to delivery and payment of any procurement of goods and services.


12.3 The disbursement vouchers were not supported by pertinent documents to determine validity of payments to suppliers of medicines.

Submit the following:

1. Detailed record/report, accounting for the medicines delivered and distributed to its intended beneficiaries and proof of distribution to/receipt by beneficiaries; and

2. Authenticated copy of business registration and permit of the

suppliers.


Not implemented

12.4 Discrepancies in the quantity and specifications of medicines per Purchase Order and actual medicines delivered by the supplier and accepted by the VFP, rendering the financial transaction doubtful.

a) Explain in writing the discrepancies in specifications and

quantity of the medicines ordered and delivered; and

b) Submit justification and approval of acceptance of delivery despite the discrepancies in quantity and specifications.

Not implemented

Not implemented

12.5 Medicines procured were immediately recognized as outright

expense upon receipt, resulting in an unquantified overstatement of Medicine Expense account during the period.

a) Modify the accounting treatment of procured medicines for

distribution to intended beneficiaries by recognizing its cost initially as an asset and as an expense only upon use or distribution; and

b) Maintain a subsidiary record for the medicines’ proper accounting of receipt and distribution and its correct recognition in the financial statements.



13. Various expenses aggregating P7,506,703.63 were recognized under one account, VFPIC-Maintenance Expense, resulting in the understatement of balances of other appropriate expense accounts presented in the financial statements.

a) Discontinue the classification of all expenses pertaining to the

maintenance and upkeep of the VFP-IC under the VFP-IC Expense account; and

b) Reclassify the misclassified accounts lumped under the VFP-IC

Expense account to the appropriate expense accounts.

Implemented

Implemented

14. The donations and financial assistance granted to various veterans

and/or veterans’ beneficiaries organizations were supported by inadequate and improper documents and the accounts were misclassified as Other Expense instead of Donation Expense.

61


Action Taken

Provide a clear-cut policies and procedural guidelines in the disbursement of funds for donations and financial assistance to veterans organizations and VFPSDAI, in consonance with Section 4 of PD 1445 and COA Circular No. 2007-001 dated October 25, 2007, to include, among others, the following: a. Approval of the disbursement by the VFP President or designated

officer; b. Certification as to the availability of funds by the Chief Accountant; c. Checks drawn in the name of the requesting organization or entity; d. Checks marked with “payee’s account only” so as to preclude

unauthorized persons from encashing checks; e. Adequate and proper documentation attached to the disbursement

vouchers; and f. Liquidation of funds by the recipient by requiring relevant and proper

documents.


15. Negative variance amounting P287,058.36 in the collection and

receipts per Statement of Fund Received and Expenses disbursed and Per Cash Receipt Book/Monthly Collection Reports, resulting in doubtful reliance on the reported amount of P62.940 million.

a) Prepare journal entries and discontinue the practice of reflecting

adjustments and other transactions directly in the financial statements. b) Account for the negative variance amounting P287,058.36.


Not implemented

16. Incomplete recording and inadequacy of controls in recording and documentation of collection from rentals resulting in doubtful reliability of the recognized amount of P54.082 million, net of value added tax.

a) Establish proper accountability, accounting guidelines and procedures

in the receipt, deposits, recording and reporting of lease payments.

b) Establish a record keeping system to safeguard valuable VFP accounting and treasury records, reports and documents.

c) Maintain subsidiary ledgers for each transaction.

d) Prepare the lease rental monitoring data/or report every month based

on the individual subsidiary ledgers which could readily show the overdue rental, classified as current and past due, as a basis for the preparation of the monthly billing statements, and legal action as necessary.

Implemented

Implemented



17. Net negative difference amounting to P5,584 for Transportation/traveling Expenses between book balances and source documents, resulting in the uncertainty of the transportation expense account.

Account for the variance noted.

Not implemented

18. There were under billings amounting to approximately P1,254,770.56

62


Action Taken

and payment deficiencies of approximately P554,338.74 on selected tenants transactions due to inadequate accounting and monitoring of tenants’ accounts and compliance with lease agreement vis-a-vis payment records.

a) Establish proper accountability, accounting guidelines and procedures

in the recording and monitoring of collection and outstanding accounts from tenants;

b) Account for the existing contracts with tenants, re-visit the terms and

conditions and evaluate the same for monitoring of compliance and guide in future decision on the disposition of contracts; and

c) Provide in future contracts a penalty clause on unpaid lease rentals to

discourage delayed payment.



Not implemented

18.1 Collections and deposits of the collecting officer amounting to P315,700 not recorded in the book.

a) Require the Accounting Department to record in the VFP’s

book of accounts the abovementioned collection and deposits; and

b) Require the Collecting Officer to account for the shortage in

the deposits

Not implemented

Not implemented

A.2 Compliance Audit 19. The policies and practices of the VFP pertaining to organization

structure/staffing pattern, position classification and grant of compensation, salaries and allowances were not in accordance with the rules and regulations issued by the Department of Budget and Management (DBM).

Comply with the provisions of RA No. 6758 and coordinate with the DBM and/or GCG on the realignment of position classification and salary rates of VFP personnel under the Position Classification and Compensation System.

Not implemented

20. The existing practices on personnel recruitment were not in accordance with Executive Order No. 292, otherwise known as the Administrative Code of 1987.

a) Comply with the provisions of EO No. 292 and be guided by the rules

and regulations issued by the Civil Service Commission, and: b) Establish written policies on personnel administration and

development, to serve among others, as guidelines in personnel recruitment;

c) Conduct an evaluation of the merit and fitness of the VFP employees

vis-à-vis their current occupied position and recommend for appropriate courses of action.

Not implemented

Not implemented

Not implemented

63


Action Taken

20.1 Use of bundy clock to register the attendance of the VFP employees and the observance of flag ceremonies.

Put in place bundy clock or mechanical/electronic register for attendance records of VFP Officers and Employees.

Implemented

21. The policies and practices on traveling expenses and allowances for local and foreign travel were not in accordance with existing laws, rules and regulations resulting in the doubtful validity and accuracy of the recorded Transportation Expenses aggregating P4,144,642.05.

Comply strictly with the provisions of COA Circular No. 96-004, as

amended by COA Circular No. 2009-002 dated May 18, 2009, in particular the traveling expenses and other expenses incurred from the cash advances which are allowed under the rules and regulations and disseminate the same to the VFP officials and personnel.

21.1 Various reimbursement and/or liquidation of cash advances

granted for travel were not supported by necessary documents required under existing rules and regulations.

Require the reimbursement of travel expenses during the

VECONAC conference in Singapore incurred by the non-VFP personnel who was not authorized to travel with the delegates.


Not implemented

21.2 Four checks totaling P240,000.00 in the name of the Assistant Treasurer General allegedly issued for RATA of VFP President were received by the former without a written authority from the latter.

Discontinue the practice of indicating the name on checks for RATA other than the intended payee.

Implemented

19. 22. The payment of procured services prior to delivery or performance violated Section 88 of Presidential Decree (PD) No. 1445.

Comply strictly with the provisions of Section 88 of PD 1445 and Annex “D” of RA 9184 and stop the practice of granting advance payment to suppliers/contractors for services not yet rendered.

Not implemented

23. The existing management policies involving cash advances were not in accordance with the provisions of Presidential Decree 1445, COA Circular Nos. 2004-006 and 97-002 dated September 9, 2004 and February 10, 1997, respectively.

23.1 Cash advances granted to VFP officers in 2008 amounting to

P303,524.50 remained unliquidated as of the year end, contrary to COA Circular No. 97-002 dated February 10, 1997. (AOM 10)

a) Liquidation of the donation amounting to P300,000; and

b) Refund of P3,524.50 from the concerned accountable officers for the difference of the amount of cash advance and documents presented in the liquidation.

Implemented

Not implemented

64


Action Taken

23.2 The liquidation of the cash advances was made beyond the period required under COA Circular No. 97-002 dated February 10, 1997.

a) All accountable officers to comply and liquidate the cash

advance granted to them as soon as the purpose for which it was granted had been served; and

b) Submit valid documents to support the liquidation, in

compliance with Section 4 of PD 1445 and COA Circular No. 2004-006 dated September 9, 2004.



23.3 The documents presented to liquidate the cash advances were improper and deficient, contrary to Section 4 of PD 1445 and COA Circular Nos. 97-002 2004-006 dated February 10, 1997 and September 9, 2004, respectively.

Be vigilant in their review of the documents presented by the accountable officers to support disbursements of government funds through the grant of cash advance, and comply with the provisions of Section 4 of PD 1445 and COA Circular Nos.97-002 and 2004-006 dated February 10, 1997and September 9, 2004, respectively, to avoid audit suspension and disallowance.


23.4 Additional cash advances were granted prior to the settlement of previous cash advances, contrary to Section 4 of PD 1445 and COA Circular No. 97-002 dated February 10, 1997.

Comply with Section 4 of PD 1445 and COA Circular No. 97-002 dated February 10, 1997 and discontinue the release of additional cash advances to accountable officers with unsettled previous cash advances.


24. Discrepancies noted in the VFP documents and records of personal loans granted to its officers and employees rendered the 2008 balance of Advances to Officers and Employees account of P2,890,686.69 doubtful.

a) Establish the necessary policies to safeguard its records and

documents in order to provide evidences of financial transactions and maintain accurate records and reports; and

b) Account for the balance of Advances to Officers and Employees

account as of December 31, 2008 and submit valid supporting documents.

Implemented Implemented

24.1 Excessive granting of per diem, utilizing cash advance for personal expenses, disbursement not properly and completely documented, long outstanding unliquidated cash advance and purchase of equipment not located during inspection.

a) Enforce appropriate action on the unliquidated cash advance;

b) Comply with the required documentation of the liquidation of

cash advances;



65


Action Taken

c) Immediately require the refund of the amount pertaining to the

personal expenses of the accountant; and d) Locate the missing computers purchased from the cash

advance.

Not implemented

Implemented

25. The officers and employees of the VFP, whose duties permit or require the possession, custody or control of funds or property for which they are accountable, were not bonded contrary to the provisions under Section 101 of Presidential Decree (PD) No. 1445 and Bureau of the Treasury (BTr) regulations.

Evaluate the minimum and maximum fund and property accountability of the concerned accountable officers and employees and apply for the appropriate bond for each of them with the Bureau of the Treasury.

Not implemented

26. There was no Annual Procurement Plan (APP) prepared by the VFP and submitted to the Department of Budget and Management pursuant to Section 7 of Republic Act (RA) 9184.

Prepare the APP, duly approved by the VFP President, in compliance with Section 7 of RA 9184.


27. The VFP Proposed Budget or Corporate Operating Budget for the year 2008 was not submitted to the DBM for approval per Section 19, Chapter III, Book VI of Executive Order No. 292, Administrative Code of 1987.

a) Comply with the provision of Section 19, Chapter III, Book VI of

Executive Order No. 292, the Administrative Code of 1987, and henceforth, submit the VFP Annual Corporate Operating Budget for review and approval of the DBM;

b) Access the DBM website for information and issuances on the

format and deadline of submission of the Corporate Operating Budget.

Not implemented

Not implemented

28. Reimbursement of travel expenses were not supported with valid documents.

a) Discontinue the practice of hiring vans and taxis and use the

customary mode of transportation;

b) Require valid documents to support traveling expenses.



29. The purchase of various supplies and materials were not supported with documents to establish the validity of the claims.

29.1 The amount of P509,237.31 were paid for the purchase of

supplies and materials despite lack of supporting documents. Also, the vouchers and liquidations reports for cash advances pertaining to purchase of supplies and materials amounting P116,821.75 were not supported with documents.

66


Action Taken

Comply with Section 4 of PD 1445 and attached the necessary documents to disbursement vouchers and liquidation reports.


30. The procurement policies, methods and procedures and supporting documents were not in accordance with Republic Act No. (RA) 9184 and transactions were not supported by complete and proper documents required under Section 4, PD 1445 and COA Circular No. 2004-006 dated September 9, 2004.

30.1 Procurement of goods and services without canvass from

accredited suppliers.

Comply with the provisions of RA 9184 and its IRR in the procurement of goods and services, Section 4 of PD 1445 and COA Circular No. 2004-006 dated September 9, 2004, and attach complete and proper documents in the disbursement voucher.


30.2 Procurement of goods and disposal of property were not supported with required documents.

a) Strictly comply with the provisions of RA 9184 and its IRR in

the procurement of goods and services and Section 4 of PD 1445, the attachment of complete and proper documents to the disbursement voucher; and

b) Designate the responsibility of procurement of goods and

services to the Property and Supply Officer and discontinue the practice of delegating such sensitive responsibility to non- VFP personnel.


Implemented

30.3 Procurement of goods and services in the aggregate amount of P20,948,541.99 did not undergo public bidding in accordance with the provisions of Republic Act 9184, otherwise known as the “Government Procurement Reform Act”.

a) Comply strictly with the provisions of RA 9184 and its IRR, as

amended, to attain transparency, accountability, equity, efficiency and economy in VFP’s procurement process;

b) Discontinue immediately the current VFP practices and policies

in procurement of goods and establish the new procurement process flow, guidelines and procedures; and

c) Create an ad hoc committee for procurement activities and

define its specific functions, in accordance with RA 9184, as well as the responsibility and specific tasks of the Procurement Section and personnel.




30.4 Procurement of medicines at an aggregate of P55.738 million in 2009 and 2010 was made without the appropriate mode of procurement prescribed in R.A. 9184.

a) Put in place the proper procurement process for medicines.

Since the distribution of the medicines is a form of benefits for the VFP members and done regularly, the requirements for the


67


Action Taken

year can be included in the APP. Based on the number of members and the planned schedule of distributions, the quantity requirements and costs can be estimated/determined for purposes of planning, budgeting, and the conduct of public bidding.

b) Formulate guidelines and procedures in the distribution of

medicines that include among others the approved allocation to beneficiaries, the proper documentation of the description and quantity of the medicines, and the acknowledgement of the authorized recipients.

.


30.5 Procurement for food for a total of P10.66 million in 2009 and 2010 in which one of the major supplier was a VFP employee without a benefit of public bidding.

a) Establish a procurement process in accordance with the rules

and regulations set forth in the IRR of R.A. 9184; b) Creation of the Bids and Awards Committee that will evaluate

and determine the mode of procurement; and c) Formulation of guidelines and procedures for the procurement

process starting from requisitions, selection of suppliers, award of supply contracts/purchase orders, inspection and acceptance of deliveries and payment.

Partially implemented .

Implemented

Partially implemented .

30.6 Purchases of office supplies and materials were awarded through shopping instead of public bidding or from the Procurement Services of the DBM.

a) Include in the APP the supplies and materials needed in the

VFP-IC and VFP National Headquarters; and

b) Ensure that “commonly used goods” are made from the Procurement Services of the DBM as provided under Section 53 (e) of the IRR of R.A. 9184.


Not implemented

31. Donations to VFPSDAI and financial assistance granted to Philippine Veterans War Foundation (FILVETS) and Regional Veterans Organizations were not in accordance with the requirements provided under COA Circular No. 2007-001.

a) Suspend the grant of any donations and financial assistance to the

VFPSDAI to give preferential attention to the review of the nature of donations and financial assistance the VFP has granted in the past years.

b) Establish policies on granting utilization, and accounting of funds

released in consonance with provision of COA Circular No. 2007-001.

Not implemented

Not implemented

A.3 Evaluation of the Existing Internal Control 32. The VFP established the “Auditor General” position without defining

the function and responsibility of internal control unit of the agency

68


Action Taken

in accordance with Section 124 of Presidential Decree (PD) No. 1445.

Define the duties and responsibilities of the internal audit unit headed by the Auditor General in accordance with the relevant laws, rules and regulations.

Not Implemented.

33. The absence of a sound internal control system violated Section 123 and 124 of Presidential Decree (PD) No. 1445, resulting in doubtful reliability of VFP’s financial transactions, account balances, records and reports.

33.1 There were no policies and accounting procedures established

for the receipt, issuance, accounting and monitoring of accountable forms.

a) Discontinue assignment of incompatible duties responsibilities

for (1) initiation and/or approval of transactions; (2) custody of assets; and (3) accounting for transactions be separated and assigned to different personnel or departments;

b) Establish proper accountability through accounting guidelines

and procedures in the receipt, issuance and monitoring of ORs, checks and other accountable forms to deter error, theft and fraud through guidelines and procedures;

c) Instruct the Accountable Officers to ensure the safekeeping of

collections and all accountable forms and cash items;

d) Designate in writing accountable officers handling disbursements, cash and collections;

e) Use the government issued official receipts in all its collections;

and;

f) Provide a permanent record book for accountable forms, cash receipts, check disbursements and cash disbursements.


Partially Implemented Implemented

Not implemented

Implemented

Partially Implemented

33.2 There were no policies and accounting procedures established for the use of Petty Cash Fund.

a) Complete the documents to support the disbursements through

the PCF; b) Accomplish properly the Petty Cash Vouchers and the

signature of the Approving Officer prior to the release of the petty cash fund;

c) Require the use of Cashbook to record the PCF transactions

and the preparation of reports, such as Report of Disbursements;

d) Require the accountable officer to replenish the PCF when the

disbursements reach at least 75% and discontinue the disbursement of personal money; and



Implemented

Implemented

69


Action Taken

g) Liquidate the Petty Cash Fund amounting to P20,000 within 20

days after the end of each year.

Implemented

.

33.3 Collections were not deposited intact the following banking day and not recorded daily in the Cash Receipt Record.

Comply with the prescribed collection procedures under Section 21 of NGAS Manual Volume 1.


34. There was improper accounting treatment and inadequate controls in the custody and recordkeeping of property and equipment, supplies and materials.

a) Conduct a periodic inventory-taking of supplies and materials and

property and equipment at least annually; b) Use the asset method in accounting for inventory items by recording

purchase of supplies and materials as prepaid expenses and recording the expense upon issuance or utilization;

c) Maintain detailed perpetual inventory records, in addition to the usual

ledger accounts for each inventory item, and an inventory control account in the general ledger on a current basis. The perpetual inventory record for each item must provide information for recording receipts, issues and balances on hand, both in units and peso amounts. With this information, the physical quantity and the valuation of supplies on hand can be obtained any time from the records of the property officer/custodian and accounting section;

d) Evaluate prepaid supplies and materials/inventory items and property

and equipment;

e) Maintain a Supply and Property Unit charged with the maintenance of bin cards, property cards and safekeeping of supplies and materials;

f) Designate a VFP personnel whose task shall include, among others,

the inspection of delivered supplies and materials and property and equipment to determine that the items delivered were in accordance with the specifications and issuance thereof to the end-users;

g) Maintain a bin card for supplies and materials and property card

wherein transactions shall be posted promptly from source documents. A property card should be kept for each item of property, plant and equipment to record the description, acquisition/transfer/disposal/ issuance and other information about the asset;

h) Maintain an orderly and well-kept stockroom to facilitate proper

preservation and monitoring of inventory items;

i) Assign property number and maintain subsidiary ledger for property and equipment; and

Implemented

Implemented








70


Action Taken

j) Issue Property Acknowledgement Receipt to monitor and pinpoint accountability upon issuance of property and equipment to the personnel.


35. The absence of necessary controls in the procurement process resulted in excess and shortage of items delivered by the suppliers amounting to P252,829.00 and 806,602.99, respectively.

a) Establish the required controls in procurement process, to include

among others, specification and quantity of items to be procured, conduct of thorough inspection of items delivered by suppliers in accordance with the agreed specifications prior to its acceptance;

b) Indicate in the Purchase Order, the delivery date and penalty clause for delivery after agreed date;

c) Prepare Inspection Report to support the claims for payment of purchased items; and

d) Demand from the supplier to refund the cost of undelivered items.


Implemented


Not implemented

36. There was conflict of interest in the maintenance of depository

accounts with the Philippine Veterans Bank because of the significant position held by the VFP President and its officers with the bank.

Secure the services of other government depository banks in accordance with DOF Department Order 27-05 dated December 9, 2005 and applicable provisions of Republic Act No. 6713.

Not implemented

A.4 Other Observations 37. Interest-free salary loans granted to officers and employees from the

funds of the VFP.

Comply strictly with the provisions of PD 1445 and COA Circular No. 97-002 dated February 10, 1997 and discontinue the policy of granting interest-free salary loans to its officers and employee from the funds of the VFP.

Implemented

38. Non-compliance with the VFP policy on employees’ salary loan.

a) Review the frequency and amount of semi-monthly loan re-payments of concerned VFP officers and employees with outstanding salary loans;

b) In order to facilitate the collection and immediate return of the

government funds, re-compute the amount that should have been deducted in the semi-monthly payroll for a period of twelve months and deduct the amount consistently from the payroll over the remaining term of the twelve-month period commencing on the date of the latest loan availed; and

b) Exert extra effort to collect the long outstanding unpaid salary loans

amounting to P46,750.00.

Implemented

Implemented

Implemented

71


Action Taken

39. Delayed distribution of membership dues ranging from two to six months.

Put in place the expeditious distribution of the funds to its members to ensure fast delivery of service to the beneficiaries.


40. Checks for remittance to the BIR for Value Added Tax of P1,837,017.00 and penalty charges on tax assessment amounting to P25,000.00 were issued in the name of the VFP Accountant. Our confirmation however, with the BIR through the Revenue District Officer No. 33 Intramuros, Manila disclosed that said VAT payments did not appear in their Taxpayer Ledger Inquiry print out.

a) Require the VFP Accountant to immediately submit the BIR ORs or

evidence of deposits to BIR accounts for payments of P1.837 million;

b) Submit to COA all documents showing the proof of payments (payment slip validated by the bank and/or Official Receipt), duly accomplished VAT Return forms and other pertinent documents;

c) In case of his failure, immediately conduct verification whether the

Accountant had remitted the amount to the BIR and had complied with all the BIR requirements regarding the remittance of VAT output tax;

d) Stop the practice of issuing checks in the name of the VFP Accountant

for remittance to the BIR; and

e) Ensure that: i. The basic requirement of internal control on segregation of

incompatible duties is observed.

ii. Payments/remittances to BIR are supported with certified schedules of remittances and properly accomplished Vat Return Forms duly signed by authorized officials.

iii. Institute appropriate action and/or investigation on the

aforementioned VAT payments which were not acknowledged by the BIR.

Not implemented

Not implemented

Not implemented

Implemented

Implemented


Not implemented

41. Postage Stamps worth P430,819.00 were purchased without proper accounting and no report of accountability as to accountable forms were accomplished for monitoring and control purposes**.

a) See to it that payment for postage stamps with significant amount should not be taken from petty cash but paid through check payable to the PPC, and acknowledged through Official Receipt; and

b) Require the custodian to prepare the Monthly Report of Accountability

as to Accountable forms.

Implemented

Implemented

2011 Audit Report

42. VFP procured medicines totaling P22.35 million in 2011 without public bidding as required under Republic Act 9184, thus, the

72


Action Taken

reasonableness of prices of medicines cannot be assured. Likewise, receipts, distributions and balances of medicines were not properly accounted for due to insufficient records maintained by the Supply Officer; hence, the accountability for the stocks of medicines cannot be ascertained.

a) Comply with the requirements of public bidding under Republic Act 9184 to ensure the reasonableness of prices of medicines and transparency in the procurement process;

b) Establish the procurement process for medicines starting with the

preparation of the APP. The number of members and the planned schedule of distributions, the quantity requirements and costs can be estimated/determined for purposes of planning, budgeting and the conduct of bidding process;

c) Require the Supply Officer to maintain adequate and updated records

of the receipt and issuance of medicines so that the balances of the items can be readily determined for determination of inventory levels for planning and accountability purposes;

d) Ensure that the stockroom is properly maintained; and access should

only be afforded to authorized personnel for physical safeguard of the stocks;

e) Designate VFP personnel who will be responsible for the conduct of

inspection of deliveries and will check whether the items delivered conform to the specifications of the purchase orders; and

f) In addition, we recommend that the reporting and documentation of the

distribution and acknowledgement by the recipients of medicines be continuously improved:

i. Require the District Commanders and other concerned Officers to

submit the acknowledgement receipts of the recipients of medicine and consolidate the reports/list by post/district/regions.

ii. Match the above consolidated reports to the issuances of medicine per post/district/regions to determine the balance.







Not implemented

43. VFP procured catering services amounting to P3.110 million in CY 2011 without the benefit of public bidding and other alternative mode of procurement required under RA 9184. Likewise, five advance payments with amounts ranging from P485,000 to P1,200,000 were made for catering services including entertainment in violation of Sec. 88 of PD 1445. a) Stop granting an advance payment for any items and/or service not yet

rendered and/or delivered;

b) Submit justification on why VFP did not conduct public bidding as required under RA 9184; and

c) Adhere and/or follow strictly the provisions of RA 9184 regarding the

conduct of public bidding.

Not implemented

Implemented


73


Action Taken

44. VFP did not comply with the requirements of RA 9184 in the procurement of food amounting to P969,539 served during Executive Board and Council meetings and other occasions. Moreover, the disbursement vouchers for payment of said expenses were not supported with the required documents as required in Section 4 of P.D. 1445.

We reiterated our audit recommendations in 2009-2010 audit that Management establish procurement process in VFP in accordance with the rules and regulations in government procurement set forth in the Implementing Rules and Regulations (IRR) of RA 9184, starting with the following:

a) Preparation of APP for the foods and other supply requirements of

VFP, considering the planned activities, meetings and other occasions for the year and the estimated costs;

b) Determination by the BAC of the proper mode of procurement for

the supply and delivery of goods and services to the VFP whether through public biddings or other appropriate alternative modes of procurement;

c) Formulation of guidelines and procedures for the procurement

processes starting from the requisitions, selection of suppliers, award of supply contracts/purchase orders, inspection and acceptance of deliveries, and payment; and

d) Inclusion in the guidelines and procedures of the persons

responsible for the processes, the required documents and reports, and the authorized certifying and approving officials.


Not implemented



45. Commonly-used office supplies and equipment amounting P1.805 million were procured through shopping instead of availing the DBM Procurement Service (DBM-PS) as required in Executive Order No. 40 dated October 8, 2001 and Administrative Order No. 17 dated July 28, 2011. Likewise, all purchases of supplies and materials including stock items were treated in the books as outright expense, and no inventory taking was conducted to account for the remaining balance in the custody of Supply Officer. a) The General Services Division to procure the commonly -used

supplies and materials, and office equipment from the DBM Procurement Service; and

b) The Accountant to record the purchases and issuance of supplies

and materials under asset “Inventory” account method.

Not implemented

Implemented

46. Variances/adjustments were noted between the amount billed to the tenants of the VFP Industrial Center and agreed rental rates without any provided explanations. Likewise, as of audit date, there were occupants whose rental contracts already expired and were not renewed.

a) Look into the noted variances between the amount billed and the

Not implemented

74


Action Taken

contract amount, and submit the supporting computations for audit;

b) Take the necessary action on the case of the tenant (ACER) and other tenants with an accumulated outstanding balance of rentals payable to VFP;

c) Verify the nature of adjustment of the amount billed to special

Contractors Inc. amounting to P548,000.00, and check whether this was supported with approved contract;

d) Take appropriate action against present occupants whose contracts

expired in 2011;

e) Provide information to the Audit Team on the status of agreement with the Veterans Canteen and submit copy of the latest contract; and

f) Restudy the contract rates to make it more relevant and fair based on

current market rental rates.


Not implemented


Implemented


47. The interest free loans granted to VFP Officers and employees aggregating P3.102 million and P1.387 million in 2008 and 2007, respectively, were not properly monitored and accounted for due to the non-updating of the subsidiary ledgers, thus, the existence, accuracy and completeness of the balance could not be ascertained. Moreover, because of the failure to strictly implement the VFP policy on such loan, the unpaid balances remained even beyond the repayment period.

a) Require the Accounting Department to immediately update the

subsidiary ledgers on the loans granted to the officers and employees to determine the correct balance of the individual account; and

b) Require immediate payment of the outstanding loans. Take the

necessary action to collect from those who have resigned from VFP if found with unpaid outstanding balance.

Implemented


48. Grant of donations to VFP Sons and Daughters Association, Inc. amounting to P2.42 million did not comply with the requirements of COA Circular No. 2007-001 dated October 25, 2007 on the grant of government funds to Non-Government Organizations / People’s Organizations (NGOs/POs).

a) Suspend the grant of donations to VFPSDAI until the requirements of COA Circular No. 2007-001 are complied with;

b) Require the VFPSDAI to submit to the VFP the requisites for

entitlement for VFP financial assistance/donation; and

c) See to it that procedures for availment, accounting and financial reporting are complied with.

Not implemented

Not implemented


49. The grant of financial assistance for the conduct of regional assemblies amounting to P270,000 were not properly authorized by the Executive Board and VFP officials, and were not supported with complete documents.

75


Action Taken

a) DV and the Request for Assistance are approved by the VFP

President or his designated Officer;

b) Checks are drawn in the name of the requesting organization; and

c) The checks are marked “payee’s account only” so as to avoid unauthorized encashment thereof.




50. Payment of overtime totaling P1.617 million in 2011 was not in accordance with the guidelines set forth under Department of Budget and Management (DBM) Circular No. 3, s. 2001 and DBM Circular No.10 dated March 29, 1996.

a) Require the Administrative Officer to refund the excess payment of overtime pay amounting to P26,571.84;

b) Require the submission of the authority and accomplishment reports

on all overtime payments in 2011;

c) Enjoin compliance with the requirements of DBM Circular No. 3, s. 2001 in the grant of authority for and payment of overtime services; and

d) See to it that overtime services are properly supervised, and

accomplishments are monitored and reported to substantiate the payment of overtime pay.

Not implemented




51. The mandatory five-day forced leave and five-day required leave balance under Civil Service Commission (CSC) Memorandum Circular No. 41, s. 1998 as amended by CSC Resolution No. 02-0731, dated May 21, 2002 were not considered in the monetization of leave credits amounting P359,013. Moreover, the absences and undertimes of those with negative balance of leave credits were not deducted from their salaries due to the absence of employee’s ledger card or equivalent record for monitoring purposes.

a) Strictly comply with the provisions of the CSC Omnibus rules with regard to the monetization of leave credits; and

b) Closely monitor the personnel absences by maintaining employee’s

ledger card or equivalent records, and see to it that the absences and undertimes of employees with negative balance of leave credits are deducted from their salaries.

Implemented

Implemented

52. Total cash advances amounting to P411,650.00 remained unliquidated in violation of COA Circular 97-002 dated February 10, 1997. Moreover, the liquidation reports of the accountable officers showed that payments were not supported with proper and complete documents, while there were expenses that were considered unnecessary and extravagant.

a) Require the immediate submission of liquidation vouchers and

supporting documents on the unliquidated cash advance amounting P411,650.00; and an immediate refund of P82,200.00 representing


76


Action Taken

prior year unliquidated cash advance of the Accountant which were already disallowed in audit per ND. No. 12-002-101-09 and 10 dated April 26, 2012.

b) Formulate guidelines on the reimbursements of jeepney and other

vehicle rentals guided by the LTO fare matrix;

c) See to it that payments are supported with authenticated copies of claimant’s IDs and authorization to receive, in case of a representative, to ensure that the cash disbursed is actually received by the right person;

d) Require that the claims for gasoline be supported with trip tickets

accomplished by the drivers;

e) Strictly observe the provision of COA Circular No. 85-55-A dated September 8, 1985 on the Irregular, Unnecessary, Excessive or Extravagant Expenditures or Uses of Funds and Property; and

f) Stop the use of cash advance for the purchase of supplies and

materials that should have been taken from the regular transactions; and see to it that procurement processes conform to the requirements of R.A. 9184.


Implemented

Not implemented



53. The following deficiencies were noted in our conduct of cash examination covering the period from January 1, 2009 to May 11, 2012:

1. Undeposited collections amounted to P1,235.82; 2. Collections were not deposited within the prescribed period;

3. The Accountable Officer (AO) did not maintain the prescribed

cashbook;

4. The Summary of Collections did not include a column for the daily deposits to reflect the balance representing the undeposited collections;

5. Inadequate control of accountable forms; and

6. Official Receipts and Deposit Slips were not submitted to COA.

a) Require Ms. Pasag to refund the amounting P8,231.87. We

issued amount of undeposited collection Demand Letter dated November 14, 2012;

b) Require the Cashier to deposit all collections intact daily;

c) Require the Accountable Officer to maintain separate cashbook for Petty Cash Fund to record the transactions daily, and reconcile periodically the balances with the accounting records;

d) Require the Cashier to improve the present Summary of

Collections Report which will be the basis in preparing the JEV



Implemented

77


Action Taken

for recording in the Cash Receipt Journal/Cash Journal, and submit the same promptly to the Auditor, indicating all the collections received by listing the ORs issued in numerical sequence, including the cancelled ones with the corresponding deposits; and

e) Install proper control of accountable form by preparing the Monthly Report of Accountability on Accountable Forms.

Implemented

Implemented

54. Various Disbursement Vouchers (DVs) and reports on the distribution of Membership Dues were not submitted for audit, thus, casting doubt on the regularity and validity of the 2011 transactions.

a) Submit immediately all DVs for regular expenses, as well as those for

the distribution of membership dues including the Distribution Reports for 2011 to substantiate the propriety and validity of the transactions; and

b) Take cognizance of Sec. 122 of P.D. 1445 on the submission of

required reports for audit.



55. The following audit observations and recommendations in 2009-2010 audit remained unacted upon/were not addressed by Management in CY 2011.

1. Salaries and wages – The compensation and position

classification of VFP did not conform to the Salary Standardization Law, while allowances and benefits did not comply with the applicable rules and regulations that affected the propriety of the expenses on personnel services account.

2. Other compensation, allowances and benefits of VFP Officers and

Employees - The allowances, compensations and other benefits received by VFP Officers and employees were not in accord with applicable rules and regulations, while others were not supported with statutory basis.

3. Retired Officer and employees from the government service

employed by the VFP were receiving both pension and salaries and allowances.

4. One VFP employee received his retirement benefits at an

aggregate amount of P1.098 million in May and June 2011, contrary to the COA Legal Opinion dated May 17, 2011.

5. VFP granted RATA at P10,000.00 per month, a bonus equivalent

to one month RATA and Uniform Allowance of P5,000.00 a year, to the member of the Executive Board, which were not in accordance with DBM Circular No. 2002-02 dated January 2, 2002 and Executive Order No. 24 dated February 10, 2011.

6. Other Personnel Matters - The existing practices on personnel

recruitment were not in accordance with Executive Order No. 292, otherwise known as the “Administrative Code of 1987”.

78


Action Taken

a) Coordinate with the GCG and the DBM on the realignment of

position classification and salary rates of VFP personnel with the Position Classification and Compensation System under the Salary Standardization Law and or as may be determined by the said Offices;

b) Ensure that the grant of benefits and incentives comply with

applicable laws, rules and regulations;

c) Comply with the provision of P.D. No. 1177;

d) Be guided by the abovementioned COA legal opinion.

e) Stop the payment of RATA, and other allowances to members of

the Executive Board except those specifically provided under Executive Order No. 24, dated February 10, 2011; and

f) Establish written policies on personnel recruitment guided by the

provisions of Executive Order 292 on the qualification standards and appointment of personnel. We also recommended the evaluation of the qualifications of existing personnel complement of VFP, and take appropriate action to enable them meet the qualification standards.


Not implemented

Not implemented

Not implemented

Not implemented

Not implemented

Schedule - A

Summary of Disbursements without Public Bidding

CY 2012

Check No. Date Payee Particulars Security Janitorial Catering

202971 Jan. 4, 2012 Kowarvets VFPIC security services for Dec. 16-31, 2011 201,609.69

202972 Jan. 4, 2012 Kowarvets VFP HQTRS security serv for Dec. 16-31, 2012 33,601.62

203081 Jan. 18, 2012 Jose Maria de Leon Executive Board meeting 37,198.66

203092 Jan. 18, 2012 HM57 Enterprises/H. Esguerra Jan. 1-15, 2012 services 19,495.54

203121 Jan. 20, 2012 Kowarvets VFPIC security services for Jan. 1-15,2012 201,609.69

203122 Jan. 20, 2012 Kowarvets VFP HQTRS security serv for Jan. 1-15, 2012 36,601.62

203201 Feb. 10, 2012 HM57 Enterprises/H. Esguerra Jan. 16-31, 2012 services 19,495.54

203205 Feb. 10, 2012 Kowarvets VFPIC security services for Jan. 16-31,2012 201,609.69

203206 Feb. 10, 2012 Kowarvets VFP HQTRS security serv for Jan. 16-31, 2012 33,601.62

203297 Feb. 16, 2012 Jose Maria de Leon Executive Board meeting 31,526.79

203321 Feb. 20, 2012 Kowarvets VFPIC security services for Feb. 1-15,2012 201,527.69

203322 Feb. 20, 2012 Kowarvets VFP HQTRS security serv for Feb. 1-15, 2012 33,587.95

203324 Feb. 21, 2012 HM57 Enterprises/H. Esguerra Feb. 1-15, 2012 services 19,495.54

203452 March 2, 2012 HM57 Enterprises/H. Esguerra Feb. 16-29, 2012 services 19,495.54

203454 March 2, 2012 Kowarvets VFPIC security services for Feb. 16-29,2012 201,609.69

203453 March 2, 2012 Kowarvets VFP HQTRS security serv for Feb. 16-29, 2012 33,601.62

203473 March 7, 2012 Jose Maria de Leon BLDS served to locators on March 6, 2012 14,093.75

203522 March 20, 2012 Jose Maria de Leon Executive Board meeting 31,526.79

203538 March 20, 2012 HM57 Enterprises/H. Esguerra March 1-15, 2012 services 19,495.54

203546 March 20, 2012 Jose Maria de Leon occasion not stated 22,982.14

203593 March 29, 2012 VFP Employees Coop downpayment for catering: Vet. Week 2012 1,800,000.00

203602 April, 2012 Jose Maria de Leon March 30, 2012 oratorical 17,678.57

203638 April, 2012 Kowarvets VFPIC security services for March 1-15, 2012 201,609.69

203639 April, 2012 Kowarvets VFP HQTRS security serv for March 1-15, 2012 33,601.62

203663 April, 2012 HM57 Enterprises/H. Esguerra March 16-31, 2012 services 19,495.54

203689 April, 2012 Jose Maria de Leon Executive Board meeting 31,526.79

203702 April 18, 2012 Kowarvets VFPIC security services for March 16-31, 2012 201,609.69

203703 April 18, 2012 Kowarvets VFP HQTRS security serv for March 16-31, 2012 33,601.62

203706 April 18, 2012 Kowarvets VFPIC security services for April 1-15, 2012 201,609.69

203707 April 18, 2012 HM57 Enterprises/H. Esguerra April 1-15, 2012 services 19,495.54

203758 April 18, 2012 Kowarvets VFP HQTR security services for April 1-15, 2012 33,601.62

203814 May 4, 2012 HM57 Enterprises/H. Esguerra April 16-30, 2012 services 19,495.54

203839 May 7, 2012 Kowarvets VFPIC security services for April 16-30, 2012 201,609.69

203840 May 7, 2012 Kowarvets VFP HQTRS security serv for April 16-30, 2012 33,601.62

203889 May 16, 2012 Jose Maria de Leon May 19, 2012 President's Night 52,500.00

203910 May 17, 2012 Jose Maria de Leon Executive Board meeting 31,526.79

203914 May 17, 2012 Kowarvets VFP HQTRS security serv for May 1-15, 2012 33,601.62

203896 May 17, 2012 VFP Employees Coop catering for Supreme Council (downpayment) 530,000.00

203922 May 23, 2012 HM57 Enterprises/H. Esguerra May 1-15, 2012 services 19,495.54

203940 May 24, 2013 Jose Maria de Leon Add'l payment for May 19, 2012 President's Night 110,437.50

204005 June 4, 2012 Kowarvets VFPIC security services for May 16-31, 2012 201,609.69

204004 June 4, 2012 Kowarvets VFP HQTRS security serv for May 16-31, 2012 33,601.62

204007 June 4, 2012 Jose Maria de Leon Occasion not stated 19,741.07

204013 June 4, 2012 HM57 Enterprises/H. Esguerra May 16-31, 2012 services 19,495.54

204062 June, 2012 Jose Maria de Leon Executive Board meeting 78,375.00

204063 June, 2012 Jose Maria de Leon Independence Day celebration 37,125.00

204107 June, 2012 Jose Maria de Leon Locators meeting 14,093.75

204111 June, 2012 Kowarvets VFPIC security services for June 1-15, 2012 201,609.69

204112 June, 2012 Kowarvets VFP HQTRS security serv for June 1-15, 2012 30,601.62

204117 June, 2012 HM57 Enterprises/H. Esguerra June 1-15, 2012 services 19,495.54

204223 July 2, 2012 HM57 Enterprises/H. Esguerra June 16-30, 2012 services 19,495.54

204224 July 2, 2012 Kowarvets VFPIC security services for June 16-30, 2012 201,860.79

204225 July 2, 2012 Kowarvets VFP HQTRS security serv for June 16-30, 2012 33,643.46

204275 July , 2012 Jose Maria de Leon occasion not stated 31,526.79

204323 July , 2012 Kowarvets VFPIC security services for July 1-15, 2012 201,860.79

204324 July , 2012 Kowarvets VFP HQTRS security serv for July 1-15, 2012 33,643.46

204326 July, 2012 HM57 Enterprises/H. Esguerra July 1-15, 2012 services 19,495.54

204371 Aug. 2, 2012 Kowarvets VFPIC security services for July 16-31, 2012 201,860.79

204370 Aug. 2, 2012 Kowarvets VFP HQTRS security serv for July 16-31, 2012 33,643.46

204439 Aug. 2, 2012 HM57 Enterprises/H. Esguerra July 16-31, 2012 services 19,495.54

204462 Aug. , 2012 Kowarvets VFPIC security services for Aug. 1-15, 2012 211,592.90

204463 Aug. , 2012 Kowarvets VFP HQTRS security serv for Aug. 1-15, 2012 35,265.48

204474 Aug. , 2012 Jose Maria de Leon Executive Board meeting 31,526.79

204477 Aug. , 2012 Jose Maria de Leon Catering SUCS VFPIC locator 14,093.75

204479 Aug. , 2012 HM57 Enterprises/H. Esguerra Aug. 1-15, 2012 services 19,495.54

204503 Aug. , 2012 Jose Maria de Leon Catering SUCS Nat'l Heroes Day celebration 48,125.00

224506 Sept. 3, 2012 Kowarvets VFPIC security services for Aug. 16-31, 2012 211,592.90

224505 Sept. 3, 2012 Kowarvets VFP HQTRS security serv for Aug. 16-31, 2012 35,265.48

224512 Sept. 4, 2012 HM57 Enterprises/H. Esguerra Aug. 16-31, 2012 services 200,000.00

224572 Sept. 18, 2012 Kowarvets VFPIC security services for Sept. 1-15, 2012 249,279.15

224571 Sept. 18, 2012 Kowarvets VFP HQTRS security serv for Sept. 1-15, 2012 41,544.86

224573 Sept. 20, 2012 HM57 Enterprises/H. Esguerra Sept. 1-15, 2012 services 19,495.54

224695 Oct. 2, 2012 Kowarvets VFPIC security services for Sept. 16-30, 2012 211,506.84

224694 Oct. 2, 2012 Kowarvets VFP HQTRS security serv for Sept. 16-30, 2012 35,251.14

224727 Oct. 9, 2012 HM57 Enterprises/H. Esguerra Sept. 16-30, 2012 services 19,495.54

224765 Oct. 16, 2012 Kowarvets VFPIC security services for Oct. 1-15, 2012 211,506.84

224766 Oct. 16, 2012 Kowarvets VFP HQTRS security serv for Oct. 1-15, 2012 35,251.14

224777 Oct. 17, 2012 Jose Maria de Leon Executive Board meeting 32,410.71

224824 Oct. 24, 2012 HM57 Enterprises/H. Esguerra Oct. 1-15, 2012 services 19,495.54

224834 Oct. 30, 2012 PEFTOK Secuirty Services VFPIC security services for Oct. 16-31, 2012 211,506.84

224833 Oct. 30, 2012 PEFTOK Secuirty Services VFP HQTRS security serv for Oct. 16-31, 2012 35,251.14

224881 Nov. 7, 2012 HM57 Enterprises/H. Esguerra Oct. 16-31, 2012 services 19,495.54

224923 Nov. 9, 2012 Jose Maria de Leon District meeting 17,560.71

224935 Nov. 12, 2012 VFP Employees Coop* Full payment of catering-Vet. Week in 2011 198,150.00

224984 Nov. 20, 2012 PEFTOK Secuirty Services VFPIC security services for Nov. 1-15, 2012 211,506.84

224983 Nov. 20, 2012 PEFTOK Secuirty Services VFP HQTRS security serv for Nov. 1-15, 2012 35,251.14

224991 Nov. 22, 2012 HM57 Enterprises/H. Esguerra Nov. 1-15, 2012 services 19,495.54

224995 Nov. 27, 2012 VFP Employees Coop Occasion not stated 644,750.00

224996 Nov. 27, 2012 VFP Employees Coop 57th VMMC Anniversary celebration 66,700.00

225051 Dec. 3, 2012 PEFTOK Secuirty Services VFPIC security services for Nov. 16-30, 2012 215,093.05

225050 Dec. 3, 2012 PEFTOK Secuirty Services VFP HQTRS security serv for Nov. 16-30, 2012 35,848.84

225096 Dec. 6, 2012 HM57 Enterprises/H. Esguerra Nov. 16-30, 2012 services 19,495.54

225167 Dec. 13, 2012 Jose Maria de Leon VFP Christmas party 14,093.75

225189 Dec. 17, 2012 PEFTOK Secuirty Services VFPIC security services for Dec. 1-15, 2012 211,506.84

225188 Dec. 17, 2012 PEFTOK Secuirty Services VFP HQTRS security serv for Dec. 1-15, 2012 35,251.14

225191 Dec. 14, 2012 VFP Employees Coop Occasion not stated 87,900.00

225206 Dec. 21, 2012 HM57 Enterprises/H. Esguerra Dec. 1-15, 2012 services 19,495.54

5,596,615.67 628,901.88 4,047,170.10

Prepared by: Reviewed by:

State Auditor III State Auditor IV

State Auditor IV

Audit Team Leader

T O T A L

10,272,687.65

annual audit report - vfp.gov.phvfp.gov.ph/wp-content/uploads/2015/10/2012.pdf · annual audit...

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