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Republic of the Philippines COMMISSION ON AUDIT

Regional Office No. I City of San Fernando, La Union

MANAGEMENT LETTER

on the Audit of the

NATIONAL CONCILIATION AND MEDIATION BOARD

REGIONAL BRANCH No. I City of San Fernando, La Union

For the Year Ended December 31, 2014

Republic of the Philippines COMl\USSIO. T 0~ AUDIT

National Conciliation and Mediation Board Regional Office No. 1

San Fernando City. La Union

CONFIDENTIAL

Ms. Brenda Rose C. Odsey Director II

February 27, 2015

National Conciliation and Mediation Board Regional Branch No. I San Fernando City, La Union

Dear Ms. Odsey:

Management Letter on the Audit of the National Conciliation and Mediation Board - RB- I

For the Period January 1 to December 31, 2014

1. Pursuant to Section 2, Article IX-D of the Constitution of the Philippines and Section 43 of the Government Auditing Code of the Philippines (PD No. 1445), we have audited the accounts and operations of the National Conciliation and Mediation Board, Regional Branch No. I (NCMB RBI) San Fernando City, La Union, for the period ended December 31, 2014. The audit was conducted in accordance with applicable legal and regulatory requirements, and generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable basis for our conclusions.

2. The audit was conducted to (a) verify the level of assurance that may be placed on management's assertion on the financial statements; (b) recommend agency improvement opportunities; and (c) determine the extent of implementation of prior year's audit recommendations.

3. The agency's financial condition, results of operations and cash flows as of December 31, 2014 are shown in the attached Audited Financial Statements, marked as Annexes B-G.

4. Minor deficiencies ob er·ed in at once and were immedia • year-end financial tatem

e cour e of audit were verbally communicated rrected I acted upon. Audit Observations on the

r ·ewi e taken up with the Accountant and

immediate adjustments/remed ial measures proper disclosures on the Notes were accordingly undertaken. These were thoroughly discussed during the exit conference .

I. Introduction

5. We are pleased to note that the agency was able to accomplish its programs of service to the public regarding labor relations enhancement and dispute prevention and resolution. It has continued to excellently promote its program thrusts of Labor-Management Cooperation, Grievance Machinery, ConciliationMediation and Voluntary Arbitration. The following accomplishments are achieved through close cooperation with the various stakeholders in the maintenance of industrial peace in the region and keeping on track with both the Board's and Branch ' s target for the applicable calendar year.

6. Through the leadership of Regional Director Odsey, the agency facilitated a total of eight (8) new LMC Programs and Grievance Machinery Systems in as many companies from the unorganized companies sector equivalent to 100% target accomplishment. LMC and GME Enhancement targets of 24 and 38 in organized and unorganized companies, respectively, were completely achieved.

7. Under the DOLE's Convergence Program, the agency attained at least twice (200%) its target in the different areas of collaboration in the facilitation of LMCs in companies with either RTWPB-initiated PIPs, existing OSH programs or Family Welfare Programs (FWP). The same achievement is true in enhancing existing LMCs through convergence with either RTWPB, OSH/ECC, or DOLE (BWSC).

8. In the increasing number of Single Entry Approach (SENA) Program Requests for Assistance (RF As), the agency was able to facilitate a total of P994,662.90 monetary claims benefiting seventy three (73) workers implementing the conciliation-mediation program. A total of seventy seven (77) RF As were filed settling fifty four (54) accounting for 70% settlement rate with an average of ten (1 0) days to settle.

9. In addition, a preventive-mediation case regarding a bargaining deadlock in one unionized company was settled resulting to P7.5M in worker benefits.

10. One of two voluntary arbitration cases was rendered decision in 2014 while one (1) is still pending for 50% accomplishment rate.

11. Region I remained a stri ke-free zone for CY 2014 averting potential strikes through preventive-mediation from two otices of Strike (NOS) cases.

II. Summary of Recommendations

For the significant deficiencies observed in the course of the audit, we recommended that Management:

• To allocate funds for insurance with the GSIS General Insurance Fund of all insurable assets of the agency pursuant to Sec. 489 of GAAM, Volume I, so that the government would be indemnified in case oftheft, fire or any fortuitous events.

• Require the designated Supply Officer to prepare Property Acknowledgement Receipt (PAR) to acknowledge the receipt of property & equipment for official use by the recipient from the office

• To adhere strictly on the prescribed period in the submission of contracts and supporting documents to the Office of the Auditor to avoid the penalties provided under Sec. 4.1 of COA Circular No. 2009-001, and the transactions covered by the unsubmitted documents be suspended in audit

• Require the Cashier Designate to prepare Monthly Report of Accountability for accountable forms pursuant to Sec. 98 of GAAM to facilitate the accounting of checks and receipts and;

• Require Property Officer designate to prepare the Inventory and Inspection Report of Unserviceable Properties for the disposal of these assets to derive additional income if sold through public auction eventually drop from the books.

• Management should integrate in their regular activities the plans, programs and projects intended to address the concerns of Elderly and Differently-abled person.

III. Detailed Observations and Recommendations

GSIS General Insurance Fund and the Property Replacement Fund

Properties of the Agency were not insured with the GSIS General Insurance Fund and the Property Replacement Fund ,contrary to Sec. 489 of GAAM, Vol. I and Sec. I of the Administrative Order No. 141 dated August 12, 1994, thus, the government is at risk of not being indemnified, in case of damage or loss of property.

12. Section 489 of the Go emment ccounting and Auditing Manual (GAAM) Volume I, provides that " all heads of department, commission, xxx offices of that national government x:x:x hall secure from the General Insurance Fund

directly all issuances or bonds covering properties and other insurable risks of the their respective offices xxx officials of the agency shall submit their respective inventories of property e;very end of the fiscal year to the Commission on Audit, furnishing the GSIS with a copy of said inventory for appraisal of the amount of the premium to be paid for the insurance of the property reported".

13. Section I of the Administrative Order No. 141 dated August 12, 1994, states that " All Heads, Presidents, General Manager, Board Members, Directors or Trustees of privatized corporations, including the proponents/implementers of BOT projects, shall insure with or secure insurance or bonds from the GSIS on or of all properties or assets, contracts or agreements, causes or rights or action or other insurable interests as this term is defined in P D 1814 (PD 612 as amended) otherwise known as the Insurance Code, and/or Administrative Order No. 33 issued by the President on August 25,1987, at least to the extent of the interest of the Government"

14. Such situation demonstrates and proves that the safety and control measures supposedly enforced for the protection of the said assets are inadequate. Hence, this is to remind the management of the importance of insurance coverage.

15. The inability to insure its properties with the General Insurance Fund of the GSIS might expose government assets to loss due to fortuitous events such fire, earthquake or other casualty.

16. We recommended that management allocate funds for insurance with the GSIS General Insurance Fund of all insurable assets of the agency pursuant to Section 489 of GAAM, Volume I, so that the government would be indemnified in case of theft, fire or any fortuitous events.

17. Management assured the audit team to strictly comply with the recommendation as soon as possible.

Property and Acknowledgement Receipt (PAR)

Property and Acknowledgement Receipt (PAR) were not prepared/updated to acknowledge the receipt of property and equipment for official use from the Property Officer which is not in accordance with Section 56 of the Manual on New Government Accounting System (MNGAS) renders difficulty in establishing accountability .

18. Section 56 of the Manual on ew Government Accounting System (MNGAS), Volume II " states that the Property Acknowledgement Receipt (PAR), formerly known as Acknowledgement Receipt for Equipment (ARE) shall be used to acknowledge the receipt of property and equipment for official use from the Property Officer. It shall be renewed every three years or every time there is a change in accountability.

19. COA Circular No.201 4-002 dated pril 15, 2014"states that for PPE, issuances shall be covered by Proper!). and Acknowledgement Receipt (PAR), while for small items purchased or disaster response and rescue activities, which do not qualify under the equipment classification, shall be recorded under the appropriate Inventory account and the issuances to be charged to appropriate expense account. Issuances shall be supported with RIS.

20. The Audit Team noted in the review of inventory report relative to the various equipment and furnitures ,the Property Acknowledgement Receipt (PAR) were not prepared/updated to acknowledge the receipt for official use from the Property Officer.

21. Such practice renders difficulty in monitoring the condition and whereabouts of the property and equipment during inventory taking, in determining the proper person to whom such property and equipment were issued and in establishing their accountability in case of loss, destruction and the like.

22. We recommended that the designated Supply Officer should prepare Property Acknowledgement Receipt (PAR) to acknowledge the receipt of property & equipment for official use by the recipient from the office.

23. Management will comply with the recommendations. Thus, property and equipment issued to each employee were acknowledged and received.

Perfected Contracts and Purchase Orders

Copies of perfected contracts and purchase orders were not forwarded to the Office of the Auditor within five (5) working days upon approval, together with the supporting documents, hence, the audit team was deprived from undertaking timely review and audit of the same.

24. COA Circular No. 87-278 dated November 12, 1987 requires audited agency to furnish the Auditor with copy of perfected contracts within five (5) working days upon approval together with the supporting documents for review.

25 . In addition, COA Memorandum No. 2005-027 dated February 28, 2005 provides the documentary requirements for the technical evaluation of all government contracts. Moreover, COA Circular No. 2009-001 dated February 12,2009 restated with Amendment COA Circular No. 87-278 and COA Memorandum No. 2005-027 and provides that any unjustified failure of the officials and employees concerned to comply with the requirements imposed shall be subject to the Administrative disciplinary act ion provided in (a) Section 127 of Presidential Decree No. 1445; (b) Section 55 , Title 1-B, Book V of the Revised Administrative Code of 1987: and (c) ection IT of the Republic Act No. 6713.

26. We have observed that perfected contracts purchase orders and their supporting documents were not submitted o e Office of the Auditor within the prescribed

period for review, in violation of the above-cited COA Circular and COA Memorandum. Also, the certificate of acceptance were not submitted one (1) day after the delivery of goods in order fo r.the audit team to inspect if necessary.

27. We recommended that management to adhere strictly on the prescribed period in the submission of contracts and supporting documents to the Office of the Auditor to avoid the penalties provided under Sec.4.1 of COA Circular No. 2009-001, and the transactions covered by the unsubmitted documents be suspended in audit.

28. Management commented to comply with the recommendation beginning January 2015.

Monthly Report of Accountability for Accountable Forms

Monthly Report of Accountability for accountable forms were not prepared by the accountable officer as provided under Sec. 98 of Government Accounting and Auditing Manual (GAAM) rendering the difficulty in accounting of the accountable forms.

29. Section 98 of GAAM provides that accountable officers shall render a report on their accountability for accountable forms at least once a month in the prescribed form. Such report shall also be prepared in case of transfer of office or accountability by the Accountable Officers. The report shall include among others the name, type, quantity and serial number and/or value of the accountable form as of the month/period, the forms received and issued during the month/period and the balances as of end of month/period.

30. It was noted that the Cashier Designate failed to prepare report on their accountability for accountable forms. Such failure caused the difficulty in accounting the receipts and checks as well as the cancelled forms to determine the balances of its accountability at the time of audit.

31. We recommended that management to require the Cashier Designate to prepare Monthly Report of Accountability for accountable forms pursuant to Sec. 98 of GAAM to facilitate the accounting of checks and receipts.

32. Management assured the audit team to comply with the recommendation beginning January 2015.

Unserviceable Properties

Unserviceable properties having acquisition cost of P108,099.00 were not yet disposed of and remained under Property, Plant and Equipment (PPE) account contrary to Section 79 of Presidential Decree No. 1445 rendering overstatement of Property, Plant and Equipment account.

33. Section 79 of PD No. 1445 provide that: " When government property has become unserviceable f or any cause, or is no longer needed, it shall, upon application of the officer accowatable therefore, be inspected by the head of the agency or his duly authorized representative in the presence of the auditor concerned and, if found to be valueless or unsalable, it may be destroyed in their presence. If found to be valuable, it may be sold at public auction to the highest bidder under the supervision of the proper committee on award or similar body in the presence of the auditor concerned or other duly authorized representative of the Commission, after advertising by printed notice in the Official Gazette, or for not less than three consecutive days in any newspaper of general circulation, or where the value of the property does not warrant the expense of publication, by notices posted for a like period in at least three public places in the locality where the property is to be sold. In the event that the public auction fails, the property may be sold at a private sale at such price as may be fixed by the same committee or body concerned and approved by the Commission.

34. Based on the submitted inventory report and ocular inspection conducted, properties amounting to P108,099.00 were identified as unserviceable. These were stored in the stockroom of the agency awaiting disposal . However, delay in the disposal of its assets would allow them to lose their value. Here under are the list of unserviceable properties.

List of Unserviceable Properties

Articles Qty. Unit Cost Total Cost Property No. Date Acquired Furniture & Fixtures Jr. Exec. Desk(42x20'J I 850.00 850.00 N-002 1975 Television Set( Samsung colored- I 10,600.00 10,600.00 N-126 June 1998 21") Swivel Chair( black leatherette w/ 2 3,550.00 7,100.00 N-69A,N-69B August 2010 cushion & wheels) IT Equipment Personal Computer (CPU Pentium I 32,999.00 32,999.00 N-120 Nov. 2007 4) Laptop Computer ( Neo Brand) I 45,000.00 45,000.00 N-121 Dec. 2007 Computer Printer (HP 2360) I 2,600.00 2,600.00 N-149 May2010 Colored Printer (HP K7000) I 12,500 12,500.00 N-60 May2012 Total 108,099.00

35. It was also noted that management did not prepare the Inventory and Inspection Report of Unserviceable Properties for the disposal of these assets rendering overstatement of the Property, Plant and Equipment Account.

36. To avoid further deterioration, we recommended that management to require the Property Officer designate to prepare the Inventory and Inspection Report of Unserviceable Properties for the disposal of these assets to derive additional income if sold through public auction eventually drop from the books.

37. Management took cognizance of our audit recommendation.

Programs for the Senior Citizens and Differently-abled Persons

The agency did not have plans, programs and projects for the elderly and differently-abled persons, which is mandated under the General Appropriations Act. Neither did management integrate in their regular activities and welfare of less fortunate and elderly.

38. The agency did not provide budget for the implementations of programs and projects related to senior citizens and differently- abled persons as prescribed under Section of RA No. 10155, the General Appropriations Act for fiscal year 2014.

39. The law provides that,

" All agencies of the government shall formulate plans, programs and projects intended to address the concerns of senior citizens and differently-abled persons and integrated the same in their regular activities which shall be at least one percent of their budget".

40. We recommended that management should integrate in their regular activities the plans, programs and projects intended to address the concerns of Elderly and Differently-a bled person.

41. The agency did not allocate funds for programs and projects related to senior citizens and differently-abled persons.

Gender and Development (GAD)

42. The agency was able to implement their Gender and Development program through conducting Team building seminars, Women's Month Celebration and other physical activities and seminars/conferences with GAD topics, disseminating GAD IEC materials to their clients. They had spent a total amount ofP246,565 .99 out of their mandated budgetary requirement ofP266,691.22

43. Management committed to comply with the audit recommendations.

Compliance with Tax Laws

44. In adherence to BIR regulations and the government' s drive toward efficient revenue generation, the Agency has been consistently withholding taxes from compensation, expanded withholding tax and value added percentage taxes. During the year, taxes withheld from compensation amounted to P297 ,001.34 and all other required taxes due for government purchases of goods and services amounted to P78,639.50. These were all remitted to the BIR thru Tax Remittance Advices (TRAs) in the total amount ofP 375,640.84

45. We commended management for the favorable accomplishment and encourage them to continue adhering to tax laws, rules and regulations.

Compliance with GSIS Premium Deductions and Remittances

46. For the year 2014, GSIS premiums withheld from the salaries oftheir employees were remitted to the GSIS regularly and on time.

Compliance with Implementing Rules and Regulations (IRR) ofRA 9184

47. For the year 2014, the agency purchased common-use office supplies from the Department of Budget and Management-Procurement Service (DBM-PS) and the rest were sourced from private supplies.

IV. Status of Implementation of Prior Year's Audit Recommendation

48. We made a follow-up on the actions taken by management to implement the two recommendations of prior years and we are happy to note that all the audit recommendations had been implemented.

49. The results of validation on the implementation of prior year's recommendation are presented in Annex I.

V. Acknowledgement

50. We wish to express our gratitude to the Management and staff of the National Conciliation and Mediation Board, RB - I for the cooperation and assistance extended to our Audit Team during the audit.

51. We request a status report on the actions taken on the audit recommendations within sixty (60) days from date of receipt hereof pursuant to Section 88, General Provisions, General Appropriations Act for FY 2014 (RA 1 0633).

Very truly yours,

COMMISSION ON AUDIT

VIRGILIO C. Q INTO State Auditor IV

OIC-Regional Supervising Auditor

ANNEXE

Annex Particulars Letter

A Statement of Management' s Responsibility for Financial Statements B Statement of Financial Position c Detailed Statement of Financial Position D Statement of Financial Performance E Detailed Statement of Financial Performance F Statement of Cash Flow G Statement of Changes in Net Assets/Equity H Notes to Financial Statements I Status oflmplementation of Prior Year's Audit Recommendations

~ati{)nal

C{)ndliati{)n and · Mediati{)n 13{)ard

_ ~m.r:.x A

Republic of the Philippines Department of Labor and Employment REGIONAL BRANCH NO. I 2nd Roor, Unison Realty Bldg., Quezon Avenue City of San Fernando, La Union Tel. Nos. 888-4610

STATEMENT OF MANAGEMENT RESPONSIBILITY FOR FINANCIAL STATEMENTS

The management of NATIONAL CONCILIATION AND MEDIATION BOARD, Regional Branch No. I is responsible for all information and representation contained in the accompanying Statement of Financial Position as at December 31 , 2014 and the related Statement of Financial Performance and Cash Flow for the year then ended. The financial statements have been prepared in conformity with the Philippine Public Sector Accounting Standard and reflect amounts that are based on the best estimates and informed judgment of management with an appropriate consideration and materiality.

In this regard, management maintains a system of accounting and reporting which provides for the necessary internal controls to ensure that transactions are properly authorized and recorded, assets are safeguarded against unauthorized used or disposition and liabilities are recognized.

1P VISHAL YN I. CAMPOS

Accountant Designate BREND

ANNEXB

Republic of the Ph il ippines NATIONAL CONCILIATION AND MEDIATION BOARD

Reg ional Branch No. I

ASSETS

Current Assets

San Fernando City, La Union

STATEMENT OF FINANCIAL POSITION As at December 31 , 2014

(With Comparative Figures for CY 2013)

CY 2014

Receivables Disallowances/Charges p p

Inventories

CY 2013

Office Supplies Inventory Other Inventories

70,156.07 66,757.41

Prepaid Expenses Prepaid Rent Prepaid Insurance

Total Current Assets

Property, Plant and Equipment Property, Plant and Equipment Less: Accumulated Depreciation

Total Property, Plant and Equipment

TOTAL ASSETS

p

50,400.00 312.91

120,868.98 p

p 2,852,133.74 p 803,267.59

p 2,048,866.15 p

2,169,735.13

2,255.37

50,400.00 1,951.27

121,364.05

2, 736,642.83 1,684,674.11 1,051 ,968. 72

1 '173,332. 77

LIABILITIES AND EQUITY

LIABILITIES

Other Payables Total Liabilities

EQUITY Government Equity, Beginning

Changes in Net Assets/Equity: Current Operations Transfer of Vehicle (FX, REVO) Montero Cash Advance (Director) Adjustment of Prior Years

TOTAL LIABILITIES AND EQUITY

p

p

CY 2014

p p -----p p

1,053,119.77

185,913.46 (115,500.00)

1,209,426.00 (66,329.07) (96,895.03)

2,169,735.13 p

2,169,735.13 p

CY 2013

120,213.00 120,213.00

856,661.06

476,275.29 73,000.00

(5, 175.00) (347,641.58)

1,053,119.77

1 '173,332. 77

ANNEXC

Republic of the Philippines NATIONAL CONCILIATION AND MEDIATION BOARD

Regional Branch No. I San Fernando City, La Union

DETAILED STATEMENT OF FINANCIAL POSITION As at December 31, 2014


ASSETS

Current Assets Receivables

Disallowances/Charges

Inventories Office Supplies Inventory Other Inventories

Prepaid Expenses Prepaid Rent Prepaid Insurance

Total Current Assets

Property, Plant and Equipment Office Equipment Furniture and Fixtures Information, Communication and Technology Equipments

Motor Vehicles Other Assets TOTAL Less: Accumulated Depreciation

Total Property, Plant and Equipment

TOTAL ASSETS

CY 2014 CY 2013

p p

70,156.07 66,757.41 2,255.37

50,400.00 50,400.00 312.91 1,951.27

p 120,868.98 p __ 1;...;::2_;...1 lc..;;_3..;._64_. 0.:......;5_

p 412,735.20 p 412,735.20 374,884.54 374,884.54 855,088.00 703,308.00

1 ,209,426.00 1 '155,000.00 90,715.09

p 2,852,133.74 p 2, 736,642.83 803,267.59 1,684,674.11

p 2,048,866.15 p 1 ,051 ,968. 72

p 2,169,735.13 1,173,332.77

LIABILITIES AND EQUITY

LIABILITIES

Accounts Payable Total Liabilities

EQUITY Government Equity, Beginning


TOTAL LIABILITIES AND EQUITY

p

p

CY 2014

p p p-----p

1,053,119.77

185,913.46 (115,500.00)

1,209,426.00 (66,329.07) (96,895.03)

2,169,735.13 p

2,169,735.13 p

CY 2013

120,213.00 120,213.00

856,661.06

476,275.29 73,000.00

(5,175.00) (347,641.58)

1,053,119.77

1 '173,332. 77

ANNEX D


Regional Office No. I City of San Fernando, La Union

STATEMENT OF FINANCIAL PERFORMANCE For the Year Ended December 31 , 2014 (With Comparative Figures for CY 2013)

REVENUE Subsidy from National Government Less: Reversion of Unused NCA

Total Income

LESS: EXPENSES Total Expenses

DEFICIT

CY 2014

5,386,179.36

p 5,386,179.36

5,200,265.93 p 185,913.43

CY 2013

5,291 ,240.05

5,291,240.05

4,814,964.76 476,275.29


Reg ional Office No. I City of San Fernando, La Union

ANNEX E

DETAILED STATEMENT OF FINANCIAL PERFORMANCE For the Year Ended December 31, 2014 (With Comparative Figures for CY 2013)

REVENUE Subsidy from National Government Less: Reversion of Unused NCA

Total Income

LESS: EXPENSES PERSONNEL SERVICES Salaries and Wages - Regular Pay PERA Representation Allowance Transportation Allowance Clothing Allowance Productivity Incentive Allowance Other Bonuses Longevity Pay Cash Gift Year End Bonus Life and Retirement and Insurance Contributions Pag - ibig Contributions PHIC Contribution ECC Contributions Other Personnel Benefits

TOTAL PERSONNEL EXPENSES

CY 2014

5,386,179.36

5,386,179.36

2,201 ,648.12 158,838.71 102,000.00 100,804.12 35,000.00 12,000.00 35,000.00

35,000.00 197,179.00 264,005.75

8,000.00 23,550.00

7,977.25 48,630.77

3,229,633.72

CY 2013

5,291 ,240.05

5,291,240.05

2,104,029.20 147,225.81 25,500.00 24,727.28 35,000.00 12,000.00

214,256.00 252,855.50

7,500.00 21 '199.88

7,200.00 249,200.42

3,100,694.09

CY 2014

MAINTENANCE AND OTHER OPERATING EXPENSES Travelling Expenses - local 171 ,258.50 Training Expenses 241 ,233.36 Office Supplies Expenses 126,012.89 Fuel, Oil and Lubricants Expenses 171 ,342.16 Water Expense 8,200.00 Electricity Expense 179,399.32 Postage and Courier Services 14,506.50 Telephone Expense- Landline 74,073.27 Telephone Expense- Mobile 21,680.00 Internet Expense 34,152.23 Extraordinary & Miscellaneous Expense 63,928.85 Rent Expense 201 ,600.00 Representation Expense 95,078.00 Subscription Expense 11,991 .00 Auditing Services Janitorial Services 99,016.17 Professional Services 16,000.00 Repairs and Maintenance - Office Equipments 4,200.00 Repairs and Maintanance - Furnitures, Fixtures and Books Repairs and Maintenance - Machinery & Equipme Repairs and maintenance - ICT Equipments Repairs and Maintenance - Motor Vehicles Fidelity Bond Premiums Insurance Expenses Printing and Binding Expense Depreciation - Office Equipment Depreciation - Furnitures, Fixtures and Books Depreciation - ICT Equipment Depreciation - Communication Equipments Depreciation- Motor Vehicles Other Maintenance and Operating Expenses

TOTAL MOOE EXPENSES Total Expenses

DEFICIT

9,930.00 17,810.75 9,782.00 5,394.27

49,472.82 211175.04 87,445.62

235,949.46 1,970,632.21 5,200,265.93

185,913.43

CY 2013

173,331 .00 41,590.00

127,674.10 141,323.12

7,727.00 151,689.23

11,757.00 73,120.70 24,100.00 26,995.54

201,600.00 132,498.10

5,050.32

51,783.75 10,000.00 13,716.00

4,150.00 85,434.90

6,016.00 5,994.18 1,176.00

25,929.00 13,123.20 71,464.84

307,026.69 1 I 714,270.67 4,814,964. 76

476,275.29

ANNEX F


Regional Branch No. I City of San Fernando, La Union

STATEMENT OF CASH FLOWS Fiscal Year Ended December 31, 2014


Cash Flow from Operating Activities

Cash Inflows: Receipt of Notice of Transfer of Allocation (NTA)

Total Cash Inflows

Cash Outflows: Cash Payment of Operating Expenses Remittance of GSIS, Pag-ibig, Philhealth Granting of Cash Advances/Petty Cash Fund Cash Purchase of Inventories Reversion of unused NCA

Total Cash Outflows Cash Provided by Operating Activities

CY 2014

5,333,824.46 5,333,824.46

4,327,455.43 303,533.00 390,324.61

86,832.56 133,778.86

5,241,924.46 p 91,900.00 p

CASH BALANCE, ENDING December 31, 2014 P=====

CY 2013

5,276,048.22 5,276,048.22

2,950,218.39 288,755.38

1,198,524.46 136,126.90 296,380.19

4,870,005.32 406,042.90

ANNEXG


Regional Branch No. I City of San Fernando, La Union

STATEMENT OF CHANGES IN NET ASSETS/EQUITY For the Year Ended December 31 , 2014

Other Payables Total Liablities

CY 2014 CY 2013 120,213.00

p 120,213.00

EQUITY Government Equity


1,053,119.77

185,913.46 (115,500.00)

1,209,426.00 (66,329.07) (96,895.03)

856,661.06

476,275.29 73,000.00

(5, 175.00) (347,641.58)

p 2,169,735.13 p 1,173,332.77

ANNEXH

NATIONAL CONCILIATION AND MEDIATION BOARD Regional Branch I

NOTES TO FINANCIAL STATEMENTS

1. General/ Agency Profile

We are presenting the financial statement of the National Conciliation and Mediation Board, Regional Branch No. I, City of San Fernando, La Union.

The National Conciliation and Mediation Board, Regional Branch No. I, was created under Executive Order No. 126 dated January 30, 1987. It is mandated to promote and emphasize the privacy of free collective bargaining and negotiation including voluntary arbitration, mediation and conciliation as mode of settling labor or industrial disputes; and to provide adequate administrative machinery for the expeditious settlement of labor or industrial dispute.

2. Basis of Financial Statements Presentation

The financial statements have been prepared in accordance with the Philippine Public Sector Accounting Structure (PPSAS) which were generally accepted the state of accounting principles and standards.

3. Summary of Significant Accounting Principles

The agency uses the accrual basis of accounting. All expenses were recognized when incurred and reported in the financial statements in the period to which they relate. Income was on accrual basis except for transactions where accrual basis is impractical or when other methods were required by law.

Notice of Cash Allocation/Notice of Transfer of Allocation (NCA/NTA) was recorded in the Regular Agency (RA) books as well as those income/receipts which the agency is authorized to use.

The Modified Obligation System was used to record allotments received and obligations incurred. Separate registries were maintained to control allotments and obligations for each class of allotment.

Supplies and materials purchased for inventory purposes were recorded using the Perpetual Inventory System.

The cost of ending inventory of the office supplies and materials and other inventory items were computed at cost.

Petty Cash Fund (PCF) account was maintained under the Imprest System. All replenishments were directly charged to the expense account. The PCF was not used to purchase regular inventory items for stock.

Accounts were classified in conformity with the New Chart of Accounts prescribed under the Revised Chart of Accounts using the Unified Account Code Structure (UACS) which was implemented effective January 1, 2014.

Unserviceable Property were properly accounted and disposed.

4. Correction of Fundamental Errors

Fundamental errors of prior years were corrected by using the Accumulated Surplus Account. Errors affecting current year's operation were charged to the current year's account.

5. Accumulated Depreciation

The breakdown ofthis account is as follows: CY 2014 CY 2013

Ace. Dep. - Office Equipment p 213,077.25 p 163,604.43 Ace. Dep. -Furniture & Fixtures 167,558.20 146,383.16 Ace. Dep.- IT Equipment & Software 422,632.14 335,186.52 Ace. Dep.- Motor Vehicles 0.00 1,039,500.00

Total p 803!261.59 p 1 !684!674, 11

6. Allotment, Obligations and Balances

The total allotment issued to them by the Central Office and made available during the year was P5, 333,824.46 and with obligations incurred in the amount of P4, 985,126. 7 4. It incurred a balance of P 348, 697. 72 and automatically reverted to the Bureau ofTreasury.

7. Unliquidated Cash Advance

The total amount of cash advance issued to Director Brenda Rose C. Odsey was used upon travel at Singapore regarding I & E Specialist Program from January 4-31, 2015 in the amount of P66, 329.07.

The breakdown ofthis cash advance is as follows: Amount

Daily Allowance . $ 25.00 Duration of Stay X 28 Total $ 700.00 Peso Rate (Bangko Sentral) X 33.740100 Total p 23,618.07 Add: Air Fare (Manila- Singapore) (Singapore- Manila) 29, 861.00

Terminal Fee (Pre Departure) 1,500.00 Estimated TEV (Jan 3, 4; Jan 31- Feb. 1, 2014) 3,350.00 Additional Air Fare 8!000.00

Grand Total p 66,322.07

8. Accumulated Surplus/(Deficit) P 1,116.615.36

This account represents the cumulative results of normal and continuous operations of the National Conciliation and Mediation Board RBI. It is used to record prior period adjustments, effect of changes in accounting policy and other capital adjustments in compliance with the RCA. The balance of "Cash- Treasury/ Agency Deposit, Regular, was closed to this account.

9. Expenses

Other Personnel Benefits account represents the monetization of leave credits for two employees in the amount of P48, 630.77.

Travelling Expenses account represents the expenses incurred during the conduct of meetings, seminars, trainings and related matters in particular place.

Training Expenses account represents the cost of training of the staff related to the programs and activities of the Agency.

Fuel, Oil and Lubricants Expenses account represents the expenses of gasoline and oil for the vehicle Mitsubishi Montero.

Electricity Expenses account in the amount of P 179, 399.32 represents the expenses of electricity for the year incurred by the Agency.

Telephone Expenses account represents the expenses on mobile and telephone-landline.

Internet Expenses account represents the expenses on PLOT -DSL internet connection used by the Agency.

Representation Expenses account represents expenses incurred during conference and meetings.

Subscription Expenses account represents the expenses in one year subscription on newspaper.

Other Professional Services account represents the payment for the services of our resource person.

Annex I Department of Labor and Employment National Commission and Mediation Board- Branch I Status of Implementation of Prior Year' s Audit Recommendations

Observations and Recommendations

Financial and Compliance

Erroneous recording of cash collecction

Ref.

1. Collections at Region I 2013 amounting to P6,000.00 were ML erroneously recorded as Cash Disbursing Officer (Account 107) instead of Cash Collecting Officer (1 06), thus collections could not be easily monitored and properly recorded in the books.

Recommendation:

We recommended that the accountant of Region I use the proper account to record collection in order to be able to monitor the account and to have a correct presentation of the account balance in the financial statement.

Management Action

Status of Implementation

The accountant Fully designate complied Implemented with the recommendation.

Results of Auditor's Validation

Collections amounting to P6,000.00 were already recorded to Cash Collecting Officer as verified in the General Ledger.

Unserviceable Properties

2. Obsolete and Unserviceable Property, ML Plant & Equipment were still 2013 included in the PPE account, contrary to Section 143, Volume III of the Manual on the New Government Accounting System (MNGAS), resulting in the misclassification of these assets and the misstatement of the related depreciation expense accounts. Moreover, these unserviceable properties remained undisposed, contrary to Section 79 of PD 1445, thus depriving the government of additional revenue that may be generated from their sale.

Recommendation:

We recommended the following:

a) Prepare the necessary Waste Materials Reports (WMRs) for all waste materials for proper disposal in accordance with Sec. 79 of PD 1445.

b) Require the acting property officer to prepare the Inventory and Inspection Report of Unserviceable Properties for the disposal of these assets to prevent further deterioration and to derive income from salvage value.

c) Advice the accountant to reclassify and prepare a journal entry voucher to record the unserviceable properties ready for disposal to the Other Assets Account

The Branch has Fully complied with the Implemented recommendations. Thus, all unserviceable properties were properly disposed on March 5, 2014.

U nserviceab I e properties were properly disposed on March 5,2014. Collection made under O.R. No. 0283163 dated March 24,2014 amounting :P3,300.00

for a fair presentation of the financial statements. Submit likewise, the list of these unserviceable items to COA using the Inventory and Inspection Report of Unserviceable Property for proper action.

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