ANNEX A

DOLE – REGION IV-A Updates/Status of Actions Taken/Management Comments/Compliance/Implementation

On the 2015 COA Annual Audit Report and Prior Years Audit Findings and Recommendations As of June 30, 2016

COA Audit Findings

COA Audit Recommendations

Actions Taken/Management Comments/Compliance/

Implementation

Timeline

Supporting Documents Attached

Internal Audit Service (IAS) Validation

Prior Year/s

1. The Administrative Officer V/Cashier withheld cash collections totalling P112,655.00 for the month of January 2014 thereby violating the provisions of COA-MOF Joint Circular No. 1-81 and COA Circular No. 97-002 as regards the intact and daily or not later than the next banking day deposit of collections that could result in mishandling or misuse of government funds.

(1) Relieve the Administrative

Officer V/Cashier and transfer

her to a position not involving

money or property.

(2) Create a fact-finding

committee to investigate the

reason for the withheld cash

collections.

(3) Instruct the Cashier to

maximize the amount of

collections to be deposited

and ensure that all collections

are deposited, if possible,

before the weekend or a long

holiday.

A fact finding committee headed by the Assistant Regional Director, this office, was created to review and validate the findings and submit the results/report as soon as the proceedings are complete.

A memorandum dated 11 November 2014 was issued to the Cashier instructing her to submit an explanation/report regarding the said audit observation memorandum (AOM) and strictly comply with the provisions of COA-MOF Joint Circular No. 1-81 and COA Circular No.

97-002.

Series of meetings were conducted by the fact finding committee covering the CY 2015 to 2016 to discussed the issues and concerns contained in the audit findings and recommendations, review and re-validate the records/reports issued by the COA Resident Auditor. The results/minutes of the said meetings were already submitted to COA as of April 2016.

To strengthen internal

control with the

recommendations made

as corrective and

preventive measures to

address the issues, the

Committee will make an

alternative measures as

basis for the monitoring

and evaluation of

internal auditing

procedures, techniques

and accounting controls

Notice of meetings/ Minutes of Meetings

and to review and

appraise controls of

systems and procedures

and the financial and

management records.

The detailed guidelines

and procedures of this

measures will be

forwarded to the

Committee Chair for

further comments before

the final report will be

issued and submitted to

the Regional Director for

approval and

implementation.

2. The balances of the current

accounts being maintained by

DOLE Region IV-A at LBP Parian,

Calamba City were overstated by

P1,222,257.02 due to the

Accountants erroneous treatment

of the reconciling items in the

Bank Reconciliation Statements

contrary to the provisions of

GAFMIS Circular Letter No. 2002-

001 and the generally accepted

Direct the Accountant III to:

(1) Strictly comply with the

provisions of GAFMIS

Circular Letter No. 2002-

001 and the proper

treatment of reconciling

items.

(2) Trace the unreconciled differences totaling P(2,921,278.96).

In compliance to GAFMIS Circular Letter No. 2002-001, the management directed the Cashier to prepare the Monthly Check Disbursement Record and Schedule of Unreleased Checks and ensure its timely submission to the Accounting Unit. Consequently, the

.

accounting principles.

(3) Satisfactorily explain, supported by valid/relevant documents, for the following:

Unclaimed, cancelled and stale checks being deducted from the balance per bank instead of being added to the balance per books;

Some stale checks being treated as outstanding checks;

Two LBP current accounts (i.e., LBP Calamba CA 0542-1053-21 and LBP Parian CA 0542-1056-66) with balances per audit totaling P665,694.18 cannot be traced in the Statement of Financial Position.

Accountant is recording the total amount of unreleased checks to the working paper based on the submitted schedule.

At the end of 2014,

entries were prepared

per JEV# 2014-12-137 for

regular MDS account and

JEV# 2014-12-138 for

trust accounts

(Writ/SPES) to record the

recognition of cash

equivalent to the

unreleased checks and

recognition of the

appropriate liability

account. In January

2015, JEV# 2015-01-002

for regular MDS account

and JEV# 2015-01-003

for trust accounts were

prepared to reverse the

entries made for CY

2014.

The Accountant noted the unreconciled differences and the proper treatment of the reconciling items, thus,

submitted a revised Bank Reconciliation Statement to the Office of the Resident Auditor for review.

Cancelled/stale checks of the regular MDS account were being deducted from the balance per bank as these checks were previously adjusted to the book balance. The adjustments to the book is in compliance to DBM Circular Letter No. 2013-12 dated November 21, 2013 wherein all notice of cash allocation (NCA) for regular MDS sub-accounts for any month, whether part of the comprehensive releases or constituting additional NCA releases, shall be valid until the last working day of the third month of that quarter. Since the cash allocation for these cancelled/stale checks already lapsed, journal entry adjustments as reflected to the Bank

Reconciliation Statements were made.

For trust accounts, stale checks being treated as outstanding checks were adjusted on the Bank Reconciliation Statement last March 31, 2015.

The two CA#’s, 0542-

1053-21 and 0542-1056-

66, are accounts

maintained at the LBP

for Social Amelioration

Program funds intended

for the payment of

administrative expenses

and unclaimed cash

bonus. These funds

were incorporated in the

Statement of Financial

Position of the Bureau of

Workers with Special

Concern (BWSC). As of

January 2016, the said

SAP funds were already

booked up and included

in the book of accounts

in the financial

statement of the Region.

3. The CY 2014 GIP/TUPAD allocation of P80,500,000.00 net of the P805,000.00 or 1% administrative cost, could not be matched with the GIP and TUPAD disbursements of P34,663,325.34 and P43,541,307.16, respectively, due to lack of breakdown of allocation for GIP and TUPAD. Further, the government’s goal of inclusive growth through massive job generation and poverty reduction could have been achieved if an even higher percentage of the CY 2014 lump sum allocation for GIP/TUPAD was disbursed for TUPAD rather than for GIP.

Make proper representation, through channels, with the DOLE Secretary as regards the specific allocations for GIP and TUPAD with recommendation for a higher allocation for TUPAD.

With regards to GIP and TUPAD, the utilization of each project is based on the commitment/preference and approved project proposal of the requesting partners/stakeholders from the proponents Local Government Units/National Government Agencies (LGUs/NGAs).

Likewise, the total allotted fund for the said projects transferred by DOLE-Central Office was through Advice of Disbursement Limit (ADL) and there was no request coming from our office as to segregation of fund.

The office cannot recommend for higher allocation for any of the two projects. As far as job generation is concerned, TUPAD can generate more jobs since it is a short term project (15-30days). However,

for poverty reduction, GIP is more advantageous since this lasts for 3-6 months.

COA Audit Findings

COA Audit Recommendations

Actions Taken/Management Comments/Compliance/

Implementation

Timeline

Supporting Documents Attached

Internal Audit Service (IAS) Validation

Current Year

1. None of the cash advances

granted way back in 2001 up to

2014 totaling P40,466,171.67 was

liquidated, while only P764,616.00

or 24% of the current year’s cash

advances of P3,155,149.75 was

liquidated contrary to Section 5.4

of COA Circular No. 2007-001.

Further, the said current year’s

cash advances were to eight

NGOs/POs for the implementation

of livelihood projects despite the

lack of some documentary

requirements and certain

deficiencies in the Memorandum

of Agreement contrary to Section 2

of COA Circular No. 2012-001 and

Sections 4(6), 85 to 87 of P. D. No.

1445, thus, rendering the propriety

and regularity of the transactions

doubtful.

1.

That the Regional Director:

(1) Explore the legal remedies

against the NGOs/POs with the

outstanding cash advances

prior to January 1, 2015.

(2) Ensure the immediate

liquidation of the cash advances

granted in CY 2015 and

onwards through regular

monitoring and the prompt

issuance of Demand Letters.

(3) Justify why a MOA was entered

into by DOLE IV-A with Now

Moving for Better Philippines

Multi-Purpose Cooperative

despite the lack of

appropriation in CY 2014 .

(4) Direct the following personnel:

The Heads of the Provincial

Offices

To be strict in the initial

evaluation of the

necessary documents

The following are the actions

taken made on the audit

recommendations:

Laguna Provincial Office

For this CY 2016, eleven

(11) and one (1)

livelihood projects on

prior years and current

year outstanding

balances submitted their

liquidation reports with a

total amount of

P4,078,274.07 and

P4,920.00 respectively.

For the period May to

June 2016, thirteen (13)

proponents/grants

amounting to

P5,259,844.20 had

conducted project

monitoring and for this

3rd quarter of 2016,

there are eighteen (18)

grants for prior years

Status of liquidation report as of March and June 2016

Monthly Progress Report for the period May to June 2016 Schedule of Monitoring for the 3rd qtr of 2016

for the grant of cash

advances to NGOs/POs

To conduct frequent

monitoring of the

implementation of the

projects by the

NGOs/POs so that the

problems, if any, may

be addressed as early

as possible

The Chief, Technical Support

and Services Division (TSSD)

To be stricter in the

final evaluation of the

necessary documents

for the grant of cash

advances to NGOs/POs

To blacklist the

NGOs/POs with prior

years’ unliquidated

cash advances

The Chief, Accounting Unit

To justify why two or

three checks were

granted to five

NGOs/POs under the

same Allotment and

Obligation Slip (Alobs)

and for the same

purpose

releases amounting to

P3,004,923.00 will be

scheduled for

monitoring.

As of March 2016, eighty

six (86) demand letters

had already been made

and issued to various

proponents.

One (1) proponent under

the name “ EAST & WEST

CENTER FOR EXCELLENCE

IN TRAINING CORP.” with

a total grant amounting

to P468,710.00 dated

October 23, 2014 has

submitted their

liquidation last February

2016 and returned the

balance of P389,313.01

per OR # 9771804 dated

February 11, 2016.

Another one (1)

proponent under the

name “CADIWA” with

the amount of grant of

P300,000.00, issued

demand letters for three

consecutive times

however, ACP did not

List of LGUs/NGOs POs with issued demand letters

Report from TSSD with Matrix

To ensure that the basic

requirements

prescribed under

existing laws, rules and

regulations are

complied with before

processing claims for

payments.

comply. Thus, we

scheduled them for a

case conference through

a formal communication

but it did not prosper.

The ACP did not receive

the letter since they are

no longer occupying the

business address

indicated.

Quezon Provincial Office

Status of unliquidated

grants for Due from

NGAs/LGUs and

NGOs/POs as of June 30,

2016 are stated in the

attached reports.

For item number 11.5 on

the detailed

observations and

recommendations,

pertaining to

discrepancies of certain

relevant data as

reflected in the related

documents re: New

Gumaca Woodcraft

Multi-Purpose

Cooperative (Annex D),

Status of unliquidated grants as of June 30, 2016

Memorandum RE: Noted observations in the approved project proposal of New Gumaca Woodcraft Multi-Purpose Coop.

attached are

justifications/clarification

s to address the

observations.

Cavite Provincial Office

As of 29 June 2016, three

(3) Local Government

Units (LGUs) namely,

Municipal Gov’t. of Gen.

Trias, City Gov’t. of

Tagaytay and City Gov’t.

of Imus that were

granted the amount of

P1,962,221.50,

P1,007,580.00 and

P994,200.00 respectively

were monitored. Of

which, two (2) submitted

their liquidation

requirements last 28

March 2016 and one (1)

with incomplete

documentary

requirements waiting for

the additional

requirements to be

submitted (refund of

unutilized

fund/liquidation report).

Status of unliquidated funds for LGUs as of June 29, 2016

Rizal Provincial Office

For the period March to

June 2016, there are four

(4) proponents under

BUB and DILP Projects

granting the total

amount of Nine Million

One Hundred Twenty

Five Thousand Nine

Hundred Ninety Two

Pesos & 10/100

(P9,125,992.10) were

liquidated. (status of

liquidation attached).

Last 14 June 2016, TSSD issued

memorandum to all Provincial

Heads/Directors regarding the

submission of list of

unliquidated livelihood projects

which have given three (3)

demand letters.

This Office is continuously

working on for the liquidation of

livelihood projects. Additional

updates on this effort shall be

submitted soonest upon

receiving the reports from our

Provincial Offices.

Status of liquidation of grants for the period March to June 2016

Memorandum No. TSSD E/W-DILP-2016-010

2. The “Subsidy from National

Government” per books

amounting to P256,687,710.24 as

of December 31, 2015 was

understated by P1,434,025.97 due

to the non-recognition of the Tax

Remittance Advice for the month

of December 2015, among others,

contrary to the qualitative

characteristics of financial

information as regards verifiability

and faithful representation. On the

other hand, the “Cash – Modified

Disbursement System, Regular”

was understated by P225,113.34

due to the under-recognition by

P125,243.67 of the lapsed

NCAs/NTAs for the third quarter,

the over-recognition by P53,664.46

of the lapsed NCAs/NTAs for the

first and fourth quarters, the

under-recognition by P50,000.00

of the NCAs/NTAs received for CY

2015 and the adjustments made

by DOLE IV-A regarding the

cancellation of ten checks totalling

P246,692.57 and the alleged P0.02

understatement of Check No.

511256.

That the Regional Director direct

the Accountant III to:

(1) Justify why:

The TRA amounting to

P1,014,233.28 for the

month of December 2015

was not recognized in the

books of accounts;

The cancellation of ten

checks totalling

P246,692.57 was debited

to “Subsidy from National

Government” instead of

“Cash – MDS, Regular”;

The balance of

P675,707.03 re: taxes

withheld for the month of

March 2015 was

filed/remitted on May 4-7,

2015 along with the taxes

withheld for the month of

April 2015 amounting to

P705,117.12 or for a total

amount of P1,380,824.15

that lead to the non-

computation of the

additional penalties of

P216,091.60 for the late

As per instruction of

DOLE-Central Office, TRA

shall be recognized in the

books only upon

remittance, that is, on

the following month.

Therefore, the December

2015 TRA was accounted

as “Due to BIR” since it

was remitted in the 1st

week of January 2016.

Recognition of TRA was

booked up per JEV#

2016-01-001-03.

Debiting cash will only be

possible if those checks

were disbursed under

“Cash in Bank-LCCA” and

only if the cancellation

was made within the

same quarter of the year

it was issued. Under

DBM Circular No. 2013-

12 4.0, “Starting January

1, 2014, all NCA crediting

to Regular MDS Sub-

Accounts for any month,

whether part of the

comprehensive releases

or constituting additional

filing/remittance of the

balance of taxes withheld

for the month of March

2015;

The deposits totalling

P194,679.35 to the Bureau

of the Treasury was

recognized as debits to

“Subsidy from National

Government” instead of

“Cash- Treasury/Agency

Deposit, Regular”;

The lapsed NCAs/NTAs for

the 3rd quarter amounting

to P125,620.14 was

recognized as P376.47 or

for an understatement of

P125,243.67;

The lapsed NCAs/NTAs for

the 1st and 4th quarters

totalling P4,442,723.89

were recognized in the

total amount of

P4,496,388.35 or for an

overstatement of

P53,664.46;

The NCAs/NTAs received

for CY 2015 totaling

P254,770,938.89 was

recognized as

NCA releases, “shall be

valid until the last

working day of the 3rd

month of that quarter”.

Cancellation of those

checks was debited to

“Subsidy from National

Government” because its

cash allocation was

already part of the

lapsed NCA and

automatically reverted to

the National Treasury.

The deadline of monthly

tax remittance was

unwillingly and

unmindfully forgotten in

March 2015. The online

remittance was newly

handled by the

Accountant II and there

was no seminar attended

yet. When realized that

it was past due, the

Accountant II

immediately proceeded

to the Bureau of Internal

Revenue to inquire/seek

for an advice for the best

thing to do. The

P254,720,938.89 or for an

understatement of

P50,000.00; and

The alleged P0.02

understatement of the

Check No. 511256 was

debited to “Due to BIR”

and credited to “Subsidy

from National

Government” instead of

debiting the same to “Due

from Officers and

Employees” (since the

correct amount of the

check should have been

P116,741.96 and not

P116,741.98) and crediting

“Cash-MDS, Regular”.

(2) Study the proposed

Adjusting Journal Entries

under Annex F-I and make

the necessary

adjustments.

remittance of a little

amount just to minimize

the penalty in April and

the full remaining

amount in May was

actually discussed with

the BIR personnel

without neither

objection nor a warn of

violation to the National

Revenue Code was

heard.

Cash – Treasury / Agency

Deposit, Regular is used

if the deposit is an

Income Account. The

amount of P194,679.35

corresponds to the total

refund from cash

advances, payments

from personal call and

fines, therefore, cannot

be accounted as an

Income.

The said understatement

does not account for the

reverted cash from MDS

Trust Account amounting

to P0.33 and

P125,244.00 payment for

Philstar Daily which was

disbursed in September

22, 2015 with Check #

511510. The latter, was

cancelled upon finding

out in November 2015

that no Advice of Checks

was issued. This

therefore cannot be

accounted as reversion

in the third quarter since

it was recorded only in

November per JEV #

2015-11-138-25.

The difference of

P50,000.00 comprised of

two NCA requests for

payment of Cash Bond

amounting to P25,000.00

each. This was not

recognized as NCA/NTA

received because it is not

a Subsidy from National

Government but a Trust

Receipt.

Necessary adjustment

will made this CY 2016

for 0.02 understatement

of check# 511256.

Recommended adjusting

entry will be used.

3. The DOLE IV-A remitted on April

17,2015 the amount of P1,127.52

for the alleged taxes withheld for

the month of March 2015 instead

of P676,834.55 which is penalized

under Sections 254 and 255 of the

NIRC of 1997. Further, the full

remittance of the taxes withheld

for the month of March 2015 was

made along with the remittance

for April 2015. Thus, no

computation was made for the

additional penalties of

P216,091.60

That the Regional Director, the

Accountant III and the Accountant

II justify why they should not be

held jointly liable for the payment

of the remaining penalties of

P216,091.60 for the delayed

remittance of the full amount of

the taxes withheld for the month

of March 2015 and also why they

should not be charged with the

criminal penalties imposed under

Sections 254 and 255 of the NIRC

of 1997.

No one of us intended to evade

the tax in March 2015. Upon

realizing the past due

remittance for the month, the

Accountant II immediately

proceeded to the Bureau of

Internal Revenue to

inquire/seek for an advice for

the best thing to do. This, in

fact, is an apparent will to abide

the law. Also, the action made,

that is, the remittance of a little

amount just to minimize the

penalty in April and the full

remaining amount in May was

actually discussed with the BIR

personnel without neither

objection nor a warn of violation

to the National Revenue Code

was heard. Since full amount

was immediately remitted and

no single centavo was neither

distorted nor lost from the

government, and in fact that a

fine was already paid from own

pockets, an appeal of not

imposing another fine is prayed for.

4. DOLE IV-A did not comply with

the provisions of COA Circular No.

89-300 in the payment of

Extraordinary and Miscellaneous

Expenses totaling P117,600.00 to

its Regional Director for the period

January to December 2015 by

basing it on mere certifications.

That the Regional Director submit

a detailed list of the expenses

incurred, supported by the

corresponding receipts and/or

other documents evidencing

disbursement, that were charged

to EME for the period January to

December 2015 or a certification

specifically stating the purposes of

the expenses incurred and the

reasons why no receipts can be

produced.

All expenses incurred were

related in the performance of

actual duties as Regional

Director such as, but not limited

to attending:

After office meetings to

deal with erring labor

unions for possible

solutions to their

demands.

Meetings with Local

Chief Executives (LCEs),

Congressional

Representatives and

other government

officials

Extended meetings with

stakeholders and

partners in

implementation of the

Department’s programs

Occasional meetings

with community

groups/civil society

organizations

Side meetings and

follow-up meetings to

advance our agenda in

solving disputes/concerns

raised by interested groups

Expenses incurred as

regards to any travel to

different provinces

Inasmuch as the Regional

Director wish to provide the

receipts and other proofs for the

expenditures up to the last

detail, she cannot possibly do

so. She unfortunately failed to

keep the said documents

because in usual practice, we

just give certification that all

expenses incurred are official in

nature. Rest assured that on

this day onwards, all activities

will be calendared and

attendant receipts will be kept

to conform to the rules as

obliged.

5. Despite the issuance of AOM

No. DOLE4A 15-02-101(11-15), the

DOLE IV-A’s balance of “Due from

NGAs – PS-DBM” as of December

31, 2015 amounting to P42,046.82

was still overstated by P33,572.71

or 396% of the account’s audited

balance of P8,474.11 because the

Accountant III was not able to

recognized the necessary

adjustments to the account as of

June 30, 2015.

That the Regional Director direct

the Accountant III to:

(1) Validate the

observations/deficiencies

noted and make the

necessary adjustments.

(2) Ensure the timely

recognition of transactions

in the books of accounts

based on supporting

documents.

(3) Adopt the “Asset Method”

in the recognition of

supplies delivered and use

it consistently.

(4) Hasten the adjustment of

the subject account since

the related AOMs were

duly supported by the

necessary documents form

DOLE IV-A and PS-DBM.

The Accountant already

validated the deficiencies noted

by the Auditor and necessary

adjustment will be made this CY

2016 upon completion of

supporting documents.

To date, the office is using the

Asset Method in recognition of

supplies delivered.

Prepared/Submitted by: Certified by: EDGAR M. MAGTAGÑOB MA. ZENAIDA A. ANGARA-CAMPITA Accountant III Regional Director Date : Date :