You are on page 1of 9

COMMENTS AND OBSERVATIONS

Overstatement of Cash and Receivable Accounts by P14.038 Million and P11.392


Million, respectively.
1. Cash Disbursing Officer (107) and Due from Officers and Employees (128) are of
doubtful accuracy and reliability due to non-liquidation of cash advances granted
for specific purpose/activity and travel in the amounts of P14,037,755.37 and
P11,391,924.98, respectively, as of year-end resulting to overstatement of the
asset accounts and understatement of the related expense accounts. The
breakdown of the unliquidated cash advances per office/region is shown below:
Region/Office

Specific Purpose/Activity

Travel

BFAR-CO
Reg. IV
Reg. V
RFTC, Reg. V
Reg. VI
Reg. XI
Reg. XIII
Reg. IX
Reg. X
Reg. XII

P 4,181,552.69
327,234.19
1,979,240.00
211,424.00
344,792.47
2,334,501.41
519,050.00
2,218,106.59
1,921,854.02

P 3,264,888.76
1,855,856.96
1,841,937.32
471,533.00
175,295.80
1,440,109.65
206,727.00
2,135,576.49
_____________

Total

P14,037,755.37

P 11,391,924.98

Cash advances granted to Regular Disbursing Officers pertaining to salaries


and wages are normally liquidated within the prescribed period.
In Region V, the subsidiary balances of Cash Disbursing Officers and Due
from Officers and Employees did not reconcile with general ledger balances,
showing a difference of P65,865.30. While in Region XI, advances for specific
purpose/activity in the amount of P302,063.47 was misclassified to Due from
Officers and Employees account instead of to the Cash Disbursing Officer
account.
We recommended that management adopt stricter measures to enforce
settlement/liquidation of cash advances to reflect the correct balances of the assets
and the related expense accounts. Accountants should also be directed to cause
the reconciliation of the subsidiary and general ledger balances of cash advances
and thereafter, prepared the necessary adjustments in the books.

17

Existence and Accuracy of the Inventory


Million

Accounts Not Certain P56.289

2. Various errors/deficiencies enumerated below which have the effect of


overstating/understating affected inventory accounts to make total inventories
amounting to P56,288,629.84 unreliable:
a. Non-preparation of Reports of Supplies and Materials Issued and Waste
Material Report as basis for recording of issuances in the books of
accounts, thus, overstating the inventory accounts and understating the
related expenses account in the following offices:
BFAR-C.O.
CAR
Region V
Region VII
Region VIII

P18,194,175.25
3,368,787.20
8,027,716.08
245,922.61
3,519,866.22

Total

P33,356,467.36

b. In Region XI, other inventory items were closed to Prior Years


Adjustment without ascertaining whether these are no longer existing or
unserviceable, thereby, understating the asset account by P630,338.70 and
understating the equity account. Moreover, there was failure to record as
inventory purchases in Region XI of supplies and materials amounting to
P1,035,998.40 or non-implementation of the perpetual inventory method
as required under Section 43 of the Manual on NGAS.
c. Misclassification of the Semi-expendable Supplies and Materials to Other
Inventory Items in the amount of P5,406,716.23 for Region XI, and to
Office Supplies Inventory account in the amounts of P3,462,021.72 in
Region VIII and P1,921,795.43 in Region VI.
d. In Region IX, Office Supplies Inventory of P2,006,624.84 was dropped
from the books of accounts thru a Journal Entry Voucher without proper
supporting documents, thus, understating the asset account.
e. In CAR, inventory produce from fishery and other agricultural operations
were not reflected in the books of accounts, and the sales/disposal or
dispersal in the total amount of P33,688.25 were not properly accounted
for.
f.

Gas, Oil and Lubricants issued are still recorded in the books, thus,
overstating the account by P359,421.50 and understating the related
expense account in Region VI, while the gas and oil purchases in Region

18

VIII amounting to P216,070.18 were erroneously recorded as Advances


to Contractors instead of to the Gas, Oil and Lubricants Inventory
account.
g. No physical inventory was conducted on the inventory assets of
P1,972,622.25 and P1,242,816.32, respectively, in Regions IV and X.
We recommended that the Property Officer be required to submit promptly
the needed reports/documents as basis of the Accounting Office to record
issuances and account for the produce, sale/disposal or dispersal of fishery
products. Physical inventory should likewise be conducted to determine the
existence of the assets. The Accountant should coordinate with the Property
Officer to reconcile the property records with the ledger balances and to prepare
the appropriate adjusting entries to reflect the correct balance of the inventory
account.
Doubtful Accuracy and Existence of the Property, Plant and Equipment
Accounts P1.648 Billion
3. The reliability, accuracy and existence of the Property, Plant and Equipment
accounts totaling P1,648,545,841.15 or 71% of the total assets cannot be
ascertained due to the following deficiencies:
a. Various regions/training centers failed to conduct physical inventory-taking of
its property, plant and equipment as required under Section 490 of the
Government Accounting and Auditing Manual, Vol. I:
Region

Amount

I
RFTC-V
V
IV

P14,095,352.86
4,160,341.00
38,391,529.50
19,105,383.67

Total

P75,752,607.03

19

b.

Accounting and property records were not periodically reconciled contrary to


Section 53, Vol. III of the Government Accounting and Auditing Manual,
resulting in the net discrepancy of P364,314,743.72, computed as follows:
Region/Office

Per Books

Per Inventory

Discrepancy

BFAR-C. O
III
XI
RFTC-VIII
Region X

P1,293,140,651.85 P940,780,259.33
16,974,982.40
18,000,010.77
22,831,652.75
22,106,782.18
3,220,452.89
1,880,849.11
12,994,113.05
2,079,207.83

P352,360,392.52
( 1,025,028.37)
724,870.57
1,339,603.78
10,914,905.22

Total

P1,349,161,852.94

P364,314,743.72

P984,847,108.22

In addition, a discrepancy of the inventory account in RFTC-IV


amounting to P1,142,714.50 was due to non-recording of acquisition of
equipment which were paid out of MOOE funds.
c.

Improper/erroneous recording resulting in under/overstatement of Property,


Plant and Equipment account balances in the following offices/regions:
-

The BFAR-C.O. failed to book up a vessel named MV DA-BFAR


valued at P604 million, while the Motor Vehicles and Patrol Boats
amounting to P34,101,248.00 and P27,421,335.64, respectively, are
still included in the books despite their being transferred to the LGUs
as beneficiaries/end-users of the same.

In CAR, an on-going construction/rehabilitation was already taken up


in the books as Land Improvements and Buildings, thereby,
overstating the said accounts by P1,126,890.65 and P4,023,883.84,
respectively. In addition, an entry made to the Land Improvement
account amounting to P60,000.00 is doubtful as this was not properly
documented. A patrol boat costing P162,439.00 allegedly turned over
to a beneficiary was still recorded in the books.

In Region III, no details or breakdown of land improvements in the


amount of P5,509,997.15 was made available.
Unserviceable
equipment with a total cost of P221,760.00 still form part of the total
equipment for the year.

In RFTC VII, Equipment and Furniture and Fixtures accounts in the


total amount of P74,680.00 were recorded as training expenses, IT and
Other Equipment account totaling P425,367.80, originally classified as
semi-expendable items were not recorded in the appropriate PPE

20

accounts, and cellphones costing P9,400.00 were recorded as office


supplies.
-

In Region XI, Property, Plant and Equipment totaling P2,262,700.00


were not recorded in the books, thereby, understating the asset account
of the region.

In Region II, Furniture and Fixtures with a unit cost of P8,160.00 was
directly charged to expense, thus, understating the asset account.

In Region XII, Construction in Progress Agency Assets totaling


P7,595,364.00 is doubtful as it includes the amounts of P3,050,000.00
for projects which did not materialize and were reverted to Central
Office. The balance of P4,545,364.00 consists of PPE which are still
to be classified.

In Region VIII, there was failure to determine whether the projects


recorded in the Construction in Progress account amounting to
P8,317,667.16 were already undertaken or delivered since there was
no reduction of the account balance for the year.

We recommended that the Property Officer be instructed to conduct a


complete physical inventory of the Property, Plant and Equipment of the Bureau,
and the results thereof should be reconciled with the accounting record. Likewise,
the Accountant should closely coordinate with the Property Officer to account for
unrecorded assets so that the same will be taken up and adjustments will be made
for assets erroneously recorded in the books to reflect the correct balances of the
PPE accounts.
Moreover, after a proper reconciliation of property records with the
accounting records has been done and after establishing the correctness of the
records and preparing the necessary adjusting entries, the Accountant should
compute the depreciation expense for each asset both for the current and the prior
years in accordance with generally accepted accounting principles to reflect the
correct valuation of the Bureaus fixed assets.

21

d.

No depreciation expense during the year was provided for depreciable assets
totaling P321,849,510.85 of the following regions, resulting in overstatement
of both the Property, Plant and Equipment and Government Equity accounts.
PPE Balances W/o Allowance
for Accumulated Depreciation

Region/Office
BFAR-C.O.
CAR
II
IV
V
VI
VIII
RFTC-IX
XI
Total

P211,013,076.46
11,171,445.15
20,054,476.99
19,105,383.67
38,391,529.50
10,716,134.61
7,242,571.12
2,980,919.56
1,173,973.79
P321,849,510.85

The total assets of Region IV which was not depreciated was disclosed in
the Notes to Financial Statements.
Management alleged that the failure to provide for depreciation on some
assets was due to reclassification of some Property, Plant and Equipment
accounts in the implementation of the New Government Accounting System.
Accounts Payable Balance Not Certain - P 1.331 Billion
4. The accuracy of the Accounts Payable totaling P1,331,333,691.74 is doubtful due
to the following:
a. The schedules of the Account Payable submitted do not tally with the
figures as presented in the financial statements and show a difference of
P48,653,448.31.
b. The account includes the amount of P5,476,769,30 representing
obligations incurred by CAR. However, records show that the items
procured were not yet delivered and accepted nor the services rendered or
bills been received from the contractors/suppliers.
c. There are no adequate supporting documents/schedules to prove validity
of accounts payables of Regions VIII, XI and XII in the amounts of
P5,592,349.85, P2,406,750.00 and P9,298,658.29, respectively.
The Accounting Unit should prepare the necessary adjusting entries to reflect
the correct amount of Accounts Payable in the books of accounts.

22

Understatement of Receivables Account P8.105 Million


5. The Bureaus Accounts Receivable and Receivable-Disallowances/Charges in the
amounts of P3,132,652.44 and P59,751,517.46, respectively, are understated
because of the following errors/deficiencies:
a. Region VIII failed to record bills representing rentals of government land
used for fishpond purposes in the amount of P1,562,400.00, excluding
surcharges of P104,882.00. The balance of Disallowances/Charges
account was overstated by P272,701.00 due to double transfer of the
amount from RA books to NG books.
b. In Region V, receivables due from lambaklad project amounting to
P137,335.85 were not booked up and the income from Fish Pond Rental
and Fishing Boat and Gear Licenses totaling P7,851,067.92 were not
billed and collected during the year, thereby, understating the Receivables
and the related income account.
c. In CAR, the Receivables-Disallowances/Charges account includes
disallowance on the payment of COLA without legal basis in the amount
of P1,278,350.00, although the same is not yet final and executory. The
expense account was understated by the same amount as a result of
crediting the account twice, first, when the adjustments were made to
reclassify the COLA paid out of the MOOE funds from the Other
Expenses account to Other Personnel Benefits account, and second, when
the entry was made due to the disallowance.
We recommended that the Accountant should prepare the necessary
adjusting entries to reflect the correct balance of Accounts Receivable and
Receivables-Disallowances/Charges and the related income and expense
accounts.
Bookkeeping Errors
6. Bookkeeping errors have been committed in the implementation of the New
Government Accounting System, thereby, affecting the reliability of the
financial records as of year-end as follows:
A. For the Cordillera Autonomous Region, bookkeeping errors amounted to
P137,752.50, consisting of the following:
- Check disbursements under Trust Fund accounts were debited to various
inventory and expense accounts instead of Due to NGAs, thereby,
overstating the inventories and expenditures by P134,239.99.

23

Non-cash settlement of a disallowance under the Trust Fund account


amounting to P1,045.45 was debited to the Prior Years Adjustments
account instead of to the Due to NGAs account.

The over remittance of withholding taxes payable amounting to P1,467.06


was erroneously debited to the Due to GOCCs account instead of to the
Due to NGAs account.

The adjusting entry made to correct the entry for the disallowance of
P1,000.00 that was deducted from the salary of the employee concerned
was credited to the Salaries Regular Pay account instead of to the
Receivables Disallowances/Charges account.

Payments totaling P501,269.35 were not correctly recorded and classified


under the proper expense account and the related asset accounts in
accordance with the NGAS.

B. In RFTC-VII, Electric, Water and Cellphone bills of prior years in the total
amount of P16,748.00 were charged to Current Years Operation instead of to
the Prior Years Adjustment. Other Inventory account amounting to
P285,922.20 was classified to the account Office Supplies Inventory.
C. Likewise, in RFTC-VII, Government Equity was erroneously debited for
recording the issuance of supplies totaling P223,824.45 and for correcting
entry of Prior Years Expenses in the amount of P37,248.00, instead of the
account Prior Years Adjustments. In addition, there was erroneous dropping
from the books of the Semi-Expendable Supplies and Materials and
Equipment in the total amount of P562,073.39.
The Accountant should effect the necessary adjusting/correcting entry/ies
as recommended by the regional auditor to reflect the correct balance of the
affected accounts.

24

Payment of P9.511 Million Personnel Benefits Without Legal Basis


6. The Bureau paid Cost of Living Allowance (COLA) and other fringe benefits
totaling P9,511,477.75 to its officials and employees which have no specific legal
basis, as shown below:
Region

Amount Paid

Region V
RFTC V
Region VI
Region VII
RFTC-VII

P 1,751,870.76
666,000.00
3,416,275.00
739,000.00
2,938,331.99

Total

P 9,511,477.75

We recommended that the officials concerned be enjoined to refrain from


granting to officials and employees allowances and other benefits without clear or
proper legal basis to avoid unnecessary depletion of cash in the National Treasury
intended for other purposes.

25

You might also like