PAR T II OBSERVATIONS AND RECOMMENDATIONS

Financial and Compliance Audit

Non-recording/adjustment of unreleased checks and reconciling items

1. The non-recording/adjustment of the unreleased checks and

reconciling items as at year-end were not in accordance with GAFMIS
Circular Letter No. 2002-001 and COA Circular No. 92-125A, respectively,
resulted to the understatement of the Cash balance of P5,015,026.412.91 by net
amount of P134,603,504.19 and payable/liability accounts by P152,400,957.82
and Subsidy Income from National Government by P(17,797,453.63).

Section 2.4 of the GAFMIS Circular Letter No. 2002-001 dated December
16, 2002 provides that, at the end of the year, a Journal Entry Voucher (JEV) shall
be prepared to record the entry for the restoration of cash equivalent to the
unreleased checks by debiting the accounts, Cash-National Treasury, MDS and/or
Cash in Bank-Local Currency, Current Account and crediting the appropriate
payable/liability account/s.

COA Circular No. 92-125A dated March 4, 1992 requires the Accountant to
prepare the Bank Reconciliation Statement (BRS) and immediately after the items
were properly analyzed and verified, prepare correcting/adjusting entries for
discrepancies/errors or other reconciling items requiring corrections by the agency.

Checks totaling P152,238,919.73 were still unreleased/unclaimed as of

December 31, 2011, however, these were not restored to Cash account as required
under Section 2.4 of the GAFMIS Circular Letter No. 2002-001. Moreover,
reconciling items in the total net amount of P(17,635,415.54), representing various
adjustments including stale checks and bank interests were not adjusted/recorded in
the books. The details of which are as follows:

Account/Amount in PhP Total/Effect

Agency Understatement
Cash, NT-MDS CIB -LCCA
(Overstatement)
A. Non-restoration of the cash equivalent of the unreleased checks as at year-end
CHD - Central Luzon 110,265,205.80 110,265,205.80
BGH 6,440,118.00 6,440,118.00
CHD - MM 30,384,275.64 30,384,275.64
RITM 1,006,255.87 1,006,255.87
TMC 1,269,844.17 1,269,844.17
SLRWH 745,076.55 745,076.55
CHD Caraga 2,128,143.70 2,128,143.70
Sub-total 151,493,843.18 745,076.55 ***152,238,919.73
1
 B. Reconciling items including stale checksa and Interest incomeb not recorded/
adjusted
* a
RMC 130,774.19 (17,666,679.44)
(17,797,453.63)
b
RITM 11,851.78 11,851.78
a
ARMMC 19,412.12 19,412.12
Sub-total (17,797,453.63) **162,038.09 (17,635,415.54)
Total 133,696,389.55 907,114.64 134,603,504.19
*Unadjusted Subsidy Income from National Government (SING); **Unadjusted stale checks and interest income; *** Unreleased Checks

As a result, the Cash balance of P5,015,026.412.91 was understated by the

net amount of P134,603,504.19. Correspondingly, the payable/liability, Interest
Income and Subsidy Income from National Government accounts were understated
by P152,389,106.04, P11,851.78 and (P17,797,453.63), respectively.

We recommended that Management direct the Chiefs/Heads of the

CHD - Central Luzon, BGH, CHD MM, RITM, TMC, SLRWH, CHD
Caraga, RMC, RITM and ARMMC to require their Accountants to
record/adjust the unreleased/unclaimed checks and reconciling items at year
end.

Unreliable cash in bank balance

2. The delayed/non preparation of Bank Reconciliation Statements

(BRS) and non-reconciliation/updating of the GL and SL balances of bank
accounts, totaling P403,830,182.17, as required under Presidential Decree No.
1445 and Manual on the NGAS, Volume II, cast doubts on the accuracy and
existence of the Cash in Bank LCCA account.

Section 74 of PD No. 1445 requires the head of the agency to see to it that
reconciliation is made between the balance shown in the monthly reports of
depositories (bank statements) and the balance found in the books of the agency.

Section 12 of the Manual on the NGAS, Volume II provides that the agency
shall maintain Subsidiary Ledger (SL) containing the details or breakdown of the
balances of controlling accounts appearing in the General Ledger (GL) and the
totals of the SL balances shall be reconciled with their respective control account
regularly or at the end of each month.

The accuracy and existence of the balance of the Cash in Bank - LCCA
account is doubtful due to the delayed/non-preparation of BRS and non-
reconciliation/updating of the GL and SLs balances of bank accounts totalling
P403,830,182.17, as shown:
2
3
 Bank Balance
as of Dec. 31,
Deficiency/Agency
2011
(Amount in PhP)
Delayed/non-preparation of Bank Reconciliation Statements
NCH 46,788,878.54
CHD for Bicol 18,446,818.02
BRTTH 105,262,740.87
CHD for Western Visayas 6,380,164.33
DJRMH 35,038,982.41
CHD SOCCSKSARGEN 12,518,612.00
Sub-total 224,436,196.17
Non-reconciliation/updating of GL and SL Balances
RITM 112,704,515.45
ARMC 53,774,237.24
FDA 8,528,967.91
SIGH -Cagayan Valley 3,434,098.34
CHD Northern Mindanao 952,167.06
Sub-total 179,393,986.00
Total 403,830,182.17

We recommended that Management direct the Chiefs/Heads of the

NCH, CHD for Bicol, BRTTH, CHD for Western Visayas, DJRMH, CHD
SOCCSKSARGEN, RITM, ARMC, FDA, SIGH -Cagayan Valley and CHD
Northern Mindanao to require their Accountants to prepare without delay the
BRS and reconcile/update the GL and SL balances of the Cash in Bank -
LCCA account.

Accumulation of unliquidated cash advances

3. The grant of additional cash advances for foreign and local travels
and other operating expenses despite non-liquidation of the previous cash
advance resulted to the accumulation of unsettled accountabilities in the
aggregate amount of P6,304,372.40 contrary to Section 89 of PD No. 1445 and
COA Circular No. 97-002.

Section 89 of PD No. 1445 and COA Circular No. 97-002, dated February
10, 1997, provide that a cash advance shall be reported on and liquidated as soon
as the legally authorized specific purpose for which it has given has been served
and no additional cash advance shall be given if the former cash advance has not
been settled.
4
5
 Audit showed that additional cash advances for foreign and local travels and
other operating expenses were granted to officers and employees despite the non-
liquidation of the previous cash advance, contrary to Section 89 of PD No. 1445
and COA Circular No. 97-002. This resulted in unliquidated balances of
P6,304,372.40, broken down as follows:

Agency Amount in PhP

Metro Manila
CHD 1,033,122.73
EAMC 1,174,853.00
RMC 842,507.00
Bicol Region
CHD 964,288.59
BMC 205,019.99
Western Visayas
CLMRMH 349,366.69
Northern Mindanao
CHD 139,554.13
Caraga
CHD 1,471,581.64
CRH 124,078.63
Total 6,304,372.40

We recommended that Management direct the Directors/Chiefs/Heads

of the EAMC, RMC, BMC, CLMRMH, CRH and CHD for Metro Manila,
Bicol Region, Northern Mindanao and Caraga to require their Accountants to
refrain from granting additional cash advance if the previous cash advance has
not been liquidated.

Long Outstanding and erroneous recording inter-agency fund transfers

4. The laxity in the monitoring of liquidations of fund transfers, which

were not in accordance with COA Circular Nos. 94-013 and 2007-001 dated
December 31, 1994 and October 25, 2007, resulted to the accumulation of the
balances of the accounts Due from Other NGAs/LGUs/GOCCs and NGOs/POs,
totaling P5,861,367,562.77. Moreover, the lapses/errors in recording resulted to
the doubtful validity of and net overstatement by P3,841,687,520.86 and
P52,969,028.62, respectively, of the said accounts and overstatement of
Accounts Payable by P10,500,000.00 and Government Equity by P90,983,015.57.

Paragraph 4.6 of COA Circular No. 94-013 dated Dec. 13, 1994 provides
that within ten (10) days after the end of each month/end of the agreed period for

6
the Project, the Implementing Agency (IA) shall submit the Report of Checks Issued
(RCI) and the Report of Disbursement (RD) to report the utilization of the funds.

7
 Paragraph6.4 of the same Circular provides that the Source Agency (SA)
shall require the IA to submit the reports duly verified by the Accountant and
approved by the Agency Head.

Sections 4.5.5 and 5.4 of COA Circular No. 2007-001 dated October 25,
2007 provide that whenever staggered fund releases/new fund release is made or
within sixty (60) days after the completion of the project, the NGO/PO shall submit
the final Fund Utilization Report certified by its Accountant and approved by its
President/Chairman to the GO, xxx. Xxx and shall be the basis of the GO in
recording the fund utilization in its books of accounts.

The accounts Due from Other NGAs/LGUs/GOCCs and NGOs/POs showed

an accumulated substantial amount of P5,861,367,562.77, broken down as follows:

Due from Due from Due from Due from

Agency Other NGAs LGUs GOCCs NGOs/POs Total
634,104, 82,065,9 1,514,031,52 2,192,557,83 4,422,759,61
DOH- CO 269.11 89.69 5.76 4.17 8.73
63,919, 48,1 63,967,2
TMC 127.23 - 35.41 - 62.64
1,914, 2,863,7 4,778,4
RMC 718.47 - 50.00 - 68.47
2,314, 2,314,6
DJNRMH 600.00 - - - 00.00
11,706,7 11,706,7
CVMC - - 30.79 - 30.79
152, 152,3
DJFMH 344.24 - - 44.24
841, 89,129,3 89,970,8
VRH 566.20 - 27.03 - 93.23
CHDs
19,478, 175,233,1 20,0 5,197,8 199,929,8
Metro Manila 856.71 45.68 00.00 39.68 42.07
10,974, 457,197,2 1,166,1 469,338,1
Ilocos Region 800.87 12.68 - 60.06 73.61
617, 187,396,5 6,497,5 194,511,2
Cagayan Valley 098.00 80.87 - 46.73 25.60
1,121, 95,752,2 370,5 97,244,7
Central Luzon 922.88 23.58 98.73 - 45.19
2,368,956. 224,360,2 2,970,9 229,700,1
Bicol Region
76 73.07 - 13.27 43.10
Northern 8, 11,192,1 11,200,9
Mindanao 815.65 07.19 - - 22.84
CARAGA 14,747,291.1 14,747,291.1
- - 0 - 0
ZMC 14,184,962.6 14,184,962.6
- - 2 2
SOCKSARGEN 13,892,957.9 20,967,380.5 34,860,338.5
5 9 - - 4

8
 751,710,034.0 1,254,164,913.3 1,647,102,321.4 2,208,390,293.9 5,861,367,562.7
Total
7 5 4 1 7
The laxity in the monitoring of liquidations of fund transfers to
implementing partners (NGAs, LGUs, GOCCs, and NGOs/POs), which were not in
accordance with COA Circular Nos. 94-013 and 2007-001 dated December 31,
1994 and October 25, 2007, respectively, resulted to the accumulation of above said
inter-agency fund transfers.

Moreover, the following lapses in recording the fund transfers totaling

P3,841,687,520.86, resulted to the doubtful validity of the inter-agency receivable
accounts:

Agency Particulars Amount in PhP

Fund transfers not recognized in the
DOH-CO books of the reported recipients for 88,571,911.20
verification
No reply from the recipients and
confirmation letters returned since
DOH-CO 3,677,744,251.81
addresses of recipients could not be
found
DOH-CO 14,905,661.73
Dormant receivables with no available
DJFMH 257,755.92
accounting records
DJNRMH 2,314,600.00
DOH-CO 3,174,895.09
Negative balances in the books
CHD for Caraga 524,076.75
Non- reporting of the LGUs to the
370,598.
CDH-Central Luzon source agency although the amount of
73
was already expended by them
RMC 4,778,468.47
ZMC Absence of SL to reconcile with the 14,184,962.62
CHD-SOCKSARGEN GL balances 34,860,338.54
Total 3,841,687,520.86

The following errors in recording the fund transfers were also observed:

Understated/
Agency Particulars (Overstated)
(Amount in PhP)
Non-recording of liquidated fund transfers (55,571,286.1
DOH-CO
1)
TMC Recording of liquidation without Credit Notice 55,819,281.84
Non-recording of liquidations covered with Credit (22,631,685.4

9
 Notices 7)
Setting up of receivable and payables upon obligation (10,500,
of the allotment for transfer to DPWH 000.00)
Non-recording of liquidations/ Fund Utilization (30,543,
Report of four Region I provinces 724.41)
Non-recording of completed projects of the DPWH (4,868,005.
CHD for
Regional Office I 05)
Ilocos
Erroneous recording of funds transferred to DPWH-
RO1 for the construction of a new drug treatment and 15,000,000.00
rehabilitation center.
Non-recording in the books due to non-submission of
CVMC the list of receivables from the Gobyerno Ti Umili (2,288,477.27)
Medical Assistance Program of Cagayan Province.
CHD for Funds recorded as receivables but not yet transferred
2,614,867.85
Caraga to recipient LGUs
(52,969,028.6
Net overstatement
2)

As a result, the following accounts were overstated and understated, as

follows:

Account Name Overstatement Understatemen

t
Inter-Agency Receivables P (57,674,686.97)
Hospital Center 55,819,281.84 -
Construction in Progress Agency Assets - 7,631,685.47
Accounts Payable 10,500,000.00 -
Government Equity 95,362,283.34 -

We recommended that Management direct the concerned

Directors/Chiefs/Heads to:

a) monitor strictly and require the settlement/liquidation of fund

transfers to implementing partners including the long outstanding
accounts (DOH-CO, TMC, RMC, DJNRMH, CVMC, DJFMH,
DJFMH, VRH , CHDs for Metro Manila, Ilocos Region, Cagayan
Valley, Central Luzon, Bicol Region, Northern Mindanao,
CARAGA, ZMC and SOCKSARGEN); and

b) require their Accountants to analyze, reconcile and make

corresponding adjustments on the recorded fund transfers and
request for write-off for dormant and undocumented accounts, if

10
necessary, fund transfers be (DOH-CO, DJNRMH, DJFMH CHD
for Caraga, CDH-Central Luzon, RMC, ZMC, CHD-
SOCKSARGEN); and henceforth be judicious in recording the
liquidations of fund transfers (DOH- CO, TMC, CHD for Ilocos,
CVMC and CHD for Caraga).

11
Inaccurate Recording of Receivables and Dormant Receivables

5. Lapses in the recording of receivables, such as non-maintenance and

unreconciled records, inclusion of dormant, long outstanding and doubtful
collectability of accounts, writing off receivables without authority and
erroneous/non-recording of receivable transactions, resulted to the doubtful
existence and validity of the Accounts Receivables, Notes Receivables and Other
Receivables accounts totaling P312,697,713.64, and understatement of accounts
Accounts Receivables, Notes Receivables and Other Receivables by
P61,329,555.00, Allowance for Doubtful Accounts by a total amount
P1,727,080.61, Income by P1,797,758.64 and Expenses by P1,727,080.61 and
Prior Years Adjustments by P11,906,308.50 and overstatement of Inventory
accounts by P47,625,487.86 as of year-end.

Audit of the intra-receivables accounts disclosed lapses in recording of

receivables, such as non-maintenance and unreconciled records, inclusion of
dormant, long outstanding and doubtful collectability of accounts, writing off
receivables without authority and erroneous/non-recording of receivable
transactions, summarized below:

Intra-agency Receivables Accounts

Accounts Notes Other Total
Agency
Receivables Receivables Receivables
(Amount in PhP)
A. Non-maintenance and unreconciled records for accounts receivables
EAMC 5,530,117.1 5,530,117.
8 18
RMC 39,512,378.6 39,512,378.
3 63
BGH 54,168,601. 54,168,601.
10 10
BMC 681,687.7 681,687.
2 72
WVMC 13,698,922. 13,698,922.
93 93
99,892,784.6 13,698,922.9 113,591,707.
Sub-total 3 3 56
B. Inclusion of dormant accounts and long outstanding accounts
DJFMH
5,281.59 252,474.33 257,755.92
NCMH 6,966,389. 6,966,389.
06 06
ITRMC 362,873. 362,873.
98 98
NMMC 8,091,294.5 8,091,294.
12
 4 54
RMC 976,667. 976,667.
06 06
15,062,965. 1,592,015.3 16,654,980.5
Sub-total 19 7 6
C. Doubtful collectability
DJFMH 2,182,969. 2,182,969.
17 17
ITRMC 3,252,304.2
0 3,252,304.20
NMMC 7,032,665.3
5 7,032,665.35
RMC 11,400,843. 11,400,843.2
23 3
WVMC 49,140,605. 37,009,255.1 86,149,860.
30 8 48
65,976,721.9 44,041,920.5 110,018,642.
Sub-total 0 3 43
D. Written-off receivables without authority
CVMC 6,209,244. 6,209,244.
14 14
DPJGMRMC 2,538,409. 2,538,409.
25 25
BMC 2,973,379.6
5 2,973,379.65
ASTMMC 1,108,875. 1,108,875.
66 66
3,647,284.9 9,182,623. 12,829,908.
Sub-total 1 79 70
E. Erroneous/ non-recording of receivable transactions
EAMC 333,179.0 333,179.
9 09
JRRMC (3,236,619.81 3,236,619.
) 81 -
NCMH 601,508. 601,508.
55 55
ITRMC 640,140.0 5,872,834.6 222,931.0 6,735,905.
0 6 0 66
NMMC (404,564.7 (404,564.7
2) 2)
MMMMHMC (1,322,515.8 (1,322,515.8
9) 9)
BRTTH 4,040,657.9 4,040,657.
0 90
SPMC 1,992,815. 1,992,815.
94 94
13
 WVMC 47,625,487.8 47,625,487.
6 86
45,699,308.1 9,508,927.8 4,394,238.4 59,602,474.
Sub-total
0 4 5 39
230,279,064. 9,508,927.8 312,697,713.
Grand Total 72,909,721.07
73 4 64

This resulted to the doubtful existence and validity of the Accounts

Receivables, Notes Receivables and Other Receivables accounts, totaling
P312,697,713.64, and understatement of accounts Accounts Receivables, Notes
Receivables and Other Receivables by P61,329,555.00, Allowance for Doubtful
Accounts by a total amount of P1,727,080.61, Income by P1,797,758.64 and
Expenses by P1,727,080.61 and Prior Years Adjustments by P11,906,308.50 and
overstatement of Inventory accounts by P47,625,487.86 as of year-end,
summarized below:

Overstatement Understatement
Accounts
(Amount in PhP)
Accounts Receivables 47,021,823.99
Notes Receivables 13,150,112.37
Other Receivables 1,157,618.64
Inventory 47,625,487.86
Allowance for doubtful Accounts 1,727,080.61
Rent Income 769,549.33
Hospital Fees 863,071.00
Other Business Income 165,138.31
Bad Debts Expense 1,727,080.61
Prior Years Adjustments (PYA) 11,906,308.50

The above lapses were due to non-observance of the following rules and
regulations:

Volume I, Manual on the NGAS:

o Sections 4.a and Section 8 requires the accrual method of

accounting as basis for accounting of income

o Section 66 provides the accounting policies for trade receivables

and allowance for doubtful accounts

COA Circular No. 97-001 dated February 5, 1997 prescribes the

guidelines on the proper disposition of dormant funds;

14
 Sections 64 and 66, Volume I of the Government Accounting and
Auditing Manual (GAAM) as to the use of subsidiary ledgers for
accounting units with accounts receivable and for the forms used in
billing procedures respectively.

We recommended that Management direct the Directors/Chiefs/Heads

of EAMC, RMC, BGH, BMC, WVMC, DJFMH, NCMH, ITRMC, NMMC,
CVMC, DPJGMRMC, ASTMMC, JRRMC, MMMMHMC, BRTTH and
SPMC to require their:

a) Billing and Collections Sections to improve policies and

procedures on collection of receivables and take necessary actions to
collect and assess collectability of long outstanding receivables in
adherence with the prescribed guidelines under COA Circular 97-
001; and

b) Accountants ensure the proper and timely recognition of

receivable and income transactions in the books following the
accrual basis of accounting and that these are substantiated with
valid, accurate and complete supporting documents; make adjusting
entries, if necessary; provide allowance for doubtful debts at year-
end for receivables in accordance with the guidelines as provided in
Sec. 66, Volume I of the Manual on the NGAS.

Doubtful Balances of Inventory Accounts

6. The absence of periodic reconciliation of the Accounting records

against those of the records of the Property, Laboratory, Pharmacy, Radiology,
Nursing, Linen, Dietary and Dental Sections/Departments and errors and
omissions in the recording and reporting of transactions resulted to total net
discrepancy of P1,418,035,124.38 in the reported balances of Inventory
accounts. Likewise the non-conduct of physical count of inventories,
non/delayed preparation of Report on the Physical Count of Inventories
(RPCI) and absence of subsidiary records and schedules to support General
Ledger (GL) rendered the existence and accuracy of the reported balances of
Inventory accounts unreliable.

6.1. Unreconciled balances of P1,418,035,124.38

Audit of the Inventory accounts disclosed discrepancies between the

records of the Accounting and the Property, Laboratory, Pharmacy, Radiology,

15
 Nursing, Linen, Dietary and Dental Sections/Departments with net amount of
P1,418,035,124.38, broken down as follows:

Per Property,
Per
Laboratory, Pharmacy, Difference
Accounting
Radiology, Nursing, Overstatement/
Records
Account Title Agency Linen, Dietary and (Understatemen
(General
Dental Section/ t)
Ledger)
Department Records
(Amount in PhP)
DOH-CO,
DJNRMH, RITM,
JRRMMC, DJFMH,
BRTTH, 1,613,936,935.1
Drugs and Medicines 1,127,886,187.9
PJGMRMC, CVMC, 6 486,050,747.20
Inventory 6
CHD for Metro
Manila, Central
Luzon, Calabarzon &
Caraga
DOH-CO, NCR-
DJNRMH, FDA,
RITM, ARMMC,
JRRMMC, DJFMH,
Medical, Dental and
CLMMRH, BRTTH,
Laboratory Supplies 259,977,757.13 93,490,839.17 166,486,917.96
DPJGMRMC,
Inventory
CVMC, CHD for
Metro Manila,
Central Luzon &
Caraga
DJNRMH, RITM,
JRRMMC, VMC,
MMMHMC,
Merchandise
CLMMRH, 76,158,099.50 75,901,454.10 256,645.40
Inventory
BRTTH,
DPJGMRMC,
CVMC
DJNRMH, FDA,
RITM, ARMMC,
DJFMH, CLMMRH,
BRTTH,
Office Supplies
DPJGMRMC, 59,081,376.22 7,370,358.26 51,711,017.96
Inventory
CVMC, CHD for
Metro Manila,
Ilocos, Central
Luzon & Caraga
DJNRMH, FDA,
Accountable Forms
RITM, CLMMRH & 1,363,199.27 1,071,000.00 292,199.27
Inventory
CHD for Caraga
Food Supplies DJNRMH,
1,648,752.72 636,435.08 1,012,317.64
Inventory JRRMMC, DJFMH

16
 FDA, RITM,
JRRMMC, DJFMH,
CLMMRH, BRTTH,
Other Supplies
DPJGMRMC, CHD 76,968,000.23 4,280,707.00 72,687,293.23
Inventory
for Metro Manila,
Central Luzon &
Caraga
Raw Materials
JRRMMC 130,556.51 150,578.63 (20,022.12)
Inventory
Finished Goods
JRRMMC 5,688,588.94 7,966,021.86 (2,277,432.92)
Inventory
2,094,953,265.6 1,418,035,124.3
Total 676,918,141.30
8 8

The causes of the above disparities were attributed to the following:

No periodic reconciliation between Accounting and Property and

Supply for inventory records (DOH-CO, ARMMC, DJFMH, VMC,
CHD for Ilocos, JRRMMC, DJFMH and CLMMRH)

Unrecorded and erroneous recording of inventories:

RITM- non-recording of P12,083,327.15 glasswares and chemicals

of the defunct BPS;

CHD for Metro Manila- unrecorded office supplies issued in CY

2011 amounted to P960,075.20;

MMMHMC- unrecorded returned merchandise by patients for the

year 2011 and Merchandise delivered from the DOH;

CVMC - erroneous classification of the items purchased;

CHD for Ilocos - the GL showed all debit entries and no credit
entries to record the issuance of inventories since CY 1980 up to the
implementation of NGAS.

17
 Measures that would improve the inventory reporting system like
the Inventory Management Assessment Tool (IMAT) was not
implemented despite inclusion of the system in the Warehouse
Operations Manual (DOH-CO).

Lapses in preparing, maintaining and submission of inventory
records and reports such as RCPI and RSMI (FDA, ARMMC,
DJNRMH, DPJGMRMC, JRRMMC, RITM and CHD for Metro
Manila, Central Luzon, Ilocos and Caraga)

Retired officers of the Supply Unit failed to turn-over their

accountabilities to their next-in rank and until now, no Supply Officer
was appointed to the vacant position in the Supply Unit (CHD for
Ilocos)

6.2. Absence of physical inventory taking and non-submission of

report thereof

As of year-end, no physical count was conducted for the following

Inventory accounts, totalling P130,192,846.77:

CHD for
Inventory ARMMC SLRWH VMC BMC BS Ilocos DJRMH Total
Accounts Region
(Amount in PhP)
Merchandise 4,005,115.26 5,515,463.43 737,099.95 651,115.58 10,908,794.22
Accountable 356,875.00 208,504.76 123,137.50 154,012.80 842,530.06
Forms
Food 256,410.64 612,283.14 120,715.95 989,409.73
Supplies
Drugs and 3,718,788.83 542,896.03 90,159.80 408,494.33 2,271,282.38 7,031,621.37
Medicines
Textbooks & 10,384.00 10,384.00
Instructional
Materials
Other 4,296,056.71 299,986.87 1,078,907.7 1,036,822.2 19,321,955.0 554,495.23 26,588,223.74
Supplies 1 2 0
Office 1,108,939.64 2,159,458.2 38,682,440.43 358,214.83 530,272.48 42,839,325.65
Supplies 7
MDLS 10,827,640.47 16,432,277. 2,246,221.1 5,591,693.70 3,359,807.23 38,457,639.79
26 3
Spare Parts 472,305.46 296,750.00 769,055.46

Construction 264,708.30 1,436,634.65 1,701,342.95

Materials
Gasoline, Oil, 54,519.80 54,519.80
Lubricants
Total 12,643,630.44 18,294,926.44 19,969,307.80 38,682,440.43 6,259,286.86 24,913,648.70 9,429,606.10 130,192,846.77

18
 6.3. Non-maintenance of accounting and property records

Subsidiary Leger Cards and Stock Cards for the following inventory items
were also not maintained by the Accounting Unit and Supply Officers, respectively,
to support the GL balances in total amount of P212,234,192.86, broken down as
follows:

CHD for
Inventory FDA RITM JRRMMC VMC Caraga Total
Accounts
(Amount in PhP)
Merchandise 6,491,701.14 18,834,892.22 2,833,301.58 - 28,159,894.94
Office Supplies 935,639.93 2,952,053.52 287,588.83 2,159,458.27 1,265,576.10 7,600,316.65
Drugs and 3,506,106.45 11,536,341.85 90,159.80 42,151,539.08 57,284,147.18
Medicines
Accountable 26,025.00 1,641,295.00 208,504.76 67,360.00 1,943,184.76
Forms
MDLS 21.944,428.81 4,679,274.95 20,449,450.73 16,432,277.26 369,151.95 63,874,583.70
Food Supplies 19,906.79 19,906.79
Spare Parts 2,018.30 2,018.30
Gasoline, Oil and 28,050.00 28,050.00
Lubricants
Other Supplies 196,233.71 1,261,444.57 1,078,907.71 3,953,000.92 6,489,586.91

Textbooks and 248,175.00 248,175.00

Instructional
Materials
Raw Materials 130,556.51 130,556.51
Finished Goods 5,688,588.94 5,688,588.94

Various 40,765,183.18
Inventories of
DOH-CO
Total 22,880,068.74 17,851,394.77 59,880,133.74 22,802,609.38 48,054,803.05 212,234,192.86

In view of the foregoing deficiencies, the correctness and existence of the

Inventory accounts could not be relied upon.

The non-conduct of periodic reconciliation of records and non-maintenance

of the prescribed records for inventory accounts as well as non-recording of
issuances were not in accordance with the following regulations:

a. Section 490, Volume I of the Government Accounting and

Auditing Manual (GAAM) Requires all Chiefs of agencies to take
a physical inventory of all equipment and supplies belonging to their
respective offices at least once a year.

19
b. Volume I, Manual on the NGAS

Section 4.j Supplies and materials shall be recorded using the

Perpetual Inventory System wherein issuances thereof shall be
recorded as they take place except those purchased out of Petty
Cash Fund which shall be charged directly to the appropriate
expense accounts.

Sections 4.l and 43 The Accounting Unit shall maintain

perpetual inventory records, such as the Supplies Ledger Cards
for each inventory stock. The subsidiary ledger cards shall
contain the details of the General Ledger accounts. For check and
balance, the Property and Supply Unit shall maintain Stock Cards
for Inventories. The balance per stock cards should always
reconcile with the ledger cards at the Accounting Unit.

c. Volume II, Manual on the NGAS

Section 12 The Subsidiary Ledger (SL) is a book of final

entry, containing the details or breakdown of the balance of the
controlling account appearing in the General Ledger. The
Accounting Unit shall maintain a SLC for each type of supplies
where all receipts and issuances shall be recorded promptly.

Section 41 The Stock Card shall be used to record all receipts

and issuances of supplies. It shall be maintained by the Supply
and Property Unit for each item in stock. The physical inventory
of supplies shall be reconciled every six months with the stock
cards and any discrepancy/ies shall be immediately verified and
adjusted. The balance per stock card shall be reconciled regularly
with the supplies ledger card maintained by the Accounting Unit.

Section 62 The Supply Officer shall summarize all supplies

and materials issued during the month in the RSMI for
submission to the Accounting Unit as basis in the preparation of
the Journal Entry Voucher (JEV) to record in the books of
accounts the inventory issuances monthly.

Section 65 - The Report on the Physical Count of Inventories

(RCPI) shall be used to report the physical count of supplies by
type of inventory as of a given date. This shall be prepared every

20
six months in three copies and shall be certified correct by the
Inventory Committee and approved by the Head of the Agency.

21
 We recommended that Management direct the concerned
Directors/Chiefs/Heads to require the:

a) Supply Officers of the Property, Laboratory, Pharmacy,

Radiology, Nursing, Linen, Dietary and Dental Sections/Departments
and Inventory Committees of concerned agencies to:

conduct physical count of all inventories and prepare and

submit to the Auditors every six months the duly certified and
approved RPCI for each type of inventory ; and

submit the RSMI to the Accountants on a monthly basis for

recording purposes and the Accountants prepare the
corresponding JEV to record the supplies issued and make the
necessary adjustments for the cost of unrecorded inventories
based on the RSMI submitted;

b) Accountants and Supply Officers of the Property, Laboratory,

Pharmacy, Radiology, Nursing, Linen, Dietary and Dental
Section/Department of the concerned agencies to:

maintain and regularly update their records of inventories and

conduct periodic reconciliation of their records with the RPCI. If
necessary, request for additional personnel for the purpose to
facilitate the reconciliation;

prepare and maintain Subsidiary Leger Cards and Stock

Cards; and

to ensure that whenever there is a reshuffling of personnel at

their Section, a proper and complete turn-over of records is
made/effected;

c) Accountants to make necessary adjustments for unrecorded

and erroneous recording of inventories (RITM, CHD for Metro
Manila, MMMHMC, CVMC and CHD for Ilocos); and

d) The Supply Officer of the MMD and DOH-CO to implement

the inventory reporting system like the Inventory Management

22
Assessment Tool (IMAT) include in the Warehouse Operations
Manual.

23
Unreliable balances of Property, Plant and Equipment (PPE) accounts

7. The existence and accuracy of the balances of the PPE account

totaling P4,976,364,962.80 as of year-end were doubtful due to the absence of
the Report of Physical Count of Property, Plant and Equipment (RPCPPE);
the existence of a net discrepancy of P235,360,329.02 between the book balance
and RPCPPE; and the non-reclassification of unserviceable property to Other
Assets account totaling P57,559,092.77 which resulted to overstatement of
Assets and Government Equity accounts by P22,297,042.01 and P20,162,039.45,
respectively, as of year-end.

Audit disclosed that the physical count of the property, plant and equipment
have not been conducted/completed in the following offices/hospitals as of year-end
to substantiate the reported balances of the Property, Plant and Equipment accounts
totaling P4,976,364,962.80:

Balance
Agency Reasons for non-conduct of physical count
(Amount in PhP)
CHD for MM 57,147,210.05 Not stated
DJNRMH 45,066,360.33 The Vice-Chairperson of the Inventory Team informed that
they are still in the process of reconciliation of the actual
quantity counted with the property records.
FDA 743,389,621.93 The Property Officer informed that after the expiry of the
Bureau Personnel Order (BPO) No. 2009-136 issued on
June 4, 2009 creating the Inventory Committee which shall
serve for a period of two years in June 2011, no succeeding
Committee was formed to handle the task of conducting
inventory of FDA assets since management overlooked the
expiration of the term of that Committee.
JRRMMC 612,080,618.15 The Inventory Committee has started the physical
inventory-taking in the second quarter of CY 2011 but this
was not completed as of year-end. The Property Officer
informed that one member of the Committee went on
absence without leave while the other members have
priority duties and responsibilities hence the scheduling of
the inventory taking had always been cancelled.
POC 451,025,758.49 The Hospital did not create any Inventory Committee for
CY 2011 to conduct physical count of its recorded PPE
accounts. It was only on January 8, 2012 that an Inventory
Committee was created.
QMMC 591,530,176.42 For CYs 2010 and 2011, the Inventory Committee was not
able to complete the conduct of inventory of the Centers
property due to the lack of manpower because of the
termination of 15 employees of the Hospital in October
2010.

24
 RITM 1,086,773,174.54 According to the Property Officer, the Inventory Committee
was created only on October 14, 2011 with the directive to
complete the inventory taking and submission of the
corresponding report thereon not later than December 31,
2011. Interview with the Chairman of the Inventory
Committee revealed that the Committee has not yet
completed the inventory-taking as of this writing.
RMC 697,899,928.04 Not stated
SLH 429,781,266.47 Not stated
SLRSHW 54,415,577.34 The Supply Officer informed that although initial steps
were already undertaken by the Inventory Committee for
the conduct of inventory for the Hospital properties, the
completion thereof could not yet be made since priority is
given to the workload of her office and to the regular
functions of the designated Inventory Committee.
CHD for Ilocos 142,488,271.04 Lack of Personnel in the Supply Unit to conduct
Region physical count. Due to retirement of organic personnel
there were only two contractual employees and two
permanent personnel remained in the Supply Unit.
CHD for 64,767,000.00 Not stated
SOCCKSARGEN
Total 4,976,364,962.80

It was also observed that a total discrepancy of P235,360,329.02 exists

between the accounting records and the RPCPPE, as follows:

Per Books Per RPCPPE Difference

Agency Reasons for the discrepancies
(Amount in PhP)
The submitted RPCPPE as of
December 31, 2011 was not
accomplished per type of PPE.
The PPELC and PCs were
neither updated nor maintained
by the Accounting and Property
Offices.
ARMMC 343,806,128.26 303,535,366.97 40,270,761.29 Small tangible assets with
serviceable life of more than one
year but small enough to be
considered as PPE in the total
amount of P1,067,501.28 were
still classified as PPE instead of
charging the same the
appropriate expense accounts.
Items totaling P2,659,964.20 were
misclassified and included in the
VMC 43,031,842.35 156,352,526.09 (113,320,683.74)
PPE accounts instead of under
Inventory accounts.

25
 The non-inclusion of accounts
Hospital and Health Center, Other
Structures, Machineries,
LPGHSTC 197,697,125.17 90,453,945.68 107,243,179.49 Firefighting Equipment and
Accessories and Other
Machineries and Equipment in the
RPCPPE as of CY 2011.
The Accounting Office does not
maintain the PPELC.
Unserviceable properties were
not reclassified from their
respective PPE accounts to
Other Asset account. As such,
these unserviceable properties
were still provided with the
monthly depreciation.
The Inventory and Inspection
Reports for Unserviceable
Property (IIRUP) for various
equipment of the Agencys
ITRMC 506,275,664.60 504,072,858.95 2,202,805.65 different offices, which were
submitted to the Supply Office,
were not reported to the
Accounting Office.
Other Assets amounting to
P19,759,835.09 were still
carried in the Agencys books
although these items were
already disposed of thru sale
thus, overstating this account by
the same amount. Disposal of
various unserviceable equipment
were also not recorded in the
books.
CHD for The Property Cards and accounting
154,161,050.10 87,685,341.92 66,475,708.18
Central Luzon Ledger Cards were not updated.
The discrepancy of P676,394.00
for Motor Vehicles account
between the records of property
and accounting balances per books
was due to the non-conversion of
CVMC 3,674,996.08 2,998,601.09 676,394.99
the currency during the time of
acquisition of two vehicles and the
presence of unreconciled balances
in the ledgers due to insufficient
data.
PPELC and accounting subsidiary
records are not maintained to
WVMC 540,746,021.11 407,464,152.31 133,281,868.80
support and verify the balances of
PPE accounts.
Properties costing P1,469,705.64
DJSMMCEH 22,849,796.68 24,319,502.32 -1,469,705.64 which are no longer existing are
still recorded in the books.

26
Total 1,812,242,624.35 1,576,882,295.33 235,360,329.02

27
 Moreover, verification of the accounting records and inspection disclosed
that various PPE totaling P57,559,092.67, which were already unserviceable, were
still recorded under the PPE accounts instead of reclassifying them to Other Assets
account, the details of which are given below.

Amount in Remarks/Reason for non-reclassification of PPE

Agency
PhP Items to Other Assets
Metro Manila
ARMMC 3,538,070.00 Delay in the submission of the corresponding report
thereon by the Property Officer.
NCH 17,805,629.21 The management is waiting for the inspection and
appraisal of unserviceable properties to be conducted
by the COA Technical Audit Specialists.
QMMC 12,347,000.00 The Disposal Committee has not yet taken the final
action on the disposition of unserviceable properties.
Sub-total 33,690,699.21
CAR
LHMRH 205,802.11
Central Luzon
DPJGMRMC - 23,163,317.96
Condemnable properties included in the Other Assets
Cabanatuan
account but were still not disposed as of CY 2011
DPJGMRMC - 499,273.39
Talavera
Sub-total 23,662,591.35
Grand Total 57,559,092.67

As such, the Property, Plant and Equipment and Other Assets accounts were
overstated and understated, respectively, both by P57,559,092.67 as of year-end.

The non-conduct of physical count of PPE, non-periodic reconciliation of

records and non-reclassification of unserviceable PPE to Other Assets were not in
accordance with the following regulations:

Section 43, Volume I of the Manual on the NGAS - The

Accounting Unit shall maintain perpetual inventory records such as
Property, Plant and Equipment Ledger Cards (PPELC) for each category
of property, plant and equipment. The subsidiary ledger cards shall
contain the details of the General Ledger Accounts. For check and
balance, the Property and Supply Office/Unit shall maintain Property
Card (PC) for property, plant and equipment. The balance in quantity per
PC and SC should always reconcile with the ledger cards of the
Accounting Unit.

28
 COA Circular No. 2004-08 - The value of obsolete and
unserviceable assets awaiting final disposition as well as those assets still
serviceable but are no longer be used should be reclassified to account
Other Assets.

29
 Section 2.2.1 of COA Circular No. 2005-002 dated April 14, 2005
- Small tangible items with estimated useful life of more than one year
shall be recorded as inventories upon acquisition and expense upon
issuance.

Section 66, Volume II of the Manual on the NGAS - The RPCPPE

shall be used to report the physical count of property, plant and
equipment by type as of a given date. It shall be submitted to the Auditor
concerned not later than January 31 of each year.

Section 490(a), Volume I of the Manual on the NGAS - Chiefs of

agencies are required to take a physical inventory of all equipment and
supplies belonging to their respective offices at least once a year.

In summary, the following were the effects of the above

lapses/discrepancies:

a. Doubtful/unreliable PPE balances P4,976,364,962.80;

b. Discrepancy between the accounting records and inventory reports

P235,360,329.02; and

c. Overstatement and understatement of accounts.

Overstatement/
Account (Understatemen
t)
(Amount in PhP)
Inventory ( 2,659,964.20)

Property, Plant and Equipment 5,197,171.12

Other Assets 19,759,835.09

Assets (Total) 22,297,042.01

Government Equity 22,297,042.01

We recommended that the Management require the

Chiefs/Heads/Directors of the concerned agencies to:

a) create or reconstitute an Inventory Committee to regularly

conduct physical count of PPE and submit report thereon;
30
31
 b) direct the Inventory Committees to conduct
immediately/complete the physical count of the properties of the
Hospital and prepare report thereon. If necessary, request for
additional/support personnel, even on a temporary basis, to assist
them in the completion of the conduct of the physical inventory
taking of PPE and in the preparation and submission of the reports
thereon to establish the accuracy and existence of the recorded
balances of the PPE accounts;

c) direct the Accountants and Property Officers to exert extra

efforts to fast track the on-going reconciliation between the
accounting and property records on PPE accounts to determine the
causes thereof for proper disposition;

d) require the Accountant and Supply Officer to maintain the

required subsidiary records and property cards, respectively to
record all procurement and issuances of properties;

e) require the Property Officers to prepare the IIRUP for the

unserviceable equipment for submission to the Audit Team, among
others, for inspection and appraisal, copy furnished the Accountant
for recording;

f) require the Accountants to reclassify the value of the

unserviceable equipment from PPE accounts to Other Assets
account based on the IRRUP;

g) require the Disposal Committees take final action on

unserviceable properties; and

h) assign other personnel in the liaisoning works of the Hospital

so that the Property Officer could devote more time in performing
her respective officials functions/responsibilities.

Non-coverage of Insurance of Property

8. Properties valued at P261,252,306.88 were not yet covered by

insurance from the Government Service Insurance System (GSIS) General
Insurance Fund, thus, affecting the interest of the government against
32
insurable risks over these properties in case of loss or damages, as required
under Section 5 of Republic Act No. 656 and Section 489, Volume I of
Government Accounting and Auditing Manual (GAAM).

33
 Records showed that PPE totaling P261,252,306.88 were not insured as
required under Section 5 of Republic Act No. 656 and Section 489 of the GAAM,
Volume I. Details are shown below:

Period of
Agency Amount in PhP Reasons for non-insurance of properties
Acquisition
The Property Officer was not informed
January 2009 to and aware of on the period of Inventory
TMC 39,073,122.90
October 2011 List submitted to the GSIS as basis for
the computation of the insurable amount
of Hospital properties.
The Accountant informed that the
CY 2004 to Property Officer had not yet submitted
BQ 99,861,471.40
2010 the list of insurable PPE as of CY 2011 as
basis of the application of the amount of
insurance coverage.
DJNRM all properties
122,317,712.58 Not stated
H as of CY 2011
Total 261,252,306.88

The coverage of government properties by insurance is mandated by the

following laws, rules and regulations:

a. Section 5 of Republic Act No. 656 - Every government, except a

municipal government below first class, is hereby required to insure its
properties, with the General Insurance Fund of the Government Service
Insurance System (GSIS) against any insurable risk herein provided and
pay the premiums thereon, which, however shall not exceed the
premiums charged by private insurance companies.

b. Section 489 of the Government Accounting and Auditing Manual

(GAAM), Volume I - All heads of agencies to secure from the General
Insurance Fund of GSIS all insurances or bonds covering properties,
contracts, rights of action and other insurable risks of their respective
offices.

With the absence of insurance of the hospital assets, the TMC, DJNRMH
and BQ will not be indemnified in case of destruction, damages to, or loss of its
property through fire, flood, theft or other fortuitous events.

34
 We recommended that Management direct the Chiefs/Heads/Directors
of the TMC, BQ and DJNRMH to require their Property Officer to facilitate
the submission of the updated list of inventory of insurable properties with the
GSIS so that the necessary insurance coverage for all the assets can be applied
with the GSIS General Insurance Fund; and thereafter, ensure prompt
renewal of the insurance properties for continuity of their coverage.

35
Unreverted dormant/undocumented payables and erroneous recording of payables

9. Dormant and undocumented payables, totaling P876,671,461.20, have

not been reverted to Cumulative Results of Operations Unappropriated
(CROU), now Government Equity, contrary to Section 98 of PD 1445, COA
Circular No. 99-004 and DBM and COA Joint Circular No. 99-6. Moreover,
payables totaling P10,221,645.26 were erroneously recorded which resulted to
the overstatement of the Liabilities account by P1,304,002.00 and
understatement of the Assets and Government Equity accounts by
P1,156,468.89 and P2,460,470.89, respectively.

Section 98 of PD 1445 requires the reversion of any unliquidated balance of

accounts payable which has been outstanding for two years or more and against
which no actual claims, administrative or judicial contracts on record.

Section 3.2 of COA Circular No. 99-004 dated August 17, 1999 provides that
Payable Unliquidated Obligations which have been outstanding for two years or
more and against which no actual claims, administrative or judicial, has been filed
or which is not covered by perfected contracts on record should be reverted to the
Cumulative Results of Operations Unappropriated (CROU), now Government
Equity.

DBM and COA Joint Circular No. 99-6 dated November 13, 1999 prescribes
that all undocumented accounts payable regardless of the year they were incurred
shall immediately be reverted.

Audit showed that payables totaling P876,671,461.20 were not reverted to CROU,
now Government Equity, even if these are undocumented or there are no actual
claims, administrative or judicial contracts on record. Details are shown below:

Intra- Other
Payable Inter-Agency Total
Agency Liability
Agency Accounts Payables Liabilities
Payables Accounts
(Amount in PhP)
5,074,87 34,618, 39,693,
DJFMH 5.99 - - 244.51 120.50
128,279,10 2,986, 131,265,
RMC 7.91 482.63 - - 590.54
494,466,64 54,530, 548,997,
DOH-CO 2.25 398.24 - - 040.49
CHD for Cagayan 540, 540,
Valley - 416.45 - - 416.45

36
 30,824,88 20,973, 51,798,
BMC
0.19 - - 778.50 658.69
39,90 108, 36,768, 36,916,
BRTTH
0.03 353.83 - 180.96 434.82
139,62 139,
BS
1.71 - - - 621.71
Western Visayas 743, 49, 792,
(Consolidated) - 309.49 - 588.42 897.91
17,395,25 5,892 23,288,
CRMC
9.80 - ,792.46 - 052.26
CHD for Zamboanga 269,71 269,
Peninsula 7.58 - - - 717.58
4,786,54 22,022, 16,160, 42,969,
CHD for Caraga
6.09 552.57 - 811.59 910.25
681,276,551.5 80,931,513. 108,570,60
Total 5 21 5,892,792.46 3.98 876,671,461.2
0

Moreover, the following lapses/errors in recording of payables were

observed:

Guaranty
Accounts Total
Deposits
Agency Deficiency Payable Liabilities
Payable
(Amount in PhP)
Double recording of the 3rd 2,460 2,460
DOH progress billing for the repair ,470.89 - ,470.89
of the National Center for
Pharmaceutical Access
Management Building
Non-recording of payments
through ADA (P2,518,601.70)
MCS - Zamboanga and erroneous recording of 2,518 3,302
783,751.0
Peninsula advance payments on contracts ,601.70 ,352.74
4
and recoupments
(P783,751.04)
PJGMRMC Non- recording of purchases (313, (313,
Central Luzon and services delivered. 659.90) - 659.90)
Failure to set-up a liability
WVMC Western (4,145, (4,145,
account for purchases made
Visayas 161.73) - 161.73)
and services availed of.
520,250.9 783,751.0 1,304,002.0
Total
6 4 0

The non-recording of purchases and services delivered but not yet paid is
contrary to Section 4.s of the Manual on NGAS, Volume I, which states that

37
Liability shall be recognized at the time goods and services are accepted or
rendered and supplier/creditor bills are received.

In view of the foregoing lapses/errors in recording, the Liabilities account

was overstated by P1,304,002.00 and the Assets and Government Equity accounts
understated by P1,156,468.89 and P2,460,470.89, respectively.

38
 We recommended that Management direct the concerned
Director/Chief/Head to require their Accountants to make the necessary
adjustments in the books and henceforth see to it that payables which have
been outstanding for two years or more and are undocumented are
reverted/adjusted as required; liabilities are recognized when goods and
services have been delivered; and transactions are recorded correctly.

Unremitted collections and unauthorized use of income

10. Collections/income totaling P152,452,178.31 were not

remitted/deposited to the National Treasury as required under Quarantine Act
of 2004, Section 7 of the General Provisions of the 2011 GAA, Department
Order No. 2008-0286, Executive Order No. 338 as implemented by COA, DBM
and DOF Joint Circular No. 1-97, and Section 44, Book VI of Executive Order
No. 292, thus, depriving the national government of the use of said funds.
Moreover, quarantine income, totaling P124,504,590.33 were utilized without
authority, in violation of Article 220 of the Revised Penal Code and Section 103
of PD. No. 1445.

Republic Act (RA) No. 9271 (Quarantine Act of 2004) provides that the
Bureau of Quarantine (BQ) shall be authorized to use at least fifty percent (50%) of
the income generated and the other fifty percent (50%) shall be treated as income
in the General Fund to be remitted to the Bureau of the Treasury.

Section 7, General Provisions of the 2011 GAA states that Performance

bonds and deposits filed or posted by private persons or entities with agencies of
the government shall be deposited with the National Treasury as trust receipts
under the name of the agency concerned in accordance with E.O. No. 338, as
implemented by COA-DBM-DOF Joint Circular No. 1-97 dated January 2, 1997.

Paragraph of DOH-Department Order No. 2008-0286 dated December 16,

2008 stated that income arising from current account deposits as income of the
general fund and income from affiliation/medical/professional fees treated as trust
receipts under EO No. 338 and implemented under COA-DBM-DOF Joint Circular
No. 1-97, shall be deposited with the National Treasury.

Executive Order No. 338 dated May 17, 1996 as implemented by COA,
DBM and DOF Joint Circular No. 1-97 dated January 2, 1997 requires the transfer
to the Bureau of the Treasury (BTr) of all existing trust receipts balances that are
deposited with authorized government depository banks.
39
40
 Section 44, Book VI of Executive Order No. 292, series of 1987 which states
that unless otherwise specifically provided by law, all income accruing to the
departments, offices and agencies by virtue of the provisions of existing laws,
orders and regulation shall be deposited in the National Treasury or in the duly
authorized depository of the Government and shall accrue to the unappropriated
surplus of the General Fund of the Government.

Various collections/income totaling P152,452,178.31, as shown below, were

not remitted/deposited to the National Treasury, contrary to above cited laws, rules
and regulations, thus, depriving the national government of the use of said funds.

Unremitted
Agency Nature Amount
(PhP)
50% share of BTr on quarantine income from 124,504,590.3
April 2008 to December 2010 3
Quarantine income representing the cost of
17,559,048.00
yellow fever vaccines
BQ
Interest earned for the 3rd and 4th quarters of CY
268,833.49
2011
142,332,471.8
Sub-total
2
1,233,891.7
EAMC Interest Income from current account deposits.
7
RITM Interest Income from current account deposits. 336,566.49
Collections from bid/performance bonds and
SLRWH 1,396,967.36
affiliation fees
Grants from World Health Organization (WHO)
and United Nations International Children
Emergency Fund (UNICEF) for various special
FDA 4,397,146.83
projects, seminar fees collected from the trainings
conducted by Regulation Divisions I and II and
performance and bidders bonds.
Refunds from hazard pay and longevity pay and
172,303.07
penalties
MMMHMC Ilocos Sale from salvaged materials 102,935.00
Sale from unserviceable property 161,796.00
Sub-total 437,034.07
CHD for Nine bank accounts which have been inactive
2,318,099.34
SOCCKSARGEN since 2006.
152,452,177.6
Total
8

41
 Moreover, of the unremitted collections/income of the BQ, the amount of
P124,504,590.33 was utilized without authority, which is in violation of Article 220
of the Revised Penal Code and Section 103 of PD. No. 1445.

42
 Article 220 of the Revised Penal Code states that Any public officer who
shall apply any public fund or property under his administration to any public use
other than for which such fund or property were appropriated by law or ordinance
shall suffer the penalty of prison correctional in its minimum period or a fine
ranging from one-half to the total of the sum misapplied, if by reason of such
misapplication, any damages or embarrassment shall have resulted to the public
service. In either case, the offender shall also suffer the penalty of temporary
special disqualification.

Section 103 of PD. No. 1445 provides that expenditures of government funds
or uses of government property in violation of law or regulations shall be a
personal liability of the official or employee found to be directly responsible
therefore.

The BQ management explained that no violations have been committed on

the utilization of funds considering that the Bureau is authorized to use no less than
fifty (50%) of its income and because of the word at least the agency can use
even more than fifty (50%) percent.

It is our position that the other fifty percent (50%) shall be treated as income
in the General Fund to be remitted to the BTr as prescribed under Section 58.5 of
the IRR of R.A. 9271. Also, we strongly believe that the authority of the BQ
Director to approve the utilization of the income pertains only to the fifty percent
(50%) share of the Bureau on income generated but does permit him to ignore/set
aside the share of the BTr pegged at 50% of the income which is due for remittance
to the said agency as mandated in the said law and IRR.

We recommended that Management: (a) require the Chiefs/Heads of the

BQ, EAMC, RITM, FDA, SLRWH, CHD for SOCCKSARGEN and
MMMHMC - Ilocos to direct their Cashier/Accountant to remit all trust
collections of performance/bidders bonds, receipts of affiliation fees, interest
income and inactive/dormant accounts to the NT/BTr; and (b) take
appropriate action against the BQ Director for the unauthorized use of income
for remittance to the BTr.

Loss of income

11. Loss of income amounting to P117,254,408.74 resulted from the

disallowances of Hospital Claims from the Philippine Health Insurance
43
Corporation (PHIC) due to non-adherence to Rule VIII of the Revised IRR of
the National Health Insurance Act of 1995 and PHIC Circular No. 14 dated
May 17, 2001.

44
 Rule VIII of the Revised Implementing Rules and Regulations of the
National Health Insurance Act of 1995 and Philippine Health Insurance Corporation
(PHIC) Circular No. 14 dated May 17, 2001 provide that the PHIC may deny or
reduce any benefit when the claims are attended by the following circumstances:
(a) over-utilization and under-utilization of services; (b) unnecessary diagnostic
and therapeutic procedures and intervention; (c) irrational medication and
prescriptions;(d) fraud; (e) gross unjustified deviations from currently accepted
standards of practice and/or treatment protocols; (f) inappropriate referral
practices; (g) use of fake, adulterated, misbranded pharmaceuticals, or
unregistered drugs; and (h) use of drugs other than those recognized in the latest
Philippine National Drug Formulary (PNDF) and those for which exemptions were
granted by the PHIC Board of Directors.

Review of pertinent documents relative to the hospitals claims from PHIC to

recover the total cost of medical services rendered revealed that disallowances
totalling P117,254,408.74 were incurred due to continued inability of the hospitals
Billing Sections to strictly comply with Rule VIII of the Revised Implementing
Rules and Regulations of the National Health Insurance Act of 1995 and PHIC
Circular No. 14 dated May 17, 2001, to wit.

Claims Disallowance Allowed

Agency
(Amount in PhP)
DJFMH 15,607,862.61 2,021,206.59 13,586,656.02
ITRMC 25,137,479.40 7,836,203.09 17,301,276.31
R1MC 529,980.45 529,980.45 -
VRH 33,340,393.33 33,340,393.33 -
PJGMRMC 4,772,000.00 4,772,000.00 -
ASTMMC 12,319,800.05 12,319,800.05 -
JRRMMC 56,434,825.23 56,434,825.23 -
Total 148,142,341.0 117,254,408.74 30,887,932.33
7

This resulted in the loss of hospital income of P117,254,408.74, which could

have been used to augment their budget for delivery of health services.

The specific reasons for the disallowed claims were as follows: (a)
incomplete documentation (DJFMH, ITRMC, R1MC and PJGMRMC); (b) past
due for one to three years (VRH); (c) inability of the Billing Section to comply with
PHIC policies of amount not to be outstanding for 60 days to more than one year
(ASTMMC); and (d) filing/re-filing beyond 60 calendar days in addition to lack of

45
complete documentation, no original signature of member on Statement of Account,
appeal not meritorious, exhausted the 45 compensable days/case not compensable,
forms not properly accomplished and case attended by non-accredited doctors
(JRMMC).

46
 We recommended that Management direct the Chiefs of Hospitals of the
DJFMH, ITRMC, R1MC, PJGMRMC, VRH, ASTMMC and JRMMC to
require the:

a) Chiefs of the Billing Sections to:

review and evaluate the reasons of the disallowed claims and

determine possible remedies to protect the interests of the
hospitals;

file a letter of reconsideration with PHIC for the collection of

the disallowed amounts;

strictly observe and comply with each and every requirement

of PHIC in filing hospital claims;

review carefully and thoroughly all claim forms before

submitting the same to the PHIC and ensure that these will be
filed or re-filed within the prescribed time frame;

send demand letters to patients whose claims were disallowed;

and

conduct, on a regular basis, trainings and seminars to the

personnel assigned at the Billing Section to keep them abreast and
updated with the current rules, regulations and procedures in the
processing of PHIC claims; and the

b) Accountants to request authority for write-off of the long

overdue and doubtful outstanding claims from the Commission on
Audit pursuant to COA Circular No. 97-001.

Incurrence of Irregular/Excessive/Unnecessary Expenses

12. The incurrence/payment of irregular/unnecessary/excessive expenses

totaling P110,093,526.82, resulted from non-conformance with COA Circular
No. 85-55A.

COA Circular No. 85-55A provides the definition and situational cases of
irregular/unnecessary/ excessive expenses, as follows:

47
 Irregular expenditures are expenditures incurred without
adhering to established rules, regulations, procedural guidelines,
policies, principles or practices that have gained recognition in law.
Irregular expenditures are incurred without conforming with prescribed
usages and rules of discipline. Xxx. A transaction conducted in a manner
that deviates or departs from, or which does not comply with standards
set is deemed irregular. An anomalous transaction which fails to follow
or violates appropriate rules of procedure, is likewise irregular.

Unnecessary expenditures are expenditures which could not pass

the test of prudence or the diligence of a good father of a family, thereby
denoting non-responsiveness to the exigencies of the service.

Excessive expenditures are unreasonable expense or expenses

incurred at an immoderate quantity and exorbitant price. It also include
expenses which exceed what is usual or proper as well as expenses which
are unreasonably high, and beyond just measure or amount. They also
include expenses in excess of reasonable limits.

Audit of transactions disclosed that the following payments totaling

P61,493,414.03 were not in conformance with COA Circular No. 85-55A, thus,
were irregular, excessive and unnecessary:

Agency Nature of Payment Amount in PhP

Unauthorized/unsupported and excessive/disbursements
CHDs for MM, Western Collective Negotiation Agreement (CNA) 20,055,952.63
Visayas, and Davao incentives/benefits to (a) regular officers and
CLMMRH, SPMC, and employees in excess of those authorized; and
DJRMH (b) individuals hired under job order/contract
of services who are not authorized to receive
the same

CHD Metro Manila Cultural and athletic allowance to 198 237,600.00

personnel at P1,200.00 each in the form of
cash instead of purchase of costume or
uniform and other related expenses in the
conduct of such activities

CHD Metro Manila, Subsistence allowance of P50.00 per day 582,350.00

Ilocos Region during non-working days, on official
travel/live-in seminar and while on leave to
personnel, who, according to the CHD for
48
 Metro Manila, are considered health workers
who must be always available on-call all the
time to provide health services to the public,
hence, considered rendering full month
service.

CHD Metro Manila, Longevity Pay and Step Increment instead of 5,220,437.70
Calabarzon, and VMC requiring the concerned personnel to choose
which of the two benefits they will avail,
which the CDH-MM justified as based on the
instruction of the DOH-CO.

CHD Metro Manila, Hazard pay to officials and employees with 10,625,157.04
Ilocos Region and Salary Grades 20 and above at a fixed amount
JRRMMC of P4,989.75 a month instead of 5% of the
basic monthly salary

CHD Metro Manila Compensation payment to personnel under Job 4,913,056.79

Orders/Contract of Services from August to
December 2011 while respective
Rationalization Plan has not yet been
approved.

EAMC Payment out of the hospital income to: (a) 22 2,383,164.26

daily wage laborers who have no existing
contract/job order; and (b) some contractuals
and permanent employees of overtime pay,
which management justified to meet the
requirement for the accreditation by PHIC
specifically the enhancement of facilities.

ARMMC and Utilization of funds for 101 Nurses under RN 1,704,992.26

LPGHSTC Heals which were previously under contractual
status

CHD Davao Taxi fares not supported by Taximeter Issuing 203,992.50

Receipts (TIR) but by RER, which
management explained was required since
DOH-CO has issued DO No. 2007-0082,
which established the maximum allowable rate
per trip of P1,000 for travelling expenses
outside Davao City, particularly on attendance
to trainings and P160.00 per day for local
seminars.

49
CHD Caraga Travelling Expenses not in consonance with 8,644,304.61
DOH DO No. 2007-082 as amended under DO
No. 2007-0082-A.
CHD Caraga Transportation Allowance in full to officials 210,000.00
despite use of government vehicle

Reimbursement of attorneys fees/legal fees 50,000.00

with no legal basis

EAMC Monthly contributions and honorarium of 1,494,450.00

P200,000.00 and P5,000.00, respectively, to
the Philippine Center for Specialized Health
Care (PCSHC), a body with no legislative
mandate and personality, casting doubts on the
validity and legality of its actions.
Onerous contracts and overpayments
EAMC Payments made based on: (a) onerous contract 1,249,499.76
(absence of: CAF, specifications/description/
make/brand/cost of the machines to be
supplied, when the ownership of the
equipment will be transferred to EAMC since
the contracts was rent to own agreements; and
the due date of the monthly payments to the
supplier); (b) monthly rentals for two (2) units
microtome machines based on demonstration
units which were later pulled out and replaced
by only one (1) unit; and (c) falsified delivery
documents

DJFMH Rental Cost for Laboratory Equipment based 1,690,560.00

on excessive quantity of reagents and unit cost
to be delivered per month.

DJFMH Higher cost of reagents per contract compared 1,487,238.00

to those of the procured price by San Lazaro
Hospital (SLH), a DOH retained hospital.

MCS Hospital- Excessive contract cost for the 740,658.48

Zamboanga Peninsula repair/renovation of Mindanao Central
Sanitarium Building, Phase II and
overpayment for the Repair/Renovation of the
MCS Main Hospital Building (Phase I) to RPJ
Construction

50
DOH-CO Cost of construction of the 4 storey HEMS and 48,552,452.
NCHP Building was increased by 19.42 01
percent from the original contract

CRH Non-provision of liquidating damages or 47,660.78

penalty clause on POs

Total 110,093,526.82

The following contracts, with undisclosed amounts, were also found to be

onerous and excessive:

51
 Agency Nature of Payment
CHD-Cagayan Valley The contractor had reported 60%
accomplishment with actual accomplishment
of only 44% and incurred negative slippages
but no warning notice was issued to the
contractor as provided under Article 14 of the
contract agreement.

CHD-Zamboanga Peninsula The Project was reported 100% completed

although the actual accomplishment was only
97.91%.

CHD-Cagayan Valley
The provision with the option to own and the
contract duration were not provided in the
contract for the rental of equipment, thus, the
essential elements of contract execution have
not been adhered to the detriment of the
government.

CRH-CARAGA Several technical deficiencies were noted in

the conduct of inspection/evaluation on the
medical and laboratory equipment, office
equipment/ application system purchased for
use at the CARAGA Regional Hospital.

The following were the specific laws, rules and regulations not complied
with:

Section 3.5 of DBM Budget Circular No. 2011-5 dated December

26, 2011

CNA Incentive for FY 2011 shall xxx xxx not exceed P25,000.00
per qualified employee.

CSC Memorandum Circular (MC) No. 17, s. 2002

Individuals hired under Contract of Services/Job Order are not

considered government employees, hence, they do not enjoy the
benefits enjoyed by government employees.

Section 28 of the General Provisions of the 2011 GAA

52
 An annual amount not exceeding P1,200.00 per employee-
participant may be used for the purchase of costume or uniform, and
other related expenses in the conduct of cultural and athletic
activities.

RA 7305 and its Implementing Rules and Regulations

53
 All Public Health Workers covered under RA 7305 are eligible to
receive full subsistence allowance as they render actual duty.

Public Health Workers shall be granted subsistence allowance

based on the number of meals/days included in the duration when
they rendered actual work including their regular duties, overtime
work on on-call duty.

Subsistence allowance of Fifty Pesos per day which is received

through payroll shall be deducted from the amount allotted for meals
during regular working days. No. amount shall be deducted if the
travel falls on weekends or non-working days.

The public health workers shall have the option to choose which
benefits will be paid to him/her, whenever other laws provided for
the same benefits under this act. However, in the event that the
benefits chosen are less than that provided under this Act, the worker
shall be paid only the difference. (Paragraph 4.0, DBM Circular
Letter No. 2004-4 dated February 26, 2004)

Hazard pay allowance of personnel with salary grades 20 and

above should be computed at 5% of their basic monthly pay.

Joint Resolution No. 4 dated July 28, 2008 of the Congress of the
Philippines

Employees authorized to receive longevity pay under existing laws

shall no longer be entitled to step increment.

Presidential Decree No.1445

Claims against government funds shall be supported with complete

documentation (Section 4.6).

Revenue funds shall not be paid out of any public treasury or

depository except in pursuance of an appropriation law or other
specific statutory authority (Section 84).

Section 51, RA No. 10147 and COA Circular No. 99-002 dated
June 15, 1999

54
The transportation allowance herein authorized shall not be granted
to officials who are assigned or presently use government motor
transportation.

55
 G.R. No. 112371, October 7, 1998 re: Aida Domingo vs. COA

Government officials whose Offices are issued with motor vehicles

shall not be entitled to transportation allowance. This is regardless of
whether the vehicle is issued to the office or to the government
official himself and whether or not they actually used such vehicles.

Section 3 (g) R.A. No. 3019, the Anti-Graft and Corrupt Practices
Act

Entering, on behalf of the Government, into any contract or

transaction manifestly and grossly disadvantageous to the same,
whether or not the public officer profited or will profit thereby

Article 171 of Revised Penal Code

Falsification by private individual and use of falsified documents.

Opinion No. 163 s. 2000 dated June 33, 2000 of the Office of the
Government Corporate Counsel (OGCC)

The opinion clearly emphasized the need for the legislative

approval on the proposed plans/strategies of the PCSHC for it to
acquire a distinct personality, structure/organizations, powers and
budgetary allocation.

COA Circular No. 85-55A dated September 8, 1985 (Situational

Cases)

Overpricing of purchases, characterized by grossly exaggerated or

inflated quotations, in excess of the current and prevailing market
price by a 10% variance from the purchased item are considered
excessive expenditures.

Expenditures for supplies and materials in quantities beyond that

required herein and that needed by the agency for a determinable
period resulting in overstocking is excessive.

Section 37 of Presidential Decree No. 1177

56
 All money appropriated for functions, activities, projects and
program shall be available solely for the specific purpose for these
are appropriated.

Section 2.1, DBM in its Circular Letter No. 2011-14 dated

December 22, 2011

57
 The moratorium on the filling of regular/permanent/itemized
positions, either through original appointment, promotion, transfer or
reemployment, and the hiring of new casuals/contractual, including
personnel on consultancy/emergency/contract of service/job order
basis, shall continue to be implemented in all Departments/
Agencies/GOCCs/GFIs of the Executive Branch whose
Rationalization Plan has not yet been approved consistent with
Section 7 and Section 13 of its Implementing Rules and Regulations.

DOH and DSWD Joint Administrative Order No. 2011-001 dated

February 1, 2011.

The RNheals program aims for the training and deployment of

currently unemployed nurses.

We recommended that the Management direct the concerned

Directors/Chiefs/Heads to:

a) faithfully adhere to the prescribed policies and procedures on

the grant of incentives on CNA and refund/settle the overpayment of
CNA cash incentives paid (CHDs for Metro Manila, Western Visayas,
and Davao and CLMMRH, SPMC, and DJRMH)

b) stop the practice of utilizing the appropriation/allotment for

cultural and athletic activities in the grant/payment of personnel
benefits to its officials and employees and to use the amount instead
for its intended purposes (CHD Metro Manila);

c) require the concerned personnel to refund the amount of

subsistence allowance received during non-working days and during
regular working days while on training course/live-in seminar or any
other similar activity and pay the subsistence allowance due to
personnel only on those days actual work is rendered or on duty, less
the equivalent subsistence while on official travel/training
course/scholarship grant/live-in seminar (CHD Metro Manila, Ilocos
Region).

d) comply strictly with the requirement on the payment of

longevity pay and step increment (CHD Metro Manila, Calabarzon
and VMC);
58
e) refrain from paying hazard at a fixed rate of P P4,989.75 a
month, instead of 5% of basic monthly salary to officers with salary
grade 20 and above and refund the overpayment of hazard pay
(CHD Metro Manila, Ilocos Region and JRRMMC);

59
 f) observe the moratorium order of EO No. 366 on the hiring of
JOs/CSs unless otherwise specific authority for the hiring thereof
was secured from the DBM and see to it that the
requirements/guidelines for Contract of Services are adhered to
(CHD Metro Manila);

g) execute/issue job orders/contracts for the services of daily wage

workers, in case there is a need for maintenance workers, and
charged the overtime pay of regular employees and contractual
against the regular fund of the agency (EAMC)

h) instruct the budget officers to return the unauthorized

expenses/charges to the RNheals Program in the amount of
P1,704,992.26 representing the salaries of the 101 nurses which were
previously under contractual status to be paid from the regular fund
of the Hospital (ARMMC and LPGHSTC);

i) strictly adhere on the provision on the granting of

transportation allowance to government officials and payment of taxi
fares be supported with official receipts generated by TIR to reflect
actual amount of fare and other details of payment (CHD Caraga);

j) require the Board of Trustees and the Corporate Secretary,

both of PCSHC, to refund the contributions and honoraria,
respectively for want of legal basis as the total amounts
contributed/paid (EAMC);

k) cause the collection of the liquidated damages of P47,660.78

from the different suppliers who incurred delays in deliveries
otherwise, they will be held responsible for the amount (CRH); and

l) institute appropriate actions against the officials who entered

into onerous and excessive contracts and refund the overpayments
made to suppliers/contractors (EAMC, DJFMH MCS Hospital-
Zamboanga Peninsula, DOH-CO, CRH, CHD-Cagayan Valley, CHD-
Zamboanga Peninsula, CRH-CARAGA).

Procurements not in accordance with R.A. No. 9184 and its IRR
60
13. The procurement of infrastructure projects, hospitals medical and IT
equipment and goods and services, totaling more than P396,659,415.96, were
not in accordance with the provisions of RA No. 9184, the Government
Procurement Reform Act and its IRR thereby defeating the purposes on
transparency, competitiveness and accountability in the procurement process
and depriving the agency from availing of the most advantageous offers/prices
in their procurement.

Review of the agencies procurement process for the acquisition of

infrastructure projects, hospitals medical and IT equipment, and goods and services
disclosed the following lapses/deficiencies and effects:

Amount in
Agency Deficiency/Effect
PhP
DJRMH, LHMRH, 1. Non-procurement of commonly-use
ZCMC, MRH, CHDs- supplies and materials from the
Socksargen and Procurement Service of the Department
Zamboanga Peninsula. of Budget and Management (DBM) Not indicated
which resulted to higher prices as
compared to those listed in the PS
catalogue. (Sec. 53.5 of RA 9184)
DJNRMH, BGH, 2. Annual Procurement Plan (APP) was
CHDs-Central Luzon, neither updated nor amended nor does it
Cagayan Valley and contain the entire procurement activity
Zamboanga Peninsula that resulted to ineffective and
Not indicated
inefficient procurement process, as
shown below: (Sec. 7 Article II of RA
9184)

a. 88% of the planned procurement was 13

only procured 9,721,692.23
c. Purchases exceeded the amount of 7
NCMH programmed procurement ,326,959.48
e. Commodities still included in the
2011 APP although these were
1,136,290.00
already purchased in 2010.
f. Purchases of Merchandise Inventory-
Drugs and Medicines exceeded the
1
R1MC - Ilocos Region amount as per approved APP that
8,327,024.98
resulted to overstocking and
expiration of drugs.
EAMC g. The Medical Center was deprived of
obtaining reasonable prices and 226,704.85
volume discount as poor planning

61
 in the procurement of drugs and
medicines which resulted in the
procurement out of petty cash fund.

JBLMGH, SLRWH, 3. Alternative mode of procurement was

VMC, FNLGHTC, adopted in the procurement of
CHDs-Northern infrastructure, office and food supplies,
Mindanao & Western goods and services instead of public
Visayas. bidding which resulted to the non-
Not indicated
attainment of the objectives of RA 9184
of transparency, competitiveness and
accountability in the procurement
process. (Rule IV-Sec. 10 of IRR of RA
9184)
a. The Hospital resorted to shopping
QMMC method of procurement of goods not
1,846,450.00
readily available off-the-shelf
b. Public bidding was not conducted for
212
JRRMMC the procurement of RSSP for
,000,000.00
Radiation Therapy Equipment
c. Procurement of International
Certificate Vaccination and supply of
BQ
fuel and oil products were done thru 1,000,000.00
shopping
d. Purchases of inventories and supplies
MMH were procured thru direct
1,023,698.34
contracting
CRH e. Dietary items were procured without
public 620,360.20
Bidding
BGHMC
1,005,845.00
4. Non-advertising and non-posting and
BGH, MRH, DJRMH, erroneous posting of ABC, invitation to
MHRSRTTH, and CRH bid, request for expression of interest
and notice of award, implementation
and termination of the contract by Not indicated
COBAC to PHILGEPs and/or to any
conspicuous places resulted to the bids
offered are not responsive to ABC.
(Sec. 21 Article VII of RA 9184)
DOH - (NCHFD) a. Error in posting of ABC for the repair 2
Central Office of the roofing of Building 14 was ,549,999.87
P3,339,893.15 instead of
P2,549,999.87.

62
 5. Non-compliance to the form and
contents of bidding documents resulted
to the delayed implementation of the
contract/PO: (Sec. 17 Art. VI of RA
91.84)

a. The Central Office Bids and Awards

DOH-CO Committee (COBAC) awarded the
contract for the procurement of 35
units of computer notebooks to a
supplier whose offers were non-
788,515.00
compliant with the required technical
specifications provided by the
PMO/end-user.

b. There were no detailed engineering

RMC investigations, surveys and designs on
the alleged defects of the construction
of the TRC-Dietary Building (Phase 5
I) which was the basis of the contract ,976,676.37
of the Phase 2 entered into with CC
Barcelona Construction.

c. The BAC accepted the application for

RITM renewal of the PCAB license of
Tochigi-ken Technologies
International (TTI), Inc., one of the
bidders and winning contractor for
Not indicated
the Antivenin Production Facility,
instead of the approved one and used
the conditional criterion for TTI,
Inc. for the first bidding instead of a
pass or failed.
NMC-Northern
d. Awarding of contract to ineligible
Mindanao/CHD- Not indicated
bidder
Cagayan Valley
e. Suppliers/Contractors were allowed
CHD - Bicol Region Not indicated
to change their offer in the bid form.
f. The bid amount for laundry service
QMMC does not include the cost of all taxes
such as the value added tax (VAT), 2,103,354.64
among others.
BGHMC g. Delivery of catering services were
made before the required 1,005,845.00
63
 procurement procedures were
undertaken
6. Non-observance of BAC composition
and function as follows: (Sec. 11 to 12,
BGH Article V of RA 9184)
b. Rules on the receipt, opening, and post
qualification of bids were not properly
Not indicated
observed.

c. Relied on the decision made by the

BAC Chairman or HOPE instead of
conducting a meeting for the purpose
of post-evaluation of all bidders to
determine the winning bidder to be
witnessed by observers.
BGH
e. BAC Resolutions for the procurement
of goods and services recommending
to the Head of Procuring Entity
Not indicated
(HOPE) the mode of procurement
were not supported.

f. Losing bidders were not notified

within the seven-calendar day period.
CRH h. The BAC Chairman and one regular
member is not a third ranking official Not indicated
of the Hospital and the office order did
not reflect that the BAC members shall
have a fixed term of one (1) year,
reckoned from the date of their
appointment as BAC members.

Total Amount 396,659,415.96

The above practices were not in accordance with RA 9184 and its Revised
Implementing Rules and Regulations (IRR) thereby defeating the purposes on
transparency, competitiveness and accountability in the procurement process and
depriving the agency from availing of the most advantageous offers/prices in their
procurement.

We recommended that Management direct the Directors/Heads/Chiefs/

COBAC/BAC/TWG of the concerned agencies to:

64
a) strictly observe the centralized procurement of commonly-used
supplies with the PS-DBM (DJRMH, LHMRH, ZCMC, MRH,
CHDs-Socksargen and Zamboanga Peninsula);

b) give utmost importance to proper procurement planning where

actual needs, right quantity and right prices, among others are
considered; (DJNRMH, NCMH, BGH, R1MC-Ilocos Region, CHDs-
Central Luzon, Cagayan Valley and Zamboanga Peninsula);

c) limit the use of PCF on emergency and petty requirements of

the hospital only and reduce the amount of PCF to an amount
sufficient to the emergency requirements for food supplies of the
hospital (EAMC) ;

d) as much as possible conduct competitive bidding, instead of

resorting to shopping and or other alternative modes of the
procurement to obtain the most reasonable price (BQ, JRRMC,
QMMC, JBLMGH, SLRWH, MMH, CRH, BGMH, VMC,
FNLGHTC, CHDs-Northern Mindanao & Western Visayas);

e) post all procurement opportunities especially the posting of

invitation to bids when shopping is resorted to for procurement of
P50,000.00 and above at the agency website, any conspicuous places
and at the PhilGEPS and Notice of Awards for procurement made
below P50,000.00 to promote transparency (BGH, MRH, DJRMH,
MHRSRTTH, and CRH);

65
 f) conduct post-qualification of all bidders and their quoted
prices to arrive at the most responsive bid (DOH-CO);

g) include the cost of all taxes which shall be itemized in the bid
form and reflected in the detailed estimate (QMMC);

h) see to it that all the required documents such as detailed ABC,

Program of Work are submitted before pursuing the procurement of
infrastructure projects (RMC);

i) make sure that the technical specifications submitted/required

by the end-users presented to prospective suppliers are up-to-date
(CHD-Bicol Region);

j) give rationale of accepting the application for renewal of the

PCAB license of TTI, Inc. instead of the approved one and using the
conditional criterion for TTI, Inc. for the first bidding instead of a
pass or failed and henceforth, strictly comply with the provisions
of RA No. 9184 in the procurement of infrastructure projects
(RITM);

k) strictly observe the provisions of the IRR of RA No. 9184 on

the requirement on notification of all losing bidders within seven
days upon receipt of the BAC Resolution and to post the notice of
award within three calendar days, respectively (BGH);

l) adhere on the composition of the BAC members as prescribed

in the IRR of the R.A. No. 9184 and that the appointment of the BAC
members have a fixed term of one year only which is to be renewed
after the one year term unless another set of BAC members will be
appointed (CRH); and

m) review the reports, consider re-bidding if necessary and refrain

from negotiating with the end-user, more so with the prospective
suppliers. in case of non-compliance with the technical specifications
per TWG evaluation (CRH-CARAGA).

Non/Delayed Submission of Contracts, Purchase Orders, Financial Reports and Other

Documents

66
14. Copies of contracts, POs, DVs, financial reports and delivery
documents were not submitted within the prescribed period contrary to COA
Circular Nos. 2009-001, 2009-002, 95-006, and Sections 22 and 71 and Section
68 of the Manual on the NGAS, Volumes I and II, respectively, and Section 21-
B of Executive Order No. 175.

The following rules and regulations require the submission of the copies of
contracts, POs, DVs, financial reports and delivery documents to the Office of the
Auditor:

Contract/Purchase Order

o COA Circular No. 2009-001 dated February 12, 2009

Section 3.1 - Within five (5) working days from the execution of a
contract by government or any of its subdivisions, agencies or
instrumentalities, including government-owned and controlled
corporations and their subsidiaries, a copy of said contract and each of
all the documents forming part thereof by reference or incorporation
shall be furnished to the Auditor of the agency concerned.

Section 3.2 - A copy of any Purchase Order (POs) irrespective of

amount, and each every supporting document, shall, within five (5)
working days from issuance thereof, be submitted to the Auditor
concerned.

Deliveries

Section 6.9 of COA Circular No. 2009-002 dated May 18, 2009 -
Furnish the Auditor copies of delivery documents within twenty-four
(24) hours after acceptance of deliveries of goods and services,
regardless of whether or not the transaction is subject to pre-audit.

Financial Reports

o Manual on the NGAS, Volume I

Section 71 - The frequency of submission of Pre-Closing TB/Post-

Closing TB and other reports shall be as follows:

Pre-Closing TB and other reports monthly, within ten days after

the end of the month to the COA Resident Auditor.

67
Year-end Pre-Closing TB/Post-Closing TB and other reports on
or before February 14 of the following year to the COA Resident
Auditor.

68
 Section 22 - At the close of each business day, the Collecting
Officers shall accomplish the Report on Collections and Deposits
(RCD) in accordance with the instructions provided in Volume II of the
NGAS Manual for RCD. At the close of each business day, the
Collecting Officers shall accomplish the Report on Collections and
Deposits (RCD) in accordance with the instructions provided in Volume
II of the NGAS Manual for RCD.

o Manual on the NGAS, Volume II

Section 68 - Provides that Report of Accountability for

Accountable Form (RAAF) shall be prepared by the Accountable
Officer to report on the movement and status of accountable forms in
his position.

o COA Circular No. 95-006 dated May 18, 1995

Section 6.04 - Disbursing officers in particular shall faithfully

comply with Section 100 of Presidential Decree No. 1445 which require
them to render monthly reports of their transactions pursuant to existing
auditing regulations not later than the fifth day of the ensuing month to
the auditor concerned.

Section 6.5 - The official involved in the daily recording of

transactions in the books of accounts shall turn over the receipts and
the disbursement records with all paid vouchers and documents
evidencing the transaction to the Auditor within ten (10) days from date
of receipt of said documents.

Records showed that the submission of contracts, POs, financial reports and
other documents as required by the above-cited rules and regulations were not
submitted or rendition thereof was delayed by the following agencies.

Agency Documents
CHD for Bicol, Western Visayas, Davao, WVMC, Contracts/Job
VRH, JBLMRH, MCS, JRRMMC, CHD for Orders/Purchase
Central Luzon and CRH Orders/MOA
BS, BRTTH, CHD for Northern Mindanao, ORs, DVs, Payrolls,
ITRMC, DJRMH, JRRMMC, CHD for Central RCD, RAAF, Report
Luzon and CRH of
Disbursements/Delive
69
 ries, BRS,and JEVs
CHD for Central Luzon and CRH Trial Balance and FS

70
 The non/delayed submission of the said documents prevented the Audit
Teams from the conduct of timely audit and review to determine compliance with
applicable rules and regulations and in determining the legality and completeness of
information and documentation of the above documents and reports.

We recommended that Management direct the concerned

Directors/Chiefs/Heads to require their Accountants and Supply/Property
Officers to submit the financial reports and procurement documents to their
respective Audit Teams within the reglementary period (JRRMMC, CHD for
Bicol, Western Visayas, Davao, WVMC, VRH, JBLMRH, MCS, BRTTH,
DPJGMRMC, BS, CHD for Northern Mindanao, ITRMC, DJRMH, CHD for
Central Luzon and CRH).

A. Value For Money Audit

Unutilized Loans and Grants Funds

15. Of the total P8,214,733.532.57 target disbursement for the DOH loans
and grants, only P5,404,987,241.66 or 66 percent was disbursed with
unutilized funds of P2,809,746,290.91 despite extension of the projects
duration from one to two years. As a result, commitment fees of P7,384,377.65
were incurred in 2011 and grants amounting to P36,032,296.41 and
P19,819,035.07 were returned and not availed of which caused the non-
implementation of most of the planned project and activities.

Analysis and comparison of the Work and Financial Plan (WFP) of the five
loans and three grants against their actual disbursements from CYs 2005 to 2011
showed that the planned or budgeted projects and activities were not fully
accomplished, hence, their respective funds were not fully utilized. The summary
of the financial performance and physical performance of the projects are as
follows:

Physical * Variance/Undisbursed
Accomplishment Time Elapsed Financial accomplishment *** Funds
Project Actual
Title/Funding Target /Cumulative
Revised Amount
Institution Target Actual Rate Disbursement Rate Rate
Duration (in PhP)
(Amount in PhP)
1. 2WHSMP/ 100% 71 92.34 Jan 2005- 809,143,000.00 274,932,000.00 34% 534,211,000.00 66%
WB Dec 2013
2. NSSHRP/ 64 111.82 Mar 2007- 4,786,942,230.00 3,208,054,953.17 67% 1,578,887,276.83 33%
WB 2012

71
3. HSDP/ ADB 79.9 90 12 Jan 559,816,530.00 412,835,820.00 74% 146,980,710.00 26%
2005-30
Sept 2012
4. HSRA-SP/ 25 80** 27 June 600,000,000.00 106,184,027.40 18% 493,815,972.60 82%
KfW 2008-31
Dec 2012
ext 2012
5. HLK/ Apr 2005 1,348,600,000.00 1,348,600,000.00 100% 0 0%
Netherlands to Dec
2011 ext
100 117.58 Sept 2012
Average %/
Total amount 100% 67.98 104.348 8,104,501,760.00 5,350,606,800.57 58% 2,753,894,959.43 42%
Grants
Dec 2007- 88,529,772.57 52,497,476.16 59% 36,032,296.41 41%
1. Global HIV March
- Round 5 100% 88% 41% 2011
2009- 15,480,000.00 1,848,664.93 12% 13,631,335.07 88%
2. SUSEA 100% 31% 12% 2011
2009- Oct 6,222,000.00 34,300.00 1% 6,187,700.00 99%
3. ME3 60% 26% 1% 2012
110,231,772.57 54,380,441.09 49% 55,851,331.48 51%
Total Loans and Grants 8,214,733,532.57 5,404,987,241.66 66% 2,809,746,290.91 34%
*from draft ODA Report of NEDA; Fact Sheet / BIHC
** per audit
***report of DOH to stakeholders/Funders

Below were the causes and effects of the low utilization/disbursement rates
of the loans and grants:

Project/Funder Cause of Low Fund Utilization Effect/ s of the low

disbursements
NSSHRP/WB Loan amount for EPI vaccines and Incurrence of commitment fees of
other drugs and medicines was in $113,527.60 or P4,959,389.50 from
excess of the needs for the items which January to December 2011.
was evident in unutilized balance of
P250 million and the outstanding
undelivered drugs amounting to
P377,858,865.15 from UNICEF; and

Late preparation of the National

Household Targeting System
2WHSMP/WB Non-availability of SARO for Performance based grant remained
Capital Outlay; and below the target (at 22% of the
P239,999,960.00) due to delayed/non-
Delayed procurement for submission of claims from the batch
consultancy services. two sites
HSRA-SP/ KfW Revision of activities resulted in Return of fund to KfW
the request for realignment of funds; amounting to 490,625.00 on
August 24, 2011; and
Change of sub-loan and grant
recipients; and Incurrence of commitment
fees in a total amount of
Non-implementation of Performance P7,384,377; and
Based Grant (PBG) amounting to P75
million.
72
HSDP/ADB Prolonged procurement process Incurrence of commitment fees in the
amount of $26,750.0 or P1,152,945.31
for CY 2011.
Global Fund Unimplemented provision of incentives Return of unutilized grant funds of
Round 5 to DOH personnel such as PHIC benefit P36,032,296.41 to Global Fund for the
and communication allowance; GFR5 Program for CY 2011 as
follows:
Delayed Full Staffing and late
engagement of Sub-Recipients; and Peso Account - P 11,269,067.19
Dollar Account - 24,763,229.22
Unimplemented activities and Budgeted Total - P 36,032,296.41
planned activities were overstated.
Results-Based The targeted 15 workshops and Non-availment of grants amounting to
Monitoring and hiring of two consultants by the 3rd P6,187,700.00.
Evaluation (M&E) quarter of CY 2011 were not attained.
towards Equity Only project meeting was conducted
and Effectiveness instead of workshops.
(ME3)
SUSEA Delayed Start-up of the project and Non-availment of grants amounting to
incomplete technical planning P13,631,335.07.
guidelines.

We recommended that Management direct the:

a) Director of the BIHC to:

fast track the utilization of the funds and implementation of

the remaining unfinished project/activities of the NSSHRP,
2WHSMP, HSRA-SP, HSDP, 2WHSMP and ME3 as per
approved WFP;

ensure that proposals are based on reasonable and feasible

activities and that the targets set are realistic and attainable with
due consideration of the available resources, manpower, funds
and partners; and

that selected beneficiaries are capable and committed to

implement the project to maximize the use of grant funds;

b) Directors of the BIHC and the Finance Service to ensure the

complete documentation of reimbursements from loan funds; and

c) COBAC to fast track the procurement of the project

requirements.

73
 Non-utilization of Hospital Equipment, Buildings and Other Facilities

16. Hospital equipment, buildings and other facilities amounting to

P42,610,460.40 were either unutilized or idle due to defects, incompatibility,
non-conduct of repair and maintenance and lack of manpower training
thereby, resulting in foregone revenues, wastage of government funds and non
delivery of efficient quality health care services.

The following are the number of defective and unutilized equipment,

patients wards and buildings in CY 2011with the corresponding reasons for being
unutilized:

Hospitals Facility Amount Reason for Being Idle/Non-Utilization

(PhP)
Metro Manila
POC Fire Safety and Protection 9,644,003.63 Lack of assessment/evaluation of the
Project costing DOH-CO and the POC of the old existing
fire safety system/facilitys scope and
program of works for the Design and
Build; and
No testing of the old existing system
before the conceptualization of the EEI
Design and Build.
TMC Laboratory equipment for 7,124,615.00 Unutilized since CY 2002 due to
processing of histopath non-assignment of personnel to handle the
specimen procedure.
SLH Walk in Freezer 675,000.00 The after sale services were not considered
Dish washing machine by the Hospital and unavailability of spare
conveyor 540,000.00 parts and service centers;
Oven steam convection 426,000.00
Tilting kettle with self- Hospital had not prepared for the
contained gas heated 984,000.00
maintenance of the
Ice making machine 88,200.00
Conveyors, gauge 16 384,900.00 equipment/machines procured; and
Bulk Food conveyor 192,666.00

Microfilm camera, DR- 203,000.00 Used for a short while and became
1600 Minolta Planetary unusable due to non-repair of the
desk top 265,000.00
items.
Microfilm Processor,
Maple 3000E . 370,000.00
Printer Minolta RP603Z, 4,128,766.00
desk top type
CAR
CHD Constructed Multi- 1,499,933.04 Absence of an occupancy permit
purpose Building

74
BGHMC The Molecular 4,484,879.73 Equipment did not pass the proficiency
Laboratory and various testing conducted by RITM as required by
laboratory equipment the DOH.

Cagayan Valley
CVMC Treadmill exercise/stress 1,750,000.00 Lack of the needed accessories such as
test machine cardiac monitor, defibrillator machine,
laryngoscope curve and suction machine to
maximize its functionality.
SIGH Ultrasound Scanner Model 1,610,650.00 MOA with a private company for the
0810 496,100.00 operation Ultrasound Scanner thru 50-
Infant Incubator Model 2,106,750.00 50% profit sharing did not push thru; and
Nanjing Brand Absence of physician to operate the said
equipment.

Central Luzon
MMW X-ray machine 2,200,000.00 Absence of a trained personnel to operate
the machine
Bicol Region
BRTTH Various hospital 7,317,513.00 Due to defects, incompatibility and lack
equipment of manpower training for its use

Zamboanga Peninsula
MRH Ultrasound machine and a 1,394,000.00 Lack regular/permanent qualified
ventilator 960,000.00 personnel to operate the equipment..
Total 42,610,460.40

The non-utilization of these building/equipment/machines and facilities

deprived the hospitals of additional income therefrom, wasted government funds
and prevented the hospitals from delivering quality health care services to the
public/clients.

We recommended that Management direct the concerned Chiefs of

Hospitals to:

a) determine, in consultation with its Engineers and those of

DOH NCHFD, what appropriate action should be undertaken to
rectify the condition of the fire safety and protection of the POC so
as not to totally put to waste the P9,644,003.63 paid by the
government to EEI Corporation. If necessary, take appropriate
administrative and criminal action against the responsible officials
for the wastage of government funds. And henceforth, in accepting
projects from the DOH, assess the viability and completeness of the
program of works with due consideration of the needs of the POC

75
and the condition of its existing facilities so as not to put to waste
government resources ;

76
b) undertake necessary measures to make all the machines which
are still functional or can still be repaired operational such as
immediate repair of the machines and assign personnel to handle
this type of lab test; after the machines became operational,
recommend for termination of the contract for conduct of
laboratory test for histopath with private provider; and henceforth,
ensure that the requirements of the machines are taken-cared of to
maintain their functionality (TMC Head of the Laboratory
Department).

c) re-visit the existing procurement policies of the Hospital to

consider, among others, the after sale service of
equipment/machines to be procured to ensure that the availability
of spare parts and service centers; strengthen/improve preventive
maintenance program of the Hospital to make sure that all
equipment/machines used in its operation are kept in good working
condition at all times; create an Inventory Team to conduct
inspection and evaluation of the actual condition/status of all
unutilized equipment; determine which among of these
equipment/machines can still be repaired and those beyond
economical repair and prepare the corresponding report/s and
recommend their disposal, if necessary (SLH);

d) purchase all the needed accessories/equipment to maximize the

functionality of the treadmill exercise/stress test machine and for
possible return of investment and or income of the hospital
(CVMC);

e) designate a permanent employee of the hospital to undergo

training regarding the operations of these hospital equipment and
be extra-sensitive in the procurement of medical, dental and
laboratory equipment so as not to waste government funds and the
hospital shall not be deprived of its income (SIGH);

f) require the concerned officials and staff to undertake the

proficiency testing conducted by the RITM (BGHMC);

g) follow-up the needed occupancy permit so that the building

could be used for the intended purpose (CHD for CAR); and

77
h) review personnel requirements of the agency and request for
additional plantilla item/s from the DBM, if warranted, and
formulate policies for maximum use of the hospital equipment to
cater to the needs of the patients and recommend same to higher
authorities (MRH).

78
Poor Implementation, Non-monitoring and Non- utilization of allotments of the Potable
Water System Program

17. The absence of implementing guidelines in the implementation of the

CYs 2009 and 2010 for the DOH Potable Water Supply Program (PWSP)
resulted to the non-monitoring/evaluation or non-validation of actual project
accomplishment/ propriety of disbursements of the targeted water supply
projects for CYs 2009 to 2011 with a total cost of P4,295,400,000.00. Moreover,
the failure to compel the identified LGU recipients to comply promptly with
the pre-release requirements as provided for under DOH Department Order
Nos. 0091 and 0091-A dated April 7, 2011 and May 24, 2011 and the delayed
release of the allotment for the Provision of PWSP as of year-end deprived the
intended beneficiaries on the timely availment of the benefits from the
program.

The DOH-CO did not monitor/evaluate/validate the fund utilization and

status of implementation of the PWSP in 2009 and 2010 with total appropriations of
P3,000,000,000.00 due to the absence of guidelines in the implementation thereof.
Also, there were no guidelines jointly issued by the DBM, DOH and LWUA before
the MOA between DOH-CO and LWUA was executed and it did not also include
the vital/crucial role of the DOH in the regular assessment/validation of the
status/progress of the program implementation and of accomplishments reported by
LWUA as well as the propriety and efficiency in the use of the DOH program
funds. The DOH-CO also did not include in its operational plan (CORE Plan) any
activity for the monitoring of the implementation of the CY 2009 PWSP for it had
no active role to implement the same since, according to DOH, the fund was
directly released to LWUA, an agency under its the administrative supervision. It
also failed to perform its responsibilities as embodied under Section 10 of the
Special Provisions of the FY 2011 DOH appropriations in the 2011 GAA and post
on its official website, at least on a quarterly basis, the list of identified waterless
LGUs.

Moreover, the initial allotment for the CHD Caraga Region, in the amount
of P20,000,000.00, for the implementation of the PWSP to identified recipients
(LGUs, Municipalities of La Paz and Sibagat, both in the Province of Agusan del
Sur, at P10,000,000.00 each pursuant to DO No. 2011-0091), was not released and
utilized due to the failure of the CHD to compel the LGUs to submit the pre-release
requirements such as letter-request for the release of funds and proof of separate
bank account intended for the projects. Furthermore, P21,200,000.00 of the
additional allotted amount of P22,500,000.00 for to the Region for identified
priority waterless recipient LGUs (Municipality of Prosperidad for

79
 P10,000,000.00, Province of Surigao del Sur, San Miguel Community District
Hospital for P2,500,000.00 and Municipality of Tubod for P10,000,000.00), were
received only in December 2011. These in effect delayed the attainment of the
objectives of the program and deprived the intended beneficiaries the prompt
availment of the benefits from the program.

We recommended that Management direct the:

a) NCDPC Director to:

include in the NCDPC WFP funds for the continuous

monitoring of the implementation of the program;

conduct a continuous monitoring, evaluation and assessment of

the water supply projects, through the EOHO and assistance from
the CHD engineers and other concerned;

prepare, on a quarterly basis, status reports for the program

containing the list of identified waterless municipalities with the
corresponding budgetary allocation, utilization of amounts and
status of implementation; and

post the reports at the DOH official website for transparency;

and submit the same to appropriate DOH officials so that
appropriate action could be undertaken for any deficiencies noted
in program implementation; and

b) the Director of the CHD for Caraga Region to set the period
for the submission/compliance with documentary requirements both
for the pre-and post-releases of funds for LGUs; intensify the
follow-ups with the LGUs concerned for the submissions of the
documentary requirements; and provide technical assistance, if
necessary, to facilitate the release of project funds.

Unattained Targets of Programs

18. An average shortfall of 17.21 and 8.5 percent from the targets of 70
percent Case Detection Rate (CDR) and 85 percent Cure Rate (CR) for the
Routine EPI and TBCP, defeated the objectives of the program to detect new
sputum smear-positive TB cases and cure new sputum smear-positive TB cases
80
discovered, respectively. Also, the hiring of only 734 nurses with
corresponding disbursement of P12,236,012.79 out of the 950 targeted health
professionals for the RNheals Program with allocated funds totaling
P21,960,000.00, resulted to the non-achievement of the program designed for
the unemployed registered health professionals, particularly the nurses and
midwives for their learning and deployment.

81
 In CY 2011, the DOH-CO sub-allotted to the CHD for Calabarzon the
amount of P36,100,000.00 for the MR-SIA, in addition to the continuing
appropriation (CONAP) for CY 2010 of P750,000.00. The amount of P912,300.00
from the current years appropriation of the CHD was allotted for the Routine EPI,
which was not utilized.

The target for MR-SIA is to immunize 95% of infants ages nine to 95

months. Only Rizal Province, the Cities of Calamba, Lipa, Sta. Rosa, and Trece
Martires exceeded the targets of immunization on infants. Eight provinces/cities
were below 85 percent, while six were below 95 percent. The shortfall of eight
percent (95%-87%) was partly due to the missed children totaling 43,471 who
were either sick, on vacation, with private doctors, or other reasons.

On the Routine EPI, the utilization of the EPI Vaccines was low vis--vis the
targets of 2.7 percent and 3.5 percent of the total population of infant below one
year and pregnant women. Only 69.84 percent of the total eligible population of
infants below one year old were fully immunized and 37.15 percent of the total
eligible population of pregnant women was immunized with Tetanus Toxoid 2.

Infant below 1 Year Pregnant Women

Vaccines Eligible Population Eligible Population
% %
Population Vaccinated Population Vaccinated
2.7% of the total population 331,857
3.5% of the total population 430,184
Tuberculosis Vaccine (BCG) 268,803 81.00
Measles Vaccine 224,187 67.56
Diphtheria Tetanus Pertussis 3 229,796 69.25
Oral Polio Vaccine 3 262,335 79.05
Hepatitis B 3 222,005 66.90
Fully Immunized Child 231,783 69.84
Tetanus Toxoid 2 159,807 37.15

The Program Manager explained that the low percentage on immunization

was due to several factors, such as (a) insufficient and shortage of 267,250 vials of
EPI Vaccines; (b) lack of manpower for the Monitoring and Supervision Activities;
and (c) enormous roles of the LGUs (PHOs, CHOs, RHUs, and DOH
Representatives) in the realization of the EPI.

The following problems were cited at the LGU level which contributed to
the low performance of the CHD on the EPI:

82
a) failure to monitor the drop-outs (people who begin the vaccination
schedule but did not complete it);

b) lack of manpower at the LGUs level as well as lack of

transportation allowance; and

83
 c) failure to conduct outreach activities and other programs were
prioritized.

Clearly, the CDR of the CHD had a continuous increase from CYs 2006 to
2010, but these still fell below the national target of 70 percent by an average of
17.21 percent. CR also fell below the national target of 85 percent by an average of
8.5 percent.

The following factors, among others, have also contributed to the low
performance of the Region:

a) sub-allotments from the DOH-CO amounting to P23,638,755.00

and P500,000.00 from the TBCP funds were realigned to Kalusugang
Pangkalahatan Program (KPP). Also, out of P16,011,053.00
allotments/sub-allotments for CHD for the TBCP only P4,840,186.62
was obligated/utilized, leaving a balance of P11,170,866.38;

b) CHD did not prepare a WFP for the Continuing Appropriation for
CY 2010 amounting to P949,653.00;

c) of the total allotment of P3,877,662.82 for monitoring and

evaluation, the CHD utilized only P873,200.00. Actual monitoring or
visitation to the RHUs and PHOs, the CHD utilized only P4,662.82 for
traveling expenses and communication expenses of P6,310.00 or a total
of P11,093.82;

d) delay in the submission of reports from the RHUs and PHOs and
erroneous reports;

e) receipt and issuance of drugs and medicines from the DOH-CO by

the CHD-IVA to the RHUs and PHOs could not be determined if these
were recorded in their respective books of accounts, hence, accountability
and existence of the drugs and medicines could not be established;

f) no applicants for medical technologists, doctors, and nurses in

view of the low salary grades offered and lack of LGUs manpower to
strictly enforce the monitoring of the RHUs and PHOs;

g) lack of funds for transportation and facilities in some communities

posed problem in the implementation of the program; and
84
h) TBCP is not the priority of the Mayor. There were other projects
that were prioritized and deliverables other than the TBCP.

85
 Further, out of the P21,960,000.00 budget of the RNheals Program covering
the period from October to December 2011 only P12,236,012.79 or 55.72 percent
for the hiring of 734 out of the 950 registered nurses was utilized for the first
tranche. Details are shown below;

No. of Nurses Funds

Hospital Authorize Actua Allotments Obligations Balance
d l (Amount in PhP)
QMMC 273 201 6,552,000.00 5,700,542.32 851,457.68
ARMMC 212 212 5,088,000.00 3,008,965.28 2,079,034.7
2
NCMH 324 264 6,936,000.00 2,530,900.49 4,405,099.5
1
LPGHSTC 141 57 3,384,000.00 995,604.70 2,388,395.3
0
Total 950 734 21,960,000.00 12,236,012.79 9,723,987.2
1

We recommended that Management direct the:

a) Director of the CHD in Calabarzon to:

provide internal control measures to get assurance that the EPI

Vaccines and TB drugs and medicines are utilized for the
intended purpose through (a) inspection backed-up with
inspection reports; (b) ensure the recording of the receipt and
utilization of the drugs and medicines in the books of accounts of
the concerned RHUs, PHOs, and CHOs; and (c) submission of the
physical inventory from the concerned RHUs, PHOs, and CHOs
to establish existence of the unutilized EPI vaccines;

ensure that all logistics for immunization are available all the
time and are functioning properly;

intensify the monitoring function of the Program Manager on

the following areas: (a) Outcomes - EPI coverage tracks over time
to determine if the expected outputs are achieved; (b) Human
resources - include the number of staff, their average workload
and training; and (c) regular physical check on the stock levels to
ensure the availability of vaccines;

86
 intensify supportive supervision to build the capacity to carry
out safe, good quality immunization services in the barangay by
providing on-site training and assistance;

foster political commitment at the LGU level and recommend

remedial measures to each LGU on the problems encountered
such as: (a) conduct of outreach activities; (b) increase capacity of
health facilities to provide immunization service through staff
allocation and skills development, to ensure that all facilities
should have adequate staff skilled in provision of immunization
services; and (c) monitor drop-outs;

prepare the WFP refocusing on the monitoring function of the

NTP Coordinators;

establish strong linkage with the LGUs to effectively perform

the monitoring function;

address the problem on lack of manpower;

maximize the utilization of the TBCP funds for the intended

purpose;

foster political commitment at the LGU level and recommend

remedial measures to each LGU on the problems encountered;
and

require compliance on the early submission of the NTP report;

and

b) the RNheals Program Managers for QMMC, ARMMC,

NCMH and LPGHSTC to complete and fast track the hiring of the
authorized number of nurses under the Program.

Delayed Completion of Infrastructure Project and Conversion of Hospital to Tertiary

Level

19. The delayed completion of the DOH-TRC Dietary Building with a

total cost of P17,207,406.10 resulted to poor dietary operations for TRC;
unnecessary rental expenses of motor vehicles in transporting cooked foods
and paraphernalia from RMC-Pasig City to DOH-TRC in Bicutan of

87
P1,102,800.00; inefficient and unsafe operations of the Dietetic Services for
patients undergoing treatment; and rehabilitation was not achieved.

Likewise, the non-approval of the plantilla position, non-completion of

the construction of infrastructure and facilities and procurement of the needed
equipment resulted to the delayed conversion of the DJNRMH into Tertiary
General Hospital.

As of December 31, 2011, the percentages of the completion of the projects

and payments made relative to the completion of DOH-TRC Dietary Building are
as follows:

88
 Contract Cost % of Total Payment
Phase
(Amount in PhP) Completion (Amount in PhP)
Phase I 13, 471,851.56 100%
-Variation Order 489,720.00 100% 13,961,571.56
Phase II 5,976,676.37 54.31% 3,245,834.54
Total 19,938,247.93 17,207,406.10

The Hospital Engineer informed that the Phase II project could not be
completed since the electrical installation at the TRC Compound is not compatible
with the voltage/electrical requirement of the equipment at the TRC compound.
Despite the delay in the implementation of the Phase II project, the RMC
management did not make any demand to compel the contractor to finish the
project as per agreement and to impose penalty from the contractor for the
unconscionable delay in the completion of the project, if not abandonment of the
project.

As such, as of year-end of CY 2011, the Dietary Services building is not yet

in used and the purpose for which it was conceptualized, which was to provide
adequate space, equipment in order to facilitate the efficient safe and sanitary
operations of the Dietetic Services, was not yet attained, thus, the amount paid for
the project totaling P17,207,406.10 remained unproductive.

This resulted in the delayed transfer of the Dietary Services from RMC to
TRC. Foods, except for the rice which are prepared at the RMC, are transported to
TRC in Bicutan, Taguig City. It was a daily routine for the TRC staff members to
assist in transporting foods from RMC to TRC and in the distribution and serving of
the foods of the patients since September 8, 2008. The RMC has to transport foods
to TRC three times a day on a regular basis. Had the Dietary Building been
completed and used, the RMC could have save about six to nine hours a day/per
staff in man-hours and approximately P1,102,800.00 for expenses in rentals of
motor vehicles in transporting cooked foods and paraphernalia from RMC-Pasig
City to DOH-TRC in Bicutan, Taguig City for CY 2011 alone. The delay in the
transfer of the Dietary Services from RMC to TRC was the result of the delay in the
completion of the Dietary Building which was started in the later part of CY 2008.

Likewise, the conversion of the DJNRMH into Tertiary General Hospital

was delayed due to the following:

a) The approved plantilla position for CY 2011 has only one item for
Supervising Administrative Officer and none for Financial Management
Officer; and
89
b) No Nursing Service Organogram was created although it was
included as one of the three major services departments;

90
 Further, the status of additional plantilla positions disclosed that it is still
pending with the DBM. Considering the present physical status/condition of the
hospital and the acquisition of new modern medical equipment and the construction
of new hospital buildings, there should have been additional positions for its
expansion to go hand-in-hand with the new facilities.

The suspensions and changes/introduction of new work items were not

included in the original contract to conform with the DOH standards, thus, delaying
the construction of infrastructure projects for the conversion of the DJNRMH into
Tertiary General Hospital. As a result some of the medical equipment acquired that
are to be installed in the new building wards remained idle at the Office of the Chief
of Sanitarium which deprived patients the supposed benefits from the machines.

Moreover, the specific description as well as the quantity of the equipment

was not included in the list of equipment to be procured as listed in the SARO and
some of the equipment listed in the SARO or AO, if acquired, has no place yet to
store because the building is still under construction.

We recommended that Management direct the:

a) Chief of the RMC to compel the contractor to finish the

project as per agreement and to impose penalty from the contractor
for the unconscionable delay in the completion of the project, if not
abandonment of the project; and

b) the Chief of the DJNRMH to:

make representation with the DBM for the immediate approval

of needed plantilla positions;
ensure that pre-construction activities are considered/worked-
out to ensure efficient and on-time execution of projects;

instruct the Inspectorate Team to conduct regular monitoring,

inspection and supervision of the project to ensure that
constructions works are within the contracted schedule;

request from the DBM the modification of the approved list of

equipment attached to the SARO attaching therein the equipment
listed in the DOH AO which was the basis of the APP; and

91
 ascertain that the equipment needed for tertiary level and
Hospitals affiliation be given priority in the procurement.

92
 B. OTHERS

Gender and Development (GAD)

20. The lack of information and awareness on Gender and Development

(GAD), preparation of the GAD Plan and budget as well as improper
allocation of funds, implementation of GAD programs and activities, non-
reporting of accomplishments and expenses relative thereto were not in
accordance with Joint Circular 2004-l of the DBM, NEDA and NCRFW. These
resulted in the non-attainment of the objectives of the GAD.

Joint Circular No. 2004-1 of DBM, National Economic Development

Authority and National Commission on the Role of Filipino Women dated April 5,
2004 provides the following:

Sections Provisions

3.2 (e) The GAD Focal Point shall advocate for, coordinate, guide and
monitor the development and implementation of the agencys
GAD plan and GAD-related programs, activities and projects.

4.1 All government agencies shall formulate an Annual Gender and

Development Plan designed to address gender issues within their
concerned sectors. The annual GAD plan/activities and budget
shall be geared towards the achievement of the desired outcomes
and goals as identified in the Framework Plan for Women.

4.2 The development of agency GAD activities shall proceed from a

review of sex-disaggregated data, the conduct of gender analysis
of major programs and the conduct of consultation/s with
womens groups or groups concerning GAD.

4.3 The conduct of massive information, education and

communication campaigns on the gender issues/s being
addressed by the agency and on the corresponding agency
program, activities and projects shall be given priority in terms of
budget allocation.
93
4.4 The agency GAD Focal Point shall prepare the annual GAD
accomplishment report in coordination with the agency budget
officers following the format prescribed in Annex B to be
approved by the agency head.

At least five percent (5%) of the total agency budget

appropriations as authorized under the annual General
Appropriations Act shall correspond to activities supporting
GAD. Agency heads shall be responsible for ensuring that GAD
activities are provided with adequate resources.

4.6 Department/agency heads shall ensure the implementation of the

annual GAD Plan and the utilization of the GAD budget of the
agency.

4.8 Agencies shall prepare their annual GAD accomplishment

reports for the previous year that contain actual accomplishments
vis--vis targets as well as the amounts utilized for the
achievement of such.

5.1 Agencies shall submit their annual GAD plans and budgets to
the NCRFW for review and endorsement prior to the
submission of the agency budget proposal.

Agencies shall submit to the DBM their NCRFW-endorsed

annual GAD plans and budgets along with the agency budget
proposals in accordance with the budget call.

94
5.2 The agency GAD Focal Point shall prepare the annual GAD
accomplishment report in coordination with the agency budget
officers following the format prescribed in Annex B to be
approved by the agency head.

Agencies shall submit to the DBM two (2) copies of the

annual GAD accomplishment report for the previous year
along with the agency budget proposal in accordance with the
budget call. The DBM shall furnish the NCRFW a copy of the
annual GAD accomplishment report.

It was observed that the DOH-CO did not designate any GAD Focal Point
Officer to catalyze and facilitate the institutionalization of gender mainstreaming
and womens empowerment since 2009, hence, no report was submitted on GAD.

Moreover, verification of the submitted GAD Plans/Budgets, evaluation of

the accomplishment reports vis--vis the budget and expenditures, analysis as to
extent of implementation as well as compliance with the pertinent laws and
regulations disclosed the following deficiencies:

Budget Expenses/
Utilization vs
Agency Amount % to Appropriations
(In PhP) Appropriations (Amount in PhP/
Percentage)
1. GAD Budget 5% of Appropriation but Low Utilization Rate and/or No Report
25,088,976.40
NCMH 27,870,950.00 5%
90%
1,373,812.08
MMMHMC 1,488,800.00 5%
92%
CHD-Central Luzon 7,746,350.00 5% no report
DPJGMRMC-Talavera
165,150.00 5% Not mentioned
Ext.
19,338,853.00
CHD-Ilocos 26,909,120.23 5%
72%
5% 303,137.00
ITRMC 512,000.00
59%
5% 186,670.00
RIMC 186,670.00
100%
5% 1,373,812.08
MMMHMC 1,488,800.00
92%

95
2. GAD Budget less than 5% of Total Appropriations and/or Low Utilization Rate
and/or No Report
ARMMC 1,621,600.00 0.01% 367,890.00 / 23%
42,098.50
FDA 2,200,000.00 1.91%
2%
NCH 315,000.00 0.2% not mentioned
QMMC 5,133,872.00 2.67% not mentioned
530,168.75
BQ 1,370,000.00 4.73%
39%
1,285,341.32 /
SLRWH 16,311,000.00 2.80%
8%
1,617,892.46
VMC 1,617,892.46 2.41%
100%
CHD-Bicol 5,204,500.00 .60% no report
2,475,411.00
POC 6,429,600.00 1.79%
39%
TMC 663,000.00 0.09% 123,600.00 / 19%
RMC 2,146,650.00 1.07% no report
3. Annual Plans/Programs not Prepared
EAMC
not mentioned
PJGMRMC
4. Annual Plans not Within the Purpose and Objective of the GAD
RMC 2,146,650.00 1.07% no mentioned
DJFMH not mentioned
NCH 315,000.00 0.2% not mentioned
CHD-Calabarzon 900,000.00 not mentioned
5. Non-submission of GAD Plan and Accomplishment Report to NCRFW
JRRMMC 2,175,000.00 not mentioned undetermined
RITM 3,365,650.00 1.99% not mentioned
SLH not mentioned 26,271,650.00
SLRWH 456,200.00 2.80%
FNLGH not mentioned

The afore-cited observations were not in consonance with Joint Circular No.
2004-1 dated April 05, 2004 of the DBM, NEDA and the NCRFW.

Further, with the less than five percent of budget and expenses for GAD
activities and projects, not much benefit are expected/derived.

We recommended that Management:

a) designate a GAD Focal Point Officer for the DOH-CO; and

96
b) direct the concerned Directors/Chief/Heads to require their
GAD Focal Point Persons to -

prepare an annual GAD plan and budget following the policy

guidelines set forth by DBM, NEDA and NCRFW Joint Circular
No. 2004-1 (EAMC and PJGMRMC);

97
 include only those programs, activities and projects that
directly address gender issues and concerns that are well defined
to avoid duplication or overlapping with the regular activities
(RMC, DJFMH, NCH and CHD-Calabarzon);

allocate funds for GAD Plans activities of at least five percent

of not only the total budget for MOOE but based on the total
agency budget appropriations and that the GAD budget is
utilized exclusively for GAD activities included in the GAD Plan
(ARMMC, FDA, NCH, QMMC, BQ, SLRWH, RMC, VMC,
CHD-Bicol, POC, TMC and RMC);

maximize the utilization of the GAD budget by implementing

the planned programs, projects and activities (NCMH,
MMMHMC, DPJGMRMC-Talavera Ext., CHD-Central Luzon,
CHD-Ilocos, ITRMC, RIMC, MMMHMC and BQ); and

prepare reports to contain the accomplishment vis--vis targets

with the corresponding financial resources utilized (JRRMMC,
RITM, SLH, SLRWH, FNLGH, NCH, QMMC, RMC,
JRRMMC, DPJGMRMC-Talavera Ext., CHD-Central Luzon,
CHD-Bicol and CHD-Calabarzon).

Senior Citizens and Differently-Abled Persons

21. Only two of the 85 agencies (66 hospitals, 16 CHDs and two bureaus
under the supervision of the DOH, including the DOH-CO), provided a budget
for the senior citizens and differently-abled persons as required under Section
32 of the General Provisions of Republic Act No. 10147, the GAA for FY 2011.

Pursuant to Section 32 of the General Provisions of Republic Act No. 10147,

the GAA for FY 2011 provides that the plans, programs and projects intended to
address the concerns of senior citizens and differently-abled persons shall be
integrated in the regular activities on the agencies, which shall be at least one
percent of their respective budget.

Verification showed that of the 66 hospitals, 16 CHDs and two bureaus

under the supervision of the DOH, only CHD for Metro Manila and FDA provided

98
a budget for the senior citizens and differently-abled persons as required by the
above-cited law as follows:

99
 Budget
Agency
Amount % to
in PhP Appropriations
CHD for Metro Manila P1,048,205.00 0.7%

FDA 2,029,000.00 not discussed

Although the FDA provided funds therefore, it was not however, utilized due
to lack of program, projects and activities identified related to the program. At the
CHD for Metro Manila, it integrated in its regular agency activities the program and
projects intended to address the concern senior citizens and differently-abled
persons.

However, the following hospitals granted discounts to senior citizens and to

differently-abled persons:

Agency Discounts Granted

EAMC Granted only 10% discounts for hospitalization and

drugs and medicines to Senior Citizens but none for
differently-abled persons.

NCMH/POC/QMMC/SLH Provisions of express lanes have been implemented

/RITM/ARMMC for the differently-abled persons and
architectural/structural facilities within the hospital
premises were provided.

We recommended that Management direct all the Directors/Chiefs/

Heads of the DOH, including the DOH-CO to:

a) provide annually at least 1% of the Agency budget pursuant to

Section 32 of RA No. 10147; and

b) give importance to the implementation of the program/

project/activities, particularly the provision of facilities which will
reasonably enhance the mobility, safety and welfare of the senior
citizens and the differently-abled persons.

100
Compliance with Tax Laws

22. The Accountants of four hospitals failed to withhold taxes and remit
the amount totaling P8,517,215.12 and P4,457,954.56, respectively, in violation
of DOF-DBM-COA Joint Circular No. 1-2000 dated January 3, 2000, Sec.3 of
BIR-Revenue Regulation (RR) No.10-2008 and BIR Revenue Memorandum
Circular (RMC) No. 23-2007.

BIR Tax Revenue Regulation No. 10-2008 dated July 8, 2008 and Revenue
Memorandum Circular No. 23-2007 dated March 23, 2007 require the Accountants
to withhold taxes for compensation and Expanded Value Added Tax, respectively.

For CY 2011, the Accountants of the following hospitals failed to withhold

taxes and remit the amount totaling P8,517,215.12 and P4,457,954.56, respectively,
as follows:

Taxable Taxes
Agency Income Not Withheld Unremitted Remarks
(Amount in PhP)
Taxes were not withheld
CDH
7,998.07 7,998.07 7,998.07 from KAELCO & Smart
Communications
Taxes withheld from
suppliers for the period
398,694.0
FNLGHTC none 398,694.00 August to December
0
2010

Taxes were not withheld

MMMHMC not mentioned from employees under
the Job Order status.
Taxes were not withheld
4,051,262.4
SPMC 4,051,262.49 4,051,262.49 on the CNA benefits of
9
employees.
Total 4,457,954.5 4,059,260.56 4,457,954.56
6

The non-withholding of taxes and remittances thereof were in violation of

DOF-DBM-COA Joint Circular No. 1-2000 dated January 3, 2000, Sec.3 of BIR-
Revenue Regulation (RR) No.10-2008 and BIR Revenue Memorandum Circular
(RMC) No. 23-2007.

101
 The DOH-CO, two DOH attached bureaus, five CHDs and 20 hospitals
included in their reports the compliance with the BIR Tax Revenue Regulation No.
10-2008 dated July 8, 2008 for compensation and Revenue Memorandum Circular
No. 23-2007 dated March 23, 2007 for Withholding Tax and Expanded Value
Added Tax as follows:

2011 Unremitted
Balance as of Balance as of
Agencies Withheld Remitted December 2011
January 2011
(Amount in PhP)
Metro Manila
DOH-CO 4,247,878.40 231,232,547.75 231,738,647.90 3,741,778.25
ARMMC 4,863,726.60 43,071,136.01 36,110,809.87 11,824,053.61
FDA 2,155,371,35 19,471,621.35 19,091,506.44 2,535,486.26
BQ 1,203,605.00 8,062,954.76 8,003,856.27 1,262,703.49
EAMC 10,622,911.99 64,258,162.13 71,448,895.42 3,432,178.70
DJFMH 2,237,199.55 53,482,475.93 49,673,676.27 6,045,999.21
DJNRMH 113,864.31 15,886,708.41 15,852,528.52 148,044.20
JRRMMC 2,774,510.69 48,403,711.18 46,342,375.46 4,835,846.41
LPGH&STC 1,276,213.07 13,619,920.08 11,740,709.80 3,155,423.35
NCH 0.00 20,440,901.42 18,972,954.28 1,467,947.14
NCMH 0.00 40,751,570.73 40,094,323.74 657,246.99
SLH 1,323,208.91 38,780,436.85 38,414,368.81 1,689,276.95
SLRHW 78,110.16 4,020,261.90 x4,047,111.86 51,260.20
POC 3,298,358.99 41,704,833.57 41,074,846.74 3,928,345.82
QMMC 4,345,144.88 38,091,590.17 37,044,846.46 5,391,888.59
RITM 520,576.94 28,990,645.36 29,151,318.17 359,904.13
RMC 3,934,306.73 34,124,682.49 32,317,780.01 5,741,209.21
TMC 2,685,556.57 17,133,025.83 18,165,468.15 1,653,114.25
VMC 362,789.05 11,817,982.69 11,924,472.98 256,298.76
CHD MM 1,749,418.48 13,569,662.24 12,133,965.59 3,185,115.13
Ilocos Region
CHD 0.00 18,107,648.26 14,647,398.21 3,460,250.05
R1MC 0.00 25,331,891.49 25,331,891.49 0.00
Cagayan Valley
BGH 0.00 219,918.04 0.00 219,918.04
Calabarzon
CHD 0.00 17,770,267.86 0.00 17,770,267.86
Bicol Region
BS 0.00 2,732,761.46 2,679,118.37 53,643.09
Caraga Region
CHD 0.00 17,088,605.63 15,843,067.47 1,245,538.16
CRH 0.00 16,432,025.44 16,432,025.44 0.00
SOCCKSARGEN
CHD 0.00 18,467,035.91 18,467,035.91 0.00
Total 47,792,751.67 903,064,984.94 866,745.998.73 84,112,736.98
102
103
 The following hospitals and CHDs also reported compliance with tax laws
and regulations but did not give details on the amount withheld and remitted: (i)
CHD for Ilocos Region, ITRMC and R1MC; (ii) CHDs for Cagayan Valley; (iii)
CHD for Central Luzon; (iv) BRTTH and CHD for Bicol Region; (v) CHD for
Northern Mindanao; (vi) NMMC; (vii) MHARSRTTH; (viii) APMC; and (ix)
CRMC.

We recommended that Management direct the concerned

Directors/Chiefs/Heads to require their Accountants to comply with BIR RR
No. 10-2008 and RMC No. 23-007 on withholding of taxes due from employees
and creditors and remittance of the same on due date (CDH, FNLGHTC,
MMMHMC and SPMC).

Status of Suspensions and Disallowances

23. The total suspensions in the amount of P188,098,833.08 remained

unsettled as of the year-end in the absence of records for the details thereof
while the settlement of disallowances amounting to P130,204,241.32 were held
in abeyance pending the final decision of the proper COA authorities on the
appeal thereof, contrary to the Rules and Regulations on the Settlement of
Accounts (RRSA).

The Rules and Regulations on the Settlement of Accounts (RRSA) require

the settlement of audit suspension and disallowances within 90 days and six
months, respectively, from the date of receipt of Notices of Suspensions/
Disallowances.

As of December 31, 2011, the reported total unsettled suspensions and

disallowances amounted to P188,098,833.08 and P130,204,241.32, respectively,
which were due to the following:

a. Suspensions of P188,098,833.08 for DOH-CO, CHDs for Metro

Manila, Zamboanga Peninsula, SOCCKSARGEN and CARAGA
Region were issued due to lack of supporting documents, the details of
which were discussed in their respective Management Letters.

Audit Suspensions
Agency (Amount in PhP)
DOH-CO 46,470,561.87
ARMMC 87,615,334.79
104
 EAMC 15,693,043.43
BQ 1,922,400.00
CHD for Metro Manila 12,682,327.30
BGH 594,249.43
CHD for Caraga 23,120,916.26
Grand Total 188,098,833.08

b. Overpayment of hazard pay of officials and employees from

January 1, 2009 to December 31, 2011 amounting to P82,393,654.98,
the payment of which was not in accordance with Section 21 of RA No.
7305, the Magna Carta of Public Health Workers, and Section 7.1.5a of
the Implementing Rules and Regulations (IRR), details of which are as
follows:

Balance as of December
Agency 31, 2011
(Amount in PhP)
DOH-CO P22,288,780.04
CHD for MM 2,085,722.32
ARMMC 344,064.09
BQ 1,246,312.75
DJFMH 2,879,285.21
DJNRMH 1,435,435.67
EAMC 13,133,575.05
FDA 1,781,481.15
JRRMMC 13,604,006.83
LPGH & STC 736,374.92
NCH 3,276,015.24
NCMH 6,629,836.77
POC 2,074,148.87
QMMC 1,820,087.02
RITM 1,613,560.43
RMC 5,034,743.28
SLH 1,115,597.06
SLRWH 255,361.38
TMC 485,529.78
VMC 553,737.12
Total P82,393,654.98

c. Disallowances totaling P47,810,586.34 for various reasons were

discussed in their individual MLs.

The appeals filed by the concerned agencies from the audit disallowances
were denied by the Director of National Government Sector, Cluster C (NGS-C),
105
COA, due to lack of merit. Accordingly, as stated in the decisions, it was ordered
that all excess payments of hazard pay to all personnel be refunded by the recipients
thereof. Similarly, the Director denied the appeals from the disallowances on the
payment of consultancy fees of a private lawyer hired by various Hospitals.

Notice of Finality of Decision is yet to be issued to the following agencies,

there being no appeal made from the management during the six-month
reglementary period:

Amount
Agency (PhP) Office to issue the NFD
Metro Manila
QMMC not mentioned NGS-C Cluster Director
RITM 25,830.00 not mentioned
VMC 245,251.24 Adjudication and Settlements Board

In addition, there were unsettled disallowances which were not included in

the balances reflected in the SASDC in the total amount of P37,714,605.69 which
were issued prior to the effectivity of the COA Circular No. 2009-005 dated
September 15, 2009, prescribing the use of the RRSA, broken down as follows:

Amount
Agency
(PhP)
VMC 1,136,193.60
DJNRMH 5,436,526.07
RITM 689,727.96
CHD for CAR 28,967.13
BGHMC 1,511,523.50
CDH 175,929.72
FNLGHTC 45,763.41
LHMRH 59,487.70
BGHMC and MC 1,511,523.50
CHD for Calabarzon 7,683,563.98
CHD for Bicol Region 5,072,797.74
BRTTH 20,601.47
Bicol Sanitarium 61,611.05
CHD for Caraga 14,051,234.46
ASTMMC 229,154.40
Grand Total 37,714,605.69

We recommended that Management direct the concerned

Directors/Chiefs/Heads to require the Accountants to enforce settlement of
106
suspensions and disallowances within the prescribed period and exert extra
efforts to retrieve documents for prior years disallowances and the eventual
settlements thereof.

107