ANNUAL RISK-BASED

INTERNAL AUDIT PLAN

AKLAN
PROVINCIAL
INTERNAL
AUDIT
OFFICE
 TABLE OF CONTENTS

I. SUMMARY OF INTERNAL AUDIT PLAN …………………………… … 1

A. Overview …………………………………………………………………… 1
B. Identification of Risks and Prioritization
of the Audit Areas ……………………………………………………….. 1
II. ENGAGEMENT TYPE AND WORK SCHEDULE ……………………. 3
A. Engagement Type …………………………………………………….. … 3
B. Scope of Audits ………………………………………………………….. 3
C. Audit Work Schedule …………………………………………….…….. 4
D. Calculation of Audit Hours …………………………………………… 5
III. STAFFING PLAN ………………………………………………….………. 6
A. Staff Composition ……………………………………………………….. 6
B. Training Schedule ………………………………………………………. 7
IV. FINANCIAL BUDGET …………………………………………………..... 7
ANNEXES
A. Prioritized Audit Areas using risk assessment
matrices/reports (RAR) ………………………………………………… 9
B. Audit Work Schedule CY 2013-2014 ………………………………..14
C. Approved Annual Audit Agenda ……………………………………... 20
D. Computation of Available Audit Hours ………………..…………… 22
E. Computation of Audit Engagement Days …………………..……… 24
F. Risk Assessment Matrices
1. PPDO ……………………………………………………………………. 25
2. PHRMO …………………………………………………………………. 37
3. PEO ……………………………………………………………………… 50
4. PBO ……………………………………………………………………… 75
5. PGSO/BAC …………………………………………………………….. 82
6. PACCO ……………………………………………………………….. … 101
7. PTO ………………………………………………………………………. 112
8. PGO-MIS ……………………………………………………………….. 120
G. Executive Order No.111: An Executive Order Approving the
2013 Annual Risk-Based Internal Audit Plan of the Province
of Aklan ………………………………………………………………........ 125
I. SUMMARY OF INTERNAL AUDIT PLAN

A. Overview

This Annual Internal Audit Plan was prepared by the Aklan Provincial
Internal Audit Office (APIAO) to be used as the basis in conducting its
internal audit activity giving due consideration on the availability of
resources, the capability of APIAO’s existing staff complement, the time
allotted to finish the audit within the period of one year and the priority of
the Governor.

The plan contains the lists of the audit engagements, the scope of
audit, and the types of audit that will be conducted. It also contains the
audit activities and the estimated man-days to complete each audit. It
covers, as well, the staffing plan and budgetary allocation that primarily
focus on improving the competence of the personnel by attendance to
trainings, other capability development activities, and hiring of additional
staff on the 3rd quarter.

B. Identification of Risks and Prioritization of the Audit Areas

The first step that was conducted by the APIAO in the formulation of
its Annual Internal Audit Plan was the identification of risks that would
prevent the Provincial Government from meeting its target and achieving its
goals and objectives.

Before the formulation of risk matrices and identification of potential

risks in the provincial government, PRMF consultant, Mr. Ricardo San
Andres conducted an orientation seminar and led APIAO and twelve (12)
road related (RR) departments in a small group workshop. And on March
11-15, 2013, another PRMF Consultant, Ms. Mary Jane Rosales trained and
coached the same departments to develop their Risk Assessment Matrices
and document their Internal Control System. As an initial output, the 8
road related offices (PPDO, PEO, PHRMO, PGSO/BAC, PBO, PACCO, PTO
and PGO-MIS) completed their risk assessment matrices and internal
control documentations.

The road related departments’ risk assessment matrices were

formulated using a risk assessment process that included identifying risks
that would prevent achievement of their objectives and assessing these risks
in terms of likelihood of occurrence and impact using the following
assessment factors:

a. Assessment Factors in measuring Likelihood:

1. Culture or Control Environment

2. Historical Occurrence
3. Complexity of processes/Systems
b. Assessment Factors in measuring Impact:

1. Economic Growth
2. Poverty Reduction
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 3. Public Access to Infrastructure services
4. Reputation/Perception of Constituents
5. Financial Targets
Rating Scale:
Likelihood Impact
1 - Rare 1 – Minor
2 – Possible 2 – Moderate
3 – Almost Certain 3 – Catastrophic

The resulting assessment of risks was placed in a risk map to

determine which risks are significant/high, moderate and low.

The annual internal audit plan for CY 2013 came from the risk
assessments performed by each office that form part of the commitment to
PRMF. The high risks identified by the offices were collated by APIAO and
prioritized using the following factors (risk ranking criteria) with equivalent
weights that has been agreed to by APIAO in its first year of audit
engagement:

1. Contributing to the 5 Reform Agenda of PRMF-PGA-40%. (1.

Sustainable Road Maintenance, 2. Transparent and accountable
budget and expenditure management system, 3. Fully functional
internal control system including an independent internal audit, 4.
Transparent procurement process, 5. Comprehensive Human
Resource Development Plan (HRMDP) and Management Strategy)

2. Control Environment-30%. (It epitomizes the entire physique of

the LGU, i.e., the program, procedures, day-to-day operations of
the organization, basic internal control safeguard and personnel.
The following are also essential ingredients of a favorable controlled
environment: tone at the top, compliance with policies and
procedures, reliable systems, prompt detection and correction of
errors, adequate staffing, etc.)

3. Complexity-30%. (Extent of Automation, Complex Calculations,

Interrelated and interdependent activities, Number of products or
services, the time spans of estimates, Dependency on third parties,
Customer Demands, processing times, Applicable laws and
regulations, etc.)

Rating Scale:
1 Probably not a problem
2 Possibly a problem
3 Probably a problem

After the comprehensive analysis of risks, those interrelated risks

were consolidated to form several audit areas. Considering the office
resources, APIAO will initially engage audit areas with rating above 80%

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 starting 2nd quarter of CY 2013 and those below will be audited on the 1st–
2nd quarters of CY 2014.

The Annual Audit Plan was primarily based on the vision of the APIAO
and the vision of the Province of Aklan in relation to the five key reform
areas.

II. ENGAGEMENT TYPE AND WORK SCHEDULE

A. Engagement Type

The two types of engagements in an Internal Audit Plan are:

1. Assurance Service – Objective examination of evidence for the

purpose of providing an independent assessment on governance,
risk management, and control processes for the PGA. This type of
engagement employs the following types of audits as embodied in
Chapter 4.4 of the IA Operations Manual of APIAO: 1) Operations
/Management Audit, 2) Compliance Audit, 3) Information Systems
Audit, 4) Fraud Audit/Forensic Audit, and 5) Special Audit. For
this year the APIAO will engage in the following types of audit:
 Operational/Management Audit – Audit Activities which may be
performed to assist management in the review or examination of
policies and procedures. They focus on the ability of an
organization to achieve its business objectives in the areas of
efficiency and effectiveness of operations.
 Compliance Audit - Audits that are largely directed at evaluating
compliance with established policies, laws, procedures,
regulations, contractual provisions, etc.

2. Consulting Services – An advisory and related client service

activities, the nature and scope of which are agreed with the client,
are intended to add value and improve an organization’s
governance, risk management, and control processes without the
internal auditor assuming management responsibility. Examples
of this activity are advisory, facilitation, training and
benchmarking.

As an initial consulting activity, the APIAO shall facilitate RISK

ASSESSMENT WORKSHOP for all hospitals, other non-RR departments and
other EEDD Units on June 2013. This is to ensure all offices in the
provincial government carry out risk assessment regularly and come up of
comprehensive risk universe.

B. Scope of Audits

The Institute of Internal Auditor’s International Standards for

professional Practice of Internal Auditing addresses the scope of audit work
as follows:

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  Review the reliability and integrity of financial and operational
information and the means used to identify measure, classify and
report such information;
 Review the systems established to ensure compliance with those
policies, plans, procedures, laws and regulations, which could have
a significant impact on operations and reports, and should
determine whether the office or unit is in compliance;
 Review the means of safeguarding assets and as appropriate verify
the existence of such assets; and
 Appraise the effectiveness and efficiency of operations within the
department of office.

C. Audit Work Schedule

The Audit Universe of LGU-PGA as identified by the 12 RR

departments can be found in Annex A. For this year, APIAO will have the
following Audit Agenda as its initial audit activities:

ANNUAL AUDIT AGENDA - CY 2013

AUDIT WORK
DEPT/ SCHEDULE
OFFICE AUDIT AREAS Types of Audit 2ND 3RD 4TH
/ UNIT QTR QTR QTR
2013 2013 2013
Scope No. 1 - Ascertaining the Reliability and Integrity of financial and operational reporting:
1 PEO, Allocation of budget for local roads Management/ x
PBO may not be adequate to fund the Operations Audit
prioritized provincial road projects
in maintenance, improvement
rehabilitation during the year.
2 PEO, Local counterpart funds for infra Management/ x
PBO, projects maybe inadequate. Operations Audit
PACCO Dependent to the arrival of funds
from donor agencies (DOH)may
result to the delayed
implementation of project s.
3 PTO, Revenues from Philhealth claims Management/ x
EEDD may not be fully collected Operations Audit
4 PPDO, AIP not fully funded by the General Management/ x
PBO Fund Operations Audit
5 PHRM Lack of budget on the conduct of Management/ x
O, PBO training programs and training Operations Audit
equipment.
Scope No. 2 - Evaluating the efficiency and effectiveness of Revenue Collection, Planning,
Budgeting,
Processing of Transactions, Project Implementation, Monitoring and Evaluation Activities:
PTO, Poor Road Condition may affect the Management/ X
6 PEO collections efficiency of Real Operations Audit
property Taxes
PPDO Delayed preparation/approval of Management/ x
7 & PBO Operations Audit
Annual Investment Plan.
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 PPDO Delayed submission of PPAs of the Management/ x
8 different offices due to multiple Operations Audit
changes of priorities.
PEO & No established system for Management/ x
9 PGSO monitoring fuel consumption Operations Audit
PEO, Delay in the preparation and Management/ x
10 PGSO, processing of transaction Operations Audit
PACCO documents
PEO, Inefficient Monitoring and Management/ x
11 PPDO, Evaluation of Projects Operations Audit
PPMC
PPDO No prescribed official monitoring Compliance Audit x
12 & tool.
PPMC
Scope No. 3 - Evaluating the Degree of compliance with laws, regulations and managerial
policies and operating procedures in the Procurement System:
BAC & Delays on procurement/release of Compliance Audit x x
13 budget
PBO
14 BAC Failure of Bidding. Compliance Audit x
15 BAC Splitting of Purchase Request Compliance Audit x
16 BAC No quorum Compliance Audit x
Delayed/incomplete delivery of Compliance Audit x
17 PGSO
goods.
Delivery of goods may not in Compliance Audit x
accordance with the technical
18 PGSO specifications, programs of works
and plans stipulated in the
contract/purchase order.
Scope No. 4 - Ascertaining the extent to which the assets and other resources of the provincial
government are accounted for and safeguarded from losses of all kinds:
PEO, Break-down of ageing equipment Management/ x
PGSO may result to delayed Operations Audit
19
implementation of road
maintenance activities.
20 Lack of storage facilities resulting to Management/ x
PGSO loss of properties Operations Audit
21 PGSO Unregistered motor vehicles Compliance Audit x
Uninsured/expired Insurance of Compliance Audit x
22 PGSO Motor Vehicles and Building
Lack of vaults for un-deposited Management/ x
23 PTO cash/safekeeping. Operations Audit
Unlicensed firearms/illegal Compliance Audit
24 PGSO possession of firearms when x
apprehended

D. Calculation of Audit Hours

The calculation of Available Audit Hours is included as Annexes C and

D of this plan. The initial audit engagement of APIAO will commence on

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 April 16, 2013, after the formulation of the initial Risk-Based IA Plan. A total
of 8, 352 hours will be available for the period April 16, to December 31,
2013. The calculation of Available Audit Hours was divided into six
categories. The six categories are:

1 Audits & Project Works – Assurance 4,708 audit hours

Services
2 Audits & Project Works – Consulting 440 audit hours
Services
3 General Administration 1, 892 audit hours
4 Training/Seminar 360 audit hours
5 Holidays 680 audit hours
6 Vacation/Sick Leave 272 audit hours

The audit works for Assurance Engagement Services requires a total

number of 5,376 hours for the year 2013, however, the available audit
hours for this project is only 4,708 hours, a difference of 668 hours.

There is a need for employment of at last one internal auditor; a CPA

would be an advantage, either by job order or by contractual basis to
complement the existing limited number of staff auditors. The deficiency in
audit hours may also be resolved by requiring the staff auditors to render
overtime services during Saturdays, Sundays and holidays.

III. STAFFING PLAN

A. Staff Composition

For the year 2013, the APIAO has employed the following personnel:

Position Title No. Status Incumbent

Internal Auditor IV 1 Permanent Elyen C. Agcaoili
Internal Auditor III 1 Permanent Brenda O. Magalit
Administrative Officer 1 Permanent Eumir Raymund
IV(equivalent to Internal (Aus-AID SM. Atienza
Auditor II, CPA) SCHOLAR)
Internal Auditing 1 Permanent Mae A. Cawaling
Assistant
Legal Researcher 1 Consultant Atty. Christian S.
Itulid
Software Engineer 1 Contractual Joven T. Punzalan
Civil Engineer 1 Job Order Engr. Niño Chris I.
Villorente
Certified Public Contractual To be hired on the
Accountant 3rd quarter
Total 7 Actual performing (full time) = 5

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 The total actual performing full time personnel of APIAO as of the
second quarter of CY 2013 are only five (5). The office aims to employ one
(1) Contractual CPA by the 3rd Quarter.

B. Training Schedule

To improve the competence of the APIAO personnel in performing their

functions, they are required to undergo seminar and workshops on the
following courses:

1. Basic Internal Control System Framework (In-house orientation –

1st Quarter)
1.1. Joven T. Punzalan
1.2. Engr. Niño Chris I. Villorente
1.3. New comer auditor

2. Risk Assessment: A Planning Tool (PRMF-1st Qtr)

2.1. Elyen C. Agcaoili
2.2. Brenda O. Magalit
2.3. Mae A. Cawaling
2.4. Atty. Christian S. Itulid
2.5. Joven T. Punzalan
2.6. Engr. Niño Chris I. Villorente

3. Effective Internal Audit Report Writing (AGIA-3rd Quarter)

3.1. Elyen C. Agcaoili
3.2. Brenda O. Magalit
3.3. Mae A. Cawaling (Optional)

4. AGIA Convention cum Seminar (Boracay-4th Quarter)

4.1. Elyen C. Agcaoili
4.2. Brenda O. Magalit

IV. FINANCIAL BUDGET

Expenditure Item Estimated

Amount
1 Travelling Expenses:
 Transpo & per diems during Fieldwork 20,000.00
 Travel Exp - attendance to Seminar
20,000.00
2 Training Expenses:
 Registration Fees – Seminar 30,000.00
 Catering (Food & Venue) – conduct of RA
90,000.00
Workshop to all Dept & EEDD Units

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 3 Office Supplies:
 Handouts for the workshop
15,000.00
 Audit Working Papers
 Audit Reports/Communications 15,000.00
15,000.00
4 Personal Services:
 Overtime Services 50,000.00
 Wages for Contractual/Job Order
120,000.00
TOTAL 375,000.00

Except for the budget for Wages of Contractual which we planned to

augment from the savings of Salaries from the vacant position of PGDH, all the
Expenditures Items hereto enumerated are within the appropriation of CY 2013
Budget of Aklan Provincial Internal Audit Office.

Respectfully submitted:

_______________________________ _______________
ELYEN C. AGCAOILI Date
OIC-Internal Auditor IV
Aklan Provincial Internal Office

Approved as submitted:

_______________________________ _______________
HON. CARLITO S. MARQUEZ Date
Provincial Governor
Province of Aklan

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