EXECUTIVE SUMMARY

A. INTRODUCTION

The Bureau of Fire Protection (BFP) was created by virtue of Republic Act No.
6975, otherwise known as the “Department of the Interior and Local Government
Act of 1990”. It is a line bureau under the DILG with a vision of creating a
modernized, efficient and responsive national protection agency fully equipped with
modern fire fighting equipment and manned by highly trained officers and men with
capability, initiative and foresight in the fulfilment of duty.

It is mandated to prevent and suppress all destructive fires on buildings, houses

and similar structures; forests; airports; land transportation vehicles and equipment;
ships docked at wharves; petroleum industry installations; and other similar
incidents; enforcement of the Fire Code; investigate all cases of fire; assist AFP in
times of national emergencies; establish at least one fire station in each Local
Government Unit nationwide with adequate personnel and equipage.

The BFP is presently headed by Director Bobby V. Baruelo, Fire Chief. Assisting
him are the Deputy Fire Chief for Operations, the Chief Directorial Staff (CDS) and
Chiefs of Directorates. It has 18 regional offices headed by Regional Directors
(RD)/Assistant Regional Directors (ARD) and Provincial, City and Municipal Fire
Marshals who supervise the provincial, city and municipal fire stations, respectively.
For CY 2016, the BFP has a manpower complement of 22,109 personnel composed
of 21,690 uniformed personnel and 419 civilian employees.

B. OPERATIONAL HIGHLIGHTS

As reported by management, the following are among the Bureau’s significant

accomplishments:

Major Final Outputs (MFO) / Percentage of

Targets Accomplishments
Performance Indicators (PIs) Accomplishment
MFO 1: Fire Prevention
Services
Percentage of buildings/
establishments inspected out of the
1,397,332 1,442,926 103.26
total number of buildings and
establishments nationwide
Percentage of buildings/
establishments with issued Fire
Safety Inspection Certificate 1,304,570 1,294,349 99.22
(FSIC) that has not been the cause
of any fire occurrence

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 Major Final Outputs (MFO) / Percentage of
Targets Accomplishments
Performance Indicators (PIs) Accomplishment
Percentage of buildings or
structures inspected within the
prescribed time from the receipt of 1,304,570 1,233,502 94.55
Mission Order by Fire Safety
Inspector
MFO 2: Fire Suppression and
Investigation Services
Percentage of fire and emergency 19,292
medical services and rescue calls fire 19,292 fire
responded nationwide incidents/ incidents/ 5,208 100
5,208 EMS
EMS
Percentage of fire calls with low
18,793 out of
level of alarm out of the total
16,398 19,292 fire 97.41
number of fire calls responded
incidents
nationwide
Percentage of fire calls, 19,961 out of
emergency medical services and 24,500 (15,380
rescue calls responded within 22,050 fire 81.47
seven minutes arrival time incidents/4,581
EMS/Rescue)

C. FINANCIAL HIGHLIGHTS

The BFP financial condition, results of operations and sources and applications of
funds for CY 2016 with comparative figures for CY 2015 are presented as follows:
2016 Amount 2015 Amount
Group of Accounts
(in thousand pesos) (in thousand pesos)
Financial Position
Assets 13,244,314 12,397,734
Liabilities 2,029,762 1,496,907
Government Equity 11,214,552 10,900,827
Financial Performance
Income/Revenues 14,757,283 15,406,536
Expenses 13,953,303 12,448,854
Net Income 803,980 2,957,682
2016 Amount 2015 Amount
Sources and Applications of Funds
(in thousand pesos) (in thousand pesos)
Allotment Received 17,185,741 17,153,229
Obligation Incurred 15,050,752 16,004,356
Unexpended Balance 2,134,989 1,148,873

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D. SCOPE OF AUDIT

The audit covered the 2016 operations and financial transactions of the Bureau of
Fire Protection.

E. AUDITOR’S REPORT

The Auditor rendered a qualified opinion on the fairness of presentation of the

consolidated financial statements of the Bureau of Fire and Protection in view of the
accounting errors and deficiencies noted as presented below together with the
recommendation and discussed in details under Part II of the Report.

1. Credit in the bank account amounting to P3,518,947.08 was unrecorded in the

books resulting in the understatement of the cash in bank accounts. (Observation
No. 10)

We recommended that Management instruct the Accounting Office to prepare

JEV to record in the books the fund transfers amounting to P3,518,947.08
credited under the bank account maintained for the Yolanda and DOE.

2. Unremitted collections by the City Government of Parañaque amounting to

P13,593,166.14 was not taken-up in the books under the Due from LGUs
account. (Observation No. 7)

We recommended that Management require the Accountant to record in the

books the unremitted collections by the City Government of Paranaque under
the Due from LGUs account.

3. The balances of the Inventory accounts totalling P95,308,561.48 was doubtful

due to: (a) non-preparation/late submission of the Report on the Physical Count
of Inventory (RPCI); (b) non-maintenance of Stock Cards (SC) and Supplies
Ledger Cards (SLC) by the Property and Supply Division and Accounting
Division, respectively; and (c) laxity in the internal control for inventories.
(Observation No. 13)

We recommended that Management: a) require the concerned officials to

conduct semi-annual physical count/inventory of supplies and reconcile the
results thereof with the balances appearing in the SLC and SC maintained by the
Property and Supply Division and the Accounting Division, respectively;
Thereafter, submit the same to the Office of the Auditor not later than July 31
and January 31 of each year for the first and second semesters, respectively, for
audit and verification purposes; and b) require the Accounting Division and
Property and Supply Division to prepare and maintain an SLC and SC,

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 respectively, and reconcile their records periodically with the view of
investigating/adjusting whatever discrepancies noted.

4. The balance of PPE totaling P5,435,851,431.14 was unreliable due to

a) unreconciled discrepancies of P167,977,856.37 between Accounting records
and balances appearing in the Report of Physical Count of PPE (RPCPPE) of
NHQ and NCR; b) non-submission of RPCPPEs in Regions 4A, 5, 6, 9, 12 and
ARMM; and c) unaccounted various equipment in ARMM. (Observation No.
14)

We recommended that Management: a) require the concerned officials to

reconcile the Accounting and Property records to reflect the correct balances of
PPE accounts in the financial statements; and b) conduct physical inventory of
all PPEs and submit a report thereon to the Auditor every January 30 of each
year to ascertain their existence and to ensure the correctness of the recorded
PPEs.

F. OTHER SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS

1. The objective of achieving a set of reliable, fast and efficient fire trucks did not
materialize viewed from the various defects noted in the 176 (or 37 per cent) out
of the 469 fire trucks delivered in 2015. (Observation No. 1)

We recommended that Management: a) direct all Regional Offices to report all

noted defects in fire trucks in their custody; b) in future procurement, ensure that
the post-qualification of winning bidder be undertaken for a period not
exceeding 30 days, judiciously and meticulously plan all procurement by setting
a reliable ABC to allow wider range of competition in order to ensure the best
quality of goods procured and comply with the 60 percent Filipino ownership in
any company or Joint Venture of winning bidders to guarantee the priority of
Filipino in any business undertaking by the government.

2. Two hundred twenty five (out of the 469) fire trucks were delivered beyond the
terms of deliveries specified in the contract, incurring liquidated damages
amounting to P51,978,800.00. (Observation No. 2)

We recommended that Management demand payment of the liquidated damages

amounting P51,978,800.00; otherwise, hold responsible all persons who allowed
the release of the full payment of the 469 fire trucks to the JV.

3. The procurements of various firefighting equipment, accessories and supplies

were delayed, moreso, the extended periods of delivery were granted beyond the
maximum allowable period. Also, the ABC was not judiciously and
meticulously planned. (Observation No. 3)

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 We recommended that the Fire Chief direct the NCR Regional Director to:
a)ensure that procurements are undertaken within the timeline set under RA
9184 and its IRR; b) grant extension with due consideration on the maximum
allowable period of extension; and c) judiciously and meticulously plan the ABC
in order to maximize the utilization of government resources.

4. Of the 288 construction projects programmed during the year, only 85 were
completed indicating a 30 percent physical delivery rate, which defeats the
objective to provide at least one fire station for each municipality. (Observation
No. 4)

We recommended that Management: a) expedite construction of fire stations

nationwide to fully achieve the goal of having fire stations each
municipality/LGU; b) require Regional Directors to closely coordinate with the
LGUs for the availability of lots for the fire stations; c) see to it that project
funds are released in a timely manner to avoid reversion of funds; d) ensure the
imposition of liquidated damages for delayed projects in the NHQ and in the
Regions to be deducted from the progress billings of the contractor; or rescind
the contract; e) see to it that regular and thorough monitoring and supervision of
projects are performed; f) see to it that appropriate permits are obtained/secured
before commencing with the construction/repairs of fire stations.

5. The Information Management System Project (IMSP) costing P204,555,024.60

was not fully implemented at year-end as planned due to: a) non-procurement of
communication network and ICT Equipment; b) late funds transferred to and
non-delivery of computer software by PS-DBM; and c) late commencement of
procurement process for Information Systems Development.(Observation No. 5)

We recommended that Management: a) closely monitor the implementation of

the IMSP in order to avoid delay in the completion thereof; and b) hasten the
procurement of the needed services and ICT equipment.

6. The benefits of the Scholarship Program was not enjoyed fully by the
beneficiaries because (a) availment is limited only to any one dependent child,
instead of all surviving children of the deceased fireman; and (b) tuition and
miscellaneous fees availed of from the program were being reimbursed to the
beneficiaries, instead of paying directly to the school, inconsistent with the same
Section 8 of RA 6963. As a consequence, P42,630,239.20 or 74.42 percent out
of the released fund of P57,285,357.00 was automatically reverted to the
National Treasury while only 159 or 31.54 percent of the 675 scholars graduated
from the program. (Observation No. 6)

We recommended that Management: a) revisit the guidelines on the BFP

Scholarship Program with the view of revising the same to conform with RA
6963 of allowing all qualified dependents to avail of the benefits lawfully due
them and insuring full implementation of the program; b) consider granting the

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 actual amount of tuition and miscellaneous fees directly payable to school and
not through reimbursement basis; c) streamline the processing of payments of
benefits to scholars; d) revisit its policy on the payment of tuition and
matriculation fees of scholars to improve the number of graduates; and e)
follow-up from DBM the release of NCA for reimbursement of tuition fee and
other benefits due the scholars for the second semester of 2015-2016.

7. The lack of clear policy on the manner of collecting the Fire Code Realty Tax
resulted in uncollected revenue in an estimated amount of P121,678,935.22 from
CY 2014 to 2016. (Observation No. 7)

We recommended and Management agreed to: a) revisit existing policy on the

collection of Fire Code Fees with the end view of including a policy on all type
of income that can be derived from the Fire Tax Code with emphasis on of the
collection of fire code realty tax; b) demand from the LGUs the immediate
remittance all fire code fees and taxes collected by them; and c) make
representation with the LGUs for the provision of a space within the LGU
premises for the BFP collecting officer in order to have a ”one-stop-shop”
collecting office.

8. The twenty percent share of 17 Regions consisting of 1,425 local government

units (LGUs), amounting to P648,198,822.52, from fire code fees from 2010-
2013 was not immediately released resulting in reversion of cash allocations.
(Observation No. 8)

We recommended that Management immediately release the LGUs share in

order that the same can be used for the intended purpose for the benefits of their
constituents.

9. Various deficiencies were noted in the handling by accountable officers of their

cash accountabilities exposing the cash to possible risk of loss or misuse, such
as: (a) non-intact deposit of collections and/or collections without official
receipts (ORs); (b) lack of proper turn-over of accountabilities; (c) lost or
missing ORs; (d) AOs not bonded or with insufficient bonds; (e) non-updating
of the required cash records; and (f) granting of excessive PCF/unutilized PCF.
(Observation No. 9)

We recommended that Management: a) require the incoming and outgoing AOs

to submit the required turnover report of accountabilities and clearance from the
Accountant before the assumption of an AO to new assignment; b) require the
concerned AO to deposit all collections once a week or as soon as it reaches
P10,000.00; c) issue notice of loss of the accountable form for the information
and guidance of all collecting and disbursing officers, provincial, city and
municipal treasurers, bureau, provincial and city auditors and other
concerned; d) ensure the availability of ORs at all times; e) require AOs to
prepare the prescribed records; f) ensure the effectivity of the bond of all AOs at

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 all times; g) ensure the protection of fund in the hands of AOs by providing safe
or vault and safety environment; h) require the PCF Custodian not to pay out of
PCF without the properly accomplished PCV; i) reduce the AO’s PCF to an
amount sufficient only for one month’s requirement; and j) require the newly
designated SDOs to regularly submit the required financial reports to COA.

10. Five bank accounts with balance aggregating P114,212,915.16 are maintained
and deposited in the Land Bank of the Philippines instead of depositing the same
with the Bureau of Treasury. (Observation No. 10)

We recommended that Management remit to the BTr the balances of bank

accounts totaling P114,212,915.16, otherwise, secure authority from the
permanent committee for the maintenance of the bank accounts.

11. Inadequate cash programming resulted in the non-utilization and eventual

reversion of huge cash allocation totalling P1,200,693,023.00. (Observation No.
11)

We recommended that Management formulate a realistic and attainable work

plan and budget to ensure expeditious and opportune utilization of cash
allocation.

12. Fund transfers to PS-DBM accumulated to a huge amount of P1,380,809,190.28

due to the practice of procuring non-common supplies and equipment such as
fire trucks, personal protective equipment (PPE), firefighting tools/gadgets,
equipment. (Observation No. 12)

We recommended that Management: a) make strong representation with PS-

DBM for the immediate delivery of the long-overdue items procured, otherwise
request for the refund thereof; b) refrain from further transferring funds to the
PS-DBM until all fund transfers had been; and c) limit procurement at the PS-
DBM to only common-use supplies and equipment.

13. The non-liquidation of cash advances (CAs) within the prescribed period and the
continuous grant of additional CAs even if the previous ones were not yet
liquidated resulted in the accumulated balance of P39,902,928.79. (Observation
No. 15)

We recommended that Management: a) require all concerned officials to

liquidate their CAs within the prescribed period; demand the immediate
settlement of all CAs which are due for liquidation; otherwise, withhold their
salaries and apply the same to their unliquidated CAs; and refrain from granting
additional CAs unless previous ones have been liquidated.

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14. Special Financial Assistance (SFA) amounting to P8,534,565.88 was granted to
the beneficiaries of deceased/incapacitated firemen without sufficient legal
basis. (Observation No. 16)

We recommended that Management refrain from granting SFA as the same has
no legal basis.

15. The procurement by BFP-NHQ of FSEC and FSIC forms amounting to

P10,560,390.00 and payments for repairs and maintenance amounting to
P1,403,488.00 were not properly documented. (Observation No. 17)

We recommended that Management: a) refrain from acquiring the services of

private printers for the printing and delivery of the forms without the required
certification from the three (3) recognized government printers (RGPs) that they
cannot service the printing requirements for the FSEC and FSIC forms;
b)request from the Government Procurement Policy Board (GPPB) to include
the BFP FSEC and FSIC forms among the list of Accountable Forms to be
identified by the recognized government printers; c) strictly comply with RA
9184 on the publication and posting of the Invitation to Bid/request for
Expression of Interest and supplemental bid bulletins; d) ensure that the
procurement of the forms are supported with the requisitions from the end-users
with a certification as to the remaining balances of the forms to determine the
reasonableness of the quantity/volume to avoid overstocking; and e) ensure that
disbursement vouchers are supported with complete documentations.

16. Procurement of tires at BFP-NCR in the amount of P4,388,060.00 are higher by

19 percent or P819,744.70, compared with the price of same brand of tires from
other suppliers. (Observation No. 18)

We recommended that Management: a) strictly comply with RA 9184 with the

end view of determining that purchases are reasonable; and b) require the refund
of the variance noted in the purchased tires.

17. The Procurement of goods and services in various BFP Regions were not made
in strict adherence to RA 9184 resulting in delays and in failure to obtain the
most advantageous prices/services. (Observation No. 19)

We recommended that Management a) require the BAC to conduct a

comprehensive evaluation on the capability/competence of the winning bidder;
b) strictly adhere to the posting requirements mandated under RA 9184;
c)require the BAC to review adequacy of specifications and to instruct bidders;
d)impose and collect from the supplier of the document reader, the amount of
P54,272.30 as liquidated damages for the delayed delivery; and e) conduct
public bidding or canvass of Suppliers who can offer the best services and easy
payment terms for the supply of plane tickets for the region and from the list of

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 eligible suppliers choose the best offer before executing a Memorandum of
Agreement.

18. Several Regional Offices failed to regularly submit all Purchase Orders,
Contracts, and Inspection and Acceptance Reports. In addition, financial reports,
disbursement vouchers (DVs) and their supporting documents, and other
mandatory reports were not submitted within the prescribed period.
(Observation No. 20)

We recommended that Management: a) oblige the Chief Logistics Division and

other concerned officers and employees to regularly submit to the Office of the
Auditor all Purchase Orders, Contracts, and Inspection and Acceptance Reports;
b) require the Regional Accountants to submit complete financial statements,
transaction documents and other mandatory reports within the period prescribed
by existing laws, rules and regulations; c) instruct the concerned Accountants to
immediately submit the required documents supporting the expenses; and
d)require the accounting unit to stamp or mark “Paid” each disbursement
vouchers and all its supporting documents.

G. IMPLEMENTATION OF PRIOR YEAR’S AUDIT RECOMMENDATIONS

Out of 47 audit recommendations embodied in the CY 2015 Consolidated Annual

Audit Report, 26 were fully implemented and 21 were not implemented.

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