DOH 2011 COA OBSERVATION RECOMMENDATION

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. 2002001 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 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 B. Reconciling items including stale checksa and Interest incomeb not recorded/ adjusted Agency

51

Account/Amount in PhP Agency RMC RITM ARMMC Sub-total Total

Cash, NT-MDS * (17,797,453.63) (17,797,453.63) 133,696,389.55

CIB -LCCA a

130,774.19 b 11,851.78 a 19,412.12 **162,038.09 907,114.64

Total/Effect Understatement (Overstatement) (17,666,679.44) 11,851.78 19,412.12 (17,635,415.54) 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 nonreconciliation/updating of the GL and SLs balances of bank accounts totalling P403,830,182.17, as shown:

52

Deficiency/Agency

Bank Balance as of Dec. 31, 2011 (Amount in PhP)

Delayed/non-preparation of Bank Reconciliation Statements NCH CHD for Bicol BRTTH CHD for Western Visayas DJRMH CHD – SOCCSKSARGEN Sub-total

46,788,878.54 18,446,818.02 105,262,740.87 6,380,164.33 35,038,982.41 12,518,612.00 224,436,196.17

Non-reconciliation/updating of GL and SL Balances RITM ARMC FDA SIGH -Cagayan Valley CHD Northern Mindanao

112,704,515.45 53,774,237.24 8,528,967.91 3,434,098.34 952,167.06

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.

53

Audit showed that additional cash advances for foreign and local travels and other operating expenses were granted to officers and employees despite the nonliquidation 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 Metro Manila CHD EAMC RMC Bicol Region CHD BMC Western Visayas

Amount in PhP 1,033,122.73 1,174,853.00 842,507.00 964,288.59 205,019.99 349,366.69

CLMRMH Northern Mindanao CHD Caraga CHD CRH

Total

139,554.13 1,471,581.64 124,078.63 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 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. 54

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: Agency DOH- CO TMC RMC DJNRMH CVMC DJFMH VRH CHDs Metro Manila Ilocos Region Cagayan Valley Central Luzon Bicol Region Northern Mindanao CARAGA ZMC SOCKSA RGEN Total

Due from Other NGAs 634,104,2 69.11 63,919,1 27.23 1,914,7 18.47 2,314,6 00.00 152,3 44.24 841,5 66.20

Due from LGUs 82,065,98 9.69

Due from GOCCs 1,514,031,525 .76 48,13 5.41 2,863,75 0.00

-

11,706,73 0.79

-

Due from NGOs/POs 2,192,557,834 .17 -

89,129,32 7.03

-

-

Total 4,422,759,618 .73 63,967,26 2.64 4,778,46 8.47 2,314,60 0.00 11,706,73 0.79 152,34 4.24 89,970,89 3.23

19,478,8 56.71

175,233,14 5.68

20,00 0.00

5,197,83 9.68

199,929,84 2.07

10,974,8 00.87

457,197,21 2.68

-

1,166,16 0.06

469,338,17 3.61

617,0 98.00

187,396,58 0.87

-

6,497,54 6.73

194,511,22 5.60

1,121,9 22.88

95,752,22 3.58

2,368,956.7 6 8,8 15.65

224,360,27 3.07 11,192,10 7.19

13,892,957.95

20,967,380.59

751,710,034.07 1,254,164,913.35

370,59 8.73 14,747,291.10 14,184,962.62 -

97,244,74 5.19

2,970,91 3.27 -

-

14,747,291.10 14,184,962.62 34,860,338.54

1,647,102,321.44 2,208,390,293.91

5,861,367,562.77

55

-

229,700,14 3.10 11,200,92 2.84

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

DOH-CO

Fund transfers not recognized in the books of the reported recipients for verification

88,571,911.20

DOH-CO

No reply from the recipients and confirmation letters returned since addresses of recipients could not be found

3,677,744,251.81

DOH-CO DJFMH DJNRMH DOH-CO CHD for Caraga

Dormant receivables with no available accounting records Negative balances in the books

14,905,661.73 257,755.92 2,314,600.00 3,174,895.09 524,076.75

CDH-Central Luzon

Non- reporting of the LGUs to the source agency although the amount of was already expended by them

370,598.7 3

RMC ZMC CHD-SOCKSARGEN Total

Absence of SL to reconcile with the GL balances

4,778,468.47 14,184,962.62 34,860,338.54 3,841,687,520.86

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

Agency DOH-CO

Particulars Non-recording of liquidated fund transfers Recording of liquidation without Credit Notice

TMC CHD for Ilocos

Understated/ (Overstated) (Amount in PhP) (55,571,286.11) 55,819,281.84

Non-recording of liquidations covered with Credit Notices

(22,631,685.47)

Setting up of receivable and payables upon obligation of the allotment for transfer to DPWH Non-recording of liquidations/ Fund Utilization Report of four Region I provinces

(10,500,0 00.00) (30,543,7 24.41)

56

Agency

CVMC CHD for Caraga

Understated/ (Overstated) (Amount in PhP)

Particulars Non-recording of completed projects of the DPWH Regional Office I Erroneous recording of funds transferred to DPWH-RO1 for the construction of a new drug treatment and rehabilitation center. Non-recording in the books due to non-submission of the list of receivables from the Gobyerno Ti Umili Medical Assistance Program of Cagayan Province. Funds recorded as receivables but not yet transferred to recipient LGUs

Net overstatement

(4,868,005.0 5) 15,000,000.00

(2,288,477.27) 2,614,867.85 (52,969,028.62)

As a result, the following accounts were overstated and understated, as follows: Account Name Inter-Agency Receivables Hospital Center Construction in Progress – Agency Assets Accounts Payable Government Equity

We recommended Directors/Chiefs/Heads to:

that

Overstatement P (57,674,686.97) 55,819,281.84 10,500,000.00 95,362,283.34

Management

direct

Understatement 7,631,685.47 -

the

concerned

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

57

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 Total Accounts Notes Other Agency Receivables Receivables Receivables (Amount in PhP) A. Non-maintenance and unreconciled records for accounts receivables EAMC 5,530,117.18 5,530,117.18 RMC 39,512,378.63 39,512,378.63 BGH 54,168,601.1 0 54,168,601.10 BMC 681,687.72 681,687.72 WVMC 13,698,922.93 13,698,922.93 Sub-total 99,892,784.63 13,698,922.93 113,591,707.56 B. Inclusion of dormant accounts and long outstanding accounts DJFMH 5,281.59 252,474.33 257,755.92 NCMH 6,966,389.0 6 6,966,389.06 ITRMC 362,873.98 362,873.98 NMMC 8,091,294.54 8,091,294.54 RMC 976,667.06 976,667.06 15,062,965.1 Sub-total 9 1,592,015.37 16,654,980.56 C. Doubtful collectability DJFMH 2,182,969.1 7 2,182,969.17 ITRMC 3,252,304.20 3,252,304.20 NMMC 7,032,665.35 7,032,665.35 RMC 11,400,843.2 11,400,843.23

58

Agency

WVMC

Intra-agency Receivables Accounts Accounts Notes Other Receivables Receivables Receivables (Amount in PhP) 3 49,140,605.3 37,009,255.18 0

Sub-total 65,976,721.90 44,041,920.53 D. Written-off receivables without authority CVMC 6,209,244.14 DPJGMRMC 2,538,409.2 5 BMC 2,973,379.65 ASTMMC 1,108,875.6 6 3,647,284.91 9,182,623.79 Sub-total E. Erroneous/ non-recording of receivable transactions EAMC 333,179.09 JRRMC (3,236,619.81) 3,236,619.81 NCMH 601,508.55 ITRMC 640,140.00 5,872,834.66 222,931.00 NMMC (404,564.72) MMMMHMC (1,322,515.89) BRTTH 4,040,657.90 SPMC 1,992,815.9 4 WVMC 47,625,487.86

Total

86,149,860.48 110,018,642.43 6,209,244.14 2,538,409.25 2,973,379.65 1,108,875.66 12,829,908.70 333,179.09 601,508.55 6,735,905.66 (404,564.72) (1,322,515.89) 4,040,657.90 1,992,815.94 47,625,487.86

Sub-total

45,699,308.10

9,508,927.84

4,394,238.45

59,602,474.39

Grand Total

230,279,064.7 3

9,508,927.84

72,909,721.07

312,697,713.64

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: Accounts Accounts Receivables Notes Receivables Other Receivables Inventory

Overstatement Understatement (Amount in PhP) 47,021,823.99 13,150,112.37 1,157,618.64 47,625,487.86 59

Accounts Allowance for doubtful Accounts Rent Income Hospital Fees Other Business Income Bad Debts Expense Prior Years Adjustments (PYA)

Overstatement

Understatement 1,727,080.61 769,549.33 863,071.00 165,138.31 1,727,080.61 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;

•

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. 60

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

Account Title

Agency

Per Accounting Records (General Ledger)

Per Property, Laboratory, Pharmacy, Difference Radiology, Nursing, Overstatement/ Linen, Dietary and (Understatement) Dental Section/ Department Records (Amount in PhP)

Drugs and Medicines Inventory

DOH-CO, DJNRMH, RITM, JRRMMC, DJFMH, BRTTH, PJGMRMC, CVMC, CHD for Metro Manila, Central Luzon, Calabarzon & Caraga

Medical, Dental and Laboratory Supplies Inventory

DOH-CO, NCRDJNRMH, FDA, RITM, ARMMC, JRRMMC, DJFMH, CLMMRH, BRTTH, DPJGMRMC, CVMC, CHD for Metro Manila, Central Luzon & Caraga

Merchandise Inventory

DJNRMH, RITM, JRRMMC, VMC, MMMHMC, CLMMRH, BRTTH, DPJGMRMC, CVMC

1,613,936,935.16

486,050,747.20

1,127,886,187.96

259,977,757.13

93,490,839.17

166,486,917.96

76,158,099.50

75,901,454.10

256,645.40

61

Account Title

Agency

Per Accounting Records (General Ledger)

Per Property, Laboratory, Pharmacy, Difference Radiology, Nursing, Overstatement/ Linen, Dietary and (Understatement) Dental Section/ Department Records (Amount in PhP)

Office Supplies Inventory

DJNRMH, FDA, RITM, ARMMC, DJFMH, CLMMRH, BRTTH, DPJGMRMC, CVMC, CHD for Metro Manila, Ilocos, Central Luzon & Caraga

Accountable Forms Inventory

59,081,376.22

7,370,358.26

51,711,017.96

DJNRMH, FDA, RITM, CLMMRH & CHD for Caraga

1,363,199.27

1,071,000.00

292,199.27

Food Supplies Inventory

DJNRMH, JRRMMC, DJFMH

1,648,752.72

636,435.08

1,012,317.64

Other Supplies Inventory

FDA, RITM, JRRMMC, DJFMH, CLMMRH, BRTTH, DPJGMRMC, CHD for Metro Manila, Central Luzon & Caraga

76,968,000.23

4,280,707.00

72,687,293.23

Raw Materials Inventory

JRRMMC

130,556.51

150,578.63

(20,022.12)

Finished Goods Inventory

JRRMMC

5,688,588.94

7,966,021.86

(2,277,432.92)

2,094,953,265.68

676,918,141.30

1,418,035,124.38

Total

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; 62

 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.

63

•

• •

•

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: Inventory Accounts

ARMMC

SLRWH

Merchandise

4,005,115.26

5,515,463.43

Accountable Forms Food Supplies Drugs and Medicines Textbooks & Instructional Materials Other Supplies Office Supplies MDLS

356,875.00

VMC

BMC

123,137.50

154,012.80

842,530.06

612,283.14

120,715.95

989,409.73

408,494.33

2,271,282.38

7,031,621.37

10,384.00 4,296,056.71

Total

10,908,794.22

90,159.80

10,384.00 299,986.87 1,108,939.64 10,827,640.47

1,078,907.7 1 2,159,458.2 7 16,432,277. 26

38,682,440.43

Spare Parts Construction Materials Gasoline, Oil, Lubricants Total

DJRMH

651,115.58

208,504.76

542,896.03

CHD for Ilocos Region

(Amount in PhP) 737,099.95

256,410.64 3,718,788.83

BS

12,643,630.44 18,294,926.44 19,969,307.80

1,036,822.2 2 358,214.83

19,321,955.0 0

554,495.23

26,588,223.74

530,272.48

42,839,325.65

2,246,221.1 3 472,305.46

5,591,693.70 3,359,807.23

38,457,639.79

296,750.00

769,055.46

264,708.30

1,436,634.65

1,701,342.95

54,519.80

54,519.80

24,913,648.70 9,429,606.10

130,192,846.77

38,682,440.43 6,259,286.86

64

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: FDA

Inventory Accounts

VMC

CHD for Caraga

Total

18,834,892.22

2,833,301.58

-

28,159,894.94

2,952,053.52

287,588.83

2,159,458.27

1,265,576.10

7,600,316.65

3,506,106.45

11,536,341.85

90,159.80

42,151,539.08

57,284,147.18

26,025.00

1,641,295.00

208,504.76

67,360.00

1,943,184.76

4,679,274.95

20,449,450.73

16,432,277.26

369,151.95

63,874,583.70

RITM

JRRMMC

(Amount in PhP)

Merchandise

6,491,701.14

Office Supplies

935,639.93

Drugs and Medicines Accountable Forms MDLS

21.944,428.81

Food Supplies Spare Parts Gasoline, Oil and Lubricants Other Supplies

196,233.71

19,906.79

19,906.79

2,018.30

2,018.30

28,050.00

28,050.00

1,261,444.57

1,078,907.71

Textbooks and Instructional Materials Raw Materials Finished Goods

3,953,000.92

6,489,586.91

248,175.00

248,175.00

130,556.51

130,556.51

5,688,588.94

5,688,588.94

Various Inventories of DOH-CO

40,765,183.18

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.

65

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 six months in three copies and shall be certified correct by the Inventory Committee and approved by the Head of the Agency. 66

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

direct

the

concerned

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

67

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 yearend to substantiate the reported balances of the Property, Plant and Equipment accounts totaling P4,976,364,962.80: Agency CHD for MM DJNRMH

Balance (Amount in PhP) 57,147,210.05 45,066,360.33

Reasons for non-conduct of physical count Not stated 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. 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.

FDA

743,389,621.93

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

QMMC

591,530,176.42

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. For CYs 2010 and 2011, the Inventory Committee was not able to complete the conduct of inventory of the Center’s property due to the lack of manpower because of the termination of 15 employees of the Hospital in October 2010.

68

Balance (Amount in PhP) 1,086,773,174.5 4

Agency RITM

Reasons for non-conduct of physical count 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 SLH SLRSHW

697,899,928.04 429,781,266.47 54,415,577.34

Not stated Not stated 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 Region

142,488,271.04

Lack of Personnel in the Supply Unit to conduct 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 SOCCKSARGEN Total

64,767,000.00

Not stated

4,976,364,962.8 0

It was also observed that a total discrepancy of P235,360,329.02 exists between the accounting records and the RPCPPE, as follows: Agency

Per Books

Per RPCPPE

Difference

(Amount in PhP)

Reasons for the discrepancies

• The submitted RPCPPE as of

ARMMC

VMC

343,806,128.26

303,535,366.97

40,270,761.29

43,031,842.35

156,352,526.09

(113,320,683.74)

69

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. • 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 PPE accounts instead of under Inventory accounts.

Agency

Per Books

Per RPCPPE

Difference

(Amount in PhP)

LPGHSTC

197,697,125.17

90,453,945.68

107,243,179.49

ITRMC

506,275,664.60

504,072,858.95

2,202,805.65

CHD for Central Luzon

154,161,050.10

87,685,341.92

66,475,708.18

CVMC

3,674,996.08

2,998,601.09

676,394.99

WVMC

540,746,021.11

407,464,152.31

133,281,868.80

22,849,796.68

24,319,502.32

-1,469,705.64

1,812,242,624.35

1,576,882,295.33

235,360,329.02

DJSMMCEH Total

70

Reasons for the discrepancies The non-inclusion of accounts Hospital and Health Center, Other Structures, Machineries, 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 Agency’s 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 Agency’s 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. The Property Cards and accounting 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 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 support and verify the balances of PPE accounts. Properties costing P1,469,705.64 which are no longer existing are still recorded in the books.

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. Agency Metro Manila ARMMC

Amount in PhP

Remarks/Reason for non-reclassification of PPE Items to Other Assets

3,538,070.00

Delay in the submission of the corresponding report thereon by the Property Officer.

NCH

17,805,629.21

QMMC

12,347,000.00

The management is waiting for the inspection and appraisal of unserviceable properties to be conducted by the COA Technical Audit Specialists. The Disposal Committee has not yet taken the final action on the disposition of unserviceable properties.

Sub-total CAR LHMRH Central Luzon DPJGMRMC Cabanatuan DPJGMRMC Talavera Sub-total Grand Total

33,690,699.21 205,802.11 23,163,317.96 499,273.39

Condemnable properties included in the Other Assets account but were still not disposed as of CY 2011

23,662,591.35 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. • 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.

71

• 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, lapses/discrepancies:

the

following

were

the

effects

of

the

above

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/ (Understatement)

Account

(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 Chiefs/Heads/Directors of the concerned agencies to: a)

require

the

create or reconstitute an Inventory Committee to regularly conduct physical count of PPE and submit report thereon;

72

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 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).

73

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 Acquisition

Agency TMC

39,073,122.90

CY 2004 to 2010

99,861,471.40

all properties as of CY 2011

122,317,712.58

Total

Reasons for non-insurance of properties • The Property Officer was not informed

January 2009 to October 2011

BQ

DJNRMH

Amount in PhP

and aware of on the period of Inventory List submitted to the GSIS as basis for the computation of the insurable amount of Hospital properties. • The Accountant informed that the Property Officer had not yet submitted the list of insurable PPE as of CY 2011 as basis of the application of the amount of insurance coverage. Not stated

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. 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. 74

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. 99004 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:

Agency

Payable Accounts

Inter-Agency Payables

Intra-Agency Payables

Other Liability Accounts

Total Liabilities

(Amount in PhP) DJFMH RMC DOH-CO CHD for Cagayan Valley BMC BRTTH BS

5,074,875 .99 128,279,107 .91 494,466,642 .25 30,824,880 .19 39,900 .03 139,621 .71

2,986,4 82.63 54,530,3 98.24 540,4 16.45

-

108,3 53.83

-

-

75

34,618,2 44.51

-

-

-

-

-

-

20,973,7 78.50 36,768,1 80.96 -

39,693,1 20.50 131,265,5 90.54 548,997,0 40.49 540,4 16.45 51,798,6 58.69 36,916,4 34.82 139,6 21.71

Payable Accounts

Agency

Inter-Agency Payables

Intra-Agency Payables

Other Liability Accounts

Total Liabilities

(Amount in PhP) Western Visayas (Consolidated)

17,395,259 .80 269,717 .58 4,786,546 .09 681,276,551.5 5

CRMC CHD for Zamboanga Peninsula CHD for Caraga Total

743,3 09.49 22,022,5 52.57 80,931,513. 21

49,5 88.42

5,892, 792.46 5,892,792.46

16,160,8 11.59 108,570,603 .98

792,8 97.91 23,288,0 52.26 269,7 17.58 42,969,9 10.25 876,671,461.20

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

Agency

DOH

Guaranty Total Deposits Liabilities Payable (Amount in PhP) 2,460, 2,460, 470.89 470.89

Accounts Payable

Deficiency Double recording of the 3rd progress billing for the repair of the National Center for Pharmaceutical Access Management Building

MCS Zamboanga Peninsula

Non-recording of payments through ADA (P2,518,601.70) and erroneous recording of advance payments on contracts and recoupments (P783,751.04)

2,518, 601.70

PJGMRMC – Central Luzon

Non- recording of purchases and services delivered.

(313, 659.90)

-

(313, 659.90)

WVMC – Western Visayas

Failure to set-up a liability account for purchases made and services availed of.

(4,145, 161.73)

-

(4,145, 161.73)

Total

520,250.96

783,751.0 4

783,751.0 4

3,302, 352.74

1,304,002.00

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 “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. 76

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.

77

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. Agency

BQ

EAMC RITM SLRWH

FDA

MMMHMC – Ilocos CHD for SOCCKSARGEN

Nature 50% share of BTr on quarantine income from April 2008 to December 2010 Quarantine income representing the cost of yellow fever vaccines Interest earned for the 3rd and 4th quarters of CY 2011 Sub-total Interest Income from current account deposits. Interest Income from current account deposits. Collections from bid/performance bonds and affiliation fees Grants from World Health Organization (WHO) and United Nations International Children Emergency Fund (UNICEF) for various special 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 penalties Sale from salvaged materials Sale from unserviceable property Sub-total Nine bank accounts which have been inactive since 2006. Total

Unremitted Amount (PhP) 124,504,590.33 17,559,048.00 268,833.49 142,332,471.82 1,233,891.77 336,566.49 1,396,967.36

4,397,146.83

172,303.07 102,935.00 161,796.00 437,034.07 2,318,099.34 152,452,177.68

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.

78

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 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.

79

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. Agency DJFMH ITRMC R1MC VRH PJGMRMC ASTMMC JRRMMC Total

Claims 15,607,862.61 25,137,479.40 529,980.45 33,340,393.33 4,772,000.00 12,319,800.05 56,434,825.23 148,142,341.07

Disallowance (Amount in PhP) 2,021,206.59 7,836,203.09 529,980.45 33,340,393.33 4,772,000.00 12,319,800.05 56,434,825.23 117,254,408.74

Allowed 13,586,656.02 17,301,276.31 30,887,932.33

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 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).

80

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 refiled 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. 8555A. COA Circular No. 85-55A provides the definition and situational cases of irregular/unnecessary/ excessive expenses, as follows: • 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 81

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 Visayas, and Davao CLMMRH, SPMC, and DJRMH

Collective Negotiation Agreement (CNA) incentives/benefits to (a) regular officers and employees in excess of those authorized; and (b) individuals hired under job order/contract of services who are not authorized to receive the same

20,055,952.63

CHD Metro Manila

Cultural and athletic allowance to 198 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

237,600.00

CHD Metro Manila, Ilocos Region

Subsistence allowance of P50.00 per day during non-working days, on official travel/live-in seminar and while on leave to personnel, who, according to the CHD for 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.

582,350.00

CHD Metro Manila, Calabarzon, and VMC

Longevity Pay and Step Increment instead of requiring the concerned personnel to choose which of the two benefits they will avail, which the CDH-MM justified as based on the

5,220,437.70

82

Agency

Nature of Payment

Amount in PhP

instruction of the DOH-CO. CHD Metro Manila, Ilocos Region and JRRMMC

Hazard pay to officials and employees with Salary Grades 20 and above at a fixed amount of P4,989.75 a month instead of 5% of the basic monthly salary

10,625,157.04

CHD Metro Manila

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

4,913,056.79

EAMC

Payment out of the hospital income to: (a) 22 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.

2,383,164.26

ARMMC and LPGHSTC

Utilization of funds for 101 Nurses under RN Heals which were previously under contractual status

1,704,992.26

CHD Davao

Taxi fares not supported by Taximeter Issuing 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.

203,992.50

CHD Caraga

Travelling Expenses not in consonance with DOH DO No. 2007-082 as amended under DO No. 2007-0082-A. Transportation Allowance in full to officials despite use of government vehicle

8,644,304.61

Reimbursement of attorney’s fees/legal fees with no legal basis

50,000.00

Monthly contributions and honorarium of 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.

1,494,450.00

CHD Caraga

EAMC

83

210,000.00

Agency

Nature of Payment

Amount in PhP

Onerous contracts and overpayments EAMC

Payments made based on: (a) onerous contract (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

1,249,499.76

DJFMH

Rental Cost for Laboratory Equipment based on excessive quantity of reagents and unit cost to be delivered per month.

1,690,560.00

DJFMH

Higher cost of reagents per contract compared to those of the procured price by San Lazaro Hospital (SLH), a DOH retained hospital.

1,487,238.00

MCS HospitalZamboanga Peninsula

Excessive contract cost for the 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

740,658.48

DOH-CO

Cost of construction of the 4 storey HEMS and NCHP Building was increased by 19.42 percent from the original contract

48,552,452.0 1

CRH

Non-provision of liquidating penalty clause on POs Total

damages

or

47,660.78

110,093,526.82

The following contracts, with undisclosed amounts, were also found to be onerous and excessive:

84

Agency CHD-Cagayan Valley

Nature of Payment 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  An annual amount not exceeding P1,200.00 per employeeparticipant 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 85

 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  The transportation allowance herein authorized shall not be granted to officials who are assigned or presently use government motor transportation. 86

•

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  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 87

 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); 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); 88

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 HospitalZamboanga Peninsula, DOH-CO, CRH, CHD-Cagayan Valley, CHD-Zamboanga Peninsula, CRH-CARAGA). Procurements not in accordance with R.A. No. 9184 and its IRR 13.

The procurement of infrastructure projects, hospital’s 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 89

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, hospital’s medical and IT equipment, and goods and services disclosed the following lapses/deficiencies and effects: Agency DJRMH, LHMRH, ZCMC, MRH, CHDs-Socksargen and Zamboanga Peninsula. DJNRMH, BGH, CHDs-Central Luzon, Cagayan Valley and Zamboanga Peninsula

Deficiency/Effect 1. Non-procurement of commonly-use supplies and materials from the Procurement Service of the Department of Budget and Management (DBM) which resulted to higher prices as compared to those listed in the PS catalogue. (Sec. 53.5 of RA 9184) 2. Annual Procurement Plan (APP) was neither updated nor amended nor does it contain the entire procurement activity that resulted to ineffective and inefficient procurement process, as shown below: (Sec. 7 Article II of RA 9184)

a. 88% of the planned procurement was only procured NCMH

R1MC - Ilocos Region

EAMC

c. Purchases exceeded the amount of programmed procurement e. Commodities still included in the 2011 APP although these were already purchased in 2010. f. Purchases of Merchandise InventoryDrugs and Medicines exceeded the amount as per approved APP that resulted to overstocking and expiration of drugs. g. The Medical Center was deprived of obtaining reasonable prices and volume discount as poor planning in the procurement of drugs and medicines which resulted in the procurement out of petty cash fund.

JBLMGH, 3. Alternative mode of procurement was SLRWH, VMC, adopted in the procurement of FNLGHTC, CHDsinfrastructure, office and food supplies, Northern Mindanao goods and services instead of public & Western Visayas. bidding which resulted to the nonattainment of the objectives of RA 9184 of transparency, competitiveness and accountability in the procurement process.

90

Amount in PhP

Not indicated

Not indicated

139, 721,692.23 7, 326,959.48 1 ,136,290.00 18, 327,024.98

226,704.85

Not indicated

Agency

Deficiency/Effect (Rule IV-Sec. 10 of IRR of RA 9184)

a. The Hospital resorted to shopping

QMMC

b.

JRRMMC

c.

BQ

d.

MMH CRH

e.

method of procurement of goods not readily available off-the-shelf Public bidding was not conducted for the procurement of RSSP for Radiation Therapy Equipment Procurement of International Certificate Vaccination and supply of fuel and oil products were done thru shopping Purchases of inventories and supplies were procured thru direct contracting Dietary items were procured without public Bidding

BGHMC

DOH - (NCHFD) Central Office

1, 846,450.00 212, 000,000.00 1, 000,000.00 1, 023,698.34 620,360.20 1,005,845.00

4. BGH, MRH, DJRMH, MHRSRTTH, and CRH

Amount in PhP

Non-advertising and non-posting and erroneous posting of ABC, invitation to bid, request for expression of interest and notice of award, implementation and termination of the contract by 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) a. Error in posting of ABC for the repair of the roofing of Building 14 was P3,339,893.15 instead of P2,549,999.87.

Not indicated

2, 549,999.87

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) DOH-CO

RMC

a. The Central Office Bids and Awards Committee (COBAC) awarded the contract for the procurement of 35 units of computer notebooks to a supplier whose offers were non-compliant with the required technical specifications provided by the PMO/end-user.

b. There were no detailed engineering investigations, surveys and designs on the alleged defects of the construction of the TRC-Dietary Building (Phase I)

91

788,515.00

5, 976,676.37

Agency

RITM

NMC-Northern Mindanao/CHDCagayan Valley CHD - Bicol Region QMMC BGHMC

BGH

Deficiency/Effect which was the basis of the contract of the Phase 2 entered into with CC Barcelona Construction.

Amount in PhP

c. The BAC accepted the application for renewal of the PCAB license of Tochigiken Technologies International (TTI), Inc., one of the bidders and winning contractor for 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”.

d. Awarding of contract to ineligible bidder e. Suppliers/Contractors were allowed to change their offer in the bid form. f. The bid amount for laundry service does not include the cost of all taxes such as the value added tax (VAT), among others. g. Delivery of catering services were made before the required procurement procedures were undertaken 6. Non-observance of BAC composition and function as follows: (Sec. 11 to 12, Article V of RA 9184) b. Rules on the receipt, opening, and post qualification of bids were not properly observed.

Not indicated

Not indicated Not indicated 2, 103,354.64 1, 005,845.00

Not indicated

c. Relied on the decision made by the BAC Chairman or HOPE instead of conducting a meeting for the purpose of postevaluation 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 (HOPE) the mode of procurement were not supported.

CRH

f. Losing bidders were not notified within the seven-calendar day period. h. The BAC Chairman and one regular member is not a third ranking official of

92

Not indicated

Not indicated

Agency

Deficiency/Effect 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

Amount in PhP

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: 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, CHDsCentral 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);

93

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 (CHDBicol 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 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 94

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/PostClosing 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.  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.

95



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 CHD for Bicol, Western Visayas, Davao, WVMC, VRH, JBLMRH, MCS, JRRMMC, CHD for Central Luzon and CRH BS, BRTTH, CHD for Northern Mindanao, ITRMC, DJRMH, JRRMMC, CHD for Central Luzon and CRH CHD for Central Luzon and CRH

96

Documents Contracts/Job Orders/Purchase Orders/MOA ORs, DVs, Payrolls, RCD, RAAF, Report of Disbursements/Deliveries, BRS,and JEVs Trial Balance and FS

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:

Project Title/Funding Institution 1. 2WHSMP/ WB 2. NSSHRP/ WB 3. HSDP/ ADB

4. HSRA-SP/ KfW

Physical * Accomplishment

Time Elapsed

Target Actual

Rate

100%

71

92.34

64

111.82

79.9

90

25

80**

Revised Duration Jan 2005Dec 2013 Mar 20072012 12 Jan 2005-30 Sept 2012 27 June 2008-31 Dec 2012 ext 2012

Financial accomplishment *** Actual Target /Cumulative Disbursement (Amount in PhP) 809,143,000.00 274,932,000.00

Variance/Undisbursed Funds Rate

Amount (in PhP)

Rate

34%

534,211,000.00

66%

4,786,942,230.00

3,208,054,953.17

67%

1,578,887,276.83

33%

559,816,530.00

412,835,820.00

74%

146,980,710.00

26%

600,000,000.00

106,184,027.40

18%

493,815,972.60

82%

97

Project Title/Funding Institution

Physical * Accomplishment Target Actual

Time Elapsed Rate

5. HLK/ Netherlands Average %/ Total amount Grants

100%

100

117.58

67.98

104.348

Revised Duration Apr 2005 to Dec 2011 ext Sept 2012

Financial accomplishment *** Actual Target /Cumulative Rate Disbursement (Amount in PhP) 1,348,600,000.00 1,348,600,000.00 100%

Variance/Undisbursed Funds Amount (in PhP)

Rate 0

0%

8,104,501,760.00

5,350,606,800.57

58%

2,753,894,959.43

42%

88,529,772.57

52,497,476.16

59%

36,032,296.41

41%

15,480,000.00

1,848,664.93

12%

13,631,335.07

88%

6,222,000.00

34,300.00

1%

6,187,700.00

99%

110,231,772.57 Total Loans and Grants 8,214,733,532.57 *from draft ODA Report of NEDA; Fact Sheet / BIHC ** per audit ***report of DOH to stakeholders/Funders

54,380,441.09 5,404,987,241.66

49% 66%

55,851,331.48 2,809,746,290.91

51% 34%

1. Global HIV - Round 5

100%

88%

41%

2. SUSEA

100%

31%

12%

3. ME3

60%

26%

1%

Dec 2007March 2011 20092011 2009- Oct 2012

Below were the causes and effects of the low utilization/disbursement rates of the loans and grants: Project/Funder NSSHRP/WB

2WHSMP/WB

HSRA-SP/ KfW

Cause of Low Fund Utilization • Loan amount for EPI vaccines and other drugs and medicines was in excess of the needs for the items which 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 • Non-availability of SARO for Capital Outlay; and • Delayed procurement for consultancy services. • Revision of activities resulted in the request for realignment of funds; • Change of sub-loan recipients; and

HSDP/ADB

and

grant

Non-implementation of Performance Based Grant (PBG) amounting to P75 million. • Prolonged procurement process

98

Effect/ s of the low disbursements Incurrence of commitment fees of $113,527.60 or P4,959,389.50 from January to December 2011.

Performance based grant remained below the target (at 22% of the P239,999,960.00) due to delayed/nonsubmission of claims from the batch two sites • Return of fund to KfW amounting to €490,625.00 on August 24, 2011; and • Incurrence of commitment fees in a total amount of P7,384,377; and

Incurrence of commitment fees in the amount of $26,750.0 or P1,152,945.31 for CY 2011.

Project/Funder Global Round 5

Fund

Cause of Low Fund Utilization • Unimplemented provision of incentives to DOH personnel such as PHIC benefit and communication allowance; • Delayed Full Staffing and late engagement of Sub-Recipients; and

Results-Based Monitoring and Evaluation (M&E) towards Equity and Effectiveness (ME3) SUSEA

• Unimplemented activities and Budgeted planned activities were overstated. • The targeted 15 workshops and hiring of two consultants by the 3rd quarter of CY 2011 were not attained. Only project meeting was conducted instead of workshops. • Delayed Start-up of the project and incomplete technical planning guidelines.

Effect/ s of the low disbursements Return of unutilized grant funds of P36,032,296.41 to Global Fund for the GFR5 Program for CY 2011 as follows: Peso Account - P 11,269,067.19 Dollar Account 24,763,229.22 Total - P 36,032,296.41 Non-availment of grants amounting to P6,187,700.00.

Non-availment of grants amounting to P13,631,335.07.

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.

99

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, patient’s wards and buildings in CY 2011with the corresponding reasons for being unutilized:

Hospitals

Facility

Amount (PhP)

Metro Manila POC Fire Safety and Protection Project costing

TMC SLH

Reason for Being Idle/Non-Utilization

9,644,003.63 • Lack of assessment/evaluation of the

Laboratory equipment for processing of histopath specimen Walk in Freezer Dish washing machine conveyor Oven steam convection Tilting kettle with selfcontained gas heated Ice making machine Conveyors, gauge 16 Bulk Food conveyor

7,124,615.00

Microfilm camera, DR1600 Minolta Planetary desk top Microfilm Processor, Maple 3000E Printer Minolta RP603Z, desk top type

203,000.00

675,000.00 540,000.00 426,000.00 984,000.00 88,200.00 384,900.00 192,666.00

265,000.00 .

DOH-CO and the POC of the old existing fire safety system/facility’s 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. • Unutilized since CY 2002 due to nonassignment of personnel to handle the procedure. • The after sale services were not considered by the Hospital and unavailability of spare parts and service centers;

• Hospital had not prepared for the maintenance of the equipment/machines procured; and • Used for a short while and became unusable due to non-repair of the items.

370,000.00 4,128,766.00

CAR CHD BGHMC

Constructed Multipurpose Building The Molecular Laboratory and various laboratory equipment

1,499,933.04

• Absence of an occupancy permit

4,484,879.73

• Equipment did not pass the proficiency testing conducted by RITM as required by the DOH.

100

Hospitals

Facility

Amount (PhP)

Reason for Being Idle/Non-Utilization

Cagayan Valley CVMC

Treadmill exercise/stress test machine

SIGH

Ultrasound Scanner Model 0810 Infant Incubator Model Nanjing Brand

1,750,000.00

• Lack of the needed accessories such as cardiac monitor, defibrillator machine, laryngoscope curve and suction machine to maximize its functionality.

1,610,650.00 • MOA with a private company for the 496,100.00 operation Ultrasound Scanner thru 502,106,750.00 50% profit sharing did not push thru; and • Absence of physician to operate the said equipment.

Central Luzon MMW

2,200,000.00 • Absence of a trained personnel to operate the machine

X-ray machine

Bicol Region BRTTH Various

hospital

7,317,513.00 • Due to defects, incompatibility and lack of manpower training for its use

Ultrasound machine and a ventilator

1,394,000.00 • Lack regular/permanent qualified 960,000.00 personnel to operate the equipment..

equipment Zamboanga Peninsula MRH

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

101

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 extrasensitive 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

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).

102

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 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. 103

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 followups 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 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.

104

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 year’s 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-à-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. Vaccines 2.7% of the total population 3.5% of the total population Tuberculosis Vaccine (BCG) Measles Vaccine Diphtheria Tetanus Pertussis 3 Oral Polio Vaccine 3 Hepatitis B 3 Fully Immunized Child Tetanus Toxoid 2

Infant below 1 Year Eligible Population Population Vaccinated 331,857

%

Pregnant Women Eligible Population Population Vaccinated

%

430,184 268,803 224,187 229,796 262,335 222,005 231,783

81.00 67.56 69.25 79.05 66.90 69.84 159,807

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: 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 105

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 h) TBCP is not the priority of the Mayor. There were other projects that were prioritized and deliverables other than the TBCP.

106

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 Hospital QMMC ARMMC NCMH LPGHSTC Total

Authorized Actual 273 212 324 141 950

201 212 264 57 734

Allotments 6,552,000.00 5,088,000.00 6,936,000.00 3,384,000.00 21,960,000.00

Funds Obligations (Amount in PhP) 5,700,542.32 3,008,965.28 2,530,900.49 995,604.70 12,236,012.79

Balance 851,457.68 2,079,034.72 4,405,099.51 2,388,395.30 9,723,987.21

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; • 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 107

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 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: 108

Phase Phase I -Variation Order Phase II Total

Contract Cost (Amount in PhP) 13, 471,851.56 489,720.00 5,976,676.37 19,938,247.93

% of Completion 100% 100% 54.31%

Total Payment (Amount in PhP) 13,961,571.56 3,245,834.54 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 b) No Nursing Service Organogram was created although it was included as one of the three major services departments;

109

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 • ascertain that the equipment needed for tertiary level and Hospital’s affiliation be given priority in the procurement.

110

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: Section s

Provisions

3.2 (e)

The GAD Focal Point shall advocate for, coordinate, guide and monitor the development and implementation of the agency’s 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 women’s 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.

111

Section s 4.4

Provisions 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-à-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.

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. 112

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 women’s empowerment since 2009, hence, no report was submitted on GAD. Moreover, verification of the submitted GAD Plans/Budgets, evaluation of the accomplishment reports vis-à-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 Agency

Amount (In PhP)

% to Appropriations

Expenses/ Utilization vs Appropriations (Amount in PhP/ Percentage)

1. GAD Budget 5% of Appropriation but Low Utilization Rate and/or No Report NCMH

25,088,976.40 90% 1,373,812.08 92%

27,870,950.00

5%

MMMHMC

1,488,800.00

5%

CHD-Central Luzon

7,746,350.00

5%

no report

165,150.00

5%

Not mentioned

DPJGMRMCTalavera Ext.

19,338,853.00 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% 2. GAD Budget less than 5% of Total Appropriations and/or Low Utilization Rate and/or No Report CHD-Ilocos

26,909,120.23

5%

ARMMC

1,621,600.00

0.01%

FDA

2,200,000.00

1.91%

NCH

315,000.00

0.2%

367,890.00 / 23% 42,098.50 2% not mentioned

QMMC

5,133,872.00

2.67%

not mentioned

BQ

1,370,000.00

4.73%

16,311,000.00

2.80%

VMC

1,617,892.46

2.41%

CHD-Bicol

5,204,500.00

.60%

SLRWH

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530,168.75 39% 1,285,341.32 / 8% 1,617,892.46 100% no report

Budget Agency

Amount (In PhP)

% to Appropriations

POC

6,429,600.00

1.79%

TMC RMC

663,000.00 2,146,650.00

0.09% 1.07%

Expenses/ Utilization vs Appropriations (Amount in PhP/ Percentage)

2,475,411.00 39% 123,600.00 / 19% no report

3. Annual Plans/Programs not Prepared EAMC PJGMRMC

not mentioned

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

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);

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• 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 Plan’s 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-à-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 a budget for the senior citizens and differently-abled persons as required by the above-cited law as follows:

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Budget Agency CHD for Metro Manila FDA

Amount in PhP

% to Appropriations

P1,048,205.00

0.7%

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/QM MC/SLH/RITM/A RMMC

Provisions of express lanes have been implemented 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.

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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: Agency

Taxable Income

Taxes Not Withheld

Unremitted

Remarks

(Amount in PhP) CDH

FNLGHTC

7,998.07

7,998.07

7,998.07

398,694.00

none

398,694.00

MMMHMC

SPMC Total

4,051,262.49 4,457,954.56

Taxes were not withheld from KAELCO & Smart Communications Taxes withheld from suppliers for the period August to December 2010

not mentioned

Taxes were not withheld from employees under the Job Order status.

4,051,262.49

Taxes were not withheld on the CNA benefits of employees.

4,059,260.56

4,051,262.49 4,457,954.56

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 BIRRevenue Regulation (RR) No.10-2008 and BIR Revenue Memorandum Circular (RMC) No. 23-2007. 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: 117

Unremitted Balance as of December 2011

2011 Agencies

Balance as of January 2011

Withheld

Remitted

(Amount in PhP) Metro Manila DOH-CO ARMMC FDA BQ EAMC DJFMH DJNRMH JRRMMC LPGH&STC NCH NCMH SLH SLRHW POC QMMC RITM RMC TMC VMC

4,247,878.40 4,863,726.60 2,155,371,35 1,203,605.00 10,622,911.99 2,237,199.55 113,864.31 2,774,510.69 1,276,213.07 0.00 0.00 1,323,208.91 78,110.16 3,298,358.99 4,345,144.88 520,576.94 3,934,306.73 2,685,556.57 362,789.05 1,749,418.48

231,232,547.75 43,071,136.01 19,471,621.35 8,062,954.76 64,258,162.13 53,482,475.93 15,886,708.41 48,403,711.18 13,619,920.08 20,440,901.42 40,751,570.73 38,780,436.85 4,020,261.90 41,704,833.57 38,091,590.17 28,990,645.36 34,124,682.49 17,133,025.83 11,817,982.69 13,569,662.24

231,738,647.90 36,110,809.87 19,091,506.44 8,003,856.27 71,448,895.42 49,673,676.27 15,852,528.52 46,342,375.46 11,740,709.80 18,972,954.28 40,094,323.74 38,414,368.81 x4,047,111.86 41,074,846.74 37,044,846.46 29,151,318.17 32,317,780.01 18,165,468.15 11,924,472.98 12,133,965.59

3,741,778.25 11,824,053.61 2,535,486.26 1,262,703.49 3,432,178.70 6,045,999.21 148,044.20 4,835,846.41 3,155,423.35 1,467,947.14 657,246.99 1,689,276.95 51,260.20 3,928,345.82 5,391,888.59 359,904.13 5,741,209.21 1,653,114.25 256,298.76 3,185,115.13

0.00 0.00

18,107,648.26 25,331,891.49

14,647,398.21 25,331,891.49

3,460,250.05 0.00

0.00

219,918.04

0.00

219,918.04

0.00

17,770,267.86

0.00

17,770,267.86

0.00

2,732,761.46

2,679,118.37

53,643.09

CHD 0.00 CRH 0.00 SOCCKSARGEN CHD 0.00 Total 47,792,751.67

17,088,605.63 16,432,025.44

15,843,067.47 16,432,025.44

1,245,538.16 0.00

18,467,035.91 903,064,984.94

18,467,035.91 866,745.998.73

0.00 84,112,736.98

CHD –MM

Ilocos Region CHD R1MC Cagayan Valley BGH Calabarzon CHD Bicol Region BS Caraga Region

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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.

Agency DOH-CO ARMMC EAMC BQ CHD for Metro Manila BGH 119

Audit Suspensions (Amount in PhP) 46,470,561.87 87,615,334.79 15,693,043.43 1,922,400.00 12,682,327.30 594,249.43

Audit Suspensions (Amount in PhP) 23,120,916.26 188,098,833.08

Agency CHD for Caraga Grand Total 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: Agency DOH-CO CHD for MM ARMMC BQ DJFMH DJNRMH EAMC FDA JRRMMC LPGH & STC NCH NCMH POC QMMC RITM RMC SLH SLRWH TMC VMC Total

c.

Balance as of December 31, 2011 (Amount in PhP) P22,288,780.04 2,085,722.32 344,064.09 1,246,312.75 2,879,285.21 1,435,435.67 13,133,575.05 1,781,481.15 13,604,006.83 736,374.92 3,276,015.24 6,629,836.77 2,074,148.87 1,820,087.02 1,613,560.43 5,034,743.28 1,115,597.06 255,361.38 485,529.78 553,737.12 P82,393,654.98

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), 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. 120

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 (PhP)

Agency

Office to issue the NFD

Metro Manila QMMC

not mentioned

RITM

NGS-C Cluster Director

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 (PhP) 1,136,193.60 5,436,526.07 689,727.96 28,967.13 1,511,523.50 175,929.72 45,763.41 59,487.70 1,511,523.50 7,683,563.98 5,072,797.74 20,601.47 61,611.05 14,051,234.46 229,154.40 37,714,605.69

Agency VMC DJNRMH RITM CHD for CAR BGHMC CDH FNLGHTC LHMRH BGHMC and MC CHD for Calabarzon CHD for Bicol Region BRTTH Bicol Sanitarium CHD for Caraga ASTMMC Grand Total

We recommended that Management direct the concerned Directors/Chiefs/Heads to require the Accountants to enforce settlement of suspensions and disallowances within the prescribed period and exert extra efforts to retrieve documents for prior years’ disallowances and the eventual settlements thereof.

121