[Republic of the Philippines

COMMISSION ON AUDIT
National Government Sector
Cluster 5 – Education and Employment
Audit Group A, Team R2-14A, DepEd Division of Isabela
Ilagan City, Isabela

ISABELA SCHOOL OF ARTS AND TRADES

SUMMARY OF AUDIT OBSERVATIONS AND RECOMMENDATIONS
For Calendar Year December 31, 2018

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1 AOM No. Various disbursements totaling to ₱36,526.33 were We recommended that Management will The Audit team
19- paid with incomplete documents due to weak internal Management: submit the lacking stressed that they
control system over the disbursement process of the documents and should submit the
001(118) lacking documents
school contrary to Sec. 4(6) of Presidential Decree a. Direct the will notify its
Date: until February 15,
(PD) 1445 and COA Circular No. 2012-001 dated June Bookkeeper to employees to
January 2018, otherwise audit
14, 2012, thus affecting the legality, propriety and submit the lacking submit their
23, 2019 suspension/disallowan
validity of the transactions. supporting boarding passes ce will be issued.
documents of the when claiming for
Section 4 (6) of Presidential Decree No.1445 claims totaling to airfare.
provides that: ₱36,526.33 as
required under
“Claims against government funds COA Circular No.
shall be supported with complete 2012-001,
documentation.” otherwise the
amount claimed
Moreover, COA Circular No. 2012-001 dated June shall be suspended
14, 2012 prescribes the revised documentary requirements or disallowed in
for common government transactions. Review of the audit; and
transactions paid by the School disclosed that several
disbursements were not adequately supported with the b. Instruct the
minimum required documents, such as: Bookkeeper to

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ensure that all
1. Traveling Allowance disbursement
a. Office Order/Travel Order approved in vouchers should be
accordance with Sec. 3 of EO No. 298 adequately
b. Duly approved Itinerary of Travel supported with the
c. Certificate of Appearance required documents
d. Certificate of Travel Completed before effecting
e. Reimbursement Expense Receipt and payments as
Official Receipts required under
f. Paper/electronic plane, boat or bus tickets, COA Circular No.
boarding pass, terminal fee 2012-001 dated
g. Payroll duly signed by the payees June 14, 2012.

2. Salary Differentials due to Promotion and/or

Step Increment
a. Certified true copy of approved
appointment in case of promotion or Notice
of Salary Adjustment in case of step
increment/ salary increase
b. Certificate of assumption
c. Approved DTR or certification that the
employee has not incurred leave without
pay

Audit of disbursement vouchers covering the

period from January to July, 2018 showed that various
expenses totaling to ₱36,526.33 were paid with incomplete
documentary requirements. The details of which are
presented on the attached Annex A.

Inquiry showed that the bookkeeper was not only

able to print the attachments regarding the payments of

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salary differential and that she failed to notify the
claimants of airfare of their boarding passes. She must be
reminded that she certifies as to the completeness of
supporting documents and as such she should be aware of
the minimum documents set by the above regulations.

The School’s practice of not complying with the

minimum documentary requirements affects the legality,
propriety and validity of such disbursements and is
contrary to the afore-cited provisions of PD 1445 and
COA Circular No. 2012-001.

2 AOM No. Audit of claims for reimbursements showed that:

19-
002(18) 1. Payments for the purchases of office equipment, We recommended that Management The Audit Team
supplies, materials, and other operating expenses Management: settled that they reminded them that
Date:
totaling to ₱43,288.05 were made on reimbursement will limit their in case of emergency
January basis contrary to Section 93 of PD 1445 and Sections a. Stop the practice of purchases through purchases, a
21, 2019 10 and 48 of Republic Act (RA) 9184 resulting in the payments thru reimbursements certification that the
non-withholding of the applicable taxes due to the reimbursements and will only purchase is really
government and no assurance that the School obtained instead payment resort to this mode emergency in nature
the most advantageous price from such purchases. should be made in cases of is a required
directly to emergency supporting
Section 93 of Presidential Decree No. 1445 states, suppliers to ensure purchase. document.
among others, that: that the
“… checks drawn against the treasury corresponding
Checking Account for Agencies taxes be withheld
maintained with any government thereon; and
depository shall be made payable either
directly to the creditor to whom the b. Strictly adhere to
money is due or to a disbursing officer the mode of
for official disbursement.” procurement as

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Moreover, Sec. 10 and 48 of RA 9184 provides required under RA
that: 9184 to ensure that
the most
Sec. 10. Competitive Bidding . All advantageous price
Procurement shall be done through be obtained for the
Competitive Bidding, except as benefit of the
provided for in Article XVI of this agency.
Act.

Sec. 48. Alternative Methods. -

Subject to the prior approval of the
Head of the Procuring Entity or his
duly authorized representative, and
whenever justified by the conditions
provided in this Act, the Procuring
Entity may, in order to promote
economy and efficiency, resort to
any of the following alternative
methods of Procurement:
a. Limited Source Bidding
b. Direct Contracting
c. Repeat Order
d. Shopping ; or
e. Negotiated
In all instances, the Procuring
Entity shall ensure that the most
advantageous price for the
government is obtained.

Review of the accounts of the School revealed that

purchases of office equipment, supplies, materials and
other operating expenses aggregating to ₱43,288.05

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(Annex A) during the period from January to September
2018 were mostly done through reimbursements by
various employees. Interview disclosed that it is already
the practice of the school to allow reimbursements due to
time constraints in procuring as the supplies/items were
needed immediately. However, review of the DVs showed
that no certification of emergency purchase was attached
and items reimbursed like office supplies and other assets
ordinarily can be purchased before their use.

It should be emphasized that government funds

must be utilized efficiently, economically and effectively
for the benefit of the public. The practice of the school
violates Sec 93 of PD 1445 and Sections 10 and 48 of RA
9184 on the mode of procurement of goods and services.
As a result, the price may not be the most advantageous to
the Agency because of the absence of competitive bidding.

Moreover, this manner of payment on

reimbursement basis deprived the Bureau of Internal
Revenue of the withholding taxes that may be collected
and/or due thereon.

2. Claims for reimbursement of gasoline expenses were We recommended that Management will
not supported with complete and properly Management require comply and will
accomplished Driver’s Trip Tickets contrary to Item the preparation and direct the driver to
B(7) of COA Circular No. 77-61 dated September 26, submission of duly maintain the trip
1977 and Sec. 4(6) of PD 1445, thus monitoring of fuel accomplished trip tickets.
consumption to minimize wasteful, excessive and tickets to support the
unnecessary expenditures for government vehicles payment of fuel, oil
could not be facilitated. and lubricants and to
strictly enforce and

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Section 4 (6) of Presidential Decree No.1445 adhere to the
provides that: provisions of COA
Circular No. 77-61
“Claims against government funds and Sec 4(6) of PD
shall be supported with complete 1445.
documentation.”

Moreover, Item B(7) of the Manual on Audit for

Fuel Consumption of Government Motor Vehicles under
COA Circular No. 77-61 provides that:

“…no disbursement voucher for

fuel consumption (gasoline and oil)
of government vehicles shall be
allowed in audit unless duly
supported by properly accomplished
and approved serially numbered
driver’s trip tickets…”

During the period January to July, 2018, the school

incurred a total of ₱3,950.00 for the claims of
reimbursement of gasoline of their RP Vehicle without the
necessary driver’s trip tickets as shown below:

Check/ADA
Date No. Payee Amount
2/1/20 101-2018-
18 002-007 Manuel Madduma ₱ 300.00
3/23/2 101-2018-
018 003-019 Manuel Madduma 1,350.00
3/23/2 101-2018-
018 003-019 Emerita M. Burgos 200.00

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4/17/2 101-2018-
018 004-025 Emerita M. Burgos 600.00
6/22/2 101-2018-
018 006-038 Emerita M. Burgos 200.00
6/28/2 101-2018-
018 006-040 Manuel Madduma 700.00
6/28/2 101-2018-
018 006-040 Emerita M. Burgos 600.00
TOTA
L ₱ 3,950.00

Review of the disbursement vouchers representing

reimbursement of gasoline expenses showed that the only
supporting document attached was the Official Receipts.
Interview disclosed that the School does not prepare trip
tickets on their travels using their RP Vehicle. They
reasoned that they were not aware that the driver’s trip
ticket is necessary on their reimbursement of gasoline
expenses.

It must be emphasized that the driver’s trip ticket is

necessary in order to ascertain the regularity of the
reimbursement of gasoline based on the purpose of the
travel and the consumption during the travel. The
signatures of the passengers are likewise required to
determine whether the vehicle was actually used for travel.

The practice of the school in not preparing driver’s

trip ticket and not accomplishing the Driver’s Trip Ticket
as an attachment to their payments of gasoline is contrary
to Item B(7) of COA Circular No. 77-61 and Sec. 4(6) of
PD 1445, thus monitoring of fuel consumption to
minimize wasteful, excessive and unnecessary

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expenditures for government vehicles could not be
facilitated.

3 AOM No. Various purchases of supplies and materials totaling to We recommend that The Bookkeeper It is highlighted that
19- ₱ 259,116.95 were recorded as outright expense management: will be the recording of
003(18) instead of recognizing the appropriate inventory coordinating with expenses and
account and accounted as expense upon issuance to a. Instruct the the Property preparation of
Date:
end-users contrary to the perpetual inventory system Bookkeeper to Custodian for the RSMI’s should be
January required under Chapter 8 of the Government observe the recognition of done monthly.
23, 2019 Accounting Manual (GAM), Volume I, thus perpetual expenses for the
increasing the risk of possible misstatement of the inventory system issued supplies
financial statements and loss of inventory. in recording and and materials.
accounting for Management
Chapter 8 of GAM for NGAs, Volume I provides supplies and settled to comply
the following specific guidelines and procedures on materials; with the
acquisition, recognition and issuance of inventory: b. Require the recommendations.
Section 9. “Supplies and materials purchased for Supply Officer to
inventory purpose shall be recorded using the accomplish the
perpetual inventory system, resulting in a more RIS for all
accurate inventory records and a running total for issuance from
the cost of goods sold in each period. The system stock and prepare
requires accounting records to show the amount of RSMI periodically
inventory on hand at all times through the and submit
maintenance of the Supplies Ledger Cards (SLC) thereof together
(Appendix 57) by the Accounting Division/Unit and with copes of RIS
Stock Card (SC) (Appendix 58) by the Supply to the Bookkeeper
and/or Property Division/Unit for each item in for proper
stock. Regular purchases shall be coursed recording;
through the inventory account and issues thereof
shall be recorded as they take place except for
supplies and materials purchased out of PCF for
immediate use or on emergency cases which shall

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be charged directly to the appropriate expense
accounts.”

Section 16. Procedures in the Requisition and Issue

of Inventory Items, Sequence No. 11 and 12.
“Stock Card Keeper in the Supply Division shall
receive signed RSMI and forwards to the
Accounting Division/Unit the original copy of
RSMI together with original RIS and files Copy 2
of RSMI. The Accounting Division then receives
the original copy of RSMI and original RIS, checks
and verifies the completeness of information,
retrieves SLC from file and fills up the “To be
filled up in the Accounting Division/Unit” portion
of RSMI, records the RSMI in the SLC, signs in the
“Posted by/date” portion and prepares JEV in two
(2) copies based on the RSMI to record the issue of
stock.

Audit, disclosed that the School failed to adopt the

perpetual inventory system in recording supplies and
materials. Examination of the accounts disclosed that
purchases of office supplies, office equipment, drugs and
medicine and other supplies and materials totaling
₱259,116.95 (Annex A) were immediately recorded an
expense instead of recognizing the appropriate inventory
account and accounted as expense upon issuance to end-
users contrary to the perpetual inventory system required
under Chapter 8 of the Government Accounting Manual
(GAM), Volume I.

Inquiry disclosed that it was already the practice of

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the School to record purchases of supplies and materials as
an outright expense. Moreover, the Supply Officer does
not prepare and submit to the bookkeeper the required
RSMI together with the RIS which would be the basis in
recording the issued supplies as an expense.

In view of the foregoing deficiencies, there is a risk

of possible misstatement of the financial statements due to
inaccuracy, and risk of possible loss of inventory due to
weak internal control.

PREPARED BY: REVIEWED BY:

ROWENA C. CAGURANGAN RITA R. PABLO

OIC-Audit Team Leader OIC-Regional Supervising Auditor

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