09-DepEd2018 Part2-Observations and Recomm

OBSERVATIONS AND RECOMMENDATIONS
FINANCIAL AUDIT
1. Nine out of the 18 accounts of the DepEd under the Assets and Liabilities
categories have misstatements totaling ₱4,415,306,512.38, which is 4.85 percent in
excess of the Materiality Threshold of one percent of the Total Expenses of
₱421,090,340,897.31 for the year 2018. The accounts also showed various
accounting deficiencies amounting to ₱63,676,033,371.01. Due to the
misstatements on the reported balances of the affected accounts, and subject to
the effects of the other accounting deficiencies noted, the accuracy, completeness
and existence of the said accounts were not established.
1.1 Section 15 of the Government Accounting Manual (GAM) for National

Government Agencies (NGAs), Volume I states that “The Financial Statements
(FSs) shall present fairly the financial position, financial performance and cash
flows of an entity. Fair presentation requires the faithful representation of the
effects of transactions, other events and conditions in accordance with the
definitions and recognition criteria for assets, liabilities, revenue and expenses
set out in PPSAS.”
1.2 Moreover, Section 111 of Presidential Decree (PD) No. 1445 provides that the
accounts of the agency shall be kept in such detail as necessary to meet the needs
of the agency and at the same time be adequate to furnish the information needed
by the fiscal or control agencies of the government.
1.3 Our audit of the DepEd’s consolidated FSs disclosed misstatements in several
of its accounts, as shown below:
Table 1: Misstatements in the FSs

Central/
Category/ Regional Office Balance as at Misstatements Amount Assertions
Table
Classification (CO/RO) December 31, 2018 Found in Affected
Involved
Cash CO, NCR, II, 13,890,417,575.03 a) Cash accounts 245,672,745.55 2 Accuracy;
III, IV-B, V, Completeness
VII, IX, X, XI,
XIII
Receivables CO, NCR, II, V, 21,184,917,944.28 b) Receivables 238,733,512.38 3 Accuracy;
VII, VIII, X, XI accounts Rights and
Obligations;
Completeness;
Cut-off;
Classification
Inventories CO, NCR, I, II, 10,405,239,867.27 c) Inventory 6,372,352.80 4 Accuracy;
III, IV-B, VI, accounts Classification;
VIII, X, XI, Existence;
CAR Valuation and
Allocation;
Completeness;
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Central/
Category/ Regional Office Balance as at Misstatements Amount Assertions
Table
Classification (CO/RO) December 31, 2018 Found in Affected
Involved
Cut-off
Property, CO, NCR, I, II, 169,570,208,138.44 d) PPE accounts 3,463,007,963.82 5 Completeness;
Plant and III, IV-A, IV-B, Accuracy;
Equipment V, VII, IX, X, Classification;
(PPE) XI, XIII, CAR
Valuation;
Ownership;
Existence
Advances CAR, II, IV-A, 4,793,779,605.93 e) Advances 104,618,229.93 6 Classification;
VII, VIII, X, accounts Accuracy;
XIII Occurrence
Liabilities NCR, CAR, II, 47,425,864,905.01 f) Financial 356,901,707.90 7 Rights and
III, V, VI, VII, liabilities Obligations;
VIII, IX, XII, g) Intra-Agency Accuracy;
XIII Payables Classification
h) Inter-Agency
Payables
i) Other Payables
Total Misstatements 4,415,306,512.38
Materiality Threshold (one percent of ₱421,090,340,897.31) 4,210,903,408.97
Excess of Misstatements over Materiality Threshold 204,403,103.41
Percentage of Excess of Misstatements over Materiality Threshold 4.85 percent
CASH AND CASH EQUIVALENTS
a) Misstatements in Cash Accounts - ₱245,672,745.55
1.4 As at December 31, 2018, the following are the misstatements found in the audit
of Cash and Cash Equivalents, which the Management did not adjust in their
books:
Table 2: Schedule of the Misstatements in Cash Accounts

Office/ Amount Assertions
Deficiencies/ Errors
Region Over/(Under) Affected
a) Cash-Collecting Officers’ Account - Unrecorded collections and deposits - (₱29,936,848.30)
VII Unrecorded several collections totaling ₱29,936,848.30 (29,936,848.30) Accuracy
Unrecorded deposits of ₱253,000.00, thus understating the Cash 253,000.00 Accuracy
in Bank (CIB) and overstating the Cash-Collecting Officers (253,000.00)
accounts by the same amount
Sub-total (29,936,848.30)
b) Unrecorded cash and other reconciling items in Cash in Bank- LCCA – (₱205,052,810.80)
CO Unadjusted reconciling items appearing in the Bank 11,107,787.32 Accuracy
Reconciliation Statement (BRS) with a net overstatement in the
books
Unrecorded stale checks (742,577.94) Accuracy
NCR Net understatement of CIB-Local Currency, Current Account (54,538,595.99) Accuracy;
(LCCA) balance due to errors/omissions in recording Completeness
transactions
Unrecorded CIB balances (19,828,947.24) Accuracy;
Completeness
II Unrecorded reconciling items such as: stale checks amounting (722,598.22) Accuracy;
to ₱7,668.22, service charges totaling ₱930.00 and deposits Completeness
amounting to ₱715,860.00 for the months of November and
77
Deficiencies/ Errors
December 2018, thus understating the Cash balance by
₱722,598.22
III Several book reconciling items with net deductive value of 69,246,533.10 Accuracy;
₱69,246,533.10 remained unrecorded Completeness
IV-B Unrecorded transactions, cancelled checks and errors in the 70,706,413.69 Accuracy
books of accounts resulted in overstatement of ₱70,706,413.69
V Unrecorded deposits/fund transfers, net of double recording of (452,370,169.58) Accuracy
fund transfers of ₱98,363,312.54
Unadjusted stale checks (1,356,044.58) Accuracy
Unrecorded disbursements 16,029,951.53 Accuracy
Erroneous recording of deposits, thus overstating the CIB 194,473,684.41 Accuracy
VII Unrecorded reconciling items such as: unrecorded deposits, 53,500.00 Accuracy
erroneous entries, returned checks with net amount of
₱53,500.00, thus overstating the CIB
Unrecorded returned checks and stale/cancelled checks (93,309.39) Accuracy
X Uncorrected bank reconciling items (12,950.98) Accuracy
Unrecorded transactions and reconciling items for the Check (3,539,946.97) Accuracy;
Disbursements Records (CDR) Completeness
XI Non-recording of 221 cancelled checks in the Checks/Advice to (19,494,492.45) Accuracy
Debit Account Disbursements Journal (ADADJ)
Unrecorded stale checks, bank credits and various erroneous (13,746,655.51) Accuracy
entries
XIII Unrecorded various transactions (224,392.00) Accuracy;
Completeness
Sub-total (205,052,810.80)
c) Non-recording of stale checks and erroneous entries – (₱10,683,086.45)
III Stale checks on the Cash-Modified Disbursement System (1,298,380.86) Accuracy
(MDS) accounts remained unadjusted in the books of the
concerned School Division Offices (SDOs)/schools
IX Expenses not yet incurred but recognized as expenses in the (9,384,705.59) Accuracy
books, thus understating the Cash-MDS account and overstating
the expenses by the same amount
Sub-total (10,683,086.45)
Total (245,672,745.55)
1.5 We recommended that the Management require the Accountants to prepare

the journal entries, supported with complete documents, to correct the
errors/omissions made in the recording of transactions to ensure fair
presentation and reliability of the account balances in the financial
statements.
1.6 The Management commented as follows:
Office/
Management’s Comments
Region
CO Journal Entry Vouchers (JEVs) were already prepared to effect the adjustments of the stale
checks and recorded in the book of accounts in January 2019. The Management will be
coordinating with Land Bank of the Philippines (LBP) to avail of the online facility the
soonest possible time to address the concern.
NCR The Accounting Office has not received the schedule of unreleased and stale checks,
although verbal follow-ups and reminders were extended to the Cashier Section.
Nevertheless, the Management will strictly impose the said reports to the Cashier Section.
III Management of DepEd Regional Office Proper (ROP) agreed to adopt the
recommendations and assured the COA to closely monitor the reconciliation and recording
of the unreconciled items.
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Office/
Region
IV-B The Regional Offices assured the Team that necessary adjusting journal entries for the
unrecorded disbursements and credit memos will be made upon the availability of
supporting documents. Coordination with the bank will also be made for the unidentified
bank debit and credit memos. Lastly, both the Regional and Division Accountants assured
regular preparation of BRS of their respective bank accounts.
V Management explained that the personnel in-charge of bank reconciliation was already
notified of the deficiencies and that the Accounting Section will review and evaluate the
reconciling items for proper recording and/or adjustment in the books.
VII The returned and stale checks amounting to ₱7,149.99 and ₱20,695.00, respectively, were
adjusted accordingly and copies of JEV were also provided to the COA.
X The Accountant has coordinated with the bank but the latter could not take action pending
advice from the Bureau of Internal Revenue (BIR).
XI Management assured that they will faithfully adhere to the recommendations of the Audit
Team. Henceforth, the Division Cashier will prepare the List of Unreleased Checks with
the cancelled original checks and the stale checks.
XIII Management in the respective Offices/Schools all agreed to comply with the
recommendations.
RECEIVABLES
b) Misstatements in Receivables - ₱238,733,512.38
1.7 The following are the misstatements found in the audit of transactions under
various Receivable accounts which were not corrected in the DepEd FSs as at
December 31, 2018:
Table 3: Schedule of Misstatements in Receivables Accounts

Amount of
Office/ Accounts Assertions
Overstatement / Audit Observation
Region Affected Affected
(Understatement)
CO Due from (7,990,286.17) The unliquidated balance of ₱7,990,286.17 Accuracy
Bureaus pertains to already completed projects of
Due from 7,990,286.17 Educational Development Projects Implementing
NGAs Task Force (EDPITAF), but per DepEd-CO books
the amount had remained unliquidated and dormant
for years, as the documents relative to the
completed projects could no longer be located.
The account must be treated as Due from Bureaus

instead of Due from NGAs.
Due from (18,013.00) The unliquidated amount pertains to prior years’ Accuracy
NGAs long outstanding accounts of National Anti-
Due from Non- 18,013.00 Poverty Commission aging 18 years in the amount
Government of ₱18,013.00 which was erroneously debited to
Organizations/ Due from NGOs/POs but must be classified under
People’s the Due from NGAs being a National Government
Organizations entity.
(NGOs/POs)
NCR Receivables- (253,350.00) Erroneous recording of a refund for cancelled plane Rights and
Disallowances/ ticket in ROP amounting to ₱3,350.00 without Obligations;
Charges Notice of Disallowance (ND); and disallowances Completeness
totaling ₱250,000.00 in Schools Division Office
(SDO) Makati with issued Notice of Finality of
Decision (NFD) and COA Order of Execution
(COE) but not yet recorded in the books
79
Amount of
Office/ Accounts Assertions
Overstatement / Audit Observation
Region Affected Affected
(Understatement)
Other 34,500.00 Erroneous recording of purchase of office supplies Classification
Receivables in ROP costing ₱34,800.00, which should have
been recorded either under the Office Supplies
Inventory account or Office Supplies Expense
account, whichever is applicable; and erroneous
recording of settlement of receivable from an
employee amounting to ₱300.00 erroneously
credited under the Other Receivables account
instead of the Due from Officers and Employees
account on which the amount being settled was set-
up
Due from 458,946.10 Unrecorded deliveries amounting to Completeness;
NGAs ₱1,985,080.60; misclassified fund transfers Accuracy
totaling ₱1,230,445.49 recorded as Office Supplies
Expense and Office Supplies Inventory instead of
Due from NGAs; unrecorded fund transfers of
₱295,689.50; and error in the recording of delivery
amounting to ₱0.25
Due from (18,277.73) Double recording of cancelled payments of Accuracy
Operating Units Government Service Insurance System (GSIS)
(OUs) loans and premium contributions totaling
₱8,832.69 and over-offsetting of cancelled
payments of GSIS loans and premium
contributions in ROP amounting to ₱9,445.04
II Receivables- (72,718.88) Unrecorded disallowance with issued NFD Completeness
Disallowances/
Charges
Due from (219,282.68) Cash shortage due to robbery/theft totaling Classification
Officers and ₱219,282.68 erroneously recorded as Advances to
Employees Special Disbursing Officer in the amount of
₱146,892.28; The difference amounting to
₱72,390.40 was not recognized in the books.
V Due from OUs (253,749,121.93) Unrecorded fund transfers totaling Completeness
₱347,040,428.75 presented as unidentified
reconciling items in the BRS; and double recording
of fund transfers amounting to ₱93,291,306.82
VII Due from OUs 101,670,472.61 Misclassification in recording advances granted to Classification
the school heads of elementary and non-
Implementing Units (IUs) for the downloading of
Maintenance and Other Operating Expenses
(MOOE) in CY 2015 should be charged to
Advances for Operating Expenses account
VIII Loans 450,008.00 Unreleased Commercial Checks Completeness;
Receivable Cut-off
Due from OUs (87,047,587.87) Misclassification of fund transfers Completeness
X Due from (128,880.95) Misclassification of advance payments to Classification

NGAs Department of Budget and Management-
Other 128,880.95 Procurement Service (DBM-PS)
Receivables
XI Receivables- 12,900.00 Recording of disallowances without issued NFD Rights and
Disallowances/ Obligations
Charges
Total (238,733,512.38)
1.8 We recommended and the Management agreed to require the Accounting

Unit of the concerned DepEd Offices to prepare correcting entries for the
80
errors and/or omissions noted in audit that caused misstatement in the
Receivable accounts balance as at year-end.
INVENTORIES
c) Misstatements in Inventory Accounts - ₱6,372,352.80
1.9 The following are the misstatements found in the audit of Inventory accounts of
DepEd which affected their fair presentation in the FSs:
Table 4: Summary of Misstatements in Inventory Accounts
Office/ Standard/ Amount Assertions
Observation Accounts Affected
Region Criteria Violated Over/(Under) Affected
III Items below the capitalization Section 10, Chapter 8 Semi-Expendable (6,247,710.28) Accuracy;
threshold of ₱15,000.00 were of the GAM for Inventory accounts Classification
accounted/treated as PPE NGAs, Volume I
instead of Semi-expendable
Inventories
CAR Purchases of supplies were Section 9, Chapter 8 of Various Inventory (36,545,930.26) Accuracy;
II charged directly to expense the GAM for NGAs, accounts Valuation and
III accounts Volume I Allocation
IV-B
VI
VII
VIII
XI
XII
CO Unrecorded issuance/ Section 7, Chapter 8 of Various Inventory 40,714,709.98 Completeness;
CAR distribution of inventories held the GAM for NGAs, accounts Cut-off
NCR for distribution, supplies and Volume I
I materials
II
III
X
XI
NCR Failure to derecognize from Section 8, Chapter 8 of Textbooks and 3,480,325.32 Accuracy;
the books the amount of the GAM for NGAs, Instructional Existence;
Textbooks and Instructional Volume I Materials account Valuation and
Materials that were razed by Allocation
fire
VI Unrecorded purchase of semi- Section 9, Chapter 8 Various Semi- (8,728,048.21) Completeness;
VIII expendable properties and of the GAM for Expendable Accuracy
receipt of textbooks and NGAs, Volume I Property accounts
learning materials
CAR Erroneous recording to Revised Chart of Various Inventory 777,404.65 Classification;
NCR reclassify entry made Accounts (RCA) for accounts Accuracy
III pertaining to purchases of NGAs containing the
XI office equipment, description of
identification cards of students accounts
and unrecognized office
supplies expenses in CYs 2016
and 2017
Semi-Expendable Machinery Other Supplies and 66,685.00

and Equipment Expenses Materials Inventory
recorded as Other Supplies and
Materials Inventory
(96,425.00)
81
Office/ Standard/ Amount Assertions
Observation Accounts Affected
Region Criteria Violated Over/(Under) Affected
Office Supplies and Medical Various Inventory
Supplies of the SDO were accounts
recorded as payables at the end
of the year. These transactions
were debited to Office
Supplies Expenses and
Medical, Dental and
Laboratory Supplies Expenses
instead of their appropriate
asset account
3,500.00
Chalk allowance was Textbooks and
erroneously accounted as debit Instructional
to Textbooks and Instructional Materials Inventory
Materials Inventory account account
203,136.00
Delivery expenses which were Office Supplies
incurred in transporting Inventory
textbooks to various schools
were erroneously debited to
the Office Supplies Inventory
account
Total Misstatement (6,372,352.80)
1.10 We recommended and the Management of the concerned Offices agreed to

require the concerned Accountants to:
a) reclassify to their appropriate account the semi-expendable items

included in the PPE accounts;
b) make the necessary adjusting entries for the unrecorded/erroneous

recording of transactions; and
c) record all purchases and receipt of supplies for stock through the
appropriate Inventory Accounts in accordance with the Perpetual
Inventory System.
PROPERTY, PLANT AND EQUIPMENT (PPE)
d) Misstatements on PPE accounts - ₱3,463,007,963.82
1.11 Philippine Public Sector Accounting Standards (PPSAS) 17 provides that the
cost of an item of PPE shall be recognized as an asset if, and only if: (a) it is
probable that future economic benefits or service potential associated with the
item will flow to the entity; and (b) the cost or fair value of the item can be
measured reliably.
1.12 Chapter 10 of the GAM for NGAs, Volume I provides the pertinent provisions
on PPE.
82
Section 3 provides the criteria for recognition of PPE:
a. It is probable that future economic benefits or service potential

associated with the item flow to entity; and
b. It meets the capitalization threshold of ₱15,000.00.
Section 6(d) provides that “Administration and other general overhead costs
are costs not qualified for recognition as PPE.”
Section 8(g) provides that “During the construction period, all expenses
incurred in relation to the construction of the PPE shall be taken up in the books
as “Construction in Progress” (CIP) with the appropriate asset classification.
As soon as the construction is completed, the CIP account shall be reclassified
to the proper asset account.”
Section 14 provides that for intra-agency transfers of PPE, the receiving office
shall recognize the asset at its original historical cost less accumulated
depreciation and accumulated impairment loss.
Section 15 provides the guidelines and procedures for the inter-agency transfer
of PPE. It provides that transfer from one government entity to another shall be
recognized by the recipient entity at net carrying value. The transferor shall
derecognize the PPE account upon transfer.
Section 24 provides that “Repairs and maintenance which are necessary to

obtain the expected service potential of a capital asset for its estimated useful
life are not betterments. These costs shall be expensed when incurred. These
include repairs to restore assets damaged by fire, flood, accidents or similar
events, to the condition just prior to the event; and routine maintenance and
expenditures, such as repainting, cleaning and replacing minor parts.”
Section 27(f) states that the estimation of useful life of the assets is a matter of
judgment based on the experience of the entity with similar assets and the entity.
Section 27(g) thereof states that the entity shall prepare the specific estimated
useful life for each asset based on its experience on the life of PPE and the entity,
copy furnished the COA Resident Auditor.
Section 28 provides that “A property is said to be impaired when its carrying

amount in the Statement of Financial Position exceeds its recoverable service
amount or recoverable amount due to fall in market value of an asset. To
determine whether an item of PPE is impaired, an entity applies PPSAS 21,
Impairment of Non-cash Generating Assets, or PPSAS 26, Impairment of Cash-
Generating Assets, as appropriate.”
83
Section 39 provides that “The cost of the PPE together with the related
accumulated depreciation and accumulated impairment loss shall be removed
from the accounts. The carrying amount of an item of PPE shall be derecognized
on disposal or when no future economic benefits or service potential is expected
from its use or disposal.”
Section 40 provides that the cost of PPE reported in the Inventory and Inspection
Report of Unserviceable Property (IIRUP) shall be dropped from the books by
debiting Impairment Loss - PPE (cost of the PPE less Accumulated
Depreciation).
1.13 Audit of various PPE accounts revealed the following misstatements which
affected the assertions on existence, completeness, accuracy, classification,
ownership and valuation of the PPE account balances in the FSs:
Table 5: Summary of Misstatements of PPE Accounts
Observation Standard Accounts Affected
Non-reclassification/recognition of PPE – (₱1,449,633,047.61)
NCR Completed Projects not Section 8(g), 111,308,900.06 CIP – School Completeness;
transferred to Chapter 10 of the Buildings Accuracy;
appropriate PPE GAM for NGAs, (111,308,900.06) School Buildings Classification;
account Volume I Valuation
CAR PPE items not recorded Section 3, (254,792,159.86) Building and Other Classification;
I in the books Chapter 10 of the (252,163,618.60) Structures Completeness;
GAM for NGAs, Land Valuation
Volume I Information and
Communications
Technology (ICT)
Equipment
II Non-reclassification of Section 8(g), 9,011,649.68 CIP – School Completeness;
CIP account to School Chapter 10 of the Buildings Accuracy;
Building account GAM for NGAs, (9,011,649.68) School Buildings Classification;
Volume I Valuation
Unrecorded properties Sections 3 and 15, (139,155,463.85) Building and Other Classification;
Chapter 10 of the Structures Completeness;
GAM for NGAs, ICT Equipment Valuation
III Unrecorded Properties Volume I (597,078,381.28) Building and Other
in the books Structures
IV-A Completed building not Section 8(g), 4,468,275.39 CIP – School Classification;
yet recognized as PPE Chapter 10 of the Buildings Valuation
GAM for NGAs, (4,468,275.39) Buildings and Other
Volume I Structures
IV-B Unrecorded properties Section 3, (171,144,895.01) Books Classification;
in the books Chapter 10 of the Various Semi- Valuation
GAM for NGAs, Expendable
Volume I Inventories
V (2,807,520.00) Motor Vehicle
VII PPE items recognized as (499,800.00) ICT Equipment
Semi-expendable items
IX Unrecorded properties (2,858,114.48) Office Equipment
in the books
X Amount of PPE were (24,274,594.53) School Buildings
erroneously charged to Repairs and
expenses Maintenance –
84
Buildings and Other
Structure
XIII Unrecorded properties (4,858,500.00) Books
in the books
Total (Understatement) (1,449,633,047.61)
Unrecorded/Not dropped from PPE accounts from the books - ₱4,912,641,011.43
CO Delivery of centrally Section 3, 3,317,158,467.15 Various PPE Classification;
procured items made Chapter 10 of the accounts Valuation;
directly to identified GAM for NGAs, Accuracy
recipient schools, these Volume I
items were not included
in the records of Asset
Management Division
(AMD)
PPE balances include 26,879,932.70 Various Classification
items with individual Semi-expendable
values below the accounts
capitalization threshold
of ₱15,000.00 Various PPE
accounts
Erroneous Section 6(d), 26,697,710.20 Various PPE Classification
capitalization of various Chapter 10 of the accounts
expenses GAM for NGAs,
Volume I Various expenses
accounts
NCR Erroneous classification Section 3, 20,302,804.33 Various Classification
of semi-expendable Chapter 10 of the Semi-expendable
properties as PPE and GAM for NGAs, accounts
unrecorded properties Volume I
in the books Various PPE
accounts
Land and buildings 391,721,519.34 Land Classification;
were recorded in books Buildings Valuation;
without establishing Ownership
ownership
Non-provision of Section 42, 25,667,964.25 Various Valuation;
depreciation and Chapter 10 of Depreciation Completeness;
erroneous recording of GAM for NGAs, Expenses Classification
Accumulated Volume I
Depreciation and Accumulated
Depreciation Expense Section 27 (f) and Depreciation –
(g), Chapter 10 of Various PPE
the GAM for Accounts
NGAs, Volume I
Disposed properties still Section 39, 2,228,447.80 Various Classification
recorded in the books Chapter 10 of the unserviceable
GAM for NGAs, equipment
Volume I
I Recognition of assets Section 3, 690,354,227.00 Land Ownership;
without proof of Chapter 10 of the Valuation
ownership GAM for NGAs,
PPE items still Volume I 51,953,245.92 School Buildings Classification
recognized in the books and Other Structures
despite transfer to IUs
Demolished and Section 40, 27,829,687.51 Various PPE Classification;
unserviceable Chapter 10 of the accounts Completeness
properties were not GAM for NGAs,
derecognized. Volume I
85
III Impairment loss not Sec. 28, Chapter 293,653,436.65 Various PPE Completeness;
recognized 10 of the GAM accounts Valuation
for NGAs,
Volume I
Various semi- Section 3, 26,260,578.55 Various Semi- Existence;
expendables recognized Chapter 10 of the expendable accounts Completeness;
as PPE GAM for NGAs, Valuation
Volume I Various PPE
accounts
X Disposed PPE items Section 39, 11,255,390.03 Various PPE Existence;
were still recorded in Chapter 10 of the accounts Completeness;
the books GAM for NGAs, Valuation
Volume I
XI Erroneous Section 24, 677,600.00 Repairs and Existence;
capitalization of repairs Chapter 10 of the Maintenance Completeness;
and recognition as GAM for NGAs, Expenses – Various Valuation
outright expense of Volume I PPE accounts
other PPE
Various PPE
accounts
Total Overstatement 4,912,641,011.43
Net Overstatement/ (Understatement) 3,463,007,963.82
1.14 We recommended and the Management agreed to require the Accountants

to:
a) prepare adjusting entries for the noted deficiencies and reclassify all
PPE items costing below the capitalization threshold of ₱15,000.00 to
the appropriate inventory account. For items that had been issued to
end-users, debit the appropriate Semi-Expendable Expenses account,
if issued in the current year, or Accumulated Surplus or Deficit
account, if issued in prior years, and for monitoring of accountability,
the issuances thereof should be covered by Inventory Custodian Slip
(ICS);
b) reclassify the completed projects to its appropriate asset account and

compute for the corresponding depreciation and prepare a schedule to
monitor the progress of constructions/repairs and anticipate the
completion to timely secure a copy of Certificate of Completion and
other necessary supporting documents to effect the transfer of CIP to
the appropriate PPE account; and
c) establish the accurate Accumulated Depreciation for all depreciable

assets; and henceforth, adjust the recording thereof and regularly
compute and provide depreciation therefor; prepare PPE lapsing
schedule and maintain Subsidiary Ledgers (SLs) for Depreciation
Expense and Accumulated Depreciation accounts to facilitate
monitoring.
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Office/Region Management’s Comments
CO, NCR, Management agreed with the audit recommendations.
CAR, II, III,
IV-A, IV-B, V,
VI, VII, VIII,
XI, XIII
IX The Regional Accountant informed the Audit Team that the corresponding entries to
record the subject Office Equipment and its depreciation expenses have been made
thru JEV Nos. 01-2019-02-0451 and 01-2019-02-0451a dated February 11, 2019 and
February 15, 2019, respectively.
X The Management noted that they shall require the Divisional Engineer to constantly
follow up with the Department of Public Works and Highways (DPWH) the pertinent
documents to enable the Division Accountant to appropriately reclassify through an
adjusting entry the amount of properties charged as expenses in the books of accounts
to its appropriate asset account.
ADVANCES
e) Misstatements in Advances Accounts - ₱104,618,229.93
1.16 The following are the misstatements found in the audit of Advances accounts
balances and transactions which were not corrected in the DepEd FSs as at
December 31, 2018:
Table 6: Schedule of Misstatements in Advances Accounts

Amount of
Office/ Accounts
Overstatement/ Audit Observations Assertion
Region Affected
(Understatement)
CAR Advances for 672,139.66 Cash advances granted to the Cashiers of Occurrence;
Operating SDO Baguio and four IUs were directly Accuracy;
Expense charged to expenses. Also, advances Classification
Advances for (7,120,770.76) granted to officers of Mataragan National
Payroll Agricultural School were recorded as
Advances to (168,400.00) liquidated even without the liquidation
Special reports. Further, the transfer of funds by
Disbursing SDO Baguio to three IUs was recorded as
Officer Advances for Operating Expenses, and
Advances to (23,925.00) liquidation thereof was not recognized. As
Officers and such, Advances was understated by
Employees ₱6,640,956.10.
II Advances to 1,359,166.02 Cash advances granted for various Classification
Officers and purposes and cash shortages due to
Employees robbery/theft in SDO Nueva Vizcaya and
Advances to (719,112.57) in nine IUs were not recorded in the
Special appropriate Advances and Receivable
Disbursing accounts.
Officers
Advances for (907,767.69)
Payroll
Advances for 414,606.52
Operating
Expenses
IV-A Advances to (22,770.00) Cash advance for the implementation of Classification
Special School-Based Feeding Program (SBFP) in
Disbursing Montana Elementary School (ES) of SDO
Officer Tanauan City was erroneously recorded as
87
Amount of
Office/ Accounts
Overstatement/ Audit Observations Assertion
Region Affected
(Understatement)
Financial Assistance to NGAs instead of
Advances to Special Disbursing Officer.
VI Advances to (164,100.00) Cash advances to a Disbursing Officer of Classification
Special Pascual M. Osuyos Memorial School in
Disbursing SDO Antique were directly recorded in the
Officer Expense accounts.
VII Advances to (101,670,472.61) Cash advances granted to school heads of Classification
Operating elementary and non-implementing schools
Expense for the downloading of MOOE in CY 2015
were recorded as Due from OUs instead of
Advances for Operating Expenses
VIII Advances for (26,000.00) Cash advances granted to two AOs of Accuracy;
Operating Tacloban National Agricultural School for Classification
Expense the conduct of K to 12 Tech-Voc National
Advances to 5,000.00 Summit 2018 and upgrading of
Officers and Strengthened Technical-Vocational
Employees Education Program (STVEP) Teachers to
National Certificate (NC) II, in their
respective amounts of ₱21,000.00 and
₱5,000.00, were erroneously recorded in
the books as Other MOOE and Advances
to Officers and Employees instead of
Advances for Operating Expenses
account.
Advances for 3,754,176.50 Paid payrolls submitted by the Completeness
Payroll Accountable Officer (AO) to the Audit
Team but not recorded in the books
Total (104,618,229.93)
1.17 We recommended and the Management agreed to require the Accountant

to prepare the necessary adjusting entries for the various misstatements in
order to reflect the correct balance of the Advances account and observe
the use of appropriate accounts in the recording of cash advances as
prescribed in the RCAs of the GAM for NGAs, Volume III.
LIABILITIES
f) Misstatements in Liability Accounts - ₱356,901,707.90
1.18 The following are the misstatements found in the audit of transactions of Payable
accounts which Management did not adjust in their books of accounts:
Table 7: Summary of Misstatements in Liabilities
Accounts Amount Assertion
Region Audit Observations
Affected Over/(Under) Affected
NCR Accounts Payable 24,189,388.00 Transactions recorded under the Accounts Rights and
Payable account despite non-rendition of Obligations
services and non-completion of
projects/activities by the
contractors/suppliers at year-end
Accounts Payable 10,500,163.19 Analysis of Accounts Payable account Rights and
revealed that the amount of Obligations
₱10,500,163.19 aged more than two years
represents transactions that were not
88
provided with list of names of creditors as
these are not substantiated with actual
administrative or judicial claims on record
including DVs/payroll and supporting
documents to validate its existence.
Due to Officers (34,965,504.00) The correct amount due to be paid for the Accuracy
and Employees CY 2018 Equivalent Record Form (ERF)
amounting to ₱62,167,004.00 and for the
CY 2018 Chalk/Cash Allowance of newly
hired teachers amounting to
₱10,860,500.00 were recorded only for
₱29,294,000.00 and ₱8,768,000.00,
respectively, citing the available allotment
as of December 31, 2018 as its basis for
the recording thereof, thus the payables
were understated by ₱32,873,004.00 and
₱2,092,500.00, respectively.
II Accounts Payable 30,000.00 Six fire extinguishers costing ₱30,000.00 Rights and
/Semi- which were undelivered as of yearend Obligations
Expendable failed to satisfy the recognition criterion
Disaster for Financial Liability as required under
Response and Section 14, Chapter 7 in relation to
Rescue Section 2, Chapter 6 of the GAM for
Equipment NGAs, Volume I, thereby resulting in the
overstatement of the “Accounts Payable”
and “Semi-Expendable Disaster Response
and Rescue Equipment” by the same
amount. The Inspection and Acceptance
Report (IAR) Numbered ITB1-12-09
showed that the items were delivered,
inspected and accepted only on January 3,
2019.
Due to Officers 614,256.00 Traveling expenses of SDO Batanes Rights and
and Employees incurred by various agency officials and Obligations
employees aggregating ₱614,256.00
recorded as Due to Officers and
Employees remained unpaid for two years
due to incomplete supporting documents,
contrary to Section 4(6) of PD No. 1445.
III Accounts Payable 483,612.32 Audit of the Liability Accounts of SDO of Accuracy
Angeles City disclosed that the payable
accounts include excess prior year’s
obligations amounting to ₱483,612.32.
The Bookkeeper of the concerned school
under the jurisdiction of SDO Angeles
City explained that her predecessor did not
furnish her the details or supporting
documents of the payable accounts during
their turnover.
Accounts Payable 8,426,587.17 Payables considered to be invalid claims Rights and
without supporting documents. Obligations
Due to BIR (42,380.75) Erroneous recording for provision of tax. Classification;
Accuracy
Accounts Payable 9,040,922.22 Accounts payable do not have Rights and
valid/complete supporting documents. Obligations
IV-A Accounts Payable 94,811,794.26 The accuracy and completeness of
Accounts Payable aggregating to
₱94,811,794.26 were found doubtful, due
to the absence of relevant documents to
substantiate the existence of liabilities,
89
contrary to Section 2(a), Chapter 6 and
Section 37, Chapter 2 of GAM for NGAs,
Volume I. Out of this amount, ₱69,625.70
worth of payables remained outstanding
for more than two years, and were not
reverted to the unappropriated surplus, in
violation of Section 98 of PD No. 1445,
resulting in the overstatement of
Accounts Payable and understatement of
appropriate accounts by the same amount
as of December 31, 2018.
V Accounts Payable (819,716.25) Unadjusted stale checks Accuracy
Accounts Payable 1,354,815.30 Undocumented and outstanding for two Rights and
years or more Obligations
V – Accounts Payable 2,000.00 Overstatement in recording the payable to Accuracy
SDO SRJE Enterprise; Obligation Request
Camari (OBR) No. 2-16-11-2297
nes Sur Accounts Payable 10,120.00 Recorded payable but no transaction was Rights and
Accounts Payable 29,400.00 made: Caleb Motor Corp. per OBR No. Obligations
02-101-101-2017-07-01805 amounting to
P10,120.00 and Kuya Doms Catering
Services amounting to P29,400.00
Accounts Payable 7,499,486.38 Processed/paid in CY 2019 Accuracy
Due to Officers 103,890,669.24 Undocumented and outstanding for two Rights and
and Employees years or more Obligations
VI Accounts Payable 5,037,814.58 Purchase of Technical–Vocational Rights and
Livelihood (TVL) supplies and equipment Obligations
of 11 NHSs in SDO of Antique were
recorded as Accounts Payable amounting
to P5,037,814.58 as of yearend despite
lack of delivery of goods and without
complete documentation, contrary to
Section 6 of DBM Circular Letter No.
2013-16 dated December 23, 2013,
rendering the balance of the said account
unreliable.
Accounts Payable 719,966.00 Accounts Payable amounting to Rights and
₱719,966.00 as of December 31, 2018, Obligations
recorded by Bacan National High School
from Division of Aklan, has no valid claim
or supporting documents, contrary to
Section 46, paragraph 2 of PD No. 1177
and Section 14, Chapter 7, Volume I of
GAM for National for NGAs.
Accounts Payable 24,286,401.57 Non-reversion of unaccounted long Rights and
Due to Officers 1,339,117.12 outstanding payable accounts and non- Obligations
and Employees adjustment of prior years’ erroneous
entries, thus affecting the fair presentation
in the financial statements
VII Accounts Payable (4,323,652.25) The Accountant committed an error in Accuracy
debiting the payment to the contractor to
Accounts Payable even if the said
payment was not previously obligated.
Due to GSIS (1,301,460.97) Remittances of government’s share for Classification;
which no obligation was set-up were Accuracy
debited to the account instead of accounts
Retirement and Life Insurance Premium
(RLIP) and Employees Compensation
Insurance Premiums (ECIP).
90
VIII Accounts Payable (11,118,629.17) The non-preparation of a Schedule of Accuracy
Unreleased Commercial Checks at the end
of the year resulted in overstatement of the
account Accounts Payable account by
P11,118,629.17.
Due to Pag-IBIG 186,810.32 Non-adjustment of stale checks Classification;
Accuracy
Due to BIR 116,642.92 Non-adjustment of double remittance of Classification;
withheld taxes Accuracy
Due to RO 144,100,282.69 For the period January to November 2018, Classification
the account used to recognize the amount
remitted to GSIS, Home Development
Mutual Fund (HDMF), PhilHealth and
various Private Lending Institutions
(PLIs) was improperly accounted to Due
to RO No. VIII, which is improper since
the amount is not payable to DepEd RO
but to various government entities and
outside creditors.
IX Due to Officers (38,395,000.00) Results of verification and analysis of the Accuracy
and Employees Due to Officers and Employees balance as
of December 31, 2018 showed erroneous
debits per JEV Nos. 01-2018-12-0141 and
01-201-12-1453, all dated December 31,
2018.
X Due to Officers 285,651.85 The Accounts Payable amounting to Rights and
and Employees/ ₱156,465.87 and ₱129,185.98 of the Due Obligations
Accounts Payable to Officers and Employees claims of
Bukidnon National School of Home
Industries lacked documentation to
support the validity of the claims.
XII Due to GSIS (5,974,730.60) The account Due to GSIS as of December Completeness;
31, 2018 of SDO-Cotabato Province Accuracy
reflected a zero balance, representing that
no outstanding liability to GSIS exists as
of the end of the year. However, review of
related documents disclosed that the
Agency had a total remittance of
₱77,238,402.47 and payroll deductions
including 12 percent government share
totaling ₱71,263,671.87 for CY 2018,
thereby incurring an under-remittance of
₱5,974,730.60.
417,168.17 The account Due to GSIS as of December Completeness
31, 2018 of SDO-Kidapawan reflected a Accuracy
zero balance. However, review of related
documents disclosed that the Agency had
a total remittance of ₱20,377,517 and
payroll deductions including 12 percent
government share totaling
₱20,188,636.87 for CY 2018, thereby
incurring an over-remittance of
₱417,168.17.
XIII Accounts Payable 8,713,169.64 Payables in the total amount of Rights and
₱8,713,169.64 were obligations not yet Obligations
due and demandable. As conveyed by the
Accounting personnel, those transactions
were credited to the account based on the
contract documents. Obligations shall
only be recognized as Accounts Payable
91
on the date of delivery/rendition/
completion and acceptance of the
goods/services/projects.
83,730.00 Contract entered into by and between the Accuracy
Barobo NHS and Wil-am General
Merchandise for the TVL Program had a
contract price of ₱531,774.00, however,
the Bookkeeper recorded an amount of
₱615,504.00, overstating the Accounts
Payable account by ₱83,730.00.
465,000.00 Erroneous recognition of Accounts Rights and
Payable. The transaction was erroneously Obligations
debited to Salaries & Wages and credited
to the Accounts Payable account.
5,421,615.07 The amount represents the cost of Rights and
obligated goods/services recorded as Obligations
Accounts Payable without actual delivery
and acceptance. Thus, rendering the
Accounts Payable balance of SDO –
Agusan del Sur unreliable.
1,165,038.81 TVL tools and equipment not yet received Rights and
by SDO – Tandag City were erroneously Obligations
accounted for as due and demandable
obligation as at year end, which resulted in
overstatement of Accounts Payable by
₱1,165,038.81 as of December 31, 2018.
CAR Other Payables 644,393.74 Overstatement on SDO Tabuk remittance Accuracy
for February 2018
(23,234.67) Salary deductions not recorded in the Accuracy
books
Total 356,901,707.90
1.19 We recommended that the Management require the concerned

Accountants to:
a) prepare the necessary adjusting entries to reflect accurately the

payable accounts;
b) recognize liability on the date of delivery/rendition/completion and

acceptance of the goods/services/projects, regardless of the year of
incurrence of such obligations in accordance with Section 6.2.1 of DBM
Circular Letter No. 2013-16 dated December 23, 2013 and Chapter 2 of
the GAM for NGAs, Volume I; and
c) stop the practice of booking up payables without valid claims.
Region Management’s Comments

NCR Adjustment per JEV No. 2019-01-447 dated January 31, 2019 was made to correct the
amount of ₱24,189,388.00 recorded under the Accounts Payable account as services have
not yet been rendered as at yearend. The Finance Division was not able to verify further the
programs and activities that were moved to dates beyond December 31, 2018 which were
mostly downloaded Sub-Allotment Release Orders (AROs) from the DepEd CO. For the Due
92
to Officers and Employees, the DepEd-NCR cannot obligate more than the available balance
of allotments as per National Budget Circular (NBC) No. 573 dated January 3, 2018.
II, III, VI, VIII, Management agreed with the audit recommendations.
XII, XIII &
CAR
IX The Regional Accountant informed that the adjustment to restore the total amount of
₱38,395,000.00 has been made thru JEV Nos. 01-2019-02-0388 and 01-2019-02-0567 all
dated February 28, 2019.
OTHER ACCOUNTING DEFICIENCIES
1.21 Section 6, Chapter 19 of the GAM, Volume I enumerated the qualitative

characteristics of financial reporting. Among which, are reliability, faithful
representation and completeness defined as follows:
Reliability – reliable information is free from material error and bias, and can be
depended on by the users to represent faithfully that which it purports to
represent or could reasonably be expected to represent.
Faithful representation – information to represent faithfully transactions and

other events, it should be presented in accordance with the substance of the
transactions and other events, and not merely their legal form.
Completeness – the information in FSs should be complete within the bounds of

materiality and cost.
1.22 The following deficiencies in recording and reporting financial transactions

resulting from lack of reconciliation of accounting and property records also
affected the reliability, accuracy, completeness, and valuation of the reported
account balances of the FSs.
Table 8: Summary of Accounting Deficiencies
Observations/ Details
Office/ Assertions
Accounts in Amount Standard
Region Affected
Affected Table
CO, a) Unreliable 9 265,515,067.65 Completeness; Section 3, Chapter 21 of the GAM for
NCR, II, CIB, LCCA Accuracy NGAs, Volume I provides guidelines
VII, VIII account on the preparation of BRS.
balances
Sections 5 and 7, Chapter 21 of the
GAM, Volume I require that the Chief
Accountant/Designated Staff shall
within ten days from receipt of the
monthly Bank Statement (BS)
together with the paid checks, original
copies of Debit Memoranda
(DM)/Credit Memoranda (CM) from
the Government Servicing Bank
(GSB), reconcile the BS with the
General Ledger (GL), and prepare the
BRS in four copies. The Chief
Accountant shall submit the BRS
93
Office/ Assertions
Region Affected
Affected Table
within twenty days after receipt of the
monthly BS to the Auditor.
Section 74 thereof states that at the

close of each month, depositories shall
report to the agency head, in such form
as he may direct, the condition of the
agency account standing on their
books. The head of the agency shall
see to it that reconciliation is made
between the balance shown in the
reports and the balance found in the
books of the agency.
CO, b) Unreliable 10 6,081,258,098.74 Completeness; Section 6, Paragraph (e) Chapter 19 of
NCR, II, balances of Accuracy the GAM for NGAs on Qualitative
V, VII receivable Characteristics of Financial Reporting
XIII accounts states that an entity shall present
information including accounting
policies in a manner that meets reliable
information which is free from
material error and bias, and can be
depended by users to represent
faithfully that which it purports to
represent or could reasonably be
expected to represent
CO, II, c) Unreliable 11 31,571,119.37 Accuracy; Section 17, Chapter 8 of the GAM
VII, XI Inventory Completeness; requires the records, forms and reports
account Valuation to be prepared and/or maintained by
balance the Accounting Division/Unit and
Property Division/Unit.
CO, d) Unreliable 12-13 55,285,348,434.84 Completeness; Section 27 of the PPSAS Volume I
NCR, II, account Accuracy; provides, “Financial Statements shall
III, V, balance of Valuation; present fairly the financial position;
VI, VIII, Property, Existence financial performance, and cash flow
X, XI, Plant and of an entity. Fair presentation requires
XIII Equipment the faithful representation of the
effects of the transactions, other events
and conditions in accordance with
definitions and recognition criteria for
assets, liabilities, revenue and
expenses set out in IPSASs.”
Section 38, Chapter 10 of the GAM for

NGAs, Volume I provides that: “The
entity shall have a periodic physical
count of PPE, which shall be done
annually and presented on the
RPCPPE as at December 31 of each
year. This shall be submitted to the
Auditor concerned not later than
January 31 of the following year.
Equipment found at the station and
losses discovered during the physical
count shall be reported to the
Accounting Division/Unit for proper
accounting/recording.”
CO, e) Unreliable 14 425,180,803.29 Accuracy Sections 5.3 and 6.3 of COA Circular
NCR, VI, Advances No. 97-002 dated February 10, 1997
VII, X provide the prescribed period of
94
Office/ Assertions
Region Affected
Affected Table
account recording and liquidating advances
balances and the reconciliation of the
Accountant and AO of their respective
records at least quarterly.
CO, f) Unsupported 15 1,585,023,693.92 Completeness; Section 6, Paragraph (e) Chapter 19 of
NCR, II, balances of Accuracy the GAM on Qualitative
III, IV- payable Characteristics of Financial Reporting
A, V, accounts states that an entity shall present
information including accounting
VI, VII, policies in a manner that meets reliable
IX, XIII information which is free from
CAR g) Unreconciled 16-17 351,871.68 Accuracy material error and bias, and can be
difference depended by users to represent
between RO faithfully that which it purports to
and Regional represent or could reasonably be
Payroll expected to represent.
Service Unit
(RPSU) and Sections 111 and 112 of PD No. 1445
books
CO h) Over 18 1,784,281.52 Accuracy
deduction of
loan
repayments
for CYs 2017
and 2018
which remain
unrefunded to
employees
Total 63,676,033,371.01
a) Deficiencies affecting the reliability of CIB - LCCA account balances -

₱265,515,067.65
1.23 Sound internal control for cash requires that a periodic reconciliation of bank
accounts shall be undertaken and reconciling items immediately corrected in
order to ensure accuracy of bank balances appearing in the financial statements.
It is only when both the books and bank records are reconciled that the reported
cash balances are rendered accurate and reliable.
1.24 Our audit showed that the correctness of the balances of cash accounts
amounting to ₱2,410,172,011.15 maintained with GSB as of a given period
could not be easily determined due to late or non-preparation/submission,
erroneous and other deficiencies noted in the preparation by the Accountants of
the BRS. Thus, it defeats the purpose for which the BRS are prepared and could
result in unrecorded adjustments, hence, casts doubt on the accuracy and
reliability of the Cash accounts and other affected accounts.
Table 9: Variance/Discrepancy in Cash in Bank Account Balances

Office/
Per Books Per Bank Discrepancy Audit Observations
Region
CO 390,493,950.40 360,625,557.59 29,868,392.81 The discrepancy of ₱29,868,392.81 includes the
amount of ₱19,913,031.68, which represents the
difference between the GL and the bank
95
Office/
Per Books Per Bank Discrepancy Audit Observations
Region
statements. The amount is recorded in the books
of the Agency but with no equivalent bank
deposit nor supported with any Subsidiary
Ledger (SL). This has existed for a long period
of time and has been a recurring audit
observation. The unaccounted difference is still
for verification by the Accounting Division, and
not yet adjusted/reconciled as of the reporting
date despite previous audit recommendations.
NCR 1,934,161,257.90 2,226,041,802.35 (291,880,544.45) The reconciling items include unascertained net
difference of ₱90,165,600.71 between the
account balance of the CIB-LCCA per books
and per bank due to the following: a) absence of
details provided for the discrepancy; and b) due
to failure of the Accountants to prepare and
submit the BRS.
II 15,085,208.89 15,842,382.81 (757,173.92) The difference could not be reconciled due to the
non-maintenance of ledgers by the Accounting
Office.
VII 52,547,634.24 56,012,739.06 (3,465,104.82) Unreliable CIB balances due to the following: a)
unaccounted difference of ₱1,836,337.72 due to
erroneous preparation of BRS; b) unaccounted
discrepancy of ₱22,365,971.00 between the GL
with a balance of ₱52,547,634.24 and SL
balances totaling ₱30,181,663.24.
VIII 17,883,959.72 17,164,596.99 719,362.73 Reconciliation was already conducted, however,
it could not be completed due to absence of SLs
and other records relative to the transactions. As
of the end of the current year, no BRS was
received by the Audit Team since its assumption
in CY 2016. By this set up, the Accounting Unit
of the Agency have omitted to give focus on the
required process.
Total 2,410,172,011.15 2,675,687,078.80 (265,515,067.65)
1.25 Further, the reliability of BRS as well as the accuracy of the Cash in Bank
accounts of RO No. VII (ECOTECH Center) amounting to ₱138,547,519.9 and
RO No. XIII could not be ascertained due to discrepancy noted amounting to
₱3,414,054.13 between cash balances per books/financial statements and per
unadjusted balance per BRS. The failure of the Accountant and Bookkeepers to
reconcile the bank statements with the GL before preparing the BRS such that
the adjusted cash balances reflected in the BRS were not the amount appearing
in the monthly Trial Balances with deficiencies ranging from (₱1,285,248.96)
to ₱424,669,520.00, respectively, affected the accuracy of the Cash accounts
valuation in the financial statements.
1.26 We recommended and the Management agreed to require the

Accountants/Bookkeepers to:
a) verify the unaccounted funds and make the necessary adjustments;
b) prepare the SLs and monthly BRS, in accordance with Section 21 of the
GAM for NGAs, Volume I, for all the Cash in Bank accounts and
96
submit the same to the Auditor within the timelines prescribed therein,
to allow the prompt verification by the Audit Teams and correction of
the accounts balances in the books; and
c) reconcile the actual GL balance with the bank balance as reported in

the books/FS and the balances as reported in the BRS.
Office/
Region
CO The discrepancy of ₱19,913,031.11 pertains to prior year's transactions which remain unaccounted
for a long period of time due to the absence of pertinent documents. Much effort has been exerted
to locate or trace the documents pertaining to these accounts so that adjustments could be made but
proved futile up to this time. The above figures emerged even prior to CY 2012 where lapses in the
recording of the previous cash transactions is also difficult to ascertain as reflected in the yearly
draft responses to the audit findings in CYs 2013 to 2017. However, review and validation of the
existing trust accounts is a continuing task of this Office and rest assured that comments and
recommendations are duly noted.
NCR The delay in the submission of BRS of SDO of Mandaluyong City was due to the delay of the LBP
to provide Statement of Account (SOA) to the SDO. It takes two to three months for the LBP to
provide a SOA. However, Management admitted that there was also delay on their part and commit
to submit immediately all the unsubmitted BRS.
The Acting Accountant of SDO of Pasig City agreed to the audit observation that no BRS was indeed
prepared and submitted to the Audit Team. The reasons for not preparing the BRS are the following:
a. The Acting Accountant just assumed the position in CY 2018 after the resignation of the
previous Accountant.
b. No proper turn-over of all the accountabilities of the previous Accountant was made.
c. Lacking manpower to assist in the preparation of some reports and the backlogs left behind by
the previous Accountant.
However, the Acting Accountant committed that this will be given due preference and attention.
The Accountant of SDO of Makati City said that BRS were submitted within the deadline; however,
there were instances that delay cannot be avoided due to late issuance of bank statements by the
LBP. The Management committed that they will submit application for online banking for easy
access of bank statements.
SDOs of Taguig City and Pateros explained that the late submission was due to the late receipt of
Bank Statements from LBP-DOST Branch. BRS of SDO were already submitted to the Audit Team.
VII The reason the CIB balances in the FS differ from those in BRS is that the latter is based on the cash
book of the Cashier instead of the records of the Bookkeeper. This has been the practice for so many
years and the Accountant, who is practically a new officer of the Agency, took notice of it only in
the latter part of CY 2018. The Management agreed and will comply with the audit
recommendations. The Accountant had submitted the BRS CY 2018 for all funds.
VIII Representative from the Accounting Unit explained that they have already requested from the LBP
issuance of statement of accounts from CYs 2004 to present but it will cost the amount of SDO of
₱500,000.00 more or less for bank charges. However, Management promised to prepare an action
plan to comply with the audit recommendation.
XIII They will adhere to the recommendations and that the revised BRS were done and submitted to
COA sub-office for reference.
b) Deficiencies affecting the reliability of Receivable accounts balances –

₱6,081,258,098.74
1.28 Unaccounted variance in balances were observed in the audit of Receivable

accounts which was caused by absence of reconciliation between the
97
Accounting Unit of DepEd Offices and concerned government agencies, and
non-reconciliation between the balance per books with that of its supporting
schedules and/or relative documents. Details are as follows:
Table 10: Details of Variances in Receivable Accounts

Office/ Accounts Audit Assertions
Amount
Region Affected Observations Affected
CO Due from The reported balance of Due from NGAs account amounting to 5,109,693,816.21 Completeness;
NGAs ₱7,510,568,508.17 as of December 31, 2018 does not reconcile Accuracy
with the DBM-PS ledger balance of ₱2,400,874,691.96 or a
difference of approximately ₱5,109,693,816.21 representing
68 percent of the total Agency Purchase Requests (APRs)
issued during the years.
Likewise, of the total fund transferred to cover MOOE of 28,167,188.00

various schools in Autonomous Region in Muslim Mindanao
(ARMM), the amount of ₱28,167,188.00 pertains to
unaccounted balances prior to CY 2004.
Moreover, previous results of confirmation made by the 13,329,785.00

concerned Audit Team Leaders (ATLs) of the SDOs of ARMM
pertaining to school building construction which also includes
regional transfers to ARMM, as part of the Regular School
Building Program (RSBP) spearheaded by DPWH, disclosed a
discrepancy of ₱13,329,785.00 that had not been reconciled by
the DepEd, as of this date.
Due from The amount of ₱11,500,000.00 were entrusted to Philippine 10,247,726.00 Completeness;
NGOs Federation of Teachers and Employees Cooperatives (PFTEC) Accuracy
under DepEd Memo No. 229 s. 1997 intended for grant loans
to DECS teachers’ and employees’ cooperatives that are duly
registered with the Cooperative Development Authority
(CDA), and affiliate members who are in need of additional
capital for their various projects. Confirmation sent to PFTEC
in the previous audit years up to CY 2013 revealed that the total
fund had a remaining balance of ₱1,252,274.00, thus a
difference in confirmation of ₱10,247,726.00.
NCR Due from The difference resulted from unrecorded fund transfers and 2,422,615.20 Completeness;
NGAs deliveries and erroneous entries in recording transactions with Accuracy
the DBM-PS.
Due from The discrepancy was observed after confirming the year-end 2,541,594.10 Completeness;
OUs account balance of the Due from OUs account in the books of Accuracy
the ROP against its reciprocal account Due to RO in the books
of five SDOs.
II Loans The balance of Loans Receivable-Others account for Provident 1,793,352.69 Completeness
Receivable- Fund under SDO Ilagan City amounting to ₱10,731,847.10 Accuracy
Others varies from the balance reflected in the Aging Report totaling
₱12,525,199.79, resulting in a discrepancy of ₱1,793,352.69.
The discrepancy was due to the failure of the Accountant to
reconcile his report with that of the employee in charge in the
preparation of the Aging Report. There was no supporting
schedule or ledger submitted to support the balance appearing
in the FS.
Due from The year-end balance of the Due from OUs amounting to 41,025,475.73 Completeness
OUs ₱142,308,260.73 did not tally with the amount reflected in the Accuracy
reconciliation schedule provided by the Accounting Unit of the
ROP with a balance of only ₱101,282,785.36 or a discrepancy
of ₱41,025,475.73.
V Due from The Due from OUs account balance at year-end amounting to 863,991,229.88 Completeness;
OUs ₱216,269,229.75 did not tally with the total SL balance of Accuracy
₱1,080,260,459.63. The Accounting Unit added an SL account
98
Office/ Accounts Audit Assertions
Amount
Region Affected Observations Affected
labeled as "Unidentified Accounts" that carried a negative
balance of ₱863,991,644.89 apparently to adjust the total SL
balance in conformity with the year-end account balance of the
Due from OUs account presented in the financial statements.
VII Accounts The book balance of the Accounts Receivable account as of 4,157,624.33 Completeness;
Receivable December 31, 2018 amounting to ₱91,005,576.34 did not tally Accuracy
with the balance reflected in the Aging Schedule of Accounts
Receivable amounting to ₱95,163,200.67 hence, a difference of
₱4,157,624.33 which has been existing in the previous years.
XIII Loans The Aging Schedule of Loans Receivable-Others account of 3,887,691.60 Completeness;
Receivable- the ROP disclosed the amount of ₱3,887,691.60 which was not Accuracy
Others accounted and still subject for reconciliation. Verification
revealed that this amount has been long outstanding and tagged
as the grant of Provident Fund to SDOs which are not yet
identified.
Total 6,081,258,098.74
1.29 The unreconciled differences between the balance per books under the Due from
NGAs account and per DBM-PS records has been continually observed in the
previous years which the Management of the concerned DepEd Offices failed to
act upon. Inadequate monitoring of advance payments and deliveries by the
Accounting and Property Unit, and lack of periodic reconciliation between the
DepEd Offices and DBM-PS could lead to recurrent unaccounted balances in
their respective records.
1.30 The Due from OUs account maintained in the DepEd-NCR ROP is a reciprocal
account of Due to RO account maintained in the books of the SDOs/IUs which
is used to record transactions pertaining to the payroll requirements of the
teaching and non-teaching personnel. At yearend, the account balances were
supposedly eliminated in the financial statements as required in GAFMIS
Circular Letter No. 2003-004 dated November 19, 2013 and PPSAS No. 6
entitled “Consolidated and Separate Financial Statements”. However, the
financial statements still showed the said accounts which could be attributed to
the failure of the ROP and SDOs/IUs to reconcile the year-end reciprocal
account balances. In RO No. II, the Due from OUs account balance had an
unreconciled discrepancy when compared with the reconciliation schedule
prepared by the Accounting Unit due to unaccounted transactions in the previous
years.
1.31 The unreconciled amount in the Accounts Receivable account in RO No. VII
and Loans Receivable-Others account in RO Nos. II and XIII was observed in
the comparison between the year-end account balance and the aging
report/schedule which was caused by inadequate monitoring and control in the
recording of receivables.
1.32 Aside from the aforementioned variances in the account balances,

negative/abnormal balances recorded under the Loans Receivables-Others
account prior to CY 2014 up to CY 2017 in the aggregate amount of
₱2,885,413.35 was likewise observed in the books of SDO Misamis Oriental
99
that contributed to the aforementioned account’s doubtful reliability. According
to the personnel in-charge, the negative/abnormal amounts resulted from, among
others, over-application of remittances and/or timing difference between the
billing of the SDO and withholding of monthly amortizations.
1.33 We recommended and the Management agreed to:
a) reconcile regularly the records of the Accounting and Property Units

with that of the DBM-PS, monitor the deliveries made by comparing
the same against the corresponding transferred funds and immediately
inform the DBM-PS about the existence of undelivered supplies with a
demand for its delivery to avoid accumulation thereof and to ensure
reconciled balances of their respective records at any given period;
b) reconcile the ROP records with those of the SDOs/IUs in order to

resolve the disparities between the balances of the reciprocal accounts
Due from OUs and Due to RO and subsequently, eliminate the said
accounts in the Consolidated Financial Statements of the DepEd at
yearend;
c) exert utmost effort to locate the documents supporting the amounts

recorded in the Due from OUs and Loans Receivable-Others accounts
in order to fully account their respective balances; and
d) review procedures in the granting and billing of loans enforcing

controls for the proper matching of loan repayments to avoid
negative/abnormal balances in the Loans Receivables-Others account.
Office/
Region
CO The Management commented that the amount of ₱2,317,737,041.51 of the noted discrepancy was
non-moving and still under procurement process. Also, a request for the authenticated copies of the
Delivery Receipts (DRs) of unbooked APR/deliveries were already forwarded to DBM-PS per
reconciliation made DBM-PS Statement as of December 31, 2018 versus Accounting Books of
which the total amount of ₱2,426,794,293.74 was recorded as liquidation.
As regards to consumables amounting to ₱4,359,763.20 for the use of various offices in DepEd CO
for CY 2018, the amounts of ₱139,436.96 and ₱2,122,542.14 were recorded as liquidation thru their
respective JEV Nos. 2018-04-29120 and 2018-07-48165.
As for the advances made to DBM-PS for the procurement of four-wheel van type vehicle, six-wheel
bus and five units of two-wheel vehicle, the unutilized balance of ₱7,899,564.00 was refunded by
DBM-PS under Bureau of Treasury (BTr) Official Receipt (OR) No. 2547452 dated February 9,
2018. The remaining balance of ₱7,800.00 will be recorded upon receipt of the requested copy of
DR from DBM-PS.
All adjustments shall be promptly recorded once the required documents are submitted to DepEd
CO.
NCR The Management of ROP, SDOs Makati, Taguig/Pateros and Valenzuela commented that they will
coordinate with the DBM-PS for the reconciliation of their respective balances.
100
Office/
Region
The Finance Division of ROP developed a facility using Google Drive for the online submission of
deposit slips as a supplement to the submission of hardcopy of validated deposit slips and List of
Due and Demandable Accounts Payables (LDDAP) to facilitate the immediate verification and
reconciliation of reciprocal accounts. In SDO Quezon City, IUs will reconcile with ROP with regard
to the discrepancies in the remitted amounts. Five schools in SDO Manila have complied and
reconciled with the balance in the ROP books.
II The Management of SDO Ilagan City instructed the person in-charge in preparing Aging Report to
update the schedule and reconcile with the Accountant. Also, the Management committed to
reconcile the difference of ₱1,793,352.69 within the 1st quarter of CY 2019.
Meanwhile, the Management of SDO Isabela explained that they only allowed loans to employees
whose net take home pay were below the prescribed amount in cases of emergency. The late posting
of payments was due to the lack of manpower in the Accounting Unit to complete such task.
However, the Accounting Unit will be able to comply with the recommendation starting this CY
2019 with the coming of their new staff.
The Audit Team, however, required that reconciliation be done monthly and updating/posting of
payments be promptly made for easier reconciliation. The Accountant of SDO Ilagan City was
instructed to submit reconciliation of balances as of December 31, 2018 not later than March 31,
2019.
As regards unreconciled balance of Due from OUs, the Management committed to work out the
details of the account balance.
V Management reasoned out that reconciliation of the reciprocal accounts Due from OUs and Due to
RO is still being conducted by the Finance Division of the ROP and the SDOs and Secondary IUs.
While there were fund transfers already identified and adjusted in the books during the year, various
unidentified amounts still persisted for which the corresponding adjustment could not be effected
due to absence of pertinent deposit slips and validated LDDAP-ADA supporting the fund transfers
from the concerned OUs.
VII The Center created a task force that would focus on locating the difference between the book balance
and the total amount in the Aging Schedule. SLs will be maintained for the receivables while the
Management is still in the process of acquiring accounting software.
c) Deficiencies affecting the reliability of Inventory account balance -

₱31,571,119.37
1.35 The following deficiencies in recording and reporting financial transactions

resulting from lack of reconciliation of accounting and property records also
affected the reliability, accuracy, completeness, and valuation of the Inventory
accounts in the financial statements. A variance in the amount of ₱31,571,119.37
between Accounting and Property records was noted in audit. Details are as
follows:
Table 11: Comparison of Inventory Balances per CO/RO
Office/Region Per Accounting Per Inventory Variance
CO 41,735,943.32 14,876,573.00 26,859,370.32
II - SDO Nueva Vizcaya 478,924.13 181,983.93 296,940.20
VII - ROP 5,672,317.85 5,480,939.68 191,378.17
XI – SDO Compostela 5,630,911.24 1,407,480.56 4,223,430.68
Valley
Total 53,518,096.54 21,946,977.17 31,571,119.37
1.36 We recommended and the Management agreed to require the Accountant

and Property Officer to conduct periodic reconciliation of their respective
reports and records and accordingly adjust the noted variances.
101
d) Deficiencies affecting the reliability of PPE - ₱55,285,348,434.84
1.37 Review of the recorded balance of PPE as of December 31, 2018, amounting to
₱66,003,067,980.08, disclosed a net difference of ₱55,285,348,434.84, contrary
to the pertinent rules and regulations prescribed by PPSAS and GAM. Details
are provided as follows:
Table 12: Comparison of PPE Balances per books and RPCPPE
Balance as of
Office/ December 31, 2018
Variance Audit Observations
Region Reported
Accounting
RPCPPE
CO 42,460,950,955.21 1,155,412,042.74 41,305,538,912.47 • The reported CY 2017
discrepancy between the
Accounting and AMD records of
₱32,607,533,225.70 had further increased to
₱41,305,538,912.47 as of year-end. The said
increase in the current year’s discrepancy was
due to the recording of centrally procured PPEs
for the implementation of
DepEd’s Programs and Projects, but the cost
was not included in the inventory report,
because the items were delivered directly to
recipient schools nationwide.
NCR 6,543,191,263.69 1,805,836,408.89 4,737,354,854.80 • Submitted RPCPPE composed only of the
following.accounts:
(a) Office Equipment;

(b) ICT;
(c) Communication Equipment;
(d) Furniture and Fixtures;
(e) Disaster Response and Rescue
Equipment; and
(f) Other PPE
• Office furniture and equipment account were

included in the RPCPPE, while the Buildings
and Other Structures, including the School
Buildings, with a total cost of
₱3,239,821,969.35 were not included.
II 696,118,362.50 930,795,848.70 (234,677,486.20) • The prepared RPCPPE applied the threshold
of ₱15,000.00 while the balance per
accounting records includes the semi-
expendable property. Further, the discrepancy
is attributable to the non-reconciliation of
records maintained by the Property Custodian
and the Accounting Unit.
• The noted variance was due to incomplete

information in the Property, Plant and
Equipment Ledger Card (PPELC), and
Property Card (PC) which was reported in the
RCPPPE) maintained by Accounting and
Supply Section, respectively. Also, the ledger
and property cards have incomplete
information or were not updated.
III 8,397,928,128.34 2,992,279,288.34 5,405,648,840.00 • Material differences of PPE accounts can be
attributed to Buildings, School Buildings,
Other Structures, Technical and Scientific
102
Balance as of
Office/ December 31, 2018
Variance Audit Observations
Region Reported
Accounting
RPCPPE
Equipment, Motor Vehicles, Furnitures and
Fixtures, CIP and Other PPE accounts which
were recorded in the books but were not in-
cluded in the physical inventory report. On the
other hand, some Communication Equipment,
ICT Equipment, Other Equipment, Medical
and Other Equipment and Other Supplies were
included in the inventory report but they were
not recorded in the books.
V 2,968,145,162.11 565,033,036.16 2,403,112,125.95 • The Supply Officer justified that the submitted
RPCPPE included only the PPE accounts
located at the vicinity of the Division Office,
thus excludes the PPE accounts located in
various schools and campuses of the province.
She commented that manpower constraints
caused the non-conduct of the actual inventory
in various schools.
• In addition, the non-reconciliation of the

accounting and property records was due to the
non-maintenance/updating of the PPELC and
PC of the concerned offices.
VI 1,600,695,680.27 260,494,171.89 1,340,201,508.38 • The RPCPPE Report did not record its PPE
into its specific accounts and were lumped
together under “Equipment Account”.
• Examination of records revealed that there

were properties which were appropriately
recorded in the books and cannot be found in
the RPCPPE and some other accounts showed
some discrepancies as to the balances per
books and per RPCPPE. This could be
attributed to the non-conduct of periodic
reconciliation between the Accounting and
Property Records.
VIII 571,864,886.97 91,136,902.13 480,727,984.84 • The discrepancy in the balances was caused by
non-reconciliation of property records between
the Accounting and the Property Unit due to
incomplete actual physical count of inventory.
Likewise, the same however could be
attributed to non-updating/maintenance of
PPELCs by the Accounting Unit and failure to
update PCs by the Supply Officers.
X 530,959,465.43 769,876,743.90 (238,917,278.47) • Reconciliation of the accounting and the
XI 177,891,934.19 727,283,558.81 (549,391,624.62) property records of Accounting and Property
XIII 2,055,322,141.37 1,419,571,543.68 635,750,597.69 were not performed.
Total 66,003,067,980.08 10,717,719,545.24 55,285,348,434.84
1.38 It was also noted that in RO No. VII, there were unaccounted/unsupported
balances of CIP-Buildings and Other Structures account in the amount of
₱867,838.320.57.
1.39 Further, audit disclosed that the following ROs were not able to submit the
complete and duly accomplished reports and/or maintain/update the required
property and/or accounting records as required by the pertinent provisions of the
103
GAM for NGAs, thus adding to the unreliability of the PPE account balance,
details as follows:
Table 13: Schedule of Non-submission/Non-maintenance of PPE Reports/Records
Region Audit Observations Standard
I • Non-submission of the complete and duly • Section 38, Chapter 10 of the GAM for NGAs,
IV-A accomplished RPCPPE Volume I further provides that “The entity
IV-B • Non-maintenance of PPELC and PC by the shall have a periodic physical count of PPE,
VI Accountants and Property and Supply which shall be done annually and presented
VIII Officers, respectively on the RPCPPE as at December 31, of each
XIII year.”
II • The complete and updated RPCPPE was
X not submitted • Appendix 73, GAM for NGAs, Volume II,
XI prescribes the RPCPPE shall be submitted to
the Auditor concerned and Accounting
Division/Unit not later than January 31 of
each year.
a) require the concerned officers to conduct and complete the annual

physical count of PPE, maintain and regularly update PPELC and PC
as prescribed under the GAM for NGAs, and conduct regular
reconciliation between the Accounting and Property records to
facilitate adjustments of discrepancies or make corrections where
applicable;
b) investigate the causes of discrepancies especially those PPE that cannot

be accounted and formulate and implement necessary measures to
avoid further discrepancies; and
c) submit the required reports within the prescribed timeline.
e) Deficiencies affecting the reliability of Advances account balances –

₱425,180,803.29
1.41 Paragraph (e), Section 6, Chapter 19 of the GAM for NGAs, Volume I states
that, “An entity shall present information including accounting policies in a
manner that meets reliable information which is free from material error and
bias, and can be depended on by users to represent faithfully that which it
purports to represent or could reasonably be expected to represent.”
1.42 Analysis of the Advances accounts revealed the following deficiencies that
rendered the Advances account balances unreliable:
Table 14: Deficiencies in Advances Accounts
Office/
Audit Observations Amount
Region
NCR Absence of complete/updated SLs or details to substantiate the total cash 31,319,729.86
advances of ₱31,319,729.86 in five SDOs of DepEd NCR.
104
Office/
Region
Existence of negative balances totaling ₱10,103,420.66 due to errors in 10,103,420.66
recording, misposting or over liquidation in the accountabilities of AOs of
SDOs Quezon City, Caloocan City, Taguig City and Pateros, and Navotas City
in their respective amounts of ₱3,576,221.87, ₱3,404,967.85,
₱3,120,522.61and ₱1,708.33.
Variance totaling ₱12,637,319.96 was observed in the comparison between the 12,637,319.96
submitted Status Report vis–a-vis the balances reported in the Statement of
Financial Position of SDOs Quezon City, Taguig City and Pateros, and Pasay
City in their respective amounts of ₱11,582,120.81, ₱1,019,448.65, and
₱35,750.50 due to timing difference and omissions in recording the grant and
liquidation of cash advances.
Comparison between the SLs and GL of the Advances accounts in SDO Roxas 8,572,578.67
City revealed a discrepancy of ₱8,572,578.67 due to entries drawn by the
Accounting Unit without the necessary details. As per information gathered by
the Audit Team, the Accounting Unit does not have the details since the figures
were projected to match their balances in the submitted Report of Cash
Advances for the fourth quarter of CY 2018, Trial Balance and Financial
Statements.
As per records of SDO Roxas City, the total cash advances granted for CY 13,599,439.90
2018 was ₱56,315,951.01. However, verification of the Report of Checks
Issued (RCI) and CY 2018 DVs for PS and MOOE funds revealed that the total
cash advances granted amounted to ₱69,915,390.91, hence, a difference of
₱13,599,439.90 was observed which was not recorded in the SLs.
VII The SLs with a total balance of ₱58,796,953.59 did not tally with the GL 340,021,840.57
balance of ₱398,818,794.16, hence, a difference of ₱340,021,840.57. The
difference was due to incomplete entries in the SLs.
The Advances for Operating Expenses account in SDO Valencia City had an 6,694,366.07
unreconciled difference between the SL and Aging Schedule of cash advances
amounting to ₱6,694,366.07.
Erroneous classification of Advances to Officers and Employees instead of 42,587.60
either Advances for Payroll or Advances to Special Disbursing Officers was
noted in Bukidnon National High School (NHS).
XI Erroneous classification of advances for the payment of travel expenses and 10,400.00
meal allowances of 52 teachers during the Teacher's Day Celebration at Big 8
Corporate Hotel, Tagum City as Advances for Payroll instead of Advances to
Officers and Employees account.
XIII Advances granted to an AO of SDO Surigao City for the implementation of 2,179,120.00
SBFP and Gulayan para sa Paaralan Program (GPP) were recorded as
Advances to Special Disbursing Officer instead of Advance for Operating
Expenses. Meanwhile, advances for special purpose like for moving-up
ceremonies, preparation and evaluation of Regional Brigada Eskwela 2018,
2018 Family Day for School Teaching and Non-Teaching Personnel, were
recorded as Advances to Officers and Employees instead of Advances to
Special Disbursing Officer.
Total 425,180,803.29
1.43 Other deficiencies are as follows:
• In DepEd CO, non-recording of liquidation reports and non-accounting

thereof within the prescribed period rendered the AO’s accountability and
the balance of cash advances unreliable and inaccurate. Submitted
liquidation reports by AOs were not acted upon immediately by the
Accountant as disclosed in the responses received on the Demand Letters
(DLs), Notice of Suspension and Disallowance sent to various AOs. It was
reported that the questioned liquidation documents were already submitted
105
to the Accounting Division for review, approval and recording and that
unutilized cash balances were already returned and receipted by the Cashier.
• In RO No. VI, LRs submitted by AOs were not immediately reviewed by

the Accounting Section, which consequently resulted to delay in its audit.
Also, cash advances still remain unliquidated in the agency’s books of
account.
Moreover, the Accounting Division of SDO Capiz was able to submit only
the Schedule of Cash Advances as of July 31, 2018 despite repeated verbal
demands, hence, verification of the Audit Team of the balances of cash
advances was contained only from the said report.
• In RO No. X, the cashbook and SL balance were not reconciled to assure

reliability of the recorded balances in the AOs cashbook and ledger of the
Accounting Unit.
Moreover, in SDO Misamis Occidental, some amounts in the Report of

Disbursements and Cash Disbursement Register (CDReg) differed from the
amounts indicated in the JEV.
1.44 We recommended that the Management:
a) monitor the outstanding cash advance/s of every AO and facilitate the

processing of liquidation reports in order to reflect the accurate
balance of Advances and other affected accounts;
b) update the monitoring schedules/reports (i.e., Report on the Status of

Unliquidated Cash Advances, Aging of Unliquidated Cash Advances,
etc.) and/or SL of each AOs and reconcile the same with the GL to
ascertain the accuracy of the Advances accounts balances; and
c) verify the composition and details of the unaccounted/unreconciled/

negative balances. Require the submission of documents in support
thereof. Effect the necessary adjustments to correct the balance of the
Advances accounts, as warranted.

Office/
Region
NCR Management of SDO Quezon City commented that the variance between the Status Report and the
balance reported in the FSs was due to timing difference. The balance in the Status Report was as of
December 31, 2018 while the FS was generated on January 25, 2019. Nonetheless, they assured that
they will exert extra effort to reconcile records and adjust the Advances accounts.
Management of SDO Caloocan City commented that the unaccounted and non-moving amounts of
₱3,778,089.81 and ₱4,605,974.56 in the Advances to Officers and Employees and Advances for
Payroll accounts, respectively, was due to the difficulty in tracing balances prior to CY 2016 by the
106
Office/
Region
incumbent Accountant. Lack of accounting system prior to CY 2015 and under-staffed Accounting
Unit contributed to the accumulated amounts.
However, the SDO has introduced an accounting internal control that includes issuance of tracers for
unliquidated cash advances granted to different AOs.
VI Management of SDO Roxas City commented that they coordinated and required the Accountant to
reconcile, adjust and submit the details relative to the Advances to Operating Expenses account.
During the Exit Conference last March 21, 2019, the Designated Bookkeeper of SDO Antique
commented that he does not understand the nature of cash advance. Hence, the Audit Team suggested
that the Designated Bookkeeper seek the assistance of fellow Bookkeepers or of the Audit Team in
the recording of transactions specifically in the granting and liquidation of cash advances.
X SDO Valencia City commented that the recording of JEV in the Electronic Financial Reporting
System (eFRS) is posted automatically to the appropriate journals, GL, SL and Trial Balance.
However, the entries for the Aging of Cash Advances could not be accurately generated by the eFRS
due to system inadequacies hence, before the reports are submitted, the Management had to check
the balances reflected in the Trial Balance and the balance under the Aging to make sure that the
amounts are tallied. The SL was requested during the time that the Accounting Section was still in
the process of preparing its monthly report for August 31, 2018. The entries were already posted but
were not yet reconciled with the balances in the Aging Schedule. Such process is done regularly every
month. Although the Management was still reconciling its reports at the time, they submitted the SL
requested by the Auditor. Upon their submission of the Aging Schedule and the Trial Balance for
August 2018, the balances were already tallied.
f) Deficiencies affecting the reliability of payable accounts balances –

₱1,585,023,693.92
1.46 The following are the deficiencies in the audit of payable accounts in the DepEd-
CO and ROs/SDOs which affected the completeness and accuracy of the
balances of Financial Liabilities, Accounts Payable, Due to Officers and
Employees and Inter-agency payable accounts of DepEd:
Table 15: Summary of Accounting Deficiencies on Payable Accounts
Office/ Accounts
Amount Audit Observations
Region Affected
CO Due to GSIS 3,758,016.29 These accounts include past due balances which are
Due to Pag-IBIG 329,862.22 not supported with schedules and any other document
Due to PhilHealth 61,884.70 to support the figures reflected in the books. This
Due to NGAs 810,782,896.94 hindered the Audit Team from conducting the
Due to Government 481,705.66 necessary verification of the Department’s Inter-
Owned Controlled agency payable account balances, casting doubt on the
Corporations correctness and reliability of the account balances
(GOCCs) presented in the FS.
NCR Accounts Payable 8,386,854.76 Documents to support the validity of the payables
Due to Officers and 56,900,306.93 were not submitted to the Audit Team for validation.
Employees
Accounts Payable 1,083,217.31 The amount of ₱1,083,217.31 payable to MCB
Construction and Supply which pertains to the
payment of repair and rehabilitation of classrooms
under the CY 2013 Basic Education Facilities Fund
obligated under OBR No. 2013-12-014, has been
outstanding for more than two years. The Audit Team
has previously recommended its reversion to
Accumulated Surplus/Deficit, however, the same
remained recorded under the Accounts Payable
account as of audit date.
III Payable Accounts 17,930.00 Unclaimed Employee’s tax refund.
107
Office/ Accounts
Region Affected
Payable Accounts 2,084,708.16 Past due accounts which have been reported in prior
years and reiterated due to non-movement.
Mandatory 1,075,770.77 These deductions include past due balances which are
Deductions not supported with schedules and any other documents
to support the figures reflected in the books. This
hindered the Audit Team from conducting the
necessary verification of the Department’s Inter-
agency payable account balances casting doubt on the
correctness and reliability of the account balances
presented in the FS.
V Accounts Payable 2,054,000.93 No documents available/presented for validation of
COA.
Accounts Payable 27,508,939.20 Documents are with Supply Office but with no DV
yet/incomplete supporting documents.
Accounts Payable 6,357,872.80 CY 2018 unpaid expenses of various schools not
verified by COA due to non-availability of documents.
Due to Officers and 45,963,940.20 Recorded in CY 2017 but with no documents
Employees available.
VII Due to GSIS 20,489,571.53 The figures set-up as payables to the three government
Due to Pag-IBIG 774,700.00 agencies were provided by the Budget Section.
Due to PhilHealth 2,392,520.65 However, unremitted government’s share set up as
payable in the current year has no breakdown.
IX Accounts Payable 49,564,167.56 Balances in CY 2014 and below which are not
supported with list of details.
Due to Officers and 447,041,931.55 Balances as of CY 2017 and below which are not
Employees supported with list of details.
Due to BIR 161,102.66 These accounts include past due balances which are
Due to GSIS 23,611,236.27 not supported with schedules and any other documents
Due to Pag-IBIG 2,813,627.13 to support the figures reflected in the books. This
Due to PhilHealth 1,516,998.76 hindered the Audit Team from conducting the
Due to NGAs 55,615,904.88 necessary verification of the Department’s Inter-
agency payable account balances, casting doubt on the
correctness and reliability of the account balances
presented in the FS.
Due to Central Office 8,715,958.81 Balances as of CY 2014 and below which are not
Due to Operating 357,327.08 supported with list of details.
Units
X Accounts 1,982,950.78 Accounts Payable totalling ₱1,657,646.80 and Due to
Payable/Due to Officers and Employees amounting to ₱325,303.98
Officers and remained unpaid and recognized in the books of the
Employees ROP, Bukidnon National School of Home Industries,
Manolo Fortich NHS for over two years contrary to
DBM Circular Letter No. 2013-16, Section 98 of PD
No. 1445 and Section 37 of the GAM for NGAs,
Volume I, casting doubt on the validity and legality of
claims, likewise rendering the reported account in the
financial statements unreliable.
XIII Accounts Payable 3,116,789.39 For SDO – Bislig City, an amount of ₱3,116,789.39
transactions was included in the Accounts Payable,
however, the non-submission of sufficient evidence of
the claims prevented the Audit Team to determine the
validity and legality of the recorded payables.
Financial Liabilities 21,000.00 An amount of ₱21,000.00 pertains to CY 2017
transactions. However, non-submission of the
SAAODB as of December 31, 2017 by Barobo NHS
resulted in difficulty of determining whether there is
still valid and undisbursed appropriation for the
recorded payables in CY 2017.
Total 1,585,023,693.92
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a) submit the necessary documents to support the recorded payables.

Otherwise, revert to Accumulated Surplus/(Deficit) all claims which
are not supported with sufficient evidence and unclaimed payables for
two years or more and against which no actual claim, administrative or
judicial, has been filed or which is not covered by perfected contracts
on record pursuant to the provision of Section 98 of PD No. 1445;
b) require the Accountant to maintain/update SLs for these payable

accounts to provide the details or breakdown of the balances appearing
in the GL for verification purposes to determine the validity, accuracy
and reliability of the recorded obligations for payment; and
c) prepare the necessary adjusting entries to reflect more accurately the

payable accounts.

NCR Relative to the outstanding Accounts Payable for over one year, the amount of ₱191,000.00 payable
to Subic Holiday Villas was already paid per Check No. 352633 dated January 7, 2019. Payment
of the amount of ₱1,083,217.31 due to MCB Construction and Supply could not be processed due
to existing AOM in the prior years and failure of the said contractor to submit the required
documents.
Out of the ₱64,394,233.38 recorded payables, a total of ₱47,726,536.58 was already adjusted and
paid as of March 14, 2019. Details of the amount paid and its supporting documents will be
forwarded to the Audit Team upon submission of the monthly Check Disbursement Journal and
LDDAP-ADA Disbursements.
II Management of DO Batanes agreed to require the employees with pending claims to provide the
necessary supporting documents.
III Management of SDO of Science City of Muñoz stated that they will do their best to reconcile the
past due Accounts Payable. Moreover, the Management of SDO of Angeles City assured the Audit
Team that they will exert effort in substantiating and ascertaining the validity of the accounts, make
appropriate adjustments on the invalid claims, and to effect the correcting entries to revert all
outstanding balances without valid claims as well as those payables aging two years or more.
Management also assured the Audit Teams of the implementation of the audit recommendations.
The Management of SDO Cabanatuan City commented that the computer which was previously
used for the remittance transaction was reformatted because of virus and no files were saved.
However, they are coordinating with the different agencies such as GSIS, PhilHealth and Pag-IBIG
for the reconciliation. In fact, GSIS had previously forwarded the list of persons who have no
remittances for certain months for their records are not updated. This is being done by the
Administrative Officer V of the Division. Furthermore, the Management will ensure that the SL as
well as supporting documents will be submitted for the payables.
IV-A Management commented that adjustments were made to the Accounts Payable account as shown
in the following JEVs:
Office JEV No. Date

RO 2019-01-01-013 and 2019-01-01-013 January 31, 2019
SDO of Quezon 2019-02-0016 February 7, 2019
109
Management of SDO of Batangas City commented that they were not able to submit the DVs for
the said financial liabilities amounting to ₱28,063,268.50 due to the voluminous transactions and
the very limited time in the preparation of financial reports and their supporting documents.
VI The Bookkeeper of SDO Aklan acknowledged the inaccuracy of recording and committed to make
the adjusting entries in January, 2019. She likewise gave her assurance not to commit such error
again.
The Accountant said she would be dropping off unaccounted and dormant prior years’ accounts
payable this year due to the required inventory of payables by the DBM. She added that those
Contractors or Payees on the list will be sent with letters reminding or informing them of their
accounts and should they be able to submit the required documents, funds will be requested from
the DBM. Otherwise, their claim will no longer be included in the final list of active payable
accounts.
IX The Regional Accountant promised to adhere to the audit recommendations.
X ROP:
Management continued to validate whether or not the obligations found in the List of Due and
Demandable Obligations (FAR No. 3) were actually delivered/rendered/completed and properly
accepted so that necessary adjustments would be effected if the said obligations were found not in
order.
Upon validation, in February 2019, obligations amounting to ₱502, 518.61 were found to be invalid
or without actual delivery/claimants and were reverted per JEV No. 01-2019-02-00621 dated
February 28, 2019 in compliance with the recommendation of the COA Office in the same AOM.
Rest assured that liabilities are recognized only at the actual delivery/rendition of goods and
services/projects so that fair and reliable books of accounts are presented.
Bukidnon National School of Home Industries:
The Bookkeeper will adhere to the recommendation of the Audit Team to revert the long
outstanding Accounts Payable to the Accumulated Surplus account. Moreover, the Accountant will
conduct an account analysis of the Due to Officers and Employees account.
Manolo Fortich National High School:
The Management agreed with the recommendations and the Bookkeeper will make the necessary
adjustments in the books by reverting the amount of ₱35,802.92 and to adjust the financial
statements as of March 2019.
XIII SDO - Bislig City accedes with the recommendation, hence, immediately advised the Accountant
to review and analyze the payable accounts and make necessary corrections, if applicable, and
immediately submit a copy of the adjusting journal entries to the Audit Team for verification.
The Bookkeeper of Barobo NHS acknowledged the observation and asserted that payables for CYs
2017 and 2018 have valid allotments. Yet, for CY 2017 payables, the School failed to request
funding from the DBM in CY 2018.
g) Unreconciled difference between RO and RPSU books – ₱351,871.68
1.49 The financial statements of DepEd CAR Regional Office (RO) showed that the
Agency had Due to GSIS and Due to Pag-IBIG as follows, with comparative
figures for 2017:
Table 16: Inter-agency Payable Account Balances with Comparative Figures for CY 2017
Account 2018 2017 Increase
Due to GSIS 137,913,463.17 109,592,448.30 28,321,014.87
Due to Pag-IBIG 13,775,557.79 13,444,596.24 330,961.55
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1.50 Verification disclosed that the amounts of contributions, premiums, and loan
amortizations deducted from the monthly salaries of employees due to GSIS and
HDMF as recorded in the books of accounts were not the same as the amounts
shown in the records of the RPSU, as presented below:
Table 17: Unreconciled Difference Between RO and RPSU and Books
Deductions
Month Variance
Per Books Per RPSU
GSIS
January 2018 114,127,563.68 114,076,869.87 50,693.81
February 114,894,279.81 114,280,058.37 614,221.44
March 115,192,938.18 115,100,118.19 92,819.99
April 115,676,396.41 115,601,845.86 74,550.55
May 115,884,358.47 115,884,358.47 -
June 116,677,973.25 116,534,098.23 143,875.02
July 116,864,892.64 116,738,422.16 126,470.48
August 117,378,005.87 117,296,733.77 81,272.10
September 118,875,217.01 118,863,624.23 11,592.78
October 120,064,634.81 119,894,883.28 169,751.53
November 121,994,368.05 121,967,906.27 26,461.78
December 123,738,992.07 123,461,209.52 277,782.55
TOTAL 1,411,369,620.25 1,409,700,128.22 1,669,492.03
HDMF
January 2018 6,192,617.45 6,581,785.33 (389,167.88)
February 6,186,927.41 6,542,760.19 (355,832.78)
March 6,128,444.81 6,527,512.69 (399,067.88)
April 6,085,101.52 6,490,979.21 (405,877.69)
May 6,046,374.94 6,458,155.33 (411,780.39)
June 6,037,897.46 5,902,243.86 135,653.60
July 6,023,122.27 5,869,281.53 153,840.74
August 5,860,510.72 5,804,848.25 55,662.47
September 5,919,934.34 5,853,206.06 66,728.28
October 5,917,937.10 5,841,972.48 75,964.62
November 5,898,127.40 5,824,299.12 73,828.28
December 5,970,339.45 5,887,911.17 82,428.28
TOTAL 72,267,334.87 73,584,955.22 (1,317,620.35)
Net Total Variance 351,871.68
1.51 Except for May 2018, in the case of GSIS, variances between the above records
existed. This meant that journal entries in recording monthly salaries were
erroneous, and that the yearend balances of Due to GSIS and Due to Pag-IBIG
were not reliable.
1.52 We recommended that the Accountant of the RO reconcile the amounts

credited in CY 2018 to Due to GSIS and Due to Pag-IBIG with the RPSU
records, and adjust the accounts accordingly.
h) Overstatement of Due to GSIS account due to over deduction of loan

repayments totaling ₱1,784,281.52
1.53 In DepEd CO, the unremitted balance from regular payroll amounting to
₱1,533,262.50 for CY 2018 still included loan repayments which were deducted
from employees’ salaries despite of the end of loan terms or of the settlement
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thru direct payment by the employees to GSIS. Out of the unremitted balance, a
total of ₱86,551.04 was refunded to various employees, while the remaining
balance of ₱1,446,711.46 is due for refund, pending submission of claims.
Further, the amount of ₱337,570.06 over deductions in CY 2017 were not yet
returned to employees to date, hence, overstating the Due to GSIS account by
an aggregate amount of ₱1,784,281.52. The details of balances due for refund to
employees for CYs 2017 and 2018 are as follows:
Table 18: Details of Balances Due for Refund to Employees for CYs 2017 and 2018
Year Over-deduction Refund Balance
2017 437,167.72 99,597.66 337,570.06
2018 1,533,262.50 86,551.04 1,446,711.46
Total 1,970,430.22 186,148.70 1,784,281.52
1.54 As per inquiry with Personnel Division, the over deduction of loan repayments
was attributed to the lack of records pertaining to the terms of loans availed by
DepEd-CO employees prior to CY 2017. Moreover, it is noted that the Personnel
Division did not adopt control measures to address the existence of over
deduction. For instance, it could have performed reconciliation of its remittances
with the monthly billings of GSIS from its Electronic Billing and Collection
System (eBCS).
1.55 We reiterated our previous year’s audit recommendation that the

Management require the Accountant to:
a) reconcile the prepared monthly remitting files with the monthly billing
of GSIS for loan repayments to minimize or avoid over deductions from
employees’ salaries of the fully paid loans; and
b) reclassify the balance of ₱1,784,281.52 in the Due to GSIS account for

the over deducted loan repayments in CYs 2017 and 2018 to Due to
Officers and Employees account and refund at once the amounts due
to employees.
COMPLIANCE AUDIT
Unauthorized maintenance of bank accounts, retention of various collections, transfer of

unutilized/excess Notices of Cash Allocation (NCAs) or Notices of Transfer of Allocation
(NTAs) to Cash in Bank – LCCA – ₱4,205,667,608.51
2. Unauthorized maintenance of bank accounts, retention of various collections and

transfer of unutilized/excess NCAs or NTAs to Cash in Bank – LCCA without
legal authority in the total amount of ₱4,205,667,608.51, which remained
unremitted to the National Treasury were noted, contrary to existing laws, rules
and regulations.
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2.1 The General Provisions of RA No. 10964 or the GAA for FY 2018 provides the
following pertinent rules and regulations:
Section 4 – Receipts or Revenues Collected by Agencies. As a general rule, all

fees, charges, assessments, and other receipts or revenues collected by
departments, bureaus and offices of the National Government, including
Constitutional Offices enjoying fiscal autonomy in the exercise of their
mandated functions, at such rates as are now or may be approved by the
appropriate approving authority shall be deposited with the National Treasury
as income of the General Fund pursuant to Section 44, Chapter 5, Book VI of
Executive Order (EO) No. 292, s. 1987 and Section 65 of PD No. 1445.
Section 10 – Reversion, Closure, and Transfer of Balances of Special Accounts,

Fiduciary or Trust Funds, Revolving Funds and Unauthorized Accounts.
Departments, bureaus, offices, and instrumentalities of the National
Government, including Constitutional Offices enjoying fiscal autonomy and
State Universities and Colleges (SUCs) are mandated to close and revert all
balances of Special Accounts, Fiduciary or Trust Funds, and Revolving Funds
to the General Fund in any of the following instances: (i) when there is no legal
basis for its creation; (ii) when their terms have expired; or (iii) when they are
no longer necessary for the attainment of the purposes for which said funds were
established.
Section 12 – Conduct of Seminar, Conference, Training, and Oath Taking

Programs. Department, bureaus, offices, and instrumentalities of the National
Government, including Constitutional Offices enjoying fiscal autonomy which
conduct training program in relation to their mandated functions are authorized
to collect seminar, conference, training, and oath taking fees from government
and private agency participants.
The proceeds derived from each seminar, conference, training and oath-taking
activities shall be deposited with the National Treasury as income of the General
Fund pursuant to Section 44, Chapter 5, Book VI of EO No. 292; However, the
agencies which do not have appropriations in their budgets for the purpose may
use the proceeds for the conduct of the said seminar, conference, training, and
oath taking activities subject to budgeting, accounting and auditing rules and
regulations. Any excess proceeds shall be deposited with the National Treasury
as income of the General Fund.
2.2 Section 5.5.1 of the Department of Finance - Department of Budget and

Management - Commission on Audit (DOF-DBM-COA) Joint Circular No. 4-
2012 dated September 11, 2012 provides that the Permanent Committee shall
require the immediate transfer to the National Treasury of the cash balances of
unauthorized accounts as defined in Item 3.3 maintained with Authorized
Government Depository Banks (AGDBs) and other banks. For those bank
accounts which are authorized under existing laws including dormant accounts
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as defined under Item 3.2, the Permanent Committee shall evaluate their legal
bases to determine if their continuing existence is still necessary and make a
recommendation to the President for the purpose.
2.3 Audit of the Cash accounts revealed that bank accounts in the AGDBs are being
maintained without specific authority nor legal basis, defying the pertinent
provisions of law, rules and regulations. Details of the unauthorized accounts
maintained by the aforesaid DepEd offices and its corresponding year-end
balance are shown below:
Table 19: Summary of Unremitted Collections/Unutilized/Excess NCAs or NTAs

Office/
Region
CO and NCR In DepEd OSEC, NCR-ROP and ten SDOs, including its IUs, 27 bank 2,505,195,571.91
accounts in LBP are being maintained without specific authority nor
legal basis.
NCR Unauthorized retention of various collections amounting to 90,989,019.93
₱53,022,666.53 million and deposits for various DepEd Programs
amounting to ₱37,966,353.40.
Transfer of unutilized/excess NCAs or NTAs from the MDS account, 1,558,149,143.67
which should have been remitted to the BTr. This pertains to allocations
for the unimplemented programs/activities and unsettled obligations of
PS and MOOE for the current and previous year/s.
III Three SDOs in RO No. III included excess/unexpended prior years’ fund 3,374,544.74
transfers, net proceeds from sale of bid documents, refunds of unutilized
cash advances and other income without legal authority to be maintained
under the LCCA accounts and remained unremitted to the National
Treasury.
IV-A (SDO Cash in Bank, LCCA pertains to receipt of Typhoon Yolanda 107,313.83
Tanauan City) Presidential Social Fund (PSF) Assistance for the former SDS of
Tanauan City.
IV-A, VI Dormant account balances of one Division in RO No. VI and ROP in 37,031,574.49
RO No. IV-A remained idle.
VI (SDO Excess balances of the proceeds of collections from seminar and 1,435,734.35
Aklan) conference fees after the payment of all expenses for such activities
IX Fund transfers to Regional Education Learning Centers (RELC) were 9,384,705.59
used in the payments of various activities/programs
undertaken/completed under ROP.
Total 4,205,667,608.51
2.4 These funds, including the unremitted collections, are retained in unauthorized
current accounts as standby funds and are kept available at their disposal. Thus,
exposing it to risk of misuse or misappropriation as the fund could possibly be
used to augment the financial requirements of un-programmed activities and/or
settlement of invalid obligations. The retention of funds in an unauthorized
account in the bank not only run contrary to its governing rules and regulations,
but also deprived the government of the use thereof to finance its other priority
programs.
2.5 We recommended that the Management secure authority from the

Permanent Committee to maintain the current accounts which are
considered extremely essential in the operations of the Agency. Otherwise,
close the unauthorized current accounts; and remit the remaining balances
114
to the BTr, pursuant to Section 10, General Provisions of the GAA for FY
2018.
2.6 Management gave their respective comments:
Office/
Region
CO Management submitted the following relevant documents:
• OR No. 5193556 dated April 8, 2019 – taking up the partial remittance of deposits
under the OSEC Trust LBP Account for collection of sales of bid docs,
performance security/bond, donation and other miscellaneous income; and
• Letter to the Department Manager/Branch Head LBP-Pasig Capitol Branch
requesting for the closure of the six dormant accounts of the Department.
The remaining trust accounts per Books are continuously under review by the Accounting
Division to determine the legality of its existence, and assured their compliance with the
recommendations.
NCR The Management expressed its intent to make representation with the DepEd CO for its
request to maintain the Trust Account due to the following reasons: (1) facilitate the Auto-
Debit – BIR Electronic Filing and Payment Scheme (EFPS) for remittances not covered by
Tax Remittance Advice (TRA) as in the case of NCAs releases gross of the appropriate taxes
and other taxes withheld from disbursements of collections which the agency has authority
to use; (2) transfer of fund corresponding to the taxes withheld not covered by the TRA from
the MDS Account; (3) deposit allotted funds for the retention of payable which can only be
paid to contractors/suppliers upon satisfying all the terms and conditions as specified in the
contract. Moreover, one SDO submitted the approved disbursement vouchers and validated
deposit slips for the remittance of the unutilized fund of CY 2018 amounting to
₱4,584,073.58 and the balance of SY 2017-2018 SBFP fund to the BTr amounting to
₱4,383,186.46.
Office of the Undersecretary for Administration (OUA) Memorandum No. 08-0119-0068

dated January 15, 2019 and Senate and the House of Representatives Joint Resolution No.
03 dated December 26, 2018 were also presented. Both issuances were authorizing the
utilization of the remaining funds of the FY 2018 SBFP for the conduct of feeding and other
related SBFP activities from January to March 2019.
III Management of Malolos commented that the excess receipts amounting to ₱143,042.89
were already deposited to the BTr per check no. 809022 dated February 22, 2019. However,
the financial assistance from the Provincial Government of Bulacan totaling ₱350,000.00
was requested to be used for a similar activity and Management is now awaiting the approval
from the Provincial Governor for the utilization of such amount. While RO in Nueva Ecija
commented that the SDOs will remit the excess funds upon disbursements of the non-
dormant accounts included in the LCCA.
IV-A The financial assistance to former Schools Division Superintendent was already issued last
February 21, 2019. Trust Fund current account shall be opened for proceeds of bid
documents fee and honoraria would be paid to members of Bids and Awards Committee
(BAC) upon completion of supporting documents. Other receipts would be remitted to BTr
in March 2019.
VI They are still verifying records to establish if the funds remaining have no pending
transactions. If determined with certainty that the remaining balance is unnecessary, this
Office will comply with the recommendation and will remit the cash balance of the account
to the BTr.
IX The Management has submitted the Analysis and composition of cash and cash equivalent
of RELC funds as of December 31, 2018 and requested that remittance of unutilized
balances to the BTr shall be deferred until December, 2019 to give time for the concerned
Program Coordinators to submit claims/payables pertaining to their activities/programs
implemented/conducted but were not yet settled.
115
Collections not deposited intact – ₱64,524,457.20
3. Collections amounting to ₱64,524,457.20 under the account Cash-Collecting

Officer were not deposited intact, contrary to Section 69 of PD No. 1445 and
Section 32, Chapter 2 of the Revised Cash Examination Manual.
3.1 Section 69 of PD No. 1445 states that “Deposit of national collections intact to
the Treasury. – Public officers authorized to receive and collect moneys arising
from taxes, revenues or receipts of any kind shall remit or deposit intact the full
amounts so received and collected by them to the treasury of the agency
concerned and credited to the particular accounts to which the said money
belong.”
3.2 Corollary thereto, Section 32, Chapter 2 of the Revised Cash Examination
Manual, provides that “All COs shall deposit intact all their collections, as well
as collections turned over to them by sub-collectors/tellers, with authorized
government depository bank (AGDB) daily or not later than the next banking
day. Where collections are minimal and daily deposit thereof becomes costly
and impractical, the COs shall deposit their collections at least once a week, or
as soon as the collections reach ₱10,000.00. xxx” (Underscoring ours)
3.3 Collections received by the Collecting Officers of NCR-ROP and Regional

Office Nos. IV-A, IV-B, VIII, IX, X and XII were not deposited intact and on a
daily basis, with delays ranging from one to 73 days. Details are as follows:
Region Amount
NCR-ROP 2,660,188.33
IV-A 61,146,259.27
IV-B Not indicated
VIII Not indicated
IX 689,809.60
X Not indicated
XII 28,200.00
Total 64,524,457.20
3.4 Collections that are not deposited intact and within the prescribed period are
exposed to possible theft or loss or misappropriation.
3.5 We recommended and the Management agreed to require the Collecting

Officers to deposit all collections daily and intact, pursuant to paragraphs
1 and 4, Section 69 of PD No. 1445 to avoid possible theft/loss/
misappropriation of government funds.
3.6 The Management provided the following comments:
Office/ Office/
Region SDO
NCR ROP As regards the collections not deposited intact and on a daily basis,
Management reasoned out that: (1) Cash Section personnel’s attendance to
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Office/ Office/
Region SDO
various seminars; (2) availability of office vehicle; and (3) lack of
manpower. Moreover, Management explained that the causes on the
delayed submission of Report of Collection and Deposit (RCD) were the
preparation and reproduction of supporting documents, increase in the
volume of collections, and the ISO process and document preparation.
IV-A SDO The collections were not deposited daily due to the lack of personnel
Batangas assigned in the Cash Section and due to voluminous transactions. Also,
Province signage pertaining to the entry of unauthorized persons on the Cashier
and Bauan Office’s front door had already been posted.
Technical
HS
IX ROP The Regional Accountant has justified that memoranda have been issued to
the concerned AO dated January 3, 2018 and July 4, 2018 reminding her to
deposit all her collections intact as required. Additionally, he submitted a
certified list of undeposited collections in the total amount of ₱773,724.33
as of December 31, 2018 and of the amount deposits made was
₱728,278.18 from January, 2019 to February, 2019.
X SDO The collections were not deposited intact due to the following reasons:
Malaybalay Registration Fees collected from various trainings were made through cash
City and check payments. Not all checks were accepted by the banks and were
returned to the AO due to the non-updating of specimen signature of the
concerned School Heads. However, some School Heads cannot
immediately be contacted due to their distant location. It would usually take
days for the School Head and co-signatory to proceed to the bank for the
updating of their specimen signatures.
Per plantilla item, the Cashiering Section only consists of one

Administrative Officer IV/Cashier and Administrative Aide VI, hence, it is
understood that the Cashier shall perform both as Disbursing and
Collecting Officer. This matter shall be communicated to DepEd CO for
their preferential attention.
Non-preparation/Delayed Submission of Monthly BRS
4. Monthly BRS of DepEd CO and ten ROPs were either not prepared or delayed in
the submission ranging from 12 days to 11 months as required under Section 74,
PD No. 1445 and Sections 5 and 6, Chapter 21 of the GAM for NGAs, Volume I.
Likewise, other deficiencies were noted in the handling and reporting of cash
accountabilities.
4.1 Sound internal control on cash requires prompt and correct recording and
reporting of transactions to ensure that financial information are reliable,
accurate and reported within the given accounting period. Likewise, to
strengthen internal control, the maintenance of SL is a requirement to check the
accuracy of the controlling asset account in the GL.
4.2 Section 74 of PD No. 1445 states that at the close of each month, depositories
shall report to the agency head, in such form as he may direct, the condition of
the agency account standing on their books. The head of the agency shall see to
it that reconciliation is made between the balance shown in the reports and the
balance found in the books of the agency.
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4.3 Sections 5 and 6, Chapter 21 of the GAM for NGAs, Volume I provide that the
Chief Accountant shall submit the BRS within 20 days after receipt of the
monthly BRS to the COA Auditor with all the supporting documents and JEVs.
Also, the Chief Accountant shall prepare a JEV to recognize all reconciling
items that require adjustment and correction in the books of accounts.
4.4 Audit disclosed that the Accountants/Bookkeepers failed to regularly prepare

and submit the monthly reconciliation of cash account balances per books and
per bank, thus, hindered the process of determining the accuracy and reliability
of the account Cash in Bank accounts. Details are shown below:
Table 20: Observations on Non-submission/Preparation or Delayed Submission of BRS

Office/
Audit Observations
Region
CO Delayed submission of BRS ranging from 12 to 133 days beyond the 20-day prescribed period of
submission at the end of each month
NCR ROP and ten SDOs
• Accountants/bookkeepers did not regularly prepare and submit the monthly BRS which affected
the timely reconciliation of the books and bank balances
II ROP, SDO Cagayan and SDO Isabela, and ten Implementing Units (IUs)
• Non-preparation of BRS by the Accounting Unit
IV-A SDO Quezon Province
• Non-preparation/submission of BRS for the period January to December 2018
IV-B ROP and SDOs Marinduque, Romblon, Oriental Mindoro and one IU
• Late preparation of BRS
V SDO Camarines Sur
• The Division Accountant submitted BRS for its MDS accounts for the months of January 2018
to July 2018. BRS for the months of August 2018 to December 2018 were not prepared and
submitted to the Audit Team. No BRS for the four current accounts for CY 2018 were prepared
and submitted
VI ROP and several SDOs
• Delayed submission of BRS in various months of CY 2018
VII Several SDOs
• Delayed/non-submission of BRS, and supporting schedules were noted in the ROP and several
Divisions
X SDOs Camiguin and Bukidnon NHS
• Late/non-preparation and submission of BRS ranging from four to 11 months
XI ROP and some of its SDOs
• Delayed submission of BRS on time
XII SDOs Cotabato City, Cotabato Province and Sarangani
• Late/Non-preparation and submission of BRS for various months in CY 2018
a) avail of the LBP’s online facility to immediately view and print the
Agency’s bank statements; and
b) comply with the prescribed period of preparation and submission of

the BRS, duly supported with the required documents, for the
Management to take corrective actions in case of errors and for the
Audit Team to perform timely verification thereof. Impose appropriate
legal/administrative sanctions on employees who unjustifiably fail to
prepare and submit the BRS on time.
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4.6 The Management gave their respective comments:
Office/ Office/
Region SDO
CO OSEC The Management sent letters thru electronic mail addressed to Regional and Division
Accountants concerned on the submission of the validated deposit slip and other
documents to support such deposits in the trust account. However, still waiting for
these documents which will serve as their bases for proper recording in the books.
IV-A SDO Iloilo The non-submission of BRS on time was due to the delayed receipts of bank
City statements from the servicing banks.
V SDO Per inquiry with the Accounting Division staff, the late transmittal by the bank
Camarines statements caused the delayed preparation of the BRS.
Sur
VI SDO Roxas All of concerned National High Schools (NHSs) have already submitted their BRS
City except for Tanque NHS & Dumolog NHS.
Antique Delayed submission was due to delayed acquiring of bank statements. Management
Vocational instructed the Bookkeeper to obtain month-end balances online or thru the eMDS of
School the LBP.
Buhang NHS The delay is due to the late receipt of the Bank Statements. Our copy was received
only on the first week of January 2019, thus causing delay in our submission. BRS
from September to December 2018 were already submitted by the Bookkeeper.
SDO Antique Seven out of 13 NHSs have partially submitted the lacking bank reconciliation
statements for CY 2018.
VII ROP The BRS for CY 2019 was already in conformity with the prescribed form in the
GAM. The ROP enrolled its DBP account in the online banking while that of LBP’s
is still in process. Another reason for the delay in submission of BRS is the securing
of signature from the different Heads of Offices. The bank accounts for Social
Expenditure Management Project (SEMP) and EPIP funds with zero and P10,000.00
maintaining balance, respectively, were already closed. The P10,000.00 was remitted
to the CO.
ECOTECH The scope of work of the Task Force previously created to address the audit findings
Center for the Receivables accounts was already expanded to include all other findings about
the financial records of the Center. The Center is also in the process of:
• Hiring another staff member for the Accounting Section to be able to comply
with the audit recommendations as soon as possible and to avoid the recurrence
of audit observations such as unbalanced books of accounts;
• Acquiring accounting software to make the bookkeeping processes efficient and
compliant with accounting standards and government regulations.
SDO Talisay The Accountant had submitted the CY 2018 BRS for all funds.
City
SDO Negros The Accountant explained that the Bank Statements that come right from
Oriental Development Bank of the Philippines (DBP) Main Office in Manila arrived late and
sometimes will not reach our office. The Office shall request from DBP Dumaguete
Branch for a printed copy of the Bank Statement. As of March 31, 2019, BRS were
already submitted on time.
SDO BRS up to December 2018 were already prepared and submitted last February 8,
Dumaguete 2019. The following concerns were raised: 1. Delayed receipt of the monthly Bank
City Statement (hardcopy) from our government servicing bank (DBP), 2. Password
issues on the (February) electronic Bank Statement, and 3. A fee of ₱100.00 is
collected if we ask for a printed copy of the Bank Statement.
VIII RTPM – We await the receipt of the Statement of Accounts from the Bank. Presently, we
Science High received advice from the bank that we can now access the Statement of Accounts
School through email.
XII SDO The Management already enrolled in the Online Banking service of the LBP, and
Cotabato will comply with the provisions on record keeping and reconciliation of accounts.
City – Datu
Siang NHS
SDO The school administration admitted the lapses committed for the reason that they are
Cotabato not knowledgeable of the GAM. They assured that the Finance Unit of the school
City – will religiously comply with the guidelines, and will try their best to do the right
manners in accounting. Since CY 2018, we submitted application for enrollment for
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Office/ Office/
Region SDO
J. Marquez online banking, and lately submitted another application for the compliance with
NHS online banking. They will do their best to have the access this second quarter.
Other Procedural and Internal Control Lapses
4.7 Items 8 and 1.8 of the Handbook on Cash Management and Control System
provide for the safeguarding of government resources against loss or wastage
which include the provision of safe and other facilities to ensure protection of
cash and unused accountable forms, as well as unused checks and other
documents.
4.8 Moreover, COA Circular No. 2012-001 dated June 14, 2012 prescribes the
Revised Guidelines and Documentary Requirements for Common Government
Transactions. Item 5 on the general requirements for all types of disbursements
requires sufficient and relevant documents to establish validity of claims.
Required records to be prepared and maintained by the AOs are prescribed under
the GAM for NGAs, Volume II.
4.9 Several deficiencies were noted in the handling and reporting of cash
accountabilities. Details are as follows:
Region Deficiencies
Delay in the submission of reports
NCR Delay/non-submission of RCD. Said reports together with the duplicate copies of the Official
Receipts (ORs) were missing. Only photocopies of the ORs, as temporary copies, were provided
to the Audit Team.
Incomplete supporting documents
NCR Debit and credit memoranda and other relevant supporting documents were not attached to the
BRS and JEV to warrant the validity of the reconciling/adjusting entries with a total net amount
of ₱21,004,211.16.
III Unliquidated and unreplenished Petty Cash Fund (PCF) due to failure of AO to provide complete
supporting documents.
VII Supporting documents for unrecorded deposits was merely photocopy of the deposit slips. A
summary of the unrecorded deposits should also be prepared to support what is presented in the
BRS.
VIII Receipts/collections of SDO Biliran, Eladio T. Balite Memorial School of Fisheries and Naval
School of Fisheries from various sources were not supported with ORs.
Expenses paid from the PCF of SDO Northern Samar and Catubig Valley NHS were not supported
with complete documentation.
Deficient maintenance of records/forms
III Cashbooks and other financial records were not regularly updated; other employees were allowed
to sign ORs.
VII Applied Nutrition Center and ECOTECH Center
• No individual SL was maintained for each bank account resulting in an unaccounted
discrepancy between the GL and SL balances
ROP and Applied Nutrition Center
• Failure to use the forms for the RCD and BRS prescribed in the GAM for NGAs, Volume
II.
VIII Non-maintenance of the required cashbooks/Cash Disbursement Report (CDR) and record for
X Cash in Bank transactions, as well as the prescribed forms/records of PCF.
X Report of Accountability for Accountable Forms (RAAF) was not submitted monthly; and non-
inclusion of LDDAP-ADA forms in the RAAF.
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Region Deficiencies
57 stubs of ORs were left in the stockroom of the Supply Office, which are supposed to be
issued/distributed to concerned AO.
Inadequate safeguard of cash
IV-A Unauthorized personnel other than the Cashier and staff had access to the Cashier’s room.
VIII Non-provision of separate room including safety deposit boxes/locked drawers to protect the
money, accountable forms and other properties.
X No proper turnover of cash and cash items, and accountable forms from the outgoing to the
incoming Accountable Officer.
Unaccounted collections for a period of 13 days where the cash were left to the custody of the
bank teller during system downtime on October 30, 2018 and were validated only on November
12, 2018.
Non-submission of cancelled checks as an attachment to the Report of Checks Issued
XII Collection of dormitory fees from the operation of Regional Educator’s Learning Center was done
by an unbonded personnel, with no assignment or office order.
Other deficiencies
NCR Unaccounted deposits as at yearend totaling ₱21,038,068.51 were debited to Cash in Bank-LCCA
and credited to Due from Operating Units accounts without appropriately identifying the name of
the depositors and the nature of the deposits
4.10 All of the foregoing lapses and deficiencies caused difficulty in the verification
of the details of transactions and likewise, are indicative of weak internal control
system over government resources. As an asset most susceptible to risk, strict
internal controls for cash should be taken with utmost attention.
4.11 We recommended that the Management require the concerned Offices to:
a) submit to the Auditor all the required supporting documents and

maintain necessary accounting records;
b) provide the Cashier/Disbursing Officer with lock and/or safety deposit

boxes/locked drawers to protect the money, accountable forms and
other properties under his/her possession from risks of loss or misuse;
and
c) henceforth, ensure that disbursements are duly supported with the

required documentations.
Office/ Office/
Region SDO
VIII Catubig It was committed that corrective actions shall be taken by complying with the exact
Valley and complete documentary attachments to the PCF disbursements.
NHS
X SDO The incoming Accountable Officer was able to issue receipts despite the fact that the
Valencia outgoing AO was not yet cleared because the fidelity bond of the outgoing AO was
City already expired.
The overlapping of receipts issued by the AOs is due to changes in the accounts for
collection. Since trust fund account is subject for closure, the receipts assigned were
merged with BTr. They were not able to identify directly the overlapping of receipts
issued.
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Office/ Office/
Region SDO
They purchased Official Receipts before in bulk order being in hundreds and storage
of the same was a problem during that time, so those were stored in the Supply Office.
Accounting and control of the ORs were not observed, only when they are requested
from the Supply Office that they are being logged and controlled as to whom certain
stubs of ORs were being issued to.
XII ROP The ROP is now processing the designation of Marissa G. Rosal, Administrative
Officer I of the Cash Administrative Division as an alternate Collecting Officer of the
NEAP operations in General Santos City and consequently recommended for her
bond.
Unliquidated Fund Transfers - Due from NGAs, Local Government Units (LGUs),
Government-Owned and Controlled Corporations (GOCCs) and Non-Government
Organizations (NGOs) - ₱1,971,217,268.71
5. Fund transfers to NGAs, LGUs, GOCCs and NGOs for the implementation of
various projects/programs with an aggregate amount of ₱1,971,217,268.71
remained unliquidated as at December 31, 2018, contrary to COA Circular Nos.
94-013, 2007-001 and 2016-005 dated December 13, 1994, October 25, 2007,
December 19, 2016, respectively. Thus, resulting in the accumulation of long
outstanding/dormant Inter-Agency Receivables and from NGOs.
5.1 Section 4.6 of COA Circular No. 94-013 dated December 13, 1994 provides that
“Within 10 (ten) days after the end of each month/end of agreed period for the
project, the Implementing Agency (IA) shall submit the Report of Checks Issued
(RCI) and the Report of Disbursement (ROD) to report the utilization of funds,
after which the Source Agency (SA) shall draw a Journal Vouchers to take up
the reports.”
5.2 Paragraph 6.4 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.”
5.3 COA Circular No. 2007-001 dated October 25, 2007, amending COA Circular
No. 96-003 dated February 27, 1996, states that:
i. Section 5.3 - The signing officials of the Government Organizations

(GO) to the Memorandum of Agreement (MOA) shall cause close
monitoring and inspection of project implementation and verification
of financial records and reports of the Non-Government Organizations
(NGO) and shall ensure compliance with the provisions of the MOA
and the Circular.
ii. Section 5.4 - Within 60 days after completion of the project, the
NGO/PO shall submit the final fund utilization report certified by its
Accountant and approved by its President/Chairman of the GO,
together with the inspection report and certificate of project completion
rendered/issued by the GO authorized representative. List of
122
beneficiaries with their acceptance/acknowledgement of the
project/funds/goods/services received. The validity of these documents
shall be verified by the internal auditor or equivalent official of the GO
and shall be the basis of the GO in recording the fund utilization in its
books of accounts. These documents shall support the liquidation of
funds granted to the LGUs/NGOs/POs.
5.4 COA Circular No. 2016-005 dated December 9, 2016, on Guidelines and
Procedures on the Write-off of Dormant Receivable Accounts, Unliquidated
Cash Advances, and Fund Transfers of NGAs, LGUs and GOCCs, prescribes
the following:
• Dormant Unliquidated Fund Transfers refer to advances granted by the source

entity to implementing entity for the implementation of programs/projects
which remained non-moving for ten years or more and where settlement could
no longer be ascertained.
• Write-off of Dormant Accounts is the process of derecognizing the asset

account and the corresponding allowance for impairment from the books of
accounts and transferring the same to the Registry of Accounts Written Off
(RAWO). This does not mean condoning/extinguishing the obligation of the
accountable officer/debtor.
• This Circular shall not cover the write-off of loans and advances of
Government Financial Institutions which are governed by pertinent
provisions of the General Banking Act.
• Likewise, it shall not cover the following:
➢ Receivables arising from disallowances and charges;

➢ Receivables arising from cash shortages; and
➢ Claims from entities' officers and employees and other parties for
transactions which are the subject of a pending case in court or before
investigative authorities.
• The Head of the government entity shall file the request for authority to write-
off dormant receivable accounts, unliquidated cash advances, and fund
transfers to the COA Audit Team Leader (ATL) and/or Supervising Auditor
(SA). No filing fee is required.
• The request shall be supported by the following documents:
a. Schedule of dormant accounts by accountable officer/debtor/government

entity and by account, certified by the accountant and approved by the
Head of the government entity;
123
b. Certified relevant documents validating the existence of the conditions, as
applicable (ten items were mentioned in the Circular to support the request
for write-off).
Central Office – ₱1,969,006,869.11
5.5 Out of the ₱2,026,006,869.11 transfers made by the DepEd CO to other

government agencies and non-government organizations, the amount of
₱57,000,000.00 pertains to Inter-Agency Receivable accounts aged below one
year, whereas the amount of ₱1,853,734,591.21 refer to those aged from one
year to ten years, while the amount of ₱115,272,277.90 remained dormant for
ten years or more. Details are as follows:
Table 21: Aging of Inter-Agency Receivables
Current Prior
Name and
Outstanding Year Years
Address of
Balance 1 year 1-5 6-10 10 years
Debtor
below years years or more
Due from 380,055,973.44 57,000,000.00 198,409,229.93 55,060,783.61 69,585,959.90
NGAs*
Due from 373,525,649.00 372,093,000.00 649.00 1,432,000.00
GOCC
Due from 47,459,786.35 28,169,715.41 9,290,070.94 10,000,000.00
LGUs
Due from 1,224,965,460.32 1,190,711,142.32 34,254,318.00
NGOs/POs
Total Balance 2,026,006,869.11 57,000,000.00 1,789,383,087.66 64,351,503.55 115,272,277.90
Grand Total 57,000,000.00 1,853,734,591.21 115,272,277.90
*Excluding long outstanding fund transfers to DBM-PS of ₱7,526,513,595.06.
a) Due from NGAs
5.6 The aging schedule for Due from NGAs, except DBM-PS, accounts of DepEd
CO with, outstanding balance of ₱380,055,973.44 pertains to the following
agencies, to wit:
Table 22: Aging Schedule for Due from NGAs

Per Subsidiary Current
Ledger/ Outstanding Year Prior Years
Implementing Balance 1 year
Over 1-5 years 6-10 years 10 years or more
Agency below
DPWH 48,157,947.46 18,606,907.61 29,551,039.85
DENR 8,245,764.22 8,245,764.22
DND 914,346.15 914,346.15
NADESCOM 5,445,000.00 5,445,000.00
RO-TRANSFER 32,250,275.73 1,119,988.00 31,130,287.73
TESDA 29,888,888.00 29,888,888.00
DSWD 217,163,465.71 27,000,000.00 190,163,465.71
NHCP 30,000,000.00 30,000,000.00
EDPITAF 7,990,286.17 7,990,286.17
Total 380,055,973.44 57,000,000.00 198,409,229.93 55,060,783.61 69,585,959.90
Grand Total 57,000,000.00 253,470,013.54 69,585,959.90
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5.7 Fund transfers made to the foregoing NGAs in the total amount of
₱310,470,013.54 aged below one year to ten years (₱57,000,000.00 and
₱253,470,013.54) were intended for the following programs/projects:
Implementing
Amount Purpose of the Transfer Remarks
Agency
Department of 27,000,000.00 To cover operating costs until Supplemental MOA was issued for the
Social Welfare December 31, 2018 for the release of additional funds to DSWD.
and construction of Indigenous Peoples
Development (IPs) classroom.
(DSWD)
National 30,000,000.00 For the restoration of Gabaldon Transferred to the Agency on October
Historical Bldg. in Burobud ES, Sorsogon City 1, 2018.
Commission of and Bahay na Bato in Prudencia D.
the Philippines Fule Memorial National High
(NHCP) School, San Pablo City.
Sub-total 57,000,000.00
Department of 18,606,907.61 Pertains to school building
Public Works construction which also includes
and Highways regional transfers to ARMM as this
(DPWH) is part of the Regular School
Building Program (RSBP) wherein
the said project shall be spearheaded
by DPWH.
Department of 8,245,764.22 Includes Surveying and Titling of The transfer made to DENR on April
Environment and School Sites of Region Nos. I, II, III, 8, 2014 amounting to ₱15,000,000.00
Natural IV-A, and V. still has a remaining balance of
Resources ₱3,245,764.22. Moreover, no
(DENR) liquidation was submitted on the
₱5,000,000.00 transferred on August
24, 2016.
National 5,445,000.00 Pertains to fund transfer to the 2nd The amount of ₱5,445,000.00
Development District of Bohol for the transferred to NADESCOM had
Support Requirement of Basic Education remained unliquidated in the books
Command Facilities. although the agency was reportedly
(NADESCOM) abolished in May 2012. There was no
information or report that reached this
Office on the management action taken
to address this problem, and to whom
or what office the required settlement
shall be demanded.
RO 1,119,988.00 Financial Assistance to cover
TRANSFER- Maintenance and Other Operating
Autonomous Expenses of various schools in
Region in ARMM.
Muslim
Mindanao
(ARMM)
Technical 29,888,888.00 Pertains to the Alternative Learning The agreement between DepEd and
Education and System Cum Madrasah Education TESDA shall be for a duration of ten
Skills for Muslim Out-of-School Youth years, effective upon signing; and may
Development (OSYS) program which covers be extended upon mutual agreement of
Authority Technical and Vocational Education the parties. However, TESDA had not
(TESDA) and Training (TVET) with ALIVE submitted to DepEd any progress
(Arabic Language and Islamic report and liquidation of expenses
Values Education). incurred from the project funds during
the nine years project implementation
covering the School Years from 2009-
2018 as of to date, contrary to Article
IV of the agreement, which demands
125
Implementing
Amount Purpose of the Transfer Remarks
Agency
TESDA to submit the required reports
and account the project funds every
school year.
DSWD 190,163,465.71 For the construction of 605 The initial allocation of cost and the
classrooms in Region Nos. IX, X, XI, grant given to DSWD amounted to
XII, and XIII for Indigenous Peoples ₱500,000,000.00. A Supplemental
communities. MOA was issued for the release of
additional funds to DSWD amounting
to ₱20,500,000.00 to cover the
operating costs until December 31,
2017 and additional funds of
₱27,000,000.00 to cover operating
costs until December 31, 2018,
because of the delay in the program
implementation. However, said
amount remained unliquidated as of
date.
Sub-total 253,470,013.54
Grand Total 310,470,013.54
5.8 On the other hand, the aging schedule for the Due from NGAs accounts with
long outstanding balance of ₱69,585,959.90 aged ten years or more pertains to
the following agencies/offices, to wit:
Implementing
Amount Particulars
Agencies
DPWH 29,551,039.85 Pertains to school building construction which also includes regional transfers to
Autonomous Region of Muslim Mindanao (ARMM), as this is part of the Regular
School Building Program (RSBP) spearheaded by DPWH.
DND 914,346.15 Fund Transfer for the Rehabilitation of schools in Mindanao which represents the
two percent remaining balance from the fund transfers made in CY 2010.
RO- 31,130,287.73 Financial Assistance to cover Maintenance and other Operating Expenses of
TRANSFER various schools in ARMM.
EDPITAF 7,990,286.17 Consists of completed projects and transfers made to NEAP for training fees in
the implementation of Capacity Building for Trainers in the Bicol and CARAGA
regions.
Total 69,585,959.90
a-1) Due from NGAs– DBM – PS
▪ CO, NCR, Regional Office Nos. I, and IV-B - ₱6,435,967,226.38
5.9 Advances to the DBM - Procurement Service (PS), recorded under the Due
from NGAs account, by the CO and three regions included past
due/dormant balances totaling ₱6,435,967,226.38, thus affecting efficient
program delivery and leaving a huge amount of funds idle in the account of
DBM-PS.
5.10 The transfer of funds by DepEd CO and three regions to the DBM-PS without
closely monitoring the liquidations and timely delivery of procured items
resulted in the accumulation of long outstanding balance of ₱6,435,967,226.38.
Details are as follows:
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Office/
Region
CO 6,429,677,306.63 The Due from NGAs account showed a total book balance of
₱7,906,569,568.50 as of December 31, 2018 of which 95 per cent
or the amount of ₱7,510,568,508.17 pertains to balance of
prepayments/fund transfers made to DBM-PS. Out of the
₱7,510,568,508.17 outstanding balance, only 14 per cent or
₱1,080,891,201.54 pertains to the current year, while the 86 per
cent or ₱6,429,677,306.63 balance pertains to prior years' fund
transfers.
NCR 1,839,264.03 The Due from NGAs account of ROP includes prior years’
unliquidated fund transfers to the DBM-PS amounting to
₱747,614.95 for the procurement of office supplies. At SDO
Quezon City, excess payments/advances to DBM-PS from CYs
2008-2018 which have accumulated to ₱1,091,649.08 were not
yet refunded and/or applied to succeeding Agency Procurement
Request (APR).
I 1,333,938.81 Transfer of funds made to DBM-PS which remained outstanding
in the books.
IV-B 3,116,716.91 The balance of ₱2,706,435.44 represents excess payments to
DBM-PS for the procurement of various Information and
Technology equipment, and cost of undelivered office equipment
and pre-school furniture.
Total 6,435,967,226.38
b) Due from GOCCs
5.11 The Due from GOCCs as of December 31, 2018 showed a total balance of
₱373,525,649.00 which included the amount of ₱372,093,000.00 transferred to
the Development Academy of the Philippines (DAP) for the Intensified Abot
Alam Program (IAAP). The implementation is anchored on integrating the
education and skills training components into one program for learners, which
is expected to increase their interest in participating and completing the program.
The amounts transferred were made in July 2017 and December 2017 but no
settlement was yet recognized to comply with the monthly report of utilization
requirement prescribed in the MOA.
5.12 While the remaining Due from GOCCs account balance in the amount of
₱1,432,000.00 pertains to advances made to the LBP for the Techvoc Daily
Subsistence Allowance for the training conducted by DepEd and TESDA on
May 21, 2007, and June 8, 2007, which had been outstanding/dormant for more
than ten years.
c) Due from LGUs
5.13 The Due from LGUs account showed a balance of ₱47,459,786.35 as of

December 31, 2018 included transferred funds to 30 local government units
totaling ₱37,459,786.35 wherein 25 percent of the accounts or ₱9,290,070.94
remained long outstanding from six to ten years; while 75 percent or
₱28,169,715.41 were outstanding accounts from over one to five years, the
details of which are presented in the following table.
127
Table 23: Aging Schedule for Due from LGUs
Aging of Outstanding PY
Name and Address
No. PY Balances Balance
of Debtor
Over 1-5 years 6-10 years
1 Municipality of Sta. Barbara 2,040.00 2,040.00
Pangasinan
2 Province of Bohol 61,904.80 61,904.80
3 Provincial Government of Surigao 433,422.00 433,422.00
Del Norte
4 Provincial Government of Quezon 8,149,811.06 8,149,811.06
5 City Government of Ligao 293,955.75 293,955.75
6 Provincial Government of Bohol 263,600.00 263,600.00
7 City Government of Iligan 19,763.58 19,763.58
8 Provincial Government of Camarines 65,573.75 65,573.75
Sur
9 Municipality of Tigbauan 1,315,850.00 1,315,850.00
10 Municipality of Agoo, La Union 386,655.50 386,655.50
11 Antipolo City 1,500,000.00 1,500,000.00
12 Bayugan City 1,500,000.00 1,500,000.00
13 Pasay City 1,500,000.00 1,500,000.00
14 Municipality of Bacnotan 1,500,000.00 1,500,000.00
15 Municipality of Lupi 1,500,000.00 1,500,000.00
16 Tagum City 1,500,000.00 1,500,000.00
17 Municipality of Tanay 276,334.91 276,334.91
18 City of Balanga 1,500,000.00 1,500,000.00
19 Municipality of Marilao 1,500,000.00 1,500,000.00
20 Municipality of Daet 1,500,000.00 1,500,000.00
21 Butuan City 1,500,000.00 1,500,000.00
22 Tagaytay City 1,500,000.00 1,500,000.00
23 General Santos City 506,725.00 506,725.00
24 Municipality of Laoac 1,500,000.00 1,500,000.00
25 Municipality of Tubungan 184,150.00 184,150.00
26 Naga City 1,500,000.00 1,500,000.00
27 Cagayan De Oro City 1,500,000.00 1,500,000.00
28 Baguio City 1,500,000.00 1,500,000.00
29 Municipality of Natividad 1,500,000.00 1,500,000.00
30 Municipality of Plaridel Bulacan 1,500,000.00 1,500,000.00
Total 37,459,786.35 28,169,715.41 9,290,070.94
Percentage 100 75 25
5.14 The unliquidated balance of ₱9,290,070.94 represents the constructed and

completed classroom/school buildings of the abovementioned LGUs which
were recipients of the "School Building Program” of the Department, while the
unliquidated amount of ₱28,169,715.41 was the financial assistance granted to
the recipient LGUs in March to May 2017 for the implementation and
improvement of initiated literacy programs and projects under the Intensified
Abot Alam Program.
5.15 The dormant Due from LGUs account balance as of December 31, 2018
amounting to ₱10,000,000.00 was the fund transfer granted to the City of Puerto
Princesa which was intended for the repair and rehabilitation of various school
buildings in School Years (SYs) 2008-2009, but was disallowed in audit,
because the funds were used in MIMAROPA Meet and Palarong Pambansa CY
2008.
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d) Due from NGOs/POs
5.16 The account Due from NGOs/POs as of December 31, 2018 showed a total
balance of ₱1,224,965,460.32, of which, the amount of ₱1,190,711,142.32 was
fund transfer to United Nations Development Programme (UNDP) for the sole
purpose of implementing the project of procurement and delivery for and in
behalf of DepEd. Based on the report last year, the UNDP already liquidated 57
percent of the fund transfer; thus, 43 percent or ₱1,190,711,142.32 remained
outstanding to date.
5.17 The account Due from NGOs/POs as of December 31, 2018, with a total balance
of ₱34,254,318.00 aged ten years or more, pertains to the following NGOs:
Table 24: Aging Schedule for Due from NGOs/POs

Outstanding Year No. of Years
No. NGO
Balance Granted Dormant
1 Buklod ng Pagkakaisa ng Bacood 711,000.00 1996 22
2 Philippine Rural Reconstruction Movement 1,200,000.00 1996 22
(PRRM)
3 Cahriba Foundation, Los Baños 139,305.00 1996 22
4 Quest Foundation 6,000,000.00 1999 19
5 Foundation for Upgrading the Std. of 3,250,000.00 2000 18
Education
6 Tagipusuon Foundation 8,171,000.00 2001 17
7 National Anti-Poverty Commission 18,013.00 2000 18
8 Creative Education Exponents & Developers 330,000.00 2005 13
9 YMCA Open Education Development 2,800,000.00 2006 12
Foundation, Inc.
10 Fil. Chinese Chamber of Commerce and 135,000.00 2008 10
Industry
11 Philippine Federation of Teachers and 11,500,000.00 1997 21
Employees Cooperatives (PFTEC)
Total 34,254,318.00
5.18 As can be gleaned from the previous table, the unliquidated amounts were prior
years long outstanding accounts of NGOs/foundations aging from ten to 22
years.
5.19 The carried forward dormant accounts affected the reliability of the account
balances presented in the financial statements. It appeared that the actions taken
by Management such as follow-up or demand letters for these long overdue
accounts were still inadequate because these remain unsettled for years, casting
doubts on the collectability of the reported receivable balances.
5.20 The accumulation of the unliquidated fund transfers merely demonstrated the
Management’s laxity in the observance of rules and regulations regarding the
fund transfers made by the DepEd. Also, it showed leniency/negligence in
performing its responsibility of closely monitoring and demanding the
immediate submission of liquidation or fund utilization report from the
respective implementing agencies.
129
▪ RO No. IV-B - ₱2,210,399.60
5.21 Likewise, the deficiencies aforementioned are also subsisting in other ROs, to
wit:
RO/ Affected
Amount Remarks
SDO Account
Region Due from 1,800,118.13 Non-moving from one to 13 years receivable from LGUs
IV-B- LGUs which has no supporting documents to substantiate the
SDO of claim.
Romblon
The lack of effort by the Division of Romblon to locate
the records of the uncollected receivable especially the
Memorandum of Agreement on the Third Elementary
Education Project (TEEP) wherein various LGUs served
as their counter parts and the failure to frequently send
follow-up letters resulted in the non-moving receivable of
the SDO of ₱1,800,118.13.
Region Due from 410,281.47 Long-outstanding receivable for more than ten years.
IV-B- NGAs
SDO of
Oriental
Mindoro
Total 2,210,399.60
a) coordinate with the concerned Implementing Agencies to demand the

submission of Liquidation Reports/Report of Disbursements on
transferred funds for completed programs/projects for proper
recording;
b) validate the status of all unliquidated fund transfers and take

appropriate action to demand immediate liquidation, or take
appropriate legal processes to demand compliance with the MOA; and
c) initiate the request for the write-off of the inter-agency and other
receivables that remained non-moving for ten years or more in the
books pursuant to COA Circular No. 2016 - 005 dated December 19,
2016.
5.23 The Management comments are as follows:
Office /
Region
CO The Management usually sends demand letters on semi-annual/yearly basis to NGAs and
LGUs with unliquidated transfer of funds. There are instances that these agencies/entities
for certain degree, submit liquidation reports on a progress basis and other choose to
provide full account and documentation of their advances after completion of the project
which, justifiably, may take several months to complete/finish, especially if such are the
structure covered by the MOA or Memorandum of Understanding (MOU), as the case,
maybe.
130
Office /
Region
The Management will closely coordinate with these agencies and other partners of DepEd
in implementing the major programs/projects of the Department, and demand that fund
transfer held in their trust and disposition be fully liquidated and properly accounted for.
The Management will take note of the recommendation of the COA Audit Team regarding
the Guidelines of the proper Disposition/Closure of Dormant Account funds/or Accounts
of the NGAs/GOCCs/LGUs/NGOs/POs, especially so, since they have taken the initial
step in requesting authority to write-off the long outstanding cash advances.
NCR The Management of ROP, SDOs Makati and Valenzuela asserted that unutilized fund
transfers to DBM-PS will either be used for new purchase by issuing new APR or
requested for refund to be remitted to the BTr.
The Management of SDO Mandaluyong commented that its Accountant already reflected
the ₱19,999.90 in its books. They will try to work back and reconcile the amounts and if
possible, request the write-off for the dormant accounts.
I The Division Accountant of SDO Dagupan City attempted to secure records from the ROP
but his efforts proved futile as other Division Accountants had experienced. Nevertheless,
he again ensured his compliance once he got the chance and possibility to access related
records and reports with proper authority from the SDO and ROP.
In Pangasinan II, they are having difficulty in producing the detailed reports of cancelled
checks comprising amounts of personal and government shares to GSIS, Pag-IBIG,
PhilHealth, BIR and other Lending Insurance Companies for the reason that practically all
of the documents and records of the Accounting Unit were devastated by floodwaters from
calamities (Typhoons, etc.) of previous years (2009, 2013 and 2014). Unfortunately, these
flooded documents pertain to the balances of Due from Regional Office and Due from
NGAs.
IV-B The ROP commented that a request for reconciliation with the Accounting Division of
DBM-PS has already been made last May 19, 2016, but such request was not granted.
Instead, a SOA was given. The SDO will try again to request for a reconciliation to solve
this matter. The Division Accountant of Oriental Mindoro explained that they have
retrieved the previous years’ accounting files and found no breakdown/details of subject
receivables. In response to the audit recommendations, the Management shall initially
inquire from former Division Accountant, in writing, the details of dormant receivables or
obtain certification in case of absence of any pertinent information and documents.
Thereafter, they shall request from COA for an authority to write-off the dormant accounts.
The Management of SDO Romblon is in the process of retrieving the MOA for them to
request for the write-off of the receivables and communications to the borrowers were also
sent.
Past Due/Dormant/Unsubstantiated Receivables
6. Inadequate monitoring and control of receivables in 11 DepEd ROs resulted in

the accumulation of past due/dormant accounts with an aggregate indicative
amount of ₱103,309,608.51; and absence of SLs and/or inadequate supporting
documents, casting doubt on the propriety and validity of the transactions posted
in the Receivables accounts.
6.1 Administrative Order (AO) No. 279 prescribes the rules and regulations for the
establishment and administration of a Provident Fund of agencies which shall
be available to employees for emergency needs, school and educational loans,
hospitalization loans, and loans for minor but immediate repair of houses and
other similar circumstances.
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6.2 Several Past due/dormant receivables totaling ₱103,309,608.51 were noted in
11 ROs, as summarized in the table below:
Table 25: Past Due/Dormant Account Balances

Due from
Loans Due from Due from Receivables-
Accounts Officers Other
Receivable- Regional Central Disallowances/
Region Receivable and Receivables Total
Others Office Office Charges
Employees
(1) (2) (3) (4) (5) (6) (7)
NCR 3,935,160.76 19,999.90 3,955,160.66
I 19,636,585.45 23,591,788.42 2,532,393.24 424,160.47 46,184,927.58
II 19,808,520.82 19,808,520.82
III 10,715,911.06 10,715,911.06
IV-A 3,164,173.65 45,715.27 3,209,888.92
IV-B 267,138.08 388,889.63 656,027.71
V 2,191,242.36 366,000.00 2,557,242.36
VI 26,101.00 1,360,947.57 1,387,048.57
VII 4,929,280.20 159,767.63 5,089,047.83
X 7,631,472.39 128,880.95 7,760,353.34
XIII 1,985,479.66 1,985,479.66
Total 65,400,523.47 23,591,788.42 4,929,280.20 4,327,261.76 2,532,393.24 1,360,947.57 1,167,413.85 103,309,608.51
6.3 Audit of aforementioned past due/dormant Receivable accounts revealed the

following deficiencies by account:
Office/Region Audit Observations

(1) Loans Receivable-Others
The Loans Receivable-Others account in SDOs Candon City, San Carlos City and Alaminos City
I had overdue/delinquent balances totaling ₱19,636,585.45. It pertains to loans granted to active,
transferred and retired employees which were not settled for three to 19 years.
The Loans Receivable-Others account of SDOs Ilagan City and Isabela had a balance of
₱10,731,847.10 and ₱49,674,190.80, respectively. From the said balances, ₱2,375,693.49 or 22.14
II percent and ₱17,432,827.33 or 35.32 percent were already past due. Included in the past due
accounts are loans with an aggregate balance of ₱1,235,626.30 from 57 employees who were
already retired, resigned and transferred.
In eight SDOs, 693 loan accounts with a balance of ₱10,715,911.06 were reported as delinquent.
III The unpaid balance has been outstanding for some years and no concrete action was done to collect
the receivables.
A total of ₱3,164,173.65 loan receivables is past due for more than 1 to 17 years and are due from
borrowers who were either deceased, retired or transferred to other government agencies. The co-
IV-A
makers were not notified by the Provident Fund Secretariat to assume the balance when the
principal borrower defaulted in payment.
Loans receivables from retired, resigned, inactive, Absence Without Leave (AWOL) or deceased
IV-B employees in SDO Romblon amounting to ₱388,889.63 had been outstanding for one to 13 years
due to the SDO’s failure to adopt adequate and strict measures to collect the amounts due.
As of July 31, 2018, the Loans Receivable account showed a balance of ₱5,270,285.90. Of the said
amount, ₱3,079,043.54 or 58 percent is in active status while ₱2,191,242.36 or 42 percent has been
V
dormant/non-moving for more than one to 15 years now. These long overdue accounts/uncollected
loans pertain to deceased, retired, resigned, transferred and AWOL borrowers.
SDOs Misamis Oriental and Valencia City have loans receivable totaling ₱7,631,472.42 which
X remained outstanding for one to 12 years. From the said amount, receivables amounting to
₱853,232.06 had no information as to when the said loans were granted.
A total of ₱1,985,479.66 of loans was past due in the records of ROP and SDOs Agusan del Sur
and Butuan City, of which, ₱1,846,958.49 are due from deceased/resigned/ retired/transferred
XIII employees. It was observed in SDO Butuan City that officers and employees were granted
additional loans without deducting the balance of their previous loans out of the renewal loan
proceeds.
(2) Due from Regional Office
In SDO Ilocos Norte, the Due from Regional Office account balance of ₱6,970,441.51 had been
I
dormant and was not reconciled due to non-maintenance by the Accounting Unit of the required
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SLs. In SDO Dagupan City, the Due from Regional Office account balance of ₱1,627,062.87 had
been existing in the books for the past 14 years and were never settled while in SDO Pangasinan
II, the Due from Regional Office account with a balance of ₱14,994,284.04 pertains to cancelled
checks that were funded by the SDO and transferred to the ROP for the net salaries and wages
including personal and government shares of GSIS, HDMF/Pag-IBIG and PhilHealth contributions
and for the payment of loans/premiums to private lending or insurance companies. The said
receivables remained outstanding in the books for more than four years to over 14 years. The
Accounting Unit informed the Audit Team that a large chunk of the documentary files and records
were devastated by floods in CYs 2009, 2013 and 2014.
(3) Accounts Receivable
Collectibles from clients who availed of the services and facilities of the DepEd Ecotech Center
amounting to ₱4,929,280.20 recorded under the Accounts Receivable account has been outstanding
VII
for more than one year. The balance accumulated and remained unsettled due to the Management’s
laxity in requiring the full settlement thereof within the agreed period.
(4) Due from Officers and Employees
In SDO Makati, the Due from Officers and Employees account balance amounting to
NCR ₱3,935,160.76 remained outstanding since CY 2009 or aged ten years as of December 31, 2018.
This indicates that the Management has not instituted any measure to determine the persons liable.
The Due from Officers and Employees account balance of ₱26,101.00 in Iloilo City NHS could
VI not be relied upon because it has been outstanding for more than five years and records of the
account were not available.
(5) Due from Central Office
In SDO Ilocos Norte, the Due from CO account balance of ₱1,411,282.95 has been dormant and
was not reconciled due to non-maintenance by the Accounting Unit of the required SLs while in
SDO Pangasinan II, the Due from CO account with a balance of ₱1,121,110.29 pertains to over-
I remittance of fund transfers of Provident Fund to DepEd CO. The said receivables remained
outstanding in the books for more than four years to over 14 years. The Accounting Unit informed
the Audit Team that a large chunk of the documentary files and records were devastated by floods
in CYs 2009, 2013 and 2014.
(6) Receivables-Disallowances/Charges
In SDO Mandaluyong City, the balance of Other Receivables account in the amount of ₱19,999.90
had been dormant for more than nine years. When asked about the details, the Accountant could
NCR
not provide the same to the Audit Team. She just said that the account was already closed and that
the fund was used in special project, proving that the balance was doubtful in existence.
Other Receivables account balance amounting to ₱45,715.27 pertains to overpayment of salaries
IV-A since CY 2013 to five employees who were already resigned and whose whereabouts were either
abroad or unknown, hence, collectability of the same could not be ascertained.
Other Receivables account balance of ₱388,889.63 in SDO Oriental Mindoro had been outstanding
IV-B
for more than ten years.
The Other Receivable account had dormant balances aggregating ₱128,880.95 since CY 2013 or
X
five years.
(7) Other Receivables
The Receivables-Disallowance/Charges of SDO Iloilo City with a balance of ₱1,360,947.57 could
VI
not be relied upon as it had been unsettled for more than five years.
Other Receivables account included ₱46,883.63 which represents returned check dated April 26,
2007 issued by a contractor to DepEd Ecotech Center for the payment of electric consumption
incurred by the former during the construction of a two-storey dormitel within the Center’s
compound. Inquiry disclosed that the Management could no longer locate or contact the contractor.
VII
While the amount of ₱112,884.00 pertains to unpaid balance from the services rendered by the
Center to a company client way back in CY 2010. The Management found out that the said
company has closed. Efforts were exerted by the Management to collect the amount due from the
debtors but have become futile, hence, collectability thereof could not be ascertained.
6.4 Lack of sufficient documents and SL in support of the transactions recorded in

the Receivables account was likewise observed, details of which are shown in
the following table:
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Table 26: Unsubstantiated Receivables Transactions
I Dormant Inter Agency – Receivable accounts were not reconciled due to the non-maintenance by
the Accounting Unit of the required Inter Agency - Receivable Subsidiary Ledgers (SLs) as required
in Appendix 6 – Instructions, GAM, Volume II, rendering unreliable the balances of the accounts.
II The Due from Operating Units account amounting to ₱142,308,260.73 as of December 31, 2018 is
not supported with SLs and not duly accounted for.
III The accuracy and validity of the Due from Regional Office year-end account balance of
₱29,982,248.70 in eight SDOs could not be ascertained because of the absence of supporting
documents, contrary to Section 111 of PD No. 1445.
IV-A Other Receivables account under the Regular Agency Fund of SDO Tanauan City in the total
amount of ₱45,715.27 are from payees of unknown whereabouts. The said account balance is of
doubtful validity due to inadequacy of supporting documents, contrary to Sections 2 and 111 of PD
No. 1445, posing risk of possible loss of government funds if not collected within the soonest time
possible.
IV-B The outstanding receivables from DBM-PS in the books of the ROP amounting to ₱2,173,600.00
resulted from the absence of documents to support the claim of DBM-PS that delivery of pre-school
furniture has already been made in settlement of the receivables. Per agency records, the pre-school
furniture were not delivered by DBM-PS. To that effect, the Accounting Unit of the ROP could not
draw adjusting/correcting entry without documents to prove the settlement of the receivables from
DBM-PS.
The Other Receivables account balance of ₱388,889.63 in SDO Oriental Mindoro was not
substantiated with documents.
VII The accuracy and validity of the Other Receivables account balance of ₱99,329.24 could not be
ascertained due to non-submission of schedules in support thereof.
Receivables amounting to ₱460.71 recorded under the Other Receivables account in DepEd Ecotech
Center could not be accounted due to the absence of documents in support thereof.
XIII In SDO Butuan City, the lump sum amount of ₱14,162,728.42 was recorded as current loans
receivable, which is of doubtful validity due to the absence of supporting documents to prove that
the portion or the said amount was not yet past due. While in SDO Agusan del Norte, previous
personnel assigned in the preparation of financial report on Provident Fund did not maintain SLs
for each borrower which rendered it difficult to trace the causes of discrepancy when it occurs.
Further, retiring borrowers were neither required to pay their outstanding loan balances in full nor
issue a notarized promissory note stating that the outstanding loan balance shall be paid in full upon
receipt of their retirement/terminal leave benefits. Similarly, resigning and transferring employees
were not required to secure clearance from money and property accountability resulting in
accumulation of loans receivable balances which could have been made available to other borrowers
had the defaulting borrowers settled their accounts within the terms of their loans.
a) intensify efforts to require the principal borrowers as well as the co-

makers of those who resigned, retired, and deceased to pay the unpaid
balance of their loans. In case of continuous default in the payment of
loans, seek assistance for the enforcement of legal remedies in the
collection of dormant and long outstanding receivables and for the
filing of appropriate charges without prejudice to the negligent officers
and delinquent borrowers;
b) direct the Accounting Unit of the concerned DepEd Offices to properly

maintain SLs and other relevant monitoring records, and secure
supporting documents in order to fully account the balances of the
receivables and to enforce the settlement thereof; and
134
c) analyze and request for write-off those dormant accounts which could
no longer be collected pursuant to COA Circular No. 2016 - 005 dated
December 19, 2016.
Office/
Region
NCR The Management of SDO Mandaluyong commented that its Accountant already reflected the
₱19,999.90 in its books. They will try to work back and reconcile the amounts and if possible,
request the write-off for the dormant accounts.
I The Division Accountant of SDO Dagupan City attempted to secure records from the ROP but his
efforts proved futile as other Division Accountants had experienced. Nevertheless, he again
assured his compliance once he got the chance to access related records and reports with proper
authority from the SDO and ROP.
During the exit conference in SDO San Carlos City, the OIC-SDS informed the Audit Team that
she had already directed the AO V and the Accountant III to update the list of those who have an
outstanding loan balance in the Provident Fund and to issue demand letters to notify the delinquent
borrowers and/or co-makers in compliance with the audit recommendations.
In Pangasinan II, they are having difficulty in producing the detailed reports of cancelled checks
comprising amounts of personal and government shares to GSIS, Pag-IBIG, PhilHealth, BIR and
other Lending Insurance Companies for the reason that practically all of the documents and records
of the Accounting Unit were devastated by floodwaters from calamities (typhoons, etc.) of CYs
2009, 2013 and 2014. Unfortunately, these flooded documents pertain to the balances of Due from
Regional Office and Due from NGAs.
II The Management of SDO Ilagan City instructed the person in-charge in preparing Aging Report
to update the schedule and reconcile with the Accountant. While the Management of SDO Isabela
explained that they do not allow loans to those with net take home pay below the prescribed amount
in cases of emergency. The late posting of payments was due to the lack of manpower in the
Accounting Unit to complete such task. However, the Accounting Unit will be able to comply with
the recommendation starting this CY 2019 with the coming of their new staff.
The Audit Team, however, recommended that SDO Isabela to require additional documents like
medical certificate or any written document to justify the immediate need of loan and to strictly
follow up payments of loan through issuance of demand letters. The Accounting Unit was also
required and agreed to submit an aging of the Loans Receivable by March 2019.
III Actions have been taken to improve monitoring and collection of Provident Fund loans receivable
including the verification of accounts, the reasons for delinquency and the preparation of action
plan to collect and resolve delinquent accounts regionwide. Two workshops were held in CY 2018
to primarily act and discuss issues and concerns of RO and its IUs on Provident Fund account.
Statements of Accounts (SOA) were sent to verify and validate existing loans. Some loan
borrowers may go directly to SDOs without informing the ROP. There is a proposed move to
transfer Provident Fund loan records to ROP and effort will be intensified for the reconciliation of
records between the IUs and the ROP.
Moreover, the Management of SDO Science City of Muñoz stated that during the year-end
financial statements consolidation held at Lubao, Pampanga on January 15-17, 2019, one of the
accounts being reconciled was the Due to and Due from Regional Office accounts wherein the
Regional Accountant said that they are nearing the settlement and hopefully can eliminate it once
reconciliation is already done. As regards locating of documents, the Management stated that
records have already been destroyed due to some fortuitous events. On the other hand, the
Management of SDO Angeles City communicated that according to RPSU, GSIS will no longer
offset them as they were already credited to the accounts of the personnel. As of this date, the SDO
had not received instruction from the ROP as to what action they will take. Nevertheless, the
Agency committed that they will take extra effort to have the list and complete supporting
documents.
IV-A The SDS of SDOs of Batangas Province, Batangas City and Lipa City agreed to follow the audit
recommendations.
135
Office/
Region
The Management of SDO San Pablo City raised their concern regarding the unavailability of
sufficient records. They commented that in CY 2014, the old SDO building where the loan records
were located was razed by fire. The only available information that can be retrieved is the SL for
Loans Receivable containing the names of borrowers. All other data were not available. They
further commented that the Division Accountant acknowledged the audit recommendations.
According to him, the SDO is currently establishing the process on the enforcement of collections
of delinquent accounts.
Moreover, the Management commented that the Other Receivables were actually the balance after
they had deducted the overpayments from the last salaries and benefits of the resigned personnel.
Also, the Division Administrative Office has been aware of these receivables since the certificates
of last payment and computation of overpayment of salaries from the ROP passed to SDO
Tanauan. They had issued Order of Payment to these personnel but unfortunately, they did not
secure clearance before separation from the SDO. Demand letters from the SDO’s Legal Officer
for these personnel could help the SDO towards the collection of those receivables.
The Management of ROP commented that diligent effort has been made to locate the document
but to no avail as records of the Office were heavily damaged by flood brought by the heavy rains
during the onslaught of Typhoon Ondoy on September 26, 2009. They attached several documents
to support the explanation such as: (1) Decision of COA granting relief of accountability; (2)
Certificate of Disposal of Records for Damaged Documents thru the National Archives; and (3)
Certification from COA that the records for the period from CYs 1999-2009 became useless due
to Typhoon Ondoy, hence, it should be disposed.
The Audit Team, however, averred that the Disbursement Vouchers pertaining to the loan’s
receivable were not included in the list of documents that were requested for relief from
accountability since the date of cash advance was April 1, 2009 while the covering period of DVs
being requested were from CYs 1999 - 2007.
IV-B The ROP commented that a request for reconciliation with the Accounting Division of DBM-PS
has already been made on May 19, 2016, but such request was not granted. Instead, a SOA was
given. The SDO will try again to request for a reconciliation to solve this matter. The Division
Accountant of Oriental Mindoro explained that they have retrieved the previous years’ accounting
files and found no breakdown/details of subject receivables. The Management shall initially
inquire from the former Division Accountant, in writing, the details of dormant receivables or
obtain certification in case of absence of any pertinent information and documents. Thereafter,
they shall request from COA for an authority to write-off the dormant accounts. The Management
of SDO Romblon is in the process of retrieving the MOA for them to request for the write-off of
the receivables and communications to the borrowers were also sent.
V The Management agreed to comply with the recommendations made by the Audit Team.
VI The Management of SDO Iloilo commented that efforts will be exerted to locate the documents to
substantiate the reported balance of Receivables account. Write-off of dormant accounts will be
requested as soon as it will be proven that collection thereof is no longer probable.
VII The Center created a task force that would focus on locating the difference between the book
balance and the total amount in the Aging Schedule. SLs will be maintained for the receivables
while the Management is still in the process of acquiring an accounting software.
With regard to the collection of receivables, the Center understands that it needs to improve its
existing collection system. A Memorandum was already issued to the personnel at the billing
station reminding them to strictly enforce the stipulations of the contract with the clients. The
Center will also seek legal assistance to collect past due receivables as soon as the reconciliation
is completed and the account balances are established.
Moreover, the Center will send final demand letters not later than March 31, 2019. If efforts to
locate the concerned entities still yield negative result and the collectability of these receivables
become highly doubtful, the Management will recommend the write-off of the account balances.
As to the unlocated difference of ₱460.71, it will be looked into when the task force conducts the
retrieval and verification of records. When the cause of discrepancy is determined, necessary
adjustments will be made and the COA will be furnished a copy of the adjusting entry.
136
Office/
Region
VIII The Management of SDO Biliran will adhere to the audit recommendation to update the SLs
regularly. Likewise, the Management of SDO Northern Samar committed to submit the needed
reports immediately.
X The Management replied on February 18, 2019 and commented that they have implemented the
CY 2014 recommendations but they have failed to request to have a full-time personnel in-charge
of the Provident Fund account which hinders accurate and timely posting of the unbilled accounts
and regular monitoring thereof. Moreover, a new personnel in-charge was designated for the
account. However, the personnel in-charge during the said period was having a two or three-day
schedule in the field and in the SDO, respectively. Different personnel were handling the accounts
from 2014 to present and no proper turnover was conducted which deterred the collections of past
due accounts. Nevertheless, the Management acknowledged the observations, hence, in
compliance with the audit recommendations, personnel in-charge will be required to work as full-
time employee of the SDO. The SDO will faithfully implement and adhere to the laws and
regulations applicable to financial transaction.
Furthermore, compared to the requirement of DepEd Order No. 12, series of 2004 that a borrower
may opt for a repayment schedule of 12 months up to a maximum period of 60 months in equal
monthly installments, SDO Valencia City is granting only up to three years or 36 months. Such
loans are still considered as current accounts because the deductions of the amortizations are done
monthly through the RPSU. For loans granted before CY 2015 which were approved through and
by the previous head of the Accounting Section, the Management have already sent billings. In
CY 2015, the Accounting Section has exerted efforts to restore the records and to set-up SLs in
order to reconcile the Loans Receivable account balances. Such records were not made by the
previous head of the Accounting Section. It was later on revealed that loans of SDO personnel,
including the previous Division Accountant, were not billed by the RPSU. This has become a basis
for the SDS in filing administrative case against the said officer. The Management confirmed that
before CY 2015, borrowers were granted new loans on which previous loans were not settled or
deducted therefrom.
Loans granted before CY 2015 were already billed by the Accounting Section. Unfortunately,
there were loan balances that were still undeducted from the borrowers in view of his/her net pay.
The Accounting Section only billed the undeducted loans as soon as borrowers have settled their
other obligations or when their net pay could accommodate additional amortization. Currently,
clearances of retiring or resigning employees including employees who are transferring are not
signed if they have unpaid Provident loan balances which was not the case before CY 2015.
Currently, the Management is sending demand letters for long outstanding accounts that are due
and demandable as of December 31, 2018.
XI The Management agreed with the recommendations and assured their implementation.
Inadequate internal control system and dormant/non-moving Inventories
7. The DepEd CO and 13 ROs had not installed adequate internal control in the
system of monitoring, controlling, and recording of inventories prescribed under
Chapter 8 of GAM for NGAs, Volume I. Likewise, unaccounted and
dormant/non-moving amounts totaling ₱48,241,616.19 were included in the
Inventory accounts.
7.1 Section 17, Chapter 8 of the GAM for NGAs, Volume I requires the following
records, forms and reports to be prepared and/or maintained by the Accounting
Division/Unit and Property Division/Unit, to wit:
“Stock Card (SC) (Appendix 58) – shall be used to record all receipts
and issues of supplies and the balance in quantity at any time. It shall
be maintained by the Property and/or Supply Division/Unit for each
137
item in stock. The IAR, RIS, PO and DR serve as the original sources
of information for making entries on the card.
Supplies Ledger Card (SLC) (Appendix 57) – shall be used to record

materials received, issued and the balance both in quantity and amount
at any time. It shall be maintained by the Accounting Division/Unit
for each kind of supplies and materials. The IAR, RIS, RSMI, PO and
DR serve as the original sources of information for making entries on
the card.
Report of Supplies and Materials Issued (RSMI) (Appendix 64) –

shall be prepared by the Property and/or Supply Custodian based on
the RIS and shall be used by the Accounting Division/Unit as basis in
preparing the JEV to record the supplies and materials issued.
Report on the Physical Count of Inventories (RPCI) (Appendix 66) –

shall be used to report the physical count of supplies by type of
inventory as at a given date. It shows the balance of inventory items
per card and per count and shortage/overage, if any. These include the
semi-expendable property wherein the issue is covered by ICS.”
▪ Inadequate internal control system over inventories
7.2 The Division Offices and Implementing Units under their respective ROs failed
to install adequate internal control in the system of monitoring, controlling, and
recording of inventories prescribed under Chapter 8 of GAM for NGAs, Volume
I as follows:
Table 27: ROs Without Inventory Internal Control System
No. of SDOs
Office/ Non-maintenance or Non-preparation/ Late or Non-conduct of
Region Unupdated SLC and SC submission of RSMI Physical Inventory/
Non-submission of RPCI
CO 1
CAR 1
NCR 14 4 13
I 2
II 1 3 1
III 7 2 4
IV-B 1 1 2
V 4 3 3
VI 1 2 1
VII 3 3 4
VIII 2 4 3
X 1 2
XI 1
XIII 2 6
Total 35 24 43
138
▪ Unaccounted and dormant/non-moving amounts totaling ₱48,241,616.19
were included in the Inventory accounts of the following SDOs:
Table 28: Summary of Unaccounted and Dormant Amounts Included in the Inventory accounts
Region SDO Audit Observations Amount
NCR Manila Dormant account balance of Textbooks and Instructional Materials 15,463,442.02
Inventory
Quezon City Existence of non-moving inventories for three to 12 years 31,904,340.72
Caloocan City Unaccounted and non-moving Textbooks and Instructional 208,507.00
Materials Inventory
III ROP Inventory balances of Medical/Dental and Laboratory Supplies for Amount not
Distribution are balances that were forwarded and remained indicated
without movement or dormant for some years in the books of
accounts.
IV-B Romblon Unused/Unissued supplies and materials of the Division of 650,648.45
Romblon of ₱650,648.45 remained non-moving from the previous
year which indicates that the required RSMIs were not being
prepared and submitted regularly by the Supply Office.
X Ozamiz City Other Supplies and Materials Inventory amounting to ₱14,678.00 14,678.00
is unsubstantiated due to nonexistent inventory items and
unrecorded issuances and utilization.
Total 48,241,616.19
7.3 Other Deficiencies were also noted by the Audit Teams that affected the
reliability of Inventory accounts, to wit:
Region SDO Deficiencies Noted
NCR ROP Existence of obsolete inventories totaling ₱17,276.81 and unsubstantiated
reclassification/adjustment of Inventories accounts amounting to ₱808,349.65
Quezon City • The descriptions of some inventory items in the SLs of Office Supplies totaling
₱314,127.96 were vague and not sufficiently described so as to identify them with
particularity, thus recording of succeeding deliveries and issuances of the same
items is hardly done.
• SLs with negative balances in the total amount of ₱590,837.60.
Taguig City Purchases of common use office supplies and materials were recorded in the
and Pateros Inventory accounts, however, recognition of expenses was done at year end and not
when the supplies/materials were issued.
II Batanes The First-in, First Out (FIFO) was used as costing method instead of Weighted
Average Method.
III Nueva Ecija • The RPCI on file contained semi-expendable items totaling ₱2,069,313.55 that
were already issued to different offices of the SDO.
• Failure by the Property Officer to issue Inventory Custodian Slip (ICS) for issued
semi-expendable items.
VII ROP The Office Supplies Inventory worth ₱4,327,566.88 and ₱299,349.80 of Other
Supplies and Materials Inventory, or a total of ₱4,626,916.68 were procured
between CYs 2008 to 2017. These items have been sitting idle in the stock room for
a period of over one year to 10 years, resulting in overstocking. Overstocking of
inventory exposes these items to obsolescence. They decrease storage space which
may be used to store other supplies which are more commonly used.
XI Davao City The Supply Section has not fully complied with the preparation of the ICS with
approved Requisition and Issue Slip (RIS) for the small tangible assets.
a) observe strictly the pertinent provisions of Chapter 8 of the GAM for

NGAs, Volume I, specifically the maintenance and updating of SLCs,
139
SCs and RSMIs, for monitoring and accounting of inventories to
establish the accuracy of the quantity and valuation of inventories;
b) direct the Property Officer to conduct physical count of inventories

semi-annually and submit the RPCI not later than July 31 and January
31 of each year for the first and second semesters, respectively;
c) require the Accountant to verify the cause/s of dormant or non-moving

inventories and take appropriate actions to prevent the increase thereof
in its corresponding Inventory accounts; and
d) require the Accountant and Property Officer to address all other

procedural lapses by strict observance of the rules and regulations on
Inventory as prescribed in Chapter 8 of the GAM for NGAs, Volume I.
Non-compliance with the pertinent rules and regulations with respect to PPE
8. The DepEd-CO and 14 ROs were unable to comply with accounting rules and
regulations in view of the incomplete inventory taking, non-submission of and
insufficient details in RPCPPE for CY 2018, and non-maintenance and/or
unupdated PPELC and PC, absence of property identification tags, and absence
of breakdown of PPE balances and lapsing schedule, contrary to the pertinent
provisions of the GAM for NGAs, Volume I.
8.1 Chapter 10 of the GAM for NGAs, Volume I provides the following:
Section 38. Physical Count of PPE. The entity shall have a periodic
physical count of PPE, which shall be done annually and presented on
the Report on the Physical Count of Property, Plant and Equipment
(RPCPPE) as at December 31 of each year. This shall be submitted to
the Auditor concerned not later than January 31 of the following year.
Equipment found at station and losses discovered during the physical
count shall be reported to the Accounting Division/Unit for proper
accounting/recording.
xxx
Section 42. Accounting and Property Records to be maintained for

PPE. The Chief Accountant shall maintain the PPE Ledger Cards
(PPELC) for each category of PPE xxx. The PPELC shall be kept to
record promptly the acquisition, description, custody, estimated useful
life, depreciation, impairment loss, disposal and other information
about the asset. For check and balance, the Property and Supply
Office/Unit shall likewise maintain Property Cards (PC) for PPE in
their custody to account for the receipt and disposition of the same. The
balance per PC shall be reconciled with PPELC maintained by the
140
Accounting Division/Unit. They shall also be reconciled with other
property records like the PAR.
8.2 Section 111 of PD No. 1445 provides, among others, that the accounts of an
agency shall be kept in such detail as is necessary to meet the need of the agency
and at the same time be adequate to furnish the information needed by fiscal or
control agencies of the government.
8.3 Appendix 73 of the GAM for NGAs, Volume II or the Report on the Physical
Count of Property, Plant and Equipment (RPCPPE) is the prescribed form to be
used in reporting the physical inventory of the PPE.
8.4 Audit and review of the PPE accounts during the year disclosed the following
deficiencies:
Table 29: Deficiencies in PPE accounts

Deficiencies
PPE Without
Office/ Non-conduct/ Unsubmitted/ Absence of/ Absence of/
Property Remarks
Region Incomplete Deficient Unupdated Unupdated
Identification
Inventory Taking RPCPPE PPELC PC
Tag
CO  It was observed that out of 24
PPE accounts, only five were
supported by PPELC. The total
cost of these unsupported PPE
items amounted to ₱38.03
billion.
Likewise, the said lapses

rendered it difficult to properly
account and determine procured
PPEs owned and utilized by
DepEd-OSEC due to non-
maintenance of PPELC by the
Accounting Division.
NCR      Failure of the SDOs to submit
the RPCPPE and PPELC for
CY 2018 on or before January
31, 2019. In addition, seven
SDOs of the RO had lapses in
the maintenance/updating of the
PPELC and PC by the
Accounting and Property
Office, respectively, due to lack
of manpower. Likewise, two
payroll printing machines
totaling ₱845,000.00 have no
corresponding tags.
I     DepEd RO I’s and its SDOs’
PPE aggregating
₱7,812,828,939.73 could not be
ascertained due to the non-
submission of the RPCPPE, the
non-conduct of the annual
physical inventory and the non-
maintenance of PPELCs and
PCs by the Accountants and
141
Deficiencies
PPE Without
Property Remarks
Identification
Tag
Property and Supply Officers,
respectively.
II   The RPCPPE was not submitted
due to the failure to conduct and
complete their respective annual
inventory taking, due to
Management’s laxity in the
creation of a Division
Inspectorate Team to perform
the task.
III     The account balances of PPE of
the RO totaling
₱6,667,783,764.92 were
rendered unreliable due to the
absence of Physical Inventory
of the Reported Assets. In
addition, audit verification
disclosed that the Accounting
and Property Offices failed to
maintain PPELCs and PCs,
respectively.
IV-A    The RO submitted a Masterlist
of PPE owned by the SDOs as
of December 31, 2018,
however, partial compliance as
to the conduct of physical count
of all the buildings, structures
and other facilities, thus resulted
in the non-preparation and
submission of a complete
RPCPPE. Likewise, it was
observed that SDOs’
Accounting Unit does not
maintain PPELC.
IV-B  Errors in recording PPEs in the
books (double recording,
misclassification of accounts
and different amount in the
books and in the RPCPPE) of
the Regional Office in the
amount of ₱433,358.98. and
recorded PPEs in the books of
accounts totaling
₱769,932,881.74 were not
included in the RPCPPE or
Inventory Report of the
Regional Office and the
Divisions of Romblon and
Occidental Mindoro.
V     Failure to conduct actual
physical count of its properties
and to submit the inventory
reports by Divisions of
Camarines Sur, Legazpi City
and Sorsogon City valued at
₱1,633,412,294.47. In addition,
it was observed that the SDO -
142
Deficiencies
PPE Without
Property Remarks
Identification
Tag
Naga City in the reporting of
physical inventory on PPE did
not conform to the format
prescribed under GAM for
NGAs.
VI     SDOs of Roxas City and Passi
City including various NHS
failed to conduct the required
annual physical inventory of
PPE and to prepare the
corresponding RPCPPE, to
ascertain the accuracy of
property records and existence
of assets, totaling
₱376,118,832.86. In addition,
review of the reported PPE
accounts of the following
schools in the Division of Aklan
showed non-conduct of
physical inventory, absence of
inventory reports, property
cards and PPELC rendering the
accounts unreliable.
VII     Inquiry with the Supply Officer
disclosed that physical count of
all PPE accounts was not
conducted due to limited
personnel, hence, no RPCPPE
as of December 31, 2018 was
prepared. The Property and
Supply Section was not able to
maintain updated Property
Cards for all PPE accounts due
to lack of personnel. Likewise,
the Accounting Section wasn’t
able to maintain updated
PPELCs due to the resignation
of the assigned personnel in
September 2018.
VIII     Six SDOs and the ROP were
unable to conduct physical
count of inventory and likewise
was not able to prepare and
submit the required report
thereon.
X     Year-end PPE balance totaling
₱530,959,465.43 of three SDOs
and one IU was not validated
due to the failure to prepare and
submit the RPCPPE and the
failure to conduct a physical
count of properties.
XI   The ROP, three of its SDOs and
its Implementing Units, failed to
conduct a physical count of PPE
for CY 2018. As a consequence,
the RPCPPE was not also
143
Deficiencies
PPE Without
Property Remarks
Identification
Tag
submitted. Thus, the existence
of the reported PPE accounts
amounting to
₱1,437,151,145.64 was not
established.
XII  The ROP and four of its SDOs
were able to conduct physical
count of inventory, however,
they were not able to submit the
required report thereon.
XIII    The SDOs of Dinagat Islands,
Tandag City and Jacinto P. Elpa
NHS were able to conduct
physical count of PPE,
however, the corresponding
reports submitted were
incomplete and not properly
accomplished. In addition, in
SDOs - Agusan del Sur, Surigao
del Norte and Surigao City, we
observed the non-maintenance
of the PPELC and PC, non-
preparation and non-issuance of
PAR to end-users.
8.5 Also, to ensure the correctness of the PPE accounts as reported in the Agency’s
financial statements, the same should reconcile with the physical inventory
report.
8.6 Likewise, most of these observations are reiterations of the previous years’
findings on the PPE accounts. The Management’s inaction to address the noted
discrepancy and failure to comply with the requirements of existing regulations,
particularly the conduct of complete physical inventory and preparation of
RPCPPE exposed the unaccounted government assets to the risk of loss.
Reconciliation of records is of paramount importance to ensure that the PPEs
recorded in the books of the Divisions and Schools actually exist.
8.7 We recommended that the Management direct the concerned officers to

conduct and complete the annual physical count of PPE, maintain and
regularly update PPELC and PC, and conduct regular reconciliation
between Accounting and Property records to facilitate adjustments.
Office/
Region
CO, NCR, Management agreed with the audit recommendations.
II, III, IV-
A, IV-B,
144
Office/
Region
VI, VII, X,
XI, XII
V Management of SDO Iriga City explained that before the Accountant assumed office, there
were no Property Ledgers maintained, thus the Accountant only relied on the turn-over
balances in the Trial Balance, and noted that the Management will adhere to the audit
recommendations.
VIII The Management of SDO Catbalogan City explained that no turnover documents were
presented yet to the division for it to properly book up all its PPE including those School
Buildings built before the division existed. Likewise, what the Accounting maintains was
the PPELC and Construction-in-Progress Ledger Card (CIPLC) of Major Repairs and
Construction of Buildings during the Division’s existence but records of the Supply Office
are yet to be finalized since reconciliation of records with the Division Engineer is yet to be
done.
In addition, for CY 2019, the RO is committed to effect the reconciliation of available

records and the regular submission of physical inventory of PPE by the Supply Officer.
XIII Management of SDO Dinagat Islands commented that there is already a Continuous
Improvement (CI) Project to address this matter. However, due to the unprecedented
resignation of the previous Supply Officer, who was suspended, it was only in October 5,
2018 that the present Supply/Property Officer was designated to perform the functions and
that there were no RPCIs and RPCPPEs turned over by the previous officer. Currently, the
Supply/Property Office practices submitting monthly RSMI to the Accounting Unit as basis
for periodic reconciliation. However, the comprehensive physical count is still a work-in-
progress, especially for those to be conducted in the field. Nevertheless, the Division already
organized an Inventory Committee and the physical count will be scheduled in April 2019.
Unliquidated cash advances - ₱2,737,798,732.74
9. Leniency in the granting, liquidation and monitoring of cash advances resulted

in: (a) accumulated year-end balance of unliquidated cash advances in DepEd CO
and in 15 ROs with an indicative amount of ₱2,737,798,732.74, at least
₱293,341,785.86 of which is aged more than one year and ₱15,252,883.30 of which
is from retired/resigned/transferred/deceased employees of regions NCR, III, IV-
B and V; and (b) other compliance deficiencies which are contrary to existing
COA rules and regulations, and DepEd guidelines relative thereto.
9.1 COA Circular Nos. 97-002 and 2009-002 dated February 10, 1997 and May 18,
2009, respectively, provide the pertinent rules and regulations regarding the
granting, utilization and liquidation of cash advances (CAs), as follows:
a. No additional CA shall be allowed to any official or employee unless the

previous CA given to him is first settled or a proper accounting thereof is
made.
b. A CA shall be reported on as soon as the purpose for which it has been given
has been served.
c. When a CA is no longer needed or has not been used for a period of two
months, it must be returned or refunded immediately to the collecting officer.
145
d. Within sixty (60) days after his return to the Philippines, in the case of official
travel abroad, or within thirty (30) days of his return to his permanent station
in case of official local travel, every official or employee shall render an
account of the cash advance received by him in accordance with existing
applicable rules and regulations.
e. All CAs shall be fully liquidated at the end of each year. Except for Petty
Cash Fund (PCF), the AO shall refund any unexpended balance to the
Cashier/Collecting Officer who will issue the necessary Official Receipt.
f. Failure of the AO to liquidate his cash advance within the prescribed period
shall constitute the withholding of his salary and the imposition of other
sanctions as provided for under the law.
g. Within ten (10) days after receipt of the report and supporting documents from
the AO, the Accountant shall verify the report, record it in the books and
submit the same with all the vouchers/payrolls and supporting documents to
the Auditor. The cash advance shall be considered liquidated upon the
recording thereof by the Accountant in the books of accounts although not yet
audited by the COA auditor.
h. Only permanently appointed officials shall be designated as Disbursing

Officers. Elected officials may be granted a cash advance only for their
official traveling expenses.
i. It shall be the responsibility of the Head of the Agency to ensure the proper
granting/utilization of all cash advances in accordance with all these rules and
regulations.
9.2 Likewise, PD No. 1445 provides the following provisions on CAs:
Section 75. Transfer of government funds from one officer to another shall,
except as allowed by law or regulation, be made only upon prior direction or
authorization, of the Commission or its representative.
Section 77. When government funds or property are transferred from one
accountable officer to another, or from an outgoing officer to his successor, it
shall be done upon properly itemized invoice and receipt which shall invariably
support the clearance to be issued to the relieved or out-going officer, subject to
regulations of the Commission.
Section 89. No cash advance shall be given unless for a legally authorized
specific purpose. A cash advance shall be reported on and liquidated as soon as
the purpose for which it was given has been served. No additional cash advance
shall be allowed to any official or employee unless the previous cash advance
given to him is first settled or a proper accounting thereof is made.
146
9.3 DepEd Order No. 13, s. 2016 dated March 11, 2016 prescribes the Implementing
Guidelines on the Direct Release and Use of Maintenance and Other Operating
Expenses (MOOE) Allocations of Schools, including other Funds Managed by
Schools, which aims to: provide guidance to all public schools on the derivation,
release and the utilization of school MOOE; ensure timely and optimal use of
school resources; and institute mechanisms for transparency and accountability.
Section 12 of the said DepEd Order provides that the elementary and secondary
schools without financial staff shall:
a. Draw cash advance from their supervising/directing SDO for their MOOE
requirements;
b. Submit to the SDO on or before the 5th day of the following month the
original copy of the Cash Disbursement Register (CDR), the paid
Disbursement Vouchers and all supporting documents which shall serve as
liquidation or replenishment of the cash advance granted. Subsequent cash
advance shall be granted only upon receipt of the CDR equivalent to at least
75 percent of the previous cash advance. It is reiterated, however, that any
remaining cash advance at the end of the year must be liquidated in full and
unexpended balances refunded.
9.4 Paragraph 6 of Department Order No. 46 series of 2004 directs, among others,
that heads of elementary schools and secondary schools without financial staff
have to open current accounts in the name of the schools and report to the SDO
for monitoring purposes, if funds are not spent immediately. In no instance shall
school funds be deposited in personal bank accounts.
9.5 As of December 31, 2018, the reported unliquidated balances of cash advances
of DepEd under the specific Advances accounts had accumulated to
₱2,737,798,732.74, details of which are as follows:
Table 30: Breakdown of Specific Advances Account
Cash
Advances to
Advances for Advances to Advances
Office/ Advances for Special
Operating Officers and Without Total
Region Payroll Disbursing
Expenses Employees Specific
Officers
Account Details
CO 3,212,885.52 81,367,172.22 4,331,871.11 88,911,928.85
NCR 365,135,700.52 28,393,169.14 10,383,035.59 110,722,488.17 514,634,393.42
CAR 4,321,857.23 79,164.00 4,401,021.23
I 7,365,235.01 7,365,235.01
II 16,346,120.55 16,346,120.55
III 19,972,842.98 491,483.30 17,244,173.15 819,785.35 38,528,284.78
IV-A 35,579,253.81 22,925,132.67 1,933,180.90 60,437,567.38
IV-B 76,156,063.50 60,000.00 2,367,800.00 1,639,274.70 80,223,138.20
V 184,351,520.29 78,079.39 167,895,672.86 452,113.36 148,557,497.64 501,334,883.54
VI 430,747,189.92 49,568,974.93 59,433,560.57 3,768,736.41 543,518,461.83
VII 433,606,126.62 747,305.20 14,054,951.02 311,376.37 448,719,759.21
VIII 8,911,181.00 30,031.86 47,439.00 821,171.75 602,486.00 10,412,309.61
IX 1,706,528.17 2,624,789.87 4,956,581.91 188,904.82 9,476,804.77
XI 14,852,076.77 130,460.00 1,228,168.48 630,278.85 16,840,984.10
XII 158,630,658.79 1,159,146.99 136,423,912.79 4,158,911.33 300,372,629.90
XIII 96,275,210.36 96,275,210.36
Total 1,729,649,142.37 86,496,326.20 522,649,457.49 127,924,076.22 271,079,730.46 2,737,798,732.74
147
9.6 The unliquidated cash advances shown in the table included unliquidated
balances due from retired/resigned/transferred/deceased former personnel of
regions NCR, III, IV-B, and V in their respective amounts of ₱13,317,199.12,
₱379,073.00, ₱53,992.00, and ₱1,502,619.18 wherein liquidation/settlement of
accounts is doubtful.
9.7 Aging of unliquidated advances in the total amount of ₱1,849,806,937.54 in

DepEd CO and in eight regions revealed that ₱293,341,785.86 had been past
due for over one year and ₱1,556,465,151.68 for 30-365 days, as shown in the
table next page:
Table 31: Aging of Unliquidated Advances

Aging of Advances
Office/Region Total
Current Year Prior Years
CO 48,475,604.69 40,436,324.16 88,911,928.85
NCR 81,904,546.82 78,228,568.32 160,133,115.14
I 6,792,648.82 572,586.19 7,365,235.01
IV-A 59,829,732.52 2,598,234.86 62,427,967.38
IV-B 71,718,266.58 8,504,871.62 80,223,138.20
V 372,681,513.19 76,406,063.96 449,087,577.15
VI 472,043,208.91 71,418,202.92 543,461,411.83
VII 438,422,292.28 10,297,466.93 448,719,759.21
IX 4,597,337.87 4,879,466.90 9,476,804.77
Total 1,556,465,151.68 293,341,785.86 1,849,806,937.54
9.8 The significant amount of unliquidated cash advances is a result of the leniency
of the DepEd in granting, liquidation and monitoring of cash advances, which is
contrary to existing COA rules and regulations, and DepEd guidelines relative
thereto.
9.9 Other common observations noted in the audit of cash advances, categorized by
deficiency, are as follows:
CO, NCR, CAR, I, IV-B, V, VI, Grant of additional cash advances despite non-liquidation of previous cash
VII, VIII, X, XI and XIII advances
CO, NCR, II, III, IV-A, IV-B, VI, Delayed/non-submission of Liquidation Reports (LRs) to the Accounting Division
IX, X, XI, XII and XIII and COA
NCR, I, III, VI, VIII, X, and XII Incomplete documentary requirements in the granting and liquidation of cash
advances
NCR, III, and X Grant of cash advances to personnel without bond
CO, NCR, and X Transfer of cash advances from an AO to another AO/official/personnel
CO and NCR Non-preparation/non-maintenance of required report/records (i.e., SL, CDReg,
etc.)
CO and NCR Cash shortage/overage
CO, VII, and X Delayed processing/recording of LR in the books by the Accounting Division
NCR and CAR Grant of cash advances to an AO of more than his/her maximum accountability
NCR, I, and XII Inappropriate safekeeping procedures for cash accountabilities.
IV-A and X Grant of cash advances of which purpose has already been served
IV-B and XIII Delayed release of MOOE resulted in reimbursement of expenses instead of cash
advance.
V and XII Advances for operating expenses and program funds of elementary schools (ES)
and non-implementing junior high schools (JHS) were deposited to personal bank
accounts of the School Heads.
148
a) enforce strict compliance with the rules and regulations on the

granting, utilization, and liquidation of cash advances, demand
settlement, specifically those pertaining to long outstanding cash
advances, and impose sanctions on erring officials and/or employees
who unjustifiably disregard the aforecited rules and regulations; and
b) request write-off with complete documentation of long outstanding

cash advances, of which, settlement is uncertain and nil, after having
exhausted all appropriate remedies for their liquidation.
9.11 The Management comments are shown below:
Office/
Region
CO The Accounting Division is now monitoring the status of cash advances on a daily basis and is
likewise issuing quarterly demand letters to the AOs to liquidate their cash advances. They will also
institute suspension of the payment of salaries of erring officials and employees for failure on their
part to submit the required documents and reports.
NCR Management of ROP and SDO Manila informed the Audit Team that they will issue demand letters
for the unliquidated advances recorded under the Advances for Operating Expenses. All other audit
observations and recommendations were duly noted particularly the prescribed rules and regulations
regarding the grant, utilization and liquidation of cash advances.
Management of SDO Makati City explained that the delay of submission was due to their plan of
instituting Internal Audit Committee. The said Committee will handle the audit of various reports
including LRs before submitting them to COA. The SDO is already ISO certified in all areas and
their goals are to minimize errors and to determine if their present set-up is compliant with COA
laws and regulations.
Management of SDO Taguig City and Pateros already stopped the practice of granting additional
cash advances to employees with outstanding balances. They are constantly calling the attention of
the concerned officers/personnel to settle their accountabilities and all possible means are utilized to
locate/retrieve the prior years’ record.
Management of SDO Valenzuela will avoid granting cash advances unless the previous amount
given has been fully liquidated.
I Management committed to comply with the audit recommendations.
II Management adheres and committed to comply with the audit recommendations and continue to
strictly enforce the period of liquidation of cash advances for the long outstanding accounts.
III Management commented that they will issue demand letters to concerned personnel with
unliquidated cash advances and will strictly observe/prohibit the practice of granting additional cash
advance to employee with outstanding balance.
In compliance with the Audit Team’s recommendations, the Management of SDO Malolos
commented that they have implemented the following courses of action: (a) the practice of granting
cash advances to officers and employees for programs and activities that can be paid directly through
check or ADA have already stopped; (b) the Division Accountant was also reminded through a
Memorandum dated August 13, 2018 to process and approve transactions/liquidation reports only
when all requirements have been complied with and to strictly adhere to the accounting and auditing
rules and regulations; (c) the personnel concerned were asked to justify as to why the purpose and
utilization of cash advances that were granted was modified and/or adjusted; and (d) the concerned
AOs have submitted their LRs to settle their unliquidated cash advances.
IV-A Management commented that demand letters were sent/re-sent to the concerned AOs to
settle/liquidate immediately their cash advances on a specific deadline and instructed the person-in-
charge to strictly monitor the liquidations. Agency officials/employees who failed to liquidate/settle
fully their outstanding cash advances within the period prescribed in the demand letter will be
endorsed to the Legal Unit for appropriate action.
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Office/
Region
IV-B Management committed to comply with the audit recommendations and strictly adhere to the rules
and regulations on the grant, utilization and liquidation of cash advances. Also, the Management of
SDO Palawan considers requesting write-off, claims against deceased AOs who have outstanding
cash advances are usually restituted from their terminal leave benefits based on the Agency’s
practice. The Division personnel explained that some school heads could not comply with the timely
liquidation of cash advances, despite the reminders being given by the Bookkeepers. In response,
the Management shall extend support to School Heads who find difficulties liquidating the School
MOOE fund. They will conduct inventory of their Administrative Assistants and will have their
proper placements to schools that most needed the additional manpower support.
V The Management of SDOs Naga City and Masbate Province commented that they will issue demand
letters to AOs with existing unliquidated cash advances while the Management of SDO Iriga City
commented that the whereabouts of the AOs granted with cash advances in the prior years could no
longer be located, hence, they are considering the option to request for authority to write-off the
accounts but there is a limitation that the cash advances should be dormant or past due for ten years
or more to qualify for write-off.
VIII Catubig Valley NHS and Mapanas Agro-Industrial High School (AIHS) committed to submit the
lacking documents for liquidation. While the liquidation of Eastern Visayas Regional Athletic
Association (EVRAA) by Eastern Samar Division are still pending for review by the Accountant
and will be immediately forwarded to COA after review.
ROP commented that the cash advance for the study travel for Siliman University after the Region’s
participation in the CY 2017 Palarong Pambansa was still in adherence to the provisions provided
for in the annual GAA, due to the following reasons:
One of the systems that have been institutionalized in the DepEd is the Monitoring and Evaluation
(M&E) System. This system requires that monitoring and evaluation should be integral process of
all activities, programs and projects that shall be conducted by the agency. This process does not
only involve specially trained people who assess the conduct of events, but these people should
likewise help all the committees and the key players to improve their performance to meet the
demands and expectations of the customers. Tools are being utilized with specific indicators.
After the event, M and E Committee calls all the other committees and the top management for
coherence to discuss the issues and concerns raised during the conduct of the event and the lessons
learned. Further, using the assessment tools, they discussed the best practices for replication.
This explains why the RO Management conducted the monitoring and evaluation post conference
dubbed as Study Visit. It was an integral part of the conduct of Palarong Pambansa because the
Region is still wanting in terms of sports management, sports coaching and mentoring, the RO
Management decided that the conduct of monitoring and evaluation of post conference would be
done together with a Study Visit to the Siliman University, Dumaguete City, which has an excellent
record on sports. It was done with the intent of addressing the concerns head on, that after the
discussion of the issues and concerns and areas for improvements, the experts from the partner
university could come in and provide the necessary coaching and intellectual inputs.
SDO Leyte, Borangan City, and Wright NHS agreed to adhere with the COA recommendations and
will strictly enforce the regulations concerning grant of Cash Advances.
IX The concerned AOs has submitted to the Team the status of their liquidations as of February 22,
2019 that out of the total unliquidated cash advances of ₱9,476,804.77, ₱3,163,635 or 34 percent
has been liquidated. Also, the Regional Accountant informed that the granting of additional cash
advances has been stopped and demand letters have been issued to all concerned dated February 13,
2019.
SDO Camiguin commented that the downloading of school MOOE fund is in accordance with
DepEd guidelines. It is treated as a cash advance and the bookkeepers are there to check and verify
as to the veracity, completeness, and propriety of the supporting documents. Serving as “schools
special disbursing officers”, the school head has full cash custody in the school. Furthermore, he is
also the HOPE. Management adds that committees relative to procurement, receipt, inspection, and
custody of items procured are already in place, thus adding controls to the transaction. While it may
be true that School Heads play a lot of roles on the disbursements, there are also other signatories
on the documents which eventually added integrity on every transaction.
150
Office/
Region
SDOs Davao City and Panabo City agreed to adhere to the audit recommendations.
XII The Management assured to follow the audit recommendations.
XIII SDO Surigao City commented on the release of MOOE that the reimbursement method is
implemented only in December 2018 to avoid accumulation of cash advances at year-end. Instead
of releasing cash advance, they advised the School Heads to reimburse whatever expenses incurred
for December or submit to the Division Office bills to be paid through direct payment to supplier.
Also, School Heads claim to have used their personal resources for the incurred expenses, the reason
why reimbursement is directly deposited to their personal account through LDDAP-ADA.
SDO Dinagat Islands commented that liquidations of cash advances were not recognized in the
books unless and until they pass the pre-audit of the Accounting Unit. Moreover, in the case of
MOOE downloading, constant follow-ups are done before the end of the month. When AOs fail to
liquidate their cash advances on time, letters of demand are sent. The Schools Division
Superintendent (SDS) also calls the attention of those AOs who still has unsettled cash advances to
remind them of their obligation to liquidate. With regard to the additional cash advances, AOs are
not granted additional cash advance unless they first settle their unliquidated balances. The multiple
cash advances for MOOE of AOs appearing in the report are due to the different programs of each
School which needs funding, such as School-based Feeding Program (SBFP), School-based
Management (SBM), etc. or those cash advances attributable to Senior High School and to Junior
High School Operations. However, the Accounting Office ensures that the AOs will not be granted
additional cash advance for a program unless they liquidate their outstanding cash advances for the
same program. They also emphasized that the Bids and Awards Committee of the Division Office
should take over the procurement process in relation to those programs/activities in cases when the
AOs still have unliquidated cash advances, so as not to hamper the operations of the school.
ROP and SDO Agusan del Sur commented that a Memorandum was issued to the concerned
personnel to immediately liquidate cash advances or within 30 days upon completion of the project.
Moreover, SDOs Agusan del Sur, Dinagat Island, Surigao del Norte, and Surigao City commented
that demand letters were issued and will be issued to concerned personnel with long outstanding
cash advances.
Incomplete documents and inconsistencies made in the payments of Accounts Payable
10. The propriety/regularity of payments of Accounts Payable made by two ROs in

the total amount of ₱73,637,214.72 cannot be established due to incomplete
documents and alterations/inconsistencies made in the supporting documents,
contrary to Par. 6, Section 4 of PD No. 1445, and Article 171 of the Revised Penal
Code of the Philippines; and payments of Accounts Payable were made thru
checks in the names of the Cashier/Property Officer, instead of the Expanded
Modified Direct Payment Scheme (ExMDPS) as required under Section 6.2 of
DBM Circular Letter No. 2013-16.
10.1 Par. 6, Section 4 of PD No. 1445 provides that “Claims against government
funds shall be supported with complete documentation.”
10.2 Pursuant to Article 171 of the Revised Penal Code of the Philippines, the
massive incurrence of alterations in the data/information indicated in the various
supporting documents and the habitual inconsistencies of inclusive dates
appearing in the various documents supporting the payment of each activity
conducted by the agency could be possible grounds of filing an administrative
and/or criminal charges against the erring public officer or employee.
151
10.3 Also, Section 6.2 of DBM Circular Letter No. 2013-16 dated December 23,
2013, provides that starting January 1, 2014, Accounts Payable (APs) due
creditors/payees of all NGAs/OUs shall be settled thru the ExMDPS chargeable
against the NCAs credited under the regular MDS sub-account of the NGA.
Region Audit Observations Amount

CAR Payable accounts amounting to ₱3,757,563.54 were settled by SDOs 3,757,563.54
Abra and Apayao and three IUs through the issuance of checks instead
of the ExMDPS, contrary to DBM Circular Letter No. 2013-16. Further,
the checks issued by the two IUs amounting to ₱333,386.62 were in the
names of the Cashiers and Property Officer, contrary to PD No. 1445.
IX Payments of Accounts Payable representing catering services in the total 39,841,081.87
amount of ₱39,841,081.87, more or less, were not attached with
complete necessary supporting documents as required by laws, rules and
regulations, thus the validity and reasonableness of the total expenditures
incurred and paid could not be determined.
The propriety, regularity and legality of payments of Accounts Payable 30,038,569.31
made by the agency in the total amount of ₱30,038,569.31 cannot be
established due to the various alterations made and inconsistencies as to
the dates indicated in its supporting documents, thus creating doubts as
to the regularity and legality of the subject transactions.
Total 73,637,214.72
a) submit the legal documentary requirements, as attachments to the

audited transactions as mandated in Par. 6, Section 4 of PD No. 1445;
b) instruct all the responsible officers/employees concerned in the

preparation of the various supporting documents to refrain/avoid
alterations and ascertain that no inconsistencies of data/dates unless
duly supported with valid reasons;
c) instruct the Regional Accountant to check and stop allowing numerous

alterations of data/information contained in the various supporting
documents unless duly justified; and
d) settle all current and prior years’ APs due to creditors/payees through
the ExMDPS chargeable against the NCAs credited under the regular
MDS sub-account of their respective agencies pursuant to DBM
Circular Letter No. 2013-16 dated December 23, 2013.
10.5 Management’s Comments and Auditor’s Rejoinder:
Region Management’s Comments Auditor’s Rejoinder

CAR The Management of SDO Abra informed that the Item 6.4 of DBM Circular Letter No. 2013-
creditors paid through checks had no bank 16 requires that all NGAs/OUs shall advise
accounts. As such, payment through ExMDPS their creditors to open a Current or Savings
could not be implemented. Account (CA/SA) with any branch of their
authorized MDS-GSB. It further provides
that for creditors where opening of a CA/SA
with the MDS-GSB is not feasible, they shall
be advised to open an account with any of
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Region Management’s Comments Auditor’s Rejoinder
the banks included in the List of
Participating Banks in the Electronic Peso
Clearing System.
IX The Management agreed to submit the legal
documentary requirements. Also, the Regional
Director issued Unnumbered Office Memorandum
dated February 14, 2019 to all RO Chiefs to
explain in writing the numerous alterations and
identify/make strategic plan to avoid similar
incidents/infractions as documents related to
conduct of trainings/seminars.
Non-compliance with Sections 39.5 and 62.1 of the Implementing Rules and Regulations
(IRR) of RA No. 9184 regarding Guaranty/Warranty Deposits
11. Performance Guaranty/Warranty Deposits amounting to ₱1,020,382.53 that

lapsed after the warranty period were not returned by the DepEd RO No. V
Proper to various contractors/suppliers while the Division of Catanduanes did not
deduct the retention money from the contract amounting to ₱1,961,394.00,
contrary to Sections 39.5 and 62.1 of the Revised IRR of RA No. 9184, thus,
affecting the balance of the Accounts Payable-Guaranty/Security Deposits
Payable Account as of December 31, 2018.
11.1 Pertinent provisions of the Revised IRR of RA No. 9184 relative to performance
guaranty and warranty are the following:
Laws, Rules
and
Specific Requirement/Provision
Regulations
References
Section 39.5 Section 39.5 - “The performance security may be released by the procuring entity after the
issuance of the Certificate of Acceptance, subject to the following conditions:
a. Procuring entity has no claims filed against the contract awardee of the surety
company;
b. It has no claims for labor and materials filed against the contractor; and
c. Other terms of the contract.”
Section 62.1 For the procurement of goods, in order to assure that manufacturing defects shall be corrected
by the supplier, a warranty security shall be required from the contract awardee for a minimum
period of three months, in the case of expendable supplies, or a minimum period of one year,
in the case of non-expendable supplies, after acceptance by the procuring entity of the delivered
supplies.
The obligation for the warranty shall be covered by either retention money in an amount
equivalent to at least ten percent of every progress payment, or a special bank guarantee
equivalent to at least ten percent of the total contract price. The said amounts shall only be
released after the lapse of the warranty period or, in case of Expendable Supplies, after
consumption thereof: Provided, however, that the supplies delivered are free from patent and
latent defects and all the conditions imposed under the contract have been fully met.
11.2 Audit of the Trust Liabilities account revealed the following deficiencies:
153
• Unreleased Warranty Deposits on Completed Contracts
11.3 Review of the account in DepEd RO No. V Proper disclosed that the December
31, 2018 balance of ₱10,405,710.56 still included the warranty deposits
amounting to ₱1,020,382.53 from various suppliers of goods and services whose
contracts were already completed or whose warranty period had already lapsed.
Records showed that the same had been outstanding in the books and remained
unreleased to the concerned suppliers for quite a number of years already.
Details of said unreleased guaranty/security deposits are presented in the table
below:
No. Date Name of Creditor Amount

1 12/31/2008 Charisma Catering & Snack House 7,000.00
2 12/31/2008 Ever Industries 10,000.00
3 12/31/2009 CPQ Computer Center 1,555.00
4 3/31/2010 Nora Espinas Garments 30,000.00
5 12/31/2010 Roman Instructional 100,000.00
6 12/31/2012 All Electronics Enterprises 29,129.20
7 12/31/2012 Casablanca Hotel 28,848.00
8 12/31/2012 Denver’s Computer Shoppe 81,759.20
9 12/31/2012 Flamingo Woodworks 108,406.62
10 12/31/2012 Lucky Educational Supply 20,160.80
12 3/31/2014 FLFB Enterprises 1,635.98
13 3/31/2014 Forms International Ent. 86,010.00
14 3/31/2014 Muebles De Filipinas Cooperativa 261,620.00
15 9/30/2014 Forms International Ent. 58,010.00
Total 1,020,382.53
11.4 This observation on unreleased warranty deposits had already been

communicated to the Management and was incorporated in our prior year’s audit
report. However, they failed to comply with our audit recommendations.
11.5 Review of the account further disclosed that the previously noted abnormal/debit
balances on the accounts of two suppliers still existed and remained unadjusted
in the books as at yearend, as detailed below:
Supplier Amount
Legazpi People’s Marketing 5,920.00
Star Anvil Trading 2,000.00
Total 7,920.00
11.6 In order to present the correct balance of the account, the abnormal/debit balance
had to be verified and adjusted.
11.7 The failure of the Agency to return the overdue guaranty/warranty deposits is
contrary to the above-cited provisions of RA No. 9184. On the other hand, its
failure to adjust the above abnormal balances, which may have resulted from
erroneous recording, omission of entries or excess refund of warranty deposits,
affected the balance of Guaranty/Security Deposits Payable account at year-end.
154
• Unwithheld Retention Money as Warranty Security on Contracts
11.8 Audit showed that the SDO of Catanduanes had awarded a contract to Empresa
Metalcraft for the delivery of Armchair and Teacher’s Table and Chair Set,
details of which are shown in the table below:
Fund Source Description Contract Cost Delivery Period Target Date

Armchair - 2,806
January 2,
CY 2015 BUB Teacher’s table and ₱1,961,394.00 90 days
2017
chair set - 57
11.9 Examination of supporting documents attached to DV under JEV No. 01-2017-

11-8070 dated November 11, 2017 with net amount of ₱1,838,806.88. DV
disclosed that the Agency did not deduct the equivalent percentage of retention
money from the final payment made to the supplier nor required the submission
of a special bank guarantee to satisfy the requirement on warranty security as
provided in Sec. 62.1 of the CY 2016 Revised IRR of RA No. 9184.
11.10 Without the warranty security, manufacturing defects that may be discovered
during the warranty period may not be corrected by the concerned supplier/s and
the Agency would have difficulty requiring said supplier/s to rectify the defects
that might be noted, if any, to the detriment of the Agency and/or the end-
users/beneficiaries, thus, defeating the objective of the procurement law.
a) refund to the concerned suppliers the guaranty/warranty deposits that

are due to them totalling ₱1,020,382.53, in consonance with Sections
39.5 and 62.1 of Annex E of the CY 2016 Revised IRR of RA No. 9184;
b) verify the negative balances of two accounts amounting to ₱7,920.00,

and thereafter, effect adjusting entry to correct the balances of the
accounts;
c) direct the Accountant to require the submission of bank guarantee or

deduct the required percentage of retention money from payments to
be made to suppliers; and
d) instruct the members of the BAC to enforce the provision on warranty

security in the procurement to be made by the Agency in consonance
with Sections 62 and 62.1 of the CY 2016 Revised IRR of RA No. 9184.
11.12 In response to the observation of retaining the guaranty deposits despite

completion, Management will be locating the addresses of the
contractors/suppliers whose contracts were already completed and which
warranty period had already lapsed taking into consideration the possible
changes of location since the transactions had transpired five to 11 years ago.
155
Upon its retrieval, Management will immediately notify and write the concerned
suppliers/contractors of their outstanding claims, provided that they will submit
the complete documentary requirements for the payment.
11.13 With regards to the abnormal/debit balances of two suppliers amounting to

₱7,920.00, Management stated that the necessary adjusting entry had already
been made and recorded in the books per JEV No. 01-2019-03-99 dated March
1, 2019.
11.14 Management agreed with the audit recommendations made by the Audit Team
and committed to require the submission of warranty security for future
contracts.
Various payments lacking proper documentation and/or legal basis
12. Various expenses totaling ₱13,898,990,600.90 from DepEd CO and 15 ROs were
found either contravening to existing government laws, rules and regulations or
not supported with adequate documentation, thus casting doubts on the validity
and propriety of expenditures.
12.1 Section 2 of PD No. 1445 provides that:
It is the declared policy of the State that all resources of the government shall be
managed, expended or utilized in accordance with law and regulations, and
safeguard against loss or wastage through illegal or improper disposition, with
a view to ensuring efficiency, economy and effectiveness in the operations of
government. The responsibility to take care that such policy is faithfully adhered
to rests directly with the chief or head of the government agency concerned.
12.2 In addition, Section 93 of PD No. 1445 provides that:
To whom warrants or checks payable - Warrants chargeable to revenue or trust

funds of the national government or checks drawn against the Treasury
Checking Account for Agencies maintained with any government depository
shall be made payable either directly to the creditor to whom the money is due
or to a disbursing officer for official disbursement.
12.3 Likewise, COA Circular No. 2012-003 dated October 29, 2012 provides for the
Updated Guidelines on the Prevention and Disallowance of Irregular,
Unnecessary, Excessive, Extravagant and Unconscionable Expenditures. The
Circular defines Irregular, Unnecessary, Excessive and Extravagant as follows:
Unnecessary Expenditures pertain to expenditures which could not pass the test
of prudence of the diligence of a good father of a family, thereby denoting non-
responsiveness to the exigencies of the service. Unnecessary expenditures are
156
those not supportive of the implementation of the objectives and mission of the
agency relative to nature of the operation.
Irregular Expenditures signify expenditures incurred without adhering to

established rules, regulations, procedural guidelines, policies, principles or
practices that have gained recognition in laws. Irregular expenditures are
incurred if funds are disbursed without conforming with prescribed usages and
rules of discipline.
The term "extravagant expenditure" signifies those incurred without restraints,

judiciousness and economy. Extravagant expenditures exceed the bounds of
propriety. These expenditures are immoderate, prodigal, lavish, luxurious, waste
grossly excessive, and injudicious.
Excessive expenditures signify unreasonable expense or expenses incurred at an

immoderate quantity and exorbitant price. These 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.
12.4 Moreover, the massive incurrence of alterations in the data/information

indicated in the various supporting documents and the habitual inconsistencies
of inclusive dates appearing in the various documents supporting the payment
of each activity conducted by the agency created doubts as to the regularity and
legality of the transactions paid and could be a possible ground for filing an
administrative and/or criminal charges against the erring public officer or
employee in pursuance of Article 171 of the Revised Penal Code of the
Philippines.
12.5 For CY 2018, disbursements incurred in DepEd CO, ROs, SDOs and its IUs
were found not adhering to pertinent laws, rules and regulations, as follows:
Table 32: Irregular, Unnecessary, Excessive and Extravagant Expenditures

Office/ Nature of
Amount Audit Observations/Deficiencies
Region Transaction
CO Training/Seminar 312,151,225.93 The trainings/seminars and midyear/annual planning
Expenses and assessment activities conducted in lavish resorts
and tourist spot locations that entailed higher cost
were against the existing government thrust of
judicious and prudent use of government funds.
NCR Travel Expense Amount not stated The officers and employees were paid by their actual
expenses incurred in excess of the ₱800.00 allowed
travel expense per day which is already inclusive of
hotel/lodging, transportation and incidental
expenses.
II Travel Expense 134,068.16 The officers and employees were paid by their actual
expenses incurred in excess of the ₱800.00 allowed
travel expense per day which is already inclusive of
hotel/lodging, transportation and incidental
expenses.
157
Office/ Nature of
Region Transaction
Training Expense 1,194,222.00 Payment of meals and accommodation in excess of
the actual number of participants to trainings,
seminars, workshops and conferences out of the
General Fund and NEAP Fund seemed excessive.
Other Supplies 97,500.00 NEAP Fund was used for the purchase of coats for
Expense use by the officials of the agency is considered
irregular and unnecessary.
Telephone/Mobile 578,391.72 Issuance of 30 mobile phone/tablets to various
Expenses officials and employees not authorized under DepEd
Memorandum. While, two officials were issued
more than one cellular phones/tablet contrary to the
provision of COA Circular No. 2012-003 dated
October, 29, 2012.
Representation 82,700.00 50 pieces personalized bags and laptop bags were
Expense purchased out of the NEAP Fund for the purchase of
goods for the officials which are considered
excessive and unnecessary.
III Travelling Expenses 33,097.58 Traveling expenses of DepEd Officials were with
deficiencies such as: a) inclusion of expenses for
hotel, meal and expenses for taxi within the place of
assignment or destinations, in addition to the
authorized per diems; b) other practices that require
additional costs; and c) claims for travelling
expenses were not supported with complete
documentation.
Office and Other 417,723.50 The SDO continued to honor suppliers' Official
Supplies Receipts which are deemed invalid by virtue of
Revenue Regulations No. 18-2012 and Revenue
Memorandum Circular No. 52-2013, causing the
payments to these suppliers not allowable in audit.
Office and Other 129,172.50 The Certificate of Availability of Fund supporting
Supplies the payment of Contracts/Purchase Orders was
certified by the Division Budget Officer of Tarlac
Province, contrary to Section 86 of PD No. 1445 and
the provisions under the Accounting and
Disbursement Procedures of the DepEd Financial
Management Operations Manual (FMOM), hence,
the certification issued by the Division Budget
Officer may render the contract void since the
indispensable requisite of a contract was not
certified by the proper Accounting Official.
Gasoline Expenses 12,831.23 Gasoline issued to private motor vehicles
Telephone/Mobile 25,405.00 Payment of cellular card allowance
Expenses
Utilities Expense 3,175.00 Payment of penalty of water bill due to late payment.
Repair and 1,972,201.83 Repair and rehabilitation of National Educators
Rehabilitation of Academy of the Philippines (NEAP) facilities
NEAP contains information and findings tending to show
irregularities as the direct cost estimate of each item
by both the Agency and contractor are exactly the
same.
Repair and 1,657,530.42 The Certificate of Availability of Fund supporting
Rehabilitation of the payment of Contracts/Purchase Orders was
Schools certified by the Division Budget Officer of Tarlac
Province , contrary to Section 86 of PD No. 1445 and
the provisions under the Accounting and
Disbursement Procedures of the DepEd FMOM,
hence, the certification issued by the SDO Budget
Officer may render the contract void since the
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Office/ Nature of
Region Transaction
indispensable requisite of a contract was not
certified by the proper accounting official.
Chalk Allowance, 516,236.69 Chalk allowance to non-teaching personnel;
Gasoline Expense, gasoline issued to private vehicle; uniform/clothing
Chalk Allowance, allowance, mid-year bonus and traveling and
and Mid-year Bonus training allowance for Job Order personnel
Other Expenses - 200,835.00 Utilization of school share for CY 2017; Starting
Canteen capital of school-managed canteens
Other MOOE 516,552.23 Payment of gasoline, toll fees, driver's fee, supplies
and materials which are not related to the specific
purpose of the School's trust fund' payment of
expenses during Stakeholders' Night, purchase of a
lot by the School Principal, and payment for meals
and snacks
Surcharge 365.02 Payment of penalty due to late payment of water bill
Various Expenses 24,005.15 Graduation expenses; Interest due to late payment of
electric bill.
Various Expenses 157,627.74 Gasoline issued to private motor vehicle; payment of
repair and maintenance of a private motor vehicle;
payment of chalk allowance to non-teaching
personnel.
IV-B Travelling Expense 51,299.62 Audit of disbursements for travelling expense and
home visit expenses by the RO revealed a total of
₱51,299.62 excess payment.
Payment to 11,108,188.74 PCAB Contractor's License is expired.
Contractor
Representation 391,075.00 Meetings can be conducted within the Office.
Expense Accommodation was spent for participants living
within the Municipality.
VI Training Expense 1,490,722.30 Payments were made for food and accommodations
on various trainings despite the non-attendance of
the participants which resulted in the overpayment
of training expenses.
Printing Expenses 531,495.00 Material amount of printing/reproduction expenses
have been incurred due to the non-utilization of the
three photocopying machines of the Agency, thus,
resulting in wastage of government funds and
foregone savings.
VIII Cellphone and 95,594.79 The School Officials were granted expensive
Mobile Expenses cellphone and payment of mobile expenses without
the documentary requirements laid down, thus may
be concluded as invalid for lack of legal basis in
addition to being excessive expenditures.
IX Various Expense 34,549,674.06 The incurrence of numerous alterations in the
data/information indicated in the various supporting
documents and the habitual inconsistencies of
inclusive dates appearing in the various documents
supporting the payment of each activity conducted
by the Agency created doubts as to the regularity and
legality of the transactions paid and could be a
possible grounds of filing an administrative and/or
criminal charges against the erring public officer or
employee in pursuance of Article 171 of the Revised
Penal Code of the Philippines.
X Cash Prizes 255,000.00 It was further observed that a cash advance
amounting to ₱370,000.00 was purposely drawn for
meals and snacks, materials, contingency and prizes
of teambuilding activities. However, verification of
corresponding liquidation contained in the Report of
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Office/ Nature of
Region Transaction
Cash Disbursement disclosed that most of the
expenses for the said activity were attributed to the
payment of cash prizes for the various team building
activities amounting to ₱255,000.00 or 77.24
percent of the total expenses incurred.
Travelling Expenses 6,049.00 Bukidnon National School of Home Industries did
not exercise adequate controls in processing
payments for travel allowance and transportation
costs of agency personnel resulting in double and
excessive claim of the Agency Head.
Team Building 431,474.46 The Agency conducted a Capability Building cum
Team Building for Planning Officers and the Policy,
Planning and Research Division (PPRD) Staff last
January 24-26, 2018 in Coron Hilltop View Resort,
Coron, Palawan. It was observed that there was no
specific allotment/funding provided for the said
activity. Payments were sourced from the regular
agency fund. Hence, the conduct of capability
building cum team building of the planning division
of DepEd RO X in Coron, Palawan was considered
unnecessary and extravagant.
Internet Expenses 98,684.30 Internet subscription continued despite installation
of fiber optic internet with speeds up to 300 Mbps
within Agency premises, which resulted in
incurrence of unnecessary use of funds.
Utilities Expenses 259,641.83 Payment for water and electric bills which were
consumed by the contractor JAMARI Construction.
Consultancy 262,770.00 The SDO designated a private lawyer as Attorney III
under Job Order Contract without prior written
conformity and acquiescence of the Solicitor
General and written concurrence of the COA.
Disbursements 2,521,120.80 Payment of Disbursement related to the setting up of
related to the setting ISO 9001:2015 were either excessive, extravagant or
up of ISO unnecessary.
9001:2015
XI Fund Transfer for 24,427,440.00 Fund transfers to the PGO-ComVal for the
School Based implementation of SBFP were not supported with: a)
Feeding Program Cost-Benefit Analysis; b) Certificate from the PGO-
ComVal that it has complied with all the conditions
of Agency-to-Agency procurement mode; and c)
posting of general information pertaining to the
activity.
XII Utilities Expense 255,890.55 All payments made to Socoteco II were charged to
the MOOE Funds of the School. No amount was
taken from the funds collected by the NSNHS from
J. G. Oranza Construction. The amount deposited by
the contractor is still to be accounted by those
personnel who have received it.
Various Expenses 2,024,302.92 Audit and verification revealed that the amount due
the authorized claimants/suppliers/creditors as
shown in the Bank Validated LDDAP-ADA were
actually debited to the account of the Ms. Analiza O.
Cutab, Disbursing Officer of NSNHS, instead of the
claimant's bank account. Review of the DVs and its
covering supporting documents including the List of
Validated LDDAP-ADA shows that the transactions
are actually due and payable to various creditors
other than Analiza O. Cutab.
160
Office/ Nature of
Region Transaction
XIII Traveling Expense 247,583.84 The SDO failed to observe prudence in the
utilization of government funds in conducting
Capacity Building cum Benchmarking of Best
Practices without an Activity Design in RO I and
NCR due to exorbitant traveling expenses which
could have been avoided had the activity been held
within CARAGA Region and the provisions of the
Travel Order was not strictly followed, thus the
expenditures incurred were considered illegal and
excessive.
Trainings/Seminar 553,250.00 Incurrence of unnecessary expenditures could have
been prevented had the Agency provided the
appropriate hotel room accommodation for the
participants of trainings/seminars conducted for
teaching and non-teaching personnel.
67,200.00 Names of 26 participants in a training appeared
twice or thrice in the room assignment for the hotel
room accommodation which was eventually paid,
thus incurring an unnecessary expense.
Various Expenses 10,731.00 Four ORs, which were part of the liquidation
documents for the downloaded MOOE to Obrero
Elementary School, were found tampered and/or
altered, casting doubt to the correctness and veracity
of the said ORs.
Various Expenses 540,069.88 Payments of salaries of newly hired teachers and
utilities incurred in CY 2017 were charged to CY
2018 appropriations.
Total 400,084,124.79
12.6 Section 4 of PD No. 1445 provides that disbursements or disposition of

government funds or property shall (1) invariable bear the approval of the proper
officials. (2) claims against government funds shall be supported with complete
documentation. (3) all laws and regulations applicable to financial transactions
shall be faithfully adhered to.
12.7 COA Circular No. 2012 -001 dated June 14, 2012 provides the documentary
requirements for common government transactions. These documents are
necessary to support the propriety of the transactions.
12.8 In addition, COA Circular No. 77-61 dated September 26, 1977 provides the
Manual on Fuel Consumption in order to minimize wasteful, excessive and
unnecessary expenditures for fuel consumption of government vehicles, in line
with the government's concern and efforts to ensure the effective conservation
of energy and proper utilization of government motor transportation. Included
for submission, among others, are Driver’s Trip Tickets, Monthly Report of Fuel
Consumption, and Monthly Report of Official Travels.
12.9 Results of the post-audit of transactions in the different Offices and IUs for CY
2018 disclosed that various disbursements were made even without necessary
supporting documents, to wit:
161
Table 33: Payments Without Adequate Documentation
Nature of
Region Amount Audit Observations/Lacking supporting documents
Transaction
I Various Expenses 29,845,216.11 Various disbursements were not supported with complete
documentation as required under Section 4 (6) of PD No.
1445 and COA Circular No. 2012 -001 dated June 14,
2012, thus casting doubts on the validity and propriety of
expenditures.
II Various Expenses 45,145,321.64 Various expenses incurred by the ROP, three SDOs and
14 IUs under four SDOs totaling ₱45,145,321.64 were
paid even without or with incomplete supporting
documents contrary to the provisions of Section 4(6) of
PD No. 1445, COA Circular No. 2012-001 dated June 14,
2012 and DBM Circular No. 2004-5A dated October 7,
2005, thus affecting the legality, propriety and validity of
the transactions.
III Rehabilitation of SHS 952,232.02 No submitted supporting documents.
Canteen
Repair and 1,597,088.42 Post-audit of the payments of repair and rehabilitation of
Rehabilitation of classrooms disclosed that expenses were supported by
Classrooms invalid ORs, contrary to Revenue Memorandum Circular
No. 52-2013.
Various Expenses 101,446,724.89 No submitted supporting documents.
Various Expenses 32,738.00 No DV, PR, Canvass, PO's attached; No attached OR for
registrations fees; No approved program of work.
IV-A Fuel, Oil and 45,745.20 Driver's Trip Tickets, Monthly Report of Fuel
Lubricants Consumption of Motor Vehicles and Monthly Report of
Official Travels were not prepared and submitted to the
Auditor, thus the reasonableness of fuel consumption
totaling ₱45,745.20 could not be established.
Various Expenses 2,707,917.48 Disbursements pertaining to security services,
construction materials, office supplies, other supplies and
materials, labor payrolls, repairs and maintenance -
building and other structures, tokens and procurement of
various materials and semi-expendable items were
deficient of complete documentation, thus casting doubt
on the validity, legality, reliability and propriety of the
accounts and transactions and posing risk of possible loss
of government funds.
V Consultancy Services 303,600.00 Payments for consultancy services by the SDO Naga City
amounting to ₱303,600.00 were not supported with
complete documentation as required in Section 4(6) of
PD No. 1445 and the 2016 Revised IRR of RA No. 9184,
thus casting doubt on the validity of the payments made.
Various Expenses 265,706.30 Review of DVs supporting the LRs submitted to the Audit
Team covering the period January to October, 2018 (the
latest liquidation reports submitted) revealed that
payments for some transactions were not completely
documented.
VI Repair and 1,002,242.71 Repair of school buildings and their surroundings
Rehabilitation undertaken by the 11 National High Schools were not
supported by an Approved Program of Work, contrary to
the provisions of the 2016 Revised IRR of RA No. 9184,
hence, propriety of the materials and labor incurred
during repair are difficult to determine.
Various Expenses 4,356,217.04 Disbursements were paid despite not using the prescribed
Forms under the GAM for NGAs, Volume I, hence,
resulted in doubtful validity of the transactions.
VII Repair and 17,340,049.75 Disbursements for progress and final billings of CYs
Rehabilitation 2015 to 2018 BEFF Repair and Rehabilitation of School
Building projects and Construction of SDO Extension
162
Nature of
Transaction
totaling ₱17,340,049.75 were not supported with
complete documents.
Various Expenses 1,761,572.41 Some of the purchases were paid even without the
corresponding supporting documents. Various
transactions were processed and paid in despite of lacking
supporting documents.
VIII Various Expenses 87,517.76 Allowances such as Collective Negotiation Agreement
(CNA) Incentive, Loyalty Incentive, Clothing, bonuses
and others including reimbursement of travelling were
paid despite the absence of complete documentation,
thus, considered of doubtful validity as well as propriety.
Expense for 474,476.00 Disbursements for CY 2018 Provincial Meet (PM)
Provincial Meet totaling ₱474,476.00 charged against funds received from
the Provincial Government of Northern Samar were made
through reimbursement basis without being supported
with DVs and supporting papers in addition to being
without prior approval of the head of the agency; all
contrary to relevant rules and laws, thus propriety and
validity of the transactions are doubtful.
VIII Various Expenses 2,008,597.87 Expenses paid from the PCF of the SDO and Catubig
Valley NHS totaling ₱1,989,343.59 and ₱19,254.28,
respectively, were not supported with complete
documentation, contrary to Section 36, Chapter 6 of
GAM for NGAs, Volume I, thus casting doubt on the
validity and propriety of the expenditures.
X Internet Expense 19,681.39 Failed to provide adequate evidence to support its PLDT
Inc. internet connectivity, thus precluded the prompt
verification as to the validity and legality of such
disbursements
Repair and 20,785,232.55 Progress and final payments to the contractor for CYs
Construction 2016, 2017 & 2018 BEFF in the total amount of
₱20,785,232.55 were not supported by proper
documentation which resulted in incurrence of irregular
expenditures, thus causing difficulty in ascertaining the
propriety of the disbursements.
Repair and 5,937,832.34 Progress payments to the contractor for CYs 2017 & 2018
Construction BEFF in the total amount of ₱5,937,832.34 were not
supported by proper documentation.
XI Travel Expense 6,317,002.00 Payments to Ambik Travel and Tours may not be valid
since the increase in obligation was not covered with
amendment to order, the obligation was based only on the
Statement of Account provided by the supplier and there
were already bookings prior to the signing of the contract.
Fuel, Oil and 114,452.61 Driver's trip ticket supporting payments for fuel
Lubricants consumption of the SDO's motor vehicle were not
properly accomplished and lacked the necessary
information, contrary to the rules and regulations on fuel
consumption.
1,101,862.24 The SDO and the Nabunturan National Comprehensive
High School did not observe the proper documentation
and control over the use of government vehicles
Telephone/Mobile 648,679.14 Absence of specific guidelines for the grant of mobile/cell
Allowance card allowance and lack of supporting documents for the
landline expense to the Division and Implementing
schools' officials and employees
Various Expenses 4,421,101.22 Liquidation or credits to account "Due from Local
Government Units" were not supported with Report of
Check Issued/Report of Disbursements certified by the
Accountant and approved by the Head of the
163
Nature of
Transaction
Implementing Agency, contrary to Section 4(6) of PD No
1445 and COA Circular No. 2012-001 dated June 14,
2012.
Various Expenses 7,613,087.01 The failure of the DO to submit complete documents to
support the payment of Personal Services (PS) and
Maintenance and Other Operating Expenses (MOOE).
Various Expenses 455,443.06 The Accounting Unit of Davao Occidental Division did
not observe the timely and proper submission of the
disbursement vouchers.
XII Monetization 104,000.00 Inquiry with the Bookkeeper disclosed that the
supporting documents of the claims were submitted to the
Department of Budget and Management. Due to lack of
supporting documents and other documentary
requirements, the propriety and validity of the claims
could not be ascertained.
Fuel, Oil and 1,610,149.17 Fuel, Oil and Lubricants Expenses for CY 2018 of
Lubricants DepEd, Division of Sultan Kudarat could not be
ascertained due to the non-submission of the monthly
report of official travel with the driver's ticket to the
Office of the Auditor by the Administrative Officer,
contrary to Section 5 of COA Circular No. 75-6 dated
November 7, 1975.
Repair and 1,040,816.13 Since construction supplies are not just ordinary office
Maintenance supplies, these types of inventory items are still to be
converted/fabricated into something, thus there is a need
to support the procurement, issuance/utilization with
documents to prove the actual usage of the construction
supplies and the completion of the planned repair and/or
maintenance of a specific projects.
Various Expenses 13,233,605,637.64 The delay/non-submission of the disbursement vouchers
and supporting documents impeded the examination of
the validity, propriety and legality of the transactions,
detection of material errors, if any, and the prompt
communication of audit results.
XIII Traveling Expense 67,555.00 Transactions for payment of traveling expenses of
Lawigan NHS were found to be deficient with
documentary requirements.
Various Expenses 368,494.59 Paid vouchers of 18 transactions totaling did not bear the
certification of the requesting official, thereby, casting
doubt on the validity and propriety of the recorded
transactions.
Various Expenses 4,129,336.25 Paid vouchers of 56 transactions for payments of personal
services and maintenance and other operating expenses
were made without the complete supporting documents,
thus, casting doubt on the validity and propriety of the
claims.
Travelling Expenses 343,165.55 Disbursements pertaining to salaries and wages of newly
hired teachers, salary differential, traveling expenses, and
various procurements not supported with complete
documentary requirements
Various Expenses 806,695.81 Disbursements pertaining to travels, trainings, purchased
for mobile loads, payments and procurement of
school/office and various supplies, salaries and wages of
newly hired teachers, trainings, monetization of leave
credits, procurement of materials for repairs and
repainting, purchased of medicines and other MOOE
expenses were not supported with complete documentary
requirements, thus, reliability, propriety and validity of
the transactions could not be ascertained.
164
Nature of
Transaction
Various Expenses 43,289.28 Disbursements in CY 2018 totaling were not
appropriately supported with complete documentation to
establish validity and propriety of the claims and were not
compliant with the required rules and regulations.
Total 13,498,906,476.20
Grand Total 13,898,990,600.90
12.10 We recommended and the Management of concerned Offices agreed to:
a) submit the lacking documents to avoid audit suspensions;
b) refrain from conducting out-of-town meeting/seminar/conference

unless extremely necessary, and instead utilize agency facilities as
venue for holding such activity, to prevent suspension or disallowance
in audit;
c) comply strictly with the prescribed rules and regulations on the

payment of salaries and wages, monetization, traveling/training, fuel,
oil and lubricants, repairs and improvements, and other expenses; and
d) ensure that all disbursements/utilization of government funds are

authorized and properly supported with the necessary documents.
12.11 The Management of concerned Offices were amenable to the audit observations
and recommendations. They commented that they will ensure the complete
submission of the lacking documents as identified and that future transactions
will be supported with the complete documentary requirements as prescribed by
law.
Budget Utilization
13. In addition to the 4.83 percent or ₱23,880,095,645.77 marginal percentage of

unutilized allotment from the total ₱494,590,861,364.00 allotments received by the
DepEd in Fiscal Year (FY) 2018, other lapses in budget utilization were observed
such as: a) unutilized allotment totaling ₱15,393,405,057.29 in CO, NCR, CAR,
and RO No. X which was mainly caused by unimplemented Programs/Projects/
Activities (PPAs) and unfilled plantilla positions; b) late incurrence of obligations
in NCR totaling ₱436,896,605.34 which was undertaken only in the latter part of
the year; c) unauthorized transfer of NCAs totaling ₱147,217,934.05 to LCCA in
NCR d) invalid claims and unpaid obligations in NCR amounting to
₱2,156,184,516.78; e) reportorial deficiencies in NCR and RO No. IV-A; f)
unauthorized modification of allotment in DepEd CAR amounting to
₱106,500.00; g) delay in release of funds in RO Nos. VI and X totaling
₱250,181,506.91; and h) lapsed NCA in RO No. X amounting to ₱11,924,422.93.
165
13.1 The DepEd is mandated through RA No. 9155, otherwise known as the
Governance of Basic Education Act of 2001, to formulate, implement, and
coordinate policies, plans, programs and projects in the areas of formal and non-
formal basic education. It supervises all elementary and secondary education
institutions, including alternative learning systems, both public and private; and
provides for the establishment and maintenance of a complete, adequate, and
integrated system of basic education relevant to the goals of national
development.
13.2 National Budget Circular (NBC) No. 573 dated January 3, 2018, provides for
the following Guidelines on the Release of Funds for FY 2018, among others:
1.0 POLICY STATEMENT
In line with the government’s thrust for more efficient, effective,

transparent, and accountable delivery of public services, key budget reforms
are being adopted to ensure the timely execution of programs, projects, and
activities, to wit:
1.1 Adoption of the one-year validity of appropriations starting FY 2017;
1.2 Comprehensive release of budget through the General Appropriations
Act as an Allotment Order (GAAAO); and
1.3 Comprehensive release of Notice of Cash Allocation (NCAs) covering
four (4) quarters at the beginning of the year, corresponding to the
operating cash requirements including RLIP.
These budget reforms shall likewise set the pace for the shift to the cash
budgeting approach in 2019.
4.0 GENERAL GUIDELINES
4.1 The FY 2018 GAA takes effect on January 1, 2018 as provided under
Section 1, General Provisions (GP) of said law.
4.2 All appropriations authorized under the FY 2018 GAA, including

programmed Automatic Appropriations, shall be valid for release and
obligation for the purpose specified until December 31, 2018. This
validity, however, shall be subject to the pertinent Special and General
Provisions of said GAA and other pertinent laws.
13.3 However, Joint Resolution No. 3 was issued by the Congress of the Philippines
and approved by President Rodrigo Roa Duterte on December 26, 2018
amending Section 61 of the General Provisions of RA No. 10964 or the GAA
for the FY 2018, to extend the availability of the 2018 appropriations for
Maintenance and Other Operating Expenses (MOOE) and Capital Outlay (CO)
to December 31, 2019.
166
13.4 Per Agency’s Consolidated Statement of Appropriations, Allotments,
Obligations, Disbursements, and Balances (SAAODB) as of December 31,
2018, DepEd had received total allotment of ₱494,590,861,364.00 for FY 2018,
of which only ₱23,880,095,645.77 or 4.83 percent was unutilized at year-end,
summarized as follows:
Allotment Obligated (in ₱) Unobligated (in ₱)

Office Allotment (in ₱)
Class Amount Percent Amount Percent
CO PS 594,085,267.00 593,505,323.37 99.90 579,943.63 0.10
CO MOOE 35,053,046,486.67 29,263,027,183.03 83.48 5,790,019,303.64 16.52
CO CO 14,978,896,165.19 6,120,640,393.53 40.86 8,858,255,771.66 59.14
Total 50,626,027,918.86 35,977,172,899.93 71.06 14,648,855,018.93 28.94
RO PS 383,444,746,889.00 379,045,133,035.61 98.85 4,399,613,853.39 1.15
RO MOOE 41,602,876,766.33 38,993,838,869.42 93.73 2,609,037,896.91 6.27
RO CO 18,917,209,789.81 16,694,620,913.27 88.25 2,222,588,876.54 11.75
Total 443,964,833,445.14 434,733,592,818.30 97.92 9,231,240,626.84 2.08
Grand Total 494,590,861,364.00 470,710,765,718.23 95.17 23,880,095,645.77 4.83
13.5 Excluding DepEd CO, the 16 DepEd ROs had remarkably utilized its budget
with a budget utilization rate ranging from 93.03 percent to 99.39 percent, as
reported in their respective SAAODBs. Details are as follows:
Allotments Obligations (in ₱) Balance (in ₱)

Office/Region
(in ₱) Amount Percent Amount Percent
CO 50,626,027,918.86 35,977,172,899.93 71.06 14,648,855,018.93 28.94
NCR 36,284,261,279.61 35,427,026,346.62 97.64 857,234,932.99 2.36
CAR 10,992,927,767.77 10,851,481,098.59 98.71 141,446,669.18 1.29
I 27,472,951,167.38 27,304,667,000.18 99.39 168,284,167.20 0.61
II 19,256,915,327.69 18,944,098,554.84 98.38 312,816,772.85 1.62
III 45,948,918,411.42 45,422,156,078.93 98.85 526,762,332.49 1.15
IV-A 50,062,980,164.97 49,570,565,521.68 99.02 492,414,643.29 0.98
IV-B 17,619,853,269.61 17,196,990,179.02 97.60 422,863,090.59 2.40
V 34,243,806,438.51 33,484,988,636.66 97.78 758,817,801.85 2.22
VI 38,405,743,854.20 35,728,903,390.54 93.03 2,676,840,463.66 6.97
VII 35,199,278,599.32 34,875,929,078.57 99.08 323,349,520.75 0.92
VIII 27,688,600,394.63 27,085,182,110.77 97.82 603,418,283.86 2.18
IX 19,565,387,612.24 19,267,219,746.60 98.48 298,167,865.64 1.52
X 21,813,440,124.92 21,366,066,054.25 97.95 447,374,070.67 2.05
XI 22,109,177,922.60 21,431,313,855.76 96.93 677,864,066.84 3.07
XII 21,364,982,311.19 21,192,586,431.46 99.19 172,395,879.73 0.81
XIII 15,935,608,799.08 15,584,418,733.83 97.80 351,190,065.25 2.20
Total 494,590,861,364.00 470,710,765,718.23 95.17 23,880,095,645.77 4.83
13.6 However, verification of the budget utilization of DepEd CO and ROs revealed
operational lapses, details of which are discussed below:
a. Unutilized allotment totaling ₱15,393,405,057.29 which was mainly caused

by unimplemented PPAs and unfilled plantilla positions in DepEd CO, NCR,
CAR, and RO No. X
Office/
ROP/SDO Audit Observations Amount
Region
CO The total unobligated allotment as at year end were unutilized 14,648,332,574.55
funds intended for the DepEd’s major programs such as DCP,
167
Office/
Region
Textbooks and Instructional Materials, and SME for FY 2018
which are still in its procurement stage due to lapses in the
procurement process, limited manpower, unrealistic Annual
Procurement Plan and physical targets without thorough
planning including the late release of funds by the DBM.
NCR ROP Unutilized allotment for the supply and delivery of the needed 7,031,683.00
Science and Mathematics Equipment (SME) for Junior High
School (JHS) and Senior High School (SHS), and for the
implementation of Joint Delivery Voucher Program (JDVP)
for SHS Technical-Vocational Livelihood (TVL)
specializations in the respective amount of ₱3,482,283.00 and
₱3,549,400.00.
SDO Quezon The unobligated amount of Personal Services (PS) and 187,317,682.30
City Retirement and Life Insurance Premium (RLIP) of
₱180,736,396.59 pertains to unutilized releases due to unfilled
positions for teaching and non-teaching personnel on account
of resignation, promotion and transfer. The unutilized
allotment of ₱6,581,285.71 represents unused School-Based
Feeding Program (SBFP) Fund and other operating expenses
relating to JHS.
SDO Manila Of the total ₱96,953,820.80 unobligated allotments for PS, 71,135,574.97
₱71,135,574.97 or 73 percent thereof were unobligated
allotment for PS under the New School Personnel Position and
Operation of Schools- (Elementary and JHS) programs
attributable to 1,313 unfilled plantilla positions as of December
31, 2018 based on the data gathered from the Personnel
Section.
SDO Caloocan Of the total ₱80,519,060.19 unobligated allotment for PS, 67,918,173.89
₱67,918,173.89 or 84.35 percent thereof pertained to the New
School Personnel Position and Operation of Schools-JHS
programs attributable to 638 unfilled plantilla positions as of
December 31, 2018 based on the data from the Personnel
Section.
SDO The Capital Outlay had the most significant unutilized budget 4,058,747.29
Valenzuela in terms of allotment released amounting to ₱4,058,747.29 or
38 percent of its total allotment. As per inquiry with the SDO
Engineer, delays were encountered in securing the approval of
various offices pertaining to electrical plans and program of
works (POWs) that is required before the project can be
implemented. The said documents have to be approved by the
DepEd CO Education Facilities Division (EFD), Local
Government Engineering Office (LGEO) and Meralco. The
result of the assessment done by Meralco was received by the
SDO in December 2018 only, hence, the program delay. A
failure of bidding during bid opening held on December 20,
2018 relative to the procurement of tools and equipment
package for TVL-SHS was due to ineligibility of the lone
bidder.
SDO Malabon Majority of the unutilized budget under Other MOOE came 17,814,803.03
from SBFP in the amount of ₱1,223,286.01, which resulted
from a discrepancy between the reported number of
beneficiaries against the actual number of beneficiaries. For
capital outlay, ₱16,591,517.02 or 93 percent of the total
unutilized funds of ₱17,864,016.57, was intended for the
implementation of Electrification Program under the Basic
Education Facilities Fund (BEFF). The SDO Engineer
disclosed that completion of the required documents,
particularly the electrical plans signed and sealed by the
professional electrical engineer from DepEd CO, took time to
168
Office/
Region
complete, thus contributing to the delay in the implementation
of the program.
SDO Pasig The unobligated amount of PS of ₱42,378,017.91 consisted of 54,855,477.80
unutilized releases of budget for salaries on Administration and
Personnel Benefit, Policy and Research Program and
Operation of Schools in Elementary. The amount of
₱11,944,142.90 under MOOE referred to over-allocation for
General Management and Supervision (GMS) in SDO, Human
Resource Development for Personnel in School and Learning
Centers, SBFP, Operation of Schools in Elementary and JHS.
On the other hand, the unutilized capital outlay of ₱533,316.99
pertained to excess funding for Basic Education Facilities
(BEF) and Operation of Schools in Elementary.
SDO Marikina The unobligated amount of PS of ₱26,958,018.87 refers to the 33,545,731.89
unutilized releases of budget for General Management and
Supervision (GMS) of SDO as well as Secondary Education,
Policy and Research Program, Operation of Schools of Junior
and Senior HS, and RLIP of regular personnel. While the
amount of ₱5,590,788.83 under MOOE consists of over-
allocation for SBFP and operating expenses of Elementary and
JHS. On the other hand, the unutilized capital outlay of
₱996,924.19 represented allotments for Learning Tools and
Equipment (LTE) and BEF.
SDO San Juan The unobligated amount of PS of ₱2,474,166.68 consisted of 3,574,716.67
unutilized releases of budget for GMS of SDO and Secondary
Education, Curricular Programs, Learning Management
Models, Standard and Strategy Development and Operation of
Schools of Senior HSs, RLIP of regular personnel and
Compensation Adjustment. The amount of ₱370,527.00 under
MOOE pertained to over-allocation for various operating
expenses mostly for travelling, training, repairs and financial
assistance/subsidy. On the other hand, the unutilized capital
outlay of ₱730,022.99 represented allotments for Technical
and Scientific Equipment and school buildings.
SDO The unutilized amount of ₱29,053,284.63 under PS was for 34,007,666.31
Mandaluyong teaching and non-teaching personnel in SDO Mandaluyong
and its implementing schools. Upon inquiry with the Budget
Unit, the excess was due to tagging of unupdated plantilla by
the HR Department which resulted in over-allocation of the
budget given to the SDO. We also noted that the HR
Department was the one directly requesting the budget from
the DBM instead of the Budget Unit. While the amount of
₱3,615,064.89 under MOOE referred to the over-allocation of
budget in Chalk Allowance which was directly related to the
problem under PS, the late release of Sub-ARO from NCR for
Training expenses, the unutilized budget for office supplies in
Andres Bonifacio Integrated School (IS) and Mandaluyong
(HS), as well as excess releases for other operating expenses.
On the other hand, the unutilized capital outlay of
₱1,339,316.79 represented allotments for office and school
buildings and technical and scientific equipment. The
Management already requested the DBM to continue the
utilization of the appropriation of unobligated allotment for
School Buildings. The HR Section of SDO Mandaluyong did
not update all the plantilla in their system as well as the tagging
thereof in order for the DBM to avoid over-allocation of funds
which should have been used for other government projects.
SDO The unobligated amount of PS of ₱37,575,226.08 was for 45,179,758.37
Taguig/Pateros newly hired teaching and non-teaching personnel. Inquiry
with the Budget Officer revealed that due to late receipt of
169
Office/
Region
allotment requested for newly hired employees, the excess
allotment allocated for regular personnel were used to pay their
salaries and other benefits. The excess allotment was derived
from the salaries and benefits of retired/resigned/transferred
employees, leave without pay, taxes and RLIP of regular
personnel. While the amount of ₱4,283,111.68 under MOOE
refers to over-allocation for various operating expenses mostly
for travelling, training and utility expenses of the SDO and its
schools. As well as unexpended budget for medical, dental and
laboratory supplies and other supplies and material expenses
allocated for SBFP. On the other hand, the unutilized capital
outlay of ₱3,321,420.61 represented allotments for
office/information and communication technology equipment,
furniture and fixtures, school buildings and mainly for
technical and scientific equipment. Of the amount,
₱2,253,889.25 pertained to the fund allocated for the purchase
of technical and scientific equipment for TVL
specialization/programs. However, during the procurement
process, no bidder participated resulting in failed bidding.
Further, no subsequent bidding took place. Instead of
requesting the DBM for continuing appropriation, the
Management opted to revert the said amount to the BTr last
December 28, 2018.
SDO Makati The unobligated amounts of PS, MOOE and Capital Outlay 8,582,838.64
amounted to ₱3,324,620.57, ₱4,672,184.18 and ₱586,033.89,
respectively, details of which were not provided by the
Management.
CAR ROP The low level of disbursements on the Agency’s PPAs was 29,980,650.57
attributed to late procurement, failure of suppliers to deliver on
time, incomplete documentation of completed projects and
activities, and insufficiency of cash allocation.
SDO Ifugao The low level of disbursements on the Agency’s PPAs were 16,523,561.46
attributed to allotments for capital outlay amounting to
₱48,908,351.96, representing 48 percent of the allotments or
₱102,759,411.18, received from the Central Office in August
to December 2018 only.
SDO Kalinga The low level of disbursements on the Agency’s PPAs 28,796,513.62
amounting to ₱42,101,713.73, represent 47 percent of the
allotments or ₱90,149,763.76, received only in November and
December 2018.
X ROP Notably, most of the unutilized allotment is attributed to the 134,748,902.93
Basic Education Inputs Program which covers the Learning
Tools and Equipment of the SHS program,
Textbooks/Instructional Materials, Computerization Program,
Basic Education Facilities and New School Personnel
Positions.
Total 15,393,405,057.29
b. Late incurrence of obligations totaling ₱436,896,605.34 in DepEd NCR

which was undertaken only in the latter part of the year
Office ROP/SDO Audit Observations Amount

NCR ROP A total of ₱231,673,695.34 was obligated only in December 231,673,695.34
2018. The said amount represented 24 percent of the total
obligated allotment of ₱946,721,956.75 as of December 31,
2018. Several PPAs which allocations were obligated only in
December 2018 comprise of a low of 0.13 percent to a high of
100 percent of the total obligated amount for each PPAs. Some
170
of the agency’s major PPAs commenced in the latter part of the
year which resulted in a delay in budget utilization and
subsequently affected the timely and full attainment of the
PPAs’ objectives.
SDO Manila Unpaid obligations in PS in the amount of ₱118,495,176.00 118,495,176.00
were intended to pay for Performance-Based Bonus (PBB) for
FY 2017. Verification of records disclosed that the Special
Allotment Release Order (SARO) for FY 2017 PBB was
released by the DBM only on December 28, 2018, the last
working day of CY 2018. The said allotment was also obligated
on the same date, while the corresponding NCA was released
only on January 23, 2019.
SDO Unpaid obligations in PS in the amount of ₱86,727,734.00 86,727,734.00
Caloocan pertained to payment of PBB for FY 2017. Verification of
records disclosed that the SARO for FY 2017 PBB was released
by the DBM only on December 28, 2018, the last working day
of CY 2018. The said allotment was also obligated on the same
date, while the corresponding NCA was released only on
January 23, 2019.
Total 436,896,605.34
13.7 From the foregoing table, it can be gleaned that some of the major PPAs
commenced in the latter part of the year which resulted in delays in budget
utilization and subsequently affected the timely and full attainment of the PPAs’
objectives.
c. Unauthorized transfer of NCA totaling ₱147,217,934.05 to Cash in Bank-

LCCA in DepEd NCR

NCR ROP Included in the total disbursements reported in the SAAODB as 20,900,900.00
of December 31, 2018 were transfers of allocations from the
agency’s Modified Disbursement System (MDS) account to its
Cash in Bank - LCCA per Advice to Debit Account (ADA) Nos.
01-1-01-101-12-665-2018 and 01-1-01-101-12-666-2018 dated
December 21, 2018. There was no actual payment yet as at year-
end as funds were only transferred to the agency’s LCCA.
SDO Manila A transfer of allocation from the agency’s MDS account to its 78,290,475.96
LCCA was noted. No actual payment yet as at year-end as funds
were only transferred to the SDO’s current account thru ADA
No. 100-2018-12-774 dated December 27, 2018.
SDO Caloocan The total disbursements include transfers of allocations from the 3,869,471.88
agency’s MDS account to its LCCA. There was, however, no
actual disbursement yet as at year end since the funds were only
transferred to the SDO’s current account.
SDO San Juan Funds were transferred by the SDO to its LCCA in order to avoid 16,004,937.45
reversion to BTR in CY 2018. As discussed, these funds were
obligated without any specific payee implying absence of valid
claims. Thus, out of the reported obligations amounting to
₱217,778,238.22, only ₱201,773,300.77 or 91 percent of the
allotments was actually obligated while ₱18,856,109.26 or 8.55
percent was not obligated.
SDO The invalid obligations were disbursed thru transfers from MDS 28,152,148.76
Taguig/Pateros account to the agency’s LCCA
Total 147,217,934.05
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13.8 The practice of transferring funds by the DepEd NCR-ROP and SDOs to its
LCCA was purportedly done to extend the validity of the NCAs which was
expected to lapse every last day of the third month of the quarter.
d. Invalid claims and unpaid obligations amounting to ₱2,156,184,516.78 in

DepEd NCR

NCR SDO Quezon Allotments were obligated without any specific payees. Only the 370,349,742.22
City word “transfer”, “Landbank” and “LBP” was written as payee
on the ORS implying absence of valid claims. Charges made
against an allotment should always be supported with valid,
proper and legitimate documents. This practice was done every
end of the quarter. The allotments were intended for payments
of PS and MOOE.
SDO Allotments were obligated without any specific payees instead, 28,152,148.76
Taguig/Pateros the word “DEPED TAPAT” was written as payees on the ORS
implying absence of valid claims. This was done few days before
year-end in view of the effectivity of the NCA pursuant to
National Budget Circular (NBC) No. 573 dated January 3, 2018,
to prevent the lapsing of NCAs and because of Item III.C of the
FY 2018 President Veto Message to the GAA of FY 2018.
ROP The agency had a low disbursement capacity with only 48.22 per 490,198,789.01
cent disbursed or paid during the year.
SDO Manila The SDO posted a disbursement utilization rate of 78.89 per cent 1,150,562,753.14
based on its total obligated amount while unpaid obligations at
year-end accounts to 21.11 per cent of its total obligations. The
unpaid obligations for capital outlay of ₱129,766,012.20
referred primarily to the cost of on-going repair and
rehabilitation of school buildings in the total amount of
₱192,084,798.07. The target date of completion is on March 22,
2019.
SDO Caloocan The SDO posted an overall disbursement utilization rate of 96.94 116,921,083.65
per cent based on its total obligated amount while unpaid
obligations at year-end accounted to only 3.06 percent of its total
obligations. The unpaid obligations for capital outlay of
₱27,736,821.09 referred, primarily, to the cost of on-going
repair and rehabilitation of school buildings in the total amount
of ₱25,595,093.82. The target date of completion is on March
14, 2019.
Total 2,156,184,516.78
13.9 Similar to the effect of the delayed/late incurrence of obligations, unpaid

obligations implies delay in the implementation of programs which has a domino
effect on the attainment of the PPAs’ expected outputs supposedly accomplished
in CY 2018.
e. Reportorial deficiencies in DepEd NCR and RO No. IV-A
Office ROP/SDO Audit Observations

NCR SDO Quezon The Budget Section does not maintain the required budget registries where
City appropriations, allotments, obligations and disbursements by expense class are to be
recorded. Instead, these are directly posted in the Budget Monitoring System, a
program provided by the DepEd CO. Absence of these registries prevents the easy and
efficient monitoring of balances of appropriations and allotments, thus, precluding the
determination of overdraft.
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Office ROP/SDO Audit Observations
SDO Manila Review of the Budget and Financial Accountability Reports (BFARs) also revealed a
system error in the preparation of the Consolidated BFARs. The Budget Services of
the SDO uses two systems in the preparation of BFARs, the Unified Reporting System
(URS) developed by the DBM and the Electronic Budget Monitoring System (E-
BMS) developed by the DepEd CO. The Consolidated BFARs (SDO and the IUs)
furnished to the Office of the Auditor were generated from the E-BMS because the
IUs directly submit their BFARs to the DBM, thus, reports generated from the URS
are not consolidated. Analysis of the BFARs showed mathematical errors in arriving
at the balances of Unpaid Obligations (Obligations minus Disbursements). According
to the staff of the Budget Services, upon encoding the data/entries, the balances are
supposedly computed by the system.
SDOs The Budget and Accounting Unit did not submit all the required budget and financial
Mandaluyong, accountability reports to the Audit Team as required under Section 32, Chapter 3,
Taguig/Pateros GAM for NGAs, Volume I.
and Makati
IV-A Batangas The accuracy of CY 2018 balances of Appropriations, Allotments, Obligations and
Budget Utilization of Division Office of Batangas Province could not be ascertained
due to the non-maintenance of the required registries by the Designated Budget
Officer, contrary to the provisions of Sections 6, 8, 10 and 18, Chapter 3 of GAM for
NGAs, Volume I and COA Circular No. 2015-002 dated March 9, 2015.
f. Unauthorized modification of allotment in DepEd CAR amounting to

₱106,500.00
13.10 The MOOE allotment of Irisan NHS of SDO Baguio City was utilized for the
purchase of office equipment costing ₱106,500.00 without approval of the
DBM, contrary to Section 72 of the General Provisions of the GAA FY 2018.
g. Delay in release of funds in DepEd RO Nos. VI and X amounting to

₱250,181,506.91

VI SDO Antique The Division Office only received Sub-Allotment Release 621,400.00
Order (SARO) No. CO 6-18-13353 dated September 27, 2018
last November 5, 2018. This allotment is valid for obligation
until December 31, 2018. This resulted in low utilization of the
fund for the year.
X ROP In the ROP, funds totaling ₱249,560,106.91 were released by 249,560,106.91
DepEd-CO in the last quarter of 2018 which consequently
delayed the implementation of the various programs of the
Agency.
Total 250,181,506.91
h. Lapsed NCA in DepEd RO No. X amounting to ₱11,924,422.93
13.11 Verification of records revealed that the SDO Camiguin had accumulated a huge
amount of ₱11,924,422.93 representing unused or lapsed NCA as of December
31, 2018. This amount was 2.09 percent of total NCA received during the year.
a) conduct thorough annual planning to ensure that targets set for

procurement and implementation of DepEd’s programs, projects, and
173
activities are specific, measurable, attainable, realistic and time
bounded;
b) identify and address lapses in the Agency’s procurement process to

ensure timely delivery of equipment, tools, and other learning
resources to intended recipient schools;
c) intensify the hiring of unfilled plantilla positions for teaching and non-
teaching personnel of the SDOs/IUs/Non-IUs through publication of
the vacant positions;
d) instruct all Accountants to revert to the unobligated surplus accounts

all obligations without legitimate claimants and valid supporting
documents, adjust the records/reports on allotment and obligations in
the budgetary records and FARs, and refrain from certifying the same
as accounts payable;
e) utilize the Agency’s allotments for its authorized purposes only;
f) instruct the Budget Officer to maintain the required budget registries

as prescribed in the GAM for NGAs and submit without delay all the
required BFARs;
g) maximize the utilization of allotments and disbursements of NCAs for

the Department, failure to fully utilize funds can adversely affect the
Agency’s future budget levels;
h) request DBM to release DepEd’s allotment early to enable the latter to

efficiently and effectively utilize these funds for its planned projects and
programs; and
i) remit to the National Treasury all the unremitted NCAs deposited

under the Cash in Bank – LCCA.
13.13 The Management commented, thus:
Office/ ROP/
Region SDO
CO Procurement activities were not carried out as planned due to delays in the
submission of required documents, i.e., Purchase Requests, technical
specifications/scope of works or terms of reference for specific projects as
indicated in the APP, by the program teams as they were revising and or
finalizing technical specifications to conform with the physical needs and targets.
The DepEd issued a Memorandum requiring offices to submit their APP on
November 20, 2017. This was reiterated in succeeding Memoranda dated April
10 and May 31, 2018.
For FY 2018, the Department encouraged program teams to conduct early

procurement activities in preparation for the transition to the Annual Cash Based
Appropriation (ACBA). DepEd Order No. 036, s. 2018 dated September 10,
174
Office/ ROP/
Region SDO
2018 was issued, which is already for 2019 Implementation based on NEP levels,
since ACBA is expected to be implemented effective CY 2019 only.
DepEd CO-PS also conducted supplier’s forum in four Clusters: Central Office
and NCR on June 19, 2018; Luzon Cluster on July 31, 2018; Visayas Cluster on
August 16, 2018; and Mindanao Cluster on August 23, 2018, to prime the market
of prospective bid opportunities in the Department by showcasing the needs and
requirements of DepEd program implementers and orient prospective bidders on
DepEd’s procurement standards and policies to facilitate faster and smooth
procurement process.
NCR ROP The Management, in their letter dated March 29, 2019, commented that it
conducts regular monitoring on the progress of accomplishments of the PPAs.
The Finance Division, thru online, regularly submits monitoring report to the
Education Program Delivery Unit (EPDU) under the Office of Undersecretary
for Finance – Budget and Performance, every third day of the month. Before
encoding in the online link, the Finance personnel coordinates with the Bids and
Awards Committee and focal persons of the PPAs to determine the status of
implementation of the PPAs and to determine if there will be a basis for
obligation.
Aside from the Management’s monthly monitoring, an Unnumbered

Memorandum dated March 12, 2019 was issued by the DepEd-NCR to remind
the concerned official/personnel on unobligated funds for MOOE and Capital
Outlay downloaded by the DepEd CO.
With regard to the fund transfer to LCCAs amounting to ₱20,900,900.00, the

Management secured the NCAs received for there were valid creditors but
lacking some requirements. It would take time for the NCAs to be released again.
As of March 29, 2019, the balance of the transferred NCA to LCCA is already
₱4,446,767.63. The Management averred that the amount transferred will be
fully utilized.
During the exit conference, the Management commented that all unutilized
allotments will form part of the Agency’s continuing appropriation in CY 2019
as authorized in the Joint Resolution No. 3 issued by the Congress, thus,
unimplemented PPAs in CY 2018 will be undertaken in CY 2019. Management
also commented that the Sub-AROs were released late, hence, the delayed
obligation of allotments in December 2018.
SDO Caloocan Management commented that the SDO, through the Personnel Selection Board
(PSB), is intensifying the advertisement and hiring campaign on vacancy by
posting available items and hastening the selection and recruitment..process.
The Budget Officer coordinates, thru the issuance of Division Memorandum,

with the different offices regarding their programs, projects and activities for
update and status relative to funding and expenditure. Monitoring of available
allotments is also presented every Executive Meeting. Proponents are well
informed but implementation is not executed due to overlapping schedule of
seminars.
Moreover, with regard to transfer of funds from MDS to current account treated
as disbursement, the Budget Officer still monitors the disbursement out of
current account.
SDO Marikina As regards the unobligated balance amounting to ₱26,958,018.87 for Personnel
Services (PS), this represents the salaries and benefits of 235 unfilled positions
for whole SDO Marikina based on the plantilla audit as of December 31, 2018.
Upon consultation with the PSB, the following are the contributory factors to the
said unfilled/vacant items:
a. Some of the unfilled positions particularly Master Teacher (MT) items

took time for validation since the existing guidelines under Ministry of
175
Office/ ROP/
Region SDO
Education and Culture (MEC) Order No. 10 s. 1979 is very stringent
on the part of the applicant.
b. The cut-off score for the Teacher 1 item is too high that restricts the
PSB to appoint applicants due to limited pool of qualified applicants.
c. Sixteen of the Administrative Assistant III and Administrative
Assistant II items were given during the last quarter of the year and
waited for clear instructions on the qualification standards and
parenthetical title that go with them.
As a solution, the Comparative Assessments for the said unfilled/vacant items

are already calendared by the PSB with a target of 50 percent filling up of
positions for the 1st semester and the remaining 50 percent filling up by the end
of the year. It is a desire of this office that the mentioned number of items be at
least completely filled up for the betterment of the schools that a teacher be
available in each classroom to deliver our main thrust which is quality basic
education for all.
As to the unobligated amounts of ₱5,590,788.83 and ₱996,924.19 for MOOE

and Capital Outlay, respectively, these balances from various programs and
projects that were already implemented and there are no other plans of utilizing
them since they have no written authority from DepEd CO. These balances
resulted from the strict implementation and adherence to the procurement
process to find the lowest responsive bidders/suppliers that can be invited within
the community and even nearby cities.
This initiative assures that public funds are spent judiciously.
With regard to the unobligated SBFP funds amounting to ₱2,325,439.34, the RO

issued Sub-ARO as early as April 23, 2018 in the amount of ₱15,817,680.00
intended for 7,323 severely wasted recipients with a budget of ₱18.00 per
beneficiary, itemized as ₱16.00 for food supplies and ₱2.00 for operational
expenses. After the conduct of Body Mass Index (BMI) Assessment of our
Health and Nutrition personnel and School Clinic Teachers at the opening of the
SY 2018-2019, only 6,313 beneficiaries were identified to be qualified
recipients, thus the Approved Budget for the Contract (ABC) was reduced and
was further reduced after the bidding process at the issuance of final contracts.
With the unimplemented programs and projects particularly the delivery of

textbooks and other instructional materials amounting to ₱84,604.00 and
₱128,302.02, respectively, the Office made use of the vehicle issued to them by
the LGU in the delivery of these items, assisted by their personnel from the
Supply Unit, thus requesting for the NCA of the said activity makes it
inappropriate while the remaining unimplemented programs and projects are
expected to be implemented this CY 2019 and assured the Audit Team that the
same safeguard for the public funds entrusted shall be observed as mandated to
them with the cooperation and proper coordination of the SDO personnel and
program implementers.
SDO Management already issued an Office Memorandum directing the Personnel
Mandaluyong Section to resolve the existing problem regarding personnel tagging and update
of all the filled and unfilled regular positions in the PSIPOP. Budget Division
already submitted the required FARs while the Accounting Division committed
to submit the reports on time.
SDO Management explained that the unutilized budget for PS was due to freeze hiring
Taguig/Pateros policy caused by the election ban. Also, the TVL bidding failed multiple times
because the SDO did not receive any bid due to its low ABC. Further, BFARs
were already submitted to the Audit Team and they guaranteed that they will be
more mindful of the deadlines in the submission of the reports.
SDO Makati According to the Accountant and Budget Officer, the required reports will be
submitted to the Audit Team as soon as possible.
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Office/ ROP/
Region SDO
CAR SDO Ifugao The Budget Officer of SDO Ifugao informed that apart from the continuous
monitoring of funds through the quarterly flash reports, the Division also
conducts quarterly Division Monitoring and Evaluation Assessment with the
program implementers.
Moreover, it has been requesting during regional and national conferences for
the early release of Sub-AROs by the Central Office.
SDO Kalinga The Management of SDO Kalinga informed that it has already published the
procurement for the 2019 BEFF and was done with the pre-bid conference.
IV-A SDO Batangas Management commented that the Budget Section used the Budget Monitoring
System (BMS), a system developed using the Microsoft Access. The application
helped the Budget Officer and the assigned staff in the preparation of various
budget reports being required by the oversight agencies. In using the said system,
it was easier to monitor the balances of allotments by program, project and
activity.
Moreover, Management also responded that other data like the Registry of
Allotments, Obligations and Disbursements (RAOD) can be exported to Excel
format. They also assured that the SDO will strictly comply with the provisions
regarding the maintenance of the required registries.
VI Antique Management commented that the funds for Capital Outlay, including funds for
Soil Exploration and TVL, were obligated at the end of the year and savings were
generated during the bidding of the projects. Also, procurement activities were
delayed due to the late release of SAROs. Management also commented that
only few recipient schools have responded and submitted the documents for land
which contributed to the low utilization of fund for the Survey and Titling of
school sites. Moreover, funds for the Textbooks and Instructional Materials were
intended for the delivery costs for the distribution of books procured by the CO
but were not fully utilized due to failure of bidding in CO. Feedbacks were
already sent by the SDO to the CO.
X ROP The major contributors to the low utilization are as follows:
a) Failed bidding of Tools and Equipment for TVL-SHS;
b) Contract for Repeat Order of Soil Exploration was cancelled as Repeat
Order is not applicable to consultancy services;
c) Late receipt of sub-allotments and numerous call-ups for attendance to
various training activities from DepEd-CO which in turn caused
overlapping of activities in the region and limited time for the
procurement and postponement of the conduct of the activities;
d) Balance/Savings in allotments for Personnel Services (PS) where there
are no more claimants; and
e) Balances/Savings in the sub-allotments received for MOOE.
Rest assured that this Office is doing its best to utilize the current and continuing
funds in FY 2019. Moreover, the procurement of the Soil Exploration and Tools
and Equipment for TVL-SHS is ongoing. Finally, this Office has consistently
raised to the DepEd-CO the issue on the late release of sub-allotments and short-
notice call-ups for attendance to trainings.
SDO The Management, in its reply dated February 26, 2019, commented that the
Camiguin School Division’s program, projects and activities (PPAs) have specific
allocations in accordance with their intended purposes and cannot be utilized for
other expenses unless there is an express authority. The Management also cited
that the remaining MOOE and Capital Outlay balances can still be used in CY
2019 and will adhere to the Audit Team’s recommendations to the maximum.
Payroll System
14. The DepEd failed to install adequate control procedures within the existing
payroll system pursuant to the DepEd Payroll Servicing Manual, resulting in:
177
(a) net under-remittance of ₱54,618,628.49 and unreconciled balance of
₱2,541,594.10 between the Due to Regional Office account vis-à-vis the Due from
Operating Units accounts; (b) unauthorized/excess payment of salaries and wages
and other personnel benefits amounting to ₱27,103,744.27; (c) non-observance of
the required minimum Net Take Home Pay (NTHP) of ₱5,000.00 due to failure of
the Agency Authorized Officer (AAO) to assess borrower’s loan payment
capacity; (d) non-submission of supporting documents for the payments of
salaries and wages and other personnel benefits to prove the validity and
propriety of claims totaling ₱2,517,051,954.16; (e) payment of salaries to retired,
deceased, transferred and separated employees amounting to ₱5,271,439.94; (f)
non-implementation of school-based payroll and ATM Payroll System; and (g)
errors and/or omissions in recording payroll transactions and other deficiencies
in the payroll system.
14.1 The DepEd has developed a Payroll Servicing Manual that serves as a reference
guide to the DepEd Central, Regional, Divisional and Field officials with their
new roles and responsibilities relative to the decentralization of the payroll
servicing system from the DepEd CO to the RPSU. The objectives of the
decentralized payroll are: (a) to shorten the payroll processing time from three
months to 30 days; (b) to minimize, if not eliminate, payroll processing errors
highlighted in the COA report of recent years; and (c) to make it easier for
teachers to follow up issues with the Department in addressing specific
complaints regarding payroll by limiting their effort to the regional level (as
opposed to previous efforts of filing and following up complaints at the DepEd
CO).
14.2 Chapter III of the said Manual provides the general procedures in the preparation
of the payroll, which starts from the submission by the Schools of the duly
accomplished Form 7, based on the Daily Time Records (DTRs) of teaching and
non-teaching personnel, on the 20th day of the month to the RPSU. The Form 7
is the basis of the SDOs in updating its payroll database. The RPSU reviews the
Form 7 and other relevant documents from which the former will prepare the
payroll, payroll slips, paychecks, etc. not later than the 10th day of the month.
Based on the payroll printed by the RPSU, the Regional Accountant informs the
SDOs/IUs of the amount to be transferred for the payroll not later than the 14 th
day of the month. Other than the payroll, the RPSU of DepEd-NCR generates a
Summary of Cash Disbursements Report (SCDR), which also shows the amount
to be transferred by the DOs/IUs for the salaries of their respective employees
to the parking bank accounts (LBP and Philippine Veterans Bank) maintained
by the DepEd-NCR. The transfer of funds from the SDOs/IUs to the DepEd-
NCR RO parking accounts shall be issued with one check or LDDAP-ADA to
facilitate the reconciliation of parking accounts’ balances in the books of the RO
and DOs/IUs, and shall be made not later than the 17th or 18th day of the month,
as amended per DepEd-NCR Unnumbered Memorandum dated September 26,
2016.
178
14.3 However, the RO issued Unnumbered Memorandum dated October 6, 2017,
which informed the SDS, OIC-SDS, Division Accountants, Budget Officers and
Personnel Officers that starting November 2017, the funding for the net pay of
personnel of DO Proper, ES, non-IUs-SS and SHS will no longer be transferred
to the parking accounts (LBP and PVB). The SDOs will remit the net pay
salaries directly from their Personnel Services MDS-Sub Accounts using the
pacsval/finDES software program.
14.4 DepEd Order No. 05, s. 2018 dated February 15, 2018 stipulated to strictly
comply with the provision that the NTHP threshold amounting to ₱5,000.00 is
mandatory. Any financial obligation incurred by any personnel of the DepEd
shall not be deducted from his/her monthly salary if such deduction will lower
his/her NTHP beyond the ₱5,000.00 threshold. No waivers effectively reducing
the NTHP shall be allowed.
14.5 Likewise, Section 48 of the General Provisions of the GAA FY 2018 provides
that:
Authorized Deductions. Deductions from salaries and other benefits accruing to

any government employee, chargeable against the appropriations for Personnel
Services, may be allowed for the payment of an individual employee’s
contributions or obligations due to the following, and in order of preference
stated below:
a. The BIR, PhilHealth, GSIS and HDMF;

b. Non-stock savings and loan associations and mutual benefits associations
duly operating under existing laws and cooperatives which are managed by
and/or for the benefit of government employees;
c. Associations or provident funds organized and managed by government
employees;
d. Government Financial Institutions (GFIs) authorized by law and accredited
by appropriate government regulating bodies to engage in lending;
e. Licensed insurance companies; and
f. Thrift banks and rural banks accredited by the BSP.
14.6 Procedures employed in the payroll system of DepEd were tainted with lapses
that resulted in the following deficiencies:
a) Net under-remittance of ₱54,618,628.49 and unreconciled balance of

₱2,541,594.10 between the Due to Regional Office account vis-à-vis the
Due from Operating Units accounts
14.7 The comparison of SCDR versus remittances per region are summarized as
follows:
179
Deposits/ Under / (Over)
Region SCDR Remarks
Remittances Remittance
NCR 13,032,307,890.25 12,977,707,407.12 54,600,483.13 In NCR, the SDOs/IUs continuously
disregarded the SCDR as its basis for
transferring funds for its payroll requirements
despite of the Memoranda issued by the
Regional Director and the recommendations of
the Audit Teams in the previous years. Three
SDOs remitted in excess of the amount required
in the SCDR by ₱4,040,457.36 while the
remaining thirteen SDOs had deficient payroll
remittances totaling ₱58,640,940.49, funding of
which were apparently taken either from the
over-remittances or accumulated balance in the
parking accounts maintained by the DepEd-
NCR, thus a net under-remittance of
₱54,600,483.13.
VI 1,482,921,790.32 1,482,903,644.96 18,145.36 Three IUs have minimal differences which are
balances as of December 31, 2017, two IUs as
of December 31, 2018 were subject for
adjustments, while Mag-aba NHS and Tinogboc
NHS incurred under remittance of ₱20,000.00
and over remittance of ₱1,683.80, respectively,
resulting in net under remittance of ₱18,145.36
as of December 31, 2018.
Total 14,515,229,680.57 14,460,611,052.08 54,618,628.49
14.8 In addition, a comparison between the balances of the Due to Regional Office
account in the books of five SDOs in DepEd-NCR with the reciprocal account
Due from Operating Units in the books of ROP disclosed unreconciled net
difference of ₱2,541,594.10. Deficiencies noted in the audit of the reciprocal
accounts were due to errors and/or omissions in the recording of payroll
transactions.
b) Unauthorized payment of salaries and wages and other personnel benefits

amounting to ₱27,103,744.27
14.9 Audit was conducted and the following deficiencies were observed in the ROs,
summarized as follows:
Nature of
Region Amount Audit Observations
Transactions
CO Salaries and 145,522.07 The payment of overtime (OT) services on a rest day was found to
Wages - be irregular as the same was not in accordance with CSC and DBM
Overtime Joint Circular No. 1 s. 2015 and DepEd Order No. 30, s. 2016
Services specifically prohibiting the rendition thereof in order to compensate
undertime (UT) and absences incurred in regular work week.
II Salaries and 168,988.68 Payment of overtime services was granted for work that can be
Wages - undertaken during the regular office hours, contrary to Section 03 of
Overtime CSC-DBM Joint Circular No. 2 s. 2015.
Services
III Chalk allowance, 52,000.00 Payment of clothing and chalk allowance to employees.
Clothing
Allowance
IV-A Cash Allowance 5,376,000.00 Granted cash allowances to 14 teachers of DO Lipa City who were
not included in the Personal Services Itemization and Plantilla of
180
Nature of
Transactions
Personnel (PSIPOP) as of September 2018 due to laxity in the
verification of requirements for entitlement to cash allowance.
Clothing 60,000.00 Granted to ten teaching and one non-teaching personnel who were
Allowance not included in the Plantilla of Personnel, have not rendered at least
six consecutive months of service during the year and without
complete documentation and not included in the updated Plantilla of
Personnel.
Hazard Pay 11,395,594.89 There was no submitted proof that they were exposed to great danger,
occupational risks, perils to life, and physical hardships, as
determined by the Secretary of Health, or by the Head of the Agency
with the approval of the appropriate Department Secretary and
attachment of relevant documents, thus rendering the transactions
irregular.
IV-B Salaries and 87,913.06 Unnecessary services
wages - Overtime
Services
Hazard Pay 30,211.42 Paid to employees while on leave and on training/seminar
Year-end bonus 48,330.30 Given to two employees who transferred to another government
and cash gift agency
VI Hazard Pay 2,112,279.91 Post-audit of various disbursements for the payment of Hazard Pay
showed that the claims were only supported with Daily Time Record
(DTR) and travel documents on attendance to
seminar/conference/training or in facilitating/monitoring of various
health related activities.
Likewise, it was also noted that the Division’s clinic is located within
the Division premises and not in “difficult areas, strife-torn or
embattled areas, distressed or isolated stations, prison camps, mental
hospitals, radiation-exposed clinics, laboratories or disease-infested
areas or in areas declared under state of calamity or emergency for
the duration thereof which expose them to great danger, contagion,
radiation, volcanic activity/eruption, occupational risks or perils of
life as determined by the Secretary of Health or the Head of the unit
with the approval of the Secretary of Health.
VIII Performance 832,239.81 The Agency approved and disbursed the amount of ₱832,239.81 as
Based Bonus payment of Performance Based Bonus (PBB) for 2015 on June 28,
(PBB) 2016 despite the absence of a Guidelines on the Grant of
Performance-Based Bonus for the Department of Education
Employees and Officials for Fiscal Year 2015 and contrary to Section
7.1 of COA Circular No. 2012-003 dated October 29, 2012.
Productivity 410,391.44 The Agency approved and disbursed the payments of Productivity
Enhancement Enhancement Incentive (PEI) on June 29, 2017 and December 12,
Incentive (PEI) 2017, respectively, contrary to Section 7.1 of COA Circular No.
2012-003 dated October 29, 2012.
RATA 715,500.00 Grant of commutable Representation (RA) and Transportation
Allowances (TA) was done despite the existence of circumstances
that prohibit it, thus, is contrary to Section 55 of the 2018 GAA and
COA Circular No.2012-001 dated June 14, 2012.
PEI & PBB 2,894,022.69 The fund dispositions despite absence of legal basis and supporting
documents exhausted government resources without any
corresponding benefit to the government. In these transactions,
utilization of public funds appeared more for personal rather than
public intents, thus, if continually tolerated, would deprive the
government of much needed funds for various targeted programs,
projects and activities.
IX Hazard Pay 582,000.00 Verification of disbursement transactions pertaining to payments of
other personnel benefits to the teaching and non-teaching personnel
of school disclosed that despite being non-health workers, employees
were granted Hazard Pay at different rates.
181
Nature of
Transactions
X Quarters 21,000.00 Rent incurred for the living quarters of the Assistant Schools
Allowance Division Superintendent is considered irregular expenditure. The
lowest rank qualified to avail the said privilege should be an Assistant
Bureau Regional Directors, equivalent to Director I (SG 25).
XI RATA 2,150,750.00 Payment of Representation Allowance and Transportation
Allowance as at December 31, 2018 without compliance with the
requirements of DBM NBC No. 548 and COA Circular No. 2012-
001 dated June 14, 2012, thus casting doubt as to the propriety of the
amount claimed and paid
XIII Cash/Chalk 21,000.00 Payments for CY 2018 Cash/Chalk Allowance were made to certain
Allowance non-teaching school personnel.
Total 27,103,744.27
c) Non-observance of the required minimum Net Take Home Pay (NTHP) of

₱5,000.00 due to failure of the Agency Authorized Officer (AAO) to assess
borrower’s loan payment capacity
14.10 Audit of payrolls revealed that various Private Lending Institutions (PLIs) had
been continuously accommodated without considering the capacity to pay of the
personnel concerned. It was noted that the AAO failed to assess borrower’s loan
payment capacity which resulted in the approval of loan applications to
employees whose salaries were already below the required NTHP of ₱5,000.00.
14.11 Observations in the Regional Offices are summarized as follows:
No. of Employees
Remarks
Region with NTHP Below
₱5,000.00
CAR 11 The Management informed that the employees were aware of the
minimum take home pay but they still requested for the issuance of
Apayao National certification on net pay for their loan applications.
Industrial and
Agricultural HS
and Hingyon
NHS
II Number of Verification of the payroll and payroll register submitted for CY 2018
employees not revealed that some employees of these schools were receiving a net
SDO of Isabela, indicated take home pay of less than ₱5,000.00 due to repayments of loans
granted to employees from PLIs.
Nueva Vizcaya
and Tuguegarao
City
IV-A 41 An examination disclosed that from the identified number of
employees with salaries below the NTHP threshold, there were loans
from different Private Lending Institutions (PLIs) which constitute
almost 38 percent to 40 percent of their total gross salaries.
VIII 73 Other than taxes, mandatory premiums and contributions to GSIS,
HDMF and PHILHEALTH, the deductions of salaries include
Eastern Samar multiple loans from GFIs and PLIs. All these deductions from GFIs
and PLIs contributed to the reduction of the monthly net take home
National
pay of employees below the required ₱5,000.00.
Comprehensive
High School
182
No. of Employees
Remarks
Region with NTHP Below
₱5,000.00
Samar National
School
X 95 This was due to the employees’ deduction of loan amortizations from

mutual benefits associations and rural banks; thus the employees are
Bukidnon deprived of receiving the minimum monthly net take home pay as
provided by law
National High
School and
Bukidnon
National School
of Home
Industries
(BNSHI)
XII 16 Audit of the payroll revealed the existence of 16 employees with
salaries below the required net take home pay of ₱5,000.00 due to
Cotabato City various personal loans availed and the negligence of the AAOs in
approving the loan applications of the employees.
XIII 8 Liquidation documents as contained in the Report of Disbursements
submitted by the School covering the months of January to December
2018 disclosed payrolls for payment of salaries and wages both for
teaching and non-teaching personnel showed that some school
personnel have monthly NTHP below the required monthly net take
home pay of ₱5,000.00 as mandated under the GAA for FY 2018,
ranging from ₱2,318.00 to ₱4,926.30.
Total 244
14.12 Gleaned from the foregoing table, observation signifies that the ROs failed to
comply with the above-cited provision of the GAA as they had not instituted
control measures to check the monthly NTHP to assess the individual’s capacity
to pay before approving the loan application from PLIs. Therefore, the overall
protection of the government employees which is the primordial concern of the
government was defeated. Government agencies should ensure that the facility
given to financing institutions will provide the most favorable terms possible to
government employees and will protect their rights and interest.
d) Non-submission of supporting documents for the payments of salaries and

wages and other personnel benefits to prove the validity and propriety of
claims - ₱2,517,051,954.16
14.13 Results of the post-audit of transactions in the CO and ROs showed that various
disbursements were made even without the necessary supporting documents or
contrary to the above-mentioned laws, rules and regulations:
Nature of
Transaction
CO CNA 260,972,996.24 Payment of CNA Incentive for FY 2016 to DepEd-
CO non-teaching employees and those from the ROs
was made in the absence of pertinent documents to
support the grant of the incentives, thus casting
doubt as to the validity of the transactions.
183
Nature of
Transaction
NCR Salaries and Wages Amount not stated The CTO implemented by the DO is not in keeping
with CSC-DBM Joint Circular No. 02-04 dated
October 4, 2004, resulting in excessive availment of
the benefit by employees which is tantamount to
double compensation.
Monetization Amount not stated Payment of monetization of leave credits to teaching
and non-teaching employees
CAR Monetization 9,299,355.72 Payment for monetization of sick leave credits and
50 percent or more of the accumulated leave credits
of 132 employees without the documentary
requirements justifying the claims.
I CNA Amount not indicated Post-audit of documents revealed that only payrolls
of recipients were attached to the Disbursements
Vouchers of the cash advance made to disburse the
CNA Incentives.
Terminal Leave Amount not indicated No SALN and Medical certificate of employee that
Benefits, Maternity is not physically fit to work
Leave
II Special Hardship 783,306.00 Payment of Special Hardship Allowances granted to
Allowances 20 officials and employees were not properly
supported with proofs that the payees were qualified
to receive the allowance and the detailed
computation to support the amounts received by the
payees, contrary to the pertinent provisions of RA
No. 4670 and National Budget Circular No. 514.
III Salaries and Wages Amount not indicated Audit of the payrolls of SDOs of Aurora, Bataan,
Cabanatuan City, Gapan City, Nueva Ecija, San Jose
City, Tarlac City and Tarlac Province disclosed that
the salaries of teaching and non-teaching personnel
under their jurisdiction were not supported by
required documents such as approved DTRs,
authenticated copy of the attendance logbooks,
approved applications for leave, if any, approved
Appointments attested by the Civil Service, payroll
and bank register, Assumption and Oath of Office
and all other required documents.
Salaries and Wages 1,039,969.41 The Management failed to submit supporting
documents for the payments of salaries and wages of
its personnel in the Division Proper and most of the
schools under their jurisdiction. This practice is
contrary to Section 4 (6) of PD No. 1445, COA
Circular No. 2012-001 dated June 14, 2012, and the
Rule XVII of Omnibus Rules Implementing EO No.
292, thus casting doubt on the validity, propriety and
accuracy of the recorded transactions.
IV-A Salaries and Wages Amount not indicated Inquiry with the Administrative Officer revealed that
the 1,152 employees did not submit their DTRs and
Application for Leave of teaching and non-teaching
personnel of the agency were filed in the said Office,
however, copies of which were not submitted to the
Auditor to support the Payrolls.
IV-B Anniversary bonus 50,341,121.08 Payment was sourced from the CY 2017 savings and
amount given exceeded the limit set forth by DepEd,
VI Salaries and PERA 13,236,051.25 Only a payroll register and database report generated
by the bank were attached to the disbursement
vouchers thus hindered the Audit Team to determine
the propriety and validity of the transactions.
Loyalty Pay 1,280,000.00 Audit of DVs/payrolls covering payment of Loyalty
Cash Award/Incentive disclosed that it was the
184
Nature of
Transaction
common practice of agency not to support payments
thereof, contrary to Section 5.15 of COA Circular
No. 2012-001 dated June 14, 2012, thus the
regularity and validity of the transactions were not
ascertained.
Terminal Leave 2,539,845.38 It was disclosed that the payments were made
Benefits despite lack of clearance, SALN, computation of
terminal leave, and affidavit of Applicant.
RATA 1,265,000.00 Review of the Disbursement Vouchers disclosed that
payment of RATA to DepEd RO No. VI officials for
the months of January to November 2018 totaling
₱1,265,000.00 were not supported with any of the
required documentation. No certifications were
attached stating that the official did not use
government vehicle and is not assigned any
government vehicle nor approved DTR for the
month’s RATA claim. Thus, accuracy and
correctness of the transaction could not be
determined.
Hazard Pay 2,112,279.91 Payment of Hazard Pay was not supported with
adequate documentation to support validity of the
claim, contrary to DBM-DOH Joint Circular No. 1,
s. 2016 dated July 15, 2016 and COA Circular No.
2012-001 dated June 14, 2012.
Monetization 804,792.58 Payment of monetization of leave credits was not in
accordance with COA Circular No. 2012-001 dated
June 14, 2012, Sections 22 and 23, Rule XVI of the
Omnibus Rules Implementing Book V of EO No.
292 and DBM Budget Circular No. 2016-2 dated
March 29, 2016, thereby, casting doubts as to the
correctness and validity of the transactions.
VII RATA 624,000.00 Claimants failed to attach a Certificate or evidence
of services rendered. Hence, the actual performance
of their respective functions cannot be established.
VIII Salaries and Wages 284,379,505.11 No Approved Payroll and DTR submitted.
Pag-IBIG Fund 23,483,287.26 No DVs including the corresponding supporting
documents, contrary to Chapter 2, Section 36 of
GAM for NGAs, Volume I.
CAN 793,000.00 The DV covering the cash advance was supported
only with ORS. Verification of the liquidation report
disclosed about absence of any other supporting
document attached except for the payroll that
contains names and signatures of payees
acknowledging receipt of the incentive.
Salaries and Wages 305,481,403.16 Payments covering salaries were paid thru ATM
without supporting evidences to establish their
validity, hence, are subject to either suspension or
disallowance during post-audit.
CNA and Loyalty 2,692,000.00 Allowances such as CNA Incentive, Loyalty
Cash Incentives Incentive, Clothing, bonuses and others including
reimbursement of travelling were paid despite the
absence of complete documentation, thus considered
of doubtful validity as well as propriety.
Anniversary Bonus 186,000.00 Anniversary Bonus was granted to its personnel in
CY 2018 without complete documentation, thus
validity of said disbursement as well as the authority
by some employees to claim such benefits is not
assured.
185
Nature of
Transaction
CNA 993,000.00 The Agency granted CNA Incentive in CY 2018 to
its employees without supporting documents as
proof of the legality of the claims, thus
disbursements may have to be concluded as doubtful
validity.
Compensatory 232,102.93 COC equivalent to 1,688 hours were allowed to 29
Overtime Credit teaching personnel despite lacking in supporting
documents and other deficiencies, contrary to
relevant rules, thus may deprive the government of
much needed services.
Hazard Pay 582,000.00 Hazard Pay was granted during CY 2018 to
employees who are non-health workers at different
rates without complete and proper documentations
as proof of the legality of claims, contrary to Section
53 of the General Provisions of the FY 2018 GAA
and Item 3.0 of DBM Budget Circular No. 2005-4
dated July 13, 2005, thus disbursements may have to
be concluded as of doubtful validity.
Subsistence 9,700.00 Management allowed grant of subsistence allowance
Allowance to public health workers despite lacking in
documentation, thus showing lack of review on said
claims prior to their being paid which subjected all
to either suspension or disallowance during post-
audit.
Transportation and 494,000.00 Payment of transportation and communication
Communication allowances to selected SDO personnel were not
Allowance supported with complete documentation, thus
validity and propriety of the disbursements were
doubtful, and could be subjected to suspension or
disallowance.
Subsistence, Amount not indicated Management allowed grant of subsistence allowance
Laundry, and to public health workers despite lacking in
Quarters documentation, thus showing lack of review on said
Allowances claims prior to their being paid which subjected all
to either suspension or disallowance during post-
audit.
Other Personnel 2,377,000.00 Allowances such as CNA Incentive, Loyalty
Benefits Incentive, Clothing, bonuses and others including
reimbursement of travelling were paid despite the
absence of complete documentation, thus considered
of doubtful validity as well as propriety.
Honoraria 484,000.00 Payment of Honoraria for the BAC & TWG is
excessive and not in consonance with DBM Budget
Circular No. 2004-5A dated March 23, 2004 and its
amendment under DBM Budget Circular No. 2007-
3, thus resulting in the disallowance and/or
suspensions of pertinent claims.
Quarter Allowance 70,000.00 Payment for rent of quarters for a DepEd Official
exceeded 175 percent compared to the allowable
amount for rent prescribed under National Budget
Circular No. 71 dated December 4, 2017 or a total
excess payment of ₱70,000.00 as of October 31,
2018.
Monetization 1,108,465.58 Employees' claims for monetization of 50% or more
of the accumulated leave credits ranging from 10-
105 days were allowed to be paid even in the absence
of inadequate earned vacation leave credits aside
from the lack of supporting documents as proofs of
payments, contrary to relevant provisions of law and
rules.
186
Nature of
Transaction
X CNA 397,965.83 The Division of Tangub City released an amount of
₱397,965.83 to its officials and employees as
payment of CNA Incentives for CY 2016, without
the necessary supporting documents. The documents
attached to the claims are the RADAI, BUR, JEVs,
Advice/ADA and the Payrolls of the officers and
employees.
Terminal Leave 241,663.18 Terminal Leave Benefits were processed, approved
Benefits and paid even with incomplete documentation;
hence, the regularity and propriety of the
expenditures could not be established.
Salaries and Wages 11,815,719.42 Salaries of Alubijid National Comprehensive High

School for the period January to December 2018
totaling ₱11,815,719.42 were not supported with the
required supporting documents, thereby hampering
the verification of the propriety of the transactions.
Loyalty Award 15,000.00 Loyalty cash award/incentives granted to three
employees of the Carmen NHS were not supported
with complete documents.
XI RATA 1,651,875.00 Payments were not supported with certification that
the official/employee did not use government
vehicle and was not assigned any government
vehicle; and payments were not supported with
certificates or evidence of service or approved DTR
as required in CSC Memorandum Circular No. 21,
Series of 1991.
Salaries and Wages 455,347,706.09 The payment of salaries and wages to regular
employees of the following SDOs of Tagum City,
Davao del Sur, Davao Occidental and its
Implementing Units amounting to ₱455,347,706.09
were not supported with complete documentation
such as DTRs, approved Application for Leave and
other necessary documents.
Salaries and Wages 1,060,508,510.46 Payment of salaries and wages to regular employees
were not supported with complete documentation
such as DTRs, approved Application for Leave and
other necessary documents.
XII Monetization 104,000.00 The DVs for the payment of monetization of earned
leave credits were not supported with the required
supporting documents, contrary to Section 4(6) of
PD No. 1445 and Item 5.14 of COA Circular No.
2012-001 dated June 14, 2012.
XIII Salaries and Wages 1,354,028.41 The practice of effecting payments for salaries and
wages to teaching and non-teaching personnel even
without the prescribed DTR duly approved by the
immediate head of the employees indicate the laxity
of the SDOs in processing claims without observing
the basic requirements on the payment of salaries
and wages, which hindered the proper verification
on the authenticity of daily entries of attendance
using the prescribed form, and the accuracy and
validity of the amount paid considering any
unauthorized absences or leave without pay for the
period.
Special Hardship 11,340,238.90 Payment of SHA was not supported with adequate
Allowance documentation due to the absence of check and
balance in the processing of claims, thus validity and
propriety of the transactions cannot be established.
187
Nature of
Transaction
Monetization 5,937,447.66 Monetization of leave credits were not supported
with all the necessary documentary requirements
due to the weakness of control measures in ensuring
complete and appropriate documentation before
effecting payment of the same, thus casting doubt on
the authority and validity of the transaction.
Overtime Services 188,832.42 Overtime pay was granted to employees without
available appropriation and was not supported with
relevant documents, thus casting doubt on the
legality of the transaction.
Hazard, 355,340.88 Actual services rendered was not considered in the
Subsistence and computation of Hazard Pay granted to Health
Laundry allowance Personnel of the SDO in CY 2018, thus the propriety
of the amount paid is doubtful and payment in excess
of the allowable rate is subject to audit disallowance.
Study Leave 129,444.30 Beneficiary of study leave was unable to take the bar
examination allegedly due to health reason,
however, casting doubt as to the legitimacy of his
reason as the existing medical condition should have
been considered before the contract was entered into
to avoid wastage of government funds.
Total 2,517,051,954.16
14.14 The failure of the Management to submit the necessary supporting documents
for several transactions of the Agency resulted in its incomplete verification and
evaluation which is vital in the establishment of the validity and propriety of the
said claims.
e) Payment of salaries to retired, deceased, transferred and separated

employees - ₱5,271,439.94
14.15 Verification of the transactions in four ROs disclosed that salaries of former
employees of DepEd were paid even after their retirement or separation from the
service. Details are shown below:
Region Amount Audit Observations Remarks/Comments
CAR 1,166,797.00 Salaries covering pay periods after Verification of the IBM Payroll of
dates of separation from the service SDOs Kalinga and Tabuk disclosed
were paid to former employees because that salaries of former employees of
the monthly Form 7 of SDOs Kalinga DepEd were paid even after their
and Tabuk were submitted to the RPSU retirement or separation from the
after deadline, resulting in loss of service.
government funds.
III 27,091.00 Overpayment/double payment of Review of the data extracted from the
salaries to some employees who are system of the RPSU showed that a
already resigned/retired/transferred/ total of 57 personnel whose age
were included twice in the payroll. ranges from 65 years old and above
are still in service and continue to
receive salaries and benefits beyond
their forced retirement age.
IV-B 48,330.30 Payment of year-end bonus and cash Given to two employees who
gift to two employees who transferred transferred to another government
to another agency. agency.
V 4,004,042.64 Amount due from Ms. Gemma R. Review of the composition of Due
Saberon-Sapo representing double from Officers and Employees account
188
Region Amount Audit Observations Remarks/Comments
payment of salaries and benefits as under the Regular Fund amounting to
Education Program Supervisor I in the ₱5,174,546.64 as of June 30, 2018
Division of Albay and Principal III of showed that a substantial portion of
Marcial O. Rañola Memorial School, which or ₱4,004,042.64 pertains to
Guinobatan, Albay with balance of the amount due from Ms. Gemma R.
₱4,004,042.64 as of June 30, 2018, was Saberon-Sapo, former Education
inappropriately accounted for in the Program Supervisor I, Division of
books of DepEd ROP. Albay and present Principal III of
Marcial O. Rañola Memorial School,
Guinobatan, Albay.
XII 25,179.00 Failure of the Accounting Unit to Examination disclosed that a total of
maintain an Index of Payments resulted ₱1,424,840.00 was paid for the Year-
in double payment of Year-end Bonus end Bonus and Cash Gift of the 47
and Cash Gift to Mr. Joe Mar Mallorca employees of Greenfield NHS.
amounting to ₱25,179.00, to the Another ADA was issued by the
disadvantage of the government. school representing payment of Year-
end Bonus and Cash Gift for CY 2018
to Mr. Joe Mar Mallorca for a total
amount of ₱25,179.00. Upon review,
it was found out that Mr. Joe Mar
Mallorca had already been included in
the 47 employees entitled to Year-end
Bonus and Cash Gift for CY 2018.
Total 5,271,439.94
f) Non- implementation of school-based payroll and ATM Payroll System
14.16 The monthly payrolls of the SDO of Tarlac Province and the 22 Autonomous
High Schools/IUs in RO No. III are continuously prepared and processed by the
Regional Payroll Servicing Unit (RPSU) DepEd RO No. III, despite the
lapses/deficiencies observed in the approved RPSU Payroll Registers of the
schools contrary to DepEd Order No. 30 s. 2011 dated March 24, 2011, requiring
the Implementation of School-Based Payroll Preparation.
14.17 Verification also disclosed that the following schools in RO No. XIII did not
fully adhere to the provisions of DepEd Order No. 8, s. 2009 and DBM Circular
Letter No. 2013-16 dated December 23, 2013 nor implement strictly the ATM
Payroll System and the ExMPDS to pay creditors/employees but instead
payments were mostly done through the grant of cash advances to Disbursing
Officer, as a result, unnecessary man-hours and supplies were incurred which
consequently affects the Agency’s operational efficiency.
g) Errors and/or omissions in recording payroll transactions and other

deficiencies in the payroll system
14.18 Other deficiencies noted in the audit are errors and/or omissions in the recording
of payroll transactions such as:
III Inconsistent employee position, salary grade and step increment in the payrolls as compared
with the approved DBM PSIPOP.
Employees that were not in the approved PSIPOP of the schools were paid by the same
school as per monthly RPSU Payroll Register and in the approved PSIPOP of the school but
189
not paid salaries in the same school, affecting the proper monitoring of payment of salaries
of the personnel.
Teachers/personnel who changed status from single to married.
55 teachers/personnel have different spelling per payroll and per PSIPOP.
VIII Payment of Salaries of DepEd personnel once in a month.
Excessive Payment of Honoraria for BAC & TWG amounting to ₱484,000.00.
14.19 This practice is contrary to Section 4 (6) of PD No. 1445, COA Circular No.
2012-001 dated June 14, 2012, and the Rule XVII of Omnibus Rules
Implementing Executive Order No. 292, thus casting doubt on the validity,
propriety and accuracy of the recorded transactions.
14.20 The foregoing deficiencies are the consequences of the complicated payroll
system of the DepEd wherein payrolls are prepared in the ROs wherein funds
for the same are transferred by the SDOs and IUs to the Payroll Fund of the RO
which processes the payments thereof while the responsibility to remit payments
with government institutions and PLIs are shared by the SDOs/IUs and the ROs.
a) require strictly the SDOs/IUs to transfer funds based on the actual

monthly requirements as shown in the SCDR and immediately provide
the RO with a copy of deposit slips and other supporting documents to
facilitate the recording and reconciliation of financial records/reports
relative to the fund transfers for payroll requirements;
b) reconcile the ROP's records with those of the SDOs/IUs in order to

resolve the disparities between the balances of the reciprocal accounts
Due from Operating Units and Due to ROs and prepare correcting
entries for errors and omissions in the recording of payroll transactions
to reflect the accurate balance of the reciprocal accounts;
c) ensure strict compliance with the provisions of DepEd Order No. 05,
series of 2018, on the order of preference in the withholding of salary
deductions with due consideration on the NTHP threshold of ₱5,000.00
as required in Section 48 of the General Provisions of GAA for FY
2018;
d) devise and install control mechanism to limit the accreditation of PLIs

to avoid excessive number of PLIs that offer several types of loans for
the protection and financial stability of DepEd employees;
e) strengthen the internal control system in the processing of payrolls

through appropriate review and approval by concerned officials of the
ROs, SDOs and IUs of payroll and refrain from accommodating
payments of salaries to teaching and non-teaching personnel without
the corresponding DTRs and its supporting documents to have a valid
190
and accurate payment of services rendered and deduction of any
unauthorized absences or leave without pay;
f) implement strictly the ATM payroll system and the ExMPDS in the
payment of payables due to creditors/payees to minimize risks in
handling cash, eliminate unnecessary man-hours and supplies thereby
boosting Agency’s operational efficiency;
g) require the immediate refund of overpayments for

double/multiple/excess payments made to employees/teachers
concerned; and
h) propose to the DepEd CO the decentralization of the payroll

preparation, processing, payment and recording in the SDOs/IUs since
the latter have first-hand access on the needed data/information
relevant to its payroll requirements to be funded from their
appropriations.
Region Management’s Comment

NCR The Management in their letter dated January 18, 2019 commented that they have already issued
Unnumbered Memorandum requiring all OUs to transfer fund for the amount reflected in the
monthly SCDR generated by the RPSU.
Procedures to simplify the processing and recording of payroll transactions are already being
undertaken by the ROs. Likewise, the Finance Division of DepEd-NCR developed a facility using
Google Drive for the online submission of deposit slips as a supplement to the submission of
hardcopy of validated deposit slips and LDDAPs to facilitate the immediate verification and
reconciliation of reciprocal accounts. Other errors/omissions committed in the recording of
reciprocal accounts as of September 30, 2018 were already adjusted.
II Management committed that they will limit the granting of loans to employees to ensure that their
net take home pay will not be below the threshold amount. They will implement the recommendation
starting this CY 2019.
III Management commented that it will closely monitor the payroll preparation and that the RPSU will
work in tandem with Division in-charge in complying with the recommendations.
The Management promised to install adequate control measures such as updating of personnel
information profile regularly, refund double payment incurred, organize their storeroom, ensure that
Application for Leave is duly approved by the Schools Division Superintendent and assured to
strengthen internal control system in the processing of payroll to avoid the continuous payment of
salaries to some resigned/transferred/deceased teachers/employees.
IV-A Management discussed with Division Heads and School Principals the early submission of DTRs
and Application for Leave of all its employees and will issue a written Memorandum reiterating
the same. Thus, starting this CY 2019, the Administration Section, Personnel Unit will be submitting
the required documents together with the Payrolls to the Office of the Auditor to ascertain the
legality and propriety of the claims.
V Management explained that the recording made by the Regional Accountant as regards the first
release of the CNA fund incentive was in compliance with the instruction of the DepEd CO that the
funds received by the ROs be accounted for as Accumulated Surplus (deficit) following the
accounting treatment at the Central Office. However, they were instructed to submit a report on the
payment of CNA for CY 2014 pursuant to Annex A of DBM Budget Circular No. 2015-2 dated
November 23, 2015.
VI Management commented that hopefully computation and preparation of payroll will be transferred
soon from RPSU to the schools since there are new items to be opened within the DepEd to handle
191
Region Management’s Comment
the concerns on payroll. Also, Mag-aba NHS has made adjustments in their books of accounts and
already remitted the ₱20,000.00 under remittance to the DepEd RO.
VIII The Management commented that they will make sure that all claims are properly supported with
the necessary documents and prepares the payroll for all salaries and other compensations in
accordance with the prescribed processes.
X The school already started to implement the ₱5,000.00 NTHP of employees in the month of May
2018. However, the school did not immediately implement the NTHP of ₱5,000.00 per employee as
they were expecting for the IRR coming from DepEd in reference to Item No. 3 of DepEd Order
No. 8. S.2012 on the implementation of ₱5,000.00 NTHP for FY 2012, that those “deducted
obligations” of the concerned DepEd personnel on their monthly payslip as a result of the
requirements on ₱3,000.00 NTHP pursuant to FY 2012 GAA shall still be continued until full
payment.
XI The Regional Director issued an Unnumbered Memorandum dated February 13, 2019, directing all
regional employees to submit their DTR on or before the fifth day of the succeeding month.
Attached with the Memorandum are the submitted DTRs of the employees.
Management assured that beginning January 2019, they will be adhering to the said requirements
and submit, as recommended, the necessary relevant documents.
XIII Management admitted the shortcomings of non-strict implementation of ExMDPS prescribed by the
DBM. Moving forward, they will adhere to the audit recommendations and strictly implement the
ExMDPS in paying their payables to their creditors/payees to minimize risk in handling cash.
Management replied that the process of submission of paid payrolls and DTRs were already
disseminated to various Districts and the Payroll In-charge was oriented in the submission of reports.
Moreover, Payrolls and DTRs for CY 2018 of the Division and some Districts were already
submitted to COA Office.
Non-compliance with the IRR of RA No. 9184 and Other Issuances on Government
Procurement
15. There were procedural lapses and/or inadequacy of supporting documents in the
procurement of goods and services totaling ₱67,624,346.07 at the CO and
₱1,695,197,966.96 in some ROs and SDOs, contrary to the provisions of RA No.
9184 or the Government Procurement Reform Act, and its Revised IRR, and of
existing COA regulations, casting doubt on the integrity and reliability of the
procurement processes and defeating the purpose of the law on transparency,
competitiveness and accountability.
15.1 The revised IRR is promulgated pursuant to Section 75 of RA No. 9184,

otherwise known as the “Government Procurement Reform Act,” for the
purpose of prescribing the necessary rules and regulations for the modernization,
standardization and regulation of the procurement activities of the Government
of the Philippines (GOP).
15.2 Audit of the procurement procedures adopted by the CO revealed the following
deficiencies:
▪ Lacking in supporting documents, lack of system accountability and non-

observance of the conditions agreed in the Contract Agreements
Contracting Parties Contract No. Date of Contract Contract Price

DepEd Book Media Press 2017-04-BEA1-(031)-BI- 21-Sept-2017 41,987,840.00
CO Inc. CB002-C001
192
Contracting Parties Contract No. Date of Contract Contract Price
Syrex Corporation 2017-04-BEA1-(031)-BI- 20-Sept-2017 18,719,920.00
CB002-C002
Ximex Delivery 2017-04-BEA1-(031)-BI- 03-Oct-2017 6,999,999.00
Express Inc. CB002-C003
Total 67,707,759.00
15.3 For Claims of Book Media Press Inc, Syrex Corporation and Ximex Delivery
Express, out of the Invoice/Billing totaling ₱67,624,346.07, ₱62,721,581.31 (net
of retention, VAT and EWIT) were paid despite lacking in supporting
documents, lack of system accountability and non-observance of the conditions
agreed in Item 5 of Contract Agreements, Section IV - General Conditions of
Contract, Section IV - Special Conditions of Contracts and Section VI -
Schedule of Requirement, hence, contrary to the provisions of Section 4 of PD
No. 1445 and Section 3 of RA No. 9184. Enumerated below are the details of
payments:
a. Book Media Press, Inc.

Payment D.V. No. Invoice/Billin 5% VAT & Retention Fee Net Amount
g Amount 2% EWIT Due
Final 17-10-20123 41,987,840.00 2,624,240.00 419,878.40 38,943,721.60
b. Syrex Corporation:
Invoice/
5% VAT & Net Amount
Payment D.V. No. Billing Retention Fee
2% EWIT Due
Amount
First 17-11-21079 7,723,280.00 482,705.00 77,232.80 7,163,342.20
Second 17-12-25929 9,468,589.63 591,786.85 94,685.90 8,782,116.88
Final 18-05-9602 1,444,637.44 90,289.85 14,446.38 1,339,901.21
Total 18,636,507.07 1,164,781.70 186,365.08 17,285,360.29
c. Ximex Delivery Express, Inc.

Payment D.V. No. Invoice/Billin 5% VAT & Retention Fee Net Amount
g Amount 2 % EWIT Due
Partial 17-11-2234 2,799,999.60 174,999.60 28,000.00 2,597,000.00
Final 2018-07- 4,199,999.40 262,499.98 42,000.00 3,895,499.42
14004
Total 6,999,999.00 437,499.58 70,000.00 6,492,499.42
Grand Total 67,624,346.07 4,226,521.28 676,243.48 62,721,581.31
▪ No performance security coverage and delays ranging from 15 to 78 days in

the approval of award of contract, issuance of Notice of Award and perfection
of the contracts amounting to ₱67,707,759.00
Contract No. Supplier Amount

2017-04-BEA 1(031)-BI-CB002- BOOK MEDIA PRESS, INC 41,987,840.00
C001
2017-04-BEA 1(031)-BI-CB002- SYREX CORPORATION 18,719,920.00
C001
2017-04-BEA 1(031)-BI-CB002- XIMEX DELIVERY EXPRESS INC. 6,999,999.00
C001
Total 67,707,759.00
193
15.4 The Declared Policy and Governing Principles on Government Procurement
embodied in the IRR of RA No. 9184 were not faithfully complied with by
DepEd BAC in conducting procurement activities for the Printing of National
Career Assessment Examination (NCAE) Test Booklets and Non-Classified
Materials and allied documents for a total contract price of ₱67,707,759.00
which led to no Performance Security coverage for five months and 12 days as
well as delay in the approval of award of contract, issuance of Notice of Award
and perfection of the contracts.
▪ Ambiguity in the technical specifications on DepEd’s requirement for

modular office system
15.5 The ambiguity in the technical specifications on DepEd’s requirement for

modular office system awarded to Design & Function Incorporated under
Contract No. 5-11-AdmS2(003)-BIII-CB028a-C069 in the amount of
₱34,175,391.64, resulted in the inability to properly determine the cost of the
installed modular office partition, casting doubts on the validity and correctness
of the payments made for the number of partition delivered/installed amounting
to ₱28,636,769.00. Furthermore, the lack of proper planning that changes actual
installation layout resulted in uninstalled modular partition and apparent waste
of government resources amounting to ₱2,316,643.37.
▪ BAC II did not meet the required minimum number of five members
Lot Contract
Contract No. Date of Contract Supplier
No. Amount
3 2017-08-ICTS1 (001, 1/9/2018 Allcard Plastics Philippines, 738,738,685.28
002 & 004 to 016)-BII- Inc. JV Silicon Valley
CB022-C038 Computer Group Phils., Inc.
4 2017-08-ICTS1 (001, No date (Date of Columbia Technologies, Inc. 1,451,290,495.00
002 & 004 to 016)-BII- Notary Public
CB022-C030 12/5/17)
5,7 2017-08-ICTS1 (001, No date (Date of Girlteki Inc. JV Shenzhen 2,557,047,068.95
002 & 004 to 016)-BII- Notary Public Hasee Computer Co., Ltd.
CB022-C031 12/4/17)
8 2017-08-ICTS1 (001, No date (Date of RedDot Imaging Philippines, 1,519,713,433.28
002 & 004 to 016)-BII- Notary Public Inc. JV Shenzhen Kstar
CB022-C032 12/4/17) Science and Technology Co.,
Ltd.
1,6 2017-08-ICTS1 (001, No date (Date of RedDot Imaging Philippines, 2,480,146,470.85
002 & 004 to 016)-BII- Notary Public Inc. JV Shenzhen Kstar
CB022-C035 12/6/17) Science and Technology Co.,
Ltd
2 2017-08-ICTS1 (001, 12/7/2017 Columbia Technologies, Inc. 1,241,866,074.00
002 & 004 to 016)-BII-
CB022-C036
9,988,802,227.36
15.6 Review of the documents relative to the above awarded contracts disclosed that
at the early stage of the procurement process, the BAC II did not meet the
required minimum number of five members, contrary to Section 11.2.1 of Rule
V of the IRR of RA No. 9184 which expressly provides that “The HoPE shall
194
designate at least five (5) but not more than seven (7) members to the BAC of
unquestionable integrity and proficiency.”
▪ Non-submission of the required supporting documents and non-compliance

with the procurement timelines with delays ranging from one day to 68 days
15.7 The non-submission of the required supporting documents, such as approved

copy of technical specifications, proof of posting requirements to PhilGEPS and
the agency websites, invitation to all observers, Certificate of Availability of
Funds (CAF) and detailed breakdown of Approved Budget for Contract (ABC)
and cost estimates, non-compliance with the procurement timelines and other
deficiencies noted in the auditorial and legal review of the contract entered into
by the DepEd with Victorious Publication, Inc. for the Printing of SY 2019-2020
Grades 4 and 10 Learning Resources, and Delivery to DepEd Central Office
Warehouse, Public Schools, District Offices and Public High Schools
Nationwide under Contract No. 2018-07-BLR2(012&014)-BI-CB013-C047
(Lot 1) in the amount of ₱72,966,298.20, impeded the timely validation and
complete evaluation by this Office of their compliance and observance with
existing procurement regulations affecting the validity of the transaction.
15.8 The Audit Recommendations, Management’s Comments and the Auditor’s

Rejoinder are tabulated as follows:
Audit
Recommendations Management’s Comments Auditor’s Rejoinder
Observations
Lacking in • Submit justification and/or The Management manifested
supporting explanation on: that they shall cooperate on all
documents, lack of of the COA’s requests for
system a) Items No. 5 of the Contract documents and explanations
accountability and Agreements of the said three for them to effectively and
non-observance of contracts which stated “One efficiently perform the
the conditions Time Payment on Complete mandate of their Office.
agreed in Contract Delivery and Final However, much as the
Agreements Acceptance” do not agree Management wants to expedite
with Item No. 11 of Section the processing of the request
IV - General Conditions of within the ten calendar days
Contract of progress billing mentioned in the AOM, said
type of terms of payments; period may not be enough to
answer all the issues the Audit
b) Name, signature and position Team had raised and to
of DepEd Accounting produce the documents
Division official who requested as these require
conducted pre-audit of coordination with and retrieval
transactions was not of documents and records from
identified; various Offices of the DepEd.
c) Section VII - TECHNICAL

SPECIFICATIONS attached
to the Contract Agreements
with bidders’ statements of
compliance with each and
every agreed specification
were not validated or verified
by the responsible official of
195
Audit
Observations
DepEd as to the truthfulness
of supplier’s compliance;
• Submit the abovementioned

supporting documents;
• Henceforth, DepEd
personnel or official who
conducted pre-audit of
transactions must state
his/her name, signature and
position; and
• Require the officials and

employees concerned to
submit the documents and
reports mentioned herein to
avoid audit suspensions.
Ambiguity in the • Instruct the AMD Division to The Management conducted
technical assess the difference of the assessment and actual
specifications on panels actually installed and validation per office of the
DepEd’s paid vis-a-vis the number of panels installed and paid as
requirement for panels per contract and recommended by the COA.
modular office deduct from the supplier’s They submitted Actual
system retention fee any deficient Inventory of the Installed
panel as counted; Modular Partition in the
Central Office and a Summary
• Provide justification on why of the Requirement of Modular
a Notice of Disallowance Partition vs. the Actual
should not be issued on the Installed Partitions which
excessive uninstalled shows that all requirements as
modular partition; and per contract were complied
with. Also, the Asset
• Thereafter, ensure detailed Management Division (AMD)
contract specification recorded the Furniture and
through appropriate Fixtures on a per set as
procurement planning and reflected in the winning
compliance with Section 7 of bidder’s proposal.
RA No. 9184.
BAC II did not meet Provide comments on the There is no question that the The observance of the
the required foregoing audit observations/ BAC II complied with the law provision of Section 11.2.1
minimum number of deficiencies within ten calendar in relation to its initial of Rule V of the IRR of RA
five members days from receipt hereof. composition. RA No. 9184 and No. 9184 requiring at least
its IRR did not expressly state a minimum number of five
that the BAC maintains at least members does not run
five members throughout its contrary to the promotion
proceedings to make their acts of efficiency. The BAC is
valid, and they can validly given functions which
function for as long as there is require decision making.
quorum. Requiring the Thus, one important
complete composition of all consideration is the
five BAC members in order to number of BAC
undertake valid transaction composition. The above
will lead to inefficiency and provision, in fact, provides
cause serious delays in the the minimum number as
procurement, thus will run decision making group, in
contrary to an important policy that an odd-number
envisioned by the framers of prevents ties and comes up
196
Audit
Observations
RA No. 9184, which is the with efficient decisions as
promotion of efficiency. majority rules.
Although even-number
size can make decisions,
the process can take more
time, in case of tie, thus,
will hamper the
procurement activities than
by having the HoPE
designate a replacement.
While the non-compliance

with the above provision
may not render the
decisions/resolutions
issued by the BAC II
invalid, this may be used
against the latter for
holding it responsible for
such non-compliance
under Section 12.2 IRR of
RA No. 9184. To wit: The
BAC shall be responsible
for ensuring that the
Procuring Entity abides by
the standards set forth by
the Act and this IRR xxx.
No performance • Comply strictly, thru the The BAC I Chairperson who As to assertion that BAC
security coverage HoPE/BAC, with the cannot even act alone as the I’s Chairperson has
and delay in the provisions of the revised IRR Chairperson and may only act nothing to do with the
approval of award of of RA No. 9184 on the together with the Vice- payment of Disbursement
contract, issuance of approval of award of Chairperson and BAC I`s Vouchers because after the
Notice of Award and contract, issuance of Notice regular and provisional issuance of the Resolution
perfection of the of Award and perfection of members, has absolutely no to Award, BAC I`s duties
contracts the contracts as mentioned jurisdiction or has nothing to and responsibilities in
herein; and do with the payment of the connection with the said
Disbursement Vouchers for project ceased, this Office
• Observe the period of action the Printing of National Career agree; but, please be
in procurement activities to Assessment Examination informed that the BAC is
ensure timely delivery of (NCAE) Test Booklets and required to monitor the
goods and services procured. Non-Classified Materials, procurement activities
Scannable Answer Sheets and from advertisement up to
Certificate Ratings, Processing issuance of Certificate of
of Scannable Answer Sheets, Final Acceptance.
Individual Test Results,
Statistical Data Output Section 12 of the IRR of
Requirements; and Delivery RA No. 9184, Functions of
and Retrieval of NCAE the BAC, Item 12.2
Materials by Suppliers, provides that: The BAC
namely: Book Media and shall be responsible for
Syrex Corp. He also has ensuring that the Procuring
nothing to do or has no Entity abides by the
jurisdiction over the offices standards set forth by the
which (a) cause the payment of Act and its IRR and, it shall
the disbursement vouchers; (b) prepare a Procurement
submitted the documents to Monitoring Report in the
ensure the compliance of form prescribed by the
companies; or (c) monitored GPPB.
the satisfaction of conditions,
197
Audit
Observations
to support payment of The standards set forth by
companies. the Act and its IRR states
that the BAC shall be
In connection with the responsible to ensure the
aforementioned transaction, preparation of a
the BAC has the following Procurement Monitoring
functions pursuant to Section Report (Form) among
12 of RA No. 9184, to wit: others,
delivery/completion and
Section 12. Functions of the inspection/turnover
BAC shall: advertise and/or pursuant to Section 12.2 of
post the invitation to bid, the IRR and Appendix 5 of
conduct pre-procurement and GPPB Circular No. 03-
pre-bid conferences, determine 2015.
the eligibility of prospective
bidders, receive bids, conduct These procurement
the evaluation of bids, activities:
undertake post-qualification delivery/completion and
proceedings, recommend acceptance/turnover, are
award of contracts to the HoPE obligations of the BAC to
or his duly authorized monitor until such time
representative: Provided, that that Certificate of Final
in the event that the HoPE shall Acceptance is issued. This
disapprove such is to say that BAC I duties
recommendation, such and responsibilities do not
disapproval shall be based end with the issuance of
only on valid, reasonable and the Resolution to Award
justifiable grounds to be but extends up to issuance
expressed in writing, copy of Certificate of Final
furnished the BAC; Acceptance.
recommend the imposition of
sanctions in accordance with This is so because
Article XXIII, and perform “delivery/completion” and
such other functions as may be “inspection/turnover”
necessary, including the which are part of the
creation of a TWG from a pool procurement activities that
of technical, financial and/or the BAC acting as a
legal experts to assist in the collegial body is obliged to
procurement process. monitor the Certificate of
Final Acceptance which is
In proper cases, the BAC shall issued after contract
also recommend to the HoPE completion which involves
use of Alternative Methods of delivery and
Procurement as provided for in inspection/turnover.
Article XVI hereof.
Thus, the contention that
The BAC shall be responsible “the BAC I Chairman
for ensuring that the Procuring cannot even act alone as
Entity abides the standards set the Chairperson and may
forth by this Act and the IRR, only act together with the
it shall prepare a Procurement Vice-Chairperson and
Monitoring Report (PMR) that BAC I regular and
shall be approved and provisional members” is
submitted by the HoPE to the immaterial because the
GPPB on a semestral basis. BAC Chairperson has the
The contents and coverage of supervisory jurisdiction
this report shall be provided in over all members of the
the IRR. Committees, including the
Vice-Chairperson to direct
all members to perform its
198
Audit
Observations
Thus, under aforequoted functions specified in
provision of RA No. 9184 and Section 12.2 of the IRR.
relevant provisions of its IRR,
BAC I`s duties and
responsibilities generally are
only to bid and then issue a
Resolution to Award to the
Lowest Calculated and
Responsive Bidder (LCRB).
After the issuance of the RTA,
BAC I`s duties and
responsibilities in connection
with the aforementioned
project ceased. Issuance of
NOA, contract perfection,
contract review, contract
implementation, monitoring of
contract implementation,
acceptance, payment to the
winning bidder, etc. which all
happen after the issuance of
the RTA, therefore, are all
beyond the scope of authority
of the BAC I, collectively,
much more the BAC
Chairperson.
Subject to the abovementioned

clarification of functions of the
BAC, the BAC I’s Chairperson
nevertheless referred the
COA’s request to the Bureau
of Education Assessment and
to the office of one of their
Assistant Secretaries in charge
of Procurement Service (which
has jurisdiction over the BAC
Secretariat) and contract
management of all
procurement activities. These
are the appropriate offices that
may address all of the subject
matter of COA’s letter-
request.
Non-submission of • Submit immediately the The Management had
the required required documents to requested time extension to
supporting facilitate the technical review submit their comments for
documents and non- of the said contracts; them to enable to properly
compliance with the coordinate responses from
procurement • Explain/justify the non- concerned offices, prepare
timelines with compliance thereof with necessary documents and other
delays ranging from existing procurement information to appropriately
one to 68 days regulations mentioned above address the abovementioned
to avoid the issuance of observations.
Notice of
Suspension/Disallowance by
this Office; and
• Review the Agency’s internal

processes related to
199
Audit
Observations
procurement in order to
further improve its service
delivery and its compliance
with timeline requirements
of the Revised IRR of RA No.
9184.
15.9 Review of procurement process implemented by the ROs and SDOs revealed
the following deficiencies:
Procurement Process in Regional Offices

Deviations from the Provisions of
Office/
Particulars Deficiencies Amount RA No. 9184, its RIRR and other
Region
GPPB Issuances
VI APP for CY 2018 of 12 Non- - Section 7.1., Rule II of IRR of RA No.
National High Schools were submission/ 9184 – All procurement shall be
not furnished to the Office of Non-compliance within the approved budget of the
the Auditor, thus with the Procuring Entity and should be
procurement made during prescribed meticulously and judiciously planned
the year could not be format of by the procuring entity. Consistent
ascertained whether these Annual with government fiscal discipline
were within the approved Procurement measures, only those considered
budget and included in the Plan (APP) crucial to the efficient discharge of
APP of the schools. governmental functions shall be
VIII APP which serves as basis in - included in the APP.
the procurement of goods
and services was not Section 7.2. – No procurement shall be
prepared by Catubig Valley undertaken unless it is in accordance
NHS. with the approved APP of the
The approved APP for CY - procuring entity. The APP shall bear
2018 was formulated not in the approval of the Head of the
accordance with the Procuring Entity or second-ranking
prescribed format leaving official designated by the Head of the
vague the information Procuring Entity to act on his behalf
specifically as to the mode and must be consistent with its duly
of procurement to be approved yearly budget.
undertaken.
IX The CY 2018 APP was not -
prepared by the BAC
Secretariat.
VII The Agency purchased Purchase of 419,950.00
various PPE amounting to PPEs not
₱419,950.00 which were not included in APP
included in the CY 2018
APP.
VIII Management failed to Non- - Section 11.1.1., Rule V of IRR of RA
establish BAC and also establishment of 9184 – Each Procuring Entity shall
omitted the preparation of BAC establish in its head office a single
APP, in violation of BAC to undertake the functions
pertinent provisions of the specified in Section 12 of this IRR in
2016 IRR of RA No. 9184, order to facilitate professionalization
thus, procurement may not and harmonization of procedures and
have been done according to standards. In line with the
prescribed processes which standardization of procurement
could have deprived the procedures and the thrust towards
government of the most strengthening the procurement
advantageous costs. function to increase operational
200
Office/
Region
GPPB Issuances
efficiency and effectiveness, Heads of
Procuring Entities shall aim to
consolidate or unify all procurement
activities of the organization, whether
locally-funded or foreign-assisted, and
whether pertaining to Goods,
Infrastructure Projects or Consulting
Services.
XII Payment to Contract Payments prior 8,723,847.00 Paragraph 1, Section 88 of PD No.
amounting to ₱8,723,847.00 to completion of 1445 – Except with the prior approval
was made prior to the the delivery of the President (Prime Minister), the
completion of the delivery government shall not be obliged to
of the items which runs make an advance payment for services
contrary to the issued decree not yet rendered or for supplies and
on prohibition against materials not yet delivered under any
advance payment on contract therefor. No payment, partial
government contract. or final, shall be made on any such
Moreover, some delivered contract except upon a certification by
items were not in the head of the agency concerned to
accordance with the the effect that the services or supplies
perfected Purchase Order and materials have been rendered or
and no variation order was delivered in accordance with the terms
provided to support such of the contract and have been duly
deviations. inspected and accepted.
The failure of the BAC Failure to 52,472,180.00 Section 34.3.b.ii, Rule X of the IRR of
TWG Team to review the review previous RA No. 9184 provides that if any of
previous contracts of the Contracts of the the ongoing contracts shows negative
bidders during the post- Bidders slippage of at least 15 percent in any
qualification stage resulted one project or a negative slippage of at
in recommendation to award least 10 percent in each of two or more
the 15 contracts to Royal contracts, the agency shall disqualify
Furnishings. In effect, a total the contractor from the award, for the
of 68,495 armchairs and procurement of infrastructure projects.
1,542 teacher’s table and
chair sets for a total cost of Section 67, Rule XXVII of the IRR of
₱52,472,180.00 remained RA No. 9184 – All contracts executed
undelivered as of December in accordance with the Act and this
31, 2018 and 15 percent IRR shall contain a provision on
advance payment totaling liquidated damages which shall be
₱7,870,827.00 were paid payable by the contractor in case of
without any breach thereof. For the procurement of
accomplishments from the Goods, Infrastructure Projects and
14 contract agreements. Consulting Services, the amount of the
Royal Furnishings was not 21,331,898.70 liquidated damages shall be at least
obligated by the concerned equal to one-tenth of one percent
DepEd officials to pay the (0.001) of the cost of the unperformed
total amount of portion for every day of delay. Once
₱21,331,898.70 comprising the cumulative amount of liquidated
the assessed liquidated damages reaches ten percent (10%) of
damage of ₱13,461,071.70 the amount of the contract, the
as of December 31, 2018 Procuring Entity may rescind or
and 15 percent advance terminate the contract, without
payments of ₱7,870,827.00. prejudice to other courses of action
The surety bonds totaling 15,756,654.00 and remedies available under the
₱15,756,654.00 were not circumstances.
forfeited in favor of the
government, as stipulated. Section 4 of Annex E of the IRR of
RA No. 9184 – The procuring entity
shall, upon a written request of the
201
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GPPB Issuances
contractor which shall be submitted as
a contract document, make an advance
payment to the contractor in an
amount not exceeding fifteen percent
(15%) of the total contract price, to be
made in lump sum or, at the most, two
installments according to a schedule
specified in the Instructions to Bidders
and other relevant Tender Documents.
Section 8 of Annex E of the IRR of

RA No. 9184 – Where the contractor
refuses or fails to satisfactorily
complete the work within the specified
contract time, plus any time extension
duly granted and is hereby in default
under the contract, the contractor shall
pay the procuring entity for liquidated
damages, and not by way of penalty,
an amount, as provided in the
conditions of contract, equal to at least
one tenth (1/10) of one (1) percent of
the cost of the unperformed portion of
the works for every day of delay.
VIII Disbursements for the Implementation 20,584,959.96 Part IV, Item I of Annex H of the IRR
payment of catering of Alternative of RA No. 9184 – Specifications for
services, venue rentals and Mode of the procurement of Goods shall be
hotel accommodation made Procurement based on relevant characteristics,
through Alternative Mode of functionality and/or performance
Procurement were with requirements. Reference to brand
deficiencies such as: names shall not be allowed except for
a) failure to include in the items or parts that are compatible with
Request for Quotation the existing fleet or equipment of the
Forms (RFQs) the detailed same make and brand and will
specifications of the items maintain the performance,
sought to be purchased functionality and useful life of the
including the Approved equipment. This rule shall also apply
Budget for the Contract to the goods component of
(ABC); b) non-adoption of infrastructure projects and consulting
public bidding for recurring services.
activities conducted
regularly by the agency Section 10, Rule IV of the IRR of RA
amounting to No. 9184 – All procurement shall be
₱1,717,770.02; and c) done through competitive bidding,
lacking in the required except as provided in Rule XVI of this
documentation. IRR.
The decrease in quantities Implementation - Items 1.1 of Annex E of the IRR of
and/or deletion of works of Variation RA No. 9184 – Variation Orders may
from those indicated per the Order be issued by the Procuring Entity to
original Programs of Work cover any increase/decrease in
(POW) was not covered quantities, including the introduction
with Variation Orders (VO) of new work items that are not
whereas variation costs of included in the original contract or
more than ten percent did reclassification of work items that are
not become subjects of other either due to change of plans, design or
contracts that should have alignment to suit actual field
been bid out. conditions resulting in disparity
between the preconstruction plans
used for purposes of bidding and the
202
Office/
Region
GPPB Issuances
"as staked plans" or construction
drawings prepared after a joint survey
by the contractor and the Government
after award of the contract, provided
that the cumulative amount of the
positive or additive Variation Order
does not exceed ten percent (10%) of
the original contract price. The
addition/deletion of works under
Variation Orders should be within the
general scope of the project as bid and
awarded. The scope of works shall not
be reduced so as to accommodate a
positive Variation Order. A Variation
Order may either be in the form of
either a change order or extra work
order.
IV-A The transparency and Non-posting in 4,374,802.47 Section 8.3.1, Rule III of IRR of RA
competitiveness in the PhilGEPS No. 9184 – All Procuring Entities are
procurement process in the mandated to fully use the PhilGEPS in
selection of a non-registered accordance with the policies, rules,
participating bidder in the regulations, and procedures adopted
Document Request List by the GPPB and embodied in this
(DRL) of PhilGEPS for the IRR. In this connection, all Procuring
repair of classrooms at Entities shall register with the
Rafael M. Lojo Memorial PhilGEPS and shall undertake
School was not achieved and measures to ensure their access to an
non-submission of on-line network to facilitate the open,
documentation created speedy and efficient on-line
doubt on the validity of the transmission, conveyance and use of
transactions. electronic data messages or electronic
documents. The DBM-PS shall assist
Procuring Entities to ensure their on-
line connectivity and help in training
their personnel responsible for the
operation of the PhilGEPS from their
terminals.
VIII Procurement of goods 138,937.50 COA Circular No. 76-41 dated July
covering catering services 30, 1976
were resorted to through
shopping and splitting of Forms of Splitting:
contracts evading the 1) Splitting of Requisitions is the non-
posting in the PhilGEPS consolidation of requisitions for one or
website. more items needed at or about the
same time by the requisitioner;
2) Splitting of Purchase Orders is the
issuance of two or more purchase
orders based on two or more
requisitions for the same or at about
the same time by different
requisitioners; and
3) Splitting of Payments is making two
or more payments for one or more
items involving one purchase order.
The above-enumerated forms of

splitting are usually resorted to in the
following cases:
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Office/
Region
GPPB Issuances
1) Splitting of requisitions and
purchase orders to avoid inspection of
deliveries;
2) Splitting of requisitions and
purchase orders to avoid action,
review or approval by higher
authorities; and
3) Splitting of requisitions to avoid
public bidding.
Section 10, Rule IV of IRR of RA No.

9184
I Procurement of commonly Procurement of 5,332,116.80 Section 20 of GAA 2018 –
used office supplies by RO Commonly Procurement of Common-Use
Proper and its SDOs were Used Office Supplies. All agencies of the
not in accordance with the Supplies government shall purchase common-
provisions and guidelines. use supplies from the Procurement
IV-A SDO Lipa City procured 483,860.00 Service (PS) as mandated under LOI
common use supplies from No. 755 dated October 18, 1978, E.O.
private dealers/suppliers No. 359, A.O. No. 17, s. 2011 and such
totaling ₱483,860.00 from other guidelines issued thereon.
January to September 2018 Common-use supplies shall refer to
which were not in those included in the Electronic
accordance with the Catalogue of the PS which shall be
provisions and guidelines. regularly updated to include all items
VIII Common-use goods and - commonly procured by agencies of the
supplies were purchased by government.
the agency outside the
DBM-PS. Section 1, Administrative Order (AO)
XII The SDO Cotabato City did - No. 17, s. 2011 – The national
not procure all their government hereby reiterates the
common-use supplies and policy that procurement of
materials for CY 2018 from government supplies, materials, and
the DBM-PS as required. equipment shall be done in the most
SDOs of Cotabato Province, 10,477,045.71 transparent and competitive manner
Kidapawan, Koronadal and by purchasing from legally,
South Cotabato, had total technically, and financially capable
disbursements for common- sources in economic lot sizes, by
use supplies of observing cost-efficient
₱2,712,384.16, specifications, and by making prompt
₱6,949,579.96, ₱291,601.35 payment. In line with this, all
and ₱523,480.24 government agencies shall procure
respectively, for CY 2018 their common-use supplies from the
which were made to private PS and use the PhilGEPS in all their
suppliers instead of procurement activities, including
purchasing directly from publishing all their bid opportunities
DBM-PS. and posting all their awards and
XII The total disbursements for 37,181.52 contracts in it, in accordance with RA
PS of ₱37,181.52 for CY No. 9184.
2018 were paid in cash,
exposing the government
funds to risk of loss thru
improper handling or thru
unforeseen cases, instead of
procuring to DBM-PS.
VI Procurement of goods for 1,172,552.95 Section 10, Rule IV of IRR of RA No.
the implementation of 9184
Senior High School
Programs in the aggregate
204
Office/
Region
GPPB Issuances
amount of ₱1,172,552.95 in Section 53.9, Rule XVI of IRR of RA
the SDO Bacolod City were No. 9184 – Procurement of Goods,
made through small value Infrastructure Projects and Consulting
procurement. Audit revealed Services, where the amount involved
that the transactions in does not exceed the threshold
question do not fall under prescribed in Annex “H” of this IRR:
any of the enumerated xxx.
conditions in the prescribed
guidelines and provisions, Annex H of IRR of RA No. 9184
thus, should have been
through competitive
bidding.
XIII 25 empowered NHSs under 1,440,630.88 Sections 1 and 4 of AO No. 17, s. 2011
three SDOs procured their
common-use supplies Section 20 of GAA for FY 2018
outside of DBM-PS for CY
2018 with a total amount of
₱1,440,630.88 without the
PS Certificates of Non-
Availability of Stocks.
VII Disbursements for the Procurement of 113,916,590.21 Section 10, Rule IV of IRR of RA No.
Comprehensive Dengue or Goods for 9184
H-Fever Control Program Special
and Comprehensive General Programs Section 48, Rule XVI of IRR of RA
Pest Control Program No. 9184 – In accordance with Section
totaling ₱82,154,390.21 and 10 of this IRR, as a general rule, the
₱31,762,200.00, Procuring Entities shall adopt public
respectively; or an aggregate bidding as the general mode of
of ₱113,916,590.21 (net of procurement and shall see to it that the
tax) were made through the procurement program allows
grant of cash advance to sufficient lead time for such public
school heads from their bidding. Alternative methods shall be
MOOE allocations. resorted to only in the highly
exceptional cases provided for in this
Rule.
Item 3.b.ii of DepEd Order No. 12, s.

2014 – The SDO shall ensure that, by
the end of the year, the MOOE
allocations of Elementary Schools
(ESs) and non-implementing
Secondary Schools (SSs) have been
fully downloaded to the respective
heads of the said non-IUs through cash
advance using the replenishment
method. The SDOs are prohibited
from undertaking centralized
procurement of any good or service
out of school MOOE intended for
distribution to schools in kind. In
extreme cases, however, the SDOs
may procure items using school’s
MOOE, provided that they submit a
report to the Office of the Secretary,
through the Office of the
Undersecretary for Finance and
Administration, explaining or
presenting: (a) the need for such items,
(b) the nature, type, quantity and price
205
Office/
Region
GPPB Issuances
of the items listed by the receiving
school, and (c) the estimated price
difference between the Division and
school procurement, and the name of
the supplier, including the mode of
procurement used. While the report
does not require pre-approval, SDOs
must submit such report within 30
days after the conduct of the
procurement, for audit and monitoring
purposes.
IV-A Procurement of Textbooks Procurement of 39,971,824.00 Section 4 (1) of PD No. 1445 – No
and Instructional Materials Textbooks, money shall be paid out of public
and Other Supplies and Instructional treasury or depository except in
Materials by SDO Quezon Materials and pursuance of an appropriation law or
Province amounting to Other Supplies other specific statutory authority.
₱24,979,370.00 and and Materials
₱14,992,454.00, Section 85 of PD No. 1445 -
respectively, or a total of Appropriation before entering into
₱39,971,824.00 were made contract.
without the available
appropriation 1. No contract involving the
expenditure of public funds shall be
entered into unless there is an
appropriation therefor, the
unexpended balance of which, free of
other obligations, is sufficient to cover
the proposed expenditure.
2. Notwithstanding this provision,
contracts for the procurement of
supplies and materials to be carried in
stock may be entered into under
regulations of the Commission
provided that when issued, the
supplies and materials shall be charged
to the proper appropriation account.
I The Procurement and Procurement of 4,774,721.88 Section 4 (6) of PD No. 1445 – Claims
Payment of Professional Consultancy against government funds shall be
Services for ISO undertaken Service supported with complete
by the SDOs totaling documentation.
₱4,774,721.88 and of
undetermined amount were Section 24.1 of the IRR of RA No.
not supported with complete 9184 – For purposes of determining the
documentation on eligibility and short list of bidders in
procurement of Consultancy accordance with Sections 24.4 and 24.5
Services. of this IRR, only the following
documents shall be required by the
V Payments for consultancy 303,600.00 BAC, using the forms prescribed in the
services by the SDO Naga Bidding Documents:
City amounting to a) Class “A” Documents
₱303,600.00 were not Legal Documents
supported with complete i. Registration certificate
documentation as required. from SEC, DTI for sole
proprietorship, or CDA for
cooperatives.
ii. Mayor’s/Business permit
issued by the city or
municipality where the
principal place of business
206
Office/
Region
GPPB Issuances
of the prospective bidder is
located, or the equivalent
document for Exclusive
Economic Zones or Areas.
In cases of recently expired
Mayor’s/Business permits,
it shall be accepted
together with the official
receipt as proof that the
bidder has applied for
renewal within the period
prescribed by the
concerned local
government unit:
Provided, That the
renewed permit shall be
submitted as a post-
qualification requirement
in accordance with Section
34.2 of this IRR. For
individual consultants not
registered under a sole
proprietorship, a BIR
Certificate of Registration
shall be submitted, in lieu
of DTI registration and
Mayor’s/Business permit.
iii. Tax clearance per EO No.
398, s. 2005, as finally
reviewed and approved by
the BIR.
Technical Documents
iv. Statement of the
prospective bidder of all its
ongoing and completed
government and private
contracts, including
contracts awarded but not
yet started, if any, whether
similar or not similar in
nature and complexity to
the contract to be bid,
within the relevant period
as provided in the Bidding
Documents. The statement
shall include all
information required in the
PBDs prescribed by the
GPPB.
v. Statement of the consultant
specifying his nationality
and confirming that those
who will actually perform
the service are registered
professionals authorized
by the appropriate
regulatory body to practice
those professions and
allied professions,
207
Office/
Region
GPPB Issuances
including their respective
curriculum vitae.
Financial Document
vi. The consultant’s audited
financial statements,
showing, among others,
the consultant’s total and
current assets and
liabilities, stamped
“received” by the BIR or
its duly accredited and
authorized institutions, for
the preceding calendar
year which should not be
earlier than two years from
the date of bid submission.
b) Class “B” Document

Valid joint venture agreement
(JVA), in case a joint venture is
already in existence. In the
absence of a JVA, duly notarized
statements from all the potential
joint venture partners stating that
they will enter into and abide by
the provisions of the JVA in the
instance that the bid is successful,
shall be included in the bid.
Failure to enter into a joint
venture in the event of a contract
award shall be ground for the
forfeiture of the bid security.
Each partner of the joint venture
shall submit the PhilGEPS
Certificate of Registration in
accordance with Section 8.5.2 of
this IRR. The submission of
technical and financial
documents by any of the joint
venture partners constitutes
compliance.
Section 24.3 of the IRR of RA No.

9184 – The following persons/entities
shall be allowed to participate in the
bidding for Consulting Services:
a) Duly licensed Filipino
citizens/sole proprietorships;
b) Partnerships duly organized
under the laws of the
Philippines and of which at
least 60 percent of the
interest belongs to citizens of
the Philippines;
c) Corporations duly organized
Philippines and of which at
least 60 percent of the
outstanding capital stock
208
Office/
Region
GPPB Issuances
belongs to citizens of the
Philippines;
d) Cooperatives duly organized
Philippines; or
e) Persons/entities forming
themselves into a joint
venture, i.e., a group of two
or more persons/entities that
intend to be jointly and
severally responsible or
liable for a particular
contract: Provided, however,
That Filipino ownership or
interest thereof shall be at
least 60 percent. For this
purpose, Filipino ownership
or interest shall be based on
the contributions of each of
the members of the joint
venture as specified in their
JVA.
Section 25.2 of the IRR of RA No.

9184 – List of contractor’s equipment
units, which are owned, leased, and/or
under purchase agreements, supported
by certification of availability of
equipment from the equipment
lessor/vendor for the duration of the
project.
IV-B Procurements made by SDO Procurement of 906,543.21 COA Circular No. 97-002 dated
Oriental Mindoro, Oriental Goods and February 10, 1997 – Only payments
Mindoro NHS, and Services in small amount may be made through
Canubing NHS, both the petty cash fund. Replenishment of
Implementing Units (IUs) of the petty cash fund shall be equal to the
Calapan City, totaling total amount of expenditures made
₱906,543.21 were made therefrom.
through reimbursement
basis which is inconsistent Revenue Memorandum Circular
with the basic principle of (RMC) No. 23-2012 dated May 8,
the imprest fund. 2012 – One of the responsibilities of
government officials/employees is to
withhold the correct amount of tax on
government money payment to VAT
registered taxpayer (GVAT) and Non-
VAT registered taxpayers subject to
percentage tax (GPT) pursuant to
Sections 80(A), 57 and 114, all of the
Tax Code.
Section 10, Rule IV of IRR of RA No.

9184
X The procurement processes IRR of RA No. 9184
made for goods and services
by the RO and various SDOs
and IUs were contrary to the
prescribed provisions and
regulations.
209
Office/
Region
GPPB Issuances
XI Failure of RO and SDOs 158,343,237.67
Davao Del Sur, Davao Del
Norte, Davao Occidental,
Davao Oriental, IGaCoS,
and Mati City to strictly
adhere to the provisions of
the Revised IRR of RA No.
9184 resulted in the
incurrence of deficiencies in
the procurement process of
projects amounting to
₱158,343,237.67.
VII Food Supplies Expenses is Section 10 of IRR of RA No. 9184
of doubtful validity due to
the following: Section 13, Chapter 8 of the GAM for
• The procurement of NGAs, Volume I – Inventory
goods did not undergo Accounting System. …The system
public bidding; and starts with the receipt of the purchased
• Several procurements inventory items. The requesting office
for the month are in need of the inventory items, after
supported with only the Property and Supply Division/Unit
one Purchase Order has determined that the items are not
(PO) and Acceptance available in stock, shall prepare and
Report (AR). The two cause the approval of the Purchase
documents were Request (PR). Based on the approved
prepared near to each PR and after accomplishing all the
other or by the end of required procedures adopting a
the month. particular mode of procurement, the
agency shall issue a duly approved
Contract or Purchase Order (PO).
Section 17, Chapter 8 of the GAM for

NGAs, Volume I - Records, Forms
and Reports to be prepared and/or
maintained. The following records,
forms and reports are prescribed for
use:
f. Purchase Order (PO) (Appendix
61) – shall be used by the Property
and/or Supply Custodian to support
the purchase of property, supplies
and materials, etc. It shall be issued
to the selected supplier indicating,
among others information, the
specifications, quantities, and
agreed prices of property, supplies
and materials to be purchased.
j. Inspection and Acceptance

Report (IAR) (Appendix 62) –
shall be used for inspection and
acceptance of purchased and
delivered property, supplies and
materials.
VIII Small Value Procurement Implementation 10,545,965.92 Annex H of IRR of RA No. 9184
resorted in the procurement of Small Value
of goods and services Procurement
amounting to
₱10,545,965.92 by SDO and
210
Office/
Region
GPPB Issuances
IUs, lacked documentary
requirements with one
transaction exceeding the
threshold.
Aside from several 260,000.00 Section 4, Paragraph (1), PD No.
deficiencies disclosed, 1445
payment of services thru
pakyaw contracts amounting Item 4.7.1, National Budget Circular
to ₱260,000.00 were made (NBC) No. 573 dated January 3, 2018
without adhering to – Use of PS Appropriations.
competitive selection Appropriations for PS shall be used for
process, in addition to the payment of authorized
having these erroneously compensation and personnel benefits
charged against the of National Government personnel.
budgetary allocations for Appropriations for this component can
Personnel Services (PS). also be used to cover deficiencies
thereof. Accordingly, use of PS
appropriations for any PS deficiency
will follow the rules provided herein
and shall not be considered as a form
of modification.
Item 4.7.2, National Budget Circular

(NBC) No. 573 dated January 3, 2018
– Any available allotment for PS
within a department or agency may be
utilized by said department or agency
for the payment of deficiencies in
authorized personnel benefits (GP No.
46 of FY 2018 GAA).
Appendix I, Paragraph 4.0 of IRR of

RA No. 9184 – Pakyaw labor shall be
drawn from the vicinity of the project,
or Pakyaw labor groups belonging to
various Barangay Associations
contiguous to the project site.
Unskilled labor should be drawn from
the Barangay where the project is
located; semi-skilled labor shall be
recruited within the municipality,
preferably within the Barangay;
skilled labor shall be recruited within
the province but preferably within the
Barangay/Municipality.
Procurements of goods and 1,260,383.98 COA Circular No. 97-002 dated
services amounting to February 10, 1997
₱1,260,383.98 were done
through shopping and on Section 10, Rule IV of IRR of RA
reimbursement. 9184
XIII The adopted procedures in 778,918,513.82 IRR of RA No. 9184
the procurement of goods
and services in the total
amount of ₱778,918,513.82
were contrary to the
prescribed provisions and
guidelines.
IV-A The brand names of four Brand Names 65,295.00 Section 18, Rule VI of IRR of RA No.
procurements of Tanauan 9184 – Specifications for the
211
Office/
Region
GPPB Issuances
School of Fisheries totaling procurement of Goods shall be based
₱65,295.00 were indicated on relevant characteristics,
in the Purchase Requests functionality and/or performance
(PR), Purchase Orders (PO) requirements. Reference to brand
and Inspection and names shall not be allowed except for
Acceptance Reports, items or parts that are compatible with
precluding other suppliers the existing fleet or equipment of the
carrying other brands of same make and brand, and to maintain
equipment to quote prices of the performance, functionality and
the same goods to obtain useful life of the equipment. This
cost advantageous to the Section shall also apply to the goods
government. component of Infrastructure Projects
and Consulting Services.
I Procurement of Infrastructure - Annex A of COA Circular No. 2009-
infrastructure projects Projects 001 dated February 12, 2009 –
awarded were not supported Provides that before prosecuting any
with Approved Budget for project, the necessary program of
the Contract (ABC) in the work shall be prepared and submitted
standard form as prescribed, for approval. In no case shall
hence, the reasonableness of construction funds be remitted to field
contract cost and the offices or construction work on a
duration of the project could project be started before the program
not be ascertained. of work is approved, in accordance
with existing laws. No program of
work for any project shall be approved
without detailed engineering.
IRR of RA No. 9184

CAR The Bidding Documents 126,659,557.19 Section 17, Rule VI of IRR of RA No.
issued by SDOs Benguet, 9184 – Forms and Contents of Bidding
Ifugao, and Tabuk for the Documents – The Bidding documents
procurement of shall be prepared by the Procuring
infrastructure projects Entity following the standard forms
amounting to and manuals prescribed by the GPPB.
₱126,659,557.19 were not in The Bidding Documents shall include
accordance with the the following:
Philippine Bidding (a) ABC;
Documents, thus the specific (b) Invitation to Bid/Request for
details of each project were Expression of Interest;
not fully provided thereby (c) Eligibility Requirements;
limiting the participation of (d) Instructions to Bidders,
contractors in the bidding. including scope of bid,
documents comprising the bid,
criteria for eligibility, bid
evaluation methodology/criteria
in accordance with the Act, and
post-qualification, as well as the
date, time and place of the pre-
bid conference, submission of
bids and opening of bids;
(e) Terms of Reference, for
Consulting Services;
(f) Scope of work, where
applicable;
(g) Plans/Drawings and
Technical Specifications;
(h) Form of Bid, Price Form, and
List of Goods or Bill of
Quantities;
212
Office/
Region
GPPB Issuances
(i) Delivery Time or Completion
Schedule;
(j) Form, Amount, and Validity
Period of Bid Security;
(k) Form, Amount, and Validity
of Performance Security and
Warranty; and
(l) Form of Contract, and
General and Special Conditions
of Contract.
CAR The bids of Begal Design 7,336,216.56 Section 30.1 IX of IRR of RA No.
and Construction for the 9184 – The BAC shall open the first
Upgrading of Electrical bid envelopes in public to determine
Systems in various school each bidder’s compliance with the
sites (Lots 1 and 5) were documents required to be submitted
declared by the BAC of for eligibility and for the technical
SDO Benguet to be the requirements, as prescribed in this
Lowest Calculated IRR. For this purpose, the BAC shall
Responsive Bid even when check the submitted documents of
the bidder failed to include each bidder against a checklist of
in its Statement of all required documents to ascertain if they
Ongoing Government and are all present, using a non-
Private Contracts including discretionary “pass/fail” criterion, as
contracts awarded but not stated in the Instructions to Bidders. If
yet started a project awarded a bidder submits the required
by DOH CAR. document, it shall be rated “passed”
CAR Two contracts for the 5,600,347.51 for that particular requirement. In this
procurement of regard, bids that fail to include any
infrastructure projects requirement or are incomplete or
amounting to ₱5,600,347.51 patently insufficient shall be
were awarded by SDO considered as “failed.” Otherwise, the
Apayao to a bidder whose BAC shall rate the said first bid
bid did not include the envelope as “passed.”
Statement of All Ongoing
Government and Private
Contracts Including
Contracts Awarded but not
yet Started, and the
Statement of Single Largest
Completed Contract,
contrary to Section 30.1 of
the IRR of RA No. 9184.
VIII Lapses in the procurement - COA Circular No. 2012-001dated
process of infrastructure June 14, 2012
projects of SDO indicating
non-compliance with the IRR of RA No. 9184
provisions in COA Circular
No. 2012-001 dated June 14,
2012 and pertinent
provisions in the 2016 RIRR
of RA No. 9184, the
Government Procurement
Reform Act, thus casting
doubt on whether mandated
proceedings were
undertaken to all the
contracts pertaining thereto.
CAR Contracts for the 32,299,400.00 Section 34.3.b.iii of IRR of RA No.
procurement of goods 9184
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GPPB Issuances
amounting to Delay in the
₱32,299,400.00 were Delivery of
awarded by the RO to Goods/
suppliers that incurred delay Implementation
in the delivery of goods of Post-
amounting to more than ten Qualification
percent of the contract price Activities
in their ongoing contracts.
Contracts for infrastructure 31,438,955.85
projects amounting to
₱31,438,955.85 were
awarded by SDOs Benguet
and Ifugao to contractors
with negative slippage of
more than 15 percent in their
ongoing contracts. Further,
the post-qualification
activities conducted by SDO
Benguet were limited to
inspection of tools and
equipment.
II Significant delay in the start 63,970,666.74 DepEd Order No. 35, s. 2017 as
and completion of amended by DepEd Order No. 61, s.
Electrification Projects in 54 2017 –
recipient schools of SDOs of a) The Regional/Division Engineer
Isabela, Ilagan and Cauayan (RE/DE) shall function as
with total contract cost of Project Engineer and shall be
₱63,970,666.74 due to slow mainly in charge of regular
undertaking of the monitoring and inspection of the
contractors and absence of electrification works. As Project
proper supervision and Engineer, the RE/DE shall have
monitoring by the project the following tasks:
engineer. 1. Conduct regular site
inspections to ensure that
the approved program of
works is being executed by
the selected contractor/s
accordingly;
2. Review and validate work
accomplishments of the
contractor/s and claims for
payments of completed
works; and
3. Assist in resolving issues
and concerns during project
implementation.
b) The Central Office through the
Education Facilities Division
(EFD) shall serve as oversight
during project implementation
and shall have the following
functions:
1. While the project is on-
going or at any time during
project start until
substantial completion, the
EFD may conduct site
inspection. Any and all
findings shall be effected in
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GPPB Issuances
writing through Site
Instructions or Inspection
Report;
2. Resolve issues that may
arise during project
implementation through
the conduct of construction
meetings; and
3. The EFD shall before
issuance of the Certificate
of Completion, conduct
Final Inspection of projects
and ensure compliance
with the Program of Works,
Plans and Specifications.
CAR Six contracts for Delay in the 16,037,539.83 Section 8.4, Annex E of IRR of RA
infrastructure projects Completion of No. 9184 – In case that the delay in the
amounting to Infrastructure completion of the work exceeds a time
₱16,037,539.83 were not Projects duration equivalent to ten percent
rescinded by SDO Benguet (10%) of the specified contract time
despite the delay in the plus any time extension duly granted
completion of the projects to the contractor, the procuring entity
for a time duration concerned may rescind the contract,
exceeding ten percent of forfeit the contractor's performance
contract time. security and takeover the prosecution
Three infra contracts of 9,896,405.55 of the project or award the same to a
₱9,896,405.55 were not qualified contractor through
terminated by SDO negotiated contract.
Mountain Province despite
the negative slippage of
more than ten percent.
Contracts for the 3,243,070.00
procurement of school
furniture of ₱3,243,070.00
were not rescinded by SDO
Apayao despite considerable
delay in the delivery of the
items, thus liquidated
damages reached 31.19
percent.
V In DepEd ROP, advances to 2,509,117.83 Par. 4, Annex D of IRR or RA No.
two contractors paid in CYs 9184 – In accordance with PD No.
2015 and 2016 amounting to 1445, advance payment shall be made
₱2,509.117.83 for the only after prior approval of the
repair/rehabilitation of President, and shall not exceed 15
school buildings under CY percent of the contract amount, unless
2014 Basic Educational otherwise directed by the President;
Facilities Fund (BEFF) have provided, however, that for cases
not been fully recouped as mentioned under 4.3, 4.4, and 4.5 of
the projects remained these guidelines, no prior approval by
unfinished as of year-end. the President shall be necessary.
Despite the delay, liquidated
damages have not been Par. 8, Annex E of IRR of RA No.
imposed against the 9184
concerned contractors.
II Books delivered by DepEd Variations in the DepEd Department Order No. 042, s.
CO thru suppliers were Actual Delivery 2018 – For common/non-common
accepted by the SDOs of and the supplies, materials and equipment
Isabela and Nueva Vizcaya through DBM-PS and outside
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GPPB Issuances
through the issuance of Corresponding supplier, if stocks requested were not
Certificate of Final Documents/ available in the DBM-PS, all
Acceptance (CFA) despite Unrecorded deliveries shall be received by the
of some variations in the deliveries in the representative of the In-Charge Supply
Delivery Information Form, Books of Office. If the quantities are complete
Delivery Receipt, and actual Accounts based on the Delivery Receipt, the
delivery due to lack of representative shall sign on the
awareness of the updated received portion of the DR. The
guidelines on delivery, delivered items shall then be inspected
inspection, acceptance and by the designated Inspectorate Team
recording of procured assets. as to technical specifications, quantity
and other requirements as deemed
Likewise, there were no necessary. Upon satisfaction of the
distribution lists provided by inspection protocol, the Inspection and
the DepEd CO to the Acceptance Report (IAR) shall then be
Division Supply Officers of signed by Inspectors and Supply
Isabela, Ilagan City, Officer/Property Custodian,
Cauayan City and Nueva respectively.
Vizcaya upon delivery of the
books as basis for the
immediate distribution to
respective schools/end-users
and no Property Transfer
Report (PTR) were brought
by the Suppliers during
delivery, hence, learning
materials received and
distributed remained
unrecorded in the books of
accounts.
II Learning Materials/ Undistributed - DepEd Order No. 13, s. 2012 –
Textbooks for Senior High, Learning 6. The allocation of the learning
Junior High and Elementary Materials/Text packages/materials shall be based on
Schools of SDOs Isabela books the enrollment data reported in the
and Ilagan totalling 240,437 Basic Education Information System
copies remained (BEIS). However, the goal of the
undistributed due to lack of DepEd is to provide all teachers and
monitoring and close pupils with a complete set of the
coordination with the learning materials subject to
recipient schools to address availability of funds. A copy of the
issues hindering them to allocation list of the packages and
pick-up/receive the materials will be provided to the
instructional materials. recipient regions, divisions, districts,
and high schools as soon as they are
Further, some of the books available.
in SDO Isabela were already 7. The materials for the elementary
infested by termites and schools shall be delivered to the school
damaged resulting in waste district, while materials for high
of government resources, schools shall be delivered directly to
contrary to sound internal the high schools. The school districts
control on safeguarding of must distribute the materials not later
assets. than one month after receipt of the
delivery.
8. The SDOs shall submit a
distribution report not later than two
months upon completion of
distribution to the recipients or not
later than three months after receipt of
the learning packages/materials xxx
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GPPB Issuances
Section 123 of PD No. 1445 -
Definition of internal control. Internal
control is the plan of organization and
all the coordinate methods and
measures adopted within an
organization or agency to safeguard its
assets, check the accuracy and
reliability of its accounting data, and
encourage adherence to prescribed
managerial policies.
Section 124 of PD No. 1445 –

Installation. It shall be the direct
responsibility of the agency head to
install, implement, and monitor a
sound system of internal control.
CAR Retention money for the Warranty 171,680.00 Section 62.1, Rule XIX of IRR of RA
procurement of tools and Security No. 9184 – For the procurement of
equipment amounting to released before Goods, in order to assure that
₱171,680.00 was released the lapse of manufacturing defects shall be
by the RO before the lapse of Warranty Period corrected by the supplier, a warranty
the warranty period despite security shall be required from the
some defective deliveries contract awardee for a minimum period
due to Agency’s failure to of three months, in the case of
inspect the items upon Expendable Supplies, or a minimum
delivery. period of one year, in the case of Non-
expendable Supplies, after acceptance
by the Procuring Entity of the delivered
supplies.
The obligation for the warranty shall
be covered by either retention money
in an amount equivalent to at least one
percent of every progress payment, or
a special bank guarantee equivalent to
at least one percent of the total contract
price. The said amounts shall only be
released after the lapse of the warranty
period or, in the case of Expendable
Supplies, after consumption thereof:
Provided, however, that the supplies
delivered are free from patent and
latent defects and all the conditions
imposed under the contract have been
fully met.
V Performance Guaranty/ Unreturned 1,020,382.53 Section 39.5 of IRR of RA No. 9184 –
Warranty Deposit that Performance The performance security may be
lapsed after the warranty Guaranty/ released by the Procuring Entity after
period, amounting to Warranty the issuance of the Certificate of Final
₱1,020,382.53, were not Deposit after the Acceptance, subject to the following
returned by DepEd RO lapse of conditions:
Proper to various Warranty Period a. Procuring Entity has no claims
contractors/suppliers. filed against the contract awardee
or the surety company;
b. It has no claim for labor and
materials filed against the
contractor; and
c. Other terms of the contract.
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Office/
Region
GPPB Issuances
Section 62.1, Rule XIX of IRR of RA
No. 9184
Warranty Security was Retention 1,961,394.00 Section 62.1 of IRR of RA No. 9184
neither required nor Money not
deducted from the payment deducted from
made by DepEd-SDO Payments made
Catanduanes to the supplier to Contractors
for the procurement of
school furniture amounting
to ₱1,961,394.00.
IV-B The RO failed to issue a Failure to Issue 5,277,745.53 Item 6 Appendix 17 of IRR of RA No.
Blacklisting Order after the Blacklisting 9184 – Upon termination of contract
termination of CY 2013 Order due to default of the contractor, the
contract for the Repair and Head of the Procuring Entity shall
Rehabilitation of School immediately issue a Blacklisting
Buildings, Cluster 5 for Order disqualifying the erring
School Sites in the Division contractor from participating in the
of Romblon amounting to bidding of all government projects.
₱5,277,745.53 and failed to The performance security of said
forfeit the Performance contractor shall also be forfeited.
Security posted by the erring
Contractor.
VI Repair of school buildings Unsupported 1,002,242.71 Annex A of IRR of RA No. 9184
and its surroundings Repair of
undertaken by the 11 School
National High Schools from Buildings
SDO Antique amounting to
₱1,002,242.71 were not
supported by an Approved
Program of Work.
Variation Orders in SDO Variation - Section 1.1, Annex E of IRR of RA
Aklan are exceeding ten Orders No. 9184 – Variation Orders may be
percent of the contract price, issued by the procuring entity to cover
ranging to as low as 13.02 any increase/decrease in quantities,
percent and to as high as including the introduction of new
77.64 percent, indicating work items that are not included in the
that detailed engineering original contract or reclassification of
from site validation and work items that are either due to
preparation of Program of change of plans, design or alignment
Works have not been to suit actual field conditions resulting
thoroughly conducted/ in disparity between the
prepared. preconstruction plans used for
purposes of bidding and the "as staked
Likewise, such variation plans" or construction drawings
orders were not submitted to prepared after a joint survey by the
COA within five working contractor and the Government after
days from the execution award of the contract, provided that
thereof. the cumulative amount of the positive
or additive Variation Order does not
exceed ten percent of the original
contract price. The addition/deletion
of works under Variation Orders
should be within the general scope of
the project as bid and awarded. The
scope of works shall not be reduced so
as to accommodate a positive
Variation Order. A Variation Order
may either be in the form of either a
change order or extra work order.
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GPPB Issuances
COA Circular No. 2009-001 dated
February 12, 2009 – Within five
working days from the execution of a
contract by the 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. In case of agencies audited
on an engagement basis, submission of
a copy of the contract and its supporting
documents shall be to the Auditor of the
mother agency or parent company, as
the case may be.
VI Information on the ongoing Unpublicized 67,226,596.55 Section 2.2.1, 2.2.3 of COA Circular
infrastructure projects Ongoing No. 2013-004 dated January 30, 2013
implemented by SDOs Infrastructure – All government agencies or the
Capiz and Roxas City Projects implementing unit, office or division
amounting to as the case may be, shall notify the
₱53,356,583.53 and public of their PPA through the
₱13,870,013.02, positing of relevant information
respectively, were not detailed in Section 2.1 above on
widely publicized. signboards, blackboards, whiteboards,
posters, tarpaulins, streamers,
electronic boards or similar materials
(collectively, “Signboards”) not
exceeding three feet by two feet, in
conspicuous places within the agency
premises, and in the venue where PPA
is located or carried out. This
requirement applies to all government
PPAs, regardless of amount or source
of funds
For infrastructure projects, a tarpaulin

signboard must be suitably framed for
outdoor display at the project location,
and shall be posted as soon as the
award has been made. xxx
Repair/rehabilitation of Unimplemented 2,267,720.84 Paragraphs 12.1, 12.2, and 12.4a of
school buildings/classrooms /Exceeded Section 4 of the Contract entered into
in SDO Antique were either Contract by and between SDO Antique and the
not implemented, exceeded Duration/Not in Contractor – The Contractor shall
the contract duration or not Accordance to assume full responsibility for the
in accordance with approved Approved Works from the time the project
program of work totaling Program of construction commenced up to final
₱2,267,720.84 contrary to Work acceptance by the Procuring Entity
the provisions of the and shall be held responsible for any
Contract entered into by and damage or destruction of the Works
between the SDO and the except those occasioned by force
Contractor. majeure.
12.2 The defects liability period for

infrastructure projects shall be one
year from contract completion up to
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Office/
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GPPB Issuances
final acceptance by the Procuring
Entity. During this period the
Contractor shall undertake the repair
works, at his own expense, of any
damage to the Works on account of the
use of materials of inferior quality
within 90 days from the time the HoPE
has issued an order to undertake repair.
In case of failure or refusal to comply
with this mandate, the Procuring
Entity shall undertake such repair
works and shall be entitled to full
reimbursement of expenses incurred
therein upon demand.
12.4a The Contractor shall be held

liable for structural defects/failures
that arise due to faults attributable to
improper construction, use of inferior
quality/substandard materials, and any
violation of the contract plans and
specifications.
VI Full payment of the contract Full Amount - Section 68 of IRR of RA No. 9184 –
(excluding the ten percent Paid to All contracts executed in accordance
retention) was made in SDO Contractors with the Act and this IRR shall contain
Aklan despite several Despite a provision on liquidated damages
unfinished works noted Damages which shall be payable by the
which is tantamount to an contractor in case of breach thereof.
advance payment. As a For the procurement of Goods,
result, liquidated damages Infrastructure Projects and Consulting
were not imposed on the Services, the amount of the liquidated
unperformed portion of damages shall be at least equal to one-
these projects. tenth of one percent (0.001) of the cost
of the unperformed portion for every
day of delay. Once the cumulative
amount of liquidated damages reaches
ten percent of the amount of the
contract, the Procuring Entity may
rescind or terminate the contract,
without prejudice to other courses of
action and remedies available under
the circumstances”.
Section 88 of PD No. 1445

Infrastructure projects in Deficiencies in 63,294,905.17 Contract entered into by and between
SDOs Capiz and Roxas City the SDO Roxas City and the Concerned
amounting to Infrastructure Contractors –
₱44,752,857.71 and Projects
₱18,542,047.46, The Owner hereby covenants to pay
respectively, were found to the Contractor in consideration of the
have defects/deficiencies in execution and completion of such
its implementation contrary works and the remedying of all defects
to the provisions of the therein, xxx.”
Contract entered into by and
between SDO Capiz and the
concerned contractors
which, if not
corrected/rectified by the
concerned contractors, may
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GPPB Issuances
result in additional
expenditure by the
government by way of
remedial works and repairs.
XII The BAC members of the Double - Sections 7, 12 and 17 of IRR of RA
SDO Tacurong failed to Quantity of No. 9184
review thoroughly the plan, Procured
specification and the scope Equipment
of work pertaining to the
quantity of air-condition
units which resulted in
double quantity of delivered
air-condition.
Procurement and delivery of Delivery of 1,868,720.00 Par. 1, Page 10 of Generic
129 units weighing scale Procured Procurement Manual, Volume II –
amounting to ₱1,868,720.00 Materials Not in The term ‘technical specifications’
were not in accordance with Accordance refers to the physical description of the
the specifications or terms with Stated goods or services, as well as the
and conditions as stated in Specifications Procuring Entity’s requirements in
the PO. terms of the functional performance,
environmental interface and design
standard requirements to be met by the
goods to be manufactured or supplied,
or the services to be rendered. The
technical specifications must include
the testing parameters for goods, when
such testing is required in the contract.
Par. 1, Page 128 of Generic

Procurement Manual, Volume II –
The goods supplied under the contract
must conform to the standards
mentioned in the technical
specifications x x x
Par. 6, Page 129 of Generic

Procurement Manual, Volume II –
The Procuring Entity may reject any
goods or any part thereof that fail to
pass any test and/or inspection or do
not conform to the specifications. The
supplier should either rectify or
replace such rejected goods or parts
thereof or make alterations necessary
to meet the specifications at no cost to
the Procuring Entity, and shall repeat
the test and/or inspection, at no cost to
the Procuring Entity, upon giving a
notice pursuant to the contract.
V In SDO Masbate Province, Irregular Use of 102,009.39 Item 4.6, Appendix 8 of IRR of RA
the use of the proceeds Proceeds from No. 9184 – The proceeds from the sale
from the sale of bidding Sale of Bidding of the bidding documents shall
documents amounting to Documents continue to be used for the payment of
₱102,009.39 for the honoraria as provided for in Budget
payment for foods and Circular No. 2004-5A, dated 7
snacks during pre-bid October 2005, or to augment the funds
conferences and opening of for the procuring entity’s legal
bids is irregular. assistance and indemnification
package as provided in the Guidelines
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for Legal Assistance and
Indemnification of Bids and Awards
Committee Members and its Support
Staff.
GPPB Resolution No. 18-2012 dated

July 27, 2012 –
• Allow the use of proceeds from
the sale of biddings documents for
legal assistance, as well as for the
indemnification package (legal,
medical and insurance) of BAC
members and its support staff; and
• Apply proceeds from the sale of
bidding documents to other
expenses pertaining to the
activities of the BAC in the
production of the Bidding
Documents
COA Circular 2012-003 dated

October 29, 2012 – Irregular
expenditures are incurred if funds are
disbursed without conforming to
prescribed usages and rules of
discipline. There is no observance of
an established pattern, course, mode of
action, behavior, or conduct in the
incurrence of an irregular expenditure.
A transaction conducted in a manner
that deviates or departs from, or which
does not comply with standards set is
deemed irregular.
Total 1,695,197,966.96
a) observe strict compliance with the applicable rules and regulations of

the Revised IRR of RA No. 9184, relevant Sections of GAA FY 2018,
COA rules and regulations, and other government issuances on the
government procurement process;
b) limit the procurement of services on a reimbursement basis, unless the

circumstances warrant its application;
c) undertake procurement of common-use supplies from private suppliers

only if a prior inquiry with the DBM-PS established that the items were
not available for procurements to be valid and assured to be most
advantageous to the government in terms of quality and cost, among
others; and
222
d) furnish copies of the programs of work to the heads of schools for them
to monitor on a daily basis ongoing infrastructure projects and to note
every deviation observed.
Region Management’s Comment Auditor’s Rejoinder

I The Management admitted the lapses and commit to strictly
II adhere to all procurement procedures recommended by the
IV-A Audit Team.
IV-B
V
VI
VIII
IX
XIII
VII The BAC members have expressed difficulty in coping up We suggested that this be done annually,
with a quarterly bidding. In addition, most of the vendors in with POs issued on a “as the need arises”
the market, particularly the ones selling perishable goods, are basis. This will also avoid the spoilage
not PhilGEPS-registered and cannot participate in the of perishable items.
government procurement.
The Management said that the purchase of the equipment, We reminded the Management that
despite not being included in the CY 2018 APP, was under RA No. 9184, they are allowed
necessitated by their immediate need for it as there was an twice in a year to make changes to their
increase in the number of clients patronizing the Center; and, APP.
that because they want to provide better service and
accommodation for their clients, a supplemental or revised
APP was not made. Having noticed now of the increase in the
number of patrons, the Management will include an item for
“additional facilities needed” in their APP every year.
Further, the Management committed to comply with the audit

recommendations.
X The Division Engineer of SDO Misamis Oriental informed The Auditor sustained that Detailed
that the DepEd has a centralized determination of quantities Costing Estimates and Quantities still
and costing from the CO using the standard template (POW) form part of the contract to be reviewed
signed by the Central Office PFSED. Further, it was by the COA Technical Services.
commented that there is a plan from the Central Office to
request COA that forms relating to infrastructure project be
separated from the forms used by DPWH.
XI The BAC could not locate anymore the file copies of such
notices to bidders in their present BAC office and admitted
that there were lapses in the safekeeping of the different
documents during the transfer from the previous BAC office,
but the BAC Secretariat is doing necessary steps to retrieve
copies of the notices for submission.
Delay/Non-submission of Financial Reports
16. The consistent disregard by the DepEd CO, ROs, and SDOs of the set timelines
on the submission of the monthly and quarterly accounting and other
financial/budgetary reports prevented the Audit Team to conduct a timely review
and evaluation of transactions for the immediate correction of any deficiency
found therein, contrary to existing rules and regulations. Thus, the purposes of
the reports have lessened or even lose their usefulness/value to the intended users
thereof.
223
16.1 Section 7.1.1(a) of COA Circular No. 2009-006 dated September 15, 2009
provides that “the head of the agency, who is primarily responsible for all
government funds and property pertaining to his agency, shall ensure that:
a) the required financial and other reports and statements are submitted by the
concerned agency officials in such form and within the period prescribed by the
Commission, xxx.”
16.2 The GAM for NGAs, Volume I, sets the deadlines on the submission of various
accounting reports and financial statements.
16.3 Section 122 of PD No. 1445 provides that “xxx require the agency heads, chief
accountants, x x x to submit trial balances, x x x, and such other reports as may
be necessary for the exercise of its functions. (2) failure on the part of the
officials concerned to submit the documents and reports mentioned herein shall
automatically cause the suspension of payment of their salaries until they shall
have complied with the requirements of the Commission.”
16.4 Pertinent COA issuances set the timelines for the submission of various financial
statements/reports, as stated below.
Report Title Deadline Basis

Report of Collections and Deposits (RCD), Report of Every 10th day after the Sec.7.2.1. a of the Rules and
Disbursements (ROD), Report of Checks Issued end of each month Regulations on the
(RCI), Report of Advice to Debit Settlement of Accounts
Account Issued (RADAI), Liquidation Reports (LR), (RRSA) as prescribed under
Report of Accountability for Accountable Forms COA Circular No. 2009-006
(RAAF) dated Sept. 15, 2009
Monthly Trial Balances (TBs) and supporting Journal 10 days after the end of Section 60b, Chapter 19
Entry Vouchers (JEVs) the month GAM for NGAs, Volume I
Quarterly Financial Statements (FS) and supporting 10 days after the end of
schedules (SS) the quarter
Year-end TBs, FSs, SSs On or before January 20
of the following year
Bank Reconciliation Statements (BRS) 20 days after the receipt Section 7, Chapter 21, GAM
of the monthly BS for NGAs, Volume I
Statement of Appropriations, Allotments, 30 days after the end of Section 32a, Chapter 3,
Obligations, Disbursements and Balances – FAR No. each quarter GAM for NGAs, Volume I
1 (SAAODB)
Summary of Appropriations, Allotments, 30 days after the end of
Obligations, Disbursements and Balances by Object each quarter
of Expenditures – FAR No. 1.A (SAAODBOE)
List of Allotments and Sub-Allotments – FAR No. 30 days after the end of
1.B each quarter
Aging of Due and Demandable Obligations – FAR On or before 30th day
No. 3 following the end of the
year
Monthly Report of Disbursements – FAR No. 4 On or before 30th day Section 32c, Chapter 3,
of the following month GAM for NGAs, Volume I
covered
Quarterly Report of Revenue and Other Receipts – 30 days after the end of
FAR No. 5 each quarter
Contracts Within five working Item 3.1 of COA Circular
days from the execution No. 2009-001 dated
The copies of documents required to be submitted of a contract February 12, 2009
shall include but not limited to the following:
224
Report Title Deadline Basis
a. Invitation to Apply for Eligibility and to Bid
b. Letter of Intent
c. Eligibility Documents and Eligibility Data Sheet
d. Eligibility Requirements
e. Results of Eligibility Check/Screening
f. Bidding Documents (Sec. 17.1, IRR-A, RA No.
9184);
g. Minutes of Pre-bid Conference, if applicable
h. Agenda and/or Supplemental Bid Bulletins, if
any
i. Bidders Technical and Financial Proposals
j. Minutes of Bid Opening
k. Abstract of Bids
l. Post Qualification Report of Technical Working
Group
m. BAC Resolution declaring winning bidder
n. Notice of Post Qualification
o. BAC Resolution recommending approval
p. Notice of Award
q. Contract Agreement
r. Performance Security
s. Program of Work and Detailed Estimates
t. Certificate of Availability of Funds, Obligation
Request
u. Notice to Proceed
v. Such other documents peculiar to the contract
and/or to the mode of procurement and
considered necessary in the auditorial review and
in the technical evaluation thereof.
16.5 Review of the records of the nine ROs revealed several financial reports were
either not submitted or untimely submitted, contrary to the aforementioned COA
issuances. Details of the said financial reports and the number of days delayed
in the submission thereof are as follows:
Table 34: Summary of Non-submission of Financial Reports
Reports Not Submitted on Time Range of
RO SDO/Schools Delay in
by SDOs by Schools
Days
NCR Ten SDOs and FS and supporting schedules in FS and supporting schedules in One to
143 schools ten SDOs; TB and supporting 36 schools; TB and supporting 373
schedules in seven SDOs; RCI, schedules in 44 schools; RCI,
RADAI, DVs and supporting RADAI, DVs and supporting
documents in seven SDOs; BRS documents in 16 schools; BRS
in six SDOs; Perfected in 49 schools; Perfected
contracts/POs and supporting contracts/POs and supporting
documents in two SDOs; BFAR documents in seven schools;
in two SDOs; and LR and JEV BFAR in ten schools; and LR
in two SDOs and JEV in 83 schools
I Six SDOs and BRS, FS and supporting BRS; FS and supporting One to 88
various schools schedules, TB and supporting schedules; TB and supporting
schedules, LR, RCI, RADAI, schedules; LR; RCI, RADAI,
DVs and supporting documents DVs and supporting documents;
in one SDO; ORS and and Perfected contracts/POs and
supporting documents; BRS, supporting documents
RCI, RADAI, DVs and
supporting documents in one
SDO; GL in one SDO; Request
for reconstruction of flooded
225
by SDOs by Schools
Days
documents in one SDO; RCI,
RADAI, DVs and supporting
documents in two SDOs; and
Perfected contracts/POs and
supporting documents
II Six SDOs and FS and supporting schedules; Journals and Ledgers; RCI, Not
more than eight RCI, RADAI, DVs and RADAI, DVs and supporting Provided
schools supporting documents documents; and LR
III Nine SDOs and FS and supporting schedules; FS and supporting schedules; Not
116 schools TB and supporting schedules; TB and supporting schedules; Provided
RCI, RADAI, DVs and RCI, RADAI, DVs and
supporting documents; BRS; supporting documents; BRS;
Perfected contracts/POs and Perfected contracts/POs and
supporting documents; LR and supporting documents; LR and
JEV; Report on the Physical JEV; Report on the Physical
Count of PPE; RAAF; and Count of PPE; RAAF; and
supporting documents supporting documents
IV-A Four SDOs and BRS in one SDO; JEV in two FS and supporting schedules in 5-329
four schools SDOs; and Perfected three schools; and Perfected days
contracts/POs and supporting contracts/POs and supporting
documents in RO and in one documents in one school
SDO
IV-B Five SDOs and FS and supporting schedules in FS and supporting schedules in Not
39 schools five SDOs; Perfected 39 schools provided
contracts/POs and supporting
documents in one SDO
V Four SDOs DVs and supporting documents Not specified Not
in four SDOs; ORs and Payrolls provided
in three SDOs; FS and
supporting schedules, TB and
supporting schedules in one
SDO; LR in one SDO; and
Journals in one SDO
VI Five SDOs and FS and supporting schedules; FS and supporting schedules; Not
various schools DVs and supporting documents; DVs and supporting documents; provided
TB and supporting schedules and Payroll
VII One SDO and RCI, DVs and supporting RCI, DVs and supporting Not
2 schools documents documents provided
VIII 11 SDOs and FS and supporting schedules; FS and supporting schedules; 3-306
various schools RCI, RADAI, DVs and RCI, RADAI, DVs and days
supporting documents; BRS, supporting documents;
LR and JEVs; RAAF; and TB Quarterly reports; RAAF; BRS;
and supporting schedules and TB and supporting
schedules;
X Eight SDOs Perfected contracts/POs and FS and supporting schedules in Not
and six schools supporting documents in seven one school; and BFAR in four provided
SDOs schools
XI Four SDOs and FS and supporting schedules; FS and supporting schedules; 31-191
various schools BFAR; DV payroll and LR; BFAR; DV payroll and LR; and
BRS; and RCD, DTR and BRS
Journals
XII Five SDOs and FS and supporting schedules; FS and supporting schedules; Not
various schools RCI, RADAI, DVs and RCI, RADAI, DVs and provided
supporting documents; and supporting documents; and
supporting documents supporting documents
226
by SDOs by Schools
Days
XIII 11 SDOs and BRS; RCI, RADAI, DVs and FS and supporting schedules; Not
various schools supporting documents; FS and Quarterly reports; BFAR; BRS; provided
supporting schedules; TB and DVs and supporting documents
supporting schedules
16.6 In addition, the Audit Team, in its letter to Secretary Briones dated January 15,
2019, requested for the submission of the financial statements and other reports
of DepEd CO on or before January 15, 2019. The reports, schedules and
documents requested by the Audit Team and the concerned offices/divisions are
shown below:
Table 35: Summary of Unsubmitted Financial Reports

Report/Schedule/Documents Concerned
Division/Office/Undersecretary
A. Reports Accounting Division
Preliminary and Final Trial Balances (Consolidated and Per Fund);
Management Representation Letter Finance-Disbursements and Accounting
Statement of Management Responsibility;
Statement of Financial Position for all funds (Detailed and Condensed Undersecretary Victoria L. Medrana-
Statement of Financial Performance for all funds (Detailed and Catibog
Condensed)
Statement of Cash Flows for all funds – Direct Method
Statement of Changes in Net Asset/ Equity;
Statement of Comparison of Budget and Actual Amounts
Notes to Financial Statements to include among others information/data
on:
• All major accounts as required under PPSAS
• Status of Funds, appropriations, allotments, obligations,
disbursements and balances
• Breakdown of the “Obligation Incurred” during the year as to:
➢ Paid Obligations
➢ Due and demandable
➢ Not yet due and demandable
Bank Reconciliation Statements and Bank Statements including the paid
checks, bank statements, debit and credit memo of all cash in bank
accounts
List of unclaimed and unreleased Checks
Report on Physical Count of Inventories (RPCI) Asset Management Division
*The Asset Management Division submitted a soft copy of the RPCI on Administration
February 4, 2019. However, undistributed textbooks and other
instructional materials were not counted during the inventory taking and Undersecretary Alain Del B. Pascua
consequently, not included in the Inventory Report.
Insurance policy issued by GSIS for insurance coverage of all insurable
assets
Budget and Financial Accountability Reports, specifically the following: Budget Division
• Physical Plan (Budget Execution Document - BED No. 2)
• Quarterly Physical Report of Operation (QPRO) – BAR No. 1 Finance-Budget and Performance
• Statement of Appropriations, Allotments, Obligations, Monitoring
Disbursement and Balances (SAAODB) – FAR No. 1
• Summary of Appropriations, Allotments, Obligations, Undersecretary Annalyn M. Sevilla
Disbursements and Balances by Object of Expenditures
(SAAODBOE) – FAR No. 1-A
• List of Allotments and Sub-Allotments (LASA) – FAR No. 1-B
• Statement of Approved Budget, Utilizations, Disbursements and
Balances (SABUDB) - FAR No. 2 (for Off-Budget Fund)
227
• Summary of Approved Budget, Utilizations, Disbursements and
Balances by Object of Expenditures (SABUDBOE) – FAR No.
2-A
• Aging of Due and Demandable Obligations (ADDO) – FAR No.
3
• Monthly Report of Disbursements (MRD) – FAR No. 4
• Quarterly Report of Revenue and Other Receipts – FAR No. 5
Personal Services Itemization Plantilla of Personnel for FY 2018 Personnel Division
List of Contract of Service personnel and Consultants for FY 2018
Administration
Undersecretary Alain Del B. Pascua

Consolidated Report on the Information and Publicity on Planning and Programming Division
Program/Projects/Activities of the Department
Planning and Field Operations
Undersecretary Jesus L.R. Mateo

Procurement Monitoring Report from January to December 2018 Procurement Management Service
Procurement
Asst. Secretary Salvador C. Malana, III

Department of Education – Office of the Secretary, Annual Planning and Programming Division
Operational/Accomplishment Report for CY 2018
Planning and Field Operations
Undersecretary Jesus L.R. Mateo

GAD Plans and Budget for CY 2018 GAD Focal Person/Committee
GAD Accomplishment Report for CY 2018
Plans and Budget for Senior Citizens and Persons with Disabilities (PWD) Projects for the Welfare of Senior
Accomplishment Report on Projects for the Welfare of Senior Citizens and Citizens/PWDs Focal Person/Committee
PWDs for CY 2018
Internal Audit Reports prepared and issued for CY 2018 Internal Audit Service
Ms. Leilani L. Galvez

OIC-Office of the Director IV
Status of Fund Utilization on the following: Accounting Division
• Yolanda Fund
• Marawi Fund Finance-Disbursements and Accounting
*The Accounting Division submitted the report on February 14, 2019. Undersecretary Victoria L. Medrana-
However, details of the utilization/disbursements made were not provided. Catibog
Budget Division
Finance-Budget and Performance

Monitoring
Undersecretary Analyn M. Sevilla

B. Schedules
Schedule/Composition of Cash-in-Bank, LCCA Accounting Division
Schedule/Composition of Cash-in-Bank, Local Currency, SA
Schedule/Composition of Cash-in-Bank Local Currency, Time Deposits Finance-Disbursements and Accounting
Schedule/Composition of Cash-in-Bank (Trust Receipts)
Schedule and Aging of Cash Advances Undersecretary Victoria L. Medrana-
Schedule and Aging of Receivable Accounts Catibog
• Accounts Receivables
• Due from Officers and Employees
• Due from National Government Agencies
228
• Due from GOCCs
• Due from NGOs/POs
• Other Receivables
Schedule and Aging of Payable Accounts
• Accounts Payable
• Due to NGAs
• Due to National Treasury
• Due to GOCCs
• Other Payables
Schedule of Remittances;
• Due to BIR
• Due to GSIS
• Due to PhilHealth
• Due to HDMF
Accomplished and updated Agency Action Plan Status of Implementation
(AAPSI) of Prior Year’s Audit Recommendations
C. Documents for all funds for the months of June to December

2018
Disbursement Vouchers, Payrolls, Official Receipts and JEVs Accounting Division
Report of Collections and Deposits
Report of Disbursements Finance-Disbursements and Accounting
Report of Checks Issued
Electronic copy of the aforementioned report and schedules Undersecretary Victoria L. Medrana-
Catibog
16.7 In response thereto, the Chief Accountant, through letters dated January 28,
2019 and February 14, 2019, requested for extension up to March 31, 2019 citing
as justification the volume of financial data and reports that need to be reviewed,
evaluated, and consolidated.
16.8 However, the Audit Team denied the request on the grounds that existing
regulations on the submission of financial reports to the oversight agencies are
mandatory, thus the target dates mentioned therein must be strictly followed.
Moreover, despite constant verbal reminders and follow-ups made by the Audit
Team, the Accounting Division and other concerned offices/divisions submitted
the required reports late.
16.9 The pertinent provisions of the PD No. 1445, otherwise known as The State
Audit Code of the Philippines, on the submission of reports by government
agencies to the Commission on Audit are as follows:
“Section 41. Annual report of the Commission
(1) The Commission shall submit to the President, the Prime Minister,
and the National Assembly not later than the last day of September of
each year an annual report of the financial condition and results of
operation of all agencies of the government which shall include
recommendations of measures necessary to improve the efficiency and
effectiveness of these agencies.
229
(2) To carry out the purposes of this section, the Chief Accountant or
the official in charge of keeping the accounts of a government agency
shall submit to the Commission year-end trial balances and such other
supporting or subsidiary statements as may be required by the
Commission not later than the fourteenth day of February. Trial
balances returned by the Commission for revision due to non-
compliance with accounting rules and regulations, shall be resubmitted
within three days after the date of receipt by the official concerned.
(3) Failure on the part of any official or employee to comply with the
provisions of the immediately preceding paragraph shall cause the
automatic suspension of the payment of his salary and other
emoluments until he shall have complied therewith. The violation of
these provisions for at least three times shall subject the offender to
administrative disciplinary action.” (Emphasis supplied)
16.10 Moreover, the latest financial statements submitted by the Accounting Division
to the Audit Team were as of June 2018 which clearly indicates lapses and
inefficiency in processing, recording, and reporting the financial transactions of
the Department.
16.11 Unreasonable delays incurred by the Agency not only impeded the timely and
thorough review and evaluation of the accuracy, completeness and propriety of
the transactions reported but also prevented the early detection and correction of
any deficiency/error noted in the audit thereof. Likewise, significant delay in the
rendition of reports directly affects the data that can be generated therefrom
which could lose its value to the intended users as their basis in decision-making.
16.12 Further, failure on the part of the officials concerned to submit on time the
required financial reports and documents shall be an automatic ground to cause
the suspension of payment of their salaries as penalty, until they have complied
with the existing regulations, pursuant to Paragraph 2, Section 122 of PD No.
1445, also known as the Government Auditing Code of the Philippines.
16.13 We recommended and the Management agreed to direct the persons

responsible in the preparation and submission of the financial reports to
submit the same within the period prescribed by the COA, to enable the
Audit Teams to conduct its timely audit. Otherwise, consider the suspension
of payment of salaries of the concerned personnel for unjustifiable delay in
the submission of the required reports, pursuant to Section 122 of PD No.
1445.
230
Office/
Management’s Comments Auditor’s Rejoinder
Region
CO The Procurement Management Service submitted CY 2018
Procurement Monitoring Report, in compliance with
Section 41 of PD No. 1445.
To facilitate the preparation of the DepEd’s financial

reports, the Financial Service conducted the National
Seminar/Workshop on the Preparation of CY 2018 Year-
End Financial Reports last January 27 to February 1, 2019
in Legazpi City. As of February 1, 2019, all regions/offices
have been able to submit the financial reports particularly
the BFARs. However, due diligence is being observed in all
stages of report preparation to generate accurate and reliable
reports. Once received, each data will undergo multiple
checking and verification to ensure correctness and validity
of the report. Often times, the reports have to be returned to
the respective units for revision and the re-submission will
take time due to multitudinous number of units (17 Regions,
214 Schools Division Offices, 2,708 Implementing Units
and 42,137 Non-Implementing Units). The repetitive and
continuous verification stage with this huge number of units
caused the delay in the consolidation, consequently delaying
the timely submission of reports. Given this, they shall
endeavor to review the existing procedural/process flow of
reporting to address the bottlenecks.
Lastly, the DepEd, as the agency with the largest

stakeholders and largest budget, at the core of its
management’s agenda under the recently created Financial
Management Reform Committee (FMRC) is the review of
DepEd’s financial management system. Among others, the
policies, systems and procedures governing budgeting,
accounting and procurement to include the corresponding
reports to be generated, reported and submitted to various
oversight agencies like the COA, DBM and Office of the
President will be addressed. The Budget Division will
submit within the days given by the COA the required
financial reports from the division.
NCR Lack of manpower explains the delay of preparation and
submission of reports and the corresponding supporting
documents. However, the Management agreed to the audit
observation and committed to comply with the
recommendation within the reglementary period as
prescribed.
I The Management acknowledged the observations and
assured the Audit Team that they will take appropriate
action for the timely submission of required financial and
other reports by the concerned AOs.
II The Management agreed with the audit observation and The Team mentioned that continuous
agreed to comply with the recommendation. Moreover, monitoring on the implementation of
Management has committed that they shall issue DepEd Order No. 8, s. of 2007 shall
Memorandum for the proper implementation and proper be done and the results be reflected
management of school canteens. The Accountant was also on the next submission of Financial
required to include in the FS the school share from the Reports by March 2019.
income of school canteen. The schools shall likewise be
required to a) prepare the necessary DVs with supporting Additionally, the Audit Team
documents for the disbursement of shares from school suggested that they could at least
canteen; b) School heads shall check the accuracy of the issue a Memorandum regarding the
231
Office/
Region
amount received by the school for its share on canteen compliance with the DepEd Order
income; c) issue acknowledgment receipt for non-IUs and and monitor compliance every
official receipt for IUs upon receipt of school canteen share; meeting. Also, the Management were
and d) deposit such share in a government depository bank reminded that Acknowledgement
or nearest commercial bank where no government Receipts shall be issued by School
depository bank is available in their area. Heads for those who do not have ORs
and Canteen Managers shall submit
proof such as ORs/Invoices and other
documents as proof of actual receipts
and disbursements of the canteen
funds together with the Financial
reports required in DepEd Order No.
8, s. of 2007.
III The Management committed for the strict compliance with
the audit recommendations and the timeline of submission
is already being observed.
IV-A The Management is amenable with the audit
recommendations set forth.
IV-B The Management agreed to comply with the
recommendations.
V The limited number of bookkeepers contributed to the delay
in the submission of required reports. Nevertheless, the
Management agreed to comply with the recommendations.
VI The Management committed to submit the required reports
on time.
VII Not provided.
VIII • At the exit conference, ROP explained that the Verification of the records showed
unsubmitted DVs were due to the unclaimed checks at that submission of December 2018
the Cashier’s Section. They also commented that the accounts by Management was made
December 2018 accounts were already submitted to on January 23, 2019. However, the
COA Office in January 2019. deadline for submission is on the 10th
• SDO Tacloban - The Management of TCDO have day of the preceding month, hence, it
already submitted some of its Disbursement Vouchers was late for 13 days. As regards the
and DTRs, as well as financial and other reports last rest of the DVs/checks, Management
January 2019. Moreover, Division Memo No. 081, s. cannot claim that the remaining 419
2019 dated February 13, 2019 was already issued in DVs were all unclaimed/unreleased
compliance with the recommendation made by the Audit since the Cash Section was resolute
Team. that majority of the checks/DVs were
already submitted to the Accounting
Furthermore, the Management commented that the audit Section. However, they could hardly
observation had been discussed with the concerned prove that due to the absence of the
administrative staff and those recommendations will be CY 2018 Monthly Report for the
acted upon. Unreleased Checks which said
Section failed to prepare and submit
to COA.
X The Management assured the Audit Team that they would
abide by the audit recommendations and ensure compliance
with the existing accounting and auditing rules and
regulations.
XI The Management committed to comply with the audit The Audit Team shall validate
recommendations. compliance with the
recommendations.
XII The Management committed to adhere to the
recommendations.
XIII • The ROP already submitted an update of the DVs
submitted after the cut-off date. A total of 566 DVs for
transactions were already submitted in the amount of
₱644,965,862.77.
232
Office/
Region
• SDO Surigao - Management commented that the BRS
for MDS-Regular and MDS-Trust Fund accounts for the
last quarter of CY 2018 were submitted last January 14,
2019.
• SDO Bislig - The Planning Officer III provided the COA
office of the said BAR for all quarters of CY 2018 as
required last February 22, 2019.
• SDO Surigao del Sur - The complete set of BFARs for
CY 2018 (SDO proper & Consolidated) were already
submitted to your Office.
Further, the Management adheres to the audit
recommendations.
PROGRAM EVALUATION
Basic Educational Facilities Fund (BEFF) – Repairs and Rehabilitation of School

Buildings
17. There were lapses in the implementation of repair/rehabilitation of classrooms

under the DepEd’s BEFF for CYs 2018, 2017 and 2016 in 12 ROs, such as:
(a) delayed completion of repair projects ranging from one to 637 days;
(b) deficiencies in the perfected contracts, Program of Works (POWs) and
Statements of Work Accomplished (SWA); (c) unrectified structural defects due
to poor workmanship and unfinished repair/rehabilitation works; (d) non-
compliance with the ₱15,000,000.00 threshold pursuant to Section 10 of the DepEd
Order No. 94, s. 2011 dated November 29, 2011; and (e) other deficiencies that
affected the timely achievement of the project’s target of increasing the provision
of safe and structurally stable facilities that are conducive to learning and
teaching.
17.1 The BEFF is an annual budget of the DepEd intended for the improvement and
maintenance of school facilities such as the provision of classroom and
workshop buildings, replacement of old dilapidated buildings, provision of
furniture, repair and rehabilitation of classrooms, including heritage buildings,
as well as water and sanitation facilities, and electrification.
17.2 DepEd Order No. 94, series of 2011 dated November 29, 2011, as amended by
DepEd Order No. 35, s. 2017 dated July 17, 2017, provides the guidelines
relative to the program implementation of BEFF.
17.3 The Audit Teams of ROs namely NCR, CAR, I, III, IV-B, V, VI, VIII X, XI,
XII and XIII conducted auditorial review of the contracts, verification of the
related documents and inspection of the implementation of repair of classrooms
funded in CYs 2018, 2017 and 2016 and noted the following observations:
233
a. Delayed completion of the BEFF repair/rehabilitation projects ranging from
one to 637 days
Region/ Total Contract

Project Status/Reasons for the Delay
SDO Price/Amount Involved
NCR 10,831,673.26 Works were still ongoing. The main cause of the
SDOs Caloocan delays was the frequent stoppage of work due to lack
and Makati or limited availability of temporary learning room
for the pupils to use while repair works are on-going
and the loaded program of activities of the school
that hindered the contractors to undergo the repairs.
CAR 17,194,930.54 There was delay in the implementation of the
SDOs Benguet projects in SDO Benguet of at least 23 percent of the
and Mountain contract time. The contracts for repairs and
Province rehabilitation of classrooms were not terminated
despite incurring a negative slippage of more than
ten percent of the contract time.
There was no reported work accomplishment on the
projects of SDO Mountain Province. Analysis
showed that the contractors incurred negative
slippage of 295 percent or more as of year-end, but
the contracts were not terminated despite the
negative slippage of more than ten percent.
I 20,413,734.44 The Schools Division of Ilocos Norte awarded the
SDOs Ilocos contracts for the implementation of the BEFF Repair
Norte and CY 2017 that were scheduled to be completed in
Pangasinan I December 2017. Verification disclosed that in the
implementation, three infrastructure projects worth
₱5,232,309.15 were delayed for 39 to 47 calendar
days, and that delays in the completion of the works
exceeded ten percent of the specified contract time.
Random validation of the status of accomplishments
of the projects in the SDOs of Pangasinan I showed
that the eight project contracts for the repair of
various school buildings totaling ₱15,181,425.29
were still ongoing as of year-end.
V 2,509,117.83 Verification of the progress payments made for the
ROP various repair and rehabilitation projects in the
region out of the CY 2014 BEFF showed that the
advances of ₱2,122,496.24 and ₱386,621.59 or a
total of ₱2,509.117.83 have not yet been fully
recouped with remaining balances of ₱118,223.05
and ₱38,082.23, respectively.
VI 968,911.31 Most of the schools inspected have buildings that are
SDO Antique not yet repaired and completed. Review of
documents revealed that despite all the unfinished
works embodied in the approved program of works,
the SDO had already released the retention fee
amounting to ₱968,911.31. It was likewise noted that
the Engineering Section reported some of the repairs
as 100 percent completed, contrary to the results of
validation/inspection. Most of these projects are
already long overdue.
X 7,858,299.50 The timelines for the implementation of the repair
SDOs Ozamiz and rehabilitation in SDO Ozamiz City in the amount
City and Tangub of ₱7,858,299.50 and SDO Tangub City under the
City CY 2018 BEFF were not observed by the concerned
contractor as noted from the report submitted by the
DepEd Engineer, revealing incomplete repairs with
delays ranging from one to 96 days.
234
Region/ Total Contract
Project Status/Reasons for the Delay
SDO Price/Amount Involved
XIII 127,938,916.54 There were 38 projects under BEFF CYs 2016 to
SDOs Siargao 2018 of SDOs of Surigao del Sur, Tandag City and
Island, Surigao Siargao with a total contract cost of ₱127,938,916.54
del Sur, and that were not completed as scheduled. The
Tandag City contractor’s laxity to address the
deficiencies/defects/remaining work to be done as
contained in the punch-list and the non-completion
of projects within the contract period resulted in
unfinished school building and classroom repairs
with delays ranging from 119 to 637 days in SDO
Surigao del Sur, six to 440 days in SDO Tandag City,
and 59 to 519 days in SDO Siargao Island as of
December 31 2018.
Total 187,715,583.42
17.4 The primary consideration for entering into a contract is the timely completion
of the projects so that the intended benefits may be achieved. Consequently, the
contracting parties are bound to adhere faithfully to the terms and conditions of
the contract. The implementing schools should have judiciously planned the
program and activities to avoid any delay or interruption of its completion.
b. Deficiencies in the perfected contracts, POWs and SWA
17.5 The DepEd Handbook on Supply and Property Management requires that the
School Head must inspect the construction of the building and call the attention
of the DepEd Project Engineer particularly on works that are not in accordance
with the specifications. The school head can seek the assistance from a technical
person specifically in the conduct of the inspection.
17.6 The Audit Teams of NCR, ROs I, IV-B, VI and VIII inspected several projects
implemented under BEFF repair and rehabilitation of school buildings of the
DepEd and observed deficiencies in the perfected contracts, approved POWs
and SWA as shown below:
Region/SDO Deficiencies
• Deficiencies in the perfected contracts
NCR There was no project period stipulated in the perfected contract. Examination
SDO San Juan of the bidding documents of the two contracts with Alpha-Rho Megabuilders
and Trading (Alpha-Rho) revealed that these contracts did not indicate the
contract duration or date of completion. On the other hand, contract with Lex-
Mar General Merchandising & Contractor had indicated 45 days delivery
period in the posted Request for Quotation in PhilGEPS. The subsequent post
on July 25, 2018 of Notice of Award (NoA) indicated the contract end date
of August 31, 2018. However, the contract had no information on the contract
duration or date of completion.
NCR Scrutiny of the contracts executed by the SDO and contractors revealed that
SDO Mandaluyong the time duration or completion period, agreement and scope of works, the
number of physical targets of classrooms to be repaired, the specific name,
actual site, location or description of the particular building, classroom and
comfort rooms needing repairs were not mentioned in the contract. The
specific details of the particular rooms or building that need repairs are
necessary to avoid duplication and overlapping of works considering that the
235
Local Government Units (LGUs) have similar programs/projects for repair
and rehabilitation of school buildings.
• Variances in the POWs against actual works performed
NCR There were variations noted in the actual works performed as against the
SDO Caloocan approved POW such as the installation of incandescent light bulbs instead of
fluorescent lamps in Caloocan North ES and the use of smooth/glazed tiles in
the flooring of hallways instead of unglazed type in Manuel L. Quezon HS.
In the case of Horacio Dela Costa HS, the school building facade was painted
with a color motif of the City of Caloocan instead of the DepEd-prescribed
color and the blackboards installed were flat type instead of panoramic.
NCR The repair/rehabilitation program did not conform to the approved POWs.
SDO Mandaluyong Some of the works were converted to constructions of new rooms and
extension/improvement of the School Principal’s office. Among the works
that were not consistent with the approved POWs are as follows:
• Installation of barb wire around the school.
• Imported partition was used in the clinic room.
• Most of the repairs were used for the extension of Feeding Room.
• Some job works were converted to the renovation of Mezzanine Room and
the Office of the Principal.
• Some works were converted to the improvement of canteen and
landscaping.
• Two rooms with an estimated size of 3x3 square meters per room were
constructed but not within the approved scope of works;
• Metal sheets were installed in seven schools instead of polycarbonated
sheets.
• The male urinal rooms and canopy in Neptali A. Gonzales HS were not in
conformity with the approved scope of works.
NCR Specifications listed in the approved POWs in the repaired classrooms in
SDO Taguig/Pateros Tipas NHS, Cipriano Sta. Teresa ES and Sta. Ana ES were not and/or
insufficiently complied with by the contractors.
I Inspection/evaluation conducted on February 8-9, 2018 in the Schools
SDO Pangasinan II Division of Pangasinan II with the assistance of the COA Technical Audit
Specialist (TAS) showed that per the Agency Reported Accomplishment, all
projects reported by the Division Office were 100 percent accomplished.
However, the Technical Inspection Reports issued by the TAS, reported that
there were non-installation and non-deliveries of items specified in the
program of works affecting the physical aspect of the project.
IV-B Cost deficiencies amounting to ₱522,219.81 were noted in 16 schools
SDOs Occidental and damaged by Typhoon Yolanda in the SDOs of Occidental and Oriental
Oriental Mindoro Mindoro, due to non-performance by the contractor of the repair works
provided in the approved programs of works, plans and specifications of the
project. The listed defects/deficiencies were not detected and reported in the
required validation and inspection conducted by the Division Engineering
Office, resulting in an overpayment of ₱522,219.81 for the repair work items
not installed or defectively performed by the contractors concerned.
VI Repair/rehabilitation of school buildings/classrooms totalling ₱2,267,720.84
SDO Antique in SDO Antique were not implemented/exceeded the contract duration and
not in accordance to the approved program of work, contrary to the provisions
of the Contract entered into by and between SDO and the Contractor.
VIII The decrease in quantities and/or deletion of works from those indicated per
SDOs Southern Leyte, the original POW were not covered with Variation Orders (VO) whereas
Maasin City, and variation costs of more than ten percent were without another contract that
Ormoc City have to be bidded, contrary to items 1.1 and 1.4 of Annex E of the RA No.
9184 and its CY 2016 Revised IRR, thus providing no basis in determining
the accuracy of payments made to contractors to the disadvantage of the
government.
• No specific details in the SWA
NCR The Audit Team found it difficult to identify the repairs made in the schools
SDO Mandaluyong inspected, since the specific classrooms and buildings for repair/rehabilitation
were not stated in the SWA. Due to lack of detailed engineering per specific
236
school building, there is no way to measure the project accomplishments and
ascertain whether the Contractors’ works were done in accordance with what
is expected of them.
c. Unrectified structural defects due to poor workmanship and unfinished

repair/rehabilitation works
17.7 It was likewise noted in the course of inspection by the Audit Teams in NCR,
RO Nos. VI and XI that there were still unfinished works and unrectified
structural defects in the repair/rehabilitation projects even if it was already 100
percent completed. Also, poor workmanship was observed in the repairs of
classrooms in various schools which resulted in the defects and negative
feedbacks coming from the end-users of the facilities. The following were the
deficiencies noted:
Region/SDO Schools Deficiencies

NCR Deparo ES • Missing/defective/damaged.doorknobs/window
SDO Caloocan Bagumbong HS glasses and dilapidated roof frames not yet replaced.
Caybiga HS • Unfinished and exposed electrical wirings in
Bagong Silang ES switches and circuit breakers hazardous to pupils.
Camarin D ES Unit II • Poor quality of jalousie blades and holders used.
Cielito Zamora Memorial • Uninstalled fire escape ladder, fire alarm bells,
School control panels, foldable partitions in classrooms,
Sto. Nino ES mirror, jalousies, blackboards, ceiling/wall fans,
Kalayaan ES steel gate grills, canopies, circuit breakers, and
Bagumbong ES – Annex protective grills on the hallway.
Caloocan North ES • Repair, tiling, carpentry, drainage system, roofing,
Horacio Dela Costa HS plumbing and sanitary works were not yet started.
Manuel L. Quezon HS • The repair/rehabilitation is considered as a major
M. B. Asistio Sr. HS repair, but the same was not recorded in the books of
Unit I accounts of Bagumbong HS, being an Implementing
Unit school.
NCR San Juan Elementary • Repair works are slowly being destroyed by termites.
SDO San Juan School • Mud tubes can be found on the corners of the ceiling
and lining of the door indicating an active termite
colony in the building.
NCR Addition Hills Integrated • No tile works done.
SDO School • No canopy, water closet, perimeter fence, cabinet,
Mandaluyong Ilaya Barangka and hand rails installed.
Integrated School • Only 12 units of water closet (pail type) were
Eulogio Rodriguez installed instead of 24 units.
Integrated School
Andres Bonifacio
Integrated School
Renato Lopez ES
Isaac Lopez Integrated
School
NCR Tipas NHS • Only refurbishment of doors and windows were done
SDO Taguig/ Sta. Ana ES by the contractor.
Pateros • Dismantled roofing sheets were abandoned by the
contractor on the second floor which may cause
accidents to students.
• A portion of the newly installed ceiling was damaged
already.
VI Anini-y CS • Uninstalled windows, orbit fans, partition walls, and
SDO Antique Magdalena ES panel doors.
237
Region/SDO Schools Deficiencies
San Francisco ES • Plumbing, sanitary, carpentry, painting, concreting,
Callan ES roofing, rebar, and tile works were not yet started.
Bagumbayan ES • Wires along the exterior ceiling were not enclosed in
Sido-San Juan ES electrical conduit, subjecting the wires to damage.
Guintas ES • Electrical and carpentry works were not done, and if
Masanag ES there were electrical installations, these were not
Hon. Francisco Zabala functioning.
Iraya ES • Poorly done tile works.
Igbical ES
Magtulis ES
San Francisco Norte ES
Sta. Justa NHS
Sta. Justa ES
Pandan NVHS
VI Laserna ES • Poor workmanship on painting.
SDO Aklan Naile NHS • Unpainted walls/doors/window jambs in some
Bugtongbato ES classrooms.
Tomas SM Bautista ES • Uninstalled windows, wall/ceiling fans, partition
Candelaria NHS walls, window grilles, locksets and panel doors.
Rizal ES • No electrical power connection in some classrooms.
Union ES • Rough surfaces painted indicating non-use of
Ochando NHS masonry putty as provided in POW.
San Ramon ES • Rough finishing of concrete slab floor which causes
Dumatad ES dirt/dust to stick posing a hazard to pupils and
Dangcalan ES teachers' health.
Toledo ES
Panayakan ES
Baybay-Alibagon IS
Rosario ES
VI Victoria Dais ES • Wall fans not functioning/defective.
SDOs Capiz Pontevedra ES • Lights not functioning/not working properly.
and Roxas City Sapian ES • Paint on the building is peeling off.
President Roxas East • Paint of the blackboard is peeling off.
President Roxas West • Jalousie window is falling off or was not installed
Dumalag Central School yet.
Bun-od ES • Window handle is broken/defective/hard to
Dao ES open/close.
Capiz NHS
• Door handle is defective/broken.
CRAAHS
• Windows not yet installed.
Banica ES
• Ceiling is unfinished.
Cogon ES
Dumolog ES • Electrical wires not properly installed.
Dona Vicenta P. • Walls have still worked to be done.
Hontiveros MS • Electrical system not yet installed.
Don Juan Celino ES
XI Gatungan ES Poor workmanship was observed in the repairs of
SDO Davao Mahayag ES classrooms in various schools in the division of Davao
City Pegdalahan ES City with contracts amounting to ₱21,403,796.53
Tibungol ES funded under the BEFF such as:
C.B. Bangoy ES • Visible gaps between the column of the classroom
Lamanan ES and the wall of the newly constructed toilets.
• Flooring inside the classrooms has shown excessive
random cracks and potholes.
• Several defects in the drainage of the newly
constructed toilets.
17.8 In every project, precise implementation and thorough execution via the
program of works are vital for its success. The main objective of the BEFF is to
come up with a commitment to build/repair buildings to respond to the growing
238
need in the locality of a more conducive learning environment. However, with
the defects that are observed after the completion of the said projects in various
schools as enumerated above, it can be said that the purpose of the projects was
not met.
d. Non-compliance with the ₱15,000,000.00 threshold pursuant to Section 10

of the DepEd Order No. 94, series of 2011 dated November 29, 2011
17.9 Section 10 of the DepEd Order No. 94, series of 2011 dated November 29, 2011
provides the threshold on contract implementation for the SDOs. As
implementing units, they shall undertake the implementation of contracts up to
₱15,000,000.00 worth of projects per contract whether single or clustered, while
the DepEd CO shall undertake the contract implementation of more than
₱15,000,000.00 worth of projects per contract whether single or clustered.
17.10 Examination of the contracts entered into by SDOs Taguig/Pateros and Makati
revealed four repair and rehabilitation contracts which exceeded the
₱15,000,000.00 threshold. Details are as follows:
Region/ Allocated Contract

Lot School
SDO Budget Amount
NCR Sen. Renato Compañero Cayetano 4,465,147.38 22,810,072.17
SDO Taguig/ Memorial Science and Technology
Pateros HS
Agripino Manalo NHS 2,975,269.32
1 Taguig Science HS 2,974,525.07
Cipriano P. Tinga ES 2,975,593.30
EM's Signal Village ES 4,465,404.93
Kapitan Eddie T. Reyes IS 1,979,387.47
Tenement ES 2,974,744.71
Bagong Tanyag ES Annex B 1,482,211.10 25,794,170.96
Bagong Tanyag ES Main 2,475,726.96
Bagumbayan NHS 3,968,222.06
2 Daanghari ES 6,456,341.99
Maria Asuncion Tinga HS 4,467,134.29
Upper Bicutan ES 2,476,878.01
Upper Bicutan NHS 4,467,656.55
Total - SDO Taguig/Pateros 48,604,243.14 48,604,243.13
SDO Makati Makati ES 2,970,129.82 20,475,221.28
Bangkal ES-Main 3,853,406.43
San Antonio Village ES 2,408,980.45
1
F. Benitez ES III 3,168,095.95
Nicanor Garcia ES 3,293,703.44
Makati HS 4,967,611.50
Fort Bonifacio ES 1,803,373.14 20,209,935.06
Fort Bonifacio HS 4,660,067.45
Nemesio I. Yabut ES 2,998,823.96
2 Rizal ES 4,828,071.34
South Cembo ES 1,294,323.23
Tibagan HS 3,070,881.02
West Rembo ES 1,720,490.86
Total - SDO Makati 41,037,958.59 40,685,156.34
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e. Other deficiencies
17.11 Aside from the delayed execution of the repair projects, deficiencies in the
perfected contracts, POWs and SWA, and non-compliance with the
₱15,000,000.00 contract threshold, other lapses in the implementation of the
projects, payments to contractors and delayed submission of contracts and other
supporting documents were also observed and discussed as follows:
Region/SDO CY Deficiencies
Implementation of the projects
NCR 2018 The reason for the grant of contract time extension was not warranted. The
SDO Caloocan original target date of completion for both Clusters 1 and 2 was February
12, 2019 but was moved to March 14, 2019 for reasons such as changes in
the scope of works specified in the contract and time delay during school
days because the classrooms are being occupied by the students. However,
based on interview with the School Heads and Property Custodians
concerned, the school buildings were already vacated upon commencement
of repair/rehabilitation works of classrooms. Likewise, it was also reported
that the laborers were not consistently present in the site to do their work.
The laborers were also interviewed and disclosed that interruptions in work
were caused by the delay in the delivery of construction materials.
2018 Out of the 13 recipient schools of the CY 2018 BEFF, 12 schools did not
put tarpaulin signboards to notify the public of the repair/rehabilitation
projects, contrary to Section 2.2 of COA Circular No. 2013-004 dated
January 30, 2013 entitled “Information and Publication on
Programs/Projects/Activities of Government Agencies”.
Audit of the payments made
NCR 2018/ The OR No. 2210 dated October 10, 2018 issued by the contractor to the
SDO San Juan 2017 SDO for the payment amounting to ₱484,193.00 was already expired by
59 days per BIR Printing Regulation, thus considered invalid.
NCR 2017 The School Head and authorized representative of the Education Facilities
SDOs Taguig/ Division (EFD) have no signature in the Certificate of Completion,
Pateros contrary to the DepEd Handbook on Supply and Property Management.
Records obtained from the Cashier Section showed that the total amount
aggregating ₱5,489,189.98 was already paid by the SDO as of September
30, 2018, despite unsigned/un-inspected Certificate of Completion by the
EFD.
2018 Date of receipt of NTPs awarded to Cresta Management and Construction
and 2H2L Construction was not indicated which hindered the
determination of the total agreed number of days for project
implementation. Likewise, the implementation of the projects cannot be
evaluated considering that the Certificates of Completion were also
undated.
Submission of contracts and other supporting documents
NCR 2018/ Contracts and supporting documents for the implementation of the projects
SDOs 2017 were not submitted to the Auditor within five working days upon approval
Mandaluyong, thereof, contrary to Sections 3.1 and 3.2 of COA Circular No. 2009-001
Taguig/ dated February 12, 2009.
Pateros,
Makati, San
Juan
III 2018 Some schools under the different SDOs paid ₱211,825,961.91 for the
SDOs repair and rehabilitation of classrooms and buildings under the CY 2018
Cabanatuan BEFF without complete documents, contrary to Section 4, Paragraph 6 of
City, Gapan PD No. 1445, COA Circular No. 2012-001 dated June 14, 2012 and RA
City, Mabalacat No. 9184 and its Revised IRR, thus affecting the validity, completeness
City, Nueva and correctness of said disbursements.
Ecija, and San
Jose Del Monte
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Region/SDO CY Deficiencies
V 2018 Contracts for various BEFF Repair/Rehabilitation projects in SDO
SDO Camarines Sur totaling ₱121,570,597.19, were not supported with
Camarines Sur complete documentary requirements as required in Sections 3.1.1 and 3.1.2
of COA Circular No. 2009-001 dated February 12, 2009, precluding the
Audit Team from reviewing the legality, validity and reasonableness of the
terms and conditions of the contracts.
VI 2018 Review of the disbursements for the period CY 2018 disclosed that
SDO Antique materials purchased and labor paid for the various repairs undertaken by
the 11 National High Schools in the total amount of ₱1,002,242.71 were
not supported by an approved program of work. Hence, the extent of work
carried out and the propriety of materials needed for the repair are difficult
to determine. Post audit of disbursement vouchers for these repair projects
disclosed that they were not supported by the approved design
plans/drawings/sketches and detailed unit price analysis (DUPA) which
should be integral and vital part of the contract. They are an indispensable
part of the project because they will be used as bases for the computation
of quantities per item of work and how the cost estimates were arrived at.
VI 2018 Various school buildings subject to various repairs with replacement under
SDO Aklan the BEFF Program implemented by the DPWH Aklan were demolished
even without the necessary permits, or approval from the Office of the
Schools Division Superintendent, contrary to DepEd Order No. 107 dated
October 20, 2010.
VII 2015- Disbursements for progress and final billings of CYs 2015 to 2018 BEFF
2018 Repair and Rehabilitation of School Building projects and Construction of
SDO Extension totaling ₱17,340,049.75 were not supported with complete
documents. This renders the validity, propriety and legality of the
transactions doubtful. This is in violation of Section 5 (f), Chapter 2 of the
GAM for NGAs, Volume I and COA Circular No. 2012-001 dated June
14, 2012.
Moreover, the non-submission of “As-built” plans for final billing of ten

projects with total contract cost of ₱19,993,525.27 hinders the timely
evaluation of the technical aspect of the contracts and inspection of projects
by COA TAS.
XII 2018 In the audit of the payment of School Repairs for CY 2018 for three
SDO Cotabato Elementary Schools, namely, the Don E. Sero Elementary School, Kimpo
Elementary School and Notre Dame Village NHS for CY 2018 amounting
to ₱6,607,453.57 disclosed that payment of transactions were approved and
paid despite inadequacy of required supporting documents, which is
contrary to Section 4.6 of PD No. 1445 which states that claims against
government funds shall be supported with complete documentation. It was
also noted that various supporting documents were either incomplete or
lacking of required signatures, contrary to Section 4.5 and 4.6 of PD No.
1445, casting doubt on the validity, propriety and legality of recorded
transactions.
a) impose liquidated damages on the Contractor, in view of delayed

completion of repair/rehabilitation works, which shall be at least equal
to one-tenth of one percent of the cost of the unperformed portion for
every day of delay. Indicate the contract duration/date of completion
in the Supplemental Contract of the Original Contract Agreement as
the basis for liquidated damages in case of delay;
b) provide in the contract and Program of Works (POW) the complete

and specific details of the nature of the repair and rehabilitation works
241
to be done, completion period and the actual classrooms/name of the
school buildings covered to ensure the propriety of the project and its
contract cost for the proper evaluation of contractor’s project
accomplishment;
c) coordinate with the officials/personnel of the schools who are involved

in the project and provide them with the necessary documents needed
such as contract and detailed POW for them to know the details of the
project and its target completion date as well as to check if the repair
works being done conform with the contract specifications;
d) instruct the Division Engineer to report the structural defects and

unfinished works and require the Contractors to repair/replace/rectify
the noted defects and to strictly comply with the provisions of the
Contract;
e) submit copies of executed or perfected contracts and all the supporting

documents within five days upon the execution thereof to the Auditor
as required under Section 3.1.2 of COA Circular No. 2009-001 dated
February 12, 2009, for their timely review and correction of errors, if
any, and to avoid the issuance of Notices of Suspension (NS)/Notices of
Disallowance (ND);
f) implement only projects with contract cost not exceeding the

₱15,000,000.00 threshold;
g) examine the facts and extent of delay in the repair works which
preceded the request for a contract time extension by the Contractors
and determine whether the same is justifiable pursuant to Section 10 of
the Revised IRR of RA No. 9184;
h) notify the public through a tarpaulin signboard of infrastructure

projects being implemented suitable for outdoor display at the project
location as provided in COA Circular No. 2013-004 dated January 30,
2013; and
i) comply with the applicable provisions of RA No. 9184 and its Revised
IRR in all phases of the procurement processes, and observe proper
documentation prescribed under DepEd and COA rules and
regulations.
17.13 The following are the comments of Management of concerned Offices:
Region/SDO Management’s Comments

NCR The Management admitted that they failed to comply with the technical requirements
SDO provided under COA regulations as regards the prescribed period of submission of
Mandaluyong contracts and supporting documents for the implementation of the said BEFF projects.
They assured that whatever lapses and errors incurred in the process and deficiencies
242
observed therein, shall all be avoided and they will comply with the pertinent rules
and regulations.
NCR The Management committed to provide the School Heads and the Property Custodian
SDO a copy of the POW and the contract. Further, they are trying in earnest to submit and
Taguig/Pateros complete the BAC documents on time and the Secretariat was instructed to check and
make sure that omission shall not happen again.
According to the BAC Chairman, the Division Engineer has already instructed to
conduct an investigation on the projects, submit a report and discuss the observations
with the concerned contractors.
The contracts exceeding ₱20 million were based on the DepEd Memorandum from
Undersecretary Alain Del B. Pascua. The Management will submit a copy of the
Memorandum to the Audit Team.
NCR The Division Engineer said that he was still completing all the documents needed and
SDO Makati will submit to the Audit Team accordingly.
The SDS explained that the delay in completion of repairs was due to the release of
SARO. The SARO of the BEFF Programs come within the School Year so the conduct
of repairs will affect classes. Contractors work on weekends to avoid the disturbance
of classes. To compensate their supposed work on weekdays, some contractors
requested for contract extensions. All unfinished projects will resume on April 6,
2019. She also assured that only those with valid justification will be approved for a
contract extension and those with delay due to the fault of contractors will cause the
imposition of liquidated damages.
The contractors will be reminded to fast track and finish the project within the
provided timeline.
The contracts exceeding ₱15,000,000.00 was based on the DepEd Memorandum from
Undersecretary Alain Del B. Pascua. The Management will provide a copy of the
Memorandum and will submit it to the Audit Team.
The Management will adhere to the audit recommendations.

CAR The Engineer of SDO Mountain Province committed to conduct an inventory of the
SDOs accomplishments made by the contractors on the repair works, impose liquidated
Mountain damages on the unaccomplished portions, and recommend for the termination of the
Province and contracts.
Apayao
The Management of SDO Apayao agreed to implement the recommendation.
IV-B The SDO of Oriental Mindoro had sent letters to contractors recommending the
SDOs Oriental immediate rectification of the identified deficiencies or repayment of the
Mindoro and corresponding amount. The Division Engineer informed that the contractor had
Occidental rectified the project deficiencies noted in Aurora National High School Bldg. No. 16,
Mindoro and committed to submit the Agency Inspection Reports on rectifications of project
deficiencies. On the other hand, the SDO of Occidental Mindoro explained that
Variation Order was made but COA was not informed.
A copy of the Variation Order approved by the Schools Division Superintendent and
concurred by the contractor has been submitted to the Office of the Auditor. The
unfinished installation of electrical fixtures was replaced by roofing works. All the
items of work in the school sites mentioned in the COA TAS report were already
included in the Variation Order completed by the contractor in CY 2014.
VI Management commented that there were lapses in the preparation of the POW and
SDO Antique some variation were not incorporated in the approved Variation Orders. Also, the
DepEd Engineer will call the attention of the contractors and require their compliance
with the contract and POW.
VIII A pre-construction conference and a pre-site validation will be conducted with the
SDOs recipient schools and winning contractor and ensure to provide them a copy of POWs
Southern for their ready reference before the implementation of the projects and issue a
Leyte, Maasin Variation Order based on the present physical condition before any change or deletion
of items. Constant monitoring and inspection of the ongoing projects and proper
243
City, and coordination with the school administrators will be conducted. They will ensure
Ormoc City issuance of Variation Orders when necessary pursuant to RA No. 9184 and its revised
IRR.
XI The Management agreed with the recommendations and assured compliance. The
SDO Davao SDS instructed the Division Engineer to also monitor the back-job repairs that are to
City be done in Pegdalahan and Tibungol Elementary Schools and to ensure that structural
strength should be the top priority over the ornamental designs, i.e., painting works in
the preparation of the POW. Also, the SDS instructed her team to draft a Division
Memorandum seeking an explanation letter from the School Principals of the said
schools on how they monitored the repairs.
XIII Management commented that during the implementation, the target numbers of
SDO Siargao classrooms to be repaired were not vacated since no other classroom is available to
Island relocate the affected classes.
The project was behind schedule due to the slow performance of the contractor and
delayed delivery of materials.
BEFF – School Furniture Procurement Program (SFPP)
18. The SFPP under the BEFF for CYs 2018 and 2017 drew implementation setbacks
as observed by the Audit Teams in the NCR, CAR and RO Nos. V, X, XII and
XIII, among which were the: (a) late release of funds resulting in delayed
implementation of the program; (b) non-compliance with the contract provisions
by the suppliers on the delivery schedules and technical specifications which led
to partial or non-delivery of the needed goods including the delivery of non-
compliant/defective/inferior quality school furniture; and (c) other deficiencies
noted in audit that affected the attainment of the program objective of addressing
the furniture requirements of the recipient schools.
18.1 The BEFF is an annual budget of the DepEd which covers the improvement and
maintenance of school facilities. One of the programs funded under the BEFF is
the School Furniture Procurement Program, which aims to address the furniture
requirements of priority schools.
18.2 The guidelines in the implementation of SFPP and the DepEd standard design
and specifications of the school furniture is embodied in Enclosure No. 3 and
Annex B of DepEd Order No. 35 series of 2017 dated July 17, 2017.
18.3 Enclosure 3 of the same DepEd Order provides the guidelines for the conduct of
inspection of school furniture in three different stages.
a. Pre-Delivery Inspection Stage shall be conducted prior to the delivery of

finished school furniture to recipient schools. Inspection may be conducted at
random at the manufacturing site of the supplier.
b. On-Site Delivery Inspection Stage shall be conducted during the delivery of

the school furniture to the recipient school.
c. Post Delivery Inspection Stage shall be conducted within the warranty period
which is one year from the date of the certificate of completion. The school
244
furniture shall be inspected if there are defects. All defects found to be due to
suppliers’ fault shall be subject to rectification/replacement.
18.4 The Special Provisions for DepEd under the GAA for the FYs 2017 and 2018
provided the following appropriations for the provision and maintenance of
BEFF particularly for the acquisition of school desks, furniture and fixtures to
ensure that all newly constructed and existing kindergarten, elementary and
secondary school buildings are provided with the corresponding number of
school desks, furniture and fixtures. Appropriated funds for the program are
shown below:
Year Total Appropriation

GAA for FY 2017 2,474,573,000.00
GAA for FY 2018 3,478,385,000.00
18.5 Review of the implementation of the SFPP in ROs NCR, X, XII and XIII as well
as ocular inspection conducted to determine the existence, extent of utilization
and condition of the delivered school furniture to recipient schools disclosed,
implementation setbacks, the details of which are discussed below:
a.) Late release of funds resulting in delayed implementation of the program
Date of Sub-
Region Office CY ARO Issued by Amount Audit Observations
the CO
NCR Quezon City 2017 12/12/2017 112,451,500.00 The DepEd CO belatedly
Manila issued an Authority to Procure
Pasig City (ATP) to the DepEd-NCR for
Taguig/Pateros it to undertake the
Makati procurement of the school
Marikina furniture pending release of
Navotas the Sub-ARO. The BAC
Valenzuela conducted opening of bids for
Las Piñas City the procurement of school
Muntinlupa furniture on December 6,
Parañaque 2017. Unfortunately, the
Pasay bidding failed which became
Caloocan the main cause of the
San Juan unprocured school furniture
Malabon for the 144 recipient schools in
Mandaluyong SDOs of Manila, Makati,
Marikina, Navotas and
Valenzuela. This affected the
delivery of the needed 35,955
armchairs and 799 sets of
teacher’s table and chair.
Given the limited time to
accomplish the said
undertaking, the provision of
school furniture for the
recipient schools of the
concerned SDOs in CY 2017 is
no longer feasible. Had the
DepEd CO released the Sub-
ARO or ATP much earlier, all
245
Date of Sub-
Region Office CY ARO Issued by Amount Audit Observations
the CO
of the needed school furniture
might have been provided to
the recipient schools as
planned.
18.6 It is evident from the very start that the delay of downloading of funds by the
DepEd CO and authorizing the IUs to initiate the procurement procedures
prevented, among others, the timely execution of the program. As a result, the
students/pupils/teachers of the recipient schools were deprived of the
comfort/use of the needed school furniture.
b.) Non-compliance with the contract stipulations particularly the delivery

schedule and technical specifications led to partial or non-delivery of the
needed goods including the delivery of non-compliant/defective/inferior
quality school furniture
b.1.) At least 195,845 Armchairs (AC) and 4,377 sets of Teachers’ Table
and Chair (TTC) were still undelivered in RO Nos. XII and XIII and
delays in the delivery of school furniture were observed in NCR and
CAR, shown as follows:
Quantity Undelivered
Region CY SDO Remarks
AC TTC AC TTC
NCR 2017 Quezon City 24,255 539 Not Not The deliveries of school
Pasig City 11,205 249 indicated indicated furniture by suppliers to the
Taguig/Pateros 6,210 138 recipient schools per
Caloocan City 14,265 317 inspection by the Audit
City of San Juan 765 17 Team were beyond the
Malabon City 2,070 46 delivery timelines which
Mandaluyong 4,005 89 signified suppliers’ delay
City from 104 to 231 days,
subject to liquidated
damages, as stipulated in
the contracts.
Sub-Total 62,775 1,395
CAR 2017 SDO Apayao Not Not Not Not Audit of the payments made
indicated indicated indicated indicated by SDO Apayao for the
procurement of school
furniture showed that the
Division imposed
liquidated damages for
delays ranging from 288 to
358 days or 28.8 percent to
35.8 percent for failure of
the supplier to deliver the
goods within the specified
delivery schedule. Despite
the considerable delay in
the delivery of the goods,
the SDO did not rescind the
contract and impose
246
Quantity Undelivered
Region CY SDO Remarks
AC TTC AC TTC
appropriate sanctions to the
supplier.
XII 2017 ROP 42,660 948 42,345 941 For the contract cost of
₱33,654,000.00 for the
supply of 42,660 pieces of
ACs for elementary and
high school students and
948 sets of TTC to the
identified recipient schools,
a total of 42,345 pieces of
AC and 941 sets of TTC
were still undelivered as of
December 31, 2018.
2016 ROP 89,235 1,983 57,600 1,280 At least 57,600 ACs and
1,280 TTCs were still
undelivered as of December
31, 2018.
2016 SDO Cotabato 70,615 1,592 68,495 1,542 The supplier failed to
deliver a total of 68,495
units of armchairs and
1,542 units of teacher’s
table and chair sets for a
total contract cost of
₱52,472,180.00 to a total of
211 school-recipients.
Verification of reports
disclosed that the supplier
had repeatedly incurred
delays in its deliveries of
furniture and fixture. The
delays incurred were ranged
from 15 to 33 calendar days
or 30 to 110 percent of the
respective contract
durations. Despite being not
in good standing due to
delays incurred in its
previous contracts with the
government and private
procuring entities,
subsequent contracts were
still awarded to said
supplier, in violation of
Section 53 of the Revised
IRR of RA No. 9184.
Sub-Total 202,510 4,523 168,440 3,763
XIII 2017 ROP 68,040 1,512 27,405 614 At least 27,405 AC and 614
TTC procured under BEFF
CY 2017 were still
undelivered. The items
were already manufactured;
however, the supplier had
difficulty on shipping them.
Sub-Total 68,040 1,512 27,405 614
Grand Total 333,325 7,430 195,845 4,377
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b.2.) Delivery of non-compliant/defective/inferior quality school furniture
18.7 Ocular Inspection was conducted to determine the present state of delivered
school furniture specifically the armchairs and teacher’s tables. Common
defects were noted in different schools during inspection, summarized as
follows:
No. of
SDO/
Region Armchairs Audit Observations/Deficiencies
Schools
Damaged
NCR Parañaque NHS 1 School furniture were delivered and/or utilized for barely four to
CAA ES Main 11 nine months only as of inspection date, an indication that it was
Las Piñas NHS 111 either of poor workmanship or that the quality of the materials used
Sauyo ES 54 were inferior. Nevertheless, a warranty certificate was issued by
San Bartolome 55 the supplier which guaranteed that all parts are warranted for one
HS year after delivery for factory defects, provided that the defects
Novaliches HS 61 were not caused by client’s fault or negligence.
Tala HS 20
Camarin HS 6 Non-compliance with technical specifications was observed,
contrary to the provisions of the contract. Some of the armchairs
delivered were labeled with green instead of royal blue paint while
a total of 1,165 armchairs and 24 tables were unlabeled. Interview
with the school Property Custodian revealed that they were not
aware of the specifications of the armchairs and tables to be
delivered to them, thus failing to check the labeling of the
furniture.
Sub-Total 319
X Bolisong ES Not indicated The delivered School Furniture under the BEF funds for CY 2017
Hinigdaan ES to recipient schools has minor deficiencies and the unacceptable
Kalabaylabay performance of the supplier resulted in the non-utilization of the
ES school furniture. Common deficiencies noted are as follows:
Molugan CES ▪ No bolts provided by the supplier or the bolts loosen and can be
Pedro SA easily detached causing the writing board to be unstable. Some
Baculio schools opted not to use the bolts provided while others use tire
Sinaloc ES wires or other remedies to keep it tightened.
Cogon NHS ▪ The supplier did not assemble the armchairs in most schools.
Molugan NHS Only a few were given instructions on how to put the parts
together.
▪ Some schools, particularly Hinigdaan ES, Molugan NHS and
Pedro SA Baculio, failed to properly safe keep the delivered
items which might cause possible breakage of the items.
SDO El Not indicated Plastic armchairs in the total amount of ₱504,000.00 appeared to
Salvador be defective or inferior quality armchairs made of poor-quality
plastic materials. During the inspection it was further observed that
the armchairs were not suitable to students with bigger built.
SDO 495 ▪ For all wood armchairs
Malaybalay - Edges and corners were not smooth which may cause
City splinter
Division of - Surface of writing boards and other areas have splits, cracks,
Valencia City holes and other defects
- Woods do not have smooth finish with at least three coats of
varnish
- Uneven legs which causes the chair to rock/swing
▪ For steel and plastic armchairs:
- Writing board was weak, unstable and can easily be removed
or detached from the chair
- Most armchairs were not strong. Screws were not properly
screwed. Bolts and nuts could easily loosen.
- Plastic parts were broken easily.
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No. of
SDO/
Region Armchairs Audit Observations/Deficiencies
Schools
Damaged
- Chairs are light-weighted that the armrests easily break. The
steel part could be easily bent. Thus, they are not durable and
not meant for heavier students.
- Most steel plates were already dented.
▪ For all plastic chairs:
- Some armchairs were not assembled/no bolt and knots.
- Plastic chairs were broken easily
- Chairs are light-weighted that the armrests easily break.
Thus, they were not durable and not meant for heavier
students.
- Writing board was weak, unstable and can easily be removed
or detached from the chair.
▪ The design and size of the armchairs were not user-friendly and
not suitable to students with bigger built.
▪ Not making use of the warranty guaranteed by the supplier.
XIII Agusan del 25 ▪ Bolts connecting the armrest and the chair were loosened. Most
Norte of the armrest was removed from the armchairs and the chairs
Butuan City were reused.
▪ Plastic chairs are in the storage room since there are no enough
classrooms to accommodate the chairs.
▪ The quality of the materials is not good and very fragile.
▪ Seat legs are not balanced and writing boards are not levelled.
▪ Writing board is too wide that the students especially Grade VI
experience difficulty in sitting down.
▪ Sizes of armchairs delivered are suited only for lower grades.
▪ The tables and chairs were not fully varnished.
Total 839
18.8 With the foregoing deficiencies, the full benefits as intended to be enjoyed from
the use of the delivered furniture were not availed by the teachers and students
of the recipient school, thus the objective of the program was not fully met as
planned.
c.) Other deficiencies
Omission of actual dates of delivery
NCR The schools were requested by the Audit Team to provide a copy of the Delivery Receipts (DRs)
ROP relative to the delivered school furniture to determine the supplier’s compliance with the delivery
timeline. Examination of the DRs provided by the recipient schools against the DRs presented by
the supplier showed omissions of actual dates when the school furniture were delivered to the
recipient schools. The DRs provided by the recipient schools were not dated and the school
personnel concerned could not recall when the actual deliveries occurred. During inspection, copies
of the DRs submitted by the supplier for payment were also presented to the schools. They noted
that the DRs were already dated, however, the dates were not written by the school personnel
concerned, as confirmed by them. This instance casts doubts on the supplier’s compliance with the
delivery timeline specified in the contract. Actual delivery dates of the school furniture could not
be easily determined which complicates the evaluation of the supplier’s compliance with the
contract provisions and subsequently, determination of liquidated damages to be imposed, should
there be any delay on the part of the supplier.
Non-imposition of liquidated damages
V Liquidated damages amounting to ₱418,847.16 was not imposed by the SDO Catanduanes for
SDO late/delayed deliveries of school furniture on two contracts awarded to Empresa Metal Craft Corp.
Catanduanes totaling ₱5,774,109.00, contrary to Section 8.1 of Annex E of the Revised IRR of RA No. 9184,
thus resulting in loss of government funds.
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XII Liquidated damages were not imposed for the undelivered/delayed deliveries of school furniture of
ROP 42,345 pieces of AC and 941 sets of TTC for CY 2017 and 57,600 ACs and 1,280 TTCs for CY
2016 as of December 31, 2018.
SDO Assessed liquidated damage as of December 31, 2018 amounting to ₱13,461,071.70 or 25.65
Cotabato percent of the total cost of the undelivered armchairs and teacher’s tables and chairs were not
imposed, contrary to Section 8.1 of Annex E of the Revised IRR of RA No. 9184.
Non-recording by the SDOs and recipient schools of delivered school furniture
NCR The SDOs and the recipient schools had no records in their books of the amount transferred by the
SDOs DepEd-NCR pertaining to the cost of furniture delivered which resulted in understatement of Semi-
Muntinlupa, Expendable Inventory or Expense account, whichever is applicable, in the books of the SDOs and
Parañaque, recipient schools by an indicative amount of ₱14,565,420.00 and consequently, in the consolidated
Las Piñas financial statements of the DepEd NCR. Details are as follows:
and Pasay
SDO JEV No. Amount
Muntinlupa City 01-2018-09-003112 2,930,580.00
Parañaque City 01-2018-09-003113 5,467,500.00
Las Piñas City 01-2018-09-003114 4,330,260.00
Pasay City 01-2018-09-003115 1,837,080.00
Total 14,565,420.00
Unavailability of space for storage of school furniture

NCR The School Principal and the Property Custodian of Parañaque National High School (PNHS) Main,
SDO programmed to receive a total of 1,305 school furniture, claimed that only 305 pieces of armchairs
Parañaque were accepted during the delivery and the remaining 1,000 pieces of armchair costing ₱884,000.00
were not accepted by the former because of non-availability of space for its safekeeping. However,
the supplier has already been paid in full through LDDAP-ADA No. 01-1-01-101-09-414-2018
dated September 24, 2018 amounting to ₱14,565,420.00. Verification of the school’s copy of DR
showed full delivery of school furniture but the same was not signed by the school personnel
concerned while the supplier’s copy of DR showed that the school received all of the school
furniture due to be delivered to PNHS Main. Further verification revealed that the Inspection and
Acceptance Report indicated partial delivery of school furniture but there was no trace on the said
document of the actual quantity of school furniture partially delivered. The delivery of the
remaining 1,000 pieces of undelivered armchairs was made uncertain as the school could not present
other proof relevant thereof that would compel the supplier to complete its delivery of school
furniture to the PNHS Main.
X Chairs are piled outside the rooms since there is no available storage.
ROP
Overpayment to Supplier
XII It was noted during the audit of Disbursement Vouchers that there was an overpayment made
ROP amounting to ₱103,510.86 in the first billing of the contractor dated July 13, 2018 with check no.
894796. Per verification, amount stated/reflected in the contract was that of the ABC instead of the
contractor’s bid amount.
Delayed submission of contracts
NCR Evaluation of the Agency’s compliance with the prescribed period of submission to COA of
ROP perfected contracts for CY 2018 SFP including supporting documents showed that it was not able
to submit copies of the same within five days after execution or issuance thereof with number of
days delayed ranging from 78 to 170 days, contrary to COA Circular No. 2009-001 dated February
12, 2009.
18.9 We recommended that the Management require:
ROs and SDOs to -
a) make representation with the DepEd CO to facilitate the downloading

of funds and issuance of ATP to ensure the timely implementation of
the SFPP;
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b) require the Educational Support Services Division (ESSD) to closely
coordinate with the SDO Supply Officers and Schools Property
Custodians for the actual date, quantity, and specifications of school
furniture to be delivered in order to prevent payment to supplier with
incomplete deliveries and non-compliance with the technical
specifications;
c) instruct the concerned Property Custodians/authorized school

representatives to indicate the actual dates of deliveries before signing
the DRs to properly determine supplier’s compliance with the delivery
timelines and to ensure that liquidated damages, if there is any, is
accurately computed, and report immediately the school furniture
found defective but still within the warranty period for the replacement
thereof by the suppliers;
d) require the supplier to expedite the delivery of the undelivered items;
e) instruct the Finance Division to transmit copies of the JEV to the SDO
Accountants and to the School Accountants/Bookkeepers for booking-
up of all deliveries made to the schools;
f) enforce the necessary sanctions against the supplier as provided under

RA No. 9184 such as the imposition of liquidated damages upon failure
to complete the work within the contract period or in the event that the
total sum of liquidated damages exceeds ten percent of the total
contract price; and
g) submit copies of executed contract/agreements and the like together

with necessary supporting documents/annexes to the Audit Team
within five days after their execution and issuance in compliance with
COA Circular No. 2009-001 dated February 12, 2009.
RO No. XII –
h) demand for the refund of the overpayment made during first billing or
adjustment on future billings.
18.10 The Management of the respective Offices provided the following comments:
Region/
SDO
NCR The Management commented during the exit conference that it has already transmitted to the
concerned SDOs and recipient schools/IUs the copies of JEVs for the dropping from the agency
books of the delivered school furniture. Receiving copies of the same were secured by the
Management for their reference.
Management commented that they have reiterated during meetings with the Supply Officers and
Property Custodians to indicate the actual dates of delivery of whatever items received by the SDOs
and schools. The Management will once again issue a Regional Memorandum reiterating policy
251
Region/
SDO
guidelines on the receipt of deliveries to avoid the recurrent observation on omission of actual
delivery dates.
Moreover, the Management commented that they are monitoring the delay in the delivery by the
defaulting suppliers. Liquidated damages will be computed and imposed accordingly.
As regards undelivered school furniture in PNHS, the Management required the Supply Officer of
SDO Parañaque and the Property Custodian of the PNHS to submit a report regarding the
undelivered 1,000 school furniture for appropriate action.
X The supplier is aware of the audit observations and promised to comply with the recommendations
ROP particularly on the rectification of delivered furniture and to supply the remaining parts which were
SDO not provided.
Valencia
City During the Exit Conference, the Management expressed that these armchairs were procured by the
Regional and Central Office. Nevertheless, the Audit Team recommended that the Agency should
give a feedback to the Regional Office on the defects noted in the delivered tools and equipment so
that they will be duly corrected by the contractors. The Agency should also report to the Regional
Office any damage or deficiency noted in the actual items delivered vis-à-vis the technical
specifications as provided in the Purchase Request for immediate action by the Regional Office.
XII The Management commented that the sets of furniture were delivered on time but the recipient
SDO principals negotiated to hold the delivery since the construction of the school buildings were still
Cotabato ongoing and there were no available school facilities to place the delivered furniture.
XIII Management commented that they have called the attention of the supplier through a meeting and
ROP advised them to expedite the delivery of the undelivered items. The Regional Inspectorate Team
SDO has inspected the delivered school furniture and instructed the suppliers to replace the defective
Butuan armchairs before the final inspection or payment. Per contract, the suppliers shall be charged with
City liquidated damages based on the number of days delayed in the delivery.
Management commented that they have inspected the delivery of school furniture and found out that
the items delivered were not in accordance with the required DepEd specifications, thus they
required the replacement of items. They also found out that some armrests were easily removed due
to loose-threading of the screws and were not fully varnished. The supplier was required to repair
and fix the delivered items.
BEFF – Electrification Projects
19. Significant delays ranging from 21 to 123 days and deficiencies in the
implementation of Electrification Projects under BEFF were observed in NCR,
CAR and RO Nos. II, X and XIII, depriving the students and teachers of the timely
usage of additional facilities of their schools which are in dire need of electrical
connections. Further, CAR and RO No. II reported that no liquidated damages
were computed and contracts were not rescinded, respectively, despite the delay
in the completion of the projects for a time duration exceeding ten percent of
contract time, contrary to Section 3 (Annex “D”) and Section 8.4 (Annex “E”) of
the IRR of RA No. 9184.
19.1 The Department under BEFF has embarked on electrification project,

particularly the upgrading of electrical connections in priority schools,
namely:
a. Schools identified by the National Electrification Administration (NEA) to

be on-grid but still remains to be without electricity; and
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b. Upgrading of electrical connections of schools (e.g., Technical Vocational
Schools, Senior High Schools offering specializations with specific needs
for high grade electrical connections (e.g., welding, automotive, etc.) and
other K-10 schools) to suit the current requirements considering the
additional facilities and equipment.
19.2 The primary consideration of the government for entering into a contract is the
timely completion of the projects so that the intended benefits may be achieved.
Consequently, the contracting parties are bound to adhere faithfully to agreed
terms and conditions of the contract.
19.3 Applicable laws, rules and regulations on the electrification project entered into
by the Department are the following:
a) General Provisions of the FY 2018 GAA authorize government agencies to

undertake early procurement activities, thus:
Sec. 19. Early Procurement Activities. To ensure full budget

utilization, timely contract implementation and efficient delivery of
services, agencies are authorized to undertake procurement activities
from pre-procurement conference until post-qualification of bids
based on their proposed budget in the National Expenditure Program
(NEP), xxx with the guidelines issued by the GPPB.
b) Section 7 of the CY 2016 Revised IRR of RA No. 9184 or the Government

Procurement Reform Act provides, among others, that all procurement shall
be within the approved budget of the Procuring Entity and should be
meticulously and judiciously planned by the procuring entity. No
procurement shall be undertaken unless it is in accordance with the
approved Annual Procurement Plan (APP).
c) In procurement planning, the end-user units of the procuring entity shall

prepare their Project Procurement Management Plan (PPMP) which shall
include the following:
i. Information on whether programs, activities, projects (PAPs) will be

contracted out, implemented by administration in accordance with the
guidelines issued by the GPPB, or consigned;
ii. The type and objective of contract to be employed;
iii. The extent/size of contract scopes/packages;
iv. The procurement methods to be adopted, and indicating if the
procurement tasks are to be outsourced as provided in Section 7.3.3 of
the IRR;
v. The time schedule for each procurement activity and for the contract
implementation; and
vi. The estimated budget for the general components of the contract.
253
d) The PPMP serves as a guide document in the procurement and contract
implementation process, as well as a vital reference in procurement
monitoring. Moreover, it serves as an important tool in resource and
financial management, allowing the Procuring Entity the flexibility to
optimize the utilization of scarce resources.
e) Section 3, Annex “D” of the same IRR states that when the supplier fails to
satisfactorily deliver goods under the contract within the specified delivery
schedule, the supplier shall be liable for damages for the delay and shall pay
the procuring entity liquidated damages to an amount equal to 1/10 of one
percent of the cost of the delayed goods for every day of delay. It further
states that in no case shall the total sum of liquidated damages exceed ten
percent of the total contract price, in which event the procuring entity
concerned may rescind the contract and impose appropriate sanctions over
and above the liquidated damages to be paid.
f) While Section 8.4, Annex “E” provides that in case that the delay in the
completion of the work exceeds a time duration equivalent to 10 percent of
the specified contract time plus any time extension duly granted to the
contractor, the procuring entity may rescind the contract, forfeit the
contractor’s performance security and takeover the prosecution of the
project or award the same to a qualified contractor through negotiated
contract.
19.4 The Audit Teams of Regional Office Nos. II, X, XIII and CAR noted the
following observations in the implementation of the electrification projects
under BEFF, to wit:
Delays ranging from 21 to 123 days in the contract implementation of the electrification
projects
19.5 It was noted in the result of confirmation and review of certificate of payments
of the electrification projects in RO No. II that there was significant delay in its
completion. The contractors were given 90 calendar days to complete the project
however, only nine out of 59 was completed within the contract period, to wit:
Actual Completion as of December 31, 2018 Total Contract

Cost of Projects
No. of
Completed Completed not completed
Agency Recipient Not yet
w/in 90 beyond 90 Ongoing within 90 days/
Schools started
days days ongoing/
not started
SDO 50 7 12 23 8 53,790,428.25
Isabela
SDO 3 0 0 3 0 5,501,585.60
Ilagan
City
SDO 6 2 4 0 0 4,678,652.89
Cauayan
Total 59 9 16 26 8 63,970,666.74
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19.6 Moreover, despite the noted delay in the project implementation, the Certificate
of payment attached to the request for fund to be submitted to the DBM by the
Accounting Sections of RO No. II - SDO Isabela showed that no liquidated
damages were computed and deducted for the 12 projects that were completed
beyond the contract period.
19.7 While for CAR-SDO Benguet, there was delay in the implementation of the
projects of at least 23 percent of the contract time, as presented below:
Contract Contract Percentage of Delay

Name of Project
Time Expiry Accomplishment Days Percent
Upgrading of Electrical 90 12/10/2018 85.00 21 23.33
Systems BEFF CY 2018
(Lots 2 and 6)
Upgrading of Electrical 90 11/11/2018 85.00 50 55.56
Systems BEFF CY 2018
(Lot 4)
19.8 With such delay, the SDO did not rescind the contracts, forfeited the contractors’
performance security, and awarded the same to qualified contractors. Thus,
further delaying the completion of the projects.
19.9 For RO No. X - Bukidnon, ocular inspection disclosed that out of the eight
projects, only the projects in Cabulohan - Paradise NHS had started, and the
Lantapan NHS just started on the same day of validation, January 25, 2018. The
delay in the implementation of the project by Digos Constrak Corporation
already incurred liquidated damages amounting to ₱513,791.65. Details are as
follows:
Date of Commencement Target No. of Days

Contract Liquidated
Lot Term Receipt of of Contract Completion Delayed as of
Price Damages
NTP Term Date Feb. 28, 2019
1 334,843.13 45 9/11/2018 9/14/2018 10/28/2018 123 41,185.70
2 449,544.61 45 9/11/2018 9/14/2018 10/28/2018 123 55,293.99
3 285,324.63 60 9/11/2018 9/14/2018 11/12/2018 108 30,815.06
4 753,354.56 45 9/11/2018 9/14/2018 10/28/2018 123 92,662.61
5 558,710.14 45 9/11/2018 9/14/2018 10/28/2018 123 68,721.35
6 1,622,321.51 90 9/11/2018 9/14/2018 12/12/2018 78 126,541.08
7 504,908.55 90 9/11/2018 9/14/2018 12/12/2018 78 39,382.87
8 1,233,103.87 120 9/11/2018 9/14/2018 1/11/2019 48 59,188.99
Total 513,791.65
19.10 Likewise, review on the implementation of BEFF electrification projects as of

December 31, 2018 of RO No. XIII - SDO Surigao del Sur disclosed that 11
projects with a total contract cost of ₱36,655,284.78 were not yet completed as
scheduled. Details are shown in the table below:
Target Percentage
Total Contract
Cluster Location Completion of
Cost
Date Completion
1 Barobo NHS, Tambis NHS, Rizal NHS- Barobo 2,848,119.48 1/23/2019 40.00
2 Gamut NHS, Cabacungan NHS- Barobo, SDS 1,670,211.56 1/7/2019 40.00
255
Target Percentage
Total Contract
Cluster Location Completion of
Cost
Date Completion
Barcelona NHS, M.K. Yusingco NHS,
3 3,164,704.75 1/25/2019 40.00
Anibungan IS- Lingig
4 Lingig NHS, Rajah Cabungsuan IS- Lingig 2,499,491.83 1/23/2019 40.00
5 Maglambing IS, Quezon IS- Tagbina, SDS 2,198,054.23 1/9/2019 40.00
Maglatab NHS, Malixi IS, Manambia IS, Sta.
6 4,702,151.95 1/26/2019 20.00
Maria IS-Tagbina, SDS
Kahayagan NHS, Osmenia IS, Quary I IS,
7 4,482,783.70 1/26/2019 20.00
Carpenito IS-Tagbina SDS
Sta. Juana NHS, Dante Luib Osano Maputi NHS,
8 3,584,456.24 1/26/2019 20.00
Jobar IS-Tagbina, SDS
Hinatuan NCHS, Baculin IS, Dugmanon NHS-
9 3,868,201.68 1/23/2019 40.00
Hinatuan, SDS
Tagasaka NHS- Loyola NHS Annex, Tarusan IS,
10 4,197,137.52 1/23/2019 40.00
Hinatuan-Cambatong NHS Annex- Hinatuan
Tagasaka NHS- Bigaan NHS Annex, Hinatuan
11 NCHS-Roxas NHS Annex, Tidman NHS- 3,439,971.84 1/25/2019 40.00
Hinatuan, SDS
Total 36,655,284.78
19.11 Among the reasons cited for the delay in the completion of electrification
projects are as follows:
Region/SDO Year Reasons for the delay

II- 54 recipient 2018 Slow undertaking and delayed commencement of work by the contractors and absence
schools of of proper supervision and monitoring by the Project Engineer. Further, the Project
SDOs Isabela, Engineer asserts that the required timeline for the completion of the project provided by
Ilagan and the DepEd CO is too short to enable the contractors to finish the projects on time.
Cauayan
X – eight For SDO Bukidnon, the awarding of multiple contracts with the same contractor, of
NHSs of SDO which the assigned Project Manager down to the Laborer handled eight projects with the
Bukidnon and same implementation period, hence, unable to implement the projects as scheduled.
12 NHSs of
DO Camiguin For SDO Camiguin, the BAC sent out Invitations to Bid only in August 2018 or five
months after receipt of the SARO. Further, review of contracts documents of the four
BEFF projects revealed that no PPMP and APP were prepared. Instead, the Management
referred only on the SARO and DepEd’s Authority to Procure with Approved List of
BEFF Projects as sufficient documents in lieu of such requirements. In the absence of
APP and PPMP as mandated by law, the BAC and other parties would not be guided as
to the time schedule for each procurement activity including the contract
implementation.
XIII – SDO 2018 Lack of detailed targets specified in a written implementation plan, which caused
Surigao del difficulty for the Agency to ascertain whether the activities and projects were
Sur (Clusters implemented towards its intended objectives/goals and the fulfilment of the envisioned
one-11) outcome.
Other deficiencies in the implementation of the project
19.12 Further observations noted by the Audit Teams are the following:
Region Year Deficiencies

NCR 2018 A contract entered into by the DO Makati for the installation of on-grid solar panels on
its Office Buildings in the amount of ₱684,430.00 was not consistent with the Guidelines
on School Electrification Program of the DepEd because it was the Main-Office Building
of the SDO that benefited from the solar panel installation and not those identified
schools needing electrical upgrade. Similarly, it may prove disadvantageous to the SDO
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Region Year Deficiencies
in the event that the solar panels may no longer be in good condition, maintenance maybe
shouldered by the SDO considering that the Local Government Unit (LGU) shoulders
the monthly cost of electricity.
II 2018 Review of Contracts awarded to the contractors on SDO Ilagan City showed that the
implementation period of the project/contract duration was not indicated although 90
calendar days contract period was published in the PhilGEPS. Also, in SDO Cauayan,
date of receipt of Notice to Proceed was not indicated.
X and XI 2018 The Agency did not submit copy of contract to the Auditor, hindering the timely and
substantial auditorial review on the propriety of the contracts and their compliance with
the Revised IRR of RA No. 9184.
SDO Contract Amount

SDO Camiguin 52,032,035.98
SDO Davao del Sur 23,217,499.41
CAR 2017 The Statements of Work Accomplished on the electrification of schools on grid projects
were signed by the Engineer of SDO Ifugao, despite project defects and deficiencies
amounting to ₱1,431,926.68.
19.13 We recommended that the Management require:
ROs and SDOs to -
a) require the end-users or the Division’s Physical Facilities Unit to

prepare the PPMP and APP on projects to be implemented for proper
planning and monitoring, pursuant to Section 7 of the 2016 Revised
IRR of RA No. 9184;
b) direct the BAC to provide sufficient lead time by commencing the

procurement process immediately upon release of the SARO or GAA,
or expedite procurement activities short of award even pending the
receipt of the SARO, to facilitate early start and completion of
infrastructure projects;
c) facilitate the completion of unimplemented projects through adequate

monitoring and supervision of the work of the contractor;
d) enforce the necessary sanctions against the erring contractor as

provided under RA No. 9184 such as the imposition of liquidated
damages upon failure to complete the work within the contract period
or in the event that the total sum of liquidated damages exceeds ten
percent of the total contract price. Management should terminate the
contract and take-over the implementation of the project or award the
same to a qualified contractor through negotiated contract, forfeit the
performance bond and/or consider blacklisting the erring contractor;
and
e) submit the remaining unsubmitted Contracts, Disbursement Vouchers

and all supporting documents to the Office of the Auditor for contract
257
review, post-audit and safekeeping in accordance with the Revised IRR
of RA No. 9184 and PD No. 1445;
SDO Makati to -
f) submit the legal basis for the installation of on-grid solar panels on
SDO-Makati Office Buildings to the Audit Team, within ten days from
receipt hereof;
g) exercise judicious planning in procurement activities and observe the

prudent way of spending SDO funds by avoiding transactions
contrary to the Guidelines on School Electrification Program;
SDO Ifugao to:
h) compel the contractor to remove and replace all defective works on the
Electrification of Schools on Grid Projects Lot 1 and 2; and
SDO Bukidnon to:
i) direct the BAC and TWG to scrutinize the sufficiency of the

Contractor’s manpower and equipment on all projects awarded which
have the same or overlapping implementation period.
19.14 The following are the comments of Management of concerned Offices:

NCR The Management of SDO Makati admitted that the installation of Solar Panel on SDO Makati was
not in accordance with the DepEd Electrification Program but the intention was based on the Trust
of Green Governance and RA No. 9153 dated December 16, 2008 – An Act promoting the
development, utilization and commercialization of renewable energy resources and for other
purposes. The SDS emphasized that the project was included in their Division Education
Development Plan and Annual Procurement Plan.
CAR The Management of SDO Ifugao informed that it will communicate with the contractor for the
rectification of the deficiencies noted.
II SDO Isabela:
The Management instructed the Division Engineer to prepare their schedule on the periodic
monitoring and inspection of the project and immediately submit reports to determine the liquidated
damages. They will further inform the contractors of the delay and charge them of any liquidated
damages. The Accountant is directed to hold payment until final inspection with the corresponding
liquidated damage. The BAC Secretariat was likewise directed to require the winning bidder to
indicate the date of the receipt of the Notice to Proceed on the next projects to be procured.
SDO Ilagan City:
The Management reasoned that delay on the completion was due to change of work in one school,
particularly Isabela School of Arts and Trade (ISAT), thus suspension was made. They further
explained that the Isabela Electric Cooperative (ISELCO) office failed to send manpower to assist
in the installation of the electrification. The Engineer already made a report regarding the
computation of the liquidated damages incurred because of the delay. Management committed to
coordinate with the contractor and with the ISELCO for the completion of the project.
SDO Cauayan City:
The Management will require the contractors to complete the work as provided in the contract and
ensure that NTP be properly dated. Also, they will instruct the Project Engineer to monitor regularly
the Work done by the contractors.
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X SDO Bukidnon:
Management will meet the contractor to discuss the delayed implementation of the projects. They
acknowledged the lapses in the procurement process and also manifested their intention to closely
monitor the implementation of the projects.
SDO Camiguin:
On a reply dated February 21, 2019, Management admitted that there is indeed delay in the execution
of the said projects and presented the following reasons for such delay:
• The POW and Plans were finalized on January 11, 2018 when the DepEd – CO hired a
Professional Electrical Engineer to review and assess the approved POW. The Electrical
Engineer suggested revising the original plan from aerial wiring to underground electrical
system. It took time from last week of February to June 2018 to finalize technical documents.
The Division Office received the approved copy in July. Then the procurement process
started.
• The APP based on the PPMP was done and was duly approved by the HoPE.
• The bidders with the lowest calculated bid for the four projects as read did not pass the post
qualification evaluation which resulted in negotiated procurement under two failed biddings.
This worsened the delay as the BAC strictly adhered to procurement schedule with utmost
consideration of the number of days set up for each step for the procurement process.
• Much is their desire to conform with the General Provisions of the GAA, Section 19
stipulation on Early Procurement Activities, however, there were uncontrollable
circumstances that caused the delay of the procurement process.
• COA recommendations are well taken and this Office commits to strengthen its procurement
process to avoid delays.
XI The Management agreed with the recommendations.
XIII SDO Surigao del Sur:
The Management has remarked that based on the result of the Agency’s monitoring and ocular
Inspection, the BAC, headed by the BAC Chairperson, Dr. Elvira S. Urbiztondo, together with the
TWG, already sent the 3rd and final warning letter dated March 12, 2019 to the Contractor, Digos
Constrak Corporation, for those unfinished projects and gave them 15 days to respond with regard
to their position on why the projects should not be terminated and the construction company not be
recommended for blacklisting in all DepEd projects. The Contractor was also required to submit
their catch-up plan on how to fast track the completion of the repair projects as their last resort before
the BAC execute any legal action.
Auditor’s Rejoinder:
19.15 The DepEd RO No. X - SDO of Camiguin through the BAC should have
followed up early the copy of the revised POW as funds were already received
and procurement had to be commenced soon to fast-track the implementation of
the school electrification projects. There is a need for a meticulous and judicious
planning (Sec. 7.1 of RA No. 9184) so that the Procuring Entity forestalls
possible delay in procurement, in this case, the revision of the POW due to a
change from aerial wiring to electrical system. The Audit Team, however, noted
that if this was the reason for the delay, the revision period was too long and
unjustifiable since it did not even affect or make a major change in the approved
budget for the contract.
BEFF – New Construction of Classrooms (DPWH-Implemented Project)
20. The two units four-storey 20-classroom Senior High School Building constructed
by the DPWH in RO No. XII at Lagao National High School located at Barangay
San Isidro, General Santos City under the DepEd’s BEFF with a total project cost
of ₱65,009,827.43 remained not completed after more than two years of
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implementation, which resulted in delays in turn over and usage by the students
of the much needed classrooms. Further, the project’s reported accomplishment
of 98.92 percent is bloated and is inconsistent with the actual appearance of the
project as per actual inspection made by the Audit Team.
20.1 DBM-DepEd-DPWH Joint Circular No. 2013-1 dated February 18, 2013, re-
Guidelines on the Implementation of the Special Provision (SP) No. 4 on the
Provision of Basic Educational Facilities, provides, among others, the following
responsibilities of both DepEd and DPWH as follows:
The Department of Education shall:
4.1.3 Conduct (Physical Facilities and Schools Engineering Division [PFSED]

and Division Physical Facilities Unit) joint validation activity with
DPWH-DEO if there are clarifications from the final list provided by
DepEd.
The Department of Public Works and Highways shall:
4.2.5 Undertake the procurement and implementation of construction works in

accordance with the provisions of RA No. 9184 (otherwise known as the
Government Procurement Reform Act) and it's IRR, and applicable
issuances of the GPPB.
Both Departments shall:
Conduct (PFSED Representative/DPFC and DPWH–DEO Representative)

joint punch listing inspection upon substantial completion (at least 95 percent
physical accomplishment) of the project for the purpose of determining the
items of works that need to be rectified by the contractor prior to final
inspection.
20.2 Par. 4.A.2 of Joint DepEd-DPWH Memorandum dated July 10, 2003 entitled
“Guidelines for Coordination and Monitoring of DPWH-Constructed School
Buildings” also provides that:
The DPWH District Office shall provide the DepEd Division Office and the
Heads of the recipient schools copies of plans, specification, program of work
and schedules of the construction project under their areas of jurisdiction for
review and comments prior to construction.
20.3 The SDO General Santos City, had a budget for the construction of various
school buildings for Senior High School in CY 2016 under the BEFF for
implementation by the DPWH, among which is the two units four-storey 20-
classroom for Senior High School Building for Lagao National High School
located at Barangay San Isidro, General Santos City with a total project cost of
260
₱65,009,827.43. This school building is intended to house the Senior High
School and the Technical-Vocational Laboratories of Lagao National High
School. The allocation for this project was released directly to the DPWH as
provided for under the FY 2016 GAA for implementation based on the list,
location, standard and specifications prescribed by DepEd, provided that design
plans and costs are jointly determined by DepEd and DPWH. Details of which
are shown below:
Particulars
Funding Year CY 2016 (Batch 1)
Project Name Construction of Senior High School Classrooms,
4 Sty, 20 CL (2 units) School Building at Lagao
National High School (Main), Barangay San
Isidro, General Santos City
Implementing Agency Department of Public Works and Highways,
General Santos City District Engineering Office
Mode of Implementation By Contract
Original Contract Cost ₱65,009,827.43
Notice to Proceed 16-Nov-2016
Start Date 21-Nov-2016
Contract Period 300 Calendar Days
Expected Completion Date 16-Sept-2017
Revised Expiry Date None
Time Extensions granted None
Total Disbursements as of 11/28/2018 ₱45,424,824.58
Accomplishment as of 28-Nov-2018 per 98.92 percent
DPWH BEFF Construction Project Status
Report
DPWH Reported Negative Slippage 1.08 percent
20.4 In view of this, the Audit Team conducted ocular inspection on the actual status
of implementation by DPWH on the construction of BEFF Projects based on the
Quarterly Report Programs, Projects and Activities submitted by Management.
Actual inspection conducted by the Audit Team revealed that the construction
of the 2 units 4-storey 20-classroom Senior High School Building at Lagao
National High School remained not completed after more than two years of
implementation. The incurrence of delay for more than two years is indicative
that problems which caused the delay were not addressed by DepEd and DPWH
promptly.
20.5 As per DPWH report, disbursements for this project as of November 28, 2018
amounted to ₱45,424,824.58. DPWH Status Report on the CY 2016 Carry-Over
Projects on the Construction of BEFF Projects showed that the SWA as of
November 28, 2018 for the 2 units 4-storey 20-classroom Senior High School
Building constructed at Lagao National High School was already at 98.82
percent with only 1.08 percent negative slippage, however, actual inspection
made by the Audit Team showed otherwise. The reported actual status of work
accomplished is inconsistent with the actual condition of the project as validated
by the Audit Team during the ocular inspection conducted on December 10,
2018 with the presence of the School Property Officer, the contractor’s Project
Engineer, Foreman and workers.
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20.6 On the other hand, per information taken from the DPWH website, the FY 2016
Status of Contracts - Report for Stakeholders as of September 30, 2018 showed
that the implementation of the project by DPWH is already 99.08 percent
accomplished, which is contrary to the actual physical status of the school
building being constructed.
20.7 The said construction started on November 16, 2016 and was expected to be
completed on September 16, 2017, just timely to be made available starting
school year 2017-2018 but up to this date, it remained unfinished to the
detriment of the school and its senior high school students.
20.8 With these observations it shows that the DepEd and DPWH were not able to
ensure quality performance of contractors resulting in delay in the completion
of projects. The implementation of the school building program was not
effectively and economically managed. The performance of the contractors was
not properly monitored. These lapses hinder the achievement of the
government’s objective of providing adequate classrooms on time for each
school thereby affecting the quality of education offered to students.
20.9 The completion of projects within the agreed period is the prime consideration
of all government agencies entering into contracts with various contractors. Any
delay in the completion of the contract work in accordance with approved
PERT/CPM and/or contract time as stipulated will not only disturb the financial
projections and/or the cash flow of the Government on these projects but will
cause also undue prejudice to the public interest sought to be sub served by the
timely completion of the infrastructure project involved.
a) require the Division’s Physical Facilities Coordinator/Division

Engineer to exercise diligent monitoring, coordination among
officials/personnel involved in the project, and supervision on the
implementation of project to immediately address issues and lapses
thereof on the part of the implementing agency (DPWH), to ensure the
timely delivery of DepEd’s physical targets to address resource gap in
school facilities; and
b) impose sanctions on the contractors for the unjustified failure to deliver

commitments resulting in the delay in the completion of the project and
immediately issue a Blacklisting Memorandum disqualifying the
concerned contractor from participating in the future biddings and
report the lapses of said contractor to the Construction Industry
Association of the Philippines (CIAP), which regulates the construction
industry in the Philippines for proper sanction.
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20.11 Management commented that the DepEd Engineer did not make any written
report and verbal communications were only made with DPWH regarding the
delays in the construction of two units four-storey 20-classroom Senior High
School Building constructed at Lagao National High School. As per response of
the DepEd Engineer, delays incurred by the particular contactor were due to lack
of workers and difficulty in hiring additional workers because of his residency
in Manila. Also, they already conducted a coordination meeting with the DPWH
District Engineer, Assistant District Engineer, DPWH Team together with their
Section Heads and all contractors on this matter. Inspection was done by DPWH
in December 2018 and determined that the project could not be finished by
December 2018. Thus, they agreed to give another extension until January 2019
for this project.
Textbooks/Instructional Materials Program
21. DepEd has an alarming number of undistributed instructional materials

amounting to ₱113,708,595.00 that were procured as buffer stock from CYs 2014
up to 2017. It represented the cost of 3,410,137 copies intended for public schools
nationwide which remained unutilized and idle in five DepEd warehouses located
in Taguig City and were minimally distributed in the last four years at an average
of 23 percent which tied-up the government resources therein in the amount of
₱113,708,595.00, contrary to DepEd Order No. 74 s. 2011, COA Circular No.
2012-003 dated October 29, 2012 and Section 33 of PD No. 1445 that may fall
under the Irregular, Unnecessary, Excessive, Extravagant and Unconscionable
(IUEEU) expenditures. Likewise, control weaknesses were observed in the
safekeeping and inventory system of instructional materials which can bring
further damage or loss thereto. Moreover, various errors were noted in some of
the learing materials intended for Grade 3 pupils with a total contract cost of
₱254,352,302.83 despite undergoing the three-step review process of the
Department.
21.1 The DepEd is mandated to formulate, implement, and coordinate policies, plans,
programs and projects in the areas of formal and non-formal basic education. It
supervises all elementary and secondary education institutions, including
alternative learning systems, both public and private; and provides for the
establishment and maintenance of a complete, adequate, and integrated system
of basic education relevant to the goals of national development.
21.2 In consonance with its mandate, it is the policy of the DepEd to provide every
pupil/student and teachers in all public schools with a complete set of
instructional materials such as Textbooks, Teachers Manual, Teachers Guide
and other learning materials. Likewise, it is the policy of DepEd to procure these
materials on a centralized basis to avail of economies of scale.
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Excessive number of instructional materials procured as buffer stocks
21.3 Section 33 of PD No. 1445, Prevention of irregular, unnecessary, excessive, or

extravagant expenditure of funds or uses of property and the power to disallow
such expenditures, states that:
The Commission shall promulgate such auditing and accounting rules

and regulations as shall prevent irregular, unnecessary, excessive or
extravagant expenditures or uses of government funds or property.
21.4 In line with this provision and the Commission’s efforts to be constantly
responsive to the changing needs of the government, the list of situational cases
that are considered IUEEU expenditures are enumerated under COA Circular
No. 2012-003 dated October 29, 2012 for the guidance of both agency officials
and employees, including the Auditors.
21.5 DepEd Order No. 74 s. 2011 provides for the guidelines in the allocation of
buffer stocks.
Par. 2 of said DepEd Order states that “buffer stock shall be provided for
Textbooks (TXs) and Teacher Manual (TMs) equivalent to 10 percent of the
projected enrolment of the school year. The buffer stock shall answer for
replacements for losses and/or damages of TXs, increase in enrolment, and for
meeting the requirements of newly established/created schools. The school
districts and high schools will receive 10 percent of the buffer stock, while 30
percent shall be delivered directly to the DOs, 10 percent to the ROs and 50
percent shall be delivered to the DepEd–CO designated warehouse. In this
regard, schools division/city superintendents (SDSs) and school heads (SHs)
shall ensure that buffer stocks are properly stored in protected
places/warehouses and that these are equitably distributed to and utilized by
schools need.” (Underscoring supplied)
21.6 Thus, a transaction conducted in a manner that deviates or departs from, or

which does not comply with standards set, is deemed irregular. The term
“irregular expenditure” signifies expenditure incurred without adhering to
established rules, regulations, procedural guidelines, policies, principles or
practices that have gained recognition in law. While excessive expenditures
signify unreasonable expenses incurred at an immoderate quantity or exorbitant
price.
21.7 The Audit Team requested for the Inventory Report maintained by the
warehouseman, which, according to him, was turned over to him when he
assumed the position in CY 2016. From there, he recorded the deliveries and
issuances to monitor the balances of the buffer stocks in the Excel file
maintained at his Office, summarized as follows:
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Table 36: Summary of Buffer Stocks for CYs 2014-2017
Year Total Total Issuances Remaining Buffer
Delivered Deliveries 2016 2017 2018 Stocks
2014 440,591 440,591
2015 1,612,747 1,612,747
2016 1,458,774 230,086 1,228,688
2017 550,867 321,103 101,653 128,111
Total 4,062,979 230,086 321,103 101,653 3,410,137
21.8 Per record maintained by the Bureau of Learning Resources (BLR) as of

December 31, 2018, the total cost of the 4,062,979 TXs/TMs/Leaner’s Materials
(LMs)/Teacher’s Guide (TGs) buffer stocks delivered by various suppliers
during those years is ₱136,576,369.94 with unit cost ranging from ₱12.53 to
₱82.96. From the total deliveries are the remaining 3,410,137
TXs/TMs/LMs/TGs buffer stocks stored in the warehouses with total cost of
₱113,708,595.00 to date. Part of the remaining stocks are 243,414 copies of
learning materials requested by the Disaster Risk and Reduction Management
Service (DRRMS) that had not been pulled out by that Office as of the report
date.
21.9 Furthermore, the percentage of issuances vis-à-vis total deliveries shows that out
of the total accumulated buffer stocks procured in CYs 2014 to 2016, only 15.77
per cent copies were pulled out which were provided to recipient schools in
typhoon-stricken areas as replacement for lost and damaged learning resources.
Nonetheless, the buffer stocks procured in CY 2017 totaling 550,867 copies, out
of which, 422,756 copies or 76 percent were issued in CYs 2017 and 2018:
Table 37: Summary of Issuances of Buffer Stocks for CYs 2014-2017

Year Delivered Total Deliveries Total Issuances Percentage
2014 440,591 - 0
2015 1,612,747 - 0
2016 1,458,774 230,086 15.77
2017 550,867 422,756 76
Total 4,062,979 652,842 23
21.10 It was noted, however, that the Asset Management Division (AMD) and the BLR
did not conduct the actual physical inventory count of the total buffer stocks and,
there was non-inclusion of deliveries in CY 2018 despite the existence of a large
number of undistributed buffer stocks noted during the inspection. Thus, the
definite number of instructional materials stored in the five warehouses, as
reported by the BLR presented in the above table was not established.
21.11 In view of the foregoing, the Audit Team has given emphasis in reiterating the
audit observations and recommendations in previous year and may consider
these procured and undistributed/unutilized buffer stocks as wastage of
government resources.
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Weaknesses in Proper Safekeeping and Inventory
21.12 The following are the previous Audit Team’s observations in CY 2017 audit as
a result of the inspection conducted at the DepEd-BLR warehouse for TXs/TMs
and review of existing policies and practices:
Non-compliance with DepEd Property Manual
a. The TX/TM warehouse which is located in DepEd-owned property within

Nutrition Council of the Philippines Compound in Taguig City consists of
five separate storage buildings. Three of which were converted to office
rooms which are not fit for storage due to lack of proper lightings and the
small constricted doorways which is not safe in case of emergency situation.
b. Stock pile of debris/trash/clutter filled the biggest warehouse that limits the
full capacity of the storage area.
c. The TX/TM boxes were not properly labeled and not properly sorted
according to the year of purchase.
d. Several books are loose from the boxes exposing the materials to possible
loss/misplacements.
e. Generally, the warehouses are not suitable for storage as these are mostly
classrooms and office rooms that are converted into storage area.
f. Procedures in Storage/Warehousing was not observed since proper

delineation of authority and accountability has not been clearly defined or not
properly observed by the concerned offices.
The following observations indicated control weaknesses in the inventory system

of TXs/TMs:
a. Interview with the Property Officer revealed that the AMD was only involved
during the pre-inspection of delivery upon request of the BLR. AMD has
never been involved in the completion of the IAR nor in the issuance of the
buffer stocks. It was further stated that the recording/monitoring of TX/TMs
was lodged solely with the BLR; hence, AMD does not maintain Stock Cards
because the TX/TM inventory was not placed under its control and custody.
b. During the inspection conducted, it was learned that the warehouse man is a
staff employee of the BLR, who does not maintain bin cards to monitor and
control the TX/TM inventories under his custody, but merely rely on the
records of issuance kept and maintained at the BLR office. With this
condition, there is apparent lax in the control of inventory as the BLR which
is in total control of the requisitions, receipts and issuances of TX/TM
inventory does not maintain complete historical records thereon; hence, it was
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not easy to determine not only the inventory items stored in the area at a given
time but more importantly the correctness of TX/TM inventory stocks in the
custody and control of the BLR due to absence of records.
c. In the absence of Stock Cards and bin cards or any record on that matter that
will monitor the stock position of TXs/TMs, reconciliation of records for
check and balance or control purposes cannot be made possible.
d. Issuances made by the BLR were not properly documented since Requisition
and Issue Slip was not accomplished.
e. Since receiving, issuance, recording and monitoring rest solely with the BLR,
both the AMD and the Accounting Division are not aware of the issuances or
transactions affecting the buffer stocks, hence, no complete recording of
inventory transactions by the AMD and Accounting Division and
reconciliation of their respective records.
21.13 To validate as to whether the aforementioned deficiencies/observations were

acted upon by concerned officials and employees, the Audit Team interviewed
the warehouseman and conducted an ocular inspection of the five warehouses
located at the Nutrition Council of the Philippines compound in Taguig City on
March 8, 2019.
21.14 During the inspection, the Audit Team noted that observations/deficiencies in
the previous year continuously exist and remained not acted upon by the BLR
and AMD. In addition thereto, the Audit Team gives emphasis also on the
following observations:
• The warehouses are in very poor condition. These are not well-maintained,
dirty, and full of dust and spider webs. The warehouses are not well-ventilated
due to absence of exhaust fans or insulation materials that will prevent fire.
The same were not properly lighted since the power supply/electricity was
cut-off for non-payment of electric bill. The ceilings and windows are
dilapidated and provision for security mechanism is inadequate. Only two
security guards were on duty and no DepEd personnel stays on the area for its
upkeep.
• The items are not properly arranged due to lack of storage plan and
materials handling equipment. As per inquiry with the warehouseman, the
piling, stacking, and pulling out of stocks are done manually due to lack of
the proper tools and equipment.
• The 2nd floor of the main building of the Nutrition Council of Philippines
intended for office use were converted as storage areas of the procured
buffer stocks adversely affecting, among others, the holding capacity of the
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area due to the accumulated weight of the undistributed instructional
materials.
• A portion of the main warehouse, the Penta Capital Building included

some of the scrap materials for disposal by the other Offices of the
Department are considered fire hazards and occupy the storage space intended
for learning materials.
• Non-submission of the inventory report as of December 31, 2018. The

BLR did not account for all stocks at the warehouse and submit the inventory
report for the proper turnover of custody and accountability to the AMD,
despite the recommendation of the Audit Team in CY 2017.
• A significant increase in the quantities of buffer stocks stored in the

warehouses was noted upon inspection, as compared with the quantities found
therein way back in CY 2017 during the previous inspection conducted by the
Audit Team.
• The quantities stored in each warehouse cannot be established since the

records can only provide the aggregate quantities of all buffer stocks stored
in five warehouses.
Errors in Learner’s Materials
21.15 RA No. 8047, otherwise known as, The Book Publishing Industry Development
Act provides for pertinent provisions on public school and textbook publishing
and participation of private publishers in the Public School Textbook Program,
which read as follows:
“Sec.10. Public School and Textbook Publishing - The DECS shall consult
with the Board in prescribing the guidelines, rules and regulations in preparing
the minimum learning competencies and/or prototypes and other specifications
for books required by public elementary and secondary schools.
The DECS shall confine itself to:
a. preparing the minimum learning competencies, and/or prototypes and other

specifications for books and/or manuscripts called for;
b. testing, evaluating, selecting and approving the manuscripts or books to be

submitted by the publishers for multiple adoption;
c. providing assistance in the distribution of textbooks to the public school

systems; and
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d. promulgating with the participation and assistance of the Board rules and
regulations for the private book publishers in the call, testing evaluation,
selection, approval, as well as production specification and acquisition of
public school textbooks.
21.16 The printing of public elementary and secondary school textbooks shall be done
on a regional or provincial level, whenever economically feasible.
21.17 The DECS shall within a period of not more than three (3) years from the
effectivity of this Act phase out its elementary and secondary textbook
publication and distribution functions and shall support the phasing in of private
sector publishers to assume these functions here. For its part, the Board shall
monitor and conduct an annual evaluation of the progress of the shift of
functions from the DECS to the private sector.
Sec. 11. Participation of Private Publishers in the Public School Textbook

Program - Guided by the minimum learning competencies for the elementary
level, the desired learning competencies for the secondary level, and other
specifications prepared by the DECS, publishers shall develop and submit to the
DECS those syllabi and/or prototypes and manuscripts or books intended for use
in the public schools for testing, evaluation, selection and approval.
Upon approval of the manuscripts or books, publishers shall produce and supply
the textbooks as ordered by the DECS.”
21.18 The Implementing Rules and Regulations of the said Act, under Rule VII, Public
Schools and Textbook Publishing, Section 2, Role and Responsibilities of
DECS, expressly states that:
The DECS shall ensure the quality of instructional materials to be

adopted in the public schools. (Emphasis supplied)
21.19 The DepEd (formerly known as DECS) had allocated funds from the FY 2012
Textbooks Funds and subsequent years until FY 2015 for the provision of the
centrally procured Learning Activity Packages (LAPs), modules, and Other
Instructional Materials (OIMs) to support the initial implementation of the K to
12 Curriculum. These materials will fill-in gaps of the Textbooks (TXs) and
Teachers Manuals (TMs) currently being used in public elementary and
secondary schools. The details of the allocated funds for textbooks and other
instructional materials from CYs 2012 to 2018 are as follows:
Table 38: Allocated Funds for Textbooks and Instructional Materials
Year General Appropriations Act (GAA) Allocation
2012 R.A. No. 10155 2,124,982,000.00
2013 R.A. No. 10352 1,493,233,000.00
2014 R.A. No. 10633 1,699,990,000.00
2015 R.A. No. 10651 3,461,693,000.00
2016 R.A. No. 10717 2,412,476,728.61
2017 R.A. No. 10924 3,040,831,000.00
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Year General Appropriations Act (GAA) Allocation
2018 R.A. No. 10964 2,990,831,000.00
Total 17,224,036,728.61
21.20 In an online article authored by a columnist of Philippine Daily Inquirer, it was

alleged that after conducting a meticulous process of evaluation, it was
discovered that two textbooks which were developed and published by the
DepEd and in current use in public schools are full of errors.
21.21 According to this author, the Grade 3 “Araling Panlipunan Learner’s Material”
written by Manalo, Capunitan, Galarosa and Sampang has 1,308 errors, while
the 363-page Grade 3 “English Learner’s Material” written by 15 authors
contains 430 errors.
21.22 Similarly, in an earlier online article he wrote on June 24, 2017, it was alleged
that a Grade 3 Science Learner’s Material that is written in Tagalog is full of
errors. This 185-page “Kagamitan ng Mag-aaral Tagalog” has 317 errors, or an
average of 1.7 errors per page.
21.23 He further averred that this Grade 3 Science Learner’s Material, which is
originally written in English, is also translated into 19 other regional dialects
such as Bikol, Hiligaynon, Kapampangan, Maranao, Pangasinan, Sinugbuanong
Binisaya and Waray, the 317 errors are, therefore, repeatedly replicated, to be
permanently imprinted onto the minds of public school students in all regions of
the country.
21.24 To support the K-12 program in its 4th year of implementation, the BAC 1 of
DepEd Central Office on June 10, 2015 issued Resolution to Award No. 2015-
IMCS-001-003&013-BI-002, recommending to the Secretary of Education the
award of Contracts for the Printing of Grades 3 and 9 LMs and Teacher’s
Guides (TGs) and Delivery to DepEd Central Office, Public Schools Districts
and Public High Schools Nationwide (Batch 6) to the bidders with the lowest
calculated responsive bids in the total amount of ₱356,735,727.16, to wit:
Table 39: Resolution to Award No. 2015-IMCS-001-003&013-BI-002

Lot Item Description Quantities Name of Bidder Bid
No. Amount
1 Grade 3 English LMs 2,499,856 Rex Bookstore, 84,589,973.56
Grade 3 English TGs 62,700 Inc.
2 Grade 3 Science LMs 2,499,856 Rex Bookstore, 66,666,978.08
Grade 3 Science TGs 62,700 Inc.
Grade 3 Filipino TGs 62,700
Grade 3 Mathematics TGs 62,700
Grade 3 MTB-MLE TGs 62,700
Grade 3 Edukasyon sa 62,700
Pagpapakatao TGs
Grade 3 Music, Arts, 62,700
Physical Educ. & Health
TGs
3 Grade 3 Araling Panlipunan 2,499,856 Book Media 110,362,281.19
LMs Press, Inc. JV
270
Lot Item Description Quantities Name of Bidder Bid
No. Amount
Grade 3 Araling Panlipunan 62,700 New World
TGs Printing Corp.
4 Grade 9 Science LMs 1,481,092 FEP Printing 50,654,456.49
Grade 9 Science TGs 16,421 Corporation
5 Grade 9 Edukasyon sa 1,481,092 FEP Printing 44,462,037.84
Pagpapakatao LMs Corporation
Grade 9 Edukasyon sa 16,421
Pagpapakatao TGs
Total 356,735,727.16
21.25 The abovementioned resolution by the BAC was approved by then Department
Secretary Armin A. Luistro. Delivery of the said LMs to public schools
nationwide was undertaken by the winning bidders in CYs 2015 and 2016.
21.26 As can be gleaned from the table above, the total printing and delivery costs for
the alleged erroneous Araling Panlipunan and English LMs/TGs are
₱110,362,281.19 and ₱84,589,973.56, respectively. As to Lot No. 2, of the total
amount of ₱66,666,978.08, ₱59,400,048.08 pertained to Science LMs/TGs. The
contract cost of these questioned learning materials amounted to
₱254,352,302.83.
21.27 The Audit Team was not able to gather data to establish the total development
and evaluation costs of the subject LMs. The Audit Team requested the said data
in a letter dated February 7, 2019 and a follow-up letter on March 5, 2019
including a questionnaire relative thereto, among other documents/reports/data
from Bureau of Learning Resources (BLR), but these were not provided to the
Audit Team despite constant reminders.
21.28 As per inquiry with the BLR personnel regarding the Department’s procurement
process for TXs and LMs, emphasis must be given to the difference between
TXs and LMs due to the fact that the manuscripts for the latter are internally
developed.
21.29 In producing LMs, the DepEd identifies and engages writers to write materials
which will be checked by the Bureau of Curriculum Development
(BCD)/Bureau of Learning Delivery (BLD)/BLR for completeness, coherence,
content, and language. The manuscript developed by the writers undergoes three
steps review process presented in the table:
Sequence Area of Activity
Responsibility
1 BLR - Submitted manuscript will undergo language review,
pedagogical review and copyright licensing.
2 BCD/BLD - Findings upon review will be submitted by BLR to BCD/BLD
for validation, incorporation, and revision of materials. The
writers will incorporate the validated findings on the materials
and submit the revised version to BCD/BLD, which will then
submit the final and revised manuscript to BLR.
271
Sequence Area of Activity
Responsibility
3 BLR - The BLR will do the final conformance checking on the
completeness of the learning resources. After which, the
manuscript will be set for mass production.
21.30 Clearly, this is a circumvention of Sections 10 and 11 of RA No. 8047 which

prevented the Department from publishing and distributing its own textbook,
instead of allowing the private publishers to produce and supply the textbook
requirements of every public school in the country. By definition, textbook
pertains to an exposition of generally accepted principles in one subject,
intended primarily as a basis for instruction in a classroom or pupil-book-teacher
situation. The LMs developed by the Department evidently falls within the
definition of a textbook as contemplated in the said act.
21.31 To validate the alleged errors in the aforementioned LMs, the Audit Team
obtained copies of the subject LMs and assessed the gravity of these alleged
errors. The following are the notable errors/deficiencies found in the LMs:
Table 40: Summary of Errors/Deficiencies in Learner’s Materials
Reference Deficiencies Noted by the Audit Team Remarks
Araling Panlipunan Learner’s Material
page 61 Sa Batangas naman matatagpuan ang pinakamaliit Sa Batangas naman matatagpuan ang
na bulkan ang bulkang Taal na nakalubog sa lawa pinakamaliit na bulkan, ang Bulkang Taal,
ng Taal. na nasa gitna ng Lawa ng Taal.
page 365 Ang mga karagatang nakapalibot sa mga lalawigan Ang Aurora at Zambales ay hindi
ng Bataan, Aurora, at Zambales napapalibutan ng dagat.
page 444 Narito ang kailangang makamit upang makatakbo Narito ang mga kwalipikasyon ng isang
sa eleksiyon. nagnanais na lumahok sa eleksiyon.
page 26 Isa itong pulo ng mahigit sa 7,100 na mga isla. Isa itong Arkipelago na binubuo ng mahigit
sa 7,100 na mga isla.
page 86 Ang buong bansa ay nakatungtong sa tinatawag na Ang buong bansa ay nakapaloob sa
Pacific Ring of Fire. tinatawag na Pacific Ring of Fire.
page 87 Saan kaya mataas ang pagkakataon ng pagguho ng Saan kaya mataas ang posibilidad ng
lupa sa tag-ulan? pagguho ng lupa kung tag-ulan?
page 27 Ang lupa mula dito ay unti-unting tumataas Major error: tumataas ang lupa
maliban na lamang sa ilang lugar.
page 101 Tulad ng pagawa ng emergency kit paggawa
page 374 Ang karamihan sa mga tao ay namumuhay at Needs improvement: umiikot
umiikot sa produksiyon ng palay.
page 383 Ang Oriental Mindoro ay 45 minuto mula sa Erroneous:
pandaigdigang daungan ng Batangas kaya’t ito ang
dinadaan ng Roll-On-Roll-Off (RORO) na barko -Pandaigdigang Daungan
upang madala ang mga produkto mula sa isang
lalawigan patungo sa ibang lalawigan. -dinadaan
English Learner’s Material
Table of The table of contents merely indicates the title of Needs improvement
Contents the stories, the topics are not indicated.
pages 1 to The LM contains activities/exercises only without
363 discussion of topics/lessons.
pages 3, 17 Repetitive activities on “Phrase or Sentence”
and 175
pages 18 Repetitive activities on “Recycling of Garbage”
and 175
Science Learner’s Material written in Tagalog
272
Reference Deficiencies Noted by the Audit Team Remarks
pages 28 tubig sa loob ng thermometer Erroneous
and 32
page 43 ang retina ay parang kurtina na tumatakip sa mata Erroneous
21.32 Furthermore, the Audit Team conducted personal interview with some of the
teachers in public elementary schools to evaluate the impact of these
errors/deficiencies to educators and learners. The following is the summary of
the significant observations and comments of the interviewees:
The LMs in general:
• The topics are repetitive and the sequencing of topics is confusing for the
teachers and learners.
• The topics are not in line with the Curriculum Guide.
• Teachers opted to use as reference the textbooks which are in accordance with
the previous curriculum, Revised Basic Education Curriculum (RBEC).
• They resorted to using supplemental resources such as books in private
schools and the internet.
• The paper used in printing the LMs is of poor quality.
• To their mind, the poor quality and the confusing sequencing of the topics are
indicative that there were several writers who co-authored the LMs without
proper coordination and review process. It seems that the authors merely
collated their outputs into single LM.
Grade 3 Araling Panlipunan – Tagalog:
• Many errors were noted and the contents/topics are mostly about Region IV-
A CALABARZON, hence, not applicable to schools in the National Capital
Region (NCR).
• There are many topics in the LMs that are not in line with the Curriculum
Guide.
Grade 3 English LM
• The LMs merely contain exercises and activities, the lessons and stories are
not included.
• The topics are repetitive.
Grade 3 Science LM
• The LM is written in Tagalog while the Teacher’s Guide (TG) is written in

English.
• The contents are insufficient and lack appropriate topics/lessons provided in
the Curriculum Guide.
• The LM is not appropriate to be used by the learners since the contents are
mere guide/outline for teachers.
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Other LMs
• Grade 3 Filipino LM is worse than other LMs for the grade 3 level since it is
full of errors and contents is insufficient to be used as reference by learners.
• The LMs for the Grade 4 level contain several errors too.
• For Grade 3 Mathematics LM, the LM is written in Tagalog while the TG is
written in English.
21.33 In effect, the errors/deficiencies found in subject LMs that are provided to the
learners and educators in public elementary schools rendered these instructional
materials of poor quality. The existence of error-filled LMs is an indication that
the diligent and meticulous checking/review/evaluation processes of the
manuscripts prepared by the writers it had selected and engaged were not
undertaken by the concerned Bureaus, before its mass production. This is a
reflection that the DepEd’s mandate of ensuring the adoption of quality
instructional materials to promote quality basic education to the Filipino youth
is not fully served.
Relative observations noted in three ROs are as follows:

Region Audit Observations/Deficiencies
II Books delivered by DepEd Central Office thru suppliers were accepted by the SDOs of
Isabela and Nueva Vizcaya through the issuance of Certificate of Final Acceptance (CFA)
despite of some variations in the Delivery Information Form, Delivery Receipt, and actual
delivery due to lack of awareness of the updated guidelines on delivery, inspection,
acceptance and recording of DepEd procured assets provided in Department Order No. 042,
s. 2018.
Likewise, there were no distribution lists provided by the DepEd Central Office (CO) to the
Division Supply Officers of Isabela, Ilagan City, Cauayan City and Nueva Vizcaya upon
delivery of the books as basis for the immediate distribution to respective schools/end-users
and no Property Transfer Report (PTR) were brought by the Suppliers during delivery,
hence, learning materials received and distributed remained unrecorded in the books of
accounts.
Learning Materials/Textbooks for Senior High, Junior High and Elementary Schools of
Division Office of Isabela and Ilagan totaling to 240,437 copies remained undistributed due
to lack of monitoring and close coordination with the recipient schools to address issues
hindering them to pickup/receive the instructional materials contrary to DepEd Order No.
13, s. 2012 dated February 3, 2012, thus, depriving learners of the benefits that could be
derived therefrom.
Further, some of the books in SDO Isabela were already infested by termites and damaged
resulting in waste of government resources. This is contrary to sound internal control on
safeguarding of assets required in Section 123 and 124 of PD No. 1445, also known as
Government Auditing Code of the Philippines, and not in keeping with the goal of the
Department to provide all pupils/students with complete learning materials.
III Out of the 219,775 sets of printed teaching and learning materials intended for Senior High
School, only 200,092 sets were available for distribution; leaving 19,683 sets of printed
materials with estimated cost of ₱1,125,292.21 remained uncompleted due to errors in
printing. Furthermore, 1,187 sets of the available learning materials are not yet taken by
intended users; hence, the objective of the program to fast-track and facilitate the early
delivery and usage of printed learning materials was not fully achieved, contrary to DepEd
Unnumbered Memorandum dated June 8, 2016, which provides for the Guidelines on the
Release and Utilization of Fund for the In-House Reproduction and Distribution of Grades
5 and 11 Learning Resources.
274
IV-A The in-house reproduction and distribution of Grades 5 and 11 Learning Resources (LRs)
for School Year (SY) 2016 to 2017 by DepEd Regional Office Proper were found with
several glitches including delays in printing and distribution, which is not in compliance
with DepEd Unnumbered Memorandum dated June 8, 2016, thus defeating the purpose to
provide printed materials for learners and teachers immediately.
V In SDO Camarines Sur, excess textbooks numbering 6,320 with total amount of ₱222,465.16
were not returned to DepEd Central Office for distribution to other recipients but remained
in the custody of the Division Office, thus depriving several students nationwide of the
utilization of said textbooks.
Aside from the excess delivery of learning materials in SDO Camarines Sur, textbooks
numbering 7,732, which were provided as buffer stocks, were in the custody of the said
SDO, contrary to the provisions of DepEd Order No. 74, s. 2011.
21.34 The aforementioned observations contributed to the non-attainment of the

program objectives.
a) explain the large number of learning materials procured during the

years by the Department that remain undistributed and stored in the
five warehouses and provide a justification on why these excessive
buffer stocks do not merit the issuance of a Notice of Disallowance;
b) revisit existing DepEd guidelines on the procurement of instructional

materials and consider in the evaluation the following as regards
control on buffer stocks:
o provision/allocation for buffer stocks on procurement/reprinting of

textbooks and to study whether the buffer stocks for Mother
Tongue-Based Multilingual Education (MTB-MLE) LMs should be
reduced or be placed under the direct custody and control of the
respective Division Offices;
o strengthen internal controls through the provision of specific

guidelines and procedures, including responsible offices, officials
and appropriate documentation for the following sub-systems on
instructional materials inventory:
➢ Delivery of Inventory Items (receipt, inspection and

reporting/recording);
➢ Requisition/Replenishment, Issuance and Disposal of Inventory
Items (including reporting/recording);
➢ Monitoring and Inventory Taking;
c) provide for a suitable facility and thereafter ensure that the buffer
stocks are properly stored in protected places/warehouses;
275
d) validate and evaluate the errors in LMs and take immediate actions to
correct the error-filled LMs which are currently circulating in public
schools as main reference of learners and teachers;
e) improve and strengthen the process of review, scrutiny, and evaluation

of instructional materials before publication and distribution to end-
users to ensure the adoption of error-free instructional materials; and
f) adhere strictly to the specific provisions of Sections 10 and 11 of RA

No. 8047.
21.36 Management comments and Auditor’s rejoinder are summarized as follows:
Region/
Management’s Comments Auditor’s Reply/Rejoinder
Office
CO The Management assured that they will revisit the
existing DepEd guidelines on the procurement of
instructional materials and will evaluate the controls
on buffer stocks. Regarding the large number of
learning materials procured, they already allocated the
materials and there is already an approved Activity
Request (AR) and is in the process of releasing the
materials.
BLR sent a letter dated April 20, 2018 requesting for We observed that several errors/findings
a meeting with Mr. Antonio Calipjo Go (Mr. Go), were also noted by the principal and
Academic Supervisor of Marian School of Quezon teachers who reviewed and evaluated the
City, to clarify issues/concerns on LMs. subject LMs apart from the errors noted by
Mr. Go.
The Office of Undersecretary for Curriculum and
Instruction (OUCI) also conducted inter-regional The Audit Team further recommends that
monitoring to gather data on utilization of learning these errors/findings noted by the
resources (LRs) including identifying errors, if any, in evaluators in different public schools along
August and September 2018. There were no reports on with the errors raised by Mr. Go must be
errors with regard to Grade 3 LRs. immediately validated and acted upon by
concerned officials.
BLR issued Memorandum DM-CI-2018-00-361
requesting the Division Offices to conduct review of The Audit Team would like, however, to
the K to 10 LMs and textbooks (TXs) being used in give emphasis on the long period of time
basic education schools that allegedly contains errors. that had elapsed from the time these LMs
were delivered to recipient public schools
The OUCI will likewise conduct a workshop on the nationwide in CY 2015 up to the time that
validation of submitted findings from the field on the Department initiated actions to correct
April 29 to May 4, 2019. the alleged errors in 2018.
The Audit Team hopes that the initiated

actions and joint efforts of the Department
including those officials and employees in
field offices will continue until the
objective of correcting the errors/findings
in LMs is completely attained and further,
to ensure that error-free and high-quality
LMs will be provided to schoolchildren in
the succeeding school years.
The OUCI, through the BLR, conducted a series of The Audit Team seeks clarification and
workshops on the development of handbooks on LR confirmation whether the scheduled
processes which includes quality assurance of LRs. activities on February 26 to March 2, 2018,
held in RO No. VI - Iloilo City and March
276
Region/
Office
12 to 16, 2018 in CARAGA, were
undertaken as planned. Further, the Audit
Team hereby requests for updates and
status of the handbooks on LR processes
which the Department intended to develop.
II SDO Isabela – The Audit Team of SDO Isabela stressed
that the Supply Officer requests from the
1. Management explained that some of the Delivery Contract Management Division at the
Information Form (DIF) came late which hindered Central Office DIF of LMs to be delivered
them to verify the actual contract quantity with that this CY 2019 and copies of the Certificates
indicated in the Delivery Receipt. They already sent of Final Acceptance (CFAs) should not be
the accomplished DIFs to the Contract Management issued until DIFs are forwarded.
Division of the Central Office indicating the report on Management should also follow up the
the disparity for their appropriate action. Management PTRs of books received and delivered in
agreed to implement the recommendation on the CY 2018 and in the previous years to
succeeding deliveries of books. facilitate recording in the books of
accounts.
2. Management already issued a Memorandum and the
schools are constantly notified to pick up their
allocation. Also, they shall fast-track the release of the
other unclaimed LRs after the Supply Unit submit the
physical count in the four temporary storage facilities.
The School Governance Operation Division (SGOD)-
DRRM and Office of the Schools Division
Superintendent (OSDS) - Supply Unit shall coordinate
and remind the field to submit reports as to learning
materials damaged after every occurrence of disaster
for the basis of future LR allocation. The Curriculum
Implementation Division – Learning Resource
Management Divisions (CID-LRMDs) shall be
venturing on writing localized policies on the delivery
and/or release of learning materials to schools/districts
to avoid the cases of unclaimed LRs.
SDO Nueva Viscaya - According to the management,

while there are different outside factors that were
uncontrollable like distribution list and PTR that were
not provided, the Management adheres to the
recommendations of the Audit Team and will comply
pursuant to the provision of DO No. 042, s. 2018. In
addition, the Management will instruct the Supply
Officer to constantly coordinate with the CO Supply
Officer.
SDO Cauayan City - The Management will

coordinate with the CO Supply Office on the noted
deficiencies and will reconcile the DIF and
distribution list to be provided by the latter with the
actual deliveries. Also, the textbooks will be recorded
by the agency upon receipt of the PTR from the
suppliers.
SDO Iligan - Management explained that they failed

to distribute the books due to the high distribution
cost. However, they already started to distribute the
books starting CY 2019. They committed do distribute
the books completely at the end of February 2019.
III Management commented that as of December 20,
2018, all the remaining copies were distributed to the
respective Division Offices.
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Region/
Office
Management also commented that they will

coordinate with Angeles City Division Office and will
request help on how to address the issue since they
have a collating machine that could bind and collate
the remaining uncollated printed materials.
Also, as per directive of the OIC-RD, immediate

actions should be implemented to comply with the
audit recommendations.
IV-A Management issued a Memorandum to various School
Division Superintendents for the distribution of the
remaining learning materials on hand and demand
from the supplier the immediate delivery of the
remaining 645 LRs.
Deficiencies in the implementation of School-Based Feeding Program
22. The School-Based Feeding Program (SBFP) for SYs 2017-2018 and 2018-2019 in
five ROs was found non-compliant with the program guidelines as the following
lapses were observed in the implementation thereof, such as: (a) inadequate space
for the implementation of Gulayan sa Paaralan Program; (b) improper execution
of double feeding scheme; (c) absence or non-updating of certificates of food
handlers; (d) non-completion of the 120-feeding days in 14 Schools Division
Offices; (e) unutilized SBFP funds with an indicative amount of ₱8,686,237.90 in
NCR; and (f) other deficiencies.
22.1 The SBFP is a program implemented by the DepEd, through the Bureau of
Learners Support Services – School Health Division (BLSS-SHD), to address
the undernutrition among public school children. It covers all Severely Wasted
(SW) and Wasted (W) Kindergarten to Grade 6 pupils for SY 2017-2018. The
program specifically aims to do the following:
a. Provide feeding to learners, prioritizing the SW and W;

b. Improve the nutritional status of the SW and W learners at the end of the 120
feeding days;
c. Ensure 100 percent deworming of target beneficiaries prior to the feeding
activity;
d. Conduct group daily hand washing and tooth brushing activities as stipulated
in DepEd Order No. 10, s. 2016 to impart development of positive health-
promoting values and behaviors;
e. Promote health and nutrition information and awareness among target
beneficiaries through the K to 12 Curriculum and its alternative modalities of
education; and
f. Encourage the Gulayan sa Paaralan Program and backyard vegetable
gardening to augment the feeding program and to complement the nutrition
and poverty-reduction initiatives of the Government.
278
22.2 The SBFP Operational Guidelines is embodied in DepEd Order No. 39, series
of 2017 with Supplemental Guidelines for the implementation thereof for FY
2018 in DepEd Order No. 15, series of 2018.
22.3 In CY 2018, the DepEd allocated a total of ₱3,870,570,960.00 distributed to its

17 ROs, as follows:
Target No. of Beneficiaries

No. of Budget
RO No. of Total
Elementary SW W Allocation
SDOs (SW+W)
Schools (ES)
I 14 2,397 27,992 62,087 90,079 194,570,640.00
II 9 2,042 11,252 33,680 44,932 97,053,120.00
III 20 2,831 47,911 110,698 158,609 342,595,440.00
IV-A 20 2,735 89,507 177,708 267,215 577,184,400.00
IV-B 7 1,872 23,960 57,062 81,022 175,007,520.00
V 13 3,126 47,121 114,413 161,534 348,913,440.00
VI 18 3,418 51,148 122,344 173,492 374,742,720.00
VII 19 2,941 32,198 88,115 120,313 259,876,080.00
VIII 13 3,640 26,447 66,717 93,164 201,234,240.00
IX 8 2,117 20,289 52,498 72,787 157,219,920.00
X 14 2,069 20,738 52,964 73,702 159,196,320.00
XI 11 1,836 18,625 58,995 77,620 167,659,200.00
XII 9 1,301 23,360 60,042 83,402 180,148,320.00
XIII 12 1,072 11,461 29,363 40,824 88,179,840.00
CAR 8 1,530 1,277 5,459 6,736 14,549,760.00
NCR 16 522 57,982 111,890 169,872 366,923,520.00
ARMM 9 2,138 20,870 55,758 76,628 165,516,480.00
Total 220 37,587 53,218 1,259,793 1,791,931 3,870,570,960.00
22.4 The RO transferred the funds to the SDOs which the latter released to the School
Heads thru cash advances subject to liquidation.
22.5 Evaluation of the implementation of the SBFP in the DepEd NCR revealed non-
compliance with the program guidelines such as: (a) inadequate space for the
implementation of Gulayan sa Paaralan Program; (b) improper execution of the
double feeding scheme; (c) non-provision of or un-updated health certificates of
food handlers; (d) non-completion of 120-feeding days;
(e) unutilized SBFP funds; (f) other deficiencies that impeded the successful
implementation of the program. Detailed discussion of the noted lapses are as
follows:
a. Inadequate space for the implementation of Gulayan sa Paaralan Program
22.6 The Gulayan sa Paaralan (GPP), as a complementary activity, is meant to

augment the resources for the implementation of SBFP. In order to maintain a
fully functional vegetable garden to supplement the school feeding, Item C.9 of
the Operational Guidelines on the Implementation of SBFP requires that all
schools should plant at least 50 Malunggay trees within the school premises.
Likewise, replanting of 20 Malunggay trees every July is encouraged.
279
22.7 It was noted during inspection that the target number of Malunggay trees that
should have been planted was not met in approximately 33 schools under the
jurisdiction of 11 SDOs in NCR due to insufficiency of space for planting and
ongoing construction of school buildings. Meanwhile, the number of inspected
schools in other regions that are non-compliant with the complementary
requirement of GPP was not provided.
22.8 While food ingredients are encouraged to be obtained from the schools’
vegetable gardens and home and communal gardens by families of the SBFP
beneficiaries, the schools substantially relied on outside suppliers for the food
ingredients, hence, the objective of augmenting the resources for the
implementation of SBFP was not fully achieved.
b. Serving of meals outside the feeding area not in accordance with the
guidelines on the Double Feeding
22.9 Double feeding, as contemplated under the Operational Guidelines on the

Implementation of the SBFP, refers to feeding the child with two meals a day
and/or feeding of one meal and one snack a day. Item V.C.6.a.ii thereof further
provides that the food shall be served and consumed inside the feeding area and
shall not be taken outside.
22.10 Interview with the School Principals/Feeding Coordinators in NCR disclosed

that double feeding was done in the following modes: (a) by giving a beneficiary
with one serving of food during lunch and one take out for dinner; (b) by giving
the first meal inside the feeding area and the second meal inside the
beneficiaries’ respective classrooms; (c) by serving both meals in one seating;
or (d) by giving a beneficiary one serving of food and additional food such as
fruit or juice.
22.11 The implementation of double feeding was improper and contrary to its intention
that a child should be fed with two separate meals a day and/or one meal and
one snack a day. Also, Item V.C.A.11 of the Operational Guidelines on the
Implementation of the SBFP requiring that foods shall not be taken outside the
feeding area was violated not complied with.
c. Absence/non-updating of health certificates of food handlers
22.12 The SBFP guidelines expressed the importance of food sanitation and hygiene
in the program implementation wherein one of its requirements is for the food
handlers to secure an updated health/medical certificate to ensure that they are
medically fit to perform their tasks. Results of validation conducted by the Audit
Teams in 49 schools in NCR revealed, however, that only 10 schools were
compliant with the requirement while food handlers in 31 schools have no health
certificates, three with health certificates but not updated, while in five schools,
no health certificate was presented during inspection.
280
22.13 As a result of the schools’ non-compliance with the health certificate
requirement, food sanitation and proper hygiene were not guaranteed exposing
program beneficiaries to health risks which could possibly be derived from
unqualified food handlers.
d. Non-completion of 120-feeding days in 170 schools of 14 SDOs
22.14 As prescribed in the guidelines, the feeding should commence as soon as

preparatory activities are conducted and funds are received by the schools to
complete the feeding cycle at the end of December 2018. Feeding should start
not later than July 31, 2018. Completion of the feeding cycle in 170 schools in
14 SDOs was delayed by 2 to 44 days. Details are as follows:
No. of Days
No. of No. of Schools Delay in the Reason for Non-completion of the
RO
SDOs Validated Program 120-day Feeding Period
Completion
NCR 10 151 2-44 days (1) school suspension of classes due
to inclement weather and holidays;
(2) earlier Christmas break on
December 15 instead of the prior
schedule of December 22 was not
anticipated; (3) delayed procurement
process; and (4) non-compliance
with the DepEd Order requiring the
feeding to start not later than July 31
due to delayed release of funds.
RO No. 2 10 10-29 days (1) non-compliance with the DepEd
X Order requiring the feeding to start
not later than July 31; and (2)
delayed procurement process.
CAR 2 9 Not provided Delayed submission of schools’
Work and Financial Plan.
In SDO Baguio, the number of days

completed contained in the SBFP
Terminal Reports of nine schools
included holidays and days when
classes were suspended, rendering
the reported number of feeding days
of 120 unreliable.
Total 14 170
e. Unutilized SBFP funds with an indicative amount of ₱8,686,237.90 in NCR
22.15 Item D.5 of SBFP Operational Guidelines states that “If the actual total number
of SW and W children in the school based on the current school year is less than
the allocated target number of beneficiaries, the school may: (a) extend feeding
beyond 120 days and/or increase the frequency of feeding to address the
nutritional status; and (b) cover other learners, regardless of nutritional status,
by feeding all kinder up to the succeeding year level until all funds are utilized
and consumed, provided that the target beneficiaries have developed their
nutritional status.” In CY 2018, DepEd NCR received a total allocation of
₱366,923,520.00 for SBFP for 169,872 beneficiaries in 16 SDOs. Since the
281
actual number of beneficiaries is lower than the target number of beneficiaries
wherein the budget allocation is based, a total of ₱8,686,237.90 remained
unutilized. Details of any unutilized funds in other regions were not provided.
f. Other deficiencies
RO Other Deficiencies Observed
Seven schools in four SDOs distributed iron supplements/multivitamins even without
parental consent, contrary to DepEd Order No. 15, series of 2010.
27 out of 41 schools inspected were non-compliant with the required composition of SBFP
Core Group.
SBFP Funds in SDOs Quezon City and Caloocan in the respective amount of
₱57,624,688.47 and ₱467,846.20 were not liquidated as at year-end.
Complementary, preparatory and intermediary activities such as 100 percent deworming,
monitoring of height and weight, and daily hand washing and tooth brushing activities, as
stipulated in DepEd Order No. 10, series of 2016, were not observed by 17 schools in SDO
Manila. Monitoring of height and weight, as one of the indicators that the nutritional status
of a beneficiary is improving was not undertaken by 12 ES while conduct of group daily
hand washing and tooth brushing activities to impart development of positive health-
promoting values and behaviors were not also practiced by majority of the schools.
Contract entered into with Allycel General Merchandise for the supply and delivery of goods
for the FY 2018 SBFP of four schools in SDO Marikina disclosed overpricing of purchases
due to inflated quotations on goods by ₱1,189,041.40 or two to 243 per cent higher than
average cost, although there were goods procured at a price lower by ₱88,349.48 or four to
56 percent lower than the average unit cost of goods, resulting in a net overpricing of
₱1,100,691.92, thus, contrary to COA Circular No. 2012-003 dated October 29, 2012. The
procurement, although within the Approved Budget, resulted in procurement of substantially
lower quantity on selected items depriving the student beneficiaries of the average daily food
intake.
Implementation of SBFP for SY 2017-2018 in SDO Mandaluyong was not satisfactorily
attained as about 249 or 54.97 per cent of the 453 targeted children categorized as SW were
rehabilitated into normal nutritional status while only 337 or 36.75 per cent of the 917
NCR
targeted children categorized as W attained the normal weight after the full implementation
of the feeding program.
Procurement of food/non-food items in SDOs Mandaluyong and Taguig/Pateros for SY
2017-2018 SBFP not relative to the purpose of the program, based on the post-audit of
liquidation reports submitted by the Management of the said SDOs.
Non-inclusion in the approved Annual Procurement Plan (APP) for CY 2017 of the
procurement requirement for the implementation of SBFP for SY 2017-2018 in SDOs
Mandaluyong and Taguig/Pateros. The approved APP shall be the basis for the Procuring
Entity’s procurement, and only those projects/procurement included therein shall be
undertaken. As such, the feeding program was not in conformity with the annual budget and
the actual expenditures for CY 2017.
Liquidation reports on the cash advances granted for the feeding program to the recipient
schools in SDO Mandaluyong were not yet submitted to the Audit Team, hence, verification
of the validity and regularity of the disbursements could not yet be established.
The budget allocation for feeding is ₱16.00 per beneficiary multiplied by the number of
feeding days while the budget allocated for operating expenses is ₱2.00 per beneficiary
multiplied by 120 feeding days. However, verification of the total funds released to SDO
Taguig/Pateros revealed that the allocation to the SDO was deficient by ₱1,627,991.87. The
Accountant explained that the difference was due to taxes imposed on the cash advance upon
release to the School Principals. She mentioned that the DBM verbally instructed the SDO
to deduct taxes on the budget allocated for feeding. In view thereof, the Audit Team
requested documents to support the deduction of taxes but they cannot provide any, since it
was just verbally communicated. Further verification of the DVs and corresponding JEVs
revealed no withholding taxes recorded in the books, only the amount released was debited
to the Advances for Operating Expenses account.
For SY 2017-2018, the cycle menu in feeding the targeted children of SDOs San Jose del
III
Monte and Malolos were not fully based on the standardized recipes suggested by DepEd;
282
RO Other Deficiencies Observed
thus, there were purchases of food which were not recommended to be served in schools
contrary to DepEd Order No. 13, series of 2017.
Several schools in SDO Cabanatuan failed to submit the supporting documents required in
the utilization of funds for the SBFP.
Procurement of 67 units of refrigerators and 5,661 pcs. Hygiene Kits totaling ₱770,433.00
and ₱169,716.78, respectively, in SDO Lipa for SBFP lacked complete documentation to
IV-A
support its validity and propriety, contrary to Sections 48 and 54 of RA No. 9184 and
Sections 2 and 9 of COA Circular No. 2012-001 dated June 14, 2012.
a) enjoin the SBFP Coordinators to:
i. maximize the implementation of the Gulayan sa Paaralan Program

pursuant to pertinent provisions of DepEd Order No. 39 to augment
the SBFP;
ii. implement properly the double feeding scheme to ensure that the
full benefits of the program are obtained;
iii. comply with the required composition of the SBFP Core Group;
iv. effectively plan the feeding program and conduct double feeding
activity to complete the feeding cycle on December 31 of each year;
v. ensure that food handlers have updated Health Certificates that
covers the whole feeding cycle;
vi. request approval from the RO to conduct double feeding to
maximize the utilization of the allocated SBFP fund;
vii. require the submission of Written Parental consent from the
beneficiaries’ parents who received the iron supplement/
multivitamins;
viii. ensure the validity and accuracy of Terminal Reports as provided
in Item V.E of the SBFP Operational Guidelines;
b) issue Demand Letters to the Principals of the concerned non-IUs to

liquidate the remaining balance of fund transfers;
c) enforce the implementation of complementary, preparatory and

intermediary activities such as monitoring of height and weight and
daily hand washing and tooth brushing activities, and impose sanction
on the non-compliance therewith;
d) explain the significant variance noted in the average unit cost per item
between Allycel General Merchandise and the other three suppliers
and ensure that the forthcoming contracts should only be awarded to
the suppliers and contractors with lowest calculated responsive bids;
e) include all forthcoming procurement projects in the preparation of the

APP, as basis for procurement and to comply strictly with the
requirements under Sections 7.1 and 7.2 of IRR of RA No. 9184;
283
f) require the Accountable Officers to submit the liquidation reports or
vouchers relative to the SBFP to the Audit Team, so that verification of
the validity and regularity of the transactions could immediately be
undertaken; and
g) direct the School Heads and other school personnel to adhere to the
provisions of DepEd Order No. 13, series of 2017 in the preparation of
the cycle menu to maintain good health and nutrition of the program’s
beneficiaries.

NCR o The Management agreed with the recommendation. However, the Gulayan sa Paaralan
Program is currently physically improbable due to limited and unavailable spaces in school
resulted from the ongoing construction of school buildings.
o Double feeding was implemented to complete the 120-feeding day cycle. But the schools
observed that feeding the learners twice on a separate time of the days was not possible due
to the following reasons:
a. Delivery schedules of goods from suppliers and food preparation time was considered
b. The learners would not be able to consume the second meal, because the first meal
already made them full
c. Lack of manpower made the supervision of the feeding difficult, as well as the
handling of food preparation
d. Class time was shortened
e. Lack of available rooms for feeding area taking into account the volume of children
that must be fed at the same time
o The Management conducted close monitoring in schools and require all the schools to
secure updated health certificates of the food handlers as compliance with the audit
recommendation.
o The 120-feeding day cycle was not completed due to the following circumstances:
a. Declaration of earlier Christmas break and other class suspensions
b. Mode of procurement of goods for the food preparation
c. Delayed downloading of funds from the RO to SDO
o The utilization was based on the actual number of undernourished children at schools
examined during the year, not on the estimate provided at the DepEd Central Office level
anchored on the number of beneficiaries of the previous year data established at the end of
CY 2017. The budget proposal by DepEd Central Office to DBM was made prior to the
year of implementation based on the national target beneficiaries per region, which more
often shows a huge difference with the actual undernourished children assessed during the
year. Moreover, augmenting the feeding funds to other learners who are not considered
undernourished might create an additional problem at schools.
o Outstanding cash advances were reduced to a substantial amount and updated status of
Unliquidated Cash Advances will be submitted to the Office of the Auditor.
o Iron supplements were distributed with parental consent, however, parents are hesitant to
sign the written consent primarily due to Dengvaxia scare. So, the teachers in effect had
difficulty retrieving the consents resulting in a low number of beneficiaries who availed of
the supplementations. With those who have parental consent, most preferred their children
to take the iron supplementation at home under their supervision and at their preferred time,
which has been allowed by the School Health Regional Office upon consultation.
284
o The purchases relative to SBFP were made when the economic climate (July-September
2018) was in a soaring inflation necessarily affecting the market prices in an extraordinary
manner. The scenario at this juncture has placed the BAC in such a difficult, exceptional
and uncontrollable circumstance. Moreover, in all prudent and honest efforts on costing and
pricing mechanism, the cost per item resulted from the standard retail price, which at that
time was on high inflation, and the mark up of 25 percent to cover incidental expenses such
as transportation, taxes, cost of money taking into account credit terms in some purchases,
inflationary factors, among others, which were all under BAC’s due diligence on price
determinations or estimations. The significant variance in the cost and/or in the quantity of
goods was never a pre-determined or intended outcome. Never will the BAC of this
Division allow the same.
o The Management already conducted and discussed in their meeting about the use of non-
healthy ingredients and promised to avoid using them. They also committed to include all
the procurement activities to their APP. Late submission of liquidation reports was already
resolved and they committed to comply with the recommendations provided by the Audit
Team.
o According to the School Principals/Heads, purchases of non-food items was necessary to

facilitate the preparation and storage of food faster and easier. These items were included
in the school inventory and in good condition. They assured that storage expenses will be
included in the APP for the succeeding years.
III The Management agreed with the audit recommendations.
IV-A For purchase of refrigerators, the Health and Nutrition Unit (HNU) has decided to purchase
refrigerators instead of freezers as stated in the list of items to be procured as refrigerators would
be more useful for the recipient schools rather than freezers. Upon receiving the SARO, the BAC
Secretariat posted the Procurement of Machineries for SBFP Recipient Schools in Lipa City on
December 11 to 14, 2017 with Reference Number 5048339 under Negotiated Procurement-
Small Value Procurement (Section 53. 9 of RA No. 9184). One supplier/bidder, Interworld
Enterprises, submitted its proposal for the refrigerators posted for procurement. It is stated in
RA No. 9184 that under Small Value Procurement, receipt of at least one quotation is sufficient
to proceed with the evaluation thereof. The procurement of refrigerators was awarded to the
single bidder after evaluation of its bid proposal. For the procurement of Hygiene Kits,
deficiency in the Sales Invoice for the procured hygiene kits was a typographical error on the
part of the supplier/bidder, Interworld Enterprises. However, the total amount in the request for
Quotation, Purchase Order and SI were the same, not affecting the net amount paid to the
supplier/bidder. They also attached the correct Omnibus Sworn Statements, Award Notice
posted in the PhilGEPs and PAR for the issued refrigerators.
X The Management justified that 120 meals in less than 120 feeding days do not significantly affect
the improvement of the nutritional status of the severely wasted/wasted beneficiaries.
CAR The Management committed that the concerned school heads will implement the audit
recommendation.
22.18 Considering all observations and recommendations, the Management aims to

make the succeeding implementation of the SBFP more sustainable and
compliant with the existing policies and guidelines.
Slow-paced implementation of DepEd Computerization Program (DCP)
23. The slow-paced implementation of the DepEd Computerization Program (DCP)

due to delay in the procurement process and failure of suppliers to completely
deliver the computer packages to 39,950 targeted recipient schools under DCP
from FYs 2015 up to 2018 including lapses in the deliveries and utilization of
different Information and Communication Technology (ICT) packages in NCR,
RO Nos. III, IV-A and XIII, hindered the attainment of the program’s objectives
285
of enhancing the teaching-learning process and raising the ICT literacy of
learners and educators beneficiaries.
23.1 The DCP aims to provide the public schools with appropriate technologies that
would enhance the teaching- learning process and meet the challenges of the 21st
century. It also aims to raise the ICT literacy of learners, pupils, students,
teachers and school heads and shall likewise respond to the computer backlog
of public schools.
23.2 Verification of the Agency’s Physical Accomplishment Report as of December

31, 2018 for DCP revealed that out of 86,389 recipient schools targeted to be
provided with ICT packages, only 46,439 schools were successfully given
during the year resulting in a 46 per cent variance representing the 39,950
recipient schools, which were not provided by the supposed computer packages
under the DCP FYs 2015 up to 2018, the details are as follows:
Table 41: Summary of DCP Targets vs. Accomplishments

Budget
Physical
Year/Batch Physical Targets Variance Remarks
Accomplishments
Particulars
FY 2018
E-Textbook 4,268 - 4,268 Ongoing procurement
Package process
ICT Package 4,000 - 4,000
FY 2017
K to 10 44,477 32,383 12,094 Ongoing delivery to
(Batches 39-46 recipient schools
& 48)
FY 2016
K to 10 (Batch 5,122 5,077 45 Ongoing delivery to
35) recipient schools
SHS (Batch 36)
FY 2015
K to 10 13,158 6,117 7,041 Ongoing delivery to
(Batches 29 to recipient schools
32)
SHS (Batch 33) 991 794 197
Unenergized 11,070 2,068 12,305
Luzmin (Batch
34)
Unenergized 3,303
Viz (Batch 34)
Total 86,389 46,439 39,950
DCP CY 2015
23.3 The former DepEd Secretary and the UNDP Country Representative entered
into a Cost-Sharing Agreement on March 23, 2016 to address certain limitations
encountered by the DepEd in its capacity to procure the needed ICT equipment
of public schools under the CY 2015 budget allocation, pursuant to Article II of
the Agreement between the Government of the Philippines and UNDP.
286
23.4 In CY 2017 audit, the Audit Team noted a discrepancy between the Physical
Accomplishment Report and the UNDP Project Document for Unenergized
DCP Package LuzMin (Batch 34), in the number of reported recipient schools
as shown in the following table:
Number of Recipient Schools

Physical Accomplishment UNDP Project Discrepancy
Report Document
11,070 4,401 6,669
23.5 Management explained that the variance between the physical targets and
accomplishments for the Batch 34 packages procured by UNDP were due to
error in the December 2017 Physical Accomplishment Report where the targets
of 3,690 were mistakenly copied for the three quarters resulting in a total of
11,070.
DCP for CYs 2016 and 2017
23.6 The DCP CY 2016 covered computer packages for Batches 35 to 38, of which,
procurement activities for Batches 37 to 38 were transferred to the UNDP.
Deliveries of ICT packages to recipient schools under Batches 37 to 38 were
completed in CY 2017.
23.7 On the other hand, the total allotment received for DCP CY 2017 was
₱11,484,254,584.52 consisting of current appropriation of ₱6,625,982,000.00
covering DCP Batches 39-46 & 48 and the continuing appropriation of
₱4,858,272,584.52 for DCP Batches 35 and 36 under the CY 2016 budget
allocation.
23.8 The following suppliers were awarded contracts for the above DCP budget:
Table 42: DCP Suppliers for CY 2017

Name of Supplier Lots Awarded Total Contract Cost
Red Dot Imaging Philippines Inc. JV With 1,6,8 3,999,859,904.13
Shenzen Kstar Science and Technology Co., LTD
Columbia Technologies Inc. 2,4 2,693,156,569.00
Girlteki Inc. JV with Shenzhen Hasee Computer 5,7 2,557,047,068.95
Co., LTD
Allcard Plastics Philippines Inc., JV with Silicon 3 738,738,685.28
Valley Computer Group Phils., Inc.
Total 9,988,802,227.36
23.9 The expected delivery of the awarded contracts for DCP FYs 2016 and 2017 is
shown in the next page:
287
Table 43: DCP Delivery Timelines for FYs 2016 and 2017
Lots Date of Receipt Expected

Name of Supplier
Awarded of NTP Completion Date
Red Dot Imaging Philippines Inc. JV With 1,6,8 12/14/2017 7/12/2018

Shenzen Kstar Science and Technology Co.,
LTD
Columbia Technologies Inc. 2,4 12/15/2017 7/13/2018
Girlteki Inc. JV with Shenzhen Hasee Computer 5,7 12/14/2017 7/12/2018
Co., LTD
Allcard Plastics Philippines Inc., JV with Silicon 3 1/9/2018 8/7/2018
Valley Computer Group Phils., Inc.
23.10 As stipulated in the contract, delivery was to be made within 210 calendar days
from the receipt of Notice to Proceed (NTP) by the suppliers. Hence, the delivery
was expected to be completed by the end of second quarter of 2018, which had
not been achieved as shown in the accountability report submitted to the Audit
Team.
23.11 In addition, a discrepancy was also noted in the Physical Target for the FY 2017
DCP Fund, K to 10 (Batches 39-46 & Batch 48) and the actual target recipients
in the awarded contracts. As per the Physical Accomplishment Report, target
recipients for K to 10 (Batches 39-46 & Batch 48) was 44,447. The total
recipients for the awarded contract with respect to the same budget were 30,985
only.
23.12 Furthermore, to validate the delivery of computer packages to the recipient

schools, the Audit Team sent confirmation letters to selected schools
nationwide. However, out of the 3,685 confirmation letters, only 154 recipients
responded as of the report date.
23.13 The summary of the feedbacks is shown below:

Table 44: Summary of DCP Feedbacks from Recipient Schools
Nature of Exception/Deficiencies No. of Recipients
Incomplete/lacking items 2
Items not in good operating condition 5
Not properly installed and tested by supplier 7
Recipient School not informed regarding the delivery/technical 4
specifications of items
Not fully compliant with school readiness requirement 58
Delivery not supported with Delivery Receipt/Inspection Acceptance 5
Report
Members of the School Inspectorate Team do not have the technical 21
expertise to examine the items delivered
Items not included in the Inventory Report 3
Items not recorded in the books of account as assets 11
Non-issuance of Property Acknowledgement Receipt (PAR) to end- 4
users/custodian
Other Issues to be addressed 35
288
23.14 The exceptions stated above were perennial deficiencies noted in the
implementation of DCP which adversely affect the outcome of the program.
Other matters commonly raised by the respondents are: a) length of time allotted
for training/orientation provided by the supplier to ICT coordinators/teachers is
not enough; b) lack of technical assistance to recipient schools for the repair and
maintenance of ICT equipment; c) lack of further trainings/seminars for ICT
teachers; and d) lack of ICT/multimedia classrooms in some public schools.
DCP CY 2018
23.15 The DCP FY 2018 is still in its procurement stage, hence, no delivery took place
as of December 31, 2018, as reflected in the Physical Accomplishment Report.
23.16 The Opening of Bids for Supply and Delivery of IT Package (E-Textbooks) and
Supply, Delivery, Installation, Configuration, Testing, Commissioning, Training
and Maintenance of IT Equipment for Senior High School (SHS) offering ICT
Track under FY 2018 DCP was held on November 20, 2018 at DepEd CO. On
January 16, 2019 a Pre-Bid Conference was also held for rebidding of some lots
under the same project.
23.17 This showed that the implementation of DCP FY 2018 is delayed by a year,
affecting, among others, the attainment of the project’s objective of providing
the required ICT packages and e-textbooks to recipient SHS learners nationwide.
23.18 Moreover, summarized hereunder are the deficiencies in the deliveries and
utilization of ICT packages in different ROs/DOs observed by respective Audit
Teams, namely:
a) Incomplete or absence of documents for the recognition in the books of accounts

and transfer of accountability of delivered ICT equipment in the recipient
DOs/Implementing Units (IUs)
DCP
Batches
NCR 35, 40, The consolidated balance of Information and Communications Technology
42 Equipment account is, therefore, understated by a total amount of ₱12,331,224.10.
Likewise, the Depreciation Expense account is understated by an undetermined
amount since the corresponding depreciation was not recognized.
The Property Custodian failed to present the Inspection and Acceptance Report and
the PTR.
40 In two ES inspected: Camarin D ES Unit II and Sto. Nino ES, the Property Custodians
were not able to present the DR to the Audit Team.
The PTR and IAR for computer packages received by Kalayaan ES and Bagumbong
ES – Annex were not presented by the Property Custodians during inspection.
In all of the ES inspected by the Audit Team, there was no PAR issued to the ICT
Coordinator.
III 42 Inspection conducted by the Audit Team on computer packages received by San Jose
ES under Batch 42 disclosed that there was no PAR issued to the ICT Coordinator.
289
DCP
Batches
Moreover, the IAR for the subject delivery was not also presented by the Property
Custodian to the Audit Team.
Some of the IT equipment delivered was not recorded in the books of accounts of the
schools or the SDOs because the recipient schools failed to inform the SDOs about the
deliveries and did not submit the necessary documents such as the Delivery Receipts,
Inspection and Acceptance and the Journal Entry Vouchers.
The DCP Equipment packages with a total amount of ₱46,536,623.84 were remained
not recorded in the respective books of accounts of the SDOs as of December 31, 2018.
The officials concerned claimed that the deliveries of DCP packages were not recorded
in the books of accounts of SDOs because they have no document to use as basis in
recording them. Consequently, the ICT Equipment and the related accounts were
understated by at least ₱46,536,623.84.
IV-A As of December 31, 2018, only Batch 25 of FY 2013 DCP totaling P5,404,464.00 was
recognized by the Accountant under JEV No. 01-2018-06006630 covering nine Non-
Implementing Units, each package costing P600,496.00. According to the SDO
Accountant, from the time DepEd CO purchased the DCP equipment, that was the
only time they were furnished JEV from CO instructing them to record DCP Batch 25
of FY 2013.
The School Property Custodians failed to furnish the Division Property Officer with
Property Form I (PF1), Delivery Receipts (DR) and Inspection and Acceptance
Reports (IAR), contrary to DepEd Order No. 45 series of 2006 wherein “The Property
Custodian submits to the Division Property Officer a report of the deliveries using
Property Form 1, together with the Division’s copy of the DRs and IARs”. Since these
properties were procured by the CO and delivered directly to the recipient schools, the
Property Officer of the SDO has no knowledge that such delivery occurred unless they
were furnished copies of PF1, DR and IAR.
The depreciation for the transferred ICT Equipment was not recorded by the SDO
which resulted in the overstatement of Accumulated Surplus and understatement of
Communications Technology Equipment Account and its related Accumulated
Depreciation-Information account.
b) Partial/Non-utilization of ICT packages due to unreadiness of recipient schools
DCP
Batches
NCR 40 In Bagumbong ES-Annex, the Computer Room is also being used as classroom due to
shortage in the number of classrooms since some of the buildings are under repair.
Also, the computers are not properly kept as it was only placed on the side of computer
rooms, hence, susceptible to damage.
In Bagong Silang ES, Grace Park ES, Kalayaan ES, and Bagumbong ES-Annex, the
delivered Interactive Projectors were not installed/mounted on ceilings as designed,
hence, their interactive features were not utilized.
XIII 17 schools in Tandag City and Surigao del Sur have failed to secure certification from
the Municipal/City Electrician on the sufficiency of electrical wirings.and.outlets;
Inadequate security measures were observed in some validated schools in Tandag City
and Surigao del Sur as computers were stored in rooms not fully secured with padlocks
and windows and doors were without grills. An indication that the recipient schools’
readiness was not properly undertaken prior to the receipt of the computer packages;
Of the 18 schools of SDO Surigao del Sur which remarked the availability of
multimedia classrooms, 11 schools were not able to provide the 50 pcs monoblock
chairs, eight schools were lacking with at least two fans/air conditioners and two
schools were without computer tables. Hence, indicating that the school recipients
were not assessed on the school’s readiness prior to the receipt of the computer
packages; and
290
DCP
Batches
Five schools of Surigao del Sur SDO responded the absence of security guard or
assistance from community, thus, school properties were not adequately safeguarded
especially at night.
c) Defective ICT packages and poor quality after sale assistance from supplier
CARAGA Computer packages delivered to three schools in Tandag City and Surigao
del Sur were defective and non-functional.
d) Other Observations
DCP
Batches
NCR 35 Inspection conducted in Caloocan HS, Benigno Aquino, JR. HS, and Maypajo HS
under Batch 35 disclosed that instead of seven PCs as indicated in the Distribution List,
three PCs only were delivered by the supplier.
36 The computer packages under DCP Batch 36 in M.B. Asistio Sr. HS Unit 1, Caloocan
City Science HS, Caloocan National Science and Technology HS and NHC HS were
not yet delivered as of February 28, 2019, while the computer package received by
Horacio Dela Costa HS could not be clearly identified if whether under Batch 35 or 36.
36 In the case of Caloocan City Science HS, the computer room was already prepared by
the Management and was ready for the installation of computer package as early as
April 2018. However, since there is no delivery yet, the computer room is temporarily
used as a storage room.
35 The following deficiencies were also observed during the inspection conducted at
Caloocan HS, to wit:
-Stickers for all equipment were Batch 35, except for Desktop Virtualization and Host
Servers with Batch 36 stickers.
-One Laptop was not presented upon inspection. The Property Custodian said that she
brought the laptop at home and was not able to return it to school.
-Another Laptop and one headset were in the possession of ICT Officer, however, there
was no Property Acknowledgment Receipt (PAR) issued to him.
-The computer room has no doorknobs for security purposes.
-42 headsets were not installed on computers and were kept only in a cartoon box.
III The items procured by DepEd Head Office were delivered directly by the contractor to
the beneficiary schools and recipient school did not inform the concerned SDOs on the
receipts of the items.
DCP/ICT packages with the same batches have different cost, each division had
different amount, it was also noted that even in the same division the cost differed,
making it hard to determine the actual cost of these batches.
Some computers were not installed in the E-classrooms or multi-media rooms as

required.
DCP batch 26 delivered in Ciriaco Mariano and Calawagan Elementary School in

Cabanatuan, Nueva Ecija were submerged in flood waters sometime in CY 2015. Some
ICT equipment were declared not functional/destroyed while others that were still
functional were just kept in unsafe room causing further deterioration.
IV-A The designated Property Custodian of Taysan National High School received 42 DCP
equipment which only two units of computers only were being used since the school’s
electric power load cannot meet the requirement needed for them to turn-on all the
291
DCP
Batches
computers. Local electric company requires the school to have a transformer that can
accommodate the electric capacity for all computers to be opened.
CARAGA The DCP monitoring reports of SDOs Bislig City, Tandag City, and Surigao del Sur as
of December 31, 2018 showed that DCP batches 34, 35, 36, 40 to 44 computer packages
were targeted to be delivered in August and October to November 2018, instead of
March to July 2018 as per mentioned memorandum, conveyed by the RO. However,
actual delivery of the computer packages commenced in the last quarter of CY 2018
only. DCP recipient schools received the equipment within the period of October 29
to December 12, 2018. The DCP monitoring report of SDO Butuan City disclosed that
as of December 31, 2018, only 95 or 77.78 percent of the 122 recipient schools were
installed with computer packages and had trained its personnel.
Some items received in Tandag City and Surigao del Sur were not used by the students
instead the School Head had the custody of the laptops and mostly used during
meetings/conferences.
23.19 We recommended that the Management in CO and SDOs undertake the

following actions to address the foregoing deficiencies cited:
a) review and enhance the Agency’s internal processes/procedures related

to the procurement and asset management in order to further improve
its service delivery including its compliance with timeline requirements
of the IRR of RA No. 9184;
b) ensure the maximum utilization of DCP computer packages by its

programmed beneficiaries to achieve the desired outcome of the
program;
c) adhere to the specific guidelines set forth under DepEd Order No. 45,
s. 2006 regarding the delivery, inspection, acceptance and recording of
all properties procured by DepEd CO. Close coordination with
concerned officials for the proper documentation, booking up and
complete accounting of the delivered DCP packages must be ensured;
d) instruct the Property Officer to gather all the DRs and IARs of various
recipient schools and submit the same to the Accountant for eventual
recording of the subject properties in the books of the SDO;
e) require the Accountants and Bookkeepers to record immediately in the

books of accounts the cost of delivered and accepted computer
packages; and
f) instruct the Property Custodians to prepare the Property

Acknowledgement Receipt which shall be acknowledged by the ICT
Coordinators upon issuance of computer package to them.
292
23.20 The Management of the respective Offices provided the following comments:
Office/
Region
CO Delays in the delivery of the DCP 2016/2017 were caused by the following reasons which were
found to be justifiable: a) lengthy local holidays; b) adverse weather conditions; c) difficult terrain
of recipient schools many of which have never received a DCP package; and d) Martial Law
declaration in Mindanao which made logistics more difficult due to added coordination with the
military and police. The DepEd strictly enforces the implementation of the 210 calendar days from
the receipt of Notice to Proceed (NTP) by the suppliers. Penalties and sanctions will be imposed on
the suppliers if the reason for the delay is deemed unjustifiable.
The DepEd is already arranging a training program that will begin this May 2019. The training
program will cover how to use Open Education Resources in ICT assisted teaching and how to use
Microsoft software in delivering the Digital Literacy component of the curriculum for Grades 4-6.
A subsequent training program for teaching Multimedia Skills is also being conceptualized for the
Junior and Senior High Schools. The training program intends to ensure that each school will have
one fully trained ICT teacher who will conduct Learning Action Cells in their respective stations to
cascade the training program to their peers.
All devices being deployed to the schools have a three-year warranty. DepEd has instituted a
monthly process where letters are sent to the suppliers requiring them to address the reported
problems being encountered in a per school basis. This process was instituted starting January 2019
to ensure that suppliers comply with the warranty requirements of the contract.
The large-scale deployment of Multimedia Classrooms started only under the DCP CYs 2016/2017
budget, in recognition of the need for a package that would address the requirements for ICT Assisted
Teaching. As such, DepEd is proposing a budget that would fully address the current norms of
providing one multimedia package for six classes by FY 2020.
The delay in the DCP CY 2018 procurement was caused by the decision of the Department to address
issues with regard to aligning the DCP packages to the requirements of the curriculum. During the
review, it was found out that previous packages were inadequate because they do not contain e-
learning resources, do not have the mobility needed for collaboration exercises and cannot run
multimedia software. As such, the packages were revised to provide tablet, PCs, laptops, and stand-
alone computers that would cater to these requirements. Additionally, more than 300 GB worth of
Open Education Resources is being preloaded into the new devices so teachers would have e-
learning resources that they can use in their respective classes. While the Department recognizes the
need to ensure that procurement timelines are met. It made a strategic decision to first align the DCP
packages to the curriculum so that these packages will have a significant impact on the achievement
levels of the learners.
The Department has recently procured the DepEd Enterprise Resource Planning System (DERPS)
that contains a module for Asset Management. This will allow the Department to track deliveries for
ICT and other equipment in real time and solve many of the implementation challenges affecting
DCP. Pilot testing of the said module will already commence in April for the Central Office.
The DERPS project also contains a module for Procurement that will automate several of the
processes and allow DepEd to diagnose steps which need to be re-engineered. Customization for the
said module is already ongoing in parallel with reforms in the manual processes of the procurement
cycle.
With that vision in the Department, Management assured that all the issues and concerns in the AOM
will be satisfactorily addressed soonest.
NCR The Management commented that based on DepEd ICTS Memorandum dated March 2, 2018, there
was no school under the SDO of Caloocan City included in the updated list of DCP recipients under
Lot III of DCP Batch 36. With regard to unrecorded and delivered DCP packages, the JEV
transmitted to the SDO shall be the basis of the Accountant in recording in the books of accounts
the amount of delivered computer packages. However, as of date, the SDO has only received one
JEV pertaining to DCP Batch 14. Nevertheless, the Management will abide with the
recommendations and will reiterate best practices on DCP usage.
293
Office/
Region
III Cabanatuan City - Management commented that the Accounting Unit cannot record the DCP
packages for lack of transfer JEV from CO. However, they have forwarded a copy of the AOM to
the CROC section of DepEd CO.
Gapan City - Management will request from the CO copy of transfer JEV so that the Accounting
Unit will be able to record the DCP packages.
SDO Munoz - Management will request CO for a listing of DCP packages with costing so as to
facilitate the booking up of IT equipment.
IV-A Management commented that Property and Supply Unit has made initial steps on October 28, 2018
informing the schools and Public Schools Districts Supervisors, Public Elementary and Secondary
School Heads and ICT coordinators, who received the DepEd Computerization Program thru a
Memorandum letter that required the schools to submit hard copies of DRs and PARs pertaining to
DCP. Further, the Property and Supply Unit is in the process of consolidating/sorting the submitted
reports and has also sought the assistance of the Division ICT Coordinator to direct the schools’ ICT
Coordinators to require the prompt submission of their reports.
XIII SDO Bislig City - The Management commented that the DCP delivery date was beyond their control
but they did closely monitor the updates on the actual deliveries of the computer packages. Summary
of DCP 2018 Delivery Reports follows:
Number of Schools
DCP Batch No. Remarks
Received
34 2 Usable
36 7 Usable
40 51 Usable
41 2 Usable
42 10 Usable
In.addition,.Management.commented.on.the.audit.recommendations:
a. For now, consolidation of DCP Documents per school such as PTR, IAR, Delivery Receipts and
other DCP delivery documents is ongoing. When completed, they will closely be coordinated with
the concerned DepEd CO Officials, Division Finance Section and Supply for proper documentation,
booking up and complete accounting of the delivered packages.
b. For maximum utilization of the computer packages so as to impact efficiently and effectively on
teaching learning process enhancement, there was sharing of the internet connectivity with the
following schools from the Division Internet Connection: Bislig Central ES, San Fernando ES,
TABON MNHS, Requina ES, Plaza Central Elem., Mangagoy Central ES, Mangagoy North ES and
ALS TECH4ED) via wide area network (Wireless connection).
SDO Tandag City - The failure to secure certification on the sufficiency of electrical wirings and
outlets, were due to inadequacy of budget allocated to the recipient schools. Further, they conveyed
that recipient schools were identified by the SDO after they assessed the school readiness and
forwarded it accordingly to DepEd CO. However, final list of recipient schools was selected by the
DepEd CO, hence, there were schools included in the list which were not yet fully ready to receive
the DCP packages.
SDO - Surigao del Sur - The late deliveries of DCP packages procured by the DepEd CO caused the
delayed implementation of the DCP for CY 2018. Deliveries were also delayed in the Division due
to various activities of Schools and SDO. Management assured that the Division ICT Office will
closely monitor the schools in complying with the school readiness requirements especially the
provision of sufficient electrical supply and wirings in computer rooms and adequate security to
safeguard the computer packages. Moreover, the Division ICT will also oversee the utilization of
the DCP by conducting actual monitoring and capacitate the school ICT coordinators through series
of trainings in using ICT in teaching and learning activities.”
SDO - Butuan City - The Division Information Technology Officer (DITO) commented that he
already submitted the updated and validated school readiness checklist to the Information,
Communication and Technology Service Office (ICTSO) in the Central Office for their appropriate
294
Office/
Region
action. Regarding the audit recommendation, during the implementation, they were conducting
monitoring from school to school and taken down notes regarding the program and problems
encountered were immediately communicated to the CO. Due to simultaneous delivery and
installation of DCP packages within CARAGA Region, the supplier cannot immediately resolve the
problems at hand due to lack of manpower. As of now, the supplier already replaced the items that
were defective.
Science and Mathematics Equipment (SME)
24. Implementation of the program aimed to support and improve the Basic
Education in Science and Mathematics through the provision of equipment for
subjects compliant with the K to 12 Curriculum revealed deficiencies that could
adversely affect its effective implementation, such as: a) undelivered 121 SME kits
in various schools depriving the students and teachers of the needed SME units to
support their learning and teaching capacity to improve/enhance Science and
Math curriculum; and b) some items delivered remained unutilized due to:
i) excessive quantities allocated and delivered to the school as compared to the
population of the Senior High School (SHS) students; ii) lack of knowledge and
proper training of the teachers to use the equipment; and iii) lack of
storage/laboratory room to safe keep the items.
24.1 To ensure the effectiveness of the teaching and learning of Science and
Mathematics in basic education, the DepEd, through the BLR, in coordination
with the BCD, and the BLD, shall distribute packages of basic SME for Grades
4–6 pupils in Public ES and Grades 11–12 students in Public SHS.
24.2 In CY 2017, the appropriated funds in the General Appropriations Act (GAA)
under DepEd Operations Major Final Output (MFO) 2 Basic Education Services
for FYs 2015 and 2016 will be utilized to procure the Science and Mathematics
Equipment. The procurement of SME packages and disbursement of funds were
centralized at the DepEd CO, hence, the allocations were not released to the
ROs/SDOs. The details are as follows:
Table 45: Allocations for SME CY 2017
Project Title Contract No. Supplier Total Allocations
2017-07-BLR2(001)-
BF Corporation
BV-CB016-C039
Girlteki, Inc. JV Luoyang
Mass Production 2017-07-BLR2(001)-
Light (Group) Office
and Supply and BV-CB016-C040
Furniture Co. Ltd.
Delivery of 8,029
2017-07-BLR2(001)-
Science and Nikka Trading
BV-CB016-C041
Mathematics 4,049,035,438.63
Red Dot Imaging
Equipment Packages
2017-07-BLR2(001)- Philippines, Inc. JV
to 2,935 Public
BV-CB016-C042 Shanghai East Educational
Senior High Schools
Equipment Co., Ltd.
for Grades 11 to 12
Andsons Educational
2017-07-BLR2(001)-
Resources, Inc. JV
BV-CB016-C043
Labotrix Group, Ltd.
295
Project Title Contract No. Supplier Total Allocations
Metro Mobilia Corporation
2017-07-BLR2(001)-
JV Linyi Poly International
BV-CB016-C044
Enterprises Co., Ltd.
2017-07-BLR2(001)- Nikka Trading, Inc. JV 83,831,807.31
BV-CB029-C076 Nikka Trading
Mass Production Andsons Educational
2017-07-BLR2(002)-
and Supply and Resources, Inc. JV
BV-CB017-C045
Delivery of 3,650 Labotrix Group, Ltd.
Science and
Mathematics 409,288,479.50
Equipment Packages 2017-07-BLR2(002)-
BF Corporation
to 1,887 Public BV-CB017-C046
Elementary Schools
for Grades 4 to 6
Total 4,542,155,725.44
24.3 From information gathered from the DepEd CO Audit Team, the SMEs for the
CY 2017 allocation were awarded to the winning bidders in December 2017 to
January 2018. As of December 31, 2018, the SME for Grades 4 to 6 were not
yet delivered, while deliveries for SMEs Packages for SHS of SDO Manila has
started in May 2018.
24.4 The packages of SME for SHS for CY 2017 that were procured by the DepEd
CO for delivery by various suppliers within the SDO Manila are composed of
the following:
Table 46: Summary of SME Packages for SHS CY 2017
Lot
Supplier Items per set
No.
2 BF Corporation STORAGE CABINETS
1) Biology Storage Cabinet
2) Chemistry Storage Cabinet
3) Physics Storage Cabinet
3 Girlteki, Inc. JV with CART-RAIL SYSTEM AND STAND SET-UP
Luoyang Light (Group) Office 1) Rail, 2lengths/set
Furniture Co., Ltd. 2) Leveling Pad Assembly, 1assy/set
3) Cart-spring loaded, 1unit/set
4) Cart with counterweight, 1unit/set
5) Stopper-Fork Assembly, 1assy/set
6) Driving Mass, 3gram, 5pcs/set
7) Cylindrical Mass, 50grams, 5pcs/set
8) Plastic Hammer, 1pc/set
9) NSTIC Storage Case 002, 1pc/set
4 Girlteki, Inc. JV with CART-RAIL SYSTEM AND STAND SET-UP
Luoyang Light (Group) Office 1) Stand Base, 3pcs/set
Furniture Co., Ltd. 2) Stand Support, 4pcs/set
3) 9.5mm x 250mm long Stand Rod, 2lengths/set
4) 9.5mm x 250mm long Stand Rod, 1length/set
5) Multiclamp Assembly, 1assy/set
6) Universal Bosshead Assembly, 2assy/set
7) Universal Clamp Assembly, 2assy/set
8) Ring with stem, 1pc/set
9) Wire Gauze, 1pc/set
10) Motorized Cart, 1unit/set
11) Dry Cell, 1.5V, size AA, 1pc/set
12) Plastic Modelling Clay, 1bar/set
13) String (thick), 1ball/set
296
Lot
No.
14) String (thin), 1ball/set
15) Hose Level, 3-meters, 1length/set
16) Plastic Storage Box, 1pc for 8sets
5 Girlteki, Inc. JV with SCIENCE EQUIPMENT
Luoyang Light (Group) Office 1) Tripod, Height: 6”, 8pcs/set
Furniture Co., Ltd. 2) Variable Power Supply, AC-DC, 3pcs/set
6 Girlteki, Inc. JV with SCIENCE EQUIPMENT
Luoyang Light (Group) Office 1) Set of Coils, 8sets/set
Furniture Co., Ltd.
7 Nikka Trading SCIENCE EQUIPMENT
1) Hand Lens, 10x magnification
2) Hand Lens, at least 5x magnification
3) Rock Samples Box, 24 compartments, w/ minerals of
3 rock types
4) Balance, Triple-Beam, 2610gram capacity
5) Cork Borers
6) Cork Stopper for 16mm test tube
7) Cork Stopper, with 1 hole for 250ml Erlenmeyer
Flask
8) Cork Stopper, with 2 holes for 250ml Erlenmeyer
Flask
9) Rubber Stopper for 16mm test tube
10) Rubber Stopper #6 with 1 hole, for 250ml
Erlenmeyer Flask
11) Rubber Stopper #6 with 2 holes, for 250ml
Erlenmeyer Flask
12) Filter Paper, ordinary, 24” x 24” (600mm x 600mm)
sheet
13) Litmus Paper Strips, blue, 100’s/vial
14) Litmus Paper Strips, red, 100’s/vial
15) Universal pH Paper, pH 0-14, 100 strips/pack
16) Hand Gloves, acid/solvent resistant, super nitrile
17) Safety Goggles, polycarbonate
18) Bunsen Burner, gas-type
19) LPG Tank with Gas, 11kg capacity, with accessories
20) Laser Pointer, dual function
21) Test Tube Brush
22) Set of Tools
23) Triangular File, fine 6” long, with plastic handle
9 Nikka Trading SCIENCE EQUIPMENT, MODELS, & STORAGE
CABINETS FOR CHEMICALS
1) Microscope, Compound
2) Dissecting Tool Set
3) Model, Human Torso
4) Model, Animal Mitosis
5) Model, Animal Meiosis
6) Benedict’s Solution, 100ml/bottle
7) Digital Microscope
8) Glass Slide, 72’s/box
9) Glass Cover Slips, 100’s/box
10) Molecular Geometry (VSEPR) Set
11) Centrifuge
12) Laboratory Hot Plate
13) Toploading Electronic Balance
14) Magnetic Stirrer
15) Storage Cabinet, stainless steel, for corrosive
materials
11 Nikka Trading GLASS WARES, PLASTIC WARES, & PORCELAIN
WARES
1) Test Tube, 16mm x 150mm long, borosilicate
297
Lot
No.
2) Evaporating Dish, 75ml capacity
3) Glass Funnel
4) Petri Dish
5) Beaker, 250ml, borosilicate
6) Alcohol Thermometer, -20C to 110C
7) Graduated Cylinder, 100ml capacity
8) Erlenmeyer Flask, 250ml, borosilicate
9) Stirring Rod, 6mm x 250mm long
10) Alcohol Burner, glass, 150ml capacity
11) Graduated Cylinder, 10ml capacity
12) Watch Glass, 90mm
13) Mortar and Pestle, 150ml capacity
14) Wash Bottle, plastic, 250ml
15) Beral Pipette Dropper, 1ml capacity
16) Syringe, plastic, without needle, 20ml
17) Distilling Flask, 250ml
18) Volumetric Flask, 250ml
22) Reagent Bottle, narrow-mouth, amber glass (250ml
capacity)
23) Reagent Bottle, wide-mouth, transparent glass
(250ml capacity)
24) Burette, 25ml capacity (acid)
25) Burette, 25ml capacity (base)
26) Glass Tubing, 6mm x 4mm x 1220mm long
27) Vial, screw-neck, 25ml (with screw type plastic cap)
28) Vial, screw-neck, 50ml (with screw type plastic cap)
29) Condenser, Liebigtype (with accessories)
30) Graduated Pipette, 10ml, with rubber pipettor
31) Spatula, porcelain and glazed
32) Calorimeter
33) Hydrometer for light liquids
34) Hydrometer for heavy liquids
35) Open U-tube Manometer, glass, with accessories
36) Open U-tube Manometer with Water Pressure
Apparatus
37) Beaker, 500ml, plastic
38) Florence Flask, glass, 250ml., round bottom
14 RedDot Imaging Philippines, SCIENCE EQUIPMENT
Inc. JV with Shanghai East 1) Vacuum Tube and Manual Vacuum Pump
Educational Equipment Co., 2) Strobe Light
Ltd. 3) Diffraction slits & Diffraction Grafting Set
18 Metro Mobilia Corporation SCIENCE EQUIPMENT & RIPPLE TANK SET
JV with Linyi Poly 1) Ripple Tank Set
International Enterprise Co., 2) Halogen Tube
Ltd. 3) Laser Light, line laser type
23 Andsons Educational MATHEMATICS EQUIPMENT

Resources, Inc. JV with 1) Scientific Calculator
Labotrix Group, Ltd. 2) Graphing Calculator, non-projectable
24 Andsons Educational MATHEMATICS EQUIPMENT
Resources, Inc. JV with 1) pH Meter, range 0 to 14 Ph
Labotrix Group, Ltd. 2) Inorganic/Organic Molecular Model Set
3) Electrolysis Apparatus, Student type
4) Osmosis Apparatus
5) Model, Human Skeleton
6) Mirror Set, Acrylic
298
Lot
No.
Nikka Trading, Inc. JV with ASTRONOMY MULTIMEDIA SET
Nikka Trading DVD Set with the following concepts:
a) Universe concepts/models: Aristotle, Ptolemy,
standard model
b) Solar system
i) Composition should include sun, planets,
moons, asteroids
ii) Concepts/models should include Copernicus,
Brahe, Kepler, Galileo
c) EARTH concepts should
i) Diurnal motion
ii) Annual motion
iii) Precession of the equinoxes
iv) Celestial sphere
d) Sun-Earth-Moon System
24.5 In line with this, the Audit Team conducted inspection in March 2019 to six
recipients of SHS to validate the delivery of packages of SME. During the
validation, the following observations/deficiencies were noted:
a. Undelivered items in various schools

24.6 Inspection conducted disclosed that there were several undelivered packages of
SMEs and/or lacking delivered items. Details are shown below:
Table 47: Summary of Undelivered SME Packages

Undelivered Lot No./
School Per allocation
Lacking Items
• Lot Nos. 2, 3, 4, 5, 6, and 18
Manuel L. Quezon High 2, 3, 4, 5, 6, 7, 9, 11, 14,
School (MLQHS) 18, & 23 • 16 pairs of Safety Goggles,
polycarbonate
• Lot Nos. 2, 3, 4, 5, 6, and 18
• 3 sets of Astronomy Multimedia
Jose Abad Santos High 2, 3, 4, 5, 6, 7, 9, 11, 14,
Package
School (JASHS) 18, & 23
• 48 pairs of Safety Goggles,
polycarbonate
Raja Soliman Science and • Lot Nos. 2, 3, 4, 5, 6, and 18
2, 3, 4, 5, 6, 7, 9, 11, 14,
Technology High School
18, 23, & 24 • 1 set of Astronomy Multimedia
(RSSTHS) Package (STEM SME)
• Lot Nos. 3, 4, 5, 6, 18, and 24
Manuel A. Roxas High 2, 3, 4, 5, 6, 7, 9, 11, 14, • 3 sets of Storage Cabinets (Lot No. 2)
School (MARHS) 18, 23, & 24 • 64 pairs of Safety Goggles,
polycarbonate
• Lot Nos. 2, 3, 4, 5, 6, and 18
Carlos P. Garcia High School 2, 3, 4, 5, 6, 7, 9, 11, 14,
(CPGHS) 18, & 23 • 16 pairs of Safety Goggles,
polycarbonate
• Lot Nos. 2, 3, 4, 5, 6, and 18
• 1 set of Astronomy Multimedia
E. Quirino Senior High 2, 3, 4, 5, 6, 7, 9, 11, 14,
Package
School (EQSHS) 18, & 23
• 16 pairs of Safety Goggles,
polycarbonate
24.7 Furthermore, the SDO Manila was provided with allocations of SMEs for Grade
4 to 6 pupils in 52 Public Elementary Schools with total cost of ₱13,568,193.43,
299
however, all items remained undelivered as of December 31, 2018. Details are
as follows:
Table 48: Summary of Undelivered SME to SDO Manila
Grade School No. of SME Kits Total Cost of SME
4 to 6 1. A. Mabini Elem. School 3 336,401.49
2. A. V. Hernandez Elem. School 3 336,401.49
3. A. Bonifacio Elem. School 3 336,401.49
4. A. Regidor Elem. School 2 224,267.66
5. A. H. Lacson Elem. School 2 224,267.66
6. A. A. Quezon Elem. School 3 336,401.49
7. Bacood Elem. School 2 224,267.66
8. Bagong Barangay Elem. School 2 224,267.66
9. Barrio Obrero Elementary School 2 224,267.66
10. Beata Elem. School 1 112,133.83
11. Dr. A. Albert Elem. School 2 224,267.66
12. Dr. C. Salvador Elementary School 2 224,267.66
13. E. Delos Santos Elem. School 3 336,401.49
14. E. Jacinto Elem. School 3 336,401.49
15. F. G. Calderon Elementary School 2 224,267.66
16. F. Ma. Guerrero Elem. School 3 336,401.49
17. F. Balagtas Elem. School 2 224,267.66
18. F. Benitez Elem. School 3 336,401.49
19. G. Lopez Jaena Elementary School 1 112,133.83
20. G. E. Aguinaldo Int. Sch. 2 224,267.66
21. G. Gregorio del Pilar Elem. School 1 112,133.83
22. G. M. Hizon Elem. School 2 224,267.66
23. G. V. Lim Elem. School 3 336,401.49
24. G. Santiago Elem. School 2 224,267.66
25. G. De Jesus Elem. School 2 224,267.66
26. H. J. Atienza Elem. School 4 448,535.32
27. I. De Los Reyes Elementary School 4 448,535.32
28. J. C. de Jesus Elem. School 1 112,133.83
29. J. P. Rizal Elem. School 3 336,401.49
30. J. Zamora Elem. School 2 224,267.66
31. J. Luna Elem. School 2 224,267.66
32. J. Sumulong Elem. School 1 112,133.83
33. J. Lukban Elem. School 2 224,267.66
34. Lakan Dula Elem. School 2 224,267.66
35. Legarda Elem. School 4 448,535.32
36. L. Avelino Elem. School 1 112,133.83
37. M. Agoncillo Elem. School 1 112,133.83
38. M. Roxas de Ayala Elem. School 2 224,267.66
39. M. Salamat Elem. School 3 336,401.49
40. M. L. Quezon Elem School 3 336,401.49
41. M. Ponce Elem. School 1 112,133.83
42. P. Burgos Elem. School 3 336,401.49
43. P. Gomez Elem. School 3 336,401.49
44. P. Guevarra Elem. School 4 448,535.32
45. Pio del Pilar Elem. School 2 224,267.66
46. Plaridel Elem. School 2 224,267.66
47. R. Almario Elem. School 4 448,535.32
48. R. Palma Elem. School 2 224,267.66
49. Sta. Ana Elem. School 2 224,267.66
50. T. Paez Elem. School 3 336,401.49
51. T. Yangco Elem. School 2 224,267.66
52. T. Earnshaw Elem. School 2 224,267.66
Total 121 13,568,193.43
300
b. Items delivered remained unutilized in five Public High Schools in DepEd
NCR
24.8 Random inspection with the SHS recipients revealed that some delivered items
remained intact in the box and unutilized due to: a) excessive quantities allocated
and delivered to the school as compared to the population of the SHS students;
b) lack of knowledge and proper training of the teachers to use the equipment;
and c) lack of storage/laboratory room to safe keep the items.
Name of School Audit Observations

There were unutilized items due to excessive quantities allocated and
delivered to the school as compared to the population of the SHS
students. According to the teachers in-charge of safekeeping the
Jose Abad Santos HS
equipment delivered to them, only two sets of items were being utilized
since there was only two Science Teacher that would use the item as tools
in teaching.
Raja Soliman Science and Unutilized items, still in the box, located at the Office of the Property
Technology HS Custodian of the school.
Unutilized items due to (a) lack of storage/laboratory room to safe keep
the items, the shelves in the laboratory/storage room for the items were
Manuel A. Roxas HS
available only in February 2019 and (b) lack of knowledge and proper
training of the teachers to develop their skills to use the items.
Carlos P. Garcia HS Unutilized items, still in the box, located at Science Laboratory.
SHS Building were still under construction resulting in unutilized items,
E. Quirino SHS still in the box, some items were located at the Principal’s Office, and at
the Science Rooms.
24.9 We also noted laxity of the five schools inspected in keeping the delivery
documents or indicating in the Delivery Receipt (DR) the date of
deliveries/acceptance resulting in inability/difficulty to determine the number of
days of delays of the suppliers for the imposition of liquidated damages.
a) require the Property Custodians of the recipient schools to coordinate

with SDO and submit appropriate report informing the DepEd CO of
the following:
i. undelivered items in various schools and the delay in the delivery of
SME items for imposition of corresponding liquidated damages as
stipulated in the contract;
ii. items delivered which remain unutilized due to: (a) excessive
quantities allocated and delivered to the school as compared to the
population of the SHS students; (b) lack of knowledge and proper
training of the teachers to use the equipment; and (c) lack of
storage/laboratory room to safe keep the items; and
b) submit to the Audit Team an updated status of delivery and utilization

of SME packages as reference for further evaluation of the program
implementation.
301
24.11 The Management agreed on the recommendations and requested if other schools
can transfer excess unutilized SME to other schools that are in need of the items.
They also pointed out that there were unutilized items due to the ongoing
construction of SHS buildings where the items are to be safely kept.
Technical-Vocational-Livelihood (TVL) Program
25. The late release of Sub-AROs by the Central Office in FY 2018 resulted in the
delay in the execution of procurement activities, non-delivery of the TVL learning
tools and equipment amounting to ₱17,936,439.39, for the development of
technical-vocational skills among the learners, thus disbursements fell short and
the teachers/learners were not provided with the necessary TVL
specializations/program tools for a more effective teaching and learning process.
Moreover, delivered items for the implementation of Redesigned Technical-
Vocational High School Program (RTVHS) in various regions for SY 2016-2017
remained unutilized or underutilized due to the following: a) ongoing construction
of building and lack of room or space to be used as technical-vocational
laboratories and to serve as stockroom for items delivered; b) deferred course
offerings for TVL tracks and non-implementation of activity that involves
utilization of TVL equipment; c) limited SHS enrollees; d) non-provision of
supplies necessary for the delivered TVL equipment to function properly and to
be utilized by the intended users such as Operating System, blade, and gas tank;
e) defective and poor quality of delivered items; f) recording and procedural
deficiencies; and g) other issues and concerns encountered in its implementation,
deprived the students of productive, relevant, and quality vocational education.
25.1 The RTVHS Program was initially implemented in the secondary technical-
vocational schools for SY 2005-2006. The program was implemented to support
the thrust of the DepEd for productive, relevant, and quality vocational
education.
25.2 For SY 2007-2008, the DepEd launched the Strengthened Technical-Vocational

Education Program (STVEP) to achieve its goal of equipping HS students with
relevant skills in order to prepare them for higher education, world of work and
for entrepreneurship. The objectives of the program, as enumerated in Annex A
of the DepEd Order No. 48, series of 2007 entitled, “Specific Guidelines for the
Implementation of the Strengthened Technical-Vocational Education Programs
(STVEP),” are as follows:
a. to provide HS graduates with opportunities to acquire certifiable vocational

and technical skills that would allow broader options in pursuing their post-
secondary career either for college education, short-term technical courses,
entrepreneurship or apprenticeship leading to eventual formal employment;
b. to provide HS graduates with employable and entrepreneurial skills that will

provide them with means and resources to support their post-secondary career
302
as well as enabling them to support formal schooling opportunities for the
younger siblings of the family; and
c. to provide technical skills training to out-of-school youths who receive

education through the Alternative Learning System (ALS) and the Madrasah
Education Program. Several intervention strategies were applied for the
successful implementation of the program, among which, are the provision
for tools, facilities and equipment, and infrastructure support that includes
repair, rehabilitation and construction of workshop buildings.
25.3 The emergence of the K to 12 program, which covers 13 years of basic

education, not only re-established the technical-vocational education but also
strengthened it by integrating TVL tracks in the last key stage of the program,
the SHS, implementation of which started in the SY 2016-2017. One of the
requirements of an effective implementation of the SHS particularly in the TVL
tracks is the provision of facilities, tools, materials and equipment.
Non-implementation of TVL program activities and unutilized funds due to delayed

release of Sub-AROs in FY 2018
25.4 DepEd Order No. 051, series of 2018 dated November 29, 2018 provides
guidelines on the FY 2018 release and utilization of SME and TVL funds to
DepEd ROs which includes information on the downloading of funds and goods
to be procured including the technical specifications, the protocols on quality
control inspection, the storage, and the monitoring and evaluation on utilization
and condition of the tools and equipment. It also discusses the roles of CO and
the RO, SDOs, and the recipient schools.
25.5 The FY 2018 list of recipients of TVL Senior High School (Downloading of
Funds to ROs) as per Annex A of the abovementioned DepEd Order, are as
follows:
Table 49: Recipients of Funds for TVL Senior High School

Office/Region No. of Packages Amount
ARMM 54 4,825,577.82
CAR 100 15,890,315.91
NCR 187 29,364,466.76
I 457 82,570,885.79
II 189 38,108,675.47
III 1,050 191,574,721.40
IV-A 1,023 215,146,602.82
IV-B 430 78,347,258.77
V 321 67,546,870.68
VI 524 100,086,239.49
VII 1,012 178,137,857.42
VIII 388 71,380,989.84
IX 655 142,835,021.14
X 473 96,340,815.56
XI 364 66,362,309.76
XII 68 11,358,974.58
XIII (CARAGA) 273 53,817,365.80
303
Office/Region No. of Packages Amount
ARMM 54 4,825,577.82
Total 7,568 1,443,694,949.01
25.6 Evaluation of the implementation of the program appeared that the procurement
activities were not initiated earlier due to the late release of Sub-AROs by the
CO which resulted in delay in the execution of procurement activities, non-
delivery of learning tools and equipment amounting to ₱17,936,439.39 and
funds not utilized as at year-end. In addition, the guidelines for the release and
utilization of TVL fund through DepEd Order No. 51, s. 2018 signed by the
DepEd Secretary was only publicized on November 29, 2018. Hence,
disbursements fell short and the objective to provide the necessary tools for the
TVL specializations/programs for effective teaching and learning process was
not fully attained. Details of observations in three ROs are as follows:
Table 50: Summary of Deficiencies in TVL Funds Utilization

CAR 2,068,255.00 On November 6, 2018, SDO Ifugao received Sub-ARO No. CO-CAR-18-15353 dated
October 8, 2018 amounting to ₱2,068,255.00 for the Provision of Tools and Equipment for
Technical Vocational Livelihood Programs of TVL-SHS. The identified recipient schools
are as follows:
School Specialization Amount

Hapid NHS - Bread and Pastry Production NCII 164,322.00
Bimpal
Cookery NCII 302,239.00
Annex
Food and Beverage Services NCII 148,943.00
Namillangan Bread and Pastry Production NCII 164,322.00
NHS
Cookery NCII 302,239.00
Sta. Maria Agricultural Crops Production NCII 199,446.00
NHS
Organic Agriculture NCII 324,536.00
SHS within Bread and Pastry Production NCII 164,322.00
Namulditan
ES
Total 2,068,255.00
Verification showed that the Purchase Order covering the procurement of the tools and
equipment was prepared only on December 21, 2018. As such, there was no delivery and
distribution of the items as of yearend.
VI 5,037,814.58 Review of Purchase Orders for purchase of TVL items and interview with
Accountants/Bookkeepers of 11 National High Schools revealed that supplies and tools
were not yet delivered as of December 31, 2018. The accounts payable was based only on
the approved Purchase Orders, but still pending delivery of items and acceptance of the
school officials. Details are shown below:
Purchase
No. Name of School Date Amount
Order No.
1 Concepcion L. 2018-27 & 28 11/20/18 256,825.00
Cazeñas Memorial
School
304
2 Libertad National 2018-12-001 12/28/18 437,630.00
Vocational School &2
3 Pis-anan National 2018-12-023 11/27/18; 320,658.58
High School to 026 12/17/18
4 Tario-Lim National 2018-11-002 12/10/18 478,220.00
Memorial High to 004
School
5 Sta. Justa National Unnumbered 12/5/18 67,588.00
High School
6 Antique Vocational Unnumbered 2/21/19 383,331.00
School
7 Gamad-Sto. Tomas Unnumbered Undated 69,750.00
National High
School
8 Gov. Julio V. 2018-11-013 11/19/18 202,105.00
Macuja Memorial & 014 11/27/18
Comprehensive
High School
9 Gen. Leandro Various 11/13/18 272,925.00
Fullon National 11/14/18
School
10 Northern Antique Various 12/7/18 965,374.00
Vocational School
11 Antique National Various 11/13/18 1,583,408.00
School 12/14/18
Total 5,037,814.58
The Purchase Orders of Antique Vocational School were dated February 21, 2019 although
the funds referred to CY 2018 and likewise recorded as Accounts Payable. This is an
indication that Purchase Orders were unreliable as approved contracts.
It should be emphasized that only payables which are due and demandable shall be
recorded as Accounts Payable at year end supported with delivery receipts, duly signed
Inspection and Acceptance Report and other documents as evidences that deliveries were
made.
XIII 10,830,369.81 Audit of the Agencies’ implementation of TVL program under CY 2018 appropriation
showed that Bislig City Division and its two Implementing Units (Tabon M. Estrella NHS
and Lawigan NHS), Surigao del Sur Division and Buenavista NHS had an allocated amount
of ₱2,434,725.00, ₱8,252,013.00 and ₱1,231,000.00, respectively. However, only an
amount of ₱1,087,368.19 items was delivered to Bislig City Division’s intended schools
and ₱1,346,736.75 of TVL tools and equipment remained undelivered at year-end while
no delivery of TVL items were completed as of December 31, 2018 to SDOs Tandag City
and Surigao del Sur.
Total 17,936,439.39
25.7 Furthermore, maximum utilization of TVL tools, equipment and materials and
full benefits from the RTVHS were not availed of by the targeted beneficiaries
due to: (a) the non-release of allotment on the 1st quarter of the year; (b) limiting
the specifications of the tools, equipment and materials on the list rather than the
schools having the option to make their own specifications based on the items
available in the local market; and (c) procurement activities not done earlier so
that the tools and equipment can be available for use by the students before the
school year starts.
305
Redesigned Technical-Vocational High School (RTVHS) Program SY 2016-
2017
25.8 DepEd Order No. 8, series of 2016 dated February 15, 2016 provides, among
others, the following guidelines for the procurement of TVL specialization tools,
equipment and materials for SY 2016-2017:
a. The regions shall consult with their SHS Coordinators and the
Divisions concerned regarding the specific requirements of schools
per specialization, including details such as quantity per item and
points of delivery;
b. Technical specifications of goods for procurement shall be guided by
the standards set by the Office of the Undersecretary for Curriculum
and Instruction as contained in the SHS Tools and Equipment
Database file provided during the Regional Orientation-Workshop
held on February 1-3, 2016. In general, the items to be procured must
meet specified standards, xxx, must be safe for use by high school
students, xxx.
25.9 Likewise, the Senior High School Manual of Operations, Volume I, was issued
per DepEd Memorandum No. 76, series of 2016 which aims to help School
Heads of SHSs in carrying out all the necessary preparations before the opening
of the classes for the SY 2016-2017. The said Manual serves as a guide to
School Heads to ensure that requirements and provisions in schools are ready
and complete when SHS Program is implemented in the said SY.
25.10 Based on the GAA for the FY 2016, the DepEd has allocated a total of
₱4,600,612,000.00 to implement the RTVHS Program in SY 2016-2017, as
summarized below:
Table 51: Summary of DepEd Allocation of RTVHS program in SY 2016-2017
Office/Region Amount
CO 128,459,000.00
NCR 145,075,000.00
CAR 107,799,000.00
I 348,584,000.00
II 186,382,000.00
III 420,114,000.00
IV-A 399,965,000.00
IV-B 178,322,000.00
V 434,219,000.00
VI 364,704,000.00
VII 536,981,000.00
VIII 233,733,000.00
IX 125,934,000.00
X 221,643,000.00
XI 236,755,000.00
XII 242,800,000.00
XIII 289,143,000.00
Total 4,600,612,000.00
306
25.11 The Audit Team conducted a validation on the status of implementation of the
prior years’ audit recommendations regarding the implementation of the
RTVHSP in SY 2016-2017. During inspection, the Audit Team observed that
some of the items delivered were still unutilized or underutilized because of the
following reasons similarly observed in the previous year:
a) On-going construction of building and lack of room/space to accommodate

the items delivered
25.12 Construction of school building is ongoing in various schools and lack of room
or space to accommodate the items delivered for the tracks offered, thus
delivered items were housed in different classrooms, buildings, clinic or in a
stock room. Details are as follows:
Table 52: Schedule of Status of Unutilized Items for RTVHS in CY 2018
Region SDO Schools Unutilized Items Reason/s
NCR Caloocan Horacio Dela 4 Upright Freezer; 4 Working Lack of room to
Costa HS Table; 4 Refrigerator; 4 Gas accommodate the items.
Range; 5 Mechanical Dough
Roller; 4 Planetary Mixer for Construction of
dough; 5 Commercial Mixer building is ongoing.
with attachments; 4 Bread
Slicer Machine; 2 Decker
Oven; 1 Reach-in Freezer
Caloocan Cielito Zamora 1 Upright Freezer; 1 Lack of room to
HS Refrigerator; 2 Gas Range; 4 accommodate the items.
Mechanical Dough roller;
Planetary Mixer for dough; 5 Newly constructed
Commercial Mixer with building not yet turned
attachments; 4 Bread Slicer over
Machine; 3 Decker Oven
Caloocan MB Asistio Sr. 2 Upright Freezer;1 Working Lack of room to
HS Unit 1 Table; 2 Refrigerator; 5 accommodate the items.
Mechanical Dough roller; 5
Commercial Mixer with Construction of
attachments; 5 Bread Slicer building is ongoing; to
Machine; 3 Decker Oven transfer by end of
March 2019
Caloocan Caloocan City 3 Upright Freezer; 4 Decker Lack of room to
Business HS Ovens accommodate the items.
Construction of
building is ongoing.
Valenzuela Dalandanan 1 Mechanical Dough roller; 1 No Food and Beverage
NHS Commercial Mixer with Services Lab, thus the
attachments; 2 Bread Slicer Cookery Lab can
Machine; 1 Decker Oven sometimes be
transformed to FBS.
Construction of
building is ongoing.
Marikina Malanday NHS 2 Commercial Mixer with Lack of room to
attachments; 5 Bread Slicer accommodate the items
Machine
Marikina Marikina HS 3 Upright Freezer; 2 Gas
Range; Mechanical Dough
Roller; 3 Planetary Mixer for
307
Dough; 4 Bread Slicer
Machine
Marikina Sta Elena HS 3 Bread Slicer Machine; 3 Not all were used either
Decker Oven; Commercial due to inadequate space;
mixer with attachments; 2 and no storage area,
Mechanical dough rollers; 2 hence, the delivered
Planetary mixer for dough equipment was outside
the classroom/in the
hallway.
Malabon Malabon NHS Commercial Mixer with Lack of room to
– Concepcion attachments; 2 Bread Slicer; accommodate the items
Tech-Voc Various big items for Shielded and no storage area,
Annex Metal Arc Welding hence, some of the
delivered equipment
were outside the
classroom/in the
hallway.
Navotas San Rafael 4 Upright Freezer; 4 TVL equipment were
Technological Refrigerator; 4 Gas Range; 5 also provided by LGU,
HS Mechanical Dough Roller; 3 Aboitiz Foundation and
Planetary Mixer for Dough; 5 Megawide Corporation;
Bread Slicer Machine; 4 Newly constructed
Commercial Mixer with building not yet turned
attachments; 2 Decker Oven over
Navotas San Roque 3 Upright Freezer;2 Gas Lack of room to
NHS Range; 2 Mechanical Dough accommodate the items;
Roller; 4 Bread Slicer laboratory sometimes
Machine; 2 Commercial Mixer converted to classroom;
with attachments; 1Decker SHS building on-going
Oven construction
Navotas Tangos HS 1 Pastry Blender; 5 Lack of room to
Mechanical Dough Roller; 5 accommodate the items;
Bread Slicer Machine; 1 No storage area, hence,
Commercial Mixer with some of the delivered
attachments; 3Decker Oven equipment were outside
the classroom/in the
hallway; SHS building
on-going construction
Muntinlupa Muntinlupa Upright Freezer; Refrigerator; A technical-vocational
NHS 5 Mechanical Dough Roller; 3 laboratory has been
Commercial Mixer with completed however, the
attachments; 3 Round Table same was not yet
good for 8 persons; 1 Square utilized by the SHS
Table students due to a
problem on the contract
relative to the
construction thereof as
per SHS coordinator;
No available room to
accommodate the items,
hence, some of the
delivered equipment
were in the stockroom.
Muntinlupa Muntinlupa 4 Bread Slicer Machine; 2 Lack of room to
NHS – Tunasan Decker Oven accommodate the items
Annex
Pasay Pasay City East 5 Mechanical Dough Roller; 5
HS Bread Slicer Machine
III Not stated Angeles City Lot A.1: Carpentry (NCII) There were no sufficient
NTS , Calulut Equipment technical-vocational
IS and laboratories to
308
Madapdap accommodate the TVL
Resettlement tools, materials and
HS equipment.
Angeles City Lot A.2: Carpentry (NCII)
NTS, Tools
Madapdap
Resettlement
HS and Calulut
IS
IM Roxas MHS Lot A.4: Plumbing Tools (NC
I)
Panipuan HS Lot B.1: Shield Metal & Arc
Welding (NC I) Equipment
AFG Lot B.2: Shielded Metal & Arc
Bernardino Welding (NCI) Tools
MTS, San
Rafael NTS,
Balagtas
NAHS, Sta
Lucia NHS,
Guiguinto
NVHS,
Panipuan HS
and IM Roxas
MHS
Angeles City Lot B.3. Shield Metal & Arc
NTS and Sta Welding (NCII) Equipment
Lucia IS
AGD Lot B.4 Shield Metal & Arc
Bernardino Welding (NCII) Tools
MTS, San
Rafael NTS,
Balagtas
NAHS, Sta
Lucia NHS,
Guiguinto
NVHS, Sta
Lucia IS and
IM Roxas MHS
Dolores SHS Lot C.1: Tour Guiding
Services (NC II) Equipment
Dolores SHS Lot C.2: Tour Guiding
Services (NC II) Tools
Frances HS, Lot C.4: Technical Drafting
Norzagaray (NCII) Tools
NHS,
Guiguinto
NVHS and
Taliptip NHS
Dolores SHS Lot C.5: Animation (NC II)
Equipment
Dona CM Lot C.6: Animation (NC II)
Duque HS, SF Tools
Xavier HS,
Frances HS,
Tiaong NHS, JJ
Mariano MHS
and Dolores
SHS
309
Angeles City Lot D.1 Bread & Pastry
NTS, Production (NCII) Equipment
D.Macapagal
MHS, Angels
City NHS,
Meysulo HS,
Sapang Batto
HS, RS Trillana
HS, Alexis
Santos NHS,
San Rafael
NTS, Angel del
Rosario HS,
San Roque
NHS, Bajet
Castillo HS, Sta
Lucia NHS,
Bunsuran NHS,
Sta Monica
NHS, Calumpit
NHS, Tiaong
NHS, Cambaog
NHS, Camp
Tinio NHS,
Dampol 2nd
NHS, M Del
Rosario MHS,
FF Halili NAS,
Mayapyap
NHS, Iba NHS,
Panipuan HS,
Lydia
Villangca TS,
Munoz NHS,
Masagan HS,
Madapdap
Resettlement
HS, Obando
School of
Fisheries, San
Jose City NHS,
Parada NHS,
Meycauayan
NHS and
Prenza NHS
Angeles City Lot D.2 Bread & Pastry
NTS, Panipuan Production (NCII) Tools
HS, Angeles
City NHS,
Munoz NHS,
Sapang Bato
HS, San Jose
City NHS,
Rafael L.
Lazatin
Memorial HS
and
Meycauayan
NHS
Angeles City Lot D.3: Food & Beverage
NTS, Lydia Services (NC II) Tools
310
Villangca TS,
Angeles City
NHS, Parada
NHS, Sapang
Bato HS,
Meysulo HS,
Rafael Lazatin
MHS, RS
Trillana HS,
SHS in Brgy.
Pandan, San
Rafael NTS,
Alexis Santo
NHS, San
Roque NHS,
AFG
Bernardino
MTS, Sta Lucia
NHS, Angel del
Rosario HS, Sta
Monica NHS,
Cambaog NHS,
Tiaong NHS,
Carlos
Gonzales HS,
Panipuan HS,
F.F. Halili
NAS,
Madapdap
Resettlement
HS, Dampol
2nd NHS,
Meycauayan
NHS and
Guiguinto
NVHS
b) Deferred course offerings for TVL tracks and non-implementation of activity

resulting in non-utilization of TVL equipment
25.13 Four schools in NCR were delivered with TVL equipment related to TVL tracks
not currently offered or no longer offered by them such as Bread and Pastry
Production (BPP) course activity which involves the use of bread slicer was not
incorporated in the course syllabus, thus delivered TVL equipment were
unutilized. Details are shown below:
Table 53: Summary of Unutilized TVL Equipment
No. SDO Schools Unutilized Items Reason/s
1 Marikina Malanday 5 Bread Slicer The BPS students do not bake loaf
NHS Machine bread for them to utilize the bread
slicer machines.
311
2 Caloocan Cielito Zamora All items under The school does not offer
HS Housekeeping NC Housekeeping NC II course since
II. SY 2016-2017.
Marikina Concepcion All items under To be transferred to Tañong NHS,
3 Integrated Bread and Pastry the school can no longer offer the
School Production NC II said course since nearby school
and Food and offered the same course; Some of
Beverage Services the equipment has been used by
NC II. JHS classes for the Cookery Class.
4 Valenzuela Valenzuela 25 Ergonomic The school does not offer Medical
NHS Computer Table; Transcription NC II instead, the
25 Ergonomic items were used in Computer
Computer Chair. Laboratory.
c) Limited SHS enrollees
25.14 Two schools in NCR, namely, MB Asistio SHS Unit 1 and Horacio Dela Costa
HS have limited number of SHS enrolees, hence, some of the delivered TVL
items in the said schools remained unutilized.
Table 54: Schedule of TVL Limited SHS Enrollees
1 Caloocan MB Asistio 2 Upright Freezer; 1 Working Table; 2 Limited
SHS Unit 1 Refrigerator; 5 Mechanical Dough roller; enrollees
5 Commercial Mixer with attachments; 5
Bread Slicer Machine; 3 Decker Oven
2 Caloocan Horacio Dela 4 Upright Freezer; 4 Working Table; 4 Limited
Costa HS Refrigerator; 4 Gas Range; 5 Mechanical enrollees
Dough roller; 4 Planetary Mixer for
dough; 5 Commercial Mixer with
attachments; 4 Bread Slicer Machine; 2
Decker Oven
25.15 In addition, during the conduct of physical inspection in Region III, it was also
noted that the TVL tools, materials and equipment delivered are not cost-
efficient to use considering the number of students currently enrolled.
d) Non-provision of supplies necessary for the delivered TVL equipment to

function properly and to be utilized by the intended users such as Operating
System, blade, and gas tank, was noted in various schools in NCR as shown
below:
Table 55: Schedule of TVL Equipment Without Supplies

NCR Caloocan M.B. Asistio Sr. 13 Desktop Computer; No Operating System; used the DCP
HS Unit I 13 Laptop Computer instead
Caloocan Caloocan City 6 Desktop Computer; 6 No Operating System
Business HS Laptop Computer
Navotas San Rafael 13 Portable Jig Saw Delivered items did not include blade
Technological HS
Item does not include the head of the
5 Mannequin mannequin which is not appropriate to the
Hairdressing NC II course, instead item
was used in Dressmaking NC II
Navotas San Roque NHS 2 Gas Range No provision for tank and gas
312
Navotas Tangos HS 3Decker Oven
Caloocan Horacio Dela 4 Gas Range
Costa HS
Marikina Marikina HS 2 Gas Range
Various All schools visited Desktop Computer; No Operating System
Laptop
e) Defective and poor quality of delivered items
25.16 There were TVL items, materials and equipment which were of poor
quality/defective upon delivery or easily damaged/broken after few uses, as
detailed below:
Table 56: Schedule of Defective and Poor Quality TVL Equipment

Defective/Broken TVL
Region SDO School Particular
Items
NCR Valenzuela Dalandanan NHS 3 Round Table good for 8 Damaged, poor quality
persons
Caloocan MB Asistio Sr. Round Table good for 8
HS Unit I persons
Navotas Kaunlaran HS 1 Gas Range Metal parts of the burner melted
Various All schools visited Bread Slicer Machine; Rusty; poor quality
Mechanical Dough Roller
III Not stated Some tools, materials and equipment
delivered are defective.
The equipment items are for commercial

use (too big), thus, not safe for students
X Not stated Non-conformance with specifications and
inclusion of defective/damage TVL items
f) Recording and procedural deficiencies
25.17 DepEd’s Financial Management Operations Manual, provides for the procedural
flow of documenting delivered TVL tools, materials and equipment, to wit:
a. Upon delivery, the School Inspectorate Team conducts inspections and

signs IAR. School Property Custodian signs the acceptance portion of the
IAR;
b. School Property Custodian returns original signed DR, and provide fully
signed IAR to the supplier;
c. Supplier provides copy of DR and IAR to CO/RO AMD;
d. CO/RO AMD prepares and transmits PTR with DR attachment to
respective SDO;
e. Division Supply Officer verifies delivery based on attachments and signs
PTR;
f. Division Supply Officer transmits signed PTR to CO/RO Accountant for
dropping from book of accounts; and
g. The CO/RO Accountant transmits JEV to respective SDO Accountant for
booking-up.
313
25.18 Various recording and procedural deficiencies noted in different regions are
shown in the following table:
NCR The Finance Division of the DepEd-NCR has already issued JEV Nos. 01-2018-03-001121
up to 01-2018-03-001125 to drop from its books the TVL tools and equipment with a total
cost of ₱46,017,458.20. However, records and interview with concerned personnel in the
SDOs and IUs disclosed that transferred TVL tools, materials and equipment were not yet
recorded in their respective books, thus, resulting in the unreliable presentation of the
affected accounts in the financial statements.
III Some delivery receipts were undated.
Some schools were not informed or notified by DepEd RO or DepEd SDO on the deliveries
to be made.
TVL items received by various schools were not recorded in the books of accounts of the
schools and the SDOs.
Some schools failed to record in the books of accounts various TVL items procured by
DepEd RO and delivered directly to various elementary and secondary schools resulting in
the understatements of some PPE and Semi-Expendable accounts.
VI TVL supplies and equipment of Gen. Leandro Fullon National School of Division of
Antique amounting to ₱1,941,240.00 were recorded under Technical and Scientific
Equipment instead of proper inventory/equipment accounts resulting in misstatement of the
affected accounts in the financial statements contrary to pertinent provisions of GAM for
NGAs prescribing the RCA.
g) Other issues and concerns

NCR • In almost all schools, the TVL items specifically those classified as PPE, had no property
stickers for inventory purposes and for proper determination of accountability, in case of
loss or damage thereof. Likewise, the Property Custodians could not identify easily the
provider of TVL items whether the same came from the national and local government
and/or private institutions;
• An upright freezer from Tangos HS was transferred to other school according to its
Property Custodian, but no PTR was prepared in support thereof;
• Items for Hairdressing NC II at Tangos HS was not fully utilized as the school availed of
the DepEd’s JDVP;
• Round table good for eight persons were used only during events/gatherings of the school.
III Some schools have no sufficient power supply to use the tools, materials and equipment
X The implementation of the Redesigned Technical Vocational High School Program of
DepEd Region No. X revealed various deficiencies on the utilization, procurement and
delivery of TVL specialization tools, equipment and materials with a total contract cost of
₱171,370,409.30 for SY 2016-2017 such as: (a) incomplete deliveries procured by the
Regional Office Proper (ROP) due to the inability of the suppliers to provide other TVL
items due to non-availability of stocks from its manufacturers totaling ₱8,519,125.55 which
were later requested for cancellation and leniency in granting time extension which further
delay the delivery, (b) non-utilization of some delivered TVL items, (c) non-conformance
with specifications and inclusion of defective/damage TVL items, (d) disparity of cost and
the current market value and (e) payments were made to suppliers totaling ₱1,904,293.66
without imposing liquidated damages for the undelivered goods/unperformed portion of the
contracts nor imposing any appropriate sanction or remedy.
25.19 From the foregoing, it can be gleaned that most of the deficiencies observed in
the previous year still exist which imply recurrent setback in the full attainment
of the program objectives.
314
25.20 We recommended and the Management of the concerned ROs and SDOs
agreed to:
a) make representation with the DepEd CO to facilitate the downloading

of funds and issuance of the authority to procure at the earliest time
possible to ensure the timely disbursement of funds and
implementation of all activities;
b) distribute the tools and equipment under the TVL - SHS program to
the beneficiary-schools upon receipt and acceptance of the items from
the supplier; and
c) reiteration of prior year’s recommendations that the Management:
o strictly monitor the suppliers’ compliance with the contract

stipulations particularly on the timeliness and completeness of the
delivery. In case of delay, impose liquidated damages on erring
suppliers;
o establish proper coordination among the concerned DepEd Offices

on the specific requirements of the TVL tracks offered by the
recipient schools and the latter’s need for technical-vocational
laboratory, supplemental budget in the schools’ MOOE allocation
and the technical specifications and quantity of TVL tools and
equipment to ensure maximum utilization thereof by the intended
program beneficiaries;
o formulate strategies to promote the TVL tracks offered by the

public SHSs enabling them to gain new enrollees or increase its
number;
o instruct the concerned Property Custodians of the SDOs and the

recipient schools to report immediately to the ROs the TVL tools,
materials and equipment that were found defective and still
covered within the warranty period for the replacement thereof
from the suppliers or adjustment in the prices of items not in
accordance with the required specifications;
o advice and provide with documents the schools’ Property

Custodians about the expected deliveries in their respective schools
which will serve as its basis for its comparison with the actual
deliveries; and
o instruct the Supply Officer of SDOs and IUs to transmit the PTR
to the Accounting Division of the ROs as well as the Accountant of
the ROs to transmit the JEV to the SDOs and IUs for the proper
315
recording of the transferred TVL tools, materials and equipment in
their respective books.

Region SDO/School Management’s Comments
NCR The Management maintains its position as last year and they have already raised
the issues to the DepEd CO for proper action. Nonetheless, the Management
agreed with the Audit Team’s recommendation to transfer unutilized TVL tools,
materials and equipment to schools that offer TVL tracks that requires the
delivered tools and equipment.
VI Antique According to the SARO received, the allotment is valid only for obligation until
National School December 31, 2018. Hence, the Management decided to record the allotment as
AP even without delivery. It was only this year that the Management is informed
that the validity extends up to the current year. The Management accepts the
error in recording of AP and will take responsibility for correcting the matter.
Antique There was a partial delivery made by the suppliers, hence, the Bookkeeper
Vocational recorded the transaction as accounts payable. Management will adhere to the
School provisions of the DBM Circular Letter from this time on and on the succeeding
transactions.
Gov. Julio V. It was an error committed by the Bookkeeper. This will serve as a learning
Macuja experience for the school. Rest assured that this will not happen again in the
Memorial future.
Comprehensive
High School
Pis-anan During the encoding of the Budget Execution Documents (BEDs) for CY 2019,
National High the Management was advised to report all obligations as due and demandable so
School that it will be funded on the following budget year. The Management only
followed the instructions and complied with the deadline set by the DBM. The
Management prompted the supplier to deliver before the year ends, however,
some of the supplies/equipment was only delivered by January 2019. The school
accepts responsibility for the error and will implement and adhere to the
provisions of the GAM.
Libertad The TVL contract was obligated at year end and was taken up as AP even
National without delivery of supplies and equipment. The school accepts responsibility
Vocational for the error and from now on will implement and adhere to the provisions of
School the GAM.
Sta. Justa
National High
School
Tario Lim
National
Memorial High
School
X ROP Out of the stated amount transferred, only ₱37, 591,694.44 was obligated as of
December 31, 2017. This leaves an unutilized balance of ₱10,958,760.52
released for the said Program in this RO. Unfortunately, based on the existing
records not all SDOs were still able to fully utilize the released funds. Since it is
anticipated that the procurement under this Program will still continue in the
future, it plans to require the field to submit a report on the challenges
encountered by them to further guide the RO in the future.
As of the latest update N.R. Eustaquio Enterprises and Mindanao Glassware and
Native Product General Merchandise have already submitted their billings for
payment as early as last year. The same are now being processed after addressing
collateral issues that arose from the controversy still pending with the DepED
CO at present. Management assured that the final payment will be subjected to
the necessary deductions so provided under existing rules and regulations. On
the part of MCX Motor (Phil.) Inc. as per information gathered is that they have
substantially finished the required deliveries only internal problems arose which
316
prevent them from submitting their billing for payment. Be that as it may, it is
likewise assured that the payment that will be made by the Office will again be
in accordance with established policies rules and regulations. There are reports
of deliveries having been made by JR and JP Enterprises although like MCX
Motors no billing was received by this office for unknown reasons. Nothing has
been heard of Jozeth Trading and this Office takes due notice to the suggestion
of looking into provisions of Annex “I” of the 2016 Revised IRR of RA No.
9184 Guidelines entitled Guidelines on Termination of Contracts. Most of these
contracts were the result of negotiated procurement after two failed biddings.
Fully aware of this condition, this office opted to exercise leniency in the request
for extension for the seeming lack of interested suppliers. It was the perception
of this Office that adopting the said stand will benefit the learners more fully as
most instances that suppliers contracted were from among the limited few that
manifested interest to enter into contract with this Office. To have terminated
the contract would have meant going through the procurement process once
again with no assurance of available interested suppliers. Be that as it may, this
Office will monitor the status of delivery of two other concerned suppliers from
the SDOs to determine the next best steps to take in so far the subject contracts
are concerned.
It is admitted that in the past transactions liquidated damages were only collected
against goods that were delivered beyond the contract time. No liquidated
damages were charged against cancelled items especially so if the suppliers
during the period of the contract manifested its limitation and its intention to
cancel delivery of concerned items and this office through the Head of Procuring
Entity manifested its agreement verbally, tacitly or in writing. The need to
include the subject scenario in the imposition of penalties, especially so if the
cancellation is without the agreement of this Office, shall henceforth be imposed,
however, the subject penalties in accordance with established rules and
regulations.
This Office always considers the interest of the public and the compliance with
existing rules and regulations in looking into requests for extensions of time to
compliance with contracts. However, because of the circumstances surrounding
this transaction, this Office opted to exercise leniency in the granting of the
requested extensions. This is more so because in the delivery of goods, unlike
contracts for public works, the provisions on the granting for extensions of time
delivery was found to be absent an express guideline and, hence, was open to the
adoption of more lenient policy. Primarily, the parameter used by this office in
evaluating the submitted request for extension was on whether the added time
will be more beneficial to the learners in terms of ensuring that there were
suppliers for the needed items. Rest assured, however, that henceforth, measures
will be adopted to ensure that there will be a more-stricter monitoring by this
Office on the implementation phase of the contract.
In all fairness, it must be stated that this office, specifically the Regional BAC
including the TWG, has exercised due diligence in evaluating the eligibility and
capability of the suppliers to whom contracts for procurement were awarded in
all the transactions it has undertaken. This included the procurement for
implementing the CY 2016 Redesigned Technical Vocational High School
Program where a few items were awarded despite the challenge of having to
compete with all the other regions of the Department.
SDO of Management agreed with the recommendations of the Audit Team and will
Bukidnon adhere to the provisions of the guidelines pertaining to the acceptance of
deliveries.
SDO of Misamis The Management commented that these recommendations have been noted and
Occidental promised to refrain from this untoward acquisition of tools and equipment for
our SHS learners. Further, for the incoming TVL tools and equipment delivery,
the Management will conduct a pre-acceptance conference such as: proper
instructions how to use or operate the tools or equipment to the recipient school
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heads to ensure diligence as a good father of a family, and would protect the
interest of the learners and the school.
SDO of The Management instructed the Division Supply Officer to make a representation
Gingoog City to DepEd RO relative to the procured TVL tools and equipment which remained
unused and dysfunctional to clarify this matter directly with the Regional Director
thru its Regional TWG/Inspectorate Team for confirmation and validation.
SDO of Iligan The Management has submitted a report on the tools and equipment which are
City defective and not in accordance with the specification to the RO. They shall take
initiative to align the course offerings of the Senior High Schools with the proper
TVL Tools and Equipment prior to the start of the SY 2019-2020.
XIII SDO of Agusan Utilization of funds fell short of disbursement and non-implementation of TVL
del Norte program
“The low disbursement rate of our SDO for FY 2018 can be directly attributed
to late downloading of funds as year ends, delay/failure in the procurement
process and the unavailability of items to be procured in the local market. These
uncontrollable factors pulled our momentum in achieving higher rate of
disbursement of fund.”
Unutilized TVL Program Fund
“Delayed downloading of funds is tantamount to non-utilization and decrease

of Agency’s absorptive capacity in fund disbursement. Thus, the Management
is giving its full assurance to raise the issue with our CO counterparts to avoid
the recurrence of same instance.”
SDO of Bislig The Management acknowledged the foregoing observation and assured
City adherence to the audit recommendations.
The Management further cited the following reasons for the above deficiency,
to wit:
“The Division was informed about the existence and availability of the subject
project only last October 22, 2018 by virtue of Regional Memorandum No. 596,
s. 2018, re: One day Collaborative Work Conference on the Guidelines on the
FY 2018 Release and Utilization of Science and Math Equipment and TVL
Funds to ROs and DOs which was attended by the Division BAC Chairperson,
Division TVL Coordinator, Secondary School Principal and TVL Coordinator
with Sub-AROs. Consequently, Sub-ARO was also received by this Office on
October 23, 2018. Immediately after that call-up by the Regional Office,
appropriate action was acted upon to expedite the related transactions and
processes.”
SDO of Tandag The Management commented through a letter dated March 19, 2019 that they
City already made a written request several times and follow-ups with DBM on the
foregoing matter.
SDO of Surigao Delayed release of Sub-ARO for the procurement of TVL tools & equipment
del Sur
“The timely provision of learning tools and equipment gives an effective
teaching and learning process. However, as experienced, the proposed provision
of tools and equipment was not availed of by the Senior High School Students
in CY 2018. The amount of ₱8,252,013.00 intended for the procurement of TVL
tools and equipment was not executed at earliest time due to late release of sub-
ARO by the CO. All the findings and recommendations of your Office as
stipulated in the AOM are thoroughly internalized, that during DepEd CO
conference suggestions must be made as to the timely downloading of funds and
issuance of the authority to procure TVL tools and equipment at earliest time
possible, SDO personnel are directed to strengthen the monitoring of the
program implementation and School Heads of the recipient schools should
conduct inspection of the delivered tools and equipment to avoid inferior quality
and defective materials.”
Utilization of Funds
The Management acknowledged the observation and assured adherence to the

audit recommendations.
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SDO of “The issue on the late downloading of Sub-AROs from the CO which caused
Cabadbaran delay in the implementation of the programs, activities and projects is a common
City scenario to all the implementing units in the Department and is beyond the
control of the SDO.
As reflected in the SCBAA for FY 2018 of this division, utilization and

disbursements of the ₱7,199,553.74 cannot be made possible because of
insufficiency of cash to cover payment of some implemented programs and
activities and some basic remittances of personnel. This could be attributed to
the number of Sub-AROs received after November 15 which were not included
in the submitted request for additional cash allocation. As a result, the office fell
short of its cash requirement. Also, there were requests made by this division to
the DBM for additional cash allocation but actual releases of NCA differed from
what were reflected in the Monthly Disbursement Program (MDP) or BED3
submitted.”
Excessive payments made to SHS VP participating schools under GASTPE
26. An initial of 115 Senior High School Voucher Program (SHS VP) beneficiaries
from SYs 2016-2017 and 2017-2018 were considered “ghost students” since they
were billed by SHS VP participating schools more than once in the same school
year resulting in excessive/overpayment of ₱1,247,200.00 by the Department for
the period due to data errors noted in audit. In addition, the amount of
₱1,200,500.00 paid by DepEd Accounting Division (DepEd AD) to an SHS VP
participating school supposedly intended for 143 Qualified Voucher Recipients
(QVRs) is doubtful, because the Billing Statement package submitted did not show
the details of the SHS students information, contrary to DepEd Order Nos. 66 and
19 dated October 28, 2016 and April 20, 2017, respectively.
26.1 RA No. 10533, otherwise known as the Enhanced Basic Education Act of 2013,
lengthens Philippine Basic Education from 10 to 13 years with the addition of
Kindergarten and Grades 11 and 12 in Senior High School (SHS). Grades 11
and 12 were introduced in SYs 2016-2017 and 2017-2018, respectively.
26.2 The major objectives for extending the years of Basic Education are:
(i) decongesting high school curriculum to allow students more time to master
necessary skills and competencies, (ii) preparing graduates for employment or
entrepreneurship, and (iii) meeting international norms for the length of Basic
Education. The SHS offers a core curriculum required of all students in four
tracks, namely:
• Academic track;
• Technical, Vocational and Livelihood (TVL) track;
• Sports track; and
• Arts and Design track
26.3 The Enhanced Basic Education Act explicitly expands the coverage of
Government Assistance to Students and Teachers in Private Education
(GASTPE) Act to include Grades 11 and 12. As such, DepEd Order No. 11
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series of 2015 introduced the SHS VP as a mechanism to provide financial
support to qualified students in SHS. Through the SHS VP, the DepEd engages
the non-DepEd Senior High School providers to enroll qualified voucher
recipients from both Public and Private Junior High Schools. Once qualified
voucher recipients are enrolled in non-DepEd Senior High School providers, the
DepEd will provide assistance to these students through a voucher subsidy paid
to non-DepEd SHS provider.
26.4 The SHS VP intends to:
• Uphold the right to quality basic education by increasing access to SHS;

• Increase the diversity of SHS providers beyond the current configuration.
This in turn will engender a more dynamic system with schools deciding
and innovating on their own;
• Provide greater choice to students and their families in deciding the SHS
program that caters to their needs and career goals.
26.5 The Private Education Assistance Committee (PEAC) has been contracted by
the DepEd to administer the SHS VP. PEAC is the trustee of the Fund for
Assistance to Private Education (FAPE), a perpetual trust fund created to
provide assistance to private education in the country. It is represented nationally
by its National Secretariat (PEAC NS) and in each region by its Regional
Secretariat (PEAC RS). Regional Program Committees (RPComs) are organized
in the region composed of representatives from DepEd and the PEAC RS with
the DepEd Regional Director as the Chair, PEAC Regional Program Director as
Co-Chair to oversee compliance of participating public and private schools in
their regions with the policies and guidelines of the GASTPE programs.
26.6 The applicable Guidelines in implementing the SHS VP for SYs 2016-2017 and
2017-2018 are embodied in DepEd Order Nos. 66 and 19 dated October 28, 2016
and April 20, 2017, respectively. Among the salient features common to both
guidelines are the following:
Qualified Voucher Recipients (QVRs)
All and only Grade 10 students of the school year, SY 2016-2017, are eligible
for the SHS VP. For brevity, these students are termed Grade 10 completers.
QVRs may be grouped into the following:
a) Automatically qualified students
Students falling under the categories below automatically qualify for vouchers.
They do not need to apply for vouchers, and are automatically considered QVRs.
• Category A: All Grade 10 completers in Public JHSs

• Category B: All Grade 10 completers in SUCs and LUCs
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• Category C: All Grade 10 completers in private schools who are Educational
Service Contracting (ESC) grantees
b) Voucher Applicants (VAs)
Category D: All Grade 10 completers in private schools who are not ESC
grantees and wish to avail of voucher subsidy in order to enroll in a non-DepEd
SHS. Only students in this category need to apply for vouchers and are thus
termed voucher applicants (VAs).
Applicable Voucher Values
The value of the voucher subsidy is lower of a) the total school fees declared in
the VMS by the VP-participating SHS or b) the applicable voucher amount. The
applicable voucher amount in turn depends on the location and type of the non-
DepEd SHS and the category of the QVR. The applicable voucher amounts are
shown below:
Voucher Amount if the SHS is a
Location of Non- Voucher State University and College (SUC)
Category of QVR
DepEd SHS amount or Local University and College
(LUC)
NCR Categories A and B 22,500 11,250
Categories C and D 18,000
Highly Urbanized Categories A and B 20,000 10,000
Cities (HUCs) Categories C and D 16,000
All other locations Categories A and B 17,500 8,750
Categories C and D 14,000
Voucher Validity and Redemption
Vouchers shall be redeemed in the first semester of the SY immediately after

Grade 10 completion and shall no longer be valid if not redeemed in the same
period. The voucher covers two years regardless of the number of years it takes
for the recipient to complete SHS.
A QVR redeems his or her voucher by enrolling in a non-DepEd SHS. As with

any student, QVRs need to satisfy the requirements for admission set by the Non-
DepEd SHS. A QVR who successfully enrolls in a Non-DepEd SHS becomes a
voucher program beneficiary (VPB).
Monitoring and Evaluation
Under DepEd Order No. 66 dated October 28, 2016, DepEd and PEAC shall
conduct random checks on schools and students to ensure program compliance.
Serious violations may disqualify a school or a student from further participation
in the SHS VP. PEAC shall monitor processes in the voucher applications so as
to meet standards on turnaround times and data integrity. It shall prepare and
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submit interim reports as may be required by DepEd to improve future
implementation of the SHS VP.
Whereas DepEd Order No. 19, s. 2017 dated April 20, 2017 provides that the
PEAC shall monitor VP-participating SHSs and report its findings to DepEd. It
verifies the VPBs listed in the schools’ billing statements and their compliance
with other requirements of the SHS VP. Monitoring is done through
unannounced visits by a monitoring team. All VP-participating SHSs are subject
to such visits and cannot turn away monitoring teams. The PEAC NS shall report
the results of its monitoring visits at the quarterly meetings of the PEAC with
DepEd. The report will include VP-participating SHSs that violated or did not
comply with the SHS VP guidelines.
26.7 The steps in creating billing statements for SHS VP-participating schools are
provided under No. XI-C of DepEd Order No. 19, s. 2017 dated April 20, 2017.
Schools create billing statements to obtain the subsidy for the VPBs they accept.
VP-participating SHSs shall access the Voucher Management System (VMS),
an online information management system and database maintained by PEAC
for schools that are participating in the SHS VP. The system contains all the
QVR details, such as the Learner Reference Number (LRN) and Qualified
Voucher Applicant Number (QVAN). It facilitates the updating of school
profile, registration of QVRs, student applications for SHS VP, updating of
VBPs, creating billing statement and monitoring school payments. To create the
billing statements, it carries out the following steps:
1. Verify the information in the “School Profile” tab under the “View School
Profile” navigation link. The VMS uses only data from the Enhanced Basic
Education Information System (EBEIS) to populate this tab. Thus, errors
found in the school profile are to be corrected in the EBEIS.
2. Under the other tabs in the “View School profile” navigation link, encode or
update the following data:
• Start and end dates of each semester/term in the current SY;

• Annual school fees (tuition, other and miscellaneous fees) per track and
strand;
• LBP account details;
• Authorized signatory for the billing statement; and
• Details of contact person for SHS VP concerns
3. Under the “Billing Statement” navigation link, select the “Create Billing
Statement” section and the semester to be billed. The VMS will return a list
of QVRs with check boxes at the leftmost column. Click on the check boxes
to tag QVRs that will be included in the new billing statement. Alternatively,
select on the “Check All” option and click on the boxes to uncheck QVRs that
will be excluded from the new billing statement.
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Create the billing statement by clicking on the “Create Billing Statement”
icon at the bottom of the list of VPBs. Billing Statements contain the
following information:
• Unique billing statement number that shall be used to process and track
payments;
• Total number of VPBs billed; and
• Total amount due to the VP-participating SHS for the semester.
26.8 No. XI-D of the same DepEd Order also provides the procedural steps in
processing of payment of the billing statements prepared by VP-participating
SHSs as summarized below:
Handling
Steps/Procedures
Unit
VP- • Creates and prints SHS VP Billing Statement (SHSVPBS) generated through the
participating SHS VMS (5 copies)
SHSs • School official signs the SHSVPBS
• Submits Billing Statement Package (SHSVPBS and supporting documents) to the
PEAC RS
PEAC RS • Checks completeness of submitted Billing Statement Package
• Checks existence of printed SHSVPBS in the SHS VMS
• Reviews VPB names included in the SHSVPBS and checks for flagged VPBs
• PEAC Regional Program Director signs the SHSVPBS processed by the PEAC RS
• Submits the processed SHSVPBS to the DepEd RO
DepEd RO • DepEd RD signs the processed SHSVPBS and retains the processed SHSVPBS and
retains the DepEd RO copy
PEAC RS • Collects signed SHSVPBS and retains the school copy and PEAC RS copy
• Submits the signed billing statement package to PEAC NS
PEAC NS • Checks completeness of submitted billing statement package
• Reviews the SHSVPBS submitted using the SHS VMS
• PEAC Executive Director signs the SHSVPBS, retains a copy of the SHSVPBS
• Submits List of Schools for Payment and SHSVPBS to DepEd AD
DepEd AD • Reviews List of Schools for Payment and SHSVPBS
• Prepares the SHS VP payments of schools
26.9 Moreover, No. XII-B of DepEd Order No.19, s. 2017 provides that program
violations as well as acts of VP-participating SHSs that defraud government
and/or its VPBs are penalized as follows:
Program Violation Penalty
Falsification of data or information in any of Suspension from recruiting Grade 11 QVRs for at least
the program forms, database fields or one school year
submitted documents
Padding and/or inclusion of "ghost students" Return of payments to and duly acknowledged by
in the list of VPBs discovered during DepEd to the “ghost students” identified and
monitoring visits termination from further participation in the SHS VP
26.10 Violations analogous to the list above may also be penalized. The PEAC
reserves the right to decide on cases of violation and their corresponding
penalties. Finally, violations of the SHS VP guidelines may bar the VP-
participating SHS from other GASTPE programs of the DepEd without
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prejudice to administrative and criminal charges that may be filed against the
school and/or its responsible officers under existing laws.
26.11 Verification and validation of the SHS grantees listed in the SHS VP
participating schools’ Billing Statements for SYs 2016 to 2017 and 2017 to 2018
showed that 115 SHS VP grantees with a total grant amount of ₱2,376,450.00
are with dual LRN and were billed twice by the SHS VP participating schools,
thus resulted in overpayment in the total amount of ₱1,247,200.00. Details are
as follows:
Table 57: Schedule of Overpayments Made to SHS VP Participating Schools
No. of Amount of
Particulars Overpayment
Grantees Voucher
Same school, same course and same voucher 104 2,045,750.00 1,018,500.00
type
Same school, same course but different 3 103,500.00 57,500.00
voucher type
Same school, same voucher type but different 4 112,000.00 56,000.00
course
Same voucher type but different school and 4 115,200.00 115,200.00
different course
Total 115 2,376,450.00 1,247,200.00
26.12 The list of SHS VP participating schools identified to have billed the DepEd
twice for the same SHS beneficiaries and violated the abovementioned DepEd
Orders is summarized below:
Number of
Name of SHS VP Particpating School Double Overpayment
Billing
1 Arandia College, Inc. 13 117,000.00
2 St. Anne College Lucena, Inc. 12 96,000.00
3 St Cecilias College Cebu, Inc. 7 49,000.00
4 North Central Mindanao College 6 42,000.00
5 Colegio De Dagupan 5 42,000.00
6 Notre Dame of Isulan (Day and Night) 5 35,000.00
7 Arellano University Pasig (Andres Bonifacio Campus) 4 38,250.00
8 Marinduque Academy, Inc. 3 21,000.00
9 Our Lady of Fatima University 3 32,000.00
10 Southland College of Kabankalan City, Inc. 3 42,000.00
11 AMA Computer College-Calamba 2 14,000.00
12 Cainta Catholic College 2 28,000.00
13 Cultural Mission Academy 2 14,000.00
14 Foundation University 2 14,000.00
15 Liceo del Verbo Divino 2 16,000.00
16 Madridejos Community College 2 11,200.00
17 San Beda College 2 18,000.00
18 San Pedro Academy 2 14,000.00
19 Santo Niño School of Roxas 2 14,000.00
20 Sisters of Mary School - Boystown, Inc. 2 21,000.00
21 Sisters of Mary School - Girlstown, Inc. 2 21,000.00
22 STI College-Cotabato 2 26,250.00
23 STI College - Ortigas - Cainta 2 14,000.00
24 STI College-Sta. Cruz 2 14,000.00
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Number of
Name of SHS VP Particpating School Double Overpayment
Billing
25 Tagum City College of Science and Technology 2 28,000.00
Foundation, Inc.
26 University of Perpetual Help System Laguna 2 14,000.00
27 Villacarlos Academy (Villacarlos Technical Institute) 2 14,000.00
28 Saint Joseph College of Sindangan, Inc. 1 7,000.00
29 Advance Montessori Education Center of Isabela 1 14,000.00
30 Archdiocesan School of San Fabian 1 7,000.00
31 Baguio Seventh Day Adventist School, Inc. 1 8,000.00
32 Barcelona Academy 1 14,000.00
33 BIT - International College Tagbilaran, Inc. 1 7,000.00
34 Centro Escolar University - Manila 1 9,000.00
35 Christian College of Tanauan 1 7,000.00
36 Colegio San Agustin - Bacolod 1 16,000.00
37 Core Gateway College, Inc. 1 7,000.00
38 Dee Hwa Liong Academy (DEECO), Inc. 1 18,000.00
39 First Asia Institute of Technology & Humanities 1 14,000.00
40 Gateways Institute of Science and Technology, Inc. 1 22,500.00
41 Genesis Christian Academy of Caloocan , Inc. 1 9,000.00
42 Holy Angel University 1 16,000.00
43 Holy Cross College, Sta. Rosa, N. E., Inc. 1 17,500.00
44 Ilog Private Academy 1 14,000.00
45 John Paul College Corporation II 1 17,500.00
46 Manuel S. Enverga University Foundation 1 16,000.00
47 MCA Montessori School, Inc 1 22,500.00
48 Meycauayan College, Inc. 1 14,000.00
49 Mother Margherita de Brincat Catholic School, Inc. 1 17,500.00
50 My Messiah School of Cavite 1 7,000.00
51 National Polytechnic College of Science and Technology- 1 22,500.00
Lagro
52 no enrolment history 1 9,000.00
53 Philippine College of Criminology High School 1 22,500.00
54 San Sebastian College-Recoletos, Manila 1 9,000.00
55 School of The Infant Jesus/Empowered Zone for 1 7,000.00
Excellence in Education, Inc.
56 Southern Isabela Academy, Inc. 1 14,000.00
57 University of Cebu METC Campus 1 20,000.00
58 University of Perpetual Help Rizal 1 9,000.00
59 University of Perpetual Help System - Dalta 1 7,000.00
60 University of San Jose Recoletos, Main and Basak 1 16,000.00
Total 128 1,247,200.00
26.13 The abovementioned circumstances indicate weak input control specifically on

data encoding including the consolidation of the billing statements at the
regional and national level before its submission to DepEd AD.
26.14 Furthermore, post-audit of Journal Entry Voucher (JEV) No. 01-2016-09-

0024893 dated September 13, 2016 and its supporting documents showed that
the amount of ₱1,200,500.00 was paid by the Department to My Messiah School
of Cavite, Inc., a SHS VP participating school with 143 VPBs in SY 2016-2017
under Billing Statement Number SHS-53296. Verification of the automatically
translated Billing Statement in the school database at the PEAC website revealed
that the list of 143 VPBs as billed by the said school were not posted therein.
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26.15 As prescribed in the guidelines, the PEAC RS should check the completeness of
submitted Billing Statement Package and verify the existence of SHSVPBS.
Likewise, PEAC RS should review the VPB names included in the billing
statement before submission to the DepEd. However, the aforementioned
deficiency showed that the PEAC did not perform its responsibilities in the
verification of the VPBs listed in the schools’ billing statements, thus casting
doubt on the existence of the 143 SHS students purported to be beneficiaries of
the GASTPE SHS VP.
26.16 The DepEd AD, on the other hand, shall at all times check the submitted billing
statement packages by the PEAC NS before the preparation of the payroll and
Obligation Request Status (ORS) and the payment to the SHS VP participating
schools, because too much reliance on PEAC without properly/independently
checking the said packages increases the likelihood of errors or irregularity in
the billing and disbursements of the funds.
26.17 A refund is due to the DepEd when its payments exceed what is due to a VP-
participating SHS as required in the guidelines. Refunds made by the schools to
DepEd relative thereto lacked the specific details of its nature particularly the
name of the students including the accompanying Order of Payment, thus the
validation and verification of the refunds made (if there’s any) by the
abovementioned schools could not be undertaken in the absence of such
documentation.
26.18 We recommended and Management agreed to:
a) require the identified SHS VP participating schools to refund the

excessive payments made to them in the total amount of ₱1,247,200.00
representing the 115 SHS VP beneficiaries within ten days from receipt
hereof, copy furnished COA of refunds documentation;
b) require the My Messiah School of Cavite, Inc., to explain how they were
able to create the billing statement since no list of VPBs is accessible in
the SHS VMS. Also, prove the existence of the 143 billed SHS VPBs,
otherwise, refund the entire amount of ₱1,200,500.00 to DepEd;
c) conduct further investigation on the lapses committed by the identified

SHS VP participating schools regarding the inclusion of the 115 “ghost
students” and 143 unnamed SHS students in the list of billed SHS VPBs
paid by the Department. If warranted, enforce the appropriate
sanctions on them in compliance with DepEd Order Nos. 66 and 19
dated October 28, 2016 and April 20, 2017, respectively;
d) strengthen the monitoring of the SHS VP participating schools and

verification of the SHS VPBs listed in the school’s billing statements;
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e) provide COA a copy of the monitoring/compliance reports submitted
by the PEAC including their findings on the SHS VP participating
schools that include, among others, the complete details and
information of the refunds made by the schools to the DepEd; and
f) ensure that schools’ claims are duly validated both by PEAC and
DepEd and see to it that they conformed with the existing
Implementing Guidelines and related regulations before payment is
made.
Excessive payments made to ESC-participating JHS under GASTPE
27. An initial of 41 Educational Service Contracting (ESC) grantees from SYs 2016-
2017 and 2017-2018 are considered “ghost students”, since they were billed by
ESC-participating Junior High Schools (ESC-participating JHS) more than once
in the same SY, resulting in excessive/overpayment of ₱484,500.00 by the DepEd
during that period due to data errors noted in audit, contrary to DepEd Order
Nos. 18 and 20 dated April 5, 2016 and April 20, 2017, respectively.
27.1 The ESC program aims to democratize and improve access to quality junior high
school education through government extension of financial assistance to
deserving elementary school graduates who wish to pursue their junior high
school education in private schools.
27.2 By providing support to students in private schools, the Program also contributes
towards reducing class size in public junior high schools to desired levels,
especially for those experiencing shortage of classrooms and teachers. Thus, the
ESC is one of the means by which the government is able to decongest public
junior high schools.
27.3 The PEAC has been contracted by the DepEd to administer the GASTPE
wherein ESC is one of the programs it has been implementing. PEAC is the
trustee of the Fund for Assistance to Private Education (FAPE), a perpetual trust
fund created to provide assistance to private education in the country. It is
represented centrally by its National Secretariat (PEAC NS) and in each region
by its Regional Secretariat (PEAC RS). A Regional Program Committee
(RPCom) is organized in the region composed of the DepEd Regional Director
as the Chair, PEAC Regional Program Director as Co-Chair with members
coming from the President of the School Division Superintendent Association,
DepEd Regional Chief of Quality Assurance and Accountability Division,
DepEd Regional Chief of Policy Research and Development Division and the
PEAC Regional Program Coordinator to oversee the implementation of all the
programs of GASTPE.
27.4 The applicable Guidelines in implementing the ESC in Junior High School for
School Years (SYs) 2016-2017 and 2017-2018 are embodied in DepEd Order
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Nos. 18 and 20 dated April 5, 2016 and April 20, 2017, respectively. Among
the salient features common to both guidelines are the following:
Amount of Subsidy
The amount of the grant depends on the location of the ESC-participating JHS
and is quoted per ESC grantee per school year. It is paid to the school and
remains the same over its four-year term, unless adjustments are approved by
the State Assistance Council (SAC). The amounts of the grant are as follows:
Amounts of the ESC grant for SY 2017-2018 (in ₱ per student per SY)*
Grade Level Schools in NCR Schools outside NCR
Grade 7 13,000 9,000
Grade 8 11,000 8,500
Grade 9 11,000 8,500
Grade 10 10,000 7,500
*subject to adjustments approved by the SAC (No. VII-D, DepEd Order No. 20, s. 2017)
Amounts of the ESC grant for SY 2016-2017 (in ₱ per student per SY)*
Grade Level Schools in NCR Schools outside NCR
Grade 7 11,000 8,500
Grade 8 11,000 8,500
Grade 9 10,000 7,500
Grade 10 10,000 6,500
*subject to adjustments approved by the SAC (No. IV-B, DepEd Order No. 18, s. 2016)
Reporting and Billing Arrangements for ESC
1. Participating schools must assign an IT-proficient staff to be responsible for

encoding data for their Billing Statement/s in the schools online account and
ESC IMS and to prepare and ensure complete and correct documentary
submission to the PEAC RS by the deadline. A seminar is conducted in every
region to instruct the participating schools' staff on the proper and complete
accomplishment of the requirements for online and documentary
submissions.
2. Participating schools are provided with a unique PEAC School ID and a

password to access their school account in the ESC IMS found at
www.fape.org.ph.
3. A school's online account should contain: (a) names and other information of
its new grantees (Grade 7) as encoded by the school; and (b) list of the
school's existing/continuing grantees (Grades 8 to 10). The status of each
grantee must be updated by the school on a yearly basis (e.g. retained,
transferred out).
4. After the accomplishment of Item 3, the system will generate an ESC Billing
Statement covering new and continuing grantees for the current school year.
The school shall print its Billing Statement in the number of copies indicated
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by the system and have each copy signed by the members of its School
Committee before submitting these to the PEAC Regional Secretariat for
processing.
Processing of School Claims
1. Each school's online account in the ESC IMS contains a guide/checklist

indicating what constitutes a complete documentary submission to the PEAC
RS.
2. The PEAC RS shall receive school Billing Statements, TSS forms, and
supporting documents. The guide/checklist in Item 1 above shall be used to
ensure that the documents are complete before these are accepted. The PEAC
RS shall check the documents for accuracy and consolidate these into batches
on a first-come, first-served basis for the signing by signatories at the region
before submitting these to the PEAC NS.
3. The PEAC NS shall compare the data in the submitted school Billing
Statements with the electronically-generated program forms. It shall
consolidate the Billing Statements in batches on a first-come, first-served
basis, and endorse these for payment to the DepEd Accounting Division not
later than October 30. The batch numbers indicate the priority or queuing
order of payment of schools. A school may check its batch number in its
online account in the PEAC website.
Payment of Grants to Official Land Bank Accounts
1. The DepEd shall credit to the schools' Land Bank of the Philippines (LBP)
accounts, the payment of the ESC and TSS grants. This bank account must
be in the official name of the school. In no case shall payment be made
directly to a person.
2. Once schools receive payment of subsidies, they must issue an official receipt
to DepEd Central Office and submit this to the PEAC RS. The PEAC RS shall
forward the receipts to the PEAC National Secretariat, which in turn, shall
forward these to DepEd Central Accounting Division. Failure of schools to
issue official receipts shall cause the withholding of the following year's grant
payments.
3. Overpayment to a school due to errors and mistakes in the ESC Billing

Statements shall be refunded by the school only through check payment
issued to DepEd Central Office. The checks shall be submitted to the
concerned PEAC RPCom, who shall acknowledge receipt of the checks and
shall forward the same to PEAC National Secretariat for consolidation and
submission to DepEd Central Accounting Division. Official receipts issued
by DepEd for cleared check refunds shall be turned over to the PEAC
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National Secretariat for delivery to the schools concerned. Failure by the
school to do so shall cause, among others, the suspension of the school's
admission of new ESC grantees.
Grounds for Penalties, Suspension and Termination of School Participation
a) Falsification of data or information in any of the program forms and related

attachments.
The penalty for this shall be a minimum suspension of one year whereby the
school shall not be allowed to recruit freshman grantees.
b) Padding and/or inclusion of "ghost students" and unqualified teachers and/or

"ghost teachers" in the list of billed ESC grantees and TSS teacher-
beneficiaries that are discovered during a singular or joint PEAC Secretariat
and DepEd field audit (monitoring) of the school.
In DepEd Order No. 20 for SY 2017-2018, the Ghost Students refer to ESC
grantees listed and billed multiple times in the same school or in different
ESC-participating JHSs. While in DepEd Order No. 18 applicable to SY
2016-2017, these refer to grantees double-listed under the ESC program.
Both carry the penalty of returning the funds to DepEd equivalent to the
amounts due for the "ghost students" identified accordingly and the
termination of school participation in the ESC program.
27.5 Verification and validation of the ESC grantees listed in the participating
schools’ ESC Billing Statements for SYs 2016 to 2017 and 2017 to 2018 showed
the following deficiencies:
Table 58: Schedule of Overpayments Made to ESC Participating JHS

No. of
Particulars Overpayment
Grantees
41 ESC grantees with a total grant amount of 41 ESC grantees 408,000.00
₱816,000.00 are with dual ESC ID and were billed
twice by the ESC-participating JHSs, thus resulted in
overpayment.
24 ESC grantees were listed as “enrolled” and billed 24 out of the 41 ESC 76,500.00
twice in two different ESC-participating JHSs of grantees mentioned above
which five of them were noted to have attended their
JHS (Grade 7 to 10) in two different schools
simultaneously.
17 ESC grantees were listed as “enrolled” and billed 17 out of the 41 ESC
twice by the same ESC-participating JHSs of grantees mentioned above
which 11 ESC grantees were due to error in name
extension, while the six ESC grantees were tagged as
“double-entry”.
Total 41 484,500.00
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27.6 It is to be emphasized that it is the responsibility of the PEAC NS to monitor
ESC-participating JHS’s compliance with the ESC guidelines, verify the ESC
grantees listed in the schools’ billing statements and report its findings to DepEd.
27.7 The DepEd, on the other hand, created an Interim Project Management Office
(PMO) for GASTPE at CO, through DepEd Order No. 16, series of 2016, to
coordinate with and perform monitoring and oversight functions on PEAC.
27.8 The aforementioned circumstances still indicate weak input control specifically
on data encoding including the consolidation of the billing statements at the
regional and national level before its submission to DepEd CO Accounting
Division. Hence, an overpayment in the total amount of ₱484,500.00 was made
by the DepEd to the ESC-participating JHS. The list of ESC-participating JHS
identified to have billed the DepEd twice for the same ESC grantees and violated
the abovementioned DepEd Orders is summarized as follows:
No. Name of School Overpayment

1 North Central Mindanao College 71,000.00
2 Ateneo De Naga University, Inc. 17,000.00
3 Greenfield Montessori School (Tanay, Rizal) Incorporated 17,000.00
4 Holy Name University 17,000.00
5 Holy Trinity Academy, Inc. 22,000.00
6 Lourdes College 17,000.00
7 Our Lady of Penafrancia Seminary 17,000.00
8 Pilar College 17,000.00
9 VMC Asian College Foundation, Inc.
10 Eastern Kutawato Islamic Institute, Inc. 24,500.00
11 Academia De San Lorenzo Dema-Ala, Inc. 8,500.00
12 Dansalan College Foundation, Inc. 8,500.00
13 Datu Mala Muslim Mindanao Islamic College Foundation, Inc. 8,500.00
14 Davao Jones Academy, Inc. 8,500.00
15 Divine Word College of Vigan 8,500.00
16 Doane Christian Academy Foundation, Inc. 8,500.00
17 Don Bosco High School 8,500.00
18 Elim School for Values and Excellence, Inc. 8,500.00
19 Erhard System Technological Institute, Inc. 8,500.00
20 Holy Family High School of Ramon Magsaysay 8,500.00
21 Hotchkiss Learning Center, Inc. 9,000.00
22 Infant Jesus Academy of Silang, Inc. 8,500.00
23 Infant King Academy 8,500.00
24 Joselito Alba Vocational and Technical School, Inc. 8,500.00
25 Kutawato Darusallam College, Inc. 26,000.00
26 Mabini Colleges of Batangas, Inc. 9,000.00
27 Mystical Rose of College of Science and Technology 8,500.00
28 Notre Dame of Kulaman, Inc. 8,500.00
29 Ovilla Technical College, Inc. (Ovilla Southern Academy) 8,500.00
30 Pablo Omerez Cedeno Memorial Learning Center, Inc. 8,500.00
31 Pioneers Academy, Inc. 8,500.00
32 Saint Columban College 8,500.00
33 Schola de San Jose, Inc. 8,500.00
34 Tomas Claudio Colleges, Inc. 8,500.00
35 Cherubs Academy, Inc.
8,500.00
36 University of San Jose Recoletos, Inc.
37 Colegio De San Sebastian, Inc.
8,500.00
38 Lipa Adventist Academy, Inc.
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No. Name of School Overpayment
39 Misamis Oriental Institute of Science and Technology, Inc. 8,500.00
40 Pilgrim Christian College
41 Oblates of St. Joseph Minor Seminary
8,500.00
42 St. Bridget College Alitagtag, Inc.
43 Notre Dame of Surala
8,500.00
44 Thelsan School, Inc.
Total 484,500.00
27.9 A refund is due to the DepEd when its payments exceed what is due to an ESC-
participating JHS as required in the guidelines. Refunds made by the schools to
DepEd relative thereto lacked the specific details of its nature particularly the
name of the students including the accompanying Order of Payment; thus the
validation and verification of the refunds made, if there’s any, by the above-
mentioned schools could not be undertaken in the absence of such
documentation.
a) require the identified ESC-participating JHSs to refund the excessive

payments made to them in the total amount of ₱484,500.00
representing the 41 ESC grantees;
b) conduct further investigation on the lapses committed by the identified

ESC-participating JHSs regarding inclusion of the 41 “ghost students”
in the list of billed ESC grantees paid by the DepEd. If warranted,
enforce the appropriate sanctions on them in compliance with DepEd
Order Nos. 18 and 20 dated April 5, 2016 and April 20, 2017,
respectively;
c) strengthen monitoring of the ESC-participating JHSs and verification

of the ESC grantees listed in the school’s billing statements;
d) provide COA a copy of the monitoring/compliance reports submitted

by the PEAC including their findings on the ESC-participating JHSs
that include, among others, the complete details and information of the
refunds made by the schools to the Department; and
e) ensure that schools’ claims are duly validated both by PEAC and
DepEd and see to it that they conformed with existing Implementing
Guidelines and related regulations before payment.
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OTHER COMPLIANCE ISSUES
Gender and Development (GAD)
28. The implementation of the Gender and Development (GAD) Program for CY
2018 of the Department disclosed deficiencies, such as: (a) non-submission of the
Annual GAD Plan and Budget (GPB) as well as the Accomplishment Reports
(ARs) to the Philippine Commission on Women (PCW) copy furnished the Audit
Team within five working days upon its approval while the accomplishments of
the preceding year within five working days from the end of January; (b) absence
of an operational GAD Focal Point System (GFPS) or a focal person for the
implementation of GAD; (c) non-allocation/non-utilization of amount equivalent
to five percent of total appropriations of ₱511,340,408,286.00 as GAD budget; (d)
failure to conduct gender analysis using the Harmonized Gender and
Development Guidelines (HGDG) tool during the planning/budgeting phase for
each major program/project; and (e) failure to develop or integrate in its existing
database the GAD information that include gender statistics and sex-
disaggregated data in the gender-responsive planning, programming and policy
formulation, contrary to the pertinent provisions of RA No. 10964, otherwise
known as the GAA of FY 2018, PCW - National Economic Development Authority
(NEDA) - DBM Joint Circular (JC) No. 2012-01 and COA Circular No. 2014-001
dated March 18, 2014.
28.1 Review/audit of the implementation of GAD programs and projects for CY 2018
of the DepEd CO and ROs revealed the following observations/deficiencies:
a. Non-submission of the annual GAD Plan and Budget (GPB) as well as the
Accomplishment Reports (ARs) to the Philippine Commission on Women for
review, approval and endorsement to the DBM copy furnished the Audit Team
within the required timeline
28.2 Section 8.2 of PCW-NEDA-DBM JC No. 2012-01 requires the GAD Focal
Point System (GFPS) to submit the final GPBs and the corresponding GAD
Accomplishment Reports (ARs) to PCW for review and endorsement to DBM.
28.3 Section 8.7 of the JC requires agencies to submit their PCW-endorsed GPB to
the DBM along with their annual GAD AR for the previous year in accordance
with the budget call.
28.4 Moreover, item V of COA Circular No. 2014-001 dated March 18, 2014
provides that the Auditee Agency shall submit a copy of the Annual GPB to the
COA Audit Team assigned to the Agency within five working days from the
receipt of the approved plan from PCW. Likewise, a copy of the corresponding
GAD AR shall be furnished the said Audit Team within five working days from
the end of January of the preceding year.
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28.5 The guidelines provide that the Attached Agencies, Bureaus and ROs of the line
Departments/COs shall prepare their respective GPBs and GAD ARs for
submission to the latter. It is the Departments/COs who will review and
consolidate the reports and submit the same to PCW for their approval.
28.6 Verification of their compliance with the above-mentioned provision revealed

that the DepEd CO did not prepare and submit for approval to the PCW the
Agency’s Annual GPB for CY 2018 along with its Annual AR from the previous
year. No PCW endorsed GPB and GAD AR were presented to the Audit Team,
hence, their GAD-related activities during the year could not be validated.
Likewise, the DepEd ROs were not able to furnish their respective Audit Team
the required PCW endorsed GAD reports.
28.7 One important mechanism for gender mainstreaming is the annual GAD
planning and budgeting process. The GAD plan seeks to address identified
women and gender issues through specific activities and the GAD budget is the
amount required to implement the GAD plan.
b. Absence of an operational GAD Focal Point System (GFPS) or a focal person

for the implementation of GAD
28.8 Section 3.5 of PCW-NEDA-DBM JC No. 2012-01 states that the Agency GFPS
shall take the lead in mainstreaming gender in Agency PAPs. As such they shall
coordinate the preparation of the Agency GPB and the GAD AR, monitor its
implementation and report on its results.
28.9 The DepEd CO and ROs CAR, VIII, IX and XI do not have a functioning focal
committee or appoint a focal person for the implementation of GAD program.
28.10 The creation of GFPS serves as a mechanism for catalyzing and accelerating
gender mainstreaming in the agency towards the promotion of gender equality
and women’s empowerment. Thus, in the absence of GFPS, these functions
could not be performed.
c. Non-allocation/utilization of the full amount of the allocated budget for GAD

Plan activities equivalent to at least five percent of its total appropriation of
₱511,340,408,286.00 for FY 2018 as budget for the implementation of GAD
Programs, Activities and Projects (PAPs)
28.11 Section 30 of the General Provisions of FY 2018 GAA provides that, “all
agencies of the government shall formulate a GAD Plan designed to address
gender issues within their concerned sectors or mandate…xxx. The GAD Plan
shall be integrated in the regular activities of the agencies which shall be at least
five percent (5%) of their budgets. xxx”.
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28.12 During the year, five ROs had reported their respective GAD related
expenditures that are below the required five percent of their respective budget,
to wit:
Table 59: Percentage of GAD-related Expenses Incurred over Appropriations
Pecentage of GAD-
Total
related Expenses
Region Office/SDO Appropriations Cost Incurred
Incurred over
for FY 2018
Appropriations
NCR ROP, SDOs Quezon City, 31,321,342,472.07 26,994,318.42 0.09
Manila, Caloocan, Manila,
Valenzuela, Malabon,
Navotas, Marikina,
San Juan, Mandaluyong,
Pasay,
Muntinlupa,
Parañaque, and
Las Piñas
I SDOs Dagupan City, 2,522,241,727.82 3,919,255.00 0.16
Urdaneta City,
Ilocos Norte,
Ilocos Sur, and
Laoag City
II SDOs Cagayan, Cauayan, 4,008,669,409.00 6,346,060.35 0.16
Ilagan, Nueva Vizcaya,
Quirino, Santiago, and
Tuguegarao
IV-A SDO Cavite 4,195,410,971.53 789,753.00 0.02
VIII SDOs Tacloban City, 18,731,373,184.06 16,449,935.07 0.09
Southern Leyte, Maasin City,
Calbayog, and Samar
d. Failure to conduct gender analysis using the Harmonized Gender and

Development Guidelines (HGDG) tool during the planning/budgeting phase
for each major program/project
28.13 Section 3.4 NEDA-DBM JC No. 2012-01 provides that to aid gender
mainstreaming, agencies shall perform gender analysis using the existing tools,
such as the Harmonized Gender and Development Guidelines (HGDG), to
ensure that the different concerns of women and men are addressed equally and
equitably in their PAPs. Activities to address these differential concerns through
capacity development on GAD or GAD-focused activities shall be included in
agency GPBs.
28.14 Further, Section 6.4.4 of the same Joint Circular states that during the
preparation of its GAD AR, the agency will again administer the HGDG test to
determine the extent that the targeted HGDG score is attained. This score will
be the basis in determining actual expenditure that can be attributed to the GAD
budget.
28.15 Based on the submitted GAD reports of RO Nos. IV-B, X, XIII and CAR, they
failed to conduct gender analysis using the required HGDG tool during the
planning/budgeting phase for each major program/project. Thus, gender
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concerns and issues were not properly addressed and the propriety of the
reported GAD expenditures cannot be ascertained.
e. Failure to develop or integrate in its existing database the GAD information

that include gender statistics and sex-disaggregated data in the gender-
responsive planning, programming and policy formulation
28.16 Section 4.0, Item 4.4 of PCW-NEDA-DBM JC No. 2012-01 provides the
“Institutionalizing GAD Database/Sex-disaggregated Data: The agency shall
develop or integrate in its existing database GAD information to include gender
statistics and sex-disaggregated data that have been systematically produced or
gathered as inputs or bases for planning, budgeting, programming and policy
formulation.”
28.17 As discussed in the HGDG for Project Development, Implementation,

Monitoring and Evaluation, 3rd edition, sex-disaggregated data and gender-
related information are also necessary inputs to a comprehensive analysis of the
situation that includes the dimension of existing gender issues. Validation of the
submitted reports of the following ROs showed the absence of the required data,
as shown below:

IV-A The determination of attendees for various trainings in SDOs Batangas, Quezon and
Lucena City, were not based on the conduct of gender audit and analysis as the
collection of sex-disaggregated data and gender related information and gender
analysis was not undertaken, hence, not considered in the CY 2018 Annual GPB.
V Some Programs, Projects and Activities (PPAs) in the GPB implemented and carried
out during the year and reported in the Annual GAD Accomplishment Report for CY
2018 of SDOs Legazpi City and Tabaco City were not in accordance with the
objectives and pertinent sections of PCW-NEDA-DBM Joint Circular No. 2012-01
and as well as the PCW Memo No. 2018-04 and CY 2018 GAA, thus failing to
address the gender issues of the agency’s clients or contribute in responding to the
gender issues of the Division .
VIII Under SDO Leyte, comparison between the submitted GPB and AR disclosed that
the following: five accomplishments were not among those included in the GPB; and
two PPAs when reported in AR already have different gender issues being addressed
from those in the approved plan. In view of the foregoing, failure to conduct gender
analysis and research to thoroughly address targeted GAD objectives is concluded.
XIII In ROP, the World Teacher’s Day activity was charged to GAD funds with total
expenditures of ₱254,802.57 despite non identification of the activity in the GPB.
a) prioritize the preparation and submission of the annual GPB to the

PCW for review, approval and endorsement to the DBM in adherence
to the aforesaid regulations;
b) require the submission of the PCW-endorsed GPB and GAD

Accomplishment Reports to the Audit Team/s within the required
period under Item V of COA Circular No. 2014-001 dated March 18,
2014;
336
c) create and establish a GAD Focal Point System (FPS) in accordance
with the Magna Carta of Women (MCW) and following the PCW
Memorandum Circular No. 2011-01 (Guidelines for the Creation,
Strengthening and Institutionalization of GAD FPS;
d) comply strictly with the GAD annual budget allocation of at least five
percent of the appropriation thru attribution to the Agency’s regular
projects and programs and ensure the full implementation thereof to
address identified gender-related issues and concerns;
e) institutionalize the GAD database with adequate and systematically

gathered sex-disaggregated data which will provide the bases for
gender analysis, planning, programming and policy formulation to
effectively plan and implement GAD-related programs, projects and
activities that will definitely address priority gender issues; and
f) require the GFPS to conduct gender analysis using the HGDG tool for
each major program/project to identify the related issues, causes,
objectives and the relevant MFO as well as plan the necessary activities
to be able to achieve the desired accomplishments that can be
attributed to GAD related projects.
Senior Citizens and Persons with Disability
29. DepEd ROs II, III, IV-B, IX, X, and NCR have failed to substantially comply with
the provisions set forth under Section 31 of the General Provisions of RA No.
10964 or the GAA for FY 2018 on the full integration in their regular activities of
plans, programs, and projects intended to address the concerns of senior citizens
and persons with disability, thus depriving them of the benefits they are entitled
to. The Department, however, in line with its thrust in providing quality and
inclusive basic education for all, continues to provide the necessary educational
interventions for learners with certain exceptionalities through its SpEd program
designed to meet the needs of children with special needs who cannot profit from
general or Regular Education because of disabilities or Exceptional Disabilities.
29.1 Section 31, General Provisions of RA No. 10964 or the GAA of FY 2018
requires that:
All agencies of the government shall formulate plans, programs and

projects intended to address the concerns of senior citizens and
persons with disability, insofar as it relates to their mandated
functions, and integrate the same in their regular activities. Moreover,
all government infrastructures and facilities shall provide architectural
or structural features, designs or facilities that will reasonably enhance
the mobility, safety and welfare of persons with disability pursuant to
BP Blg. 344 and RA No. 7277, as amended.
337
29.2 Further, RA No. 7277, otherwise known as the Magna Carta for Persons with
Disability, as amended by RA No. 9442, provides privileges and incentives and
specifies prohibitions against verbal, non-verbal ridicules and vilification to
persons with disability.
29.3 The granting privileges and incentives to persons with disability is aimed to
enhance their health, physical fitness, economic and social well-being and their
integration into the mainstream society.
29.4 Also, disabled persons should be able to live freely and independently and
should be able to enjoy the same rights and privileges as other people in order
to take their proper place in society. The rehabilitation of the disabled persons
shall be the concern of the Government in order to foster their capability to attain
a more meaningful, productive and satisfying life.
29.5 Assessment and verification conducted revealed that only RO Nos. IV-A, XI,
and XIII and the NCR-ROP and eight SDOs under it have implemented
programs and projects related to senior citizens and differently-abled persons,
while no plans, programs, and projects intended to address the concerns of senior
citizens and persons with disability were formulated in CY 2018 by the
following agencies: NCR (SDOs Las Piñas, Makati, Malabon, Manila,
Parañaque, and Pasig), and RO Nos. II, III, IV-B, IX, X.
29.6 As a result, issues and concerns of senior citizens and persons with disability
were not adequately addressed during the year, thus depriving them of the
benefits due them.
29.7 Notwithstanding the foregoing, the Department continues to provide the

necessary educational interventions for learners with certain exceptionalities
through its SPED program. The SPED program provides a holistic approach in
catering to the needs of learners with various exceptionalities. This program
ensures that learners with exceptionalities will have access to quality education
by giving them their individual and unique learning needs. This initiative caters
to learners with visual impairment, hearing impairment, intellectual disability,
learning disability, autism spectrum disorder, communication disorder, physical
disability, emotional and behavioral disorder, multiple disability with visual
impairment, and to those who are orthopedically handicapped, chronically ill,
gifted and talented.
a) enjoin all operating units of DepEd to formulate plans, programs, and

projects related to senior citizens and persons with disability insofar as
these relate to its mandated functions, and integrate the same in their
regular activities and ensure proper implementation thereof; and
338
b) consider designating a focal person or establishing a focal committee
that will work in formulating and conducting activities to address the
concerns of senior citizens and persons with disability.
Compliance with RA No. 656, otherwise known as the Property Insurance Law
30. The reported insurable assets of the Department and its ROs are not amply
protected against unforeseen events such as loss thru fire, earthquake, typhoon
and/or flood as these are not insured with the GIF of the GSIS, thus exposing the
Management to the risk of not being indemnified with the equivalent amount
thereof, contrary to RA No. 656, as amended by PD No. 245 dated July 13, 1973,
and other pertinent rules and regulations.
30.1 RA No. 656, otherwise known as the Property Insurance Law dated June 16,
1951, as amended by PD No. 245 dated July 13, 1973 states that “Every
government, except a municipal government below first class, is hereby required
to insure its properties, with the Fund against any insurable risk here in
provided and pay the premiums thereon.”
30.2 In addition, the Office of the President, as well as the COA, have been persistent
in reminding all NGAs to enforce the compliance with the RA No. 656, thus the
following issuances have been issued:
a. Memorandum Circular No. 634 dated May 10, 1973 - requiring all
departments, bureaus, offices, agencies and instrumentalities of government,
all provincial, city and municipal governments and GOCCs to insure their
properties and assets in accordance with Property Insurance Law;
b. COA Circular No. 79-112 dated August 30, 1979 - to assist the GSIS in
implementing the Property Insurance Law;
c. Administrative Order No. 33 series of 1987 - prescribing guidelines for

insurance of all properties, contracts, rights of action and other insurance risks
of the government, including those in which the government has an insurable
interest, with the GIF of the GSIS; and
d. COA Circular No. 92-390 dated November 17, 1992 - imposed that all heads
of national agencies, LGUs and GOCCs shall be responsible for the
preparation and submission of the inventory of all insurable physical assets
and also requires submission of said inventory report to the GSIS not later
than October 31 of the ensuing year.
e. COA Circular No. 2018-002 dated May 31, 2018 - prescribed the guidelines
on the submission of the Property Inventory Form as basis for the assessment
of general insurance coverage over all insurable assets, properties and
interests of the government with the GIF of the GSIS. The Circular was issued
339
to assist in the implementation of the provisions of RA No. 656 on the
insurance and bonding of risk on insurable government assets and properties
with the GIF.
30.3 In addition, Section 489 of the Government Accounting and Auditing Manual
(GAAM) required that all officials of government shall submit their respective
inventories of property on those that have insurable interest of such nature that
a contemplated peril might directly damnify the insured. The mentioned
inventories shall be submitted every end of the fiscal year to the COA, furnishing
the GSIS with a copy for appraisal of the amount to be paid for the insurance of
the property reported. However, it was duly noted that the NCR has insured
some of its properties against fire and non-mortgage with the GIF of the GSIS
under the following Policy Nos.:
Premium Payment
Amount
Policy No. Period Covered Amount
Insured OR No. Date
(PhP)
FI-NM-GSISHO- June 23, 2018 to June 11,552,483.56 8300017140 30-Jul-18 45,747.84
0029781 23, 2019
0029782 25, 2019
FI-NM-GSISHO- June 7, 2018 to June 7, 9,643,646.70 8300017142 30-Jul-18 39,380.53
0029784 2019
0029786 25, 2019
30.4 Furthermore, the weather conditions in the Philippines have drastically changed
which extremely affected the ROs. In the recent years, the schools in the
province were damaged by different typhoons, such as Lawin, Lando, Rosita
and Yolanda. The SDOs incurred repair expenses due to the onslaught of
typhoons, without indemnification from GSIS Insurance Fund since its buildings
were not insured. Thus, to cover loss or damage of the public-school properties
against catastrophic perils and guarantee immediate damage control, repair and
replacement, the properties of the agency must be insured.
30.5 In addition, it was observed that the absence of budget allocations for the
insurance premiums was the main reason for the non-availment of insurance for
SDO properties.
30.6 In view of the foregoing, failure to insure the aforementioned properties and
equipment denies the government of adequate and reliable protection against
any damage to or loss of its properties or assets due to fire, earthquake, storm,
or other fortuitous events/casualty. In addition, it also deprives the GSIS of
substantial premium income that should have formed part of the GIF.
a) require the designated Property Officers to submit an inventory of all

its insurable assets to the GSIS within the prescribed timeline and
340
thereafter secure insurance of the same with the GIF of the GSIS in
order to ensure compensation of the equivalent value in case of loss or
damage; and
b) allocate an amount for the insurance premiums in the agency’s yearly

budget.
Compliance with Tax Laws
31. DepEd Offices substantially complied with the revenue regulations on

withholding of taxes on salaries, benefits, and procurement of goods and services
and the subsequent remittance thereof pursuant to Revenue Memorandum
Circular (RMC) No. 23-2007 dated March 23, 2007 and BIR Tax Revenue
Regulation No. 10-2008 dated July 8, 2008. However, weaknesses in the controls
were observed as the account still showed unremitted taxes amounting to
₱294,259,835.85 and other deficiencies with regard to compliance with BIR
regulations.
31.1 Revenue Regulations No. 10-2008 dated July 08, 2008 provides the pertinent
provisions relative to the withholding of income taxes on compensation while
RMC No. 23-2007 dated March 20, 2007 provides clarifications on the
computations of withholding taxes and other requirements on government
money payments due or payable to suppliers of goods and/or services.
31.2 Revenue Regulations No. 1-2013 dated January 23, 2013 provides that the filing
of return and payment of tax due should be on or before the 10th day following
the month in which withholding was made, except for taxes withheld for the
month of December of each year, which shall be filed on or before January 15
of the succeeding year.
31.3 The DepEd Offices substantially complied with the revenue regulations on
withholding of taxes on salaries, benefits, and procurement of goods and
services and the subsequent remittance thereof. However, reported balances of
unremitted taxes as of December 31, 2018 amounted to ₱294,259,835.85,
broken down as follows:
Table 60: Breakdown of Balance of Unremitted Taxes

Office/
Beg. Balance Tax Withheld Total Remittance Balance
Region
CO 68,195,227.95 791,063,043.71 859,258,271.66 715,012,951.15 144,245,320.51
NCR (3,068,005.28) 185,191,147.14 182,123,141.86 177,138,069.40 4,985,072.46
CAR 7,247,699.11 27,000,343.43 34,248,042.54 32,145,873.39 2,102,169.15
III 88,874,732.21 543,206,797.20 632,081,529.41 595,997,197.28 36,084,332.13
IV-A 0.00 683,764,923.50 683,764,923.50 677,001,574.72 6,763,348.78
IV-B 38,005,451.18 250,713,020.89 288,718,472.07 275,521,234.09 13,197,237.98
V 167,169,448.17 510,623,193.46 677,792,641.63 615,666,386.74 62,126,254.89
IX 373,004.10 13,504,393.93 13,877,398.03 13,089,539.83 787,858.20
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Office/
Beg. Balance Tax Withheld Total Remittance Balance
Region
X 0.00 480,452,357.08 480,452,357.08 479,451,583.62 1,000,773.46
XI 1,207,126.63 319,300,723.09 320,507,849.72 299,702,063.08 20,805,786.64
XIII 0.00 236,440,604.54 236,440,604.54 234,278,922.89 2,161,681.65
Total 368,004,684.07 4,041,260,547.97 4,409,265,232.04 4,115,005,396.19 294,259,835.85
31.4 The following are some of the observations/deficiencies noted as regards to

compliance with revenue regulations in different Offices:
Table 61: Deficiencies in Compliance with BIR Regulations

Region Audit Observations/Deficiencies noted
Non-maintenance of Subsidiary Ledger and unaccounted beginning balances
NCR At SDO San Juan, out of the year-end balance of ₱1,186,320.42, the amount of ₱1,178,195.55 or 99.32
percent pertained to prior years’ balances without any supporting schedule and subsidiary ledger to support
the amount.
The ending balance of taxes withheld by the SDO pertained mainly to the prior year’s unreconciled taxes
and the result of over/under remittances in CY 2018. Upon verification, the said balance in the amount of
₱2,970,924.05 was already paid as supported with TRA Nos. 413900028992804, 011900028993432 and
171900028992225 all dated February 7, 2019. However, the payment is still considered delayed contrary
to Section B No. 4 of BIR RMC No. 23-2012 dated February 14, 2012. The payment will be reflected in
the CY 2019 books of accounts.
Taxes withheld by Pateros NHS pertaining to prior years and CY 2018 remained unremitted in the amount
of ₱282,447.01 and ₱48,767.28, respectively. Upon inquiry with the Bookkeeper, the composition of the
beginning balance cannot be identified due to absence of schedule of taxes in the prior years.
Non-remittance of taxes withheld
II The Due to BIR account in the financial reports of Divisoria High School and Cabulay High School showed
balances of ₱157,685.70 and ₱172,278.99, respectively, as of December 31, 2018 which pertain to taxes
withheld in CY 2018. The amount was not remitted to the BIR through TRA due to the problem of agency
enrollment with the electronic Filing and Payment System (eFPS) of the BIR in SDO Santiago.
Non withholding of tax
I Corresponding withholding taxes were not deducted from the claims for the procurement of office supplies
and equipment, overtime pay and honoraria of resource persons totaling ₱682,762.35.
II Payment of goods and services subject to withholding taxes of Addalam RHS, Mabini NHS and Sandiat
NHS for CY 2018 revealed that no amounts of taxes were withheld by these schools. (SDO Isabela)
VI The SDO of Bacolod City and Cadiz City failed to deduct and withhold the corresponding Expanded
Withholding Tax (EWT) in the total amount of ₱443,655.30 from the payment to suppliers for the purchase
of goods and services.
Over withheld and over/under remittance
NCR The SDO of Mandaluyong City had an over-remittance of ₱3,068,005.28 for CY 2017 due to the
unrecorded taxes withheld for the month of August last year and ₱912,394.27 unremitted taxes withheld
for the month of January, March, May and June for CY 2018 which resulted in a net over-remittance of
₱2,155,611.01.
31.5 We recommended and Management of concerned Offices/Schools agreed

to:
a) require their Accountants to strictly implement the imposition of taxes

on income and money payments due or payable to all suppliers of goods
and/or services being a withholding agent of the government and,
immediately remit the balance of taxes withheld on or before the 10th
day of the month following the month of withholding; and
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b) reconcile the prior years’ unremitted balances of the Due to BIR
account and eventually adjust the books or remit the balance to BIR.
31.6 The Management of SDO Taguig City and Pateros of NCR commented that its
Accounting Unit is currently reconciling the differences between the taxes
withheld per books and actual remittance and committed to reconcile the account
within three months. Nonetheless, they assured that they will strictly observe the
tax remittance period and will immediately remit the taxes withheld to BIR.
Compliance with GSIS Law
32. Premium contributions and/or loan amortizations totaling ₱1,208,870,944.83

deducted from salaries of teaching and non-teaching personnel of CO and 11 ROs
remained unremitted to GSIS as at yearend exposing the concerned personnel to
penalties/interest that could result in undue limitations in enjoying the privileges
and benefits conferred under the GSIS Law.
32.1 Sections 6 and 7 of RA No. 8291 or the GSIS Act of 1997 provide that:
Section 6. Collection and Remittance of Contributions -
(a) The employer shall report to the GSIS the names of all its employees,
their corresponding employment status, positions, salaries and such other
pertinent information, including subsequent changes therein, if any, as
may be required by the GSIS; the employer shall deduct each month from
the monthly salary or compensation of each employee the contribution
payable by him in accordance with the schedule prescribed in the rules
and regulations implementing this Act.
(b) Each employer shall remit directly to the GSIS the employee’s and
employer’s contributions within the first ten (10) days of the calendar
month following the month to which the contributions apply. The
remittance by the employer of the contribution to the GSIS shall take
priority over and above the payment of any and all obligations, except
salaries and wages of its employees.
Section 7. Interest on Delayed Remittances - Agencies which delay the

remittance of any and all monies due to the GSIS shall be charged
interests as may be prescribed by the Board but not less than two percent
(2%) simple interest per month. Such interest shall be paid by the
employers concerned.
32.2 As of December 31, 2018, deductions from the salaries of teaching and non-
teaching personnel of DepEd Offices for the GSIS premiums and loan
amortizations and its remittances during the year are summarized as follows:
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Table 62: Summary of GSIS Premiums, Loan Amortizations and Remittances
Beginning Balance and
Current Year Balance as of
CO/ Region Remittances Adjustments
Deductions/ 12/31/2018
Contributions
CO 54,840,960.43 52,893,257.23 - 1,947,703.20
NCR 5,616,846,399.77 5,347,368,197.43 - 269,478,202.34
CAR 1,525,502,350.63 1,384,227,852.63 - 141,274,498.00
II -* -* - 18,144,919.71
III 7,627,733,674.29 7,354,676,202.40 (726,982.93) 272,330,488.96
IV-A 5,240,771,289.10 5,229,084,428.91 - 11,686,860.19
IV-B 943,126,239.79 900,715,028.19 - 42,411,211.60
VI -* -* - 1,383,898.36
VII -* -* - 42,493,334.24
VIII 143,523,479.39 127,828,737.27 - 15,694,742.12
IX -* -* - 266,239,711.83
XI 2,994,866,289.16 2,896,158,178.76 - 98,708,110.40
XIII 281,714,199.87 254,636,935.99 - 27,077,263.88
Total 1,208,870,944.83
*Amount not indicated
32.3 Audit of the deductions and remittances of GSIS premiums and loan
amortizations deducted from the salaries of employees by the SDOs revealed the
following deficiencies:
a) Unremitted year-end balances payable to GSIS of ₱1,208,870,944.83

representing premium and loan amortizations deducted from the salaries of
DepEd employees are discussed in detail below:
CO/Region Amount Audit Observations
CO 1,947,703.20 For CY 2018, DepEd CO deducted the total amount of ₱54,426,519.73 as
GSIS contributions from the monthly compensation of its employees of
which the amount of ₱52,893,257.23 was remitted to GSIS, leaving an
unremitted balance of ₱1,533,262.50 as of December 31, 2018 pursuant to
Sections 13 and 14, Rule III of RA No. 8291. Likewise, further verification
of the transactions showed unremitted GSIS deductions from the
individual voucher claims amounting to ₱414,440.70, thus the total
amount of ₱1,947,703.20 remained unremitted to the GSIS as of December
31, 2018.
NCR 269,478,202.34 Failure by the SDO and IUs to remit on time the monthly premium
contributions and loan repayments withheld from salaries of the
employees and newly-hired personnel, thus resulting in payment of
penalty, interest, and other charges by the SDO due to delayed remittance
of GSIS withheld deductions.
CAR 141,274,498.00 The unremitted deductions were uploaded to the GSIS system but were
rejected because employee-information in the GSIS database were not
updated or corrected. This information included increase in basic salaries
due to promotion, actual salaries lesser than those in the database,
transferred employees, incorrect spelling of names, and civil status.
II 18,144,919.71 The year-end balances of GSIS contributions of SDO Nueva Vizcaya
amounting to ₱18,143,343.18 and RLIP withheld by the Santiago City
NNHS under SDO Santiago City amounting to ₱1,576.53 or a total of
₱18,144,919.71 were not remitted in full within the prescribed period.
III 272,330,488.96 RPSU and 20 SDOs had an accumulated unremitted premium deductions
and government share to GSIS amounting to ₱272,330,488.96 as of
December 31, 2018.
IV-A 11,686,860.19 DepEd RO IV-A and its SDOs complied with GSIS Premium deductions
and remittance requirements.
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CO/Region Amount Audit Observations
IV-B 42,411,211.60 ₱41,176,488.62 were fully remitted in the first quarter of ensuing year,
while ₱1,234,722.98 withheld by SDO Marinduque were not remitted.
VI 1,383,898.36 Verification of the Schedule of Due to GSIS disclosed a balance of
₱1,383,898.36 as of December 31, 2018. Of this amount, ₱196,243.42
refers to premiums/loans deducted from payrolls of employees as early as
January to October, 2018 aging 80 days to 342 days as of December 31,
2018 which remain unremitted while the rest of the amount pertains to
deductions in December, 2018 only.
VII 42,493,334.24 The unremitted balances of ₱6,323,566.17 and ₱36,169,768.07 were
balances during prior years and current year, respectively.
VIII 15,694,742.12 As of December 31, 2018, Due to GSIS had an unremitted balance of
₱15,694,742.12 per SL and FS.
IX 266,239,711.83 ₱241,937,928.79 were remitted to GSIS on January 3, 2019. The
unremitted balance of ₱24,301,783.04 was balances during prior years of
which the Accounting Unit is on the process of reconciliation and working
back to determine the details.
XI 98,708,110.40 Of the total amount withheld ₱2,994,866,289.16, the amount of
₱2,896,158,178.76 was remitted, leaving an unremitted balance of
₱98,708,110.40 as of December 31, 2018.
XII No data given A discrepancy of ₱473.87 was found between the total billings and payroll
deductions indicating that there were unreconciled data between the
employee records of Kidapawan City NHS and the records of GSIS
pertaining to the members under the school, resulting in lower total
deductions as compared to the billings from GSIS.
An aggregate amount of ₱188, 880.77 was over-remitted by the school for

CY 2018 to GSIS. The said amount is the difference between the total
payroll deductions of ₱20,188,636.87, comprising of the personal share,
government share, and monthly loan amortization, among others, and the
total remittance for CY 2018 amounting to ₱20,377,517.64.
XIII 27,077,263.88 The deficiency was attributed to the failure of the Accounting Unit
personnel/School Bookkeeper who is responsible in the preparation of the
monthly payroll to deduct fully the GSIS premiums, loan amortizations
and other accounts due to the GSIS, which were not also detected by the
Agency Head, who approved the payments.
Total 1,208,870,944.83
b) Other deficiencies observed are as follows:

CO Under remittances for CYs 2016 and 2017 to GSIS pertains to deductions from newly-hired employees’
individual voucher claims and salary adjustments arising from promotions, step increments and the
effectivity of EO No. 201 or Salary Standardization Law of employees which were not included in the
masterlist of balance due for remittance.
I GSIS Premiums and amortizations were delayed/not remitted intact due to discrepancies between the
records of the personnel per RPSU file and GSIS database.
X The non-prioritization of GSIS loans in the current payroll system resulted in the accumulation of unpaid
obligations due to GSIS totaling ₱2,051,762.33 contrary to RA No. 8291 or the GSIS Act of 1997,
Section 48 of the General Provisions of CY 2018 GAA and DepEd Order No. 5, s. 2018, which
consequently not deducted from the monthly salaries of DepEd borrowing employees due to deficiency
in the net take home pay. The accumulation of huge amount in arrears increases risk of default and the
borrowing employee may further suffer the burden of paying interest and penalties, becomes ineligible
in availing annual dividends and be deprived of enjoying the whole retirement benefits upon separation
from the service.
Thorough review of the delinquent accounts disclosed that there are 108 borrowing employees who have
multiple unpaid loans due to GSIS totaling ₱803,941.43.
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32.4 We recommended and the Management agreed to remit all premium
contributions and loan payments to the GSIS within the timelines set to
avoid penalties/interests and to enable all employees to enjoy the privileges
and benefits accruing to members and impose sanctions on employees
responsible for the non-remittance thereof.
Office/
SDO Management’s Comments
Region
NCR Quezon The SDO has two Agency Authorized Officers who are in-charge with the updating of
City/Mandaluyong personnel GSIS records, and approval of loans, with more than 15,000 employees as
City/Taguig City members. That is why, the correction of errors in the personal profiles of members are
and Pateros not updated. The system of the GSIS does not accept remittances of members with
incorrect data in the system, resulting in the unremitted amounts to the GSIS.
Management said that the cause of delay was due to the 100% matching of the GSIS
system. They were not aware that unmatched item can be dropped temporarily to avoid
delay. The Personnel Section had difficulty in generating the SOT before due to the 100
percent matching. They waited until it would match 100%. Management commit to
submit an appeal to the GSIS regarding the penalty and commits to settle this.
Management have set a meeting with the GSIS on March 26, 2019 to reconcile the
accounts with clarifications. And they are already processing the refund amounting to
₱750,977.26.
II Nueva Vizcaya The Management adheres to the recommendations. The GSIS remittances were
continually being prepared thru the ERF System provided by GSIS and the HRMO and
the Accounting Office are interfacing to facilitate the immediate remittance of withheld
mandatory contributions.
One of the hiring processes of DepEd is to orient the newly hired teachers with regard
to their role and duties and responsibilities to the pupils/students and orientation of their
benefits and first salary. The Management has initiated that no salary shall be given
unless the newly hired employee will be able to furnish the PhilHealth, TIN, Pag-IBIG
and GSIS numbers. With this method, the delay in remittance of mandatory
contributions/taxes will be avoided.
The Management has instructed the Accountant to comply with the recommendation
and to correct the erroneous entry thru reclassification from “Due to NGAs” to “Due to
GSIS, Pag-IBIG or PhilHealth” accounts.
VI Management commented that the GSIS changed its system and have their own billing
for each teacher. However, some computations of the Accounting Office are not the
same with those of the GSIS and the latter does not accept remittances if the amount
varies. Management also commented that they resend communications to the GSIS to
settle the issue on unreconciled remittances.
X The matter on incorporating the order of priority of authorized deductions setting GSIS
and HDMF Loans as mandatory deductions was brought to the attention of the Central
Office during the two separate seminar-workshops. The first was on the Standard
Processing and Approval of Loan Applications and Other Financial Obligations
Pursuant to DepEd Order Nos. 5 and 18, s. 2018 on November 25 to 28, 2018 and on
the Coordination Meeting and Workshop on the Standardization of Process Flows for
GSIS Premiums and Loans: Approval, Billing, Payroll Integration and Remittance held
in Apple Tree Resort, Opol, Misamis Oriental on February 26-28, 2019. In the latter
activity, RO No. X and CARAGA were joined by the Vice President for Visayas-
Mindanao and the Branch Managers with their staff where one of the agreements
reached was for the Department to come up with a new payroll system to replace the old
FoxPro program.
XIII Tandag City/ Their remittances are being paid and remitted by the Regional Office but obligation and
Jacinto P. Elpa disbursement of funds is in the Division. This is done by monthly payment through
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Office/
SDO Management’s Comments
Region
NHS (Tandag issuance of checks to DepEd CARAGA deductions. Every month, the Regional Office
City) will send the management Monthly Billing Statements containing the Disbursement
Summary Report (PS and GS) which serves as the Basis for Computation of the Total
deductions that will be transferred to the Region.
The Management of Jacinto P. Elpa NHS commented during the exit conference that
variances were due to e.g. (1) teachers’ absences/leave without pay and (2) teachers were
transferred to other schools. Reconciliation of GSIS records with those of School will
be facilitated to trace the variances between the billing statements and actual
remittances.
Compliance with RA No. 9679 on Further Strengthening the HDMF and for Other
Purposes
33. Of the total amount withheld by the DepEd for Pag-IBIG/HDMF premium
contributions as of December 31, 2018, the amount of ₱65,809,331.48 remained
unremitted, contrary to the pertinent provisions of RA No. 9679 on Further
Strengthening the Home Development Mutual Fund (HDMF) and For Other
Purposes.
33.1 Section 23 of RA No. 9679 or An Act to Further Strengthening the HDMF, and
for Other Purposes provides, among others, for the immediate remittance of the
contributions, and HDMF. Circular No. 275 requires that: “Employers shall
remit the required monthly employer and employee contributions to the nearest
Pag-IBIG branch or its authorized collecting banks, together with the duly
accomplished Membership Contribution Remittance Form (MCRF.)”
33.2 Further, “failure or refusal of the employer to pay or to remit the contributions
herein prescribed shall not prejudice the right of the covered member to the
benefits under the Fund. Such employer shall be charged a penalty equivalent to
1/10 of 1% per day of delay of the amount due starting on the first day
immediately following the due date until the date of full settlement.”
33.3 The details of the premium contributions and loan amortizations deducted from
the salaries of the DepEd officials and employees with its corresponding
remittances are shown below:
Table 63: Summary of Pag-IBIG Premium Contributions, Loan Amortizations and Remittances
Total Withheld
(Beginning Balance and
Office/Region Remittance Unremitted Balance
CY Contribution and
Loan Repayment)
CO 2,919,201.75 2,689,457.16 229,744.59
NCR -Las Piñas City, 4,416,856.48 4,249,106.48 167,750.00
Pasay City, Parañaque
City, Mandaluyong City
and San Juan City
NCR-ROP, SDOs 295,815,171.98 277,369,654.80 18,445,517.18
Caloocan, Navotas City,
Muntinlupa, Valenzuela
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Total Withheld
(Beginning Balance and
Office/Region Remittance Unremitted Balance
CY Contribution and
Loan Repayment)
I No report on Pag-IBIG/HDMF
II 1,704,229.96 0.00 1,704,229.96
III 363,546,909.64 348,523,394.13 15,023,515.51
IV-A No report on Pag-IBIG/HDMF
IV-B 36,074,666.94 35,852,634.51 222,032.43
V 244,471,208.26 230,066,252.56 14,404,955.70
VI No amount provided in the report
VII 2,644,565.01 88,100.00 2,556,465.01
VIII 5,136,056.20 5,012,932.73 123,123.47
IX 15,236,210.56 12,412,081.49 2,824,129.07
X No report on Pag-IBIG/HDMF
XI 133,466,970.00 123,359,101.44 10,107,868.56
XII No amount provided in the report
XIII No report on Pag-IBIG/HDMF
Total 1,105,432,046.78 1,039,622,715.30 65,809,331.48
33.4 Other deficiencies in CO, NCR and five ROs were also noted as shown below:
Table 64: Other Deficiencies in GSIS and Pag-IBIG Remittances

Unremitted
CO/
SDO Balance as of Deficiencies Noted
Region
Year-end
CO 244,169.59 GL transactions for the current year still reflected unremitted
deductions to Pag-IBIG totaling ₱244,169.59 consisting of
unremitted contributions/deductions from regular payroll and
individual voucher claims of DepEd-CO employees amounting to
₱229,744.59 and ₱14,425.00, respectively.
NCR ROP 18,204,689.98 The DepEd-NCR had unremitted HDMF/Pag-IBIG loan payments
and premium contributions.
SDO 236,772.28 The SDO had unremitted HDMF/Pag-IBIG loan payments and
Muntinlupa premium contributions contrary to the pertinent provisions of RA
City No. 9679 on Further Strengthening the HDMF and For Other
Purposes.
SDO 600.00 The SDO of Navotas City had an unremitted balance at year end.
Navotas
City
SDO 4,254.92 Analysis of the Due to Pag-IBIG account revealed that the SDO
Valenzuela had unremitted HDMF/Pag-IBIG loan payments and premium
City contributions.
II 1,704,229.96 The personnel-in-charge of the remittances informed us that the
amount represents the unremitted contributions from CY 2017 and
contributions of newly-hired employees who are yet to acquire and
to complete their GSIS BP and Pag-IBIG Numbers but their
employee’s share on the contributions have been withheld from
their salaries. Furthermore, funds to be remitted by SDO Nueva
Vizcaya to HDMF were transferred to the Trust Fund account of
the Agency under DV No. 2018-12-4420 to avoid its reversion to
the National Treasury. Moreover, the funds transferred were
recorded to Due to NGAs account instead of the Due to Pag-IBIG
accounts, contrary to the Revised Chart of Accounts under GAM
for NGAs, Volume III.
III SDO 20,200.00 Only ₱1,200.00 were remitted in January 2019, while the remaining
Malolos balance was not yet remitted
and 2 IUs
348
Unremitted
CO/
SDO Balance as of Deficiencies Noted
Region
Year-end
SDO 4,807,436.57 The Accountant disclosed that the unremitted balances, except for
Pampanga Pag-IBIG contributions of employees who were included in the
regular payroll, still pertain to employees whose middle names
were not provided in the data.
SDO 400,812.00 Unremitted Pag-IBIG deductions were due to either the absence or
Zambales discrepancy in the Membership ID Number of employees.
SDO 132,300.00 Remittance of withheld Pag-IBIG premiums was not done in a

Olongapo timely manner because of discrepancies in the employee's records.
IV-B 222,032.43 Except for the ₱172,937.76 withheld by the SDO of Marinduque,
the amount of ₱49,094.67 from the year-end balance of
₱222,032.43 was fully remitted in the first quarter of the ensuing
year
VII 2,556,465.01 Only the personal share of the employees was recognized as
payable from CY 2014 to 2017. Government’s share was
recognized only upon remittance as expense. For CY 2018, the
Division was able to recognize unremitted government’s share to
Pag-IBIG per JEV No. 2018-12-008501 amounting to ₱774,700.00
only at year-end.
The SDO, for the past and current years, has low remittance
efficiency. The practice of the Division of recognizing only the
personal share in the prior years as Due to Pag-IBIG materially
understated the aforementioned account. This practice also
understated the expenses of the year the government shares pertain
to. The expenses are only recognized upon remittance, which are
mostly to be done in the succeeding years. Hence, the expenses are
mostly charged to the Accumulated Surplus/Deficit account. In CY
2018, the government share for Due to Pag-IBIG set up as payable
at the end of the year is also unreliable because the figures were
only provided by the Budget Section. There were no documents to
support the recorded payables.
IX 2,824,129.07 The agency has duly complied with the requirements of the Home
Development Fund Law. The unremitted balance of ₱2,824,129.07
or 18.55 percent were balances during prior years of which the
Accounting Unit is in the process of reconciliation and working
back to determine the details.
RO No. XII
33.5 The implementing schools under Cotabato Province and Kidapawan Division
failed to secure the ORs from HDMF Collecting Office for remittances made in
CY 2018 totaling ₱5,659,858.14 and ₱1,591,604.07, respectively, contrary to
Section 68 of PD No. 1445 and Section 3.1 of COA Circular No. 2013-007 dated
September 18, 2013, hence, a failure of the employer to safeguard the interest of
its employees.
33.6 In Kidapawan, audit of the monthly billings, payroll deductions, and remittances
made to HDMF for CY 2018 revealed that the agency had a total monthly billing
of ₱1,591,604.07, total payroll deductions of ₱1,595,709.91, and total
remittances of ₱1,595,709.91 for the period January 1 to December 31, 2018. A
349
difference of ₱4,105.84 was found between the total billings and payroll
deductions indicating that for CY 2018, specifically for the months of January
to April, 2018, the school deducted more than what should be deductible from
its employees.
33.7 A total of ₱4,105.84 was under-remitted by the school to HDMF for CY 2018
contrary to Section 3, Rule VII of RA No. 9679. The said amount was the
difference between the total payroll deductions of ₱1,595,709.91, comprising
the personal share, government share, and monthly loan amortization, and the
total remittance for CY 2018 amounting to ₱1,591,604.67. In addition, the
ending balance of the account Due to Pag-IBIG does not reflect the unremitted
deductions of ₱4,105.84, casting doubt as to the completeness and fair
representation of this amount in the CY 2018 financial reports.
33.8 It is mandatory on the part of the agencies to withhold and remit all monthly
premium contributions within the timelines set by the governing agencies. It is
only when premiums are remitted that members are able to enjoy and access
whatever privileges or benefits accruing to them, thus, unremitted Pag-IBIG
premium contributions could result in the delay in the availment of loan
privileges and other benefits offered to all Pag-IBIG members.
a) immediately remit all premium contributions withheld to the

concerned government agencies within the timelines set to avoid
penalties/interests and to enable all employees to enjoy the privileges
and benefits accruing to the members.
RO No. II
a) require all newly employed personnel to immediately register their

membership with Pag-IBIG, GSIS and PhilHealth upon assumption to
office to avoid delay in the remittances of their mandatory deductions;
and
b) instruct the Accountant to prepare a JEV for the reclassification of the

mandatory withheld amounts from Due to NGAs account to Due to
Pag-IBIG account.
RO No. VII
a) assign/hire a person with the sole responsibility of maintaining and

reconciling the records of accounts Due to GSIS, Pag-IBIG and
PhilHealth and provide said personnel with a separate computer to
facilitate remittances;
350
b) require that records for unremitted prior years’ contributions be
retrieved so that these can be remitted and credited to the right
employees;
c) require the Accounting Section to recognize the Government’s Share

of premiums for Due to Pag-IBIG simultaneously with the personal
share and prepare the necessary adjusting journal entry to correct the
account balance; and
d) require the Accountant to maintain separate Subsidiary Ledgers for

the personal and government share for account Due to Pag-IBIG.
RO No. XII
a) require the concerned official/s to secure the Official Receipts for the
months paid to the HDMF Collecting Office in accordance with Section
68(1) of PD No. 1445 and Section 3.1 of COA Circular No. 2013-007
dated September 18, 2013. In case of failure of the HDMF Office to
provide the said official receipts, refer the matter to DepEd Legal
Office for appropriate legal action to compel the HDMF to issue official
receipts for remittances made, considering that the deficiency noted is
a reiteration of prior year’s audit observation which was not acted
upon accordingly.

Office/Region SDO Management’s Comments
II SDO The Management adheres to the recommendations and the Accounting
Nueva Section remitted the unreleased checks to the HDMF which was duly
Vizcaya accepted by the said agency. The GSIS remittances were continually
being prepared thru the ERF System provided by GSIS and the HRMO
and the Accounting Office are interfacing to facilitate the immediate
remittance of withheld mandatory contributions.
One of the hiring processes of DepEd is to orient the newly hired teachers
with regard to their role and duties and responsibilities to the
pupils/students and orientation of their benefits and first salary. The
Management has initiated that no salary shall be given unless the newly
hired employee will be able to furnish the PhilHealth, TIN, Pag-IBIG and
GSIS numbers. With this method, the delay in remittance of mandatory
contributions/taxes will be avoided.
Likewise, the Management has instructed the accountant to comply with
the recommendation and to correct the erroneous entry thru
reclassification from “Due to NGAs” to “Due to GSIS, Pag-IBIG or
PhilHealth” accounts.
SDO Santiago City National High School committed to remit immediately to
Santiago the GSIS premiums withheld for CY 2018.
IV-B The Division Accountant assured to comply with the
recommendations.
351
Compliance with Philippine Health Insurance Corporation (PhilHealth)
Table 65: Details of Deficiencies in PhilHealth Contributions

Unremitted
Region SDO Balance at Deficiencies Noted
Year end
III SDO of 29,725,765.13 The unremitted contributions were caused by incomplete details
Malolos and 2 and/or information such as PhilHealth Employee Number.
IUs
SDO of 12,510,206.13 The unremitted balance consists of deductions from employees
Nueva Ecija who are not enrolled in the electronic Premium Remittance System
and 1 IU (EPRS) because of incomplete personnel records.
SDO of 179,848.81 The balance remained unremitted due to incomplete/incorrect data
Mabalacat of the employees in the system of PhilHealth.
City and 6
IUs
SDO of 437,741.79 Remittances in the total amount of ₱9,500.00 were still attached to
Zambales the disbursement vouchers without any supporting paper; hence,
they were already stale checks.
IV-B 167,312.78 Recapitulation of the transactions extracted from the Journals of the
agency which pertain to the said accounts, showed that monthly
mandatory contributions for GSIS, Pag-IBIG and PhilHealth,
deducted from the salaries of the agency’s newly hired employees
were not remitted within the prescribed period. Hence, the balances
at year end were results of the accumulation of the unremitted
contributions which were continuously carried forward from the
prior years.
VII 6,062,283.04 The Division, for the past and current years, has low remittance
efficiency. The practice of the Division of recognizing only the
personal share in the prior years as Due to GSIS, Pag-IBIG and
PhilHealth materially understated the aforementioned accounts.
This practice also understated the expenses of the year pertaining
to government shares. The expenses are only recognized upon
remittance, which are mostly to be done in the succeeding years.
Hence, the expenses are mostly charged to the Accumulated
Surplus/Deficit account. In CY 2018, the government share for Due
to GSIS, Pag-IBIG and PhilHealth set up as payable at the end of
the year is also unreliable because the figures were only provided
by the Budget Section. There was no document to support the
recorded payables.
VIII 1,867,714.34
X 46,684,606.01 Pursuant to PhilHealth Circular No. 025, s.2015 and 2016-0008 on
the Mandatory Use of the Electronic Premium Remittance System
(EPRS), all employers are required to use the Statement of
Premium Account (SPA) generated from the EPRS for the payment
of premiums, and preparation and submission of remittance reports.
Starting November 2018, The Regional Payroll Servicing Unit
(RPSU) has complied with this online payment facility, however,
it cannot accommodate the updating of the remittances status of
almost 30,000 employees of DepEd RO No. 10. Likewise, it had
encountered system errors, hence, on December 31, 2018, “Due to
PhilHealth” balance included unpaid remittances totaling
₱46,684,606.01 for the months of November and December 2018
amounting to ₱23,282,112.71 and ₱23,402,493.30, respectively.
XII 1,068,655.46 PhilHealth premiums totaling ₱1,068,655.46 was reflected as
unpaid in the Statement of Premium Account from PHIC despite
corresponding remittances already made for the months, resulting
in unreconciled balances between the records of DepEd
Implementing High Schools and PHIC as of December 31, 2018,
to the disadvantage of the employees from which deductions are
regularly charged.
352
Unremitted
Region SDO Balance at Deficiencies Noted
Year end
Inquiry with the concerned officials disclosed that the total

premiums due for the respective months were already paid in the
months they became due. However, upon review of the submitted
Disbursement Vouchers (DVs), the PHIC Collecting Office did not
issue an Official Receipt which may indicate that the remittances
were not acknowledged, only the PhilHealth’s Agent Receipt
(PAR) was issued instead.
33.11 We recommended that Management:
RO No. III
a) require the concerned Accountants to adhere strictly to the provisions

of RA No. 7875 on the prompt remittance of amount due to PhilHealth
to avoid imposition of penalty on delayed or non-remittance thereof.
RO No. VII
a) assign/hire a person with the sole responsibility of maintaining and

reconciling the records of account Due to PhilHealth and provide said
personnel with a separate computer for remittances;
b) require that records for unremitted prior years’ contributions be

retrieved so that these can be remitted and credited to the right
employees;
c) require that all outstanding contributions/premiums withheld this year

and of prior years’ be remitted immediately and ensure that
subsequent remittances be made within the period required by law;
and
RO No. XII
a) make representation to PHIC with regard to the unpaid premiums

reflected in the Statement of Premium Account from PHIC as of
December, 2018 and reconcile the school records with the PHIC
records. Likewise, request the submission of related documents, such
as the Official Receipts from PHIC. Also, if payment was indeed not
made on the due months, the school must settle the unpaid balances
within a reasonable time to avoid penalties stipulated in RA No. 10606,
including penalties that may be charged to the employer and its
authorized officials.
33.12 The Management of RO No. VIII explained that remittances were made in the
succeeding year 2019 for the Due to PhilHealth balances as of December 31,
353
2018. However, the Audit Team cannot verify the remittances made since
neither advance copies of the remittances nor the disbursement vouchers for
January 2019 were submitted to the office.
Enforcement of Settlement of Suspensions/Disallowances/Charges
34. In our audit of various transactions, we noted the non-compliance with laws, rules
and regulations which resulted in total suspensions, disallowances and charges of
₱5,730,534,239.70, ₱1,961,425,897.50 and ₱7,123,576.73, respectively, which
remained unsettled as of December 31, 2018.
34.1 The total audit suspensions, disallowances and charges found in the audit of
various transactions as at December 31, 2018 based on the Notices of
Suspension (NSs), Notices of Disallowances (NDs), Notices of Charges (NCs)
and Notices of Settlement of Suspension and Disallowances/Charges (NSSDCs)
issued by this Office, is summarized below:
Table 66: Status of Notices of Suspensions/Disallowances/Charges

Beginning Balance January 1 to December 31, 2018 Ending Balance (As
Particulars
(As at 12/31/17) NS/ND/NC NSSDC at 12/31/2018)
NS 8,530,106,604.70 5,556,449,279.49 8,356,021,644.49 5,730,534,239.70
ND 1,115,351,760.99 874,600,335.90 28,526,199.39 1,961,425,897.50
NC 7,179,663.99 373,776.00 429,863.26 7,123,576.73
Total 9,652,638,029.68 6,431,423,391.39 8,384,977,707.14 7,699,083,713.93
Note: Data on the balances of Suspension/Disallowances/Charges were not included in the submitted Consolidated
Management Letter of Regional Offices VII and XII
34.2 NS/ND/NC issued prior to the effectivity of the 2009 Rules and Regulations on
Settlement of Accounts (RRSA) are not included in the reflected balances but
are deemed disallowances/charges, which shall continue to be enforced in
accordance with these Rules as provided under Section 28 thereof.
34.3 We recommended and the Management agreed to require the officials

concerned to comply with the laws, rules and regulations to avoid audit
suspensions, disallowances and charges and to settle the same within the
prescribed period to prevent their accumulation to highly significant
amounts, pursuant to COA 2009 RRSA.
354

09-DepEd2018 Part2-Observations and Recomm

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09-DepEd2018 Part2-Observations and Recomm

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OBSERVATIONS AND RECOMMENDATIONS

1.1 Section 15 of the Government Accounting Manual (GAM) for National

Table 1: Misstatements in the FSs

CASH AND CASH EQUIVALENTS

a) Misstatements in Cash Accounts - ₱245,672,745.55

Table 2: Schedule of the Misstatements in Cash Accounts

1.5 We recommended that the Management require the Accountants to prepare

1.6 The Management commented as follows:

b) Misstatements in Receivables - ₱238,733,512.38

Table 3: Schedule of Misstatements in Receivables Accounts

The account must be treated as Due from Bureaus

X Due from (128,880.95) Misclassification of advance payments to Classification

1.8 We recommended and the Management agreed to require the Accounting

c) Misstatements in Inventory Accounts - ₱6,372,352.80

Semi-Expendable Machinery Other Supplies and 66,685.00

1.10 We recommended and the Management of the concerned Offices agreed to

a) reclassify to their appropriate account the semi-expendable items

b) make the necessary adjusting entries for the unrecorded/erroneous

PROPERTY, PLANT AND EQUIPMENT (PPE)

d) Misstatements on PPE accounts - ₱3,463,007,963.82

a. It is probable that future economic benefits or service potential

Section 24 provides that “Repairs and maintenance which are necessary to

Section 28 provides that “A property is said to be impaired when its carrying

1.14 We recommended and the Management agreed to require the Accountants

b) reclassify the completed projects to its appropriate asset account and

c) establish the accurate Accumulated Depreciation for all depreciable

e) Misstatements in Advances Accounts - ₱104,618,229.93

Table 6: Schedule of Misstatements in Advances Accounts

1.17 We recommended and the Management agreed to require the Accountant

f) Misstatements in Liability Accounts - ₱356,901,707.90

1.19 We recommended that the Management require the concerned

a) prepare the necessary adjusting entries to reflect accurately the

b) recognize liability on the date of delivery/rendition/completion and

c) stop the practice of booking up payables without valid claims.

1.20 The Management commented as follows:

Region Management’s Comments

OTHER ACCOUNTING DEFICIENCIES

1.21 Section 6, Chapter 19 of the GAM, Volume I enumerated the qualitative

Faithful representation – information to represent faithfully transactions and

Completeness – the information in FSs should be complete within the bounds of

1.22 The following deficiencies in recording and reporting financial transactions

Section 74 thereof states that at the

Section 38, Chapter 10 of the GAM for

a) Deficiencies affecting the reliability of CIB - LCCA account balances -

Table 9: Variance/Discrepancy in Cash in Bank Account Balances

1.26 We recommended and the Management agreed to require the

a) verify the unaccounted funds and make the necessary adjustments;

c) reconcile the actual GL balance with the bank balance as reported in

1.27 The Management commented as follows:

b) Deficiencies affecting the reliability of Receivable accounts balances –

1.28 Unaccounted variance in balances were observed in the audit of Receivable

Table 10: Details of Variances in Receivable Accounts

Likewise, of the total fund transferred to cover MOOE of 28,167,188.00

Moreover, previous results of confirmation made by the 13,329,785.00

1.32 Aside from the aforementioned variances in the account balances,

1.33 We recommended and the Management agreed to:

a) reconcile regularly the records of the Accounting and Property Units

b) reconcile the ROP records with those of the SDOs/IUs in order to

c) exert utmost effort to locate the documents supporting the amounts

d) review procedures in the granting and billing of loans enforcing

1.34 The Management commented as follows:

c) Deficiencies affecting the reliability of Inventory account balance -

1.35 The following deficiencies in recording and reporting financial transactions

1.36 We recommended and the Management agreed to require the Accountant