Republic of the Philippines

COMMISSION ON AUDIT
OFFICE OF THE TEAM LEADER
Cluster 5 – Education and Employment
Audit Group – NGS-5-A
Audit Team No. R9-15
Dipolog City, Zamboanga del Norte

AUDIT OBSERVATION MEMORANDUM

AOM No: 2016 –009 (15)

Date: April 11, 2016

FOR : NATIVIDAD P. BAYUBAY, CESO VI

School Division Superintendent
Division of Zamboanga del Norte
Gen. Luna St., Estaka, Dipolog City

Attention: ARVIE M. OMPOY

Division Accountant

We have evaluated the electronic accounting report generating system of DepEd

Division Office of Zamboanga del Norte as of December 31, 2015 and observed the
deficiencies/errors discussed below.

The electronic accounting report generating system of DepEd Division Office of

Zamboanga del Norte known as the Government Accounting and Financial Report
(GAFR) was found to be unauthorized and non-compliant with the National
Government Accounting System (NGAS) in violation of COA Circular No. 2002-002
and 2003-005 dated June 20, 2002 and July 30, 2003, respectively.

COA Circular No. 2002-002 dated June 20, 2002 prescribes the Manual on the New
Government Accounting System (MNGAS) for use in All National Government Agencies.
Volume II of the said manual prescribes the various templates of the books of accounts,
registries, records, forms and reports including instructions on their use.

On the other hand, COA Circular No. 2003-005 dated July 30, 2003 prohibits any
individual or private entity to develop and sell software on government accounting and
financial management information systems.

Page 1 of 4
 Moreover, COA Circular No. 2013-002 dated January 13, 2013 also prescribes the
Adoption of the Revised Chart of Accounts for National Government Agencies for the
adoption of the Philippine Public Sector Accounting Standards (PPSAS).

Evaluation of the accounting system of DepEd Division Office of Zamboanga del

Norte disclosed that the Accounting Section operates an electronic accounting report
generating system known as the Government Accounting and Financial Report (GAFR)
developed by a private entity in the name of Mr. Benedict Yee Inoferio of 838 Computer
Connection Services which generates forms, schedules for cash advances and payables,
journals, general ledger, subsidiary ledgers, trial balance and financial statements (single year
only/not comparative).

The Audit Team requested management a copy of the authority from the Commission
on Audit for the use of the system. However, the Accounting Section alleged that it is
sanctioned by the Commission but could not present a written authority to validate the claim.

The electronic accounting system was found unauthorized since the Commission
issued COA Circular No. 2002-005 prohibiting any individual or private entity to develop
and sell software on government accounting and financial management information systems.
Further, the system was found non-compliant with MNGAS and COA Circular No. 2013-002
in view of the following:

a. General ledgers, subsidiary ledgers and detailed financial reports generated by

the GAFR are not in accordance with the prescribed format of the MNGAS;

b. References (e.g. general/special journal and sheet number) and particulars

(other information/details pertaining to the account) in the general ledger are not
provided by the software and particulars in the subsidiary ledgers are located in the
last column named as “remarks”. What was indicated only in the GAFR generated
reports both in general and subsidiary ledger is mainly the object code and
description, transaction date, fund source, organization code, sub-fund, debit/credit
entry and the balance. Transaction dates provided by GAFR in the general ledger are
month and year only;

c. Journal Entries in the Journal Entry Voucher (JEV) generated by the GAFR
are presented with the credit amount first then followed with the debit amount; and

d. Some account titles in the general ledger generated by the GAFR were not in
accordance with COA Circular No. 2013-002 as shown in Annex “A”.

Review of the disbursement voucher (DV) and other supporting documents such as
the Journal Entry Voucher, Obligation Request and Status, Acknowledgement Receipt,
Contract of Service, “Offer” of the Developer, Certification that the program was exclusively
developed by the Mr. Inoferio, Regional Bids and Awards Committee Resolution No. 224, s.
2015 disclosed the following:

a. Management paid P5,000.00 for the Database Program on GAFR. However,

the DV was not supported with Purchase Request, Purchase Order and Inspection and
Acceptance Report, Notice of Award and BAC Meeting Minutes in violation of
Section 4 of PD 1445 and COA Circular 2012-001 dated June 14, 2012;

Page 2 of 4
 b. Pre-qualification, pre-bid conference, bidding, post-qualification and award of
the project was made by the DepEd Regional Office No. IX Regional Bids and
Awards Committee (BAC) under Resolution No. 224, s. 2015 while the contract was
entered into by and between DepEd Division Office of Zamboanga del Norte and the
service provider caused verification of the documents on the legality of the
procurement process pursuant to RA 9184 difficult;

c. The installation of GAFR was recorded as Trainings and Seminars instead of

Computer Software; and

d. Certification on the exclusive software developer and distributorship was

issued by the supplier himself, Mr. Benedict Yee Inoferio of 838 Computer
Connection Services, which is considered self-serving. Furthermore, the Team is
bound to question such claim on the exclusive software developer and distributorship
of Mr. Inoferio because Mr. Muksin M. Jumaarin of PC Homes Computer & Services
also issued a certification that GFAR was exclusively developed and sold by the
latter.

Having in mind the good intention of management in the procurement of an

electronic accounting report generating system, we recommend that management to:

a. secure the approval/authority of the Commission on Audit on the use of

the software;

b. offer an explanation on the inconsistencies of the dates of documents;

c. submit the lacking documents mentioned in this AOM and the Annual
Procurement Plan (APP) containing the procurement of the database programs;
and

d. disburse funds in accordance with laws, rules and regulations.

May we have your comments on the foregoing audit observations within five (5)
calendar days from receipt hereof.

ENRIQUE A. FRANCISCO, JR.

State Auditor IV
Audit Team Leader

ESTRELLA B. AVILA
State Auditor V
Regional Supervising Auditor

Page 3 of 4
Proof of Receipt of AOM:

Received by: _________________

Date: ______________________

Page 4 of 4