EXECUTIVE SUMMARY

A. Introduction

The Philippine Nuclear Research Institute (PNRI) was known before as the
Philippine Atomic Energy Commission (PAEC) which was created on June 13, 1958
by virtue of Republic Act No. 2067, otherwise known as the Science Act of 1958. It
has undergone several organizational and personality changes. Several amendments
were issued then, like R.A. No. 3589 dated May 23, 1963 which provided regulatory
authority over the use of radioactive materials and R.A. No. 5207 dated June 5, 1968
which authorized the Institute to license applications for the use of atomic energy
facilities and nuclear materials. On January 30, 1987, the National Science and
Technology Authority (NSTA) was reorganized by Executive Order No. 128 into the
Department of Science and Technology (DOST) and PAEC which is under the
supervision of the DOST became the Philippine Nuclear Research Institute (PNRI).

PNRI’s mission is geared towards the effective and efficient delivery of

peaceful nuclear energy applications through research and development, specialized
nuclear services, nuclear transfer programs, and the firm and fair implementation of
nuclear regulatory policies.

The Institute is headed by Director Alumanda M. Dela Rosa assisted by

Deputy Director Corazon C. Bernido and four chief of divisions namely: Atomic
Research Division; Nuclear Services Division, Technology Diffusion Division,
Nuclear Regulatory Division and Finance and Administrative Division.

As of December 31, 2012 PNRI has a total of 263 plantilla positions, 218 of
which are filled-up and 35 contractual personnel, funded out of project funds.

Consistent with its legal mandate, all programs, activities and projects undertaken
by the PNRI in Calendar Year (CY) 2012 focused on Research and Development (R&D).
As reported by management, 46 R&D projects (Annex A) were successfully
implemented.

B. Financial Highlights

The agency’s total assets, liabilities and government equity as of December

31, 2012 as compared to CY 2011 figures are as follows.

Financial Increase
Condition 2012 2011 (Decrease)
Assets P427,042,475.57 P 345,429,267.56 P 81,613,208.01
Liabilities 71,469,073.21 52,035,175.30 19,433,897.91
Equity 355,573,402.36 293,394,092.26 62,179,310.10

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 For CY 2012, the PNRI has a total appropriations of P134,132,000.00 under
Republic Act No. 10155. The total allotments during the year amounted to
P162,449,699.27 while the total obligations incurred was P160,434,918.14, leaving a
balance of P2,014,781.13. Details are presented as follows:

A. Allotment, Obligations Incurred and Balances

Sources of Funds Allotment Obligations Unobligated

Incurred Balance
A. Current Year
1. Regular P 141,781,154.00 P 140,067,765.59 P 1,713,388.41
2. Other Releases 18,612,936.00 18,603,236.00 9,700.00
B. Continuing Appropriations 2,055,609.27 1,763,916.55 291,692.72
Total P 162,449,699.27 P 160,434,918.14 P 2,014,781.13

B. Notice of Cash Allocation

Obligations Unexpended Reversion to

Description NCA Liquidated Balance National
Treasury
Fund 101 P145,346,068.00 P 144,567,800.21 P 778,267.79 P 778,267.79
Fund 171 4,857,515.07 4,802,725.57 54,789.50 54,789.50
Fund MDS-184 68,640,921.00 33,480,935.45 35,159,985.55 35,159,985.55
Total P218,844,504.07 P182,851,461.23 P35,993,042.84 P35,993,042.84

Moreover, the Institute generated income from various services in the total
amount of P24,395,610.67.

C. Scope of Audit

The audit covered the review of accounts and operations of the PNRI for the
year ended December 31, 2012. The objectives of the audit were to ascertain the
fairness and the reliability of the agency’s financial position, result of its operations
and cash flows and to determine the validity and propriety of the related transactions.

D. Auditor’s Report

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

financial statements due to discrepancy amounting to P 34,189,846.24 between the
accounting records and the Report on the Physical Count of Property, Plant and
Equipment and non-maintenance of subsidiary records (PPPELC and Property
Cards) which affected the accuracy and completeness of the reported balances.

The matrix of analysis on the effect of the misstatements on the financial

statements marked as Annex B.

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E. Summary of Significant Observations and Recommendations

The significant observations and recommendations are presented below and

the details of which are discussed in Part II of the report. These were discussed with
management officials and their views and comments were incorporated in the report,
where appropriate.

1. The book balances of Property, Plant and Equipment (PPE) accounts

totaling P 458,067,787.23 as of December 31, 2012 does not reconcile
with the balances per Report on the Physical Count of PPE amounting to
P423,877,940.99 showing a difference of P34,189,846.24; errors in
recording/classifying the equipment and non-inclusion of PPE in the total
amount of P32,901,227.40 in the Inventory Report were also noted, thus
affecting the accuracy and completeness of both balances. Moreover,
Accounting and Property Units failed to maintain PPE Ledger Card and
Property Card, respectively, for each PPE, rendering difficulty in the
reconciliation of PPE accounts.

We recommended that Management require the Accounting and

Property Units to:

a. maintain PPE Ledger Card and Property Card for each class of
PPE;

b. reconcile the discrepancy between the accounting and property

records; and

c. reclassify/make the necessary adjustments to come up with an

accurate PPE balance.

2. Account receivables recorded in the National Government book totaling

P9,114,671.34, representing fees and charges for radioactive material
licenses and other related regulatory services, remained uncollected for
over five to more than ten years.

We recommended that Management:

a. send demand letters to clients who confirmed their accounts;

b. send follow-up letters to debtors who did not reply; and

c. require the Accountant to analyze and evaluate dormant accounts

for possible write-off, in accordance with the provisions of COA
Circular No. 97-001 dated February 5, 1997.

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F. Status of Implementation of Prior Year’s Audit Recommendations

Out of the ten audit recommendations, three were fully implemented, four were
partially implemented and three were not implemented. Details are shown in Part III of
this Report.

We recommended that management ensure full implementation of all audit

recommendations in prior years to improve the operational efficiency of the agency.

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