Republic of the Philippines
COMMISSION ON AUDIT
Regional Office No. IV-A
NGS Cluster 8-A, B, G, Audit Team R4A-42
Department of Environment and Natural Resources
Provincial Office, Rizal
Don Hilario Cruz Ave., Brgy. San Juan, Taytay, Rizal
AOM No. 2020-002 (2019)
Date: June 16, 2020
AUDIT OBSERVATION MEMORANDUM (AOM)
Dr. ISIDRO L. MERCADO, PhD
Provincial Environment and Natural Resources Officer
Provincial Environment and Natural Resources Office
Taytay, Rizal
Attention: Ms. JENNY ANNE S. MATIRA
Accountant III
We have audited the accounts and transactions of PENRO Rizal for CY 2019 and
observed the following deficiencies:
Unreliable cash balances
The reported cash account balance totaling P8,573,311.35 were unreliable due to non-submission of
Bank Reconciliation Statements.
Section 112 of PD 1445 provides that each government agency shall record its financial
transactions and operations conformably with generally accepted accounting principles and
in accordance with pertinent laws, rules and regulations. Sections 11 and 12 of the Manual
on the New Government Accounting System, Volume II require the maintenance of the
general and subsidiary ledgers.
1.1 The following are among the standards required in the safekeeping, accounting,
recording and control of the various cash accounts of government agencies:
a) Section 74 of PD 1445 provides 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.
b) Moreover, COA Circular No. 92-125A requires, among others, the
Accountant to prepare and submit to the Auditor bank reconciliation
statements within fifteen (15) days after the end of each month.
“Sec. 5. Preparation of the Bank Reconciliation Statement. 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 GSB, reconcile the BS with
the GL and prepare the BRS in four copies.
xxx
Sec. 7. Reporting. The Chief Accountant shall submit the BRS within twenty days after receipt of the
monthly BS…”
The reliability of the balance of the Cash in Bank accounts as of year-end with a total of ___ was
doubtful due to non-submission of BRS.
This resulted to non-verification of items found in the BRS which might require adjustment.
Account Amount
Petty Cash Fund P 11,600.28
Cash in Bank-Local Currency, CA 5,874,904.12
Cash-Treasury Agency Deposit, Special Account 2,686,806.95
Total P 8,573,311.35
1.1 According to the Chief Accountant, adjustments could not be made due to lack of
documents to support the existence of the unreconciled balances.
We recommend that the PENR Officer instruct the Accountant to regularly and promptly prepare the
BRS at the end of each month to identify errors and reconciling items and effect the necessary
adjustments, if any.
1.1 We recommended that the Chief Accountants of the concerned DPWH central,
regional and district offices conduct a detailed review and analysis of the Cash
accounts by (a) gathering information on all the bank accounts maintained by the
DPWH and request the banks to give the Department copies of the bank
statements; and (b) identifying the reconciling items by comparing entries in the
accounting and bank records and immediately record adjustments in the books to
eliminate unreconciled balances. Thereafter, conduct regular bank reconciliation of
accounting and bank records in accordance with Section 74 of PD 1445 and submit on
time and on schedule the monthly bank reconciliation statements to detect
errors/reconciling items and effect immediate correction in the books of accounts.
Further, subsidiary ledgers per bank accounts must be maintained to facilitate
reconciliation of records.
1.2 We also recommended that the Chief Accountants concerned effect the
necessary adjustments to correct the accounting errors noted in audit.
1. Interest income amounting to P432,049.40 was not remitted to BTr contrary to Section
65 of PD 1445.
1.1. Section 65 of PD 1445 provides that “Unless otherwise specifically provided by law, all
income accruing to the agencies by virtue of the provisions of law, orders and
regulations shall be deposited in the National Treasury or in any duly authorized
government depository and shall accrue to the unappropriated surplus of the General
Fund of the Government”.
1.2. Bank Statements and Subsidiary Ledger accounts of cash-in-bank accounts under PRDP
PSO Luzon B disclosed that interest income recognized in CY 2017 amounting to
P432,049.40 were not remitted to the BTr as of December 31, 2017 contrary to Section
65 of PD 1445, details follow:
Office Cash in Bank Account Amount
PSO Luzon B LCCA No. 3212-1036-40 P137,174.29
FCSA No. 3214-0058-82 (LP) 253,195.54
FCSA No. 3214-0059-04 (GEF) 41,679.57
Total P00
1.Section 38, Chapter 10 of the GAM Volume I, for NGAs, provides:
“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) (Appendix 71) 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.”
2.Moreover, Appendix 73 of GAM, Volume II for NGAs presents the proper format and
instructions for accomplishment and preparation of the RPCPPE, the form used to report on the
physical count of PPE by type such as land, land improvements, infrastructure, building and
other structures, machinery and equipment, transportation equipment, furniture, fixtures and
books, etc. which are owned by the agency. It shall be prepared yearly by fund cluster.
3.Further Section 42, Chapter 10, Volume 1 of the same Manual, provides:
“The Chief Accountant shall maintain the PPELC for each category of
PPE including work and other animals, livestock etc. 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 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 Accounting Division/Unit. They
shall also be reconciled with other property records like PAR.’’
3.1 Inquiry with the Accounting and Property Sections also
disclosed that periodic reconciliation of PPE accounts
was not undertaken
4.Comparison of the balances per RPCPPE with the PPE recorded in the books of accounts of
P5,042,254.00 disclosed a variance of P2,282,465.04, as shown below:
Account Per Accounting Per RPCPPE Difference
Property, Plant and Equipment
Machinery and Equipment
Office Equipment P1,010,450.00 P 180,000.00 P 830,450.00
Information and Communication
Technology 1,363,000.00 2,193,450.00 -830,450.00
Communication Equipment 39,000.00 39,000.00 0.00
Furnitures, Fixtures, and Books 54,850.00 54,850.00 0.00
Motor Vehicles 2,574,954.00 0.00 2,574,954.00
Misclassified Assets 0.00 274,800.00 -274,800.00
Unrecorded Asset 0.00 17,688.96 -17,688.96
Total P5,042,254.00 P2,759,788.96 P2,282,465.04
5.Non-reconciliation of records between the Accounting and Property Sections, and
inconsistencies in the classification of the properties and recording of the acquisition dates which
affect the total balance of each account and the determination of correct depreciation expense
rendered the PPE account balance doubtful as to valuation and completeness.
The existence of variance in the balances of PPE Account between the two records rendered
the reported balances of property accounts as of year-end unreliable.
6.We recommended that the OIC Regional Executive Director instruct the Accountant and
the Property Officer to reconcile periodically the RPCPPE with the accounting records for
a reliable and accurate balance of the assets of the agency.
Fast track the reconciliation of PPE Account balances per books and per RPCPPE, and make the
necessary adjustments;
Maintain PPELC to facilitate verification and reconciliation, and to effect the necessary adjustments in
their records;
Account for the missing unaccounted equipment and take necessary action against those responsible or
accountable therefore.
