Anne

xH
STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT
RECOMMENDATIONS
Ref.
Status of
Implementatio Reason for Partial
Observations Recommendations Management’s n (Full, Partial, or Non-
Action Not Implementation
Implemented)

As of December 31, 2018

LEYTE AGRO INDUSTRIAL SCHOOL
The school granted Collective Negotiation We recommend
Agreement (CNA) Incentive in CY 2018 to its management the 1. AOM The management Full
employees in the amount of P13,000.00 for following: No. already advised
every employee totaling P793,000.00 without LAIS- the employees /
supporting documents as proof of the legality 1. Not to 2019- personnel to
of the claim contrary to Section 73 of the disburse funds in 001 observed strictly
General Provisions of the FY 2018 General payment of other (2018) the guidelines on
Appropriations Act (GAA) and Item 4 of personnel benefits granting CNA.
DBM Budget Circular No. 2018-5 dated without conforming
Employees /
November 14, 2018 thus, the disbursement is to prescribed rules
personnel are
considered irregular and is subject to and regulations
directed to
disallowance. relating to that
payback the
particular
amount received
Section 73 of the General disbursement.
due to the
Provisions of the FY 2018 General Appropriations
disallowance.
Act (GAA) provides the rules in the grant of CNA
Incentive as follows:

“Sec. 73. Rules in

the grant of Collective
Negotiation Agreement
Incentive. Departments,
bureaus, and offices of the
National Government,
including Constitutional
Offices enjoying fiscal
autonomy and SUCs may
grant collective negotiation
agreement (CNA) Incentive
sourced from the allowable
MOOE allotments identified
by the DBM, subject to the
following:

(a) There a valid CNA

executed between the
agency and the
recognized employee
organization which
includes a provision
on cost-cutting
measures to be
undertaken
collectively by the
agency and its
personnel;

(b) The one-time annual

payment of CNA
Incentive shall be
made through a
written resolution
signed by the agency
representatives from
both labor and
management, and
approved by the

Page 1 of 6
 agency head;

(c) The CNA Incentive that

may be granted shall
be limited to the
amount determined by
the DBM; and

(d) The payment of the CNA

Incentive shall be
subject to approval by
the DBM and made
only during the
validity of
appropriations. Any
excess amounts
therefrom after
payment of the CNA
Incentive shall revert
to the General Fund.

X x x . . . x x x.

Item 4 of DBM Budget

Circular No. 2018-5 dated November 14, 2018
provides:

Policy Guidelines

4.1 Conditions for

the Grant of the CNA Incentive

4.1.1 Existence
of a CNA

(a) There should be

a valid and
subsisting
CNA executed
between the
representative
s of the
management
and the
employees’
organization
accredited by
the CSC as the
sole and
exclusive
negotiating
agent for the
purpose of
collective
negotiations
with the
management
of a
department,
line bureau,
attached
agency,
GOCC, LWD,
or LGU.

(b) The grant of the

CNA Incentive
must be
stipulated in
the CNA or in
supplements
thereof.
X x x . . . x x x.

Page 2 of 6
 In December 20, 2018 a cash
advance was granted to the Cashier for payment
of Collective Negotiation Agreement (CNA)
Incentive for CY 2018 amounting to P793,000.00.
The disbursement voucher (DV) covering the cash
advance was supported only with Obligation
Request and Status. Verification of the liquidation
report disclosed that no other supporting
documents attached except for the payroll with the
names and signatures of the payees
acknowledging receipt of the incentive.

Pursuant to the above-

mentioned rules and regulations pertaining to the
grant of CNA Incentive, the agency is required
before the grant to have the following:

1. A valid and subsisting CNA

executed between the
representatives of the management
and the employees’ organization
accredited by the CSC as the sole
and exclusive negotiating agent for
the purpose of collective
negotiations with the management
wherein the grant of CNA Incentive
must be stipulated in the agreement
or in supplements thereof.

2. A written resolution signed by

agency representatives from both
labor and management the payment
of the one-time annual CNA
Incentive, and approved by the
agency head.

3. Approval by DBM on the payment of

CNA Incentive.

The absence of the above

documents renders the disbursement irregular and
thus disallowed in audit.

Anniversary Bonus was granted by We recommend 2. Full

the school to its personnel in CY 2018 management the The management
AOM already advised
amounting to P3,000.00 each totaling following:
P186,000.00 without complete documentation No. the employees /
contrary to Section 4 (6) of PD 1445 and 1. To enforce LAIS- personnel to
observed strictly
Section 36 (f), Chapter 2, Volume I of the strict compliance of 2019- the guidelines on
Government Accounting Manual (GAM) thus, the pertinent 002
validity of said disbursement as well as the provisions embodied granting the
authority by some employees to claim such in Section 4(6) of PD
(2018) Anniversary
benefits is not assured. 1445 and Sections bonus.
36(f) Chapter 2,
Employees /
SECTION 4 (6) of PD 1445 Volume I of the
personnel are
states: Government
directed to
Accounting Manual
payback the
SECTION 4. Fundamental (GAM) in order that
amount received
principles. – Financial transactions and disbursement
due to the
operations of any government agency transactions and
disallowance.
shall be governed by the fundamental financial reports are
principles set forth hereunder, to wit: assured of validity
Xxx... and propriety.
(6) Claims against
government funds shall be supported
with complete documentation.
X x x . . . x x x. 2. To submit the
lacking supporting
On the other hand, Section 36 documents such as
(f), Chapter 2, Volume I of the GAM provides: among others:
Service Records of
Sec. 36. Basic Requirements all employees who
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 for Disbursements and the Required were granted
Certifications. Disbursements of Anniversary Bonus
government funds shall comply with the and copy of the law
following basic requirements and or enactment
certifications: relative to the
creation of school or
Xxx... the Department of
f. Submission of proper Education, as the
evidence to establish case maybe.
validity of the claim. The
Head of the Requesting
Unit shall certify on the
necessity and legality of
charges to allotments
under his/her supervision
as well as the validity,
propriety and legality of
supporting documents. All
payments of government
obligation and payables
shall be covered by
Disbursement Vouchers
(DV)/Payrolls together
with the original copy of
the supporting documents
which will serve as basis
in the evaluation of
authenticity and authority
of the claim. It should be
cleared, however, that the
submission of the
supporting documents
does not preclude
reasonable questions on
the funding, legality,
regularity, necessity
and/or economy of the
expenditures or
transactions; . . . x x x.

In November 22, 2018 a cash

advance was granted to the Cashier for payment
of Anniversary Bonus for CY 2018 amounting to
P793,000.00 paid under check number
0002081829. The disbursement voucher (DV)
covering the cash advance was supported only
with Summary of Payroll. Verification of the
liquidation report disclosed that no other
supporting documents attached except for the
payroll with the names and signatures of the
payees acknowledging receipt of the incentive.

It was noted during

verification of the payroll, that majority of the
employees of the school received or were granted
anniversary bonus. Service records of all those
who receive the benefits were not submitted or
attached to the DV covering the grant of the cash
advance as well as on the liquidation report as
proof that all of them are entitled, thus, casting
doubt on the validity of their entitlement.

Moreover, there was no

information or document provided as to what date
is the anniversary and which anniversary the
school is celebrating, whether for the whole of
DepEd or for the school only, thus, the reckoning
date could not be determined which could have
aided in the determination of who are entitled.

The absence of the above

documents renders the authority of the employees
to receive the anniversary bonus of doubtful

Page 4 of 6
validity and thus could result in the disallowance
of those determined to be not entitled upon the
submission of the lacking documents.

Of the total common-use supplies procured by We recommend 3. The management Full

the school in CY 2018 amounting to for management to AOM have each
P183,597.25, only P4,752.00 was procured impose mandatory procurement of
from DBM-Procurement Service (PS); compliance with the No. common-use
P178,845.25 or 97.41% thereof were from provisions of LAIS- supplies to the
private suppliers contrary to Section 1 and 4 of Administrative 2019- DBM-PS first and
Administrative Order No. 17 dated July 28, Order No. 17 and 003 secure a
2011 and Section 20 of the General Provisions the 2016 Certification of
of RA 10924 or the General Appropriations Implementing Rules
(2018) Non-availability
Act (GAA) of FY 2017 thus, there is no and Regulations of of the items duly
assurance that cost as well as the quality of the RA 9184 signed before
items procured are advantageous to the school. particularly in the resorting in
procurement of shopping outside.
Administrative Order (AO) common-use
No. 17 dated July 28, 2011 entitled: “Directing the supplies in order Action has been
Use of the Procurement Service (PS) and the Phil. that there is taken already on
Government Electronic Procurement System assurance that the the onset of year
(PhilGEPS) in procurement activities in price is reasonable 2019 and will
accordance with Republic Act (RA) 9184, and and the product regularly exercise
Improving the Operation of the Procurement quality is in these procedures
Service” prescribed the following: accordance with the to assure that the
standard prices are
“SECTION 1. specifications. reasonable and
Reiteration of Policy. The national the product
government hereby reiterates the policy qualities are in
that procurement of government accordance with
supplies, materials, and equipment shall the standard
be done in the most transparent and specifications.
competitive manner by purchasing from
legally, technically, and financially
capable sources in economic lot sizes,
by observing cost-efficient
specifications, and by making prompt
payment. In line with this, all
government agencies shall procure their
common-used supplies from the PS and
use the PhilGEPS in all their
procurement activities, including
publishing all their bid opportunities
and posting all thgeir awards and
contracts in it, in accordance with R.A.
No. 9184.”

“SECTION 4.
Procurement of Common-Use Supplies.
Common-use supplies shall be procured
directly from the PS or its depot without
need of public bidding as provided in
Section 53.5 of the Implementing Rules
and Regulations (IRRs) of R.A. 9184.”

Section 20 of the General Provisions of

RA 10924 or the General Appropriations Act
(GAA) of FY 2017 likewise provides:

“Sec. 20. Procurement of

Common-Use Supplies. All agencies of
the government shall purchase
common-use supplies from the
Procurement Service (PS) as mandated
under LOI No. 755 dated October 18,
1978, E. O. No. 359, s. 1989, A.O. No.
17, s. 2011 and such guidelines issued
thereon. Common-use supplies shall
refer to those included in the Electronic
Catalogue of the PS which shall
regularly updated to include all items
commonly procured by agencies of the
government: Provided, That there shall

Page 5 of 6
 be no transfer of funds from the
agencies to PS within three (3) months
before the lapse of the obligation
authority for the purpose.”

Verification of disbursement
transactions of Leyte Agro-Industrial School
involving procurement of common-use supplies
for the year 2018, disclosed a total procurement of
P183,597.25. From this amount, P4,752.03 was
procured from DBM-PS and P178,845.25 or
97.41% were sourced from various private
suppliers. It was noted that for the entire year,
procurement from DBM-PS happened only once.
Moreover, majority of payments to
private suppliers were not supported by proof of
non-availability of the items procured from the PS
duly signed by authorized DBM-PS official, an
indication that the school did not conduct inquiry
before resorting to the private suppliers as their
source.
The failure to exercise proper
procurement procedures in accordance with
pertinent laws, rules and regulations on
procurement may put to question the
reasonableness of the price paid as well as the
quality of the items procured which could be
disadvantageous to the school.

Prepared by: Approved by:

JOSE MARI V. BALURAN TEODORICO N. SULLA

Accountant I School Principal II

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