AUDIT TEST SUMMARY

Agency: Housing Dev’t. Authority Prepared By: xxxx Date: xxxx

Audit Period: CY 2010 Reviewed By: xxxx Date: xxxx
Approved By: xxxx Date: xxxx

Significant Account: 1. Mortgage Contract Receivable

2. Provision for Impairment Audit Risk Assessment:
3. Interest Income
Account Balance: Php86,700,416,472 (Net of Impairment) Minimal Moderate

Low High

Part I: TEST OF CONTROLS

Note: TOC is not performed if audit risk assessment is High or Moderate since our preliminary
assessment of Control is “High” – Not Rely on Controls

Process: Window B: End-User Financing Program

Controls to be tested:
1. Review details of the membership status by the Senior Mortgage Loans Specialists
2. Review of the Credit Investigation Report by the Chief of the Credit Investigation
Division
3. Review and approval of the Confirmation of Appraisal by the Chief of the Credit
Appraisal and Property Valuation Division.
4. Review and approval of the Notice of Loan Approval (NOA) by the Manager of the
Loans Evaluation Dept.
5. The Vice President of the Housing Loan Sector reviews and signs the RFP.
Person/s Assigned: XXXX
Due Date: 30 November 2011
TOC Working Paper Reference: TOC-EUHL-2011-01

Summary of Test Results

Findings Recommendation TOC WP Ref. AOM Ref.

1. Housing loans were Recommend to the CEO TOC-EUHL-2011-01 HDA-AOM-

granted to three of the HDA to advise the 2011-01
member-borrowers Senior Mortgage Loan
who are not qualified Specialist (SMLS) to
because their total designate competent
contributions is not personnel that will review
equivalent to at least 24 and sign MSVS in his
months at the time the absence.

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 loan was granted. The
MSVS were approved
by the assistant of the
SMLS during the time
that he is on leave.

2. Housing loan was The management should TOC-EUHL-2011-01 HDA-AOM-

granted to one advise the Division Chief 2011-01
member-borrower does of the Credit
not have the capacity to Investigation Division to
pay as recomputed carefully review the
based on the Credit Investigation
employment Reports to ensure that
information and entries loans are granted only to
in the ITR. The credit those with capacity to
investigator committed pay.
an error in this regard.

3. The amount of loan The management should TOC-EUHL-2011-01 HDA-AOM-

granted to three advise Chief of the 2011-01
member borrower is Housing Loan Division to
more that the appraised carefully review the Loan
value of the property Evaluation Sheet before
being mortgaged. approval.
There was an error in
the input of the
loanable amount.

Conclusion: Final Assessment of Control Risk

The deviation noted is within the set tolerable
deviation and thus it can be concluded that
the controls are operating effectively.
Low - Rely on Controls
(Controls are operating effectively)
High – Not Rely
(Controls are not operating effectively)

Re-assess audit risk

Minimal
Low
Moderate
High

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Extent of Testing:
Extensive (for Moderate or High)
Less Extensive (for Minimal or Low)
Summary of Test Results
Findings
Financial:
Out of the P97.172 million
balance of the SCR, P97.172
million or 96 percent is not
valid and existing as at year-
end broken down as follows:
Denied having applied for a
loan P73.147M
Cannot be
located 19.680M
Unqualified new
Members 1.500M
Total P94.327M
Interview of 127 housing
loan borrowers at their
stated addresses, showed
that the developers
committed breaches of
warranties on the following:
Loan evaluation –
That member-borrowers
and their respective housing
loan applications have been
properly evaluated and
approved in accordance with
the applicable guidelines of
the Housing Loan Program
prior to their endorsement
to the HDA;
Part II: SUBSTANTIVE TEST
ST Work Program Reference:
ST WP
Recommendations AOM REF
Ref
Revisit and review the provisions of HDA-AOM-2011-02
ST-DA-
HDA Circular particularly those
HL-2011-
pertaining to Window A facility.
01
Those provisions exposing to risk the
interest of the HDA have to be
amended/revised. Adequate safety
measures have to be installed to
protect the interest of the Fund.
Blacklist the developer, including its
officers from any future availment or
participation under HDA lending
programs pursuant to existing HAD
policies.
Revisit and review the provisions of ST-DA- HDA-AOM-2011-02
HDA Circular particularly those HL-2011-
pertaining to Window A facility. 02
Those provisions exposing to risk the
interest of the HDA have to be
amended/revised. Adequate safety
measures have to be installed to
protect the interest of the Fund.
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 ST WP
Findings Recommendations AOM REF
Ref
On Documentation –
That all documents, inclusive
of the individual titles and
the corresponding Deeds of
Assignment, submitted to
the Fund relative to the
program, are valid, binding
and enforceable in all other
respects that they purport
to be.

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