09-DOH2019 Part2-Observations and Recomm

PART II - OBSERVATIONS AND RECOMMENDATIONS
Financial Audit
Accounting Errors and Omissions
1. Various accounts of the Department of Health (DOH) have misstatements

resulting in aggregate errors of the reported total Assets, Liabilities and Net
Assets/Equity by ₱24,712,730,250.05, ₱766,995,040.51 and ₱15,767,299,768.84 which
represent 13.48%, 3.23%, and 9.88% of its total Assets, Liabilities and Net
Assets/Equity, respectively, with emphasis on the unrecorded value of land
amounting to ₱16,422,000,000.00 by the San Lazaro Hospital. Due to the significant
impact of such misstatements on the reported balances of the affected accounts, the
accompanying financial statements do not present fairly, in all materials respects, the
agency’s financial position, financial performance, cash flows, changes in net
assets/equity, and comparison of budget and actual amounts for the year then ended,
and the notes to the financial statements, including the summary of significant
accounting policies in accordance with the Philippine Public Sector Accounting
Standards (PPSAS).
2. Section 27 of the Philippine Public Sector Accounting Standards (PPSAS) 1 and

Section 15, Chapter 2 of the Government Accounting Manual, Volume I, states that “The
FSs shall present fairly the financial position, financial performance and cash flows of an
entity. Fair presentation requires the faithful representation of the effects of transactions,
other events, and conditions in accordance with the definitions and recognition criteria for
assets, liabilities, revenue, and expenses set out in PPSAS.”
3. Moreover, Sections 111 and 112 of PD 1445 provide that the accounts of the agency
shall be kept in such detail as necessary to meet the needs of the agency and at the same
time be adequate to furnish the information needed by the fiscal or control agencies of the
government; and that the highest standard of honesty, objectivity and consistency shall be
observed in the keeping of accounts to safeguard against inaccurate and misleading
information. Each government agency shall record its financial transactions and operations
conformably with generally accepted accounting principles (PPSAS) and in accordance
with pertinent laws and regulations.
4. Full disclosure principle is one of the generally accepted accounting principles that
require an organization to disclose all the information that would affect a reader's
understanding of the financial statements (FSs).
5. The DOH Consolidated Financial Statements (FS) is a combination of the FS of the

Central Office (CO), 15 Centers for Health Development (CHDs), 59 DOH government
hospitals, 12 Treatment and Rehabilitation Centers (TRCs), and 2 Bureaus under its
jurisdiction.
59
6. Review and verification of accounts and transactions of the CO, Foreign-assisted
Projects (FAPs), CHDS, Hospitals, TRCs, and Bureaus disclosed various errors and
omissions amounting to ₱41,247,025,059.40 that were not adjusted by Management which
have an impact on the fair presentation of the year-end consolidated FSs and had affected
Management’s assertions that all transactions and events should have been fully reported
(Completeness), recorded without error (Accuracy), valued appropriately (Valuation),
within the correct reporting period (Cut-off), in the proper accounts (Classification), and
actually took place (Occurrence). Further, all account balances exist (Existence), and the
agency has the right to ownership or use of the recognized assets, and the liabilities
recognized in the financial statements represent the obligation of the agency (Rights and
Obligations), as shown in Table 1.
Table 1: Summary of Accounting Errors and Omissions per Findings (in Million Php)
AMOUNT OF (OVER)/UNDERSTATEMENTS
ASSETS (A)
CRITERIA/ Intangible EQUITY (E)
ERRORS/FINDINGS Receivables
STANDARDS Assets LIABILI- (including
(Net of Acc. Investment PPE (Net of Other
Cash Inventories (Net of TIES (L) Income and
Imp. Property Acc. Dep.) Assets
Acc. Expenses)
Losses)
Amor.)
A Unrecorded transactions in the
12.31.2019 Financial
Statement balances
A.1 Unrecorded Sec. 26 (a - (29.08) 209.35 - 17,649.32 - - 266.09 17,563.51
assets and d),
Chapter 5 of
GAM Volume
I;
Section 63 of
Presidential
Decree No.
1445
Section 3,
Chapter 1 of
GAM Volume
I
A.2 Unrecorded Sections 39 - 0.07 (1,493.16) - (1,220.85) - - (15.30) (2,698.62)
credits/ and 40,
derecogni- Chapter 10
tions of of GAM
assets Volume I
Sections 2,
7, 9, 13 and
17, Chapter
8 of GAM
Volume I
A.3 Unrecorded Sections - - 8.09 - (8.10) - - - (0.01)
reclassifica- 8(g), 39 and
tions to 40, Chapter
appropriate 10 of GAM
accounts Volume I
Paragraph
13 of the
PAS No. 1
A.4 Unrecorded Sections 27, - - - - (42.57) - - - (42.57)
depreciation Chapter 10
60
ASSETS (A)
Acc. Expenses)
Losses)
Amor.)
of GAM
Volume I
A.5 Unrecorded Section 57, (1.78) (2.50) - - - - 0.98 (59.80) 56.50
adjusting Chapter 19
entries of GAM
Volume I
Section 4 of
the General
Provisions of
GAA of 2019
A.6 Unrecorded Section 22.6 - 6.85 - - - - - 0.15 6.70
disallowances of COA
Circular
2009-006
entitled
Revised
Rules on
Settlement of
Accounts
(RRSA)
dated
September
15, 2009
A.7 Unrecorded Section 37, (18.93) 0.99 - - - - 0.01 (27.85) 9.93
credits to Chapter 1 of
cash GAM Volume
1
A.8 Unrecorded Section 2.a, - - - - - - (0.02) 0.35 (0.37)
expenses Chapter 2 of
GAM Volume
I
A.9 Unrecorded Item C, - 6.48 (6.48) - - - - - -
claims from Appendix 66
agency of GAM
officers Volume II
A.10 Unrecorded - (27.02) - - - - - - (27.02)
Return to
Section V of
Hospital
PhilHealth
(RTH) and
Circular No.
Denied
2019-001
PhilHealth
Claims
A.11 Unrecorded Section 4 125.79 (16.48) - - - - - 33.57 75.74
Book and 10,
reconciling Chapter 21
items and Section
56, Chapter
19 of GAM
Volume I
A.12 Unrecorded Revised - (3.76) - - (11.05) - - - (14.81)
Impairment Implementin
g Rules and
Regulations
(RIRR) of RA
No. 7875 or
the NHIA of
1995, as
amended by
RA Nos.
61
ASSETS (A)
Acc. Expenses)
Losses)
Amor.)
9241 and
10606
A.13 Unrecorded Section 52, - 25.81 - - - - - - 25.81
receivables Chapter 19
of GAM
Volume I
A.14 Unrecorded Section 32 - 0.67 - - - - - 0.67 -
Issuance/ Chapter 2 of
sale of GAM Volume
consigned I and DOH
drugs and Administrativ
medicines e Order No.
2006-0039
dated
December 8,
2006
A.15 Unrecorded Section 15, 1.51 (1.21) - - - - - 0.30 -
receipts of Chapter 10
cash of the GAM
Volume I
A.16 Unrecorded COA Circular - (122.80) - - - - - - (122.80)
liquidations No. 94-013
Erroneous GAM Volume (28.49) 54.98 203.32 (52.00) (235.28) 5.47 (17.38) (5.00) (64.38)
B use of III - Revised
accounts Chart of
Accounts
Section 3, 4
and 25,
Chapter 10
of GAM
Volume I
COA Circular
2013-002
dated
January 30,
2013
Sections
4(8), 112,
119 and
121(1) of
Presidential
Decree 1445
Sections 3
and 4 of COA
Circular No.
97-002
Section 44,
Rule II, Title
IV of the
RIRR of
National
Health
Insurance
Act of 2013
(RA 7875 as
amended by
62
ASSETS (A)
Acc. Expenses)
Losses)
Amor.)
RA 9241 and
10606)
Section 6
and 15,
Chapter 2 of
GAM Volume
I
C Improper/ Section 9, (350.02) 22.09 (11.27) - (29.87) - (2.16) (62.70) (308.55)
Erroneous Chapter 5 of
Recording of GAM Volume
Transactions I
Section 27,
Chapter 10
of GAM
Volume I
Section 58 of
the
Presidential
Decree No.
1445
Item 3 of
Annex A of
DOH
Administrativ
e Order No.
2006-0039
TOTAL NET OVER(UNDER)
( 271.92) ( 84.91) (1,090.15) ( 52.00) 16,101.60 5.47 ( 18.57) 130.48 14,459.06
STATEMENTS-PER
ERRORS/FINDINGS
14,589.52 14,589.54
A=L+E
TOTAL ACCOUNTING ERRORS PER 475.13 1,092.13 1,645.57 101.39 21,358.84 6.62 33.05 767.00 15,767.30
ACCOUNT TITLE (ABSOLUTE
AMOUNTS) 41,247.03
DETAILS DISCUSSED IN ANNEX B-A
- MAED 24,712.73 767.00 15,767.30
TOTAL BALANCES PER FINANCIAL
183,297.91 23,729.99 159,567.92
STATEMENTS
% OF ERRORS PER FS BALANCES 13.48% 3.23% 9.88%
Assertions affected:
Completeness, Existence and Occurrence, Accuracy, Valuation, Validity/Regularity/Legality, Ownership, Presentation and Disclosure, Rights and Obligations and
Compliance.
BatMC, BRTTH, CDH, CHD-C, CHD-CL, CHD-Davao, CHD-Soccsksargen, CLMMRH, CO, DPJGMRMC,
A.1 DRMC, EVRMC, FDA, JRRMMC, LHMRH, LPGH-STC, POC, SAMCH, SH, SLH, SLRWH, TGH,
TMC, TRC-Argao, TRC-Cebu City, TRC-Dagupan, TRC-Dulag,TRC-Ilagan, VMC, EAMC
BGH, BGHMC, BOQ, BRTTH, CHD-B, CHD-C, CHD-Caraga, CHD-CV, CHD-Davao, CHD-Ilocos,
CHD-Northern Mindanao, CHD-Soccsksargen, CHD-WV, CHD-ZP, DPJGMRMC, EVRMC, JRRMMC,
A.2
MMMHMC, MMWGH, NCMH, R1MC, RITM, SH, SLH, TGH, TMC, TRC-Bataan, TRC-
Dagupan, TRC-Dulag,TRC-Ilagan, TRC-Malinao, TRC-Pototan, VMC, VSMMC
BGHMC, BMC, CHD-CL, CHD-Northern Mindanao, CHD-Soccsksargen, CHD-WV, CHD-ZP, CLMMRH, DJSMMCEH,
A.3 DRMC, EVRMC, LPGH-STC, SAMCH, SH, TDH, TRC-Argao, TRC-Camarines Sur, TRC-Cebu City,
TRC-Dulag, VSMMC, WVS, EAMC
BGHMC, CDH, CHD-Caraga, FDA, LHMRH, R2TMC, SAMCH, SH, SLRWH, TRC-Argao, TRC-
A.4
Bataan, TRC-Cebu City, VSMMC
63
ASSETS (A)
Acc. Expenses)
Losses)
Amor.)
A.5 BRTTH, CHD-Cagayan Valley, CRMC, VSMMC, EAMC
A.6 CHD-Cagayan Valley, FDA
A.7 BRTTH, CHD-B, TRC-Camarines Sur
A.8 CHD-Davao, CHD-EV
A.9 CHD-Davao, SIMC
A.10 BMC, R2TMC, SIMC, SLRWH
ARMMC, ASTMMC, BGH, BOQ, BRTTH, CHD-CL, CHD-EV, CHD-MM, CO, CVMC, EVRMC, FDA,
A.11 LHMRH, LPGH-STC, NCMH, QMMC, R2TMC, SAMCH, SIMC, SPMC, TRC-Camarines Sur, TRC-Ilagan,
VMC, VSMMC
A.12 CS, ONP, VSMMC
A.13 CRMC, DJNRMHS, FNLGHTC, MMMHMC, SLRWH
A.14 SIMC
A.15 BRTTH, CDH, CHD-CAR
A.16 CHD-Cagayan Valley, CHD-CAR, CHD-CL, FDA
ASTMMC, BatMC, BGHMC, BMC, BOQ, BRTTH, CDH, CHD-B, CHD-C, CHD-Cagayan Valley, CHD-Caraga,
CHD-CL, CHD-EV, CHD-Ilocos, CHD-Mimaropa, CHD-MM, CHD-Northern Mindanao, CHD-
Soccsksargen, CHD-WV, CRH, CRMC, CS, CVMC, DJFMH, DJNRMHS, DJSMMCEH, DPJGMRMC,
B DRMC, FDA, FNLGHTC, JBLMGH, JRRMMC, MHARSMC, MMMHMC, MMWGH, NCH, NMMC, QMMC,
R1MC, R2TMC, SIMC, SPMC, TGH, TRC-Argao, TRC-Bataan, TRC-Camarines Sur, TRC-
CDO, TRC-Dagupan, TRC-Ilagan, TRC-Malinao, TRC-Pototan, TRC-Surigao, VSMMC, WVMC,
EAMC
BGHMC, BOQ, BRTTH, CHD-B, CHD-CAR, CHD-EV, CHD-MM, CHD-Soccsksargen, CHD-WV, CS, DJFMH,
DJNRMHS, EVRMC, FDA, FNLGHTC, JRRMMC, NCH, NCMH, POC, QMMC, RMC, SAMCH, SIMC,
C
SLRWH, TMC, TRC-Camarines Sur, TRC-Ilagan, TRC-Pototan, TRC-Surigao, VSMMC, WVS,
EAMC
64
7. The foregoing errors and omissions were due to: (a) late submission (ranging from
30 days to 200 days of delay) or non-submission of reports by concerned offices (i.e.,
Billing Sections, Pharmacy Sections, Logistics Management Divisions, Material
Management Divisions, Engineering Offices, General Services Offices, among others,) to
the Accounting Division; (b) lack of coordination and monitoring procedures on flow of
transactions by the concerned offices and the Accounting Division; (c) lack of necessary
documentation to support adjusting entries, erroneous entries being overlooked by the
Accountants; (d) current Accountants are just following the practices of their predecessors;
(e) lack of awareness on the new policies and guidelines on the recording of
accounts/transactions provided in the GAM which took effect on January 1, 2016; and (f)
documents for transferred assets were not forwarded by the DOH Central Office and/or
Regional Offices to the recipients (i.e., Regional Offices and/or Hospital), among others.
8. Additionally, emphasis should be given to the unrecorded value of land amounting

to ₱16,422,000,000.00 by the San Lazaro Hospital (SLH). Based on our evaluation and
consideration of the authorities quoted above, the cost of land qualifies to be recorded as
an asset. Item 6.1 (f-2) of COA Circular No. 2015-002 is clear. An entity shall recognize
the cost of existing PPE which were not previously recognized due to the absence of
ownership/title based on contract, memorandum of agreements (MOA) and other reasons.
It shall recognize the cost of the PPE based on fair value at the date it is determined, among
other options given. The ₱16,422,000,000.00 value of the land was computed by
multiplying the total San Lazaro Compound (SLC) area of 109,480 square meters by
₱150,000.00, the zonal value per square meter of lots in Barangay 331 along Rizal Avenue
in Manila and the vicinity within Tayuman-Quiricada (where the SLC is located) and
pursuant to the Bureau of Internal Revenue (BIR) Department Order (DO) No. 077-2018
dated December 20, 2018. As may be noted, title or proof of ownership over the property
is not a requirement in the recognition/recording of the asset in the books of accounts. The
Torrens system merely confirms ownership and does not create it. The position taken by
the Financial Management Services and Accounting Division, in refusing to record the
value of land in its books of accounts due to the lack of proper documentation and
valuation, has caused the non-recording of an asset that should have been recognized as
required. The omission of land affected Management’s assertions on completeness, rights
and obligations with the effect of FS material misstatement.
9. These errors and omissions in recording and reporting financial transactions have
affected the fair presentation of the accounts in the FSs. We noted that there are few
agencies that have adjusted their errors through JEVs dated CY 2020. However, although
their accounting records have already been corrected to date, their submitted financial
statements still include the above errors, thus, still rendering the December 31, 2019
financial statements erroneous and unreliable.
10. We reiterated our prior years’ recommendations, with modification, and

Management of the concerned Central Office, CHDs, TRCs, Hospitals and Bureaus
agreed to require:
Their respective Accountants to:
65
a. effect the necessary adjustments on the errors and omissions, among
others, the erroneous recording of transactions as well as misclassification
of accounts to correct the reported balances of affected accounts in the FSs;
b. effect the necessary restatement entries to correct the final and beginning
balances of the 2019 consolidated financial statements; and
c. observe the proper recording, adjustments and reclassifications of

accounts and transactions, and that all transactions should be supported
by necessary documentations in accordance with the GAM and other
existing accounting rules and regulations;
Their Heads of Agencies to:
d. formulate and strictly implement internal control policies requiring timely

submission of reports consistent with requirements in the GAM and
immediate submission of supporting documents to the Accounting Division
for recording purposes, taking into account the deadlines and imposition
of corresponding penalties for non-compliance in the submission of
different agency transactions (e.g., receipt of collections, accrual of
receivables, receipt and issuances of equipment/inventories, completion of
infrastructure projects and among others), for strict adherence to the
abovementioned process owners and other responsible offices; and
The Accountant of the San Lazaro Hospital to:
e. record in the books of accounts the value of the land based on fair value at
the date it is determined, maintain all related property records starting
with the financial statements for CY 2020, and include in the restatement
of the 2019 balances.
11. Management informed us that the drafting of a policy is already being undertaken
and will be duly coordinated with concerned offices. It also committed for the Accountants
to ensure the careful review of accounting entries before approval shall be made to avoid
errors, the correction of errors as the case maybe at the soonest time possible, and the
review of Subsidiary Ledgers (SLs) to be done regularly for immediate adjustment when
necessary, before the COA audit.
Accounting Deficiencies
12. Deficiencies were noted in recording and reporting financial transactions

which also affected the reliability and accuracy of the reported balances of the FSs.
13. The accounts showed various accounting deficiencies amounting to

₱89,451,462,311.43 as presented in Table 2. The detailed effects on the FS of these
deficiencies are presented in Annex B-B.
66
Table 2: Summary of Accounting Deficiencies
ACCOUNTING DEFICIENCIES
ASSETS EQUITY
(including
Intangible LIABILITIES
Cash Receivables Inventories PPE Other Assets Income and
Assets
Expenses)
Dormant/Unauthorized/Unnecessary/Uncollected/Unliquidated/Long-Outstanding Accounts
7,907,051.52 15,427,083,662.21 - - - 25,852,666.58 - -
Unadjusted/unrecorded book reconciling items
54,233,683.68 - - - - - - -
Negative Account Balances
13,461,702.05 231,240,787.15 19,320,043.79 - - - 100,307,634.75 -
Unexplained/undetermined Beginning Balances
6,347,892.88 - - - - - -
Non-Preparation of Bank Reconciliation Statement/Non-Maintenance of Subsidiary Ledger/Absence of Periodic Reconciliation / Non-Preparation of Schedule of Accounts Receivables
183,113,031.15 113,427,521.52 - - - - - -
Absence/Non-maintenance of Supporting Documents
Non-preparation/maintenance/update of PC and PPELC
- - - 3,279,663,572.25 - - - -
Non-submission/preparation of the RPCPPE
- - - 3,881,016,696.40 - - - -
No physical inventory taking
- - - 7,026,671,014.88 - - - -
Unremitted to the Bureau of Treasury
3,015,984.95 - - - - - - -
Unreconciled Amounts / Non-reconciliation of Accounts
Accounting Records (GL) vs. Cash Receipts Record (CRR)
46,934.92 - - - - - - -
Accounting Records (GL) vs. Report of Collections and Deposits (RCD)
399,245.33 - - - - - - -
Accounting Records (GL) vs. Bank Reconciliation Statements (BRS)
73,024,775.89 - - - - - - -
Accounting Records (GL) vs. Confirmation Replies
- 331,490,806.24 - - - - 335,748.15 -
Accounting Records (GL) vs. PS-DBM Records
- 6,707,045.74 - - - - - -
Accounting Records (GL) vs. Subsidiary Ledgers (SL)
408,382.43 70,229,865.32 - - - - 36,701,879.86 -
Subsidiary Ledgers (SL) vs. Bank Reconciliation Statements (BRS)
857,363.62 - - - - - - -
Accounting Records (GL) vs. Physical count balances
- - 27,544,407,782.33 6,996,321,408.95 - - - -
Accounting Records (GL) vs. Accounts Receivables Schedules
- 2,288,406.46 - - - - - -
Accounting Records (GL) vs. Other Records
- 14,254,083.61 - - - - 55,915,242.42 -
Unidentified/Unaccounted/Unsupported with Documents
146,002.06 - - - - - 47,424,325.14 -
Various lapses for the unserviceable properties and in the grant, utilization and liquidation of cash advance
- - - 1,252,787,179.63 - 22,668,937.23 - -
Other deficiencies affecting various PPE accounts
- - - 2,348,742,747.98 - - - -
Non-reversion of unsupported and past due payables
- - - - - - 175,179,814.23 -
Non-elimination of intra-agency accounts
- 1,831,017,534.32 - - - - 1,737,201,667.36 16,530,242,186.45
Deficiencies affecting disclosure requirements
- - - - - - - -
TOTAL DEFICIENCIES
342,962,050.48 18,027,739,712.57 27,563,727,826.12 24,785,202,620.09 - 48,521,603.81 2,153,066,311.91 16,530,242,186.45
2,153,066,311.91 16,530,242,186.45
70,768,153,813.07
18,683,308,498.36
89,451,462,311.43
67
Deficiencies on Cash Accounts
14. Unreliable cash account balances due to existence of various deficiencies which
include the dormant/idle/closed bank accounts, unremitted cash balances and
collections to the BTr, unreconciled accounts, unrecorded/unadjusted reconciling
items, accounts with negative balances, delayed/non-preparation of reconciliation
statements, non-maintenance of/un-updated subsidiary ledgers, unidentified bank
accounts amounting to ₱342.962 million
15. The following were noted deficiencies amounting to ₱342,962,050.48 affecting the
Cash in Bank - Local Currency, Current Account, Cash – Treasury/Agency Deposit,
Regular, Cash in Bank-Foreign Currency Savings Account, and Cash-Collecting Officers
accounts.
Table 3: Deficiencies on Cash Accounts
Region/Office/CHDs/Hos
Findings Accounts Affected Criteria/Standards Amount of Deficiencies
pitals/TRCs/Bureaus
COA Circular No. 97-001
dated February 5, 1997 (as
amended by COA Circular
Cash in Bank - Local No. 2015-001 dated January
NCR- (MMCHD / NCHM)
Dormant Cash Account Currency, Current 29,2015) 7,907,051.52
VI - (WVS)
Account (CIB-LCCA) Section 3 of COA Circular No.
2015-001 dated January 19,
2015
Cash in Bank - Local Section 2 of Executive Order
NCR - (DJFMH / BOQ) Currency, Current No. 338 dated May 17, 1996 663,772.45
Unremitted to Bureau of Account (CIB-LCCA)
Treasury Cash – Treasury/Agency Section 4 of the General 2,352,212.50
X - (NMMC) Deposit, Regular Provisions of the GAA 2019
Unreconciled Amounts/Non-Reconciliation of accounts 74,736,702.19
GL vs. Cash Receipts Section 74 of PD 1445 and

NCR - (NCMH) Cash Collecting Officer Sections 4, 5-7, Chapter 21, 46,934.92
Record (CRR)
Volume I of the Government
Accounting Manual (GAM)
GL vs. RCD NCR - (EAMC) Cash Collecting Officer Chapter 3, Volume III of the 399,245.33
GAM
SL vs. BRS III - (DPJGMRMC) 857,363.62
Cash in Bank - Local
V- (BRTTH) Currency, Current
GL vs. BRS 73,024,775.89
VIII - (EVRMC) Account (CIB-LCCA)
GL vs. SL VI - (WVMC) 408,382.43
68
Region/Office/CHDs/Hos
Findings Accounts Affected Criteria/Standards Amount of Deficiencies
pitals/TRCs/Bureaus
Section 74 of PD 1445 54,233,683.68
Sections 111 and 112 of PD
NCR - (ARMMC / DJFMH 1445
/ QMMC) Section 1(b) of the
II - (CVMC) Cash in Bank - Local Government Accounting
Unadjusted/unrecorded
V- (CS-TRC) Currency, Current Manual for National
book reconciling items
VII - (VSMMC) Account (CIB-LCCA) Government Agencies,
VIII - (EVRMC) Volume I
XI - (SPMC) Sections 4, 5, 6, and 7,
Chapter 21 of the GAM,
Volume I
Section 111 (1)(2) of 6,347,892.88
Cash in Bank - Local Presidential Decree No.1445
Unexplained/undetermin
VIII - (CHD) Currency, Current
ed Beginning Balances
Account (CIB-LCCA) Sections 2, 3, and 6, Chapter
21 of the GAM, Volume 1
Section 111 (1)(2) of 13,461,702.05
Presidential Decree No.1445
Accounts with Negative NCR - (BOQ)
Cash Collecting Officer
Balances VIII - (CHD)
Sections 2, 3, and 6, Chapter
21 of the GAM, Volume 1
Section 74 of PD No. 1445 183,113,031.15
COA Circular 92-125A dated

March 4, 1992
Non-Preparation of Bank
Reconciliation Statement NCR - (FDA / RITM / Cash in Bank – LCCA Section 12 Volume II of the
(BRS)/Non-Maintenance RMC) (Payroll) Manual on the New
of Subsidiary Ledger Government Accounting
System Sections 3, 5 to 7,
Chapter 21, Volume I of the
GAM
Cash in Bank - Local Sections 111 and 112 of PD 146,002.06
Unidentified Bank
II - (CVMC) Currency, Current 1445
Accounts
Account (CIB-LCCA)
Grand Total 342,962,050.48
16. The above-mentioned deficiencies can be attributable to the failure of the

Accountant to monitor/validate the propriety of the account balances, analyze thoroughly,
reconcile and adjust immediately deficiencies noted, thus, affecting the fair presentation of
the Financial Statements and cast doubts to the accuracy of the cash balances.
17. We recommended that Management require the concerned Heads of CHDs,

Hospitals and Bureaus to require their respective Accountants to:
a. cause the closure of dormant and/or unauthorized bank accounts and

remit balances as well as collections from liquidated damages to the
Bureau of the Treasury, and subsequently submit the proof of remittance
to the Auditor’s Office;
b. analyze negative and unreconciled current and prior years’ balances

between the bank accounts and schedules/ledgers, reconcile and record
69
immediately appropriate reconciling items to adjust affected accounts;
and
c. maintain complete and updated subsidiary ledgers, and prepare and

submit timely and completely the BRS to the Office of the Auditor,
together with the original copies of the bank statements.
Deficiencies on Receivable Accounts
18. Approximately 49 percent or ₱15.427 billion of the recorded consolidated

Accounts Receivable, Inter/Intra-Agency Receivables, and Other Receivables of
₱877.429 million, ₱14.180 billion, ₱370.104 million, respectively, remained
uncollected/unliquidated and had been outstanding for less than 30 days to over 10
years, of which ₱371.259 million had been dormant for 10 years and above, and
₱769.639 million pertained to other deficiencies noted.
19. COA Circular No. 94-013 dated December 13, 1994 prescribes the rules and
regulations on the grant, utilization and liquidation of funds transferred to the
Implementing Agencies (IA) while COA Circular No. 2007-001 dated October 25, 2007
prescribes the guidelines in the granting, utilization, accounting and auditing of the funds
released to Non-Governmental Organizations/People’s Organizations (NGOs/POs).
20. Further, COA Circular No. 2016-005 dated December 19, 2016, Section 5.6 defines
Dormant Unliquidated Fund Transfers as advances granted by the source entity to
implementing entity for the implementation of programs/projects which remained non-
moving for ten (10) years or more and where settlement could no longer be ascertained.
Section 7 outlines the specific guidelines and activities to be conducted prior to the request
for write-off.
21. Accounts Receivables pertain to uncollected claims from the Philippine Health
Insurance Corporation (PHIC) for hospital bills, drugs and medicines for services rendered
to the PhilHealth beneficiaries by the hospital and employees who guarantor the patients.
22. Inter- and Intra-agency fund transfers were executed mainly for the implementation
of DOH various health programs and infrastructure projects to/by various NGAs, LGUs,
GOCCs, DOH ROs, OUs and Bureaus.
23. The Due from GOCCs account also includes the recorded uncollected claims from
the PHIC in some DOH retained hospitals.
24. Moreover, the Other Receivables includes Receivables-Disallowances and

Charges, Due from Officers and Employees, Due from Civil Society
Organizations/People’s Organizations (CSOs/POs), and Other Receivables.
70
25. However, the Receivables-Disallowances and Charges which pertains to the
uncollected and unsettled disallowances and charges issued by the respective agencies are
not covered by COA Circular No. 2016-005 dated December 19, 2016.
26. The total outstanding balance comprising the above-mentioned accounts in several
CHDs, TRCs, and Hospitals of regions NCR, CAR, I, II, III, IVA, VI, VII, VIII, X, XI, XII
and XIII amounted to ₱15,427,083,662.21, of which ₱371,259,113.67 became dormant for
more than 10 years, ₱3,576,196,908.10 aged over 3 years but less than 10 years,
₱4,410,716,122.19 over 1 year to 3 years, and ₱7,068,911,518.25 less than 30 days to 365
days. The detailed breakdown is presented in Annex B-C
27. The details of the Aging of the Receivables accounts of the DOH CHDs, Hospitals
and TRCs and the causes/reasons for the continuing occurrences of the accumulated
uncollected, unliquidated, long-outstanding and dormant Receivable accounts are shown
in Table 4:
Table 4: Aging and Causes of Uncollected and Unliquidated Receivable Accounts
10 years and
Region over 1 - 3 years above
Less than 30 days Over 3 years but
Findings Office/CHDs/Hospitals/ (Uncollected / (Dormant Total
to 365 days less than 10 years
TRCs/Bureaus Unliquidated) Receivable
(Long-outstanding)
Accounts)
NCR-(DJNRMHS/ POC/
RMC); I-(R1MC); II-
Accounts (CVMC); VI- (TRC-
615,740,886.80 137,644,100.95 108,501,866.14 15,541,901.99 877,428,755.88
Receivables POTOTAN/ DJSMMCE);
VIII-(TRC-DULAG); XII-
(CS)
Causes:
a) the system upgrade of the PhilHealth which was not communicated to the Agency prompted the delay in the processing of hospital claims, thus, resulted in the slow
collection of receivables;
b) there was inadequate system of control in place to ensure that unpaid hospital bills are fully collected/recovered;
c) there were no formal policies or guidelines on sending of demand letters; the promissory notes issued by the patient debtors were not secured by either a mortgage
or a guarantee of a co-maker; thus, there is no assurance on the part of the Hospital that the same could be collected/recovered; and
d) patients who were unable to pay their fees were required to execute promissory notes before they were allowed to leave the rehabilitation center; however, demand
letters were not issued to all of its delinquent patients who have outstanding balances payable to the Agency.
NCR-(CO); I-(CHD); III-
(CHD/JBLMGH); IVA-
Due from
(CHD); VI-(CHD); VIII-
National 2,168,025,692.93 2,340,861,453.62 154,868,718.09 175,768,931.08 4,839,524,795.72
(CHD); X-(CHD/TRC-
Government
CDO); XII-(CHD); XIII-
(CHD)
NCR-(CO/MMCHD);
CAR-(CHD); I-(CHD); II-
Due from Local (CHD); III-(CHD); IVA-
Government (CHD); VI-(CHD); VIII- 1,877,801,183.14 647,340,214.16 622,359,245.35 105,807,059.61 3,253,307,702.26
Units (LGUs) (CHD); X-(CHD); XI-
(CHD); XII-(CHD); XIII-
(CHD)
Due from
NCR-(CO/NCMH/VMC);
Government-
CAR-
owned
(CHD/LHMRH/BGHMC); 2,238,100,844.28 1,065,015,811.81 2,643,632,977.70 8,206,421.54 5,954,956,055.33
Controlled
I-(CHD); III-(CHD); XII-
Corporation
(CHD)
(GOCCs)
Total Inter Agency Receivables 6,283,927,720.35 4,053,217,479.59 3,420,860,941.14 289,782,412.23 14,047,788,553.31
71
10 years and
Region over 1 - 3 years above
Less than 30 days Over 3 years but
Findings Office/CHDs/Hospitals/ (Uncollected / (Dormant Total
to 365 days less than 10 years
TRCs/Bureaus Unliquidated) Receivable
(Long-outstanding)
Accounts)
NCR-(CO); CAR-(CHD);
Due from
VI-(CHD); X-(CHD); XII- 17,300,734.86 71,979,784.85 9,635,780.17 6,070,830.66 104,987,130.54
Operating Units
(CHD); XIII-(CHD)
Due from
NCR-(CO); VI-(CHD) - 49,833.00 11,613,923.01 14,492,613.93 26,156,369.94
Regional Office
Due from
- 591.58 591.58
Bureau NCR-(CO)
Due from Other
- 618,401.73 618,401.73
Funds NCR-(EAMC)
Total Intra-Agency Receivables 17,300,734.86 72,029,617.85 21,249,703.18 21,182,437.90 131,762,493.79
Causes:
a) laxity in/non-monitoring of the liquidation of funds transferred to different IAs;
b) non-enforcement of the provisions of COA Circular No. 94-013 dated December 13, 1994 and on the grant, utilization and liquidation of funds transferred to
Implementing Agencies (IAs);
c) absence of specific responsibilities in the liquidation of fund transfer; details on the schedule of deliveries/activities and sanction and penalties in the Memorandum of
Agreement (MOA);
d) non-compliance with the demand letters sent by the Management of IAs; and
e) supporting documents for the recording in the books of the IAs could not be located.
f) No adjustment has ever been made by the Accountant since CY 2005 despite the disclosure made in the Notes to FS. It seems that no effort was being exerted to
trace the nature/source of the error committed.
Receivables–
Disallowances/
VII-(TDH/GCGMH);
Charges (not - 429,768.45 2,419,936.69 2,849,705.14
X-(MHARSRTT)
included in the
write-off)
Due from Officer NCR-(BOQ/MMCHD); I-
826,535.47 77,093.44 4,836,264.99 5,247,839.68 10,987,733.58
and Employees (R1MC)
NCR-(CO/EAMC/RITM);
Due from I-(CHD); III-(JBLMGH);
45,490,312.24 89,200,134.43 19,591,683.93 33,385,602.85 187,667,733.45
CSOs/POs IVA-(CHD); VI-(CHD);
VIII-(CHD); XII-(CHD)
NCR-(CO/NCH); CAR-
Other
(CHD); I-(R1MC); II- 105,625,328.53 58,547,695.93 726,680.27 3,698,982.33 168,598,687.06
Receivables
(CVMC); VI-(CHD)
Total Other Receivables 151,942,176.24 147,824,923.80 25,584,397.64 44,752,361.55 370,103,859.23
Causes:
a) non-enforcement of COA Circular No. 2007-001 dated October 25, 2007 on the grant, utilization and liquidation of funds transferred to CSOs/POs were not
followed/observed by Management;
b) several demand letters had already been sent to the payee but no reply was received;
c) diligent effort was not exerted to collect the total amount disallowed;
d) the persons liable are no longer connected with the hospital due to separation of service; and
e) supporting documents for the recording in the books of the Agency could not be located.
Grand Total 7,068,911,518.25 4,410,716,122.19 3,576,196,908.10 371,259,113.67 15,427,083,662.21
28. Furthermore, other deficiencies were noted such as the existence of unreconciled
balances, non-preparation of schedules/ absence of periodic reconciliation, and existence
of negative balances amounting to ₱424.970 million; ₱113.428 million; and ₱231.241
million, respectively.
Table 5: Other Deficiencies of Receivable Accounts

Region Office/CHDs/Hospitals/
Particulars Accounts Affected Amount
TRCs/Bureaus
Unreconciled Amounts between Accounting NCR-(EAMC/MMCHD); XIII-(CHD) Due from National Government 36,486,803.58
Record and Confirmation Reply Agencies
72
Region Office/CHDs/Hospitals/
Particulars Accounts Affected Amount
TRCs/Bureaus
NCR-(MMCHD); I-(CHD); II-(CHD); Due from LGUs 290,504,002.66
XIII-(CHD)
XIII-(CHD) Due from Operating Units 4,500,000.00
Unreconciled Amounts between Accounting NCR-(DJSMMCE) Accounts Receivables 2,288,406.46

Record and AR Schedule
Unreconciled balances of PS-DBM Account NCR- Due from National Government 6,707,045.74
for the undelivered common-supplies (JRRMMMC/RITM/SLH/VMC) Agencies-PS-DBM
Unreconciled Balances per SL and GL NCR-(RMC) Accounts Receivables 70,229,865.32
Unreconciled Balances per GL and SASDC NCR-(EAMC/NCMH) Receivable- 14,254,083.61

(other Documents) Disallowances/Charges
Sub-Total 424,970,207.37
Absence of Periodic Reconciliation / Non- NCR-(ARRMC/POC) Account Receivable 113,427,521.52
Preparation of Schedule of Accounts
Receivables
Sub-Total 113,427,521.52
Negative Balance NCR-(JRRMMMC) Accounts Receivables 228,575,924.45
NCR-(RITM) Due from NGAs (PS-DBM) 2,664,862.70
Sub-Total 231,240,787.15
Grand Total 769,638,516.04
29. We recommended and Management agreed to require the Head of the Central
Office, CHDs, TRCs and Hospitals to:
a. require their respective Accountants to:
i. Continue to send Demand Letters to ROs/IAs with outstanding

balances due for liquidation or already past due for the immediate
settlement thereof, and to refund unused balances, if any;
ii. Continue to follow up/monitor the submission of liquidation reports

on funds transferred to the procuring entities/IAs upon completion
of each project, and coordinate with the Accountants of the IAs to
reconcile the funds transferred and liquidated as recorded in both
books of accounts;
iii. Refrain from transferring funds to IAs with outstanding balances,

and issue Certification that previous fund transfers had been
liquidated;
iv. Evaluate and reconcile all overdue accounts to determine proper

disposition and/or request for write-off of dormant or non-collectible
accounts, pursuant to the requirements under COA Circular No.
2016-005 dated December 19, 2016 and COA Resolution No. 2016-
022 dated December 19, 2016;
v. Analyze, reconcile and adjust accounts with negative balances in

order to present fairly their balances in the financial statements; and
73
vi. Prepare and maintain updated Subsidiary Ledgers to verify the
completeness and accuracy of the account balances; and
b. require the Legal Service/Program Manager/End-User Unit to revisit and

consider revising the MOA for future fund transfers to provide conditions
with specific timelines for project deliverables, schedule of
activities/deliveries with sufficient and precise controls to effectively
liquidate the fund transfer pursuant to COA Circular No. 94-013 dated
December 13, 1994 and COA Circular No. 2007-001 dated October 25,
2007.
Deficiencies on Inventory Accounts
30. The reliability and accuracy of Inventory accounts were affected due to: (a)
the discrepancy between the GL/SL balances and the physical count/Supply Section
records of ₱27.754 million; and (b) the existence of negative balances of ₱19.320
million.
31. Section 6 and 9, Chapter 8 of the GAM, Volume I require the use of weighted
average method in costing inventories and to course through the inventory account regular
purchases of supplies and materials and to record issuances as they take place in accordance
with the Perpetual Inventory Method.
32. Section 17 requires the preparation of Report of Supplies and Materials Issued
(RSMI) by the Property/Supply Custodian to be used by the Accounting Division as basis
in recording supplies and materials issued.
33. Item 4, Section VI of COA Cir. 2014-002, and Appendix 66C, GAM Volume I
require periodic reconciliation of accounting and property records and
verification/adjustment of discrepancy, if any.
a) Unreconciled balances of Inventory Accounts- ₱27.544 billion
34. Comparison of balances between the books and the physical count reports/ Supply
Section records showed a difference of ₱27,544,407,782.33 as at year-end, summarized as
follows:
Table 6: Summary of unreconciled account balances
CHDs/ Hospitals/ TRCs/ Accounting Records Physical count balances Discrepancy in absolute
Region
Bureaus (GL) (in Php) (in Php) value
DOH CO 25,475,855,717.25 3,503,998,367.63 21,971,857,349.62
JRRMMC 146,554,844.35 28,772,932.29 117,781,912.06
QMMC 202,331,577.66 167,882,596.49 34,448,981.17
NCR
DJRNMHS 30,309,743.52 30,345,762.69 36,019.17
FDA 42,460,569.45 1,427,124.57 41,033,444.88
RMC 94,292,390.18 38,764,740.31 55,527,649.87
CAR FNLGH Not indicated Not indicated 274,719.67
I CHD 611,895,743.62 84,604,674.97 527,291,068.65
74
CHDs/ Hospitals/ TRCs/ Accounting Records Physical count balances Discrepancy in absolute
Region
Bureaus (GL) (in Php) (in Php) value
MMMHMC 157,058,105.08 130,629,458.78 26,428,646.30
CVMC 59,686,874.04 13,171,862.73 46,515,011.31
TRC 3,165,193.00 129,907.04 3,035,285.96
II
R2TMC 8,494,807.97 7,392,645.32 1,102,162.65
SIMC 37,216,820.42 38,969,209.39 1,752,388.97
CHD 1,430,207,866.54 164,745,697.90 1,265,462,168.64
DPJGMRMC 56,534,908.15 35,680,599.18 20,854,308.97
III
TRC Bataan 7,648,415.53 739,196.91 6,909,218.62
TGH 7,076,496.00 13,986,391.09 6,909,895.09
CHD 1,373,736,608.49 222,408,182.91 1,151,328,425.58
IVA
BatMC 40,438,095.88 36,812,746.87 3,625,349.01
CHD 1,090,699,278.76 249,924,993.64 840,774,285.12
BRGHGMC 104,826,520.19 22,212,856.56 82,613,663.63
V
BRTTH 60,946,563.85 12,910,556.43 48,036,007.42
MTRC 1,311,049.33 895,430.06 415,619.27
CHD 113,308,522.11 111,508,138.35 1,800,383.76
VI DJSMMC 2,570,076.24 2,483,684.86 86,391.38
WVMC 87,518,001.18 86,468,001.18 1,050,000.00
DEVMH 23,719,209.46 2,764,754.03 20,954,455.43
GCGMH 108,345,116.05 102,599,712.45 5,745,403.60
VII
TDH 69,275,985.04 20,826,944.13 48,449,040.91
VSMMC 108,013,060.92 100,465,120.88 7,547,940.04
CHD 69,639,945.17 163,975,060.36 94,335,115.19
VIII TRC Dulag 4,457,926.40 1,254,528.86 3,203,397.54
EVRMC 258,686,404.56 64,290,481.69 194,395,922.87
XI CHD 359,125,182.34 148,997,551.41 210,127,630.93
XII CHD 502,468,555.72 75,414,056.77 427,054,498.95
CHD 481,011,405.34 206,537,184.81 274,474,220.53
XIII
DTRC 2,645,012.93 3,814,812.50 1,169,799.57
TOTAL 27,544,407,782.33
35. These unreconciled discrepancies, which cast doubt on the reliability and existence
of the inventory accounts of the DOH, were mainly caused by: (i) non-conduct of periodic
reconciliation between the Accounting Unit and Material Management Division/Supply
Section; (ii) lapses in preparing, maintaining and submission of inventory records to
Accounting; (iii) existence of unreconciled prior year beginning balances; (iv) lack of
manpower; (v) difference in costing method; and (vi) erroneous entries.
b) Negative balances on Inventory Accounts – ₱19.320 million
36. Further, due to error in postings to SL accounts and/or postings of issuances prior
to the recording of receipt of inventories, the following negative balances on various
inventory accounts were noted:
Table 7: Negative balances on inventory accounts
CHDs/ Hospitals/
Region Inventory Account Amount
TRCs/ Bureaus
Merchandise Inventory (15,403,982.05)
II CVMC Medical, Dental and Laboratory Supplies (833,749.45)
Office Supplies Inventory (363,046.63)
XIII CHD Property & Equipment for Distribution (2,572,780.66)
75
CHDs/ Hospitals/
Region Inventory Account Amount
TRCs/ Bureaus
Semi-Expendable Office Equipment (37,235.00)
Semi-Expendable Information and Communications
(105,850.00)
Technology Equipment
Semi-Expendable Furniture and Fixtures (3,400.00)
TOTAL (19,320,043.79)
37. We recommended that Management require the Heads of the Central Office,
CHDs, TRCs and Hospitals to direct the Accounting and MMD/Inventory
Committee/Supply Sections concerned to:
a. develop an action plan with timelines to work on the reconciliation process

between the Accounting and Supply Section records and reports.
Subsequently, submit updated reports (Inventory Report and the General
Ledger) showing the reconciled balances or adjustments made on the
Inventory accounts using the December 31, 2019 figures as reckoning
balances. Thereafter, the Accounting and Material Management Section
(MMS) perform periodic and regular reconciliation of records;
b. establish coordination and monitoring among the different units involved

in the receipts and issuances of inventories, in order to ensure that all
purchases and issuances are recorded by the Accountants in accordance
with the perpetual inventory method of recording using the weighted
average method of costing inventories, and the transactions pertaining to
CY 2019 and onwards will always reconcile with the recorded balances in
the books of accounts, while gradually working back on the previous
transactions to be able to establish accurate and/or reconciled balances;
c. make detailed investigation on the deficiencies and negative balances noted

and exert all efforts to reconcile the affected inventory accounts by
referring to the earliest available records, and make necessary adjustments
in the books to correct the balances of the accounts; and
d. evaluate and assess the manpower requirement in the respective Units

and/or the capabilities of personnel assigned to perform crucial tasks and
give appropriate trainings, if necessary to ensure effective and efficient
performance of their tasks and adherence to reporting requirements.
Deficiencies on Property, Plant and Equipment (PPE)
38. The accuracy and existence of the PPE accounts, could not be fully ascertained
due to: (a) failure to prepare/maintain/update the Property Cards (PCs) and PPE
Ledger Cards (PPELCs) – ₱3,279,663,572.25; (b) non-submission/non-preparation of
Report on Physical Count of PPE (RPCPPE) – ₱3,881,016,696.40; (c) failure to
conduct physical inventory taking of all its PPE – ₱7,026,671,014.88; (d) unreconciled
76
differences between the accounting records and physical count balances –
₱3,881,016,696.40; and (e) un affecting various PPE accounts – ₱2,348,742,747.98.
Table 8: Summary of Deficiencies in Property, Plant and Equipment of DOH Offices/CHDs/TRCs/Hospitals/Bureaus
DOH Offices/
Deficiency Region CHDs/TRCs/ Amount Criteria
Hospitals/Bureaus (in Php)
Failed to NCR ARMMC 584,111,000.00 Section 42, Chapter 10 –
prepare/maintain/update the PC DJFMH 9,665,263.00 Property, Plant and
and PPELC (per book balance) NCH 90,303,794.80 Equipment, GAM Volume I
RMC 510,804,674.59
POC 40,869,350.94 Appendix 69 and 70, GAM
CAR CDH 184,019,199.95 Volume II
LHMRH 1,348,418.76
FNLGHTC 612,710,131.26
III BGHMC not stated
CHD not stated
TGH not stated
TRC BATAAN not stated
VI CHDWV 2,647,990.00
VII SAMCH not stated
VIII EVCHD 925,227,454.80
SH 1,247,013.32
EVRMC 316,709,280.83
XI DRMC not stated
XII CS not stated
Total 3,279,663,572.25
Failed submission / Non- NCR CO 337,294,708.21 Section 38, Chapter 10 –
Preparation of RPCPPE POC 653,874,518.97 Property, Plant and
(per Book Balance) I CHD 64,200,217.52 Equipment, GAM Volume I
VI DJSMMCEH 244,401,993.61
WVMC 1,540,244,295.44
XI DCHD 57,108,239.89
XII CRMC 837,839,766.65
CS 146,052,956.11
Total 3,881,016,696.40
Failure to conduct physical NCR DJFMH 4,597,465.00 Section 38, Chapter 10 –
inventory taking of all its PPE FDA 619,279,837.36 Property, Plant and
(per Book Balance) NCH 707,247,755.64 Equipment, GAM Volume I
NCMH 128,314,150.06
CAR CDH 184,019,199.95
FNLGHTC 612,710,131.26
I R1MC 1,040,355,106.74
II R2TMC 3,057,195.34
III TRC Bataan 805,920.56
JBLMGH 1,640,752,831.86
IV-B CHD 1,185,626,949.68
V CSTRC 20,237,970.82
VI WVS not stated
VIII EVCHD 879,666,500.61
Total 7,026,671,014.88
Unreconciled differences NCR CO 844,940,436.80 Chapter V of Property &
between the GL and RPCPPE ARMMC 9,291,590.21 Supply Management
balance (in absolute amount) BOQ 7,660,215.31 System Manual
FDA 619,279,837.36
MMCHD 71,360,501.19
NCMH 130,623,738.12
QMMC 58,628,302.47
RMC 71,951,806.07
SLH 481,674,839.10
SLRWH 1,536,600.00
TMC 488,757,103.20
VMC 9,713,520.75
I MMMHMC 17,758,999.29
CHD 10,138,632.02
77
DOH Offices/
II CVMC 400,677,773.27
DATRC 449,467.00
III TGH 511,511.96
CHD 1,802,438,372.85
Dr. PJGMRMC 1,557,323.90
IV-A CHD 370,235,928.38
BatMC 197,085,490.67
V CSTRC 2,273,998.86
CHD 87,553,702.22
VII DEVMH 124,636,745.18
GCGMH 8,816,019.25
SAMCH 1,793,231.74
VSMMC 43,276,383.50
VIII EVCHD 23,965,260.13
SH 362,680.65
EVRMC 93,284,386.10
X NMMC 641,262,307.72
CHDNM 3,028,998.48
XI DCHD 9,586,000.00
XII CHD 149,102,443.18
XIII CHD 211,107,262.02
Total 6,996,321,408.95
Lapses in Unserviceable Property
Disposed unserviceable III CHD 1,778,759.70 Section 79 of Presidential
property not yet derecognized Dr. PJGMRMC 972,526.06 Decree No. 1445
from the books VII VSMMC 555,337.89
Total 3,306,623.65 Section 39 and 40, Chapter
Unserviceable property not yet NCR TMC 10,730,409.12 10 – Property, Plant and
dropped from the books VMC 9,472,949.97 Equipment GAM Volume I
I MMMHMC 18,440,973.27
TRC Dagupan 35,180.08
II BGH 638,791.24
VII SAMCH 5,912,536.62
VSMMC 1,197,000.00
VIII EVRMC not stated
XII CHD 661,988.80
Total 47,089,829.10
Unserviceable property NCR FDA 71,132,651.51
remained undisposed NCMH 7,400,212.71
RITM 30,949,616.54
III BGHMC 363,738.26
TGH 1,062,121.00
Dr. PJGMRMC 2,692,918.29
MMWGH 305,198.84
TRC Bataan 680,227.09
JBLMGH 3,894,524.88
IV-A BatMC 9,010,343.24
XII CRMC 23,989,002.88
XIII ASTMMC 11,328,974.12
CRH 17,944,855.28
CHD 3,551,314.92
Total 184,305,699.56
Failure to adopt uniform VII ECS 2,720,240.00
procedures, systematic and
timely disposal of unserviceable
properties
Unserviceable properties were VII SAMCH 8,427,750.37
disposed without contract and
performance bond
No IIRUP for unserviceable VII VSMMC 220,500.00
property VIII TRC Dulag 102,612.00
Total 323,112.00
78
DOH Offices/
Non-issuance of certificate of VII VSMMC 1,250,000.00
condemned for unserviceable
property
Unserviceable properties NCR ARMMC 44,345,000.00
reported per IIRUP still included
in RPCPPE
Inadequate disclosure of PPEs NCR MMCHD 3,055,811.45
held for disposal in Notes to FS
Non-assessment of physical NCR CO 947,734,062.15
condition for impairment
Incomplete IIRUP information NCR SLH 10,229,051.35
Other Deficiencies affecting PPEs
Beginning balance in CIP cannot VII TRC Cebu City 8,141,736.54 Section 15 Chapter 2 –
be attributed to a certain project VSMMC 11,579,383.80 General Provisions, Basic
Total 19,721,120.34 Standards and Policies
GAM Volume I
Certificate of Title not yet under VII SAMCH 1,998,992.81 Section 42 Chapter 10 –
the name of the hospital Property, Plant and
Equipment GAM Volume I
CIP in prior years remained III CHD 80,164,467.64 Section 8(g) Chapter 10 –
uncompleted in the books of Property, Plant and
accounts Equipment GAM Volume I
Delayed issuance of PAR NCR DJNRMHS 160,678,990.00 Section 21 Chapter 10 –
Property, Plant and
Delayed derecognition of PPE XI DRMC 109,842,840.00 Section 73 Presidential
from the books due to non-filing Decree No. 1445
of the request for relief from
property accountability for the COA Memorandum No. 92-
loss of PPE 751
Equipment issued to Chief VIII EVRMC 488,942,100.00 Section 21 Chapter 10 –
Admin Officer and not to end- Property, Plant and
users Equipment GAM Volume I
Section 105(1) Presidential

Decree No. 1445
Failure to recognize hospital VIII EVRMC 956,870,329.21 Section 21 Chapter 10 –
buildings due to absence of Property, Plant and
deed of donation Equipment GAM Volume I
Failure to establish ownership I TRC Dagupan 5,792,068.69 Section 63 Presidential
over building constructed within Decree No. 1445
the vicinity of the hospital
Section 3 Chapter 10 –
Property, Plant and
Inadequate records to validate NCR LPGH-STC 4,310,827.00 Section 8(g) Chapter 10 –
completed projects Property, Plant and
Inconsistent classification of NCR CO 81,104,630.98 Chapter 10 – Property, Plant
items/equipment in the RPCPPE and Equipment GAM
Volume I
Lumping of systems’ component NCR SLH 19,850,490.47 Appendix 69 GAM Volume II
in PC and use of old PC Form
Negative balance in PPE (in NCR BOQ 5,989,151.59 Section 42 Chapter 10 –
absolute amount) VII SAMCH 350,546.67 Property, Plant and
XIII CHD 7,400,607.71 Equipment GAM Volume I
Total 13,740,305.97
No deed of donations for turn- VIII EVCHD 132,775,079.96 Section 12 Chapter 10 –
over of completed infrastructure Property, Plant and
projects Equipment GAM Volume I
Non-issuance of PAR NCR JRRMMC 19,000.00 Sections 4 and 25 Chapter
II R2TMC 3,057,195.34 10 – Property, Plant and
Total 3,076,195.34 Equipment GAM Volume I
No impairment losses on idle IV-B ONP 10,940,000.00 Section 28 Chapter 10 –
PPEs Property, Plant and
79
DOH Offices/
Section 23 PPSAS 21
Non-dropping of demolished I R1MC 2,485,327.78 Item 8 Guidelines in Proper
buildings in the books Disposal
Property, Plant and
Non-recognition of residual VIII EVCHD 499,906.02 Section 27 Chapter 10 –
value Property, Plant and
Non-compliance with the GAM NCR CO 299,894.00 Section 4 Chapter 10 –
capitalization threshold of Property, Plant and
P15,000.00 Equipment GAM Volume I
PPEs not found in the location VII VSMMC 508,000.00 Section 79 Presidential
during physical count Decree No. 1445
PPEs not depreciated due to VIII SH 1,138,646.00 Section 27 Chapter 10 –
absence of subsidiary ledger Property, Plant and
Procedural lapses in dropping NCR MMCHD 6,549,504.58 Section 15 Chapter 10 –
from books of transferred Property, Plant and
property Equipment GAM Volume I
Report on missing PPEs not III TRC Bataan 137,676.00 Section 38 Chapter 10 –
submitted to Accounting Section Property, Plant and
Semi-expendable items X CHD-NM 15,318.00 Section 4 Chapter 10 –
included in the RPCPPE Property, Plant and
Unrecorded PPE due to XII CHD 12,387,653.70 Section 3 Chapter 10 –
absence of necessary Property, Plant and
documents for its recording Equipment GAM Volume I
Semi-expendable items XII CHD 9,851,208.25 Section 3 Chapter 10 –
included in the PPELC Property, Plant and
Unreconciled beginning balance IV-A CHD 189,835,436.11 Sections 38 and 42 Chapter
in PPELCs VI WVMC 28,034,488.89 10 – Property, Plant and
Total 217,869,925.00 Equipment GAM Volume I
Section 111 Presidential

Decree No. 1445
Untitled Land I CHD 2,545,200.00 Sections 39(2) and 58
III JBLMGH 4,646,050.24 Presidential Decree No.
Total 7,191,250.24 1445
Property, Plant and
39. The following deficiencies were also noted but corresponding amounts were not
disclosed:
Table 9: Deficiencies with no amounts disclosed
DOH Offices/
Deficiency Region CHDs/TRCs/ Criteria
Hospitals/Bureaus
Conditions of PPEs not stated in the RPCPPE VI CHDWV; WVS Section 42 Chapter 10 – Property, Plant and
Failure to account donated land and facilities due to absence III TRC Bataan Section 79 Presidential Decree No. 1445
of deed of donation
Inadequate PPE disclosures in the Notes to FS NCR SLH Section 48 Chapter 10 – Property, Plant and
Incomplete record of PPEs VII DEVMH Sections 20 and 21 Chapter 10 – Property, Plant
and Equipment GAM Volume I
80
DOH Offices/
Deficiency Region CHDs/TRCs/ Criteria
Hospitals/Bureaus
Non-disclosure of PPE details in the Notes to FS XII CHD Section 48 Chapter 10 – Property, Plant and
Non-provision of depreciation for completed unrecorded III CHD Paragraph 71 International Public Sector
Buildings and Other Structures Accounting Standards No. 17
Non-submission of documents for the turnover of Hospital and VI CHDWV Section 3 Chapter 10 – Property, Plant and
Health Centers to LGU Equipment GAM Volume I
Non-updating of PAR I MMMHMC Sections 20, 21, 38 and 42 Chapter 10 – Property,
II R2TMC; SIMC Plant and Equipment GAM Volume I
XI DRMC
XII CRMC
Non-utilization of prescribed PPELC NCR RMC Appendix 70 GAM Volume II
PPEs not found in the locations as stated in the RPCPPE I MMMHMC Sections 20, 38 and 42 Chapter 10 – Property, Plant
and Equipment GAM Volume I
RPCPPE prepared on a per office basis instead of per asset NCR CO Section 42(g) Chapter 10 – Property, Plant and
type Equipment GAM Volume I
Summary report of discrepancies in PPEs not submitted to III BGHMC Section 38 Chapter 10 – Property, Plant and
Accounting to correct balance of PPEs Equipment GAM Volume I
Unrecorded donation of undetermined amount III TGH Section 15 Chapter 10 – Property, Plant and
Various PPEs have no property tag NCR NCH Chapter 4, Training Handbook on Property and
I MMMHMC Supply Management System
II R2TMC; SIMC
XI DRMC DOH Hospital Property and Supply Manual
Item V.2 COA Circular No. 80-124
40. The following were the causes of the above-noted observations:
a. The non-conduct of physical inventory-taking resulted in the unreconciled and

unreliable balances of PPEs per accounting and property records;
b. The failure to properly derecognize the unserviceable property, whether

already disposed or pending disposal resulted in the overstatement of the above
PPE accounts;
c. Delayed disposal of the unserviceable properties have caused the

storeroom/warehouse to be congested and the equipment to continually
accumulate dust, deteriorate and lose its value; and
d. Non-assessment of physical condition for impairment of the PPEs caused the

assets whose carrying amount already exceeds its recoverable amount to not be
properly accounted in the accounting records.
e. Unreliable PPE accounts were also due to the following: (1) Conditions of
PPEs not stated in the RPCPPE; (2) failure to account donated land and
facilities due to absence of deed of donation; (3) inadequate PPE disclosures in
the Notes to FS incomplete record of PPEs; (4) non-disclosure of PPE details
in the Notes to FS; (5) Non-submission of documents for the turnover of
Hospital and Health Centers to LGU; (6) Non-updating of PAR; (7) Non-
utilization of prescribed PPELC; (8) PPEs not found in the locations as stated
in the RPCPPE; (9) RPCPPE prepared on a per office basis instead of per asset
type; (10) Summary report of discrepancies in PPEs not submitted to
81
Accounting to correct balance of PPEs; (11) Unrecorded donation of
undetermined amount; and (12) Various PPEs have no property tag.
CHDs, TRCs and Hospitals to:
a. Require the Accounting and Property Units to: (i) use common reference
identical property numbers and maintain complete and updated PPELCs
and PCs with complete details of the property for easy reconciliation and
to ensure strict adherence to pertinent regulations; (ii) after the conduct
of physical count reconcile records to identify the causes of the differences
and adjust accordingly; (iii) come up with an effective Property
Accounting System for prompt recording of delivery and receipt and
transfer of PPE to account real time; and (iv) verify and validate the
whereabouts of items not reported in RPCPPE but recorded in the books
or vice versa, and make the necessary adjustments, if warranted;
b. Ensure the creation and establishment of an Inventory Committee (IC),

duly represented from accounting and property divisions to: (i) conduct
and complete the physical count of PPE annually, implement proper
planning in the conduct of inventory, and ensure that all concerned
perform their assigned duties and responsibilities in accordance with the
appropriate guidelines to be observed during the inventory taking; (ii)
identify the discrepancies/unaccounted PPE during the count; (iii)
conduct assessment of the physical condition of PPE as basis of the
accounting division in recording impairment losses, if any; (iv) prepare a
complete RPCPPE based on actual count/existence with the complete
detailed information and whereabouts of the property; (v) participate in
the reconciliation process by the Property and Accounting Units; and (vi)
submit the duly reconciled RPCPPE to the Audit Team not later than
January 31 of each year as mandated under Sec. 38, Chapter 10, Volume
I of the GAM for NGAs;
c. Require the Property Division to: (i) issue/renew/provide PARs for every
PPE issued/assigned to all end-users and maintain files for reference in
subsequent renewal every third year after issue; (ii) facilitate the
placement/attachment of Property Tags/Numbers on all properties for
easy and proper identification of the properties; (iii) facilitate the
processing of Transfer Certificates of Title (TCTs) of the donated lot
which serve as evidence of ownership over the property; and (iv)
coordinate with the Disposal Committee to facilitate disposal of
unserviceable properties to avoid further deterioration, and earn income
from their sale, if warranted, and to free and make use of the occupied
storage spaces;
82
d. Require the Accountants to: (i) analyze, verify, confirm, identify and
reconcile all discrepancies and deficiencies noted affecting PPE accounts
and prepare the necessary adjusting entries duly supported with adequate
documentations, for the proper presentation of the affected accounts in
the financial statements; (ii) recognize impairment losses for derecognized
unserviceable properties from the respective PPE accounts, if any; and
(iii) fully comply with the GAM in the preparation of Notes to the FS and
effect changes in the succeeding reporting season; and
e. Require the Health Facilities Enhancement Unit to fast-track the

preparation of the Deed of Donation for all turned-over and completed
infrastructure projects, and submit the documents to the Accounting Unit
for appropriate documentation and as basis in recognizing the
transactions in the books of accounts.
Deficiencies on Other Assets
42. Lapses in the granting, utilization and liquidation of cash advances in 19 out
of 86 DOH Offices, CHDs, TRCs, Hospitals and Bureaus, resulted in the
accumulation of the balances of affected accounts amounting to ₱32.994 million.
43. COA Circular No. 97-002 dated February 10, 1997 provides, among others, the
following:
Sec. 4.1.2. No additional cash advances shall be allowed to any official or

employee unless the previous cash advance given to him is first settled or a
proper accounting thereof is made.
Sec. 4.1.3. A cash advance shall be reported on as soon as the purpose for
which it was given has been served.
Sec. 5.1.3, par. 2. Failure of the AO to liquidate his cash advance within the
prescribed period shall constitute a valid cause for the withholding of his
salary and the instruction of other sanctions as provided for under
paragraphs 9.2 and 9.3 hereof.
Sec. 5.8. All cash advances shall be fully liquidated at the end of each year.
Except for petty cash fund, the AO shall refund any unexpended balance to
the Cashier/Collecting Officer who will issue the necessary official receipt.
44. As at December 31, 2019, the outstanding balance of cash advances of the 19 DOH
Offices, CHDs, TRCs, Hospitals and Bureaus amounted to ₱32,994,455.10, consisting of
₱7,141,788.52 not yet due for liquidation; ₱25,920,465.95 due for liquidation; and a
negative balance of ₱67,799.37 due to erroneous recording of liquidation of advances
granted to WVMC employees, the details of which are shown in Table 10.
83
Table 10: : Aging of Unliquidated Cash Advances (in million ₱)
DOH Offices/ Due for liquidation

Balances as
CHDs/TRCs/ Not yet Negative
Region at December
Hospitals/ due Over 1 Balance
Not more than 31-60 61-365 Over 3 years - 10 Over 10 31, 2019
Bureaus year - 3 Total
30 days days days years years
years
Advances to Officers and Employees
NCR CO 2.006 0.842 0.786 0.117 0.020 - - 1.766 - 3.773
RITM 0.350 0.019 0.252 0.253 - 0.042 - 0.566 - 0.915
RMC 0.125 - - - - - - - - 0.125
MMCHD - 0.366 0.005 0.135 0.006 0.435 0.006 0.954 - 0.954
QMMC - - - 0.118 - - - 0.118 - 0.118
CAR CHD - - 0.007 - - - - 0.007 - 0.007
IV-A CHD - - - 0.015 - - 0.506 0.521 - 0.521
VI WVCHD - - - - - 0.010 0.654 0.664 - 0.664
WVMC - - - - - 0.159 - 0.159 (0.068) 0.091
VIII EVCHD - - - - - 0.015 0.042 0.058 - 0.058
EVRMC - - - 0.131 0.271 - - 0.402 - 0.402
IX DJRMH - 0.039 - 0.031 - - - 0.070 - 0.070
X CHD 0.084 0.031 - - - - - 0.031 - 0.114
XIII CRH - 0.015 0.140 0.268 0.016 - - 0.440 - 0.440
Sub-Total 2.565 1.311 1.191 1.069 0.313 0.661 1.209 5.754 (0.068) 8.252
Advances for Operating Expenses
NCR RMC - - - - - 0.354 - 0.354 - 0.354
IV-A CHD - - - 0.252 0.004 - - 0.256 - 0.256
X CHD - 0.615 0.187 0.006 - - - 0.807 - 0.807
Sub-Total - 0.615 0.187 0.258 0.004 0.354 - 1.417 - 1.417
Advances for Payroll
NCR RMC - 1.201 0.553 0.037 0.095 1.410 - 3.297 - 3.297
NCMH - - - 0.238 0.061 - - 0.299 - 0.299
IV-A CHD - 0.140 - 1.375 - 0.041 - 1.556 - 1.556
IX DJRMH - 0.005 - - - - - 0.005 - 0.005
Sub-Total - 1.347 0.553 1.650 0.155 1.451 - 5.157 - 5.157
Advances to Special Disbursing Officers
NCR CO - 0.161 - - - - - 0.161 - 0.161
RITM 1.991 - - - 0.287 - - 0.287 - 2.277
84
DOH Offices/ Due for liquidation
Balances as
CHDs/TRCs/ Not yet Negative
Region at December
Hospitals/ due Over 1 Balance
Not more than 31-60 61-365 Over 3 years - 10 Over 10 31, 2019
Bureaus year - 3 Total
30 days days days years years
years
RMC - - 0.516 0.340 0.163 0.013 - 1.032 - 1.032
CAR CHD - 0.545 - 0.135 - - - 0.680 - 0.680
IV-A CHD - - - 0.945 - - - 0.945 - 0.945
VI TRC Iloilo 0.060 0.141 - 0.100 - - - 0.241 - 0.301
WVMC 0.347 - - - - - - - - 0.347
VIII EVRMC - - - 0.500 1.485 - - 1.985 - 1.985
IX DJRMH - 0.161 - - - - - 0.161 - 0.161
X CHD - 0.103 0.005 - - - - 0.108 - 0.108
TRC - - 0.195 - - - - 0.195 - 0.195
XIII CRH - - 0.006 0.027 0.002 - - 0.035 - 0.035
CHD - 0.080 0.001 0.600 0.250 - - 0.931 - 0.931
Sub-Total 2.397 1.191 0.723 2.646 2.187 0.013 - 6.761 - 9.158
Various Advances Accounts
XII CHD 2.179 0.703 1.996 1.467 2.271 0.392 - 6.831 - 9.010
Sub-Total 2.179 0.703 1.996 1.467 2.271 0.392 - 6.831 - 9.010
Grand Total 7.142 5.167 4.650 7.091 4.930 2.873 1.209 25.920 (0.068) 32.994
45. Non-compliance of the Accountable Officers with the abovementioned pertinent

regulations resulted in the accumulation of unliquidated CAs and non-reporting of related
expenses. Considering the length of time that has elapsed, it is presumed that the purpose
of the CAs had already been served.
46. Among the deficiencies we noted in the 19 DOH Offices, CHDs, TRCs, Hospitals
and Bureaus that contributed to the accumulation of unliquidated CAs were the following:
a. Excessive/additional grant of advances despite non-liquidation of existing

balances;
b. Delays in the settlement/liquidation of cash advances;
c. Non-return of unutilized balance and AOs are already either no longer in

government service or transferred to other government agencies; and
d. Unbooked or suspended liquidations due to incomplete or insufficiency of

supporting documents.
85
47. Moreover, we noted other deficiencies on the grant, utilization, and liquidation of
cash advances as shown in Table 11.
Table 11: Other Deficiencies in the Grant, Utilization and Liquidation of Cash Advances
DOH Offices/
CHDs/TRCs/
Deficiency Region Amount Criteria
Hospitals/
Bureaus
Disbursements not immediately reported and replenished VIII EVCHD 23,685.00 Sections 2, 6 and 35,
Chapter 2 – General
Provisions, Basic
Standards and Policies
GAM Volume I
Disbursement vouchers including its supporting documents II CVCHD not stated Section 2 (Q) COA Circular
pertaining to the replenishment and liquidation of cash 92-389
advances were not stamped “PAID”
Irregular payment of expenses through cash advance VII ECS 270,576.00 Section 4.1.5 COA Circular
No. 97-002
Negative beginning balance of advances VIII EVCHD 67,807.43 Section 111(1) Presidential
Decree No. 1445
No Subsidiary Ledger for Advances for Payroll VIII EVRMC 18,703,146.54 Sections 111(1) and 114(2)
Presidential Decree No.
1445
Non-maintenance of Cash Disbursement Record II SIMC not stated Section 17, Chapter 6 –
Disbursements
GAM Volume I
Non-reconciliation of AO's records and SL V BRTTH 113,050.00 Section 6.3 COA Circular
No. 97-002
XII CHD not stated Section 5.2 COA Circular
No. 97-002
Payment of goods/services through cash advance II CVMC 505,412.00 Section 2.2 COA Circular
No. 97-002
Payment of salaries and travel expenses of employees VII ECS 1,569,636.31 Section 4.1.6 COA Circular
through cash advance No. 97-002
Unidentified beginning balance of advances VIII EVCHD 1,056,717.87 Section 111(1) Presidential
Decree No. 1445
Unreconciled prior years' balance of Advances for Payroll V BRTTH 358,906.08 Section 19 Chapter 6 –
Disbursements GAM
Volume I
Total ₱22,668,937.23
CHDs, TRCs, Hospitals and Bureaus to direct:
a. All concerned AOs to submit complete necessary documentary

requirements and immediately settle their unliquidated cash advances as
soon as the purpose for which these were given have been served,
otherwise, we will be constrained to further recommend to the Agency
Head the withholding of their salaries until they have complied with the
liquidation; and
Their respective Accountants to:
b. Strictly monitor cash advances and regularly remind/require the

liquidation of a previous cash advance, or the proper accounting thereof,
before another cash advance be granted to an accountable officer;
86
c. Provide allowance for impairment loss for the dormant accounts with
improbable collectability, as applicable per agency basis; and
d. Send demand letters to the concerned officers and employees requiring the
immediate liquidation of their cash advances which are overdue for
liquidation, and suspend the salary of the said officers and employees until
they fully comply with the demand.
Management Comments:
49. DOH Central Office balances mostly pertains to advances granted during the last
quarter of 2019 and these were already liquidated in 2020. The Financial Management
Services strictly impose the policy “No Liquidation/No Cash Advance”.
Deficiencies on Payables Accounts
50. The accuracy and reliability of Liabilities accounts could not be ascertained
due to: (a) non-reversion of unsupported and past due payables of ₱175.180 million;
and (b) existence of negative/abnormal/unreconciled balance of ₱240.685 million,
rendering the balance of said accounts unreliable.
51. Verification of the Payables accounts showed dormant/non-moving and

undocumented accruals of payables amounting to ₱175,179,814.23. The summaries are
shown in Table 12:
Table 12: Summary of invalid, unsupported and past due payables not reverted
Without
Accounts More than 2 years and valid/unsupported/
Region Agency 5 years or more Total Criteria
Affected less than 5 years undocumented
claims
NCH 1,213,174.49 1,213,174.49 Section 98 of PD
BOQ 51,720.00 51,720.00 1445 and EO 87
NCR SLH 6,297,310.57 6,297,310.57 dated August 13,
TMC 7,275,794.98 7,275,794.98 2019.
DJFMH 2,196,638.34 19,070.00 2,215,708.34
Section 4,
CHD-I 760,548.24 760,548.24 paragraph (f) of PD
MMMHMC 758,783.50 758,783.50 1445
I Accounts
RIMC Payable 13,806,750.48 13,806,750.48
III CHD-III 35,594,347.05 35,594,347.05
VI WVMC 52,017,104.67 52,017,104.67
VII GCGMH 1,821,804.58 1,821,804.58
X CHD-X 64,855.80 64,855.80

XI DRMC 29,924,866.61 29,924,866.61
Sub-total 121,807,112.70 51,720.00 29,943,936.61 151,802,769.31
Other 21,443,305.46 21,443,305.46
I RIMC
Payables
Sub-total 21,443,305.46 0.00 0.00 21,443,305.46
Guaranty/Sec 125,095.55 125,095.55
TRC-
V urity Deposits
Malinao
Payable
Sub-total 125,095.55 0.00 0.00 125,095.55
NCR CHD-MM Due to NGAs 320,670.00 320,670.00
87
Without
Accounts More than 2 years and valid/unsupported/
Region Agency 5 years or more Total Criteria
Affected less than 5 years undocumented
claims
Sub-total 0.00 320,670.00 0.00 320,670.00
NCR CHD-MM Due to LGUs 1,431,398.91 1,431,398.91
Sub-total 0.00 1,431,398.91 0.00 1,431,398.91
NCR CHD-MM Due to CO ₱56,575.00 56,575.00
Sub-total 0.00 56,575.00 0.00 56,575.00

Grand-total 143,375,513.71 1,860,363.91 29,943,936.61 175,179,814.23
52. Moreover, negative/abnormal/unreconciled balance of Liabilities accounts

amounting to ₱240.685 million were noted as shown in Table 13.
Table 13: Summary of unreliable balances of Liabilities Accounts.
Region Agency Accounts Affected Amount Remarks Criteria
NCR NCH 80,988.65 Existence of negative/abnormal Section 111 and

TMC 32,021,944.63 balances reflected in Subsidiary 112 of PD No.
NCMH 6,355,403.43 Ledger 1445
II TRC-Isabela 627,670.56
Accounts Payable
III CHD-III 33,335,900.96
Dr. PJGMRMC 15,116,036.77
VI CHD-VI 9,269,687.77
VII GCGMH 249,240.00
VSMMC Other Payables 873,275.51
V TRC-Malinao Guaranty/Security Deposits 30,761.74
Payable
NCR CHD-MM Due to NGAs 4,925.14
QMMC Due to BIR 1,884,684.26
LPGHSTC Due to GSIS 434,149.79
Due to Pag-IBIG 7,320.30
Due to PhilHealth 15,645.24
Sub-total 100,307,634.75
VI WVMC Accounts Payable 9,269,687.77 Existence of unreconciled
V BRTTH Due to GOCCs 8,369.74 subsidiary ledger
NCR SLRWH Guaranty/Security Deposits 1,245,713.87
X CHD-X Payable 3,675,767.73
VI WVMC Due to Officers and 21,955,208.32
Employees
NCR LPGHSTC Due to Pag-IBIG 26,415.09
Due to PhilHealth 520,717.34
Sub-total 36,701,879.86
I MMMHMC Accounts Payable 335,748.15 Unreconciled amounts A/P
Sub-total 335,748.15 Aging Schedule vs. confirmation
reply
I MMMHMC Accounts Payable 41,125,242.42 Unreconciled and negative
Sub-total 41,125,242.42 amounts in FS and Aging of
Accounts Payable
V BRTTH Due to Regional Office 14,790,000.00 Unreconciled between the
Sub-total 14,790,000.00 DOH-RO and Hospital
VI CHD-VI Accounts Payable 42,617,946.40 Accounts Payable without DVs
Sub-total 42,617,946.40 & Supporting documents
NCR SLH Due to Other Funds 4,806,378.74 Existence of unaccounted
Sub-total 4,806,378.74 balance
GRAND TOTAL 240,684,830.32
88
CHDs, TRCs and Hospitals concerned to direct their respective Accountants to:
a. review and analyze the validity of the liability accounts outstanding for
two (2) years or more and revert those found undocumented, and if found
to have no valid claims cause the reversion of the same to the Accumulated
Surplus/(Deficit) account pursuant to PD No. 1445 and EO 87;
b. analyze and reconcile the negative/abnormal/unaccounted/unreconciled

balances and make the necessary adjustments in the books of accounts to
correct the accounts affected; and
c. stop setting up payables without complete documentation and/or valid

claimants.
Non-reconciliation / elimination of Intra-agency accounts
54. Non-reconciliation/elimination of reciprocal accounts of DOH Central Office,

Bureaus, Regional Offices, and Operating Units balances, resulted in variances of
₱93.816 million and ₱6,390.662 million between Intra-Agency Receivables and
Payables, and Subsidy from and Subsidy to accounts, respectively, affecting the
reliability and accuracy of the reported consolidated balances in the CY 2019 FSs.
55. Section 8, Chapter 20 of the GAM, Volume I, prescribes the Procedures in the
Consolidation of Financial Statements which states among others “In order that the
consolidated financial statements may present financial information about the economic
entity as that of a single entity, the following steps are to be taken: Xxx d. Balances,
transactions, revenues, and expenses between entities within the economic entity shall be
eliminated in full. Consolidated financial statements shall be prepared using uniform
accounting policies for like transactions and other events in similar circumstances. (Paras.
45 and 49, PPSAS 6)”
56. Section 3.2 of Government Accounting and Financial Management Information

System (GAFMIS) Circular Letter 2003-007 provides the Responsibilities of
Departments/Agencies with Decentralized Accounting System that in the process of
consolidation, the Regional Chief Accountant shall eliminate the reciprocal accounts
between the Regional Office and the Operating Units. Similarly, the Central Office Chief
Accountant shall eliminate the reciprocal accounts between the Central Office and the
Regional Offices, and between the Central Office and the Provincial Offices/Operating
Units, if any.
57. The CYs 2019 and 2018 year-end balances of intra-agency accounts in the
consolidated Financial Statements (FSs) of the DOH are shown in Tables 14, 15, 16 and
17.
89
Table 14: Intra-Agency Receivables for the CYs 2019 and 2018
(Per initial Notes to FS submitted by the accounting division)
Account 2019 2018

Due from Central Office 109,888,764.34 71,514,955.58
Due from Bureaus 591.58 148,489.58
Due from Regional Offices 65,264,502.40 61,532,260.39
Due from Operating Units 539,301,814.51 367,805,465.09
Due from Other Funds 1,116,561,861.49 854,676,531.51
TOTAL 1,831,017,534.32 1,355,677,702.15
Table 15: Intra-Agency Payables for the CYs 2019 and 2018
Account 2019 2018

Due to Central Office 217,695,421.73 72,098,643.72
Due to Bureaus 5,978,183.89 8,152,880.57
Due to Regional Offices 249,903,738.57 6,595,092.51
Due to Operating Units 10,533,771.21 10,285,131.71
Due to Other Funds 1,253,090,551.96 904,064,391.79
TOTAL 1,737,201,667.36 1,001,196,140.30
Table 16: Intra-Agency “Assistance/Subsidy to” accounts for the CYs 2019 and 2018
Account 2019 2018

Subsidy to Regional Offices/Staff Bureaus 3,621,837,141.14 151,281,307.59
Subsidy to Operating Units 579,762,327.98 162,178,311.67
Subsidy to Other Funds 868,190,437.53 109,241,811.37
TOTAL 5,069,789,906.65 422,701,430.63
Table 17: Intra-Agency “Assistance/Subsidy from” accounts for the CYs 2019 and 2018
Account 2019 2018

Subsidy from Other Funds 913,527,861.20 38,437,435.82
Subsidy from Central Office 10,389,359,059.28 5,069,713,787.05
Subsidy from Regional Office/Staff Bureaus 157,565,359.32 74,191,114.45
TOTAL 11,460,452,279.80 5,182,342,337.32
58. The consolidated financial statements (FSs) of the DOH disclosed that intra-agency
accounts were not properly eliminated during the consolidation process of the FSs of the
Central Office (CO), Bureaus, and Regional Offices (ROs) as well as at the regional level,
in the consolidation of FSs of the RO and its respective Operating Units (OUs).
Table 18: Unreconciled Intra-Agency Accounts – Receivables and Payables

Account 2019 amounts 2018 amounts
Total Intra- Receivables 1,831,017,534.32 1,355,677,702.15
Total Intra- Payables 1,737,201,667.36 1,001,196,140.30
Difference 93,815,866.96 354,481,561.85
Table 19: Unreconciled Intra-Agency Accounts – Income and Expenses

Account 2019 amounts 2018 amounts
Total Intra- Agency “Assistance/Subsidy from”
11,460,452,279.80 5,182,342,337.32
accounts
Total Intra- Agency “Assistance/Subsidy to”
5,069,789,906.65 422,701,430.63
accounts
Difference 6,390,662,373.15 4,759,640,906.69
90
59. The Subsidy accounts are closed to Revenue and Expense Summary account at
year-end and closed to the accumulated surplus account. However, its non-reconciliation
will still result in the non-elimination of its corresponding credits and debits, thus,
overstating and understating the balances found in the financial statements.
60. The unreconciled balances may be attributed to the non-recording of

receipt/liquidation of funds transferred by the Central Office (CO) to Bureaus, Regional
Health Offices (RHOs), and Operating Units (OUs) such as the Hospitals and Treatment
Rehabilitation Centers (TRCs); or by the Bureau and RHO to another RHO or OUs.
Another possible causes are the errors in recording transactions or misclassification of
accounts. These deficiencies were not eliminated as the analysis, reconciliation, and
elimination processes of reciprocal accounts were not conducted due to unawareness of the
accountant that such activity/exercise should be conducted in the consolidation of FSs.
Also, allegedly, the breakdown of the intra-agency accounts were not provided by the
regional and hospital accountants.
61. Also noted is the negative balance of the account Subsidy from Regional
Office/Staff Bureaus in the amount of ₱15,312,892.41 in the FS of TRC Tagaytay, thus,
rendering the total balance for said account unreliable.
62. Thus, the reciprocal accounts balances presented in the CYs 2019 and 2018
consolidated FSs cannot be relied upon due to the unreconciled balances which resulted in
either over or understatement of certain accounts affected in the individual FSs of DOH
CO, CHDs, Hospitals, TRCs and Bureaus, which likewise casts doubt on the accuracy and
validity of the amounts presented in the individual FSs.
63. Such practice is not in compliance with Section 8, Chapter 20 of the GAM, Volume
I, which requires balances, transactions, revenues, and expenses between entities within
the DOH to be reconciled and eliminated in full, as illustrated in Tables 20 and 21, because
the balances are brought to the consolidated FS as a single entity.
Table 20: Pro-forma elimination entries – Receivables and Payables

Account Name Debit Credit
2018
Dr. Appropriate Accounts (e.g. Asset, Liability, Equity, Income or 1,831,017,534.32
Expense)
Cr. Due from Central Office 109,888,764.34
Cr. Due from Bureaus 591.58
Cr. Due from Regional Offices 65,264,502.40
Cr. Due from Operating Units 539,301,814.51
Cr. Due from Other Funds 1,116,561,861.49
To eliminate Intra-Agency Receivables and related transactions for the Consolidated FS (Another similar entry should also be made for the
2018 balances)
Due to Central Office 217,695,421.73

Due to Bureaus 5,978,183.89
Due to Regional Offices 249,903,738.57
Due to Operating Units 10,533,771.21
Due to Other Funds 1,253,090,551.96
Cr. Appropriate Accounts (e.g. Asset, Liability, Equity, Income or 1,737,201,667.36
Expense)
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To eliminate Intra-Agency Payables and related transactions for the Consolidated FS (Another similar entry should also be made for the
2018 balances)
Note: Such elimination entries should only be made in the reconciliation working paper made in the preparation of the Consolidated
Financial Statements to correct the 12/31/2019 and 12/31/2018 consolidated balances to show the financial condition and results of
operation of DOH as a single entity and not to be entered in the eNGAS, accounting records and individual FSs of each facilities.
Table 21: Pro-forma elimination entries – Income and Expenses

2019
Dr. Appropriate Accounts (e.g. Asset, Liability, Equity, Income or 5,069,789,906.65
Expense)
Cr. Subsidy to Regional Offices/Staff Bureaus 3,621,837,141.14
Cr. Subsidy to Operating Units 579,762,327.98
Cr. Subsidy to Other Funds 868,190,437.53
To eliminate Intra-Agency Intra- Agency “Assistance/Subsidy to” and related transactions for the Consolidated FS (Another similar entry should
also be made for the 2016 balances)
Subsidy from Other Funds 913,527,861.20

Subsidy from Central Office 10,389,359,059.28
Subsidy from Regional Office/Staff Bureaus 157,565,359.32
Cr. Appropriate Accounts (e.g. Asset, Liability, Equity, Income or Expense) 11,460,452,279.80
To eliminate Intra-Agency Intra- Agency “Assistance/Subsidy from” and related transactions for the Consolidated FS (Another similar entry
should also be made for the 2018 balances)
Note: Such elimination entries should only be made in the reconciliation working paper made in the preparation of the Consolidated Financial
Statements to correct the 12/31/2019 and 12/31/2018 consolidated balances to show the financial condition and results of operation of DOH as
a single entity and not to be entered in the eNGAS, accounting records and individual FSs of each facilities.
64. We recommended that Management require the Accountant of the DOH CO

to:
a. coordinate with the Accountants of the Bureaus, RHOs/CHDs, Hospitals,

TRCs and other facilities for the conduct of the reconciliation of reciprocal
accounts;
b. prepare consolidation working papers and adjusting entries to eliminate

in full the balances, transactions, revenues, and expenses between entities
within the DOH in the consolidated financial statements, in compliance
with the requirements of Sections 8, Chapter 20 of the Government
Accounting Manual (GAM), Volume I; and
c. require the Accountants of Bureaus, CHDs, Hospitals, TRCs and other

facilities to:
i. prepare schedules of reciprocal accounts and undertake an

analysis, reconciliation and elimination thereof;
ii. draw a Journal Entry Voucher to take up the reconciling items

noted to correct the balances of the accounts affected after
reconciliation; and
iii. thereafter, conduct a regular quarterly reconciliation to

immediately rectify any discrepancy and to show the financial
92
condition and results of operation of the Department as a single
entity.
Management Comments:
65. DOH Central Office has effected elimination entries for reciprocal accounts
involving Due from Regional Office, Operating Units and Bureaus and Due to Central
Office. Likewise, Subsidy to Regional Offices, Operating Units and Bureau and Subsidy
from Central Office in the preparation of consolidated Financial Statement.
66. The FMS regularly conducts reconciliation of accounts with Regional Offices and
other Operating Units. It is noteworthy to mention that the account balances of “Due from
Regional Offices and Due from Operating Units” have significantly decreased.
Nevertheless, reiteration to Regional Offices and Retained Hospital have been made for
them to also conduct regular reconciliation of accounts.
67. Department Memorandum is already drafted instructing the Regional accountants

to prepare the annual consolidated financial reports within their jurisdiction to facilitate
smooth and close coordination among different offices to address issues on elimination of
reciprocal accounts, restatement, pro forma notes to FS as provided in the GAM with
explanation on increases and decreases of accounts, status of litigations and claims.
Auditor’s Rejoinder:
68. DOH Central Office should effect complete elimination of the Intra-Agency
Accounts in the Notes to the Consolidated Financial Statements.
Non-provision of the required disclosures on the Notes to the Consolidated FS
69. Non-conformance of the CY 2019 FS with the required disclosures under Pro-
forma Notes to FS of the GAM, Volume I, affected the reliability, accuracy and fair
presentation of the financial position, financial performance and cash flows of the
DOH.
70. The Notes to financial statements are integral parts of the financial statements that
provide additional information and help clarify the items presented in the financial
statements. It provides narrative description or disaggregation of items in the financial
statements and information about them that do not qualify for recognition.
71. Section 31, Chapter 19 of the GAM, Volume I provides that the note shall:
a. Present information about the basis of preparation of the financial statements

and the specific accounting policies used;
b. Disclose the information required by IPSASs that is not presented on the face
of the FSs; and
93
c. Provide additional information that is not presented on the face of the FSs, but
is relevant to an understanding of any of them.
72. The Notes to FS of the DOH CY 2019 Consolidated Financial Statements showed
that required disclosures under the Pro-Forma Notes to FS prescribed in Annex F of the
GAM, Volume I were not provided due to unavailability of the breakdown, details and
explanation of the nature of the accounts which were either not provided by various
regional and hospital accountants or non-disclosure in their individual financial statements
which were used as reference for consolidation.
73. Moreover, in II-TRC Ilagan, NCR-SLH, V-BMC and XI-DRMC, their respective
Notes to FS lacked the pertinent disclosure requirements of some accounts prescribed in
Appendix F.
74. The following are the details of the noted deficiencies vis-à-vis the specific
regulations and rules not complied with:
Table 22: Summary of Findings on required notes disclosures

Region Office Noted deficiencies Disclosure Requirements/Criteria
Consolidated Annual Audit Report a) Non-inclusion of explanations on the reasons for the • Section 15, Chapter 2 of GAM Volume I requires
Financial Statements movements (i.e. increases/decreases) of the account faithful representation of the effects of transactions,
balances during the year. other events, and conditions in accordance with the
definitions and recognition criteria for assets,
liabilities, revenue, and expenses set out in PPSAS
a) Receivables - no Aging/ Analysis • Annex F of GAM Volume I for the Pro-forma Notes
to Financial Statements.
b) Inventory accounts - No details of the movement (e.g. • Disclosure requirements of Paragraph 47 of IPSAS
additions/acquisitions during the year, expensed during the 12
year (cost of sales, expenses involving distribution of
inventories) except write-down, (write-down during the
year, reversal of write-down during the year) of the
increases or decreases of
c) Cost of Sales - no details of the movements of the • GAM Volume III page 146
account in CY 2018 and 2019; was included as deduction
to Revenue instead of being disclosed as separate expense
account.
d) PPE, Intangible Assets and Accumulated depreciation/ • Disclosure requirements of Paragraph 88 of IPSAS
amortization accounts - Non-disclosure of the details of the 17 and Paragraph 117 of IPSAS 31
movement (e.g. additions/acquisitions, disposals,
impairment loss, accumulated depreciation, amortization • Annex F of GAM Volume I.
recognized, allowance for impairment) of the increases or
decreases
e) PPE - carrying amount of temporarily idle, fully • Annex F of GAM Volume I
depreciate, still in use and retired from active use and held
for disposal, and the fair value when this is materially • Disclosure requirements of Paragraph 88 of IPSAS
different from the carrying amount; and 17
f) Construction in Progress accounts - details of the
movements • Paragraph 89 of IPSAS 17 requiring the disclosure
of the amount of expenditures recognized in the
carrying amount of an item of PPE in the course of
its construction.
g) Intangible Assets - non-disclosure of the required • Disclosure requirements of paragraph 117 of IPSAS
format 31
h) Litigation and claims – no disclosure on the status of • FAM item E.8.4, page 19
prior year’s (2018) disclosure made. The disclosure • FAM item b.1 and b.2, page 99
pertains only on the status of litigation and claims of the • Paragraph 100 of IPSAS 19
Central Office due to non-disclosure of CHDs, TRCs,
Bureaus and Hospitals in their respective Notes to FS
submitted for consolidation.
94
Region Office Noted deficiencies Disclosure Requirements/Criteria
NCR SLH PPE – The disclosures merely present the names, carrying • Disclosure requirements of Paragraph 88 of IPSAS
balance and short description of FS accounts without the 17
required information such as the measurement bases used
for determining the gross carrying amount, depreciation
methods used, useful lives or depreciation rates used and
the gross carrying amount and accumulated depreciation
(aggregated with accumulated impairment losses) at the
beginning and end of the period, which must be separate
and on top of the reconciliation report.
II TRC-Ilagan • Annex F of GAM Volume I for the Pro-forma Notes
Receivables - Non-disclosure of the aging/analysis
to Financial Statements.
V BMC Contingent Liability - Non-disclosure of a contingent liability • Section 2(c), Chapter 18, GAM Volume I
that may arise from a contractor’s money claim against the
BMC amounting to ₱805,526.80 had produced an • Paragraph 18 of IPSAS 19
incomplete and misleading information to users of financial
reports.
XI DRMC PPE - Non-disclosure of the details/breakdown of the • Disclosure requirements of Paragraph 88 of IPSAS
increases or decreases 17
75. We reiterated our prior years’ recommendations, with modification, and

Management agreed that the Accounting Divisions of the DOH CO, Hospitals and
TRCs be required to make the necessary disclosures in their respective Notes to FS,
in accordance with the pro-forma notes provided in Annex F of the GAM, Volume I
in order to ensure conformance of the Notes to Consolidated FS with the
requirements.
Other Financial Audit Issues

Non-/Delayed submission of contracts/POs, accounting and financial reports
76. The non-/delayed submission of contracts, POs, accounting and financial

reports amounting to ₱14,097.162 million or ₱14.097 billion prevented the Auditor
from conducting timely review, evaluation, audit, and verification thereof and
deprived Management of relevant and timely information for decision-making.
77. The deadlines for submission of contracts, purchase orders, accounting and
financial reports are shown below:
Table 23: List of reports/documents and pertinent rules on submission

Reports Deadline for submission Pertinent rules prescribing the deadline
Contracts and supporting documents (SDs) Within five (5) working days from execution Section 3.1.1 and 3.2.1, COA Circular No.
Purchase Orders (POs) and SDs Within five (5) working days from issuance 2009-001 dated Feb 12, 2009
Monthly Trial Balances (TBs) and Supporting
Within 10 days after end of each month
Schedules (SSs)
Quarterly TBs, Financial Statements (FSs),
and SSs with Statement of Management Section 7.2.1 of the Rules and Regulations
Responsibility on the Settlement of Accounts
Report of Collections and Deposits Within 10 days after end of each quarter
(RCD)/ORs with Deposit Slips Sec. 60, Chap. 19, GAM, Vol. I
Reports of Checks Issued (RCIs) with
Disbursement Vouchers (DVs)
Year-end TBs, FSs, SSs February 14 of the following year
Traveling Expenses – within 30 days after the
return of the official/employee concerned to Item 1.2, of COA Circular 2012-001 dated
Liquidation Reports
his official station for local travel and within June 14, 2012
60 days after the return of the
95
Reports Deadline for submission Pertinent rules prescribing the deadline
official/employee concerned to the
Philippines in the case of foreign travel
Special Purpose – as soon as the purpose of
the cash advance has been served
Within 20 days after receipt of the monthly
Bank Reconciliation Statements Sec. 7, Chap. 21, GAM, Vol. I
bank statements
Accounting records of various accounts - Sec. 107 PD 1445
BAR No. 1, FAR Nos. 1 to 2, FAR Nos. 5 to
6 – within 30 days after the end of each
quarter
FAR No. 3- on or before 30th day following the Sec. 4.3, COA-DBM Joint Circular No. 2019-1
end of the year
FAR No. 4 – on or before the 10th day of the
month following the last month of the covered
reporting period
Fund Utilization Reports
Health Facilities Enhancement Program – on DOH Department Order No. 2018-0075

or before the 5th day of each month
Budget and Financial Accountability Reports, DOH Department Order No. 2017-0112
Utilization Reports Disaster Risk Reduction Management Fund
– on the 5th day following the end of each Section V, COA Circular No. 2014-002
month
Fund transfers to Implementing Agencies – Item 4.6, COA Circular No. 94-013
within ten days after the end of each
month/end of the agreed period for the
project
Grant in Aids Fund – a month after each Section 6.3.3., DOST Administrative Order
semester depending on the nature of the No.005, series of 2013
project for Financial Report and within three
months the completion of the project for
Terminal Audited Financial Report
Section 2, Special Provision of the Department
Annual Operating Budget for Utilization of Not later than November 15 of the preceding of Health General Appropriations in the FY
Hospital Retained Income year 2019 General Appropriation Act (RA No.
11260)
COA Circular No. 96-010 dated August 15,
Notices of delivery, and Inspection and 1996
Acceptance Report (IAR) of purchased Within 24 hours from acceptance of delivery
goods Item 9, Section 6, COA Circular 2009-002
under
Petty Cash Vouchers (PCVs), Report of Paid
Sec. 37, Chapter 6, GAM, Vol. I
Petty Cash Voucher (RPPCV), Petty Cash -
Appendices 48- 50, GAM, Vol. II
Fund Report (PCFR)
Drug Consignment Orders and Agreements,
Item VI.B.10 and D.17 DOH Administrative
Private-Public Partnership (PPP) and Within three (3) days from perfection
Order No. 2006-0039
Consignment Contracts
78. Delayed and non-submission of Contracts, Purchase Orders (POs), and supporting
documents amounting to ₱6,388.257 million and ₱1,047.476 million, respectively, were
noted in FDA, 5 CHDs, 16 Hospitals, and 1 TRC. Likewise noted were the delayed and
non-submission of accounting and financial reports, such as Report of Collections and
Deposits, Report of Disbursements, Disbursement Vouchers, Liquidation Reports, Journal
Entry Vouchers, Trial Balance, Bank Reconciliation Statements, Quarterly and year-end
Financial Statements, among others, and other documentary requirements and supporting
documents amounting to ₱264.941 million and ₱6,396.487 million, respectively, to the
audit teams concerned within the prescribed period by CO, FDA, BOQ, and several CHDs,
TRCs and Hospitals, prevented the auditors from conducting a timely audit and verification
of financial transactions, the results of which could have been used as an aid in
96
Management decisions and inputs in enhancing financial accountability. Moreover,
submissions of the above-mentioned reports by several other CHDs, TRCs, Hospitals and
Bureaus were delayed by 1 day to 1,371 days, and/or no submission at all. The details are
summarized in Table 25.
79. Inasmuch as analysis and review of the agency’s financial reports, evaluation and
verification of the appropriateness of the agencies’ transactions and recommendation of
corrective measures as warranted could not be undertaken on time, Management’s
assertions on the accuracy, validity, completeness and existence of recorded/reported
transactions have not been validated in a timely manner.
Table 24: Summary of Delayed/Non- submission of Required Reports/Documents
DOH Offices/CHDs/ Amount

Region Reports
TRCs/Hospitals (In million PhP)
Delayed Submission – 1 to 1,215 days
NCR DJNRMH, NCH
Dr. PJGMRMC, TGH, BGHMC,
III
TRC Bataan, MMWGH, CHD
CAR LMRH
VI CHD, WVS
Contracts, POs and SDs 6,487.511
VII SAMCH
X NMMC, APMC
XI SPMC
XII CHD
XIII CRH
CAR CHD RCD/ORs with DS 1.035
I MMMHMC
LRs 1.385
XIII CHD
CAR CHD RCI, DVs, RADAI 178.894
NCR CO
NOD/IARs 83.624
IV-A BMC
Total 6,752.449
Non-submission
NCR RMC
I MMMHMC
II CVMC
IV-A BMC
Contracts, POs and SDs 949.162
IV-B CSGH, ONP
X CHD
XI CHD, SPMC
XII CS, CHD
III CHD LRs 242.866
NCR RMC
I MMMHMC, R1MC, TRC Dagupan
RCI, DVs, RADAI 3,925.796
III Dr. PJGMRMC
V CHD, BRTTH, TRC Malinao
97
Region Reports
VIII CHD
XII CHD
XVI CLMMRH
VI CHD JEVs 184.044
III CHD
V BMC, BRGHGMC, TRC
BAR/FAR, Utilization Reports 914.126
VIII CHD
XVI CLMMRH
NCR SLH Accounting records of various accounts 1,129.655
VII ECS PCVs, RPPCV, PCFR 0.443

Total 7,346.092
Delayed Submission – 1 to 1,371 days
NCR FDA Contracts, POs and SDs Not stated
CHD, BOQ, DJFMH, FDA,
NCR
JRRMMC, RMC, TMC
I CHD, MMMHMC
III Dr. PJGMRMC, TGH, CHD
IV-A CHD, TRC
Monthly/ Quarterly TBs, FSs, SSs, Not stated
V CHD
VI DJSMMMCEH
VIII SCRH
XI DRMC, SPMC
XII CHD
III CHD
IV-A TRC
IV-B CSGH
V CHD Year-end Pre-Closing Trial Balance/Post Closing Trial
Balance and FSs with Statement of Management Not stated
VIII SCRH Responsibility
X TRC
XI DRMC
XII CHD
NCR
JRRMMC, RMC
I CHD, MMMHMC
III CHD
IV-A CHD, TRC Tagaytay
V CHD, TRC Malinao, Albay
VI DJSMMMCEH RCD/ORs with DS Not stated
VII SAMCH
VIII SCRH
X NMMC, TRC
XI DRMC
XII CHD
NCR BOQ, JRRMMC LRs Not stated
98
Region Reports
NCR
JRRMMC, RMC
I CHD
III CHD, Dr. PJGMRMC, TGH
IV-A CHD, TRC Tagaytay
V CHD
VI DJSMMMCEH, TRC Pototan
RCI, DVs, RADAI Not stated
VII SAMCH
VIII VSCRH
X CHD, NMMC, TRC
XI DRMC
XII CHD
XVI CLMMRH
NCR
JRRMMC, RMC
I CHD, MMMHMC JEVs/Journals Not stated
VIII SCRH
NCR BOQ, JRRMMC, RMC
I MMMHMC
Payroll Not stated
VIII SCRH
XI DRMC
CHD, ARMMC, BOQ, DJFMH,
NCR
FDA, JRRMMC, RMC, TMC
I CHD, MMMHMC
III CHD, Dr. PJGMRMC, TGH
V CHD, TRC Malinao, Albay Bank Reconciliation Statement Not stated
X CHD, NMMC, TRC

XI SPMC
XII CHD
NCR CO Utilization Reports Not stated
NCR FDA
I MMMHMC, R1MC NOD/ IARs Not stated
VI CHD, WVS
Non-submission
I CHD
VII CHD Contracts, POs and SDs Not stated
IX CHD
NCR RITM, RMC
V TRC Malinao, Albay
Monthly/Quarterly Trial Balance and FSs Not stated
VI DJSMMMCEH, WVS
VII DEDVMH
NCR EAMC
I CHD
Year-end Pre/Post Closing Trial Balance and FSs Not stated
VI DJSMMMCEH, WVS
VII DEDVMH
NCR RITM RCD/ORs with DS Not stated
99
Region Reports
I CHD
V TRC Malinao, Albay
VI DJSMMMCEH
NCR RITM LRs Not stated
NCR RITM
III TGH
VI DJSMMMCEH, TRC Pototan RCI, DVs, RADAI Not stated
XI DRMC
XII CHD
NCR RITM
I CHD
Journal Entry Vouchers (JEVs)/Journals Not stated
V BRTTH
VII CHD
NCR QMMC, RITM
I CHD
III Dr. PJGMRMC
V CHD Bank Reconciliation Statements Not stated
VI WVMC, WVS
VII DEDVMH
VIII EVRMC
NCR RMC
BAR and FAR, Utilization Reports Not stated
VI WVS
Annual Operating Budget for the Utilization of Hospital
VI WVS Not stated
Retained Income
NCR RMC NOD / IARs Not stated
NCR DJNRMH, EAMC, POC
II CMVC
V CHD
PCVs, RPPCV, PCFR Not stated
VI CHD, WVS
VII SAMCH
XIII CHD
II CVMC Drug Consignment Orders and Agreements, Private-Public
Not stated
VI WVS Partnership (PPP) and Consignment Contracts
80. Causes of the delay/non-submission of the financial statements, reports and

schedules were the following: (i) late submission of some DVs and reports from the
Cashier Section and other offices; (ii) late receipt of the bank statements; (iii) voluminous
transactions; (iv) late completion of the required documents such as the receipt of ORs
from the payee; (v) adoption of eNGAS, wherein the Accounting Division is still in the
transition stage from manual recording to the computerized system; (vi) setting up of
beginning balances of accounts in the eNGAS; (vii) inadequacy in the number of qualified
personnel in the Accounting Section; and (viii) lack of coordination between the
Accounting Office and other Offices concerned in the inspection, payment of delivered
equipment and others.
100
81. We recommended and Management agreed to:
a. submit immediately all the perfected contracts, Purchase Orders and the
related supporting documents and documentary requirements to the
Auditing Unit for auditorial and legal review, in compliance with COA
Circular Nos. 2009-001 and 2012-001, and to avoid disallowances and the
penalty prescribed by law;
b. require the concerned officers/employees to strictly/consistently observe

the timely submission of the required FSs and financial reports and related
schedules and supporting documents as mandated under existing COA
rules and regulations; otherwise, consider the withholding of salaries of
concerned officials, if deemed necessary, until the timely submission of
financial and accounting reports has been complied with, pursuant to
Section 122 of PD 1445;
c. expedite the use of e-NGAS in order to cope with the demand of

voluminous accounting transactions for a timely recording of accounting
records and submission of reports, and to have access to up-to-date
information involving financial data or transactions;
d. make representations with the LGUs to facilitate the signing of the

Certificate of Turn-over and acceptance and the deed of donations, to
provide a copy of the JEVs for the transfer of the assets as basis in
derecognition; and
e. extend the validation and monitoring of the equipment up to its proper

disclosure in the books of accounts and use the journal entry voucher
drawn by the source agency and end user to link the accounting records in
compliance with DOH DM No. 2016-0220 dated June 23, 2016.
Non-filing of the request for relief from property accountability - ₱109.843 million
82. Non-filing of request for relief from property accountability by the DRMC
accountable officers caused the continued existence of ₱109.843 million worth of
damaged equipment in the books of accounts.
83. Records disclosed that one motor vehicle was totally wrecked due to a vehicular
accident and three equipment were damaged due to a fire incident, details of which are as
follows:
Table 25: Details of property accountability not requested for relief

Net carrying
Date
Property No. Type of PPE amount at the Date of Accident Criteria
Acquired
time of loss
2012-09425 Toyota Fortuner, with Red-Plate 5/17/12 616,000.00 March 20,2019
No. SHE-805
101
Net carrying
Date
Property No. Type of PPE amount at the Date of Accident Criteria
Acquired
time of loss
2015-14077 Hitachi 128 Slice Scanner 12/28/2015 109,200,000.00 Dec. 1, 2016 Section 73, PD
1445
2014-11949 Koppell, 2HP Window Type 10/20/2014 13,420.00 Dec. 1, 2016
2014-11950 Koppell, 2HP Window Type 10/20/2014 13,420.00 Dec. 1, 2016

COA
Memorandum No.
92-751 dated
February 24, 1992
Total 109,842,840.00
84. As of this writing, the damaged equipment is no longer serviceable and beyond
repair. In addition, the accountable officers concerned have not yet submitted the
application for request for relief of accountability for the four equipment, together with
their supporting documents. Inquiry with the personnel of Material Management Section
(MMS) revealed that they were not able to file the appropriate request since they don’t
know the procedures in filing.
85. We recommended that Management require the accountable officers

concerned to immediately file the request for relief from property accountability
citing the delay of the filing, together with the required documents as enumerated in
COA Memorandum No. 92-751.
Noncompliance with National Building Law and Regulations
86. Necessary permits were not secured prior to the demolition of old hospital
buildings and the occupancy of the newly-constructed hospital building in SIMC,
thus, exposing the Hospital to risks of fines and penalties.
87. The provision of the National Building Code (NBC) and its Implementing Rules
and Regulations (IRR) is clear: “No person, firm or corporation, including any agency or
instrumentality of the government shall construct, alter, repair, convert, use, occupy, move,
demolish, and add any building/structure or any portion thereof or cause the same to be
done, without first obtaining a building permit therefor from the Building Official assigned
in the place where the subject building/structure is located or to be done.”
88. The demolition of two old hospital buildings in Southern Isabela Medical Center
(SIMC) as well as the occupancy of 4th to 8th floor of the newly-constructed 8-storey
building do not have the necessary permits to undergo the preparatory activities in said law
and regulation.
89. Non-compliance with the provisions of the NBC and its IRR has corresponding
consequences that may be imposed on responsible officials or employees of the Hospital
who erred in performing their duties and responsibilities.
90. It is noteworthy to mention the penal provisions stated in Section 213 of the same
Code, to wit: “It shall be unlawful for any person, firm or corporation to erect, construct,
102
enlarge, alter, repair, move, improve, remove, convert, demolish, equip, use, occupy, or
maintain any building or structure or cause the same to be done contrary to or in violation
of any provision of the Code. Any person, firm or corporation who shall violate any
provisions of the Code and/or commit any act hereby declared to be unlawful shall upon
conviction, be punished by a fine of not more than twenty thousand pesos or by
imprisonment of not more than two years or by both such fine and imprisonment; Provided,
that in case of a corporation, firm, partnership or association, the penalty shall be imposed
upon its officials responsible for such violation xxx.”
91. We recommended that Management require the Head of SIMC to:
a. strictly comply with the provisions of the National Building Code of the
Philippines and its Implementing Rules and Regulations;
b. facilitate as soon as possible the production of the necessary documents to

avoid penalties that may be imposed to the detriment of the hospital; and
c. explain in writing why the facilitation of the building permits has been
overlooked.
Non-submission of the list of all on-going government PAPs
92. The DOH CO, TRC-VI and four Hospitals in NCR and Region VI failed to
submit a list of all on-going government PAPs, thereby precluding efficient scheduling
of inspection/validation and eventual monitoring of PPAs.
93. Item 2.1 of COA Circular No. 2013-004 dated January 13, 2013 requires that at the
beginning of the year, all government agencies shall provide their respective assigned
Supervising Auditors (SAs) and Audit Team Leaders (ATLs) with a list of all on-going
government projects/programs/activities (“PPA”) and those that are to be implemented
during the year.
94. Records showed that the DOH CO, DJFMH, SLH, JRRMMC, DJSMMCEH and
TRC-VI failed to submit a list of all on-going government projects/program/activities
(PPAs) and those to be implemented during the year contrary to Item 2.1 and 3.1 of COA
Circular No. 2013-004 dated January 13, 2013.
95. It was noted that there were postings of relevant information detailed in Item 2.1
above on signboards/blackboards, however, the Head of the Agency failed to inform the
SA and the ATL within ten (10) days after the award of the infrastructure project or before
the start of the program/activity that the appropriate project signboards and or public
notices were already posted for their validation, contrary to Item 3.1 of the above cited
COA Circular.
103
96. The failure of the Agency to conform to the provisions of the aforementioned
Circular precluded efficient scheduling of inspection/validation and eventual monitoring
of Projects, Programs and Activities, and prevented determination of the agency’s
compliance on the requirement of posting and notification to the public of infrastructure
projects.
TRCs, and Hospitals to:
a. submit the list of all ongoing Projects, Programs and Activities and those
to be implemented during the year to the Audit Team at the beginning of
the year;
b. inform the COA Auditors within ten (10) days after the award of the
infrastructure projects or before the start of the program activity that the
appropriate project signboards and/or public notices are already posted;
and
c. henceforth, observe strictly the provisions of COA Circular No. 2013-004

dated January 30, 2013.
Program Budget Utilization
Low Disbursement of Allotment
98. Of the total DOH allotments received of ₱110.25 billion for current and
continuing appropriations, ₱97.09 billion or 88.07 percent was obligated and ₱71.592
billion or 64.94 percent thereof was disbursed mainly due to partial
implementations/realizations of ten (10) DOH major programs for 2019 with 11.84
percent to 86.93 percent disbursement rates, showing the inability to optimize the
utilization of its authorized appropriations for CY 2019 and thereby depriving the
intended beneficiaries of immediate access to additional safe and reliable health care
systems, hospital equipment and facilities.
99. General Provisions of RA No. 11260 or the General Appropriations Act (GAA) of
Fiscal Year (FY) 2019 provides for the following notable sections:
• Section 20. Early procurement Activities. Notwithstanding the mandatory

procurement timelines under R.A No. 9184 and its revised IRR, agencies are
authorized to undertake early procurement activities, from pre-procurement
conference until post-qualification of bids, as soon as the proposed national budget
is submitted to Congress. However, agencies may only proceed with the issuance
of the notice of award of contract upon approval or enactment of their respective
appropriations and issuance of budget authorization document and based on the
amount authorized therein.
104
• Section 76. “as a general rule, departments, bureaus and offices of the National
Government xxx shall spend what is programmed in their respective appropriations
xxx”
• Section 65. “All appropriations authorized in this Act shall be available for release
and obligation for the purpose specified, and under the same special provisions
applicable thereto, until December 31, 2019.”
100. The Department of Health’s appropriations, allotments and obligations as at

December 31, 2019 revealed that out of the total allotments received amounting to
₱110,245,170,541.98, ₱97,089,800,272.58 or 88.07% was obligated. Summary of the
appropriations, allotments and obligations for CY 2019 is presented below.
Table 26: Summary of the appropriations, allotments and obligations for CY 2019
Source Of Funds Adjusted Appropriation Adjusted Allotment Obligations Incurred Unobligated Allotment
Current Year
1. Regular 97,653,633,000.00 93,146,794,378.65 82,875,508,655.09 10,271,285,723.56
a. PS 43,484,439,912.83 40,177,406,233.48 39,894,515,393.57 282,890,839.91
b. MOOE 37,270,211,087.17 36,422,785,130.17 30,649,393,826.86 5,773,391,303.31
c. CO 16,898,982,000.00 16,546,603,015.00 12,331,599,434.66 4,215,003,580.34
2. Automatic
4,409,868,185.00 4,382,372,341.00 3,920,844,242.72 461,528,098.28
Appropriations
a. PS 3,339,036,942.00 3,339,036,942.00 3,195,589,853.77 143,447,088.23
b. MOOE 794,795,970.00 767,300,126.00 593,960,491.99 173,339,634.01
c. CO 276,035,273.00 276,035,273.00 131,293,896.96 144,741,376.04
3. Special Purpose Fund 5,168,519,323.35 5,168,519,323.35 4,961,978,639.10 206,540,684.25
a. PS 4,933,647,483.35 4,933,647,483.35 4,758,942,845.22 174,704,638.13
b. MOOE 234,871,840.00 234,871,840.00 203,035,793.88 31,836,046.12
c. CO - - - -
Sub-total 107,232,020,508.35 102,697,686,043.00 91,758,331,536.91 10,939,354,506.09
a. PS 51,757,124,338.18 48,450,090,658.83 47,849,048,092.56 601,042,566.27
b. MOOE 38,299,878,897.17 37,424,957,096.17 31,446,390,112.73 5,978,566,983.44
c. CO 17,175,017,273.00 16,822,638,288.00 12,462,893,331.62 4,359,744,956.38
Prior Year
1. CONAP 2016 6,852,813,293.98 6,802,633,998.98 4,590,028,063.95 2,212,605,935.03
a. MOOE 4,527,760,578.19 4,477,760,578.19 3,114,801,313.41 1,362,959,264.78
b. CO 2,325,052,715.79 2,324,873,420.79 1,475,226,750.54 849,646,670.25
2. Special Purpose Fund 744,850,500.00 744,850,500.00 741,440,671.72 3,409,828.28
a. MOOE 500,000,000.00 500,000,000.00 498,524,077.13 1,475,922.87
b. CO 244,850,500.00 244,850,500.00 242,916,594.59 1,933,905.41
Sub-total 7,597,663,793.98 7,547,484,498.98 5,331,468,735.67 2,216,015,763.31
a. MOOE 5,027,760,578.19 4,977,760,578.19 3,613,325,390.54 1,364,435,187.65
b. CO 2,569,903,215.79 2,569,723,920.79 1,718,143,345.13 851,580,575.66
Grand Total 114,829,684,302.33 110,245,170,541.98 97,089,800,272.58 13,155,370,269.40
PS 51,757,124,338.18 48,450,090,658.83 47,849,048,092.56 601,042,566.27

MOOE 43,327,639,475.36 42,402,717,674.36 35,059,715,503.27 7,343,002,171.09
CO 19,744,920,488.79 19,392,362,208.79 14,181,036,676.75 5,211,325,532.04
101. Republic Act 11260 otherwise known as General Appropriations Act (GAA) of
2019 appropriated a total of ₱100,209,582,000.00 for the DOH for which a total of
₱7,022,438,508.35 was authorized by DBM as Special Allotment Release Order (SARO),
thereby, having a total adjusted appropriation amounting to ₱107,232,020,508.35 for the
current year (excluding CONAP 2018).
105
102. Further, Joint Resolution No. 3 of the Seventeenth Congress, approved on
December 28, 2018, extended the availability of the 2018 appropriations for MOOE and
CO to December 31, 2019, amending Section 61 of General Provision of RA 10964 or the
GAA of 2018. With this, total CONAP of 2018 amounted to ₱7,597,663,793.98, thus, total
adjusted appropriations of the DOH of ₱114,829,684,302.33.
103. There are three (3) indicators to assess DOH ability to maximize the use of available
financial resources, details of which are as follows:
Table 27: Indicator and Remarks
Indicator Remarks
Obligation over Allotment Rate or the Extent to which the agency has utilized
Allotment Utilization Index (AUI) the allotments that were made available
by the DBM
Disbursement over Allotment Rate or How fast an agency uses the funds it
the Disbursement Rate (DR[a]) receives
*Disbursement over Obligation also How fast an agency pays its obligation
Disbursement Rate (DR[o])
*formula prescribed under Section 5.4.a. of Memorandum Circular No. 2019-1 dated September
3, 2019 of the Inter-Agency Task Force on the Harmonization of National Government
Performance Monitoring, Information and Reporting Systems for the grant of performance-based
bonus
104. For purposes of this report, AUI and DR[a] will be used on the analysis of the ability
of DOH to maximize the use of its available financial resources.
105. Analysis of the DOH 2019 disbursement over allotment showed low disbursement
rate of 64.94% in 2019 as depicted below:
Table 28: Disbursement over Allotment per Source of Fund for CY 2019
Source Of Funds Adjusted Allotment Obligation Incurred Disbursement AUI DR(a)
A. Current Year
1. Regular 93,146,794,378.65 82,875,508,655.09 61,197,658,155.13 88.97% 65.70%
a. PS 40,177,406,233.48 39,894,515,393.57 39,323,805,190.77 99.30% 97.88%
b. MOOE 36,422,785,130.17 30,649,393,826.86 19,537,827,468.85 84.15% 53.64%
c. CO 16,546,603,015.00 12,331,599,434.66 2,336,025,495.51 74.53% 14.12%
2. Automatic
4,382,372,341.00 3,920,844,242.72 3,386,158,904.10 89.47% 77.27%
Appropriations
a. PS 3,339,036,942.00 3,195,589,853.77 2,999,814,969.46 95.70% 89.84%
b. MOOE 767,300,126.00 593,960,491.99 359,787,235.41 77.41% 46.89%
c. CO 276,035,273.00 131,293,896.96 26,556,699.23 47.56% 9.62%
3. Special Purpose
5,168,519,323.35 4,961,978,639.10 4,356,232,172.52 96.00% 84.28%
Fund
a. PS 4,933,647,483.35 4,758,942,845.22 4,208,318,511.80 96.46% 85.30%
b. MOOE 234,871,840.00 203,035,793.88 147,913,660.72 86.45% 62.98%
c. CO - - - - -
Sub-Total 102,697,686,043.00 91,758,331,536.91 68,940,049,231.75 89.35% 67.13%
a. PS 48,450,090,658.83 47,849,048,092.56 46,531,938,672.03 98.76% 96.04%
b. MOOE 37,424,957,096.17 31,446,390,112.73 20,045,528,364.98 84.03% 53.56%
c. CO 16,822,638,288.00 12,462,893,331.62 2,362,582,194.74 74.08% 14.04%
B. Prior Year
1. CONAP 2018 6,802,633,998.98 4,590,028,063.95 2,165,398,597.20 67.47% 47.18%
a. MOOE 4,477,760,578.19 3,114,801,313.41 1,780,303,628.93 69.56% 57.16%
b. CO 2,324,873,420.79 1,475,226,750.54 385,094,968.27 63.45% 26.10%
2. Special Purpose
744,850,500.00 741,440,671.72 486,629,516.34 99.54% 65.63%
Fund
106
Source Of Funds Adjusted Allotment Obligation Incurred Disbursement AUI DR(a)
a. MOOE 500,000,000.00 498,524,077.13 486,629,516.34 99.70% 97.61%
b. CO 244,850,500.00 242,916,594.59 - 99.21% 0.00%
Sub-total 7,547,484,498.98 5,331,468,735.67 2,652,028,113.54 70.64% 35.14%
a. MOOE 4,977,760,578.19 3,613,325,390.54 2,266,933,145.27
b. CO 2,569,723,920.79 1,718,143,345.13 385,094,968.27
Grand Total 110,245,170,541.98 97,089,800,272.58 71,592,077,345.29 88.07% 64.94%
a. PS 48,450,090,658.83 47,849,048,092.56 46,531,938,672.03 98.76% 96.04%
b. MOOE 42,402,717,674.36 35,059,715,503.27 22,312,461,510.25 82.68% 52.62%
c. CO 19,392,362,208.79 14,181,036,676.75 2,747,677,163.01 73.13% 14.17%
106. Out of the adjusted total allotment of ₱110,245,170,541.98, 88.07% were obligated
and only 64.94% were disbursed or actually paid. Disbursement over allotments rates of
MOOE and CO are notable which only have 52.62% and 14.17%, respectively.
107. It shall be stressed that disbursement rate is not only about how fast the agency uses
the funds it receives, it also shows, among others, the ability of the agency to implement
its programs/activities/projects (PAPs) to achieve its established objectives timely and that
the deliverables reach its intended users. Hence, having low disbursement rate indicates
that the PAPs were not executed efficiently and the desired results and benefits from the
completed projects were not delivered as timely as intended.
108. Relative thereto, the following budget utilization rates of major DOH programs for
CY 2019 and 2018 were computed and compared and have revealed the following:
Table 29: Comparison of Obligation over Allotment and Disbursement over Allotment
2019 2018 Increase/(Decrease)
DOH Programs 2019
AUI DR(a) AUI DR(a) AUI DR(a)
1.Health Facilities Enhancement
73.38% 13.11% 93.49% 32.66% (20.11%) (19.55%)
Program
2.Human Resource for Health
91.78% 86.93% 97.71% 88.84% (5.93%) (1.91%)
Deployment
3. Public Health Management 92.50% 70.69% 95.13% 61.80% (2.63%) 8.89%
4. National Immunization 86.13% 41.05% 98.16% 15.63% (12.03%) 25.42%
5. Family Health 53.52% 15.13% 61.76% 0.75% (8.24%) 14.38%
6.Elimination of Infectious
76.82% 27.55% 87.18% 40.98% (10.36%) (13.43%)
Diseases Program
7. Rabies Control 87.65% 13.83% 87.36% 6.65% 0.29% 7.18%
8.Prevention and Control of
97.39% 31.83% 83.25% 11.02% 14.14% 20.81%
Infectious Disease
9.TB Control 99.31% 42.97% 61.05% 0.00% 38.26% 42.97%
10.Non-Communicable
84.16% 11.84% 81.77% 5.14% 2.39% 6.70%
Diseases
109. Significant portion of the total DOH Adjusted Appropriation in 2019 is allocated
to the ten (10) DOH Programs listed in Table 30 as these programs covered 41.61% and
51.67% of the total Adjusted Appropriations - Regular plus Continuing Appropriations in
2019 and Current Year Adjusted Appropriations (Regular) in 2018, respectively.
110. Table 30 showed that the three (3) DOH Major Programs, namely Health Facilities
Enhancement Program (HFEP), Human Resource for Health Deployment, and Elimination
of Infectious Diseases Program had decreased both on its AUI and DR (a). In CY 2019,
eight (8) over ten (10) of these programs have DR(a) ranging from 11.84% to 42.97%
107
which may imply that actual utilization of funds on specific DOH programs were not
maximized and that low utilization rates reflect the inability to execute the programs and
projects on time.
111. It is also notable that the low disbursement over allotment rates of these DOH Major
Programs were already discussed with the DOH Management on prior year’s CAAR and
yet 80% of the programs still have less than 50% disbursement rates.
112. In addition, findings on budget utilization were specifically noted on the following
CHDs/Hospitals/TRCs/Bureaus:
Table 30: Status of Fund Utilization
CHD/
Status of Fund Utilization Cause
Hospital/
NCR - CO Out of the total allotments received of ₱23,992,729,028.80, only (a) procurements issues; (b) extensions on delivery/performance
75.57 percent or ₱18.131 billion was obligated, and 36.04 percent or of awarded contracts; (c) limited warehouse; (d) no Certification
₱8.646 billion was disbursed. of Product Registration (CPR) issued by FDA as additional
requirement by COA; ( e) delay on payment due to FDA Testing
Analysis issue; (f) payment on construction project is by
progress billing; (g) late submission of billing by the external
clients; and (h) non-liquidation of previous funds downloaded to
LGUs affecting the release of NCA for the current year
NCR - SLH Of the total allotments received of ₱1.143 billion for current and Late fund releases and delayed/non-conduct of procurement
continuing appropriations, ₱997.388 million or 87.25 percent was activities.
obligated. However, only ₱822.581 million or 71.96 percent thereof
was disbursed.
NCR - Fund utilization/obligation amounted to ₱496.749 million or 99.17 Late receipt of SARO/ SAAs, NCA and/or NTCA from the DBM/
ARMMC percent of the total allotment of ₱500.859 million, although four of the DOH hence several procurement activities, like the preparation
various programs/projects showed low disbursement rate from 34.86 of PO was only consummated mostly from September to
percent to the lowest of 0 percent. December 2019 and no delivery nor payment was made as at
year-end
NCR - FDA Disbursements over allotments posted an overall fund utilization rate Inadequate financial planning and untimely/non-implementation
of 62.8 percent. of planned procurement activities.
CAR - CDH Of the total allotment received of ₱132.297 million, obligation Slow implementation of the MAIP, failed public bidding and
incurred amounted to ₱125.677 million leaving an unobligated failure to request authority to realign savings.
allotment of ₱6.620 million or equivalent to five percent of the total
allotment received
V - BMC Of the total sub-allotments received from DOH – CO and CHD-Bicol (a) late release/receipt of SAAs in the last quarter of CY 2019;
in CY 2019, only 46 percent or ₱13.306 million was actually (b) tedious and lengthy procurement process; (c) incomplete
obligated, thereby leaving a significant unobligated balance of 54 bids; and (d) time-consuming ‘itemized evaluation of bids’ that
percent or ₱15.877 million at the end of that year. often resulted in multiple awards of what was supposed to be a
single procurement opportunity.
VI - CHD Minimal utilization amounting to ₱1.087 billion of the authorized Delays in the bidding of infrastructure projects.
appropriations/allotments in CY 2019 of ₱2.906 billion, indicating a
low fund utilization rate of 43.48.
VIII - CHD Low disbursement rate of only 62.95 percent. Six out of the eight Delays in the implementation of various
programs have moderately high obligation rate of 86.94 percent but programs/projects/activities.
with very low fund utilization rate of zero to 66.58 percent, thus
reversion of unused NCAs of ₱179.425 million to the National
Treasury.
XII - CRMC CYs 2018 to 2019 indicated low disbursement rates of only 69.68 Delays in the implementation of various programs. projects and
percent and 75.73 percent. The DOH major programs for CY 2019 activities.
although showed a high obligation rate, but has a very low fund
utilization rate of 4.91 percent.
XII - CHD Low disbursement rate of 61.44 percent. Late release of Sub-Allotment Advice for various programs,
projects and activities, as well as late submission of necessary
documents for disbursements.
108
CHD/
Status of Fund Utilization Cause
Hospital/
XIII - Of the total appropriation of ₱726.291 million, only ₱395.274 million Delayed implementation of said programs owing to the late
ASTMMC or 54 percent was obligated, and a total of P326.919 million was approval of the GAA and late receipts of sub-allotments. Not
disbursed or actually paid at year-end indicating low disbursement Indicated
rate of 45 percent.
XIII - CRH Disbursement rate of two (2) programs ranging from zero (0) to 18.49 Procurement activities relative to program implementation only
percent commenced during the 3rd quarter of the year owing to the late
approval of the GAA and late receipts of sub-allotments.
113. As our Government is heading towards the cash-based budget wherein agency
budgets are based on the agency’s disbursement over allotment capacity, and the readiness
of their targeted programs/projects to be implemented within the fiscal year, DOH must
improve its program implementation to be able to keep up with the requirement of this new
budget system. The extended availability of the 2019 appropriations up to the end of CY
2020 gave agencies time to adopt the new budget system and make better with their
management of budgetary sources.
a. Consider early procurement activities short of award for goods to be

delivered, and infrastructure projects to be implemented in the following
Fiscal Year (FY) pending approval of the corresponding GAA as
authorized in EO 91 and Section 7.6 of RA 9184, to cope up with the
pending full blown implementation of cash-based budget;
b. Facilitate the completion of projects within the extended period provided

by RA No. 11464 or December 31, 2020 to fully utilize and improve the
DOH, concerned CHDs and Hospitals’ spending rate in terms of
disbursements of allotments received and avoid any adverse effect on
future budget levels;
c. Immediately address the perennial factors impeding project

implementation through a written plan and coordination with the DOH on
project/program implementation as well as organizational strengthening
of project management offices; and
d. Establish coordination with the concerned budget section heads on the

following matters: (i) possible reforms that will improve budget
determination and programming; (ii) linkage between fiscal framework
and budget preparation so that funds will be available for use by the CHDs,
Hospitals and TRCs (as implementing agency) and be released on time;
(iii) need to institutionalize monitoring of fund utilization and the use of
information derived from DBM’s system of annual agency budget review;
and (iv) greater flexibility in the provision of technical assistance in project
preparation, design and management, installation of incentive system in
project management offices for early or on scheduled completion of
projects and sanctions for delays if delays are caused by inefficiencies.
109
Purchase and Allocation of Drugs, Medicines and Vaccines
115. Drugs and medicines, medical and dental supplies amounting to ₱2.200 billion
are either expired or overstocked/slow-moving or nearly expired, due to: (a) poor
procurement planning; (b) inefficient and uncoordinated transfer/distribution; and
(c) lack of monitoring and proper storage, which hindered the maximum delivery of
the highest quality of medical/health care services to the general public and entailed
wastage of government funds.
116. Section 2 of PD 1445 states that “all resources of the government shall be managed,
expended or utilized in accordance with law and regulations, and safeguarded against loss
or wastage through illegal or improper disposition, with a view to ensuring efficiency,
economy and effectiveness in the operations of government. The responsibility to take care
that such policy is faithfully adhered to rests directly with the chief or head of the
government agency concerned.”
117. The GAA for FY 2019 appropriated ₱15,371,330,000.00 for the procurement of
drugs, medicines and vaccines, including medical and dental supplies for distribution to
various government health care facilities nationwide. Of said amount, eighty percent
(80%) shall be allocated to provinces where the incidence of diseases are high. Provided,
that no amount shall be used to purchase dengue vaccines.
118. In the utilization of the said fund, the following expired, overstocked, and near
expiry inventories were specifically noted on the DOH-CO, CHDs and Hospitals:
Table 31: CHDs and Hospitals with Expired, Overstocked and Near Expiry Inventories as of December 31, 2019
Region Agency Account Amount Causes Management’s Comment
a. Expired - 29,952,276.31
NCR DOH CO Medical and Other 166,320.00 Poor procurement planning and See Table 32
Supplies inefficient distribution.
1 CHD Drugs and 5,405,920.00 • Delay in the transfer or late None
Medicines distribution of nearing expiry
medicines from DOH-CO.
• Transfer of unrequested
medicines from DOH-CO without
prior knowledge of Hospital’s
Program Coordinators.
2 CHD Drugs and 78,647.49 • Transfer of unrequested and/or None
Medicines unwanted medicines from DOH-
CO
• Excessive allocation of
medicines more than the average
monthly consumption
6 WVMC Medical and Dental 16,186,264.54 Failure to re-sterilize expired Management emphasized
Supplies medical and dental supplies for that the WVMC is observing
utilization despite the hospital’s re-sterilization of medical
policy on sterilization. devices, however, on selected
items only. The Management
added that in this
circumstance, medical
supplies such as disposable
needles, IV cannula, suction
catheter, chromic
110
single/double arm/SA cutting,

silk cutting and dental needles
were not recommended for re-
sterilization as per evaluation
of the Infection and prevention
Unit.
As of September 2020, the

amount of expired medical
supplies was reduced to
P12,115,277.71 as some of
the items that can be re-
sterilized were sterilized and
eventually used. Management
will continue to look for more
ways to utilize the expired
medical and dental supplies.
7 GCGMH Drugs and 2,804,819.67 No longer used or prescribed by Purchase Request of
Medicines the doctors since they are no Medicines, Drugs and IV
longer recommended by their fluids are based on the 3
Clinical Practice Guideline (CPG). months consumption using
the stock position sheet as
proof of our issuances and
have adapted steps to
minimize expired medicines.
8 SH Drugs and 8,302.84 Receipt/acceptance of deliveries None
Medicines with remaining shelf life of 18
months or less before expiration
date and absence of control in
monitoring the level of stocks and
expiry dates.
11 DRMC Drugs and 4,117,728.53 Lack of proper planning, Management directed the
Medicines managing and monitoring of Pharmacy Section to resolve
stocks. the issue of expired medicines
and shall properly account the
expired medicines by
determining those volumes
that can still be returned to the
supplier based on the contract
of agreement. Also the
management shall create an
investigating team to identify
the accountability and liability
of the personnel responsible
for monitoring the inventory of
medicines, Furthermore, the
Pharmacy Section shall
submit any assessment and
evaluation report pertaining to
the stocking to aid
procurement planning.
12 CS Drugs and 393,998.24 Lack of procurement planning, None
Medicines proper monitoring on utilization
and improper storage.
13 CRH Medical and Dental 790,275.00 Non consideration of the level of Corrective measures will be
Supplies stocks and procurement on the instituted to improve the
bases of prior year’s purchases inventory management
plus 25%. system of CRH. Improvement
of the storage area for
medical supplies will be
prioritized in CY 2020.
Sub-total 29,952,276.31
b. Overstocked/ Slow-moving/ Idle - 1,144,306,662.45
NCR DOH CO Other Inventories for 1,137,588,374.32 Poor procurement planning and See Table 32
distribution (slow- inefficient distribution.
moving)
111
13 CRH Medical Supplies 6,718,288.13 Excessive procurement of items Corrective measures will be
(overstocked) without taking into consideration instituted to improve the
the average consumption. inventory management
system of CRH. Improvement
of the storage area for
medical supplies will be
prioritized in CY 2020.
Sub-total 1,144,306,662.45
c. Near Expiry - 1,024,494,144.59
NCR DOH CO Drugs and 1,024,456,386.98 Poor procurement planning and See Table 32
Medicines inefficient distribution.
8 SH Drugs and 37,757.61 Receipt/acceptance of deliveries None
Medicines with remaining shelf life of 18
months or less before expiration
date and absence of control in
monitoring the level of stocks and
expiry dates.
Sub-total 1,024,494,144.59
Grand Total 2,198,753,083.35
119. The occurrence of these expired, overstocked and nearly expired inventory items is
a manifestation of an excessive expenditure since items were procured more than what is
needed. It is a result of poor inventory/supply management system covering procurement
planning, monitoring, storage and acceptance/issuance/transfer/distribution of goods.
Essentially, the existence of this conditions affects the curative efficacy of drugs and
medicines and wastage of government funds, thus, failing to deliver a quality health care
services.
CHDs and Hospitals to:
a. review the contract especially those of existing suppliers with regard to the
subject expired drugs and medicines, and other supplies whether these
items can be returned and replaced by them, otherwise, dispose the expired
drugs and medicines in accordance with the manner prescribed in Section
79 of the PD 1445 and Solid Waste Management Act of 2000;
b. exercise prudence in the use of government resources by ensuring that

procurement is limited to those immediately needed or for the current year
requirement, close coordination with the intended recipients during the
procurement planning, conduct of full inventory of drugs and medicines
nationwide to completely account those that are slow moving and idle as
well as those with fast turnover as basis for Management’s decision;
c. strictly implement the timeline on the distribution/transfer of the

inventories and monitor properly and fast track the distribution of the
drugs and medicine to its intended beneficiaries to prevent expiration and
insufficiency of supplies;
d. expedite the distribution of the nearly expired medicines amounting to

₱1.024 billion and the additional slow-moving inventories amounting to
112
₱1.138 billion to the CHDs and hospitals that are in need of particular
medicines and require the submission of their requests as basis in
allocation;
e. implement the use of Framework Agreement as stated in GPPB Resolution

No. 12-2017 and conduct judicious and meticulous procurement planning;
and
f. to formulate internal control policies necessary to minimize the occurrence

of expired drugs such as establishing adequate control on custodianship,
issuances, and stock level monitoring through the maintenance of
inventory database or computerized system to facilitate retrieval of data
on inventory balances, actual condition of stocks, and expiry dates at any
given time.
121. DOH CO Management’s Comment:
Table 32: Responses to Audit Observations of DOH CO on Inventories

Office/Issue Management’s Responses
DPCB-DDO • Gliclazide 30 mg MR: Drugs were procured in 2017 by DPCB and was delivered to the DOH warehouse by
supplier in four tranches (December 2017, March 2018, June 2018, and August 2018). Allocation list of drugs
that were included in the fourth tranche was provided to SCMS last October 2018. As of June 2020, drugs
were completely distributed.
• Metformin 500 mg: These drugs were procured and allocated by the Pharmaceutical Division (PD) in 2016. The
DPCB was not able to procure in 2017 due to bid failure, hence, the management decided to have the budget
transferred to PS-DBM. To avoid overstocking, no procurement was done in 2018 in order to allow the procured
Metformin tablets in 2017 to be delivered to the access sites based on the allocation list provided by PD to
SCMS. As of June 2020, drugs were completely distributed
DPCB- IDPCD (FWBD) Zinc Syrup 27.5 mg/ml Oral Drops 15ml and Zinc Syrup 55 mg/ 5m1 Oral Solution 60 ml: There was a delay in the
delivery of commodities which was lodged in in different warehouses since there was no courier last 2019 to
deliver DOH commodities. Allocation list, however, was submitted on time to SCMS for the scheduled delivery.
Dispatch of commodities expiring on March and September 2020 was facilitated by the LMD.
DPCB – IDPCD Alere CD4 Reagent, Daclastavir, Hepatitis C, HIV Rapid Diagnostic Test, Point of Care HIV Viral Load Reagents
and SD Hepatitis B Surface Antigen: Commodities listed have already been delivered to intended recipients last
February 2020. Laboratory kits and reagents have relatively shorter shelf lives (1 year or less). Given this, the
DPCB through the NASPCP is closely monitoring the delivery to DOH and distribution to intended recipients.
DPCB — IDED Ferrous sulfate Heptahydrate Syrup: Program had constant coordination with SCMS regarding the submission of
allocation list and distribution status of the commodity. However, SCMO's contract for hauling was depleted.
Courier halted the delivery or distribution to different CHDs. SCMO requested for emergency hauling services.
Contract timeframe for this is December 1-31, 2019 with near-expiry drugs as priority for delivery. Unfortunately,
some bottles were left in the warehouse.
Nutrition Commodities Nearing Expiry as of • The various nutrition commodities have been procured mostly in 2017 and 2018 and no succeeding
December 31, 2019 procurements were done for the year 2019 for most of these commodities, but they are still at the DOH
warehouses undelivered as a result of accumulated problems on the lack of warehouse space and limited
capability of the SCMO to deliver the bulk of all DOH programs procurement to CHDs and/or LGUs.
• This was further aggravated when the Supply Chain and Management Office (SCMO) had problem with their
third party provider of courier/delivery services and was not able to deliver commodities from March, 2019 to
December, 2019.
• In response to the situation, the Program, as early as April, 2019 called on the Program Coordinators in Luzon
areas to pick up their allocated nutrition commodities as the delivery services was suspended by SCMO. Most
of the Luzon CHDs picked up their partial allocation as they do not have vehicles big enough to carry the full
bulk of commodities intended for their region. The remaining commodities as of December 2019 were intended
for Visayas and Mindanao regions which do not have the capacity to pick up their commodity allocations.
• The program also requested development partners like UNICEF, World Food Programme and Nutrition
International to help DOH deliver nutrition commodities intended for their project areas. UNICEF was able to
113
deliver in Samar and Northern Samar while the World Food Programme was able to deliver 12 truckloads of
various nutrition commodities in CHDs 11 and 12.
• The program also partnered with the Pilipinas Shell Foundation, Inc., Philippine Marines and the Philippine
Coastguard to be able to deliver commodities in island provinces like Palawan, Sulu, Tawi-tawi and Zamboanga
Peninsula.
• Various NGOs, faith-based organizations and civil society organizations like the Lions Club, International Care
Ministries, Caritas, Vitamin Angels' Network of NGOs were also tapped to pick up and distribute nutrition
commodities directly to the intended beneficiaries or in coordination with the CHDs and/or local health offices.
Most of these NGOs have been conducting feeding programs and management of acute malnutrition so they
accept commodities even those with 2-3 months of shelf life.
• The aforesaid efforts facilitated the distribution of the various nutrition commodities to intended beneficiaries.
Nutrition Commodities received with • Several nutrition commodities like Ferrous Sulfate drops, Calcium Carbonate, Lipid-based Nutrient Supplement
remaining shelf life of less than 18 months for mothers and children, Micronutrient Powder, Ready-to-use Supplementary and Therapeutic Foods, were
or one and a half years on the date of alleged to be received by the management with remaining shelf life of less than 18 months or one and a half
delivery
years on the date of delivery.
• Suppliers of the said commodities followed the delivery schedule stipulated in the Notice to proceed and were
ready to deliver those commodities with an expiration of not less than 18 months on the scheduled date of
delivery. However, the lack of warehouse space prevented the SCMO to receive those commodities as per
schedule of delivery, had to enter into a safekeeping agreement with the supplier for at least 3 months at no
cost to the government and ultimately had to pay for the rental of the warehouse where these commodities
were being safe kept by the suppliers.
• Because of the concerted efforts of the programs to help the SCMO deliver the program commodities, a
substantial warehouse space was freed up. That was the only time the SCMO transferred those commodities
from the suppliers' warehouse to DOH warehouses, hence, the remaining shelf life is already less than 18
months when received at the DOH warehouses. But, technically, those commodities were delivered, received
and inspected by the SCMO with the program at the suppliers' warehouse while the shelf life of the commodities
were still 18 months or longer.
Non-submission of allocation list by the • Part of the requirement of the Purchase Request of any commodity is the allocation list based on the estimated
Program requirements of the CHDs is already prepared by the program.
• Prior to 2018, the allocation list is detailed as to the smallest unit like tablets, sachets, capsules, etc. and SCMO
has to repack some boxes of commodities to follow the allocation list. Thus, in 2018 the allocation list being
prepared by the program is based on the quantities per carton or big box so that repacking will no longer be
necessary. Thus, the allocation list submitted to COBAC as an attachment for the PR is no longer revised and
is being promptly submitted to SCMO.
• There has been delay in the updated inventory report of the SCMO.
• With regard to the memo of Director IV to SCMO regarding the distribution of micronutrients and ready-to-use
supplements dated December 2, 2019 for commodities procured in 2017 and 2018, this new allocation is just
for updating the previous allocation lists submitted to SCMO based on the latest inventory provided to the
program and based on the quantities approved for acceptance by the CHD nutrition program coordinators and
supply officers to prevent rejection of deliveries due to shorter shelf life of the commodities or lack of warehouse
space. Submitted are the copies of allocation lists for various commodities received by the Logistics and
Management Division (now SCMO) in 2017 and 2018 to disprove the allegation that for commodities procured
in 2017 and 2018 we only submitted the allocation on December 2, 2019 as per exhibited memorandum.
Poor procurement planning and inventory • Since 2018, the Procurement Service, COBAC and the Supply Chain Management Office has been conducting
management practices consultative workshops where programs present its procurement plan, the SCMO the current commodities
inventory to enable the program to adjust its commodity procurement based on the current inventory and the
program guidelines on commodity distribution and allocation for the target beneficiaries. Because of this,
starting 2018, only a few essential nutrition commodities were purchased by the program. Hence, it is not true
that programs continue to buy commodities every year without consideration of the current stock level and
careful consideration of the requirements of the beneficiaries.
• In fact, the 2021 proposed procurement levels for the nutrition commodities, except Vitamin A are all at a very
minimum level in consideration of the DOH warehouse capacity and the very limited capacity of SCMO to
deliver on time and to provide accurate and up-to-date inventory of program commodities to the detriment of
program beneficiaries.
Unnumbered memorandum dated June 10, NTMO coordinated with the SCMO for the inventory and clarification of the commodities listed for the TB program
2020 by the Division Chief of the DPCB- resulting in the following status of said commodities:
IDPCD P.O. No. Commodity Amount Status
GOP-2017-03- Sputum Cups 724,980.00 Delivered to the health facilities
0059
114
GOP-2017-06- Industrial Fan 5,030,256.00 Remaining seven (7) industrial fans to be given
0183#1 to CHD 5
GOP-2017-06- Office Cabinet 3,029,440.80 Out of 253 office cabinets, 215 to be given to
0183#2 CHD 5. The 38 remaining stocks will be given to
other facilities.
GOP-2018-03-006 Sputum Cups 4,692,000.00 Delivered to the health facilities
GOP-2019-04-052 Surgical Mask 1,143,810.00 This is an EREID commodity.
Unnumbered memorandum dated June 10, • Provided the chronology of events of Procured Commodities under the Emerging and Re-emerging Infectious
2020 by the Division Chief of the IDPCB Disease (EREID), i.e., Personal Protective Equipment (GOP-2017-04-0079), Doxycycline 100mg (GOP-2019-
03-023), Oseltamivir Phosphate 75mg capsule (GOP-2019-03-022), and Propan Olmecetronium Ethyl Sulfate
(GOP-2019-08-109) which is included in "Other Inventories for distribution amounting to ₱1,137,588,374.32
which were found to be slow moving and idle in DOH warehouses."
• Personal Protective Equipment (GOP-2017-04-0079) were all delivered to respective Center for Health
Development (CHDs). This was with the help of the coordinators who picked-up the PPEs due to lack of courier.
Details of Notice to Proceed (NTP), Inspection and Acceptance Report (IAR), complete delivery date, awaiting
requested from Logistics Management Office.
• The allocation list of the Oseltamivir, Doxycycline, Propan Olmecetronium Ethyl Sulfate, this was also submitted
to the Logistics Management Office and is scheduled for delivery by the newly-hired courier last May 5, 2020.
Letter dated June 10, 2020 by the Director Stated the status of the following commodities:
IV of the Health Emergency Management Particulars Status
Bureau Commodities under HEMB mentioned in Table under These items were already distributed
Drugs and Medicines Nearing Expiry as of December
31, 2019
Commodities under HEMB mentioned in Table under Latest Inventory of HEMB Logistics dated June 2,
Months Elapsed since Delivery of Various Inventories 2020 is submitted. The said inventory will provide
that still remain in the Warehouses as of December information on the movement of each item from
31, 2019 2019 to present.
IHCP and SCEP on the slow moving and They have consistently coordinated with the Supply Chain Management Office with regards to the distribution of
idle in DOH warehouses commodities to Centers for Health Development and noted the following reasons for pending delivery:
• September 2019, SCMO's contract amount for hauling was depleted. Courier has halted the delivery or
distribution to different CHDs.
• In October 2019, SCMO requested for emergency hauling services. Contract timeframe for this is December
1-31, 2019, with near-expiry drugs as their priority for delivery.
• In March 2020, courier resumed distribution of commodities. However, the COVID-19 pandemic has negatively
affected the delivery of commodities to CHDs.
The IHCP and SCEP are coordinating constantly with SCMO with regards to the delivery of commodities.
Unnumbered memorandum dated June 10, • In September 2019, SCMO's contract amount for hauling was depleted. Courier has halted the delivery or
2020 by the Division Chief of the IDED distribution to different CHDS. In October 2019. SCMO requested for emergency hauling services. Contract
timeframe for this is December 1-31. 2019, with near-expiry drugs as their priority for delivery. Unfortunately,
some bottles of Ferrous Sulfate Heptahydrate syrup were left in the warehouse.
• The commodity has already expired last March 2020. Remaining bottles should be pulled out and discarded as
per FDA guidelines.
122. Auditor’s Rejoinder:
Table 33: Auditor’s Rejoinder on Management’s Comments

Office/Issue/ Auditor’s Rejoinder
Management’s Comment
DPCB-DDO • The mere fact that the various nutrition commodities have been procured mostly in 2017 and 2018 and still
found in the DOH Warehouses in 2020 further evidences the poor procurement planning and ineffective
DPCB- IDPCD (FWBD) inventory management of the DOH. Thus, said inventories should already have been distributed during the
DPCB – IDPCD years 2017 and 2018 and should have not been affected by the SCMO’s problem with their third-party provider
DPCB — IDED
which happened only last March to December 2019.
Nutrition Commodities
Nearing Expiry as of • The giving of the program of the allocation list of the Gliclazide 30 mg MR only on its fourth tranche also
December 31, 2019 evidences poor supply chain practice and contributed to the delay in the distribution of the medicines
Nutrition Commodities • The DPCB should continually submit the details of the distribution inventories which should include the name
received with remaining shelf of recipients and date of delivery.
life of less than 18 months or • Execution of Safekeeping Service Agreements between the DOH and various suppliers to facilitate payment to
one and a half years on the
suppliers despite lack of actual deliveries since the DOH can no longer accommodate the drugs and medicines
date of delivery
115
Office/Issue/ Auditor’s Rejoinder
Management’s Comment
Non-submission of allocation they procured due to lack of storage facilities to house excessive quantities which are not only inconsistent with
list by the Program Section 88 of PD 1445 but also caused increased risk of loss and lack of control over inventories.
Poor procurement planning • Additionally, even though allocation lists for various commodities received by the LMD (now SCMO) in 2017
and inventory management
and 2018, said allocation lists were not followed and were only revised last December 2, 2019 evidencing poor
practices
procurement planning. Thus, management should also provide the documentations of the policies and
procedures applied by the program in arriving at the allocation list based on the estimated requirements of the
CHDs is already prepared by the program, as stated above.
• The program’s statement stating that the very limited capacity of SCMO to deliver on time and to provide
accurate and up-to-date inventory of program commodities resulted in the detriment of program beneficiaries
further evidences an overall poor supply chain management practice of the DOH.
Unnumbered memorandum • The National Tuberculosis Management Office should submit the details of distributed inventories including the
dated June 10, 2020 by the name of recipients and date of delivery
Division Chief of the DPCB- • The Supply Chain Management Office should explain the reasons for the misclassification of the Surgical Mask
IDPCD
under GOP-2019-04-052 under TB programs instead as an EREID commodity and make the necessary
corrections in their inventory reports.
Unnumbered memorandum The Infectious Disease Prevention and Control Bureau should submit the details of distributed inventories
dated June 10, 2020 by the including the name of recipients and date of delivery. Additionally, they should submit an explanation why the
Division Chief of the IDPCB chronology of events in a memorandum dated June 10, 2020 already included events dated July to October 2020.
Letter dated June 10, 2020 by The HEMB should continually submit the details and status of Commodities under HEMB mentioned in Table
the Director IV of the Health under Months Elapsed since Delivery of Various Inventories that still remain in the Warehouses as of December
Emergency Management 31, 2019.
Bureau
IHCP and SCEP on the slow The IHCP and SCEP should continually submit the details of the distribution of inventories which should include
moving and idle in DOH the name of recipients and date of delivery
warehouses
Unnumbered memorandum The Infectious Disease for Elimination Division should submit the details of the distributed inventories which should
dated June 10, 2020 by the include the name of recipients and date of delivery, as well as, the details and status of the commodities that
Division Chief of the IDED expired last March 2020.
Deficiencies in the Internal Control System
a) DOH warehouses / storage facilities
123. Internal Control deficiencies in the warehouses/storage facilities of the DOH

CO, DOH Hospitals, namely NCH, NCMH, FNGHTC, R1MC, R2TMC, NMMC,
and CRH and in TRC-Dulag due to failure to adopt an orderly storage system and
adequate controls taken to safeguard procured drugs and medicines, equipment and
supplies amounting to ₱25,492,832,791.41 against possible wastage, loss, obsolescence
or expiry, thus, exposing the inventories to the elements, theft and rapid
deterioration/expiration of drugs and medicines causing the possible loss of their
efficacy.
124. Below are our observations in the CO, Hospitals, and TRC:
Table 34: Internal control deficiencies in the warehouses/storage facilities of DOH CO, Hospitals, and TRC
Offices/ Amount of affected

Region Hospitals/ Findings inventories/ Criteria
TRCs/ properties
Ocular inspection and interview/inquiry with General Criteria:
DOH concerned personnel disclosed that
there are defective controls for maintaining Section 101, 105, 123 and 124
NCR CO 25,475,855,717.25
proper storage conditions for health PD 1445 – safekeeping,
commodities that is vital to ensuring their custody and accountability of
quality, as well as, those processes involved government properties.
116
Offices/ Amount of affected
Region Hospitals/ Findings inventories/ Criteria
TRCs/ properties
in the distribution and transportation of said
inventories (e.g. insufficient existing personnel COA rules and regulations and
at the Distribution Section to monitor all items Internal Control Policies
for dispatch (both for pick-up and for delivery),
on the following warehouses: Section 2.4.1 of the National
Guidelines on Internal Control
• Central Office Systems (NGICS)
• Nonpareil Sunvalley
• Nonpareil Veterans Warehousing Criteria:
• Nonpareil Tanyag
• Ximex WHO Technical Report Series,
• QMMC No. 908, 2003, Annex 9 entitled
• Tala “Guide to good storage
practices for pharmaceuticals”
• Metropac
UNICEF Guidelines for the
Additionally, non-inspection of contents of
Storage of Essential Medicines
kits/packages upon receipt from the supplier,
and Other Health Commodities
such as in the case of Breastfeeding Kits,
provides provisions for
resulted in incomplete or inconsistent contents
maintaining proper storage
for each package.
conditions for health
Absence of adequate storage due to
commodities.
NCR NCH storeroom/warehouse is still under Not Indicated
construction.
Administrative Order No. 2013-
The insufficient storage room for the Center’s 0027 was issued to require the
NCR NCMH stock requirements and limited working Not Indicated Department of Health to adopt
capacity of the Pharmacy personnel. and implement the World
Defective controls for maintaining proper Health Organization’s Annex 5
CAR FNGHTC storage conditions for health commodities that Not Indicated Guide to Distribution Practices
is vital to ensuring their quality (GDP) for Pharmaceuticals and
Sufficient storage rooms were not provided for Annex 9.4 Guide to Good
I R1MC 5,592,677.73 Storage Practices for
various medical supplies.
Pharmaceuticals
Non-segregation of the incompatible functions
II R2TMC of custody and recording by administrative 208,181.90 Facility Safety Criteria:
staff and lack of supervision and monitoring.
DOH Administrative Order No.
Internal control deficiencies in the storeroom 2012-0020 dated October 9,
were noted by the TRC Auditors due to 2012 sets the Guidelines
absence of adequate storage facilities, Covering the Occupational
VIII TRC - Dulag inability to adopt an orderly storage system 4,457,926.40 Health and Safety of Public
and inadequate controls to safeguard Health Workers
procured drugs, medicines, supplies and
equipment. Stockroom Criteria:
Paragraph 21 of the DOH

Non-conducive and limited working area for Guidelines in the Planning and
X NMMC Supply Officers, unorderly piling of inventories Not Indicated Design of a Hospital requires
and not well-ventilated stockroom. adequate areas in square
meters to be provided for the
Inadequate ventilation and storage area for people, activity, furniture,
XIII CRH medical supplies, specifically dextrose/fluids 6,718,288.13 equipment and utility.
in the stockroom.
TOTAL ₱25,492,832,791.41
117
125. The above practices defeat the directive to safeguard the properties on stock to
promote accountability and responsibility for government properties such as inventories,
supplies and property, plant and equipment.
126. Internal controls are integral components of the management processes, which are
established in order to provide reasonable assurance that the operations are carried out
efficiently and effectively, financial reports and operational data are reliable, and the
applicable laws and regulations are complied with so as to achieve organizational
objectives.
127. Internal control and good warehousing practices are also necessary to prevent
obsolescence, expiration, loss, damage, wastage, and deterioration of government
properties. It is also emphasized that one of the principles of internal control is the
segregation of incompatible functions. Key duties such as authorization, custody and
recording should be assigned to separate individuals to eliminate opportunities to conceal
errors and irregularities.
128. Moreover, one major factor contributory to the contamination or damage of medical
supplies is poor warehousing or stockroom conditions. An effective storage management
is essential in maintaining quality, and physical protection of medical supplies and
medicines. Among the basic requirements of health commodities are the prevention of
moisture, protection from high temperature, and preventing from pests entering the
warehouses. Product expiration dates are based on ideal storage conditions and protecting
product quality until their expiration date is important for serving clients and conserving
resources. Failure to promptly address the deficiencies inside the storerooms will impair
the quality and efficacy of medical supplies stored therein and will consequently affect the
quality of service provided to the patients of the hospital.
129. Further, an ineffective storage system and lack of maximum security can put the
said goods to the risk of loss, damage and/or wastage brought by different factors like fire,
spoilage, theft and the like. This can also hamper a hospital’s effective and efficient
operations and quality services because these supplies are usually commonly-used medical
items and must always be readily available in support to various patient and medical needs.
130. Additionally, healthcare workers are entitled to a humane working environment and
should be protected from hazards and risks associated with their occupations. Thus, it is
imperative that management should look into this condition.
131. In summary, the above practices defeat the purpose of establishing accountability
for government properties such as inventories, supplies and property, plant and equipment
as provided by COA rules and regulations and the tenets of effective internal control system
on safeguarding of assets. We can determine the importance of internal controls by looking
at the consequences/results of a poor internal control system, which includes the following:
a. Errors in financial and other forms of information that lead to poor decision-
making;
118
b. Irregularities, waste and fraudulent transactions cannot readily be detected;
c. Programs/Projects do not address the needs, demands and priorities;
d. Non-establishment of the integrity of property custodianship; and
e. Exposure of the inventories to bad elements leading to rapid deterioration
and expiration.
132. We reiterated our recommendations, with modification, that Management

require the Heads of DOH CO Teams to:
a. require the Supply Chain Management Office to ensure the strict

implementation of the provisions of the recently crafted Warehousing
Operating Manual;
b. consider revisiting the contracts for the rental of warehouses to include,

among others: (i) provision of adequate security and protection system by
the warehouse owner/lessor; and (ii) imposition of penalties to the courier
or owner/lessor of rented warehouses in case of non-conformance to good
warehousing practices to ensure proper safekeeping of DOH inventories;
and
c. provide explanation/justification of the inconsistent contents of the

Breastfeeding Kits. Investigate the root cause of the noted deficiency and
impose liability upon the program head and/or accountable officer at
fault.
133. We further recommended that Management require the Heads of the

National Children’s Hospital, the National Center for Mental Health, the Far North
General Hospital and Training Center, the Region 1 Medical Center, the Region 2
Trauma and Medical Center, the Treatment and Rehabilitation Center – Dulag, the
Northern Mindanao Medical Center, and the Caraga Regional Hospital to adopt
measures/ procedures to strengthen their internal controls, particularly those related
to distribution, recording and monitoring of inventories in order to avoid incurrence
of shortages and overages, and to safeguard its resources and promote efficiency and
economy to its operations by requiring the:
Supply Chain Management Offices, Logistics Management Divisions,

Materials Management Divisions, Supply Sections and/or Pharmacy Units
to:
a. ensure that authority, responsibility and accountability should be clearly

defined and consistent with the agency’s objectives so that decisions and
actions are undertaken by appropriate people and said people should have
the necessary knowledge, skills and tools to support the achievement of the
agency’s objectives;
119
b. provide adequate, convenient, safe and well-ventilated
storerooms/warehouses for inventories and temporary
storerooms/warehouses if permanent warehouse is still unavailable (i.e.,
construction is still on-going) for proper safekeeping of all equipment in
the custody of the Property Officer that are not yet distributed to the end-
users;
c. coordinate with the Procurement and Engineering Units for the immediate
repair of supply buildings and the procurement of necessary storeroom
facilities;
d. ensure the utilization of installed CCTV cameras and install additional

units as needed by considering the dimension of the storage areas;
e. establish the layout plan to expedite the storeroom arrangement and

organization of supplies according to class/group and ensure that all
inventories are installed following First In First Out (non-expiring
inventories) /First Expiry First Out (expiring inventories) policy for stock
management;
f. require the Property Officer to regularly update the Stock Cards to

account for all the inventories, and submit a monitoring report to the
Accounting Department at the end of each quarter for reconciliation. The
Property and Accounting Division should also reconcile any discrepancies
noted during the quarterly reconciliations of Inventory/Property
Monitoring and Accounting Records; and
g. provide adequate working space for personnel assigned in managing

inventories, and ensure the segregation of incompatible duties and
functions. Moreover, the Chief Pharmacist in the Hospitals should also
strictly supervise, monitor and account for all drugs and medicines
received and distributed and establish control against theft, loss or abuse
of inventory.
Management Comments – DOH CO
134. In a letter dated July 20, 2020, the Director IV of the SCMS stated that they already
hired two (2) additional staff to augment existing personnel at the Distribution Section to
monitor all items for dispatch (both for pick-up and for delivery) and ensure compliance of
the 3PL to the pull-out plan and delivery schedule. Discussions are held and the PSCMT
has been monitoring and cancelling PRs if the inventory report states the current stock level
that will be enough until next year or so to avoid overstocking. While the process of hiring
for regular plantilla positions is on-going, contractual pharmacists are engaged to manage
each rented warehouse. The new contract for warehousing services requires the provisions
of CCTV, adequate lighting, Fire Detection and Protection System, PPE, additional
equipment and manpower to properly manage the DOH inventory/stock. Compliance to
120
good warehousing practices will be included in the Terms of Reference (TOR) for 2021
Warehousing Service Procurement. Inspection of rented warehouses will be made and
penalties imposed if the existing TOR are not complied with. A thorough audit of the items
will be conducted, together with the Program and the root cause of the noted deficiencies
will be investigated, if any, and liabilities imposed subsequently.
135. The Warehouse Operating Manual (WOM) was first created in 2010, but processes
involved are already outdated. Thus the second edition was created in 2019 to apply some
new provisions.
Auditor’s Rejoinder – DOH CO
136. The SCMS should submit detailed evidences on the actions taken on each of the
observations/recommendations presented, including discussion of internal control
deficiencies in DOH Warehouses. Furthermore, the presence of the deficiencies despite
existence of a WOM further proves the ineffective implementation of the SCMS of said
warehouse policies.
Management Comments – NCH
137. Management informed that MMS keeps the unissued equipment in any available
space for safekeeping. Since there is no available storeroom to accommodate all the
equipment, they still use the hallway but they see to it that everything is accounted for.
Auditor’s Rejoinder – NCH
138. The Audit Team still maintains its stand that an adequate temporary
storeroom/warehouse be provided while construction is still on-going, for proper
safekeeping of all equipment in the custody of the Property Officer that are not yet
distributed to the end-users to avoid possible loss or wastage.
b) Various processes other than warehousing/storing
139. Deficiencies observed in the course of audit in the various processes

manifesting breakdown/inadequacy of internal control system of TRC Ilagan and
three DOH Hospitals, namely SLRWH, MMHMC, and R1MC due to lack of proper
policies, non-adherence to proper procedures, and lack of segregation of duties
rendering said agencies vulnerable to malversation, theft, and loss of government
funds, as well as, concealment of possible irregularities through unauthorized actions
or the gaining of unauthorized access to assets or records by a single person.
140. Results of audit and review of operations revealed several deficiencies that are
manifestations of inadequate/poor internal control system due to lack of proper policies,
non-adherence to proper procedures and lack of segregation of duties rendering said
agencies vulnerable to malversation, theft and loss of government funds, as well as,
concealment of possible irregularities through unauthorized actions or the gaining of
121
unauthorized access to assets or records by a single person. The breakdowns could have
been controlled or managed if detected early, as discussed in the following paragraphs.
Table 35: Internal Control deficiencies noted in various processes
Hospitals/
Area/Process Region Findings Criteria
TRC
Undetected typographical error in the dates indicated in the BAC Section 123 of PD
Resolution with the opening of bids, manifested weak internal control 1445
in the processing and signing of documents by the Accounting Unit
Processing and
and the Bids and Awards Committee Paragraph 2.4.1. of the
signing of
NCR SLRWH National Guidelines on
procurement
The Accountant and the Procurement Section had been directed to Internal Control
documents
carefully check all supporting documents before affixing their System (NGICS)
signatures and ensure that same error in the preparation of the BAC
Resolution will no longer be committed. Section 35, 51, 54 and
Deficiencies under the IT general controls (i.e. absence of Strategic 55 of the Government
Information IT Plan, no policies on segregation of incompatible duties and Accounting and
Technology General I MMHMC absence of established controls over the availability of IT services in Auditing Manual
Controls the event of major disruption). (GAAM), Volume III
Collection Systems Issuance of pre-numbered official receipts and checks were not Paragraph H, Section 4
and Preparation of I R1MC made in a strict numerical sequence and no proper turnover of pre- of the GAM, Volume I
Reports numbered official receipts among the Cashier and Collecting Officers
Sixteen (16) plantilla positions for the different sections of the agency Section 77 of PD 1445
remained unfilled due to the prolonged recruitment process caused
by the delay in posting of the job vacancies and the voluminous work,
Segregation of Duties
II TRC-Ilagan considering that HRMS consist of only two (2) permanent employees.
across various offices
Thus, employees are performing concurrent functions and increased
workload affecting efficiency in the performance of duties and
responsibilities
141. We recommended that Management require the Heads of the TRC and
Hospitals concerned to adopt measures/procedures to strengthen its internal controls
by:
a. Ensuring compliance with pertinent rules and regulations covering

specific transactions and operations;
MMHMC
b. Designing and developing a Strategic IT Plan and a policy on segregation

of incompatible Information System functions such as, but not limited to,
applications and systems programming, data base and security
administration and systems librarian; and
c. Establishing controls on availability of IT services through development

of an IT service continuity plan that would ensure minimum hospital
operation impact in the event of major disruption;
R1MC
d. Requiring the Cashier and Collecting Officers the proper turnover of pre-
numbered official receipts and strictly issue pre-numbered official receipts
and checks in strict numerical sequence; and
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e. Requiring the agency head to stop the practice of signing blank checks;
and
TRC-Ilagan
f. Prioritizing and fast tracking in the filling of existing vacant positions,

especially Section Heads.
Challenges in Health Facilities Enhancement Program (HFEP) Implementation
142. The Universal Health Care or Kalusugan Pangkalahatan (KP) of the DOH is
directed to “ensure the achievement of the health system goals of better health outcomes,
sustained health financing and responsive health system ensuring that all Filipinos,
especially the disadvantaged group, have equitable access to affordable health care
facilities”.
143. In order to achieve the objectives of KP, the DOH identified “access to quality
health facilities” as one of its three (3) strategic thrusts implemented mainly through the
HFEP. The said program provides funding assistance for infrastructure and equipment of
government health facilities nationwide, particularly Barangay Health Stations (BHSs),
Rural Health Units (RHUs), District Hospitals, City & Provincial Hospitals, and DOH
Retained Hospitals and specialty centers.
a) Non-compliance with issued Department Orders
144. The continued non-compliance by DOH-CHDs, Hospitals and TRCs on

several issued DOs reflects weak internal control on the monitoring of the
implementation and fund utilization of the HFEP, thus, affecting the efficiency and
effectiveness of the program’s implementation and non-attainment of the program
objectives. It likewise defeated the Department’s long-term vision of guaranteeing
equitable, sustainable, and quality health care for all Filipinos as well as fostering a
renewed commitment to achieve better timeliness, better responsiveness, better
quality, and better outcomes for health clients.
145. The DOH implemented the HFEP with the main goal of improving the delivery of
basic, essential and as well as specialized health services. The project envisions
revitalization of primary health care facilities and the rationalization of the various levels
of hospital to decongested-referral hospitals. Facilities will be upgraded to make them
more responsive to the need of the catchment area, to provide Basic Emergency Obstetric
and Newborn Care (BEmONC) and Comprehensive Emergency and Newborn Care
(CEmONC) services to the population, and to strengthen the health facility referral system
or network. HFEP has also provided the hospitals of the needed equipment to comply with
minimum licensing and PhilHealth accreditation requirements.
123
146. Specifically, for the year 2019, a total of ₱15.645 billion was allotted for the
implementation of the HFEP. Out of said amount, the total expenditures/obligations for
CY 2019 reached ₱11.697 billion.
147. Section 2 of Presidential Decree (PD) No. 1445 imposes upon the head of agency
the responsibility to safeguard all government resources from loss, wastage, or
illegal/improper disposition. Section 4 (4) thereof states that “fiscal responsibility shall, to
the greatest extent, be shared by all those exercising authority over the financial affairs,
transactions, and operations of the government agency”.
148. DOH Department Order (DO) No. 2018–0075 dated February 29, 2018 requires all
relevant office to submit appropriate reports and to comply with the “Guidelines for the
Implementation of the HFEP FY 2018” and all other previous/similar/related issuances.
149. On May 5, 2019, the Audit Team requested Health Facilities and Infrastructure
Development Team (HFIDT) for the soft/electronic copies and signed printed copies of
the monthly consolidated and summarized HFEP monitoring reports which are supposed
to be prepared by the Health Facilities Development Bureau (HFDB) and submitted to
DOH Executive Committee and to the Secretary of Health (SOH) from January 2015 to
December 2018 but no reports were submitted to date.
150. We reiterated our request during the Audit Exit Conference for the December 31,
2018 Management letter held last April 30, 2019, on June 20, 2019 during Audit Exit
Conference for the CY 2018 CAAR of the DOH and continued to remind Management on
the submission of the reports.
151. Subsequent inquiry with and confirmation by the HFEP, revealed that, the Office
of the Secretary did not receive the monthly status reports on the implementation of HFEP
Projects for the CYs 2015 to 2018 as required by DOH Department Orders (DOs) Nos.
2015 – 0128, 2016 – 0110, 2017 – 0112 and 2018 – 0075.
152. Meanwhile, the HFDB admits to non-compliance with the previous DOs and that
they intend to issue a Memorandum repealing said DOs since no compliance was made.
As of even date, no such memorandum repealing previous years’ DOs has been submitted
to this office. Hence, monitoring and evaluation of the status of HFEP projects should still
be done by the HFEP Team.
153. Per our verification in the DOH Intranet, it was noted that AO No. 2019-0048 with
the subject: “Guidelines for the Implementation of the Health Facilities Enhancement
Program (HFEP) FY 2019” was issued only on October 29, 2019 which was already the
last quarter of the year, for which said funds are to be utilized. This has rendered the HFEP
funds being disbursed without any guidelines on its utilization for the early months of the
year.
154. The above practice is also a contributing factor on the noted findings of low
absorptive capacity for the HFEP noted on the CAARs for CYs 2017 and 2018.
124
155. Per unnumbered Memorandum dated January 20, 2020 of the Director IV of
Knowledge Management and Information Technology Service (KMITS), it has developed
the Health Facility Enhancement Program Tracking System (HFEPTS) in 2013 as
requested by the then National Center for Health Facility Development (now HFDB) to
monitor the progress of HFEP grants/projects. It is a web-based system to ensure real time
reporting of various recipient offices of HFEP funds.
156. The non-submission of the monthly reports on HFEP project status, non-
monitoring/consolidation by the HFDB/HFEP, subsequent non-submission thereof of
required consolidated report to the Secretary of Health are contrary to the DOH’s own
Department Orders. Non-implementation of issued policies for the monitoring of program
implementation reflects weak internal control while also contributing to the previous
deficiencies noted for the total expenditures of ₱38.711 billion as stated in the CAAR 2018.
Ultimately, this has defeated DOH’s long-term vision to guarantee equitable, sustainable,
and quality health care for all Filipinos, as well as that of fostering a renewed commitment
to achieve better timeliness, responsiveness, quality, and outcomes for health clients.
157. We recommended and the HFDB/HFEP Team agreed to:
a. comply with pertinent DOH Department Orders (DO) by:
i. requiring the DOH CHDs, Hospitals, TRCs and the DPWH to prepare
and submit the monthly reports on HFEP project status for the CYs
2015 to 2018;
ii. summarizing and consolidating said monthly reports for submission to

the Secretary of Health and copy furnished the COA and other offices
as required in the DOs;
b. require the KMITS to submit evidence on the functionality, reliability and

usefulness of the HFEP Tracking System starting February 2016, in
coordination with the HFEP Management Office as required; and
c. submit justification/explanation on why the monthly status reports were

not previously prepared, consolidated and submitted to the appropriate
offices, and why the policy issuance/guidelines on the implementation of
projects under HFEP for CY 2019 was issued only during the last quarter
of 2019.
158. Management commented that there is a new implementation guidelines overriding

the above mentioned Department Orders. However, such guidelines and the attached
documentations have not yet been submitted to the Office of the Auditors.
125
b) Deficiencies on HFEP Infrastructure Projects Implementation - ₱3,827,811,901.03
159. Various HFEP infrastructure projects with total contract costs of

₱3,827,811,901.03 were found to be: (a) not executed in accordance with the terms of
its contracts; (b) prior years’ projects still in progress; (c) not completed within
contract time; (d) idle/ unutilized/ not fully operational/ underutilized/ not yet turned
over; (e) unimplemented/ not started; and (f) new projects were implemented even if
the previous ones were not yet completed, thus, exposing these facilities to
deterioration and affecting the benefits that the public could have derived from the
immediate and maximum use of the said facilities and the non-attainment of the
program objectives.
160. DOH DO No. 2018-0075 dated February 29, 2018 states that the Department’s
long-term vision is to guarantee equitable, sustainable, and quality health care for all
Filipinos, especially the poor. Healthcare facilities all over the country are thus, enjoined
in the further acceleration of the Universal Health Care agenda, a renewed commitment to
achieve better timeliness, better responsiveness, better quality, and better outcomes for
health clients on the platform of “Boosting Universal HealthCare through FOURmulaOne
for HealthPlus (orFl+)”.
161. DOH DO No. 2008-0162 dated July 7, 2008 provides the guidelines and procedures
for the implementation of the Government Hospital Upgrading Project under CY 2008
HFEP Funds of the DOH. The Health Facilities Enhancement Program of the DOH is
being pursued in support of one of the DOH’s strategic approaches to improve the delivery
of basic, essential, as well as specialized health services through the rationalization and
critical upgrading of health facilities nationwide. It includes parallel revitalization of
primary health care facilities and the rationalization of the various levels of hospitals with
the end view of decongesting and referring to hospitals especially to primary health care
delivery and strengthening its capabilities and potentials thus improving the accessibility
and availability of basic and essential health care.
162. GPPB Circular No. 03-2019 dated March 08, 2019 Guidance on Contract
Termination Due to Fifteen Percent (15%) negative slippage by the Contractor in
infrastructure projects as provided in Annex A of GPPB Resolution No. 018-2004, to
ensure the timely implementation of infrastructure projects and effective management of
the performance of contractors.
163. For CY 2019, the following deficiencies were noted in the DOH Central Office,
CHDs, Hospitals, TRCs, Bureaus and LGUs as summarized in Table 36.
Table 36: Summary of Findings on HFEP Infrastructure

DEFICIENCIES/
REGION CHDS/ HOSPITALS/ TRCS/ BUREAUS/ LGUS AMOUNT
STATUS
Projects not
CHD-NM
executed in
(New Poblacion BHS, Alipuaton MCP, New Alipuaton BHS, Casulo BHS, Amoros BHS,
X accordance with the 14,824,204.67
Cogon BHS, Misamis Oriental Provincial Hospital, Misamis Oriental Provincial Hospital
terms of its
Level 2)
contracts.
126
DEFICIENCIES/
STATUS
XIII ASTMMC Prior years’ HFEP
Projects still in 222,439,809.66
NIR CLMMRH progress
Not Completed
NCR ARMMC, LPGH-STC, EAMC within Contract Time
I R1MC
I MMMHMC
II BGH
V BMC
CHD-WV
(Caluya RHU, Rep. Pedro Trono Memorial Hospital, San Joaquin Mother and Child
Hospital, Crossing Dapuyan BHS, Bayunan BHS, Igcores BHS, Ilog RHU, Salong BHS,
Binicuil BHS, Bocana BHS, Tabu BHS, Vista Alegre BHS, Delicioso BHS, Manalad
BHS, Ciriaco S. Tirol Hospital, Angel Salazar Memorial General Hospital, Culasi District
Hospital, Calixto Zaldivar Memorial Hospital, Pedro L. Gindap Municipal Hospital,
Ramon Masa Sr. Memorial Hospital, Sibalom RHU, San Francisco BHS, Casay BHS,
Tordesillas BHS, Barasanan A BHS, Buenavista Nutrition Center, Guimbal RHU,
Aglobong BHS, Visayas State University Medical Center, Silay CHO, Galicia BHS,
Bocana BHS, Libacao Municipal Hospital, Ciriaco S. Tirol Hospital, Malay RHU III,
Laserna BHS, Pedro L. Gindap Municipal Hospital, Bugasong Medicare Community
Hospital, Ramon Maza Sr. Memorial District Hospital, President Diosdado Macapagal
VI 2,859,669,667.93
District Hospital, Valderrama Municipal Hospital, Roxas Memorial Provincial Hospital,
Blasco BHS, Nueva Valencia RHU, Getullo BHS, San Isidro BHS, Tanag BHS, Naoway
Island BHS, Jesus M. Colmenares District Hospital, Barotac Viejo District Hospital (Niel
D. Tupas Sr. District hospital), Ramon Tabiana Memorial District Hospital, Ricardo S.
Provido Sr. Memorial Hospital, Ramon D. Duremdes District Hospital, Rep. Pedro G.
Trono Hospital, Dr. Ricardo Y. Ladrido Memorial Hospital, Don Valeriano Palmares Sr.
Memorial Hospital, Sara District Hospital, Dumangas RHU II, Cabatuan RHU II, Passi
City RHU II, Luca BHS, Alapasco BHS, Macatunao BHS, Canauillan BHS, Burak BHS,
San Carlos City Hospital, Valeriano Gatuslao District Hospital, Ignacio L. Arroyo District
Hospital, Sagay CHO II, Vicente F. Gustilo BHS, Abaca BHS, Baclao BHS,
Camalandaan BHS, Lumbia BHS, Tambad BHS, Yaoyao BHS, Daug BHS, Sangke
BHS, Macahagay BHS, Dung-I BHS and Vista Alegre BHS)
VI TRC-Pototan
VI DJSMMCEH
VI WVMC
VIII EVRMC
X MHARSMC
Idle/ Unutilized/ Not
CAR FNLGHTC fully operational/
Underutilized/ Not 215,175,929.20
I R1MC Yet Turned Over
127
DEFICIENCIES/
STATUS
CHD-Caraga
(Bilay BHS, Brgy MJ Santos BHS, Brgy San Vicente BHS, Cabadbaran District Hospital,
Sta. Maria BHS, San Joaquin BHS, Esperanza RHU, Binucayan BHS, Katipunan BHS,
Tagbayagan BHS, Salvacion BHS, San Isidro BHS/BF, Cabawan BF, Bayugan Comm
Hospital, Esperanza Med Comm Hospital, La Paz Mun Hospital, Brgy Zillovia BHS, Brgy
Mabuhay BHS, Brgy. Tabon-Tabon BHS, Brgy Sta Teresita BHS, BUNAWAN District
Hospital, Brgy Sta Maria BHS, Brgy Comota BHS, Brgy Novele BHS, Brgy Maligaya
BHS, Cabawa BHS, Alegria MHO, Cabugo BHS, BHS Magpayang, Socorro Dist
Hospital, Sta Monica Mun Hospital, Pilar Dist Hospital, Surigao del Norte PH, Alegria
RHU, Bacuag RHU, Brgy Lahi BHS, Brgy Camam-onan BHS, Brgy Anibongan BHS,
XIII
Brgy Daywan BHS, PLACER RHU Birthing, Brgy Bad-as BHS, Brgy Pautao BHS, Brgy
Pongtud BHS, Brgy San Juan BHS, Brgy Pongtud BHS, Brgy Karihatag BHS, Brgy
Cawilan BHS, Brgy Cabugao BHS, Brgy Poniente BHS, Lianga Dist. Hosp. Cortes
District Hosp., Bislig Dist. Hosp., Lingig Community Hospital, Bislig District Hospital,
Tabon MHC, Kalagdaan BHS, Javier BHS, Cortes RHU, Madrid Dist Hospital, San
Miguel Comm Hospital, Marihatag Dist Hospital, Tagbina RHU, Barcelona BHS, Loreto
Dist. Hospital , Dinagat RHU, Loreto District Hospital, Brgy Sering Birthing Facility, Brgy.
Cabayawan BHS, Brgy Panamaon BHS, Brgy Esperanza BHS, Brgy San Juan BHS,
Brgy Luna BHS, Brgy Matingbe BHS, Brgy Rizal BHS, Brgy Coring BHS, Brgy Cortes
BHS, Brgy Ferdinand BHS, and Opcen Bldg.)
NCR BOQ
CHD-WV
(Calubang BHS, Andulauan BHS, Pinggot BHS, Justice Calixto Zaldivar Memorial
Hospital, Caluya RHU, Villa Igtadiao Nuevo Site 2 BHS, Callan BHS, Tula-tula BHS, Dr. Unimplemented/
Catalino G. Nava Provincial Hospital, Himamaylan CHO, Naasog BHS, Anini-y RHU 431,701,475.91
Not Started
VI (Conversion to Polyclinic), Caluya RHU (Conversion to Polyclinic), Piapi III BHS, Villa
Igtadiao Nuevo Site 2 BHS, Igtadio BHS, Aningalan BHS, Callan BHS, Nagdayao BHS,
Tigbauan RHU, Tubungan RHU, Barotac Nuevo RHU II, Jaro 1B Main Health Center,
Sto. Rosario RHU, Concepcion BHS, Gustilo BHS, Guzman-Jesena BHS, Navais BHS,
South Fundidor BHS, Loboc BHS, Pulupandan RHU and Mambulac BHS)
Implementation of
new projects even if
IX CHD-ZP the previous ones 84,000,813.66
were not yet
completed
TOTAL ₱3,827,811,901.03
164. The reasons/causes of the reported deficiencies were as follows:
a. Projects not executed in accordance with the terms of its contracts –

₱14,824,204.67
Breach of contract as manifested by the difference between the amount per

scope in the Contract of Performance and contractor’s bid with deviation of
58% negative and 139% positive.
b. Prior years’ HFEP Projects still in progress – ₱222,439,809.66
Project accomplishments are way beyond completion due to:
- Suspension of works that resulted in time extensions of 136 to 405

calendar days;
- Delayed initiation of the procurement process and unworkable site
condition due to heavy rains;
- Non-finalization of the Revised Program and Revision of Plan, and the
necessary relocation of the hospital facilities and equipment; and
128
- Delayed initiation of the relocation of project site.
c. Not Completed within Contract Time – ₱2,859,669,667.93
Various HFEP facilities were found not completed within Contract time due to
the following:
- Unavailability of the required equipment;

- Lack of man-power and supply of materials;
- Non-issuance of the Certificate of Completion for the Negotiated Contract
because the installation of the elevator is yet to be done by the Contractor;
- Not yet tested and accepted by the end user;
- Several revisions of the plan due to site condition;
- Constructed last among the various buildings in the same complex
indicative of poor planning;
- Delay in the processing and approval of donated lot;
- Valid Suspension Orders not yet submitted; and
- Procurement under the Design and Build scheme resulted in the Contractor
being given too much discretion on the project. The integration of
specifications and design might be imposed by Management midway
through the contract duration, thus, potentially resulting in unnecessary
delays in the construction.
- Furthermore, there are also infrastructures that were not completed within
the specified contract time and incurring negative slippages based on
contract duration ranging from 10% to 92.34% which already be a ground
for the termination of the contracts, thus, the benefits that can be derived
therefrom by the public were not maximized and objectives of the program
were not attained.
d. Idle/Unutilized/Not fully operational/Not Yet Turned Over- ₱215,175,929.20
Various HFEP facilities were found to be idle/ unutilized/not fully operational

and/or not yet turned over due to the following:
- Unavailability and non-testing of required equipment;

- Facility not accepted by the end user due to absence of Certificates of
Turn-over; and
- Lack of pre-operational requirements which should have been in-place
before procurement or implementation.
e. Unimplemented/Not Started - ₱431,701,475.91
The reasons/causes for the reported deficiencies are as follows:
- delayed downloading of funds;

- locations of sites in geographically hazardous areas;
129
- unstable weather conditions;
- unavailability of the documents to prove ownership of the land;
- no regular coordination with their counterparts in the PS-DBM; and
- several bid failures and delay in the completion/submission of documents.
f. Implementation of new projects even if the previous ones were not yet
completed – ₱84,000,813.66
New projects are implemented notwithstanding the existence of uncompleted

one under similar facility thereby, providing not only on the difficulty of
delineating the scope of works between the old and new ones but also on the
difficulty of determining accountability between the previous and the latest
Contractors.
165. The above deficiencies hindered the attainment of the objective of providing HFEP
projects to the intended recipients in order to improve the delivery of basic, essential, as
well as specialized health services through the rationalization and critical upgrading and
licensing of health facilities nationwide. Thus, parallel revitalization of primary health care
facilities and rationalization of the various levels of hospitals to strengthen their capabilities
and potentials with the end view of improving the accessibility and availability of basic
and essential health care to the public cannot be immediately achieved.
166. We recommended that Management require the Heads of CHDs, TRCs and
Hospitals to direct the:
Procurement Units and Bids and Awards Committees to:
a. review meticulously the bids of the contractors and amounts of awarded

contracts in order to avoid similar occurrence of projects not being
executed in accordance with the terms of its contracts in the future and
discrepancies can be detected early;
b. expedite the procurement process for immediate implementation of the

projects once the Plans/Program of Works are completed and conduct pre-
engineering activities to consider all the necessary requirements of project
implementation such as proper and/or final project site and preparation of
temporary relocation; and
c. disqualify or blacklist the contractors with unsatisfactory performance of

existing and prior projects during the post-qualification stage in the
procurement process; and
DOH HFEP Team of the Central Office CHDs, Hospitals and Bureaus to:
d. explain the noted projects not being executed in accordance with the terms
of its contracts. Otherwise, a Notice of Disallowance shall be prepared to
130
recover the cost of the items not installed/carried out/ not within the scope
of the contract;
e. facilitate the full operation of the newly-built infrastructures and ensure

the immediate installation of needed equipment, electrical power, and
other needed utilities, as well as, ensuring the immediate securing of
Licenses to Operate (LTO);
f. advise the Engineering offices to conduct regular and strict monitoring of

all on-going hospital infrastructure projects during implementation to
ensure that deficiencies are detected early for immediate remediation and
ensure their immediate completion;
g. exert committed efforts, strengthen the monitoring capacities and engage

close coordination among concerned parties – Local Government Units
(LGU), concerned contractors and HFEP personnel to ensure completion
and full utilization of projects;
h. draw/approve specific and immediate plans or measures that will compel

defaulting contractors to fast-track the final completion and turnover of
their projects, and require strict supervision on the implementation
(construction, repair, rehabilitation and expansion) of the project, and
ensure that requests for time extension are approved based on the
requirements of RA No. 9184 and its IRR;
i. impose liquidated damages for the time elapsed in accordance with

Sections 68 and 8.5 of Annex "E" of the Revised IRR of RA No. 9184, and
report the unsatisfactory/poor performance of the Contractor to
concerned authorities for disciplinary measures; and
j. regularly coordinate with their PS-DBM counterparts, if applicable, for

the immediate implementation and completion of projects.
Management Comments
167. Conducted meeting with the concerned Engineers/Architects in charge of the

project to ensure accuracy of the reports and timeliness of the completion of the projects.
Some agencies have hired engineers to supervise and monitor the construction progress of
the infrastructure projects.
168. Management has assigned a focal point/person who will regularly follow up and
coordinate with the PS DBM to fast-track the awarding of the contracts to the winning
bidder.
169. Projects in Region XIII amounting to ₱117,400,503.81 were already completed,

turned over and utilized in 2020.
131
c) Deficiencies on equipment – ₱716.155 million
170. Unutilized/ undelivered/ delivered with delay/ undistributed HFEP

Equipment amounting to ₱716.155 million, thus, exposing these properties to
deterioration, theft, lapse of warranty period/expiry date, wastage of government
funds, and non-attainment of program objectives.
171. Various equipment funded under the HFEP were found to be undelivered
amounting to ₱169,344,632.19, delivered with delay by the suppliers amounting to
₱11,804,000.00, untimely purchase amounting to ₱19,463,549.60, and undistributed to and
unutilized by the intended recipients amounting to ₱16,815,351.86 and ₱498,727,193.89
in CHDs and Hospitals with a total of ₱716,154,727.54, details are shown in Table 37.
Table 37: Summary of Deficiencies on HFEP Equipment
Region CHDs/ Hospitals Amount Causes Management's Comments / Remarks
Undelivered Equipment - P169,344,632.19

VIII CHD 83,918,000.00 -
XII CHD 85,426,632.19 -
Delayed Delivery – P 11,804,000.00
The X-ray machine is now being used after the
Poor pre-procurement planning delayed the
training of employees and immediately after the
delivery and installation of the equipment
issuance of Certificate of Acceptance by the
NCR SLWRH 11,804,000.00 due to unavailability or non-readiness of the
Management in June 2019 and the delay has
space / location in the Hospital where the
been duly compensated with the quality and
equipment will be installed / commissioned
upgraded service to the public.
Untimely Purchase - P19,463,549.60
Management’s Comments (Supply Officer) as
reported to the Auditor are as follows:
• Equipment amounting to ₱6,248,289.60

intended for the TSEKAP school based clinic.
Status of the Equipment: Some of the equipment

were released to the LGU, the exact amount
cannot yet be established by the Audit Group due
Purchase of equipment was push through
to lack of supporting documents. The Audit Team
although the construction of the facility that
XII CHD 19,463,549.60 will confirm the transfer to the LGU after all
will be needing the equipment was not
Property Transfer Receipts (PTR) are submitted.
started.
•Equipment amounting to ₱13,215,260.00
intended for the operation of the Water Testing
Center of DOH Region 12.
Status of the Equipment: The Water Testing

Center Phase 1 is completed. However, the
Phase 2 is yet to be funded/awaiting funding.
Hence, the equipment remained idle.
Undistributed Equipment - P16,815,351.86
Construction of health facilities not yet
I CHD 8,996,661.56
started and in progress
VIII CHD 7,818,690.30 -
Unutilized Equipment - P498,727,193.89
The Management compelled the responsible
Purchased Power Supply Systems unable
officers to submit the required documents to the
NCR NCMH 24,500,000.00 to address the electrical requirements of the
CT Scan Equipment COA Audit Team.
132
Notice of Suspension (NS) no. 2019-004-

101(2018) dated August 27, 2019 amounting to
₱24,500,000.00 was issued.
The submitted documents in compliance to the

NS are for further validation and evaluation by
the Audit Team.
Absence of personnel who are trained to All ten (10) units were already utilized on
NCR DJNRMH 160,678,990.00 operate the machines and handle the January 2020.
intended patients
• Since 2019, it has been the practice of the
Management to direct the HFEP Regional Team
to properly plan, assess and evaluate the
equipment to be procured in terms of availability
of space, facilities and immediate needs of the
recipient hospitals to attain the maximum use of
the HFEP equipment especially when certain
LGUs received a large budget for medical and
hospital equipment with no proposed list
submitted to the Regional Office. HFEP Nurses
assigned to the Provinces were tasked to
validate the proposed list submitted by the LGU,
taking into consideration the infrastructure
requirements as well as the personnel
1. Defective parts;
complement needed to operate the requested
2. Unavailable facilities for its installation;
equipment.
3. Damaged beyond repair;
• The supplier provided the end-user the
4. Stored for later utilization;
Warranty Certificate as stipulated in the
5. Measurements do not correspond with
Purchase Order. The End-user or Supply Officer
the Manual;
or even the HFEP Nurses of the health facility
VI CHD 100,914,917.89 6. BHS/RHUs were under renovation and
takes charge of contacting the Supplier for any
not ready for installation of the equipment;
repairs needed within or after the warranty
7. Equipment still for demonstration;
period.
8. Equipment for delivery by the supplier;
• The monitoring of HFEP equipment is ongoing;
and
HFEP Nurses are tasked to monitor the status of
9. Lack of personnel to operate the
equipment donated by DOH in terms of their
equipment.
functionality and utilization. The Regional
Director is given authority to transfer unutilized
equipment to other health facilities that is in need
of them after consultation and concurrence of the
end-user or LGU.
• It is an ongoing practice by this office not to
allow extension of the delivery period except for
reasons of Force Majeure or other unavoidable
circumstances like the present pandemic.
Liquidated Damages are also being imposed on
those with late deliveries. Equipment not
compliant to the technical specifications upon
delivery is not accepted by both the end-user and
the Inspector assigned.
WVMC just received 1 unit of X-ray Villa Sistemi
Apollo EZ-RF from DOH CO in November 2015.
However, the X-ray machine has 440 voltage
which is not compatible with the electrical power
system of WVMC. For the machine to operate, it
needs a step up transformer. Each year, since
Low supply of electricity in the Hospital
2015, the X-ray Unit requests for purchase of the
VI WVMC 9,810,000.00 which was not sufficient for operation of the
transformer but no supplier submits its intention
PPE.
to quote because the transformer is not readily
available in the market. With this, Management
upon recommendation of its Engineering Unit,
will try to look for suppliers who are capable to
make a customized transformer and UPS for the
X-ray Machine.
133
It was only in the year 2017 and 2018 that the

budget for the installation of electrical power
supply was approved, hence, funding was
allotted only at a latter period than the validity of
the SAA budget for the procurement of the
Modular Bank Expandable Type Medical Oxygen
Generator Type which is only for obligation until
December 29, 2015.
There was an allocation of P65 million for the
year 2017 for electrical power supply Phase I
implementation and P50 million for the year
2018, for Phase II respectively. Phase I was
completed on September 22, 2019 but testing
Problem on lack of power supply which has
VII VSMMC 120,000,000.00 and commissioning was conducted last August
not been resolved.
16, 2018 to ensure that the design capacity of the
oxygen plant was fully met including the
parameters, such as: (1) Oxygen Concentration;
(2) Temperature; (3) Product Delivery Pressure;
and (4) Design Production Capacity.
The Certificate of Completion dated August 18,
2018 was issued evidencing the conduct of the
testing analysis by the Engineering Department
and duly confirmed by the contractor.
The Management provided the status of the

equipment on June 5, 2020 that it is already
operational.
The status of the CY 2016-2019 HFEP
equipment as of May 5, 2020 are as follows:
• 5 units of various equipment were used since
2016, 2018 and 2019;
• 6 units laboratory equipment were intended for
the expansion and the planned upgrading to a
category III laboratory, however, due to some
unforeseen circumstances, the area for the
expansion was converted to be used for the CT
scan equipment.
• 65 units of various equipment are intended to
The transformer needs to be upgraded;
be set-up and used in the new building of which
VII SAMCH 69,953,286.00 Waiting for the scheduled tapping by the
the construction was completed last December
Visayan Electric Company (VECO).
2019.
The new building and the hospital equipment can

only be functional and utilized once the tapping
of the new electrical wiring to the new sets of
transformers had been done to prevent
overloading of the current electrical capacity.
All equipment are already functional this CY 2020

as commented by the Management during the
CAAR Exit Conference.
Management committed strict adherence to the
audit recommendations to ensure that the
equipment and machines will be utilized starting
Power supply requirements that the CY 2020.
XIII CRH 12,870,000.00
hospital is unable to provide.
Management commented during the CAAR Exit
Conference that the equipment is operational as
of June 2020.
Grand Total 716,154,727.54
172. The occurrence of undelivered/delayed delivery, untimely purchase, undistributed

and unutilized medical equipment displayed the poor strategic planning and inadequate
monitoring by the agencies and against the policy of the State that all resources shall be
134
used appropriately. Further, the prolonged idleness of these equipment entail risk of
diminishing value and effectiveness due to deterioration. In effect, the main goal of Health
Facilities Enhancement Program to improve the delivery of basic, essential, as well as
specialized health services through the revitalization, rationalization, and upgrading of
health facilities was not attained.
a. require the HFEP Team to properly plan, assess and evaluate the
equipment to be procured in terms of availability of space, facilities and
immediate needs of the recipient hospitals to attain the maximum use of
the HFEP equipment;
b. coordinate with the property units of the LGU hospital to report

immediately the defective equipment so as to facilitate the availment of
warranties;
c. require the suppliers to deliver in accordance with the terms and

specifications to avoid delays in the acceptance; and
d. ensure readiness of the recipient facilities in receiving the equipment (i.e.

enough power supply, availability of the space/location, availability and
trainings of necessary personnel, and availability of turn-over documents)
during the procurement and before implementation.
Idle/Unutilized Medical Equipment (Funds other than HFEP) – ₱663.787 million
174. Medical Equipment amounting to ₱663.787 million remained idle and

unutilized due to: (a) non-availability/non-completion of facilities for its
installation/use; (b) lack of trained personnel to operate the same; (c) incompatibility
with reagents; and (d) absence of turnover documents from the DOH Central Office.
175. Ocular inspection revealed that the following list of medical equipment aggregately
amounting to ₱663,787,086.90 were found to be unutilized which resulted in the
inefficiency and uneconomical procurement of the equipment/machines in contributing
quality health care service and revenues that could have been derived from them.
Table 38: Summary list of Idle/Unutilized Medical Equipment
CHDs/ Hospitals/ Amount Involved

Region Causes Management Comment
TRCs/Bureaus (in Php)
NCR JRRMMC Unavailability of complete and ready The dialysis equipment is now being used in GGHS as license to operate 13,046,599.90
space for dialysis area and lack was granted last March 2020 while the ultrasound was transferred to
and/or delayed training of JRRMMC as compliance to the recommendation of COA so as not to let it
idle in GGHS.
135
CHDs/ Hospitals/ Amount Involved
Region Causes Management Comment
TRCs/Bureaus (in Php)
technician/personnel to operate the

equipment.
CAR LHMRH Incompatibility of procured reagents One of the machines is under repair while the other two machine requires 6,362,500.00
and the Hospital Management’s costly maintenance due to frequent repairs. Moreover, they are having
decision of using laboratory difficulty in reaching for the supplier since the guaranty period has expired.
equipment provided by the supplier of Considering the efficiency of the two machines as to its maintenance cost, the
the reagents. management resorted to other method wherein the Lowest Calculated and
Responsive Bidder for the reagent will provide the machine including its
maintenance.
VI TRC Pototan Absence of available room suitable The infrastructure project was not started earlier as planned because of 2,500,000.00
for the machine and necessary problems regarding lot donation. The Radiologist Technician was instructed
accessories, as well as radiation to prepare a request for the necessary accessories and additional
protection equipment, for its effective paraphernalia needed for the operation of the said equipment.
and efficient operation. Delayed
completion of the infrastructure
project where the medical equipment
will be placed.
VIII EVRMC Pending completion of the building The infrastructure project is 80% completed and the contractor stopped 181,738,888.00
where these are to be installed and working on the project in 2018. The contractor, JD Legaspi, that they intend to
prior to the conduct of training for the finish the project and vowed to send engineers as soon as possible. As of this
Cardiologists which caused the non- time, their people are still awaiting for the RT PCR results, a requirement for
installation of the state-of-the-art them to travel to Tacloban and resume work.
medical equipment.
All the trainings related to the equipment have been conducted. Personnel
have also completed their training at the Philippine Heart Center and other
higher institutions. When the building is completed, the cathlab will already
undergo accreditation procedures.
XII CRMC Premature purchase as the Equipment Engineer of CRMC justified that most of the major equipment that 298,863,679.00
infrastructure project where it will be were installed were on the last phase of its testing and commissioning.
used was being suspended. Moreover, the Head of Procurement Office justified that even though, they had
purchased the mobile equipment based on the request of the end user in
advance, it would not waste the government funds because the equipment
supplier have signed an affidavit of undertakings which states that the warranty
of the equipment will commence upon the actual use.
XIII CRH No available space suited for its Management committed strict adherence to the audit recommendations to 161,275,420.00
installation considering that the said ensure that the equipment and machines will be utilized starting CY 2020.
office has no permanent location yet;
lack of trained personnel to operate
the same; an existing service
concession agreement by the
hospital with a private dialysis center;
and lack of turn-over documents from
the DOH Central Office.
TOTAL 663,787,086.90
a. evaluate and assess the actual conditions of the unutilized equipment and
make a report thereon to include detailed plans on how and when the said
equipment will be utilized with a timeline on the completion of the facilities
where it will be installed (a copy submitted to the Auditor’s Office);
136
b. exhaust all possible means, including the conduct of cost benefit analysis to
determine whether or not to pursue the procurement of reagents
compatible with the laboratory equipment, to ensure that utilization of
equipment is maximized, to prevent wear and tear due to exposure to
elements or through obsolescence or non-use, and for equipment found to
be defective/non-working due to its non-utilization, to report promptly to
the supplier to facilitate availing of warranties; and
c. establish coordination with the DOH Central Office (for medical

equipment transferred to hospitals/CHDs) to address all issues to make the
machine operational such as: availability and trainings of necessary
personnel, and availability of turn-over documents.
Delayed Completion of Infrastructure Projects (Funds other than HFEP) – ₱571.190

million
177. Delayed completion of infrastructure projects amounting to ₱571.190 million

due to: (a) inadequate planning and monitoring; and (b) issuance of various
change/extra work orders and time extensions, thus, depriving the public of the
intended social and economic benefits that these projects could have provided had
these projects been timely completed.
178. The contracts entered into between the hospitals and various contractors
specifically state that it may be terminated for any of the causes, including among others:
(i) non-completion of the work within the time agreed upon, or upon the expiration of
extension agreed upon; (ii) violation by the Contractors of the terms and conditions of the
contract; (iii) institution of insolvency or receivership proceedings involving Contractor;
and (iv) other causes provided by law applicable to the contracts.
179. Several infrastructure projects with an aggregate contract price amounting to

₱571,189,557.49 were not completed within the specific contract time or required
completion date, the details of which were as follows:
Table 39: Summary list of Delayed Infrastructure Projects (by region)
Contract Amount (in

Region Hospitals Project Cause of Delay Management Comment
Php)
5 BRGHGMC Various Inadequate planning and 205,060,820.94 Management was amenable to the
monitoring. Variation orders, work foregoing audit observations and
suspensions, and time extensions promised to implement the
granted near the end of contract recommended courses of action in
expiry dates, for periods double the the ensuing year 2020 (see written
original contract time, and for comment dated August 10, 2020
reasons/circumstances contrary to hereto attached as Annex G)
related laws.
6 WVMC Various 17,404,432.55 All of the projects referred to in this
audit findings were budgeted in 2017
and 2018. These projects were
completed already. To prevent
delays in the implementation of
Infrastructure Projects, the
management of WVMC has hired
137
Contract Amount (in
Region Hospitals Project Cause of Delay Management Comment
Php)
two civil engineers to act as the
Project Managers of a specific
infrastructure projects. They are
tasked to supervise and monitor the
construction progress of the infra
projects. With this, management
hopes that delays in the project
implementation will be avoided.
12 CRMC Design & Build 348,724,304.00

Infrastructure of
Cotabato Regional &
Medical Center Hospital
Modernization
(CRMCHM) Phase 1
Total 571,189,557.49
180. We recommended that Management require the Heads of the Hospitals to:
a. direct the Head, Civil Works Section to intensify monitoring of the

progress of the project and closely coordinate with the
contractors/suppliers to make sure that the project/s should be 100%
accomplished on the date stated in the Contract and/or Approved Catch
Up Plan/Program pursuant to item e, Section 3 of RA 9184 which states
that public monitoring of the procurement process and the implementation
of awarded contracts with the end in view of guaranteeing that these
contracts are awarded pursuant to the provisions of the Act and this IRR,
and that all these contracts are performed strictly according to
specifications; and
b. strictly observe adequate planning including preliminary design and

construction studies, approval of the detailed engineering design and the
details of the construction methods and procedures considering the current
technological advancements to avoid additional costs, negative slippages
and delay in its implementation in accordance with Section 7- Preliminary
Design and Construction Studies and 8 - Detailed Engineering Requirements,
Annex G of RA 9184.
Low utilization and unauthorized use of hospital income
181. Utilization of the 25 percent allowed limit use of hospital income amounting to
₱504.877 million of the nine DOH Hospitals and TRCs for the procurement of
equipment and upgrading of hospital facilities had not been maximized, with only
21.34 percent or ₱107.764 million utilized. Moreover, charges of ₱0.170 million
against their income in one (1) hospital was not within the prescribed usages and
authority under the DOH-DOF-DBM Circular No. 2003-1.
138
182. Section 3.5 of DOH-DOF-DBM Circular No. 2003-1 and as provided in Section 2,
Chapter XIII of the Special Provisions of RA 11260 or GAA for FY 2019, the use of
hospital income, generated from the operation of specialized hospitals, medical centers,
institute for disease prevention and control, including drug abuse treatment and
rehabilitation centers and facilities, blood service facilities (blood stations, blood collection
units, blood banks), national reference laboratories and other hospitals under DOH, is
authorized to augment the requirement of the hospitals for maintenance and other operating
expenditures, including repair and maintenance of existing hospital facilities provided that
at least twenty-five percent (25%) of said income shall be used to purchase and upgrade
hospital equipment used directly in the delivery of health services and that is shall not be
used for salaries and other allowances and benefits whether in cash or in kind.
183. It was noted that in nine (9) hospitals, the utilization of their income of ₱504.877
million was not maximized, with only approximately 21.34 percent or ₱107.764 million
utilized for the procurement of hospital equipment and upgrading of existing facilities,
leaving an unutilized balance of ₱397.112 million. Details are shown in Table 40.
Table 40: Summary of hospitals with low income utilization (in million ₱)
Income with Utilized Unutilized

Regi Hospital Income
Agency Authority to Use Amount % Amount %
on
(a) (a) x 25% (b) b/a a-b = c c/a
Unutilized Income (with authority to use)
NCR JRRMMC ₱754,863,644.84 ₱188,715,911.21 ₱24,371,313.55 12.91% ₱164,344,597.66 87.09%
CAR CDH 15,747,144.85 3,936,786.21 0.00 0.00% 3,936,786.21 100.00%
VI WVS 172,500,000.00 47,809,644.84 45,050.82 0.09% 47,764,594.02 99.91%
WVMC 254,997,080.91 63,749,270.23 51,112,646.20 80.18% 12,636,624.03 19.82%
DJSMMC 92,181,517.24 23,045,379.31 3,352,211.49 14.55% 19,693,167.82 85.45%
TRC-Pototan 3,814,424.00 953,606.00 497,550.00 52.18% 456,056.00 47.82%
X NMMC 527,854,340.43 131,963,585.10 23,749,037.95 18.00% 108,214,547.15 82.00%
XIII ASTMMC 177,634,780.80 44,408,695.20 4,493,705.50 10.12% 39,914,989.70 89.88%
TRC-Surigao 1,000,000.00 294,000.00 142,957.20 48.62% 151,042.80 51.38%
City
Total ₱2,000,592,933.07 ₱504,876,878.10 ₱107,764,472.71 21.34% ₱397,112,405.39 78.66%
184. Moreover, expenditures of ₱0.107 million incurred in the construction of Fr. Milan
statue, which were charged against income, in IVB-CSGH did not conform to prescribed
usage and rules authorized under the DOH-DOF-DBM Circular No. 2003-1. The audit
team of CSGH considered said disbursement as irregular considering that the nature of
expense was made more of as a tribute for the service of Fr. Milan to Culion and as part of
the preservation of leprosy history and heritage of CSGH, which is not directly related in
the delivery of health service.
185. We recommended and Management agreed to require the concerned Chiefs of

Hospitals and TRCs to:
a. plan carefully and maximize the utilization of hospital income to ensure

that acquisition of much needed hospital equipment, including
139
medical/dental/laboratory equipment, and upgrading of existing hospital
facilities, are prioritized; and
b. refrain from using hospital income for unauthorized or irregular

expenditures to prevent suspensions or disallowances in audit.
Ineffective implementation of iHOMIS - ₱89.115 million
186. The lower rate of 27% in the installation and utilization of the developed and
accepted iHOMIS of the DOH resulted in the incurrence of additional expenditures
of ₱89.115 million on the employment of vendor-supplied Electronic Medical Records
(EMR) systems, due to the absence of policy mandatorily enforcing the application of
the iHOMIS to all government hospitals.
187. The Department of Health (DOH) holds the over-all authority on health as the
national health policy-maker and the health regulatory institution. It has three (3) major
roles in the health sector namely: leadership in health; enabler and capacity builder; and
administrator of specific services. Its mandate is to develop national plans, technical
standards, and guidelines on health. It is also a regulator of all health services and products.
It is also the provider of special tertiary health care services and technical assistance to
health providers and stakeholders.1
188. Among the programs implemented by the DOH to carry out its mandate is the
Integrated Hospital Operations and Management Information System (iHOMIS). It is an
electronic medical records and hospital information system that satisfies Philippine Health
Insurance requirements for electronic claims and DOH reporting necessities. 2 It automates
the operation of a government hospital. It reinforces standard operating procedures to
systematically collect, process, generate and share data/information to facilitate and
improve patient delivery services. The iHOMIS is comprised of the following modules: (1)
Admitting, Emergency Room, Outpatient, Billing, Cashier, PhilHealth, Medical Records,
Medical Social Service; (2) Wards, Laboratory, Pharmacy, Radiology, Revenue Centers,
Dietary and Other Ancillaries; and (3) Personnel Information System, Integrated Logistics
Management System, Financial Management, Health Care Equipment System.
189. The vision of the DOH through its Knowledge Management and Information
Technology Services (KMITS), is to have Information and Communications Technology
(ICT) supporting the Universal Health Care (UHC) to improve healthcare access, quality,
efficiency, and patient safety and satisfaction, to reduce cost and enable policy maker
providers, individuals and communities to make the best possible health decisions. Its
mission is to effectively use ICT to improve health care delivery, administration and
management, and in communicating health.
1
Page 4 of 365, DOH Information Systems Strategic Plan (DOHISSP), 2018 – 2020.
2
3rd Whereas Clause, proforma Memorandum of Agreement (MOA) on the Implementation of the
Integrated Hospital Operations and Management Information System (iHOMIS) between hospitals and the
Department of Health (DOH).
140
190. In the realization of the DOH’s vision/mission, it implemented the iHOMIS in
various government hospitals across the country through Health Facilities Development
Bureau (HFDB) and KMITS. The HFDB developed the standards and provide technical
assistance to ensure compliance to the standards while the KMITS translated the standards
into electronic system. In the Memorandum of Agreement (MOA) between the hospitals
and the DOH for the implementation of iHOMIS, the installation of the iHOMIS includes
the training and technical support if needed subject to compliance to standards of the HFDB
for hospital operations, acceptability of ICT infrastructure in place and commitment for
hospital management and operation support including availability of at least two (2)
iHOMIS systems administrators.
191. In the iHOMIS implementation, the following were observed:
a. 526 out of 721 government hospitals across the country did not implement
iHOMIS.
192. As of February 12, 2020, the data submitted by KMITS showed only 27 percent or
an aggregate total of 195 out of 721 government hospitals across the country, comprising
of 43 out of 70 DOH hospitals and 152 out of 651 other public hospitals, have installed and
are currently using the iHOMIS software being provided for free to all interested public
hospitals. The breakdown is shown in Table 41.
Table 41: Public Hospitals per Region installed with iHOMIS

DOH Other Public
Regions Total
Hospitals Hospitals
NATIONAL CAPITAL REGION (NCR) 8 9 17
BANGSAMORO AUTONOMOUS REGION IN MUSLIM
MINDANAO (BARMM) - 6 6
CORDILLERA ADMINISTRATIVE REGION (CAR) 4 8 12
REGION I (ILOCOS REGION) 2 4 6
REGION II (CAGAYAN REGION) 2 1 3
REGION III (CENTRAL LUZON) 1 18 19
REGION IVA (CALABARZON) 1 16 17
REGION IVB (MIMAROPA) 2 11 13
REGION IX (ZAMBOANGA PENINSULA) 6 2 8
REGION V (BICOL) 3 12 15
REGION VI (WESTERN VISAYAS) 3 15 18
REGION VII (CENTRAL VISAYAS) 4 20 24
REGION VIII (EASTERN VISAYAS) 1 2 3
REGION X (NORTHERN MINDANAO) 2 9 11
REGION XI (SOUTHERN MINDANAO) - 2 2
REGION XII (SOCCSKSARGEN) 2 13 15
REGION XIII (CARAGA) 2 4 6
Total 43 152 195
193. The remaining 526 public hospitals which are not currently using the iHOMIS are
either using only the iHOMIS Billing System (HBSys) and/or other vendor-supplied
Electronic Medical Records (EMR) systems or are not using a health information system
at all. The HBSys is an integration to the iHOMIS of the requirements of the PhilHealth to
submit data needed for membership verification and claims processing. It is independently
provided to facilitate implementation of eClaims. On the other hand, vendor-supplied
EMR systems are those which are provided by private health information system providers
other than the DOH such as BizBox Inc. and Medix.
141
194. However, resorting to vendor supplied EMR systems has its own disadvantages
such as the exclusion of: (a) integrated HBSys of the iHOMIS featuring the PhilHealth
membership verification and claims processing; and (b) linkage that integrates iHOMIS
and the Electronic New Government Accounting System (eNGAS).
b. Absence of policy to mandatorily direct installation or usage of the iHOMIS.
195. The DOH has yet to issue an updated policy issuance/directive on the
installation/use of the iHOMIS. The latest issuance of the DOH on the matter was
Administrative Order (AO) No. 44-A s. 1999 dated 18 October 1999 prescribing the
Guidelines for the implementation of the INTEGRATED HOSPITAL OPERATIONS AND
MANAGEMENT PROGRAM (IHOMP) within the Philippine Hospital System, the purpose
of which is to institutionalize the Integrated Hospital Operations and Management Program
(IHOMP)3 within the hospitals. Said AO specified among others, the following objectives:
(1) to implement the IHOMP preferably within a computer-based environment; (2) to
standardize the flow of information within and among hospitals; and (3) to fully utilize
hospital data/information for evidence-based decision making.
196. Remarkably, after nearly two decades since the issuance of AO No. 44 s. 1999, the
DOH has yet to fully implement the institutionalization of the IHOMP within the hospitals
in the Philippines. In fact, the hospitals had been given the discretion whether to use the
iHOMIS developed by the DOH or to procure and use other vendor-supplied EMRs. This
practice was tolerated due to the lack of policy mandating hospitals to install and use the
iHOMIS and prohibiting them to use other vendor-supplied EMRs which perform the same
functions and features with the iHOMIS. The DOH, being the agency which holds the over-
all authority on health as the national health policy-maker and the health regulatory
institution, has the authority and should have mandate the installation and use of the
iHOMIS in all public hospitals in the entire Philippines.
c. Incurrence of ₱89.115 million in resorting to vendor-supplied EMRs instead of

free iHOMIS.
197. As a consequence of the DOH’s absence of policy mandatorily enforcing the

implementation of the iHOMIS throughout the country’s government hospitals, it has
caused the government the incurrence of expenditures with an aggregate amount of
₱89,114,930.14 as shown in Table 42. The amount pertains to purchasing, installing and
using other vendor-supplied EMRs by 15 DOH hospitals which may instead be used for
other projects had they opted to install the iHOMIS which was developed and being
provided free by the DOH.
3
IHOMP is a program that upgrades routine data collection in a computerized environment that ensures the
implementation of hospital standards, systems and procedures of hospital operations for continuing quality
system improvement and patient safety.
142
Table 42: Details of hospitals’ expenditures on the purchase, installation and use of other vendor supplied EMRs/HIS
Region Hospitals Name of EMRs (Electronic Medical Records/HIS (Hospital Information Systems) Amount
BIZBOX Hospital System-Current version 8.26.12.30 0.00

ARMMC Enhancement BIZBOX Hospital System 11,803,350.00
Web-based Software and Hardware Human Resource Information System (HRIS) 4,800,000.00
DJNRMH MEDIX 19,908,200.00
EAMC Bizbox Hospital Information System 2,888,460.00
Hospital Information Management System 475,000.00
POC Hospital PhilHealth eClaims System including Claims Transmission Cost with 24/7 Technical 575,000.00
NCR Support, Software Maintenance and User Training for Unlimited number of Users.
Laboratory Information System (LIS) 3,738,985.00
QMMC Radiological Information System (RIS) 3,890,000.00
Human Resource Information System (HRIS) 4,114,381.50
RMC Bizbox Hospital Information System 679,907.14
Payroll/Attendance Management System
688,800.00
purchased in CY 2017
SLRWH Queuing System purchased in CY 2018 355,200.00
Radiology Information System specifically supply and installation of picture archiving and 2,699,998.00
communication system obligated in CY 2019
I ITRMC Biomedical Database System 440,000.00
II SIMC Bizbox Hospital Information System 8,000,000.00
III Dr. Bizbox Hospital Information System 1,964,709.50
PJGMRMC
VI WVMC Human Resources Information System (HRIS) 4,995,000.00
IX ZCMC Bizbox Hospital Information System 5,738,389.00
X APMC Hospital Information System from Segworks Technologies Corporation 5,829,450.00
XI DRMC Bizbox Hospital Information System 3,280,100.00
XIII CRH Bizbox Hospital Information System 2,250,000.00
Total ₱89,114,930.14
d. Uninstalled Financial Management System included in the vendor-supplied

EMR contract
198. In Davao Regional Medical Center (DRMC), the Financial Management System
(FMS) which was supposedly included in the contract with Bizbox was not installed due
to incompatibility of the Bizbox system to e-NGAS. Despite the existence of e-NGAS and
availability of FMS in the iHOMIS, the DRMC still included the installation of FMS in the
Contract Agreement with Bizbox, but ended up unutilized resulting in wastage of
government resources. The FMS was then disregarded in the contract implementation
without terminating that part of the contract and without any written amendment thereto.
199. Clearly, the lack of an updated policy on iHOMIS and the seemingly current
practice of the DOH of allowing the hospitals to use and install other vendor-supplied
EMRs instead of the iHOMIS are not only repugnant to DOH’s objective which is to
standardize the flow of information within and among hospitals but also resulted in an
additional unnecessary expenditures on the part of the government and deprives the public
to fully attain the potential benefits from the program such as the submission of timely,
complete and relevant reports, improvement of hospital performance through sound and
efficient clinical care and management systems, and to enhance the preventive and
143
promotive role of hospital through the improvement of management systems and
procedures within the hospital.
200. Also, allowing the use of other vendor-supplied EMRs performing the same
functions with the iHOMIS resulted in duplication of information systems, increase cost in
developing, implementing and maintaining the systems, difficulty in systems integration,
sustainability and maintenance, and runs counter to the one of the guiding principles in the
development of Philippines eHealth Strategic Framework under the Philippine eHealth
Strategic Framework and Plan 2014 – 2020 (PeHSFP 2014-2020) of the DOH, which is to
optimize the use of resources so as not to duplicate time, effort and investments.
201. We recommended and Management of the DOH Central Office and

CHDs/TRCs/Hospitals/Bureaus agreed to require the:
Health Facility Development Bureau (HFDB) and Knowledge Management

and Information Technology Services (KMITS) to:
a. formulate and implement a policy that (i) requires the installation and use
of the iHOMIS in all government hospitals nationwide; (ii) prohibits the use
of other vendor-supplied EMRs which perform the same functions and
features with the iHOMIS; (iii) will provide assistance to hospitals
especially those in remote areas in the installation and use of the iHOMIS;
and (iv) will fast track the improvement/upgrading of the iHOMIS to keep
up with the latest trends in technology and to be flexible/adaptable to
different needs of various hospitals and the DOH as a whole.
Concerned 15 Hospitals which availed the vendor-supplied EMRs to:
b. provide justification on the necessity to procure hospital information system

from outside supplier instead of availing the free program/application of
the DOH iHOMIS;
c. plan judiciously and meticulously the procurement of information system

to avoid replication and proliferation of disparate systems and/or non-
integration of reporting system to DOH;
d. use the e-NGAS and e-Budget provided by the DOH as well as the other
features of iHOMIS to ensure speedy processing and recording of
voluminous government transactions and compliance with regulatory
requirements, and generate prompt and accurate outputs/reports; and
Davao Regional Medical Center (DRMC) to:
e. justify the delayed completion of hospital information system purchased

from Bizbox and impose liquidated damages from the time delay was
incurred.
144
Compliance Audit
Expenditures incurred not in accordance with prescribed rules and regulations
202. Disbursements of ₱360.002 million in 23 CHD Offices, Hospitals and TRCs

did not comply with established rules, procedural guidelines, policies, principles or
practices, resulting in the incurrence of irregular, unnecessary, excessive and
extravagant expenditures.
203. COA Circular No. 2012-003 dated October 29, 2012 provides the guidelines for the
prevention and disallowance of irregular, unnecessary, excessive, extravagant and
unconscionable (IUEEU) expenditures.
204. In CY 2019, payment of the IUEEU expenditures of ₱360,002,390.45 was made in

twenty-three (23) CHD Offices, Hospitals and TRCs, with details shown in below:
Figure 1: Summary of IUEEU Expenditures Incurred

(In Millions of Philippine Pesos and Percentages)
P1.799 (0.500%)
Extravagant
P1.221 (0.339%)
Excessive
P309.521 (85.978%)
Unnecessary
P47.460 (13.183%)
Irregular
- 50.0000 100.0000 150.0000 200.0000 250.0000 300.0000 350.0000
205. The transactions did not conform to applicable laws, rules and regulations, thereby,
affecting their legality, validity and propriety. It likewise exposed government funds and
property to possible loss or misuse.
206. We recommended that Management require the heads of the concerned

CHDs, Hospitals and TRCs to conform to established rules, regulations, procedural
guidelines, policies, principles or practices and avoid IUEEU expenditures to prevent
disallowance in audit.
207. We further recommended that Management require its Internal Audit Service
to fully comply with the provisions of AO Nos. 278 and 70, DBM Circular Letter Nos.
2008-5 and 2008-8, and other applicable rules in relation to the performance of IAS
145
in the DOH and strengthen internal controls, specifically on the disbursement of
public funds, department-wide.
Non-compliance with procurement laws, rules and regulations
208. Non-compliance of 56 out of 86 DOH Offices, CHDs, TRCs, Hospitals and

Bureaus with certain provisions of RA 9184 and its Revised IRR in the procurement
of goods, services, and infrastructure projects amounting to ₱2,063,493,436.10.
209. RA 9184, its RIRR and related issuances apply to the procurement of infrastructure
projects, goods and consulting services, regardless of source of funds, whether local of
foreign, by all branches and instrumentalities of government, its departments, offices and
agencies, including government-owned and/or-controlled corporations and local
government units.
210. The Supreme Court in the case of Philippine Sports Commission, et al. v. Dear
John Services, Inc., G.R. No. 183260 dated 04 July 2012, held that the law on public
bidding is not an empty formality. A strict adherence to the principles, rules and regulations
on public bidding must be sustained if only to preserve the integrity and the faith of the
general public on the procedure.
211. In the procurements of goods, consultancy services, and infrastructure projects by

the following DOH Offices, CHDs, TRCs and Hospitals totaling ₱2,063,493,436.10, the
provisions of RA 9184, its RIRR and related issuances were not strictly complied with.
Specific deficiencies with corresponding amounts are shown as follows:
Table 43: Summary of Deficiencies in Procurement Activities

Offices/
Deficiency Region CHDs/TRCs/ Amount Percentage
Hospitals/Bureaus
Different standards used in Infrastructure Project V BRTTH 316,998,034.99 15.362%
Failure to provide a detailed description and scope of the contract NCR CO 217,504,574.59 10.541%
Procurement thru Lot Bid without indicated line item prices VI WVMC 196,335,000.00 9.515%
Discrepancies between the data provided in the APP and the PPMPs NCR FDA 194,009,429.04 9.402%
Reasonableness of ABC of the project. I MMMHMC 155,900,000.00 7.555%
Higher computation of ABC
NTP issued beyond the prescribed period
Statement of all ongoing government and private contracts lacking some required XI SPMC 143,791,036.05 6.968%
information
Awarded contract not duly supported with documentary requirements
Issuance of NOAs despite absence of CAF II CVMC 116,886,656.54 5.665%
Erroneous classification of procurement
76,240,500.00 3.695%
Unspecified Project Site and Location VI CLMMRH
Construction took place despite failure to enter into a contract due to cancellation
75,440,000.00 3.656%
of procurement
Major defects in completed project CAR BGHMC 74,179,342.11 3.595%
Inadequate scope of work
Validity and regularity of Change Order cannot be established due to incomplete NCR NCMH 60,415,183.22 2.928%
supporting documents
Emergency purchases due to inadequacies in procurement planning 56,455,495.20 2.736%
I MMMHMC
Criteria for evaluation of bid not followed
40,537,200.00 1.964%
Post-qualification process not strictly observed
Misclassification in Mixed Procurement V BMC 35,849,768.18 1.737%
Unimplemented Program NCR NCMH 30,407,706.25 1.474%
Late awarding of contract I R1MC 29,380,000.00 1.424%
146
Offices/
Deficiency Region CHDs/TRCs/ Amount Percentage
Hospitals/Bureaus
Premature and Unauthorized Substitution of Retention Money with Surety Bond V BMC 29,295,040.62 1.420%
Lapses in Bid Evaluation and Post-Qualification
Lapses in the advertisement and posting requirement
NCR CO 22,572,346.00 1.094%
Lapses in the receipt and opening of bids
Non-preparation of Minutes of Meeting
Cumulative Positive Variation Order beyond 10 percent NCR SLH 21,360,283.53 1.035%
Award of contract to non-compliant bidders IV-A BatMC 17,570,170.50 0.851%
Unserved Purchase Orders II CVMC 15,592,874.93 0.756%
Contract Agreement not dated
II DATRC Ilagan City 14,953,979.13 0.725%
Non-conformity with the specifications under the contract
Overpayment of Retention Money V CSTRC 13,043,556.52 0.632%
Irregularity in the issuance of Certificate of Completion and Acceptance X CHDNM 12,939,974.82 0.627%
Expiration of Warranty Securities before end of defects liability period VIII CHD 11,866,554.77 0.575%
Bidder's capability to deliver not verified
Delay in the issuance of NTP
I MMMHMC 11,488,000.00 0.557%
Expired Validity Period of Performance Security
Incomplete Re-bidding process
ITB not advertised in a newspaper of general circulation
Simulated canvassing for Small Value Procurement (SVP) I R1MC 11,373,922.00 0.551%
Irregularity in advance payment IV-B CSGH 10,200,000.00 0.494%
Guidelines on Ordering Agreements not fully observed I R1MC 10,054,734.50 0.487%
Deficient Surety Bond VIII CHD 6,156,289.89 0.298%
Delayed execution of contract NCR RITM 5,214,701.54 0.253%
Failure to terminate contract NCR RITM 4,780,848.99 0.232%
Emergency purchases through cash advances III BGHMC 3,960,000.00 0.192%
Lapses in Project Evaluation II DATRC Ilagan City 3,195,657.08 0.155%
Non-updating of PPMP VII GCGMH 2,804,819.67 0.136%
Lapses in evaluation and post-qualification of bids II CVCHD 2,752,583.58 0.133%
Non-observance of post-qualification procedures and pass and fail criteria in bid
NCR JRRMMC 2,606,000.00 0.126%
evaluation
Procurement of common-use supplies from different suppliers I DTRC Dagupan 2,153,826.00 0.104%
Non-compliance with the conditions for alternative mode of procurement
NCR JRRMMC 2,150,850.00 0.104%
Premature release of Guaranty deposit
Splitting of Contract VII TRC Cebu City 1,727,245.00 0.084%
Contractors' non-compliance to terms and conditions of the contract X CHDNM 942,007.28 0.046%
Absence of Certificate of Availability of Funds IV-B ONP 938,837.81 0.045%
Disbursement not included in the APP and without bidding VII TRC Argao 590,400.00 0.029%
Awarded contract cost higher than ABC X NMMC 479,088.72 0.023%
Awarded contract not duly supported with documentary requirements NCR JRRMMC 246,240.00 0.012%
Items purchased beyond the contract price II CVMC 140,958.30 0.007%
Award to a blacklisted supplier I MMMHMC 11,718.75 0.001%
Total 2,063,493,436.10 100.000%
212. The following deficiencies were also noted but corresponding amounts were not
disclosed:
a. Deficiencies in the posting of bidding documents;

b. Delayed completion of projects, delivery of goods and issuance of POs;
c. Erroneous mode of procurement;
d. Failure to adopt the use of Framework Agreement, notify bidders and suspend
or terminate contract;
e. Inadequate Procurement Planning;
f. Irregularity on Contract effectivity;
g. Lapses in Small Value Procurement;
h. Liquidated Damages not properly imposed;
i. Long Overdue Infrastructure Projects;
j. Material delay and Other Deficiencies in Infrastructure Projects;
147
k. Non-establishment of CPES;
l. Non-forfeiture of Performance Securities;
m. Non-imposition of liquidated damages;
n. Non-issuance of Certificates of Final Acceptance;
o. PhilGEPS posting requirement not followed;
p. Posting of warranty security not enforced;
q. Procurement not included in the APP and without public bidding;
r. Purchases out of Petty Cash Fund;
s. Repeat Order beyond the allowable period;
t. Several items of work not sufficiently implemented;
u. Signing of contract beyond the prescribed period;
v. Understated retention money;
w. Warranty Securities not required for duly accepted/completed contracts and not
deducted from payments;
x. Attendance of observers not strictly observed;
y. Bids with partial quotation considered as responsive bids;
z. ABC not in accordance with DPRI 2019; and
aa. Defective Performance Security.
213. Moreover, six (6) out of 86 DOH Offices, CHDs, TRCs, Hospitals and Bureaus
showed that liquidated damages for the delayed delivery and/or completion of procured
goods and infrastructure projects in the amounts of ₱5,344,727.83 and ₱12,022,246.64,
respectively, or an aggregate amount of ₱17,366,974.47 were not imposed/collected. The
summary of liquidated damages not imposed are shown in Figure 2.
Figure 2: Summary of Liquidated Damages Not Imposed on Procurement Projects
CHD-Region VII
RITM-NCR TRC-Ilagan City- P686.620 thousand
P2.089 million Region II 5.711%
39.090% P63.300 thousand
0.527%
GOODS INFRASTRUCTURE
PROJECTS
R1MC-Region I
DRMC-Region XI
CRH-Region XIII P2.909 million
P11.272 million
P346.642 thousand 54.425%
93.762%
6.486%
214. The imposition of liquidated damages on erring suppliers serves as a deterrent to

ensure faithful compliance of the latter with the terms and conditions under the contract,
otherwise it will eventually result in non-compliance and unnecessary delays in the
implementation of the projects.
148
CHDs, TRCs, Bureaus, and Hospitals to direct the respective:
Bids and Awards Committee (BAC) to:
a. comply and strictly adhere to the provisions of RA 9184, its Revised IRR
and other issuances related thereto, in order to efficiently and effectively
carry out the procurement activities and ensure that the same are within
their approved APP to achieve transparency, competitiveness, equity,
efficiency and economy;
b. conduct periodic assessment of processes and procedures to streamline

procurement activities pursuant to Section 3(c) of this 2016 Revised IRR;
c. ensure that the Procuring Entity abides by the standards set forth by the
Act and its revised IRR, and prepare a Procurement Monitoring Report
(PMR) in the form prescribed by the GPPB; and
d. ensure and consider/recommend the imposition of appropriate sanctions

including imposition of proper liquidated damages on delayed delivery
and/or completion of procured goods, services and infrastructure projects
to encourage faithful adherence and timely execution of contracts;
BAC members, TWGs, and Procurement Officers to:
e. ensure, in all instances, that the most advantageous price and quality for
the government/CHDs/TRCs/Hospitals/Bureaus are obtained in every
procurement activity;
End-Users/Implementing Units of the Procuring Entity to:
f. prepare and update the PPMPs and submit the same to Procuring Entity’s
Budget Office for evaluation in order to ensure consistency with the
Procuring Entity's budget proposal and compliance with existing budgeting
rules; and
g. ensure that the PPMPs included in the budget proposal be forwarded to the
BAC Secretariat for consolidation into an indicative APP; and
BAC Secretariat/Procurement Unit to:
h. consolidate the PPMPs, prepare and update the APP, and submit to the
BAC for final recommendation as to the appropriate procurement
modality; and
149
i. Monitor procurement activities and milestones for proper reporting to
relevant agencies when required, to efficiently and effectively carry out
procurement activities.
Denied Philippine Health Insurance Corporation (PHIC) Claims
216. Owing to the Hospitals’ inability to address the recurring challenges and non-
compliance with applicable regulations, claims for reimbursement to the PHIC in the
aggregate amount of ₱111.150 million were denied. This condition has resulted in the
Hospitals’ loss of income which could have been used to augment their operating
requirements.
217. RA 7875, as amended by RA 10606, seeks to provide all citizens of the Philippines
comprehensive health care services that prioritize and accelerate the provision of health
services to all Filipinos, specially that segment of the population who cannot afford such
services.
218. Title IV, Rule II, Section 47(e) of the RIRR of the law provides that PHIC shall
penalize health care providers for claims attended by any but not limited to the specific
circumstances stated therein.
219. Denied or disallowed claims are prevalent in most hospitals/health facilities due to
failure of concerned employees/officials to address the challenges and non-compliance
with the existing regulations. Below are the noted hospitals with denied PhilHealth Claims
for CY 2019 amounting to ₱111,150,328.17. Details are shown in Figure 3.
Figure 3: Summary of Denied PHIC Claims

(Millions of Philippine Pesos and Percentages)
Region XII
5%
CS P5.241 (4.715%) Region X
6%
MHARSMC P6.403 (5.760%)
ONP P1.933 (1.739%) Region IV-B
2%
R2TMC P2.783 (2.503%)
SIMC P2.707 (2.435%) Region II

12%
CVMC P7.534 (6.778%)
MMMHMC P2.985 (2.686%)

Region I
R1MC P4.304 (3.872%) 6%
FNGHTC P0.702 (0.632%)

NCR
NCMH P3.310 (2.978%) CAR 69%
P1.578 (1.420%) 0%
VCM
SLRWH P5.772 (5.193%)
DJNRMH P63.144 (56.809%)
SLH P2.756 (2.479%)
0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00
150
220. The denied claims for reimbursement to the PHIC led to the non-collection of
material amounts, resulting in loss of hospital income which could have been used to
augment their operating requirements.
221. We recommended and Management of the concerned DOH Hospitals agreed

to:
a. analyze the causes for the disapproved/denied claims and make use such
information in the processing of future PhilHealth claims to improve
reimbursement rate;
b. review carefully and thoroughly all claim forms for completeness and
correctness of data prior to submission to the PhilHealth and monitor the
deadline set for filing and appeals, to ensure payment/collection thereof;
and
c. adhere strictly with the guidelines prescribed by the Revised IRR of the
National Health Insurance Act of 2013 and other relevant PhilHealth
circulars.
222. Further, we recommended that the DOH Management and the PHIC Board
of Directors collaborate in instituting specific policies addressing the recurring
problems on denied PHIC claims, specifically on improving the system showing the
qualifications of claimants.
Other Compliance Issues
ASEAN Funds for FYs 2016 and 2017
223. The remaining balance of ASEAN funds amounting to ₱13,040,355.80 was

returned to DILG by DOH-CO through JEV No. 2018-09-000745 and Check No. 593937
dated September 7, 2018. Thus, there are no outstanding funds in the hands of the
Department intended for this program as at year-end.
Yolanda Funds
224. The DOH received NCA amounting to ₱13,273,758.00, considered as Yolanda

Funds. Out of this amount; ₱12,988,757.23 was transferred to PHIC and CHD Eastern
Visayas – Region VIII as financial assistance to affected employees of Typhoon Yolanda.
On the other hand, ₱285,000.77 worth of NCA have lapsed and subsequently reverted to
the BTr on December 27, 2019.
151
Marawi Crisis Funds
225. On April 2, 2019, the DOH received NCA No. BMB-B-19-0006672 to cover trust
receipts representing donations made by the Chinese Embassy as financial assistance to
Marawi in the total amount of ₱7,499,850.00. However, the funds remained unutilized and
were reverted to the BTr on December 27, 2019 per JEV Number 2019-12-019706.
226. On the other hand, the sub-allotment received by the Amai Pakpak Medical Center
from DOH Central Office amounting to ₱8,800,000.00 during the year 2017 for Marawi
Siege was fully utilized by the agency through various transactions and thereafter fully
disbursed with supporting documents.
Disaster Risk Reduction Management and Health Emergency Management Programs
227. Various deficiencies were noted in the management of DRRM and HEM
Program Funds by the DOH-CO and JRRMMC, thereby resulting in non-compliance
with existing guidelines. Further, the low utilization of DRRM Funds noted in the
DOH-CO and NCH prevented the full attainment of program objectives and
enjoyment of benefits by intended beneficiaries.
228. Section 37 of the General Provision of RA 11260, otherwise known as the General
Provisions Act of 2019, provides that all agencies of the government shall plan and
implement programs and projects, taking into consideration measures for climate change
adaptation and mitigation, and disaster risk reduction, based on climate and disaster risk
assessments. NGAs shall report their actions to the Climate Change Commission (CCC)
for monitoring and evaluation of the implementation of the National Climate Change
Action Plan.”
229. COA Circular No. 2014-002 dated April 15, 2014 formulated the Accounting and
Reporting Guidelines to achieve better quality financial reports and availability of
information on the receipt and utilization of National Disaster Risk Reduction and
Management (NDRRM) Fund, cash and in-kind aids/donations from local and foreign
sources, and funds allocated from the agency regular budget for DRRM program.
230. Some of the deficiencies noted in audit includes the following:

Table 44: Deficiencies Noted in the Management of Program Funds
DOH
Observation Remarks
CHDs/Hospitals/TRCs
DOH - CO • DOH incurred delay in the preparation and submission of • Due to the late submission of
the Receipt and Utilization of the NDRRMF sourced from disbursement report of some Hospitals
GAA and Cash Donations and non-submission of the and Regions and change of work
monthly report on the receipt and assignment for the creation of new unit,
distribution/utilization/issuance of in-kind donations to the Central Processing Unit without
National Disaster Risk Reduction & Management Council proper turn over to the concerned
(NDRRMC) through the Office of the Civil Defense (OCD), personnel.
subsequently non-posting of reports in the DOH Official • Insufficient support, coordination and
Website; and monitoring of reports with regards to
• Non-preparation of Inventory List of Items for DRRM administrative concerns from the
152
DOH
Observation Remarks
CHDs/Hospitals/TRCs
Administrative Unit of HEMB to the other
DOH offices
JRRMMC • non-preparation of Monthly Report on the Receipt and Causes were not mentioned.
Utilization of the, DRRM Fund;
• non-posting of monthly/annual DRRM Fund reports in the
Medical Center’s website;
• non- preparation and maintenance of an inventory list of all
procured and donated items; and
• non-disclosure in the Notes to Financial Statement.
231. Meanwhile, the utilization of DRRM funds for DOH-CO and NCH was not
maximized due to insufficient support and coordination from the Administrative Unit of
HEMB to the other DOH offices, and failure of the NCH DRRM Manager to formulate the
DRRM Plan. Likewise, the NCH received the sub-allotment on Quick Response Fund
(QRF) from the DOH during the last quarter of CY 2019 only. The obligation of funds, on
the other hand, was made on December 27, 2019, resulting in zero disbursements as at
year-end. Details are shown as follows:
Table 45: Summary on Deficiencies Noted in the Utilization of Program Funds
DOH
Remarks
CHDs/Hospitals/TRCs
DOH - CO HEMBF, allotment utilization index (AUI=obligation/allotment) was marked at 81% and 85% for Current Year
and Continuing Appropriation (CONAP), respectively. Meanwhile, for QRF AUI was marked at 54% and 96%
for Current Year and CONAP, respectively. Of the HEMBF total obligation, 53% and 76% were paid from Current
Year and CONAP, respectively while 66% and 70% of the QRF obligation. Further, the total disbursement rates
(TDR=disbursement/allotment) for HEMBF Current Year and CONAP were extracted at 43% and 65%,
respectively and for QRF were 36% and 67%, respectively.
NCH Total unutilized fund of ₱3,331,673.90 or 98% of the total allotment.
232. We reiterated our recommendations, with modification, that Management

require the Heads of the DOH CO Teams, JRRMMC and NCH, through a written
memorandum, to immediately rectify the deficiencies noted, implement the audit
recommendations, and henceforth, comply with all applicable guidelines in the
management of funds and hasten the utilization of program funds and require:
a. the Health Emergency Management Bureau (HEMB) Director to establish

policies and controls for the strict implementation of COA Circular No.
2014-002 dated April 15, 2014 to ensure that reportorial requirements are
submitted within the prescribed period by the Administrative Unit of
HEMB, in close coordination with the Budget, Accounting and Logistics
Management Division;
b. the HEMB/HEMS, Accounting, Budget, LMD/Material Management

Divisions to strictly comply with all the provisions in the COA Circular
No. 2014-002 dated April 15, 2014 to establish transparency and
accountability on the funds and goods pertaining to the DRRM program;
153
c. the Chief Accountant of JRRMMC to include in the Notes to Financial
Statements pertinent information pertaining to DRRM transactions which
are not evident on the face of the Financial Statements; and
d. the DRRM Manager of NCH to formulate a plan for disaster risk

reduction activities to serve as a concrete basis in allocating funds from its
appropriation for emergencies and disasters, and ensure that the
utilization of the DRRM Fund allotted to the NCH be maximized, thru
prompt execution and implementation of the planned activities during the
year for optimum attainment of the program/project objectives.
Uninsured properties with the GSIS – ₱3.497 billion
233. Properties with total cost of ₱3.497 billion remained not insured with the GIF,
thereby exposing the government to the unnecessary risk of not being indemnified for
any damage or loss due to any fortuitous event, such as fire, earthquake, typhoon
and/or flood.
234. RA 656, otherwise known as the Property Insurance Law, as amended by PD 245,
requires all government agencies (except municipal governments below first class
category) to insure against any insurable risk their properties, assets, and interests with the
General Insurance Fund (GIF), as administered by the Government Service Insurance
System (GSIS).
235. To strictly enforce this law, Administrative Order (AO) No. 33 was signed in 1987,
requiring government agencies to submit an updated inventory of properties of their
respective offices to the GSIS and to secure from the GIF an insurance covering all its
properties. In addition to AO No. 33, COA Circular No. 92-390 dated November 11, 1992
was issued to assist GSIS in ensuring that all insurable assets and properties of the
government are adequately covered/insured with the GIF.
236. COA Circular No. 2018-002 dated 31 May 2018 was issued, setting up the
guidelines prescribing the submission of the Property Inventory Form (PIF) as basis for the
assessment of general insurance coverage over all insurable assets, properties and interests
of the government with the GIF of the GSIS.
237. Verification showed that properties amounting to ₱3,497,212,963.91 owned by

various DOH Offices/Institutions are not insured with the GIF due to understatement of
amount of inventory of insurable properties and/or plain omission by officials/personnel
assigned. Said government properties are therefore not protected from damage or loss for
any eventuality that may occur. Details are presented as follows:
154
Figure 4: Summary of Properties not insured by DOH Offices/Institutions
SLH – 18.224%
P637.317
CRMC – 32.229%
P1,127.127 DOH-CHD – 0.552%
P19.320
LHMRH – 7.229%
P252.815
MMHMC – 5.531%
JBLMGH – 0.113% P193.415
P3.950
R1MC – 36.122%
P1,263.267
238. Other deficiencies noted in audit were as follows:
a. Property Insurance Form (PIF) was not submitted;

b. Inventory report did not include other property items such as supplies,
materials, drugs and medicines and the like in the insurance coverage;
c. Report submitted to GSIS is insufficient for the information provided; and
d. Omission to include in the insurance coverage the Dental Bus as well as the
contents or properties inside the insured buildings.
CHDs, TRCs and Hospitals to direct their respective Property/Supply/Budget
Officers to:
a. determine all its insurable assets based on the latest and updated
RPCPPE and extract from it the data for the preparation of Property
Inventory Form which should be submitted to the GSIS annually, as
basis for the insurance coverage of the Agency’s assets on or before the
date prescribed by the above circular;
b. coordinate with the GSIS concerned office for the necessary

requirements in the insurance of these property and equipment;
c. facilitate the insurance of the identified insurable property of the DOH

Offices/CHDs/TRCs/Hospitals by allotting an additional fund in their
budget to finance the required cost of insurance premiums of all
insurable assets and property with the General Insurable Fund of the
GSIS so that the government may be indemnified in case of any damage
155
or loss caused by fortuitous events; and against insurable risks to protect
the interest of the government; and
d. submit the Property Inventory Form (PIF) to the Finance Section, setting
aside in its appropriation the amount needed for premiums and remitting
the premiums to the GSIS within the prescribed period to avoid
unnecessary losses in the event of damage to, or loss of assets and
properties brought by fortuitous events and guarantee immediate repair
or replacement and uninterrupted delivery of public service.
240. We further recommended that the Secretary of Health issue a memorandum

directing/requiring all Offices/Institutions under the Department to implement the
audit recommendations, and henceforth, comply with all guidelines in insuring
agency properties with the GIF.
Compliance with Other Mandatory Accounts
241. The DOH, in general, complied with the withholding and remittance of mandatory
deductions pursuant to the regulations issued by the BIR, GSIS, PHIC, and HDMF.
242. For CY 2019, various Offices/Institutions deducted the required taxes and premium
payments from the salaries of its personnel within the prescribed period to the concerned
institutions or agencies.
243. However, deficiencies in the total amount of ₱239,244,377.27 were noted in some
Offices/Institutions, as shown in Table 46 below.
Table 46: Deficiencies noted on mandatory accounts

Area Account Deficiencies
Affected Particulars Amount
Compliance with Tax Due to BIR Current/Prior year/s forwarding balance for reconciliation ₱29,000,794.48
laws Unremitted Balance for verification 88,589,645.73
Over-remittance 272,775.99
Failure to withhold taxes 14,474,498.00
For Refund 1,147,776.90
Unsupported Adjustments 460,705.48
Deduction and Due to GSIS Balances after remittances/For Refund 1,261,047.90
Remittance of GSIS For reconciliation 16,597,323.59
Premiums Unremitted amount 61,482,146.61
Deduction and Due to Balances after remittances/For Refund 525,752.68
Remittance of PHIC PhilHealth For reconciliation 3,024,311.37
Premiums Unremitted amount 6,846,962.91
Deduction and Due to Pag- Current/Prior year/s forwarding balance for reconciliation/adjustment 1,813,797.17
Remittance of Pag- IBIG Unremitted Balance for verification/adjustment 13,686,906.52
IBIG Premiums Negative Balance 22,487.14
Under-remittance 36,944.80
Over-remittance 500.00
Total ₱239,244,377.27
244. We recommended that the Secretary of Health issue a memorandum calling

the attention of heads of offices concerned, requiring explanations and the immediate
156
settlement of subject accounts, and conduct investigations when warranted under the
circumstances and direct said concerned DOH CHDs/Hospitals/TRCs/Bureaus to:
a. religiously remit the mandatory deductions withheld within the

prescribed period to avoid the imposition of penalties;
b. require the Accountant to trace and verify the over-remittances and

adjust accordingly; and
c. require the Accountant to analyze and reconcile the current/prior year/s

forwarding balance subject for reconciliation and effect the necessary
adjustments on the affected account/s to attain the correct and reliable
balance of the accounts/s.
Gender and Development (GAD)
245. Twenty-five (25) CHDs, TRCs and Hospitals failed to allocate at least 5
percent in their GAD Plans and Budget while others failed to submit their budgetary
reports. Moreover, various lapses/deficiencies were noted, thus, defeating the intent
of the program to pursue women’s empowerment and gender equality.
246. Section 32, General Provisions of RA 11260 or the GAA for FY 2019 mandates
that all agencies of the government shall formulate a GAD Plan designed to address gender
issues within their concerned sectors or mandate, which shall be integrated in the regular
activities of the agencies, which shall be at least five percent (5%) of their budgets.
247. During the year, the DOH has substantially implemented its GAD Program with an
aggregate allocation of ₱10,189,669,463.39 and which was mainstreamed into the regular
PAPs of the Department. Said amount constitutes 10.687 percent of the
₱95,342,186,747.97 total appropriations for CY 2019.
248. However, we noted that a total of 25 CHDs, TRCs and Hospitals did not allocate at
least 5 percent of their total budget or appropriation for GAD. The allocation ranged only
from 0.07% to 4.97% of their total budget, details of which are shown as follows:
Table 47: Non-compliant DOH Offices/Institutions with the minimum 5 percent GAD Budget Requirement
Appropriation Allotted Budget of the Percentage as to

Region Offices/Institutions
(a) Agency (b) Appropriation (b/a)
SLH 738,158,000.00 28,287,500.00 3.83%
BOQ 526,607,822.88 15,500,000.00 2.94%
RMC 735,940,000.00 14,219,738.31 1.93%
NCMH 1,045,567,000.00 52,000,000.00 4.97%
NCR ARMMC 500,859,000.00 22,114,660.00 4.42%
DJNRMH 567,457,000.00 15,998,000.00 2.82%
VMC 360,060,000.00 13,052,145.93 3.62%
POC 737,675,000.00 16,690,500.00 2.26%
CAR BGHMC 966,962,000.00 31,496,663.00 3.26%
II CVMC 889,489,000.00 650,000.00 0.07%
157
Appropriation Allotted Budget of the Percentage as to
Region Offices/Institutions
(a) Agency (b) Appropriation (b/a)
III TGH 75,984,000.00 1,075,000.00 1.41%
VI WVMC 994,366,808.15 40,077,500.00 4.03%
CHD 1,998,988,691.43 29,559,756.00 1.48%
VII VSSMMC 1,113,041,000.00 27,738,148.10 2.49%
GCGMH 1,013,200,759.74 14,390,000.00 1.42%
VIII EVRMC 680,684,000.00 25,980,000.00 3.82%
X APMC 417,320,000.00 8,586,870.12 2.06%
XII CS 66,558,000.00 1,669,000.00 2.51%
XIII ASTMMC 258,481,500.00 5,169,630.00 2.00%
XVI CLMMRH 1,046,819,879.93 44,082,392.69 4.21%
Dulag, Leyte 59,660,000.00 380,000.00 0.64%
Argao Cebu City 95,433,742.47 1,312,458.00 1.38%
TRC Cebu City 37,823,000.00 996,520.00 2.63%
Cagayan De Oro 78,196,122.35 2,370,526.00 3.03%
Caraga, Surigao City 87,700,000.00 877,000.00 1.00%
249. On the other hand, only 40 Offices/Institutions were found to have allocated at least
5 percent for GAD, in the aggregate amount of ₱9,775,395,455.24 or 12.181 percent of the
total agency appropriations of ₱80,249,154,421.02. The percentages of GAD budget over
agency appropriations of these Offices/Institutions ranged from 5 to as high as 88.59
percent.
250. The other remaining Offices/Institutions failed to submit GAD budgetary reports
as required, thus, defeating the intent of the program to pursue women’s empowerment and
gender equality.
251. Moreover, other lapses and deficiencies the implementation of GAD include the
following:
Table 48: Summary of Lapses and Deficiencies in the implementation of GAD
Offices/Institutions Lapses/Deficiencies
GAD Plan and Budget (GPB) and AR Forms that were submitted were not properly filled up as stated in the Annexes
(I- R1MC); (TRC- Dagupan City) A and B of the same Joint Circular mentioned above, thus, may mislead the users in the implementation of GAD
projects and activities.
(I- R1MC) The lack of proper coordination and a more comprehensive and intensive planning policies in the conduct of GAD
Training Workshop on Mainstreaming-Gender in the Development of programs, Projects Integrating the HGDG
Core Elements and 2020 GAD Plan and Budget and GAD Sensitivity Trainings provided by the R1MC resulted in
overstated training expenses and underutilized GAD training.
(II-CHD) DOH-CVCHD’s planned client-focused and organization-focused activities for GAD through its programs, projects
and activities positively addressed the issues on gender, poverty and economic protection and empowerment of
marginalized women but were not effectively implemented through gender-responsive governance nor adequately
presented in the GAD Accomplishment Report.
(III-DPJGMRMC) Hospital GAD focal point did not secure the endorsement of its GAD Plans and Budget (GPB).
(IV-B-CSBH, ONP) The Harmonized Gender and Development Guidelines (HGDG) tools were not used in the preparation of GAD Plan
and Budget (GPB) for CY 2019.
(IV-B-CSBH, ONP) The GAD Focal Point System (GFPS) failed to establish and maintain a GAD Institutionalized Database of Sex-
disaggregated Data which will serve as gender statistics and GAD-related information crucial for evidence-based
planning and policy-making thus, gender issues and concerns identified in the GPB may not actually be fully
addressed.
158
Offices/Institutions Lapses/Deficiencies
(Sub-Group 1- JRRMMC); (IV-B- Late Submission, Non-Preparation/Non-Submission of GAD Plan and Budget / Accomplishment Report for the CY
CSBH, ONP) ;( VI- WVS) ;( XIII- 2019 to COA.
ASTMMC) ;( TRC-Caraga, Surigao
City)
(VI- WVS) Output statements not SMART - The outputs indicated in the GPB and AR were not tangible deliverables and
SMART, thus, its contribution to the attainment of the GAD desired outcomes is difficult to ascertain.
Inclusion of activities not related to GAD and unimplemented GAD activities in the AR
Failure to strengthen GFPS (GAD Focal Point System)
(VII-VSSMMC) Some of the programs do not clearly address gender-related issues and concerns.
(VIII-SH) ;( TRC-Dulag, Leyte) The inability to conduct gender audit and establish the GAD database or sex-disaggregated data resulted in non-
selection of appropriate gender related interventions, minimal utilization of the GAD allocation and low fund
expenditure of the total appropriation.
(X-MHARSRTTH) The patient-oriented activities programmed under its GAD Plan amounted only to ₱9,842,897.32 as other activities
were being 13 undertaken by the Hospital in their regular activities which relate to GAD that contributed to poverty
alleviation, economic empowerment especially the marginalized women.
(TRC-Dagupan City) Gender and Development (GAD) activities implemented stated in the Accomplishment Report (AR) for CY 2019
were not based on the PCW-endorsed GAD Plan and Budget (GPB) which may result in possible forfeiture of the
AR.
(TRC-Camarines Sur) Imbalance in the GAD Plan and Budget and Non-Implementation of Major GAD PAP.
(TRC- Caraga, Surigao City) The insufficient budget for GAD is caused by the inability of the GAD Focal Point to properly attribute DTRC’s
programs, projects and activities to GAD. There have been GAD-related seminars attended by the concerned
personnel but proper attribution using the Gender Analysis and Harmonized Gender and Development Guidelines
(HGDG), still could not be applied.
252. We recommended that the Secretary of Health issue a memorandum, calling

the attention of concerned heads of CHDs, Hospitals, and TRCs under the
Department to immediately correct the deficiencies found, implement the audit
recommendations, and henceforth, adhere to all applicable guidelines in the
implementation of GAD Programs including the requirements on the allocation of at
least 5% of the budget, and integration in the agencies’ regular activities.
Management Comments
253. Per PCW MC 2017-03, the determination of compliance to the GAD budget floor
shall be by agency and not by constituent unit (e.g., regional offices, district or field
offices). The GAD budget of a regional office or a constituent unit may not necessarily
reach 5% of its total annual budget. The total GAD budget utilization of DOH Central
office and its constituent units (per PCW-reviewed 2019 GAD AR) is ₱20,685,730,100.11
or 21.18% of the DOH OSEC’s 2019 GAA amounting to ₱97,653,633,000.00.
254. We acknowledge COA’s audit observations and recommendations on improving

the implementation of the GAD PAPs. On September 3, 2020, a Department Order on the
“Revised Guidelines for the Institutionalization of the GAD Focal Point System to
mainstream gender in the DOH” has been issued. This policy aims to ensure that GAD
perspective is incorporated and integrated in the DOH programs, projects and activities.
Further, please be informed that starting this CY 2020, the DOH submitted one
consolidated GAD Plan and Budget to PCW (still under review).
159
Implementation of programs/projects/activities for Senior Citizens and Differently-
Abled Persons
255. Sixty (60) DOH CHDs/Hospitals/TRCs formulated plans, programs and

projects intended to address the concerns of senior citizens and persons with disability
as required under Section 33 of the General Provisions of the F Y 2019 GAA.
256. Section 33, General Provisions of RA 11260 (GAA FY 2019) requires that all
agencies of the government shall formulate plans, programs and projects intended to
address the concerns of senior citizens and persons with disability, insofar as it relates to
their mandated functions, and integrate the same in their regular activities.
257. The DOH-CO, 14 CHDs, 40 Hospitals, and five (5) TRCs extended free health care
services in CY 2019. These included medical services, laboratory examination, rehabilitation
medicines and inpatient/outpatient treatment, free medical and laboratory supplies and drugs
and medicines; provided financial assistance and discounts on laboratory examinations,
medicines and hospital bills; and integrated/implemented programs/projects/activities
benefitting senior citizens and persons with disability with total aggregate expenditures of
₱955,144,603.44.
Table 49: Aggregate Expenditures for Senior Citizens and Differently-Abled Persons
CHDs/Hospitals/
Region Amount
TRCs/Bureaus
DOH-CO 87,084,250.00
NCH 392,790.95
TMC 801,781.40
RMC 20,283,802.00
DJNRMH 68,637.43
NCR POC 23,745,851.68
QMMC 48,677,721.33
VMC 6,541,003.00
ARMMC 52,585,694.95
SLRWH 1,536,480.79
SLH 54,871,092.24
CHD 1,304,706.00
CAR LMHRH 37,370,565.28
BGHMC 73,990,767.53
CHD 6,934,985.40
I MMMHMC 19,864,471.78
RIMC 32,591,137.71
CHD 5,103,872.00
BGH 2,698,011.89
II
SIMC 2,066,948.61
R2TMC 3,045,986.21
160
CHDs/Hospitals/
Region Amount
TRCs/Bureaus
CHD 2,711,313.11
DPJGMRMC 23,596,066.93
DPJGMRMC-TEH 795,634.40
III
JBLMGH 14,075,754.68
MMH 1,815,884.50
BGHMC 36,952,508.11
CHD 3,664,500.00
IV-A
BMC 49,070,452.23
IV-B CHD 1,436,762.00
CHD 25,648,832.00
V
BRTTH 314,825.00
CHD 41,504,191.60
VI
DJSMMCEH 268,717.09
TDH 32,712,810.23
CPD 192,923.00
SAMCH 100,000.00
VII
DEDVMH 36,445,408.66
GCGMH 1,017,877.73
VSSMMC 10,726,802.50
CHD 108,953.00
VIII
EVRMC 585,387.00
IX DJRMH 31,275.37
CHD 5,949,721.19
X
MHARSRTTH 32,489,366.94
CHD 910,544.61
XI SPMC 27,663,707.40
DRMC 10,995,000.00
CHD 733,002.00
XII
CRMC 15,536,662.49
CHD 1,389,111.84
XIII CRH 50,000.00
ASTMMC 6,682,983.45
IX CHD 1,150,455.20
XVI CLMMRH 85,731,491.60
TRCs TRC-Caraga, Surigao city (DTRC) 93,000.00
TRC-Tagaytay City 40,775.00
TRC-Cagayan de Oro City-RO10 330,501.00
TRC-Bataan 20,928.40
161
CHDs/Hospitals/
Region Amount
TRCs/Bureaus
TRC-Malinao, Albay (MTRC) 39,915.00
TOTAL ₱955,144,603.44
258. Likewise, various DOH offices provided ramps, hand rails, steel benches, comfort
rooms, elevators and priority lanes to enhance mobility of senior citizens and persons with
disability as well as provided employment to them in compliance with Batas Pambansa
Blg. 344 and RA 7277, as amended.
Compliance with programs and projects related to Youth Development Plan
259. Section 34 of the General Provision of the 2019 GAA, provides that all agencies of
the government are encouraged to provide allocation for youth development projects and
activities within the framework of the Philippine Youth Development Plan (2017-2022).
260. Various CHD and Hospitals reported to have utilized the amount aggregating
₱1,653,851.59 to support the welfare, promotion and development of youth through the
conduct of various PAPs.
Figure 5: Fund Utilization of Various Offices/Institutions for Youth Programs
SLH – 2.094%
P0.035
CHD – 34.760%
P0.575
DRMC – 57.823%
DJRMH – 2.290%
P0.956
P0.038
SPMC – 3.034%
P0.050
261. The DOH-CO and other hospitals such as JRRMMC, TMC and ASTMMC are
noted to have implemented their Youth Development Programs as well but corresponding
amounts have not been disclosed.
Enforcement of COA Audit Suspensions, Disallowances and Charges and Settlement of

Accounts
262. The Audit Teams of 76 DOH Offices noted in the audit of various transactions
the non-compliance with laws, rules, and regulations which resulted in total
suspensions, disallowances, and charges of ₱9,242,560,871.39 as at December 31,
2019.
162
263. The total audit suspensions, disallowances and charges found in the audit of
various transactions as at December 31, 2019 is summarized in Table 50.
Table 50: Summary of NSs, NDs and NCs Issued and Settlements
This Period
Beginning Balance Ending Balance
Regions Particulars (As of January 1, January 1 to December 31, 2019 (As of December
2019) 31, 2019)
NS/ND/NC NSSDC
NCR, I, II, IV-A, V, VI, VII, VIII, IX, X,
NS 8,205,369,081.17 464,080,004.52 415,436,158.36 8,254,012,927.33
XI, XII, XIII, XVI
NCR, CAR, I, II, III, IV-A, IV-B, V, VI,
ND 1,011,776,225.28 24,830,698.57 50,149,782.73 986,457,141.12
VII, VIII, IX, X, XI, XIII, XVI
NCR, I, II, IV-B, XI NC 2,172,616.54 88,406.50 170,220.10 2,090,802.94
Total 9,219,317,922.99 488,999,109.59 465,756,161.19 9,242,560,871.39
264. Out of the total audit disallowances in the amount of ₱986,457,141.12, a total of
₱31,172,502.63 or 3.16 percent thereof are on appeal to the COA authorities.
265. ND/NC/NS issued prior to effectivity of the 2009 RRSA amounting to
₱19,270,315.86 are not included in the reflected balances but are deemed
disallowances/charges, which shall continue to be enforced in accordance with the Rules
as provided under Sec. 28 thereof.
266. We recommended that the Secretary of Health issue a memorandum,

reminding concerned Heads of CHDs/TRCs/Bureaus/Hospitals to immediately cause
the settlement of audit disallowances that have attained finality, and compliance with
the requirements of audit suspensions issued, under their respective agencies and to
require:
a. the officials concerned to comply with laws, rules and regulations to avoid
audit suspensions, disallowances and charges;
b. those persons liable with NDs that are final and executory to refund, in full,
the amount due from them and direct the HR to strictly comply with COA
Resolution 2017-021 relative to the rules and regulation in the settlement
of disallowance; and
c. the Accountant to continuously monitor the settlement of all suspensions,

disallowances and charges and record disallowances with issued NFDs
pursuant to Revised RRSA.
163

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09-DOH2019 Part2-Observations and Recomm

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PART II - OBSERVATIONS AND RECOMMENDATIONS

Accounting Errors and Omissions

1. Various accounts of the Department of Health (DOH) have misstatements

2. Section 27 of the Philippine Public Sector Accounting Standards (PPSAS) 1 and

5. The DOH Consolidated Financial Statements (FS) is a combination of the FS of the

A.5 BRTTH, CHD-Cagayan Valley, CRMC, VSMMC, EAMC

A.6 CHD-Cagayan Valley, FDA

A.7 BRTTH, CHD-B, TRC-Camarines Sur

A.8 CHD-Davao, CHD-EV

A.9 CHD-Davao, SIMC

A.10 BMC, R2TMC, SIMC, SLRWH

A.12 CS, ONP, VSMMC

A.13 CRMC, DJNRMHS, FNLGHTC, MMMHMC, SLRWH

A.15 BRTTH, CDH, CHD-CAR

A.16 CHD-Cagayan Valley, CHD-CAR, CHD-CL, FDA

8. Additionally, emphasis should be given to the unrecorded value of land amounting

10. We reiterated our prior years’ recommendations, with modification, and

Their respective Accountants to:

c. observe the proper recording, adjustments and reclassifications of

Their Heads of Agencies to:

d. formulate and strictly implement internal control policies requiring timely

The Accountant of the San Lazaro Hospital to:

12. Deficiencies were noted in recording and reporting financial transactions

13. The accounts showed various accounting deficiencies amounting to

Unreconciled Amounts/Non-Reconciliation of accounts 74,736,702.19

GL vs. Cash Receipts Section 74 of PD 1445 and

COA Circular 92-125A dated

16. The above-mentioned deficiencies can be attributable to the failure of the

17. We recommended that Management require the concerned Heads of CHDs,

a. cause the closure of dormant and/or unauthorized bank accounts and

b. analyze negative and unreconciled current and prior years’ balances

c. maintain complete and updated subsidiary ledgers, and prepare and

Deficiencies on Receivable Accounts

18. Approximately 49 percent or ₱15.427 billion of the recorded consolidated

24. Moreover, the Other Receivables includes Receivables-Disallowances and

Table 5: Other Deficiencies of Receivable Accounts

Unreconciled Amounts between Accounting NCR-(DJSMMCE) Accounts Receivables 2,288,406.46

Unreconciled Balances per GL and SASDC NCR-(EAMC/NCMH) Receivable- 14,254,083.61

a. require their respective Accountants to:

i. Continue to send Demand Letters to ROs/IAs with outstanding

ii. Continue to follow up/monitor the submission of liquidation reports

iii. Refrain from transferring funds to IAs with outstanding balances,

iv. Evaluate and reconcile all overdue accounts to determine proper

v. Analyze, reconcile and adjust accounts with negative balances in

b. require the Legal Service/Program Manager/End-User Unit to revisit and

Deficiencies on Inventory Accounts

a) Unreconciled balances of Inventory Accounts- ₱27.544 billion

Table 6: Summary of unreconciled account balances

b) Negative balances on Inventory Accounts – ₱19.320 million

Table 7: Negative balances on inventory accounts

II CVMC Medical, Dental and Laboratory Supplies (833,749.45)

Office Supplies Inventory (363,046.63)

XIII CHD Property & Equipment for Distribution (2,572,780.66)

a. develop an action plan with timelines to work on the reconciliation process

b. establish coordination and monitoring among the different units involved

c. make detailed investigation on the deficiencies and negative balances noted

d. evaluate and assess the manpower requirement in the respective Units

Deficiencies on Property, Plant and Equipment (PPE)

Table 8: Summary of Deficiencies in Property, Plant and Equipment of DOH Offices/CHDs/TRCs/Hospitals/Bureaus

Section 105(1) Presidential

Section 111 Presidential

Item V.2 COA Circular No. 80-124

40. The following were the causes of the above-noted observations:

a. The non-conduct of physical inventory-taking resulted in the unreconciled and