EXECUTIVE SUMMARY

A. Introduction

The Office of the Vice President (OVP) traces its origin in the 1935
Constitution when the United States government granted full independence to the
Philippines after more than 30 years of colonization in the country.

When Martial Law was declared in September 1972, the OVP became
irrelevant. The 1973 Constitution which was ratified and came into effect on
January 17, 1973 did not provide for a Vice President. In 1984, the OVP was
restored through a Constitutional amendment that was ratified by the people. After
the February 1986 snap election, the new President and Vice President were
installed under Proclamation No. 3 dated March 25, 1986. Subsequently, the 1987
Philippine Constitution provided for a Vice President as the second highest official
of the land.

The OVP was reorganized under Executive Order (EO) No. 240 dated July
24, 1987 which gave the Vice President the authority to appoint personnel under his
office except for the positions of Chief of Staff and Assistant Chief of Staff who are
appointed by the President upon the recommendation of the Vice President. As the
second highest office in the land committed to the service of the nation, the OVP
performs executive, ceremonial, and advocacy functions, collaborating with
stakeholders and organizations in both the public and private sectors, to develop
and promote programs that uplift the lives of the Filipino people.

After the national elections held in 2016, the Honorable Maria Leonor G.
Robredo became the VP. She is assisted by Chief of Staff Philip Francisco U. Dy
and Assistant Chief of Staff Sofia C. Yanto-Abad with the cabinet rank of
Undersecretary and Assistant Secretary, respectively. There are 134 filled up
plantilla positions and 148 non-plantilla positions, as tabulated below:

Positions
Particulars
Plantilla Non-plantilla
Elected 1
Presidential Appointees 2
Co-terminus 51
Permanent 60
Contractual 12
Casual 7
Temporary 1
Contract of Service 49
Consultants 10
Military detailed personnel 89
Total 134 148

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B. Operational Highlights

The reported accomplishments of the OVP during the Calendar Year (CY)
2018 are presented below.

Accomplishments Percentage of
Performance Indicators
Target Actual Accomplishment
Good Governance Program

Output Indicators
1. Percentage of requests acted 81 93.27 115.15
upon within standard processing
time.

2. Percentage of projects with 50 96.88 193.76

partners implemented as
planned.

3. Percentage of completed 85 93.90 110.47

engagements of the OVP rated
by the requesting organization /
entity as satisfactory or better.

1. Under the Angat Buhay

(AB) Program, the OVP
conducted the following
activities:

1.1 Angat Buhay Bridging

Leadership (BL) – 33
local chief executives
attended the BL
program where they
participated in coaching
sessions and partnered
with the academe sector
to help them refine their
project proposals. To
recognize their efforts,
the BL Awards was
launched in partnership
with Sea Oil Foundation
Inc. (SFI), an AB
partner.

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 Accomplishments Percentage of
Performance Indicators
Target Actual Accomplishment
1.2 AB Youth-Mindanao –
30 participating youth
organizations underwent
workshops to better
design, market,
implement, and sustain
their projects towards
countering violent
extremism. The winning
groups from participants
were given seed grants
funded by the US
Embassy and the chance
to pitch their project in a
youth congress in South
Korea.

1.3 AB Women’s Workshop

for Aspiring Women
Entrepreneurs (AB
WAWE) – 30 women
from various parts of
Mindanao were gathered
to attend workshop for
basic competencies they
need to run their
businesses. A seed grant
from SFI and Samahan
ng mga Pilipina para sa
Reporma at Kaunlaran
was received by
participants.

1.4 Metrolaylayan assisted

beneficiaries in four
metropolitan cities:
Manila, Muntinlupa,
Parañaque, and Tanay.

1.5 Disaster Relief and

Rehabilitation –
₱600,000.00 livelihood
assistance given by the
OVP to the miners and

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 Accomplishments Percentage of
Performance Indicators
Target Actual Accomplishment
their families that were
affected by Typhoon
Ompong in Ucab,
Itogon, and Benguet.

1.6 Omasenso sa
Kabuhayan launched in
July 2018 which seeks
to empower and increase
the income of
smallholder farmers in
the poorest communities
and create direct links
between farmers and
potential markets.

2. Social Services Program

2.1 Medical Assistance – A

total amount of
₱175,705,674.00 were
given to 14,456
beneficiaries.

2.2 Burial Assistance – A

total amount of
₱60,000.00 were given
to 20 beneficiaries.

3. Istorya ng Pag-asa (INP) –

aims to empower
communities and instill
hope, through the words and
profiles of inspiring
individuals; the OVP’s way
of changing the conversation
and countering the rising
culture of negativity and
apathy. OVP conducted 26
INP activities to 26 areas.

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C. Financial Highlights

The financial position, financial performance and sources and utilization of

funds of the OVP for CY 2018, with corresponding figures for CY 2017, are as
follows:

Amount (₱)
Particulars 2017
2018
(As Restated)
Financial Position
Assets 156,196,915.82 51,535,025.21
Liabilities 91,282,977.57 56,180,480.83
Net Assets/Equity 64,913,938.25 (4,645,455.62)
Financial Performance
Revenue - -
Current Operating Expenses 447,227,799.80 649,208,154.89
Surplus/(Deficit) from Current
(447,227,799.80) (649,208,154.89)
Operations
Net Financial Assistance/Subsidy 518,385,252.97 629,762,818.98
Gains 51,626.21 113,071.79
Losses - (167,508.65)
Surplus/(Deficit) for the period 71,209,079.38 (19,499,772.77)
Sources and Utilization of Funds
Appropriations 561,829,939.00 696,230,132.93
Allotments 561,801,617.00 696,230,132.93
Obligation Incurred 558,176,026.72 663,431,280.73
Disbursements 470,138,586.04 615,229,955.24
Unobligated Allotments 3,625,590.28 32,798,852.20

The Statement of Appropriations, Allotments, Obligations, Disbursements and

Balances for CY 2018 is shown in Annex A.

D. Scope of Audit

The audit covered the accounts and operations of the OVP for CY 2018. It
was conducted to: a) ascertain the level of assurance that may be placed on the
Management’s assertion on the financial statements; b) determine the propriety of
transactions as well as extent of compliance on the applicable laws, rules and
regulations; c) recommend agency’s improvement opportunities; and d) determine
the extent of implications of prior year’s audit recommendations. Moreover, the
audit was conducted in accordance with International Standards of Supreme Audit
Institutions (ISSAIs).

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E. Opinion of the auditor on the fairness of presentation of the Financial
Statements

The Auditor rendered an unqualified opinion on the fairness of presentation of

the financial statements.

F. Summary of Significant Observations and Recommendations

The following are the significant audit observations and corresponding

recommendations, which were discussed with Management officials concerned,
details of which are further discussed in Part II of this report. Management views
and comments were incorporated in the report, where appropriate.

1. Of the ₱14,675,456.67 fund transfers to various NGAs as at December 31,

2018, ₱8,934,342.96 or 60.88 percent remained unliquidated for up to six (6)
years, contrary to COA Circular No. 94-013 dated December 13, 1994,
affecting the fair presentation of the account’s balance in the Financial
Statement (FS).

We recommended that Management instruct the Accountant to:

a) demand from the Implementing Agencies (IAs) the liquidation of the

actual project expenses, and return the unutilized amount for proper
accounting and fair presentation, in the FS, of transferred funds;

b) monitor all fund transfers to avoid their non-liquidation within the

agreed period for the project to report the utilization of the funds; and

c) henceforth, strictly adhere to COA Circular No. 94-013 on Fund

Transfers.

2. The Other Receivables account totaling ₱5,783,191.06 as at December 31,

2018 is overstated by ₱5,422,230.85 due to the incorrect classification of the
disallowances in audit due from the defunct Office of the Prime Minister
(OPM), which was integrated into the books of accounts of the OVP from the
OPM in year 1995, affecting the fair presentation of the financial statement,
contrary to Section 15, Chapter 2, Volume I of the Government Accounting
Manual (GAM).

We recommended and Management agreed to:

a) instruct the Accountant to reclassify back to Receivables-

Disallowances/Charges account the disallowance incorrectly recorded
as Other Receivables; and

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 b) henceforth, strictly implement the accounting policies, guidelines and
procedures embodied in the GAM.

3. The agency incorrectly provided an allowance for impairment for the dormant
amounts under the Other Receivables account totaling ₱353,973.19, contrary
to Sections 7 and 10, Chapter 7, Volume I of the GAM on impairment of
financial instruments.

We recommended and Management agreed to instruct the Accountant to

reverse the provision of allowance for impairment, and request instead for
their write-off, strictly in accordance with the guidelines and procedures
prescribed in COA Circular No. 2016-005.

4. The recorded Property Plant and Equipment (PPE) totaling ₱58,342,806.45 as

at December 31, 2018 is not accurate due to the inclusion of nonexistent
equipment costing ₱33,800.00. Moreover, the Audit Team was not notified of
the inventory taking conducted by the Agency, hence, unable to witness the
physical count/inventory taking, contrary to Section 490, Volume I of the
Government Accounting and Auditing Manual (GAAM).

We recommended and Management agreed to:

a) investigate the whereabouts of the equipment that were not located

during the physical inventory, and include in the RPCPPE if found;
otherwise, identify the responsible personnel accountable for the
disappearance; and henceforth, request for Relief from Accountability,
in accordance with Section 73 of PD No. 1445, and in strict compliance
with the procedures required by COA Memorandum No. 92-751; and

b) invite/inform the COA Auditor to witness the physical stock-taking/

physical count of PPE.

5. PPE items totaling ₱4,335,408.96 were inconsistently classified into PPE

sub-accounts, defeating the need for uniform accounts to facilitate the
preparation of harmonized financial and budget accountability reports, and to
classify all transactions according to the accounts they affect.

We recommended and Management agreed to instruct the Accountant to

review the Chart of Accounts, Volume III of the GAM, and reclassify the
PPE sub-account balances accordingly.

6. The Telephone Expenses account totaling ₱2,716,550.05 as at December 31,

2018 was overstated by ₱72,927.00 as a result of misclassified internet
services expenditures.

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 We recommended and Management agreed to:

a) remind the Chief Accountant to continuously supervise her

subordinates by reviewing their work systematically; thus, minimizing
errors; and

b) strictly implement the accounting policies, guidelines and procedures

embodied in the GAM.

7. The OVP unnecessarily stores unserviceable PPE totaling ₱1,159,119.66;

thus, depriving the government of any income that could be realized from
their sale.

We recommended and Management agreed to require the Disposal

Committee to facilitate the disposal of unserviceable assets, in accordance
with Chapter 6 of the Handbook on Property and Supply Management
System.

8. Inadequate monitoring of the funds transferred to the Local Government

Units (LGUs) for the OVP’s Locally Funded Projects (LFPs) resulted in
deficiencies committed by the recipient LGUs, such as: (1) non-issuance by
LGUs of Official Receipts (ORs) for the transferred amount; and (2) non-
submission of Liquidation and Quarterly Reports, casting doubt on the
regularity, completeness and accuracy of the projects.

We recommended that Management:

a) improve its monitoring on the fund transfers;

b) instruct the Responsible Officer to demand from the LGUs the ORs to
validate the receipt of the money, in compliance with their
Memorandum of Agreement (MOA), which is also specified under
COA Circular No. 2012-001 on the Revised Guidelines and
Documentary Requirements for Government Transactions, and Section
68 of PD No. 1445; and

c) remind the LGUs of Section 90 of the GP of FY 2018 GAA on the

submission of quarterly reports on fund utilization and
accomplishments, and demand the immediate submission of the
liquidation and quarterly reports.

9. The OVP has no clear-cut procedure on the selection of recipient LGUs,

tainting the impartiality and fairness of the screening process, which defeats
the purpose of providing LGUs with financial assistance based on Need or
Opportunity.

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 We recommended that Management revisit the Guidelines on Locally
Funded Projects and clarify the selection process and ranking system for the
selected LGUs; hence, avoid questions on partiality and bias.

10. The agency was delayed in the submission of the MOAs between the OVP
and the LGUs, contrary to COA Circular 2009-001, which requires that
government contracts, purchase orders and their supporting documents be
submitted to the Commission on Audit within five (5) working days from the
execution for immediate identification of any deficiency.

We recommended that Management:

a) Require the Responsible Officer to explain, and resolve the above-

mentioned deficiencies of the MOAs; and

b) Henceforth, submit to the Audit Team within five (5) working days
from the execution, all government contracts, purchase orders and their
supporting documents, as required in COA Circular 2009-001 dated
February 12, 2009.

11. Disbursement Vouchers (DVs) and the related financial reports and
statements were not submitted to the Office of the Auditor within the
prescribed period or were not submitted at all, contrary to Sections 100 and
107 of PD No. 1445, COA Circular No. 95-006, and Section 60, Chapter 19,
Volume I of the GAM; hence, their timely evaluation, and consequently the
early detection and immediate communication to management of
deficiencies, if any, was prevented including the corresponding corrective
actions to be undertaken.

We recommended and Management agreed to:

a) immediately comply with the submission of the documents and reports

mentioned;

b) impose the suspension of payment of salaries of the AOs who

repeatedly failed to submit on time the documents and reports
mentioned above, as mandated in Section 122 of PD No. 1445; and

c) be mindful that as stated in Section 127 of PD No. 1445, unjustified

failure of a public officer to comply with any of the provision of PD
No. 1445 shall constitute neglect of duty and shall be a ground for
administrative disciplinary action against said public officer.

12. Government Contracts, Purchase Orders (POs) and their supporting

documents were not submitted to the Audit Team within five days after their
execution or issuance thereof in violation of COA Circular No. 2009-001

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 dated February 12, 2009, thereby hindering the Audit Team in conducting its
timely evaluation/review of the contracts, and communicating to management
the observed deficiencies, if any.

We recommended and Management agreed to submit:

a) all perfected contracts, POs, and all the supporting documents within
five working days as provided under Section 3 of COA Circular No.
2009-001 to facilitate timely review and appropriate action by the
Auditor, as well as the Agency; and

b) the list of cancelled POs for proper accounting of the totality of POs
prepared.

13. Of the ₱1,988,795.67 total Cellular Phone line payments for CY 2018,
₱363,985.42 or 18.30 percent were not supported with the documents
required in the Office Order on the use of cellular phone lines issued by the
OVP, whereas in some of the submitted supporting documents, deficiencies
were observed.

We recommended and Management agreed to:

a) call the attention of employees with issued cellular phone lines to

strictly comply with the provisions of the OVP Office Order No. 2017-
18 dated August 30, 2017, most especially on the submission of the
required Annexes;

b) revisit the Office Order and clarify the proper use of the Annexes, and
the treatment of personal calls/charges; and

c) henceforth, monitor the employees’ compliance with the Office Order.

G. Implementation of Prior Year’s Audit Recommendations

Of the 10 audit recommendations contained in CY 2017 Annual Audit Report

(AAR), seven were implemented, two were partially implemented, and one was not
implemented. The details are presented in Part III of this report.