EXECUTIVE SUMMARY

A. Introduction

The Early Childhood Care and Development Council (ECCDC) was created
pursuant to Executive Order (EO) No. 778 issued on January 13, 2009. The
Council is the principal government agency mandated to support implementation of
the full range of health, nutrition, early education and social services programs that
provide for the basic holistic needs of young children from birth to age six and to
promote their optimum growth and development.

The subsequent issuance of EO No. 806 on June 8, 2009 further established

the ECCDC as a distinct council from and independent of the Council for the
Welfare of Children (CWC). The ECCDC is an attached agency to the Office of
the President.

The ECCDC is composed of the Governing Board and its Secretariat. The
following are the members of the Governing Board: Department of Education,
Department of Health, National Nutrition Council, Department of Social Welfare
and Development and the Union of Local Authorities of the Philippines. The
Governing Board shall be headed by a Chairperson to be appointed by the
President.

The Council is headed by Chair Dr. Teresita G. Inciong.

As of December 31, 2011, ECCDC has a total manpower of 24, consisting

of the Chairperson, Deputy Executive Director, 3 contractual and 19 personnel
hired under Contract of Service.

B. Financial Highlights

The ECCDC has no allotted budget from the General Appropriations Act
(GAA). The Council’s financial requirement for its operations is supported by a
grant from Philippine Amusement and Gaming Corporation (PAGCOR) as
provided for by Republic Act (RA) No. 8980 or the ECCD law. The funds received
from PAGCOR were being remitted to the Bureau of the Treasury under a Special
Account in the General Fund and released by the Department of Budget and
Management (DBM) to ECCDC thru issuance of Special Allotment Release Order
(SARO)` with the corresponding Advice of Notice of Cash Allocation (NCA).

Aside from funds received from PAGCOR, ECCDC also received funds
from UNICEF based on the latter’s approved annual work plan.

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 The following table summarizes the sources and application of funds of the
agency for the last two years:

Increase/
Particulars 2011 2010
(Decrease)
Allotments Received 20,347,142.00 83,142,307.00 (62,795,165.00)
Continuing Appropriation 35,462,355.77 35,462,355.77
Obligations Incurred 50,571,548.37 45,976,034.07 4,595,514.30
Unexpended Balance 5,237,949.40 37,166,272.93 (31,928,323.53)

The Statement of Allotments, Obligations and Balances is shown in Annex A.

C. Operational Highlights

Among the noteworthy accomplishments of the ECCD Council in CY 2011

were the following:

1. Initiated the development of the Competency Based Framework Project that

will be composed of two major outcomes (a) Competency Based Framework
for Early Child Education (ECE) Teachers and Day Care Workers and (b)
ECCD Learning Framework
2. Conceptualization and development of the Human Resource development
program agenda of the ECCD Council
3. Establishment of the National Child Development Center in 25
municipalities/cities in the country
4. Up-scaling the Home-Based ECCD program
5. Initiated the development of the Capacity Assessment Tool for ECCD in
Emergencies in partnership with UNICEF and Plan International

D. Scope of Audit

The audit covered the accounts and operations of the ECCDC for Calendar
Year 2011. The objectives of the audit were to ascertain the propriety of financial
transactions and to determine the fairness of presentation of the financial
statements.

E. Auditor’s Report on the Financial Statements

The Auditor rendered a qualified opinion on the fairness of the presentation

of the financial statements due to the observations in the subsequent paragraphs.

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F. Observations and Recommendations

The following are the audit observations and corresponding recommendations,

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

1. Fund transfers of ₱23,471,228.56 to LGUs remained outstanding as of year-

end, P8,017,074.62 of which pertained to prior year’s balances.

We recommended and Management agreed to require the following:

a. recipients to submit Official Receipts;

b. Municipalities to submit Monthly Report of Fund Disbursements
pursuant to IIB.7 of the MOA and complete liquidation reports for
projects already completed;
c. City/municipality to submit monthly accomplishment reports to ECCDC;
and
d. ECCDC projects-in-charge to submit monitoring reports regarding the
projects pursuant to the MOA.

2. Office Supplies Inventory account of ₱1,127,640.02 could not be relied upon

because physical count was not conducted; the Accounting Unit (AU) did not
adopt the moving average method in costing inventories; and the Supplies
Ledger Cards (SLC) and the Stock Cards (SC) were not updated, contrary to
the provisions of the Manual on New Government Accounting System
(MNGAS).

We recommended that Management require the creation of an Inventory

Committee and the conduct of the physical count of Inventories as required;
AU to update the SLCs and to adopt the moving average method of costing
inventories; and the Property Unit (PU) to update the SCs and to submit
monthly the Report of Supplies and Materials Issued (RSMI) to the AU as
basis in the preparation of the JEV.

3. The balances of the PPE accounts of ₱14,710,688.20 were unreliable due to

the failure of Management to conduct physical count; update the Property
Cards (PCs) in the PU; and to reconcile the quantity per PC with the Property,
Plant and Equipment Ledger Cards (PPELC) of the AU, contrary to Section
43, Volume I and Section 66, Volume II, both of the MNGAS.

We recommended and Management agreed to require the PU to maintain and

update the PCs and reconcile the quantity with the PPELC and the Inventory
Committee to conduct physical count and properly accomplish the prescribed
form of RPCPPE for submission to the Auditor within the prescribed period.

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 4. Equipment totaling ₱1,353,480.00 were procured without the benefit of
public bidding, contrary to Section 10, Rule IV of the Revised Implementing
Rules and Regulations (IRR) of R.A. No. 9184, thus affecting the regularity of
the transactions.

We recommended and Management agreed to direct the Supply Officer to

accomplish properly the POs and ensure that Section 10, Rule IV of RA No.
9184 is complied with in all procurement activities of the agency.

5. Inadequacy of proof/documentation showing that competitive bidding was

undertaken by Management and non-imposition of liquidated damages for the
delay in the delivery, raised doubts as to the regularity of the transaction and
reasonableness of the contract amount and were contrary to Item II.3 of the
contract with Candid Trading Company and the applicable provisions of R.A.
No. 9184 (Government Procurement Reform Act).

We recommended that Management direct the submission of the necessary

documents to support the claims of Candid Trading Company and impose
liquidated damages for the late deliveries.

6. Delays were incurred in the submission of the required accounting/financial

reports including Bank Reconciliation Statements for CY 2011, contrary to
Section 100 of PD No. 1445, COA Circular Nos. 95-006 and 92-125A, and
Note 8, Section 71 of the MNGAS, thus, affecting the timely verification
thereof and correction of deficiencies, if any, as well as communication of
results to Management.

We recommended that Management direct the Chief Accountant to submit the

required reports within the reglementary period as provided under Sections 71
of the MNGAS, Volume I, Section 100 of PD No. 1445 and COA Circular
Nos. 95-006 and 92-125A.

G. Implementation of Prior Year’s Audit Recommendation

Of the three audit recommendations contained in the CY 2010 Annual

Audit Report, two were partially implemented and one was not implemented by
Management.

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