EXECUTIVE SUMMARY

A. Introduction

The Presidential Commission for the Urban Poor (PCUP) was established
under Executive Order (EO) No. 82, dated December 8, 1986, to serve as a direct
link of the urban poor to the government in policy formulation and program
implementation addressed to their needs. In October 2018, the PCUP was
transferred from the Office of the President (OP) to the Department of Social
Welfare and Development (DSWD) pursuant to EO No. 67, dated October 31,
2018.

Its functions and responsibilities are to:

1) coordinate the speedy implementation of government policies and programs for

the urban poor;
2) set up a consultative mechanism which shall provide a forum for continuing
dialogue between the government and the urban poor on the proper planning
and evaluation of programs and projects affecting them;
3) accredit legitimate urban poor organizations for purposes of representation in
the formulation of recommendations to the President;
4) review existing legislation, policies and programs of the government relating to
the Urban Poor, in consultation with the latter, and recommend appropriate
actions thereon to the President;
5) evaluate post and on-going shelter-related projects of the government in
squatter and resettlement areas in consultation with beneficiary communities,
and recommend appropriate action thereon to the President;
6) help coordinate the various activities and services being rendered by different
government organizations/non-government organizations for the Urban Poor;
7) plan and monitor programs and projects for the development of urban poor
communities in coordination with agencies involved;
8) request the assistance of any ministry, bureau, office or agency in the
performance of its functions;
9) facilitate the funding of urban poor programs and projects both from foreign
and domestic fund sources; and
10) perform such other functions as may be authorized by the President of the
Philippines.

The PCUP is presently headed by Chairman and Chief Executive Officer

Alvin S. Feliciano and assisted by four Commissioners, while each of the PCUP’s
three Field Operations Divisions (FODs) at Luzon, Visayas and Mindanao is
headed by a Director.

As at December 31, 2021, PCUP is complemented by 246 personnel,

composed of 140 plantilla positions, and 106 staffs hired under casual and contract
of service (COS).

i
B. Operational Highlights

The reported accomplishments of PCUP for the Calendar Year (CY) 2021
are as follows:

Organizational Outcomes (OOs)/ Physical Physical Percentage of

Performance Indicators Target Accomplishment Accomplishment
Access of the urban poor to asset reform, human development, basic services and other
programs enhanced
Urban Poor Coordination and Support Program
Output Indicators
1. Number of capability
building/training to Urban 678 678 100
Poor Organizations conducted
2. Number of Urban Poor
Organizations issued 274 910 332.12
Certificate of Accreditation
3. Percentage of demolition and 100%
eviction activities reported to 90% (546 cases with 111.11
PCUP monitored 13,484 families)

C. Financial Highlights

The financial position, financial performance and the sources and utilization
of funds of PCUP for CY 2021, with corresponding figures for CY 2020, are
summarized below:

Amount (₱)
Particulars 2020
2021
(As Restated)
Financial Position
Assets 560,971,362.25 587,718,648.33
Liabilities 410,787,065.16 433,494,944.23
Net Assets/Equity 150,184,297.09 154,223,704.10
Financial Performance
Revenue 44,016.39 20,514.69
Current Operating Expenses 190,868,891.00 155,843,807.41
Net Financial Assistance/Subsidy 195,225,609.06 163,673,084.70
Losses 4,020.00 -
Surplus/(Deficit) 4,396,714.45 7,849,791.98
Sources and Utilization of Funds
Appropriations 221,509,224.89 198,435,726.92
Allotments Received:
Current Year 198,670,730.00 177,683,630.00
Continuing Appropriations 22,838,494.89 11,023,726.92
Obligations Incurred 196,518,306.24 154,438,180.71
Disbursements 188,394,888.46 145,244,526.73

ii
 Amount (₱)
Particulars 2020
2021
(As Restated)
Unobligated Allotments 24,990,918.65 34,269,176.21

The Statement of Appropriations, Allotments, Obligations, Disbursements

and Balances for CY 2021 is shown in Annex A.

D. Scope of Audit

The audit covered the accounts and operations of PCUP for the period ended
December 31, 2021. The audit 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 with
pertinent laws, rules and regulations; (c) recommend agency improvement
opportunities; and (d) determine the extent of implementation of prior year’s audit
recommendations. Moreover, the audit was conducted in accordance with the
International Standards of Supreme Audit Institutions (ISSAIs).

E. Independent Auditor’s Report on the Financial Statements

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

the financial statements of PCUP as at December 31, 2021 in view of the material
accounting errors and deficiencies as enumerated below:

1. Inclusion of advances to separated employees amounting to ₱260,000.00

resulted in the overstatement of the Advances to Special Disbursing Officers
(SDOs) account and corresponding understatement of the other receivables
account by the same amount. (Paragraph 1); and

2. Misstatements in the Inventory accounts caused by the non-recognition of

issued Semi-Expendable Properties (SEPs) with an aggregate amount of
₱3,376,162.15. (Paragraph 1)

F. Summary of Significant Audit Observations and Recommendations

The following are the other significant audit observations and the
corresponding recommendations:

1. PCUP was not compliant with pertinent rules on administering cash advances
(CAs) and disbursement of funds as evidenced by: (a) non-liquidation of
overdue CAs totaling ₱1,943,146.65; (b) multiple granting of CAs which may
have caused the existence of long overdue accounts; (b) CAs amounting
₱64,838.00 were used to defray load allowance to employees and the grant of

iii
 unauthorized monthly communication allowance totaling ₱1,377,451.79; (c)
CAs were used for the procurement of common-supplies aggregating
₱1,703,064.18; (d) delays in the liquidation of CAs from 41 to 436 days; and
(e) transfer of funds to not bonded employees. (Paragraph 4)

We recommended that Management require the Chief, AFD to:

a. intensify the monitoring of CAs and ensure that no additional CAs are
granted to SDOs with unsettled balances;

b. exhaust all remedies to recover the unliquidated CAs from separated

employees;

c. submit the authorization from the OP or the legal basis for the grant of
₱1,377,451.79 communication/telephone allowance and cause the return
of excessive load allowance of ₱64,838.00. Henceforth, refrain from
granting allowances without the proper authorization from the OP or the
DBM and/or legal basis;

d. ensure that common-supplies are procured from the Procurement Service-

Department of Budget and Management (PS-DBM) in accordance with
the General Provisions (GP) of General Appropriations Act (GAA) Fiscal
Year (FY) 2021;

e. ascertain the timely liquidation of CAs for the proper accounting of

transactions by withholding the salary of erring SDOs; and

f. consider the designation of area coordinators as SDOs and ensure that they
are properly bonded and authorized to handle government funds.

2. The existence and accuracy of the Property, Plant and Equipment (PPE)
accounts in the financial statements cannot be ascertained and the
accountability over these assets cannot be established due to: (a) non-issuance
of Property Acknowledgment Receipt (PAR) for issued Furniture and Fixtures
(FF) and Motor Vehicles (MV) totaling ₱3,498,921.00; and (b)non-conduct of
physical count of PPEs and non-maintenance of complete PPE Ledger Card
(PPELC). (Paragraph 5)

We recommended and Management agreed to require the Chief,

Administrative Finance Division (AFD) to:

a. formulate and enforce internal policies and procedures aligned to the

provisions of Government Accounting Manual (GAM) for National
Government Agencies (NGAs) on the accounting and internal controls of
PPEs and inventories which include the following, among others:

iv
 i. establishment of accountabilities of all issued properties;

ii. proper accounting and maintenance of records and/or reports such as

PPELC, Property Card (PC), PAR, Inventory Custodian Slip (ICS)
pursuant to the provisions of Chapters 8 and 10, Volume I of the GAM
for NGAs; and

iii. periodic conduct of physical count to establish the existence of these

assets and the conduct of reconciliation of records of Accounting Unit
and SPGSU; and

b. consider assigning the responsibilities over the properties and supplies to a

full-time officer or employees who has no multiple assignments.

3. Of the ₱300,000,000.00 initial fund received in 2018, only 11.31 percent or

₱33,935,194.13 was utilized, signifying underperformance of targeted
activities. However, no status report is available to evaluate the extent of the
completed activities listed in the Memorandum of Agreement (MOA).
Moreover, expenses representing salaries of several personnel hired Contract
of Service (COS)/Job Order (JO) for the Department of Transportation
(DOTr) project amounting to ₱382,847.50 performed activities related to the
regular function/operation and other project of the Agency. (Paragraph 3)

We recommended and Management agreed to:

a. evaluate its absorptive capacity or ability to cope with the demand of

existing projects and the Agency’s regular mandate. If the Agency is
determined to be incapable of performing its functions, it is further
recommended that the idle Fund be returned to the Source Agency or to
the National Treasury, where its use will be optimized. Otherwise, the
Agency draw the new timelines on when the project be implemented in
coordination with the source agency and accelerate the execution of the
PCUP’s agreed obligation while ensuring compliance with the other
provisions of the MOA so that benefits are timely realized;

b. submit the documents as stated above to fully assess the status of the
project;

c. ensure that hired COS/JOs personnel are made to perform the jobs they
were hired for; and

d. henceforth, ensure that funds are utilized only for their specific purposes
for which they are created.

4. The disbursements on training and traveling totaling ₱384,632.55 were

considered irregular, excessive and unnecessary due to (a) per diems of

v
 ₱127,820.00 granted to PCUP employees whose foods and accommodations
were already provided and daily travel expenses (DTE) rate used were more
than the prescribed rate by EO No.77; and (b) expenditures incurred for
unused hotel room reservations and additional meals on top of room
accommodations where meals are already included aggregating ₱256,812.55.
(Paragraph 6)

We recommended that Management require the concerned Officials/

employees to:

a. establish and implement internal guidelines or policies on the

disbursements for training, seminars, conferences and similar activities to
ensure that government funds are expended economically and the
incurrence of irregular, unnecessary and excessive expenditures are
prevented pursuant to EO No. 77, COA Circular 2012-003 and other
pertinent rules. It is recommended that the guidelines cover the following:

• precluding double payment of travel expenses, particularly on per

diem for meals;

• hotel reservations for training/s are only for participants who need
room accommodation and provide a condition that should the
participant not use the reserved room, he/she shall be charged;

• preventing incurrence of unjustified additional meals for

participants/employees whose foods and accommodations were
adequately provided for; and

• consideration of Department of Tourism (DOT)-accredited

accommodations.

b. justify and submit the necessary documentation for the above-mentioned

disallowable expenses amounting to ₱201,140.50.

5. The regularity and propriety of PCUP-Central Office (PCUP-CO)’s

disbursements for Fuel, Oil and Lubricants (FOL) totaling ₱1,727,218.26
could not be ascertained due to: (a) FOL were procured through a purchase
order account without complying with the requisite of competitive bidding
under Section 10 of the Revised Implementing Rules and Regulations (RIRR)
of RA No. 9184, depriving the government of the most competitive and
advantageous price and terms; and (b) absence of internal policies and
procedures on the use of government motor vehicle and consumption of FOL.
(Paragraph 7)

We recommended that Management direct the concerned Officers to:

vi
 a. formulate policies and procedures on the use of government motor
vehicles, procurement and consumption of fuel, oil and lubricants
expenses in conformity with the existing rules and regulations; and

b. strictly adhere to the provisions of Section 10 of the RIRR of RA No.

9184 and other applicable mode of procurement.

6. Various accounting deficiencies that were noted in the recording and reporting
of financial transactions aggregating ₱2,599,844.19 had undermined the
qualitative characteristics of information in the FSs. (Paragraph 2)

We recommended and Management agreed to:

a. require the Accountant to: (i) conduct a thorough review and evaluation of
the affected accounts and balances; and (ii) ensure that these are well-
supported, validly and accurately reported;

b. exert all efforts necessary to recover these advances, deposits, and other
receivables. For the deposits and other receivables, if the same could no
longer be recovered after exhaustion of all remedies, Management to
request authority to write-off and/or adjust the balances in accordance with
COA Circular Nos. 2016-005 and 97-001; and

c. withhold the salaries of the officers and employees until such time that
they can comply/settle their advances.

The above findings and recommendations were discussed with Management

officials concerned in the exit conference held on April 28, 2022. Management
views and reactions were considered in the report, where appropriate. The details of
the above observations were discussed in Part II of this report.

G. Status of Implementation of Prior Year’s Recommendations

Of the 44 prior years’ audit recommendations contained in the CY 2020

Annual Audit Report (AAR), 29 were implemented and 15 remained
unimplemented. The details are presented in Part III of this report.

vii