EXECUTIVE SUMMARY

A. INTRODUCTION

The Office of Civil Defense (OCD), as the implementing arm of the

National Disaster Risk Reduction and Management Council (NDRRMC) under
RA No. 10121 dated May 27, 2010, otherwise known as the “Philippine Disaster
Risk Reduction and Management Act of 2010” continues to administer a
comprehensive national civil defense and Disaster Risk Reduction and
Management (DRRM) program which entails precise administration of the
procedures in coordinating disaster risk reduction management efforts.

RA No. 10121 tasked OCD to conduct periodic assessment and

performance monitoring of the member agencies of the NDRRMC and the
Regional Disaster Risk Reduction and Management Council (RDRRMC).

OCD is headed by Undersecretary Ricardo B. Jalad as the Administrator

for OCD and Executive Director for NDRRMC. He is assisted by two Civil
Defense Deputy Assistants (CDDAs): (1) Assistant Secretary Kristoffer James E.
Purisima for Administrations and (2) Assistant Secretary Casiano C. Monilla for
Operations.

Figure 1, presents the approved Organizational Structure of OCD.

Figure 1

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 The recruitment process of OCD is still ongoing to fill up the manning
requirements under the approved Organizational Structure and Staffing Pattern
(OSSP). The agency has a total manpower of 462 regular employees as of year-
end which is 72 percent of the total requirements of 644 plantilla positions, to
support its mandate.

B. FINANCIAL HIGHLIGHTS

Under RA No. 10964 (GAA FY 2018), the agency had total

appropriations of ₱1,067,198,000.00.

The financial condition, results of operation and sources and application of

funds for CY 2018, with corresponding figures for CY 2017, are summarized
below:

2017 Increase/
Particulars 2018
(As Restated) (Decrease)
A. Financial Condition
Assets ₱1,949,439,400.19 ₱1,756,728,506.08 ₱192,710,894.11
Liabilities 305,670,624.29 356,231,122.80 (50,560,498.51)
Government Equity 1,643,768,775.90 1,400,497,383.28 243,271,372.62
B. Results of Operation
Total Revenue 2,190,289.34 1,282,901.13 907,388.21
Current Operating Expenses 763,294,293.28 766,518,803.56 (3,224,510.28)
Surplus/(Deficit from Current 4,131,898.49
Operations (761,104,003.94) (765,235,902.43)
Net Financial 1,222,588,878.54 1,011,444,503.75
Assistance/Subsidy from 211,144,374.79
National Government
Loss - (1,055,865.90) 1,055,865.90
Surplus (Deficit) for the period 461,484,874.60 245,152,735.42 216,332,139.18
C. Sources and Application of Funds
Allotment Received 1,163,057,172.00 1,522,621,194.18 (359,564,022.18)
Obligations Incurred 1,087,818,970.68 1,106,734,652.56 (18,915,681.88)
Unexpended Balance 75,238,201.32 415,886,541.62 (340,648,340.30)

C. OPERATIONAL HIGHLIGHTS

The OCD reported the following accomplishments per Physical Report of

Operation for Calendar Year (CY) 2018:

Physical Physical
Particulars Variance
Target Accomplishments
 Percentage increase of volunteers
10% 10.39% 0.39%
accredited, organized and capacitated.
 Percentage decrease in fatality rate due to
5% -38% -43%
human-induced hazards.
 Number of volunteers capacitated 1,512 1,572 60
 Number of emergency operations centers
19 18 1
maintained.

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 Physical Physical
Particulars Variance
Target Accomplishments
 Percentage of sectors who rated the
DRRM training and resource learning 70% 96% 26%
initiatives as satisfactory or better.
 Percentage increase of sectors assessed and
10% 29% 19%
improved.
 Number of sectors provided with DRRM
266 268 2
training and learning initiative.
 Percentage of sectors assessed on disaster
10% 23% 13%
readiness and resiliency.
 Percentage of sectors provided with
information, education and communication 10% 13.63% 3.63%
campaigns.

D. SCOPE OF AUDIT

The audit covered the accounts and operations of the OCD for CY 2018.

E. INDEPENDENT AUDITOR’S REPORT

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

financial statements of the OCD as of December 31, 2018.

F. SUMMARY OF OBSERVATIONS AND RECOMMENDATIONS

1 The Accountant failed to record and reclassify financial transactions

amounting ₱312,916,529.33 which occurred during the year resulting in the
understatement of the Due from GOCCs by ₱2,420,909.03 and the Equity by
₱273,685,311.71, and the overstatement of the Inventory and Due to NGAs
amounting to ₱242,008,509.70 and ₱29,255,892.98 respectively.
We recommended that Management (a) take up in the books of accounts the
interest earned and penalty recognized in the books of PITC. Thereafter
withdraw the amount for remittance to the Bureau of Treasury; (b) require the
Property Officer/SAOs to immediately submit the RSMI supported with RIS
to the Accounting Section for immediate recording of issuances in the books
of accounts; (c) require the Property Officer and all SAOs to maintain and
update stock cards for all inventory items for ready reference of inventories on
hand; (d) refrain from assigning the personnel of the Property and Supply
Section at the NDRRM Operations Center for monitoring disasters and
response operations so they can focus on their tasks and be able to accomplish
and submit mandatory reports to the Accounting Section and to the Office of
the Auditor on a timely basis; (e) require the Chief of the GASS of the GSD to
submit all pertinent documents of completed projects to the Accounting
Section as bases of adjustment in the books of accounts; (f) immediately
liquidate the utilized funds within 10 days after the end of each month and

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 upon the completion of the project and return the unused/unutilized portion of
funds in accordance with COA Circular No. 94-013.

2 The continuous transfer of funds to the Philippine International Trading

Center (PITC) despite the unliquidated amount of fund transfer made in FYs
2015 and 2016 totaling ₱186,452,135.18 resulted in the accumulation of
outstanding balance amounting to P480, 863,759.13 as of December 31, 2018.
We recommended that Management (a) demand the immediate delivery of
Non Food Items (NFI); (b) require the refund of excess balance of the
transferred funds; and (c) refrain from making additional fund transfer unless
the previous years’ balances are liquidated/refunded.

3 Unutilized cash balances of regional offices maintained at various Local

Currency, Current Account at the end of the year totaling P68, 070,897.14 was
not remitted to the Bureau of the Treasury contrary to Section 2 of Executive
Order No. 338. Moreover, the correctness of account balances of the 17
regions could not be determined due to the non-preparation of Bank
Reconciliation Statement.
We recommended that Management deposit unused balances of cash in bank
accounts in compliance with Section 2 of Executive Order No. 338 and
require the concerned officers of regional offices to prepare and submit bank
reconciliation statements to the Office of the Auditor on a timely basis.

4 Cash shortage amounting to ₱ 530,334.86 was discovered in the examination

of cash and cash accounts of the Special Disbursing Officer (SDO) of OCD-
NCR.

We recommended that Management require the SDO to restitute the missing

funds and submit explanation why the shortage occurred. Otherwise, impose
proper sanction relative thereto.

5 Utilization/Withdrawal of Fuel, Oil and Lubricants charged against the Quick

Response Fund (QRF) amounting to P12,797,666.65 were made outside the
dates of alert activation which is inconsistent with the intended purpose of the
Fund as provided under Republic Act 10964, paragraph 1 under Special
Provision(s) of 2018 GAA of the Office of Civil Defense (OCD)

We recommended that Management (a) require the concerned personnel that

all fuel withdrawals shall be properly controlled, monitored and accounted for,
through the use of Requisition and Issue Slip (RIS) indicating the purpose and
destination of the vehicles duly approved by authorized official; (b)require the
SAO to submit a Monthly Report of Fuel Consumption of FOL products to
the Auditor for verification purposes to determine the reasonableness and
validity of fuel withdrawal; (c) require Petron to indicate the type and plate

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 numbers of vehicles to facilitate validation of users of QRF Fleet Cards; (d)
revisit the Implementing Guideline and Procedures of the Fleet Card System
and consider revision to include specific and appropriate procedures in the
processing and approval of FOL withdrawal; and (e) require concerned
regional offices to account for all withdrawals outside alert activation dates.

6 Management failed to submit copies of contracts and purchase orders

including documents forming part thereof within five (5) working days upon
approval/issuance thereof as required under Paragraphs 3.1.1 and 3.1.2 of
COA Circular No. 2009-001 dated 12 February 2009, hence, precluding the
Auditor from conducting a timely evaluation and review.

We recommended that Management comply strictly with COA Circular No.

2009-001 in order to facilitate timely evaluation and review of the contracts.

7 The Management failed to: (a) submit the reviewed and endorsed GAD Plan
and Budget (GPB) and Accomplishment Report (AR) contrary to COA
Circular No. 2014-001; (b) comply with the mandatory requirements of
allocating at least five percent of the total appropriations for GAD programs,
projects and activities contrary to Section 36(a) of RA 9710; and (c) fully
utilized the budgeted amount and implement the programs, projects and
activities identified in the GPB.
We recommended that Management (a) ensure timely submission of the GPB
to the PCW for review/approval/endorsement and submit copy of the
approved/endorsed to COA as required under COA Circular No. 2014-001;
(b) allocate at least five percent of the total annual budget for the
implementation of GAD-related activities as required under Section 36(a) of
RA 9710; and (c) maximize the utilization of the GAD funds and implement
as much as practicable all programs/ projects planned during the year.

The foregoing observations and recommendations were discussed with concerned

officials of the agency in our exit conference conducted on March 27, 2019.
Management’s views and compliance with the recommendations were considered in the
report, where appropriate.

G. STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT

RECOMMENDATION

Partially
Implemented
41% Fully
Implemented
59%

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 Out of the 34 audit recommendations contained in the CY 2017 Annual
Audit Report, 20 were fully implemented and 14 were partially implemented.
Details are shown in Part III of this report.

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