PART II – AUDIT OBSERVATIONS AND RECOMMENDATIONS

Long Outstanding Reconciling Items in the BRS – Main Campus

1. The correctness and reliability of the “Cash in Bank” account cannot be ascertained
due to the presence of unadjusted long outstanding reconciling items totaling
P29.133 million and unreconciled items amounting to P1.299 million, respectively,
in the Bank Reconciliation Statements which is not in accordance with Section 58
of Presidential Decree (PD) No. 1445 and Sections 3 and 6, Chapter 21 of the
Government Accounting Manual (GAM), Volume I.

Section 58 of PD 1445 provides among others that the examination and audit of assets shall
be performed with a view to ascertaining their existence ownership, valuation and
encumbrances as well as the propriety of items composing the respective asset accounts,
determining their agreement with records, proving the accuracy of such records; ascertaining
if the assets were utilized economically, efficiently and effectively; and evaluating the
adequacy of controls over the accounts.

Likewise, Section 6, Chapter 21 of the GAM, Volume I, states:

“Sec. 6. Recognition of Adjustments. The Chief Accountant/Designated Staff shall prepare

a JEV to recognize all reconciling items that require adjustment and correction in the books
of accounts.”

For CY 2021, verification of records disclosed that the total amount of unrecorded deposits
significantly increased by P24.529 million bringing the long overdue reconciling items to a total
of P28.892 million. Meanwhile, the total unreconciled items remained at P1.299 million as of
December 31, 2021. Details of the reconciling items (Appendices A, A1 and A2) are
summarized below:

Table 1: WVSU – Main Campus BRS Reconciling Items

BOOK BANK
PARTICULARS
Additions Deductions Additions Deductions
Total Reconciling Items P28,892,276.65 P1,299,456.00 P226,447.27 P14,592.50

The practice of not adjusting the long overdue bank reconciling items is inconsistent with the
objectives in the preparation of the Bank Reconciliation Statements as provided for in
Section 3, Chapter 21 of GAM, Volume I, as follows:

a. check correctness of both the bank’s and agency’s/entity’s records,

b. serve as a deterrent to fraud, and
c. enable the agency/entity or bank to take up charges or credits recognized by the bank or
agency/entity but not yet known to the agency/entity or bank.

Moreover, Section 6, Chapter 2, Volume I of Government Accounting Manual (GAM) for

National Government Agencies (NGAs) provides the basic government accounting and
budget reporting principles, on which each entity shall recognize and present its financial
transactions and operation. One of the basic principles adopted in GAM is the accrual basis
of accounting in accordance with the International Public Sector Accounting Standards
(IPSAS).

55
Accrual basis has been defined in IPSAS 1-Presentation of Financial Statements as follows:

“Accrual basis means a basis of accounting under which transactions and

other events are recognized when they occur (and not only when cash or its
equivalent is received or paid). Therefore, the transactions and events are
recorded in the accounting records and recognized in the financial statements
of the periods to which they relate. The elements recognized under accrual
accounting are assets, liabilities, net assets/equity, revenue, and expenses.”
(Emphasis supplied)

The non-recording of the BRS reconciling item identified as unrecorded deposits amounting
to P28.892 million, resulted in the understatement of the “Cash in Bank”, as well as, the
“Income/Government Equity” accounts of the agency, which is inconsistent with Section 58 of
PD No. 1445 and Sections 3 and 6, Chapter 21 of GAM, Volume I. This rendered the
correctness of the affected account balances uncertain and unreliable.

The Accountant stated that unrecorded deposits were not recognized in the books and no
official receipts were issued, due to difficulty in identifying the depositors/payors as some
pertained to payments/deposits made directly to the bank. Fortunately, they have
resolved/identified most of the deposits made by College Admission Test (CAT) and Diploma
in Teaching (DIT) applicants including some other unrecorded deposits.

Furthermore, several letters were sent to the Land Bank of the Philippines (LBP),
Development Bank of the Philippines (DBP) and Officials of the University seeking assistance
in identifying these unrecorded deposits, resulting to adjustments on some of the long overdue
reconciling items appearing on various BRS of the Campus, as follows:

Table 2: WVSU – Main Adjusted BRS Reconciling Items for CY 2021

BOOK BANK
PARTICULARS
Additions Deductions Additions Deductions
DBP Acct. No. 0755-009622-030

Overstated amount of Check – 1/22/2018

P5.00
Unrecorded Deposits – 4/21/2020 P2,100,000.00
Collections of Himamaylan erroneously deposited to
993.00
Main
DBP Acct. No. 0755-009630-030
Unrecorded Deposits 81,740.00
DBP Acct. No. 0755-030285-030
Unrecorded Deposits – 7/27/2020 5,805.50
LBP Acct. No. 0032-1322-78
Unrecorded Deposits – 12/9/2020 20,000.00
LBP Acct. No. 0032-1513-70
Unrecorded Deposits – 9/14/2016 31,680.00
Unrecorded Deposits – 11/18/2019 149,610.00
TOTAL P2,389,828.50 P0.00 P5.00 P0.00

56
We recommended and Management agreed to:

a. Direct the Accountant to resolve the unadjusted book and bank reconciling items,
particularly the unrecorded deposits totaling P28.892 million, and effect the
necessary adjustments, to correct the balances appearing in the books of
accounts;

b. Review and revise, if necessary, the procedures in the recording of online

payments/deposits from clienteles to ensure that all deposits in WVSU – Main
Campus’ accounts are properly recorded on time and reconciled with bank records
and; and

c. Send confirmation letters to the concerned government servicing banks on the

balances of their respective accounts, in order to effect the necessary
reconciliation and adjustments of the long overdue bank reconciling items.

Unreconciled balance of PPE totalling P1.262 billion – WVSU – Main and CAF Campuses

2. The reliability, existence and completeness of the Property, Plant and Equipment
(PPE) account of WVSU – Main and CAF Campuses totaling P1.262 billion could not
be established due to unreconciled balances amounting to P58.704 million between
the financial statements and the Reports on the Physical Count of Property, Plant
and Equipment (RPCPPE) inconsistent with Government Accounting Manual
(GAM), Volume I, Chapter 10, Sections 38 and 42.

Section 38 Chapter 10 of GAM, Volume I, requires that the entity shall have a periodic physical
count of PPE, which shall be done annually and presented on the Report on the Physical
Count of Property, Plant and Equipment (RPCPPE) (Appendix 73) as at December 31 of each
year. This shall be submitted to the Auditor concerned not later than January 31 of the
following year. Equipment found at station and losses discovered during the physical count
shall be reported to the Accounting Division/Unit for proper accounting/recording.

Section 42 of the same Chapter in GAM, Volume I states that the Chief Accountant shall
maintain the Property Plant and Equipment Ledger Card (PPELC) for each category of PPE
including work and other animals, livestock etc. The PPELC shall be kept to record promptly
the acquisition, description, custody, estimated useful life, depreciation, impairment loss,
disposal and other information about the asset. For check and balance, the Property and
Supply Office/Unit shall likewise maintain PC for PPE in their custody to account for the receipt
and disposition of the same. The balance per PC shall be reconciled with PPELC maintained
by the Accounting Division/Unit. They shall also be reconciled with other property records like
PAR.

Verification of the submitted financial statements (FS) and RPCPPE of WVSU – Main and
College of Agriculture and Forestry (CAF) revealed that there were variances in the amounts
between the Accounting and Supply Offices records for CYs 2015 to 2021. As of December
31, 2021, recorded PPE accounts totaling ₱1.262 billion were not reconciled with the RPCPPE
submitted by the Supply Offices totaling ₱1.203 billion. Details of the variances totaling
₱58.704 million are presented in Appendix B and summarized as follows:

57
Table 3: WVSU – Main and CAF Comparison of Balances of PPE
Campus Per FS Per RPCPPE Variance
Main 1,158,818,982.74 1,102,288,473.16 56,530,509.58
CAF 103,064,908.18 100,891,193.95 2,173,714.23
Total 1,261,883,890.92 1,203,179,667.11 58,704,223.81

It was also noted that the Property, Plant and Equipment Ledger Cards (PPELCs) and
Property Cards (PCs) were not regularly updated by the Accounting and the Supply Units,
respectively. This further precluded the agency from performing effective asset reconciliation
and counterchecking the balances of PPE.

Consequently, the accuracy and existence of the PPE accounts totaling P1.262 billion could
not be ascertained, thus, casting doubt on the reliability of the balances reflected in the
Financial Statements of WVSU – Main and CAF Campuses at year end.

The Accountants remarked that they were not able to complete the reconciliation between the
accounting and property records due to several interruptions caused by the rising number of
cases of infection during the implementation of the Property Inventory Plan (PIP). Likewise,
the reconciliation and investigation on missing properties is ongoing.

It is worthy to mention that the accounts “Buildings” and “Medical Equipment” of WVSU - CAF
were fully reconciled and the Agency was able to reduce the net variance between the
accounting and property records from P29.995 million at the beginning of the year to only
P2.174 million as of December 31, 2021. Likewise, WVSU – Main was able to reconciled the
following accounts as of year-end:

Table 4: WVSU – Main Reconciled PPE as of December 31, 2021

Account Amount
Land 147,914,100.00
Other Land Improvements 25,755,514.20
Water Supply Systems 5,524,113.00
Machinery 1,023,342.00
Agricultural and Forestry Equipment 38,000.00
Disaster Response and Rescue Equipment 1,326,677.00
Military and Police Equipment 281,078.30
Motor Vehicles 21,547,197.93
Other Property, Plant & Equipment 467,035.00
Development in Progress - Computer Software 290,972.25
Total 204,168,029.68

We recommended and Management agreed to:

a. Require the Accountant and Supply Officer to update the PPE Ledger Cards and
Property Cards, respectively as well as ensure that PPELCs and PCs are
accomplished with complete and necessary data; and

58
b. Direct the Accountant and Supply Officer to continue the reconciliation between
the accounting and property records to ensure reliability of the year-end PPE
account balances.

Supplies and Materials Issued not recorded as Expenses – Newborn Screening Center –
Visayas (NSCV)

3. Supplies and materials issued by NSCV totaling ₱9.616 million in CY 2021 were not
recorded as expenses as provided in Chapter 8 of the Government Accounting
Manual (GAM), Volume I, resulting in the understatement of related expense
accounts and overstatement of “Government Equity” account. This rendered the
balances of the affected accounts presented in the financial statement unreliable.

Section 7, Chapter 8 of the Government Accounting Manual (GAM) Volume I states that when
inventories are sold, exchanged, or distributed, their carrying amount shall be recognized as
expense in the period in which the related revenue is recognized. If there is no related
revenue, the expense is recognized when the goods are distributed or the related service is
rendered.

Likewise, Chapter 17 of the same chapter requires the preparation by the Property and/or
Supply Custodian of the Report of Supplies and Materials Issued (RSMI) based on the
Requisition Issue Slip (RIS) which shall be used by the Accounting Division/Unit as basis in
preparing the JEV to record the supplies and materials issued. Moreover, the Accounting
and Supply units are required to conduct periodic reconciliation of the Supplies Ledger Card
and Stock Cards to identify and adjust any discrepancy.

Verification of the submitted financial statements (FS) and RSMI of the Center for CY 2021
disclosed that total Supplies and Materials issued amounted to ₱101.648 million
(Appendix C) while recorded Supplies and Materials expenses only totaled ₱92.032 million,
resulting in net understatement of related expenses accounts amounting to ₱9.616 million.
The details of the discrepancy are as follows:

Table 5: NSCV Comparison of Issued Inventories and Recorded Expenses

Recorded as
Expense in the Total issued per Overstatement
Supplies and Materials Issued FS RSMI (Understatement)

Office Supplies Expenses P1,120,618.02 P1,132,602.67 P(11,984.65)

Accountable Forms Expenses 12,750.00 12,750.00 0.00
Drugs and Medicines Expenses 6,411,057.99 0.00 6,411,057.99
Medical, Dental and Laboratory Supplies Expenses 84,218,217.64 100,278,359.13 (16,060,141.49)
Fuel, Oil and Lubricants Expenses 80,945.39 0.00 80,945.39
Other Supplies and Materials Expenses 188,393.91 224,423.71 (36,029.80)
TOTAL P92,031,982.95 P101,648,135.51 P(9,616,152.56)

Interview with the NSCV Accountant revealed that the recording of receipts and issuances of
supplies and materials in the book of accounts was done in the Accounting Unit of West
Visayas State University Medical Center (WVSUMC) and all Reports of Supplies and
Materials Issued for CY 2021 were already forwarded to that Office. However, they were
unable to conduct periodic reconciliation of records due to the promotion and transfer of the

59
personnel in-charge in the Accounting Unit (WVSUMC) to the Budget Department last July
2020. The position remained vacant until September 2021.

Another interview conducted with the Accountant III of WVSUMC disclosed that for CY 2021,
due to lack of communication between the Accounting Office and the NSCV, they were not
able to conduct reconciliation of their records. The recorded supplies and materials expenses
was based on the amounts reflected in the disbursement vouchers for the purchases of
various supplies and materials.

This practice was not in accordance with Chapter 8 of the GAM, Volume I, that the expense
is recognized when the goods are distributed or the related service is rendered and that
recording of supplies and materials issued should be based on the monthly RSMI.

This resulted in the understatement of the supplies and materials expenses in the amount of
₱9.616 million and overstatement of the Government Equity account, which rendered
unreliable the presentation of the affected accounts in the financial statements of the NSCV.

We recommended and Management agreed to:

a. Require the Accounting Office of the WVSUMC and NSCV to communicate and
conduct reconciliation of their records;

b. Prepare adjusting entries to correct the “Government Equity” account; and

c. Require the Accounting Office of WVSUMC to use the RSMI as basis in recording
supplies and materials issued.

Unreconciled Online Deposits amounting to P26.723 million - NSCV

4. Deficiencies in the recording of Income/Cash Receipts of NSCV resulted in

unreconciled online deposits totaling P26.723 million, thus, the correctness and
reliability of the year-end balances of Cash in Bank and Government Equity account
could not be ascertained, which is inconsistent with the pertinent provisions of the
Government Accounting Manual.

Section 6, Chapter 2 of Government Accounting Manual (GAM), Volume I for National

Government Agencies (NGAs) provides the basic government accounting and budget
reporting principles, on which each entity shall recognize and present its financial transactions
and operations. One of the basic principles adopted in GAM is the accrual basis of accounting
in accordance with the International Public Sector Accounting Standards (IPSAS).

Accrual basis has been defined in IPSAS 1-Presentation of Financial Statements as follows:

“Accrual basis means a basis of accounting under which transactions and other events
are recognized when they occur (and not only when cash or its equivalent is received
or paid). Therefore, the transactions and events are recorded in the accounting records and
recognized in the financial statements of the periods to which they relate. The elements
recognized under accrual accounting are assets, liabilities, net assets/equity, revenue, and
expenses.” (Emphasis supplied)

60
It was observed that despite Management’s commitment during the exit conference
conducted on March 16, 2021, the Center was not able to implement the recommendation of
the Audit Team in the previous years’ Annual Audit Reports. It was recommended to the
Accountant to take up the various unrecorded online deposits totaling P26.723 million, for the
period January 2015 to April 2020. Details are shown in Appendix D and summarized below:

Table 6: NSCV Unrecorded Online Deposits

DBP Account No. PNB Account No.
PERIOD TOTAL
0756002862030 291806700027
Jan. 2015 to Dec. 2019 P1,365,672.50 P4,585,848.23 P5,951,520.73
Jan. 2020 to Apr. 2020 13,078,718.75 7,692,528.15 20,771,246.90
Total as of Apr. 2020* P14,444,391.25 P12,278,376.38 P26,722,767.63
*latest submitted Bank Reconciliation Statement is for April 2020

These reconciling items were deposits made to the Center’s depository banks representing
online payments by facilities which availed of the services offered by the Center. The same
remained unreconciled and unrecorded because the Center was having difficulty in tracing
the deposits since some facilities were not able to provide or send the deposit slips. To avoid
accumulation of unreconciled deposits, the Audit Team had recommended the use of accrual
basis of accounting and to set up receivables for services rendered as provided in the
Government Accounting Manual (GAM) since CY 2015.

Lack of control mechanism, such as the use of accrual basis of accounting which could have
facilitated the identification of online deposits and recognition of income as soon as services
have been rendered, as well as, the non-preparation of the Bank Reconciliation Statements
on a timely basis, resulted in difficulty in reconciling and accumulation of online deposits.

Interview with the NSCV Accountant disclosed that while they have committed during the last
exit conference to set up Accounts Receivable, to properly monitor the accounts and
payments of facilities availing their services, they were unable to do so due to lack of
manpower to handle these accounts. It was further stated that they were unable to hire
additional personnel since the same was not included in the CY 2021 approved budget of the
agency.

Inability of the Center to resolve the unadjusted online deposits, particularly in the year the
income was earned, resulted to the understatement of Cash in Bank and Government Equity
accounts, which affected the reliability, accuracy, and fair presentation of the financial
statements of the Center.

We recommended and Management agreed to:

a. Direct the Accountant to use accrual basis of accounting and set up accounts
receivables for services rendered by the Center;

b. Assign or hire personnel to handle and monitor the Accounts Receivable account
and its subsidiary ledger; and

c. Establish procedures in the recording of payments from clientele to ensure that

all deposits in NSCV’s accounts are properly recorded on time and reconciled
with bank records.

61
Doubtful accuracy and completeness of Inventories - NSCV

5. The reliability and completeness of recorded Inventory accounts totaling

₱244,446.43 could not be established due to the unreconciled balances totaling
P(7.079) million between the financial statements and the Report on the Physical
Count of Inventories (RPCI) which is inconsistent with Chapter 8 of the Government
Accounting Manual (GAM) for National Government Agencies.

Section 13, Chapter 8 of the Government Accounting Manual (GAM) Volume I provides the
guidelines on Inventory Accounting System which consists of the system of monitoring,
controlling and recording of acquisition and disposal of inventory. It also states that physical
count/inventory, which is required semi-annually, is an indispensable procedure for checking
the integrity of property custodianship.

Among the Records, Forms and Reports to be prepared and/or maintained by the Agency, as
required in Section 17, Chapter 8 of GAM, are the following:

a. Stock Card (SC) – shall be used to record all receipts and issues of supplies and the
balance in quantity at any time. It shall be maintained by the Property and/or Supply
Division/Unit for each item in stock. The Inspection and Acceptance Report (IAR),
Requisition and Issue Slip (RIS), Purchase Order (PO) and Delivery Receipt (DR) serve
as the original sources of information for making entries on the card.

b. Supplies Ledger Card (SLC) – shall be used to record materials received, issued and the
balance both in quantity and amount at any time. It shall be maintained by the Accounting
Division/Unit for each kind of supplies and materials. The IAR, RIS, Report of Supplies
and Materials Issued (RSMI), PO and DR serve as the original sources of information for
making entries on the card.

c. Report on the Physical Count of Inventories (RPCI) – shall be used to report the physical
count of supplies by type of inventory as at a given date. It shows the balance of inventory
items per card and per count and shortage/overage, if any. These include the semi-
expendable property wherein the issue is covered by ICS.

The RPCI shall be prepared semi-annually by the Inventory Committee and by fund cluster.
The report shall be reconciled with the Supplies Ledger Card and Stock Cards maintained by
the Accounting Unit and Supply Unit, respectively. Any discrepancy shall be verified and/or
adjusted accordingly.

Verification of the submitted financial statements (FS) and RPCI of the Center revealed that
there were variances in the amounts between the Accounting and Supply Offices records. As
of December 31, 2021, recorded Inventory Accounts totaling ₱244,446.43 were not reconciled
with the RPCI submitted by the NSCV totaling ₱7.323 million. Details of the variances totaling
(₱7.079 million) or 2,895.75 percent of recorded inventories, are as follows:

62
Table 7: NSCV Comparison of Inventories
Inventories Per FS Per RPCI Variance
Office Supplies Inventory P244,446.43 P3,927,794.10 P(3,683,347.67)
Medical, Dental and Laboratory Supplies
0.00 3,125,718.00 (3,125,718.00)
Inventory
Other Supplies Inventory 0.00 258,111.44 (258,111.44)
Semi-Expendable Information and
0.00 11,380.00 (11,380.00)
Communications Technology Equipment

TOTAL P244,446.43 P7,323,003.54 P(7,078,557.11)

Moreover, we have noted that the Supplies Ledger Cards (SLCs) were not updated by the
Accounting Unit. This further precluded the agency from performing effective asset
reconciliation, counterchecking, and tracking the movement of its inventories.

Interview with the NSCV Accountant revealed that the recording of receipts and issuances of
inventories in the book of accounts was done in the Accounting Unit of West Visayas State
University Medical Center (WVSUMC) and that all documents such as Purchase Orders,
Delivery Receipts, Requisition and Issue Slips (RIS) and Reports of Supplies and Material
Issued (RSMI) for CY 2021 were already forwarded to that Office. However, they were unable
to conduct periodic reconciliation between their records due to the promotion and transfer of
the personnel in-charge in the Accounting Unit (WVSUMC) to the Budget Department last
July 2020 and that the vacant position remained unfilled until September 2021.

Non-reconciliation of the recorded Inventory in the financial statements and the RPCI resulted
to difficulty in establishing the accuracy and completeness of the Inventory accounts of the
Center, thus, casting doubt on the reliability of the balances reflected in the Financial
Statements at year end.

We recommended and Management agreed to:

a. Assign a personnel in-charge in the Accounting Unit to update the Supply Ledger
Cards and ensure that SLCs are accomplished with complete and necessary data;

b. Direct the Accountant (WVSUMC) and personnel-in-charge (NSCV) to conduct

reconciliation between their records to ensure reliability of the year-end Inventory
account balances; and

c. Require concerned agency officials to submit to the Auditor progress report on the
reconciliation together with the supporting documents.

63
Unreliable accuracy and existence of PPE due to non-conduct of physical count – WVSU –
Pototan, Medical Center and NSCV

6. Absence of complete physical count of PPE items lead to the non-preparation of

the CY 2021 Report on the Physical Count of Property, Plant and Equipment
(RPCPPE) for properties of WVSU – Pototan, Medical Center and NSCV totaling
₱1.131 billion, as required by Government Accounting Manual (GAM), Volume I,
Chapter 10, Sections 38 and 42, casting doubt on the completeness and validity of
account balances, as well as, the existence and condition of the PPE items.

Section 38 Chapter 10 of GAM, Volume I, states that, “the entity shall have a periodic physical
count of PPE, which shall be done annually and presented on the Report on the Physical
Count of Property, Plant and Equipment (RPCPPE) (Appendix 73) as at December 31 of each
year. This shall be submitted to the Auditor concerned not later than January 31 of the
following year. Equipment found at station and losses discovered during the physical count
shall be reported to the Accounting Division/Unit for proper accounting/recording”.

Section 42 of the same Chapter in GAM, Volume I provides that, the “Chief Accountant shall
maintain the Property Plant and Equipment Ledger Card (PPELC) for each category of PPE
including work and other animals, livestock etc. The PPELC shall be kept to record promptly
the acquisition, description, custody, estimated useful life, depreciation, impairment loss,
disposal and other information about the asset. For check and balance, the Property and
Supply Office/Unit shall likewise maintain PC for PPE in their custody to account for the receipt
and disposition of the same. The balance per PC shall be reconciled with PPELC maintained
by the Accounting Division/Unit. They shall also be reconciled with other property records like
PAR.”

Verification of accounts revealed that RPCPPE for properties totaling ₱1.131 billion
(Appendix E) was not submitted as of December 31, 2021. The significant amount of PPE
account balances was reflected in their respective financial statements without ascertaining
the actual existence and correctness of the property records by conducting an actual physical
count of the Agency’s property, plant and equipment. The balance of PPE accounts in the
Financial Statements as of December 31, 2021 is summarized as follows:

Table 8: WVSU – Pototan, MC and NSCV Property, Plant and Equipment

Agency PPE
Pototan Campus P 108,378,344.91
Medical Center 902,902,257.86
NSCV 119,962,564.20
Total P1,131,243,166.97

Moreover, Property Plant and Equipment Ledger Cards (PPELC) for each category of PPE
and the Property Cards (PC) were not updated regularly by the Accounting and Supply
Offices, respectively.

Reconciliation of records between the Accounting and Property units is important to establish
the accuracy of the recorded amount of Property, Plant and Equipment. It also provides check
and balance as to reliability of the PPE account balances reflected in the financial statements.
However, the agency was not able to conduct reconciliation due to non-updating of PPE
Ledger Cards and Property Cards, as well as, the non-preparation of the RPCPPE.

64
Moreover, physical inventory-taking is an indispensable procedure for validating existence
and property custodianship. The said accounts should have been given utmost importance by
validating their existence and completeness through the conduct of physical count,
considering the materiality of the amount of the PPE in the financial statements.

As a result of the non-conduct of physical count and non-preparation of the RPCPPE,

accuracy and reliability of PPE balances of WVSU – Pototan, Medical Center and NSCV as
of December 31, 2021 could not be established.

The Management remarked that the delay in the preparation and submission of the RPCPPE
was due to several interruptions of the physical count caused by members of the inventory
committee being infected with COVID-19 virus, as well as, the rising number of cases of
infection during the implementation of the Property Inventory Plan (PIP). Likewise,
investigation on the missing properties is still ongoing.

We recommended and Management agreed to:

a. Direct the Inventory Committees to complete the conduct of inventory and

preparation of the Report on the Physical Count of Property, Plant and Equipment
as of December 31, 2021;

b. Require the Accountants and Supply Officers to regularly update the Property, Plant
and Equipment Ledger Cards and Property Cards, respectively and ensure their
completeness; and

c. Direct the Accountants and Supply Officers to conduct reconciliation between their
records.

Payment of Wages of JO/COS with incomplete documentation – WVSU Medical Center

7. Payments for Salaries and Wages of Job Order (JO) and Contract of Service (COS)
personnel of the Medical Center totaling P31.428 million for the period January to
June 2021 were not supported with complete documentation to support validity of
claims as required by Section 4 of Presidential Decree No. 1445, thus propriety of
expenditures was not established and therefore suspended in audit.

Section 4 of PD No. 1445 otherwise known as the State Audit Code of the Philippines provides
the fundamental principles in the handling of financial transactions and operations of any
government agency, to wit:

4.6 Claims against government fund shall be supported with complete documentation.

4.7 All laws and regulations applicable to financial transactions shall be faithfully adhered to.

Results of our audit disclosed that payment of salaries/wages of Contact of Services (COS)
and Job Order (JO) personnel totaling P31.428 million (Appendix F) for the period
January 1, 2021 to June 15, 2021, disclosed the following deficiencies:

1. Disbursements were not supported with complete documentation such as

Accomplishment Reports and any record of attendance.

65
According to the Human Resource and Management Office (HRMO), it is the policy of the
agency not to require JO/COS personnel to prepare and submit accomplishment reports nor
attach a copy of the logbook or any record of attendance. Attached to the disbursements were
only the payroll and the Daily Time Records (DTRs) of personnel.

COS/JO personnel were hired to undertake special job within a specific period, hence
submission of Accomplishment Reports as supporting documents for the payment of their
salaries/wages were necessary for the determination of the work done in accordance with
their contracts. Likewise, submission of biometrics, bundy clock, logbook or any record of
attendance was necessary to determine the validity of entries in the personnel DTRs.

2. Time-Ins and Time-Outs during lunch time were not reflected in the DTR.

The Medical Center Chief, consistent with compliance with the Citizen’s Charter, issued
Memorandum No. 160-A, s. 2020 dated October 16, 2020 which provides:

“Department/Unit Heads of frontline services should ensure that at no given time of the official
working hour the office be left without any personnel to attend to clients’ requests or queries.
The following offices should make sure that this condition is complied with:

a) Office of the Medical Center Chief

b) Medical Division
c) Nursing Service Division
d) Ancillary Services
e) Cashiers Office
f) Housekeeping Department
g) Infection, Prevention and Control Office
h) Linen Department
i) PhilHealth and Billing Services
j) PPMDO
k) Security Office”

The HRMO stated that personnel including JO/COS assigned to the above-mentioned
departments have shifting schedules (i.e. three (3) shifts in 24 hours or 12 to 16 hours of duty),
hence, have straight duty hours and not required to have one-hour meal break.

However, nowhere in the above-mentioned memorandum did it state that personnel were
required to have straight hours duties. Unless there is only one personnel in any of the above-
mentioned departments, they can practice alternate lunch break to comply with the
memorandum just like any other government agencies implementing the no-noon break
policy.

Likewise, JO/COS personnel are not regular employees of the agency and are subject to the
limitations of their contacts of services including their work hours.

3. DTRs with no time entries were paid salaries/wages

Eleven JO/COS personnel with no time entries on their submitted DTRs were paid
salaries/wages equivalent to 107 days (Appendix G).

66
Salaries were also paid to personnel with DTR entries labeled only as “facility quarantine”. as
presented in Appendix “H”. Payments thereto were not supported with any documents nor
computation of salaries received.

The above deficiencies in the payments of salaries and wages of the JO and COS personnel
resulted in the difficulty in ascertaining the propriety of the disbursements totaling
P31.428 million.

We recommended and Management agreed to:

a. Direct the HRMO to require submission of complete supporting documents such as

accomplishment reports and any record of attendance in compliance with
Section 4 of Presidential Decree No. 1445; and

b. Require the HRMO to submit justification to the above-mentioned deficiencies, as

well as, basis of computation of salaries/wages of personnel who submitted DTRs
with no time entries.

Doubtful validity of PPE totaling P10.725 million due to non-provision of Depreciation

8. The validity and accuracy of various “Property, Plant and Equipment” (PPE)
accounts totaling P10.725 million of the WVSU – Himamaylan Campus could not be
established due to non-provision of depreciation as required by Section 27, Chapter
10 of the Government Accounting Manual (GAM), resulting in overstatement of the
asset and government equity accounts.

Section 27, Chapter 10 (Property, Plant and Equipment) of the Government Accounting
Manual provides the following:

“Sec. 27. Depreciation. PPE gradually loses its ability to provide service over the
course of time. Because of this, its cost needs to be distributed on a systematic
basis over its useful life. The allocated cost is referred to as depreciation. The
depreciation charge for each period shall be recognized as expense unless it is
included in the carrying amount of another asset. Xxx.”

It further provides that except for land and not recognized heritage assets, all PPE shall be
depreciated and that the straight-line method of depreciation shall be adopted unless another
method is more appropriate for entity operation. That method is applied consistently from
period to period unless there is a change in the expected pattern of consumption of those
future economic benefits or service potential.

As for the estimation of the useful life of the asset, the GAM states that it is a matter of
judgment based on the experience of the entity with similar assets. The agency/entity is in the
best position to estimate the expected useful life of its PPE or the Management may refer to
the Section 27(f), Chapter 10 of GAM for the life spans in which PPE can be depreciated.

Likewise, Section 27(i) of the same Manual states that a residual value equivalent to at least
five percent (5%) of the cost shall be adopted unless a more appropriate percentage is
determined by the entity based on its operation subject to the approval of COA. Generally,
infrastructure assets have no residual value. In case, the residual value of parts of the

67
infrastructure assets can be determined, the policy of at least five percent (5%) of the cost of
that part shall be applied.

The Campus’ Trial Balance as of December 31, 2021 showed various PPE accounts as
follows:

Table 9: WVSU – Himamaylan PPE Balances

PPE Accounts Amount
School Buildings P3,246,705.24
Other Structures 328,101.54
Office Equipment 1,176,620.00
Furniture and Fixtures 302,002.00
IT Equipment and Software 4,361,610.13
Library Books 94,792.00
Communication Equipment 912,778.00
Other Machinery and Equipment 302,068.00
TOTAL P10,724,676.91

The Accountant explained that no depreciation was provided for all PPE accounts ever since,
because that was the practice of the Agency when he assumed office last August, 2019.
Likewise, details such as original costs and dates of purchase of some PPE were not
available, contributing to the difficulty in providing depreciation.

The reason advanced by the Accountant could not be accepted as valid in not providing
depreciation even for current year’s purchases totaling P0.696 million, as follows.

Table 10: WVSU – Himamaylan CY 2021 PPE Acquisition

PPE Accounts Amount
Office Equipment P246,929.00
Furniture and Fixtures 237,587.00
IT Equipment and Software 211,230.00
TOTAL P695,746.00

The non-provision of depreciation for various PPE accounts resulted in the overstatement of
the asset accounts PPE and understatement of the corresponding expense accounts.

We recommended and Management agreed to require the Accountant to exert extra

effort to analyze and provide depreciation for various PPE accounts totaling
P10.725 million, to ensure the validity, accuracy, and correctness of the year-end
balances presented in the financial statements.

68
Non-derecognition of Unserviceable Properties – WVSU Lambunao Campus

9. Unserviceable properties totaling P1.350 million remained undisposed of and not

derecognized from the books of accounts, which is inconsistent with Section 79 of
Presidential Decree (P.D.) No. 1445, thus, overstating the “Property, Plant and
Equipment” account and exposing properties to risk of further deterioration and
eventual loss of salvage value.

Section 79 of P.D. No. 1445 states, “When government property has become unserviceable
for any cause, or is no longer needed, it shall, upon application of the officer accountable
therefore, be inspected by the head of the agency or his duly authorized representative in the
presence of the auditor concerned and, if found to be valueless or unsalable, it may be
destroyed in their presence. If found to be valuable, it may be sold at public auction to the
highest bidder under the supervision of the proper committee on award or similar body in the
presence of the auditor concerned or other duly authorized representative of the Commission,
after advertising by printed notice in the Official Gazette, or for not less than three consecutive
days in any newspaper of general circulation, or where the value of the property does not
warrant the expense of publication, by notices posted for a like period in at least three public
places in the locality where the property is to be sold.”

Chapter 10, Section 40 of GAM also provides policies on unserviceable properties. It states
that, if a PPE is no longer capable of providing the entity with future economic benefits or
service potential, it is said to be unserviceable. All unserviceable property shall be reported in
the Inventory and Inspection Report of Unserviceable Property (IIRUP). Section 39.e of the
same manual provides that the disposal procedures of unserviceable property shall be in
accordance with applicable rules and regulations on Supply and Property Management
Manual and Section 79 of P.D. No. 1445.

Audit disclosed that 44 unserviceable properties of the campus amounting to P1.350 million
(Appendix I) were not disposed as of December 31, 2021. These unserviceable properties
remained in the books of the agency as part of the PPE account.

Non-disposal of unserviceable properties which are beyond economic repair could result in
further deterioration and eventual loss of salvage value of the properties due to natural wear
and tear, thereby depriving the agency of added income that could be derived from its
disposal. Moreover, non-derecognition of these items does not reflect the true valuation of the
recorded PPE.

The Supply Officer of WVSU – Lambunao Campus remarked that the lack of personnel in the
Supply Office and her additional assignment as member of the Bids and Awards Committee
Secretariat, precluded them to facilitate the disposal of the recorded unserviceable properties
as of year-end.

We recommended and Management agreed to:

a. Constitute an Appraisal and Disposal Committee to conduct inspection/appraisal

and provide valuation on unserviceable properties;

b. Direct the Supply Officer to prepare the Inspection and Inventory Report of
Unserviceable Properties (IIRUP) to facilitate the disposal and basis for dropping
from the books of accounts the unserviceable properties;

69
c. Request in writing for the disposal of the unserviceable properties, for the Auditor
to inspect and witness its disposal in any manner provided in Section 79 of
P.D. No. 1445; and

d. Require the Accountant to derecognize from the books of accounts the

corresponding value of the disposed properties reported in the IIRUP.

Unreliable accuracy and existence of Inventories - WVSU Medical Center

10. Non-preparation of the CY 2021 Report on the Physical Count of Inventories (RPCI)
for inventories OF WVSU Medical Center amounting to ₱46.150 million, as required
in Chapter 8, Government Accounting Manual (GAM), Volume I, rendered the year-
end Inventory accounts balances unreliable.

Section 13, Chapter 8 of the Government Accounting Manual (GAM) Volume I provides the
guidelines on Inventory Accounting System which consists of the system of monitoring,
controlling and recording of acquisition and disposal of inventory. It also states that physical
count/inventory, which is required semi-annually, is an indispensable procedure for checking
the integrity of property custodianship.

Among the Records, Forms and Reports to be prepared and/or maintained by the Agency, as
required in Section 17, Chapter 8 of GAM, are the following:

a. Stock Card (SC) – shall be used to record all receipts and issues of supplies and the
balance in quantity at any time. It shall be maintained by the Property and/or Supply
Division/Unit for each item in stock. The Inspection and Acceptance Report (IAR),
Requisition and Issue Slip (RIS), Purchase Order (PO) and Delivery Receipt (DR) serve
as the original sources of information for making entries on the card.

b. Supplies Ledger Card (SLC) – shall be used to record materials received, issued and the
balance both in quantity and amount at any time. It shall be maintained by the Accounting
Division/Unit for each kind of supplies and materials. The IAR, RIS, Report of Supplies
and Materials Issued (RSMI), PO and DR serve as the original sources of information for
making entries on the card.

c. Report on the Physical Count of Inventories (RPCI) – shall be used to report the physical
count of supplies by type of inventory as at a given date. It shows the balance of inventory
items per card and per count and shortage/overage, if any. These include the semi-
expendable property wherein the issue is covered by ICS.

The RPCI shall be prepared semi-annually by the Inventory Committee and by fund cluster.
The report shall be reconciled with the Supplies Ledger Card and Stock Cards maintained by
the Accounting and Supply Units, respectively. Any discrepancy shall be verified and/or
adjusted accordingly.

Verification of accounts revealed that RPCI for inventories totaling ₱46.150 million was not
submitted as of December 31, 2021. These significant amounts were reflected in the Medical
Center’s financial statements without ascertaining the actual existence and correctness of the
records by conducting an actual physical count of the Agency’s inventories. The Financial
Statements as of December 31, 2021 showed the following balances:

70
 Table 11: WVSU Medical Center Inventories
Inventories Amount
Office Supplies Inventory P56,067.95
Accountable Forms, Plates and Stickers Inventory 769,084.60
Food Supplies Inventory 334,160.00
Drugs and Medicines Inventory 7,650,752.54
Medical, Dental and Laboratory Supplies Inventory 33,672,418.00
Other Supplies Inventory 3,667,973.41

TOTAL P46,150,456.50

Moreover, Supplies Ledger Cards (SLCs) and Stock Cards (SCs) were not updated regularly
by the Accounting and the Supply Units, respectively. This further precluded the agency from
performing effective asset reconciliation, counterchecking, and tracking the movement of its
inventories.

Reconciliation of records between the Accounting and Property units is important to establish
the accuracy of the recorded amount of Inventories. It also provides check and balance as to
reliability of the account balances reflected in the financial statements. The absence of report
from either unit impedes the reconciliation process.

As a result of the above deficiencies, accuracy and reliability of Inventory balances of WVSU
Medical Center as of December 31, 2021 could not be established.

The Management remarked that the delay in the preparation and submission of the RPCI was
due to several postponement of the physical count caused by rising number of cases of
COVID-19 infection among the personnel in the different units of the Medical Center.

We recommended and Management agreed to:

a. Direct the Inventory Committee to complete the conduct of physical count and the
preparation/submission of the Report on the Physical Count of Inventories as of
December 31, 2021;

b. Assign a personnel in-charge in the Accounting Unit to regularly update the Supply
Ledger Cards and ensure that SLCs are accomplished with complete and
necessary data;

c. Require the Supply Office to regularly update the Stock Cards; and

d. Submit to the Office of the Auditor a workplan for the conduct of reconciliation with
corresponding timelines indicating therein the persons responsible for this task.

71
Long outstanding Accounts Payable – WVSU System

11. The Accounts Payable account amounting to ₱139.090 million in the Statement of
Financial Position as at December 31, 2021 included payables amounting to
P4.030 million which had been outstanding for more than two years, thus
inconsistent with COA-DBM Joint Circular No. 1, s. 2021 dated March 8, 2021, and
rendered the validity of the payable accounts balances doubtful.

Commission on Audit (COA) and Department of Budget and Management (DBM) Joint
Circular No. 1, s. 2021 dated March 8, 2021 provides the guidelines implementing Executive
Order (EO) no. 87 directing that all accounts payable which remain outstanding for two years
or more in the books of national government agencies be reverted to the accumulated surplus
or deficit of the general fund of the national government.

Section 4.1 of said joint circular requires that all National Government Agencies shall revert
all accounts payable (A/Ps) for FY 2017 and prior years thereto in the Accumulated
Surplus/(Deficit) on or before the end of 2021.

Likewise, Section 4.6 provides that all government entities concerned shall prepare an
inventory of A/Ps incurred in FY 2017 and years prior thereto, as of December 31, 2020. It
shall reflect the name of creditor, Obligation Request and Status (ORS) Number, allotment
class, funding source, year of incurrence and obligations, etc., and shall be submitted to DBM
and COA not later than June 30, 2021. Such inventory shall serve as one of the bases for
reversion of the A/P and for the purpose of payment after reversion, subject to agency
validation procedures.

Review of the WVSU Consolidated Statement of Financial Position as at December 31, 2021
and its supporting schedules disclosed that out of the balance of total Accounts Payable of
₱139.090 million, ₱4.030 million or 2.90 percent are aged over two years. The long-
outstanding liabilities pertain to payables to 251 various creditors (Appendix J). Likewise, the
accountants were not able to conduct periodic review of all recorded payables to determine
their validity and completeness of documents on file.

The inclusion of accounts payable aging two years or more in the balance of Accounts
Payable rendered the validity of the same doubtful.

It is worthy to mention that for CY 2021, the Accountants of the different campuses were able
to initiate the reversion resulting to decrease in the number of long outstanding accounts
payable from 504 to 251. However, perusal of the Consolidated Inventory of Accounts Payable
incurred in FY 2017 and prior years (Appendix K) showed that out of the ₱3.489 million, only
₱1.926 million (Appendix L) were reverted to the Accumulated Surplus(Deficit) as of
December 31, 2021. Likewise, despite the decrease on the number, total outstanding
accounts payable aged two years or more increased from ₱4.010 million to ₱4.030 million, at
year-end.

We recommended and Management agreed to require the Accountants to:

a. Conduct periodic review of the recorded Accounts Payable in order to determine

the validity of claims and completeness of documents on file; and

72
b. Cause the reversion of undocumented accounts payable, as well as, those two
years old or over and against which no actual claim, administrative or judicial, has
been filed or which is not covered by perfected contracts on record.

Prior Years’ Issued Inventories – WVSU Main Campus

12. Supplies and Materials Issued in CY 2019 and prior years totaling ₱0.562 million
were not dropped from the books of accounts due to the non-submission of the
Reports of Supplies and Materials Issued as required in Chapter 8 of the
Government Accounting Manual, Volume I, resulting in overstatement of related
asset accounts and “Government Equity” account. This rendered the balances of
the accounts presented in the financial statement unreliable.

Section 7, Chapter 8 of the Government Accounting Manual (GAM) Volume I states that when
inventories are sold, exchanged, or distributed, their carrying amount shall be recognized as
expense in the period in which the related revenue is recognized. If there is no related
revenue, the expense is recognized when the goods are distributed or the related service is
rendered.

Likewise, Chapter 17 of the same chapter requires the preparation by the Property and/or
Supply Custodian of the Report of Supplies and Materials Issued (RSMI) based on the
Requisition Issue Slip (RIS) which shall be used by the Accounting Division/Unit as basis in
preparing the JEV to record the supplies and materials issued. Moreover, the Accounting
and Supply units are required to conduct periodic reconciliation of the Supplies Ledger Card
and Stock Cards to identify and adjust any discrepancy.

Verification of the submitted financial statements (FS), Report on the Physical Count of
Inventories (RPCI) and RSMI of the Campus for CY 2021 disclosed that the following Supplies
and Materials totaling P0.562 million issued in CY 2019 and prior years were not dropped
from the books of accounts due to the non-submission of corresponding RSMI:

Table 12: WVSU – Main CY 2019 and Prior Years Issued Inventories
Supplies and Materials Issued Amount
Animal/Zoological Supplies Inventory P410,758.50
Medical, Dental and Laboratory Supplies Inventory 1,170.44
Agricultural and Marine Supplies Inventory 10,159.50
Textbooks and Instructional Materials Inventory 140,000.00
TOTAL P562,088.44

It is worthy to mention that for CY 2021, the Accounting and Supply Units of the Campus were
able to prepare RSMIs corresponding to supplies and materials issued in CY 2019 and prior
years and conduct reconciliation between their records, thus reducing the balance from
P4.598 million at the beginning of the year to only P0.562 million as of December 31, 2021.
The details of the reconciliation are as follows:

73
Table 13: WVSU – Main Reconciliation of Inventory Accounts for CY 2021
Balance as of Balance as of Reconciled/Adjusted
Inventory Account
12/31/2020 12/31/2021 in CY 2021
Office Supplies Inventory P1,577,252.55 P0.00 P1,577,252.55
Accountable Forms, Plates and Stickers Inventory 38,800.00 0.00 38,800.00
Animal/Zoological Supplies Inventory 530,155.00 410,758.50 119,396.50
Medical, Dental and Laboratory Supplies Inventory 331,769.14 1,170.44 330,598.70
Agricultural and Marine Supplies Inventory 12,280.00 10,159.50 2,120.50
Textbooks and Instructional Materials Inventory 461,320.00 140,000.00 321,320.00
Other Supplies and Materials Inventory 1,646,081.94 0.00 1,646,081.94
TOTAL P4,597,658.63 P562,088.44 P4,035,570.19

Non-submission of RSMI for supplies and materials issued in CY 2019 and prior years
resulted in non-recording of related expenses and overstatement of Inventory and
“Government Equity” accounts, thus rendered unreliable the presentation of the affected
accounts in the financial statements.

We recommended and Management agreed to:

a. Require the Supply Officer to prepare and submit the RSMI for the remaining
supplies and materials issued in CY 2019 and prior years;

b. Direct the Accounting and Supply Units to continue the reconciliation between their
records; and

c. Require the Accountant to prepare adjusting entries to correct the related asset
accounts and “Government Equity” account.

Delayed Submission of DVs – WVSU Janiuay Campus and Medical Center

13. Disbursement Vouchers (DVs) and its supporting documents totaling P1.486 billion
were not submitted within the reglementary period, while those for December 2021
totaling P22.077 million were totally not submitted, as required in COA Circular No.
2009-006 dated September 15, 2009. These precluded the Auditor from conducting
timely audit of accounts to ascertain the legality and validity of the transactions.

Section 7.1.1 (a) of COA Circular No. 2009-006 or The 2009 Revised Rules and Regulations
on the Settlement of Accounts approved on September 15, 2009 states:

“The head of the agency, who is primarily responsible for all government funds and property
pertaining to his agency, shall ensure that the required financial and other reports and
statements are submitted by the concerned agency officials in such form and within the period
prescribed by the Commission.”

Moreover, Section 7.2.1 (a) of the said circular requires “The Chief Accountant, Bookkeeper
or other authorized official performing accounting and/or bookkeeping functions of the audited
agency shall ensure that the reports and supporting documents submitted by the Accountable
officers are immediately recorded in the books of accounts and submitted to the Auditor within
the first ten (10) days of the ensuing month.”

74
Perusal of records disclosed that the WVSU – Janiuay Campus incurred substantial delays in
the submission of 993 DVs totaling P76.410 million, ranging from 13 to 188 days. Further, 243
DVs for the period December 2021 totaling P11.211 million were not submitted to the Office
of the Auditor as of February 28, 2022 (see Appendix M for details).

Likewise, despite the prior years’ observations on the delayed/non-submission of DVs, WVSU
Medical Center still incurred substantial delays in the submission of 3,948 DVs totaling P1.410
billion, ranging from 9 to 191 days (Appendix N). Moreover, 39 DVs for December 2021 for
Fund 184 – Others amounting to P10,866,066.03 were not submitted.

The delayed/non-submission of DVs for CY 2021 is summarized as follows:

Table 14: WVSU – Janiuay and Medical Center Submission of DVs

No. of Days
Fund Amount No. of DVs
Delay
Delayed Submission
Janiuay Campus
Fund 101 P 56,781,671.58 360 13 to 188
Fund 164 7,431,069.22 312 13 to 188
Fund 184 12,197,500.00 321 13 to 160
P 76,410,240.80 993 13 to 188
Medical Center
Fund 101 P658,204,623.89 1,299 38 to 160
Fund 164 243,112,223.41 1,008 38 to 191
Consignment 140,257,676.62 736 38 to 130
Fund 184 - Others 182,388,850.42 445 10 to 99
Fund 184 - PHIC 23,605,638.27 86 9 to 99
Fund 184 - PHIC Hospital Charges 130,353,309.81 264 9 to 99
Fund 184 - PHIC Professional Fees 31,618,634.83 110 9 to 99
P1,409,540,957.25 3,948 9 to 191
Total – Delayed Submission P1,485,951,198.05 4,941

Not Submitted
Janiuay Campus
Fund 101 P8,794,832.02 75
Fund 164 1,656,505.31 130
Fund 184 760,000.00 38
P11,211,337.33 243
Medical Center
Fund 184 - Others P10,866,066.03 39
P10,866,066.03 39
Total – Not Submitted P22,077,403.36 282

The Management remarked that the delays in the submission of disbursement vouchers (DVs)
for CY 2021 was primarily due to the COVID-19 pandemic. Granting as it may, however, the
same should not be a reason for incurring substantial delay in the submission of disbursement
vouchers.

The delayed or non-submission of the Disbursement Vouchers and its supporting documents
within the prescribed period provided in COA Circular No. 2009-006 precluded the timely audit

75
of accounts and financial transactions to ascertain the legality and validity of the transactions,
as well as, its compliance with applicable rules and regulations.

We recommended and Management agreed to require the Accountants to immediately

submit the disbursement vouchers complete with supporting documents and strictly
comply with the deadline provided in COA Circular No. 2009-006 dated
September 15, 2009.

Doubtful validity of operation and reliability of reported income amounting to P3.563 million

14. The reported revenue from the operation of an Income Generating Project (IGP), the
WVSUMC Canteen and Catering Services, amounting to ₱3.563 million could not be
completely accounted for and the viability of the aforementioned IGP could not be
easily determined due to lack of a clear-cut policy/manual of operations and
financial reports pursuant to Sections 112 and 124 of Presidential Decree No. 1445.

Sections 124 of Presidential Decree No. 1445 provides that it is the direct responsibility of the
agency head to install, implement, and monitor a sound system of internal control.

Likewise, Section 112 of the same manual provides for recording of financial transactions
which states that “Each government agency shall record its financial transactions and
operations in conformity with generally accepted accounting principles and in accordance with
pertinent laws and regulations.”

The Medical Center’s Income Generating Project (IGP) – Canteen and Catering Services
under the Nutrition and Dietetics Service Unit was established to meet the demand of the
clientele and to generate additional funds for the Center. However, the IGP was not properly
implemented since CY 2019 due to the absence of a Policy and/or Manual of Operations that
should have guided its operation.

Evaluation of its operation for CY 2021 disclosed that such IGP was able to generate revenues
totalling ₱3.563 million, the details of which are as follows:

Table 15: WVSUMC IGP Gross Revenue for CY 2021

Month Amount
January P155,501.00
February 161,792.00
March 271,751.00
April 274,248.00
May 284,538.00
June 272,505.00
July 298,332.00
August 301,758.00
September 321,930.00
October 364,719.00
November 433,953.00
December 421,674.00
TOTAL P3,562,701.00

76
The practice of the agency was to record daily sales/revenues through the use of a Cash
Register starting only on November 2020. The total cash at the end of the day was remitted
and issued an Official Receipt by the Cashier, and the same was recorded as income of the
Medical Center without any control such as to the number of items available for sale and sold
for the day.

Likewise, the cost of goods sold and expenses incurred in the operation could not be properly
accounted. Inquiry with the Head of the Nutrition and Dietetics Service Unit disclosed that
while waiting for the approval of the Policy and Manual of canteen and catering operations
which was already in its final draft, the Unit for the meantime continues to utilize the Petty
Cash Fund (PCF) of the Unit to pay for the costs of operating the canteen and catering
services. However, such PCF was established solely for the the daily market purchases of
patients’ subsistence, thus, resulted in difficulty in accounting for the cost of goods
sold/expenses related to its operation since purchases and usage of food supplies inventory
for both patients’ subsistence and operation of the canteen were done simultaneously.

With these procedures, accountability was not clearly defined as duties and responsibilities
such as sales, handling of cash and recording of financial transactions were not properly
assigned.

Likewise, management need not wait for such policy and manual to establish a separate fund
for the canteen operations as Section 2 of Department of Budget and Management (DBM)
Circular Letter No. 92-8 provides that all receipts from IGP such as canteen operations shall
be constituted into a Revolving Fund. All income from the operation should be deposited in
an authorized government depository bank and shall accrue to the Revolving Fund while all
expenses directly related to its operation and maintenance shall be charged directly against
the Fund.

Moreover, inability of the agency to constitute a revolving fund, hindered in the preparation of
financial report such as Statement of Financial Performance to record revenues and
disbursements related to the operation of the Canteen, as well as, to determine the profitability
of the project. Overhead costs such as electricity, water, depreciation of equipment, etc. in the
operation of the Canteen were likewise not considered/monitored in determining the financial
condition of the project.

The above-mentioned conditions, resulted in difficulty in accounting for the income of the
project and the accuracy and reliability of reported revenue of ₱3.563 million for CY 2021.

We recommended and Management agreed to:

a. Require the Heads of the Internal Audit and Nutrition and Dietetics Services to
expedite the completion/approval of the Policy/Manual on the operation of the
Canteen to include the accurate recording of revenues and expenses, proper
assignment of responsibilities such as handling of cash, recording of financial data
as well as counter-checking the correctness of the recorded transactions and other
areas related to its operation, to ensure validity and accuracy of recorded
transactions;

77
b. Direct the Head of the Nutrition and Dietetics Service/Petty Cash Custodian to stop
utilizing the Petty Cash Fund to pay for the expenditures of the canteen and catering
operations and constitute a revolving fund for the operation of the Canteen so that
proper accounting of expenses related to its operation can be made; and

c. Require the Head of the IGP to prepare and submit financial reports to determine
the viability of the income generating project.

Payment in Cash of Overtime Services - NSCV

15. Payment of overtime services totaling P0.692 million were not in accordance with
Civil Service Commission (CSC) and the Department of Budget and Management
(DBM) Joint Circular No. 1 s. 2015, thus, necessity and propriety of the
disbursements could not be ascertained

Section 3 of the Joint Circular No.1 s. 2015 provides the General Policies on Overtime
Services, to wit:

1. The rendition of overtime services shall be authorized only when extremely necessary,
such as when a particular work or activity cannot be completed within the regular
work hours and that noncompletion of the same will:

a. cause financial loss to the government or its instrumentalities;

b. embarrass the government due to its inability to meet its commitments;
c. negate the purposes for which the work or activity was conceived.

2. As a general rule, the remuneration for overtime services shall be through CTO, in
accordance with the guidelines under the CSC-DBM Joint Circulars No. 2, s. 2004 and
No. 2-A. s. 2005.

3. The payment in cash of overtime services through Overtime Pay may be authorized only
in exceptional cases when the application of CTO for all overtime hours would adversely
affect the operations of the agency.

Audit of disbursements for overtime services paid for the period August 23, 2020 to
December 22, 2021 totaling P0.692 million (Appendix O) showed that administrative
personnel rendered overtime services mostly for signing and approving sales invoices,
receiving/segregating documents, preparing purchase orders, cleaning the office, and other
routinary works. For laboratory personnel, approved overtime services involved recalling
patients, punching of results, and the like. Such activities performed were part of their daily
tasks that can be completed within the regular work hours and were not priority activities that
warranted the rendition of overtime services.

The NSCV Accountant explained that even during the pandemic, the Center did not observe
alternative work arrangements for personnel such as skeleton workforce or work-from-home
arrangements due to the bulk and demand of the Center’s services which catered the whole
Visayas Area, hence overtime services were necessary.

It should be noted that the guidelines provided that overtime services shall be authorized only
when extremely necessary. The grant of overtime pay for work that was not of urgent nature
that require completion within a specified time is an unnecessary expense. It could be

78
undertaken during regular office hours and non-completion of such will not result in financial
loss nor adversely affect its operation.

We recommended the Management to:

a. Submit justification on the necessity of paid and authorized overtime services

rendered by NSCV personnel;

b. Use Compensatory Time-Off (CTO) to remunerate overtime services duly

authorized in accordance with CSC-DBM Joint Circular No. 1 s. 2015; and

c. Refrain from authorizing overtime services not considered as priority activities that
may warrant rendition of necessary overtime services in accordance with CSC-DBM
Joint Circular No. 1 s. 2015.

Management Comments:

NSCV performs Overtime services since the center continue to operate even during holidays.
While during weekdays, if the running of samples is not finished within the day, the center
needs to do overtime to monitor the screening results and release urgent results for urgent
follow-up of positive babies in order to meet the standard requirement, as prescribed by the
international standards.

Auditor’s Rejoinder:

We acknowledged the need of some laboratory personnel to render overtime services for
monitoring the newborn screening results, release of urgent results and/or follow-up of
positive babies. However, the same should be remunerated using CTO and not paid in cash
through overtime pay as such may be authorized only in exceptional cases when the
application of CTO for all overtime hours would adversely affect the operations of the agency.
Likewise, only a limited laboratory personnel should be authorized to render overtime services
during holidays as there are no guarantee of walk-in clients/couriers endorsing NBS blood
samples to the Center. Moreover, activities that warrants the rendition of overtime services
pertains to those assigned in the laboratory and releasing/selling of NBS kits and do not
include administrative personnel paid Overtime Pay mostly for signing and approving sales
invoices, receiving/segregating documents, preparing/checking purchase orders/other
documents, cleaning the office, and other routinary works.

Uncollected Receivables totalling P1.826 million from StuFAP and SAFE Loans

16. Long outstanding loans receivable from grantees of Student Financial Assistance
Program (StuFAP) and Student Assistance Fund for Education (SAFE) amounting
to P0.639 million and P1.187 million, respectively have not been collected as
required by CHED Memoranda Order Nos. 4 s. 2004 and 25 s. 2008, thus, the risk of
program discontinuance is high, program viability is not ensured and the program’s
objective of providing loans continuously to the students was not fully achieved.

The Commission on Higher Education (CHED) through the StuFAP and SAFE loan programs
pursues the goal of broadening the access of deserving and qualified students to loan
schemes intended to contribute to the long-term objectives of enhancing the nation’s human
capital, competitiveness and economic development.

79
To attain the objectives of the programs, the amounts of P1.581 million and P1.965 million
were allocated to WVSU Main and external campuses for the StuFAP and SAFE Loan
Programs, respectively, to wit:

Table 16: Loan Programs Released to WVSU System

Campus StuFAP SAFE Total
Main P1,109,082.00 P850,000.00 P1,959,082.00
Pototan 176,000.00 250,000.00 426,000.00
Janiuay 40,000.00 250,000.00 290,000.00
Calinog 96,000.00 250,000.00 346,000.00
Lambunao 160,000.00 250,000.00 410,000.00
CAF 0.00 115,000.00 115,000.00
TOTAL P1,581,082.00 P1,965,000.00 P3,546,082.00

It is envisioned that the funds will be treated as Revolving Fund to expand the number of
beneficiaries of the program.

Item IV.2 of CHED Memorandum Order (MO) No. 4, s. 2004 provides the duties, functions
and responsibilities involved in the implementation and administration of StuFAP loan
program. Likewise, as provided in Section VII of the same regulation and covered by Loan
Agreements, the qualified borrowers may be allowed to borrow a maximum of ₱8,000.00 per
semester and that the loan shall be payable as follows:

• Loans below ₱4,000 –within 5 years

• Loans above ₱4,001 – within 10 years
Responsibilities of the Loan Borrower are as follows:

A. Pay the amount borrowed under the program within the amortization period;
B. Notify the school within 30 days for any changes of the following:

1. Change of permanent address

2. Commencement of employment
3. Transfer of change of employment
4. Change in civil status

Items VI and VII of the same CHED MO provides the following:

“VI. QUALIFICATION OF APPLICANTS

The applicants for the STUDENT FINANCIAL ASSISTANCE PROGRAM must meet the
following qualifications/requirements:

Xxx d. Must have a co-borrower either his/her parents or his/her relatives or any person
who is a GSIS/SSS Member. xxx”

“VII. LOANABLE AMOUNT and MODE OF PAYMENT

80
“xxx The student borrower’s parents (either father or mother), any relatives or persons
he/she may present shall sign the loan agreement together with the student.”

Furthermore, Section IX.B of CHED Memorandum Order No. 25, s. 2008 on the guidelines for
the SAFE loan program provides that:

“Participating Higher Education Institutions (HEIs) shall perform the following:

v. Draw corresponding duly notarized promissory note for repayment within 2 to 5 years after
graduation, duly signed by the borrower when grant of loan is awarded; x x x assist CHEDRO
to monitor or track the whereabouts of the scholars after graduation in order that the latter
properly comply with their obligation to refund the loan at the intended period of repayment”

Audit of StuFAP and SAFE loans receivables of the WVSU System revealed that P1.826
million (Appendix P) had been outstanding as of December 31, 2021. The summary is as
follows:

Table 17: WVSU Main and External Campuses Outstanding Loans Receivables as of December 31, 2021
No. of Grantees with Balance as of CY 2021 Balance as of
Campus
Outstanding Loans 12/31/2020 Collections 12/31/2021
StuPAF Loans

Main 115 P451,218.00 P46,505.00 P404,713.00

Pototan 12 74,000.00 11,000.00 63,000.00
Janiuay 16 30,400.00 0.00 30,400.00
Calinog 18 41,350.00 5,950.00 35,400.00
Lambunao 17 105,600.00 0.00 105,600.00
Sub-total 178 P702,568.00 P63,455.00 P639,113.00
SAFE Loans
Main 79 P427,500.00 P 61,500.00 P366,000.00
Pototan 40 207,090.00 0.00 207,090.00
Janiuay 37 177,000.00 0.00 177,000.00
Calinog 43 208,500.00 3,000.00 205,500.00

Lambunao 32 156,000.00 0.00 156,000.00

CAF 15 75,000.00 0.00 75,000.00

Sub-total 246 P1,251,090.00 P64,500.00 P1,186,590.00

TOTAL 424 P1,953,658.00 P127,955.00 P1,825,703.00

Verification of records showed that out of the P3.546 million loan granted to student-borrowers
of the StuFAP and SAFE, the amount of P1.826 million or 51.49 percent were not collected
as of December 31, 2021. This said amount remained outstanding for over 10 years, thus, the
loan agreement between the student borrowers, co-makers and the University was not fully
carried out.

81
For CY 2021, not all campuses were able to re-issue demand letters to student-borrowers and
their co-makers and enforce the provisions provided in the loan agreement, resulting in
minimal collection of P127,955.00 for both loan programs.

Interview with the Accountants, as well as, remarks from the Managements disclosed the
following:

Campus Remarks/Explanation
Main The tagging of students with outstanding loans in the University’s information
system notifies the management when they have transactions in the different
departments of the university such as enrollment in the Graduate School or
getting their credentials.

The non-collection of the remaining receivables was due to the ongoing

COVID-19 pandemic and the difficulty to track the whereabouts of the
grantees, as well as, the refusal of borrowers to settle their obligations.
Calinog The Management was able to re-issue demand letters to student-borrowers
and their co-makers to enforce the provisions provided in the loan agreement.
They have also created a Facebook Group to reach out to most of the
grantees. This resulted to a collection of P5,200.00 from both loan programs
in CY 2021 and an additional P7,000.00 from SAFE loans as of January 31,
2022.

CAF The Management was not able to re-issue demand letters to student-
borrowers and their co-makers. The Office of Students Affairs (OSA) was able
to contact the grantees and four out 15 already paid the outstanding
receivable as of February 28, 2022. One of the grantees died and the OSA
and Accounting Unit will evaluate and commence the process to request
write-off of said dormant account.

Currently, the OSA and Accounting Unit are exerting efforts to remind the
borrowers of their due and demandable accounts.
.
Lambunao Interview with the Accountant disclosed that the non-collection of these
receivables was due to the ongoing COVID-19 pandemic and the difficulty to
track the whereabouts of the grantees and co-makers (most of them are
parents of borrowers) as well as, the refusal of borrowers to settle their
obligations.

Likewise, personnel still connected with the agency listed as loan maker
refused to pay the principal borrowers’ obligations since they have not signed
any loan document and alleged that their names were just listed as co-makers
to facilitate the release of loans to student-borrowers. Moreover, for CY 2021,
the accountant was able to obtain two promissory notes from borrowers,
promising to pay their obligations.

Pototan Demand Letters were received by the co-borrowers/family members of

borrowers as of December 31, 2021 with promise to settle. However, no
payment was made as of February 28, 2022.

82
 Campus Remarks/Explanation

Demand letters will be sent again to the co-borrowers and the Accounting
Office will seek the assistance of OSA in establishing the whereabouts of the
borrowers.

Janiuay The Management was able to send demand letters to guarantors. However,
the collection process becomes difficult as face-to-face interaction was
discouraged. Furthermore, we have coordinated with the OSA to continue
contacting the co-makers of grantees using all sorts of communication
including social media to disseminate and gather information and the re-
issuance of demand letters to grantees and their co-makers.

The non-collection of due and demandable receivables increased the risk that the program
be discontinued. Also, program viability was not ensured and the objective of the program
aimed at providing loans continuously to the students was not fully achieved because of
exhaustion of funds

We recommended and Management agreed to:

a. Intensify the collection of due and demandable accounts by re-issuance of demand

letters to student-borrowers and to the co-makers through registered mail to
ensure receipt of these letters;

b. Set up an effective monitoring system to keep track of the whereabouts of the

student-borrowers; and

c. Evaluate if the outstanding receivables meet the criteria provided in COA Circular
No. 2016-005 dated December 19, 2016 on Request for Write-Off of Dormant
Accounts and commence the process required therein.

Delayed Submission of BRS – WVSU Himamaylan, Janiuay, Pototan, Medical Center and
NSCV

17. The accuracy of the year-end balance of the account Cash in Bank – Local Currency,
Current Account totaling P867.322 million could not be established due to non-
submission of monthly Bank Reconciliation Statements (BRS) within the prescribed
timeline to the Office of the Auditor, as required under Section 7, Chapter 21 of the
Government Accounting Manual (GAM), Volume I.

Section 7, Chapter 21, of the GAM, Volume I, provides that:

“Reporting. The Chief Accountant shall submit the BRS within twenty days after receipt of
the monthly BS to the following:

Original – COA Auditor (with all the supporting documents and JEVs)
Copy 2 – Head of Agency/Entity
Copy 3 – Accounting Division/Unit file
Copy 4 – Bank, if necessary”

83
Verification of records showed the status of submission of BRS as of February 28, 2022 as
follows:

Pototan Campus

The Campus incurred substantial delay in the submission of the required monthly Bank
Reconciliation Statements (BRS) to the Office of the Auditor (Appendix Q).

Himamaylan Campus

The Campus submitted the following BRS simultaneously only on October 26, 2021:

Table 18: WVSU – Himamaylan Submission of BRS

Bank Account Number Monthly BRS Submitted
DBP 00-0-05589-745-1 January 2021 to September 2021
LBP 0032-1938-54 March 2021, June 2021 and September 2021

Likewise, the BRS for October 2021 for DBP Account No. 00-0-05589-745-1 was submitted
only on November 16, 2021 while the remaining Bank Reconciliation Statements were not yet
submitted to the Office of the Auditor.

Janiuay Campus

The Campus was not able to prepare and submit the required monthly Bank Reconciliation
Statements and supporting documents for the period December 2021 for its three depository
accounts.

WVSU Medical Center

The Medical Center was not able to prepare and submit the required monthly Bank
Reconciliation Statements and supporting documents for the period January 2021 to
December 2021 for nine depository accounts.

Moreover, as shown in Appendix “R”, most of the unsubmitted BRS for CY 2020 of the Center
were submitted only on March 19, 2021 and October 20, 2021 while others remained
unsubmitted to the Office of the Auditor as of February 28, 2022.

NSCV

The Center was not able to prepare and submit the required monthly Bank Reconciliation
Statements and supporting documents for the period January 2021 to December 2021 for two
depository accounts.

Likewise, the remaining Bank Reconciliation Statements for the period May to December 2020
and February to December 2020 for PNB Account No. 310710012012 and DBP Account No.
0756-002862-030, respectively were not yet submitted to the Office of the Auditor as of year-
end.

Interview with the Accountant of Himamaylan Campus disclosed that the delay in the
preparation and submission of the BRS was due to lack of personnel in the Accounting Unit.
The Cashier of the Campus transferred to the Department of Education effective
December 31, 2020. His staff in the Accounting Unit was also designated as Officer-in-Charge

84
of the Cashier’s Office, hence, he was in charge of the processing of disbursement vouchers,
preparation of payrolls and monthly remittances, as well as, preparation of reports. Moreover,
he was also acting as Budget Officer since his assumption on August 2018.

Likewise, the Accountants of Janiuay and Pototan Campuses explained that the delay in the
preparation and submission of the BRS was due to the late receipts of bank statements, as
well as, the preparation of various reports.

Moreover, interview with the Accountant III of the WVSU Medical Center disclosed that the
delay in the preparation and submission of the BRS for Medical Center and NSCV was due
to the promotion and transfer of the personnel in-charge of its preparation to the other unit of
the agency and that the vacant position remained unfilled from June 2020 to September 2021.
Likewise, another staff of the Accounting Department was transferred to another unit in
November 2020, hence, given the two vacant positions, they have decided to prioritize
preparation of payrolls and monthly remittances, as well as, processing of disbursement
vouchers.

Furthermore, in August and September 2021, four personnel of the Accounting Department
of the Medical Center were infected with COVID-19 virus resulting to the quarantine of all
other personnel of the Office.

In the exit conference conducted last March 22, 2021, it was agreed upon that the preparation
of the BRS of the NSCV, which was previously done by the Accounting Office of the WVSU
Medical Center, will be delegated to the Accountant of the Center. However, interview with
the Center’s Accountant revealed that while she has already started the preparation of the
BRS, she was still waiting for the official letter of designation from the WVSU Medical Center
Chief for her to start transmitting the reports to the Office of the Auditor.

The Bank Reconciliation Statement reconciles the cash balance per Agency books vis-à-vis
per bank statement. Consequently, non-reconciliation of the Cash balances per books and
bank cast doubt on the accuracy of the Cash-in-Bank accounts of the WVSU – Himamaylan,
Pototan and Janiuay Campuses, WVSU Medical Center and NSCV totaling P867.322 million
(Appendix S) as of year-end.

We recommended and Management agreed to:

a. Direct the Accountants to immediately prepare and submit the Monthly Bank
Reconciliation Statements (BRS) for all depository accounts together with all the
supporting documents and JEVs, to facilitate verification of the correctness of the
cash balance per book and bank; and

b. Assign/Hire additional personnel in the Accounting Units to assist in the processing

of disbursement vouchers, preparation of payrolls/monthly remittances and
preparation of various reports.

85
Non-submission of Financial Reports within the prescribed period – WVSUMC and NSCV

18. Financial Reports were submitted beyond the prescribed period as provided in
Section 7.2.1(a) of COA Circular No. 2009-001 and Section 60, Chapter 19 of
Government Accounting Manual (GAM), Volume I, which precluded the Auditor from
conducting timely audit and ascertaining the legality, validity and completeness of
the transactions.

Section 7.2.1 (a) of COA Circular No. 2009-006 or The 2009 Revised Rules and Regulations
on the Settlement of Accounts approved on September 15, 2009 states “The Chief
Accountant, Bookkeeper or other authorized official performing accounting and/or
bookkeeping functions of the audited agency shall ensure that the reports and supporting
documents submitted by the Accountable officers are immediately recorded in the books of
accounts and submitted to the Auditor within the first ten (10) days of the ensuing month.

Likewise, Section 60, Chapter 19 of GAM, Volume I provides:

“Sec. 60. Deadlines on Submission of Reports. All NGAs shall prepare and submit the
following financial statements and schedules as follows, within the prescribed deadline:

a. Provincial Offices and Operating Units

b. Regional/Branches Offices
c. Central/Head/Main Offices

Entity/Office Statement/Report Deadline Submit to:

Monthly Trial Balances (TBs) Ten days after the Auditor, DBM,
and Supporting end of the month Management
Schedules (SSs)

Quarterly TB, FSs, SSs Ten days after the Auditor, DBM,
end of the quarter Management

Yearend TBs, FS, SSs February 14 of the COA Auditor, DBM,

(combined CO, ROs following year COA-GAS
and OUs)

Perusal of the records showed that monthly Trial Balances for the period July to
December 2021 were not submitted to the Office of the Auditor as of February 14, 2022.

Furthermore, monthly Trial Balances submitted for the period January to June 2021 were not
supported by schedules while quarterly financial statements and supporting schedules were
likewise not submitted to the Auditor as required under COA Circular No. 2009-001 and
Section 60, Chapter 19 of GAM, Volume I.

Interview with the Accountant III disclosed that the delay in the preparation and submission of
the financial reports was due to the promotion and transfer of the personnel in-charge of its
preparation to the other unit of the agency and that the vacant position remained unfilled from
June 2020 to September 2021. Likewise, another staff of the Accounting Department was
transferred to another unit in November 2020, hence, given the two vacant positions, they
have decided to prioritize preparation of payrolls and monthly remittances, as well as,
processing of disbursement vouchers.

86
Moreover, in August and September 2021, four personnel of the Accounting Department were
infected with COVID-19 virus resulting to the quarantine of all other personnel of the Office.
Furthermore, the Management remarked that although they were unable to submit the
financial reports for the period July to December 2021 to the Office of the Auditor, year-end
financial reports were submitted to the Accounting Office of the WVSU Main Campus for
consolidation.

While we acknowledged that there will be delays in the submission of financial reports due to
the aforementioned reasons, the same cannot be used as an excuse not to submit the
required reports to the Auditor as required by Section 60, Chapter 19 of GAM, Volume I.

Aside from non-compliance with regulations, non-submission of financial reports and their
supporting schedules within the prescribed deadlines affected the timing of validation of
Management’s assertions on regularity of its transactions, as well as, its validity and legality
were not ascertained.

We recommended and Management agreed to:

a. Require the Accountant to immediately submit all CY 2021 financial reports with
complete supporting documents to allow the Auditors to conduct audit of
transactions to ascertain its validity, legality and regularity; and

b. Direct the Accountant to strictly comply with the provisions of COA Circular No.
2009-001 and Section 60, Chapter 19 of GAM, Volume I, on the submission of all
financial reports within the reglementary period.

Improper Use of Petty Cash Fund – WVSU Medical Center

19. The Petty Cash Fund (PCF) of the Nutrition and Dietetics Services Unit was used
for payment of regular expenses rather than recurring petty operating expenses as
provided in Section 35, Chapter 6 of the Government Accounting Manual, Volume I,
thus, the expenditures charged against the fund were not appropriate.

Section 35, Chapter 6 of Government Accounting Manual (GAM), Volume I states that “The
Petty Cash Fund (PCF) to be set up shall be sufficient for the recurring petty operating
expenses of the agency for one month.”

Likewise, Section 35 (a) provides that the fund shall be kept separately from the regular cash
advances/collections and shall not be used for payment of regular expenses such as rentals,
subscriptions, light and water bills, purchase of supplies and materials for stock purposes, and
the like.

Audit disclosed that the authority to establish the Petty Cash Fund (PCF) issued by the Head
of Agency, specified that the PCF amounting to P250,000.00 was for the sole purpose of the
daily market purchases of patients’ subsistence.

It was recommended in last year’s observation to stop using the PCF for disbursements not
related to patients’ subsistence, however, the PCF Custodian continued to utilize the PCF for
payment of regular expenses/purchases related to the canteen operations of the unit. The
practice was inconsistent with the specific purpose for which the PCF was established.

87
Perusal of the Nutrition and Dietetics Service’s weekly replenishments of Petty Cash Fund for
CY 2021 disclosed that aside from the operating costs of canteen and catering services, food
expenses for the quarantined employees/staff of the Medical Center due to COVID-19
amounting to P3.851 million or 34.39 percent of the total replenishments (Appendix T) was
also paid through this fund. Audit showed that this contributed to the significant increase of
total replenishment for the year totaling P11.197 million. Moreover, training expenses of
P275,762.12 was also inappropriately charged to the fund.

In their reply to our query, management explained that the PCF Custodian for patients’
subsistence was also designated as personnel-in-charge for purchases of food provided to
quarantined employees/staff due to COVID-19, which explained the use of the petty cash fund
for both activities. They further remarked that such food provision included quarantined
personnel infected or in contact with COVID-19 positive, as well as, those assigned in the
COVID-19 Unit of the agency, who were restricted to go out and buy their food and other
personal needs.

While we acknowledged the good intention of the agency in providing food for their
quarantined personnel, the use of petty cash fund has limitations, as provided in Section 35,
Chapter 6 of Government Accounting Manual (GAM), Volume I.

The Head of the Nutrition and Dietetics Service Unit likewise justified that while waiting for the
approval of the Policy and Manual of canteen and catering operations which was already in
its final draft, the Unit continued to utilize the Petty Cash Fund to pay for the costs of operating
the canteen and catering services. The management, however, need not wait for such policy
and manual for the establishment of a separate revolving fund for the canteen operations.

The use of the Petty Cash fund for any purpose other than those specified in the Government
Accounting Manual (GAM) for NGAs, on the use of Petty Cash Fund was inappropriate.

We recommended and Management agreed to:

a. Require the PCF Custodian to comply with Section 35, Chapter 6 of the Government
Accounting Manual (GAM) for NGAs on the use of Petty Cash Fund;

b. Direct the PCF Custodian/Head of the Nutrition and Dietetics Service Unit to stop
the practice of utilizing the fund for the operation of the canteen and catering
services of the unit and any other disbursements contrary to its purpose of
establishment; and

c. Establish a separate funds for the operation of the canteen and catering services,
as well as, the provision of food for quarantined personnel so that proper
accounting of expenses can be made.

88
Unsettled Disallowances totalling ₱2.890 million despite issuance of COE – WVSUMC

20. Notices of Disallowances issued totaling ₱2.890 million remained outstanding and
uncollected despite the issuance of Notices of Finality of Decision and COA Orders
of Execution, which is inconsistent with the pertinent provisions of the 2009 Rules
and Regulations on Settlement of Accounts (RRSA).

Commission on Audit (COA) issued Circular No. 2009-006 dated September 15, 2009 which
prescribes the use of the 2009 Rules and Regulations on the Settlement of Accounts. Section
22.1 of the Circular provides that a decision of the Commission Proper, Director or Auditor
upon any matter within their respective jurisdiction, if not appealed as herein provided, shall
become final and executory. The rules also state that the period to file an appeal by any
person aggrieved by a disallowance or charge is within six (6) months from receipt of the
notice. Consequently, the authorized COA official shall issue a Notice of Finality of Decision
(NFD) to the agency head to notify that a decision of the Auditor, Director, or Commission
Proper has become final and executory, there being no appeal or motion for reconsideration
filed within the reglementary period. Accordingly, a COA Order of Execution (COE) shall be
issued to enforce the settlement of an audit disallowance/charge, whenever the persons liable
thereof refuse or fail to settle them after the decision has become final and executory.

Pertinent provisions in the COA 2009 RRSA state:

“7.1 Responsibility of the Agency Head

7.1.1 The head of the agency, who is primarily responsible for all government funds and
property pertaining to his agency, shall ensure that: (a) x x x ; (b) the settlement of
disallowances and charges is made within the prescribed period; xxx

7.1.2 xxx

7.1.3 He shall enforce the COA Order of Execution (COE) by requiring the withholding
of salaries or other compensation due the person liable in satisfaction of the
disallowance or charge.

7.1.4 He shall ensure that all employees who are retiring or transferring to other agencies
shall first settle the disallowances and charges for which they are liable.”

In the monitoring conducted on the settlement of suspensions/disallowances/charges of

WVSU Medical Center as of year-end, it was noted that three unsettled NDs were issued
NFDs and COEs, which became final and executory. As of December 31, 2021, the
outstanding balance of unsettled NDs with NFDs and COEs amounted to ₱2.890 million
(Appendix U). The COE was issued on December 20, 2019, leaving the Management of
WVSU Medical Center ample time to enforce the COE and collect from the persons liable their
individual accountability on the NDs issued.

Under Section 3, Rule XIII-Enforcement and Monitoring of Decisions of the 2009 RRPC of
COA, in case of failure of the person(s) liable to refund the amount disallowed, the COE
directing the Cashier/Treasurer/Disbursing Officer to withhold payment of any money due
such person(s) shall be issued.

89
Pertinent COA regulations require for full and immediate settlement of all disallowances which
have become final and executory, except those granted with authority to be paid in installment
basis. It was noted however, that no requests were filed to settle the audit disallowances in
installment basis despite management’s commitment to make such request for CY 2021.

Still, it is the practice of persons liable connected with the agency to settle their respective
audit disallowance through salary deduction. However, the amounts were dependent on the
capacity to pay/net take home pay of persons liable, hence, refunds for the three
disallowances for CY 2021 amounted to only P191,696.50 since withholding additional
amount from persons liable will reduce their net take home pay below the mandated minimum
amount of P5,000. Total settlements as of December 31, 2021 amounted to ₱0.940 million,
with ₱0.604 million or 64.25 percent of which was made by the former University President
upon his retirement in October 2019. It was for the full settlement of his liabilities for the three
(3) NDs with COEs.

The Agency Head did not ensure that all personnel found liable who are retiring settle the
disallowances, resulting in the non-collection of receivables from disallowances from two
retired personnel. Persons liable who were separated from service for whatever reason upon
the issuance of COA Finality or COA Order of Execution, shall pay in full the audit
disallowances to the Agency Cashier as stated in COA Resolution No. 2017-021 dated
November 3, 2017, otherwise their liability shall be collected from the persons liable in active
service, particularly the approving/certifying officers.

As stated in the 2009 RRSA, Section16.3, “The liability of persons determined to be liable
under an ND/Notice of Charge (NC) shall be solidary and the Commission may go against
any person liable without prejudice to the latter’s claim against the rest of the persons liable”.
(emphasis ours) Due to the fact that it is a solidary liability, COA can demand full compliance
to any of the persons determined liable in the ND and not necessarily to the payees.

We recommended and Management agreed to:

a. Enforce the immediate settlement of the long outstanding audit disallowances with
NFDs and COEs, by sending of notice/letter of demand to persons liable, especially
those who are no longer connected with the College, pursuant to the pertinent
provisions of the 2009 RRSA and PD 1445;

b. Instruct the Cashier to withhold the payment of salary and other money due to
persons liable in case of unjustified refusal to settle the audit disallowances and
demand compliance from any of the persons determined solidarily liable, pursuant
to the pertinent provisions of the 2009 RRSA; and

c. Make a written request to the Commission on Audit, for audit disallowances to be

settled on installment basis, in accordance with COA Resolution No. 2017-021
dated November 3, 2021.

90
GENDER AND DEVELOPMENT (GAD)

The University had substantially implemented its GAD Plan and Budget (GPB) for Calendar
Year 2021 with a budget of P81.340 million which constitute 5.13 percent of the total budget
of the agency amounting to P1.585 billion, and had incurred expenditures of P61.598 million
or 75.45 percent of the total allocated budget for GAD. The University was not able to
accomplished all activities in the GPB due to the restrictions brought about by the COVID-19
pandemic.

Attributed programs to GAD were properly supported with corresponding Harmonized Gender
and Development Guidelines (HGDG) Tool and Project Implementation and Management
Monitoring and Evaluation (PIMME) checklist. GAD Accomplishment Report together with the
supporting documents was submitted on February 9, 2022, within the deadline set forth by
COA Circular No. 2014-001 dated March 18, 2014.

Likewise, the agency has a duly constituted GAD Focal Point System and its GPB was duly
endorsed by the Philippine Commission on Women (PCW).

COMPLIANCE WITH TAX LAWS

The total taxes withheld by the University amounted to P72.603 million covering January-
December 2021 while total remittances amounted to P72.601 million leaving an unremitted
balance of P0.522 million as of December 31, 2021, as shown in the following table:

Month Withheld Remitted Balance

Balance, 12/31/2020 P520,419.16
January P4,773,215.06 P4,773,215.06 520,419.16
February 3,827,766.46 3,827,766.46 520,419.16
March 5,197,002.08 5,197,002.08 520,419.16
April 5,566,885.56 5,566,885.56 520,419.16
May 8,074,422.11 8,011,746.55 583,094.72
June 5,395,433.92 5,256,542.37 721,986.27
July 5,696,545.12 5,709,274.91 709,256.48
August 5,706,202.69 5,706,449.61 709,009.56
September 4,682,383.27 4,730,776.10 660,616.73
October 5,533,164.01 5,536,500.10 657,280.64
November 10,323,079.10 10,316,896.51 663,463.23
December 7,826,627.03 7,967,903.59 522,186.67
Total as of 12/31/2021 P72,602,726.41 P72,600,958.90 P522,186.67

The balance as of December 31, 2021 included old accounts for CY 2004 and prior years that
could not be remitted due to lack of details like Payees/Suppliers' Names.

91
COMPLIANCE WITH Republic Act (RA) 8291 OR GOVERNMENT SERVICE INSURANCE
SYSTEM (GSIS) LAW

In accordance with RA 8291, total amount deducted from salaries and wages of personnel
pertaining to GSIS Social Insurance, Loans and Employees Compensation Fund amounted
to P132.937 million of which P132.653 million were remitted to GSIS for CY 2021. Unremitted
balance as of December 31, 2021 amounted to P302,026.08. Details are shown in the
following table:

Month Withheld Remitted Balance

Balance, 12/31/2020 P17,659.67
January P4,720,015.81 P4,724,510.59 13,164.89
February 9,458,640.09 9,456,979.86 14,825.12
March 5,227,254.84 5,224,831.56 17,248.40
April 12,922,421.72 12,071,434.61 868,235.51
May 11,978,352.63 12,326,677.74 519,910.40
June 12,688,730.69 12,845,046.68 363,594.41
July 12,353,771.15 12,459,658.66 257,706.90
August 12,166,995.59 7,582,264.01 4,842,438.48
September 14,592,224.79 19,128,658.82 306,004.45
October 12,220,251.80 7,390,925.19 5,135,331.06
November 12,028,491.47 16,909,400.88 254,421.65
December 12,580,229.42 12,532,624.99 302,026.08
Total as of 12/31/2021 P132,937,380.00 P132,653,013.59 P302,026.08

COMPLIANCE WITH Republic Act (RA) 9679, HOME DEVELOPMENT MUTUAL FUND
(HDMF) LAW

Amounts withheld and remitted for HDMF contributions in CY 2021 are as shown in the
following table:

Month Withheld Remitted Balance

Balance, 12/31/2020 P4,074.55
January P1,004,338.55 P997,583.54 10,829.56
February 994,743.29 994,943.29 10,629.56
March 984,733.59 985,133.59 10,229.56
April 959,234.80 959,134.80 10,329.56
May 961,364.68 961,264.68 10,429.56
June 979,948.80 978,348.80 12,029.56
July 971,591.88 970,291.89 13,329.55
August 956,843.24 532,469.35 437,703.44
September 984,202.58 1,404,925.31 16,980.71
October 877,374.74 491,900.80 402,454.65
November 868,296.38 1,264,876.48 5,874.55
December 845,505.30 845,305.30 6,074.55
Total as of 12/31/2021 P11,388,177.83 P11,386,177.83 P6,074.55

92
COMPLIANCE WITH PHILIPPINE HEALTH INSURANCE CORPORATION (PHIC) LAW

Amounts withheld and remitted for PHIC contributions in CY 2021 are shown in the following
table:

Month Withheld Remitted Balance

Balance, 12/31/2020 P2,120.00
January P749,549.23 P746,478.76 5,190.47
February 696,454.42 697,708.66 3,936.23
March 716,167.79 717,655.54 2,448.48
April 742,271.66 742,567.05 2,153.09
May 726,709.26 726,658.47 2,203.88
June 731,363.06 725,647.70 7,919.24
July 742,347.00 740,975.56 9,290.68
August 721,364.38 503,110.95 227,544.11
September 722,079.95 926,933.20 22,690.86
October 697,960.41 493,218.05 227,433.22
November 725,517.27 945,031.25 7,919.24
December 749,752.66 749,752.66 7,919.24
Total as of 12/31/2021 P8,721,537.09 P8,715,737.85 P7,919.24

AUDIT SUSPENSIONS AND DISALLOWANCES

The Status of unsettled Suspensions, Disallowances and Charges issued as of

December 31, 2021 are as follows:

Agency Suspensions Disallowances Charges Total

WVSU – Main P0.00 P2,110,317.88 P0.00 P2,110,317.88
WVSU – Medical Center 137,503.77 6,859,119.03 0.00 6,996,622.80
WVSU – External Campuses 0.00 0.00 0.00 0.00
TOTAL P137,503.77 P8,969,436.91 P0.00 P9,106,940.68

Disallowances amounting to P4.670 million are under appeal with the Commission on Audit.

93