PART II - OBSERVATIONS AND RECOMMENDATIONS

FINANCIAL AUDIT

Accounting Errors, Omissions and Other Accounting Deficiencies

1. The total misstatements of P93,927,751.62 found in audit due to accounting errors

and improper accounting treatment of transactions that are considered departures
from the International Public Sector Accounting Standards (IPSAS) have been
adjusted, thus the Institute’s financial statements (FSs) present fairly, in all
material respects, the financial position of the Institute as at December 31, 2021,
and its financial performance, changes in net assets/equity, cash flows, comparison
of budget and actual amounts, and notes to financial statements for the year then
ended, which became our basis in rendering an unmodified audit opinion.

1.1 The FSs shall present fairly the financial position, financial performance, and cash
flows of an entity. Fair presentation requires the faithful representation of the
effects of transactions, other events, and conditions in accordance with the
definitions and recognition criteria for assets, liabilities, revenue and expenses set
out in IPSAS.1

1.2 Moreover, Sections 111 and 112 of Presidential Decree (PD) No. 1445 require
agencies to keep the accounts in such detail as necessary to meet the needs of the
agency and at the same time be adequate to furnish the information needed by
fiscal or control agencies of the government; and that the highest standard of
honesty, objectivity and consistency shall be observed in the keeping of accounts
to safeguard against inaccurate or misleading information. Each government
agency shall record its financial transactions and operations conformably with
IPSAS and in accordance with pertinent laws and regulations.

1.3 In preparing the FSs, Management is making implicit/explicit claims (i.e.,

assertions) regarding the recognition, measurement and presentation of assets,
liabilities, equity, income, expenses and disclosures in accordance with the
applicable financial reporting framework, or the IPSAS. Among the
Management’s assertions are completeness and accuracy. The completeness
assertion addresses whether all transactions that were supposed to be recorded
have been recognized in the FS, while the accuracy assertion addresses whether
full amounts of all transactions were recorded, without error.

1.1 Our audit of the various accounts of the EARIST disclosed errors and omissions
in several of its accounts in the financial statements totaling P93,927,751.62
(See Annex A). Accordingly, these were already adjusted in the books of accounts.

1
Section 15, Chapter 2 of the GAM, Volume I

37
 1.2 We commended the Management for the prompt adjustments of
misstatements and ensuring that the financial statements were free from any
material misstatements and were prepared in accordance with IPSAS.

Accounting and Property Control Deficiencies

2. The aggregate balance of P459,922,372.02 of accounts Inventories, Advances and

Property, Plant and Equipment (PPE) as of December 31, 2021 is unreliable and of
doubtful validity due to accounting and property control deficiencies.

2.1 The highest standards of honesty, objectivity and consistency shall be observed
in the keeping of accounts to safeguard against inaccurate or misleading
information.2

2.2 Responsibility for the fair presentation and reliability of FSs rests with the
management of the reporting agency, particularly the head of finance/accounting
office and the head of entity or his authorized representative.3

2.3 Audit of the various Assets accounts of the Institute disclosed the following
accounting and property control deficiencies:

Table 1 - Summary of Accounting and Property Control Deficiencies

Balance as at
Accounts December 31, 2021 Deficiencies

Inventories 50,542,456.19 a) Deliveries of supplies and materials totaling

P8,309,511.83 were recorded as outright
expense
b) non-moving balance of Inventory sub-accounts
carried in the books for several years
amounting to P9,922,484.50;
c) unaccounted semi-expendable properties
totaling P40,627,966.69;
d) Non-conduct of physical count;
e) Non-maintenance of Subsidiary Ledger Cards
(SLC) and Stock Cards (SC);
f) Deficiencies in the preparation of the Report of
Supplies and Material Issued (RSMI)
Advances 1,899,633.70 g) Unaccounted Book Balance - P610,796.38
PPE [excluding 407,480,282.13 h) Incomplete annual physical inventory-taking;
Construction in and
Progress (CIP) i) PPE Ledger Card (PPELC) for each category
account] of PPE was not maintained;
Total P459,922,372.02

2
Section 111, Chapter 2 of PD No. 1445
3
Section 4, Chapter 19 of the GAM, Volume I

38
Details of Accounting and Property Control Deficiencies:

INVENTORY ACCOUNTS

2.4 Chapter 8 of the Government Accounting Manual for National Government

Agencies (GAM, for brevity), Volume I, covers the definition, recognition,
measurement, cost formulas to be used and related disclosure requirement in
accordance with IPSAS 12 pertaining to Inventories. It includes specific
guidelines and procedures on acquisition, issue, disposal and impairment of
inventory and defines the benchmark for those tangible items not enough to be
considered as PPE. The following are the pertinent sections of Chapter 8 that
were applied in the audit of Inventories:

i. Section 9 - Perpetual Inventory System requires accounting records to show

the amount of inventory on hand at all times through the maintenance of the
SLC by the Accounting Division/Unit and SC by the Supply and/or
Property Division/Unit for each item in stock.

ii. Section 10, Chapter 8 of the GAM Volume 1, provides that semi-
expendable properties shall be recognized as expense upon issuance to end-
users.

iii. Section 13, paragraph 3 requires that physical count/inventory which is an

indispensable procedure for checking the integrity of property
custodianship shall be conducted semi-annually.

iv. Section 17 provides for, among others, the following records, forms and
reports to be prepared and/or maintained:

 Stock Card– 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.

 Supplies Ledger Card – 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.

 Requisition and Issue Slip – shall be used by the end-user to request

issue of supplies and materials that are carried on stock. It is also used
by the Property and/or Supply Division/Unit to indicate availability or
non-availability of items requisitioned and/or to record issues of item/s
requisitioned.

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  Report of Supplies and Materials Issued – shall be prepared by the
Property and/or Supply Custodian based on the RIS and shall be used
by the Accounting Division/Unit as basis in preparing the JEV to
record the supplies and materials issued.

 Report on the Physical Count of Inventories – 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 issuance is covered by Inventory Custodian Slip (ICS).

2.5 As of December 31, 2021, the EARIST’s reported Inventory account balance
amounted to ₱50,542,456.19, details of which are shown in Table 2, below:

Table 2 - Inventory Accounts as of December 31, 2021

Accounts Fund 101 Fund 164 Fund 161 Total
Inventory Held for Sale
Merchandise Inventory 93,500.00 93,500.00
Inventory Held for Consumption
Office Supplies Inventory 4,954,692.82 69,835.73 5,024,528.55
Accountable Forms, Plates &
122,009.60 56,400.00 178,409.60
Stickers Inventory
Medical, Dental & Laboratory
55,795.11 10,130.00 65,925.11
Supplies Inventory
Textbooks &Instructional Materials
591,779.35 591,779.35
Inventory
Other Supplies and Materials
3,449,682.12 510,664.77 3,960,346.89
Inventory
Semi-Expendable Machinery and Equipment
Semi-Expendable Office Equipment 18,700.00 830,253.48 848,953.48
Semi-Expendable Information and
Communications Technology (ICT) 37,845.00 24,195,100.00 24,232,945.00
Equipment
Semi-Expendable Communications
7,995.00 7,995.00
Equipment
Semi-Expendable Disaster,
1,745,170.00 1,745,170.00
Response & Rescue Equipment
Semi-Expendable Medical
7,995.00 106,205.00 114,200.00
Equipment
Semi-Expendable Technical and
283,713.14 283,713.14
Scientific Equipment
Semi-Expendable Other Machinery
and Equipment 1,124,463.57 1,124,463.57

Semi-Expendable Furniture and Fixtures and Books

Semi-Expendable Furniture and
80,850.00 7,664,635.00 7,745,485.00
Fixtures
Semi-Expendable Books 4,525,041.50 4,525,041.50
Total 9,319,349.00 41,129,607.19 93,500.00 50,542,456.19

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 a. Deliveries of supplies and materials totaling P8,309,511.83 were recorded
as outright expense

2.6 We noted that it has been the practice of the Accounting Unit to record
inventories as outright expense, contrary to the Perpetual Inventory System
prescribed in Section 9, Chapter 8 of the GAM. For CY 2021, the Institute made
purchases of supplies and materials in aggregate amount of P8,309,511.83 and
these had been recorded as outright expense rather than debiting first the
appropriate Inventory Account.

b. non-moving balance of Inventory sub-accounts carried in the books for

several years amounting to P9,922,484.50

2.7 We also noted that inventories totaling P9,922,484.50 were non-moving from
six to more than 11 years. This observation had been raised in the previous year’s
findings and the Management is amenable that the amounts reported in the books
no longer existed or were already issued/consumed but were not derecognized
in the books due to absence of regular reconciliation between the accounting and
property records. The amount is only being carried forward every year without
verification.
Table 3 - Non-moving Balances of the Inventory Accounts
Amount Years
Accounts
Dormant
Merchandise Inventory 93,500.00 7 years
Office Supplies Inventory 5,024,528.55 6 years
Accountable Forms, Plates and Stickers Inventory 178,409.60 11 years
Medical, Dental and Laboratory Supplies Inventory 65,925.11 < 10 years
Textbooks and Instructional Materials Inventory 591,779.35 <10 years
Other Supplies and Materials Inventory 3,960,346.89 6 years
Semi-Expendable Communication Equipment 7,995.00 6 years
Total 9,922,484.50

c. Unaccounted Semi-Expendable Properties totaling P40,627,966.69

2.8 For CY 2021, the Institute reported Semi-Expendables properties totaling

P40,627,966.69, as shown in Table 4.

Table 4 - Summary of Semi-Expendables Properties

Accounts Amount
Semi-Expendable Office Equipment 848,953.48
Semi-Expendable ICT Equipment 24,232,945.00
Semi-Expendable Communication Equipment 7,995.00
Semi-Expendable Disaster, Response and Rescue Equipment 1,745,170.00
Semi-Expendable Medical Equipment 114,200.00
Semi-Expendable Technical and Scientific Equipment 283,713.14
Semi-Expendable Other Equipment 1,124,463.57
Semi-Expendable Furniture and Fixtures 7,745,485.00

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 Accounts Amount
Semi-Expendable Books 4,525,041.50
Total 40,627,966.69

2.9 Ocular inspection revealed that these reported semi-expendables were no longer
in the stockroom. Confirmation and verification with the concerned personnel
disclosed that they do not have these semi-expendables reported as they do not
stock these items, except for the 4,400 electronic device (tablets) purchased in
October 2021. Semi-expendable items are only purchased upon request and the
same are issued immediately to the requesting office upon receipt since the
Institute’s stockroom cannot accommodate a large volume of stocks.

d. Non-conduct of physical count

2.10 The Institute had not conducted physical count of inventory for the first and
second semesters of CY 2021. According to the Management, the failure to
conduct the timely physical count at yearend is due to the pandemic and lack of
personnel. However, it has been observed that for several years, no physical
count was conducted, thus the non-submission of the Report on the Physical
Count of Inventories (RPCI), which bears out the existence of inventories as
reported in the FSs.

e. Non-maintenance of SLCs and SCs

2.11 We also noted that the SLCs and SCs are not maintained by the Accounting Unit
and the Supply/Property Unit, respectively. This is despite the submission of the
RSMI which should have been the basis of the Accounting Unit in posting the
issuances of supplies and materials to the respective SLC.

f. Deficiencies in the preparation of the RSMI

2.12 Moreover, deficiencies in the preparation of the RSMI were noted, to wit:

a. RSMIs were not prepared and submitted monthly, but rather yearly. The
RSMI for CY 2021 was only submitted on March 7, 2022, thus precluded
the Audit Team from conducting timely audit;
b. Original RIS signed by the officials concerned were not submitted as part
of the supporting documents;
c. No stock number was assigned on various items;
d. The unit cost, amount and recapitulation were filled out by the Property
Management Service (PMS) instead of the Financial Management Service
(FMS);
e. The object codes were not filled out accordingly;

2.13 The foregoing deficiencies are indications of weakness of internal control which
affect the correctness of the reported balances in the FSs.

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2.14 We recommended that Management:

a. instruct the Accountant to recognize Inventories upon purchase or

receipt of deliveries and record expenses only upon distribution;

b. instruct the Accountant to gather copies of the RSMIs and ICSs and
account for the non-moving balances of inventory and the semi-
expendable properties and make adjusting/correcting entries to reflect
the correct balances of the affected accounts;

c. thru an Inventory Committee, conduct physical count of inventories

and submit RPCI thereof to ensure the existence of the inventories
reported;

d. require the concerned officials to prepare and submit the required

reports/forms such as RPCI, SLC, SC, RSMI and ICS and cause the
suspension of payment of their salaries until they shall have complied
with the requirements; and

e. thru the Property Officer, submit to the Accountant the correctly filled
out RSMI, supported with the original RIS to enable the Accountant to
record the issuance of inventory items;

ADVANCES

g. Unaccounted Book Balance- P610,796.38

2.15 Item 7.0 of the COA Circular No. 2016-005 dated December 19, 2016 requires
the Accountant to conduct regular and periodic verification, analysis, and
validation of the existence of the receivables, unliquidated cash advances, and
fund transfers, and determine the concerned debtors, accountable officers
(Regular and SDOs, Collecting Officers, Cashiers) and the source and
implementing government entities concerned.

2.16 It further states that the Accountant shall prepare aging of dormant receivables,
unliquidated cash advances, fund transfers on a quarterly basis to support the
request for write-off , and indicate in the remarks column the existence of the
applicable conditions, as follows:

a. Absence of records or documents to validate /support the claim and/or

unreconciled reciprocal accounts
b. Death of the accountable officer/employee/debtor
c. Unknown whereabouts of the accountable officer/employee/debtor, and that
he/she could not be located despite diligent efforts to find him/her
d. Incapacity to pay or insolvency

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 e. Exhaustion of all possible remedies by the Management to collect the
receivables and to demand liquidation of cash advances and fund transfers
f. No pending case in court involving the subject dormant accounts.

2.17 Audit of the accounts revealed that out of the total amount reported in the books,
P610,796.38 remained unaccounted, as shown below:

Table 5 - Summary of Unaccounted Accounts (in PhP)

Accounts Fund 101 Fund 161 Total
Advances to Officers and Employees 78,498.19 357,742.68 436,240.87
Advances to SDOs 174,555.51 0.00 174,555.51
Total 253,053.70 357,742.68 610,796.38

2.18 The above advances either have no details for significant information such as
dates, check number and the purpose to which it was granted, and/or were
unaccounted, thus strict compliance and liquidation of said cash advances may
not be enforced due to lack of information that could support the claims.

2.19 We acknowledge the Management’s effort on the reduction of unliquidated cash

advances. However, there are still audit recommendations which were not
implemented, hence this reiteration.

2.20 We recommended that Management instruct the Accountant to analyze the

remaining dormant accounts, including the unaccounted balances and
initiate the request for write-off which must be supported with the
documents as prescribed in COA Circular No. 2016-005 dated December
19, 2016.

Management’s Comments

2.21 Management commented that they have issued the necessary notifications to the
accountable officers, even during the previous years. This time, they will re-issue
notification, informing that deduction will be effected on their March 2022
payroll to settle their unliquidated cash advances.

2.22 The Accountant has started analyzing dormant accounts but encountered
difficulties due to unavailability of records. Also, the documents to support the
request for write-off are still being completed.

Auditor’s Rejoinder

2.23 The Audit Team acknowledged the actions taken by the Management but further
required to prepare/maintain a monitoring report of actions taken, copy of which
shall be furnished to them.

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PROPERTY, PLANT AND EQUIPMENT

2.24 On January 31, 2020, COA Circular No. 2020-006 was issued prescribing the
guidelines and procedures in the conduct of physical count of PPE, recognition
of PPE items found at station, and disposition for non-existing/missing PPE
Items, for the One-Time Cleansing of PPE Account Balances of Government
Agencies.

2.25 The Chief Accountant shall maintain the 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.4

h. Incomplete annual physical Inventory-taking

2.26 As of December 31, 2021, the EARIST’s PPE accounts had a total carrying
amount of P407,480,282.13, net of accumulated depreciation and excluding
construction in progress presented as follows:
Table 6 - PPE Balances (inPhP)
Accumulated Carrying
Account Name Cost
Depreciation Value
Land 1,119,500.00 - 1,119,500.00
Other Land Improvements 8,373,012.70 - 8,373,012.70
Sewer Systems 8,895,188.14 845,042.88 8,050,145.26
Power Supply Systems 58,616,213.88 5,103,074.64 53,513,139.24
Buildings 40,192,918.55 7,811,576.92 32,381,341.63
School Buildings 346,772,713.62 172,161,234.46 174,611,479.16
Machinery 2,182,224.52 2,073,113.29 109,111.23
Office Equipment 63,544,812.33 45,068,708.37 18,476,103.96
Information and Communications
58,209,497.20 45,530,914.47 12,678,582.73
Technology Equipment
Communications Equipment 2,485,749.95 1,628,379.60 857,370.35
Disaster Response and Rescue
1,489,000.36 1,164,355.84 324,644.52
Equipment
Medical Equipment 567,220.00 408,520.80 158,699.20
Sports Equipment 386,000.00 192,240.00 193,760.00
Technical and Scientific Equipment 228,808,657.80 173,723,871.98 55,084,785.82
Other Equipment 86,513,018.55 60,971,678.74 25,541,339.81
Motor Vehicles 15,156,760.22 6,464,920.96 8,691,839.26
Furniture and Fixtures 13,694,281.77 9,046,902.41 4,647,379.36
Books 5,357,806.19 3,062,258.29 2,295,547.90
Leased Asset, Machinery and
7,450,000.00 7,077,500.00 372,500.00
Equipment
Total 949,814,575.78 542,334,293.65 407,480,282.13

4
Section 42, Chapter 10, Volume I of the GAM for NGAs

45
2.27 For the last four years, the EARIST has not submitted its RPCPPE, citing the
lack of manpower of the PMS, which is composed of one Administrative Officer
and three Job Order personnel. Although an Inventory Committee was created
on August 16, 2021, the inventory-taking was targeted to be completed on April
04, 2022. On November 24, 2021 a copy of the schedule of inventory count of
the Institute’s PPE was submitted to the Audit Team.

2.28 The incomplete physical inventory-taking casts doubt on the completeness and
existence of the recorded PPEs.

i. PPELC for each category of PPE was not maintained

2.29 We noted that PPELCs were not maintained by the FMS as basis to record
acquisition of PPE. We would like to emphasize the importance of PPELC
maintenance which is to strengthen the control over PPE and to have a check and
balance mechanism on whether all the PPE owned and utilized by the Institute
are being properly accounted for.

2.30 Non-maintenance of PPELC by the FMS renders difficulty in determining

whether the Institute has properly accounted all the properties they have
procured.

2.31 We recommended that Management:

a. require the Head of the Inventory Committee and the Accountant to

work together in immediately completing the physical count that they
had started and prepare and submit the RPCPPE;

b. require the Accountant to maintain PPELCs for each PPE item; and

c. consider augmenting the members of the Inventory Committee

Management’s Comments

2.32 Management commented that the FMS has started maintaining the PPELCs for
each PPE item purchased in the current year only due to unavailability of reports
and necessary documents to support the details of purchased PPE in prior years.

2.33 The actual physical inventory for the offices is almost sixty percent done. The
Committee has not yet started with the inventory-taking of the PPE items located
in different colleges where retrofitting works are currently ongoing and faculty
staff are still on a work-from-home scheme. To date, four job orders have been
tasked to assist in the inventory-taking.

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 Auditor’s Rejoinder
2.34 The Audit Team acknowledged the Management’s efforts in complying with the
above-cited reports but emphasized the need to complete the inventory-taking.

COMPLIANCE AUDIT

Unliquidated Cash Advances

3. The unliquidated cash advances of ₱2,111,786.70 includes (a) dormant and long
outstanding balances totaling ₱1,100,261.37 and (b) cash advances granted to
students totaling ₱198,659.00 due to non-adherence to the rules and regulations
in the granting, utilization and liquidation of cash advances.

a) Cash advances were not liquidated within the prescribed period - ₱2,111,786.70

3.1 COA Circular No. 97-002 dated February 10, 1997 provides, among others, the
following rules and regulations regarding the granting, utilization and liquidation
of cash advances.

i. A cash advance shall be reported on as soon as the purpose for which it was
given has been served.

ii. Cash advances for special time-bound undertaking shall be liquidated by the
accountable officer concerned within one month from the date the purpose
of cash advance was accomplished;

iii. Failure of the AO to liquidate his cash advance within the prescribed period
shall constitute a valid cause for the withholding of his salary and the
instruction of other sanctions as provided for under paragraphs 9.2 and 9.3
of the Circular.

3.2 The unliquidated Cash Advances reflected in the schedule of Advances to

Special Disbursing Officers (SDOs), Officers and Employees of the Institute as
of December 31, 2021 amounted to ₱2,111,786.70, broken down as follows:

Table 7 - Summary of Unliquidated Cash Advances

Advances to
Fund Advances to SDOs Officers and Total
Employees
Fund 101/151 486,266.00 534,545.00 1,020,811.00
Fund 164 188,926.02 193,518.00 382,444.02
Fund 161 315,080.00 393,451.68 708,531.68
Total 990,272.02 1,121,514.68 2,111,786.70

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3.3 Table 8 presents the aging of the unliquidated cash advances as of December 31,
2021.

Table 8 - Aging of Unliquidated Cash Advances (In PhP)

Undated/ Less than Over 1 Over 2 3 years and
Fund Total
Unaccounted 60 days year years over
Fund 101/151 253,053.70 - - 1,211.00 766,546.30 1,020,811.00
Fund 161 357,742.68 - - - 350,789.00 708,531.68
Fund 164 - 54,541.63 4,362.14 24,870.00 298,670.25 382,444.02
Total 610,796.38 54,541.63 4,362.14 26,081.00 1,416,005.55 2,111,786.70
Percentage 28.92% 2.58% 0.21% 1.24% 67.05% 100.00%

3.4 Cash advances which are outstanding for less than 60 days represents payment
for various extension activities/projects conducted by the different colleges of
the Institute for the month of December 2021. It has been noted that although the
purposes for which the cash advances had already been served, the accountable
officers did not liquidate the same nor return the unspent amount.

b) Cash Advances of Deceased/Retired/Separated Employees - P1,100,261.37

3.5 COA Circular No. 2016-005 dated December 19, 2016 prescribes the guidelines
and procedures on the write-off of dormant receivable accounts, unliquidated
cash advances and fund transfers of NGAs, local government units and
government-owned and controlled corporations. The same circular defines
dormant account as “accounts which balances remained inactive or non-moving
in the books of accounts for 10 years or more and where settlement/collectability
could no longer be ascertained”.

3.6 In last year’s audit observation, we recommended that Management exert effort
for the full liquidation of advances or initiate the write-off of accounts as
warranted. It is noteworthy to mention that an account amounting to P788,316.42
was written-off in CY 2021, hence, the decrease in unliquidated/ dormant
accounts. However, cash advances totaling P1,100,261.37 or 52.10% of the total
cash advances reported in the Institute’s books as of December 31, 2021
remained unsettled:

Table 9 - Unliquidated/Dormant Accounts

No. of Amount
Age of
Status Accountable (in PhP) Remarks
Accounts
Officers
Includes accounts of
one deceased AO
7 to 13
Deceased 3 409,109.91 totaling P395,970.16
years
that has been approved
for write-off in CY 2022
Includes accounts with
6 to 13
Retired from Service 9 331,591.64 check number and date
years
not available

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 No. of Amount
Age of
Status Accountable (in PhP) Remarks
Accounts
Officers
Separated from the
5 to 16
service (Resigned, 13 359,559.82
years
Dropped from Rolls)
Total 25 1,100,261.37

3.7 We recommended that Management cause the immediate settlement by all

accountable officers with past due accounts and exhaust possible remedies
including, among others, the withholding of salaries, pursuant to the
provisions of COA Circular No. 97-002.

Implementation of Tertiary Education Subsidy (TES) Program

4. Lapses in the implementation of the TES such as: a) delays ranging from 29
to 207 days in the distribution of the subsidy to student beneficiaries for AY
2019-2021; b) unexpended TES funds of P8,870.00 not returned to CHED;
and c) non-maintenance of a separate bank account for the TES funds, were
not in accordance with provisions of the Universal Access to Quality Tertiary
Education Act or RA No. 10931, and its Implementing Rules and Regulations
(IRR), and the Tripartite Memorandum of Agreement (MOA) among the
Commission on Higher Education (CHED), UniFAST Board, and EARIST,
defeating the timely realization of the objectives of the program.

4.1 Pursuant to Section 7 of RA No. 10931, the TES has been established for Filipino
students who shall enroll in undergraduate–post-secondary programs of State
Universities and Colleges (SUCs), CHED-Recognized Local Universities and
Colleges (LUCs), private Higher Education Institutes (HEIs) and all Technical
Vocational Institutions (TVIs), to support the cost of tertiary education or any
portion thereof.

4.2 Section 23 of the IRR of RA No. 10931 provides for the benefits that may be
availed of under the TES, to wit:

a) Tuition and other school fees in private HEIs, and in private or LGU-
operated TVIs, which shall be equivalent to the tuition and other school fees
of the nearest SUC or State-run TVI in their respective area;

b) Allowance for books, supplies, transportation, and miscellaneous personal

expenses, including reasonable allowance for the documented rental or
purchase of personal computer or laptop; and other education-related
expenses;

c) Allowance for room and board costs incurred by the student;

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 d) For a student with disability, allowance for expenses related to the student’s
disability, including special services, personal assistance, transportation,
equipment, and supplies that are reasonably incurred; and

e) For a student in a program requiring professional license or certification, the

one-time cost of obtaining the first professional credentials or qualifications,
which may include the following application fees: notarial fees, review
classes fees, insurance premium fees, and documentation fees.

4.3 Further, all TES beneficiaries enrolled in SUCs, LUCs and private HEIs shall be
entitled to a full academic-year grant for students enrolled in programs offered
therein, subject to yearly renewal based on their continued studies.

4.4 A Tripartite MOA dated June 07 2021, between the CHED, UniFAST Governing
Board and the EARIST had been entered into to effectively implement the Free
Higher Education (FHE), TES and Student Loan Program (SLP).

4.5 In Item 1.3(d) of the said MOA, the EARIST undertakes, among others, to
diligently implement and comply with the IRR of RA No. 10931 and the specific
provisions of Rules II and III of the guidelines on FHE; the specific provision of
Section 6.5 of the guidelines on TES and the specific provisions of Rules II and
III of the guidelines on the SLP. Among the procedures to be undertaken are as
follows:

i. Issue an Official Receipt (OR) for every amount received from CHED in
relation to the implementation of RA No. 10931, specifically on FHE,
TES and SLP;
ii. Deposit the amount received in relation to FHE, TES and SLP to the
authorized depository bank;
iii. Maintain a separate bank account for proper account management for the
FHE, TES and SLP;
iv. Revert back to CHED excess fund transfer (if applicable);

4.6 For AY 2020-2021, the EARIST had received a total amount of P2,113,437.50
for qualified student-beneficiaries for the implementation of various student
subsidy programs of CHED, including administrative cost as shown in Table 10,
below.

Table 10 - Subsidy Received from CHED

Amount (in PhP) OR
No. of
Particulars Adminis- No./Date
Grantees Benefits Total
trative Cost
Payment for TES grant for 837387
14 280,000.00 2,800.00 282,800.00
1st semester AY 2020-2021 12/02/2021
Payment for TES grant for 838713
14 280,000.00 2,800.00 282,800.00
2nd semester AY 2020-2021 01/25/2022

50
 Amount (in PhP) OR
No. of
Particulars Adminis- No./Date
Grantees Benefits Total
trative Cost
Payment for ESGP-PA 838714
grants for 1st semester AY 14 200,000.00 2,000.00 202,000.00
2020-2021 01/25/2022
Tulong Dunong, 1st
838183
Semester, 2020-2021 –
90 675,000.00 0.00 675,000.00
EARIST Cavite Campus
12/16/2021
(ECC)
839153
Tulong Dunong, 2nd
89 667,500.00 3,337.50 670,837.50
Semester, 2020-2021 –ECC
02/10/2022
2,102,500.0
Total 10,937.50 2,113,437.50
0

4.7 Based on our audit of payrolls, schedules and disbursement vouchers, the TES
Grants from CHED-UniFAST for AY 2020-2021 were utilized as follows:

Table 11 - Utilization of TES Grants for AY 2020-2021 (in PhP)

Administrative
Particulars Grant Total
Cost
Allocated Budget 2,102,500.00 10,937.50 2,113,437.50
Actual Utilization 1,435,000.00 0.00 1,435,000.00
Unutilized 667,500.00 10,937.50 678,437.50
Percent of Utilization 68.25 0.00 67.90
Percent of Non-Utilization 31.75 100.00 32.10

4.8 The remaining unutilized amount of P678,437.50 represents grants for TES-
Tulong Dunong program intended for 89 ECC student beneficiaries covering the
2nd semester of AY 2020-2021, which are yet to be distributed amounting to
P667,500.00 and unutilized administrative cost of P10,937.50. Out of the
unutilized administrative cost, ₱4,800.00 were refunded to CHED per Check
Nos. 378855 and 378856 dated March 25, 2022.

c) Delays ranging from 29 to 207 days on the distribution of funds to student

beneficiaries - AY 2019-2020

4.9 Audit of available financial records relevant to the implementation of TES

Grants from CHED-UNIFAST shows that a total of P4,351,800.00 TES subsidy
including administrative costs, which is intended for the TES beneficiaries for
AY 2019-2020, were not immediately received/receipted and recorded in the
books of accounts. This caused the delay in the distribution of the said subsidies
to the student-beneficiaries which defeats the timely realization of the objectives
of the program.

4.10 Inquiry with the TES Focal Person of EARIST disclosed that they made regular
follow-ups with the CHED NCR UniFAST Coordinator for the immediate
release of funds. However, when the checks were already available and/or when

51
 funds are already credited to EARIST Regular Trust Fund account, the latter did
not immediately inform them.

4.11 The delay in the receipts of fund have further caused the delay in the distribution
to the student-beneficiaries ranging from 29 to 207 days, as shown in Table 12,
below.
Table 12 - Details of Delayed Distribution of Funds
Distribution to
Receipts of Fund
Beneficiaries
Particulars Amount Amount Delays
OR No./ Check
(in PhP) (in PhP)
Date No./Date
378640
320,000.00 29
824599 03/03/2021
TES-UAQTE,1st Sem, 2019-2020 432,600.00
02/02/2021 378641
100,000.00 29
03/03/2021
378647
2,330.00 42
03/16/2021
378646
5,000.00 42
03/16/2021
TES-NonListahanan 2.0,4Ps , AY 2018- 824598 378639
20,600.00 20,000.00 29
2019 02/02/2021 03/03/2021
824600 378639
4Ps, 2nd Sem 2019-2020 20,600.00 20,000.00 29
02/02/2021 03/03/2021
TES List (A) , 1st and 2nd Sem 2019- 824601 378642
41,200.00 40,000.00 36
2020 02/02/2021 03/10/2021
TES-NonListahanan 2.0 4Ps , AY 2018- 824597 378638
164,800.00 160,000.00 29
2019 02/02/2021 03/03/2021
TES-Tulong Dunong, 1st and 2nd Sem, 824595 378850
12,000.00 12,000.00 39
AY 2019-2020 02/10/2021 03/21/2022
378678
3,504,000.00 69
827354 05/19/2021
3,540,000.00
TES-Tulong Dunong, 1st and 2nd Sem, 03/11/2021 378748
24,000.00 207
AY 2019-2020 (300 Grantees) 10/04/2021
831360 378770
168,000.00 180,000.00 126
06/30/2021 11/03/2021
TES-Tulong Dunong, 1st and 2nd Sem, 832451 378745
120,000.00 120,000.00 48
AY 2019-2020 (100 Grantees) 07/29/2021 09/15/2021
Total 4,519,800.00 4,507,330.00

4.12 The balance between the amount receipted and the amount distributed pertains
to unused administrative cost of P12,470.00 wherein P5,270.00 of which
remained in the books as of date.

d) Unexpended TES Funds not returned to CHED – P8,870.00

4.13 Moreover, verification of fund releases made by EARIST disclosed that a total
of P8,870.00 as shown in Table 13 remained in the books of account of the
Institute representing unexpended amount under TES –Listahanan program.

52
 Table 13 - Unexpended Amount Not Returned to CHED (in PhP)
Academic Year Amount
1st and 2nd Semesters, 2018-2019 800.00
1st Semester, 2019-2020 5,270.00
1st AY 2020-2021 2,800.00
Total 8,870.00

e) Non-maintenance of separate bank account for the Fund

4.14 Likewise, no separate bank account is being maintained by the Institute which is
not in adherence to the rules and guidelines stipulated in the tripartite MOA
signed by the UNIFAST, CHED and EARIST. This observation had been raised
in CY 2020 audit, but to date, the funds received from the CHED–UNIFAST is
still being deposited in the Institute’s Regular Trust Fund bank account.

4.15 We recommended that Management :

a. require the UniFAST Focal Person to request the CHED-UniFAST to

immediately inform the Institute that such funds have been downloaded
to the account of the EARIST to ensure timely release of the funds to the
student-beneficiaries;

b. return the unexpended balance to CHED; and

c. maintain a separate bank account for the TES fund for proper account
management as required in the MOA dated June 07 2021.

Management’s Comments

4.16 Management commented that closed coordination with the CHED-UniFAST is

already being done however, there is still delay in the distribution of the subsidy
since the CHED-UniFAST does not inform the Institute that such funds have
been downloaded or released.

4.17 In the last General Orientation held on March 31, 2022, UniFAST informed them
that they are addressing the issue on the delayed releases.

4.18 Reversion of excess/unused funds is already in process.

4.19 The request for the opening of separate bank account will be presented to the
Board of Trustees on the Second Quarter Regular Meeting.

53
Overpayment of Honorarium to Part Time Instructors, Undergraduate Program -
P126,120.66

5. Proper and adequate verification of relevant documents required for the claims
and payment of honorarium of 43 Part Time (PT) Instructors from different
colleges of the Institute for the first semester of AY 2020-2021 to ensure accurate
computation thereon were not done by responsible EARIST officials, which
resulted in excess payment of P126,120.66.

5.1 Section 5(4) of Presidential Decree (PD) No. 1445 states that fiscal responsibility
shall, to the greatest extent, be shared by all those exercising authority over the
financial affairs, transactions and operations of the government agency while
Section 5(5) states that disbursements and disposition of government funds or
property shall invariably bear the approval of the proper officials.

5.2 The Internal Control Standards for the Philippine Public Sector (ICSPPS),5
which was issued through COA Circular No. 2018-003 dated November 21,
2018, includes, among others, the principal foci that “Management develops
control activities which includes a range of diverse policies and procedures. Item
10.1 on Supervision (assigning, reviewing and approving, guiding, and
training) states that competent supervision helps to ensure that internal control
objectives are achieved. Assigning, reviewing, and approving an employee's
work include systematically reviewing each member's work to the extent
necessary.

5.3 For the 1st Semester of School Year 2020-2021, PT Instructors for
Undergraduate Programs were hired by the Institute to teach in the different
colleges of both EARIST Main Campus and Cavite Campus. Each PT Instructor
was issued an appointment stating the period and duration of the contract, rate
of compensation per equivalent lecture and laboratory hour and other terms and
conditions agreed upon by both parties.

5.4 Face to Face classes in all levels including government offices were suspended
on March 9 to 13, 2020 due to the COVID-19 Pandemic. On March 16, 2020,
lockdown in entire Luzon was declared by the President of the Philippines, hence
conduct of classes was done thru online via Google platform.

5.5 PT Instructors were paid based on their appointment supported by

Accomplishment Report (AR) and Daily Time Record (DTR) duly approved and
signed by the respective Deans of each College and further supported by the
attendance report of the students.

5.6 Table 14 shows the school calendar for SY 2020-2021 for EARIST, the non-
working holidays and the dates when classes were suspended.

5
Provides guidance essential for the professional practice of internal auditing to improve the effectiveness of
governance, risk management and control processes in all agencies of the government

54
 Table 14 - School Calendar for SY 2020-2021
Date Event
October 5, 2020 Start of Regular Classes
October 31, 2020 Declared Non-working Holiday
November 2, 2020 Special Non-working Holiday (All Souls Day)
November 11, 2020 (noon) Suspension of Classes in all levels due to Typhoon
to November 14, 2020 Ulysses and Typhoon Rolly
November 17-20, 2020 Semestral Break
December 8, 2020 Declared Non-working Holiday (Feast of the Immaculate
Concepcion)
December 24 and 31, 2020 Special Non-working Holiday (Christmas and New Year)

5.7 Verification and review of the signed and approved EARIST School Calendar
for SY 2020-2021, together with the Daily Time Records and Accomplishment
Reports of concerned Instructors enumerated in Table 15, revealed that 43 PT
Instructors of both Main and Cavite Campuses were paid even on the days those
classes were officially suspended and during non-working holidays.

Table 15 - Computation of Excess Payment

Excess No. of Hrs. Excess Amount Claimed
Lecture
College/ Labor- Laboratory
Lecture (P229.57/
Instructor Period Claimed atory (P172.18/hr)
hr) Total
a b (a x (b x
229.57) P172.18)
College of College of Public Adm. and Criminology
No. 1 11/12-13/2020 18 4,132.26 4,132.26
10/31/2020; 11/14/2020 8 1,836.56 3,673.12
No. 2
8 1,836.56
10/31/2020; 9 2,066.13 6,198.39
No. 3 11/12-14/2020 15 3,443.55
12/8/2020 3 688.71
No. 4 11/12-13/2020 14.5 3,328.77 3,328.77
No. 5 11/12-13/2020 18 4,132.26 4,132.26
EARIST Cavite Campus
No. 6 10/31/2020 3 688.71 688.71
No. 7 10/31/2020 5 3 1,147.85 516.54 1,664.39
No. 8 10/31/2020 3 688.71 688.71
11/17-18/2020 12/8/2020 9 2,066.13 3,443.55
No. 9
6 1,377.42
No. 10 10/31/20 9 2,066.13 2,066.13
No. 11 11/14/2020 6 1,377.42 1,377.42
No. 12 11/13/2020 3 688.71 688.71
11/13/2020 3 688.71 1,377.42
No. 13
12/8/2020 3 688.71
11/12/2020 2 3 459.14 516.54 1,492.22
No. 14
12/8/2020 3 516.54
College of Architecture and Fine Arts
10/31/2020; 11/14/2020 4 6 918.28 1,033.08 3,902.72
No. 15
4 6 918.28 1,033.08
11/12/2020 2 7 459.14 1,205.26 3,960.12
No. 16
12/8/2020 4 8 918.28 1,377.44
11/12-13/2020 8 4 1,836.56 688.72 4,361.85
No. 17 12/8/2020 5 4 1,147.85 688.72
No. 18 10/31/2020 2 6 459.14 1,033.08 3,673.15

55
 Excess No. of Hrs. Excess Amount Claimed
Lecture
College/ Labor- Laboratory
Lecture (P229.57/
Instructor Period Claimed atory (P172.18/hr)
hr) Total
a b (a x (b x
229.57) P172.18)
11/13/2020 5 6 1,147.85 1,033.08
10/8, 15, 22, 29, 31/2020; 2 16 459.14 2,754.88 9,297.68
11/5, 12, 14, 26 /2020; 4 22 918.28 3,787.96
No. 19 12/3, 10, 17/ 2020 6 1,377.42

10/31/2020 4 7 918.28 1,205.26 4,247.08

No. 20 11/14/2020 4 7 918.28 1,205.26
11/12-13/2020 4 8 918.28 1,377.44 4,361.85
No. 21 12/8/2020 9 2,066.13
10/31/2020 2 9.5 459.14 1,635.71 6,485.43
No. 22 11/13-14/2020 3 15 688.71 2,582.70
12/8/2020 6.5 1,119.17
No. 23 11/12-13/2020 4 6 918.28 1,033.08 1,951.36
College of Industrial Technology
No. 24 10/31/2020 2 6 459.14 1,033.08 1,492.22
11/12-13/2020 3 14 688.71 2,410.52 4,476.66
No. 25
12/8/2020 3 4 688.71 688.72
No. 26 10/31/2020 3 9 688.71 1,549.62 2,238.33
College of Engineering
No. 27 11/14/2020 3 688.71 688.71
No. 28 10/31/2020 3 3 688.71 516.54 1,205.25
10/31/2020 3 688.71 6,657.55
11/12-14, 15.5 10.5 3,558.34 1,807.89
No. 29
17-20/2020 1.5 1.5 344.36 258.27
12/8/2020
11/12-13, 13 6 2,984.41 1,033.08 4,706.20
No. 30 17-2020/2020
12/8/2020 3 688.71
No. 31 10/31/2020 6 6 1,377.42 1,033.08 2,410.50
No. 32 10/10, 17, 24, 31/2020 15 3 3,443.55 516.54 3,960.09
No. 33 10/31/2020 2 3 459.14 516.54 975.68
No. 34 11/12-14/2020 6 6 1,377.42 1,033.08 2,410.50
No. 35 10/31/2020 9 2,066.13 2,066.13
No. 36 10/31/2020 3 3 688.71 516.54 1,205.25
10/31/2020 4 6 918.28 1,033.08 5,567.11
No. 37
11/12-14/2020 9 9 2,066.13 1,549.62
No. 38 12/8/2020 5 3 1,147.85 516.54 1,664.39
No. 39 12/1-19/2020 1 2.5 229.57 430.45 660.02
No. 40 10/31/2020 9 2,066.13 2,066.13
College of Arts and Sciences
No. 41 12/8/2020 6 1,377.42 1,377.42
No. 42 10/31/2020 9 2,066.13 2,066.13
No. 43 11/14/2020 6 1,033.08 1,033.08
Total 82,300.85 43,819.81 126,120.66
Note: Names of the Instructors cannot be disclosed in this Report

5.8 It is noteworthy to mention that verbal inquiries with other EARIST faculty
members disclosed that they never claimed honorarium on days when classes
were officially suspended and during non-working holidays.

5.9 We also observed that mathematical computations were not accurate in some
instances, hence excess payments were incurred.

56
 Table 16 - Overpayment of Honoraria Due to Erroneous Mathematical
Computation
Instructor Date Particulars Audit Remarks
No./College
No. 32/ 10/10, 17, 24, Schedule: Saturdays – Entry per DTR:
CEN 31/2020 7:00-12:00; 1:00-6:00 – 7:00-12:00; 1:00-6:00
counted as 12 hours Should be 10 hours instead of 12;
No classes on 10/31/20
No. 19 10/8, 15, 22, Schedule: Thursdays - Entry per DTR:
CAFA 29/2020; 11/5, 12, 10:00-3:00; 3:00-8:00 – 10:00-3:00; 3:00-8:00
26/2020; 12/3, 10, counted as 12 hours Should be 10 hours instead of 12;
17/2020 No classes on 11/12-14, 2020

No. 41 12/8/2020 No time in and out on Paid 6 hours on 12/8/20 which

CAS 12/8/2020 was declared an official holiday
No. 27 11/14/2020 DTR stated No Classes Paid 3 hours on 11/14/20 which
CEN on 11/14/20 was suspended due to Typhoon

5.10 We would like to emphasize that in compliance with Sections 4(4) and (5) of PD
No. 1445, claims against government funds must be reviewed and evaluated
before the signatories to the claims and approving authorities affix their
initials/signatures. Moreover, internal control requires that government
transactions shall be properly reviewed before funds are disbursed.

5.11 We recommended that Management require the:

a. concerned employees to refund the excess payment; and

b. all concerned officials to be prudent in the processing and review of all

transactions before disbursements are made.

Management’s comments:

5.12 Management commented that similar observation had been raised by the Internal
Audit Services of the Institute and that they are currently reviewing the payroll
and its necessary attachments to check if excess honorarium are already deducted
from the succeeding payrolls.

5.13 Coordination with the Vice President for Academic Affairs shall be initiated to
remind the Deans to check the Daily Time Records of their faculty before
approval and submission to the Human Resource Management Services.

Auditor’s Rejoinder:

5.14 The Audit Team requested for the immediate release of the report of the Internal
Audit Services which will be compared with the audit observations raised.

57
Compliance with RA No. 9184 and Other Pertinent Rules and Regulations

6. Procurements of service and infrastructure projects were not in accordance with

Section 3 of RA No. 9184 as the following lapses were committed: a) absence of
stipulation requiring the contractor to pay for the water and electricity
consumption; b) overpayment of P58,352.75 due to overstated work
accomplishment; c) absence of approved detailed Bill of Materials; d) Inspection
and Acceptance Report not supported by a report of actual measurements;
e) installation of four glass windows to replace an existing one; and f) tarpaulin
signboards were not posted by the Institute, contrary to pertinent laws, rules and
regulations.

6.1 Section 3, the Governing Principles on Government Procurement or RA No.

9184 states that all procurement of the national government, its departments,
bureaus, offices and agencies, including state universities and colleges,
government-owned and/or controlled corporations, government financial
institutions and local government units, shall, in all cases, be governed by these
principles:

(a) Transparency in the procurement process and in the implementation of

procurement contracts.
(b) Competitiveness by extending equal opportunity to enable private
contracting parties who are eligible and qualified to participate in public
bidding.
(c) Streamlined procurement process that will uniformly apply to all
government procurement. The procurement process shall be simple and
made adaptable to advances in modern technology in order to ensure an
effective and efficient method.
(d) System of accountability where both the public officials directly or
indirectly involved in the procurement process as well as in the
implementation of procurement contracts and the private parties that deal
with government are, when warranted by circumstances, investigated and
held liable for their actions relative thereto.
(e) Public monitoring of the procurement process and the implementation of
awarded contracts with the end in view of guaranteeing that these contracts
are awarded pursuant to the provisions of this Act and its implementing
rules and regulations, and that all these contracts are performed strictly
according to specifications.

6.2 The General Procurement Manual defines “technical specifications” as the

physical description of the goods or services, as well as the Procuring Entity`s
requirements in terms of the functional, performance, environmental interface
and design standard requirements to be met by the goods to be manufactured or
supplied, or the services to be rendered. The technical specifications must
include the testing parameters for goods when such testing is required in the
contract.

58
6.3 In determining the technical specifications of the goods or services it will
procure, the PMO or end-user unit must consider the needs of the procuring
entity; the objectives of the project; and the entire procurement at hand and
identify the standards that should be met by the goods or services in terms of
function, performance, environmental interface and/or design. Hence, depending
on the need of the procuring entity, it may require standards that must be met to
conform to the needs of the procuring entity.

6.4 To verify and validate the existence of CY 2021 procured projects, the Audit
Team, together with concerned officials of the Institute and its campuses,
conducted an ocular inspection in March 2022 on the projects listed in Table 17.

Table 17 - Details of Projects Inspected

Project No. and Description/Contract Check Amount Status of
Fund
Price (CP)/Location No./Date Payment
1. Designed and Built Customized 402003 571,875.00 164 Full
Computer Table for CEN Computer 21-Sept-21
Lab. Contract Price (CP): P610,000.00
2nd Floor Computer Room,
Engineering Building
2. Repair and Rehab of Computer 401870 788,413.80 164 Full
Laboratory, CP: P840,974.72 19-May-21
2nd Floor Computer Room,
Engineering Building
3. Supply and Installation of Movable 401964 227,354.50 164 Full
Partition to be placed at the ORPDS, 02-Aug-21
CP: P242,511.46
Research Building
4. Repair and Rehab of EARIST 1038466 477,900.32 101 15%
Perimeter Fence CP: P3,186,002.14 30-Jun-21 Mobiliza
EARIST Main Campus tion
5. Additional Enhancement of CCJE 402107 277,327.64 164 15%
Lab, CP: P1,848,850.95 29-Nov- Mobiliza
Room 211, CCJE Laboratory 21 tion
6. Rehabilitation and Modernization of 402103 6,937,633.33 164 15%
EARIST Electrical System, CP: 25-Nov-21 Mobiliza
P46,250,888.88 tion
EARIST Main Campus Buildings
7. Designed and Construction of ECC 402015 2,064,653.30 164 1st
Research and Extension Bldg. 06-Oct- Billing
Contract Price (CP) P8,236,101.33 21
Cavite Campus
8. Conversion of ICT to Learning 402058 591,035.79 164 Full
Commons, CP: P630,438.17 03-Nov-
Library Building 21
Note: All projects were observed to have been completed, except for No. 6

59
6.5 Verification and audit of the pertinent Disbursement Vouchers (DV) and
supporting documents disclosed the following observations:

a. absence of stipulation requiring the contractor to pay for the water and
electricity consumption

6.6 Infrastructure projects with more than P1 million contract price, as listed below,
have no stipulations in the contract and in the special condition of the contract
as to who will pay for the water and electricity consumption during the project
construction. In the absence of such stipulation, the EARIST had paid for these
utilities, hence disadvantageous to the Institute and is not in keeping with Section
22 of the Philippine Civil Code which states that every person who, through an
act of performance by another, or any other means, acquires or comes into
possession of something at the expense of the latter without just or legal ground,
shall return the same to him.

Project Contract Price

Rehabilitation and Modernization of EARIST Electrical System 46,250,888.88
Designed and Construction of ECC Research and Extension Building 8,236,101.33;
Repair and Rehab of EARIST Perimeter Fence 3,186,002.14
Additional Enhancement of CCJE Laboratory 1,848,850.95

b. overpayment of P58,352.75 due to overstated work accomplishment

6.7 Measurement conducted by the Audit Team disclosed an overstated work

accomplishment of 40.234 square meters, hence, the contractors were overpaid
by P58,352.75 for the two projects, as listed in Table 18.

Table 18 - Overpayment to Contractors

Project No. 2 - Repair and Rehabilitation of Computer Laboratory
Square Total Amount
Description Meter @ P1,525 per
(sq.m.) sq.m.
I. As Claimed and Paid per Statement of Work Accomplished
Supply and installation of 60 cm x 60 cm floor tiles 119.00 181,475.00
II. Per Measurement during ocular inspection
Location and Area (length x width in meters) sq.m.
Computer Room (15.21 x 6.3) 95.823 146,130.08
Overstated floor area/overpayment 23.18 35,344.92

Total Amount
Description sq.m. @ P1,349.10
per sq.m.
Project No. 8 - Conversion of ICT to Learning Commons
I. As Claimed and Paid per Statement of Work Accomplished
Carpeted Flooring 193.129 260,550.33
II. Per Measurement during ocular inspection
Location and Area (length x width in meters)

60
 Total Amount
Description sq.m. @ P1,349.10
per sq.m.
Entrance / Hallway (8.43 x 2.2) 18.546
Learning Common Area (13.8 x 9.18) 126.684
Internet / Multi-Media Room (9.18 x 3.36) 30.8448
Total 176.075 237,542.51
Overstated floor area/overpayment 17.054 23,007.82
Total Overpayment 40.234 58,352.74

c. absence of approved detailed Bill of Materials

6.8 For CY 2021, the EARIST procured 20 sets of customized computer tables for
the College of Engineering Computer Laboratory for P610,000 or P30,500 per
set. Each set is designed for three slots of computer set (monitor, central
processing unit, keyboards) or for three users/students. As reported in the
Acknowledgement of Turnover/Custody of Completed Project dated August 9,
2021 and Notice to Proceed which was received and acknowledged on July 8,
2021, the project was completed in 32 days and below is the breakdown of the
cost of material and labor:
Particulars Total Unit Cost
Material 550,000.00 27,500.00
Labor 60,000.00 3,000.00
Total 610,000.00 30,500.00

6.9 However, in the absence of approved detailed Bill of Materials, the

reasonableness of the total contract price of P610,0000 cannot be determined.
The Audit Team is concerned on why the Management contracted the
customization of the computer tables when there are readily available computer
tables in the market.

d. Inspection and Acceptance Report not supported by a report of actual

measurements

6.10 For the two projects, no report was submitted by the designated Acceptance and
Inspection Officer to show the actual measurement of the visually verifiable
components of the approved Bill of Quantity and the Statement of Work
Accomplished submitted by the contractor to validate whether the same were in
accordance with the technical specification.

a. Repair and Rehab of EARIST Perimeter Fence – CP: P3,186,002.14:

 Part F. Concrete Works
 Part G. Masonry Works
 Part H. Steel Works
 Part M. Painting Works

61
 b. Additional Enhancement of CCJE Laboratory - CP: P1,848,850.95
 D-1 Provision of ceramic 600 x 600 floor tiles
 D-2 Provision of ceramic 600 x 600 wall tiles
 E-1 Provision of Sound-Proof Wall and Partition
 F-1 Repainting of Exposed Surfaces
 G-1 Provision of Epoxy Concrete Metallic Floor Coating

e. installation of four glass windows to replace an existing one

6.11 We also noted that in the repair and rehabilitation of Computer Laboratory with
a contract price of P840,974.72 (Project No. 2, Table 17), four sets of sliding
glass windows with total price of P81,500.00 were installed to cover an already
existing fixed glass window.

f. tarpaulin signboards were not posted by the Institute

6.12 Section 2.2.3 of COA Circular No. 2013-004 dated January 30, 2013 requires
that for infrastructure projects, a tarpaulin signboard must be suitably framed for
outdoor display at the project location and shall be posted as soon as the project
was awarded. The design and format of the tarpaulin was prescribed in Annex A
of the said Circular. This requirement was not complied with by the Institute.

6.13 In view of the foregoing, public procurement done by the Institute to acquire
services and infrastructure projects at the best possible price to meet their needs
in terms of quality and quantity, time, and location were not met, hence the
interest of the government was not amply protected.

6.14 We recommended that Management:

I. require the Bids and Awards Committee:

a. that in future similar transactions, include in the contract the

provisions on who will pay for electricity and water consumption;

b. to submit justification/explanation duly supported by relevant

documents:

i. on the discrepancies noted in the measurement of area (square

meters), resulting in the overpayment by P58,352.75;

ii. on the necessity of installing four sets of sliding glass windows

when there is already an existing fixed glass window;

c. to submit the Approved Detailed Bill of Materials with costing for

the fabrication of 20 computer tables

62
 d. in future similar transactions, ensure that infrastructure program
and projects of the Institute be properly publicized in accordance
with COA Circular No. 2013-004;

II. instruct the designated project inspector of EARIST that henceforth, all
visually verifiable components of the approved Bill of Quantity and
Statement of Work Accomplished submitted by the contractor be
properly measured before the issuance of Project Post
Completion/Inspection Report and Certificate of Acceptance.

Management’s Comments:

6.15 Management commented that payment for electricity and water consumption
will be included in the special provision of the succeeding contracts.

Non-compliance with Transparency Seal

7. The non-posting of the Report on COA Findings and Recommendations and non-
compliance/updating of the eight out of nine information in the Transparency Seal
of the EARIST’s official website during the year precluded the public in
(a) assessing the EARIST’s performance and its compliance with the audit
recommendations outlined in the Commission on Audit’s Annual Audit Report;
(b) determining propriety of budget utilization; (c) monitoring the agency
programs/activities; and (d) being apprised of the agency’s procurement, as
mandated under Sections 91 and 96 of the General Provisions, General
Appropriations Act for Fiscal Year 2021 or Republic Act No. 11518.

7.1 Sections 91, 95 and 96 of the General Provisions in the GAA of FY 2021 or RA
No. 11518 provides that specific reports and information are required to be
posted in the official website of the Agency to enhance transparency and
accountability in the government.

7.2 The head of agency concerned and the agency’s web administrator or
his/her equivalent shall be responsible for ensuring that said status reports
are posted on the agency’s website.” (underscoring and emphasis supplied)

7.3 Further, GPPB Circular No. 01-2021 dated March 4, 2021 reminds all Procuring
Entities (PEs) to strictly comply with the transparency, accountability and good
governance policies and measures in the procurement process set forth under RA
No. 9184 and its 2016 Revised IRR, the GAA, Resolutions issued by GPPB and
other relevant laws, rules and regulations.

7.4 Validation of the Agency’s official website at https://earist.edu.ph conducted on

March 18, 2022 showed that the following requirements mandated under
Sections 91 and 96 of the General Provisions (GP), GAA for FY 2021 or RA

63
 No. 11518 are either not complied with or only partially complied with by the
EARIST.
Table 19 - EARIST’s Compliance with Transparency Seal
Required Information for Posting
I – Report on Commission on Audit Findings and Recommendations
Status report on the actions taken on No report posted
audit findings and recommendations
using the prescribed form under COA
Memorandum No. 2014-002 dated
March 18, 2014.
IV – Transparency Seal
i. Agency’s Mandates and
Functions, names of its officials
with their position and
designation, and contact
information
ii. DBM Approved Budgets and
corresponding Targets,
immediately upon approval of
this Act
iii. Modifications made pursuant to
the general and special
provisions in this Act
iv. Annual Procurement Plan/s
(APP) and Contracts awarded
with the winning supplier,
contractor, or consultant
v. major activities or projects
categorized in accordance with
the 0+10-point socio economic
agenda and their target
beneficiaries
vi. status of implementation,
evaluation, or assessment reports
of said programs or projects
vii. Budget and Financial
Accountability Reports
EARIST’s
Audit Team’s Validation
Compliance
Not Compliant
EARIST’s Mandate, Vision Compliant
and Mission are posted, as
well as the names of its
officials with their position
and designation, and contact
information.
Uploaded DBM Approved Compliant
Budget and Corresponding
Targets from FYs 2016 up to
2021
No report posted Not Compliant
Uploaded APP for Common Partially
Supplies and Equipment for Compliant
FYs 2015 to 2021 and APP
for Non-CSE for FYs 2019 to
2021. Uploaded Contracts for
Goods with ABC above P1
Million for FY 2021.
Uploaded Contracts for
Infrastructure and Services
from January to June, 2021.
Uploaded Programs/ Projects Partially
but without categorization as Compliant
to 0+10-point socio economic
agenda. Target beneficiaries
reported.
Uploaded status of Partially
implementation of programs compliant
and projects. But no
evaluation and assessment
reports posted.
Uploaded FAR Nos. 1, 4 and Partially
5 for FYs 2014 to 2021. Compliant
64

Required Information for Posting
viii. People’s Freedom of
Information (FOI) Manual
signed by head of agency,
Agency Information Inventory,
2019 and 2020 FOI Summary
Report, and 2019 and 2020 FOI
Registry
ix. annual reports on the status of
income authorized by law to be
retained and/or used and be
deposited outside the National
Treasury, which shall include
the legal basis for its retention
and/or use, the beginning
balance, income collected and its
sources, expenditures, and
ending balance for the preceding
fiscal year.
EARIST’s
Audit Team’s Validation
Compliance
Financial Plan (BED No. 1)
and Physical Plan (BED No.
2) uploaded pertains to FYs
2016 to 2017 only. No report
on Unliquidated Cash
Advances and Aging of
Unpaid Obligations uploaded.
Uploaded 2017 People’s Partially
Freedom of Information Compliant
Manual but without signature
of the head of agency.
Reports on Agency
Information Inventory, 2019
to 2021 FOI Summary
Report, and 2017 to 2021 FOI
Registry are posted.
No report posted Not Compliant

7.5 The Institute’s headline on Transparency Seal is also not updated, it still refers
to FY 2017. Likewise, the MFO Accountability Report Card-I and II (MARC-I
and MARC-II) is not updated, uploaded report pertains to FYs 2012, 2014 and
2015 only. The President’s Annual Report is not updated, uploaded report
pertains only to FYs 2016 to 2018. The Management’s lack of full disclosure of
all the vital information enumerated above is a setback in adopting measures to
ensure transparency and accountability required from the Institute.

7.6 The College’s non-compliance with and/or its non-update of the Transparency
Seal denied the public of vital information in real-time that will enable them to
productively participate in transactions which may involve or benefit them.

7.7 We recommended that Management instruct the Web Administrator to

comply and update the Transparency Seal with the required information
by coordinating with the concerned Institute officials and employees.

7.8 Management commented that the Web Administrator had been advised to update
the Transparency Seal and necessary coordination has been made with the
responsible officials on the information to be posted in the Institute’s website.

65
Delayed Submission of FSs, Reports and Supporting Documents

8. Delays ranging from two to 243 days in the submission of disbursement vouchers,
trial balances, FSs and supporting schedules precluded the timely conduct of audit
and consequently, prevented the early detection and correction of errors and
deficiencies as well as timely reporting of the audit results to the Management,
contrary to Section 122 of PD No. 1445, Section 7.2.1 of the Rules and Regulations
on Settlement of Accounts, various provisions of the GAM and COA DBM Joint
Circular No. 2014-1 dated July 2, 2014.

8.1 Whenever deemed necessary in the exigencies of the service, the Commission may
under regulations issued by it require the agency heads, chief accountants, budget
officers, cashiers, disbursing officers, administrative or personnel officers, and
other responsible officials of the various agencies to submit trial balances, physical
inventory reports, current plantilla of personnel, and such other reports as may be
necessary for the exercise of its functions. Failure on the part of the officials
concerned to submit the documents and reports mentioned herein shall
automatically cause the suspension of payment of their salaries until they shall
have complied with the requirements of the Commission. 6

8.2 Table 20 shows the due dates on the submission of financial/accounting reports
and accounts to the Auditor’s Office for audit as required under various cited rules
and regulations.

Table 20 - Reports to be Submitted

Report Title Deadline Basis
Report of Collections and Deposits (RCD), Every 10th day after Sec.7.2.1.a of the
Report of Cash Disbursements (ROCD), the end of each month Rules and Regulations
Report of Checks Issued (RCI), Liquidation on the Settlement of
Reports (LR), Report of Accountability for Accounts (RRSA) as
Accountable Forms (RAAF) prescribed under
COA Circular No.
2009-006 dated
September 15, 2009
Monthly Trial Balances and Supporting 10 days after the end Section 60-c, Chapter
Schedules (SSs) including the Journal Entry of the month 19 GAM Volume I
Vouchers (JEVs)
Quarterly Trial Balances, FSs and 10 days after the end
Supporting Schedules of the quarter
Year-end Trial Balances, FSs and February 14, of the
Supporting Schedules (consolidated) following year
Statement of Appropriations, Allotments, 30 days after the end Section 32-a, Chapter
Obligations, Disbursements and Balances – of each quarter 3, GAM Volume I
FAR No. 1 (SAAODB)
Summary of Appropriations, Allotments, 30 days after the end COA DBM Joint
Obligations, Disbursements and Balances of each quarter Circular No. 2014-1
by Object of Expenditures – dated July 2, 2014
FAR No. 1.A (SAAODBOE)

6
Section 122 on Submission of Reports, PD No. 1445

66
 Report Title Deadline Basis
List of Allotments and Sub-Allotments – 30 days after the end
FAR No. 1.B (LASA) of each quarter
Statement of Approved Budget, 30 days after the end
Utilizations, Disbursements and Balances – of each quarter
FAR No. 2 (SABUDB)
Summary of Approved Budget, 30 days after the end
Utilizations, Disbursements and Balances of each quarter
by Object of Expenditures –
FAR No. 2.A (SABUDBOE)
Quarterly Report of Revenue and Other 30 days after the end
Receipts – of each quarter
FAR No.5 (QRROR)

8.3 As of April 22, 2021, review and evaluation of the Institute’s submission of trial
balances, FSs and other reports for the CY 2021 showed substantial delay and/or
non-submission of the said reports, as follows:

Table 21 - Schedule of Submission of Reports and Delays Incurred

Latest Report Number of
Report Title
submitted Days Delayed
1. Monthly Trial Balances and Supporting Schedules including the JEVs
Fund 101 21-Dec 39 to 243 days
Fund 164 21-Dec 33 to 133 days
2. Quarterly Trial Balances, FSs and Supporting Schedules
Fund 101 4th Quarter 49 to 193 days
Fund 164 4th Quarter 60 to 74 days
3. Budget and Financial Accountability Reports (BFARs)
FAR No. 1, FAR No. 1.A, 4th Quarter
37 to 152 days
FAR No. 1B ( Quarterly) 4th Quarter
FAR No. 2, FAR No. 2.A (Quarterly) 4th Quarter -
FAR No.5 (Quarterly) 4th Quarter 3 to 53 days
5. LRs including OR's and other supporting documents
Fund 101 21-Dec -
Fund 151 21-Dec 2 to 59 days
Fund 164 21-Dec -
6. RCI including Disbursement Vouchers and Supporting Documents
Fund 101 21-Dec
27 to 69 days
Fund 151 21-Dec
Fund 164 21-Dec 22 to 90 days

8.4 Section 5, Chapter 19, Volume I of the GAM provides the components of the FSs,
namely:

a. Statement of Financial Position

b. Statement of Financial Performance
c. Statement of Changes in Net Assets/Equity
d. Statement of Cash Flows
e. Statement of Comparison of Budget and Actual Amount (SCBAA); and
f. Notes to FSs comprising a summary of significant accounting policies and
other explanatory notes.

67
8.5 Section 30 of the same Manual emphasizes that Notes to FSs are integral parts of
the FSs. Notes provide additional information and help clarify the items presented
in the FSs. It provides narrative description or disaggregation of items in the FSs
and information about them that do not qualify for recognition. Notes shall, as far
as practicable, be presented in a systematic manner. Each item on the face of the
Statement of Financial Position, Statement of Financial Performance, Statement
of Changes in Net Assets/Equity, and Statement of Cash Flows shall be cross-
referenced to any related information in the notes.

8.6 The delayed submission of the foregoing financial reports and its supporting
documents precluded the timely conduct of audit and consequently prevented the
early detection and correction of errors and deficiencies as well as timely reporting
of the audit results to the Management.

8.7 We recommended that the Management:

a. require the concerned officials to, henceforth, be mindful of the deadlines

on the submission of the subject reports and adhere strictly to the
provisions of COA rules and regulations; and

b. cause the suspension of the payment of salaries and other emoluments of

the officials/employees concerned until they have complied therewith in
case of repeated failure of the officials/employees concerned to submit
the said financial reports, records and other documents to the Office of
the Auditor within the period prescribed under the above-cited COA
rules and regulations pursuant to Section 122(2) of PD No. 1445.

8.8 Management commented that to date, all the financial reports being required have
been submitted to the Audit Team. Delays in the submission of BFARS are due to
technical issues encountered using the DBM-URS portal which were already
reported to the IT department of DBM.

68
OTHER COMPLIANCE ISSUES

Gender and Development (GAD)

9. The Institute had accomplished 18 of the 19 planned programs, projects and

activities on GAD and spent P9,387,210.41 or 94 percent of the approved budget of
P9,943,263.01 for CY 2021, in accordance with its GAD Plan and Budget (GPB) and
Section 32 of the General Provisions of RA No. 11518 or GAA for FY 2021.

9.1 All agencies of the government shall formulate a GAD Plan designed to address
gender issues within their concerned sectors or mandate and implement the
applicable provisions under R.A. No. 9710 or the Magna Carta of Women.7

9.2 The GAD shall be integrated in the regular activities of the agencies, which shall
be at least 5% of their budget. For this purpose, activities currently being
undertaken by the agencies which relate to the GAD or those that contribute to
poverty alleviation, economic empowerment especially of marginalized women,
protection, promotion, and fulfillment of women’s human rights, and practice of
gender-responsive governance are considered sufficient compliance with said
requirement. Utilization of GAD budget shall be evaluated based on the GAD
performance indicators identified by the agencies.

9.3 Review and evaluation of the CY 2021 EARIST GPB as well as the
Accomplishment Report revealed that 18 out of the 19 PPAs were implemented
during the year resulting in a 95% accomplishment.

9.4 For CY 2021, the Institute’s total appropriations amounted to P224,975,000.00.

At least five percent of the said appropriations or P11,248,750.00 was to be
allocated for GAD programs and activities. However, only P9,943,263.01 was
approved, wherein P9,387,210.41 was spent or 94% of the approved allocation.
Details are shown in Table 22.

Table 22 - GAD Plan and Accomplishments for CY 2021

GAD
GAD Projected Activities Actual Percentage Variance
Budget
Expenditure
Client-focused
1. Conduct the following activities:
a. Seminar on Reproductive Health
Issues;
b. Forum on HIV and Cancer
Awareness; 150,000.00 59,000.00 39.33 91,000.00
c. Forum on COVID Standard
Protocol;
d. Seminar on Everyday Practice for
Wellness; and

7
Section 32, Programs and Projects Related to Gender and Development, General Provisions, GAA 2021

69
 GAD
GAD Projected Activities Actual Percentage Variance
Budget
Expenditure
e. Seminar on Taking Care of our
Mental Health During Pandemic
2. Conduct seminar on how to undertake
qualitative and quantitative researches
100,000.00 100,000.00 100.00 -
that center on gender and development
perspective
3. Conduct symposium, seminar/forum
and other related activities that promote 40,000.00 16,230.00 40.58 23,770.00
awareness of VAW
4. Conduct sustainable training programs
that could help the less privileged
250,000.00 249,478.00 99.79 522.00
women among community partners to
be productive.
5. Launch a short training that could assist
the out-of-school to obtain skills on the
following:
a. Computer Hardware
Troubleshooting
150,000.00 - - 150,000.00
b. Baking
c. Food Processing
d. Bartending
e. Housekeeping
f. Agri-Tourism
6. Conduct seminar on the following:
a. Climate Change and Eco Gender 40,000.00 12,500.00 31.25 27,500.00
Sensitivity
b. Disaster Information Campaign 40,000.00 1,500.00 3.75 38,500.00
7. Conduct GAD Orientation for
100,000.00 31,400.00 31.40 68,600.00
freshmen and transferee students
8. Conduct Capability Training on Gender
Responsive Risk Reduction 100,000.00 9,000.00 9.00 91,000.00
Management
Organization-focused
9. Conduct Seminar on the following
issues:
a. Reproductive Health Awareness
b. Mental Health Issues in the midst 60,000.00 9,000.00 15.00 51,000.00
of the Pandemic
c. c. Best Practices in Fighting
COVID 19: Lessons from SUCs
10. Purchase of the needed equipment and
Office supplies needed for the conduct 1,000,000.00 1,000,000.00 100.00 -
of gender and development activities
11. Conduct Orientation of Gender and
Development for the newly hired 15,000.00 5,000.00 33.33 10,000.00
faculty and employees.
12. Participation of the GAD advocates on
the different seminars, workshops,
trainings, forums, conferences, and 400,000.00 395,839.40 99.00 4,160.60
paper presentations within and outside
Metro Manila

70
 GAD
GAD Projected Activities Actual Percentage Variance
Budget
Expenditure
13. Hire a dedicated staff to manage the
Gender Development Office and its 1,449,888.00 1,449,888.00 100.00
-
projects and activities.
14. Purchase of the equipment, supplies
and materials to combat the COVID 2,000,000.00 2,000,000.00 100.00 -
19.
15. Maintenance of the vertical garden
placed in the three buildings of the 225,000.00 225,000.00 100.00 -
Institute.
16. Construction for EOCS and GAD
3,203,375.01 3,203,375.01 100.00 -
Office at EARIST ECC
17. Provision of Ramps at Strategic Areas
320,000.00 320,000.00 100.00 -
of the Institute
18. Gender Neutral Comfort Room with
150,000.00 150,000.00 100.00 -
Septic Vault
19. Periodic maintenance of the elevators
150,000.00 150,000.00 100.00 -
of the Institute.
Total 9,943,263.01 9,387,210.41 556,052.60

9.5 It is worth to mention that some GAD activities were conducted via Webinar,
Zoom and Google meet due to legal restrictions imposed by the government in
compliance with IATF recommendation on face-to-face activities, thus no cost or
lesser cost was incurred.

9.6 In summary, our evaluation of the Institute’s GAD AR revealed that the Institute
had substantially complied with the rules and regulations on GAD.

9.7 We commend Management for its accomplishment of the identified CY 2021

GAD PPAs and enjoin them to continue the implementation of its GAD plan
in the ensuing year.

Compliance with the Property Insurance Law

10. Insurable assets of the Institute were not insured since CY 2018, thus exposing them
to the risk of not being indemnified for any damage to or loss of properties due to
fortuitous events, contrary to RA No. 656 or the Property Insurance Law. Likewise,
the Management did not submit the Property Inventory Form (PIF) as required
under COA Circular No. 2018-002 dated May 31, 2018.

10.1 RA No. 656 was enacted to establish a “Property Insurance Fund” which
administration was placed under the GSIS and requires all government agencies
to have their insurable properties, assets, and interests insured with the GIF
administered by the GSIS to ensure compensation of the equivalent value thereof
in case of loss thru fire, theft or any unforeseen events.

71
10.2 Section 11 of the RA No. 656 provides that each government, as defined in Section
4 thereto, shall include in its annual appropriations the amount necessary to cover
the premiums for the insurance of its properties during each fiscal period and remit
the same immediately to the System as provided in Section 10 thereof.

10.3 COA Circular No. 2018-002 dated May 31, 2018 prescribes the submission of the
PIF as basis for the assessment of general insurance coverage over all insurable
assets, properties and interests of the government with the GIF of the GSIS. The
Circular was issued to assist in the implementation of the provisions of RA No.
656 on the insurance and bonding of risk on insurable government assets and
properties with the GIF.

10.4 Moreover, Item 5.3 of the Circular prescribes that the Head of Agency,
Accountant, Property Officer, Administrative Officer, Cashier, Treasurer, or any
government official of National Government Agencies, who are responsible for
the payment of the premium prescribed, who habitually neglects to comply within
the time prescribed, shall be held liable for the payment of said premiums and shall
pay to the GSIS a fine of two per centum (2%) per month from their due dates
until received by the GIF, as provided for under Section 6(b) of RA No. 656.

10.5 Inquiry with concerned personnel disclosed that since CY 2018, the Institute had
not provided in its annual appropriations the amount necessary to cover for the
insurance of its insurable assets. This resulted in the non-insurance of the PPE, as
listed in Table 23.

Table 23 - Insurable Assets of EARIST as of December 31, 2021

Accumulated
Account Name Cost Carrying Value
Depreciation
Sewer Systems 8,895,188.14 845,042.88 8,050,145.26
Power Supply Systems 58,616,213.88 5,103,074.64 53,513,139.24
Buildings 40,192,918.55 7,811,576.92 32,381,341.63
School Buildings 346,772,713.62 172,161,234.46 174,611,479.16
Machinery 2,182,224.52 2,073,113.29 109,111.23
Office Equipment 63,544,812.33 45,068,708.37 18,476,103.96
Information and Communications
58,209,497.20 45,530,914.47 12,678,582.73
Technology Equipment
Communications Equipment 2,485,749.95 1,628,379.60 857,370.35
Disaster Response and Rescue
1,489,000.36 1,164,355.84 324,644.52
Equipment
Medical Equipment 567,220.00 408,520.80 158,699.20
Sports Equipment 386,000.00 192,240.00 193,760.00
Technical and Scientific
228,808,657.80 173,723,871.98 55,084,785.82
Equipment
Other Equipment 86,513,018.55 60,971,678.74 25,541,339.81
Motor Vehicles 15,156,760.22 6,464,920.96 8,691,839.26
Furniture and Fixtures 13,694,281.77 9,046,902.41 4,647,379.36
Books 5,357,806.19 3,062,258.29 2,295,547.90

72
 Accumulated
Account Name Cost Carrying Value
Depreciation
Construction in Progress –
19,557,861.72 - 19,557,861.72
Buildings and Structures
Total 952,429,924.80 535,256,793.65 417,173,131.15
Excludes Land, Other Land Improvements, Leased Asset- Machinery and Equipment

10.6 Moreover, the Institute did not submit a complete RPCPPE as basis in the
preparation of the PIF.

10.7 In the absence of an insurance coverage, the EARIST faces the risk of non-
indemnification in case of damage or loss due to fortuitous events.

10.8 We recommended that Management:

a. immediately secure property insurance of its uninsured assets in order

to ensure indemnification in case of loss, in compliance with the rules
and regulations of RA No. 656 and record payment of insurance
premiums as prescribed;

b. fast-track the inventory-taking and submit the required PIF of all

insurable properties to the GIF of the GSIS within the prescribed
timeline; and

c. impose the appropriate administrative sanctions to the concerned

officials if they repeatedly do not comply with Item 5.3 of COA Circular
No. 2018-02.

Management’s Comment:

10.9 The Institute’s approved budget for property insurance amounting to

P9,383,511.13 for CY 2021 was not utilized because the required documents for
the insurable assets are not yet complied with.

Senior Citizens and Differently-Abled Persons (DAPs)

11. The EARIST had utilized P764,882.88 or 82.69% of the agency approved budget
amounting to P925,000.00 and had only accomplished four out of the nine targeted
activities for Senior Citizens mainly because of the health restrictions established
to prevent the spread of COVID-19 pandemic.

11.1 Section 32 of the General Provisions of RA No. 11518 or the GAA of FY 2021
requires all agencies of the government to formulate plans, programs and
projects intended to address the concerns of Senior Citizens and DAPs, in so
far as these relate to their mandated functions, and integrate the same in their
regular activities.

73
11.2 For CY 2021, EARIST submitted its Annual Senior Citizen Plan and Budget
for the implementation of Programs and Projects related to Senior Citizens.
Shown in Table 24 are the Agency’s objectives and planned activities intended
to cater to the welfare of the Senior Citizens, at an approved budget of
P925,000.00.

Table 24 - Agency Approved Budget

Objectives Activity Budget
1. To update the list of Senior Citizens (SC) Survey of Senior Citizens Using
of the Institute members available
resources
2. To strengthen the knowledge and Attend Municipal / National 50,000.00
understanding of the TWC in Section 35 Meetings / Conferences /Seminars
of RA No. 10717
3. To give recognition to all SC retirees Recognition for Retirees/Loyalty 160,000.00
during the Institute Faculty and Awardees for EARIST SC
Employees Virtual Recognition

4. To provide livelihood opportunities for Livelihood activities for SC and 100,000.00

SC of the adopted communities PWD:
a. Face Shield making
b. Dishwashing Liquid making
c. Disinfectant Solution
d. Alcohol making
e. Processed Food
5. To provide opportunity in hiring retired Hire retired faculty to work in the 300,000.00
faculty to work as part timers Institute
6. To exhibit the essence of gift-giving to Gift-giving for elderly (SC) 50,000.00
the elderly (SC)
7. To give health data and information Health Forum 15,000.00
through health forum
8. To exercise the lawful manifestation Orientation/Information on SC 10,000.00
through orientation on SC rights and Rights and Privileges
privileges
9. To assist Senior Citizens working force of To launch Annual Physical 240,000.00
the Institute in dealing/ maintaining their Examination
health concerns amidst the pandemic
Total 925,000.00

11.3 Review of the Institute’s Accomplishment Report for CY 2021 disclosed that
four of its nine planned activities were implemented with expenditures totaling
P764,882.88 or 82.69% of the agency approved budget. Details are shown in
Table 25.

Table 25 - Accomplishment Report for CY 2021

Actual Result Actual
Planned Activities Budget Variance
(Output/ Outcome) Expenditure
1. Survey of Senior Citizens Collate and encode Used Used -
members data and issues available available
gathered. resources resources
2. Attend Municipal / National Not accomplished 50,000.00 0.00 50,000.00
Meetings / Conferences /
Seminars

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 Actual Result Actual
Planned Activities Budget Variance
(Output/ Outcome) Expenditure
3. Recognition for Retirees / Conducted 160,000.00 149,882.88 10,117.12
Loyalty Awardees for recognition program
EARIST SC for all Retirees as
well as Loyalty
Awardees
4. To provide livelihood Conducted face mask 100,000.00 75,000.00 25,000.00
opportunities for SC: and face shield
a. Face Shield Making making in 7 barangay
b. Dishwashing Liquid and 1 NGO of which
c. Disinfectants Solution 280 individuals were
d. Alcohol Making benefited on the
e. Processed Food training conducted
for face mask and
face shield making
5. Hire retired faculties to work
Hired retired faculty 300,000.00 300,000.00 0.00
in the Institute as part-timer
6. Gift-giving for elderly (SC) Not accomplished 50,000.00 0.00 50,000.00
7. Health Forum for elderly Not Accomplished 15,000.00 0.00 15,000.00
8. Orientation/ Information on Not Accomplished 10,000.00 0.00 10,000.00
Senior Citizen’s Rights and
Privileges
9. To launch the Annual Physical Not Accomplished 240,000.00 240,000.00 0.00
Examination
Total Amount 925,000.00 764,882.88 160,117.12

11.4 As can be gleaned from the Table, P160,117.12 was not utilized due to the non-
implementation of five planned activities because of health restrictions imposed
by the government, particularly by the Inter-Agency Task Force for the
Management of Emerging Infectious Diseases.

11.5 We recommended that Management continue with the programs intended

to address the concerns of the Senior Citizens and DAPs.

Management’s Comment

11.6 Management commented that they appreciate the recommendation of the Audit
Team and assured that the Institute will continuously provide the necessary
programs to address the concerns of Senior Citizens and DAPs.

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Tax Laws and Regulations, GSIS and Pag-IBIG Premium Contributions and Loan
Amortizations, and PhilHealth Premium Contributions

12. The Agency was able to comply with the timely remittance of mandatory deductions
pursuant to the regulations issued by the BIR, GSIS, PhilHealth, and Pag-IBIG,
including loan amortizations. However, there are unremitted amounts which
pertains to unaccounted balances which had been in the books for several years
already. Management informed that their efforts had proven to be futile due to
absence of subsidiary ledgers in previous years. Table 26 shows the details of
amounts withheld and remitted to the concerned government agencies.

Table 26 - Schedule of Amount Withheld and Remitted

Accounts Withheld Remitted Unremitted / Remarks

4,125,930.48 Remitted January 2022

Due to BIR
27,482,749.60 22,748,808.79 608,010.33 Prior Year’s Unaccounted
4,733,940.81 Balance

25,933.80 Remitted January 2022

Due to GSIS 40,560,844.40 39,391,953.72 Prior Year’s Unaccounted
1,142,956.88
1,168,890.68 Balance

Due to Pag- 800.00 Remitted January 2022

1,868,270.01 1,795,114.80
IBIG 72,355.00 Prior Year’s Unaccounted
73,155.00 Balance

Due to 24,564.69 Remitted January 2022

PhilHealth 3,961,062.94 3,905,997.32 30,500.93 Prior Year’s Unaccounted
55,065.62 Balance

12.1 The breakdown of prior year’s unaccounted balances totaling P1,853,823.35 is

shown in Table 27.

Table 27 - Schedule of Unaccounted Balances (in PhP)

Fund
Accounts Affected Total
101 164
Due to BIR 601,600.19 6,410.14 608,010.33
Due to GSIS 1,142,956.88 - 1,142,956.88
Due to Pag-IBIG 72,355.21 - 72,355.21
Due to PhilHealth 30,500.93 - 30,500.93
Total 1,847,413.21 6,410.14 1,853,823.35

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Weak enforcement of settlement of audit disallowances

13. Management failed to enforce the settlement of audit disallowances despite the
issuance of Notice of Finality of Decision (NFD) and COA Order of Execution
(COE), contrary to Section 7.1 of COA Circular No. 2009-006, which resulted in
the accumulation of unsettled disallowances as reported in the Statement of
Audit Suspensions, Disallowances and Charges (SASDC) as of December 31,
2021.

13.1 Table 28 presents the details of the audit suspensions, disallowances, and
charges as at December 31, 2021.

Table 28 - Status of Audit Suspensions, Disallowances, and Charges (in PhP)

Balance,
Balance, This period
December 31,
Particulars January 1, January 1 to December 31, 2021
2021
2021
NS/ND/NC NSSDC
Notice of Suspension 70,645,600.07 - 70,619,532.07 26,068.00
Notice of Disallowance 118,191,367.79 - 4,246,560.398 113,944,807.40
Notice of Charge - - -
Total 188,836,967.86 - 74,866,092.46 113,970,875.40

13.2 COA Circular No. 2009-006 dated September 15, 2009 prescribes the Rules
and Regulations on the Settlement of Accounts. Salient sections of the Circular
include the following:

a. Section 7.1.1(b) - provides that the Head of the Agency who is primarily
responsible for all government funds and property pertaining to his agency,
shall ensure that the settlement of disallowances and charges is made within
the prescribed period.

b. Section 7.1.3 - states that the Agency Head shall enforce the COE by
requiring the withholding of salaries or other compensation due to the
person liable in satisfaction of the disallowance or charge.

c. Section 7.1.4 - states that the Head of the Agency 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.

d. Section 10.4 - states that the disallowance shall be settled within six months
from receipt of the ND by the person liable.

8
Excludes settlements totaling P31,000.00 made thru salary deduction since the Certificate of Deduction was
issued by the Accountant on February 18, 2022 and the corresponding Notices of Settlement of Suspension,
Disallowance and Charges (NSSDC) were issued by the Audit Team on February 22, 2022.

77
 e. Section 22.2 – The NFD shall be issued by the authorized COA official 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

f. Section 23.1 The COE shall be issued to enforce the settlement of an audit
disallowance, whenever the persons liable refuse or fail to settle after the
decision has become final and executory

13.3 Pursuant to Section 6 of Article IX-A of the 1987 Constitution, and by virtue
of the powers vested in it by existing laws, the Commission on Audit
promulgated the 2009 Revised Rules of Procedure. Included therein are the
following Rules and Sections:

a. Rule XIII, Section 3. COA Order of Execution (COE) - In case of failure of

the person(s) liable to refund the amount disallowed/charged, the COE
directing the Cashier/Treasurer/Disbursing Officer to withhold payment of
any money due such person(s) shall be issued by the concerned COA
officials.

In case of failure by the Cashier/Treasurer/Disbursing Officer to comply

with the COE, the Auditor shall notify the agency head concerned of the
non-compliance. At the same time, the Auditor shall report the matter
through the COA Director concerned, to the General Counsel who shall take
any or all of the following actions: a. Recommend to the Commission
Proper to cite defaulting party in contempt; b. Refer the matter to the
Solicitor General for the filing of appropriate civil suit; c. Refer the case to
the Ombudsman for the filing of appropriate administrative or criminal
action.

13.4 In relation to the above regulations, the NFD and Notice of Disallowance (ND)
directs the persons liable to immediately settle the disallowance.

13.5 As of December 31, 2021, the SASDC reflected a balance of P113,944,807.40

unsettled disallowances. Out of this amount, P52,171,196.07 have been issued
NFDs and COEs, as shown in Table 29.

Table 29 - NDs with issued NFD and COE

NFD COE
Amount
ND No. Received Received by
(in PhP) Date Date
by Mgt. Mgt.
1. 10-101-164(08) 65,000.00 07/10/2014 10/13/2014 11/03/2016 12/09/2016
2. 2014-006-
20,000,000.00 5/21/2018 06/01/2018 5/28/2018 06/08/2018
164(2013)A
3. 2017-002-164(2014) 736,000.00 06/06/2018 6/18/2018 08/08/2019 09/10/2019
4. 2014-005-161(2013) 1,050,000.00 06/06/2018 6/18/2018 08/08/2019 09/10/2019
5. 2010-001-164(09) 102,000.00 06/06/2018 6/18/2018 06/06/2020 11/24/2020
6. 09-001-164(08) 232,600.00 06/06/2018 6/18/2018 06/06/2020 11/24/2020

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 NFD COE
Amount
ND No. Received Received by
(in PhP) Date Date
by Mgt. Mgt.
7. 09-001-164(07) 191,700.00 06/06/2018 6/18/2018 06/06/2020 11/24/2020
8. 09-001-164(06) 215,250.00 06/06/2018 6/18/2018 06/06/2020 11/24/2020
9. 2015-002-164(2014) 10,000,000.00 5/21/2018 06/01/2018 5/28/2018 06/08/2018
10. 2017-003-101(12) 20,181.15 06/06/2018 6/18/2018 08/08/2019 09/10/2019
11. 2014-008-161(2014) 500,000.00 06/06/2018 6/18/2018 08/08/2019 09/10/2019
12. 2014-007-161(2014) 300,000.00 06/06/2018 6/18/2018 08/08/2019 09/10/2019
13. 2019-001-101(07) 148,415.50 1/15/2021 1/20/2021 10/13/2021 10/21/2021
14. 2019-003-101(07) 53,935.00 1/15/2021 1/20/2021 10/13/2021 10/21/2021
15. 2019-004101(08) 110,189.00 1/15/2021 1/20/2021 10/13/2021 10/21/2021
16. 2016-009-101(2010) 8,944.00 06/02/2017 6/29/2017 12/12/2017 12/18/2017
17. 2016-008-161(2010) 11,598.00 06/02/2017 6/29/2017 12/12/2017 12/18/2017
18. 2016-007-161(2010) 30,000.00 06/02/2017 6/29/2017 12/12/2017 12/18/2017
19. 2016-006-161(2010) 184,500.00 06/02/2017 6/29/2017 12/12/2017 12/18/2017
20. 2016-005-161(2010) 22,000.00 06/02/2017 6/29/2017 12/12/2017 12/18/2017
21. 2016-004-161(2010) 21,598.00 06/02/2017 6/29/2017 12/12/2017 12/18/2017
22. 2016-003-161(2010) 169,537.00 06/02/2017 6/29/2017 12/12/2017 12/18/2017
23. 2016-002-164(2014) 736,000.00 06/02/2017 6/29/2017 12/12/2017 12/18/2017
24. 2016-001-164(2014) 5,711,217.19 06/02/2017 6/29/2017 12/12/2017 12/18/2017
25. 2014-003164(11) 466,201.82 06/02/2017 6/29/2017 12/12/2017 12/18/2017
26. 2014-002-164(2011) 458,906.25 06/02/2017 6/29/2017 12/12/2017 12/18/2017
27. 2014-001-164(2011) 461,250.00 06/02/2017 6/29/2017 12/12/2017 12/18/2017
28. 2020-014-164(10) 10,164,173.16 5/21/2021 6/29/2021 2/16/2022 2/21/2022
Total 52,171,196.07
Note: Items 1 to 8 have partial settlements

13.6 Out of the NDs issued with NFD and COE, settlements totaling P2,179,350.00
was made, as shown in Table 30. This, however, represents only 1.91 percent
of the total disallowance.

Table 30 - Details of Settlements Made (in PhP)

ND No. Date NFD/COE Original Settlements Balance as of
Served Amount of ND Made 12/31/21
2014-006-164(2013)A 6/1/18; 6/8/18 20,000,000.00 1,333,333.33 18,666,666.67
2014-005-161(2013) 6/18/18; 9/10/19 1,050,000.00 229,000.00 821,000.00
2016-002-164(2014) 6/29/17; 12/18/17 736,000.00 484,000.00 252,000.00
2010-001-164(09) 6/18/18; 11/24/20 102,000.00 15,000.00 87,000.00
09-001-164(08) 6/18/18; 11/24/20 232,600.00 45,500.00 187,100.00
09-001-164(07) 6/18/18; 11/24/20 191,700.00 25,100.00 166,600.00
09-001-164(06) 6/18/18; 11/24/20 215,250.00 9,750.00 205,500.00
10-101-164(08) 10/13/14; 12/9/16 65,000.00 37,666.67 27,333.33
Total 22,592,550.00 2,179,350.00 20,413,200.00

13.7 On the other hand, the NDs totaling P51,884,588.73 had become final and
executory but the corresponding COEs are still to be issued. However, it is
emphasized that the absence of COEs does not preclude the liable persons to
settle their accounts, nor the Management to demand settlement thereof.

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 13.8 Considering that most of the NFDs and COEs were issued as early as June 2017
or almost five years ago and the NDs were issued as early as CY 2010, the total
settlement of P2,179,350.00 or 1.91 percent is a manifestation of low
enforcement of settlement of audit disallowances.

13.9 Management commented that they acknowledged that most of the NFDs and
COEs were issued as early as 2017, however, the accountable persons were
either deceased or retired/separated from the service earlier than 2017.

13.10 We recommended and Management agreed to enforce settlement of

disallowances in accordance with the provisions of Section 7.1.3 of COA
Circular No. 2009-006.

Management’s Comment:

13.11 For those who are retired/separated from the service, demand letters thru
registered mail are continuously sent. The Record Management Services will
submit the matrix of registered mails sent to the respective accountable
personnel.

80