EXECUTIVE SUMMARY

A. INTRODUCTION

By virtue of Republic Act (RA) No. 6975, known as “An Act Establishing the
Philippine National Police under a reorganized Department of the Interior and Local
Government and Other Purposes,” a highly effective and competent police force that is
national in scope and civilian in character was established in the year 1991. Also, as
amended under RA 8551, otherwise known as the Philippine National Police Reform and
Reorganization Act of 1998, the Philippine National Police (PNP) was envisioned to be a
community and service-oriented agency responsible for the maintenance of peace and
order and public safety.

Effective May 8, 2022, the PNP is being headed by Police Lieutenant General
Vicente D. Danao Jr. as Officer-in-Charge, vice Police General Dionardo B. Carlos
(November 13, 2021 to May 7, 2022). During Calendar Year (CY) 2021, Police General
Debold M. Sinas and Police General Guillermo Lorenzo T. Eleazar also held the position
from November 10, 2020 to May 8, 2021 and May 7 to November 13, 2021, respectively.

The PNP Organizational Set-up is composed of the: (a) National Headquarters

(NHQ), which houses the offices of the PNP Chief and two Deputy PNP Chiefs – one for
Administration and one for Operations, the Chief Directorial Staff, who acts as the chief
operating officer and who coordinates, supervises and directs the 12 Directorial Staff,
with the support of 14 Administrative and 15 Operational units; and (b) 17 Police
Regional Offices (PROs) nationwide corresponding to the regional subdivisions of the
country to include the National Capital Regional Police Office (NCRPO), PROs 1, 2, 3,
4A (CALABARZON), 4B (MIMAROPA), 5, 6, 7, 8, 9, 10, 11, 12, 13, Cordillera and
Bangsamoro Autonomous Region (BAR).

The PNP Chief is also assisted by: (a) Internal Affairs Service (IAS) to ensure the
operational readiness of the police and investigate infractions of the regulations
committed by members of the PNP; (b) the Human Rights Affairs Office (HRAO) to
promote, protect and fulfill human rights thru effective institutional and policy
development, capability building, prevention and control of human rights violations and
multi-sectoral cooperation; and (c) Center for Police Strategy Management (CPSM) to
ensure proper management and monitoring of the agency scorecard, the periodic review
and evaluation, and making necessary adjustments and amendments to the strategy with
the support of National Advisory Group (NAG). For police training, human resource
development, and continuing education, the Philippine Public Safety College (PPSC),
together with the Philippine National Training Institute (PNTI), is the premier
educational institution for all PNP personnel.

For CY 2021, the manpower complement of PNP totaled 221,419 composed of

15,666 Police Commissioned Officers, 192,565 Police Non-Commissioned Officers,
1,082 cadets and 12,106 Non-Uniformed Personnel.

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B. FINANCIAL HIGHLIGHTS

The PNP’s financial conditions for CY 2021 with corresponding figures for CY
2020 are as follows:

2020 Increase
Financial Position 2021
(As Restated) (Decrease)
(In thousand pesos)
Assets 55,432,952 48,807,552 (6,625,400)
Liabilities 4,307,054 4,411,555 104,501
Net Assets/Equity 51,125,898 44,346,667 (6,779,231)
Result of Operations
Income 2,730,813 1,791,888 938,925
Current Operating Expenses 249,517,751 234,366,111 (15,151,640)
Deficit from Current Operations (246,786,938) (232,574,223) 14,212,715
Net Financial Assistance/Subsidy 247,648,623 238,914,505 (8,734,118)
Gains 3,470 6,090 2,620
Losses (8,164) (3,358) 4,806
Surplus (Deficit) for the Period 856,992 6,343,013 5,486,021
Sources and Application of Funds
Allotment 251,894,585 238,108,197 13,786,388
Total Obligations Incurred 249,265,782 236,035,937 13,229,845
Unexpended Balance 2,628,802 2,072,259 556,543

The Statement of Appropriations, Allotments, Obligations and Disbursements and

Balances for CY 2021 is shown in Annex A.

C. OPERATIONAL HIGHLIGHTS

The PNP reported the following accomplishments per Major Final Output (MFO)
and Performance Indicators for CY 2021.

Key
Performance
Programs/Projects Targets Accomplishments Remarks
Indicators
MFO
Operations
MFO 1 – Crime • Number of foot and 35,540,706 33,072,824 The PNP
Prevention and mobile patrol accomplished
Suppression operations conducted 19,886,797 foot
Services patrol operations and
13,186,027 mobile
patrol operations.

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 Key
Performance
Programs/Projects Targets Accomplishments Remarks
Indicators
MFO
• Percentage change in 5% 2.55% reduction The PNP
National Index Crime reduction accomplished 19.05
Rate (NICR) percentage change
reduction in NICR
for the third quarter
of CY 2021.
• Percentage of crime 100% 99.13% The 0.87% pertains
incidents responded response to crimes responded
within 15 minutes calls for beyond 15 minutes
police due to inaccessibility
assistance of some barangays
located in coastal
areas and some are
quite far from the
municipal police
stations.
MFO 2 – Crime • Number of crime 522,301 365,526 The crime volume is
Investigation investigations significantly lower
Services undertaken than the forecasted
number of crimes for
the year.

• Percentage of most 5% 82.63%

wanted persons/high increase
value targets arrested

• Percentage of 5% 55.90%
arrested persons monthly
within 30 days upon arrest
receipt of warrant of
arrest

MFO 3 – Police • Number of

Education Program assessment and
training needs

a. NPTI 1 TNA 7 TNA

b. PNPA 2 TNA
• Percentage of total
uniformed personnel
completing training
programs of the PNP
for a School Year
a. Baccalaureate 80% of 1,016 or 92.36%
1,100
b. Mandatory Courses
PSOCC 2,000 1,560
PSSLC 4,600 5,907

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 Key
Performance
Programs/Projects Targets Accomplishments Remarks
Indicators
MFO
PSJLC 11,000 9,943
PSBRC 30,600 9,114
• Number of PNP
personnel trained
a. Baccalaureate 100% 100%
b. Mandatory Courses 100% 93.25% 201 newly appointed
for PNCOs PNCOs and
currently undergoing
training

D. SCOPE OF AUDIT

The audit covered the operations and financial transactions of the PNP for CY
2021 and the results of the audit included the NHQ and the 17 PROs nationwide.

E. INDEPENDENT AUDITOR’S REPORT

The auditor rendered an unmodified opinion on the fairness of the presentation of

the financial statements of PNP as at December 31, 2021.

F. SUMMARY OF OBSERVATIONS AND RECOMMENDATIONS

Among the observations and recommendations discussed in Part II of this report,

the significant observations are summarized as follows:

1. The year-end balance of the Cash in Bank-Local Currency, Current Account

is understated by ₱10.424 million due to the non-recognition of cash/check
deposits, interest income, stale checks, and other reconciling items in the
books of accounts. Moreover, prior years’ bank credits and debits amounting
₱32.187 million and ₱6.565 million, respectively, reflected in the National
Headquarters (NHQ) bank accounts were unsupported with pertinent
documents. (Observation No. 1)

We recommended and Management agreed to instruct the: a) Chief,

Accounting Division and Accountants of PROs 2 and 6 to recognize in the
books all unrecorded reconciling items; and b) Director, Directorate for
Comptrollership to send written request to Land Bank of the Philippines for
the submission of copy of all Debit and Credit Memos and other supporting
documents to support prior years’ deposits and withdrawals.

2. The year-end balance of the Due from National Government Agencies

account in NHQ is overstated by ₱52.655 million due to the non-recognition

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 in the books of accounts of deliveries and remittances of unused funds to the
Bureau of the Treasury (BTr) by Procurement Service-Department of Budget
and Management (PS-DBM). Moreover, fund transfers to PS-DBM for the
years 2010 to 2021 totaling ₱1.696 billion remained unserved and
unliquidated, depriving PNP of the use of the much-needed equipment and
supplies. (Observation No. 2)

We recommended and Management agreed to instruct the: a) Chief,

Accounting Division to recognize in the books of accounts the unrecorded
deliveries and remittance to the BTr of ₱10,920.00 and ₱52,644,427.64,
respectively; and b) Director, Directorate for Logistics to make
representations with PS-DBM to expedite the procurement and delivery of the
common-use office supplies and radios to ensure that programmed
activities/projects are effectively carried out and demand immediate return to
PNP for remittance to the BTr of prior years’ balances of fund transfers.

3. Cash advances totaling ₱81.081 million remained unliquidated at year-end,

of which, advances of ₱1,586,767.52 were outstanding for 24 to 63 years.
(Observation No. 3)

We recommended and Management agreed to require the concerned

Accountable Officers (AOs) to immediately liquidate their outstanding cash
advances and/or refund the unutilized balance, as the case may be.

4. The inventory accounts balance of ₱2.123 billion as of December 31, 2021 is

unreliable and inaccurate due to the: a) unreconciled variance of ₱1.520
billion between the accounting and property records in NHQ and PRO 6;
b) unrecorded issuance of inventories aggregating ₱1.034 billion due to
delayed or non-submission of Report of Supplies and Materials Issued
(RSMI) and Requisition and Issue Slip (RIS) in NHQ; c) unrecorded receipts
of Fuel, Oil and Lubricants totaling ₱6.613 million in NCRPO; and d) direct
charging of purchases totaling ₱131.944 million to expenses accounts in
PROs 6 and 8. (Observation No. 5)

We recommended and Management agreed to instruct: a) Chief, Accounting

Division/Regional Accountant and Supply Accountable Officers (SAOs) of
NHQ and PRO 6 to reconcile their records, identify cause/s of difference and
adjust their records, as necessary; b) Concerned SAOs of NHQ and NCRPO
to ensure timely preparation and submission to the Accounting Division/Unit
of RSMI, RIS and Inspection and Acceptance Report for proper recording in
the books of accounts; and c) Regional Accountants of PROs 6 and 8 to
record receipt of supplies and materials to the related inventory accounts and
its issuances as expenses upon receipt of RSMIs and RISs.

5. The Construction in Progress account balance at year-end is overstated by

₱555.310 million due to the: a) non-reclassification of completed projects at

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 the Special Action Force (SAF), PROs 4A, 5 and 9 totaling ₱550.043 million
to their proper asset accounts; and b) excess of ₱5.266 million on the
recorded cost of two ongoing projects in PRO 3. (Observation No. 6)

We recommended and Management agreed to instruct the: a) Chief,

Accounting Division and Regional Accountants of SAF, PROs 4A, 5 and 9 to
reclassify completed projects to the appropriate PPE accounts and recognize
the corresponding allowance for depreciation; and b) Regional Accountant of
PRO 3 to adjust the recorded contract cost of the two on-going projects.

6. The Property, Plant and Equipment (PPE) accounts balance of ₱68.060

billion as of December 31, 2021 is unreliable and inaccurate due to the:
a) unreconciled variances of ₱6.356 billion between the accounting records
and the physical count in NHQ, PROs 3, 4B, 6 and COR; b) unrecorded
equipment and buildings amounting to ₱67.238 million in PROs 1 and 12;
c) non-dropping of disposed motor vehicles and K9 dogs in the books of
accounts amounting to ₱18.856 million in PRO 12; d) overstatement of
depreciation expenses by ₱10.232 million in PRO 11; and e) recording as
PPE the semi-expendable properties in PRO 13. (Observation No. 9)

We recommended and Management agreed to instruct the: a) SAOs, Chief,

Accounting Division and Regional Accountants of PROs 3, 4B, 6 and COR
to verify the discrepancies so that their records are reconciled with the results
of the physical count; b) concerned officers in PROs 1 and 12 to submit to
the Regional Accountant the List of PPEs “Found at Station” and turnover
documents of Police Station Buildings for recording in the books of accounts;
c) AOs in PRO 12 to submit the pertinent documents to the Accounting Unit,
for the dropping of the disposed motor vehicles and K9 dogs in the books of
accounts; and d) Regional Accountants of PRO 11 and 13 to make necessary
adjustments to correct the over recognition of depreciation expense and
recording of semi-expendable properties as PPE.

7. The 308 lost firearms with an aggregate value of ₱2.940 million were not
derecognized in the books of accounts; thus, overstating Military, Police and
Security Equipment account by the same amount. (Observation No. 10)

We recommended and Management agreed to instruct the Chief, Accounting

Division and Accountant of PRO 2 to immediately derecognize the lost
firearms and take up the corresponding allowance for depreciation and
receivables from the concerned AOs.

8. Due to non-submission of the Deeds of Donation by the concerned SAOs and

Logistics Officers to the Accounting Division and for want of basis for
conversion to local currency of properties valued in foreign currencies,
donations in kind received by the PNP amounting to at least ₱267.085 million

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 remained unrecorded in the books of accounts as of December 31, 2021.
(Observation No. 11)

We recommended and Management agreed to instruct the: a) Concerned

SAOs and Logistics Officers to promptly submit copies of all the Deeds of
Donation and pertinent documents for all unrecorded donated properties to
their respective Accounting Division/Unit; b) Chief, Accounting Division and
Accountants of NCRPO, PROs 3, 5, 6, 7, 9 and 12 to record all donated
properties and the corresponding depreciation expenses upon receipt of Deeds
of Donation and pertinent documents; and c) Chief, Accounting Division to
record the donated properties valued in foreign currency using the spot
exchange rate on the date of recognition.

The foregoing audit findings and recommendations were discussed with the
concerned officials of the agency during the exit conference on April 25, 2022.
Management’s views and reactions were considered in this report, where appropriate.

G. STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT

RECOMMENDATIONS

Out of 80 prior years’ audit recommendations, 66 were implemented and 14 were

not implemented, of which six were revised/reiterated in Part II of this report.

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