EXECUTIVE SUMMARY

A. Introduction

The Commission on Elections (COMELEC) is the principal government agency

tasked by the Constitution to enforce and administer all laws and regulations
concerning the conduct of regular and special elections. It is a body that is designed
to be constitutionally independent from the executive, legislative and judicial
branches of the government to ensure the conduct of free, fair and honest elections.

As an added measure, the Constitution also grants fiscal autonomy to enable

COMELEC to operate effectively, efficiently and free from political interference.
The Constitution mandates that “funds certified by the Commission as necessary to
defray the expenses for holding regular and special elections, plebiscites, initiatives,
referenda, and recalls, will be provided in the regular or special appropriations and,
once approved, will be released automatically upon certification by the Chairman of
the Commission.”

In addition to its primary task of election administration, the COMELEC also

performs judicial, regulatory and administrative functions.

The COMELEC consists of one Chairman and six Commissioners, all of whom
have a seven-year term without reappointment. In all matters pertaining to election
administration and policymaking, the Commissioners act as a collegial body. In
election cases and pre-proclamation controversies, however, the Commission sits in
two divisions initially, but decides en banc on motion to reconsider a division
decision.

The Chairman is the Chief Executive of the Commission. Under him is the
Executive Director (ED) whose duty is to implement policies and decisions and to
take charge of the administrative affairs of the Commission. Assisting the ED are
two deputies: a Deputy Executive Director for Administration (DEDA) and a
Deputy Executive Director for Operations (DEDO).

In the field, there are 17 Regional Election Directors, 17 Assistant Regional

Election Directors, 80 Provincial Election Supervisors, 1,646 Election Officers
(EO) and their staff. The EOs are based in every city and municipality, whose main
function is to supervise the conduct of electoral activities within their areas of
responsibility as field representatives of the Commission. In the Central Office,
there are 12 departments with their corresponding divisions and three other offices.

As of December 31, 2022, the COMELEC has a total personnel complement of

6,638, of which 4,803 are permanent, 925 are plantilla casual, 582 are job order,
103 are co-terminus, 193 are contract of service, and 32 are contractual
positions distributed among various departments, divisions, and offices.

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B. Financial Highlights

The comparative financial position, financial performance, and sources and

application of funds for CYs 2022 and 2021 were as follows:

2022 2021 Increase/(Decrease)

Particulars
(In Philippine Peso)
Financial Position
Assets 19,677,972,255.25 23,367,649,940.84 (3,689,677,685.59)
Liabilities 2,756,932,404.51 7,640,498,178.74 (4,883,565,774.23)
Government Equity 16,921,039,850.74 15,727,151,762.10 1,193,888,088.64)
Financial Performance
Total Revenue 163,881,234.38 206,588,208.89 (42,706,974.51)
Total Current Operating
Expenses 18,747,959,699.52 7,064,444,744.33 11,683,514,955.19
Surplus (Deficit) from
Current Operation (18,584,078,465.14) (6,857,856,535.44) (11,726,221,929.70)
Net Financial Assistance/
Subsidy 21,471,624,973.98 14,545,692,806.42 6,925,932,167.56)
Other Non-Operating
Income (Loss) (279,176.67) (133,985.22) 145,191.45
Surplus (Deficit for the
Period) 2,887,552,885.76 7,687,702,285.76 (4,800,149,400.00)
Sources and Application of Funds
Allotments 28,446,983,733.35 16,132,281,734.44 12,314,701,998.91
Obligations 21,428,902,395.19 14,613,827,001.09 6,815,075,394.10
Balance 7,018,081,338.16 1,518,454,733.35 5,499,626,604.81

The details of appropriations, allotments, obligations, disbursements and balances

(SAODB) are presented in Annex A.

C. Operational Highlights

COMELEC reported the following targets and physical accomplishments for CY

2022 Election Administration Program and Electoral and Adjudication
Program:

Particulars Targets Accomplishments

Voter Education and Registration Management Sub-Program
1. Percentage increase of new registrants during 1.13% 4.58%
registration period

a. Local Registration
b. Overseas Registration 0.01% 0.13%
2. Percentage of cleansed database of registered 100% 100%

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 voters
3. Number of voters education/ information 200 (EID) 189 (EID)
campaigns conducted
19,884 (Field 21,881 (Field
Offices) Offices)
4. Number of applicants for registration, transfer 657,911 4,234,906

a. Local Registration
b. Overseas Registration 266 1,373
5. Number of registration records cancelled (death), 190,888 1,533,295
deleted, deactivated and reactivated
Electoral Supervision and Monitoring Sub-Program
1. Range of voters turnout 72%-78% 84.10%
2. Number of elections held 1 (NLE) 1 (NLE), 5
(Plebiscites)
3. Number of command conferences/ 2 14
meetings/discussions conducted with election
stakeholders/deputies/media
Electoral Enforcement and Adjudication Program
1. Increase in percentage of electoral protests 9.82% 59.00%
resolved within an election cycle
2. Number of cases filed
Election protest cases, election appeal cases 43 112
Special action cases 150 132
Special proceedings 2 7
Election matters 60 189
Special cases 8 10
3. Number of cases resolved
Election protest cases, election appeal cases 24 144
Special action cases 100 556
Special proceedings 2 19
Election matters 20 71
Special cases 1 32

D. Scope of Audit

The audit was focused on the COMELEC’s accounts and financial operations for
year ended December 31, 2022. It was conducted to: (a) verify the level of
reliance that may be placed on Management’s assertions on the financial
statements; (b) determine the extent of compliance with applicable laws, rules and
regulations; (c) recommend agency improvement opportunities; and (d) determine
the extent of implementation of prior years’ audit recommendations.

Moreover, the audit was conducted in accordance with the International Standards
of Supreme Audit Institutions (ISSAIs).

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E. Audit Opinion on the Financial Statements

The Auditor rendered an adverse opinion on the fairness of presentation of the

financial statements of the Commission on Elections as at December 31, 2022 in
view of the unadjusted accounting errors and omissions amounting to P1.110
billion, which misstated the financial statements, in all material respects,
individually or in the aggregate, and had exceeded the materiality level of
P374.959 million or 296.12 percent as discussed in the Independent Auditor’s
Report and in detail in Part II of this report and the analysis of their effects on the
financial statements are presented in Annex B.

F. Significant Observations and Recommendations

The following audit observations and the corresponding recommendations, which

are presented in detail in Part II, were communicated through Audit Observation
Memoranda (AOM):

1. Various unadjusted/uncorrected accounting errors and omissions amounting

to P1.110 billion and unresolved accounting deficiencies of P19.962 billion
materially affected the fair presentation of the Financial Statements.
(Observation No. 1).

Accounting Errors

a. Non-reversion of stale checks and unclaimed ADA - P1.427 million

We recommended and Management agreed to require the FSD to exert

extensive effort to substantiate all stale checks and long outstanding ADA and
prepare the necessary adjusting entries to reflect the correct balance of the
CIB-LCCA account as at December 31, 2022 with the following adjusting
entries:

Cash in Bank – LCCA 1,427,242.98

Accounts Payable 1,427,242.98

b. Unadjusted Book Reconciling Items - ₱50.129 million

We recommended and Management agreed to make necessary adjustments in

the books to correct the balance of the Cash in Bank - LCCA account as at
December 31, 2022 with these proposed adjusting entries:

Cash in Bank – LCCA 47,205,635.95

Trust Liabilities 47,205,635.95
To recognize unrecorded deposits

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 Accounts Payable 2,864,348.56
Cash in Bank – LCCA 2,864,348.56
To record disbursements

Cash in Bank – LCCA 59,270.88

Interest Income 59,270.88
To record Interest Income

We likewise recommended the FSD to verify unrecorded deposits without

breakdown, exert efforts to account for the disbursements already debited by
the bank and reconcile the same with the bank records. Thereafter make
necessary adjustment to correct the balance of the affected accounts in the
books.

c. Unrecorded Semi - Expendable PPE Issuances - P85.751 Million

We reiterated our previous recommendations with modifications and

Management agreed to: (a) direct the Property Division to prepare and submit
the RSPI with the Accounting Division for the immediate recording of the
issued Semi-Expendable properties, as provided for under the provisions of
Section 10, Chapter 8, GAM, Volume I, to come up with a more realistic
balance of the Inventory accounts: and (b) require the Accounting Division to
closely coordinate with the Property Division for the reconciliation of their
respective records and to prepare the necessary adjusting entry, as follows:

Accumulated Surplus/(Deficit) 85,751,401.46

Semi-Expendable Machinery
and Equipment 55,547,294.20
Semi-Expendable Furniture,
Fixtures and Books 30,204,107.26
To record semi-expendable property issuances

d. Unrecorded Computer software Deliveries from PS-DBM- P6.803 Million

We recommended and Management agreed to prepare the necessary

accounting entries to record the deliveries of Office 365 and 361 licenses
delivered by the PS-DBM to correct the balance of the accounts Due from
NGAs-PSDBM account and Computer software as at December 31, 2022.
Proposed adjusting entry as follows:

Computer Software 6,803,135.31

Due from NGAs (PSDBM) 6,803,135.31
To record computer software delivered by PS DBM

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e. Non-reclassification of various PPE Accounts - P400.871Million

We recommended and Management agreed to require the Chief Accountant to

prepare the necessary entries to reflect the reclassification of the Semi-
Expendable properties and corresponding recognition of expenses to correct
the balances of the affected accounts as at December 31, 2022. The proposed
adjusting entries as follows:

Accumulated Surplus/(Deficit) 400,871,043.78

Books 319,429.50
ICT Equipment 332,473,673.13
Communication Equipment 1,586,682.73
Furniture and Fixtures 12,435,358.46
Medical Equipment 16,245.00
Military, Police and Security 1,684,883.00
Equipment
Office Equipment 8,977,175.37
Other Machinery and Equipment 285,210.00
Other Property, Plant and Equipment 43,092,386.59
To reclassify issued PPEs to semi-expendable property accounts

f. Unrecorded PPE Acquisitions - P1.160 Million

We recommended and Management agreed to require the Accounting

Division to immediately record the cost of PPE items that were already
delivered and received as at December 31, 2022, to reflect the correct balance
of the related PPE accounts as at December 31, 2022, as follows:

Office Equipment 320,000.00

ICT Equipment 840,424.00
Depreciation Expense 43,706.71
Accounts Payable 1,160,424.00
Accumulated Depreciation 43,706.71

g. Unadjusted Expired Prepaid Expenses - P19.745 Million

We reiterated our recommendations and Management agreed to require the

Accounting Division to: (a) ensure that schedules of Prepayment accounts are
prepared and the expiration/lapsing thereof are monitored such that expenses
pertaining thereto are properly recorded at the period to which they relate;
and (b) record the expired/lapsed portion of the Prepayment accounts to
correct the balances of the affected accounts. Proposed adjusting entry as
follows:

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 Accumulated Surplus/(Deficit) 368,483.22
Rent Expense 8,605,530.82
Prepaid Rent 8,927,323.32
Prepaid Insurance 10,665.82
Prepaid Registration 36,024.90

Accounting Deficiencies

a. The reported balance of Cash – Collecting Officer account amounting to

P13.149 million as at December 31, 2022 was unreliable due to existence
of dormant, negative and For Reconciliation SL Balances amounting to
P4.883 million, P5.068 million and P1.484 million, respectively.
(Paragraph No. 1.42)

We reiterated and Management agreed to our previous recommendations

to require the AD to: (a) expedite the analysis and reconciliation of SLs
with significant balances and make the necessary adjustment/s, if
warranted, to come up with more accurate balance of the account.
Moreover, enforce strict monitoring on the complete submission of
Reports of Collections and Deposits and supporting documents to avoid
non-recording of the corresponding deposits indicated thereat; (b) exert
extra effort to analyze the SLs captioned as “For Reconciliation” taking
into consideration the details of SLs manually prepared prior to the
adoption of the eNGAS, and thereafter make the necessary adjustments in
the individual SLs; and (c) conduct a thorough review of the SLs to
determine the cause/s of the negative balances and effect the necessary
adjusting entries, to come up with a more reliable balance of the accounts
affected.

We further recommended and Management agreed to direct the AD to: (d)

analyze and justify the causes of the increase in the balance of SLs
captioned as “For Reconciliation” and SLs with Negative Balances from
CY 2017 to CY 2022 balances and make the necessary adjustments, if
warranted; (e) adopt extra measures in journalizing/posting the current
transaction, as well as in the approval of the Journal Entry Vouchers to
avoid increase in the balances of SLs captioned as “For Reconciliation”
and SLs with negative balances; and (f) conduct a thorough investigation
to determine whether the reported balance of the Cash Collecting Officers
account is either unrecorded deposit or undeposited collections. If
determined to be unrecorded deposit, require the submission of the
corresponding deposit slips from the concerned Collecting Officers, to
facilitate recording of the transaction in the books. If these are determined
to be undeposited collection, cause the immediate deposit of the said
undeposited collections. Henceforth, institute appropriate sanction to all
Collecting Officers who failed to deposit intact their collections.

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b. The reported balance of the Cash-in-Bank -LCCA account of P2.052
billion as at December 31, 2022 was unreliable due to existing
unaccounted book reconciling items and “for reconciliation” balances
amounting to P1.221 billion and P302.801 million, respectively.
(Paragraph No. 1.54).

We recommended and Management agreed to require the AD to exert

extensive effort to account all book reconciling items and immediately
prepare adjusting entries supported with necessary documentation.

We further reiterated our prior year audit recommendations and

Management agreed to require the AD to exert extra effort to analyze the
SLs captioned as “For Reconciliation” taking into consideration the details
of SLs manually prepared prior to the adoption of the eNGAS, and
thereafter make the necessary adjustments, if warranted.

c. The existence and reliability of the reported balances of the Inter-Agency

Receivables account totaling P1,278,134,922.41 as at December 31, 2022
could not be ascertained due to the existence of dormant and “For
Reconciliation” SL Balances amounting to P806,311,826.14, and
P74,033,030.89, respectively. (Paragraph No. 1.62)

We recommended and Management agreed to require the AD to: (a) submit

the required documents for the Request for Write-off of the Due from NGAs
and Due from LGUs accounts to facilitate the review and evaluation of the
request; and (b) strictly comply with the provisions of COA Circular No.
94-013 dated December 13, 1994 to ensure that all fund transfers are
efficiently monitored and liquidated as prescribed.

We further recommended and Management agreed to require the AD to

exhaust all means to analyze the SLs captioned as “For Reconciliation”
taking into consideration the details of SLs manually prepared prior to the
adoption of the eNGAS, and make the necessary adjustments, if warranted.

d. The validity, accuracy and existence of Receivables –

Disallowances/Charges account amounting to P141.323 million as at
December 31, 2022 cannot be ascertained due existence of unaccounted
SL balance amounting to P140.792 million classified as “For
Reconciliation” and dormant for more than 15 years. (Paragraph No. 1.76)

We reiterated our prior year audit recommendations that Management

require the AD to provide an individual SL for the account and exert extra
effort to locate and determine the details of the recorded Receivables –
Disallowances/Charges account and thereafter, enforce
collection/settlement thereof from the persons liable.

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e. The accuracy, existence and valuation of the Inventory Held for
Consumption accounts amounting to P216,988,694.56 as at December 31,
2022 could not be ascertained due to existence of: a) significant variance
between the Report on the Physical Count of Inventory (RPCI) and AD
records of P202.591 million; b) non-moving items/dormant SLs
amounting to P52.985 million; c) SLs with negative balance totalling
P28.085 million; and d) SLs captioned as “For Reconciliation” amounting
to P32.353 million. (Paragraph No. 1.82)

We reiterated our prior year’s audit recommendations with modification

and Management agreed to require the: (a) AD and the PD to reconcile
their records, investigate the causes of the variance, determine who is
accountable for the missing items, if any, impose appropriate action
thereat, and prepare adjusting entries, if warranted; (b) PD to ensure that
all issuances of inventories are reported in the RSMI and submitted to the
AD for proper recording; (c) AD exert extra effort to analyze the SLs
captioned as “For Reconciliation” taking into consideration the details of
SLs manually prepared prior to the adoption of the eNGAS, and make the
necessary adjustments, if warranted; and (d) AD conduct a thorough
review of the SLs to determine the cause/s of the negative balances and
effect the necessary adjusting entries, to come up with a more reliable
balance of the accounts affected.

We further recommended and Management agreed to require the AD to

coordinate with the PD and analyze the SLs identified as non-moving or
dormant for more than five years from the CY 2017 to CY 2022 balances
and make the necessary adjustments, if warranted.

f. The existence, accuracy and valuation of PPE accounts in the total amount
of P10.390 billion as at December 31, 2022 cannot be relied upon due to:
a) unreconciled variance of P7.929 billion between the AD records and
PD; and b) existence of SL captioned as “For Reconciliation” amounting
to P5.341 billion. (Paragraph No. 1.102)

We reiterated our prior year’s audit recommendations and Management

agreed to require the: (a) AD and PD to make a concerted effort to
reconcile their respective records and make the necessary adjustments
thereafter to reflect the correct balance of PPEs accounts; (b) AD to exert
extra effort to analyze the SLs captioned as “For Reconciliation” taking
into consideration the details of SLs manually prepared prior to the
adoption of the e-NGAS, and make the necessary adjustments, if
warranted; (c) Complete and strictly comply with the provisions of COA
Circular No. 2020-006 dated January 3, 2020 on the One-Time Cleansing
of PPE Accounts; and (d) COMELEC Region VII PD to create an
inventory committee that will administer the inventory-taking of
COMELEC’s properties and equipment in the Region.

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g. The Accuracy and existence of recorded Advances to Special Disbursing
Officers (SDO) and Advances to Officers and Employees (OE) accounts
amounting to P1.900 billion and P188.892 million, respectively, as at
December 31, 2022, cannot be ascertained due to the existence of: a)
Unreconciled SLs account balances reported in the books, Ageing Reports,
and Status of Unliquidated Cash Advances (UCA) of P113.799 million; b)
dormant SL balances amounting to P16.393 million; c) SLs with negative
balance totalling P12.268 million; and d) SLs captioned as “For
Reconciliation” of P68.064 million. (Paragraph No. 1.113)

We reiterated our prior year’s audit recommendations and Management

agreed to require the AD to: (a) exert extra effort to reconcile the Status of
Unliquidated Cash Advances (UCA), as against the balance reported in the
books and in the Ageing Report; (b) ensure that balances reported in the
different financial reports/schedules are reconciled to establish reliability
of the said reports/schedules: (c) determine the details of the 210 dormant
SL accounts and prepare the necessary adjusting entries to present a more
reliable balance of the account; (d) conduct a thorough review of the SLs
to determine the cause/s of the negative balances and effect the necessary
adjusting entries, to come up with a more reliable balance of the accounts
affected; and (e) analyze extensively the SLs captioned as “For
Reconciliation” taking into consideration the details of SLs manually
prepared prior to the adoption of the eNGAS, and make the necessary
adjustments, if warranted.

h. Recorded balances of 14 Asset and 10 Liability accounts with total

balances of P1.491 billion and P1.041 billion, respectively, cannot be
relied upon due to the existence of Subsidiary Ledgers (SLs) captioned as
“For Reconciliation” since CY 2017. (Paragraph No. 1.123)

We reiterated our prior year’s audit recommendations and Management

agreed to require the Chief Accountant to exert extra effort to analyze the
SLs captioned as “For Reconciliation” taking into consideration the details
of SLs manually prepared prior to the adoption of the eNGAS, and make
the necessary adjustments, if warranted.

We further recommended and Management agreed to require the Chief

Accountant to: (a) analyze and explain the causes of the increase in the
balance of SLs captioned as “For Reconciliation” from CY 2017 to CY
2022 and make the necessary adjustments if warranted; and (b) adopt extra
measures in journalizing/posting the current transaction, including the
approval of Journal Entry Vouchers (JEVs) to avoid increasing the
balances of SLs captioned as “For Reconciliation.”

i. The accuracy and reliability of various Asset and Liability accounts cannot
be ascertained due to SLs with abnormal or negative balances amounting

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 to P1.754 million and P1.076 billion, respectively, thus rendering the
reliability of the Financial Statements for CY 2022 doubtful. (Paragraph
No. 1.130)

We reiterated our prior year’s recommendations and Management agreed

to require the Chief Accountant to conduct a thorough review of the SLs to
determine the cause/s of the negative balances and effect the necessary
adjusting entries, to come up with a more reliable balance of the affected
accounts.

We further recommended and Management agreed to require the Chief

Accountant to: (a) analyze and explain the causes of the increase in the
SLs with negative balances from CY 2017 to CY 2022 and make the
necessary adjustments, if warranted; and (b) adopt extra measures in
journalizing/posting the current transaction, as well as in the approval of
the JEVs to avoid an increase in SLs with negative balances.

2. Terms and conditions of the warehousing facility contract entered into by and
between the COMELEC and Blue Chip Marketing with contract amount of
P7.00 million were not complied by the lessor, including deliverables stated
in the terms of reference, thus, causing undue disadvantage to the
COMELEC. (Observation No. 2).

We recommended the Management to require the: (a) Technical Working

Group to carefully evaluate the compliance of the winning bidder in
accordance with the Table of Rating Factors for lease of real property and
terms of reference and explain why the deficiencies which were subject for
compliance were not properly coordinated to Contract Management Division
and Administrative Services Department for proper monitoring; (b) Contract
Management Division, Procurement Management Department and
Administrative Services Department to explain/justify why said procurement
should not be disallowed in audit for its non-compliance with various
specifications indicated in the Terms of Reference of the lease contract; and
(c) Finance Services Department to enforce collection from the lessor relative
to the water supply paid by the COMELEC totaling P142,545.00 to avoid
disallowance of this payment.

3. A total of 3,880 sets of Disinfecting Mat with Tray Foot Bath costing P1.145
million procured thru Negotiated Procurement under Emergency Cases which
were set to be used in the 2022 NLE, remained undistributed/unutilized as of
June 8, 2023, due to prolonged procurement process, thereby, defeating the
intended purpose for which the same were procured. (Observation No. 3).

We recommended that Management require the concerned offices to: (a)

explain/justify the reason/s for the prolonged procurement process
considering the modality used was through Negotiated Procurement under

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 Emergency Cases; (b) prepare specific plan of action relative to the
distribution of the remaining 3,880 sets of Disinfecting Mat with Foot Bath,
to avoid their rapid deterioration and possible loss or wastage of government
assets; and, (c) henceforth, properly plan the procurement of goods and
services to avoid delay in the various procurement stages to ensure that
procurement of needed supplies and materials serve their intended purpose
and will contribute to the efficiency and effectiveness of the COMELEC
operation.

4. Procurement process for various supplies and materials for CY 2022 NLE
and Barangay and Sanggunian ng Kabataan Elections (BSKE) exceeded the
maximum period allowed by 72 days for 114 POs out of 136 or 84 percent
totaling P106.475 million, contrary to Annex “C” of the Updated 2016 RIRR
of RA No. 9184 and Section 37 of the same RIRR. Hence, longer acquisition
time that exposed the COMELEC to risk of not achieving or optimizing the
intended purpose of the procured election supplies and materials.
(Observation No. 4).

We recommended that Management require the PMD to: (a) monitor and
expedite the procurement process in accordance with Annex “C” of the
Updated 2016 RIRR of RA 9184 to avoid delay in the implementation of
programs, projects and activities; and (b) ensure that the winning bidder
formally enters into contract with the procuring entity within the prescribed
period of 10 calendar days to comply with the delivery terms of the contract
pursuant to Section 37 of RA 9184.

5. Non-submission of 173 perfected POs, Job Orders (JOs) and Contracts

amounting to P212.842 million and delayed submission of 214 perfected POs
and JOs totaling P472.413 million, and supporting documents for the
procurement of supplies, equipment and services precluded the Audit Team
from timely review and prompt communication of results to Management
with the end-view of guiding them in their decision making. (Observation
No. 5).

We reiterated our prior year’s audit recommendations with modification that

Management direct the PMD to cause the immediate submission of copies of
unsubmitted contracts, purchase orders, and job orders including the
complete supporting documents thereof to avoid the issuance of a Notice of
Suspension; and henceforth, ensure the submission of all contracts for review
within the prescribed period as provided for under Section 3.1.1 and Section
3.2 of COA Circular No. 2009-001.

6. The validity and propriety of payments made to Northern Star Energy

Corporation with a total amount of P13.435 million for the supply of gasoline
to the COMELEC covering the period from CYs 2017-2022 could not be
established due to the: a) procurement not included in the Annual

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 Procurement Plan (APP) per Section 7.2 of the 2016 RIRR of RA 9184; and
b) absence of Contract and Certificate of Availability of Funds to properly
support the claim, contrary to Section 4 of PD 1445, Sections 9.1 and 9.2 of
COA Circular No. 2012-001 dated June 14, 2012 and Section 37, Chapter 2
of the GAM, Volume I and Section 40, Chapter V, Book VI of Executive
Order 292. (Observation No. 6).

We recommended and Management agreed to: (a) strictly comply with

Section 7.2 of the Updated 2016 RIIR of RA 9184 that no procurement shall
be authorized or undertaken unless it is included in the Annual Procurement
Plan (APP) or the supplemental APP; (b) submit justification or explanation
on the payments made to Northern Star Energy Corporation without a valid
contract and Certificate of Availability of Funds, and why the same should
not be disallowed in audit; and (c) henceforth, the PMD to ensure that each
procurement must be properly supported by an approved contract and with
complete supporting documents to establish the validity of claims.

7. Cash advances totaling P2.169 billion remained unliquidated even when the
purpose for which it was granted has been served, contrary to Section 89 of
PD 1445 and pertinent provisions of COA Circular No. 97-002. (Observation
No. 7).

We reiterated our prior year’s audit recommendations and Management

agreed to require: (a) FSD to issue demand letters to concerned AOs for the
immediate liquidation of their outstanding cash advances which were long
overdue and institute necessary sanction, including the withholding of his
salary, in accordance with Section 5 of COA Circular No. 97-002; and (b)
strictly enforce collection/settlement of long outstanding receivables from the
resigned/retired/dismissed officials/employees. If all efforts have been
exerted and settlement thereof is nil, consider the preparation of the request
for authority to write-off the accounts from the Commission on Audit
pursuant to COA Circular No. 2016-005. Henceforth, ensure strict
compliance with the guidelines on the grant, utilization and liquidation of
cash advances.

We further recommended and Management agreed to implement an effective

monitoring system to ensure that all cash advances are liquidated at the end
of the year to avoid their accumulation.

8. Failure of management to enforce collections/settlements resulted in long

outstanding receivables from officers/employees representing overpayment of
salaries/other benefits and overtime amounting to P3.323 million and P8.838
million, respectively, contrary to Section 6.1 of COA Circular No. 2016-005
and Section 37 of PD No. 1445. (Observation No. 8).

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 We reiterated our prior year’s audit recommendations with modifications and
Management agreed to require the FSD to: (a) deduct immediately the full
remining amount of excess overtime from the salaries/other claims of all
active employees; and (b) undertake necessary measures to intensify
collection of the overpaid salaries and other personnel benefits from the
active employees and those who are already separated from service.

We further recommended and Management agreed to implement robust

controls and procedures to avoid incurrence of overpayment by thoroughly
reviewing/computing the correct claim before payment, regular monitoring
of accumulated uncollected balance, analysis of the SL balances and
immediate deduction/collection/demand payment from the concerned officers
and employees of the said overpayment.

9. Cash advances were granted to 1,539 AOs totaling P5.985 billion despite
non-liquidation/non-settlement of the previous cash advances given to them,
contrary to Section 89 of PD 1445 and COA Circular No. 97-002.
(Observation No. 9).

We reiterated our prior year’s audit recommendations that Management

require the FSD to require the Chief Accountant to attach a “Certification” to
the disbursement voucher (DV) that previous cash advances have been
liquidated before processing the grant of cash advance; or the Accountant
may indicate on the face of the DV the certification, pursuant to Item 1.1 of
COA Circular No. 2012-001.

10. Cash advances for the payment of allowances, honoraria and other similar
payments were granted to Election Officers (EOs) at gross amount of P5.830
billion, contrary to Sections 4.2.1 and 4.2.2 of COA Circular No. 97-002.
(Observation No. 10)

We recommended and Management agreed to: (a) maintain records/database

for the Electoral Boards (EB) and Support Staff (SS) profile for immediate
reference and validation purposes; and (b) require the FSD to grant cash
advances for the payment of allowances, honoraria and other similar
payments equal to the net amount of the payroll for a pay period and
supported by payroll or list of payees with their net payments in accordance
with Sections 4.2.1 and 4.2.2 of COA Circular No. 97-002.

11. Additional Fund transfers were released to the AFP, DFA and PS-DBM
totaling to P648.537 million, despite non-liquidation of previously transferred
funds. Moreover, fund transfers to six government agencies amounting to
P500.977 million have not been liquidated despite completion of the
project/activity, contrary to COA Circular No. 94-013. (Observation No. 11)

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 We reiterated our prior year’s audit recommendation and Management
agreed to require the Chief Accountant to monitor the fund transferred to the
NGAs and demand immediate liquidation from those agencies with
unliquidated balances and such liquidation to be supported with necessary
documents to fully account the utilization of the fund transfer after
completion of each activity, thus, avoiding their accumulation and the
account from becoming dormant.

We further recommended and Management agreed to collaborate closely with

the AFP, DFA and other Implementing Agencies to effectively enforce the
liquidation of outstanding balances of fund transfers and/or demand refund of
any unexpended balance.

12. Unused balance of fund transfers from various Local Government Units
(LGUs) for the conduct of plebiscites totaling P114.493 million remain
unrefunded notwithstanding completion of the projects, contrary to Section
4.9 of COA Circular No. 94-013, thus, deprived the Source Agencies (SA) of
additional funds which could have been utilized for operations and other
priority projects. (Observation No. 12)

We reiterated our prior year’s audit recommendations and Management

agreed to require the FSD to: (a) cause the immediate refund/return to the
Source Agencies all unused/cash balances of completed plebiscites/projects,
as required under Section 4.9 of COA Circular No. 94-013. In addition, exert
effort to identify the nature and details of the balance of the “for
reconciliation” account and remit the same to the concerned LGUs; and, (b)
evaluate and monitor all recorded fund transfers to LGUs for proper
liquidation and adjustment, if warranted.

13. The Cash in Bank- LCCA account with a balance of P2.052 billion as at
December 31, 2022, included trust receipts P301.253 million, which were not
remitted to the Bureau of Treasury (BTr ), contrary to Section 65 of PD 1445
and Section 10 of the General Provisions of the General Appropriations Act
(GAA) FY 2022, thus depriving the national government of the proper
disposition or use of such resources. (Observation No. 13)

We reiterated our prior year’s audit recommendations that Management

require the Accounting Division to: (a) remit to the BTr the remaining
balance of the service fees and other income amounting to P301,252,678.96
pursuant to Section 65 of PD 1445 and Section 10 of the General Provisions
of the GAA FY 2022; (b) remit the remaining balance of the collections of
the Legal Research Fees of P16,600.00 to the UP as required under Section 1
of PD 1856, s.1982, thereafter, remit regularly the collections of LRF to the
UP as required; and c) henceforth, require the remittance of collection of
service fees directly to the BTr to augment the scarce resources of the
government.

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14. A total of 1,241 Accountable Officers (AOs) were not bonded and 589 have
expired fidelity bonds, contrary to Section 4.1 of Treasury Circular 02-2019
dated April 25, 2019 thus, exposing the agency to risk of not being
indemnified in case of loss, misuse or misapplication of funds. (Observation
No. 14)

We reiterated our prior year’s audit recommendation and Management agreed

to direct the FSD to establish and implement an effective monitoring system
on the application, expiration and renewal of bonds of AOs and timely
renewal thereof.

15. The Bank Reconciliation Statements (BRS) were not submitted to the Office
of the Auditor within the prescribed period with delay ranging from 36 to 196
calendar days, contrary to Sections 3.1 and 3.4 of COA Circular No. 96-011.
(Observation No. 15)

We recommended and Management agreed to require the FSD to exert

extensive effort to prepare and submit bank reconciliation statement within
the prescribed period pursuant to Sections 3.1 and 3.4 of COA Circular No.
96-011 to ensure that deficiencies and reconciling items are immediately
corrected and recorded.

16. Unserviceable PPE from COMELEC field offices in Regions IV-B, V, VII,
VIII, XII and CAR amounting to P80.208 million remain undisposed,
contrary to Section 79 of PD 1445, National Budget Circular (NBC) No. 425
and COMELEC Minute Resolution (MR) No. 08-0819, thus resulting in
further deterioration of the assets and deprivation of the Agency of any
benefit or income that may be derived from their disposal, not to mention the
optimum utilization of the space occupied by said properties. (Observation
No. 18)

We recommended the RED to coordinate with the COMELEC, Main Office

for the valuation of the unserviceable properties to facilitate the immediate
disposal of unserviceable PPEs to prevent further deterioration thereof and of
becoming worthless, in accordance with Section 79 of PD 1445.

17. Procurement of Semi-Expendable Machinery and Equipment and Various

Furniture for the different offices in CAR with an Approved Budget for the
Contract (ABC) of P0.599 million appears to have not been awarded to a
supplier of known qualification due to non-adherence by the BAC to the
prescribed procedures of Annex H of the Updated 2016 RIRR of RA 9184 on
Small Value Procurement. (Observation No. 19)

We recommended that Management require the BAC to strictly adhere to the

procedures required by Annex H of the Updated 2016 RIRR of RA 9184 in

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 the procurement of goods to be able to award contracts or purchase orders
that will be advantageous, fair and reasonable to the government.

18. COMELEC Region XIII incurred lease expenses with an aggregate amount of
P0.744 million for leased equipment, instead of procuring LCD projectors
intended for the conduct of trainings, with a view of ensuring economy in the
operations, consistent Section 2 of PD No. 1445. (Observation No. 20)

We recommended that Management: (a) consider the option of procuring

projectors to be used in future trainings to be conducted as a view of ensuring
economy, efficiency and effectiveness in managing government resources;
and (b) revisit the timeline for the conduct of election-related trainings for
possible alternating schedule instead of simultaneous one, in order to
minimize the cost of projector rentals by utilizing the Comelec-issued
projectors.

19. The COMELEC withheld taxes for CY2022 amounting to P1.773 billion in
compliance with Revenue Memorandum Circular No. 23-2014 dated June 20,
2014. Of which, P285.893 million pertaining to the current year was still
unremitted as of audit date, contrary to Section 2.58.A.2 of BIR Revenue
Regulation (RR) No, 2-98. In addition, COMELEC failed to prepare and
submit the alphabetical list of employees and list of payees on income
payments subject to creditable and final withholding taxes, which is not in
compliant with Section 2.83.3 of the Revenue Regulations No. 1-2014.
(Observation No. 25)

We reiterated our prior year’s audit recommendations and Management

agreed to require the Accounting Division to: (a) strictly monitor the monthly
remittance to BIR so that balances at year-end pertain only to unremitted
deductions of the immediately preceding period for remittance in the
following month; (b) extensively analyze the prior years’ SLs balances and
prepare the necessary adjustment/s, if warranted, to come up with a more
accurate balance of the Due to BIR account; and (c) revert the dormant
accounts which had been outstanding for more than five (5) years. Should
there be claims after the same had been reverted, request the DBM for
appropriate funding.

We further recommended and Management agreed to require the Accounting

Division to strictly adhere with BIR Revenue Regulations as well as prepare
and submit to the BIR the alphabetical list of employees and list of payees on
income payments subject to creditable and final withholding taxes.

20. The COMELEC has not fully complied with the remittance of mandatory and
other deductions to the GSIS, Pag-IBIG and PhilHealth, contrary to
regulations issued by the GSIS, Pag-IBIG and PhilHealth as evidenced by the
presence of unremitted balances of mandatory and other deductions for CY

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 2022 totaling to P8.891 million as at December 31, 2022. (Observation No.
26).

We reiterated our prior year’s audit recommendations that Management

require the Accounting Division to: (a) conduct verification and
reconciliation of unremitted balances and thereafter, remit to the concerned
collecting agency the amounts due to ensure that benefits for the subject
contributions accrue to the concerned employees, as well as avoid incurrence
of penalties as a result of delayed/non-remittance; (b) analyze extensively the
prior years’ SLs balances and prepare the necessary adjustment/s, if
warranted, to come up with accurate balance of the account; and (c) monitor
strictly monthly remittances to the GSIS, Pag-IBIG and PhilHealth so that
balances at year-end pertain only to the unremitted deductions of the
immediately preceding period for remittance within the deadline prescribed
in the next period.

Other equally significant audit observations and recommendations were also noted
and discussed in detail under Part II of this report.

The above findings and recommendations contained in the report were discussed
with concerned officials of the agency in an exit conference held on June 8, 2023.
Management’s views and reactions were considered in the report, where
appropriate.

G. Status of Audit Suspensions, Disallowances and Charges

The status of Notice of Suspension, Disallowance and Charge as of December 31,

2022 showed unsettled disallowance totaling ₱24,090,017.66:

Beginning Issued January 1 to December Ending

Balance 31, 2022 Balance
(January 1, (December
Particulars 2022) 31, 2022)
NS/ND/NC NSSDC
Notice of Suspension P 11,747,667.69 (P 11,747,667.69)* 0.00 0.00
(NS)
Notice of Disallowance 13,243,121.97 11,747,667.69 900,772.00 24,090,017.66
Notice of Charge 0.00 0.00 0.00 0.00
Total P24,990,789.66 P0.00 P900,772.00 P24,090,017.66

* The NS had matured into a disallowance and issued 111 NDs.

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H. Status of Implementation of Prior Years’ Audit Recommendations

Of the 82 audit recommendations embodied in the Management Letter, in lieu of

Annual Audit Report, for CY 2021, 28 were implemented and 54 were not
implemented.

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