OBSERVATIONS AND RECOMMENDATIONS

A. Financial Audit

Unrecorded collections of the Tokyo PE

1. The balance of the Cash-Collecting Officers account amounting to

₱20,264,253.72 as of December 31, 2022 was overstated by ₱392,366.80,
while the Cash in Bank-Foreign Currency, Current Account (CIB-FCCA)
and Service and Business Income were understated by ₱41,139,953.35 and
₱40,747,586.55, respectively, due to unrecorded collections and deposits in
July to December 2022 of the Tokyo PE.

Paragraph 27 of International Public Sector Accounting Standard (IPSAS)

1 states that financial statements 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 IPSASs. The application of IPSASs, with
additional disclosures when necessary, is presumed to result in financial
statements that achieve a fair presentation.

Foreign Service Posts (FSPs) are required to submit fiscal reports (FR)
concerning all financial transactions at foreign post, on or before the 10th day of
the month following the period covered of FR. These FRs are analyzed and
recognized in the DFA books of accounts by the Foreign Service Accounting
(FSA). The collections of the FSPs includes Passport and Visa Fees,
Authentication Fees Examination Fees and other service income.

Analysis of Subsidiary Ledgers and FRs of Tokyo PE, on a test basis,

disclosed collections and deposits for August to December 2022 which were
remained unrecorded as at date of the report, to wit:

Collections Deposits Balance

CY 2022
Amount (₱)
July 573,128.12 (573,128.12)
August 12,490,615.99 11,961,914.82 528,701.17)
September 11,614,614.32 11,633,888.66 (19,274.34)
October 8,971,428.15 8,972,035.11 (606.96)
November 6,180,948.74 6,294,943.34 (113,994.60)
December 1,489,979.35 1,704,043.30 (214,063.95)
Total 40,747,586.55 41,139,953.35 (392,366.80)

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 As can be deduced from above table, the collections of the Cash Collecting
Officer for August to December 2022 totaling ₱40,747,586, on the other hand,
the amount deposited from August to December of ₱41,139,953.35 consisted of
the collection from July to December 2022, which were not recognized in the
books at year-end, due to the delayed submission of the hard copies of the FRs.
The soft copies of the FRs were submitted by the Finance Office of all FSPs on
time thru the archive, which could have been accessed by the FSA of the Tokyo
PE for timely accounting of the transactions.

We recommended and Management agreed instruct the Chief

Accountant to:

a. prepare journal entries taking up the unrecorded deposits and

collections from August to December 2022 of Tokyo PE; and

b. require the FSA Examiners of all concerned FSPs to utilize the agency’s
archives for the timely recording of the deposits and collections to
ensure complete and reliable balance of the accounts in the financial
statements.

Unrecorded receipts and disbursements of 24 FSPs

2. The cash inflow/receipts and cash outflow/disbursements totaling

₱709,194,310.87 and ₱790,957,575.61, respectively, for CY 2022, were not
timely recognized in the books of account due to the late submission of the
FRs of 24 FSPs, thereby affecting the fair presentation of year-end cash flow
statement, financial position and financial performance.

Section 39, Chapter 5, Volume I of the Government Accounting Manual

(GAM) for National Government Agencies (NGAs) provides that field
offices/Operating Units (OUs) without complete set of books shall record their
collections of income chronologically in the Cash Receipts Register (CRReg).
The certified copy of the CRReg together with the required supporting
documents, duplicate copies of ORs and Deposit Slip shall be submitted within
five days after the end of each month to the concerned mother unit for review and
recording of the transactions in the Cash Receipts Journal (CRJ) by the Chief
Accountant.

While, Section 11, Chapter 6, Volume I of the GAM for NGAs requires that
field offices without complete set of books shall record chronologically in the
Cash in Bank Register (CBReg) all checks issued/charged to deposits with the
Authorized Government Depository Bank (AGDB), the certified copy of the
CBReg together with the required supporting documents shall be likewise be
submitted within five days after the end of each month.

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 FSA prepares the Monthly Status of Working Fund (MSWF) which include
the fund or cash beginning balance, cash inflows/receipts, cash
outflows/disbursements, and the ending balance for the period. Amounts also
presented in local currency, US dollars and peso equivalent.

The balance of Cash in Bank – Foreign Currency accounts as at December

31, 2022, are as follows:

Account Title Account Balance (₱)

Cash in Bank - Foreign Currency, Current Account 10,809,541,363.42
(CIB - FCCA)
Cash in Bank - Foreign Currency, Savings Account 338,548,292.92
(CIB - FCSA)
Total 11,148,089,656.34

Review of the accounts disclosed that 24 FSPs had unrecorded FRs at year-
end due to its late submission, thus, the cash inflows and cash outflows were
posted in the following year, the corresponding amount of which are summarized
below.

Cash Cash Outflows/

Particulars Inflows/Receipts Disbursements
Amount (₱)
CIB-FCCA 686,690,852.43 766,812,181.73
CIB-FCSA 22,503,458.44 24,145,393.88
Total 709,194,310.87 790,957,575.61

As presented above, the unaccounted cash inflow amounting to

₱709,194,310.87 understated the cash receipts/collection at year-end, whereas,
the disbursements/payments was understated by ₱790,957,575.61, thereby
affecting the fair presentation of the financial statements as at year-end.

We recommended and Management agreed to instruct the Chief

Accountant to:

a. henceforth, record all receipts/collections and disbursements reported

in the FRs before the closing of the books of accounts for fair
presentation of accounts in the financial statements; and

b. strictly monitor the submission of FRs by the FSPs.

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Unrecorded remittance of unused fund transfers from COMELEC and erroneous
recording of finance charges
3. The remittances of the five FSPs’ unutilized balances of the fund transfers
from COMELEC totaling ₱8,659,117.61 were not recognized in the books of
accounts, and return of unused fund transfer by The Hague PE of
₱1,692,948.44 and finance charges accruing to the COMELEC amounting to
₱60,959.05 were erroneously debited to Other Financial Charges account,
contrary to the Memorandum of Agreement (MOA) between DFA and
COMELEC, thus resulting in the overstatement of the CIB - FCCA by
₱8,659,117.61, Due to NGAs account by ₱10,413,025.10 and Other Financial
Charges account by ₱1,753,907.49.

Item C.1.c of the MOA between the COMELEC and DFA, provides that
the financial charges or expenses for the transfer of funds from the COMELEC
to each Post shall be on the account of the COMELEC. FSPs are authorized to
charge additional costs related to the foreign exchange conversion from USD to
the local currency against the transferred funds from the COMELEC.

Review of the Liquidation Reports and other supporting documents of the

fund transferred from COMELEC for the implementation of the 2022 National
Election revealed that five (5) FSPs had remitted to the COMELEC the unutilized
funds of ₱8,659,117.61, to wit:

Post Supporting Documents Amount (₱)

Calgary PCG Fund transfer from Royal Bank of 2,403,690.02
Canada
Los Angeles PCG Wire transfer from Bank of America 3,003,557.90
Vancouver PCG Wire payment from TD 1,388,174.91
Tokyo PE Remittance Advice from PNB Tokyo 184,648.99
Branch
Wellington PE Confirmed telegraphic transfer from 1,679,045.79
Westpac New Zealand Limited
Total 8,659,117.61

However, further verification revealed that that the amount returned was
not recognized in the books of accounts.

Moreover, examination of the FRs of nine FSPs showed that the remittance
of The Hague PE amounting to ₱1,692,948.44 and the corresponding bank
charges totaling ₱60,959.05 on the fund transfers from COMELEC for the
implementation of the 2022 National Election disclosed that the same was
inadvertently charged to the Other Financial Charges account, instead as a credit
to the Due from NGAs account. This is not in conformity with the above
provision of the MOA between the COMELEC and the DFA.

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 The non-recording of the remittances of unutilized fund transfers of the five
FPS totaling ₱8,659,117.61, and the inadvertent recording of the return of excess
fund transfer from The Hague PE of ₱1,692,948.44 and cost of bank charges of
₱60,959.05 accruing to the COMELEC or a total of ₱1,753,907.49, to the Other
Financial Charges account resulted in the overstatement of the CIB-FCCA by
₱8,659,117.61, Due to NGAs account by ₱10,413,025.10 and Other Financial
Charges account by ₱1,753,907.49.

We recommended and Management agreed to instruct the concerned

FSA Examiners to recognize the total remittances made by the FSPs in the
books of accounts, and to correct the corresponding cost of bank charges
erroneously debited the Other Finance Charges account.

Non-derecognition and non-provision of allowance for impairment of obsolete blank

passports

4. The Accountable Forms, Plates and Stickers Inventory account balance of

₱341,069,153.55 as at December 31, 2022 is overstated by ₱174,289,540.82 due
to the non-derecognition of disposed obsolete blank passports and non-
recognition of an Allowance for Impairment of the obsolete blank passports as
required under Section 8, Chapter 8, Volume I of the GAM for NGAs.

Section 8, Chapter 8, Volume I of the GAM for NGAs, provides among

others, that an asset is considered impaired if the cost of inventories held for
distribution, or consumption is higher than the current replacement cost. It further
provides that the difference between the cost and the net realizable value/current
replacement cost shall be recognized as expenses in the financial statements.

The Department, in order to secure the integrity of Philippine passport,

and the need to adopt technological developments in the production and
security of ePassports, has shifted to the issuance of personalized ePassports.
Consequently, unissued blank passports were no longer used and became
obsolete, hence considered impaired as provided for under the above provision
of the GAM.

The Accountable Forms, Plates and Stickers Inventory account balance of

₱341,069,153.55 as at December 31, 2022 consists of the following:

Description Amount (₱)

General Form (Inventory Tag, Official Receipt, 5,728,521.22
and Travel Documents)
Blank Passport 174,289,540.82
Authentication Certificate 29,294,475.31
Visa Sticker 131,573,797.20
Postage Stamp 182,819.00
Total 341,069,153.55

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 It can be gleaned from the above table that ₱174,289,540.82 or 51 percent
of the total balance of the account represents the cost of 465,367 blank passports
which were on hand since CY 2015 and could no longer be issued due to the
shifting of the Department to the personalized ePassports, hence considered as
obsolete and impaired, details as follows:

Particulars Quantity Amount(₱)

Diplomatic Passport - Blue (epassport) 11,666 7,336,162.30
Diplomatic Passport - Blue (mrp-eformat) 1,606 341,756.80
Official Passport - Red (epassport) 16,629 10,489,490.97
Regular Passport - Green (32-page regular) 2,428 595,369.88
Regular Passport - Green (64-page) 87 22,693.78
Regular Passport - Maroon (ePassport) 161,401 75,396,817.09
Regular Passport - Maroon (MRP without IC
Chips) 269,550 79,517,250.00
Regular Passport – MRCTD 2,000 590,000.00
Total 465,367 174,289,540.82

The Audit Team noted that no Allowance for impairment was set-up by
Management on the cost of the blank passports which could no longer be
used/issued, hence, overstating the account by the net realizable value as at year-
end.

It was likewise noted that during the inspection at the Consular Records
Division (CRD), there were several boxes of obsolete blank passports together
with the spoiled and cancelled passports which were transferred from the
Passport Division of the Office of the Consular Affairs (OCA) for appropriate
disposition. However, when asked for inventory report of these passports, the
personnel in charge claimed he has no record of actual quantity received from
OCA.

Further, the personnel-in-charge at the CRD likewise informed the Audit

Team that several disposals of obsolete blank passports have already taken place
since 2019, however, there was no available records to substantiate said
disposals. The only documents available at the CRD were on the five disposal
made in CY 2020 for a total of 20,975 black passports with a total cost of
₱6,187,625.00. However, the report on the said disposals were not submitted to
the Accounting Office for its derecognition in the books of accounts.

The non-derecognition of the 20,975 disposed obsolete passports, and the

non-provision of allowance for impairment on the remaining 444,392 obsolete
passports, renders the balance of the Accountable Forms, Plates and Stickers
Inventory overstated by ₱174,289,540.82 as at December 31, 2022.

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 We recommended and Management agreed to:

a. require the CRD to:

 submit the reports on the disposals made in CYs 2019 and 2020 of
the obsolete blank passports to the Accounting Office for its
derecognition in the books of accounts;

 conduct physical count on the remaining obsolete blank passports;

and

 henceforth, to submit reports on the disposal of the obsolete blank

passports to the Accounting Office

b. instruct the Chief Accountant to:

 assess the net realizable value of the obsolete and unissued blank
passports and provide necessary allowance for impairment loss; and

 to prepare necessary entries for the derecognition of the disposed

blank passports.

Long outstanding and uncollectible Due from Officers and Employees

5. Non-provision for an Allowance for Impairment on the dormant outstanding
and uncollectible receivables totaling ₱51,073,601.61 from personnel already
retired, deceased, or no longer in the service of the Department, lodged
under the Due from Officers and Employees account with a balance of
₱80,915,265.76 as of December 31, 2022, thus the net realizable value of the
account is overstated.

Paragraph 72 of IPSAS 29 - Financial Instruments: Recognition and

Measurement, provides among others, that if there is an evidence that an
impairment loss on loans and receivables or held-to-maturity investments carried
at amortized cost has been incurred, the amount of the loss is measured as the
difference between the asset’s carrying amount and the present value of estimated
future cash. The carrying amount of the asset shall be reduced through use of an
allowance account which shall be recognized in surplus or deficit.

This is further stressed under Section 10, Chapter 7, Volume I of the GAM
for NGAs which provides, among others, that an allowance for impairment on
receivables shall be provided in an amount based on collectability of receivable
balances and evaluation of such factors as aging of accounts, collection
experiences of the agency, expected loss experiences and identified doubtful
accounts.

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 Moreover, COA Circular No. 2016-005 dated December 19, 2016 provides
for the guidelines and procedures on the write-off of dormant receivable accounts,
unliquidated cash advances, and fund transfers of NGAs, Local Government
Units (LGUs) and Government – Owned and Controlled Corporation (GOCCs).
It likewise defines Dormant Receivable Accounts as those which balances which
remained inactive or non-moving in the books of accounts for 10 years or more
and where settlement or collectability could no longer be ascertained.

Verification and analysis of the Due from Officers and Employees, on a test
basis, revealed that various uncollected and dormant accounts totaling
₱51,073,601.61 had been outstanding for over 10 to 40 years, as shown on the
table below.

Age of
Purpose Total Amount (₱)
Accounts
Regular Agency Fund
Overpayment – Personal Services 10 to 15 years 1,337,449.00
Overpayment – Maintenance and
Operating Expenses (MOOE) 11 years 905,118.49
Overpayment - Personal Expenses 10 to 15 years 342,551.44
Withholding Tax- Deficiencies 21 to 24 years 4,290,210.48
Cash Shortages 10 to 34 years 2,547,940.32
Others 10 to 41 years 40,831,303.92
Subtotal 50,254,573.65
Passport Revolving Fund
Overpaid Salaries and Allowances 10 to 15 years 819,027.96
Subtotal 819,027.96
Total 51,073,601.61

It is worth noting that the Accounting personnel regularly send demand

letters to the concerned officers or employees, however, not even one responded,
thus the balance remained outstanding and dormant in the books, hence
considered impaired.

Considering that these individuals were no longer connected to the

Department, the amount may be reclassified to Other Receivables account.
Moreover, since the amounts remained dormant for more than 10 years, and the
collectability is no longer probable, and no allowance for impairment was
provided, the Due from Officers and Employees account is overstated by its net
realizable value.

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 We recommended and Management agreed to direct the Chief
Accountant to:

a. reclassify the amount of receivables charged to Due from Officers and

Employees account, of those who were no longer connected with the
Department to the Other Receivables account;

b. provide and allowance for impairment on the dormant receivables

from separated officers and employees, based on its collectability and
identified doubtful accounts to come up with the net realizable value of
the account; and

c. conduct an evaluation of the long outstanding and non-moving

accounts, and if warranted, consider to request for write-off of dormant
accounts, pursuant to COA Circular No. 2016-005.

Non-provision of depreciation charges of buildings

6. The carrying amount of the Buildings account was overstated by
₱736,938,644.88 due to non-allocation of prior years’ depreciation charges
on the major repairs/renovation of 11 buildings, omission and erroneous
computation of depreciation charges of 28 buildings, contrary to Section 27,
Chapter 10, Volume I of the GAM for NGAs.

Section 25, Chapter 10, Volume I of the GAM for NGAs provides that
betterments are enhancements to the future economic benefits or service potential
of a capital asset which meet the threshold of the applicable capital asset category
are capitalized. It likewise requires, among others, that where betterment
increases the estimated useful life of a capital asset, its useful life shall be
changed, and the revised depreciation period shall not exceed the estimated useful
life of that capital asset.

Section 27 thereof likewise requires, among others, that PPE gradually

loses its ability to provide service over the course of time and because of this, its
cost, which is referred to as depreciation, needs to be distributed on a systematic
basis over its useful life. It further provides that the estimation of the useful life
of the asset is a matter of judgment based on the experience of the entity with
similar assets. Though the agency/entity is in the best position to estimate the
expected useful life of its PPE, as a general guideline, Buildings and Others
Structures shall be depreciated over 30 to 50 years, to be reviewed on a regular
basis and revised when the appropriateness of a change can be clearly
demonstrated.

Analysis of the Buildings account showed that there were 11 buildings

owned and recognized in the books of DFA which were renovated or upgraded
in prior years. Upon their completion, these were added and recognized under the

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Buildings account with a total cost of ₱823,066,693.14. The corresponding
original costs of these building were already beyond their useful life, but inquiry
revealed that these are still being used by various FSPs.

The total renovation/betterment costs of the 11 buildings were not provided

with corresponding depreciation charges in prior years, when these were already
available for use. Re-computation of the prior years’ depreciation resulted in the
understatement of the Accumulated Depreciation by an estimated amount of
₱519,951,645.71 and overstatement of Accumulated Surplus/(Deficit) by the
same amount.

Moreover, there were 28 buildings, with a total cost of ₱3,952,721,008.30

which were either not depreciated for certain period, or depreciation charges were
erroneously computed. Re-computation of the prior years’ depreciation on these
buildings showed an understatement of the Accumulated Depreciation by an
estimated amount of ₱216,986,999.17 and overstatement of Accumulated
Surplus/(Deficit) by the same amount.

Inquiry with the personnel-in charge at the Accounting Office revealed that
they ceased to compute and recognize in the books the depreciation charges upon
the end of useful life of the buildings. The corresponding cost of renovations,
repairs and upgrades to prolong the useful lives of these buildings were not
allotted with corresponding depreciation cost. Hence, there is a need to revise the
estimated useful life pursuant to the pertinent provisions of Chapter 10, Volume
I of the GAM for NGAs.

The non-allocation of depreciation charges on the betterments of the 11

building totaling ₱519,951,645.71, and the erroneous computation of
depreciation charges of ₱216,986,999.17 of the 28 buildings, resulted in the
understatement of the Accumulated Depreciation-Building by ₱736,938,644.88
and the overstatement of the Accumulated Surplus/Deficits by the same amount.
As a result, the carrying amount of the Buildings account was understated by
₱736,938,644.88 as at December 31, 2022.

We recommended and Management agreed to instruct the:

a. Head of the Engineering Office to inspect and evaluate the condition of

the buildings with age beyond their useful life, and recommend the
appropriate useful life; and

b. The Head of the Accounting Office to:

 compute the prior and current years’ depreciation charges on the

cost of renovations/betterments of the 11 buildings and recognize
the same in the books of accounts; and

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  include the Buildings account in the One-Time Cleansing of the
PPE.

Erroneous recognition of the PPE under finance lease

7. The property acquired under a finance lease with the Development Bank of
the Philippines (DBP) at a contractual amount of ₱535,000,000.00 was
erroneously recognized in books of accounts, and the inaccurate
computation of its depreciation charges, as provided under Section 7(a),
Chapter 13, Volume I of the GAM for NGAs resulted in the overstatement
of the accounts Leased Assets, Land; Leased Assets, Buildings and Other
Structures; and Accumulated Surplus/(Deficit) by ₱273,378,338.52,
₱112,919,377.88, and ₱499,907,718.69, respectively, and the understatement
of the Finance Lease Payable and Accumulated Depreciation-Leased Assets,
Buildings and Other Structure by ₱98,258,968.51 and ₱15,351,033.78,
respectively.

Section 7 (a), Chapter 13, Volume I of the GAM for NGAs provides, among
others, that at the commencement of the lease term, lessees shall recognize assets
acquired under finance lease as assets, and the associated lease obligations as
liabilities in their statements of financial position. The assets and liabilities shall
be recognized at the lower of the fair value of the leased property or the present
value of the minimum lease payments, each determined at the inception of the
lease.

It further states that the minimum lease payments shall be apportioned

between the finance charge and the reduction of the outstanding liability. The
finance charge shall be allocated to each period during the lease term so as to
produce a constant periodic rate of interest on the remaining balance of the
liability.

Moreover, it requires that finance lease gives rise to a depreciation expense

for depreciable assets, as well as a finance expense for each accounting period.
The depreciation policy for depreciable leased assets shall be consistent with that
for depreciable assets that are owned.

On March 20, 2009, DFA entered into a MOA with DBP for the latter to
acquire a Land and Building at the Aseana Business Park, Parañaque City for
the purpose of consolidating the different units of the DFA OCA in just one
location.

On July 29, 2009, DFA and DBP entered into a Lease-Purchase Agreement
(LPA) for the subject property with the term of 15 years and with a full rental-
sale amount of the subject property for the whole duration of ₱535,000,000.00,
plus the prevailing interest rate at the time of drawdown, payable monthly, the
rent paid is considered and converted into amortizations.

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 Examination of the Leased Assets account disclosed that as at December
31, 2022, the book balance of the Leased Assets - Land and the Building and
Other Structures amounting to ₱653,228,338.52 and ₱268,069,377.88,
respectively, which includes the interest and the GRT, to wit:

Leased Assets
Buildings and
Particulars Land Other Total
Structures
(₱)
Rental-Sale Principal Amount 310,086,132.36 126,654,899.13 436,741,031.51
Interest 335,578,065.10 137,067,097.01 472,645,162.11
GRT 7,564,141.06 4,347,381.74 11,911,522.80
Balance as at December 31,
2022 653,228,338.52 268,069,377.88 921,297,716.40
Per Audit 379,850,000.00 155,150,000.00 535,000,000.00
Overstatement of the
Leased Assets 273,378,338.52 112,919,377.88 386,297,716.4

Analysis of the JEVs on the payments of the lease amortizations showed

that of the total amount paid of ₱921,297,716.40, 71 percent or ₱653,228,338.52
was debited to the Leased Assets, Land, and 29 percent or ₱268,068,377.88 to
the Leased Assets, Building and Other Structures.

It was noted that at the inception of the lease, the lease payable was not
recognized, and in every periodic payment, the interest and taxes were also not
recognized in the books as an outright expenses, instead, these were erroneously
included in the cost of the leased assets, hence, not in accordance with Chapter
13, Volume I of the GAM for NGAs.

In view of the erroneous entries made upon inception of the LPA and its
subsequent monthly amortization, the Finance Lease Payable was understated
by ₱98,258,968.51, Accumulated Surplus/(Deficit) was overstated by
₱484,556,684.91 for non-recognition of interest and taxes, overstatement of the
Leased Assets, Land and Leased Assets, Building and Other Structures by
₱273,378,338.52 and ₱112,919,377.88, respectively.

Moreover, re-computation of the corresponding Accumulated Depreciation

of the Leased Assets – Buildings and Other Structures showed that it was
understated by ₱15,350,935.52, hence, also resulting in the overstatement of the
Accumulated Surplus/(Deficit) by the same amount.

We recommended and Management agreed to direct the Chief

Accountant to:

a. reconcile all payments made to the DBP in order to arrive at the correct
balance of the Leased Assets, and the amount still due to the lessor; and

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 b. analyze the entries made upon inception of the LPA and its subsequent
payments, and recompute the depreciation charges on the assets
acquired through LPA, and affect the necessary adjustment of the
affected accounts.

Non-reclassification of the completed projects under the CIP-Buildings and Other

Structures account

8. The Construction in Progress (CIP) – Buildings and Other Structures

account totaling ₱2,173,175,518.75 was overstated by ₱1,286,933,041.94 due
to non-reclassification of the 48 completed projects with additions and major
repairs totaling ₱1,263,774,450.14 and 13 completed projects in prior years
with minor repairs totaling ₱23,158,591.80 to its appropriate accounts as
prescribed by the GAM, thereby, understating the Buildings and Other
Structures account by ₱1,263,774,450.14 and overstating the Accumulated
Surplus/(Deficit) account by ₱23,158,591.80.

COA Circular No. 2020-001 dated January 28, 2020 prescribing the
Revised Chart of Account (Updated 2019) describes CIP–Building and Other
Structures as the account used to recognize the accumulated cost or other
appropriate value of buildings and other structures which are still in the process
of construction or development. The account is credited for reclassification to
appropriate Buildings and Other Structures account upon completion.

Further, Section 24, Chapter 10, Volume I of the GAM for NGAs provides
that repairs and maintenance which primarily maintain or improve the
functionality and capacity of the PPE, increase its service life, improve the quality
of its output, or reduce the operating cost, may be categorized into major and
minor repairs. It further requires that minor repairs shall be directly charged to
the Repairs and Maintenance expense account of the specific PPE, while major
repairs shall be added to the carrying amount of the PPE and shall be depreciated
over the remaining life of the PPE.

DFA FSPs were authorized to construct buildings and acquire properties to

house the Chancery and to serve as the official residences of the head of FSPs.
Due to wear and tear, some of the acquired properties undergone repairs or
renovation to accommodate and serve the increasing number of Filipinos abroad.

The balance of the CIP–Building and Other Structures account as at

December 31, 2022 amounted to ₱2,173,175,518.75. This consisted of cost of
repairs, renovations/enhancements and constructions of 68 projects in various
FSPs and in Home Office sourced out of the Building Fund of the Department.
This Building Fund is one of the expenditure classes under the Capital Outlay of
the Department.

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 Inquiry made with the Accounting Office disclosed that out of the 68
projects comprising the CIP account with a total cost of ₱2,173,175,518.75, 61
projects with a total cost of ₱1,286,933,041.94 were already 100 percent
completed. Of the 61 completed projects, 48 were major repairs/enhancement
totaling ₱1,263,774,450.14 and 13 with a total cost of ₱23,158,591.80 were
minor repairs.

The non-reclassification of the CIP-Buildings and Other Structures account

to the Buildings and Other Structures account was due to the non-submission of
the projects’ progress reports by the Property Office. Management, in its letter
informed the Audit Team that the Office of Financial Management Services
(OFMS) Accounting Division is currently in the process of analyzing the
reclassification of the completed projects to its appropriate PPE accounts.

It was likewise noted that all projects whether major repairs/enhancement

and minor repairs were charged against the Building Fund of the Department. It
should be taken into consideration that minor repairs should be funded out of the
Maintenance and Other Operating Expenses (MOOE), and only projects with
major repairs/enhancements are to be charged to the Building Fund.

The non-reclassification of the completed CIP projects with major repairs

to the Buildings and Other Structures account overstated the CIP account by
₱1,286,933,041.94 and understatement the Buildings and Other Structures
account by ₱1,263,774,450.14, while the non-reclassification of the completed
projects with minor repairs resulted in the understatement of the Accumulated
Surplus/(Deficit) by ₱23,158,591.80.

We recommended and Management agreed to direct the:

a. Chief Accountant
 to reclassify the completed projects to PPE-Buildings and Other
Structures account or to the Repairs and Maintenance, duly
supported with complete documentation; and

 to recognize in the books of accounts the corresponding depreciation

of the reclassified Buildings and Other Structures already
completed.

b. Engineering Office
to prepare a list of all proposed constructions/renovations properly
categorized into major or minor projects for inclusion in the Annual
Procurement Plan so that the project budget consideration will be
classified whether to charge to capital outlay or to MOOE; and

77
  submit regularly to the Accounting Office the projects progress
report as a basis in the reclassification of completed projects to its
proper account.

c. Inventory Committee to include the CIP accounts in the one-time

cleansing of the PPE accounts of the Department.

Erroneous computation of depreciation charges of Information and Communication

Technology Equipment (ICTE)

9. Accumulated Depreciation - ICTE account was understated by

₱21,056,345.01 while the Accumulated Surplus/(Deficit) and the
Depreciation - Machinery and Equipment accounts were overstated by
₱20,130,428.88 and ₱925,916.13, respectively, thus, not fairly presented in
the financial statements due to erroneous computation of its depreciation
charges and the inconsistent application of its useful life contrary with the
provisions of Section 27, Chapter 10, Volume I of the GAM for NGAs.

Section 27, Chapter 10, Volume I of the GAM for NGAs states that PPE
gradually loses its ability to provide service over the course of time. Because of
this, its costs needs to be distributed on a systematic basis over its useful life. The
allocated cost is referred to as depreciation.

It further provides, among others, that the estimation of the useful life of
the asset is a matter of judgment based on the experience of the entity with similar
assets. The agency/entity is in the best position to estimate the expected useful
life of its PPE. However, as a guideline, Machinery and Equipment, which
includes the ICTE, shall be depreciated over 5 to 15 years.

As of December 31, 2022, the total carrying amount of ICTE is

₱255,902,825.79, net of the gross cost and accumulated depreciation amounting
to ₱776,031,922.12 and ₱520,129,096.33, respectively. Recalculation of the
depreciation disclosed that the prior years’ depreciation charges was understated
by ₱20,130,428.88 and for current year by ₱925,916.13, or a total of
₱21,056,345.11, to wit:

Accumulated Depreciation
Year of Cost Variance
Per Books Per Audit
Acquisition
Amount (₱)
Regular Agency Fund – Prior Years
2016 & PYs 382,401,741.37 360,738,188.96 363,227,809.97 2,489,621.01
2017 16,264,564.87 8,465,827.28 8,814,469.63 348,642.35
2018 93,364,628.26 35,996,651.65 39,227,530.90 3,230,879.25
2019 42,034,052.84 23,342,863.17 25,598,958.28 2,256,095.11
2020 15,478,237.44 5,641,832.08 6,115,868.72 474,036.64
2021 143,860,108.40 42,332,336.52 44,653,687.55 2,321,351.03

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 Accumulated Depreciation
Year of Cost Variance
Per Books Per Audit
Acquisition
Amount (₱)
Sub-total – Prior years 11,120,625.39
Passport Revolving Fund – Prior Years
2016 and
PYs 52,940,058.72 41,318,093.48 50,293,055.78 8,974,962.30
2018 950,300.00 391,208.48 421,299.67 30,091.19
2019 600,000.00 204,250.00 209,000.00 4,750.00
Sub-total – Prior years 9,009,803.49
Total – Prior Years 20,130,428.88
Regular Agency Fund – current year
2022 28,138,230.22 1,697,844.71 2,623,760.84 925,916.13
Grant Total 21,056,345.11

As shown in the table above, the total variance noted understates the
Accumulated Depreciation by ₱21,056,345.11 and overstates the Accumulated
Surplus/(Deficit) by ₱20,130,428.88 and the Depreciation-Machinery and
Equipment by ₱925,916.13 due to the erroneous computation of the depreciation
charges in the prior years and current year.

Further review of the ICTE account disclosed that its useful life was not
consistently applied. Management used 1 to 3 years of useful life for 43 laptops
while the rest, for five years in accordance with the set guidelines provided under
Chapter 10, Volume I of the GAM for NGAs and the management representation
as disclosed in the Notes to the Financial Statement. This may have contributed
to the discrepancy noted in the Accumulated Depreciation-ICTE.

We recommended and Management agreed to instruct the:

a. Chief Accountant to review the correctness of the computation of

depreciation charges whether the same is in accordance with the
prescribed guidelines, and prepare adjusting entries to correct the
under/overstatement of accounts;

b. Property Officers and the Chief Accountant to revisit the general

guidelines in the determination of the appropriate estimated useful life
of the property; and

c. to consistently apply the estimated useful life of the same class of PPE
in accordance with the guidelines set by COA.

79
Unreliable PPE of five FSPs

10. The net carrying amount of the PPE as of December 31, 2021 in five FSPs
cannot be relied upon due to non-recognition of donated assets and non-
reconciliation of the book balance and the Report on Physical Count of PPE
(RPCPPE), PPE Ledger Cards (PPELC) and Property Cards (PC) contrary
to Section 6.3 of COA Circular No. 2020-006 dated June 31, 2020.

Section 6.3 of COA Circular No. 2020-006 dated June 31, 2020 provides
for the reconciliation of inventory count per RPCPPE with property and
accounting records. It specifically requires that the Property and Accounting
Units shall undertake collaborative procedures to ensure that all PPEs included in
the RPCPPE are duly recorded in their respective records and that the PCs
maintained by the Property Unit and the PPELCs maintained by the Accounting
Unit are reconciled.

Review of the PPE accounts and conduct of random physical count thereof,
disclosed the following deficiencies:

In Brasilia PE, a donated 25,0000 square meters lot where the Chancery
Office and the Official Residence of the Ambassador stand, and the title of which
was already in the name of the Republic of the Philippines was not included in
the RCPPE nor recognized in the books of accounts. Moreover, various PPE items
located at the Chancery Building were not included in the RPCPPE.

In Honolulu PCG, a motor vehicle “Buick 1992” with an acquisition cost of

₱643,750.00was included in the PPELC but not reflected in the RPCPPE.
In Milan PCG, disclosed that the submitted RPCPPE as of November 8,
2022 did not reconcile with the PPELC maintained by Home Office. There were
items indicated in the RPCPPE which were not in the PPELC and vice versa.

In Seoul PE, four equipment with acquisition cost of ₱1,571,055, including

a motor vehicle “2013 Kia Caravan”, and 3 pieces of furniture, acquired thru
negotiated procurement were included in the RPCPPE, but were not recognized
in the books.

In Vientiane PE, during the ocular inspection of PPE conducted on October

17, 2022, it was revealed that there were some PPE found at the station that was
yet to be recorded by the Home Office Accounting Unit totaling USD139,335.67.

The non-reconciliation of the RPCPPE, PPELC and PC casts doubts on the

reliability of the PPE account balance as well as its existence.

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 We recommended and the concerned FSPs agreed to:

a. closely coordinate with the Home Office in the reconciliation of property

and accounting records in order to come up with accurate records of
actual properties owned by the Department;

b. direct the Property Officers to update the PC and RPCPPE and make
sure that the said PPE records should reconcile pursuant to Section 6.3.1
of COA Circular No. 2020-06

c. henceforth, periodic reconciliation of property records be carried out,

pursuant to Section 42, Chapter 10 of the GAM for NGAs;

d. For Brasilia PE to submit the pertinent documents on the donated lot to

the Home Office for its recognition in the books;

Discrepancy between the balances per books of Accounts Payable against the amount
confirmed and non-reversion of outstanding Accounts Payable

11. The validity and reliability of the Accounts Payable amounting to

₱1,144,690,620.31 is doubtful due to the discrepancy of ₱12,959,797.94
between the balance per books and confirmed amounts, inconsonance with
Paragraph 27 of IPSAS 1. Moreover, non-reversion of long outstanding
accounts payables aged two years and above totaling ₱193,004,627.14 is
contrary to Executive Order (EO) No. 87 dated August 13, 2019.

Accounts Payable as described in Section 2, Chapter 6, Volume I of the

GAM for NGAs, refers to valid and legal obligations of National Government
Agencies (NGAs)/Operating Units (OUs), for which, goods/services/projects
have been delivered/rendered/completed and accepted, regardless of the year
when these obligations were incurred.

Confirmation letters were sent to 20 creditors with total outstanding balance

of ₱519,823,067.54 as at December 31, 2022. However, only six creditors with a
total balance of ₱45,730,222.86 replied, four confirmed their balances of
₱16,604,313.05, while two showed a discrepancy of ₱12,959,797.94, to wit:

Balance as of December 31, 2022

Variance
No. Name of Creditor Per DFA Per Creditor
Amount (₱)
1 NC Lanting Security Specialist
Agency 15,415,060.99 - (15,415,060.99)
2 RNB Travel and Tours
Corporation 13,710,848.82 16,166,111.87 2,455,263.05
3 Sunfu Solutions Inc. 2,244,000.00 2,244,000.00 -
4 A&W Tours En Transport Corp. 2,696,300.00 2,696,300.00 -

81
 Balance as of December 31, 2022
Variance
No. Name of Creditor Per DFA Per Creditor
Amount (₱)
5 Sinematika, Inc. 5,150,000.00 5,150,000.00 -
6 V.B. Columna Construction
Corporation 6,514,013.05 6,514,013.05 -
TOTAL 45,730,222.86 32,770,424.92 (12,959,797.94)

Review of the above creditors disclosed that discrepancies were due to late
recording of payments made.

Moreover, the aging schedule of Accounts Payable as of December 31, 2022

showed that ₱193,004,627.14 or 16.86 percent of the total account balance had
been outstanding for more than two years, and were not reverted to the
Accumulated Surplus of the General Fund National, contrary to EO No. 87, series
of 2019. Said EO was issued directing that all Accounts Payable which remain
outstanding for two years or more in the books of NGAs be reverted to the
Accumulated Surplusor Deficit of the General Fund, or the Cumulative Results
of Operations (CRO) of the National Government. While its implementing
guidelines were issued on March 8, 2021 per COA-DBM Joint Circular No. 1, s.
2021, the EO took effect on August 13, 2019.

It was likewise noted that a request for money claim was filed with the COA
Commission Proper for a recognized legal obligation which is lodged under the
Accounts Payable account amounting to ₱962,500.00. This amount represents
the 10 percent retention fee of the project for the supply and installation of split
type air-conditioning units at the DFA OCA-ASEANA Building with a total
project cost of ₱9,625,600.00.

Verification disclosed that two progress payments amounting to

₱8,663,040.00 had been made by DFA to the supplier representing 90 percent of
the total contract price in May and October 2018. The Office of Asset
Management and Support Services (OAMSS) had issued two certifications on the
completion of the project, on July 24, 2018 and June 10, 2021. However, the
retention fee being claimed by the supplier remained unpaid and was recognized
in the books as Accounts Payable. Thus, on October 11, 2021, the supplier,
demanded the payment of the retention fee and was advice to file a Petition for
Money Claim for payment of the said retention fee. The said retention fee should
have been paid without the need to file a petition for money claim considering
that the same was a recognized valid and legal obligation.

We recommended and Management agreed to require the Chief

Accountant to:

a. reconcile the balance of accounts payable per books against the

balances confirmed by the creditors;

82
 b. review, analyze and revert all recorded payables that remained
outstanding for two or more years pursuant to EO No. 87; and

c. settle valid and legal obligations duly recognized in the books of

accounts without the need to file a petition for money claim.

Unreliable balance of the Other Payables account

12. The faithful representation in the FSs and the verifiability of the Other
Payables account balance of ₱680,312,753.77 as at December 31, 2022 could
not be established due to the inclusion of dormant accounts of
₱537,296,221.91, representing 78.98 percent of the total account balance, of
which ₱254,826,867.97 is unaccounted/unidentified. Moreover, the account
was understated by ₱2,262,165.27 due to non-recording of the collected
expedite fees at year-end.

The Other payables account of the Departments includes the unremitted

expedite fees from various FSPs, deductions from the salaries and allowances of
DFA Personnel other than the mandatory deductions subject for remittance to
DFA Provident Fund Contributions and Loans, One Appeal Plan, DFA Multi-
Purpose Cooperative Inc. (DFAMCI) loans payment, financial support and others.
This account is credited upon deductions of contributions and loans of employees
from payroll and upon collection of expedite fees. The account is debited upon
remittance of payment of loans, contributions and collection of expedite fees.

The beginning balance in CY 2015 amounting to ₱537,296.221.91

representing 79.82 percent of the total account balance of ₱673,079,806.97 as of
December 31, 2022 remained non-moving since then, of which ₱282,827,529.41
could only be identified as to which FSPs it originated, while ₱254,826,867.97
are unaccounted/unidentified and is classified only as originated from the Home
Office. Inquiry revealed that the amount could not be identified due to lack of
supporting documents.

Moreover, verification disclosed that an aggregate amount of ₱2,262,165.27

pertaining to the collections of expedite fees from January to December 2022 of
11 FSPs were not recorded in the books of accounts as of December 31, 2022,
thus understated the Other Payables account by the same amount.

We recommended and Management agreed to require the Chief

Accountant to:

a) analyze and verify non-moving and long outstanding balances of Other

Payables account and the unaccounted/unidentified amounts, and to
reclassify to its proper account; otherwise, revert the same to the
Accumulated Surplus/(Deficit) of the General Fund in accordance with
COA-DBM Joint Circular No. 1, series 2021 dated March 8, 2021; and

83
 b) henceforth, record all expedite fees before the closing of the books of
accounts.

B. Compliance Audit

Delayed submission of liquidation reports

13. Delayed submission for an average of 141 days of the liquidation reports of
the fund transfers of the National Election overseas of the 23 sampled FSPs
to the COMELEC, hence, not in compliance with the provision of item B.1.d
of the MOA.

The MOA entered into, by and between the COMELEC and DFA for the
2022 National Elections overseas requires that the amounts transferred from the
COMELEC to the concerned FSPs shall be liquidated within 30 days from May
9, 2022, in accordance with pertinent COA rules and regulations.

Under the same provision of the MOA, it is the responsibility of the DFA-
Overseas Voting Secretariat (OVS) to ensure that all documents necessary to
support the disbursement of funds be submitted by the concerned FSPs, and to
transmit the report to COMELEC within 30 days from May 9, 2022.

The transmittal of liquidation reports by the 23 sampled FSPs to the DFA-

OVS indicated delays of 33 to 244 days; and DFA-OVS to COMELEC by 1 to
120 days, for a total delay of 41 to 209 days, or an average delay of 141 days,
details as shown in the table below.

Date No. of Date Received No. of Days

Received Days by COMELEC Delayed Total
No. Post
by DFA-OVS Delayed from DFA- from DFA- Delay
from FSPs from FSPs OVS OVS
1 Calgary PCG Oct. 19, 2022 132 12/07/2022 49 181
2 Chicago PCG Aug. 17, 2022 69 12/07/ 2022 112 181
3 Houston PCG Aug. 26, 2022 78 12/07/ 2022 103 181
Los Angeles
4 Dec. 27, 2022 201 01/04/2023 8 209
PCG
New York
5 Dec. 27, 2022 201 01/04/2023 8 209
PCG
San Francisco
6 Aug. 17, 2022 69 12/07/2022 112 181
PCG
7 Toronto PCG Jul. 15, 2022 36 07/20/2022 5 41
Vancouver
8 Jul. 19, 2022 40 07/28/2022 9 49
PCG
Washington
9 Jul. 15, 2022 36 07/20/2022 5 41
D.C. PE
Hong Kong
10 Jul. 12, 2022 33 07/20/2022 8 41
PCG
11 Osaka PCG Aug. 3, 2022 55 09/10/2022 38 93

84
 Date No. of Date Received No. of Days
Received Days by COMELEC Delayed Total
No. Post
by DFA-OVS Delayed from DFA- from DFA- Delay
from FSPs from FSPs OVS OVS
Port Moresby
12 Nov. 16, 2022 160 12/07/ 2022 21 181
PE
13 Singapore PE Oct. 6, 2022 119 12/07/ 2022 62 181
14 Tokyo PE Jun. 22, 2022 13 07/06/2022 14 27
15 Wellington PE Sept. 12, 2022 95 12/07/ 2022 86 181
16 London PE Jul. 26, 2022 47 07/28/2022 2 49
17 Madrid PE Aug. 17, 2022 69 11/23/2022 98 167
18 Milan PCG Aug. 17, 2022 69 12/15/ 2022 120 189
19 Oslo PE Dec. 12, 2022 186 12/15/ 2022 3 189
20 Rome PE Sept. 5, 2022 88 09/14/2022 9 97
21 Dubai PCG Aug. 22, 2022 74 12/07/ 2022 107 181
22 Riyadh PE Oct. 26, 2022 139 12/07/ 2022 42 181
23 Moscow PE Feb. 7, 2023 244 02/08/2023 1 1
Total Average days delayed 97 44 141

The 141 days delayed submission of the liquidation reports to the

COMELEC is not in compliance with item B.1.d of the MOA, that all liquidation
reports should be submitted within 30 days from the date of the election.

Moreover, review of the liquidation reports with the corresponding DVs,

documents and records on the said fund transferred disclosed that the concerned
FSPs included the same with the Monthly FRs which were submitted to this
Office.

Inquiry revealed that the concerned FSPs submit advance copies of the
liquidation reports, which the DFA-OVS immediately forwards to COMELEC
pending the transmittal of the originals through diplomatic pouch. The diplomatic
pouch does not always depart on regular basis which contributes to the delay in
the submission of the original liquidation reports.

We recommended and Management agreed to:

a. require the concerned FSPs and the DFA-OVS to strictly comply with
the provision of the MOA in the submission of the liquidation reports
and necessary documents;

b. submit separately the liquidation reports for specific purposes,

including its supporting documents, and the Monthly FRs; and

c. In the ensuing years, to:

85
  set a more reasonable deadline for the submission of liquidation
reports for specific purpose, considering the geographical locations
of the FSPs; and

 include in the MOA a provision on applicable sanction/penalty that

may be imposed to persons identified to be responsible for the
delayed submission of liquidation reports.

Collected expedite fees not remitted regularly as required under the Department’s
internal guidelines

14. Expedite fees totaling ₱29,337,092.72 collected from CYs 2018 to 2022,
remained unremitted as of April 30, 2022, contrary to DFA Circular-401-
OUA-2014 dated February 26, 2014.

The Office of the Undersecretary for Administration (OUA) of the

Department issued Circular-401-OUA-2014 dated February 26, 2014 requiring
the FSPs to implement the remittance of expedite fee collections to the Home
Office’s Provident Fund account on a monthly basis unless the monthly
collections are too small that it is not economical to do so, and submit not later
than the 10th of the month a monthly report on their previous month’s expedite
fee collections to the DFA provident fund for proper accounting, recording and
monitoring purposes.

Verification revealed that collections of expedite fees for the account of

Passport Revolving Fund (PRF), Provident Fund and other related funds
pertaining to collections from various payers of expedite fees for the current year
from 28 FSPs totaling ₱29,337,092.72 remained unremitted to date, as follows:

Particular Aged Amount (₱)

CY 2022 – 26 Posts Current 19,581,211.48
CY 2021 – 14 Posts 1 year 8,610,489.41
CYs 2018-2020 – 7 Posts 4 years and below 1,145,391.83
Total 29,337,092.72

The non-remittance of the expedite fees from CYs 2018 to 2022 is

inconsonance with the provisions of the above internal guidelines issued by the
Department.

We recommended and Management agreed to require the FSPs to

remit immediately the expedite fees collected in compliance with the internal
guidelines issued by the Office of the Undersecretary for Administration.

86
Unutilized ICF, Building Funds and fund transfers remained in the FSPs and the
COs

15. Unutilized and long outstanding a) International Commitment Fund (ICF)

amounting to USD100,000.00 in Moscow PE and b) building funds
amounting to CAD 1,165,028.47 and USD222,750.88 in Ottawa PE and
Sydney PCG, respectively remained in Post’s bank accounts were not yet
returned to the Home Office. Moreover, unutilized transferred working fund
in three Consular Offices (COs) totaling ₱1,852,114.75 was not returned to
the National Treasury.

c) ICF amounting to USD100,000.00 in Moscow PE

The ICF is the source of Philippine contribution to International

Organizations and funding for hosting international conferences. The
contributions are commitments or obligations of the Philippine Government
as membership assessments in international organizations, counterpart
contribution to officers of international organizations based in the country,
and hosting of international conferences. The ICF is a component in the
General Appropriations Act (GAA) and separate from the operational budget
of the DFA, which is co-chaired and administered by the DFA-United Nation
and International Organization (DFA-UNIO) and the DBM.

It was noted during the audit that, despite raised in previously conducted
audit, the ICF remained unutilized at Moscow PE’s depository bank since CY
2015 or more than eight years from the date deposited to the bank. The said
unutilized ICF amounting to USS100,000.00 is idle, and the Moscow PE is
still waiting for decision of the Home Office in its proper disposal. Inquiry
also revealed that the Moscow PE incurred bank charges in the maintenance
of the dollar account depending on the amount maintained. This is not
inconsonance with good fiscal management.

d) unutilized Building Fund in Ottawa PE and Sydney PCG

The Special Provisions of the GAAs for FYs 2018 to 2022 for the DFA
budgets uniformly state that the Building Fund shall be used for the following
purposes:

i. Acquisition of new properties abroad and in the Philippines for

chanceries and residences, as well as office space for COs through
direct purchase or lease-purchase agreements;

ii. Renovation of deteriorating government-owned COs and chanceries

and residence of the Philippines Foreign Service;

iii. Purchase of furniture, fixtures, and equipment for chanceries,

residences, and COs; or

87
 iv. Long-term lease of chanceries, residences, and COs the terms and
conditions are favorable and advantageous to the government.

Review of the latest Status of Working Fund attached to the Monthly FRs
submitted by the Finance Officer (FO) of PE-Ottawa showed a balance of the
Building Fund amounting to CAD 1,165,028.47. Verification from the PE’s records
revealed that the total unutilized balance is composed of the following:

Amount
Particulars Reference
(CAD)
Refund of Harmonized Sales Tax paid to the ZOT-897- 1,001,000.00
Government of Canada in connection with the 2016
purchase of the Chancery Office of the
Philippines in Ottawa in CY 2016.
Undocumented excess unutilized balance of ZOT-897- 164,028.47
Building Fund in prior years 2016
TOTAL 1,165,028.47

In Sydney PCG, the balance of the Building Fund in the amount of

USD222,750.88 as of October 17, 2022, deposited at Commonwealth Bank
of Australia Account disclosed that the said balance includes USD170,000.00
for the replacement cost of office elevator in CY 2017, and the excess
unexpended balance for various repairs and replacements of PPE items in CY
2017 totaling USD52,750.88.

No clear and specific guidance on the disposition of the idle and long
outstanding ICF and Building Fund balances were received from the Home
Office, though said balance is properly reflected in the Monthly Status of
Working Fund included among the reports in the Monthly FR submitted to
the Home Office.

e) Unutilized working funds transferred to three COs not returned to the

National Treasury

Moreover, due to the slow procurement process and non-

implementation of various programmed activities, three COs were not able to
utilize the working fund transferred to them totalling ₱1,853,504.50 received
from the Home Office for CYs 2020-2022, to wit:

CO Amount (₱)
General Santos 1,324,631.20
Puerto Princesa 151,749.75
Tuguegarao 377,123.55
Total 1,853,504.50

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 The total unutilized amount was not remitted to the National Treasury, as
required under Section 99 of PD No. 1445 providing that unexpended balances
should be transferred to the general fund.

We recommended and Management agreed that:

a. concerned FSPs reiterate their request for a specific guidance on the

disposition of the idle and long outstanding ICF and Building Fund
balances or for its eventual reversion to the National Treasury
considering that the funds were sourced out of the GAA; and

b. concerned COs to cause the reversion of the unutilized working funds

to the National Treasury.

Accountable Officers and Head of Post in seven FSPs not bonded

16. Seven Accountable Officers (AOs) and two Head of FSPs were either not
bonded or the amount of their fidelity bond were not enough to cover their
accountabilities, contrary to Section 4.1.1 of Treasury Circular (TC) No. 02-
2019, may preclude the government to substantially recover from the
Fidelity Fund the appropriate amount due to the government in case of loss
of government assets under their custody.

Section 4.1.1 of TC No. 02-2019 requires, among others, that every officer,
agent and employees of the Government of the Philippine Republic, its agencies
and instrumentalities, GOCCs and SUCs, regardless of the status of their
appointment, whenever the nature of their duties performed permits or requires
the possession, custody or control of public funds or properties for which he/she
is accountable, be deemed a bondable officer and shall be bonded or bondable
and his fidelity insured.

Section 4.4 of the same TC likewise provides that an accountable officer,

who has accountability for money, property, and accountable forms, shall be
bonded only once to cover all accountabilities in accordance with the schedule of
premium rates.

During the cash examination conducted, it was found out that the approved
bonds of AOs and Head of FSPs in seven FSPs were either without the required
fidelity bond or the amount of their fidelity bond were not enough to cover their
accountabilities, to wit:

Insufficient amount of
FSPs Without Fidelity Bond
Fidelity Bond
1. Moscow PE The Head of Post and alternate
Collecting Officer not bonded

89

FSPs Without Fidelity Bond
2. Riyadh PE Three AOs not bonded
3. Muscat PE ATN Officer not bonded
4. Canberra PE The Head of Post and the
Finance Officer not bonded
5. Sydney PCG Collecting Officer not bonded
6. Kuwait PE The confirmation on the
application for the fidelity bond
of the Head of Post was not yet
release as of audit date
7. Kuala
Lumpur PE
Insufficient amount of
Fidelity Bond
Fidelity bond of the Finance
Officer amounting to
₱1,500,000.00 is not
sufficient to cover her cash
accountability
Fidelity bond of the Finance
Officer amounting to
₱3,500,000.00 is short of the
required amount of bond by
₱4,500,000.00.
The amount of fidelity bonds
of the Finance and Collecting
Officers were insufficient to
cover their accountabilities

In Riyadh PE, a local hire assigned as a translator at the Assistance to

National Section, was designated custodian of the travel documents, which is
considered an accountable forms. The assignment of the assigned translator were
not in accordance with Section 4.1.1 of the TC No. 02-2019. In case of loss of
documents, the assigned translator cannot apply for Request for Relief from
Property Accountability as this is only available to an accountable officer.

Moreover, at the Los Angeles PCG, from September 4, 2018 to September

26, 2022 disclosed that renewal of the fidelity bonds of the AOs were processed
and approved by the BTr several days after the expiration thereof. Clearly, they
continued to perform their duties and functions as AOs even if their bonds were
already expired.

The absence of the fidelity bonds or the inadequate amount of fidelity bonds
coverage of the AOs and the concerned officials expose the FSPs to the risk of
non-indemnification from the fidelity insurance in case of loss of government
funds and properties.

Further, it was likewise noted that the Finance Officer in Muscat PE was
granted additional cash advances without liquidating firsts her previous cash
advances which is not in consonance with the provisions of Item 9.3.3 of the COA
Circular No. 97-002 dated February 10, 1997, which provides that no additional
cash advance shall be provided unless the previous cash advance was properly
accounted for. The practice of granting overlapping cash advances may result in
difficulty in liquidation and accumulation of cash advances, thus exposing it to
the risk of misappropriation.

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 We recommended and Management of concerned FSPs agreed to:

a. secure the required fidelity bond that is sufficient to cover their

accountabilities in compliance with Treasury Circular No. 02-2019
dated April 25, 2019;

b. monitor closely the renewal/application of bonds of all AOs and Head

of FSPs; and

c. For Kuala Lumpur, Riyadh and Kuwait PEs to duly notify the Home
Office of the amount of accountabilities of AOs and submit the required
application for bond and to request increase of the amount of bond.

We likewise recommended that Muscat PE to strictly monitor the

granting and liquidation of cash advances to ensure that no additional cash
advances are granted when the concerned AO still has outstanding cash
advances.

Delay in deposits and lack of safeguarding of asset

17. Non-compliant with Section 3 of DFA DO No. 03-05 and Section 32, Chapter
2 of COA Memorandum No. 2013-004 dated July 09, 2013 or the Revised
Cash Examination Manual resulted in the delayed deposits of collections
ranging from 1 to 25 days and deficiencies in the handling and safekeeping
of collections in four FSPs, thus indicates weak internal control and may
exposes government resources to possible loss or misuse of funds.

Section 3 of DFA DO No. 03-05 provides that included in the functions and
responsibilities of CO are a) in the absence of a safe or vault in the CO’s office,
he/she should turn over the collections in a sealed envelope to the Finance Officer
at the end of the day for safekeeping; and b) deposit the collections to the FSPs’
depository bank the following business working day.

Similarly, Section 32, Chapter 2 of COA Memorandum No. 2013-004 dated

July 09, 2013 or the Revised Cash Examination Manual provides that all COs
shall deposit intact all their collections, as well as collections turned over to them
by sub-collectors/tellers, with AGDB daily or not later than the next banking day.

Analysis of the collections and deposits made by four FSPs disclosed the
following deficiencies in the handling and deposits of collections, to wit:

FSPs Deficiencies
Brunei PE The Collecting Officer has no cash box and vault to safe
keep the collection and deposited the collections after
office hours using her personal vehicle.

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 FSPs Deficiencies
Chicago PCG The Collecting Officer station is not secured nor enclosed
to protect it against unauthorized intrusion,
Brunei PE, Collections were not deposited daily and intact and some
Yangon PE, collections are deposited on the following days with delays
Vientiane PE ranging 1 to 25 days

The deficiencies noted on the handling and delayed deposit of collections

exposes its assets to misappropriation, theft and other fraudulent conducts.

Sound internal control dictates that diligence of a good father of a family

shall be exercised over safekeeping and handling of government funds and
properties in order to prevent the incurrence of loss.

We recommended and Management of concerned FSPs agreed to

instruct:

a. the concerned Finance Officers to strictly observe the prescribed

period to deposit collections intact and in full to safeguard the funds
from possible loss or misuse;

b. the Collecting Officer of Brunei PE to deposit collection during office

hours using an official vehicle; and

c. the Collecting Officers of Brunei PE and Chicago PCG to procure and

install a cash box and vault/safe in the COs’ offices.

Delayed reporting by the PHCs of the FRs and other administrative reports

18. Delays ranging from 4 to 461 days were incurred in the submission of the
FRs of the Philippine Honorary Consulates’ (PHCs) in Athens PE, and
submission of required FRs and other reports were not consistently complied
with by the PHCs under the jurisdiction of the Brasilia PE, as required under
DO No. 04-2018 dated April 12, 2018 and Foreign Service Circular No. 107-
2010 dated October 13, 2010, which also resulted in the
unaccounted/unreported 87 official receipts (ORs) issued thereto.

To ensure that access to consular services is provided to Filipino residents

in places without any COs, the Department was authorized to appoint Honorary
Consular Officers to serve for a term of three years, extendable for an additional
period of three years or less.

To meet the accounting and auditing requirements on the collections and

expenses of PHCs, DO No. 92-34 was issued by DFA which requires that
Honorary Consuls to submit on a monthly basis, the following forms:

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  An Abstract of Receipts and Deposits supported with the duplicate copies
of Official Receipts issued. In case of cancellation or defective receipts,
both original and duplicate;
 Statement of Monthly Collection;
 Monthly Report of Accountability; and
 Statement of Operating Expenses.

Moreover, Foreign Service Circular (FSC) No. 107-2010 dated October 13,
2010 was issued to reiterate the responsibility of Supervising Foreign Service
FSPs over Honorary Consulates to ensure that the monthly FRs of the PHCs are
transmitted to the Department every 10th day of succeeding month.

In Athens PE, Cyprus and Thessaloniki Honorary Consulates, under its

jurisdiction, incurred delays from 4 days to 461 days, computed after the 10th day
of the succeeding month on the submission of the FRs from CY 2019 to 2022.
The Audit Team was informed that the Athens PE requested the Honorary
Consulate of Cyprus to submit its report every 5th of the succeeding month,
however, it was informed that the slow postal system prevents its reports to reach
Athens PE on the requested period.

On the other hand, review of the monthly FRs for the period September
2017 to 2022 showed that the PHCs under the jurisdiction of the Brasilia PE were
not consistently preparing and submitting the FRs and administrative reports as
required.

In March 2015, official receipts (ORs) with serial numbers 6348401 to

6348500, or a total of 100 ORs were issued to PHC-Bogota, Columbia, which is
under the jurisdiction of the Brasilia PE. It was noted that there was no Quarterly
Reports of Collections on the subject ORs. The Finance Officer explained that
the subject ORs were included in the April to June 2017 FRs which was reported
in December 2017 to the Home Office. However, further verification showed that
only 13 ORs with serial numbers 6348488 to 6348500 were included in the April
to June 2017 FRs. Thus, 87 ORs were unaccounted as of audit date. Inquiry with
concerned officials of Brasilia PE disclosed that the documents pertaining to
previous years were no longer available.

We recommended and Management agreed that:

a. In Athens PE to require the Administrative Officer and the Finance

Officer to devise a workable arrangement considering the slow postal
system encountered by the PHCs in the submission of its FRs on time;
and

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 b. In Brasilia PE to:

 make necessary arrangements for periodic briefings of PHC to

update them on the rules and regulations on administrative, fiscal
and consular matters and to enforce the submission of required
reports on time; and

 exhaust all available remedies to account for the unaccounted 87

ORs and to coordinate with the Home Office for the appropriate
action to be pursued if there is no other recourse to account the same.

Non-conduct of physical count of PPE and Inventories

19. Due to the non-creation of an Inventory Committee, the physical count of

PPE and Inventories was not conducted at the Home Office and in four
FSPs with an aggregate amount of ₱2,105,648,315.39, resulting in the non-
preparation of the Reports on the Physical Counts of Tangible Assets
contrary to the pertinent provisions Chapters 8 and 10, Volume I of the
GAM for NGAs, hence the existence and accuracy of the PPE and
Inventories accounts balances in the financial statements could not be
established.

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

On the other hand, Section 13, Chapter 8, Volume I of the GAM for NGAs,
states that physical count/inventory is an indispensable procedure for checking
the integrity of property custodianship, and the physical inventory taking which
is required semi-annually should be regarded with importance.

Moreover, Section 17 thereof provides that the Report on the Physical

Count of Inventories (RPCI) shall be used to report the physical count of supplies,
while the Report on the Physical Count of Semi-Expendable Property (RPCSP)
shall be used to report the physical count of semi-expendable property, which are
owned by the agency/entity, by type of inventory/property, still in the custody of
the Property and/or Supply Division/Unit, as at a given date. Both reports shall
be submitted to the COA Auditor concerned not later than July 31 and January
31 of each year for the first and second semesters, respectively.

Subsequently on January 31, 2020, COA issued the Circular No. 2020-006
on the guidelines and Procedures in the Conduct of Physical Count of PPE,
94
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, which requires that each government agency
shall conduct physical count of all its PPE, whether acquired through purchase or
donation, including those constructed by administration and found at station.

As of December 31, 2022, the balance of the Home Office tangible

properties totaled to ₱1,670,942,641.84 or 12.44 percent of the PPE of the
Department, details as shown below.

Accounts Amount (₱)

Office Supplies Inventory 35,500,154.57
Accountable Forms, Plates and Stickers Inventory 341,069,153.35
Non-Accountable Forms Inventory 9,073,506.89
Other Supplies and Materials Inventory 48,980,045.74
Semi-Expendable Office Equipment 3,599.50
Semi-Expendable ICT Equipment 4,000.00
Semi-Expendable Communications Equipment 14,990.00
Semi-Expendable Other Equipment 11,226.50
Semi-Expendable Furniture and Fixtures 48,997.00
Total – Inventories 434,705,673.55
Land 185,035,870.51
Buildings 107,871,686.80
Other Structures 170,033,716.00
Office Equipment 8,094,173.49
Information and Communication Technology
Equipment 151,436,152.94
Communication Equipment 5,465,353.60
Disaster Response and Rescue Equipment 261,716.94
Medical Equipment 11,557.38
Other Machinery and Equipment 1,123,349.27
Motor Vehicles 11,740,354.66
Furniture and Fixtures 13,584,209.14
Books 164,522.03
Leased Assets, Land 653,228,338.52
Leased Assets, Buildings and Other Structures 307,482,712.59
Leased Assets Improvements, Buildings 4,563,497.57
Other Leased Improvements 515,352.40
Construction in Progress–Buildings and Other
Structures 13,678,299.53
Construction in Progress–Leased Assets 31,091,214.35
Other Property, Plant and Equipment 5,560,564.12
Total – PPE 1,670,942,641.84
Grand Total 2,105,648,315.39

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 The Audit Team was informed that DFA did not conduct the physical count
since Home Office has yet to create an Inventory Committee. Likewise, it was
also noted that no physical count on Inventories and RCPIs were not submitted
by Canberra and Ottawa PEs, and Frankfurt and Sydney PCGs. Moreover,
Requisition and Issue Slips (RISs) were not prepared at Frankfurt and Los
Angeles PCGs, and Ottawa and Riyadh PEs.

In Los Angeles PCG, during the inspection done in September 2022, it was
also noted that 72 semi-expendable items with no inventory costs were not
included in the RPCSP.

Without the RPCPPEs, RCPIs, and the RPCSPs, verification on the

existence of the PPE and Inventories is not possible considering that PPELC,
Stock Ledger Cards (SLCs), Stock Cards (SCs), and Property Cards (PCs) were
not prepared and updated in the Home Office, Canberra and Ottawa PEs,
Frankfurt and Sydney PCG.

The non-conduct of the physical counts cast doubt as to the existence of the
PPE and Inventories accounts presented in the statement of financial position.

We recommended and Management agreed to:

a. create an Inventory Committee at the Home Office and concerned

FSPs;

b. conduct physical count at Home Office and concerned FSPs on the

Inventories. Semi-Expendable items and PPE as prescribed under
COA rules;

c. submit RPCPPEs, RPCIs and RPCSPs within the prescribed period,

and instruct the Property Officers and Accounting Office to maintain
and update PPELCs, SLCs, SCs and PCs and other required reports;
and

d. implement the one-time cleansing of all DFA properties, to establish

existence and to prove accuracy of the recognized amounts in the books
of accounts.

Unserviceable and disposed PPE still included in the RPCPPE and RPCSP

20. Unserviceable and disposed PPE items still included in the RPCPPEs and
RPCSP of 11 FSPs and were not reported in the Inventory and Inspection
Report of Unserviceable Property (IIRUP), and the same were not disposed
inconsonance with Section 40 (d), Chapter 10, Volume I of the GAM for
NGAs and National Budget Circular (NBC) No. 425, thus, deprived the
agency of the benefits that may be derived from its disposal.

96
 Section 40, Chapter 10, Volume I of GAM for NGAs provides that a
property is said to be unserviceable if it is no longer capable of providing the
entity with future economic benefits or service potential. All unserviceable
property shall be reported in the Inventory and Inspection Report of
Unserviceable Properties (IIRUP).

Appendix 74, Volume II of the GAM for NGAs prescribed the form to be
used in preparing the IIRUP which requires additional information such as the
Accumulated Impairment Losses, Carrying Amount and the condition and status
of the property.

While, the manual on Disposal of Government Property as embodied in

NBC No. 425 dated January 28, 1992 was issued to guide agencies in their
disposal undertakings. Part 1 (A) thereof provides, among others, that disposal
occurs when a piece of equipment or property can no longer provide efficient
service or, though still working, has been rendered useless due to obsolescence.
Disposal proceedings should be immediately initiated to avoid further
deterioration of the property and the consequent depreciation in its value. A
systematic and timely disposal will yield benefits in terms of a higher appraised
value/selling price and enabling storage areas available for other purposes.

Actual inspection of properties in 12 FSPs revealed the unserviceable items

and disposed PPEs were still included in the RPCPPEs and RPCSPs, and
corresponding IIRUPs were not yet prepared, details as shown in the table below:

No. FSPs Deficiencies

1 Athens PE 1 unserviceable property included in the RPCPPE
2 unserviceable properties included in the RPCSP
2 Berlin PE 31 items reported to be disposed still included in the
RPCPPE.
3 Brasilia PE Unserviceable properties have remained undisposed
despite the approved authority.
4 Chicago PCG Included various unserviceable properties in the
RPCPPE
1 disposed property still included in the
RPCPPE and 3 disposed semi-expendable items still
included in the RPCSP.
5 Honolulu Included 9 unserviceable properties in the RPCPPE.
PCG
6 Kuwait PE Included 2 disposed and 1 unserviceable motor
vehicles in the RPCPPE.
7 Los Angeles Included 6 unserviceable properties in the RPCPPE
PCG
8 Riyadh PE Included 8 unserviceable properties in the RPCPPE

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 No. FSPs Deficiencies
9 Sydney PCG Included various unserviceable properties in the
RPCPPE
10 Vientiane PE Included 78 unserviceable properties in the RPCPPE
11 Yangon PE Included 5 unserviceable properties in the RPCPPE

While, in Muscat PE, it was noted that the Property Officer prepared the
IIRUP for the 47 unserviceable properties as at September 01, 2022. However,
review of the said IIRUP disclosed that the total cost or carrying amount of the
unserviceable items to be disposed were not indicated. Further, of the 47 items
listed, 34 do not have unit cost, total cost and carrying amount, thus making the
said report an unreliable source of information to facilitate review and disposal
of unserviceable properties of the PE.

The unserviceable PPE should be excluded from RPCPPE and report the
same in the IIRUP, and should be derecognized in the books, upon proper
disposal of the unserviceable items. These unserviceable properties were already
damaged and may no longer be used. The exposure to elements of nature such as
dust, dirt, and weather conditions, may further deteriorate the items and lessen
their salvage value and reduce their saleable value if not disposed of on time.

The non-reporting of unserviceable properties in the IIRUPs overstates the

assets by its net book value affecting the reliability and accuracy of the reported
PPE account. On the other hand, the prolonged custody over the unserviceable
properties due to their non-disposal resulted in the accountable officer not to be
relieved of unnecessary accountability and to make available space for the FSPs.

We recommended and Management of the concerned FSPs agreed to:

a. direct the Disposal Committee to conduct disposal of unserviceable

properties, duly approved and properly determined the recoverable
values of the disposable properties;

b. submit a copy of the disposed properties to DFA Foreign Service

Accounting/Home Office Accounting for the derecognition of the
disposed PPE in the books of accounts;

c. instruct the Property Officer to revise the IIRUP based on the new form
prescribed in Appendix 74, Volume II of the GAM and provide all the
required information necessary to facilitate disposal and recording of
the same in the books of accounts; and

d. include in the conduct one-time cleansing of PPE accounts at the FSPs

pursuant to COA Circular No. 2020-006.

98
Non-preparation and deficiencies in the preparation of the RAAFs

21. The monthly Report of Accountability for Accountable Forms (RAAFs) of

four FSPs were not prepared, and ten FSPs were with deficient and
erroneous RAAFs, contrary to Section 17(k), Chapter 8, Volume I of the
GAM for NGAs, thereby, correctness and accuracy of the ending balances
of accountable forms cannot be established and relied upon.

Section 17(k), Chapter 8, Volume I of the GAM for NGAs prescribed that
the RAAF shall be prepared by the Accountable Officer to report on the
movement and status of accountable forms in his/her possession. The accountable
forms include those with or without face value.

Likewise, Appendix No. 67, Volume II of the same Manual prescribed the
format and the instructions on how to accomplish the RAAF. The instructions
required for the monthly preparation of the RAAF by fund cluster and disclosure
of the quantity of the a) accountable forms available at the beginning of the
month, b) received and issued by the accountable officer during the month, and
c) quantity and the inclusive serial numbers of the accountable forms still in the
custody of the Accountable Officer at the end of the month.

Section 77 of PD No. 1445 or the Government Auditing Code of the

Philippines, on the application of the Invoice and Receipt upon transfer of funds
or property, requires that when government funds or property are transferred from
one accountable officer to another, or from an outgoing officer to his successor,
it shall be done upon properly itemized invoice and receipt which shall invariably
support the clearance to be issued to the relieved or out-going officer, subject to
regulations of the Commission.

Audit of the accountable forms in four FSPs, namely, the PEs of Brasilia,
Riyadh, Cairo and Vientiane disclosed that no monthly RAAF were prepared.
The details of the observations are shown in the table below.

FSPs Deficiencies
Brasilia PE No RAAF prepared from September 2017 to December 2017
Riyadh PE No RAAF for FA Form No. 89 or Official Receipts, New Visa
and Travel Documents
Cairo PE RAAF for Travel Documents, New Visa Sticker and NBI Forms
were not prepared by the AOs
Vientiane PE No Consolidated RAAF on all accountable forms was prepared

Likewise, review of the submitted monthly RAAF of nine FSPs disclosed

deficiencies in its preparations, details are shown on the next page.

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 FSPs Period Covered Deficiencies
1. Cairo PE October 1, 2017, to Erroneous recording of receipts and
October 17, 2022 issuance of various accountable forms
2. New Delhi August 21, 2018 to Erroneous posting of the quantity of the
PE September 12, 2022 accountable forms received in the
beginning balance column
3. Los Angeles August 1, 2020 to Errors in presenting the beginning and
PCG September 27, 2022 ending balances and issuance columns for
4. Chicago August 9, 2016 to Receipt and issuance of 2,724 issued
PCG October 17, 2022 checks, ORs, visa laminate and travel
documents were not completely recorded
5. Brunei PE September 17, 2018 Receipt of checks not encoded in the
to September 9, Received portion but in the Beginning
2022 Balance and issuances of check not
reported
6. Vientiane October 1, 2017, to Errors in the recording and omissions in
PE October 17, 2022 taking up serial numbers of the
accountable forms for the period October
1, 2017, to October 17, 2022
7. Brasilia PE September 26, 2017 Discrepancies on the ending balances
to September 26, against actual quantity on hand, inaccurate
2022 data reflected on receipts and issuances
8. Honolulu 250 pieces of travel documents with serial
PCG August 23, 2016 to numbers 003651-003900 issued by the
October 10, 2022 HO on April 26, 2017 not included in the
report and unaccounted
9. Kuala September 29, 2018 Visa stickers not included in the RAAF
Lumpur PE to September 19, and considered unaccounted
2022
10. Muscat PE November 05, 2018 90 pieces of old and obsolete PNB checks
to October 16, 2022 were not included in the RAAF

In Honolulu PCG, the unaccounted five booklets or 250 pieces of travel

documents were issued to the Post on April 26, 2017, however, during the actual
count, the Audit Team discovered that the said 5 booklets are missing or
unaccounted. The Property Officer claimed that the same were not included in
the monthly RAAF as these were not turned over to him during his assumption to
Office in July 2019.

In Kuala Lumpur PE, the unaccounted 24 Visa Stickers were not included in
the RAAF and per inquiry with the Consular Assistant, these may have been lost
due to spoilages, thus, rendering the list with inaccurate balances. Improper
handling of accountable forms may result to bigger problems in establishing
accountability of the accountable officer and is contrary to the due diligence
required of a public officer.
Moreover, in Muscat PE, 2 checkbooks which contained 90 pieces of old
and obsolete PNB checks was produced by the Finance Officer during the cash
examination in October 2022, however, the same were not included in the

100
monthly RAAF. Though this was in her Office, she claimed that these were also
not turned-over to her when she assumed Office in 2016, details as shown below.

Name of Depository Bank Check No. No. of pieces

Philippine National Bank (Europe) PLC 006156-006200 45
Address: Ground Floor, Old Change House, 128 Queen
Victoria Street, London EC4V 4HR, England
Philippine National Bank (Europe) PLC 001156-001200 45
Address: 103 Cannon Street, London, EC4N 5AD,
England

The Post has no information as to the status of the subject PNB accounts
because the current Finance Officer was not informed about the existence of the
subject PNB bank accounts in London, England, and there were no available
records or documents showing the details of these checkbooks. The existence of
the two checkbooks indicates that bank accounts in London, England exist which
were not fully accounted and properly turned-over by the concerned AO.

The correctness of the ending balances of accountable forms cannot be

established and the accuracy of the submitted reports cannot be relied upon due
to the erroneous entries in the beginning balances and issuances in the RAAFs.

The non-preparation and erroneous preparation of the monthly RAAFs are

both contrary with Appendix 67, Volume II of the GAM for NGAs, which
resulted in inaccurate presentation and may lead to incorrect statement of
accountabilities. The incomplete and inaccurate information supplied in the
RAAF may likewise cause deficiencies to arise during the course of the cash
examination and thereby, may put the property at risk of improper or
unauthorized use or misapplication thereof.

We recommended and Management agreed to require the concerned

AOs and Property Officers to:

a. prepare correct and reliable RAAFs and submit the same regularly to
facilitate monitoring and ensure reliability of reports prepared;

b. review the entries made on each month’s RAAFs, as to the accuracy of

the serial numbers of AFs in the receipt, issued, and balance columns
before submission to the Home Office; and

c. direct all the AOs to properly monitor the accountable forms under
their possession or custody and ensure the completeness and accuracy
of the monthly RAAF.

We likewise recommended and Management agreed:

a. for Honolulu PE to direct the Property Officer to:

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  exert diligent efforts to locate in the records the issuance or the usage
of the five booklets of travel documents that were allegedly not
turned over to him;

 prepare a report on the missing travel documents and submit to the

Office of the Head of the Consular General who will inform the
Home Office of the missing forms, if warranted; and

 Strictly implement the preparation of the Invoice and Receipt for the
transfer of funds or property every time there is a reshuffling of the
AOs to ensure the proper turnover of accountability between the
outgoing and incoming AO and completeness of the report pursuant
to Section 77 of PD No. 1445.

b. for Kuala Lumpur PE, to prepare and submit a Report of Lost, Stolen,
Damaged, Destroyed Property to reflect the actual status of the
Accountable Forms without Money Value after the conduct of
inspection and inventory; and

c. for Muscat PE to direct the Finance Officer to:

 verify the status and ownership of the PNB accounts in London, and
trace and identify the former AO responsible to fully account and
properly turn-over the old and obsolete checks to him; and

 prepare and submit the necessary inventory of the old and obsolete
checks to facilitate its destruction.

No PTR on transferred custody of assets and non-renewal of the PAR

22. Property Transfer Reports (PTRs) were not prepared in Los Angeles, Milan
and Sydney PCGs and Moscow PE, for the turn-over of property from an
outgoing to the incoming AOs, consequently, Property Acknowledgement
Receipts (PARs) were not renewed, contrary to Sections 21 and 42, Volume
I of the GAM for NGAs, thereby proper accountability for these PPE items
could not be ascertained.

Section 21, Volume I of the GAM for NGAs provides that a PAR be issued
to support the issue of property to end-user. The PAR shall be renewed at least
every three years or every time there is a change in accountability or
custodianship of the property. Moreover, Section 42 (j) of the same Manual
prescribes the use of the PTR every time there will be a transfer of property from
an outgoing officer to his successor or from one accountable officer/employee to
another of the same or another entity.

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 Actual inspection of properties conducted sometime in September 2022
together with the Property Officer disclosed that various properties assigned to
the outgoing AOs were transferred to incoming AOs in four FSPs, namely, Los
Angeles, Milan, Sydney PCGs and in Moscow PE. However, it was noted that
there were no proper turn-over of properties, hence PTRs were not prepared and
consequently the PARs were also not renewed.

Due to the non-issuance of the PTRs and non-renewal of the PAR, proper
accountability for the turned-over PPE items could not be ascertained.

We recommended and Management agreed to direct the concerned

Property Officers to:

a. issue a PTR every time there is a transfer of accountability over

properties from one personnel to another; and

b. cancel the PAR issued to the previous AOs, and issue new PAR to the
incoming AOs to establish accountabilities over the transferred
properties.

Deficiencies of the ATN Program

23. Deficiencies noted in the review of ATN Programs includes: a) unutilized

ATN Funds totalling ₱18,188,334.09 and BN$24,388.4 in three FSPs; b)
delayed processing of ATN requests ranging from 58 to 229 days from
receipt of request to release of funds in two FSPs; c) no stand by funds to
charge the ATN expenses in Frankfurt PCG; and d) Brunei PE did not
maintain a database of beneficiaries who availed of repatriation and other
expenses charged thereat, thus inconsistent with the Migrant Workers and
Overseas Filipinos Act of 1995 and DFA Memorandum Circular (MC) No.
2021-001, depriving the overseas Filipinos of timely assistance and benefits
that could have been derived therefrom, and number of actual beneficiaries
not monitored.

The Migrant Workers’ and Overseas Filipinos Act of 1995 mandated the
protection of the rights and immediate assistance to OFWs through the ATN Fund
provided under the GAA. On the other hand, DFA MC No. 2021-001 dated May
31, 2021 provides the revised implementing guidelines on the disbursement of
the ATNs fund, including the reportorial requirements for Legal Assistance Fund
(LAF) utilization in Section VII, which is within 15 days after receipt of authority
to disburse, and every 30 days thereafter until the end of the engagement, in
accordance with the ATNs Report Form A in Annex C.

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 Further, Item III, Annex A of MC No. 2021-001 on the Process Flow for
ATN Fund Disbursements prescribes that the Post/CO, within 24 hours from
receipt of request for assistance, assesses the case/needs of the distressed OFW
and prepares the Request Assistance Form addressed and sent to Office of the
Undersecretary for Migrant Workers Affairs (OUMWA). It further states that the
request are successively reviewed by the OUMWA within two working days from
receipts in normal case, or within 12 hours in extremely urgent cases.

a) Unutilized ATN Funds totalling ₱18,188,334.09 and BN$24,388.4

Review of the ATN Fund Utilization Reports and the fund utilization of
Muscat, Cairo and Brunei PEs disclosed that for CYs 2018 to 2022, there
were various requests for ATN funds that were approved only after the
scheduled ATN projects/activities have already lapsed. This resulted in the
non-utilization of ATN funds totalling ₱18,188,334.09 and BN$24,388.40
and non-implementation of the intended ATN programs and activities to the
prejudice of the distressed Overseas Filipinos, to wit:

FSPs Deficiencies Amount

Muscat PE Approved requests for assistance to OFWs 17,560,239.14
chargeable to the ATN Fund for CYs 2019 to
2021were not utilized
Cairo PE In CYs 2021 and 2022, due to long processing 628,094.95
time in the issuance of authority to pay and late
releases of funds in the Home Office, services
and intended assistance to seven overseas
Filipino Nationals in Egypt were not fully
accomplished and rendered; and resulted in
unutilized fund
Total in Philippine Peso ₱18,188,334.09
Brunei PE delays in the issuance of authority to disburse
ATN fund, thus, not responsive to the needs of
the Nationals BN$24,388.40

b) Delayed processing of ATN requests

In Seoul PE and in Milan PCG, it was noted that there were delayed in
the processing of various ATN requests, ranging from 58 to 229 days from
receipt of request for assistance up to the release of funds to claimants until
the issuance of the Authority to disburse which prolonged the burdens of the
affected OFWs/relatives of OFWs.

Request for funding of the eight requests for financial assistance in

Seoul PE was within the prescribed period as indicated in the Manual of
Operations; however, it took 58 to 229 days from receipt of request for
assistance and/or request for funding up to the release of funds to claimants.

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 On the other hand, in Milan PCG, analysis and verification of
disbursement vouchers (DVs) and supporting documents from November
2018 to October 2022 showed that requests for shipment of remains incurred
delays ranging from five days to 88 days in the evaluation of requests to be
sent or emailed to the OUMWA.

Both are not compliant with Item III, Annex A of Memorandum

Circular No. 2021-001 on the Process Flow for ATN Fund Disbursements
which prescribes that the Post, within 24 hours from receipt of request for
assistance, assesses the case/needs of the distressed OFW and prepares the
Request Assistance Form addressed and sent to OUMWA.

c) No standby fund for ATN expenses

In Frankfurt PCG, it was noted that there was no standby fund where
appropriate ATN expenses could be charged; and approval of request for
funding was delayed, thus, immediate assistance in the form of food
allowance, basic supplies, visitation expenses, among others, had to be
advanced by the Deputy Consul or the ATN officer.

d) Brunei PE did not maintain a database of ATN beneficiaries

Section 5 (b) of DFA MC No. 01-08 dated January 10, 2008 states that
OFMS shall make a weekly report of disbursements which should include
status of funds, itemized expenditures and list of beneficiaries charged against
the ATN Fund.

In Brunei PE, review of the Report of Utilization of the ATN Fund for
CYs 2018 to 2022 disclosed that the number of beneficiaries who availed of
the ATN fund was not included in the said report. The ATN Officer explained
that the number of beneficiaries was included in the quarterly OPCR.
However, review of the OPCR disclosed that the actual number of activities
was used as performance indicator. The number beneficiaries who benefited
from ATN programs was not also indicated in the supporting documents
attached to the OPCR. Thus, cost benefit analysis and other analytical
procedures cannot be facilitated. Consequently, some Filipino Nationals may
take advantage of the ATN program.

We recommended and the Management of concerned FSPs agreed to:

a. instruct the concerned ATN Officers and Finance Officers to

coordinate closely in scheduling ATN projects and activities and in the
processing of the Request for Approval Form from the Home Office to
ensure that funds will become available before the scheduled
projects/activity in accordance with the timelines set in Annex A of
DFA MC No. 2021-21;

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 b. make representation with Home Office to resolve the delay in the
issuance of authority to disburse ATN/LAF;

c. for Frankfurt PCG, to request for a reasonable ATN standby fund to

the HO necessary to facilitate the extension of immediate recurring and
valid requests for assistance by distressed OFW and to require the
ATN Officer to develop a work and financial plan for the standby fund
to meet the recurring and reasonable requests for assistance by OFWs;
and

d. for Brunei PE, to create a database of ATN beneficiaries to facilitate

the monitoring of the actual number of beneficiaries and to ensure that
ATN Fund shall not be disbursed repeatedly for the same violation by
the same beneficiary.

Deficient provisions in the Lease Agreements on the land and building in Sydney
PCG, and in the Property Management Agreement in Ottawa PE

24. Deficient provisions in the a) Lease Agreements between Philippine

Government, as Lessor and owner of the building in Sydney PCG, and b)
Property Management Agreement between Ottawa PE and Conti
Corporation, thereby the Government may be at the disadvantage due to
undetermined basis of billing and uncertainty in the amount of payment for
utilities and maintenance expenses.

a) Lease Agreements between Philippine Government, as Lessor and owner

of the land in Sydney and Travelodge Wentworth Avenue Pty Limited, as
Lessee and owner of the building

The PCG Sydney occupies an office space within the IBIS Hotel Central
Sydney Building, covered by a 50-year Lease Agreement entered into by and
between the Philippine Government, as Lessor and owner of the land; and
Travelodge Wentworth Avenue Pty Limited, as Lessee and owner of the building,
commencing on February 14, 2000 to February 13, 2050. Under the terms of this
Lease Agreement, the Lessor becomes the sublessee and the Lessee as
sublessor of that portion of office space occupied by the Post, pursuant to
Clause 2.1 of the Lease Agreement.

In a Deed of Agreement for Lease and Sublease executed on July 21,

1998, the Philippine Government, as Lessor and owner of the land, entered
into agreement with the SPHC Properties Pty Limited, et al., as Lessee and
owner of the building to be erected on the land as defined in the Design and
Construct Contract, and known as the Travelodge Hotel Sydney. Under
Clause 3.1(a) of the said lease agreement, the lessor will pay rent for the term
in accordance with the said agreement.

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 Review of the lease agreement, however, showed no provision for the
manner and method of rent payments. The FRs of Sydney PCG covering the
period under audit also did not show any payment of rental made by the Post.
It also does not specifically state the floor size of the office space that the
Post should occupy, the arrangement for repairs and maintenance, the
percentage sharing in utilities, etc.

From 3rd Quarter 2018 to 2nd Quarter 2022, the PCG paid Travelodge
the total amount of AUS$119,422.15 or ₱4,045,966.33 as its share in
utilities. Thus, the Lease Agreement put the PCG Sydney at a disadvantage
due to undetermined basis of billing and uncertainty in the amount of
payment for these expenses.

Further, it is worth mentioning that formerly the PTIC Sydney and the
PDOT Sydney had occupied office spaces in Travelodge. Due to limited
spaces, however, these foreign based government agencies moved out from
the building and are now leasing office spaces elsewhere. The PTIC Sydney
is currently located at Suite 9.05, Level 9, At. Martins Tower, 31 Market
Street, Sydney. The DTI HO directly pays the rental to the owner of the
property. Meanwhile, the PDOT Sydney holds office at Suite 11.01, Level
11, 92 Pitt Street, Sydney with monthly rental of AUS$16,175.56.

b) Monthly payments of CAD 4,200 for the property management services to

Ottawa PE 3-storey building and the official residence of the PE
Ambassador rendered by Conti Corporation is not fully supported by
appropriate documents to evidence the total actual man-hours rendered by
the Management’s Supervisor as required under the Property Management
Agreement

A Property Management Agreement (PMA) was entered into by the

Government of the Republic of the Philippines, called the “Owner” and
“Conti Corporation”, called the Manager, for the mutual purpose of the
management and operation of the Chancery of the PE in Ottawa, to do any
and all things necessary to keep the Property clean, tidy, neat, and in lawful
and safe condition, described as a three-storey office building at 30 Murray
Se., near Sussex Drive, Ottawa Canada.

Review of the corresponding documents on file relative to these services

showed, among others, the management of the Chancery is contracted
annually to Conti Corporation since 2018, allegedly being the lone offeror in
the annual Requests for Proposals by PE-Ottawa.

The PMA provides, among others, that the Manager shall make or cause
to be made proper and thorough inspections of the Property at reasonable
intervals, and shall make or cause to be made such repairs, alterations,

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 painting and maintenance as necessary to preserve the property in good
condition at a total monthly compensation of CAD 4,200.00 plus applicable
HST taxes.

Review of sample DVs for the monthly fixed payments to Conti

Corporation for the abovementioned services showed that the corresponding
disbursements are supported only with the copy of the contract for the year,
the corresponding Invoice from Conti Corporation for the month, and the
check payment. However, no document evidencing the actual number of
hours and frequency of actual services rendered by the Supervisor are
attached to the DVs, making it appear that all the services require by the PMA,
as well as the number of required man-hours are assumed to have been
undertaken by the Supervisor.

Documentation of the actual number of hours and frequency of actual

services rendered by the Supervisor serves is an effective tool for monitoring
and evaluating the implementation of the terms and conditions of the service
agreement with the contractor for future decision-making.

We recommended and Management agreed to:

a. for Sydney PCG to provide the:

 necessary summary details pertaining the office space occupancy

using the particular provisions in the Lease Agreement as reference,
including the sharing in utilities, and repairs and maintenance
expenses; and

 Home Office a study or plan on the disposition of the Lease

Agreement prior to termination date (February 13, 2050) that is
most advantageous to the Philippine Government.

We further recommended that since the Post’s occupied office

space called the Philippine Centre, include the possibility of housing the
PDOT and the PTIC in the same location, to save on rental expenses for
the Philippine Government and facilitate coordination with the Sydney
PCG on business matters involving trade and tourism that need
recommendation from the Post.

b. for Ottawa PE to consider imposing a requirement for the Supervisor of

Conti Corporation to record in an applicable document the number of
hours and frequency of actual services rendered to the Chancery and the
Official Residence for the duration of the Agreement, to be verified and
approved by a responsible designated official of the PE which shall form
part of the support document to the monthly/periodic payments to Conti
Corporation, among others.

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Various discrepancies, errors and inconsistencies of the OPCRF

25. Eight FSPs reported that accomplishments were beyond the set targets,
however, five of which were with reservations, such as the targets were set
conservatively, unstructured target setting or lack of attention to historical
data, and unapproved Office Performance Commitment and Review Form
(OPCRF), and at Ottawa PE, various deficiencies of the OPCRF and the
Cumulative Report of Income and Collection (CRIC) were noted, contrary
to the pertinent provisions of Civil Service Commission (CSC) MC No. 06,
series of 2012, thus affecting its credibility and hinders the conduct of
thorough performance evaluation for CYs 2018-2021.
CSC MC No. 06 s. 2012 sets the guidelines on the establishment and
implementation of the Strategic Performance Management System (SPMS) in all
government agencies. The SPMS gives emphasis to the strategic alignment of the
agency’s thrusts with the day-to-day operation of the units and individual
personnel within the organization. It focuses on measures of performance vis-à-
vis the targeted milestone, and provides a credible and verifiable basis for
assessing the organizational outcomes and the collective performance of the
government employees.

An OPCRF is an important reporting and monitoring tool of the

Performance Management System of the Department, which serves not only as a
feedback mechanism but also provides a basis for decision making and future
planning. It shall reflect the office commitments and performance, it likewise
shows variance in the implementation of the plans and programs of the
agency/office as of a given year.

Under the Special Provisions of the DFA in the GAA, the DFA has two
significant programs adopted and implemented by satellite offices in the
Philippines and FSPs all over the world, namely, the Diplomacy Program and the
Consular/ATN Program.

Review of the OPCRF of the FSPs which were subjected to the Special
Audit disclosed that eight FSPs reported that accomplishments were beyond the
set targets, however, five of which were with reservations, such as the targets
were set modestly or conservatively, unstructured target/commitment setting or
lack of attention to historical data, and unapproved OPCR, to wit:

Period
FSPs Result of Performance Evaluation
Reviewed
1. Sydney July 2018 to Notable accomplishments on different areas of
PCG September 2022 diplomacy, consular services and Assistance to
Nationals, notably during the COVID-19
pandemic. The Post was able to perform its

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 Period
FSPs Result of Performance Evaluation
Reviewed
consulate functions/responsibilities as it
exceeded its accomplishments over targets.
2. Canberra CY 2019 to The PE's accomplishments totaling 47,004
PE September 2022 activities under its two major final outputs
(MFOs) from calendar year 2019 to September
30, 2022 exceeded its targets of 36,847 for the
same period by 10,157, or 127.57 percent.
3. Chicago CY 2016 to Its reported accomplishments had always
PCG December 2021 exceeded their targets/commitments as to
quantity from 90 to 100 percent, as to quality
from 90 to 98 percent, and as to timeliness from
93 to 100 percent on foreign policy services,
consular and ATNs, and diplomatic services,
thus, making consular services accessible to the
Filipinos in Chicago.
4. Frankfurt CY 2019 to The Post registered accomplishments of more
PCG September 2022 than 100 percent of its targets for Diplomacy
Program and Consular/ATN Program for the
audit period. as the targets were deemed to have
been set modestly or conservatively.
5. Los CYs 2018-2021 The Post continuously surpasses its target for
Angeles diplomacy program with a distance from 205
percent to as high as 1.234 percent despite the
occurrence of the COVID-10 pandemic,
however, the static or diminishing number of
targets seemed contrary to the continuous
escalation of the accomplishment.
6. Berlin PE CY 2019 to Its yearly accomplishments on the audit period
September 2022 particularly on Consular/ATN Services far
exceeded its targets, suggesting unstructured
target/commitment setting or lack of attention to
historical data, possible measures that could be
adopted by the office to address current
situations, changes in policies and clients’
behavior thereby affecting budget allocation,
available man-hours and most importantly the
quality of service rendered to clients.
7. Moscow CY 2017 to The set target is significantly below the actual
PE September 2022 accomplishment by the Post, however the
OPCRs was not approved by the DFA Secretary
or its authorized representative, casts doubt on
the validity of set targets or success indicators
against the reported actual accomplishments.
8. Milan PE CYs 2018 to Despite the pandemic, accomplishments
2022 exceeded the targets by almost double in
number, and changes in the ways things were
done to suit the situation and be able to provide
the needed services to nationals were already in

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 Period
FSPs Result of Performance Evaluation
Reviewed
place; however, the targets for CY 2022 were
reduced instead of increased. Thus, it could be
said that historical data, client behavior, and the
adjustments made by the office to meet the
needs of the time were not given much
consideration in the setting of the PE’s targets.

Moreover, at Ottawa PE, perusal and comparison of the sampled

accomplishments of the Consular Program as reported in the Annual OPCRFs for
2020 and 2021 as well as the 2022 3rd Quarter disclosed that the reported
quantitative accomplishments therein do not reconcile with the actual reported
quantities of the same consular services rendered, as reported in its CRIC which
support or justifies the reported Service Income.

While the OPCRF is a report on physical accomplishments and the CRIC is

a financial report, nonetheless the reported quantities for consular services
rendered in both reports must reconcile, as they both report the same services
rendered for the same period by the same responsibility center. Moreover, the
quantity of consular services rendered as reported in the CRIC are supported by
actual amounts of collections/revenue, and is a credible counter-check to the
physical accomplishments reported in the OPCRF. These discrepancies between
the two aforementioned reports create doubt on the completeness and accuracy of
the OPCRF, and diminishes its credibility and value for purposes of planning and
decision making.

Moreover, any error in the OPCRF will affect the output or decisions of
many user-offices namely Office of Policy Planning and Coordination (OPPC),
Undersecretary for Civilian Security and Consular Affairs (UCSCA), Office of
the Undersecretary for Migrant Workers Affairs (OUMWA), Office of the
Undersecretary for Multilateral Affairs and International Economic Relations
(OUMAIER), and Office of Public and Cultural Diplomacy (OPCD) who use as
input, the data from the OPCRF.

We recommended and the concerned FSPs agreed to:

a. provide feedback to the Home Office to consider issuing a written

guideline on proactive target-setting, one that is very specific in terms
of determining the targets, for adoption of all FSPs to avoid the
discretionary setting of priority targets;

b. for Los Angeles PCG, instruct the Administrative Officer to review the
processes and procedures in the preparation of the OPCRF for CY
2022 in conformity with the prescribed guidelines and instructions
from the CSC and the Home Office; and

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 c. for Berlin PE, Moscow PE and Milan PCG that moving forward, the
concerned officials structure its target setting and consider the
historical data but also other factors like environmental, governmental
or office thrusts and service modifications to be able to objectively
measure its performance vis-à-vis its programs, activities and projects
(PAPs) that contributes to the attainment of the strategic goals of the
Department through performance monitoring and coaching.

Likewise, we recommended and Ottawa PE agreed that, in order to

improve preparation of OPCRF in succeeding periods to:

a. reconcile the quantitative accomplishments reported in the OPCRF

and the reported quantity of Consular Services rendered per CRIC to
determine the cause(s) of the variance between the two reports; and

b. henceforth, assign a responsible consular official who should be tasked

to review the OPCRF and counter check the same with other
corroborative reports, or with the source documents before the same is
submitted for the approval or signature of the Head of the Post, and to
the OPPC and other users of the Report.

C. Other Areas

Gender and Development (GAD) Program

26. The GAD Plan and Budget (GPB) of DFA for CY 2022 is ₱939,444,235.17,
or 4.49 percent of its total appropriations of ₱20,905,687,000.00, which is
below the required amount of at least five percent of the total appropriation,
thus, not endorsed by the Philippine Commission on Women (PCW) to the
Department of Budget and Management (DBM), and not in accordance with
GAA for Fiscal Year (FY) 2022 and PCW-National Economic and
Development Authority (NEDA)-DBM Joint Circular 2012-01. Moreover,
out of the 159 programmed GAD activities, 153 were implemented during
the year at an actual cost of ₱739,529,715.76 or 78.72 percent of the total
GAD Budget, thus defeating the purpose and intent of the program to pursue
women’s empowerment and address the identified gender issues.

Section 34 of the General Provisions of the GAA for FY 2022 provides that
all agencies of the government shall formulate a GPB designed to address gender
issues within their concerned sectors or mandate and implement the applicable
provisions under RA No. 9710 or the Magna Carta of Women, Convention on the
Elimination of All Forms of Discrimination Against Women, the Beijing Platform
for Action, the Philippine Plan for Gender-Responsive Development (1995-2025)
and the Philippine Development Plan (2017-2022).

112
 It further states that GPB Plan shall be integrated in the regular activities of
the agencies, which shall be at least five percent of their budgets. For this purpose,
activities currently being undertaken by agencies which relate to 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 said agencies.

Moreover, Section 26 of RA No. 9710 provides that the right to information

shall ensure access to information regarding policies on women, including PAPs,
and funding outlays. Likewise, Section 36 (c) thereof requires that, all
government agencies to develop and maintain a GAD database containing gender
statistics and sex-disaggregated data that have been systematically gathered,
regularly updated, and subjected to gender analysis for planning, programming,
and policy formulation.

For CY 2022, the GPB of DFA amounted to ₱939,444,235.17, representing

4.49 percent of the total appropriations of ₱20,905,687,000.00. Said budgeted
amount was below the required five percent of the total appropriation of DFA,
hence, the same was not endorsed by PCW to the DBM.

Inquiry with the GAD Focal Point System (GFPS) revealed that the GPB for
CY 2022 was submitted to PCW on time, however, the same cannot be endorsed
to the DBM due to its non-compliance on the required allocation of five percent
of its total budget for the PAPs for GAD, as required under Section 34 of the
general provisions of GAA for CY 2022. The GFPS emphasized that the major
appropriations of DFA includes funds for Assistance to Nationals (ATN) and
Office of the Consular Affairs (OCA) which could not be attributed to GAD
because expenditures thereto were not yet subject to gender analysis using the
Harmonized Gender and Development Guidelines (HGDG) tool.

Despite not being endorsed to the DBM, the Management has implemented
153 PAPs for GAD at an actual cost of ₱739,529,715.76 out of 159 GAD
programmed activities with a total budget of ₱939,414,235.17.

Moreover, in the Home Office, Milan PCG and Moscow PE, it was noted
that the Management did not integrate in its accomplishment report any existing
database or GAD information on gender statistics and sex-disaggregated data as
required in the Magna Carta for Women (MCW) and reiterated under Section 4.4
of the PCW-NEDA-DBM JC No. 2012-01. The availability of the GAD Website
enables migrant workers and Overseas Filipinos to have access to information
pertaining to women empowerment and gender equality.

While in Sydney PCG, although it maintained GAD database that contains

gender statistics and sex-disaggregated data information, this was not uploaded in

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 the Post GAD website, and the GAD PAPs and accomplishment reports were not
updated in the GAD Website. Without a relevant and updated GAD database, the
FSPs may not be able to identify the gender issues in their jurisdictions for the
necessary gender analysis to plan and conceptualize appropriate GAD PAPs for
its personnel and Filipino women nationals.

Lastly, we commend Agana PCG for complying with RA No. 9710 by

implementing all their GAD related activities and urge the Post to remain
committed towards increasing the awareness of Filipino-Americans and migrant
Filipino workers in the Pacific Islands.

We recommended and Management including concerned FSPs agreed

to instruct the GFPSs to:

a. prepare and submit a GBP that is compliant with the provisions of the
PCW-NEDA-DBM Joint Circular 2012-01 and the pertinent provisions
of the GAA;

b. subject the ATN and those under the OCA programs to gender analysis
using the HGDG tool to determine the extent of the programs’ budget
that will be attributed to GAD;

c. develop and improve the existing GAD database or sex-disaggregated

data for purposes of determining the gender-responsiveness of PAPs to
be attributed; and

d. maintain and update existing GAD website with the necessary

information on its GAD PAPs and ARs to enable Filipino women within
its jurisdiction to have access to the information pertaining to women
empowerment and gender equality.

Programs and Projects Related to Senior Citizens (SCs) and Persons with Disability
(PWDs)

27. The Department was able to implement and integrate its Senior Citizens and
PWDs programs and activities pursuant to Section 35 of the General
Provisions of the GAA of FY 2022.

Section 35 of the FY 2022 GAA provides that all agencies of the

government shall formulate plans, programs and projects intended to address the
concerns of senior citizens and persons with disability, insofar as it relates to their
mandated functions, and integrate the same in their regular activities. Further, it
requires that all government infrastructures and facilities shall provide
architectural or structural features, designs or facilities that will reasonably

114
enhance the mobility, safety and welfare of persons with disability pursuant to
Batas Pambansa Blg. 344 and RA No. 7277, as amended.

The DFA had accomplished the programs and activities related to SCs and
PWDs as follows:

a. Senior Citizens/Retirees
No. of Date
Programs
Participants Implemented
Online Briefing on Pag-IBIG Fund’s February 11,
227
Latest Programs and Benefits 2022
Online GSIS Pre-retirement Seminar 108 May 20, 2022
Enrollment of PhilHealth Lifetime Year round
48
Members (DFA Retirees) activity
Annual Physical Examination (DFA
477 June 3-4, 2022
Personnel and 76 Dependent Parents)
Flu Vaccination of 162 Personnel and 61
223 June 3-4, 2022
Dependents
Pneumococcal Vaccination of 232
288 June 3-4, 2022
Personnel and 56 Dependents

b. PWD-Related Activities
No. of Date
Programs
Participants Implemented
Wellness Talk/Disability Sensitivity 47 July 27, 2022
Wellness Talk/Stress Management for 32 August 2, 2022
Persons with Disabilities especially
Deaf Personnel
Advanced English Language Course for 32 August 9, 2022
Deaf Personnel Part 1
Advanced English Language Course for 32 August 10, 2022
Deaf Personnel Part 2

DFA-UNIO also facilitated the submission of inputs and consolidated the

same for the participation of the Philippines to the different meetings/conferences
regarding the SCs and PWDs such as Open Ended Working Group on Ageing,
Asia-Pacific Intergovernmental Meeting on the Fourth Review and Appraisal of
the Madrid International Plan of Action on Ageing, High Level
Intergovernmental Meeting of the Final Review of Asia and Pacific Decade of
PWDs and the 2022 Inter-Agency Meetings facilitated by National Council on
Disability Affairs (NCDA).

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Compliance with Tax Laws and Proper Deduction and Remittance of Contributions
to Pag-IBIG, PhilHealth and GSIS

28. The DFA complied with the provisions of laws and regulations on the proper
deduction and remittance; however, prior years’ balances were still not
remitted and for reconciliation.

 Compliance with Tax Laws/Regulations

Revenue Memorandum Circular No. 23-2007 dated March 23, 2007, and BIR
Tax Revenue Regulation No. 10-2008 dated July 8, 2008, the DFA has fully
remitted taxes withheld on salaries, benefits and procurement of goods and
services.

However, there was over-remittance of taxes withheld from compensation

amounting to ₱14,493.00 which represents tax refund of an employee who
resigned in 2021. The said tax was not deducted in the December 2022 tax
remittance but was offsetted in the January 2023 remittance.

 Compliance with Section 23 of RA No. 9679, an Act Further Strengthening

the Home Development Mutual Fund (HDMF), and for other Purposes.

 Compliance with RA No. 7875, an Act instituting a National Health Insurance

Program for all Filipinos, withholding and remittance of PhilHealth
Contributions.

For the year, the following total amounts withheld were remitted, to wit:

Total Taxes/
Beginning Remittances Ending
Contribution
Particulars Balance Balance
Withheld
(₱)
BIR 12,813,509.65 582,860,825.67 486,183,509.90 83,863,806.12
Pag-IBIG 1,396,284.52 38,255,776.19 38,236,874.46 1,415,186.25
PhilHealth 2,784,720.86 60,739,132.75 60,596,892.26 2,912,488.97
GSIS 24,976,699.99 470,436,812.22 475,208,999.48 20,204,512.73
Total 29,157,705.3 1,152,278,074.45 1,060,226,276.10 108,395,994.07

The balance as of December 31, 2022 of the Due from BIR was remitted in
January 2023. While for the Due to Pag-IBIG, PhilHealth, and GSIS, only the
unremitted balance of the current year’s deductions/amounts withheld were
remitted, amounting to ₱3,900.00, ₱26,626.39, and ₱3,752,382.63, respectively.
The prior year’s balances remained unremitted and for reconciliation, as of date.

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 We reiterate our recommendation with modification and Management
agreed to instruct the Chief Accountant to:

a. remit regularly the amount withheld from the salaries of the personnel
within the prescribed timeline to prevent penalties and interest; and

b. facilitate the reconciliation with the Pag-IBIG, PhilHealth and GSIS so

that the personnel may be able to reap the benefit they are entitled from
these entities.

Status of Settlement of Audit Suspensions and Disallowances

29. For CY 2022, The Audit Team has no issued Notices of Suspensions (NSs),
Notices of Disallowances (NDs), Notices of Charges (NCs), and Notices of
Settlement of Suspension/Disallowance/Charge (NSSDCs). Below is the details
of NS, ND and NC as of December 31, 2022:

Beginning CY 2022
Subject Balance
Balance Issued NSSDC
NS - - - -
ND $175,849.40 - - $175,849.40
₱1,723,085.13 ₱1,723,085.13
NC ₱1,200,400.00 - - ₱1,200,400.00

Property Insurance

30. The DFA had complied with the insurance of government assets with the
General Insurance Fund (GIF) of the GSIS. Insurance premiums paid by
Home Office in insuring its eligible assets for CY 2022 amounted to
₱2,136,257.77 and the FSPs reported an accumulated insurance premium
of ₱36,677,180.28, except for properties in Doha and Riyadh PEs, with
insurable risks totalling ₱3,402,736.81 and ₱78,143,267.76, respectively,
thus in case of loss due to fire and other fortuitous events, Doha and Riyadh
PEs, will not be indemnified of the value of the properties.

Section 5 of RA No. 656 provides that every government is required to

insure its properties with the GIF against any insurable risk. Section 4 (c) of the
said RA states that property includes vessels, and craft, motor vehicles,
machineries, permanent buildings and properties stored therein, or in buildings
rented by the government or properties in transit.

For the FSPs, Section 344 of DO No. 19A- 95 dated May 01,1995 of DFA
provides, among others, that the Head of Post may exercise judgment as to the

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 necessity and propriety of insuring government-owned properties and make
appropriate recommendations therefor to the Department.

In Doha and Riyadh PE, various properties with insurable risk totalling
₱3,402,736.81 and ₱78,143,267.76, respectively, were not insured against fire
and other risks with a local and financially stable insurance company, thus the
FSPs will not be indemnified of the value of the properties in case of loss due to
fire and other fortuitous events.

We recommended and Management of concerned PEs agreed that

funds be allocated for the acquisition of all-risk insurance policies for the
properties located in Doha and Riyadh PEs from a local and financially
stable insurance company.

31. COVID-19, Marawi Fund, Yolanda Fund and Other Special Funds

a. COVID-19 Funds

Though the Department did not receive funds for the COVID-19, it
continued to respond and implement programs and activities, to combat the
threat of the COVID-19 global pandemic.

The Department incurred COVID-19 related expenditures totalling

₱30,504,633.85, for its prevention sourced out of its MOOE.

Table below presents COVID 19-related expenditures incurred by DFA

during the year:

Available Amount
Program/
Particulars Funds Utilized
Project
Amount (₱)
Personnel RT-PCR Swab Testing 50,000,000.00 20,337,316.99
Safety and Rapid Antigen Test Kits 8,000,00.00 4,438,200.00
Wellness Shuttle Services for Employees 26,377,000.00 3,318,000.00
Food for Vaccination
Volunteers, seminars and others 2,500,000.00 1,940,700.35
Disinfection Services 2,500,000.00 -
HEPA Filter Air Purifiers 16,200,000.00 -
Cold Storage Facility for 1,500,000.00 194,085.01
Vaccines
Safety Seal Lanyard, Face
Masks and Other Medical/Non-
Medical Supplies 3,550,000.00 124,708.00
Other Expenses related to
Vaccination Program 3,950,000.00 151,623.50
Total 114,577,000.00 30,504,633.85

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 b. Yolanda and Marawi Funds

The Department received from the Office of the President on March 15,
2022 the 2nd tranche financial assistance for the 27 DFA employees assigned
in Regions VI and VII affected by Typhoon Yolanda and 7.2 magnitude
earthquake in Bohol.

c. National Task Force to End Local Communist Armed Conflict (NTF-

ELCAC)

The Department did not receive funds from the NTF-ELCAC nor incurred
related expenses during the CY 2022.

32. Disaster Risk-Reduction and Management (DRRM) and Climate Change

Adaptation and Mitigation (CCAM)

As part of the Department’s DRRM and CCAM programs for CY 2022, in

compliance with Section 40 of the GP of FY 2022 GAA, its representatives
attended the following conferences:

Conference Place/Date Accomplishments

DRRM
7th session of the Global Bali, Indonesia / Global platform produced
Platform for Disaster Risk May 23-28, 2022 recommendations of actions for
Reduction 2022 policymakers and actions related to
disaster risk reduction tailored to
the specific needs of each country.
Reported its implementation
progress of the Sendai Framework
and achievement of disaster-related
targets of the 2030 Agenda for
Sustainable Development.
Asia-Pacific Ministerial Brisbane, It accelerate progress on disaster
Conference on Disaster Australia/ risk reduction and tool stock of the
Risk Reduction 2022 September 19-22, Sendai Framework for disaster risk
2022 reduction implementation progress.
CCAM
27th Session of the Egypt/ November The Philippines was able to
Conference of Parties 4-19, 2022 introduce language to decision texts
(COP2&) to the United that will accelerate the support for
Nations Framework developing countries that are
Convention on Climate vulnerable to the impacts of climate
Change (UNFCCC) change.

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 DFA-UNIO coordinated Philippines’ participation which includes providing
substantive support, facilitating inter-agency meetings, letter of credentials of the
delegation, and administrative and logistical support.

Fund Utilization

33. The Department had obligated the amount of ₱22,084,172,330.61 or 90.24

percent out of the total allotments of ₱24,471,937,315.21 while only
₱17,065,474,580.47 or 77.27 percent was disbursed during the year indicating
low fund utilization and agency’s inability to maximize the utilization of the
budget provided which may affect the services to be rendered to the Filipinos
all over the world. Moreover, out of the total current year’s Notice of Cash
Allocation (NCA) of ₱18,586,547,136.00, ₱2,053,497,297.62 or 11 percent,
was reverted back to the National Treasury, due to its non-utilization.

Section 68 of the General Provisions of RA No. 11639 or FY 2022 GAA

provides that all appropriations authorized in this Act shall be available for release
and obligation for the purpose specified, and under the same general and special
provisions applicable thereto, until December 31, 2023, except for personnel
services which shall be available for release, obligation and disbursement until
December 31, 2022.

Furthermore, Item 3.3 of the NBC No. 587, dated provides that Consistent
with Section 68, GPS of the FY 2022 GAA and the President’s Veto Message, all
appropriations authorized under the FY 2022 GAA, shall be available for release,
obligation, and disbursement for the purpose specified, under the same General
and Special Provisions of said GAA applicable thereto, personnel services until
December 31, 2022 and Maintenance and Other Operating Expenses (MOOE) and
Capital Outlays (CO) until December 31, 2023.

The DFA is entrusted with crafting, coordinating and implementing

Philippine foreign policy to advance the interests of the Philippines and the
Filipino people in the world community. Per FY 2022 GAA, the DFA
organizational outcome are (a) strengthen foreign relations to promote national
development and international cooperation; and (b) protect and engaged the
overseas Filipinos and improved consular services.

To carry out its mandate and achieve its organizational outcome, the DFA
was provided with the budget appropriations. Analysis of its budget utilization
based on Statement of Appropriations, Allotments, Obligations, Disbursement and
Balances (SAAODB) for FY 2022 Current and Continuing Appropriations,
inclusive of Automatic Appropriations and Special Purpose Fund, is shown in the
next page.

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 Obligati Disburse
Expenses Adjusted Obligations Disbursements on Rate ment Rate
Class Allotments (%) (%)
a b c d=b/a e=c/b
Current Appropriations
PS 9,602,154,319.00 9,497,273,662.76 8,814,872,249.09 98.91 92.81
MOOE 8,620,496,825.00 7,671,915,132.61 4,680,827,355.14 89.00 61.01
FinEx 37,548,000.00 36,864,122.62 30,538,129.95 98.18 82.84
CO 931,922,000.00 849,900,380.98 313,932,905.37 91.20 36.94
Subtotal 19,192,121,144.00 849,900,380.98 13,840,170,639.55 94.08 76.65
Continuing Appropriations
MOOE 4,350,036,394.74 3,373,891,207.80 3,059,598,607.43 77.56 90.68
FinEx 15,457,284.94 14,769,197.33 14,685,627.25 95.55 99.43
CO 914,322,491.53 639,558,626.51 151,019,706.24 69.95 23.61
Subtotal 5,279,816,171.21 4,028,219,031.64 3,225,303,940.92 76.29 80.07
Grand Total 24,471,937,315.21 22,084,172,330.61 17,065,474,580.47 90.24 77.27

The table above shows that out of the total allotment of ₱24,471,937,315.21,
only ₱22,084,172,330.61 or 90.24 percent was obligated, and only
₱17,065,474,580.47 or 77.27 percent was disbursed. As deduced from the table
above, the primary reason for the low utilization of the total allotment is the
significantly low disbursements of the Capital Outlay which is only 36.94 and
23.61 percent from the current and continuing appropriations, respectively.

As stated in the Notes to FS for CY 2022, unobligated Allotments for

Capital Outlay was due to a) failed biddings for repairs and renovation projects of
COs; b) late submissions of new project proposals; and c) failure to procure motor
vehicles for eight FSPs due to the price increase. The unobligated allotments of
Continuing Appropriations of ₱1,251,597,139.58, or the difference between the
adjusted allotment for continuing appropriation of ₱5,279,816,171.21 and the
obligated appropriation of ₱4,028,219,031.64, had already lapsed. This denotes
that the program/projects supposed to be funded by the CY 2021 budget may have
not been fully implemented even up to the end of the current year.

Moreover, for CY 2022, DFA received a total cash allocation of

₱18,586,547,136.00 and reverted unused NCA totaling ₱2,053,497,297.62 or
11.05 percent of the NCA received to the National Treasury, to wit:

Received NCA NCA Utilized Reverted

Period
Amount (₱) Rate (%) Amount (₱) Rate (%)
1st Qtr 4,182,427,000.00 4,182,426,996.29 100 3.71 -
2nd Qtr 3,683,335,000.00 3,683,333,906.26 100 1,093.74 -
3rd Qtr 6,217,994,283.00 6,217,994,255.20 100 27.80 -
4th Qtr 4,502,790,853.00 2,449,294,680.63 54.40 2,053,496,172.37 45.60
Total 18,586,547,136.00 16,533,049,838.38 88.95 2,053,497,297.62 11.05

The agency low fund utilization rate of the MOOE and CO suggests that the
Department lacks proper procurement planning and reflects its limited capability

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to implement its PAPs which can be a hindrance in achieving its mandate for the
advancement of the interest of the Philippines and the Filipino people in the world.

We recommended and Management agreed to:

a. establish measures to ensure timely implementation of

projects/programs and utilization of funds within the year they were
budgeted;

b. facilitate proper planning and implement early procurement in order

to increase the utilization of capital outlay, and prepare alternative
PAPs in case of unforeseen events particularly those in the FSPs; and

c. strictly monitor the utilization of budget appropriations and the

implementation of the agency’s program/projects/activities for each
budget year to prevent the lapsing and reversion of unused cash
allocations.

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