PART II

OBSERVATIONS AND RECOMMENDATIONS

1. The results of the current year’s audit were all communicated to the TESDA’s
concerned officials through the issuance of audit observation memoranda (AOMs) for
comments and during exit conference conducted in September 29, 2009. Their
comments and justifications, were incorporated in this report, where appropriate.

2. We are pleased to note the positive responses to our prior years’ observations and
immediate implementation of our audit recommendations, as follows:

 Secretary Syjuco issued TESDA Order No. 325 Series of 2009 dated July
30, 2009 creating an investigating team on the Audit Observation
Memorandum Nos. 2009-17 and 2009-011 related to findings on non-
utilization of equipment and overpricing of procurement of equipment
under the TESD Project.
 A TESDA Board Resolution had been promulgated identifying the
framework for the utilization of the interest of the TESDA Development
Fund(TDF) investment in Treasury Retail Bond.
 TESDA thru OCSA had made representation with PNB and other banks
to close its dormant accounts with said banks and depositing the same to
the Bureau of Treasury. Under OR No. 1497123 the amount of
P469,509.69 was returned by PNB to TESDA closing its account with
the Bank. TESDA deposited the same amount to the Bureau of Treasury
on July 21, 2009.
 TESDA Office Order No. 231 and 232 S. 2009 both dated May 18, 2009
were issued constituting the Inventory Committee to conduct inventory
of all its PPE in the Central Offices and in the Regional Offices.
 The Office of the Property Supply Division had started submitting the
copies of served PO/JO although the submission is not within five days
from approval of the PO/JO.
 Secretary Augusto Syjuco and Director Gabriel Genaro Bordado had
refunded the amounts of P59,443.08 and P56,602.54, under OR Nos.
174118 and 174119, respectively both dated July 22, 2009, to partially
settle their unliquidated cash advances.
 TESDA thru OCSA had prepared constructive receipts of direct
payments made to various suppliers by fund source using the JEV as
basis for the DBM to release the Notice of Non Cash Availment as
authority to book up the procured equipment under the TESDP and
CEMMTP.
 TESDA thru OCSA had secured the copy of deed of donation for the
seven vehicles donated to TESDA by various donors (OVP,

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 DOLE,NCSB,PMS) as basis to book-up/record the cost of donation in its
books of accounts.
 TESDA thru OCSA and Legal Unit have started to work for the special
patent of land presently being occupied by TESDA. It had coordinated
with various government offices, the Solicitor General, DENR, PNP,
AFP, DPWH, DOT, DOH and Dep-ED. On May 19, the Legal Unit had
forwarded the White and Blue Print of the Conversion Plan of Lot 8064,
McDam 590-DTaguig Cadastral Mapping as approved by the DENR to
the Office of the Solicitor General, through the Records Section,
TESDA.
3. Presented in the succeeding paragraphs are the audit observations and audit
recommendations for CY 2008:

A. Program/Project Evaluation

Technical Education and Skills Development Project (TESDP)

4. Loss amounting to P34,613,811.37 was manifested by the outcome of the

recanvass/ inspection and purchases of the same items made on LEPTES and
NDFTES tools and equipment. Likewise, management’s non-submission of copies of
the bidding and other related documents, hampered the timely review and evaluation
of the contract with the end in view of generating timely and relevant audit results.
4.1 The TESDP is a project funded by the ADB under Loan Number 1750-PHI, Nordic
Development Fund, OPEC fund, Danish International Development Agency and the
Government of the Philippines for a total project cost of US$70.00M or P280Million.

4.2 It is a five-year project which started in November 2000 and was expected to be
completed in June 2006. However, the project was extended up to December 31, 2007
and its closing date was adjusted to June 30, 2008.

4.3 The TESDP aims to (a) strengthen the capacity of TESDA, (b) devolve its training
functions to Local Government Units (LGUs) or Non-Government Organizations
(NGOs), (c) strengthen the capacity of private providers of TESD, and (d) enhance
equity in skills acquisition.

4.4 One of the objectives of the TESDP is to improve the quality and relevance of
TESD System through the development, provision and implementation of institutional
capacity building through: (a) curriculum and courseware development, and (b)
provision of tools and equipment in priority skills areas. The target is to equip the
technical schools and training centers with modern equipment and teaching tools and
materials.

4.5 In pursuance of its objectives, TESDP undertook the procurement of testing and
training equipment under thirteen separate contracts totaling P1,256,057,256.23. This
amount does not include the contracts ADBTES-01 to 03 funded out of the ADB loan.

35
Unjustified failure of concerned TESDA officials to furnish for review copies of
documents supporting contracts covering the TESDP purchases

4.6 For a systematic and efficient review of perfected contracts with the end in view
of generating timely and relevant audit results, the Commission on Audit (COA) issued
COA Circulars No. 76-34 and 87-278 requiring audited agencies to furnish the Auditor
with a copy of perfected contracts and purchase orders within five (5) days upon
approval together with the supporting documents for review.

4.7 To facilitate the review and evaluation process, particularly on the technical
aspects, COA issued Memorandum No. 91-704 and later Memorandum No. 2005-027
defining the documentary and information requirements and providing the checklists for
all types of technical evaluation.

4.8 And then again on February 12, 2009, COA issued Circular No. 2009-001
restating with amendment COA Circular 87-278 and COA Memorandum No. 2005-027.
This latest issuance was on account of prevalent observation that the prescribed
submission by management of copies of perfected contracts and supporting documents
within the prescribed period have not been complied with and is, at times, lacking in
basic supporting documents.

4.9 Needless to state, the submission of the aforementioned documents is without

need of demand by the Auditor.

4.10 For the procurements made under TESDP, the Team observed that only copies of
the contracts were furnished the Auditor’s Office. Accordingly, in a series of letters,
submission of all the bidding and supporting documents needed for the proper review
and evaluation of the TESDP contracts was requested by the Team from the concerned
TESDA officials.

4.11 Instead of the requested documents, the Team received a letter from the Director
General of TESDA informing that all requests for submission of documents, inquiries
and information should only be addressed to his Office, otherwise, all documents would
be considered unofficially sourced.

4.12 While it is incumbent upon the Management to submit the requested documents
without need of demand, the Team, nevertheless acceded to the Director General’s
requirement and re-sent all the earlier letter-requests to his office. Up to this writing,
however, there had been no substantial compliance to our requests.

4.13 TESDA Management’s non-submission of copies of the required documents

pertaining to the TESDP procurement can only be construed as an overt act to limit the
scope of the audit to be done.

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4.14 In view of the aforecited limitation, the Team decided instead to validate the
delivery of the procured items. This change in tact was decided after the Team noted the
piling up of training tools, supplies and equipment on the grounds of TESDA-CO and
again, no copies of the procurement documents were furnished the Auditor’s office
despite the Team’s request.

4.15 From November 2008 to January 2009, the Team in coordination with its regional
counterparts in TESDA RO I, III, IV, V, VI, VII and XIII, jointly inspected deliveries
made under LEPTES 2-3 and NDFTES 2-3. The Team was unable to conduct inspection
of deliveries under the other contracts because of travel restrictions. Requests were
made for the Audit Teams at the regional offices to conduct the inspection. However, no
substantial feedback was received.

4.16 The results of the inspection by the Team on the aforesaid date as well as the
result of supplemental procedures done are discussed in the following paragraphs.

Defective/non-functional training tools and equipment - P 2,800,065.26

4.17 The Team’s inspection disclosed that some items delivered under LEPTES-02,
LEPTES-03 and NDFTES-03 were either defective or with missing parts thus cannot be
operated. The total cost of the defective and/or tools and equipment with missing parts
is P 2,901,171.81. Please see Annex 1 for details.

Defective/non-functional
various training tools and equipment

Package No. Amount

Defective
LEPTES-02 P 557,264.43
LEPTES-02 818,157.28
NDFTES-03 1,342,302.47
Sub-total 2,717,724.18
Non-functional
LEPTES-02 82,341.08
Total P 2,800,065.26

Non-installation, commissioning, testing and training conducted - P 6,844,717.02

4.18 While the contract provided for the installation, commissioning and testing by
the supplier of the tools and equipment delivered as well as the training of the end-
users, officials of the recipient schools and training centers claimed that these were not
done by the supplier hence the units were not being used.

4.19 The total cost of the tools and equipments delivered to various schools and
training centers that were not properly installed, commissioned and tested by the
supplier is P6,844,717.02. Please see Annex 2 for details.

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 Package No. Amount
LEPTES-02 P 494,533.23
LEPTES-02 964,096.93
NDFTES-03 5,386,088.85
Total P 6,844,717.02

No manuals provided or the manuals have no English translation - P 6,109,726.01

4.20 Some training tools and equipment costing P 6,381,074.01 were not being used
because there are no manuals or if manuals are available, these are in Chinese and there
are no English translations. Thus, the concerned officials and their staffs are afraid to
operate the equipments for fear of damaging the same. Details as follows:

No Manual/Manual in Chinese character:

Name of School/
RTC/PTC Items Delivered Amount
LEPTES-02
Davao Norte Lot 2b-Agri-fishery- Animal Production-(Semen P 24,738.81
NAS Storage Cabinet & Debeaker
LEPTES-03
Leon Ganzon PC Lot 1a-Automotive-(Multimeter) 3,690.56

Bulusan NVTS Lot 1d-Building and Wiring Installation- 23,461.54

(Multimeter & Fire Alarm System
NDFTES-03
Sorsogon NAS; Lot 5b-Agri-fishery-Crop Production Technician- 122,591.91
(Flash Drier)
Simeon SVTC; Lot 6-Processed Food & Beverage-various 5,935,243.75
Leon Ganzon PC; equipment
Suralla NAS

P 6,109,726.01

Delivered equipments are for commercial use/insufficient power supply –

P1,563,381.32

4.21 The inspection conducted by the Team revealed that some training equipment
costing P 1,563,381.32 are either for commercial use hence not suitable to the training
requirements of the recipient training centers/schools or requires three phase electrical
connection hence, were not being use because existing power supply is for a single
phase, not sufficient to operate the same or if they are operated, it would be very costly
and would consume a major portion of their budget for maintenance and other operating
expenses (MOOE).

4.22 For example, in one of the agricultural schools, the training staff informed that
all the equipments delivered are for commercial use or for large scale production, such

38
as cooker/mixer, filling machine, etc. However, for training purposes, the trainees can
only afford to process say a kilo of meat for processing sausage or longganiza.

Schedule of Training Equipment Which Are for Commercial Use/Insufficient

Power Supply

Name of School/ Items Delivered Amount

RTC/PTC
For commercial Use
Davao NAS LEPTES 02-Lot 2b-Agri-fishery-Animal P 41,231.32
Production- (ear notcher and egg grader
machine)
Leon Ganzon NDFTES-03-Lot 6-Processed Food and 946,400.00
Polytechnic Beverage-(Cooker/mixer and filter plate
Cpllege press)
P 987,631.32
Insufficient Power Supply 575,750.00
Total P 1,563,381.32

Delivered items not in accordance with specifications-P4,691,080.03

4.23 Moreover, delivered equipment costing P4,691,080.03 were not being used
because these were not in accordance with specifications but nonetheless accepted by
the recipient schools/training centers (details in Annex 3).

Package No. Recipient Region Amount

LEPTES-02 RI, IVB P 559,413.85
LEPTES-02 RI, IVA, IVB, V,VI, VII, XI, XII 2,719,029.98
NDFTES-03 RI, IVB, V 1,412,636.20
Total P 4,691,080.03

No training courses offered for the delivered equipment- P13,772,820.57

4.24 Furthermore, inspection revealed that of the unutilized training tools and
equipment, P13,772,820.57 were not used because the training courses for which the
tools and equipment were procured are not offered, there are no enrollees in their
respective DAC. Details are shown below:

Training Centers/Schools where training courses are not available/offered

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 Number Cost per
Name of Training of TC/ beneficiary Amount
Trade Area Center/School Schools TC/School
LEPTES-02
Lot 1a-Baking and Pastry RTC-Iloilo; PTC-Jagna,
Carmen & Mintal; Surigao 5 P 405,279.51 P 2,026,397.55
Norte CAT
Lot 2a-Agri-fishery-
Agricultural Crops RTC-Iloilo 1 352,134.92 352,134.92

Lot 2b-Agri-fishery-
Animal Production Lazi NAS 1 307,269.97 307,269.97

Lot 3a-ICT-PC Operations PTC-Lingayen; PTC- 2 1,146,554.89 2,293,109.78

Malilipot
Lot 3b-ICT-Computer PTC-Lingayen; PTC-Jagna 2 782,839.31 1,565,678.62
Hardware Servicing
Lot 4-Health-Caregiver Pangasinan SAT; Camrines 48
Sur ISMS; 3 9,770.85 1,469,312.55
Leon Ganzon PC
Lot 5-Criminology PTC-Lingayen; Cavite;
Bingangonan; Jagna & 8 300,303.63 2,402,429.04
Mintal QNAS; Sorsogon
NAS; RTC-Iloilo
Sub-total 10,416,332.43
LEPTES-03
Lot 1a-Automotive PTC-Tubigon & Bilar 2 242,576.30 485,152.60

Lot 1c-Welding Lazi NAS; Surigao NCAT 2 433,758.95 887,517.90

Lot 1e-RAC NC II PTC-Inabanga 1 759,539.06 759,539.06
Lot 2b-Tourism- PTC-Bilar; Wangan NAS; 3 408,092.86 1,224,278.58
Housekeeping Surigao NCAT
Sub-Total 3,356,488.14
Total P13,772,820.57

Delivered items unutilized and still in original packaging – P70,662,310.61

4.25 Also noted during the inspection were delivered tools and equipment worth
P61,147,583.93 simply unutilized, lying around idle and P9,514,726.68 are still in their
original packaging. One of the main reasons cited by the concerned centers is that they
already have these same tools and equipments. In other words, the new deliveries were
not really necessary.

4.26 These equipment and training tools or supplies are gathering dust, some were
eaten by mice and are in disarray in stock rooms resulting in wastage of scarce
government resources. Below is the summary per lot of various training tools and
equipment unutilized and still in boxes (details in Annex 4).

Summary of unutilized & still in boxes various tools & equipment per Lot
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 Lot Number Recipient Region Unutilized Still in boxes
LEPTES-02
Lot 1a-Baking & Pastry P 4,393,511.20 -
RI,IVB,V,VII,XI,XIII
Lot 1b-Bartending RXI 121,734.02 -
Lot 2a – Agri-fishery- RV,VI,VII,XI,XII,XIII 2,222,942.85 -
Agricultural Crops
Lot 2b– Agri-fishery- RV,VI,VII,XI,XII,XIII 899,041.21 P 107,201.49
Animal Production
Lot 3b- ICT –PC RI,IVA.V,VI.VII 30,000.00 3,645,882.43
Operations
Lot 3b- ICT Computer RI,IVA,V,VI,VII,XI 3,221,185.64 940,014.29
Hardware
Lot 4 – Health- Caregiver RI,IVB,V,VI,VII,XI,XIII 2,935,955.88 733,745.05
Lot 5 – Criminology RI,IVA,V,VI,VII,XI 1,702,478.38 300,303.63
Sub-total 15,527,849.16 5,727,126.89
LEPTES-03
Lot 1a- Automotive RI,IVA,V,,VII,XI,XII,XIII 1,204,251.28 485,152.60
Lot 1b- Carpentry RIVB,V,VI,VII 1,153,399.99 --
Lot 1c- Welding RI,V,VI,VII,XI,XII,XIII 3,480,074.66 1,740,793.38
Lot 1d- Building & Wiring RI,IVA,IVB,V,VI,VII 1,637,423.06 250192.31
Lot 1e – RAC-NC II RVI,VII,XI 1,326,890.59 -
Lot 2a- Commercial RI,VI,VII,XI 4,731,81.51 -
Cooking
Lot 2b- Housekeeping RI,V,VI,VII,XI,XII,XIII 1,922,035.73 56,671.43
Lot 2c- Food and RI,IVB,V,VI,VII 747,88.41 -
Beverages
Sub-total 11,944,925.21 2,532,809.72
NDFTES-03
Lot 1-Tourism-H & R RI 1,407,693.41 -
Lot 2- Automotive RIVA, IVB 1,931,729.86 -
Lot 4 - HVAC RIVA, IVB 2,872,144.07 122,144.87
Lot 5a- Agri-fishery- RIVB, XI 1,785,162.13 919,542.25
Aquaculture
Lot 5a- Agri-fishery-Crop RI, V 916,080.88 213,102.95
Production Tech.
Lot 6-Food Processing RIV.VI,VII,XI,XII 24,781,999.21 -
Sub-total 33,674,809.56 1,254,790.07
Total P61,147,583.93 P9,514,726.68

Some of the delivered tools and equipment were overpriced- P 34,613,811.37

4.27 In two supervised schools inspected, one item in each school carried price tags
which when compared to the indicated purchase price per list of awarded items were
significantly lower denoting probable overpricing.

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4.28 The matter was brought to the attention of the personnel in-charge who confirmed
that compared to purchases they have made for the same items, the prices of the
delivered items were indeed very high.

4.29 The Team shared the same observation. A lot of the items inspected were items
which are commonly used in the home or in similar scale enterprises. The Team took
note of the brand, model and specifications of the items perceived to be of questionable
costing and made their own canvass delivered by the supplier to the different training
centers and supervised schools.

4.30 Indeed, various canvasses made for similar items revealed big price differences.
As noted, the price difference ranged from a low 13 percent to an exorbitantly high
42,732 percent. Please see Annex 5 for details of overpriced amount per training
tools/equipment items per column 3 below:

Summary of overpriced LEPTES & NDFTES tools and equipment

Recipient Overpriced No. of Total Overprice Total Total

Region Amount per TTEs & Amount per No. of Overpriced
Training Inspected Inspection Recipie Amount per
Tools/Eqpt. nt total
(TTEs) TTEs beneficiaries
(Col. 1) (Col. 2) (Col. 3) (Col. 4) (Col. 5) (Col. 6) (Col. 6)
Per Sched 1
LEPTES-02
Lot 1a-Baking & RI.IVB.V,VI P129,679.95 14 P1,815,519.30 38 P 4,927,838.10
Pastry I,XI.XIII
Lot 1b- RXI 25,086.80 2 50,173.60 2 50,173.60
Bartending
Lot 3b- ICT RI,IVA&B,V 20,153.12 12 241,837.44 38 765,818.56
Computer ,VI,VII,IX
Hardware
Lot 4 – Health- RI,IVB,V,VI 31,548.84 11 347,037.24 26 820,269.84
Caregiver ,VII,XI,XIII
Sub-total 2,454,567.58 6,564,100.10
LEPTES-03
Lot 1a- RI,IVA,VII, 3,227.23 10 32,272.30 42 135,543.66
Automotive XI,XII.XIII
Lot 1b- RIVB,VI,VI 22,806.71 5 114,033.55 11 250,873.81
Carpentry I
Lot 1c- Welding RI,IV,V,VI, 14,735.73 18 265,243.14 43 663,107.85

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 Recipient Overpriced No. of Total Overprice Total Total
Region Amount per TTEs & Amount per No. of Overpriced
Training Inspected Inspection Recipie Amount per
Tools/Eqpt. nt total
(TTEs) TTEs beneficiaries
(Col. 1) (Col. 2) (Col. 3) (Col. 4) (Col. 5) (Col. 6) (Col. 6)
VII,XI,XII,
XIII
Lot 1d- Building RI,IVA&B,V 5,386.62 14 75,412.68 45 242,397.90
& Wiring ,VI,XIII
Lot 2a- RI,VI,VII,X 23,824.48 4 95,297.92 14 333,542.72
Commercial I
Cooking
Lot 2b- RI,V,VI,VII, 15,508.36 10 155,083.60 25 387,709.00
Housekeeping XI,XII,XIII
Lot 2c- Food and RI,IVB,VI, 7,397.44 6 44,384.64 12 88,769.28
Beverages VII
Sub-total 781,727.83 2,101,944.22
NDFTES-03
Lot 1-Tourism- RI 150,923.78 1 150,923.78 1 150,923.78
H&R
Lot 5a- Agri- RI,V 12,141.25 2 24,828.50 3 36,423.75
fishery-
Aquaculture
Lot 6-Food RIVB,VI,VI 322,366.00 6 1,934,196.00 10 3,223,660.00
Processing I,XI,XII
Sub-total 2,109,948.28 3,411,007.53
Per Schedule
2
NDFTES-03
Lot 5a- Agri- RI,V 431,805.23 2 863,610.46 3 1,295,415.69
fishery-
Aquaculture
Lot 6-Food RIVB,VI,VI 4,733,992.87 6 28,403,957.22 10 47,339,928.70
Processing I,XI,XII
Sub-total P 29,267,567.68 P 48,635,344.39
TOTALS P 34,613,811.37 P 60,712,396.24

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Same items delivered for TESDP only different contracts were differently named and
priced differently

4.31 Also noted during the inspection were deliveries of the same item under the
different contracts within the TESDP. While the delivered items are exactly the same,
these were differently named and differently priced (details in Annex 6).

Earlier purchase of the same items at a much higher foreign exchange conversion rate
is comparatively lower than the later purchase

4.32 When the Team asked for copies of the detailed cost of items awarded under the
different contract packages, the Team noted that same tools and equipment purchased
two years earlier at a much higher foreign exchange conversion rate were comparative
lower than the later purchase of the same item but a much lower exchange rate.

4.33 But it was also noted that compared to the Team’s canvass of items’ current
prices, the earlier purchases were likewise much higher that the canvassed price
denoting that there could be also be overpricing in the other purchases which the Team
was not able to inspect.

Failure of the concerned TESDA officials to exercise due diligence in safeguarding the
funds of the agency

4.34 The foregoing discussions when viewed in the light of Management’s continued
refusal to furnish Team with copies of the bidding and other document supporting the
procurement of the different tools and equipment for the TESDP highlights a deliberate
attempt to cover up deficiencies and lapses in the procurement process.

4.35 The management commented that even before the issuance of the Audit
Observation Memorandum, the management had already acted on the reported
deficiencies by the field officers and in fact did not release for final payment an amount
of P39,804,280.00 unless the deficiencies noted by the field officers are rectified and
the undelivered items delivered. They also reminded the Supplier that the amount of
liquidated damage will be imposed and will be deducted on whatever remaining claim
they have with the agency until they have completed the delivery. An investigation team
was also formed to look into the reported overpricing by the audit team.

4.36 The Audit Team however, observed that the management failed to validate the
reported deficiencies by the field officers. Considering that the reported flaws are
already red flags, Agency’s people in the Main Office should have validated the said
report and could have come up with more concrete remedy in addressing the
deficiencies noted.

4.37 Recommendations:

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  Considering that TESDA has already created an independent body to
look into the matter, we enjoin Management to expedite the
investigation to determine the appropriate action to be undertaken to
resolve the issues raised and to immediately institute control mechanism
within the procurement system to preclude the recurrence of the same
issues.

Procurement of additional equipment despite non-utilization of similar items purchased

earlier

5. Provision of training tools and equipment to TESDA training centers are done
without due regard to the capability or readiness of the recipient/beneficiaries to
undertake the training courses for which these tools and equipment are needed
thereby resulting in the non-utilization or underutilization of such tools and
equipment.

5.1 By awarding the contracts for the supply of the various tools and equipment
funded out of the TESDP ADB Loan 1750 PHI on a per item basis instead of per lot,
TESDA was able to save US$3.33 Million or approximately P146.463Million. Instead
of returning it to the Asian Development Bank (ADB), TESDA, with the approval of
NEDA and ADB, used the amount to procure additional training tools and equipment.

5.2 Accordingly, in October 2008, TESDA entered into contract for the supply of the
various tools and equipment with the following suppliers:

Contract No. Supplier Amount

ADBTES-07 State Alliance Enterprise, Inc. P 19,423,339.80
V.G. Roxas, Inc. 18,386,238.10
Xiamen Huamin Import & Export Co., Ltd. 71,979,815.91
Sub-total P 109,789,393.81
ADBTES-07-A ACMI Office Systems, Phil., Inc. P 20,528,966.40
ACMI Office Systems, Phil., Inc 3,244,800.00
Sub-total P 23,773,766.40
ADBTES-07-B ACMI Office Systems, Phil., Inc P 3,162,599.29
Yale Hardware Corp. 1,013,562.00
Super Tank Int’l 821,700.00
Sub-total P 4,997,861.29
ADBTES-07-C State Alliance Enterprise, Inc. 1,074,938.16
V.G. Roxas, Inc. 825,153.95
Xiamen Huamin Import & Export Co., Ltd 1,011,649.88
ACMI Office Systems, Phil., Inc 4,990,078.36
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 Contract No. Supplier Amount
Sub-total P 7,901,820.35
Grand Total P 146,462,841.71

5.3 The tools and equipment purchased under the above contracts which were
delivered in December 2008, are intended for use under the following Distinctive Areas
of Competence (DAC):

1. Building and Wiring Installation

2. Painting
3. Masonry
4. Plumbing
5. Heavy Equipment Servicing
6. Carpentry
7. Screed Operation
8. Reinforced Steel Bar Installation
9. Scaffolding Erection
10. Tile Setting

5.4 The recipients of the additional tools and equipment purchased are the following
CENTEX/Training Institution/Provincial Training Center:

1. Aparri School of Arts and Trades (ASAT)

2. Southern Isabela College of Arts and Trades (SICAT)
3. Jacobo Z. Gonzales Memorial School of Arts and Trades (JZGMSAT)
4. Puerto Princesa School of Arts and Trades (PPSAT)
5. Dumalag Vocational Technical School (DVTS)
6. Balicuatro College of Arts and Trades (BCAT)
7. Kabasalan Institute of Technology (KIT)
8. Cagayan de Oro (Bugo) School of Arts and Trades (COBSAT)
9. Agusan del Sur Sur School of Arts and Trades (ASSAT)
10. New Lucena Polytechnic College (NLPC)
11. Leon Guanzon Polytechnic College (LGPC)
12. PTC-Libertad

5.5 Based on information received from the Regional Audit Team Leaders, the most
common trainings conducted were on (a) Masonry, (b) Plumbing, (c) Carpentry and (d)
Building Wiring Installation. However, courses on (a) Painting, (b) Screed Operation,
(c) Scaffold Erection, (d) Heavy Equipment Servicing, (e) Tile Setting and (f)
Reinforcement Steel Bar Installation were not being conducted due to various reasons
such as:

 The courses for which the tools and equipment are to be used are not being
offered by the recipient;
 The courses were offered only in 2009 (COBSAT & BCAT)

46
  None of the courses is being offered (NLPC)
 The training center has yet to be established (PTC-Libertad)
 Some training courses have yet to be registered with the UPTRAS

5.6 Thus, until the new envisioned training courses are offered, the procured training
tools and equipment may again remain unutilized similar to some of those procured
under the earlier under this Project.

5.7 We recommended that Management:

 Require the TESDA office concerned to facilitate the processing of the

application for registration of the new courses to allow the timely
offering of these courses and thus optimize the use of the procured
training tools and equipment.

 Require the officials concerned to expedite the establishment of PTC

Libertad.

 Assess the capability of NLPC to undertake the training programs for

which the delivered equipment are intended, or else, consider
transferring the equipment to other training institutions ready to
undertake the said training courses.

 For future projects, ensure the readiness of the recipient training

centers to undertake the trainings for which tools and equipments are
provided to optimize the use of resources and to avoid wastage or
underutilization of available resources.

E-TESDA Portal Prepaid Card-Enabled Portal 2007-2008 Contracts-P36.34M

6. The award of the contract to Prime Logic Corp.(PLC) for the customization of
the e-TESDA Portal was highly irregular because PLC was not eligible to bid, and
the documents needed for the technical review were not submitted both contrary to
Sec 24.7, IRR-A, RA 9184 and COA Circular No. 87-278 dated November 12, 1987.
Moreover, the contracts amounting P33.272M were paid despite the failure to deliver
the prepaid cards amounting P2M and the development of the corresponding
payment management system, and the fact that the portal was not operating as a
virtual community of TVET providers and learners, contrary to the purpose of the
project, and despite further that same was not duly funded contrary to Sec 85-87 PD
1445. All these resulted in giving undue benefits or advantage to Prime Logic Corp.,
sanctioned under Sec.3 (e) or (g) of RA 3019 or the Anti-Graft and Corrupt Practices
Act.

6.1 The Project Integrated TVET Management thru the E-TESDA Portal seeks to:

 broaden access and opportunities to quality TVET by improving

47
 service delivery and providing training to more students and trainees
through a technology driven and technology managed-learning
environment;

 increase the absorptive capacity of TESDA Training Institutions to

offer TVET programs and services;

 effect cost effectiveness of the course offerings of TESDA by

apportioning the knowledge acquisition component of its training
programs into a managed internet-based learning system;

 improve service delivery of TVET programs to trainees and learners

of the TESDA by providing a technology-driven and managed
learning environment;

 improve coordination of TVET schemes offered by public and

private providers by establishing a virtual community of TVET
providers and learners;

 establish data bases/registries of various users, learners and certified

manpower as well as TVET programs implemented by the public and
private TVET providers for policy development, planning and
program development;

 provide integration of prepaid credit card system for access to web-

based courseware;

 establish partnerships with eligible third-party content providers, on

line users/students, fine tuning of users functionalities, usage tracking
system, user registries/databases, chat and message facilities, among
others.

6.2 The total budget for this project was P30 million and is allocated among the
different program components as follows:
Component Budget
Project concept, customization, training and P 19,300,000.00
documentation
Internet connectivity 1,800,000.00
Integration of content 3,300,000.00
Provision of pre-paid cards 2,000,000.00
Tax 3,600,000.00
Total P30,000,000.00

6.3 Documents to determine eligibility of winning bidder were not submitted contrary
to Sec. 24.7,IRR-A, RA 9184 whereas the submitted bid documents were not initialed
by all BAC members present during the opening of bid on August 13, 2007.

48
The copy of the business permit and license dated July 11, 2007 is marked “New”
whereas the expertise required pursuant to the Term of Reference (TOR) is for five
years.

 On Quality of Staff (Per Agency’s Technical Evaluation report dated August,

2007
o No copy of certificate/diploma was provided, number of hours of
training of technical staff was not included;

o Project organization diagram was not provided;

o Only the staff to be assigned was presented.

 On experience and capability of consultants

o Not all inclusive dates of employment of each staff were indicated;

o All listed projects were with private companies, no government projects,

as required, however the certifications issued showing contracts with
these private companies were vaguely stated where no contract periods
are stated and contract amounts are confidential.

o Per telephone call Mr. Francis Javier, President, Protech Enterprise, one
of those who issued certification, the contract of PLC with his company
is for the procurement of hardware for PLC’s portal project, hence the
contract is not related to the E-TESDA Portal.

o Likewise, Mr. Alan F. Boribor, President, Infotech executed a

certification that PLC is the technical developer and educational web
portal provider of Infotech Institute of Arts and Sciences in the amount
of P6M for a period of two years. However, when asked for details such
as, when was the contract undertaken, what is the coverage of the
contract, copies of the contract, Mr. Bolibor could not remember about
these details and anything about the project. It appears he was just
requested to sign the certification.

o Highest project cost is only P3.5M. Per RA 9184, past projects should be
at least 20 percent of the ABC of this project, per Technical Evaluation
Report. However, PLC was allowed to submit a new listing, two
contracts from Infotech and St John Bosco Institute of Arts and Sciences
were in the amount of P6M each (20 percent of ABC, P30M),
nevertheless said contracts could not be verified for reason already stated
above and St. John could not be reached in the landline and mobile
phone numbers indicated therein. Still there is no contract with
government agencies.

49
o There is no list of equipment owned/leased provided;

o Sec 24.7, IRR-A, RA 9184, provides, “the determination of eligibility

shall be based on the submission of the aforesaid documents.”

Sec. 24.12 also provides, “the BAC shall determine if each

consultant is eligible to participate in a bidding by examining each
consultant‘s eligibility requirements or statements against a checklist
of requirements, using a non-discretionary “pass/fail” criteria as
stated in the IAEB and shall be determined as either “eligible” or
“ineligible”. If a consultant submits the specific eligibility document
required, he shall be rated “passed” for that particular requirement.
In this regard, failure to submit a requirement, or an incomplete or
patently insufficient submission shall be considered “failed” for the
particular eligibility requirement concerned. If a consultant is rated
“ passed” for all the eligibility requirements, he shall be considered
as “eligible”. If BAC shall mark the set of eligibility documents of
the consultant concerned as “ineligible”. In either case, the marking
shall be countersigned by the BAC chairperson or duly designated
authority.”

o Thus, pursuant to the aforesaid Section, PLC should had failed the
eligibility check, and should not be eligible to participate in the bidding.
However, despite this observation, PLC was instead, awarded the
contract.

o Pursuant to the Agency’s Technical Evaluation Report, the subject

documents were not available, but the BAC allowed later the submission
of the said documents using the 3-stages evaluation.

o Moreover, the submitted bidding documents did not bear the initials of
all the members of the BAC who were present during the opening of the
bids.

o Likewise, the BAC failed to submit the bid documents of the other short
listed bidders (Total Information Management, Softrigger Interactive,
Inc), and the corresponding Official Receipts issued by TESDA for their
purchase of said documents, despite the Team’s request to submit the
same. (Note: Even if these two shortlisted bidders did not eventually
participate in the bidding, at least the copies of the ORs issued to
purchase the bid documents should have been made available)

o The Invitation to Apply for Eligibility and to Bid (IAEB) did not indicate
the Approved Budget for Contract (ABC), funding source, the contract
duration or delivery schedule, all contrary to Section 21.1, IRR-A,

50
 RA9184, which provides that the abovementioned information should be
included in said IAEB.

6.4 Paid-up capital of P0.5M disproportionate to the contract amount of P29.34M.

Income Tax Return and audited Financial Statements for years 2005-2006 disclosed
PLC incurred net losses of P0.81M and P0.16M, respectively, net stockholders’ equity
of the company for the said years were only P0.63M and P0.61M respectively, and
actually incurred deficit by P1.37M and P1.39M for the same years, rendering doubtful
the financial capability of the contractor.

6.5 The copy of the Securities and Exchange Commission (SEC) Registration
Certificate of PCL secured by the Audit Team showed only a P0.50M paid-up capital
which is disproportionately very low compared to the contract amount of P29.34M.

6.6 Based on the submitted audited financial statements, PLC incurred net losses of
P80,596.44 and P15,966.44 the years. 2005-2006, respectively.

6.7 Moreover, for the same years, PLC actually incurred deficit by P1,371,,201.87 and
P1,390,168.31, respectively. Total stockholders’ equity amounted only P628,798.13 and
P609,831.69, likewise for the same years, rendering doubtful the financial capability of
the contractor.

6.8 The project was not included in the Annual Procurement Program (APP) of the
Agency. This was disclosed by Mr. Belda, Property Officer in an interview conducted
by this Office. This is the reason why he cannot submit a copy of the 2007 APP as
required by the Audit Team. After three formal and several verbal follow-ups and
instead of complying with our request, Mr. Belda furnished this Office an Unnumbered
Memorandum by the Director General, TESDA, requiring the Procedural Guidelines
for Obtaining Access by the Public to Official Records and Documents. This office
informed Secretary Syjuco that we take exception to the Unnumbered Memorandum,
firstly because we are not covered in its subject, “Public” and second because under the
Constitution COA has authority to require the submission of documents necessary in the
conduct of audit. To date, the APP remains to be submitted.

6.9 In addition as there is also no copy of the Project Procurement Management Plans
(PPMP) submitted to the National Computer Center (NCC), now Commission on
Information and Communications Technology Center (CICT) and should have been
attached to the APP contrary to NCC Memorandum Circular No. 2004-01.

6.10 There is also no copy of the NCC-approved/endorsed Information Systems

Strategic Plan submitted to the DBM, as basis to release the fund for ICT resources,
likewise contrary to the same NCC Circular.

6.11 he ABM does not also show inclusion of the E-TESDA Prepaid Card Enabled
Portal project among the capital outlays of the Agency. This was corroborated by the
TESDA Major Final Output document.

51
6.12 Hence, there was no capital outlay for the project. Per information received from
the OIC, Budget Division, TESDA sourced the funding of the project from the 40
percent budget of the Regional Offices/TVIs which were negated by the DBM from the
appropriations A.I- (General Administration and Support), A.I.a – (General
Administration and Supervision, Maintenance and Other Operating Expenses-200).

6.13 The Certificate of Availability of Funds issued by the OIC Budget Division,
revealed that the funding for said project was sourced under SARO Nos. B-07-06277-5-
28-07- P87,019,000.00, B-07-06226-5-18-07-P128,119,000.00, B-07-06440-6-19-07-
P22,645,000.00 or a total of P237,783,000.00.

6.14 From the foregoing, it cannot be deduced from what specific negated
appropriation the funding of E-TESDA Prepaid Card-Enabled Portal was sourced from
because the CAF indicated three SAROs in the total amount of P237,783,000.00
whereas the amount of contract was only P29.34M.

6.15 Nonetheless, the fund transferred is for MOOE and not for Capital Outlay which
should be the funding source of the project.

6.16 Relative to 2008 contracts in the total amount of P7M for the enhancement of the
e-TESDA Portal, the Certificate of Availability of Fund (CAF) executed by the Budget
Officer showed the source of funding is RA 9401 under Special Allotment Release
Order (SARO) No. B-08-01122 dated January 17, 2008 from the e-government fund in
the total amount of P168,702,220.00 (P19,677,600.00 for MOOE and P149,024,620.00
for Capital Outlay) for the contract amounting P4.8M and another CAF from the 2008
appropriations of TESDA in the amount of P808,379,000.00 for the contract amount of
P2.2M.

6.17 As appearing, while the two contracts refer to one Project the funding were from
two different sources, the P4.8M was funded from the P168,702,220.00 e-gov. fund, the
P2.2 M has no specific release since it was taken from the regular funding for MOOE
of the Agency.

6.18 Section 21.1, IRR-A, RA 9184, provides that the ABC, source of funding, and the
contract duration or delivery schedule must be among the information to be indicated in
the IAEB.

6.19 However, the same were not among the information included in the IAEB. This
corroborated our observation that this project is not included in the APP, hence it was
not duly funded.

6.20 The contract amount of P29,343,600.00 was paid on November 15, 2007,
December 18, 2007, December 27, 2007, details follow:

Schedule of Payment

52
 Date Check No. Amount Particulars
11/15 121014 4,401,540.00 15 percent Mobilization
12/18 121717 10,270,260.00 35 percent Progress payment
12/27 122086 14,671,800.00 50 percent
Total 29,343,600.00 100 percent

6.21 In a record time of less than two months, the contract was executed and fully
paid, despite the fact that the P2M worth of prepaid card to access the e-tesda portal
were not yet delivered. Incidentally up to the time of writing this report, the subject
prepaid card have not been delivered.

6.22 In addition the detailed training for the complete operation and maintenance of the
portal, including trouble shooting and preventive maintenance pursuant to the TOR
were not also conducted.

6.23 The e-tesda portal is not yet fully operational since it is still subject to beta testing
from January-June 2008 as indicated in its web site.

6.24 Lastly, the e-tesda portal project is not funded, yet it was fully paid, contrary to
Sec. 85, PD 1445 which requires that no contract involving the expenditure of public
funds shall be entered into unless there is an appropriation therefore.

6.25 Hence, the subject contract is void pursuant to Sec. 87 of the same PD1445. This
provides that any contract entered into contrary to said provision shall be void, and the
officer or officers entering into the contract shall be liable to the government or other
contracting party for any consequent damage to the same extent as if the transaction had
been wholly between private parties.

6.26 Payments were made for the 2008 contracts on enhancement of the e-tesda portal
despite the fact that the P2.2M contract was not appropriately funded, as discussed
above.

6.27 The mobilization fee of P720,000.00 was made for enhancing the payment
management system and virtual meeting/classroom management system but to date,
PLC failed to deliver the developed payment management system. This is in addition to
the payment to PLC of the P2M worth of prepaid card to access the portal for training
despite its non-delivery. It appeared that even if the prepaid cards were delivered, they
could not be used because the payment management system using the prepaid card had
not been developed and delivered.

6.28 On post-audit, the Team requested on several instances, the submission of the
bidding and other documents necessary to review the financial and technical aspects of
the 2007 contract (P29.34M), to date however, the same documents were not submitted
limiting our audit of the subject contracts:

 Copy of the Approved Budget for the Contract (ABC) and its detailed estimates
53
  Detailed costs breakdown or basis of coming-up the estimated amount of each
item such as project concept, customization, training and documentation in the
amount of P19,300,000.00, internet connectivity, in the amount of
P1,800,000.00, integration of content in the amount of P3,300,000.00 and
provision of credit cards in the amount of P2,000,000.00.

 Detailed or cost breakdown of the financial proposal of the consultant of the

contract amount involving P29,343,600.00.

 Other documents stated in Annex A of the Team’s letter relative thereto.

6.29 A letter tracer was made dated October 3, 2008 from our request dated June 17,
2008. The BAC Chairman informed that he had forwarded our request to the Office the
Director General, TESDA. Up to this writing the requested documents were not
submitted.

6.30 Just like the original contract in 2007, the supporting documents necessary for
review of the 2008 contracts for the enhancement of the e-TESDA Portal were not also
submitted, likewise contrary to COA Circular No.87-278 dated November 12, 1987.

6.31 The contract seeks to achieve the objectives stated in paragraph 185, most notably
of which are: (a) to broaden access and opportunities to quality TVET by improving
service delivery and providing training to more students and trainees through a
technology driven and technology managed-learning environment, (b) to effect cost
effectiveness of the course offerings of TESDA by apportioning the knowledge
acquisition component of its training programs into a managed internet-based learning
system, (c) to improve service delivery of TVET programs to trainees and learners of
the TESDA by providing a technology-driven and managed learning environment, (f) it
would also provide integration of prepaid credit cart system for access to web-based
courseware.

6.32 However, signing up in the portal on July 2, 2009 and July 23, 2009 with the
assistance of an IT expert from the Technical Services Office, Commission on Audit, it
was disclosed that the e-Learning site is not functional because there is no link. The
cursor (arrow) did not change to hand, meaning there is no link, hence, empty. In
addition the site can be detected as empty because the status bar does not indicate link.

6.33 The “Profile”, “Post” and “Application” sites are likewise not functional. The
Virtual Campus is a site for “Tell Tito Boboy”. The “Jobs” site is not specific in
location. The TESDA e-Zine appears to be an advertising site. This outside link to other
web-sites may not be necessary or against the mandates of TESDA, because what
appears therein are for music (karaoke) and recipe corner.

54
6.34 It was shown that there were no training courses that could be accessed, hence, the
purposes for which the project, customization of the prepaid e-tesda portal, was
conceptualized were not realized.

6.35 To summarize, in 2007, the project was not duly funded, the bidding processes
were disregarded, the financial capability of the contractor was questionable and part of
the subject matter of the contract were not complied with, i.e. the delivery of the prepaid
card worth P2M, yet the contract was executed and amount of P29,343,600.00 was fully
paid in less than two months. In 2008, the amount of P3,927,820.00 was also paid
despite same observations, these resulted in giving undue benefits, advantage or
preference to PLC to the disadvantage of the government.

6.36 For the 2007 contract Management commented that:

 There are no other bid documents from other bidders because there is in fact
only one bidder who favorably responded to the call for bid over this project. In
the same manner, minutes of the so-called “failed bidding” could not be
submitted because there is no such failure of bidding that occurred in the first
place. There is nothing unusual with the business permit of PLC being marked
“new”. Under the Securities and Exchange Commission (SEC) registration of
PLC, its principal office is originally located in Quezon City way back in 1999.
Thereafter it transferred to Pasig City. Hence, it is regular and logical for it to
secure a new business permit with the new territorial business jurisdiction in
Pasig City. In the Technical Post-Evaluation Report of PLC conducted by the
Technical Working Group (TWG), PLC was reviewed on the basis of Quality of
Personnel As an overall-rating, PLC scored with a passing rate of 85 percent.
Furthermore, based on the given results, the TWG recommended that the PLC,
be considered for the project. It was signed by Dir. Ma. Susan P. Dela Rama,
Chair from TESDA and by Ms. Grace T. Amberong and Ms. Melanie Arminio,
both from the National Computer Center (NCC). The Agency Budget for the
Contract (ABC), funding source and contract duration were included in the web
posting and actual bidding.

 As evidenced by the Certificate of Registration/Articles of Incorporation of

PLC, its Authorized Capital Stock(ACS) is originally P8M ACS was even
augmented with an additional amount of P32 M for a total of P40 M, which is
therefore more by P10M vis a vis project contract price. With the financial
qualification of the company, PLC’s capability to undertake the project could not
be doubted.

 The TESDA e-Portal Project was duly budgeted. To presume that funds from
TESDA Regional Schools were diverted into this project is presumptuous and
out of order. During the 55th TESDA Board Meeting last April 20, 2007, the
Board approved the outsourcing of the implementation and management of a
web-based portal for TESDA. The Board Resolution likewise resolved that an
initial funding of up to Thirty Million Pesos be set aside from the appropriate

55
 funds of TESDA for the employment of such a Web-based Portal through the
engagement of a suitable Portal/Technology provider, and the utilization of said
funds shall be in accordance with existing government accounting and auditing
rules and regulations. Furthermore, a Certificate of Availability of Funds (CAF)
in the amount of P30,000,000.00 was issued to cover the requirements of the
Project. Said amount was based under SARO No. 07-06440 dated June 19, 2007
in the amount of P22,645,000.00, SARO No. B-07-06277 dated May 28, 2007
in the amount of P87,019,000.00 and SARO No. B-07-06226 dated May 18,
2007 in the amount of P128,119,000.00.

 Indeed, not the entire quantity of the pre-paid cards had already been delivered
to TESDA because since the e-learning in the portal has yet to be subjected to
actual real-world exposure, the exact denominations of the pre-paid cards are yet
to be determined. However, it should be emphasized that the printing of those
prepaid cards is callable or may be made upon demand pursuant to the
agreement of the parties. The President and CEO of PLC Jason Dela Rosa
confirmed this in a letter to the Director General of TESDA dated December 27,
2007 stating that when called upon by TESDA, Prime Logic Corporation shall
comply with its obligation to deliver prepaid cards amounting to P2,000,000.00
with a minimum of 10,000 customized prepaid cards; to provide training and
technology transfer to TESDA personnel; and to turn-over all equipment,
hardware and software included or purchased/acquired under the Contract.

 Relevant thereto, Prime Logic, as required by TESDA, posted a Performance

Bond in the amount of P8,803,000.00 to guarantee the 30 percent balance of the
contract price. The surety bond was provided in behalf of PLC by Great
Domestic Insurance Co., of the Philippines.

 The observation that the e-TESDA Portal is not operational because it is still
subject to Beta Testing can be construed as a manifestation of an inadequacy in
the appreciation of the entire project and its technical design. In customizing the
e-TESDA Portal, its initial version, like any other computer product or software,
did not contain all of the features that were planned for the final version. This
initial version underwent a series of Alpha Testing the basic goal of which is to
determine to what extent the e-TESDA Portal architecture has been
implemented. It did not involve any external user yet except those only
involved in the customization of the e-TESDA Portal i.e. PLC computer
programmers and e-TESDA technical staff. The results of the Alpha Testing
guided the programmers in putting the e-TESDA in its final version. After
completing this process, the e-TESDA Portal has become operational with all
the basic systems running. However, interoperability of all the systems needs to
be subjected to a succeeding test-the Beta Test. One must understand that no
Beta Test will ever proceed if what is being subjected to testing is not
operational. Hence, the e-TESDA Portal cannot be subjected to Beta Testing if it
is not operational.

56
  Beta Testing involves the use of actual users. This is crucial process for any
computer product prior to its “commercial release” Beta Testing, which follows
Alpha Testing, involves the process of subjecting the product to actual use
before any real-world exposure. It does not mean, therefore, that the e-TESDA
Portal cannot be utilized simply because it is on Beta Test. In reality, it is
already capable of operating other functionalities, namely a) Career profiling; b)
TEKBOKOnline where almost all of the TESDA Board members have
completed the first e-learning module on-line; and c) Communication and
Collaboration and Collaboration Facility which is powered by Google APPS.

 While the e-TESDA Portal is on its Beta Test stage, the PLC computer
programmers and the e-TESDA Unit continues to work together particularly
during joint technical design session where technology transfer actually
happens. During said sessions, trouble shooting and preventive maintenance are
likewise being adequately covered. Hence it becomes premature to raise the
observation that “detailed training for the complete operation and maintenance
of the portal, including trouble shooting and preventive maintenance were not
also conducted.

 The goods and services required for the e-TESDA Portal have been delivered
and what have been delivered are operational. As a customized portal, it is
expected to undergo further, to a certain extent, never-ending refinements and
enhancements.

6.37 In response to the Management comments, the Audit Team would like to point out
the following:

 While TESDA informed thru its comments that there is only one bidder, the
BAC Resolution No. 047-2007 dated August 29, 2007, recommending the award
to PLC took note of three shortlisted bidders, namely: (1) Total Information
Management, (2) Softrigger Interactive, Inc. and (3) PLC. In our letter dated
February 11, 2008, we requested the submission of eligibility requirement
documents needed of the shortlisted bidders, to date, however, the said
documents were not submitted. Granting there was only PLC as lone bidder
during the opening of bid, the requested documents of the other two shortlisted
bidders should have been submitted if indeed shortlisting of consultants was
done pursuant to Section 24, IRR of RA 9184 was conducted.

 On the issue that PLC submitted a “New” business permit from Pasig City
whereby the requirement is for a five-year expertise, while management
commented that PLC had transferred to this new location from Quezon City to
Pasig City, the reason why PLC submitted a “New” business permit, we would
like to point out that other records of PLC related to the financial requirements
showed PLC with business address at 4 th/F RNL-Infotech Bldg., 2 Marcos
Highway Dela Paz, Pasig had been registered with the Bureau of Internal
Revenue, Revenue District N0. 043 on March 19, 1999.

57
  Management did not controvert the issues raised on the financial capabilities of
PLC such as its incurrence of losses in 2004-2006, and its deficit for the same
years as these have a great bearing on the financial ability of the consultant,
PLC. We likewise reiterate our view that PLC has a paid-up capital of only
P500,000.00 as gathered from the SEC, disproportionate the contract amount of
P30M. There may be an increase in Capital Stock but it did not show increase in
paid-up stock.

 The Portal contract has no appropriate funding as shown by the Certificate of

Availability of Funds signed by the Budget Officer. This is admitted in the
management comment. Indeed the SAROs enumerated therein were
appropriations from the regional offices which were negated and transferred to
the TESDA Central Office. Said appropriations refer to MOOE as already
discussed above, and not for CAPITAL OUTLAY which should be the
appropriate funding as the customization of the e-TESDA Portal is a capital
expenditure. The TESDA Board Resolution setting aside P30 M for the contract
will not suffice as the requirement for appropriate funding. What is required is a
Capital Outlay authorized in the TESDA annual appropriations in the 2007
General Appropriations Act.

 No ABC was indicated in the IAEB contrary to Section 21, IRR, RA 9184
because of the absence of appropriate funding.

 Management admitted that not the entire quantity of the prepaid cards had
already been delivered and the e-TESDA Portal is indeed in its Beta Testing
stage (January-June, 2008) and during this stage management informed that
trouble shooting and preventive maintenance are likewise adequately covered.
Hence our observations that full payments were made in December 2007 despite
the absence of delivery of the subject prepaid cards, detailed trainings for the
complete operation and maintenance of the portal, including trouble shooting
and preventive maintenance were conducted were bolstered.

 The truth of the matter no prepaid cards were delivered up to the writing of this
report. In addition the new contract awarded to PLC to enhance the portal
incorporating the payment management system of the portal had not been
developed by the same contractor, as per information relayed to this office by
the e-TESDA Unit (June, 2009).

 Moreover, no training courses were uploaded to the portal, as also relayed to this
office by e-TESDA Unit, therefore, the portal is not being used for the purposes
for which it was contracted, as enumerated under paragraphs.

6.38 It is informed that the contract on the e-TESDA Portal project was referred to the
Technical Services Office (TSO), this Commission, for technical review. However,

58
additional documents were required to be submitted by TESDA. These requirements
were referred to TESDA on June 16, 2008 but to date, same were not yet submitted.

6.39 We recommended that management:

 Direct the investigation of all the concerned officials who recommended

and approved the contract, members of the BAC for disregarding the
processes of the bidding and recommending the award of the contract to
PLC, the budget officer who executed the Certificate of Availability of
Fund knowing that there was no appropriate appropriation relative
thereto and the Accountant who certified that cash is available, and
supporting documents, valid, proper and legal and processed the
payments, and if warranted by circumstances, file the appropriate case
against all concerned officials and the PLC to protect the interest of the
government pursuant to Sec. 3(e) and (g) of RA 3019.

 Submit with explanation on their continued failure to submit to the

Office of the Auditor the contract documents needed in the review the
financial and technical aspect of the contract which is a ground for the
issuance of a notice of suspension/disallowance on the subject
transactions.

 Demand from PLC full compliance of the scope of work of the three
contracts related to the customization of the portal and its
enhancement, otherwise demand the refund of the amount of P36.34M
paid to it because the portal did not function as such, to protect the
interest of the government.

A.1 Reiteration of Prior Years’ Program /Project Evaluation

Center of Excellence for Modern Manufacturing Technology (CEMMT) Project

7. The CEMMT Project’s objective of developing into Centers of Excellence,

Regional Training Center (RTC) equitably distributed nationwide have not been
achieved with the transfer of the equipment intended for a strategically located RTC
in the Mindanao region to a training school in the Visayas region whose Distinctive
Area of Competence (DAC) is not allied to modern manufacturing technology.

7.1 In line with the Medium Term Development Plan of the Philippines, the Project
was approved. The Project involved the upgrading of a network of seven TESDA
Training Centers nationwide into CEMMT. The Centers are envisioned to respond to
the current emerging skills requirements of the manufacturing industry in the area of
modern technology and to the technological needs of manufacturing companies within
their service area.

7.2 The development of CEMMTs was funded out of the Soft Loan Agreement (SLA)
under the Austrian Export Promotion Scheme entered into in February 2002 by and
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between the Philippine Government (GOP) through the Secretary, Department of
Finance, and ERSTE Bank DER OESTERREICHISCHEN SPARKASSEN AG, as the
Lender.

7.3 Pursuant to this Soft Loan Agreement, the TESDA represented by the TESDA
Board Chairman as Buyer entered into an Agreement with the EMCO MAIER
GESELLSCHAFT MBH for the delivery of equipment, consumables, tools and related
facilities for a total amount €18,168,208.54 or P943,717,648.00. The said amount is
broken down as follows:

Fund Foreign
Component Peso Equivalent
Source Currency
Foreign Supply and delivery of equipment, €14,582,377.9
Loan tools and related facilities 1 P 601,960,560.12
Technical assistance, fellowship
training 1,673,387.63 69,077,441.37
Services and programs 1,912,443.00 78,945,647.04
Sub-total €18,168,208.54 P749,983,648.53
GOP Refurbishment of the
mechanical/metals and engineering
workshops, establishment of
Technology Laboratories and
rehabilitation of dormitories 43,734,000.00
Taxes, duties and licenses 150,000,000.00
Sub-total P193,734,000.00
Total P943,717,648.53

Delayed project implementation resulting in increased project cost due to foreign

exchange fluctuation

7.4 The Project was initially programmed to run up to May 17, 2005 but was extended
by the Investment Coordination Committee-Cabinet Committee (ICC-CC) to May 16,
2009. As a result, the project cost increased by P487,867,351.47 or 51.70 percent, from
P943,717,648.53 to P1,461,585,000.00 due to foreign exchange fluctuation. Had the
Project been implemented within the period originally planned, the increased cost could
have been reduced if not totally avoided.

7.5 To ensure the achievement of the goals and objectives of the Project, TESDA
Regional Beneficiary Centers to be developed as Centers of Excellence were selected
based on the following criteria:

 The institution is strategically located in the vicinity of an industrial or

agricultural growth zone.

 The Distinctive Area of Competence (DAC) of the institution is in Metals and

Engineering.

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  The DAC of the institution matches the skills priority demand in its service area.

 The institution has existing and strong partnership with industries in its service
area.

 The institution is not a current prospective recipient of another ODA project of

similar scope and magnitude.

7.6 Accordingly, seven project sites, equitably distributed nationwide, two sites each
in Luzon, Visayas and Mindanao, were selected and these are:

Center Region/Zonal Area

National Center-TESDA-Main NCR
RTC-Baguio CAR-Luzon
RTC-Batangas City Region 1V-Luzon
RTC-Talisay City Region V1-Visayas
RTC-Cebu City Region VII-Visayas
RTC-Tagoloan Region X-Mindanao
RTC-Davao Region IX-Mindanao

Inequitable distribution of training and employment opportunities

7.7 As of December 2007, the CEMMT equipments costing P723.86M have been
delivered to the following zonal sites:

Center Amount
National Center-Taguig-NCR P 263,801,830.31
RTC-Batangas City-Luzon 134,276,497.42
RTC-Cebu-Visayas 94,639,478.13
RTC-Talisay,- Iloilo-Visayas 82,688,63.50
NLPC-Iloilo-Visayas 148,453,294.78
Total P 723,859,864.14

7.8 Based on the selection criteria set, there would only be two projects sites in the
Visayas, one in Talisay City, Region 6 and the other Cebu, Region 7. But based on the
above table, it will be noted that an additional project site in Visayas, the New Laguna
Polytechnic College (NLPC) - Iloilo, in Region 6, while not among the identified zonal
sites, was the recipient of CEMMT equipments.

7.9 It was learned that before the equipments intended for Region X were delivered,
Secretary Syjuco wrote NEDA on May 31, 2006 requesting authority to transfer the
TESDA Region X CEMMT equipment allocation to TESDA Region VI because
TESDA Region X was also a recipient of many other hardware and software allocation

61
from AusAID, EDETP and TESD Projects while TESDA Region VI looks to CEMMT
as a single major source of development assistance and the transfer would rectify the
inequitable allocation of regional project sites and benefits under the Foreign Assisted
Projects being implemented by TESDA.

7.10 On November 2, 2006, then NEDA Director General, Secretary Romulo L. Neri,
favorably endorsed the aforesaid request of Secretary Syjuco. The said endorsement
was subject to TESDA’s written assurance that the proposal and the subsequent transfer
of equipment would not entail additional budgetary requirement for the project nor
require the extension of project implementation period, both of which would require
ICC re-evaluation.

7.11 Contrary to the statement made by the Director General that TESDA Region VI
looks to CEMMT as a single major source of development assistance, Region VI is a
recipient of a number of foreign-funded projects, as follows:

 The Project for the establishment of Centers of Excellence (CENTEX) for San
Vicente Pilot School (SVPS) funded under the TESDP loan from the ADB,
OPEC and NDF, in San Vicente, Bataan, TESDA, RO III, was likewise
transferred to NLPC, Iloilo, RO VI.

 The PASSI Trade School, Barangay Sablongon, Passi, Iloilo City, and Dumalag
Vocational Technical School, Dumalag, Capiz, both in Region VI, are both
recipients of the TESDP/NDFTES 1 for the establishments of Centers of
Excellence(CENTEX) including the supply, delivery, installation and
commissioning of training/testing equipment under NDF Credit 331 amounting
to P5,238,907.98 and P7,151,574.64 respectively.

 Part of the loan is for the establishment of Assessment Center. The Regional
Training Center, Iloilo, TESDA RO VI was also a beneficiary of this project
including likewise the supply, delivery, installation and commissioning of
training/testing equipment.

 Recently, under the LEPTES-04, TESDA RO VI is among the beneficiaries of

the project for the delivery of desktop and laptop computers with project cost of
P14.50Million.

 Although there was no additional funding requirement from the CEMMT

project, the rehabilitation of the electrical system of NLPC costing
P4.975Million was taken from the funds allotted for the establishment of the
CENTEX for San Vicente Pilot School (SVPS) in TESDA Region III, under
another foreign-assisted project (TESDP).

7.12 Management commented that, among others, (a) TESDA RO X did not object to
the transfer of the CEMMT equipment to NLPC, Iloilo; (b) the inventory of equipment
of RTC-Tagoloan are similar to the subject CEMMT equipment; (c) the NLPC

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Electrical System rehabilitation is already completed as of December 31, 2007; (d) the
training by the Technical Experts of EMCO MAIER has started in May, 2008; (e) that
the revision of the original training plan in terms of the need to prioritize training
intervention in production for the ROI and in the repair and maintenance is to ascertain
that the equipments do not become “white elephants”.

7.13 Contrary to Management’s claim that TESDA RO 10 did not object to transfer of
the CEMMT equipment to NLPC in Iloilo, the President of the Metalworking Industries
Association of the Philippines Cagayan de Oro/Northern Mindanao Chapter, Inc.
appealed to the then Director-General, NEDA for the retention of Tagoloan, RTC RO X,
as one of the seven zonal sites of the CEMMT or defer the transfer of the equipment to
TESDA RO VI, for the following reasons:

 Region X will directly benefit from the Project in terms of technology upgrading
in machining and the possible use of modern CNCs for production of parts
needed in various agricultural and industrial machineries.

 The location of the said project in RTC Tagoloan in Region X is highly strategic
with the presence of PHIVIDEC Industrial Estate which housed major industries
including the Mindanao Container Terminal Port (MCTP) and soon to be
operational the STEAG Power Plant.

 The Project is critical in attaining both the region’s long term vision and medium
term goal of becoming a leading industrial and trade center and major
transshipment hub in Mindanao.

 The RTC, Talisay, Iloilo is also one of the identified zonal sites of the project
hence, the transfer will duplicate the installation of the same facility in one
region.

7.14 From the series of communications furnished by Management, the Team found
none that directly addressed the issues raised by the President of the Metalworking
Industries Association of the Philippines Cagayan de Oro/Northern Mindanao Chapter,
Inc.

7.15 The foregoing considered, the Audit Team believes that the transfer was
inappropriate and works to the detriment of the overall objective of the CEMMT
Project, for the following reasons:

 Based on the Unified TVET Program and Registration and Accreditation System
the Distinctive Area of Competence (DAC) of NLPC is Health Services. It offers
2-year Associate in Elderly Health Care, 1 year Health Aide, 1 year Institutional
Housekeeping; 2 year Automotive Technology; 6 months Caregiver; and 1,254
hour Health Aide. On the other hand, among the DAC of RTC-Tagoloan are
Metalworking Technology specializing in Computer Aided Designing in Metals,

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 Welding, Civil Technology, which the CEMMT Computer Numerically Control
and Computer Aided Manufacturing equipment.

 With the transfer, the upgrading of the RTC-Tagoloan was set aside in favor of
NLPC which is not a regional training area, contrary to the objective of the
Project. Moreover, the utilization of the equipment by the NLPC may have to
wait as the development of the competencies for which the equipment are
intended will take some time. In fact, despite the coming and presence of the
Austrian expert in January, 2009, no trainers training had been conducted
because the designated focal persons are not available.

 The inclusion of RTC-Tagoloan as one of the seven zonal sites must have
undergone a thorough evaluation of its compliance with the criteria for the zonal
site selection.

7.16 The Team recommended that for future projects, the selection criteria, the
formulation of which must have taken into account the project’s objectives, must
be adhered to in order to ensure the equitable distribution of project benefits.

PGMA – Training for Work Scholarship Program (PGMA-TWSP)

8. Three years after its launching and despite a 60.67 percent increase in the
funds allocated for its implementation, only 273,593 or 85.67 percent of the enrollees
were able to graduate and only 78,766 or 28.79 percent were employed, denoting that
the PGMA-TWSP had failed to fill the demand for the highly critical and emerging
skills identified in the National Manpower Summit in 2006.

8.1 The PGMA-TWSP, a project under the Pump Priming Program Fund of the
Government to carry out the Ten-Point Agenda of President Gloria Arroyo, was
launched in May 2006. This program is a coordinative effort among the Department of
Labor and Employment, Office of the Presidential Adviser on Job Creation and TESDA.
The main objective of the program is to provide skills and competencies to job seekers
and facilitate their immediate employment through appropriate training programs that
are directly connected to existing jobs.

8.2 With the country’s educational structure where permeability between tech-voc
and degree programs is not provided, a link between tech-voc and a degree is
paramount. Statistics show that the Philippine education and training system has been
producing unemployed educated graduates every year. It was against this backdrop that
President Gloria Macapagal-Arroyo, on September 15, 2004 issued Executive Order
No. 358 to institutionalize a ladderized interface between Technical-Vocational
Education and Training (TVET) and Higher Education (HE).

8.3 The purpose of ladderization is to open pathways of opportunities for career and
educational progression of students and workers. Specifically, it intends to create a

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seamless and borderless education and training system that allows mobility in terms of
flexible entry and exit into the educational system.

8.4 The Department of Labor and Employment (DOLE) has admitted that there are
unfilled quality job opportunities in the country. Thus, on March 2, 2006, the National
Manpower Summit (NMS), participated by key players in various sectors, was
convened to identify skills and competencies needed to fill in the demand.

8.5 Based on a PGMA-TWSP Publication, the NMS identified seven sectors that are
major employment generators, to wit:

Sector 2006 2007 2008-2010

Agri-business 329,609 372,317 2,044,161
ICT/Cyber Services 148,350 204,146 1,383,890
Hotel and Restaurant 56,001 69,028 400,280
Medical Tourism 25,310 25,310 128,150
Health Services 8,066 9,455 58,003
Mining 6,672 7298 39,382
Aviation 3,710 4,450 27,581
TOTAL 577,718 692,004 4,081,447

8.6 According to the NMS, the identified occupations or skills demand that are
considered highly critical and need to be addressed immediately are the following:

Sector Occupation 2006 2007 2006-2010

I. BPO Industry Call Center 103,000 132,600 735,500
Medical Transcriptionist 6,225 8,250 61,900
Legal Transcriptionist 4,000 4,000 20,000
2D/3D Animator 2,544 3,473 22,759
Software Developer 12,200 17,200 122,100
II. Other Industries w/
Highly Critical Skills
Agri-business Butcher 500 600 4,000
Aviation Aviation Technician/ 2,040 2,448 15,177
Mechanic
Ground Equipment 230 276 1,710
Operator
Medical Spa Therapist 200 200 400
Tourism Massage Therapist 900 1,500 7,500

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 Sector Occupation 2006 2007 2006-2010
Wellness Sector Pinoy Hilot 2,000 2,500 4,500
Health Biomedical Equipment 165 187 958
Technicians
TOTAL 134,004 173,234 996,504*

*-Note: 996,504/5years (2006-2010) =199,300/year x 3 years (2006-2008)= 597,902

8.7 Other skills identified by TESDA to be considered critical mass and emerging
are as follows:

Sector Occupation 2006 2007 2006-2010

Metals and Gas Metal Arc Welding (GMAW) 1,660 1,826 16,500
Engineering
Construction Heavy Equipment Operators 1,200 1,200 6,000
(Different Types)
Hotel and Barista 1,488 1,509 7,658
Restaurant
Cook 14,309 19,087 111,220
TOTAL 18,657 23,622 141,378

8.8 Thus, to address the structural unemployment disclosed by the NMS, TESDA
projected the following targets for the PGMA–TWSP for the period 2006 to 2010:

2006 2007 2006-2010

I. BPO Industry Call Center 60,000 66,000 366,306
Medical Transcriptionist 2,500 2,750 15,363
Legal Transcriptionist 1,000 1,100 6,105
2D/3D Animator 1,000 1,100 6,105
Software Developer 3,000 3,300 18,315
Sub-Total 67,500 74,250 412,194
II.Other Industries
Agri-business Butcher 500 500 2,500
Aviation Aviation Technician / 2,244 2,468 15,177
Mechanic
Ground Equipment Operator 211 232 1,710
Medical Spa Therapist 200 200 400
Tourism Massage Therapist 900 1,500 7,500

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 2006 2007 2006-2010
Pinoy Hilot 2,000 2,500 4,500
Metals and Gas Metal Arc Welding 2,000 2,200 12,210
(GMAW)
Engineering
Construction Heavy Equipment Operators 1,200 1,200 6,000
(Different Types)
Hotel and Restaurant Barista 1,500 1,500 7,658
Cook 2,731 2,959 4
Health Biomedical Equipment 2000 200 1,000
Technicians
Sub-Total 13,686 15,459 58,659
III. Special Special Employment 500 500
Program for Mindanao
Programs Ladderization Scholars 4,000 4,000 20,000
OFWs from KSA 700 700
Disabled Soldiers 500 500
2006 Tower Awardees 9 9
Scholarships for the 1,000 1,000 5,000
Retirement Industry
Sub-Total 6,709 5,000 31,709
IV. Support National TVET 4,000 4,500 21,000
Trainers/Assessors
programs Qualification Program
Youth Profiling for Starring 100,000 100,00 500,000
Career (YP4SC)
0
ProSpeak Assessment for 50,000 50,000
Call Center Agents
GRAND TOTAL 88,895 95,709 502,562

Increased per capita cost for the program’s implementation

8.9 To fund the project, TESDA programmed a yearly appropriation of P500 Million
to generate 100,000 jobs or P2.50 Billion from 2006-2010 to generate 500,000 jobs for
the duration of the program, that is an average per capita cost of P5,000.00 per enrollee
to be trained and employed.

8.10 Based on the Summary of Performance from 2006 to 2008, TESDA received a
total budgetary allocation of P2.41B, higher by P910 Million or 60.67 percent than the

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programmed yearly appropriation, for the implementation of the PGMA-TWSP, now
Pangulong Gloria Scholarships.

8.11 The reported number of enrollees for the three year period was 319,354. Based
on the total number of enrollees, with the increased funding, the per capita cost of the
PGMA-TWSP scholarships slightly increased from the projected average of P5,000.00
per enrollee to P7,546.44 per enrollee, that is a 50.93 percent increase.

Low rate of graduates effectively increasing the cost of producing the same

8.12 But, while the number of enrollees exceeded by 6.46 percent the projection of
100,000 or 300,000 for the three years that the PGMA-TWSP has been operational, the
number of enrollees who actually graduated was only 273,593 or 85.67 percent. Based
on the actual number of graduates, the effective per capita cost for TESDA to produce
prospective employees for the identified labor market demand for critical and emerging
skills further increased by P1,262.26 or 17.92 percent, from P7,546.44 to P8,808.70.
Low employment rate denoting failure of the program to address the claimed existing
labor market demand

8.13 Finally, of the reported number of PGMA-TWSP graduates, only 78,766 or

28.79 percent were reportedly employed with 194,827 or 71.21percent remaining
unemployed. The extremely low rate of employment of PGMA-TWSP graduates
denotes that the program has not been able to equip the graduates with the skills and
competencies necessary to fill in the gap of highly critical and emerging skills demand
identified in the 2006 National Manpower Summit.

8.14 Our observations relative to the implementation of the PGMA-TWSP at the

regional offices which contributed to the foregoing overall evaluation of the project
results are discussed in the subsequent paragraphs.

TESDA RO 1

Low employment rate/absence of employment assistance

8.15 In TESDA-RO 1, only 1,404 or 44 percent of the 3,185 PGMA-TWSP graduates

which cost the TESDA P23.3 M to train, were reportedly employed, an employment
rate way below the 90 percent target. The Physical and Financial Accomplishment
Report of the Regional Office showed that the graduates were from eleven programs
with the number of enrollees ranging from 30 to 814 and the employment rates ranging
11 percent to 82 percent.

8.16 Relative to the low employment rates, the Regional Management commented
that it was presumed that the presence of such skilled workers would trigger the
establishment of business enterprises that would eventually absorb these graduates and
that for those training that were intended for abroad, placement financing appears to be
a hindrance to employment.

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Accumulation of payables to training providers due to delayed submission of
supporting documents as well as the delay in the receipt of the scholarship certificates
from the TESDA-CO

8.17 It has been observed that submission of the enrolment lists and bills by the
training institutions concerned has resulted in the accumulation of unpaid tuition fees of
the PGMA-TWSP scholars in the region. Management claimed that the real cause of
the delay is the late receipt of the scholarship certificates from the TESDA-CO.

Non-preparation and submission of the Report of Accountability for the scholarship

vouchers

8.18 It was also noted in audit that the no Report of Accountability for Accountable
Forms covering the PGMA-TWSP scholarship certificates were being prepared by the
accountable official concerned. Hence, no such reports were submitted to the Auditor’s
Office for verification contrary to the provisions of Section 68 of the New Government
Accounting System Manual which provides that the Report of Accountability for
Accountable Forms shall be prepared by the accountable officer to report on the
movement and status of accountable forms in his possession.

Incomplete documentation of payments to training providers

8.19 The amount of P745,000 was paid to training providers despite incomplete
documentation contrary to the provisions of the Implementing Guidelines for the
PGMA-TWSP Ladderized Education Program Scholarship No. 49, series of 2008 and
TESDA Circular No. 31, series of 2007.

TESDA RO 2

Low implementation rate of the PGMA-TWSP

8.20 Out the 5,320 scholarship slots under the different courses available for CY
2008, only 1,252 or 23.54 percent were utilized thereby defeating the Program’s
objective of providing skills and competencies to job seekers to enhance their
opportunities for job placement. It was claimed that the very low rate of program
implementation was due to the delayed receipt of the scholarship certificates from the
TESDA-CO.

Low rate of fund utilization

8.21 Of the P28,817,500.00 allotments received for CY 2008, only P3,312,000.00

was obligated while only P160,000.00 was paid. Of the amount obligated,
P3,152,000.00 was obligated with the requisite supporting documents.

8.22 Management claimed that the non-utilization of the funds released for the
PGMA-TWSP for CY 2008 was due to lack of basis to obligate, much more pay the
same. The prescribed supporting documents were reportedly not obligated due to the
absence of supporting documents.
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Insufficient documentation of payments to training providers

8.23 The propriety and validity of the payments made to training providers of various
occupational areas under the PGMA-TWSP and LEP in TESDA CAR and in RO1 and
VI amounting to P15.14 Million, P745,000.00 and P5.30 Million, respectively, could
not be established since these were not supported with the documentation requirements
prescribed under the Implementing Guidelines on the Implementation of the PGMA-
TWSP, LEP Scholarship, TESDA Circular No. 22 Series of 2008, No. 49, 31 and 23
dated September 4, 2006 and May 29, 2007, respectively.

Misuse of program funds/erroneous payment of assessment fees to the wrong TAC -

P797,282.50

8.24 In TESDA-CAR, funds intended for payment of assessment fees of trainees to

various TESDA Assessment Centers(TAC) amounting to P235,520.00 were used by the
Regional Office in its operational expenses while the amount of P561,762.50 was
erroneously remitted to the wrong TAC.

Unutilized scholarship grants due to delayed project implementation

8.25 In RO II, implementation of the program was delayed. As a result, only 1,252 or
23.53 percent of the 5,320 scholarship slots under the different qualifications/courses
for the year 2008, were utilized as at year end thereby defeating the objective of
providing skills and competencies to job seekers for job placement.

Low rate of graduates and of employed but increased per capita cost

8.26 In conclusion, based on the foregoing discussions, the reported physical

accomplishment from 2006 to 2008 is very much lower than what was targeted in terms
of number of graduates and employed but very much higher in terms of per capita cost.

8.27 We recommended that Management:

 Make an in depth analysis on the reasons why only 85.67 percent of

enrollees are able to graduate and only 28.79 percent are employed out
of the graduates, which are very much lower than the projected figures
considering that as per NMS there are available jobs that are just
waiting to be filled-up and for which reason the PGMA-TWSP was
launched, precisely to address this concern of lack of workers who are
equipped with the appropriate skills for the available jobs in the
market.

 Re-evaluate whether to continue or to discontinue the courses and

channel the funds to more in demand courses.

 Direct the timely submission of enrollment lists and other documents

from the training providers to avoid the accumulation of Accounts
Payable at the end of the year.
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  Instruct the submission of the requisite supporting documents to make
valid the payments of training fees to the respective training
providers.

 Stop the practice of using the assessment fees in the operation of the
region and rectify the remittance of assessment fees to the wrong
training provider pursuant to the guidelines on free assessment.

Unrecorded Equipment-P131.54 Million

9. Equipment worth P131.54 Million purchased under the Nordic Development

Fund and delivered directly to the CENTEX and Assessment Centers in the regions
were not booked up.

9.1 One of the components of TESDP is the procurement of training and testing
equipments worth P 415,143,614.93 under the Nordic Development Fund (NDF) for the
various Centers of Excellence (CENTEX), Regional Training Centers (RTC) and
Assessment Centers (AC).

9.2 However, audit showed that items of equipment amounting P131,538,412.72

which were delivered directly to the regions were not recorded in their respective books
of accounts. Further verification disclosed that the non-booking up resulted from the
failure of the TESDA-Main to furnish the copies of the Journal Entry Vouchers
dropping the PPE account from its books of accounts, as basis to record the equipment
in the regions. Payments of the equipment were made by the Main Office, hence the
regions surmised that the subject equipment were taken up in the books of accounts of
the Main Office.

9.3. Nevertheless the Accountant of the TESDA-Main informed that the regions should
be the one to book up the equipment since deliveries were made thereat. Due to lack of
coordination between the Main Office and ROs, these equipment were not booked up in
the books of the recipient agency. Details are presented hereunder:

9.4. We recommend that Management:

 Direct the Accountant to coordinate with the Financial Analysts in the

regions or centers to cause the recording of the cost of equipment
amounting P131,538,412.72 in the books of accounts of the respective
Centers.

B. Cash Management

TESDA Development Fund (TDF)

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10. Six years from the creation of the TDF and four years from the time the initial
investment of the funds were made, no grants or assistance to training institutions,
industries and local government units for upgrading their capabilities to develop and
implement training and related activities have been made thereby defeating the
purpose for which the TDF was set up.

10.1. As of December 31, 2008, the TDF had a balance of P64,566,041.48 of which
P14,767,244.74 represents interest earned from September 1, 2004, when the initial
investment of the fund was made up to December 31, 2008.

10.2. Section 31 of the 1994 TESDA Act provided for the establishment of the TDF, the
income from which shall be utilized exclusively in awarding grants and providing
assistance to training institutions, industries and local government units for upgrading
their capabilities to develop and implement training and training related activities.

10.3. The TESDA Board as the designated administrator of the Fund was mandated to
formulate the necessary implementing guidelines for the management of the fund
subject to the following:

 Unless otherwise stipulated by the private donor, only earnings of private

contributions shall be used; and

 No part of the seed capital of the fund, including earnings thereof shall be used
to underwrite expenses for administration.

10.4. The capital of the fund shall come from the following:

 a one-time lump sum appropriation from the National Government;

 an annual contribution from the Overseas Workers Welfare Administration Fund,

the amount of which shall be part of the study on financing in conjunction with
letter D of Section 34;
 donations, grants, endowments, and other bequests or gifts; and
 any other income generated by the Authority

10.5. In June 2002, the TESDA Board issued Resolution No. 2002-17 declaring the
TDF operational and promulgating its policy framework. The Board further declared
that any net cash balance of the Sariling Sikap Program (SSP) Revolving Fund at the
end of every calendar year shall accrue to the TDF to augment capital formation.

10.6. As of December 31, 2003, based on the Chief Accountant’s report, P9,084,689.66
was deposited to the TDF, P7,022,624.43 of which came from the SSP Revolving Fund
and the rest from donations of various individuals and institutions. Initial investment of
the Fund in Retail Treasury Bonds (RTB) was made in September 2004 in the amount

72
of P10,600,000.00 with subsequent additional investments. Since then, the Fund has
earned a total interest of P14,767,244.74.

10.7. The Team noted that since its creation, no grants or financial assistance to the
intended beneficiaries have been made by TESDA. As stated earlier, the main purpose
of the TDF is to assist the beneficiary training institutions, industries and local
government units upgrade their capabilities to develop and implement training and
related activities thru the provision of grants and financial assistance.

10.8. While the Fund is earning interest from investment, it is nonetheless unfavorable
since the objective has not been achieved.

10.9. Management commented that the alleged failure to achieve the Fund’s objective
cannot be blamed exclusively on TESDA because while the sources of the fund were
identified in the TESDA Act itself, the two major source of fund never materialized. At
the same time, the study on financing TVET commissioned to Laya et al required an
approximate amount of P500 million per year which could have been realized if the two
major contributions to the TDF were received.

10.10. Since the existing amount then is not attractive to any accredited portfolio
manager, the TESDA Board decided to assume the responsibility of administering the
fund and instructed the TESDA Secretariat to start investing the contributions coming
from the minor sources to ensure capital build-up.

10.11. Technically, the interest earned may be used but the TESDA Board decided that
the amount is not sufficient enough to create an impact in the TVET sector. Given the
limited funds, accommodation of identified projects may not be sustained and may end
up as palliative stop gap measures which could be costly in the long run.

10.12 Auditor’s rejoinder:

The two major sources of fund for the TDF are legislated hence, Management
should have invoked the same to secure the needed funding.

10.13. We recommended that Management make representations to the

appropriate body for the appropriation of the legislated seed money of the TDF.
Likewise, representations should be made to the OWWA for the remittance to the
Fund of the its prescribed annual contribution.

Petty Cash Funds

11. The number of designated Petty Cash Custodians at TESDA Main and
amount of Petty Cash Funds granted to each one of them is excessive and
unnecessary resulting in too much cash in the custody of these Petty Cash
Custodians, which posed the risk of loss thru theft or misappropriation, contrary to
existing rules and regulations
73
11.1. Section 176, Vol. I of the Government Accounting and Auditing Manual (GAAM)
and par.4.3.1 of the COA Cir. No. 97-002 dated February 10, 1997 requires that the cash
advance shall be sufficient for the recurring expenses of the agency for one month. The
AO may request replenishment of the cash advance when the disbursements reach at
least 75 percent or as the need requires, by submitting a replenishment voucher with all
supporting documents duly summarized in a report of disbursements.

11.2. It is likewise provided under the same of the GAAM that Petty Cash Fund shall
not be used for the payment of regular expenses and shall be in amounts not exceeding
P10,000.00 for each transaction.

11.3. Review of the Petty Cash Fund (PCF) account as of December 31, 2008 revealed
that there are eleven (11) Petty Cash Custodians (PCC) holding cash advances intended
for petty recurring maintenance and operating expenses of the agency. Further analysis
showed that the cash advances of a number of these PCCs are for similar purposes.

11.4. Furthermore, one PCC was noted to be holding five different cash advances
totaling P 523,987.32.

11.5. The replenishment history of the different PCCs for CY 2008 is shown below:

No. of Total Average Percent

Petty Cash Petty Cash
times amount monthly to total
Custodian Fund
replenished expenses PCF
Belen Laresma 100,000.00 8 629,796.23 52,483.02 52
50,000.00 4 81,633.73 6,802.81 14
50,000.00 8 399,480.00 33,290.00 67
Ma. Clara Ignacio 50,000.00 2 166,487.44 13,873.87 28
50,000.00 5 76,678.44 6,389.87 13
Lilia Lim 80,000.00 6 408,793.54 45,421.50 57
20,000.00 5 100,000.00 11,111.11 56
Digna Diaz 30,000.00 2 52,866.00 5,874.00 20
30,000.00 1 21,044.75 1,753.73 6
Ma.Regina Ansay 50,000.00 1 24,269.74 2,022.48 4
Eduardo Alminiana 20,000.00 8 99,549.94 8,295.83 41
Lyn de Guzman 20,000.00 8 97,249.57 8,104.13 41
Jane Vitug 400,000.00 6 647,164.43 53,930.37 13
Ronnel Mirasol 30,000.00 2 51,510.41 4,292.53 14

11.6. Based on the above table, given the frequency and the total replenishments made
during the year, the average monthly petty cash disbursements is very much lower than
the amount of petty held clearly denoting the Petty Cash Funds ceilings granted to some
Petty Cash Custodians are excessive while some are unnecessary.

74
11.7 Not included in the above table are the Petty Cash Funds of Ms. Larena for the
purchase of drinking water for TESDA Main and gasoline for TESDA executive offices
and OCSA. The Petty Cash Fund for the purchase of drinking water was supposed to be
temporary and only until such time that a new supplier to replace the one whose
contract was pre-terminated has been selected. However, as of this writing, payment for
drinking water is still thru the Petty Cash Fund. We noted that payments to Philippine
Spring Water Resources, Inc. was once weekly in the average amount of P26,974.55 or
P296,720.00 for the period January to November 2008. On the other hand, Ms. Larena
Petty Cash Fund for the gasoline requirements of the TESDA executive offices and the
OCSA is P250,000.00 and average payments per month is P343,096.47. The level of
disbursements cited is clearly beyond the ceiling of allowable disbursements out of
Petty Cash Funds.

11.8 We recommended that:

 Limit the number Petty Cash Custodians and the amount of Petty Cash
Fund to amounts equal to the requirement for one month and limit the
payments to those items which could not be practically paid thru checks
in accordance with the provisions of Section 176, Vol. I of the
Government Accounting and Auditing Manual (GAAM) 4.3.1 of the
COA Cir. No. 97-002 dated February 10, 1997.

 Maintain an account with gasoline and drinking water stations for the
Agency’s gasoline and drinking water requirements by entering into
contracts with these stations and payments be made thru check in
conformity with Section 176, Vol. I of the Government Accounting and
Auditing Manual (GAAM) and par. 2 of the COA Cir. No. 97-002 dated
February 10, 1997.

Cash-in-Bank

12. The accuracy of the reported balances of the various depository accounts
maintained by the Agency cannot be conclusively established due to the absence of or
the delayed submission of bank reconciliation statements; inclusion of long dormant
accounts which under existing regulations must be remitted to the National Treasury;
and non-adjustment of long staled checks.

Unreverted Dormant or Non-Moving Accounts

12.1. Dormant bank accounts at TESDA Main have not been remitted to the National
Treasury or returned to the grantor as required under Section 99 of PD 1445, EO 388 as
amended by EO 441 and Section 4.1 of COA Circular No. 97-001 dated February 5,
1997.

75
12.2. Accounting records show that there are included in the reported balance of cash,
five bank accounts with a total balance of P842,964.14 that have been dormant since
1995 and two accounts totaling P222,807.71 that have been dormant since 2005.

12.3. Verification showed that these cash balances represent unutilized or excess trust
funds from completed projects that were neither reverted to the general fund nor
returned to the grantor upon completion of the project as required under Section 99 of
PD 1445, EO 388 as amended by EO 441 and Section 4.1 of COA Circular No. 97-001
dated February 5, 1997.

12.4. Section 99 of PD 1445 provides for the transfer of unexpended balances to the
general fund any surplus balance standing to the credit of any fund when the officer
having administrative control thereof certifies to the Commission that there is a surplus
in excess of the requirements, or that the work or purpose for which the appropriation
was made has been completed, indefinitely postponed or abandoned, and that there is no
obligation to be paid there from.

12.5. Likewise, EO 388 as amended by EO 441 requires all national government

agencies to immediately transfer all cash balances deposited with authorized
government depository banks or private banks including collections still in the hands of
collecting officers to the National Treasury regardless of income source.

12.6. Relative to this, Management informed that on July 21, 2009, the amount of
P469,509.60 representing the balance of four dormant accounts with PNB had been
received and accordingly remitted to the Bureau of the Treasury.

Non-Preparation and/or Delayed Submission of Bank Reconciliation Statement

12.7. Section 74 of Presidential Decree 1445 requires monthly reconciliation with the
depositories of the agency while COA Circular No. 96-011 dated October 2, 1996
requires the Accountant to reconcile the bank statements with the general ledger of the
agency within ten (10) days from the receipt of the bank statement and submit to the
Auditor concerned the bank reconciliation prepared.

12.8. The objective of bringing into agreement the cash balance per books of the
agency and that of the bank is to establish the correct cash balance at the balance sheet
date and also to prove the integrity of the cash records.

12.9. As of December 31, 2008, the reported cash-in-bank of TESDA–CO was

P88,639,930.20. The completeness and accuracy of the said balance cannot be
ascertained due to the delayed preparation and submission of Bank Reconciliation
Statements. Records show that as of December 31, 2008, the latest Bank
Reconciliation Statements submitted were as follows:

Latest Bank Recon

Depository Bank/FUNDS Account No. Statement
Land Bank of the Phil:
TESDA F101 - Regular 2281-9000-59 April 30, 2008
76
 TESDA F101/Accts Payable April 30, 2008
TESDA - Sariling Sikap Program 2812-1001-68 December 31, 2007
TESDA - F 102 / TESDP (GOP) 2281-9003-00 June 30, 2007
TESDA - Trust Fund 101 2812-1001-76 not submitted
TESDA Development Fund 2812-1012.37 not submitted
TESDA Imprest Account LP Fund 102 2812-1015-80 not submitted
TESDA TVET with ALIVE 2814-0025-38 not submitted
TESDA Trust Fund 102 2812-1023-73 not submitted

12.10. The BRS is not only an important tool for checking the accuracy of the reported
cash balance but is also required under existing regulations to be regularly prepared by
the accounting division for submission to the Auditor within a specified time frame.

Failure to confirm the balances of TESDA’s depository

12.11. The Team sent confirmation requests to TESDA’s depository banks on various
bank accounts maintained by the agency to confirm the correctness of deposits made to
the Land Bank of the Philippines (LBP) for the CY 2008 as stated below. Further, this
office has also sent confirmation requests dated October 24, 2008 and February 10,
2009 addressed to the LBP confirming the correctness of the Investment of Retail
Treasury Bonds (RTBs) from the TESDA Development Fund (TDF) Account. As of
this writing no reply has yet been received by this office from the Land Bank of the
Philippines.

Bank Confirmation Requests Issued

As of December 31, 2008
Depository Bank/FUNDS Account Number Amount
LBP
TESDA Fund 101 (BTR ) 0012-2222-03 779,883.86
0012-2222-03 321,803.07
TESDA-Sariling Sikap Program 2812-1001-68 30,326,868.59
2812-1001-68 9,423,091.51
TESDA - Trust Fund 101 2812-1001-76 1,304,888.53
2812-1001-76 53,346,591.40
TESDA Development Fund 2812-1012.37 2,402,595.46
2812-1012.37 1,129,228.40
TESDA Imprest Account (LP) F 2812-1015-80 512,418.86
2812-1015-80 11,525.90
TESDA TVET with ALIVE 2812-1028-02 15,000,000.00
TESDA-Trust F102 –
TESDP/EDETP/CEEMT 2812-1023-73 7,532,271.22
TESDA Dev. Fund Investment 64,566,014.48
57,470,604.00
53,602,134.19

77
12.12. We recommended that:

 Chief Accountant in TESDA-Main should expedite the reversion of the

remaining dormant accounts to the general fund in accordance with
Section 99 PD 1445 and Section 4.1 of COA Circular No. 97-001 dated
February 5, 1997 and EO 388 and also for the concerned officials of the
respective regional offices to revert/deposit to the BTR the account
balances of LCCA and adjust or reconcile accordingly said account.

 Direct the preparation of bank reconciliation statement to establish the

correctness of the cash accounts reported in the financial statement of
the agency.

 Instruct the Accountant to give specific assignment to staff including the

timely preparation and submission of BRS to the Office of the Auditor
pursuant to Sections 74 and 120-122 of Presidential Decree 1445 and
COA Circular No. 96-011 on the preparation and submission of the
required reports.

Cash Advances

13. Of the P 26.8 M balance of the account Advances to Officers and Employees,
P 7.24 M have remained outstanding for more than 30 days to more than three years
contrary to COA Circular No. 97-002 dated February 10, 1997 and COA
Memorandum 2004-027 dated April 20, 2004 implementing Executive Order 298
dated, March 23, 2004. Likewise personal calls amounting P0 .21M has remained
unsettled for more than three years contrary to Section 2 PD 1445 directing that
government funds shall be spent solely for public purposes and the government policy
that long distance calls shall be limited to official business only. Moreover, in various
TESDA Regional Offices, the unliquidated cash advances amounted to P 8.56M.

13.1. As of December 31, 2008, the consolidated balance of unliquidated cash

advances

 Cash – Disbursing Officers ( Account 103) P 1,815,391.47

 Payroll Fund (Account 106) 17,812,159.29

 Due from Officers and Employees (Account 123) 2,155,532.91

 Advances to Officers and Employees (Account 148) 24,653,738.06

Total P46,436,821.7

13.2. Audit at the TESDA Central Office disclosed that there are unliquidated cash
advances of P 3,082,466.96 for both foreign and local travels, that have been
outstanding for periods ranging from 31 days to three (3) years as shown below:

78
 Age Amount Percent to total
31 to 90 days P 195,609.00 6.35
91 to 365 days 1,211,975.27 39.32
>1year to 2 years 153,728.05 4.99
>2 years to 3 340,774.88 11.06
>3 years 1,180,379.76 38.30
P3,082,466.96 100.00
13.3. We also noted that there were cash advances totaling P329,080.00 granted to three
TESDA Regional Directors way back in 2005 for the payment of Performance award to
the regional personnel that remain unliquidated as at year end. The said cash advances
were for the following regions:

Region Amount
CAR P 82,000.00
Region II 177.080.00
NCR 70,000.00
Total P 329,080.00

13.4. Likewise, cash advances totaling P3,622,636.87 granted to Disbursing Officers

for various purposes have remained outstanding even if the purposes for which these
were granted have been accomplished. Some have been unused for two months or more
denoting that these outstanding cash advances are either excess funds or unnecessary
cash advances. Aging of said outstanding cash advances is shown below:

Age Amount Percent to total

31 to 90 days P 699,000.00 19.30
91 to 365 days 2,484,664.50 68.59
>1year to 2 years 109,063.74 3.01
>2 years to 3 0.00 0.00
>3 years 329,908.63 9.11
Total P3,622,636.87 100.00

13.5. Sec. 16, EO 298 provides that within 60 days after the return to his official station
from foreign travel or 30 days from local travel, the Accountable Officer shall render an
accounting of his cash advance.

13.6. Section 4.1.2 of COA Circular 97-002 which provides that, no additional cash
advance shall be allowed to any official or employee unless the previous cash advance
given to him is first settled or a proper accounting thereof is made, thereby
accumulating cash in the hands of the Accountable Officers which overstates the
agency’s cash account and understates expenses.

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13.7. There were delays in the liquidation of cash advances as required under COA
Circular 97-002 and COA Memorandum 2004-027 dated April 20, 2004 implementing
Executive Order 298 dated, March 23, 2004 because most of the officers and employees
having been granted the cash advance are not aware of the liquidation period or even
aware that they are accountable for their liquidation after the travel have been
completed.

13.8. Another reason is the poor monitoring mechanism by the personnel in-charge of
cash advances. The Accounting Staff failed to prepare an Aging of Cash Advances to
remind the officials and employees concerned of their need to settle their cash advance.

Granting of clearance to retiring accountable officials with unsettled cash advances

13.9. It was noted in audit that a TESDA Cashier who retired from the was granted
clearance without first requiring her to settle her unliquidated cash advances amounting
to P 325,008.23 that have been outstanding for more than three years.

Inappropriate classification of personal long distance calls

13.10. We have noted in the analysis of the details of the reported cash advances that
these include the cost of personal long distance phone calls of TESDA personnel
totaling P209,619.58. The cost of personal long distance calls of employees does with
fall within the context of a cash advance hence, should not be recorded as such. Instead,
these should be classified as accounts receivable from the concerned employees.

13.11. Incidentally, we have noted that a large percentage of the cited receivable
accounts have been outstanding for more than three years. The accounting personnel in-
charge claimed that the concerned personnel have been requested to settle the cost of
their long distance calls but to no avail.

13.12. On the other hand, audit of the regional offices disclosed cash advances totaling
P8,562,438.71 that have remained unliquidated for periods ranging from 31 days to
more than three years. The distribution of the said unliquidated cash advances is shown
below:

RO Particulars Amount
CAR Regional Office P 1,782,592.05
BCSAT 228,126.50
II Unliquidated TEVs and other operating expenses 805,298.44
V Advances to Officers and Employees – Fund 101 662,.246.52
TESDP 140,783.71
BNVTS- Labor Payroll 155,700.00
VI Iloilo PO 149,748.76
PASSI Trade School 74,976.35
VII Non liquidation of Advances to Officers and Employees, 1,136,864.00
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 RO Particulars Amount
Due from Officers and Employees, Due from NGOs/Pos
and Other Receivables
IX Regional Office 899,373.66
Kabasalan IT 1,130,884.77
X Oroquieta AIS - TEVs 530,889.53
XII Cash Advances to Officers and Employees 280,409.38
XIII RO, NMSF, ADN, SDN and SDS 584,545.04
TOTAL P 8,562,438.71

13.13. We recommended that Management:

 Direct the Accounting division to require the respective accountable

officers to immediately settle their long outstanding cash advances
pursuant to the COA Circular No. 97-002 .

 Instruct the Accounting Division to maintain an updated subsidiary

records for each accountable officer for easy monitoring of all cash
advances and its liquidation in compliance with COA Circular No. 97-
002 dated February 10, 1997 and COA Circular 2004-027 dated April
20, 2004 implementing Executive Order No. 298 dated March 23, 2004.

 Stop the practice of granting new cash advance unless the previous cash
advance has been liquidated in accordance with COA Circular No. 97-
002 to avoid accumulation of cash advances in the hands of the
accountable officers and also misstatement of cash balances due to
unrecorded expenditures.

 Enforce the collection/settlement of unpaid personal calls from the

concerned personnel amounting P195,146.05. Henceforth, strictly
implement the policy that long distance calls shall be limited to official
and urgent calls, otherwise it should be charge to the calling party.

 Instruct the abovementioned Regional Directors to immediately

liquidate their outstanding cash advances to prevent the eventual filing
of case against them by the Civil Service or the Ombudsman pursuant
to COA Memorandum No. 2004-014 dated February 24, 2004.

 Direct the liquidation of outstanding cash advances in the

aforementioned TESDA ROs pursuant to COA Circular 97-002.

C. Property, Plant and Equipment Management

14. The accuracy and reliability of the reported Property, Plant and Equipment
totaling P4,278,178,394.51 as of December 31, 2008, P 7B cannot be ascertained due
to unreconciled balances between accounting records and property records/inventory

81
reports for Office Tools and Equipment as of December 31, 2008; non-maintenance
by the Property and Supply Division (PSD) of Property Cards for each category of
PPE accounts and non-submission of Inventory Report of PPE. Likewise, the
account is understated by P 425.642 Million due to the non-booking-up of the cost of
equipment installed at CEMMT area and the non-recording of the donated motor
vehicles in the books of accounts and due to erroneous recording of depreciation and
non inclusion of equipment in the Inventory Report.

14.1. As of December 31, 2008, the reported balance of TESDA’s Property, Plant and
Equipment was P4,278,178,394.51, detailed as follows:

Description Balance
Land P169,037,347.47
Land Improvements 33,250,721.16
Electrification, Power & Energy Structures 1,024,194.63
Office Buildings 836,547,658.13
School Buildings 529,933,813.63
Hospitals & Health Centers 734,569.20
Other Structures 112,079,545.42
Leasehold Improvements, Buildings 17,173,646.40
Other Leasehold Improvements 496,115.29
Office Equipment 256,875,611.72
Furniture & Fixtures 460,757,011.73
IT Equipment & Software 490,110,819.41
Library Books 86,588,253.49
Machineries 120,565,879.69
Agricultural, Fishery and Forestry 14,106,752.49
Communication Equipment 19,815,128.43
Construction & Heavy Equipment 299,654.00
Firefighting Equipment & Accessories 2,426,996.50
Hospital Equipment 29,525.00
Medical, Dental & Laboratory Equipment 1,943,731.66
Sports Equipment 420,557.67
Technical & Scientific Equipment 360,958,271.93
Other Machineries & Equipment 351,895,451.70
Motor Vehicles 115,300,948.65
Watercrafts 7,154,324.77
Other Transportation Equipment 18,038,664.86
Other Property, Plant & Equipment 209,163,329.48
Construction in Progress – Agency Assets 59,301,971.62
Construction in Progress – Other PI 2,147,898.38
Total P4,278,178,394.51

14.2. Audit showed that the Inventory Report was not reconciled with the Accounting
records. Physical Inventory of Office Tools and Equipment made by the PSD as of
December 31, 2007 for Fund 101 and SSP disclosed a balance of P181,557,711.67,
82
while the balance per accounting records is P412,261,259.90, as shown below,
resulting in unreconciled balances of P230,703,548.23. Likewise, the PSD did not
maintain Property Cards for each category of PPE, contrary to Section 43 (par. 4) of the
NGAS Manual Vol. I which provides that PSD shall maintain Property Cards for PPE.

83
 Account Title Account Code Amount
Office Equipment 221 P 32,577,065.96
Furniture and Fix. 222 345,175,900.69
IT Equipment 223 27,658,893.61
Library Books 224 138,361.91
Comm. Equipment 229 6,332,459.73
Firefighting & Acc. 231 51408.00
Med., Dental & Lab. 233 249,600.00
Sports Equipment 235 77,570.00
Total Office Tools & Equipment Fund 101 & SSP (CY2007) P412,261,259.90
14.3. Sec. 490 (a) of GAAM provides that Chiefs of agencies are required to take a
physical inventory of all the equipment and supplies belonging to their respective
offices at least once a year unless otherwise determined by the COA Chairman in
specific cases. Such inventory shall be made as of December 31 on General Form
41(A) and submitted to the Auditor not later than January 31, of each year, unless
extended by the Chairman, COA upon prior request of the chief of agency concerned.

14.4. Thus validation of the existence, condition and costing of the PPE accounts could
not be facilitated in the absence of the Inventory Report.

14.5. Machineries and equipment received and installed at the CEMMT area amounting
to P234,768,436.94 were not yet booked up resulting in the understatement of the PPE
account due to the delayed receipt of the Non-Cash Availment Authority from DBM.

14.6. Seven motor vehicles acquired thru donation from 2004 to 2006 were not yet
booked up due to incomplete copies of deed of donation documents from the Australian
Embassy, German TZ and Office of the VP of the Phils.

14.7. Lastly, the cost of the land over which TESDA’s building is constructed is not
recorded in the books of accounts because there is no title of ownership over the land
acquired by it thru Presidential Proclamation No. 653 dated January 29, 1970, however
there were already surveys made by the Register of Deeds for titling and awaiting for
the Certificate of Title to be released.

14.8. Management commented that it had already secured the copies of deed of
donations of the subject vehicles and is working closely with respective government
offices to secure the special patent to the land being occupied by it. Moreover, it had
created a committee to conduct physical inventory.

14.9. We recommended that Management:

 Direct the PSD to submit the Inventory Report pursuant to Sec. 490 (a)
of GAAM Vol. I and reconcile the Inventory Report with the Accounting

84
 records and establish the correct balances. Investigate differences and
effect necessary adjustments in the books of accounts.

 Direct the PSD to coordinate with the Project personnel in the conduct
of physical inventory so that all PPEs are included in the Report of
Inventory.

 Require the PSD to maintain Property Cards for each category of PPE
pursuant to Section 43 (par. 4) of the NGAS Manual.

 Direct the OIC, Accounting Division to record the CEMMT machineries

and equipment by following up the submission of the required
documents to support the booking up of the subject PPE.

 Create a committee to conduct inspection and appraisal of the vehicle

and direct the accountant to prepare JEV to record the said donated
properties.

 Continue to coordinate with various government offices to establish

legal claim over the land by complying with the requirements of the
Register of Deeds for issuance of Certificate of Title.

 Direct the Accountant in NCR to properly compute the allowance for

depreciation of the PPE accounts.

 Consider the utilization of the equipment which had laid idle in the
regions.

 Coordinate with the RO and suppliers for undelivered/replacement of

defective equipment.

Non Reclassification of Unserviceable and Obsolete PPE-P9.23M

15. Unserviceable and obsolete properties with a book value of P9.23M were not
reclassified into account Other Assets as prescribed under Section 143 Vol. III of the
New Government Accounting System (NGAS) Manual.

15.1. Section 143, Vol. III of the NGAS Manual, provides, “the account Other Assets
(290) is used to record the value of obsolete and unserviceable assets awaiting
disposition as well as those assets still serviceable but are no longer being used. These
items are not subject to depreciation.”

15.2. Based on the Inventory Report of Unserviceable Property submitted by the

Property and Supply Division (PSD), as of December 31, 2006, TESDA had
unserviceable properties totaling P 9,234,056.01 distributed as follows:

Office Balance
85
 CO P2,262,654.79
NCR 3,826,052.35
RO I 840,696.74
RO II 168,274.38
RO XI 1,145,669.30
RO XII 172,982.53
RO XIII 817,725.92
Total P 9,234,056.01

15.3. We have noted that the said unserviceable properties are still carried in the books
under the regular Property, Plant and equipment accounts instead of having these
reclassified into Other Assets (Account 290) as required under Section 143 Vol. III of
the NGAS Manual.

15.4. The physical inventory of unserviceable/obsolete properties has not been

submitted by the PSD to the Accounting Division hence, the required reclassification
cannot be effected by the latter.

15.5. We recommended that Management:

 Require the PSD to submit physical inventory of unserviceable/obsolete

properties to Accounting Division for reclassification, and

 Direct the Accountant to cause the reclassification of

unserviceable/obsolete PPE items to Other Assets account pursuant to
Section 143 of the NGAS Manual.

D. Inventory Management

16. The accuracy, reliability and existence of the reported Inventory as of

December 31, 2009 totaling P 125,009,547.88 is extremely doubtful due to the failure
of the Property Supply Division of some offices to prepare Reports of Supplies and
Materials Issued and to submit the same to the Accounting Division for recording in
the books; direct charging to expense of purchases irrespective of amounts and
failure of some office to conduct physical inventory.

Absence of physical inventory

16.1. Section 490 of the Government Accounting and Auditing Manual (GAAM)
provides that Chiefs of Agencies are required to take a physical inventory of all
equipment and supplies belonging to their respective offices at least once a year. Such
inventory shall be made as of December 31 and submitted to the Auditor not later than
January 31of each year.

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16.2. Our audit of the accounts and operations of the different offices of TESDA
disclosed that this procedure is not being done by some offices. The following regional
offices reported that no physical inventory was conducted:

Office Balances
NCR P 621,321.55
RO V 1,562,777.09
RO IX 4,222,625.61
RO XIII 893,162.34
Total P 7,299,886.59

16.3. As a result of this noted deficiency, the validity, accuracy and existence of the
reported Inventory of Office and Other Supplies of the above offices cannot be
ascertained.

Non-preparation and submission of the Report of Supplies and Materials Issued

16.4. At TESDA – CO, the reported balances of the accounts Office Supplies Inventory
and Other Supplies Inventory totaling P35,0,812.82 as of December 31, 2009 were
noted to be carry-over balances from the previous year denoting no movement during
the year, an abnormal condition considering that these are intended for use in the regular
operation of the office.

16.5. Upon inquiry, the Accounting Division claimed that the said supplies have
already been issued in prior years but the same cannot be recorded for lack of
documentary basis. The Property Supply Division is reportedly not preparing Reports of
Supplies and Materials Issued for submission to the Accounting Division hence, the
failure of said office to record the issuance of such supplies in the books of TESDA CO.
The total overstatement of the inventory accounts of these offices as of December 31,
2009 is P6,466,342.90.

Use of expense method in recording purchases instead of the perpetual inventory

method

16.6. We likewise noted at TESDA CO that purchases of supplies and materials during
the year totaling P22,835,078.84 were directly charged to expense.

16.7. Section 43 of the Manual on the New Government Accounting System provides
that purchases of supplies and materials for stock, regardless of whether or not these are
consumed within the accounting period, shall be recorded under the Inventory account
and the issuance thereof shall be recorded based on the Report of Supplies and
Materials Issued.

16.8. As a result of the erroneous practice, both the reported Supplies Inventory as well
as the reported Supplies Expenses for the year are grossly misstated. This is also true in

87
TESDA RO III and V.

16.9. We recommended that Management:

 Require the Property Supply Division to prepare the lacking Reports of

Supplies and Material Issued and submit the same to the Accounting
Division for updating of the Inventory records;

 Likewise, the Property Supply Division should be required to henceforth

regularly prepare and submit to the Accounting Division Reports of
Supplies and Materials Issued;

 Ensure the conduct of physical stock taking at least once a year as

required under existing regulations and the reconciliation of the result
with the accounting records.

E. Audit of Disbursements

Excessive print media advertisements

17. TESDA has continuously incurred over the last four years, significant
expenses in print media advertisements which, when viewed in the light of the
provisions of Administrative Order No. 103 and COA Circular No.85-55A, are
extravagant and unnecessary as these are not essential in the operations of the
agency.

17.1. Administrative Order (AO) No. 103 dated August 31, 2004 called for the
continued adoption of austerity measures in the government. Said AO prohibits any
activity related to paid, media advertisements, except those required in the issuance of
agency guidelines, rules and regulations, the conduct of public bidding, and the
dissemination of important public announcements.

17.2. TESDA under TESDA Circular No. 17 dated September 1, 2004 adopted the
same guidelines on such observance and adoption of austerity measures. Pertinently, the
Circular, states among others, “Any activity related to paid media advertisements except
those required in the issuance of agency guidelines, rules and regulations, the conduct
of public bidding and the dissemination of important public announcement, is
prohibited”.

17.3. For CY 2008, TESDA incurred a total of P13,592,190.07 in print media

advertisement. Of the said amount, P5,813,344.90 or 42.47 percent was incurred by
TESDA CO while P4,481,600.00 or 32.97 percent was incurred by TESDA RO VI.

17.4. This year’s expenses bring the total print media advertisements incurred by
TESDA CO over the last four years to P18,146,949.22, broken down as follows:

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 Year Amount
2008 P 5,813,344.90
2007 5,073,537.32
2006 5,826,165.48
2005 1,433,901.52
Total P 18,146,949.22

17.5. On the other hand, the total advertising expenses incurred by TESDA RO VI over
the last two years was P7,898,441.60 broken down as follows:

Year Amount
2008 P 4,481,600.00
2007 3,416,841.60
Total P 7,898,441.60

17.6. Common to all the advertisements is the noticeable prominence given to

officials/political personalities including listing of names of Congressmen thereby
detracting attention from the main objective of the advertisements. Moreover, it was
noted that the same advertisements were simultaneously placed in several newspapers
making the advertisement doubly expensive.

17.7. The Team believed that the TESDA does not have to engage into advertising,
recording of songs and jingles and hosts TV programs. The media print advertisements,
the Team surmised, are not important public announcement aimed at educating its
clients and stakeholders and at advocating technical vocational education and training as
claimed by TESDA.

17.8. Management commented that since its creation in 1994 through RA 7796, one of
the greatest challenges that TESDA has had to face is the societal bias against Technical
Vocational Educational and Training (TVET). Culturally, TVET has always been
regarded as a second class career option for most Filipinos giving preference to white
collar over blue collar jobs. Thus, TVET should be continually promoted thru the mass
media as a viable option in the career choice of students and out-of-school youth.

17.9. The need for vigorous and sustained advocacy campaign for TESDA’s major
programs and services is necessary to address primarily the perennial cultural and
societal bias against TVET and secondarily to address the twin problems of mismatch in
the labor supply and demand and the structural unemployment in the country.

17.10. The heightened social marketing and advocacy campaign of TESDA is in

compliance with Section1 of Administrative Order No. 127 issued on August 16, 2007
which directed all national government agencies under the Executive Department to
undertake increased information dissemination campaign regarding their respective
policies, programs and objectives, including their accomplishment and performance, in
order to bring government closer to the people.

89
17.11. In its recent survey, Pulse Asia reported an increased level of awareness in
TESDA and its program and services from 91 in October 2008 to 99 in July 2009. The
Agency’s approval rating also went up from 67 to 69 for the same period. The number
of inquiries on TESDA programs and services through e-mail, SMS and contact center
surged to new heights – an indication of greater awareness and interest from prospective
clients.

17.12. The Team recognizes and appreciates Management’s explanation on the

perceived excessive and unnecessary print media advertising expenses incurred by
TESDA for the promotion of its programs. However, the Team noted that, of the
reported expenses for print media advertising expenses of P13,592,190.07 for CY 2008,
P5,813,344.90 or 42.77 and was spent by TESDA CO while P4,481,600.00 or 32.98
percent was spent by TESDA RO VI.

17.13. If indeed the vigorous and sustained advocacy campaign is to address the
perennial cultural and societal bias against TVET and the twin problems of mismatch in
the labor supply and demand and the structural unemployment in the country, then the
Team believes that all the regions must be accorded equal exposure to TESDA programs
and projects and thus be granted equitable budgetary allocation to ensure the same.

17.14. Since the projected increase in the public’s awareness of TESDA’s

programs had been achieved, we recommended that Management:

 Sustain public awareness and continue the dissemination of TESDA’s

programs thru less expensive medium like the distribution of
information and education campaign materials by TESDA’s 16 regional
offices, 74 provincial offices, 6 district in NCR, 47 provincial training
centers and 57 TESDA supervised schools nationwide. In addition,
optimize the use of the TESDA website in informing the public about the
programs;

 Include as part of the Training Partners’ responsibility, the

indoctrination of the trainees on the benefits and advantages of
TESDA’s training programs to sustain their interest and in turn
encourage others to avail of the training programs offered;

 Limit the more expensive print media advertising to those really

important announcements about TESDA that need immediate and
wider dissemination.

Printing and Binding Expenses-P 47.55M

18. The necessity, propriety of the mode of procurement adopted and the
subsequent distribution to the intended users of the procured coffee table books,
posters and tarpaulins amounting to P47.55 million for the last three years, cannot be
validated due to management’s refusal to furnish the Team of the necessary
documents for the conduct of inspection.
90
18.1. Sec. 2 Art. XII-D of the Philippine Constitution states: “The Commission on Audit
shall have the following powers and functions:

“Examine, audit, and settle, in accordance with law and

regulations, all accounts pertaining to the revenues and receipts
of, and expenditures or uses of funds and property, owned or held
in trust by, or pertaining to, the Government, or any of its
subdivisions, agencies or instrumentalities, including
government-owned or controlled corporations; keep the general
accounts of the Government and, for such period as may be
provided by law, preserve the vouchers pertaining thereto; and
promulgate accounting and auditing rules and regulations
including those for the prevention of irregular, unnecessary,
excessive, or extravagant expenditures or uses of funds and
property.”

18.2. Thus, the Commission shall have exclusive authority (subject to the limitations
under Art. IX of the Constitution) to define the scope of its audit and examination,
establish the techniques and methods required therefore among which are (a) inspection,
(b) inquiry/interview,(c) observation,(d) confirmation,(e) vouching, etc.

18.3. For the past three years 2006-2008, TESDA contracted the National Printing
Office (NPO) to print and bind coffee table books, posters and tarpaulins amounting to
P47.55 million, details below. Of this amount, a total of P17,264,955.40 pertains to CY
2008.

Schedule of Contracts for Printing and Binding

From 2006 to 2008

Particulars/Contract Quantity Check Issued by TESDA Amount

No. Date
CY 2008
Printing of Career 55,000 copies @ 123089 02-27-08 1,660,450.00
Guidance in Ladderized 30.19
Education for Filipino
Empowerment (Student
Edition)
Printing of Career 65,000 copies @ 123396 03-13-08 1,962,350.00
Guidance in Ladderized 30.19
Education for Filipino
Empowerment (Student
Edition)
Printing of Coffee Table 2,000 / copies at 123692 03-28-08 3,032,420.00
Books on Vocational P1,516.21@
Education and Training

Printing of tarpaulins 150,000-poster 130515 05-29-08 2,799,035.40

91
 Particulars/Contract Quantity Check Issued by TESDA Amount
No. Date
and posters (3kinds)
4 pcs-tarpaulin
(20x30ft.)
111pcs-
tarpaulins (8
disciplines)
41pcs-tarpaulins
(YP4SC, Career
Mo Now Na and
Ladders)
Printing of Career 130,000 copies 131085 06-27-08 3,924,700.00
Guidance in Ladderized @ 30.19
Education for Filipino
Empowerment
(Administrator/Guidance
Counselor Version)
Printing of Career 65,000 131084 06-27-08 1,962,350.00
Guidance in Ladderized copies @ 30.19
Education for Filipino
Empowerment (Student
Edition)
Printing of Career 55,000 copies @ 132414 9-4- 1,660,450.00
Guidance in LEP for 30.19
Filipino Empowerment
(Student Edition)
Printing of e-TESDA A/P 10-8 123,200.00
Portal ‘Brochures and
YP4SC Brochures.(APO
Production Unit)
Printing of Poster for 134081 140,000.00
Frame(by Grand C
Graphics)
Sub-total CY 2008 P17,264,955.40
CY 2007
Printing of Tech Voc 06-20 114895 P1,425,126.00
Agenda containing the
ff. books(1)PGMA
Manual (2)YP4SC
Manual (3)lep (4)TVET
Outlook
Note: Awarded to Grand
C. Graphics
Printing of Career 06-21 114902 1,962,350.00
65,000 copies
Guidance in LEP for Fil.
Empowerment (Student
Version) 65,000 copies
Note: Awarded to Grand
C Graphics
Printing of Career Mo 06-29 115057 1,831,500.00
65,000 copies
Now & Ladderized,
poster

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 Particulars/Contract Quantity Check Issued by TESDA Amount
No. Date
Printing of 290 pcs. 06-29 115058 1,292,545.78
290 pcs
Tarpaulin used in the
caravan for LEP by Sec.
Syjuco and party in the
regions.
Printing of 200,000 pcs. 08-03 115820 1,974,000.00
200,000 pcs
poster calendar
Printing of LEP 124,676 copies 08-07 115843 690,591.36
Brochures 124,676 and 96,000
copies and 96,000 copies copies
Songhits
Printing of poster 09-17 116510 1,605,000.00
65,000 copies
calendars, 100,000
copies
Printing of Career 10-16 120413 1,962,350.00
65,000 copies
Guidance in LEP for
Filipino Empowerment
(Student Edition),65,000
copies
Printing of poster 11-12 120812 802,500.00
65,000 copies
calendars, 50,000 copies
Printing of Career 57,000 copies of 11-16 120958 1,962,350.00
Guidance in LEP for poster-
Filipino Empowerment
(Student Edition),65,000
copies
Printing of 57,000 57,000 copies of 11-17 120957 1,682,970.00
copies of poster- Career poster-
mo Now & Ladderized
and 100,000 copies
poster calendars 3 kinds
Printing of Career 12-18 121696 1,962,350.00
65,000 copies
Guidance in LEP for
Filipino Empowerment
(Student Edition),65,000
copies
Printing of Career 12-27 122085 1,962,350.00
65,000 copies
Guidance in LEP for
Filipino Empowerment
(Student Edition),65,000
copies
Sub-total CY 2007 P 21,115,983.14

CY 2006

Printing of Salabat Book 250,000 copies 08-18 102030 P 9,175,000.00

2 - newsprint
@ 36.70
Grand Total P 47,555,938.54

18.4. However, to establish the propriety of the payment to NPO for CY 2008
93
transactions amounting P17,264,955.40, the Team was denied access to conduct the
necessary inspection of the aforesaid books, posters and tarpaulin. The Public
Information Office, in-charge of the printing informed this office that we should first
request authority from the Director General, TESDA, to conduct inspection on dates we
have to specify in our request.

18.5. In a letter dated November 7, 2008, Director General, TESDA, wrote the Audit
Team, thus, “As a matter of standard operating procedure and to forestall any possibility
of misinformation, all inquiries, information and requests for official documents should
ONLY be coursed through the Office of the Director General. These shall in turn, be
officially referred to the attention of the concerned offices/units for appropriate action.
Any such information may be considered as unofficial if the same were gathered
through any other means inconsistent with this management policy.”

18.6. While we have already made the requests to the respective focal persons in early
2008, we were constrained to make the same requests to the Office of the Director
General (DG) in 2009 pursuant to the aforesaid letter.

18.7. However, almost all requests have remained not acted upon up to this writing.
Focal persons or concerned officials would not answer inquiries from the Team on
matters relative to our post-audit without prior clearance from the DG.

18.8. Hence, the audit scope on inspection, inquiries, interview and observation contrary
to Sec. 2 Art. XII-D of the Philippine Constitution and specifically Sec. 126, PD 1445,
the Audit Team was limited and we are not able to validate the existence of the
deliveries, distribution and balances and necessity of printing and the propriety of the
payment of printed materials contracted with NPO.

18.9. It is recommended that management:

 Submit written explanation why the inspection of the subject deliveries

amounting P17.26M was not allowed without prior authority from the
DG, contrary to Sec. 2 Art. XII-D of the Philippine Constitution and
specifically Sec. 126, PD 1445.

Extraordinary and Miscellaneous Expenses

19. TESDA Management again paid in CY 2008, extraordinary and

miscellaneous expenses in excess of the authorized limit prescribed under the
General Appropriations Act amounting P4.353M despite the disallowance of similar
payments made in 2004 to 2007 totaling P5,498,706.60.

19.1. Section 26 of the General Provisions of the 2008 GAA provided appropriations
for the payment of extraordinary and miscellaneous expenses to officials at certain
levels at the following rates:

 P220,000.00 for each Department Secretary;

94
  P90,000.00 for each Department Undersecretary;

 P50,000.00 for each Department Assistant Secretary;

 P38,000.00 for each Head of Bureau or organization of equivalent rank, and for
each head of a Department Regional Office;

 P22,000.00 for each head of a Bureau Regional Office or organization of

equivalent rank; and

 P16,000.00 for each Municipal Trial Court Judge, Municipal Circuit Trial Court
Judge and Shari’a Circuit Court Judge.

19.2. In addition, miscellaneous expenses not exceeding P72,000.00 for each of the
offices under the above named officials were likewise authorized.

19.3. On the other hand, Section 397 of the Government Accounting and Auditing
Manual (GAAM), Volume I prescribed the guidelines for the payment of Extraordinary
and Miscellaneous Expenses. The officials concerned shall be guided by the following
rules:

 The amount fixed by the Budgetary Act for the offices and officials authorized
shall be the basis for control in the disbursement of these funds.

 The entitlement to the benefit shall be on a strictly non-commutable basis. The

corresponding claim for reimbursement of such expenses shall be supported by
receipts and/or other documents evidencing disbursement, if these are available,
or, in lieu thereof, by a certification executed by the official concerned that the
expenses sought to be reimbursed have been incurred for any of the purposes
contemplated under the law or regulation in relation to or by reason of his
position. In the case of miscellaneous expenses incurred for an office specified
in the law, such certification shall be executed solely by the head of the office.

 EME may be taken from any authorized appropriation but shall not exceed the
ceiling set forth in the Appropriations Act.

19.4. Contrary to above cited regulations, the Director General who is the Project
Director of the Technical Education and Skills Development Project (TESDP),
authorized the payment of additional EME to officials already receiving EME under the
General Fund and certain officials designated to internally created positions by the
following officials chargeable against the TESDP Fund (Fund 102) on the contention
that the budgetary allocation of TESDA consists of two distinct and separate funds,
namely Fund 101 and Fund 102 and each fund provides for separate appropriation items
that particularly pertain to EME that may be incurred in the implementation of the twin
projects. Also, TESDA officials who claimed for and received payments for EME from
Fund 102 were all designated in concurrent capacities as Project Officers in their
respective areas of responsibility of the TSDP.
95
19.5. This office issued ND No.08-002 on May 15, 2008, disallowing the grant of
excessive/unauthorized EME amounting P5,498,706.60 covering the period 2004-2007.
The DG appealed said disallowance but the same was denied by the Cluster Director
under NGS Cluster 7 Decision No. 2008-01 dated September 5, 2008, pursuant to the
Revised Rules of Procedure of the COA.

19.6. Despite the disallowance which is now under appeal with the COA Commission
Proper, TESDA again granted excessive EME to twenty seven of its officials both under
Fund 101 and 102 in the total amount of P4,040,770.28 from January to December,
2008, this time at rates even higher than the rates prescribed in the GAA These include
officials who were assigned to internally created offices and whose positions are not of
equivalent rank to those authorized by the DBM. Likewise, Directors assigned to the
Office of the Director General were granted EME totaling P318,500.00 All in all, the
practice in TESDA-Main resulted in the excessive/unauthorized payment of EME in the
amount of P2,738,770.28.

19.7. On the other hand, audit in the regions likewise showed double payment of EME
as follows:

Regions Amount Per GAA Per Audit Over payment

NCR 110,000.00 156,408.01 46,408.01
CAR 110,000.00 253,458.10 143,458.10
1 110,000.00 180,501.00 70,501.00
IV-B 110,000.00 171,500.00 61,500.00
V(PD, Sorsogon, none 16,900.00 16,900.00
Masbate & Catanduanes)
VII 80,000.00 141,500.00 61,500.00
(In addition the amount P57,664.00 of food expenses incurred 57,664.00
during staff meetings, official entertainment of guests/visitors
were charged against Other MOOE instead of against the EME
of the Regional Director. This resulted in unauthorized EME
119,164.00
VIII 110,000.00 172,000.00 62,000.00
XIII 110,000.00 183,890.00 73,890.00
TOTAL 593,821.11

19.8. Management claimed:

 The TESDA officials who were paid additional EME from Fund 102 were
all designated in concurrent capacities as Project Officers of the TESD
Project, in their respective areas of responsibility. Under this set-up, subject
officials perform the dual functions of a regular TESDA official assigned to
an organic unit thereof and of a TESDP-ADB Project Component Manager.

96
  That applicable rules of statutory construction support the view that the
ceilings for the payment of EME provided in Section 26 of the General
Provision, GAA 2008 are applicable to officials who are actually performing
only the duties and function regularly attached to their appointive positions;
and that said section does not prohibit the same officials from receiving
additional EME chargeable against authorized funding for another office to
which they have been duly designated. The officials who actually received
the EME in question may be considered as de facto officers and, as such, are
entitled to retain the emoluments received by virtue of actual services
rendered.

19.9. The foregoing are the same points raised by Management in their appeal now
pending before the Commission Proper of the Commission on Audit. The Team
maintains its view that the grant of the EME both under Funds 101 and 102 is
excessive/unauthorized but will defer to the decision of the Commission Proper.

19.10. We recommended that meanwhile the appeal of TESDA Management on

the disallowance made by the Team on the questionable propriety and legality of
the EME payments, has not been decided with finality by the appropriate
authority, Management refrain from paying double EME to those officials
concurrently assigned to the TESDP and those assigned to internally created
offices but whose position is not of equivalent rank as those approved by the
DBM.

Representation and Transportation Allowances

Continued payment of excessive representation and transportation allowances

20. Excessive/unauthorized Representation and Transportation Allowances

(RATA) amounting to P259,800 in TESDA-Main and P171,600 in RO IX and XII
due to unauthorized or excessive payment of RATA contrary to Sections 45 and 44
of the General Provisions of the 2008 General Appropriations Acts(GAA) despite the
disallowance of the overpayment of said grant of RATA from 2005-2007 in the total
amount of P283,050.00.

20.1. Section 45 of the General Provisions of the 2008 GAA granted monthly
commutable representation and transportation allowances to officials and those of
equivalent rank as may be determined by the DBM, while in the actual performance of
their respective functions, not exceeding the rates indicated below, which shall apply to
each type of allowance:

 P9,500 for Department Secretary;

 P7,500 for Department Undersecretaries;
 P6,700 for Department Assistant Secretaries;
 P6,000 for Bureau Directors and Department Regional Directors;

97
  P5,400.00 for Assistant Bureau Directors;
 P4,800 for Asst. Bu. Regional Directors; and
 P3,500 for Chief of Divisions identified as such in the Personal Services
Itemization and Plantilla of Personnel(PSIPOP).

20.2. However, current audit of the accounts Representation and Transportation

Allowances revealed that some officials were either granted unauthorized or claimed
RA/TA in excess of the aforesaid authorized rates as indicated below despite this Office
disallowance of the grant of the same unauthorized/excessive amounting to P283,050.00
from 2005-2007 which is now pending appeal with the Cluster C Director, NGS.

Payment of transportation allowance to official with service vehicle

20.3. In TESDA RO IX, the audit disclosed that a Vocational School Administrator was
paid transportation allowance in the amount of P42,000.00 for the period January-
December, 2008 despite his use of a 4 wheeler REVO assigned to his office in the
performance of his official functions.

Payment of RATA to a position not provided such benefit under the GAA

20.4. In RO XII, one official assigned to a position that is not included in the Personal
Services Itemization and Plantilla of Personnel, hence no funds had been appropriated
for the payment of RATA was paid a total of P129,000.00 for CY 2008.

20.5. The payment of said RATA was without legal basis due to the absence of the
position in, both contrary to Sections 44 and 45 of the General Provisions of the 2007
and 2008 GAA.

20.6. Management in TESDA-Main maintains that the questioned grant of RATA to the
officials of TESDA is not contrary to the provisions of the GAA. It further claims that
the General Provisions of the GAA should be interpreted and construed in conjunction
with pertinent specific provisions in the Charter of TESDA, RA No. 7796 which is a
special law. Section 8 of the IRR of RA 7796 provides for the power of the Director
General to appoint an Executive Director and such personnel as may be necessary.
Needless to say, it includes the power to designate incumbent TESDA officials to said
positions in acting and concurrent capacities. This personnel action, Management
further claims, is also consistent with the pertinent provision of the GAA which requires
that, to be entitled to the corresponding RATA rates, the concerned officials must be “in
the actual performance of their respective functions”. By way of example, those
designated as and are actually performing the functions of Executive Directors are
entitled to the RATA rates for Director IV. The same is applicable to those designated as
Director III and Division Chief who are actually performing the functions inherent to
said positions. Thus, in keeping with applicable principles of statutory construction, i.e.,
the reconciliation of provisions in a general law with those of a special law, the
pertinent exceptions contained in the AOM should be considered and set aside.

98
20.7. The Team acknowledges Management’s comment on the issue but maintains the
stand that while the TESDA Director General is authorized under the TESDA Charter to
appoint personnel to the different positions within TESDA, that the power to appoint
does not carry with it the power to create positions and set the corresponding
compensation.

20.8. The TESDA’s plantilla of personnel prepared by concerned offices of the

Department of Budget and Management and the compensation rates are covered by the
Salary Standardization Law.

20.9. Section 77 and 78 dealing on Administrative Procedures of the General

Provisions of the GAA, provides that unless otherwise provided by law or directed by
the President of the Philippines, no organizational units or changes in key positions in
any department or agency shall be authorized in their respective organizational
structures and staffing patterns and funded from appropriations provided under the
annual appropriations act. Notwithstanding the number of authorized positions as
provided in the staffing summary of each department, bureau, office or agency, the
appointment of officers and employees shall be limited to the number of authorized
positions in the plantilla of personnel approved pursuant to the organizational structure
provided for in the law creating such department, bureau, office or agency.

20.10. Hence, the Team disallowed the payments made in excess of the authorized rates
and those paid for internally created positions for lack of legal basis. As in the case of
the excessive payment of EME, the Team will defer to the decision of the Commission
Proper.

20.11. We recommended that Management refrain from making additional

payment of excessive and unauthorized RATA until the matter has been decided
with finality by the proper authority.

Unsubmitted/insufficiently documented Disbursement Vouchers P109.23

21. Transactions amounting to P 12.43M in TESDA-Main, P81.87M in TESDA

Regional Office (RO) IV-A, P9.10M in RO VIII and P5.83M in RO XIII, respectively,
were paid without the necessary supporting documents contrary to Section 4 PD
1445, and COA Circular No. 89-299-A dated April 3, 1989.

21.1. Section 4, PD 1445, provides among others, the fundamental principles on

government operations and financial transactions. Paragraph 6 thereof states that
claims against government funds shall be supported with complete documentation.

21.2. On the other hand, Section 6.3, COA Circular 89-299-A dated April 3, 1989
directs the official concerned with the daily recording of transactions in the books of
accounts shall turn over the receipts and the disbursement records with all paid
vouchers and documents evidencing the transaction to the Auditor within 10 days after
such records, vouchers and documents have been received by such official for recording
in the books of accounts.

99
21.3. Verification of the Report of Checks Issued (RCI), Check Disbursement Journal
(CkDJ) against the submitted DVs showed that there were various DVs totaling
P12,429,977.05 by TESDA – Main were not submitted contrary to Section 107 of PD
1445. Details of which is shown in Annex 7.

21.4 In TESDA RO IV-A in Laguna PO, Quezon PO, Rizal PO and Batangas RTC
covering the period CY 2007-2008, the various paid disbursement vouchers totaling
P81,865,603.59 were not likewise submitted contrary to Section 107 of PD 1445 as
shown in the Table below:

Agencies Quantity 2007 2008 Total

RO 52 P 8,349,270.68 P 8,349,270.68
360 P72,650,801.60 72,650,801.60
Laguna PO 17 428,420.00 428,420.00
Quezon PO 4 127,933.86
Rizal PO 1 9,934.25
Batangas RTC 6 299,243.20
Total 440 P 8,349,270.68 P73,516332.91 P81,865,603.59

21.5 While in TESDA RO VIII, Northern and Eastern Samar, the unsubmitted vouchers
amounted to P7,651,348.26 contrary to Sec.6.3 of COA Circular No.89-299A dated
September 8, 1989. In addition, in the same provinces disbursements in the total amount
of P 1,452,772.03, lack the necessary supporting documents contrary to Sec. 4, PD
1445, resulting either in audit suspensions or disallowance:

Lacking of
Agency Unsubmitted DVs Supporting Total
Documents
Regional Office P 3,239,908.95 P P 3,239,908.95
Northern Samar 1,746,365.00 812,995.58 2,559,360.58
Eastern Samar 2,665074.31 639,776.45 3,304,850.76
Total P 7,651,348.26 P 1,452,772.03 P 9,108,120.29

21.6. Lastly, in TESDA RO XIII, a total of 271 disbursement vouchers (DV) for paid
transactions totaling P5.833 Million as of October 31, 2008 were not supported with
complete documentation to substantiate the legality of the expenses incurred, contrary
to Section 138(f) of GAAM Vol. I and Section 4(6) of PD 1445. Likewise, 45 DVs
were not submitted for audit as required under Sec. 6.3 of COA Circular No. 89-299(a),
thus, precluding the Auditor from the timely review and conduct of audit of accounts.

21.7. The validity of the subject transactions cannot be passed upon by COA due to the
non-submission of the pertinent disbursement vouchers and supporting documents. It
could not also be determined whether the transactions are for public purposes and bear
the approval of the proper official, resulting in irregular transactions.
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21.8. We recommended that management require the immediate submission of the
subject disbursement vouchers and all supporting documents pursuant to Sections
4 and 107, PD 1445 and COA Circular No. 89-299-A dated April 3, 1989.
Continued failure of the concerned officials and employees casts doubt on the
validity and/or regularity of the subject transactions hence may be a ground for
disallowance in audit.

F. Gender and Development

22. The GAD programs and activities, actual amount utilized and the nature for
which it was expended cannot be verified due to non-submission of reports in the
implementation and utilization of the funds.

22.1. Section 31 of RA 9498 (GAA CY 2008) provides that all government agencies
shall formulate a Gender and Development (GAD) plan designed to address gender
issues within their concerned sectors or mandate and implement applicable provisions.
The cost shall be at least 5percent of the agency’s budget appropriation.

22.2. Joint Circular No. 2004-01 issued by the DBM, NEDA, and NCRFW, as well as
other guidelines on GAD Planning and Budgeting issued by the appropriate oversight
agencies prescribed the guidelines in the preparation and submission of annual GAD
Plans and annual GAD Accomplishment Reports.

22.3. The implementation of the GAD plan which proceeds from the conduct of gender
analysis, the generation and review of sex-disaggregated data, and consultations with
gender advocates and women clientele is expected to contribute to poverty alleviation;
economic empowerment especially of marginalized women; protection, promotion, and
fulfillment of women’s human rights; and the practice of gender-responsive governance.
Utilization of the GAD budget shall be evaluated based on the GAD performance
indicators identified by the agency.

22.4. In response to our request for their GAD Plan and GAD Accomplishment Report,
Management in TESDA-Main, in a letter dated June 8, 2009 informed that the GAD
Report was only submitted on May 25, 2009 due to several problems encountered in the
course of the preparation of the said report such as difficulty in collecting the report
from the regions, it was observed that most of the activities indicated were not GAD-
related so that there was a need to verify from the Focal Persons. Lastly the GAD Focal
Person was reportedly also swamped with other duties and responsibilities.

22.5. In NCR, the implementation by the region and its district offices of programs,
activities an projects related to the GAD as mandated has been short of target, thus
defeating the objectives of GAD Plan to promote gender-responsive governance, protect
and fulfill women’s human rights and promote women’s economic empowerment.

22.6. In TESDA, RO V only 6 of the 15 offices of the region implemented programs on

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GAD, thereby depriving personnel of the other 9 offices of the benefits derived from the
GAD Program.

22.7. On the other hand, TESDA RO XIII, failed to allocate 5 percent from its total
budget appropriation for GAD programs, projects and activities to address gender issues
and concerns.

22.8. We recommended that Management:

 Require the timely submission of duly accomplished Annual GAD Plan

and Accomplishment Reports following the format prescribed under
Annex A & B of Joint Circular No. 2004-1 issued by the Department of
Budget and Management (DBM), National Economic and Development
Authority (NEDA) and the National Commission on the Role of Filipino
Women.

 Instruct the officials concerned in the regions to allocate 5 percent of its

total budget related to GAD activities to address the gender issues and
concerns of their clients and/or the organization in coordination with
TESDA Central Office.

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