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PART III – STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT RECOMMENDATIONS

Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
FINANCIAL AND COMPLIANCE
AUDIT
CY 2012
1.1 The existence, correctness, reliability CY Management No result yet of the Partially There were settle-
and collectibility of the balance of the 2012 agreed to evaluate evaluation of the Implemented ments made by
account “Receivables- Disallowance and AAR, the amount of P1,577,815.56 that employees who
Charges” as of September 30, 2012 p. 22 P1,577,815.56 that was set up in the e- retired within the
amounting to P1,276,202.91 could not - 24 was set-up in the e- NGAS in 2006. year, However,
be ascertained due to erroneous journal NGAS during 2006 there was no
entries, flawed aging schedules of the and is withholding of
account, absence of the subsidiary contemplating on salaries from
ledgers/records for prior years’ dropping these employees with
disallowances and failure to enforce the subsidiary ledger disallowances who
settlement of the disallowances, contrary balances from the are still connected
to Sections 111 and 112 of P.D. 1445, books of accounts with the agency.
Sections 53 and 55 of the NGAS in consultation
Manual, Volume I and Sections 7.1 and with the COA due
7.2 of COA Circular No. 2009-006 dated to the absence of
September 15, 2009. supporting
documents.
We recommend that Management:

a. Cause the settlement of disallowances


by requiring the withholding of
salaries and other compensation due
the person liable in satisfaction of the
disallowance or charge;
b. Ensure that all employees who are
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Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
retiring or transferring to other
agencies shall first settle the
disallowances and charges for which
they are liable; and

c. Evaluate/review the amount of


P1,577,815.56 that was set-up in the
e-NGAS during 2006 and prepare
adjusting entries to appropriate
subsidiary ledger accounts of each
official/employee in order to monitor
their respective balances and reflect
the accurate Receivables-
Disallowances and Charges account.

1.2.1 The BUGEP did not comply with CY The BUGEP Expenses related to Partially There were still
COA Circular No. 97-002 which 2012 Director was check up of vehicle Implemented payments for
prescribed the regulations on the AAR, instructed to is still charged to check up of
granting, utilization and liquidation of p. 25- strictly comply the Petty Cash fund vehicle which
cash advances. 26 with the audit established for were taken from
recommendation. gasoline and repairs PCF.
We recommend that management should of service vehicles.
take note of the above-mentioned Cash advances of
deficiencies and henceforth, strictly BUGEP are now
comply with the COA Circular No. 97- monitored
002 on granting, utilization and regularly by the
liquidation of cash advances in order to Internal Audit
prevent their recurrence. Service Division.

71
Reasons for
Observations and Recommendations Ref.
Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
1.2.2 Unnecessary expenses totaling CY According to Management still Not Periodic
P62,557.51 were incurred during the 2012 Management, the allowed the periodic Implemented maintenance of
year in connection with the regular AAR, periodic maintenance of the vehicle of BUGEP
check-up/maintenance of the BUGEP p.27 maintenance of the BUGEP Service are still done in
Service Vehicle contrary to COA BUGEP Service Vehicle at Batangas City,
Circular No. 85-55A as amended by Vehicle is now Batangas. although, the
COA Circular No. 2012-003. being made at Travel Orders are
Toyota Service for Naga City
We recommend that Management Center, Naga City. only.
should, henceforth, have the periodic
maintenance of the BUGEP service
vehicle at the Toyota Service Center in
Naga City in order to save on costs.
Management should avoid unnecessary
expenses in the future.

1.2.3 In four (4) instances, the travel CY The Management Management still Partially Although the
claims of drivers in connection with 2012 instructed the allowed the periodic Implemented actual travels for
regular check-up/maintenance of the AAR, Accountant of BU maintenance of the the regular check-
BUGEP Service Vehicle in Manila p. 27 Gubat Extension BUGEP Service up of vehicle were
exceeded the travel period indicated in - 28. Program (BUGEP) Vehicle at to Batangas City,
the Driver’s Trip ticket and/or Travel to comply with the Batangas. the travels claims
Order. In another instance, travel was audit were only for
made to a destination not covered by the recommendation. Naga City.
Travel Order.

We recommend that the Accountant


should allow only claims to a destination
and within the travel period indicated in

72
Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
the Travel Order. Deviations of actual
travel from the duly approved travel
order should be properly justified.

1.3 Gasoline and oil consumption of CY The BUGEP Implemented We found that the
Bicol University Gubat Extension 2012 submitted a submitted reports
Program (BUGEP) vehicles for CY AAR, compilation of the were complete and
2012 totaling P99,256.75 was not p. 28 monthly reports of in accordance with
properly controlled and regulated - 30 fuel consumption the pertinent COA
contrary to existing COA rules and and official travel rules and
regulations. of its service regulations.
vehicle from
We recommend that Management should January to
adhere to the above-mentioned December 2013.
regulations. Specifically, it should:

1. Require the submission of the


Requisition and Issue Vouchers (RIV)
[with an indication of the plate
number of the vehicle and duly
signed/acknowledged by the driver]
as a basis for the procurement of
gasoline and as a one of the
supporting documents to the
disbursement;
2. Require the authorized driver to
submit complete periodic reports
such as the Monthly Reports of
Official Travel for each vehicle

73
Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
(supported by Driver’s Trip Tickets)
and the Monthly Report of Fuel
Consumption (supported by the RIVs
or its equivalent);
3. Use the prescribed format of the
Monthly Report of Fuel
Consumption;
4. Use serially-numbered Driver’s Trip
Tickets as required by COA Circular
No. 77-61;
5. Require the authorized driver to
properly, accurately and completely
fill up the Monthly Report of Fuel
Consumption and Driver’s Trip
Tickets; and
6. Include in the Monthly Report of Fuel
Consumption all vehicles used by
BUGEP.

1.4 Existing conditions regarding the CY Management will Management’s Partially Subject employees
hiring of Job Order/Contract of Service 2012 review and inquire review of the Implemented are still under Job
personnel indicate the existence of AAR, with the Civil existing conditions Order/Contract of
employer-employee relationship p. 30- Service regarding the hiring Service.
contrary to CSC Resolution No. 020790 31 Commission on the of Job
and CSC Memorandum Circular No. 17 conditions Order/Contract of
S. 2002. regarding the Service personnel
hiring Job and inquiry with
We recommend that Management should Order/Contract of concerned agencies
review the existing conditions regarding Service personnel. is yet to be

74
Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
the hiring of Job Order/Contract of The Management completed.
Service personnel in the light of the coordinated also
above-mentioned Supreme Court with DBM and as
decision. of now, the
management is
drafting the various
positions that
would be created
for present Job
Order/Contract of
Service employees
for a contract-
ualization scheme
that the
management is
contemplating in
lieu of the Job
Order/Contract of
Service for
submission to the
DBM.
1.5 Fund Transfers to DPWH, Regional CY Management DPWH is yet to Partially The P1,952,755.48
Office No. V for the implementation of 2012 informed the Audit submit its Implemented due from DPWH
various projects totaling P1,952,755.48 AAR, Team that the liquidation report. remained
remained unliquidated for over one year p. 32- personnel in- unliquidated as of
to more than three years, contrary to 33 charge of these December 31,
COA Circular No. 94-013 dated projects was 2013 (please refer
December 13, 1994 and the already notified to Note 5, Notes to
Memorandum of Agreement (MOA) and that the Financial

75
Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
dated August 15, 2008 executed by and University is Statements).
between the Bicol University, Legazpi waiting for the full
City and the DPWH, Regional Office liquidation of the
No. V, Legazpi City. fund transfers.

We recommend that Management


enforce strictly the provisions of COA
Circular No. 94-013 dated December
13, 1994 and the MOA by requiring the
DPWH, Regional Office No. V to
completely liquidate the funds
transferred considering that the agreed
period for the implementation/
completion of the projects is long
overdue.

1.6 Unauthorized payroll deductions due CY Management Management failed Partially For CY 2013, the
to private banks and insurance 2012 vowed to to ensure uniform Implemented accountants of
companies totaling P1,569,484.35 were AAR, implement the compliance of the most of the
made from the employees General p. 33 Audit Team’s campuses/colleges campuses/colleges
Payroll for Salaries, and the net take - 34 recommendation. to the requirement did not comply
home pay of some employees were less herein stated. with the required
than P5,000.00, contrary to Section 37 P4,000.00 net take
of the General Appropriations Act for home pay of
FY 2012. government
employees as
We recommend that management stop required by
the practice of effecting deductions from Section 37 of
the payrolls of employees which are not GAA of FY 2013.

76
Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
authorized to be deducted under Section
37 of GAA for FY 2012 and to observe
the authorized employee’s net take home
pay of not lower than P5,000.00.

1.7 Purchases of office supplies CY Management Concerned units Partially There are still
amounting to P1,882,955.44 were 2012 informed the Audit failed to strictly Implemented numerous
charged/recorded directly to expense AAR, Team that the observe the proper purchases that
contrary to Sections 4, 43, 47 and 287 of p. 34 Accountants of accounting method were recorded
the New Government Accounting -35 various campuses for the procurement directly to Office
System (NGAS) Manual. were already and issuance of Supplies Expense
instructed to supplies and account instead of
We recommend that the Management observe the materials as using the perpetual
instruct the Accountants to observe the perpetual inventory required under the inventory method.
perpetual inventory method of method of NGAS Manual.
accounting for the procurement and accounting for
issuance of supplies and materials as supplies.
required under the NGAS Manual.

1.8 The “Items in Transit” and “Other CY Management Evaluation, analysis Not To date, no request
Receivables” accounts under Fund 164 2012 instructed the and reconciliation Implemented for authority to
with book balances of P320,297.49 AAR, accounting section of Items in Transit write off was
and P264,192.02, respectively as of p. 36 to evaluate and with pertinent received by the
December 31, 2012 have remained in analyze the “Items records is not yet audit team.
the books with no significant in Transit” and prepared by the
movements for more than five (5) proper adjustments accounting section. Instead, the Audit
years, rendering said accounts dormant. will be made after team noted that
Thus, these accounts need to be cleared the reconciliation. P222,083.46 Due
from the books of accounts, after review from Officers &

77
Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
and analysis of the accounts, pursuant to Employees and
COA Circular No. 97-001. P137,732.00
Advances to
We recommend that Management: Officers and
Employees were
a. Exert vigorous efforts to review and reclassified to
analyze the accounts “Items in Other Receivables
Transit” and “Other Receivables” account thru JEV
and proper adjustments be made No. 2012-11-
after the reconciliation. If the 026907.
analysis or review of the accounts is
not possible due to the absence of
records or documents, the agency
should request from COA for
authority to write-off the balances of
said accounts duly supported with all
the necessary documents as required
under COA Circular No. 97-001;

b. Determine the lapses in the reporting


and recording procedures of the
transactions in order to prevent the
occurrence of the same; and

c. Maintain and update regularly the


subsidiary ledgers for the
aforementioned account to facilitate
verification and audit.
1.9 Cash advances for wages, incentives, CY Management Implemented Analysis of the
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Reasons for
Observations and Recommendations Ref.
Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
tuition fees under the scholarship 2012 informed the Audit entries to the
programs of Ako Bicol (AKB) and other AAR, Team that it started Subsidiary Ledger
party-list totaling P249,244.20 were p. 37 using the Advances (SL) during the
recorded under the account “Cash- - 38 to Officers and Calendar Year
Disbursing Officer” instead of Employees account (CY) 2013
“Advances to Officers and Employees”, in fiscal year 2013. revealed that
contrary to Accounting Circular No. cash advances
2006-001. pertaining to
specific purpose
We recommend that Management should were accounted
require the Accountant/ Bookkeepers to under Advances to
comply strictly with Accounting Circular Officers and
No. 2006-001 in recording various types Employees (148)
of cash advances. account.

1.10 Expenses totaling P101,350.73 CY Management Supporting Not At BU Tabaco


pertaining to CY 2011 transactions were 2012 replied that the documents for prior Implemented and Gubat
charged against the current year’s AAR, billing statements year’s expenses (e.g Campuses the
appropriations/allotments, contrary to p. 38 for security, travel claims) are Audit Team still
Section 141 of the Government - 39 electricity and not timely received noted prior year’s
Accounting and Auditing Manual, water expenses for for recognition in expenses charged
Volume I and Section 63 of the General the month of the proper period. to current year’s
Appropriations Act for FY 2012. December 2012 appropriations.
were received only
We recommend that Management stop in January 2013.
the practice of charging prior year’s
expenses to the current year’s

79
Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
appropriations.

1.11.1 The delayed submission of copies CY Management Management failed Partially There are BU
of approved contracts and 2012 called a meeting to ensure uniform Implemented campuses/colleges
purchase/letter orders and their AAR, for this purpose strict observance of that did not
supporting documents in violation of p. 39 and reminded all all its units/colleges implement the
COA Circular No.2009-001 precluded - 41 concerned to to the required recommendation
the timely review and verification of comply with the timeline of while there are
said transactions and/or inspection of audit submission of campuses that
deliveries by the Auditor. recommendation. copies of approved partially imple-
contracts, mented the same.
In view of the foregoing, we recommend purchase/letter
strict observance by the Management, orders and their
including its units/colleges, particularly supporting
those personnel responsible for the documents.
preparation and issuance of contracts
and purchase/letter orders, on the
required timeline of submission of these
documents to the Office of the Auditor
(COA) pursuant to COA Circular No.
2009-001.

1.11.2 Purchase/letter orders were not CY Management Management failed Partially Only BUGASS
properly accomplished, contrary to the 2012 called a meeting to ensure uniform Implemented complied with the
format prescribed in Appendix 52 of the AAR, for this purpose strict compliance of recommendation
Manual on the New Government p. 41 and reminded all all its units/colleges while other
Accounting System (NGAS), Volume II. - 42 concerned to to the format campuses/units did
comply with the prescribed in not implement the

80
Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
We recommend that Management audit Appendix 52 of the recommendation.
require personnel/officials responsible recommendation. Manual on the New
for the preparation and issuance of Government
purchase orders/contracts to properly Accounting System
accomplish all the required (NGAS), Volume II
data/information in the Purchase Order for the proper
in order to effectively serve as a basis accomplishment of
for enforcement of the terms and Purchase/Letter
conditions contained therein. orders.
2.1 Overtime payments were granted to CY The BCARRD There is no definite Partially Refund of claimed
the Consortium Director and 2012 Consortium instruction from Implemented overtime of
Coordinator of BCARRD Project- AAR, Director justified Management for the concerned officers
PCARRD Counterpart Contribution who p. 42 and requested implementation of was not made yet.
were already paid with honoraria on the - 44 reconsideration for the refund of the
same project, contrary to Section 283 of the audit claimed overtime of
Government Accounting Auditing observation. concerned officers.
Manual (GAAM), Volume I, and
Section 5.3 of DOST Memorandum
Circular No. 001, series of 2003
resulting to irregular and improper
utilization of project funds.

We recommend that Management


should:

a. Adhere strictly with Section 283 of


the Government Accounting and
Auditing Manual, Volume I and
DOST Memorandum Circular No.

81
Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
001, series of 2003;
b. Stop the practice of paying overtime
services to personnel already granted
with honoraria; and
c. Require the concerned personnel to
refund the amount of overtime
claimed contrary to the above-cited
provisions.

2.2 Receipts of funds totaling CY Management Management’s Not The accounting


P478,962.00 for PCARRD Projects and 2012 informed all decision caused the Implemented section failed to
PCARRD Counterpart Contributions AAR, concerned to deposit of the deposit with the
were deposited in the Cash in Bank- p. 44 adhere strictly with project fund to the Bureau of
Local Currency Current Account while - 45 the governing laws Special Trust Fund. Treasury the fund
disbursements totaling P303,332.02 for on utilization and received on Dec.
the respective projects as of September accounting of Trust 19, 2013 for DOH-
30, 2012 were charged against the funds Funds. MCNHN Project
under Cash-National Treasury, MDS- amounting to
Trust account contrary to the GAA for P1,675,000.00 and
FY 2012, E.O. No. 338 and Section deposited the same
138(c) of GAAM, Volume I. Thus, to current account
funds under Cash-National Treasury, of Special Trust
MDS-Trust account were not properly Fund and
utilized according to its purpose. proceeded with the
disbursement,
We recommend that Management contrary to the
should: cited regulations.

a. Adhere strictly to the provisions of

82
Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
General Appropriations Act for FY
2012, Executive Order No. 338 and
Section 138(c) of the Government
Accounting and Auditing Manual,
Volume I relative to the receipt and
utilization of the trust funds;
b. Direct the Accountant to prepare
bank reconciliation to ascertain the
ending balance of the trust fund in
the CIB-LCCA for the
aforementioned projects; and
c. Immediately transfer the unexpended
balance from the CIB-LCCA to the
Cash-National Treasury, MDS
account and consequently, request
from the Department of Budget and
Management the issuance of Notice
of Cash Allocation for the respective
projects.

2.3 Unused funds transferred by the CY The representative Implemented We have verified
Commission on Information and 2012 of the Dean of specific projects in
Communications Technology (CICT) to AAR, College of Science 2013 such as Bicol
Bicol University (BU) was utilized to p. 45 justified the audit Consortium for
purchase computer supplies amounting - 46 observation during Health Research &
to P44,471.00 after the termination of the exit Development
the project, contrary to Section II (3.11) conference. (BCHRD), Project
of the Memorandum of Agreement and for the
Section 4.9 of COA Circular 94-013. Establishment of

83
Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
Research and
We, therefore, recommend that the Technology
management should always comply with Commercialization
the provisions of the MOAs of projects and Information
funded by various funding agencies to Center at the Bicol
avoid possible refusal of future requests University College
for funding. of Agriculture and
Forestry and other
projects. We
found that
agreements as
contained in
respective MOAs
were complied
however with
certain exceptions
duly
communicatedto
the Management.
2.4 Stipends of 80 scholars amounting to CY Management There were noted Partially Implemented as to
P 400,000.00 under the Graduate 2012 instructed the delays in the Implemented the adjustment
Diploma in Cultural Education Program AAR, Accountant of provision of funds required, however,
were paid out of the Special Trust Fund p. 46 BUGS to effect the from the funding there are still
(Fund 164) contrary to Section 138 (a) - 48 necessary agency. instances noted
and (c) and 609 of the Government corrections in the that disbursements
Accounting and Auditing Manual books of accounts. were made from
(GAAM), Volume I. The cash advance project funds even
for the purpose was made even before without the request
the receipt of the Notice of Cash and receipt of

84
Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
Allocation (NCA) from the Department NCA.
of Budget and Management.

We recommend that management should


refrain from using Special Trust Funds
to defray for expenses of projects funded
by other agencies and see to it that
disbursement from project funds should
be made only when the corresponding
NCA has been received from DBM. The
necessary adjustments for the erroneous
recording should also be made in Fund
164.

2.5.1 The research team for the project CY The University There was a delay Partially There were still
entitled “Assessment of the Status of 2012 acknowledged the in the Implemented some deviations
Swimming Crabs Fishery Resource in AAR, audit implementation of from the terms and
San Miguel Bay with focus on Christian p. 48 recommendation the audit conditions stated
Crab” did not strictly comply with - 50 and immediately recommendation. in the project
certain provisions of the Project informed the documents noted
Documents. Project Team to by the audit team.
strictly comply
We strongly recommend that the Project with the terms and
Team should strictly comply with all the conditions
terms and conditions stated in the provided in the
project documents. project documents.

2.5.2 Management violated existing CY The Management Not all audit Partially
accounting and auditing laws, rules and 2012 instructed the recommendations Implemented

85
Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
regulations in the utilization and AAR, accountable officer were implemented.
recording of project funds. p. 50 concerned to
- 52 strictly comply a) Delayed
a) We recommend that the Accountable with the provisions liquidation of
Officer who made the cash advance of COA Circular cash advances
should immediately liquidate the 97-002. were still noted.
same as soon as the purpose for
which it was given has been served. b) The necessary
The date of the liquidation report correction was
should be clearly indicated therein. already made in
April 2013.
b) The Accountant should immediately
make the necessary correction in the c) This could not
books of accounts of the Bicol be fully
University - Tabaco Campus implemented
(BUTC). because the
Bureau of
c) We recommend that separate series Treasury’s
of checks (50 checks per stub) should directive is to
be assigned for each program. As an reduce the
added control, issuance of number of bank
checkbooks to a particular program accounts
should be recorded in a logbook to maintained.
facilitate accounting for the same.
d) Already
d) Management should explain the explained by
seeming discrepancy and, in the the
future, be careful in putting Management
information on supporting and

86
Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
documents since these are usually incorporated in
the primary basis for auditing. CY 2012 AAR.

CY 2011
3.0 Cash advances for wages, CY Management Implemented Analysis of the
honorarium, stipend, incentives, refund 2011 promised that the entries to the
of tuition fees and rewards totaling AAR Cash-Disbursing Subsidiary Ledger
P1,124,430.69 were recorded under the page Officer account (SL) during the
account “Cash- Disbursing Officer” 27 will be sorted out, Calendar Year
instead of the “Advances to Officers and for reclassification (CY) 2013
Employees” account, contrary to to the appropriate revealed that
Accounting Circular No. 2006-001 dated accounts. cash advances for
November 9, 2006, thereby affecting the the salaries,
fair presentation of the accounts in the wages, honorarium
financial statements. and other benefits
of BU officers and
We recommended that Management employees were
require the Accountant/Bookkeepers to accounted under
record cash advances for salaries, the Payroll Fund
wages, honoraria for extra teaching (Account Code
load and other personnel benefits of the 106). We however
officers and employees of the noted a minimal
College/Unit under the “Payroll Fund” balance for the
account and cash advances for travel Cash-Disbursing
and other special time-bound Officer account
undertaking under the “Advances to (103) as at the
Officers and Employees” account in close of 2013
compliance with Accounting Circular which is due for

87
Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
No. 2006-001 dated November 9, 2006. adjustment. See
also item 1.9, CY
2012 (p.78).

3.1 Monthly Treasury Reconciliation CY The Chief The Accounting Partially The Audit team
and Bank Reconciliation Statements 2011 Accountant office admitted that implemented made an inventory
were not prepared and submitted for the AAR informed the audit insufficient of the Bank
Cash-National Treasury, Modified page team that manpower hindered Reconciliation
Disbursement System (MDS) and Cash- 33 Accountants are timely and complete Statements
in Bank, LCCA under Funds 101, 164 aware of the accomplishment transmitted to
and 161 as of December 31, 2011, requirement for the and submission of COA. We found
respectively, as required under Section Bank the set of bank that most recent
74 of P.D. 1445, COA Circular No. 92- Reconciliation reconciliation reports were for
125A dated March 4, 1992 and COA Statements. statements for the the cash in bank
Circular No. 96-011 dated October 2, bank accounts. account balances
1996, hence, correctness of the reported They give priority as of September
balances of the Cash in Bank accounts in to Funds 101 and 2013 (Fund 164)
the financial statements totaling 164 accounts. and June 2013
P174,262,971.43 could not be readily (Fund 101)
ascertained. transmitted on 21
May 2014 and 5
We recommended that Management: November 2013
respectively.
a) Require the Accountants and
Bookkeepers to update and prepare
the monthly Treasury and Bank
Reconciliation Statements for each
bank account and to submit these

88
Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
statements together with the bank
records/statements, paid checks and
other necessary documents to the
Auditor within the prescribed
period;
b) Make a strong representation with
the Officers of the depository banks
to deliver/produce the bank
statements and its attachments on
time so that the
Accountant/Bookkeepers could
reconcile its records with the bank;
and
c) Automatically, cause the suspension
of payment of salary of the
Accountants and other concerned
employees of the agency, in case of
continuous failure to prepare and
submit the monthly BRS, until they
have complied with the prompt
submission of the BRS.

3.2 Accounting and Cashier’s Records CY The Audit team Strict compliance to Partially In the conduct of
of BUTC were not regularly reconciled 2011 was informed that the periodic Implemented cash examination
inconsistent with Section 181 (c) of the AAR Accountants and reconciliation of in 2013, the audit
Government Accounting and Auditing page Cashiers cash balances team noted
Manual (GAAM), Vol. I, thus, 35 periodically between accounting cashier’s records
correctness of balances of cash between reconcile their and cashier’s which were not
accounting and cashier’s records could records. records is not updated thus not

89
Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
not be ascertained. consistently consistent with a
observed. Lack of supposed periodic
We recommended that Management manpower and reconciliation of
require the Cashier to coordinate with volume of records. See also
the Agency Accountant for the transactions were Audit Observation
immediate reconciliation of the noted reasons. 7.3 pp.66-68.
individual balances of these accounts
between her cashbook and relevant
accounting records and make the
necessary adjustments thereof.

3.3 The purchases of office supplies CY Management Concerned units Partially There are still
made by BU-Main Campus and its Off 2011 informed the Audit failed to strictly Implemented numerous
Campuses amounting to P4,030,132.44 AAR Team that the observe the proper purchases that
were recorded as outright expense page Accountants of accounting method were recorded
contrary to Sections 4 and 43 of the New 40 various campuses for the procurement directly to Office
Government Accounting System were already and issuance of Supplies Expense
(NGAS) Manual, Volume I, resulting in instructed to supplies and account instead of
the understatement of Office Supplies observe the materials as using the perpetual
Inventory (155) account and perpetual inventory required under the inventory method.
overstatement of Office Supplies method of NGAS Manual. This audit
Expense (755) account, thereby accounting for observation is of
affecting the fair presentation of the supplies. similar nature to
accounts in the financial statements as of an audit
a particular date. observation in
2012 as discussed
We recommended that Management in page 77 of this
implement the perpetual inventory section.
method of accounting for the

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Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
procurement and issuance of supplies
and materials. The procured supplies
should be recorded as inventories upon
acquisition and delivery while issuances
thereof during the accounting period
should be recorded as expense. The
recorded expense shall be supported
with the Report of Supplies and
Materials Issued, Requisition and Issue
Slip and other evidences that would
support their issuances to the end-users.

3.4 The account balance of Other CY An Inventory The Inventory Not We found that no
Supplies Inventory (165) as of 2011 Committee was report on the Implemented adjustments were
December 31, 2011 amounting to AAR created by the physical count of made to reconcile
P2,741,980.31 under Fund 101 was page Management to the PPE was not the book balances
inaccurate and unreliable due to the 42 conduct a physical relied upon and thus with the physical
recording of tangible items worth count of the no adjustments count in the
P346,993.23 as Other Supplies existing PPE of the were made in the review of the PPE
Inventory instead of Property, Plant and Agency as of books. account subsidiary
Equipment (PPE) and the presence of December 31, ledgers as against
reconciling items amounting to 2012. An the inventory
P955,821.39 since June 30, 2006 which inventory report report. Further, the
remained unreconciled as of year end, was submitted by Chief Accountant
thereby affecting the fair presentation of the Committee in confirmed with the
the accounts in the financial statements. 2013. Audit team that no
adjustments were
We recommended that Management The conduct of the indeed made for
require the Accounting Units to review physical count the reconciliation

91
Reasons for
Observations and Recommendations Ref. Action Taken by Partial or Non- Status of Auditor’s
Management Implementation Implementation Validation/Results
the items included in the Other Supplies supposedly will of the PPE balance
Inventory account which should have enable the per book with the
been recorded as Property, Plant and Accounting units results of the
Equipment (PPE). Thereafter, reclassify to review the physical count.
these tangible items to the appropriate accuracy, existence
PPE accounts and provide them with and completeness
depreciation. Also evaluate/ review the of the recorded
reconciling items since June 30, 2006 PPE.
and prepare adjusting entries to
appropriate accounts.

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