EXECUTIVE SUMMARY

INTRODUCTION

The Department of Health (DOH) is one of the oldest government institutions in

the country. It was first established as the Board of Health (BOH) in September 1898.
The BOH was abolished and its functions and activities were taken over by the Bureau of
Health.

On January 1, 1941, the Department of Health and Public Welfare was established.
In 1947, when government offices were reorganized it was renamed Department of Health
(DOH) with the transfer of the Department of Public Welfare to the Office of the President.

With the implementation of the Local Government Code in 1991, certain functions
of the DOH were devolved to the local government units (LGUs). Executive Order (EO)
No. 102 was issued on May 24, 1999 and as a result of the devolution of basic service
delivery to the local government, the DOH was re-directed from a sole provider of health
services to a provider of specific health services and technical assistance provider of
health. As such, the DOH is mandated to provide assistance to local government units
(LGUs), non-governmental organizations (NGOs), other national government agencies
(NGAs), people’s organizations (POs) and other members of the health sector in
effectively implementing programs, projects and services for the provision of health care
services to every Filipino. EO No. 102 also established DOH as the national policy and
regulatory institution for health, making it responsible in setting standards within the
country for performance and health systems that affect the ideals of quality, equity and
sustainability in health care.

The DOH is composed of the Central Office, 16 Centers for Health Development
(CHDs), two attached bureaus and 65 retained hospitals, consisting of eight special
hospitals, 24 medical centers, 18 regional hospitals, six district hospitals, seven sanitaria
and two research centers. In addition, it has four attached agencies/corporations, namely:
Population Commission (POPCOM) and National Nutrition Council (NNC) and Philippine
Health Insurance Corporation (PHIC), Philippine Institute of Traditional and Alternative
Health Care (PITAHC) and four specialty hospitals, namely: Lung Center of the
Philippines, National Kidney and Transplant Institute, Philippine Children’s Medical
Center and the Philippine Heart Center.

The CHDs are responsible for field operations of the Department in each respective
region and for providing catchment areas with efficient and effective medical services.
They are likewise tasked to coordinate with regional offices of the other Departments,
offices and agencies for health related concerns, as well as with the local government units,
the DOH partners, in the implementation of various public health programs. On the other
hand, the DOH hospitals provide hospital-based medical care, specialized or general
services, some conduct research on clinical priorities and some are training hospitals for
medical specialization. The PHIC, as an attached agency, is implementing the National

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Health Insurance Law and administers the medical care program for both public and
private sectors.

The DOH is headed by Secretary Enrique T. Ona, assisted by three undersecretaries

and four assistant secretaries.

OPERATIONAL HIGHLIGHTS

The DOH, being the lead agency in the health sector, has steadfastly pursued its
mandate to effectively lead in providing technical assistance to LGUs, NGAs, NGOs/POs
and other members of the health sector in effectively implementing programs, projects and
services for the provision of health care services to every Filipino.

The year 2010 marked the move of the DOH towards addressing the challenges of
the Health Sector. The health agenda to achieve Universal Health Care was launched to
improve, streamline and scale up reforms interventions espoused in the Health Sector
Reform Agenda.

Consistent with the DOH Health Sector Reform Agenda and FOURmula One, the
following were the major accomplishments for CY 2010:

• Refocusing the National Health Insurance – The cumulative aggregate registration

to National Health Insurance Program (NHIP) totaled 22.44 million. 122,495
Sponsored Program members were given NHIP cards. Total NHIP benefit payouts
reached P30.52 billion for 3.48 million claims. The sponsored members of NHIP
received P6.6 billion benefit payouts, both for in-patient and out-patient services.

• Upgrading of Health Facilities – The Health Facilities Enhancement is continually

being pursued in support of one of the DOH’s strategic approaches to improve the
delivery of basic, essential as well as specialized health services through the
rationalization and critical upgrading of health facilities nationwide. It aims to
upgrade government-owned hospitals and health facilities to expand the capacity
and provide quality to attain MDGs, attend to traumatic injuries and emergencies
and manage non-communicable diseases and their complications. Five Hundred
Fifty Three (553) health facilities had been upgraded, including 124 Rural Health
Units, 259 Barangay Health Stations and 8 other facilities.

• Scholarship Programs for Doctors and Midwives – Three specialized training

programs are being implemented by the DOH to ensure available health human
resources. Once the scholars graduate and pass their licensure examinations, the
doctors and midwives are deployed to unserved and under-served municipalities to
address the staffing requirements of health facilities for a more effective delivery
of quality health services. The Masters in Public Management – major in Health
Systems Development was a program offered to the Doctors to the Barrios.

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• Botika ng Barangay (BnB) - The Universally Accessible Cheaper and Quality
Medicines Act of 2008 (RA No. 9502) institutionalized the establishment of
various BnBs, which can offer up to 40 essential drugs and medicines and are
allowed to sell eight prescription preparations and can provide client savings of up
to 60% compared to the leading brands.

• Tuberculosis Prevention and Control Program – New smear positive cases treated
in 2010 was 95,219 for a case detection rate of 77%. Total TB cases detected was
178,550. Cure rate of new smear positive cases in 2010 was 49,684 out of 59,934
evaluated or 84%.

• Emerging & Re-Emerging Infectious Diseases – The National Pandemic

Preparedness Plan has been reviewed and revised based on the lessons learned from
the Pandemic A (H1N1) 2009 experiences. More than a million Filipinos had been
vaccinated with the H1N1 vaccines donated by WHO. Capacity building programs
among Barangay Health Emergency Response Teams were conducted to assist
early identification of possible emerging disease in a community. The DOH
initiated the International Training Course on the Prevention and Control of Avian
influenza in Asia and the Pacific with the assistance from the Asian Development
Bank.

• Maternal, Neonatal and Child Health and Nutrition (MNCHN) Strategy – This
strategy addresses the health risks that continuously threaten the lives of thousands
of under-privileged Filipino women, mothers and children and highlights the
importance of the attendance of skilled health professionals in the delivery of an
integrated package of health services by life stages. The Manual of Operations for
MNCHN was revised, updated and disseminated to effectively guide local
government units in delivering their services especially to populations that are most
at risk from maternal and child deaths. Orientation fora on policies and manual of
operations and essential newborn care protocol were conducted. Forty-five (45)
Basic Emergency Obstetric and Newborn Care teams were trained during the same
period. Moreover, the new and expanded Garantisadong Pambata was launched in
October 2010 catering to 0-14 years old instead of the previous 0-5 year-old
children. This expanded GP also emphasizes the daily provision of the GP package
in all health facilities rather than the usual twice a year national campaign.

• Expanded Program on Immunization (EPI) – Instead of the traditional single dose

of measles, the combination of Measles, Mumps and Rubella (MMR) was
introduced nationwide during the 3rd quarter of CY 2010 with the end goal of
measles elimination by 2012. The MMR was recommended to also prevent mumps
and rubella (German measles) infections. In addition, the pentavalent vaccine
(DPT-HepB-Hib) was also introduced in regions VI, VII and Caraga. This vaccine
prevents the sequelae of Hib meningitis and other invasive Hib diseases and
approximately 30% of all pneumonia. The reported Fully Immunized Coverage
(FIC) as of December 2010 was 80%.

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FINANCIAL HIGHLIGHTS

The DOH had a total appropriation of P28,686,083,000.00 provided for in the

General Appropriations Act of FY 2010, RA. No. 9970. Total allotments received
amounted to P31,581,339,926.85 as follows:

Particulars Amount
Regular Appropriations P22,612,289,448.82
Continuing Appropriations 6,447,119,329.79
Special Purpose Fund 1,851,757,899.91
Other Releases . 670,173,248.33
Total P31,581,339,926.85

Of the total allotment received, P24,494,041,102.62 were incurred leaving an

unexpended balance of P7,087,298,824.23. Details of the financial condition, sources and
application of funds are presented below:

Amounts in Thousand Pesos

Particulars
CY 2010 CY 2009 Increase(Decrease)
A. Financial Condition
Assets P 31,117,056 P 24,230,846 P 6,886,210
Liabilities 8,241,064 6,367,059 1,874,005
Government Equity 22,875,992 17,863,787 5,012,205
B.1 Sources of Funds
Subsidy from National Government -net 17,842,843 11,412,720 6,430,123
Other income 5,041,747 3,555,268 1,486,479
Total 22,884,590 14,967,988 7,916,602
B.2 Application of Funds
Personal services 8,481,348 7,295,808 1,185,540
MOOE 8,928,598 5,744,370 3,184,228
Financial Expenses 701 347 354
Total P 17,410,647 P 13,040,525 P 4,370,122

The figures above exclude those for the CHD for CAR and one Hospital in Ilocos
Region, two Hospitals in Cagayan Valley, one Hospital in Central Luzon, the CHD for
CALABARZON, the CHD for MIMAROPA and one Hospital, two Hospitals in Western
Visayas, the CHD for Eastern Visayas and one Hospital, three Hospitals in Zamboanga
Peninsula, the CHD for Northern Mindanao and two Hospitals in SOCCKSARGEN and
one Hospital in Caraga Region.

SCOPE OF AUDIT

Our audit covered the operations of the DOH-CO, 14 CHDs, 57 Hospitals and three
attached agencies of DOH for CY 2010 as enumerated in Annex A. It was conducted to:
(a) verify the level of assurance that may be placed on management’s assertions on the
financial statements; (b) recommend agency improvement opportunities; and (c)
determine the extent of implementation of prior year’s audit recommendations.

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INDEPENDENT AUDITOR’S REPORT

The Auditor rendered a qualified opinion on the fairness of presentation of the

financial statements of the DOH, 11 CHDs, 38 Hospitals and three attached agencies for
CY 2010 due to the various significant accounting errors and deficiencies noted in the
audit which are summarized below, the details of which are discussed in Part II of the
report.

A. Accounting Errors

Effect to
Total
Assets (in
Reference
Errors Accounts Affected millions)
(Obs. No.)
Under/
(Over)
statement
a) Understatement due to non- Cash, National Treasury – MDS P 30.08
restoration of cash equivalent of and Cash in bank
unreleased checks at year-end

b) Overstatement due to errors in Due from NGAs, Due from (934.53)

recording receivables and non LGUs, Due from GOCCs, Due
recording of liquidations. from NGOs/POs, Accounts,
Notes and Other Receivables
Due from Officers and
Employees

Overstatement due to error in Construction in Progress (16.92)

recording fund transfer as PPE

Understatement due to non Supplies Inventory 1.04

recording of deliveries from PS-
DBM

c) Understatement due to errors and Inventories 86. 23

omissions in the recording and
reporting of inventories.

d) Overstatement due to erroneous Cash, receivables, inventories (43.80)

and incomplete recording/reporting and PPE accounts
of payable transactions

e) Overstatement due to error in Cash in bank (6.82)

recording collections Cash Collecting Officer

Understatement due to errors and Receivables 0.36

incomplete recording of income

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 Effect to
Total
Assets (in
Reference
Errors Accounts Affected millions)
(Obs. No.)
Under/
(Over)
statement

f) Understatement due to lapses in PPE Accounts 834.95

recording PPE accounts

g) Understatement due to errors in the Inventories and PPE Accounts 2.19

recording of expenses
Net Overstatement (P135.65)
Total Assets 31,117.05
Percent to Total Assets 0.44%
a) Understatement due to non- Accounts Payable P 30.08
recognition of appropriate
payable/liability account
b) Overstatement of due to error in Accounts Payable (942.08)
recording obligation as liability

d) Overstatement due to erroneous Accounts and Other Payables, (907.67)

and incomplete recording/reporting Due to other NGAs, etc.
of payable transactions

e) Overstatement due to recording of Other Payables (12.47)

income as payable

f) Understatement due to due to lapses Accounts Payable 50.97

in recording PPE accounts

Net Overstatement (P1,781,17)

Total Liabilities 8,241.06
Percent to Total Liabilities 21.61%
b) Understatement due to non- Hospital Income P 5.28
recording of receivables Expenses and prior years’ (8.34)
adjustments

c) Understatement due to errors and Government Equity 13.18

omissions in the recording and Prior Years’ Adjustments 12.05
reporting of inventories.

Overstatement due to errors in the Expenses 85.10

recording of inventories

d) Overstatement due to erroneous Expense 1.36

and incomplete recording/reporting
of payable transactions

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 Effect to
Total
Assets (in
Reference
Errors Accounts Affected millions)
(Obs. No.)
Under/
(Over)
statement
Understatement due to non Government Equity, income 868.61
recording of incomplete recording and Prior Years’ Adjustments
of payments.

e) Overstatement due to errors non Income and Prior Years’ (42.71)

and incomplete recording of Adjustments
income Expenses 48,72

f) Understatement due to lapses in Government Equity 773.19

recording PPE accounts

g) Overstatement due to the errors in Expenses 2.19

the recording expenses

Understatement P 955.76
Total Government Equity 22,875.99
Percent to Government Equity 4.18%

B. Other Deficiencies

Reference Amount
(Obs. No.) Deficiencies Accounts Affected (in millions)
Non/delayed preparation and incomplete Cash in bank, LCCA P 379.34
bank reconciliation statements, non-
updating of SLs and absence of
documents to support the reconciling
items
Lapses in recording receivables Receivable, Inventories and 490.51
related expenses

Non-conduct of the physical count of the Drugs and Medicines 1,724.40

inventory and absence of a periodic Inventory
reconciliation of accounting records Medical, Dental, and
Laboratory Supplies
against property, pharmacy and physical
Merchandise Inventory
inventory reports on inventory accounts Office/ Other Supplies
Inventory
Construction Materials

Non-Conduct of Annual Physical PPE accounts 9,908.64

Inventory; discrepancies between
accounting and property records and

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 Reference Amount
(Obs. No.) Deficiencies Accounts Affected (in millions)
lapses in property management

Non-Reclassification of Unserviceable PPE accounts 160.17

Property to Other Assets Other Assets

Absence of subsidiary records/ Accounts payable, Due To 571.94

breakdown/supporting documents to Other NGAs/GOCCs, Due
support the reported amount of liability to BIR/Pag-Ibig/GSIS/Phil
accounts. Health and
Other Payables
Total P13,214.18

SUMMARY OF SIGNIFICANT AUDIT OBSERVATIONS AND

RECOMMENDATIONS

Below are the significant audit observations and recommendations together with
management responses/actions which were discussed in detail in Part II of the report.

1. The non/delayed/slow implementation of activities for foreign-assisted projects

(FAPs) as well as low fund utilization of loans and grant proceeds attributed to
the discontinuance and changes in the planned activities; absence of project
officials to closely supervise, oversee and monitor the Programme performance;
inadequate planning, control of activities and monitoring on the implementation
of project components; and non-compliance with documentary requirements on
the release of funds resulted in the non-implementation of public finance
management reforms as envisioned by DOH and ultimately the non-attainment
of the Projects’ objectives within the set time frame. Further, commitment fees
totaling P79.13 million were charged to the government for the undisbursed
loan amount of P1.64 billion for four FAPs from CYs 2007 to 2010. (paragraphs
1-9)

We recommended that the DOH through the Director of the Bureau of

International Health Cooperation to:

• prepare /maintain a list of all the existing programs and projects

with their corresponding activities, funding agencies, implementing
partners, program/project sites and other significant data relative
thereto to serve as a database to be used in planning and monitoring
purposes;

• in planning for future programs and projects, use the database to

ensure that there are no duplication of programs, projects and
activities and ensure active involvement of technical units; and

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 • strengthen collaboration/coordination with development partners for
them to better appreciate the significance and the need for DOH
programs and projects, anticipate all possible problems and
predicaments and to address the same to avoid the non and delayed
implementation thereof.

2. The inclusion of unnecessary training component totaling €490,625 or P31.40

million in the Program cost resulted in additional loan of this amount,
incurrence of commitment fees estimated at P.565 million and interest expenses
of approximately P1.18 million for a five-year period, the duration of the loan,
for non-productive purposes. Further, of the said amount, €250,000 or P16
million which were already withdrawn for the purpose in August 2010
remained unutilized in the bank account of the Program Consultant as of year-
end. (paragraphs 10-15)

We recommended that the DOH, through the Director of BIHC:

• initiate the cancellation of the unutilized loan amount of €490,625 or

P31 million permitted under Article 5 of the Loan Agreement;

• require the Consultant to immediately refund in full the €250,000 or

P16 million to the DOH to form part of the cancelled loan amount for
remittance to BTr; and

• for future similar undertaking/funding, determine beforehand the

availability of the component/activity from other existing
programs/projects to avoid this observation and incurrence of
unnecessary/avoidable expenses.

3. The procurement of Information Technology (IT) Equipment worth P81.43

million in CYs 2008 to 2010 was made in the absence of a clear DOH policy
guidelines of the procedures on the procurement, utilization, disposal, and
transfer of acquired IT property and deficiencies in the existing controls and
system in property management resulted in the overstocking and idleness/non-
utilization of 249 IT equipment in violation of Article II, Sec. 7 of Republic Act
No. 9184. Further, these lapses deprived the intended end-users to fully
achieve the intended purposes of the IT equipment and increase the attendant
risk of diminishing their value and effectiveness due to obsolescence caused by
prolonged idleness and expose the unused units to possible misuse and loss
contrary to Section 2 of PD No. 1445. (paragraphs 16-30)

We recommended that the:

• IMS properly and carefully plan the procurement of IT equipment

and fast track distribution of the procured IT equipment to the
recipients and prepare a complete report of distributions;

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 • Management refrain from centralized procurement of these
equipment; and

• Administrative Service provide a secured storeroom to store all the

property in the custody of the IMS or entrust/return the safekeeping
of the undistributed units to the MMD.

4. The revenue-sharing scheme agreements entered into by ARMMC, RMC and

JRRMMC with various suppliers were found to be disadvantageous to the
Hospitals/government due to the absence of proper planning and public bidding
and the provisions of the Memoranda of Agreement which prevented the
hospitals from the benefit of earning additional income from the scheme.
Further, the provision of depreciation cost for the PACS system and MRI
shielding room provided by Himex Corporation, Inc. for JRRMMC from CYs
2007 to 2010 totaling P 8.83 million and the deduction of the same from the
gross income were not only improper, onerous and in violation of the
provisions of the MOA but more importantly, it deprived the Hospital of its
equitable share of the income from the scheme by P4.41 million. (paragraphs
31-38)

We recommended that:

o the Chiefs of ARMMC, RMC and JRRMMC –

• review/evaluate of the viability and benefits of similar contracts

to ensure that the interest of the government and the Hospital in
particular are safeguarded/protected;

• adopt the useful life of medical equipment determined by the

COA in computing depreciation; and

• comply with Section 3.1.1 of COA Circular No. 2009-001 on the

submission of contract/agreement within five working days from
its perfection;

o JRRMMC - instruct the Acting Chief Accountant to bill the HCI for
the refund of the P4.41 million representing the cost of depreciation
of the PACS system and MRI Shielding Room;

o RMC - negotiate for the amendment of the MOA with MIDEAST on

the increase of the percentage of revenue sharing; and

o ARMMC - initiate/work-out for the amendment of the MOA to

include a provision on the equal sharing of net losses.

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5. The MOA on the Revenue Sharing Scheme (RSS) entered into by and between
EAMC with Philips Electronics and Lighting Incorporated, through its
authorized Philippine Distributor Medicotek Inc., appears to be
disadvantageous to the EAMC/government Hospital which is in violation of
Section 3 (e) and (g) of Republic Act No. 3019, the Anti-Graft and Corrupt
Practices Act, and constitute grave offenses in civil service under Section 52 of
Civil Service Commission (CSC) Memorandum Circular No. 19,s. 1999. The
EAMC incurred expenditures for capital outlay of P30.71 million, costs of
consumables totaling P2.36 million, personnel expenses of P5.39 million, costs
of water and electricity utilities of undetermined amount for the operation of the
machines under the RSS, loss/reduction of income from radiology machines of
at least P7.79 million and shouldered cost of space rental occupied by the RSS
radiology machines estimated to be at least P27.31 million or a total of P73.57
million. Moreover, after 14 months from the implementation of the RSS to
May 2011, the EAMC has not been accredited by the Philippine College of
Radiology (PCR) as a training institution which was its primary reason in
entering into that scheme. (paragraphs 39-63)

We recommended that the Medical Center Chief:

o require the supplier to submit documentary proofs on the actual

costs of the radiology machines installed/to be installed covered by
the RSS to be used in determining the amendments on the share of
the EAMC and the supplier in the scheme;

o initiate and negotiate for the amendment/inclusion in the MOA of

provisions that will correct the lopsided provisions in the existing
MOA; and

o initiate/cause the conduct of an investigation on the erring officials

for committing acts violative of R.A. No. 3019, the Anti-Graft and
Corrupt Practices Act, as well as for conduct prejudicial to the best
interest of the service and gross negligence under CSC
Memorandum Circular No. 19, s.1999;

We also recommended that the Assistant Secretary, Office for Special

Concerns, Department of Health, initiate/cause the conduct of an
investigation against the Medical Center Chief for entering into a contract
on the RSS in behalf of the Government which appeared disadvantageous
to the government and to file appropriate criminal and administrative
charges, if warranted.

6. Absence of proper and periodic monitoring on the implementation of the Botika

ng Barangay (BnB) Program in five CHDs and non-compliance with the
requirements provided for under DOH Administrative Order (AO)No. 144,
series of 2004 resulted in the failure of four CHDs to recover the seed capital in

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 the form of drugs and medicines amounting to P14.27 million distributed to 590
BnB outlets, operations without the necessary Special Licenses to Operate
(SLTOs) as well as the non-submission of the required financial reports to
enable program officials to periodically validate the reliability of these reports.
Further, failure of CHD for Caraga Region to maintain files on the documentary
requirements submitted by BnB operators and transmit these to the DOH-CO
for issuance of SLTOs precluded Management of ready references, access and
availability of important records essential for the licensing and
renewal/revalidation of SLTO issued to BnB operators. (paragraphs 64-72)

We recommended that the Management of the following CHDs:

o Metro Manila –

• coordinate with PHARMA 50 of DOH-CO for the issuance of

supplemental guidelines regarding the recovery of the “seed
capital” issued to BnBs; and

• revisit existing BnB guidelines and make necessary

amendments/revisions thereto taking into consideration the
foregoing audit observations;

o Central Luzon and Central Visayas - comply strictly with DOH-AO

144 in the establishments and operations of BnB; and

o Caraga Region –

• undertake periodic evaluation of the financial standing of the

operators; and

• direct the concerned personnel to install/design a monitoring

system to ensure compliance by the BnB operators on the
submission of financial reports.

7. The required outputs of Isla Lipana & Co., the consultancy firm in the
Development of a Sustainability Model amounting to P10 million for
2WHSMP, were not submitted within the agreed time line of the Project the
cited causes of which were not justifiable/acceptable but were considered by the
DOH. The BIHC even endorsed favorably the request for extension of the
consultant. This resulted in the non-delivery of the planned workshops and
trainings, non-disbursement of loan amount on schedule and incurrence of
commitment fees estimated at P132,911.00 for CY 2010.(paragraphs 77-88)

We recommended that the Project Management:

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 o require the Consultant to pay the P132,911.00 commitment fees
corresponding to the undisbursed loan amount as liquidated
damages as a result of the delayed submission of contracted
deliverables; and

o ensure promotion of the interest of the government/DOH by

including a penalty clause in the contract for delays in the
submission of deliverables.

8. The lease contract for the RMC Cafeteria (RMCC) was entered into without the
benefit of a feasibility study conducted to determine the need for the project and
a cost-benefit analysis from RMC to determine the income to be realized and
expenses to be incurred relative thereto. As such, the P3 million lease rental
contract with RMCC with 15- year duration was considered relatively low
when compared to the computed P11.94 million total income of the lessee from
the sub-lease of the rented premises. Thus, the contracted amount of rental was
disadvantageous/detrimental to the Hospital. (paragraphs 89-104)

We recommended that the:

o Medical Center Chief:

• submit documents to substantiate the basis of the contract

amount and duration of 15 years;

• amend/revise the new lease contract; and

o Engineering/Maintenance Section submit explanation why no sub-

meter readings were done on the water usage in the old canteen
which resulted in the payment of consumption based on previous
months; and conduct timely readings on the water and electricity
consumption.

9. The provisions of the lease contract entered into by the EAMC with Heaven
Indulge Food House Inc. (HIFHI), a canteen concessionaire, in CYs 2005 and
2006 were onerous to the government/EAMC as the contracted space rental rate
to the lessee ranged only from P10.00 to P12.00 per square meter while for
rates for other tenants at the same period was from P316.00 to P484.12 and
HIFHI was granted with the privilege of free utilities from six to 15 months
charged to the account of the Hospital in violation of Sections 3 (e) and (g) of
R.A. No. 3019, Anti Graft and Corrupt Practices Act, and constitute grave
offenses in the civil service as stated under Section 52 of Civil Service
Commission (CSC) Memorandum Circular No. 19,s. 1999. For space rental
alone, the hospital lost an income ranging from P2.75 to P4.27 million for the
three–year period, the duration of the contract with HIFHI.

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Further, despite the non-payment/settlement of the P565,208.93 unpaid rentals
and utilities from December 6, 2007 to December 31, 2010, the lessee was
allowed to continue its canteen operation without the EAMC initiating
appropriate legal action such as ejection of the lessee from the leased premises
and instituting civil action for the collection of the amount due from the
concessionaire. (paragraphs 105-121)

We recommended that the:

• concerned EAMC Officials render a satisfactory explanation on the

onerous lease contract otherwise, a Notice of Charge shall be issued
for the total amount of lost income for EAMC without prejudice to
the following:

• Medical Center Chief initiate/cause the conduct of an investigation

on the above action against the former members of the HBAC and
initiate the filing of appropriate criminal and administrative
actions, if warranted; and

• Assistant Secretary for Office of Special Concerns, DOH

initiate/cause the conduct of an investigation on the above action
against the Medical Center Chief for signing the MOA with
arduous/onerous terms and conditions and for his leniency/laxity in
protecting the interest of the Hospital, for committing acts violative
of Sections 3 (e) and (g) of R.A. No. 3019, Anti Graft and Corrupt
Practices Act, and for the conduct prejudicial to the best interest of
the service and gross neglect of duty which constitute grave offenses
under Section 52 of Civil Service Commission (CSC) Memorandum
Circular No. 19, s. 1999, and to file appropriate criminal and
administrative action, if warranted.

We further recommended that the Medical Center Chief ensure that:

o space rental rates be standardized and uniformly imposed on all

tenants of the Hospital;

o any gratis to tenants be anchored/founded on legal basis;

o the period within which to pay the rental fee be stipulated in the
agreement;

o include a penalty clause provision for late/delayed payment of

rental fee;

o space occupancy be duly covered by a valid lease contract; and

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 o in the event of continuous non-payment and unreasonable delay in
the settlement of the obligations/accounts of lessees, rescind the
contract and/or institute appropriate legal action for the collection
of the amount due from the defaulting tenants.

10. Defective equipment for the production of vaccines, lack of back-up parts
insufficient funds for the preventive maintenance, delay in the procurement of
parts of equipment and inadequate technical capability trainings of BMD
production staff resulted in the non-attainment of objective of the VSSP project
which is to produce high grade BCG vaccines compliant to Good
Manufacturing Practice and procurement of BCG vaccines costing P28.43
million. (paragraphs 122-137)

We recommended that the:

o Director make strong representation with the DOH for the

provisions of funds to address the VSSP equipment, training and
other production requirements and with the DBM for authority to
fill-up the positions for VSSP Engineers; and

o Biological Medical Engineering Unit consider lag time of deliveries

of parts to ensure their availability so that the equipment could be
used for the timely production of vaccines.
11. Failure of five DOH hospitals in Metro Manila to judiciously prepare realistic
ABCs resulted in unreasonable and excessive budget costs for the procurement
of medical, dental and laboratory expenses thus, resulting in higher prices of
procured commodities when compared to those purchased by other hospitals
from the same suppliers within the locality. Further, the Hospitals have no
suppliers’ accreditation standards and database of suppliers by category, per
line of goods and services doing business with DOH Hospitals in Metro Manila
to monitor prices and to broaden competition among them. As such, the
Hospitals could have used the data to invite more suppliers to broaden
competition among them and to monitor prices. Thus, savings of P14.63
million could have been earned had they availed of the lower prices of other
suppliers. (paragraphs138-150)

We recommended that the:

o Medical Center Chief of concerned hospitals negotiate with the

suppliers for the lowering of the prices of the delivered supplies
using as references the lowest prices offered by the other suppliers
for medical oxygen and compressed air to other government
hospitals;

o BAC, BAC Secretariat and Technical Working Group establish the

criteria/standards for the establishment of the baseline prices as

xv
 ABC of medical gases offered for public bidding and suppliers’
accreditation standards; and

o henceforth, conduct competitive bidding in the procurement of

goods and services as provided under Section 10 of R.A. No. 9184.

12. JRRMMC could have saved at least an estimated amount of P1.02 million in
security services expenses had the required number of guards been reduced to
only 12 with their tour of duty divided into 8-hour and 12-hour tour of duty.
This would lessen the total number of guards on week-ends as well as
maximize the services of its own organic security forces to support the reduced
number of contracted security guards. (paragraphs 151-156)

We recommended that for succeeding security services agreements, the

Medical Center Chief:

o in consultation with the Chief Security Officer of JRRMMC, reduce

the number of guards to 12 with no provision for supervisory
personnel;

o require the Chief Security Officer to include in his supervisory

jurisdiction the contracted security guards and ensure that the
provisions of the Security Services Agreement are strictly and fully
implemented;

o consider implementing again the collection of parking fees; and

o maximize the generation of income for the hospital through the

formulation of the Guidelines on the Parking Management and
Collection System to include the internal controls over the
collections, remittances and reporting thereof.

13. The government/EAMC suffered losses in terms of costs of expired,

unnecessary and overpriced laboratory reagents totaling a net amount of P6.84
million due to lack of prudence in the procurement and management of
laboratory supplies by the concerned Hospital officials which is in violation of
Sections 3 (e) and (g) of the Republic Act No. 3019, the Anti Graft and
Corrupt and Practices Act, COA Circular No. 85-55A and constitute grave
offenses in civil service as stated under Section 52 of Civil Service Commission
(CSC) Memorandum Circular No. 19,s. 1999. (paragraphs 168-206)

We recommended that the:

o Chief Medical Technologist –

xvi
 • render an explanation, on the reagents procured from Grepcor
Diamonde, Inc. and Bumark Trading, Inc., why there were
expired reagents; non-submission of Monthly Consumption for
reagents; over-stocking of HCV Chemiluminiscence reagents;
and why no requests were made for the replacement of reagents
worth P1,886,795.50 to the supplier; and

• submit the basis of the prepared Stock Position Sheet (SPS) and
Request and Issue Slips (RIS) for reagents from Grepcor
Diamonde, Inc..

o concerned officials render an explanation on approving the

documents relative to the procurement of reagents for the machines
of Bumark Trading, Inc. despite the expiration of the contract with
the supplier on December 31, 2009 and the non-utilization of the
Elecsys Machine;

o HBAC Secretariat -

• justify the reasonableness of the price of the procured reagents

from Grepcor Diamonde, Inc.; and

• render an explanation on why they were the one who is

preparing the ABC instead of the end-users.

o members of the HBAC to satisfactory explain the recommendation

for award of the overpriced reagents from Grepcor Diamonde, Inc;
and the basis thereof as well as procurement from Bumark Trading,
Inc.; and

o in the event that no satisfactory/acceptable explanation can be

rendered by the above officials on their respective participation on
the transactions, a Notice of Suspension shall be issued for the costs
of unnecessary and overpriced reagents without prejudice of
initiating the conduct of an investigation to the filing of appropriate
criminal and administrative charges by the Medical Center
Chief/Assistant Secretary for Special Concerns of the DOH against
the concerned EAMC officials for violation of Sections 3 (e) and (g)
of R.A. No. 3019, Anti Graft and Corrupt Practices Act, and for the
committing grave offenses stated under CSC Memorandum
Circular No. 19,s. 1999.

We also recommended the following courses of action to avoid the

recurrence of the above observations:

xvii
 o the Chief Medical Technologist to monitor on a regular basis the
stocks on reagents ; and on a periodic basis or whenever warranted,
prepare and submit reports on reagents about to expire;

o the Chief of the Laboratory Department to require all Sections

Chiefs under the Laboratory Department to prepare monthly
Consumption Report for reagents and the Stock Position Sheet
(SPS) per reagent and stop the practice of transferring the custody
of procured reagents to the Laboratory Department instead,
request reagents from the MMS of quantity sufficient enough for
the needs of each Section;

o the HBAC to obtain awarded prices of goods and services from

other DOH-retained Hospitals and develop and maintain a database
of suppliers by category/type/line of goods and services with their
corresponding price offers; and use as references the prices
gathered from other DOH-retained Hospitals in evaluating the bids
of participating bidders and in bargaining prices; and

o the Medical Center Chief require the concerned end-users to

prepare the ABC for the reagents taking into consideration the
requirements of Section 4 of the GPPB Guidelines; and as
circumstances warrant, update the prices of reagents in the ABC
before the conduct of actual bidding/procurement.

14. The ARMMC ’s mission of providing affordable cost of services to its patients
was not fully achieved as the costs of its laboratory services are higher by 5% to
75% compared to those charged by other DOH-retained hospitals and by 29%
to 100% to those offered by private diagnostic clinics. Moreover, the laboratory
fees collected by the Center for Send-Out laboratory examinations carry a
mark-up of from 40% to 550%. Likewise, specimen plastic bottles for urine
and stool samples were most of the time unavailable at the Laboratory Section
causing inconvenience to the patients, depriving them of immediate conduct of
laboratory procedures and causing additional financial burden. (paragraphs 207-
228)

We recommended that the Laboratory Section conduct a re-visit of the

reasonableness of the fees currently being charged on laboratory
procedures with due consideration on the rates offered by other
government hospitals and private diagnostic centers; add reasonable
mark-up on fees for send-out patients; and increase to a reasonable level
the quantity of the specimen bottles for urine and stool samples to be
procured which are less-costly containers.

15. The three-year agreement entered into by the QMMC with Philips Electronics
and Lighting Inc. in the amount of P3.76 million for the service maintenance of
a fully depreciated CT Scan machine proved to be uneconomical and barely

xviii
 prevented the malfunctioning of the machine. The contract was entered into
without conducting a cost-benefit analysis to determine the viability of the
maintenance program. (paragraphs 229-235)

We recommended that the Medical Center Chief, before entering into

future similar undertaking/agreement, require the Chief Radiologic
Technologist to prepare a cost-benefit analysis to ensure that the
agreement would be economical and beneficial to the Hospital. Otherwise,
consider other alternatives such as replacement of the old machine with a
new one.

16. Funds for Family Planning and MNCHN grants totaling P20.45 million were
not released to LGUs in CYs 2009 and 2010 due to failure of most LGUs to
liquidate the previous fund transfer and the delay in the signing of Service
Level Agreements. The delay in the transfers of funds to the LGUs deprived the
public of the much-needed health services in their respective localities.
(paragraphs 236-249)

We recommended that Management look into the specific causes of the

delay in the release of funds for Family Planning, MNCHN Grants and
PIPH from Program Coordinators and develop measures or strategies to
facilitate the prompt release thereof, particularly for issued checks.

17. Unserviceable equipment valued at P38.49 million that are already beyond
economic repair at two CHDs and six hospitals were not disposed of as required
under Section 79 of PD No. 1445 due to the absence of an Inventory and
Inspection Report of Unserviceable Property (IIRUP) and unserviceable
properties not turned-over to the property units which resulted in their
accumulation and diminished value due to prolonged exposure to natural
elements thus, depriving these agencies from earning additional income from
sale therefrom and preventing them from use of the space occupied by these
properties. (paragraphs 250-255)

We recommended that the:

o Chief of Hospital and Agency Head –

• initiate action on the immediate disposal of all the equipment

found to be beyond economical repair;

• create an Appraisal and Disposal Committee to undertake

appraisal of the unserviceable property and equipment and
render a report together with the recommendation on the
appropriate mode of disposal; and

xix
 • advise all sections of the hospitals and agency to turn-over all
unserviceable property to the Property Section for inclusion in
the IIRUP.

o Property Section furnish the Accounting Section with copy of the

IIRUP and other pertinent documents to facilitate dropping from
the books the cost of the disposed properties.

18. Government/Hospital funds were not judiciously spent when the NCMH
constructed a basketball court inside Pavilion 1 at a total cost of P1.18million to
be used by the mental patients confined at the said Pavilion and for other
Hospital activities considering that there are already two existing basketball
courts near Pavilion 1 and other facilities that can be used for the purpose.
(paragraphs 256-264)

We recommended that the Medical Center Chief submit a written

justification on the need and urgency of the construction of the said
basketball court since there are already existing courts and hospital
facilities to serve the intended purpose of the project and conduct an in-
depth study for the purpose of determining benefits that could be derived
therefrom to ensure maximization of scarce government funds/resources.

19. The non-release of the Notice of Transfer of Cash Allocation for the sub-
allotment issued by the DOH in the amount of P1.4 million and the lack of
adequate funds of the Bureau for the continuation of the study entitled “Bureau
of Quarantine’s Clients Satisfaction Monitoring System” resulted in the non-
attainment of the Project’s objective to have a sound data on client’s
satisfaction and possible wastage of the P699,042.28 already spent for the
Project. (paragraphs 265-280)

We recommended that the Director of the Bureau make representation

with the DOH for the release of another SAA and NTCA amounting to
P1.4 million covering the requirements for the project to replace the funds
borrowed and to complete the research study project and for future
similar research study that requires the expertise of a Consultant, the
Director and other officials that may be assigned, consider and observe
timetable set for the implementation and completion of the report.

20. One unit ventilator, Newport brand, purchased from Respicare Enterprises on
March 3, 2008 costing P.99 million was no longer operational after being
utilized for only ten months. The repair works, which needed a replacement of
only a part costing P16,080.00 was not given much importance instead, a new
ventilator costing P1.70 million was acquired thus wasting the P.99 million
spent for the old machine. (paragraphs 281-289)

We recommended that:

xx
 o the Property Officer initiate efforts for the possible repair of the old
ventilator so that the amount spent for the equipment will not be
wasted; and

o Medical Center Chief consider the exclusion of Respicare

Enterprises from participating in any transaction with the NCMH
since it has clearly absconded from its after sales obligation with the
hospital.

21. From December 2009, the date of turn-over of the above drugs and medicines
from Tropical Disease Foundation Incorporated (TDFI), to December 2010, or
for one year, four kinds of drugs and other medicines costing P285,711.42
expired since no patients were in need of these items while the remaining P4.45
million were not yet issued/utilized as of year-end. (paragraphs 290-296)

We recommended that for the remaining usable items, the Supply

Management Assistant and Project Associate for Procurement and
Operation:

• determine the treatment houses which may be in need of the items for
immediate issuance/distribution; and

• monitor the expiry period of the stocks to ensure that appropriate

actions are undertaken to prevent further wastage of
funds/resources.

22. Absence of proper monitoring of the procurement and consumption of the drugs
and medicines and laboratory supplies resulted in excessive stocks of slow and
non-moving inventories which tied-up the meager funds of RIMC Hospital and
the FDA to these items and deprived them of the income that could have been
generated from the sale of fast moving drugs and medicines. (paragraphs 297-
301)

We recommended that the concerned CHDs and hospitals require their:

o Property and Supply, Laboratory and Pharmacy Sections to

establish the monthly stock level of the laboratory supplies and
drugs and medicines as basis in determining the quantity of items to
be procured;

o Chiefs of the Laboratory and Pharmacy Sections -

• submit the Monthly Report of Consumption and Physical

Inventory Count every end of the month; and

xxi
 • strictly monitor their level of stocks which shall be their basis in
preparing Purchase Requests.

o Property and Supply Section analyze these reports to ascertain the

slow and fast moving inventories. The frequency of placing orders
and the quantity to be procured be dependent on the historical rate
of consumption of each item.

23. There were weaknesses and lapses in controls over cash collections which were
not in conformity with the provisions of PD No. 1445, Manual on the NGAS,
Volumes I and II and the COA Handbook on Cash Examination resulting in
unreliable data of cash records and balances as of CY 2010 and
misappropriation of collections totaling P162,433.42 at ITRMC in Ilocos
Region. (paragraphs 302-305)

We recommended that the:

o the Accounting Unit of BGHMC prepare the necessary JEV to

adjust the difference of P61,024.34 and the Center Chief demand
for the restitution of the shortage of P469.91 and issuance of official
receipt for the overage of P1,405.25;

o Cashier of FNL and LHMRH deposit intact on a daily basis her

collections to the authorized depository bank of the hospital;

o Center Chief of ITRMC –

• initiate the review of their present system of Assessment,

Collection and Recording of hospital collections and establish
stronger controls to prevent misappropriation or loss of
government funds; and

• designate permanent employees instead of Job-Order

Contractuals to act as Collectors due to the sensitivity of the
work assigned.

o all designated Cashier and Accountant of concerned CHDs and

hospitals properly review the report of collections as well as
reconcile their records regularly to ensure that errors are
immediately detected and corrected.

24. Lapses/errors in the recording of cash in bank transactions resulted in net

understatement of two assets, a liability and one expense account by P1.19
million and net overstatement of Cash in Bank-Local Currency, Current
Account (LCCA), Prior Years’ Adjustments and one expense account by P4.99
million in two CHDs and two Hospitals. Moreover, the non/delayed preparation

xxii
 of bank reconciliation statements, unaccounted differences between the General
and Subsidiary Ledgers and Cashbook, discrepancies between the accounting
and bank records and undocumented balances and reconciling items which were
not in consonance with Section 74 of PD No. 1445 and Section 403 of the
Government Accounting and Auditing Manual (GAAM), Volume II rendered
unreliable the reported cash in bank balances totaling P358.53 million of DOH-
CO, six CHDs and 11 Hospitals as of December 31, 2010. (paragraphs 306-312)

We recommended that the Accountants of the above agencies;

o prepare the monthly BRS for all bank accounts to determine the
reconciling items and establish the existence and accuracy of the
reported cash in bank balances;

o trace and reconcile the differences between the recorded book and
bank balances;

o take up the reconciling items and other errors noted in the BRS;

o prepare and submit monthly BRS for all bank accounts within 15
days after the end of each month as stipulated in COA Circular No.
92-125A; and

o secure copies of bank statements and/or enroll in the “We Access”

service of the LBP to ensure the timely preparation and submission
of the BRS

25. The cash in bank balances as of December 31, 2010 totaling P91.45 million
deposited and maintained as Trust Funds of DOH-CO, four Hospitals and a
CHD which include interest earned/income totaling to P.450 million were not
remitted to the National Treasury contrary to EO No. 338 and Section 65 of PD
No. 1445. Moreover, the amount of P1.73 million has been dormant from four
months to three years while P12.61 million posted by bidders and suppliers
was utilized for payment of personnel benefits in violation of Section 41 of the
R.A. No. 9970 and Section 122 of the General Accounting and Auditing
Manual, Volume I. (paragraphs 313-328)

We recommended that the:

o Accountants of the above agencies –

• transfer the recording of interest income from RA books to NG

books;

• record on time interest earned in the NG books; and

xxiii
 • prepare the BRS to determine the amount to be remitted to the
National Treasury, including the idle/dormant accounts and
interest income.

o Accountant of EAMC deposit to the trust fund the amount of

P88.48 million as reimbursement for the amount utilized for the
grant of personnel compensation.

26. The transfer of P62.19 million unutilized amount of Notices of Cash Allocation
(NCAs) to the trust and revolving funds as well as to the Payroll Fund account
without any specific purpose every end of the month and in excess of the
payroll amount of DOH-CO, three Hospitals and one CHD to prevent the same
from automatic reversion to the National Treasury is in violation of DBM
Circular Letter No. 2008-11 and Section 4(6) of P.D. No. 1445. The amounts
transferred were utilized to pay the salaries and personnel benefits for the
subsequent months of DOH-CO and two hospitals. (paragraphs 329-342)

We recommended that the Accountants of these agencies:

o remit immediately to the National Treasury the balance of the

Payroll Fund account after deducting the required maintenance
balance and amount of outstanding checks;

o stop the practice of transferring the balances of the unutilized

NCAs to the Payroll Fund account or to any fund for the purpose of
preventing them from automatic reversion to the National
Treasury; and

o ensure that transfer of funds to the Payroll Fund account is made

only for specific purposes and based on existing obligations.

27. The non-restoration of the cash equivalent of the unreleased checks as at year-
end in four Hospitals and one CHD as prescribed by GAFMIS Circular Letter
No. 2002-01 and errors in recording of disbursement and reversion of unused
Notice of Cash Allocations in two Hospitals resulted in net understatement of
both accounts, Cash-NT, MDS and Cash in Bank – LCCA, totaling P30.08
million, Accounts Payable by P30.07 million and net overstatement of Subsidy
Income from National Government by P6,703.97 as of CY 2010. (paragraphs
433-349)

We recommended that the:

o Cashier of TMC furnish the Accountant with copy of the List of

Unreleased and Cancelled Checks as of year-end for recording of
the amount of unreleased checks in the books of accounts;

xxiv
 o Accounting Section comply with the requirement of the said
Circular on the recording of unreleased checks as at year-end; and

o Accountant of MHRSRTTH initiate the reversion of the unutilized

NCAs and wait for the notice of the depository bank on the actual
reversion before recording such in books of accounts.

28. The grant of additional cash advances for foreign and local travels and other
operating expenses despite non-liquidation of the previous ones resulted in the
accumulation of unsettled accountabilities totaling P5.36 million in violation of
Section 16 of Executive Order No. 298 dated March 24, 2004 and COA
Circular No. 97-002 dated February 10, 1997. (paragraphs 350-353)

We recommended that the Chiefs of Hospitals and Heads of CHDs,

through their Accountants:

o require all concerned officials and employees to liquidate their cash

advances immediately after the purpose for which these were
granted had been served in conformity with the above regulations;

o discontinue the practice of granting additional cash advances if the

previous ones are not yet liquidated; and

o in the event that they fail to render an accounting of their cash

advances within the period prescribed, send demand letters and/or
withhold the salaries of concerned officials and employees pursuant
to COA Circular No. 97-002 dated February 10, 1997.

29. Losses in revenues from medical services totaling P120.62 million were
reported by five hospitals due to disallowances of Philippine Health Insurance
Corporation on hospital claims attributed to the continued inability of the
hospital Billing Sections to strictly comply with Rule VIII of the Revised
Implementing Rules and Regulations of the National Health Insurance Act of
1995 and PHIC Circular No. 14 dated May 17, 2001 and to review the accuracy
and completeness of information indicated in the PHIC forms as well as the
apparent difference in the appreciation of PHIC Guidelines between the
hospitals and the Corporation. (paragraphs 354-360)

We recommended that the concerned Chiefs of Hospitals, through the:

o Chiefs of the Billing Sections:

• review and evaluate the reasons of the disallowed claims and

identify/determine possible remedies;

xxv
 • file a letter of reconsideration with PHIC for the collection of the
disallowed amounts;

• strictly observe and comply with each and every requirement of

PHIC in filing hospital claims; and

• review carefully and thoroughly all claim forms before

submitting the same to the PHIC and ensure that these will be
filed or re-filed within the prescribed time frame.

o Accountants request authority for write-off from the Commission

on Audit pursuant to COA Circular No. 97-001 dated February 5,
1997 for long outstanding claims.

30. Lapses in the management and recording of receivable accounts resulted in

doubtful existence and validity of two receivables amounting to P57.31 million
and net understatement of three receivable balances, and totals of Hospital
Income and Prior Years’ Adjustments by P111.453 million, P5.28 million and
P56.85 million, respectively, as of year-end. (paragraphs 361-366)

We recommended that the Accountants of concerned agencies undertake

the following courses of actions to correct the book balances and to fairly
state the amount reflected in the financial statements:

o enhance collection of receivables;

o after exhausting all means to collect long outstanding receivables,

request for authority to write-off from the Commission on Audit
following the guidelines prescribed under COA Circular No. 97-
001;

o record the services rendered and goods delivered as receivables and

support them with complete documents and subsidiary ledgers for
monitoring purposes;

o record promissory notes as receivables to ensure and facilitate

monitoring of settlements by patients/guarantors;

o prepare journal entries to adjust errors in recording receivables

and income to correct the reported balances;

o strictly observe the accrual method of accounting for income; and

o set up allowance for bad debts at year-end for receivables of

doubtful collectability based on the percentages and aging of

xxvi
 accounts receivables as provided in Section 66 of the Manual on the
NGAS, Volume I.

31. The laxity in the monitoring of liquidations of transferred funds to recipient

Local Government Units (LGUs), National Government Agencies (NGAs),
Non-Government Organization (NGOs)/People’s Organizations (POs) as well
as the lack of periodic reconciliation of accounting records between the source
and the implementing agencies which is contrary to COA Circular Nos. 94-013
and 2007-001 dated December 31, 1994 and October 25, 2007, respectively,
renders doubtful the validity of receivables from recipients totaling P330.54
million of DOH-CO. Further, the non-recording of expenses/liquidations of
fund recipients at the time of incurrence resulted in net overstatement of six
receivable accounts and understatement of related expenses by P948.21 million.
Moreover, the erroneous recording of fund transfers to LGUs and NGAs
totaling P16.92 million understated two receivable accounts and overstated
Construction in Progress account by the same amount. (paragraphs 367-378)

We recommended that the:

o Accountant and Project Coordinators of the DOH-CO, DJFMH and

CHDs continue to monitor the settlement and submission of
documents to liquidate current accounts; and

o Accounting Division of DOH-CO and CHDs continuously conduct

periodic monitoring, analysis and reconciliation of receivables with
the implementing agencies, especially those non-moving old
balances and unliquidated minimal balances, request for write off
of old accounts of recipients whose addresses and other details of
the receivables could no longer be determined.

32. The reported account balance of Due from NGAs - PS-DBM of DOH-CO and
FDA amounting to P95.27 million and P7.39 million , respectively, were
unreliable due to the non-recording of the P1.04 million delivered items,
inclusion of the P2.20 million obligation for advance payment and the disparity
of P51.66 million between the records of DOH-CO and PS-DBM for the
balance of the account as of CY 2010 and lack of regular reconciliation
between the FDA and PS-DBM records contrary to Sections 4.s and 14 of the
Manual on the NGAS, Volume I and Sections 29 and 144 of same Manual,
Volume III. (paragraphs 379-388)

We recommended that the:

o MMD of the DOH-CO forward immediately the documents for the

delivery of P1.04 million to the Accountant for recording in the
books of accounts;

xxvii
 o Accountant –

• prepare an adjustment on the erroneous recording of the P2.19

million recorded obligation; and

• verify/trace the cause/s of the negative balance of P4.87 million

so that the appropriate adjusting entries can be made.

33. The absence of periodic reconciliation of the accounting records against those
of the Property, Dietary and Pharmacy Sections for ten various inventory
accounts of DOH-CO, three CHDs, 15 hospitals and a DOH-attached agency as
required under Section 43 of the Manual on the NGAS, Volume I as well as the
errors and omissions in the recording and reporting of transactions resulted in
total net discrepancy of P155.32 million in the reported balances of these
accounts thus, casting doubt on their existence, validity and correctness as of
year-end. Moreover, said lapses also resulted in the understatement of various
inventory accounts by P86.23 million and Government Equity by P25.22
million and overstatement of Expenses by P85.10 million as of CY 2010.
(paragraphs 389-395)

We recommended that the concerned accounting and property employees

of the hospitals and offices:

o adopt corrective measures to address the deficiencies:

o determine the causes of the disparity of their records and after

identifying such, effect the necessary adjustments;

o update the posting of issuances of supplies in their respective

records;

o maintain SLC and SC for each inventory stock and to observe the
required conduct of physical count of inventories once every
semester; and

o reconcile periodically the physical inventory with the SLC and SC

to check the existence of each item in the inventory and the
correctness and validity of the account balances.

34. The non-conduct of physical count of Inventory accounts, non/delayed

preparation of Report on the Physical Count of Inventories (RPCI), absence of
subsidiary records and schedules to support GL balances, and unsupported
issuances and adjustments as required under Sections 12, 46, 62 and 65 of the
Manual on the NGAS, Volume II and Section 490 of the Government
Accounting and Auditing Manual, Volume I rendered unreliable the existence

xxviii
 and accuracy of the reported balances of Inventory accounts totaling P1.18
billion as of December 31, 2010. (paragraphs 396-401)

We recommended that the responsible officials of the concerned

offices/hospitals observe all the existing government regulations
governing the reporting and record-keeping of inventory accounts to
ensure the accuracy of year-end balances.

35. There was an overstocking of inventories for drugs and medicines amounting to
P6.14 million and P3.99 million at the Pharmacy Sections of NCMH and
RIMC as the monthly ending balances of stocks always exceeded the normal
three-month requirements from as low as 65% to as high as 89% which was not
in consonance with the provisions of Section 23 of R.A. No. 9970, the General
Appropriations Act for FY 2010 and Section 428 of the GAAM, Volume I.
(paragraphs 402-408)

We recommended that the Pharmacy Sections of the Centers after

determining the buffer stock, consume the stocks on hand before
submitting new requisition and ensure that the restriction on the normal
three-month volume requirements in the procurement of drugs and
medicines is complied with to prevent overstocking.

36. The absence of physical inventory reports in 22 offices/hospitals to substantiate

the reported balance of P5.75 billion of PPE accounts required under Section
490.a of the GAAM, Volume I and the existence of P425.65 million net
discrepancies in the balances of these accounts in 22 hospitals/offices due to
non-reconciliation of the accounting and property/inventory records/reports
rendered the existence and accuracy of the reported P4.62 billion account
balances for PPE accounts unreliable as of year-end. (paragraphs 409-417)

We recommended that the:

o Chiefs of Hospitals create an Inventory Team to conduct the

physical inventory of PPE accounts;

o Accountants and Property Officers reconcile their records to

determine the causes of all discrepancies between the balances of
the asset accounts and effect any adjustments thereon to reflect the
correct balances of PPE accounts; and

o Accountants re-classify the equipment to their appropriate accounts

in accordance with NGAS Chart of Accounts.

37. Inadequate controls and lapses in property management as well as erroneous

and incomplete recording of transactions of DOH-CO, one DOH attached
agency, 27 hospitals and six CHDs rendered unreliable/doubtful the balances of

xxix
 three asset accounts totaling P402.82 million as of CY 2010 and resulted in net
understatement of PPE by P722.01 million and Government Equity by P773.19
million and net overstatement of Liability and Expense accounts by P50.97
million and P200,830.56, respectively, as of year-end. (paragraphs 418-424)

We recommended that the:

o Heads of the DOH offices and hospitals review the existing property
management policies to conform with all the government
regulations governing the same; and adopt adequate controls and
procedures in property management to ensure the accuracy of year-
end balances of PPE accounts;

o Accountants –

• ensure that government properties are correctly recorded and

adequately subjected to depreciation using the straight line
method to systematically and gradually allocate the amount over
their useful lives;

• re-compute the depreciation expenses and accumulated

depreciation on all properties and adjust the books accordingly;
and

• exert more efforts to locate valid documents to support and

facilitate recording/dropping from the books of accounts the
value of property which belong/does not belong to the
hospital/office.

38. The erroneous/incomplete recording/reporting of payables transactions, the

non-restoration of the cash and liability accounts for stale/unreleased checks as
at year-end in ten CHDs/hospital and failure of DOH-CO to request and
complete the documentary requirements for the issuance of NCAA pursuant to
Item 5.1.4 of DBM-COA-DOF Joint Circular No. 2-97 dated March 21, 1997
resulted in the net overstatement of assets by P388.42 million, liabilities by
P911.73 million and expenses by P1.36 million and net understatement of
Government Equity by P222.84 million and Income by P646.77 million .
Moreover, the correctness of liability accounts aggregating to P571.94 million
of DOH-CO and eight hospitals/CHDs could not be ascertained due to the
absence of subsidiary records/breakdown/supporting documents as prescribed
in Section 12 of the Manual on the NGAS, Volume II to support the reported
amount. (paragraphs 431-443)

We recommended that the concerned Accountants:

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 o take-up the Accounts Payable based on actual billings of
supplier/service providers, analyze the details of the negative entries
in the Accounts Payable and make the necessary adjustment;

o review all outstanding payables and revert those which are

undocumented/ not supported with valid claims;

o maintain SLs for each payable account and update the same on a
monthly basis which will be the basis of the Schedule/List of Due
and Demandable Payables;

o maintain control ledgers to separate Accounts Payable for Regular

Account and Income Account; and

o strictly comply with the provisions of NGAS and related DBM

Circulars on the budgetary treatment of commitments/ obligations
of the Agency.

39. The validity and accuracy of the reported income accounts of 12

hospitals/CHDs could not be ascertained due to errors, non-and incomplete
recording of receivables from affiliations, notes and other income which are not
in accordance with Section 18 of the Manual on the NGAS, Volume I, which
resulted in a net overstatement of P42.31 million for income, P6.46 million for
asset, P12.47 million for liability, P48.72 million for expense and P406,387.82
for equity accounts as of December 31, 2010. Moreover, the accrual basis of
accounting of income prescribed under Section 18 of the Manual on the NGAS,
Volume I was not followed which also misstated Income and Receivable
accounts in three hospitals as of year-end. (paragraphs 444-449)

We recommended that the Accountant of the concerned hospitals/offices

make the proper accounting treatment/recording of all transactions
affecting income accounts.

40. The non-compliance with existing government laws, rules and regulations and
contract agreements in the payment of benefits/expenses by the DOH-CO, three
CHDs, ten Hospitals and one DOH attached agency resulted in the incurrence
of unauthorized/excessive/undocumented expenses totaling P53.87 million,
improper use of appropriations/allotments amounting to P19.75 million and
erroneous recording of expenses of P2.23 million. The erroneous recording of
transactions/expenses understated and overstated four assets and six expense
accounts, respectively, both by P2.23 million rendering the validity and
accuracy of the balances of the affected accounts doubtful. (paragraphs 450-458)

We recommended that the Directors and other responsible officials of the

concerned hospitals/offices comply with the existing laws, rules and
regulations as well as contract agreements in the payment of

xxxi
 benefits/expenses and prepare the necessary adjustments to correct the
errors in recording the expenses.

41. The grant of Collective Negotiation Agreement (CNA) incentive to the

personnel of four CHDs, five Hospitals and two DOH-attached agencies
totaling P116.81 million did not conform with the guidelines set forth under the
Department of Budget and Management (DBM) Budget Circular No. 2006-1
dated February 1, 2006, thereby casting doubts on the validity and propriety of
the payments made. (paragraphs 459-469)

We recommended that the Heads of the hospitals/offices require the

Accountant, Budget Officer and other responsible officials to submit the
complete documentation for the payment of the CNA incentives in
compliance with prescribed policies and procedures on the grant of CNA
incentives pursuant to DBM Budget Circular No. 2006-001; and
Management strictly comply with the requirements and restrictions on
the payment of CNA benefits and use of funds particularly those that
take the form of trust receipts.

42. The DOH-CO, three CHDs and 15 Hospitals paid the hazard pay of the officials
and employees with Salary Grade 20 and above pegged at P4,989.75 per month,
without further increase, based on DOH Administrative Order No. 2006-0011
dated May 16, 2006 and Department Circular No. 2009-0187 dated August 11,
2009, contrary to the provisions of Section 21 of R. A. No. 7305 and Section
7.1.5a of its Implementing Rules and Regulations which was affirmed by the
Supreme Court Resolution dated November 27, 2008, resulting in overpayment
of P61.78 million for such pay in CY 2010, which now accumulated to P95.58
million as of December 31, 2010. (paragraphs 470-481)

We recommended that the Management of the concerned CHDs/

Hospitals/DOH Offices:

o stop the payment of hazard pay to officials and employees with SG

20 and above based on the pegged amount of P4,989.75 per month;

o require the persons liable to refund the excess amount paid to

them; and

o comply strictly with the rates of hazard pay as provided under

Section 21 of R.A. No. 7305 and Section 7.1.5.a of its IRR.

43. The POC was used as a conduit in the purchase of medical supplies/items in
bulk such as wheelchairs, crutches, canes and nebulizers in the amount of
P885,011.30 charged against the Priority Development Assistance Fund
(PDAF) of five legislators for distribution to their constituents who are not
confined in POC or any government hospital contrary to RA No. 9970, the

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 General Appropriations Act for fiscal year 2010, DOH Department Order No.
2007 – 0057, as amended by DO No. 2007-057–A and the stipulation of the
Memorandum of Agreement (MOA) entered into by and between the POC and
the legislators. Further, due to the lapsing of the Special Allotment Release
Order (SARO) for the PDAF of two legislators totaling P550,000.00, the POC
failed to take advantage of the stipulation in the MOA that should the fund have
a balance at the end of the current fiscal year or before the expiry of the SARO,
the POC may use the same to purchase medicines it needs in serving its other
patients. (paragraphs 482-490)

We recommended that the Management:

o require the PDAF Unit to maximize the utilization of the fund by

taking advantage of the provision of the MOA on the use of the
balance for the needs of other patients of the Hospital; and

o remind the five legislators on the proper use of the PDAF as

mandated by RA No. 9970, DOH Department Order No. 2007–0057,
as amended by DO No. 2007-057–A and as stipulated in the MOA.

44. There were lapses in the identification of selected bidders and the awarding of
winners for the conduct of Trainings on Management of TB in Children for
physicians and nurses in CY 2009 with total contract cost of P2.47 million
hence, the decision of the Bids and Awards Committee (BAC) to award the
contracts to selected four hotels instead of the bidder with Lowest Calculated
Bid was unwarranted/not meritorious and through negotiated procurement only
after one failed public bidding violated the prohibition of Section 53 of RA No.
9184. (paragraphs 491-496)

We recommended that the BAC submit an explanation on the awarding

of the contracts to selected four hotels instead of the bidder with Lowest
Calculated Bid which was disqualified only during the post-qualification
stage and through negotiated procurement only after one failed public
bidding which violated the prohibition of Section 53 of RA No. 9184 and
comply strictly with the provisions of RA No. 9184 and its IRR in
conducting competitive and transparent public bidding. This will provide
equal opportunity to all interested hotel-venues and obtain the most
advantageous price offer in the procurement of the training needs of the
Region.

45. The current/existing practices in the procurement of infrastructure projects,

goods and services of 12 hospitals, four CHDs and one attached DOH agency
are not in accordance with the provisions of R.A. No. 9184, the Government
Procurement Reform Act, and its IRR and GPPB issuances which defeated the
purpose of the law on transparency, competitiveness and accountability and
deprived these agencies from availing of the most advantageous offers/prices.
(paragraphs 597-502)

xxxiii
 We recommended that the Management of the concerned hospitals/
offices comply strictly with the provisions of R.A. No. 9184 and GPPB
Circular 01-2009 to adhere to the principle of transparency,
accountability, equity, efficiency and economy in the procurement
process.

46. There was an overpayment of P4.00 million in the construction of a six-storey

Main Hospital Building (Phase IV) of ARMMC due to the inclusion of
unaccomplished civil works in the payment thereof. Further, deficiencies of
P775,307.65 due to non-conformity with the terms and reference of the
contracts were noted in the construction of the two-storey OPD Building and
the renovation/rehabilitation of hospital structures of three Hospitals.
(paragraphs 503-515)

We recommended that the:

o ARMMC Medical Center Chief direct the contractor and/or the

Center’s responsible officials to refund the overpayment and
instruct the contractor to immediately proceed with the completion
of the project and submit copy of the written communication by the
management to the contractor directing suspension of all the other
items of work on the contract as well as justification for the
suspension. Impose liquidated damages in the absence of approved
suspension orders;

o Project Engineer of DJNRMH require the contractor to fully screw

the roofing sheets to avoid peeling-off in time of strong winds or
typhoons; and collect from the contractor the amount of
P212,320.65 representing the deficiencies in the contracted items of
works – roofing, carpentry and repainting works;

o BGH Chief advice the representative of ERSAN Construction to

correct the project deficiencies noted by the COA-CAR Technical
and Information Technology Services (TechITS); and

o MCS Management direct the persons liable for the P529,141.38

deficiency to immediately settle the disallowance.

47. The contract agreements of JRRMMC aggregating P57.50 million and the P1.9
million paid payrolls of patients’ monetized allowance of MCS were not
supported with a Certificate of Availability of Funds (CAF) as required under
Section 73, General Provisions of R.A. No. 9970, General Appropriations Act
of 2010. On the other hand, although the contract totaling P34.11 million of
NCMH was supported with the CAF issued by the Accountant, such
certification was not supported with actual funds at the date of certification. At

xxxiv
 QMMC, the practice of issuing one-time PO for the annual supplies
requirements of the Hospital without the covering funding and thereafter
recognizing obligations based on delivery receipts for the said PO are not in
accordance with Section 86 of PD No. 1445 and Sections 2.2 and 2.4 of COA
Circular No. 2006-003. Thus, the contracts entered into without such
certification/actual fund by these three hospitals are considered null and void
pursuant to Section 87 of PD No. l445 and Letter of Instruction (LOI) No. 968.
(paragraphs 523-535)

We recommended that the:

o BAC of the hospitals discontinue the practice of preparing one-time

CA/PO for the annual supply requirements with no supporting
CAF;

o Budget Officer of JRRMC charge the janitorial expenses to the

MOOE allotment of the General Fund; and

o Accountant of MCS certify as to the availability of funds on the

payroll as required by regulations and the payrolls should be aptly
supported by documents or information that would establish the
number and identity of the patients in the payrolls per pay period.

48. The remittances of the EAMC employees’ share premiums and other
deductions as well as government share for the months of November and
December 2010 amounting to P7.19 million to GSIS was delayed from three to
four months from due date which was not in consonance with Section 6(b) of
Republic Act (RA) No. 8291, the GSIS Act of 1997. As a result, the Hospital
was charged a penalty of P156,425.81 which was paid out of the Hospital funds
instead of to the account of the Head of the Agency who shall be
administratively liable for the delayed remittance of amount due to GSIS as
stated in Section 5(c) of RA No. 8291. On the other hand, of the P1.31 million
due to GSIS and Pag-ibig for the month of December 2010, only P399,574.97
was remitted by MMMHMC which was not even covered by available funds
thus, incurring overdraft by the same amount in violation of Section 158 of
GAAM, Volume I. (paragraphs 541-556)

We recommended that the Medical Center Chief and the Chief

Accountant of the EAMC render a satisfactory explanation on the use of
the NCA for the operations of the EAMC for payment of the above
benefits; and delayed remittance of the amount due to GSIS and the
Management of MMMHMC adhere strictly to the provisions of Section
158 of GAAM, Volume I.

49. In five Hospitals, there was a slow pace in the implementation of projects
costing of P77.39 million or the repair/rehabilitation of hospital facilities

xxxv
 damaged by Typhoon Ondoy that have not started as of December 31, 2010 and
delayed conduct of bidding and awarding of contracts which resulted in the
delay/non-deliveries of hospital equipment totalling P27.46 million as of year-
end. (paragraphs 557-558)

We recommended that Management of the five Hospitals fast-track the

full utilization of the remaining Malampaya funds and closely monitor
the status of implementation of vital projects and procurement of hospital
equipment for the timely use of improved hospital facilities and upgraded
equipment.

50. The utilization of funds for infrastructure totaling P182.60 million and the
procurement of equipment amounting to P50.50 million by eight
hospitals/agencies were not in conformity with the intended purposes of the
Malampaya funds which were for the repair/rehabilitation of DOH
hospitals/health facilities and purchase of equipment damaged by Typhoon
Ondoy. The deviation therefrom was without authority from the DBM which
was in violation of the provision of Section 4 of P.D. No. 1445 on the proper
use of funds. (paragraphs 559-567)

We recommended that the Medical Center Chiefs of the hospitals/health

facility through the DOH, obtain post-approval, from the Department of
Budget and Management for the utilization of Malampaya funds outside
of its intended purpose.

51. The provisions of R.A. No. 9184 and its IRR were not observed in the
procurement of equipment and infrastructure projects charged to the
Malampaya Funds, thereby casting doubt on the integrity and reliability of the
procurement processes. (paragraph 568-569)

We recommended that the BAC of ARMMC and TMC, thru their

respective BAC Secretariat:

• regularly post in the websites of PhilGEPS and DOH information

relative to procurement transactions from Invitation to Bid to
issuance of Purchase Orders/contracts for dissemination of all
interested parties and regulatory agencies; and

• be aware and updated with the current issues/developments on

procurement.
Audit Team be furnished with documents and/or information
showing compliance with the requirements of the pertinent
provisions of R.A. No. 9184 and its IRR.

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 We also recommended that the members of the BAC be reprimanded on
such acts and to refrain from committing similar acts which distorts
competitiveness in the procurement process.

52. The P702.76 million and P22.00 million sub-allotted and transferred funds,
respectively, to 16 hospitals/health facilities/agency by the DOH-CO as of
December 31, 2010 chargeable against the DOE - Malampaya Funds were
recorded and reported under the General Fund-Fund 101 instead of under
Special Account in the General Fund-Fund 151 contrary to COA Circular No.
78-81 dated April 28, 1978. (paragraphs 570-576)

We recommended that the Budget Officers and Accountants transfer the

recording of the releases, receipt of NCA/fund transfer and the
corresponding obligations and disbursements therefrom from Fund 101
to Fund 151 in accordance with COA Circular No. 78-81 and henceforth,
comply strictly with the said Circular in the recording/accounting of fund
releases from Fund 151 and the obligations and disbursements therefrom.

53. The properties of ARMMC and SLRWH valued at P53.82 million were not yet
covered by insurance from the Government Service Insurance System (GSIS)
General Insurance Fund while the insurance coverage of P20.76 million for the
property of CHD for Caraga with total book value of P51.14 million was
inadequate thus, affecting the interest of the government against insurable risks
over these properties in case of loss or damages which is not in accordance with
Memorandum Circular No. 634, dated May 10, 1973 of the Office of the
President and Section 489 of GAAM, Volume I. (paragraphs 536-540)

We recommended that the Heads of the concerned hospitals/offices

secure adequate insurance coverage on all insurable properties and assets
to protect the interest of the government against loss or damage caused
by insurable risks and other perils; and thereafter, observe prompt
renewal of insurance policies to ensure continuity of insurance coverage
and avoid expired insurance.

54. The lack of information and awareness on Gender and Development (GAD),
preparation of the GAD Plan and budget as well as improper allocation of
funds, implementation of GAD programs and activities, non-reporting of
accomplishments and expenses relative thereto of 12 hospitals, two CHDs and
one DOH attached agency were not in accordance with Joint Circular 2004-l of
the DBM, NEDA and NCRFW. These resulted in the identification and
pursuance of programs/projects/activities which did not contribute to the
attainment of the fundamental objectives of GAD, non pursuance of some
planned programs and activities, expenses incurred as well as non-
determination/identification of reported accomplishments for the
implementation of the GAD, thus depriving the intended beneficiaries of the
benefits that can be derived therefrom. (paragraphs 577-584)

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 We recommended that the Focal Person:

o prepare an annual GAD plan and budget following the policy

guidelines set forth by DBM, NEDA and NCRFW Joint Circular
No. 2004-1;

o submit the GAD Plan to NCRFW for the required review and
endorsement to the DBM;

o include only those programs, activities and projects that directly

address gender issues and concerns that are well defined to avoid
duplication or overlapping with the regular activities;

o allocate funds for GAD Plan’s activities of at least five percent of

not only the total budget for MOOE but based on the total agency
budget appropriations and that the GAD budget is utilized
exclusively for GAD activities included in the GAD Plan;

o maximize the utilization of the GAD budget by implementing the

planned programs, projects and activities;

o make consultation or networking with various women organizations

to ensure that planning of gender activities and monitoring of
accomplishments effectively respond to gender equality goals; and

o prepare reports to contain the accomplishment vis-à-vis targets

with the corresponding financial resources utilized.

IMPLEMENTATION OF PRIOR YEARS’ AUDIT RECOMMENDATIONS

The status of implementation of prior years’ audit recommendations embodied in

CY 2009 Consolidated Annual Audit Report (CAAR) for the 85 DOH offices and hospitals
is shown below.

Status Number Percentage

Fully implemented 41 33%
Partially Implemented 61 48%
Not Implemented 13 10%
No status report submitted 11 9%
Total 126 100%

Recommendations on the following audit findings/observations were either partially

or not implemented as of December 31, 2010:

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A. Partially Implemented

• Non-utilization of Hospital Equipment and Other Facilities - Regions I, III, XII and
NCR
• Non-disposal of Unserviceable Equipment – Regions I, III, V, VII, IX and NCR
• Use and Deficiencies in Recording of Petty Cash Fund – Regions I, V, X and NCR
• Weaknesses and Lapses in the Controls over Collections - NCR
• Lapses in Recording and Non-Reconciliation of Cash Account Balances – Regions
I, VI, and NCR
• Dormant Cash Balances – Region III, XIII and NCR
• Inaccurate Balances and Non-Settlement of Receivable Accounts – Regions V, XII,
XIII and NCR
• Inaccurate Balance of Due from NGAs Account – Procurement Service – NCR
• Uncollected and Dormant Receivables – Regions VII, XIII and NCR
• Disparity in the Balances of Inventories – Regions V, VI, IX and NCR
• Lapses in Issuances and Record-keeping on Inventory Accounts - Regions I, III, V,
VI, IX, XIII and NCR
• Procurement of Inventories not in Accordance with R.A. No. 9184 – Regions II, V,
VII, X and XII
• Absence of Physical Inventory Reports and Discrepancies in the Balances of
Property, Plant and Equipment Accounts - Regions I, III, V, VII, IX, XIII and NCR
• Inadequate Controls and Lapses in Property Management – Regions I, II, III, V, VI,
IX, X, XII, XIII and NCR
• Non-Reclassification of Unserviceable Properties - Regions I, III, V, VII, IX, XII,
XIII and NCR
• Unreliable Balance of Items in Transit Account - NCR
• Erroneous Recording of Payables Transactions – Region III and NCR
• Unrecorded/Erroneous Recording of Income – Regions VI and NCR
• Lapses/Deficiencies in the Revenue Sharing Scheme with Himex Corporation, Inc.
- NCR
• Non-maintenance of Separate Books of Accounts and Bank account on Receipt and
Utilization of Hospital Income - NCR
• Incurrence of Excessive and Unauthorized Expenses and Lapses in the Charging/
Payment of Expenditures - Regions I, II, VI, VII, XIII and NCR
• Accounts of Fully Completed/Terminated Projects-Non-closure of Accounts of
Fully Completed/Terminated Projects - NCR
• Non-remittance of Trust Receipts, Interest Income and Affiliation Fees to the
National Treasury and Use of Income for Payment of Personnel Benefits – Regions
1 and NCR
• Gender and Development Plan (GAD) - All Regions Except Regions IV-A, IV-B
and XII

B. Not Implemented

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 • Excessive Water Expenses - NCR
• Use and Deficiencies in Recording of Petty Cash Fund – Regions I, V, X and NCR
• Lapses in Recording and Non-Reconciliation of Cash Account Balances – Regions
I, VI and NCR
• Disparity in the Balances of Inventories – Regions V, VI, IX and NCR
• Procurement of Inventories not in Accordance with R.A. No. 9184 – Regions II, V,
VII, X and XII
• Inadequate Controls and Lapses in Property Management – Regions I, II, III, V, VI,
IX, X, XII, XIII and NCR
• Doubtful Balance of Construction in Progress – Agency Assets - NCR
• Erroneous Recording of Payables Transactions – Region III and NCR
• Incurrence of Excessive and Unauthorized Expenses and Lapses in the Charging/
Payment of Expenditures - Regions I, II, VI, VII, XIII and NCR
• Excessive Hazard Pay – Regions I, VI, XIII, CAR and NCR
• Non-inclusion of Foreign Grant Fund and Other Trust Funds in the Financial
Statements - NCR
• Gender and Development Plan (GAD) - All Regions Except Regions IV-A, IV-B
and XI

The details of the Status of Implementation of Prior Years’ Audit

Recommendations are presented in Part III of the report.

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