consolidated audit report on the official development ... · v highest five outstanding balance by...

2011

Consolidated Audit Report on

Official Development Assistance Projects

TABLE OF CONTENTS Page

1.0 INTRODUCTION

Legal Basis 1

Scope and Content 3

Methodology 5

2.0 HIGHLIGHTS OF THE REPORT 6

3.0 STATUS OF CY 2010 ODA-FUNDED PROJECTS

Outstanding Balances 10

Availments 14

Repayments 17

Commitments 20

Undrawn Commitments 28

Actual Debt Service Expenditures 33

4.0 CONSOLIDATED AUDIT OBSERVATIONS AND RECOMMENDATIONS 46

5.0 CHART

I Sources and Utilization 4

II Programs and Projects Status 6

III Loan Balances and Distribution 7

IV Changes on Loan Outstanding Balance 10

V Outstanding Balance by Creditor Type 10

VI Number of Loans Outstanding Balance by Sector 11

VII Cumulative Availments by Sector 16

VIII Commitments by Type of Creditor 22

IX Cumulative Commitments, Cancellation and Net Commitments by Sector 25

X Commitments, Cancellation and Net Commitments by Implementing Agency 26

XI Undrawn Balance by Sector 30

XII Debt Service Expenditures 33

XIII Principal Repayment by Type of Creditor and Type of Loans 38

XIV Commitment Fees 42

XV Status of Implementation of Prior Years’ Audit Recommendation 118

6.0 TABLES

I Status and Breakdown of Loans 3

II Debt Service Expenditures by Creditors 8

III Debt Service Expenditures by Sector 8

IV Commitments Fees by Type of Creditor and Type of Loans 9

V Highest Five Outstanding Balance by Sector 12

VI Outstanding Balance by Implementing Agency 14

VII Current Year Availments by Creditor 15

VIII Cumulative Repayment by Creditor 17

IX Current and Cumulative Repayment by Implementing Agency 19

X List of New ODA Loans 21

XI Cancelled Commitments for 2011 21 XII Net Loan Commitment by Creditor 23

XIII Cumulative Commitments, Cancellation and Net Commitments by Implementing Agency

26

XIV Net Commitments, Cumulative Availments and Undrawn Balance by Creditor 28

XV Net Commitments, Cumulative Availments and Undrawn Balance by Sector 31

XVI Debt Service Expenditures by Type of Loans and by Creditor 33

XVII Debt Service Expenditures Paid by BTr 35

XVIII Debt Service Expenditures Paid by GOCCs 37

XIX Debt Service Expenditures Paid by BTr for GOCCs Account 39

XX Interests by Type of Creditor and Loans 40

XXI Interests on NG Direct Loans, by Agency 40

XXII Interests on Loans Paid by GOCCs 41

XXIII Commitment Fees by Type of Creditor and Loans 42

XXIV Status of Implementation of Prior Years’ Audit Recommendation 118

4 Ps Pantawid Pamilyang Pilipino ProgramAAIGA Agriculture, Agribusiness and Income Generating ActivitiesABC Approved Budget for the ContractADB Asian Development BankAGDB Authorized Government Depository BankAO Administrative OrderAPP Annual Procurement PlanAPR Annual Procurement RequestARCDP II Agrarian Reform Communities Development Project Phase IIARCP I Agrarian Reform Communities Project IARCP II Agrarian Reform Communities Project IIARIIP Agno River Integrated Irrigation ProjectARISP II Agrarian Reform Infrastructure Support Project, Phase II ARISP III Agrarian Reform Infrastructure Support Project, Phase III ARMM Autonomous Region in Muslim MindanaoATs Agricultural TechniciansATLs Audit Team Leaders BAC/TWG Bids and Awards Committee /Technical Working GroupBACr Bank Austria CreditanstaltBCDA Bases Conversion Development AuthorityBDS Business Development ServiceBIHC Bureau of International Health CooperationBIR Bureau of Internal RevenueBPI Bureau of Plant IndustriesBPIP Banaoang Pump Irrigation Project BRISRIP Bago River Irrigation System Rehabilitation and Improvement ProjectBRSs Bank Reconciliation StatementsBTr Bureau of the TreasuryBUR Budget Utilization RequestsCAR Cordillera Autonomous RegionCBFMMP Community-Based Forest and Mangrove Management Project CCT Conditional Cash TransfersCDA Community Development AssistanceCDD Community Driven Development CEXIM The Export-Import Bank of ChinaCFL Compact Fluorescent LampsCHI-I China National Construction and Agriculture Machinery ICHI-II China National Construction and Agriculture Machinery IICIP-RHB Construction In Progress - Roads, Highways and BridgesCIPLC Construction in Progress Ledger Cards CHARMP Cordillera Highland Agricultural Resource Management ProjectCLSWMP Credit Line for Solid Waste Management ProjectCMIPP Casecnan Multi-Purpose Irrigation and Power Project CNA Collective Negotiation Agreement CNS/ATM New Communications Navigation Surveillance/Air Traffic ManagementCO Central OfficeCOA Commission on AuditCS Certified SeedsCSF Container Service Fee CVS Compliance Verification SystemCY Calendar YearDA Department of AgricultureDAR Department of Agrarian ReformDBM Department of Budget and Management DBP Development Bank of the Philippines

LIST OF ACRONYMS

LIST OF ACRONYMS

DENR Department of Environment and Natural ResourcesDepEd Department of EducationDFIMDP Diversified Farm Income and Market Development Project DILG Department of Interior and Local GovernmentDMAD Debt Monitoring and Analysis Division DOF Department of FinanceDOH Department of HealthDOTC Department of Transportation and CommunicationsDP-D-IFM Direct Procurement-Distribution-In-Field MethodDPUCSP Development of Poor Urban Communities Sector ProjectDPWH Department of Public Works and HighwaysDSWD Department of Social Welfare and DevelopmentDTI Department of Trade and IndustryDVs Disbursement VouchersEDCF Economic Development Corporation FundEFBs Eligible Farmer BeneficiariesEIMP Export Industry Modernization ProjectEVAT Expanded Value Added Tax FAPs Foreign Assisted ProjectsFA Fiscal AutonomyFB Farmers BeneficiariesFCCA Foreign Currency Current Account FFIs Foreign Funding Institutions FLI Foreign Lending InstitutionFMIS Financial Management Information SystemFMR Financial Monitoring ReportFMRs Farm to Market RoadsFOREX Foreign Exchange FS Financial StatementFMO Fund Management OfficeFXRC Foreign Exchange Risk CoverGAAM Government Accounting and Auditing Manual GAD Gender and DevelopmentGITEC Grosse Internationale TechnologieGL General LedgerGOP Government of the Philippines GPA Good Practice Award GMDSS Global Maritime Distress and Safety SystemGOCCs Government Owned and Controlled CorporationsGPPB Government Procurement Policy BoardGSD General Services DivisionGSFPC General Santos Fish Port ComplexHCAAP Help for Catubig Agricultural Advancement ProjectHSDP Health Sector Development Project HSRP Health Sector Reform Project HSRA-SP Health Sector Reform Agenda - Support ProgrammeHDMF Home Development Mutual FundIAs Implementing AgenciesIBRD International Bank for Reconstruction and DevelopmentICS Inventory Custodian Slip ICC-CC Investment Coordination Committee- Cabinet CommitteeIDF International Development Fund IMAT Inventory Management Assessment ToolIMOs Irrigation Management OfficesInfRES Infrastructure for Rural Productivity Enhancement Sector ProjectIFAD International Fund for Agricultural Development

LIST OF ACRONYMS

IRR Implementing Rules and RegulationsJBIC Japan Bank for International CooperationJICA Japan International Cooperation AgencyJEVs Journal Entry VouchersJEXIM Export-Import Bank of Japan JRSP Judicial Reform Support ProjectKALAHI-CIDSS Kapit-Bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social KEXIM Export-Import Bank of KoreaKFAED Kuwait Fund for Arab Economic DevelopmentKFW Kreditanstalt für WiederaufbauLBP Landbank of the PhilippinesLCC LGU Counterpart CommitmentLCCA Local Currency Current AccountLGUs Local Government UnitsLISCPP Laguna de Bay Institutional Strengthening and Community Participation ProjectLLDA Laguna Lake Development Authority LP Loan ProceedsLIDP Logistics Infrastructure Development ProjectLRTA Light Rail Transit Authority LTI Land Tenure ImprovementLWUA Local Water Utilities AdministrationMSIP Maritime Safety Improvement Project Phase CMAO Municipal Agriculture OfficesMCT Municipal Coordinating TeamMCTP Mindanao Container Terminal Project MDFO Municipal Development Fund OfficeMEFBs Masterlist of Eligible Farmers BenificiariesMIRIDP Metro Iligan Regional Infrastructure Development Project MBURDP Mega Bridges for Urban and Rural Development ProjectMINSSAD Mindanao Sustainable Settlement Area Development MTSP Manila Third Sewerage ProjectMMD/RITM Material Management Division/Research Institute for Tropical MedicineMMSMRTDP Metro Manila Strategic Mass Rail Transit Development ProjectMMUTIP Metro Manila Urban Transport Integration ProjectMOA Memorandum of AgreementMOOE Maintenance and Other Operating ExpensesMRDP II Mindanao Rural Development Project Phase IINCA Notice of Cash AllocationNCAA Non-Cash Availment Authority NCIP National Commission on Indegenous PeoplesNCISP Non-intrusive Container Inspection ProjectND Notice of DisbursementNDF Nordic Development FundNEDA National Economic Development Authority NFA National Food AuthorityNG National Government NGAs National Government AgenciesNGAS New Government Accounting SystemNGDAD National Government Debt Accounting Division NGOs Non-Governmental OrganizationsNGOs/POs Non-Governmental Organizations/Peoples' OrganizationNHTSPR National Household Targeting System for Poverty Reduction NIA National Irrigation Administration NMCIRMP Northern Mindanao Community Initiative and Resource Management Project

LIST OF ACRONYMS

NPSBE National Program Support to Basic Education NPSENRMP National Program Support for Environment and Natural Resources Management

Program NPSTAR National Program Support for Tax Administration Reform ProjectNRIMP I National Roads Improvement and Management Project (Phase II)NRIMP II National Roads Improvement and Management Project (Phase II)NSCB National Statistical Coordination Board NSQCS National Seed Quality Control ServiceNSSHRP National Sector Support for Health Reform ProjectsNOA Notice of AwardODA Official Development AssistanceOECF Overseas Economic Cooperation FundOFID OPEC Fund for International DevelopmentOPEC Organization of the Petroleum Exporting CountriesORs Official ResceiptsOSEC Office of the SecretaryOTC Over the CounterPAR Property Acknowledgement Receipt PC Property CustodianPD Presidential DecreePPE Property Plant and EquipmentPEEP Philippine Energy Efficiency ProjectPEO Provincial Engineering Office PEZA Philippine Economic Zone AuthorityPGLDN Provincial Government of Lanao del NortePHIC Philippine Health Insurance CorporationPIA PHIVIDEC Industrial AuthorityPIDP Participatory Irrigation Development ProjectPIM Project Implementation Manual PMMA Philippine Merchant Marine AcademyPMO Project Monitoring OfficePhilGEPS Philippine Government Electronic Procurement SystemPNB Philippine National BankPNR Philippine National RailwaysPOPSTIRP Post Ondoy and Pepeng Short-Term Infrastructure Rehabilitation Projects PO Purchase Order PrA Provincial AgriculturistsPrOs Provincial OfficesPPA Philippine Ports AuthorityPPE Property, Plant and Equipment PPELC Property, Plant and Equipment Ledger CardPSALM Power Sector Assets and Liabilities Management PS Procurement ServicePSO Project Support OfficePTA Philippine Tourism Authority RaFPEP Rapid Food Production Enhancement ProgramRaSSFiP Rapid Seed Supply Financing ProjectRAO Registry of Allotment and ObligationRCI Report of Checks Issued RFO Regional Field OfficeRFU Regional Field UnitRuMEPP Rural Micro-Enterprise Promotion Programme RO Regional OfficeRPCPPE Report of Physical Count of Property, Plant and EquipmentRPMT Regional Project Monitoring Team

LIST OF ACRONYMS

RPMO Regional Project Management OfficeRSMI Report on Supplies and Materials Inventory RRNDP II Rural Road Network Development Project IISAOB Statement of Allotment, Obligation and BalancesSBER Support to Basic Education ReformSBGFC Small Business Guarantee and Finance CorporationSC Supreme CourtSINOMACH China National Machinery Industry CorpSCHARMP Second Cordillera Highland Agricultural Resource Management Project SEDIP Secondary Education Development and Improvement ProjectSRRFP Social Reform Related Feeder Ports Project (SRRFP)SEZEMP Special Economic Zones Environmental Management Project SL Subsidiary Ledger SLA Subsidiary Loan AgreementSLAMP Second Land Administration and Management Project SOE Statement of ExpendituresSPISP Southern Philippines Irrigation Sector Project SPOTS II Solar Power Technology Support to ARC, Phase II SSLDIP Support for Strategic Local Development and Investment ProjectSWDRP Social Welfare and Development Reform ProjectSWHSMP Second Women's Health and Safe Motherhood Project SBMA Subic Bay Metropolitan AuthorityTAS Technical Audit SpecialistTEU Twenty-foot Equivalent UnitsTESDA Technical Education and Skills Development AuthorityTESDP Technical Education and Skill Development ProjectTRC Technology Resource CenterTF Trust Fund TOA Terms of AgreementTRB Toll Regulatory Board UBCPRD Urgent Bridges Construction Project for Rural DevelopmentVAT Value Added Tax WAER Weighted Average Exchange RateWB World Bank WMCIP Western Mindanao Community Initiative Project

1.0 INTRODUCTION

1

CONSOLIDATED AUDIT REPORT ON OFFICIAL DEVELOPMENT ASSISTANCE

FOR THE CALENDAR YEAR 2011

1.0 INTRODUCTION

1.1 Legal Basis

Official Development Assistance is governed by Republic Act No. 8182, approved on June 11, 1996, entitled:

“An Act Excluding the Official Development Assistance (ODA) from the Foreign Debt Limit in order to Facilitate the Absorption and Optimize the Utilization of ODA Resources, Amending for the Purpose Paragraph 1, Section 2 of R.A. No. 4860, as amended by R.A. No. 8555”.

The law was issued in order to facilitate the absorption and optimize the utilization

of ODA resources. It also excluded ODA funded projects from foreign debt limit of US$10 billion or its equivalent in other foreign currencies as set under Presidential Decree (P.D.) No. 139, the law amending R.A No. 4860. The ODA loan continued to be the favored source of financing for the priority development projects of the country due to its lower interest rate and longer maturity periods compared to other foreign loans.

Section 2 of the subject law defines ODA as a loan or a loan or grant which meets

all of the following criteria:

a. It must be administered with the objective of promoting sustainable social and economic development and welfare of the Philippines;

b. It must be contracted with governments of foreign countries with whom the

Philippines has diplomatic, trade relations or bilateral agreements or which are members of the United Nations, their agencies and international or multilateral lending institutions;

c. There are no available comparable financial instruments in the capital market;

and

d. It must contain a grant element of at least twenty-five percent (25%). Grant element is the reduction enjoyed by the borrower whenever the debt service payments which shall include both principal and interest and expressed at their present values discounted at ten percent (10%) are less than the face value of the loan or loan and grant. The grant element of a loan or loan and grant is computed at the ratio of (i) the difference between the face value of the loan or loan and grant and the debt service payments to (ii) the face value of the loan or the loan and grant.

2

The main law on public debt is RA No. 4860, issued on August 8, 1966 entitled:

“ An Act Authorizing the President to Obtain such Foreign Loans and Credits or to Incur such Foreign Indebtedness, as may be Necessary to Finance Approved Economic Development Purposes or Projects, and to Guarantee, in behalf of the Republic of the Philippines, Foreign Loans Obtained by the Government of the Philippines, Foreign Loans Obtained or Bonds Issued by Corporations Owned or controlled by the Government of the Philippines for Economic Development Purposes including those Incurred for Purposes of Re-lending to the Private sector, Appropriating the Necessary Funds Therefore, and for other Purposes”.

Under Section 1 of the above Act, the President is authorized, in behalf of the

Republic of the Philippines, to contract such loans, credits or indebtedness with foreign governments, agencies or instrumentalities of such foreign governments, foreign financial institutions, or other international organizations, with whom, or belonging to countries with which, the Philippines has diplomatic relations, as may be necessary and upon such terms and conditions as may be agreed upon, to enable the Government of the Republic of the Philippines (ROP) to finance, either directly or through any government office, agency or instrumentality or any government-owned or controlled corporations, industrial, agricultural or other economic development purposes or projects authorized by law. It is also provided in this section that the authority of the President of the Philippines shall include the power to issue, for the purposes herein before stated, bonds for sale in the international markets the income from which shall be fully tax-exempt in the Philippines.

Section 2 provides that the total amount of loans, credits and indebtedness,

excluding interests, which the President is authorized to incur under this Act shall not exceed US$1 billion or its equivalent in other foreign currencies at the exchange rate prevailing at the time the loans, credits and indebtedness are incurred, provided that the total loans, credit and indebtedness incurred under the Act shall not exceed US$250 million or its equivalent in other currencies in the fiscal year of the approval of this Act, and US$250 million every fiscal year thereafter.

Regarding the guarantee extended by the NG to the GOCCs, the 1987 Philippine

Constitution provides under Section 20, Article VII, that the President may contract or guarantee foreign loans on behalf of the Philippines with the prior concurrence of the Monetary Board, and subject to such limitations as may be provided by law. The Monetary Board shall, within thirty days from the end of every quarter of every calendar year, submit to the Congress a complete report of its decision on applications for loans to be contracted or guaranteed by the Government or government-owned and/or controlled corporations which would have the effect of increasing the foreign debt, and containing other matters as may be provided by law. This provision is likewise reiterated under Section 3 of RA No. 4860 which states that the President of the ROP is likewise authorized, in behalf of the ROP, to guarantee, upon such terms and conditions as may be agreed upon, foreign loans extended directly to, or bonds for sale in international markets issued by, corporations owned or controlled by the Government of the Philippines for industrial, agricultural or other economic development purposes or projects authorized by law.

3

Another legal basis for public debt is PD No. 139. This was issued on June 27,

1984 amending R.A. No. 4860 by increasing foreign debt limit to an amount not exceeding US$10 billion or its equivalent in other foreign currencies at the exchange rate prevailing at the time the loans, credits or indebtedness are incurred at terms of payment of not less than ten (10) years except those contracted in the interest of national security and rehabilitation resulting from natural calamities. It amended the last paragraph of Section 3 to state that the total amount of loans, credits or indebtedness incurred, and the proceeds of bonds, securities or other evidences floated or issued, which may be guaranteed by the President shall not be more than US$7.5 billion or its equivalent in other foreign currencies at the exchange rate prevailing at the time the guarantee is made excluding interests and other normal banking charges imposed or charged by the International Bank for Reconstruction and Development (IBRD), the Asian Development Bank (ADB) and other similar international financial institutions.

1.2 Scope and Content

The scope and content of the report follows:

1.2.1 The data on 376 ODA loans contracted and guaranteed by the National Government (NG) since January 1, 1995, the effectivity date of R.A. No. 8182, up to December 31, 2011 are featured in this report. The loans comprise of 49 program loans and 327 project loans. Shown below is the status and breakdown of these loans:

Table I – Status and Breakdown of

Loans

Status Breakdown

Program Project Total

Active 6 58 64 New 2 3 5 New/Closed* 2 0 2 Closed 39 260 299 Cancelled 6 6

Total 49 327 376 * Loans granted and fully availed during the year

1.2.2 The loans were obtained from multilateral, bilateral and commercial creditor and utilized in Infrastructure, Social Reform and Community Development, Industry, Trade and Tourism, Agriculture, Natural Resources and Agrarian Reform, and Governance and Institution Development Sectors. Shown in the next page is the graphical presentation of sources and utilization.

4

114

40

36

16

30

10

10

121 39

40

8

6

140

0

20

40

60

80

100

120

140

160

180

200

Infrastructure Social Reformand Community

Dev’ t.

Industry, Tradeand Tourism

Agriculture,Natural

Resources andAgrarianReform

Governance andInstitution

Dev’ t.

Chart I - SOURCES AND UTILIZATION

Bilateral Multilateral Commercial

Sources

Utilization

Total Infra.

Social Reform and Community

Dev’t.

Industry, Trade and

Tourism

Agriculture, Natural

Resources and Agrarian

Reform

Gover-nance and Institution

Dev’t.

Bilateral 114 16 10 39 6 185 Multilateral 40 30 12 40 14 136 Commercial 36 10 1 8 0 55

Total 190 56 23 87 20 376

1.2.3 Consolidated Audit Observations and Recommendations as of December 31, 2011 on 78 programs and projects.

This report does not include Foreign-Assisted Projects (FAPs) funded from

ODA grants.

The sources of the above data are the following:

a) Status Report on National Government (NG) Direct and Guaranteed Loans –

shows the detail of foreign loans by loan account number, creditor and implementing agency with summary on type of loans and creditors. This report is prepared by the Debt Monitoring and Analysis Division (DMAD), Bureau of the Treasury (BTr).

5

b) List of ODA loans signed during the year – the list is sourced from the

Department of Finance (DOF) and National Economic Development Authority (NEDA) upon request.

c) Summary of Debt Service Expenditures - Foreign – debt service pertaining to

payments made by the NG on Principal, Interests, Commitment Fees and Other Charges for the Direct and Relent Loans prepared by the National Government Debt Accounting Division (NGDAD), BTr

d) Actual Debt Service, ODA - Funded Projects – debt service pertaining to

payments made directly by the GOCCs for the NG Guaranteed loans prepared by concerned GOCCs.

e) Audit Observations and Recommendations submitted by the Auditors/Audit

Team Leaders (ATLs) of implementing agencies.

1.3 Methodology

The Commission on Audit (COA) is maintaining database on ODA loans which are being updated annually based on Status Report on NG Direct and Guaranteed Loans submitted by the BTr. The data on Status Report were validated from the DMAD, BTr and agency personnel of implementing agencies concerned. The status of projects and loans were solicited from the agencies and respective auditors/ATLs and verified from the NEDA Portfolio Review Report.

Based on updated data file, schedules were prepared for ODA loans by creditor,

sector and implementing agency with data on commitments, availments, repayments and outstanding and undrawn balances per loan account and project. The sectoral classifications of loans/projects used were based on NEDA reports. Data on tables, charts and narrative reports were taken from the lists.

All balances were translated to the local currency equivalent using BSP weighted

average rate at reporting date which was published on the first working date of the ensuing year. Third currency balances are first converted to US Dollars (USD) then translated to Philippine Peso (PhP) using the exchange rate at reporting date.

To comply with Section 8 (b) of R.A. No. 8182 which requires the COA to conduct

an audit on each ongoing and completed project and to submit report to Congress, the Auditors/Audit Team Leaders (ATLs) of National Government Agencies (NGAs), Government – Owned and Controlled Corporations (GOCCs) and Local Government Units (LGUs) concerned, prepared and submitted to National Government Sector (NGS) the audit observations and recommendations for consolidation. The consolidated audit observations and recommendations were grouped into audit issues related to Budget, Procurement, Financial Performance, Physical Performance, Project Progress Sustainability and Other Issues by implementing agency, by loan account number, and by project.

2.0 HIGHLIGHTS OF THE REPORT

6

2.0 HIGHLIGHTS OF THE REPORT

The NG had contracted 370 (excluding 6 cancelled loans) ODA loans financing 310 programs and projects of the government with net loan commitments of P1.464 trillion (US$33.34 billion) as of December 31, 2011. Of these projects, 238 had been completed, 67 are on-going, 3 are new and 2 are not yet implemented.

In 2011, seven new loans were

contracted with net loan commitments of P67.55 billion (US$1.54 billion), 38.23 percent of these amounting to P25.82 billion (US$587.98 million) were still undrawn, wherein P5.12M paid by NG for the commitment fee.

2.1 Loan Balances and Distribution

2.1.1 Outstanding Balances– P864.79 billion (US$19.69 billion)

As of December 31, 2011, out of 376 ODA loans, 328 had an outstanding balance amounting to P864.79 billion (US$19.69 billion) payable to three types of creditors, namely: Bilateral, Multilateral and Commercial.

2.1.2 Availments – P1.12 trillion (US$25.43 billion)

Of the cumulative commitments, total cumulative availments as of December 31, 2011, amounted to P1.12 trillion (US$25.43 million) while the current availments summed up to P123.43 billion (US$2.81 billion).

During the year, the Infrastructure sector availed most of the loan commitments totaling P68.25 billion (US$1.55 billion) or 55.29 percent followed by Social Reform and Community Development – P51.41 billion (US$1.17 billion) or 41.65 percent, Agriculture - Natural Resources and Agrarian Reform – P2.38 billion (US$0.54 billion) or 1.93 percent, Industry, Trade and Tourism – P1.16 billion (US$0.03 billion) or 0.94 percent and Governance and Institution Development – P0.24 billion (US$0.006 billion) or 0.20 percent.

Among the implementing agencies, the NGAs availed a total of P784.03 billion

(US$17.85 billion), while the GOCCs and LGUs got P321.82 billion (US$7.33 billion) and P10.89 billion (US$0.25 billion), respectively.

All balances were translated to the local currency equivalent using BSP weighted average rate at reporting date which published on the 1st working day of the ensuing year. Third currency balances are first converted to USD then translated to PhP using the exchange rate at reporting date.

Chart II - Programs and Projects Status

2

3

238

67

Completed (238) On-going (67) New (3) NYI (2)

7

-

200

400

600

800

1,000

1,200

Commercial 66.40 30.48 35.92

Multilateral 400.15 79.97 320.18

Bilateral 650.19 141.50 508.69

Total 1,116.74 251.95 864.79

Cumulative Availments

Cumulative Repayment

Outstanding Balance

2.1.3 Repayments – P251.95 billion (US$5.74 billion)

Cumulative Repayments of P251.95 billion (US$5.74 billion) or 22.56% of the total availments were made to the following creditors: Bilateral – P141.50 billion (US$3.22 billion) or 56.16 percent, Multilateral – P79.97 billion (US$1.82 billion) or 31.74 percent and Commercial – P30.48 billion (US$0.69 billion) or 12.10 percent.

Shown below is the total loan amount and balances as of December 31, 2011 and its

distribution as to the type of creditor.

2.2 Commitments – P1.65 trillion (US$37.58 billion)

The cumulative loan commitments as of December 31, 2011 totaled P1.65 trillion or US$37.58 billion. The cumulative cancellation of commitments reached P185.79 billion (US$4.23 billion) or 11.26 percent of the cumulative commitment.

The net loan commitments of P1.464 trillion (US$33.35 billion) is sourced from the

following types of creditors, namely: Bilateral – P916.57 billion (US$20.87 billion), Multilateral – P466.47 billion (US$10.62 billion) and Commercial – P81.45 billion (US$1.85 billion).

1,464.49

1,116.74

347.75

916.57

650.19

266.38466.47 400.15

66.32

81.45 66.40 15.050

200

400

600

800

1000

1200

1400

1600

in b

illio

n p

eso

N etC ommit ment s

C umulat iveA vailment s

U ndrawnB alance

Commercial

M ult ilateral

Bilateral

Total

Chart III - Loan Balances & Distribution(in billion peso)

Commercial Multilateral Bilateral Total

Type of Creditor

Net Commitments

Cumulative Availments

Undrawn Balance

Commercial 81.45 66.40 15.05

Multilateral 466.47 400.15 66.32

Bilateral 916.57 650.19 266.38

Total 1,464.49 1,116.74 347.75

% to Net Commitments 100% 76% 24%

8

For the current year, the seven new loans were contracted from five creditors. On

the other hand, ten loan accounts for P23.93 billion or US$0.54 billion were cancelled representing unused/undisbursed balances of loan accounts.

2.3 Undrawn Commitments – P347.76 billion (US$7.92 billion)

For the year, the undrawn balances of commitments of P347.76 billion (US$7.92 billion) represents 23.75 percent of the net loan commitments, of which, P266.38 billion (US$ 6.07 billion) or 76.60 percent is from Bilateral creditors, P66.32 billion (US$1.51 billion) or 19.07 percent from Multilateral creditors and P15.05 billion (US$0.34 billion) or 4.33 percent from Commercial creditors.

2.4 Debt Service Expenditures – P62.98 billion

During the year, the total debt service expenditures paid to creditors amounted to P62.98 billion, broken down as follows: Principal – P47.10 billion or 74.78 percent, Interest – P15.04 billion or 23.88 percent, Commitment Fees – P0.37 billion or 0.59 percent, other charges – P0.47 billion or 0.75 percent as shown in Table II below:

The breakdown of debt service expenditures by Sector is shown in Table III as follows:

Table II- Debt Service Expenditures by Creditor Type(in million pesos)

Creditor Type Principal Interest Commit-ments Fees

Other Charges

Total

1 Bilateral 29,215.13 7,776.17 255.84 425.26 37,672.40 2 Multilateral 13,339.69 6,137.39 50.48 43.73 19,571.29 3 Commercial 4,545.35 1,124.01 66.32 4.21 5,739.89

Total 47,100.17 15,037.57 372.64 473.20 62,983.58 Percentage to total 74.78 23.88 0.59 0.75 100.00

Table III- Debt Service Expenditures by Sector(in million pesos)

Creditor Type Principal Interest Commit-

ments Fees

Other Charges

Total % to Total

1 Infrastructure 31,645.76 8,165.46 318.15 455.88 40,585.25 64.44 2 Governance &

Institution Develoment 3,072.27 2,782.18 1.87 0.03 5,856.35 9.30

3 Agr.,Nat. Res.& Agra. Reform 6,589.40 1,636.67 25.61 3.83 8,255.51 13.11

4 Social Reform and Community Development 2,872.77 1,470.04 15.36 10.12 4,368.29 6.94

5 Industry, Trade and Tourism 2,919.97 983.22 11.65 3.34 3,918.18 6.22

Total

47,100.17

15,037.57

372.64

473.20 62,983.58 100.00

9

Commitment fees paid during the year for the undrawn amount is P372.64 million or 10.72 percent of the total undrawn balance of commitments. Presented in Table IV are the types of creditors and the type of loans where commitment fees are paid:

2.5 Consolidated ODA Audit Observations and Recommendations

The audit observations and recommendations were summarized and the more significant and common observations were further grouped into audit issues related to Budget, Procurement of Consulting Services, Civil Works and Goods, Financial Performance, Physical Performance, Project Sustainability and Others. It is further shown by implementing agency (IA), loan account and project.

Due to the significance of the observations noted and the need for appropriate

actions by the implementing agencies, and the intervention by the Congress and oversight agencies, such as the NEDA, DOF and the DBM, prior years’ recommendations are reiterated.

Table IV- Commitment Fees by Type of Creditor and Type of Loans

(in billion pesos)

Creditor Type NG

Direct NG

Relent NG-

Guaranteed Total

1 Bilateral 212.99 0.00 42.85 255.84 2 Multilateral 34.61 0.00 15.87 50.48 3 Commercial 47.82 0.00 18.50 66.32

Total 295.42 0.00 77.22 372.64 Percentage to

3.0 STATUS OF ODA –

FUNDED PROJECTS

10

3.0 STATUS OF ODA-FUNDED PROJECTS

3.1 Outstanding Balances – P864.79 billion (US$19.69 billion)

As of December 31, 2011, the outstanding balance of ODA loans is P864.79 billion (US$19.69 billion) which has an increase of P108.86 billion (US$2.44 billion) compared with 2010 balance of P755.93 billion. The net change in balances is caused by revaluation of foreign currency, adjustments and current year transactions. The details are shown below:

Particulars Amount

(in billion pesos)

2010 Outstanding Balance 755.93 Net change due to: Forex Revaluation 24.91 Adjustments 9.42 CY transactions 74.53

2011 Outstanding Balance 864.79 3.1.1 By Type of Creditor

The outstanding balance of ODA loans is payable to the following types of creditors: Bilateral – P508.69 billion (US$11.58 billion) or 58.82 percent, Multilateral – P320.18 billion (US$7.29 billion) or 37.02 percent and Commercial – P35.92 billion (US$0.82 billion) or 4.16 percent. Chart V shows the outstanding balance of ODA loans by creditor type as of December 31, 2011 and its breakdown.

Breakdown of Bilateral Creditors 8.97, 1.76%

8.53, 1.68%

7.7, 1.51%

7.12, 1.40%

10.89, 2.14%

15.43, 3.03%

KE

XIM

= 4

6.65

9.1

6%

1.65 0.32%

1.32, 0.26%

3.46 0.68%

4.46, 0.88%JBIC = 403.40 79.31%

JBIC KEXIM BNP Paribas ECGD

AFD KFW US Public Laws ICO

FP ANZ/EFIC Others Creditors

Breakdown of Multilateral Creditors

ADB = 179.35 56.02%

IBRD = 136.30 42.57%

0.300.09%

0.37 0.12%

0.61 0.19%

3.24 1.01%

ADB

IB RD

IFAD

NDF

EIB

OPEC

Chart V - Outstanding Balance by Creditor Type

35.92

320.18

508.69

-50

50

150

250

350

450

550

650

0 0.5 1 1.5 2

Outstanding Balance

in b

illion

pes

o

Commercial Multilateral Bilateral

Difference between totals and sum of components is due to rounding off

Breakdown of Commercial Creditors

CEXIM = 18.64 51.89%

BAC =6.82 18.99%

BNP=3.53 9.83%

5.04 14.03%

RZOA = 1.89 5.26%

1.032.87%

4.01 11.16%

CEXIM

BAC

BNP Paribas

RZOA

ERSTE (Austria)

Other Creditors

Chart IV - Changes on Loan Outstanding Balance (in billion peso)

74.53

755.93

24.91

9.42

2010 Outstanding balance Forex Adjustments Transactions

11

Of the outstanding ODA liabilities for bilateral creditors, the amount of P403.40 billion (US$9.18 billion) or 79.31 percent is payable to Japan Bank for International Cooperation (JBIC). For multilateral creditors, the liabilities to ADB and IBRD reached P179.35 billion (US$4.08 billion) or 56.02 percent and P136.30 billion (US$3.10 billion) or 42.57 percent, respectively. The amount due to commercial creditors are mostly for CEXIM – P18.64 billion (US$0.42 billion) or 51.89 percent, Bank of Austria Creditanstalt – P6.82 billion (US$0.16 billion) or 18.99 percent and BNP Paribas – P3.53 billion (US$0.08 billion) or 9.83 percent, among others.

3.1.2 By Sector

Of the 376 loans, only 328 had an outstanding balance of P864.79 billion (US$19.69 billion) which is shared by the five sectors as shown in Chart VI below.

SECTOR No. of Loan Accts

Outstanding Balance (in billion) % to

Total USD PHP

1. Infrastructure 163 9,732.35 427,435.07 49.43 2. Governance and Institution

Development 19

3,548.21 155,833.94 18.02 3. Agriculture, Natural

Resources and Agrarian Reform 73

2,615.63 114,876.07 13.28

4. Social Reform and Community Development 52

2,453.17 107,740.79 12.46

5. Industry, Trade and Tourism 21 1,341.14 58,901.42 6.81

TOTAL 328

19,690.50 864,787.29 100.00 Difference between totals and sum of components is due to rounding off

Chart VI -Number of Loans and Outstanding Balance by Sector

163

19

73

52

21

427.44

155.83

114.88 107.74

58.90

0

20

40

60

80

100

120

140

160

180

Infrastructure Governance Agriculture Social Reform Industry

Nu

mb

er o

f L

oan

s

-

50

100

150

200

250

300

350

400

450

Ou

tsta

nd

ing

Bal

ance

(in

bill

ion

pes

o)

No. of Loan Accts Outstanding Balance

12

Presented in Table V - is the list of top five loans with highest outstanding balance per sector.

Table V- Highest Five Outstanding Balance by Sector

(in million)

Loan Account Number

Name of Project IA Creditor Outstanding Balance % to Total -by

Sector USD PHP

INFRASTRUCTURE

1 JBIC PH-P226 Subic-Clark-Tarlac Expressway Project

BCDA

JBIC

743.24

32,642.20

7.64

2 PHL-9 Bacolod-Silay Airport Access Road Project

DPWH

KEXIM

497.38

21,844.28

5.11

3 PHL-10 Gapan-San Fernando-Olongapo Road Project, Phase II

DPWH

KEXIM

496.94

21,824.91

5.11

4 ADB2282 PHI Power Sector Development Program Cluster

DOF

ADB

406.40

17,848.46

4.18 5 JBIC PH-P171 MM Strategic MRT

Devt.(Line 2) Project, Phase II

LRTA

JBIC

256.55

11,267.62

2.64

TOTAL 2,400.51

105,427.47 24.68

GOVERNANCE AND INSTITUTION DEVELOPMENT

1 ADB2538 PHI Countercyclical Support Facility

DOF

ADB

500.00

21,959.50

14.34

2 JBIC-PSDP Power Sector Development Program

DOF

JBIC

376.91

16,553.64

10.81

3 ADB2489 PHI Governance in Justice Sector Reform Program

SC

ADB

300.00

13,175.70

8.60

4 ADB2450 PHI Development Policy Support Program Cluster-Sub Program 2

DOF

ADB

250.00

10,979.75

7.17 ADB2545 PHI Development Policy

Support Program, Subprogram3

DOF

ADB

250.00

10,979.75

7.17 IBRD 7424 PH First Development

Policy Loan Program DOF

IBRD

250.00

10,979.75

7.17

IBRD 7913-PH Food Crisis Response Development Policy Operation: Supplemental Support for Post-typhoon Recovery

DepEd

IBRD

250.00

10,979.75

7.17

5 ADB2315 PHI Development Policy Support Program

DOF

ADB

232.28

10,201.29

6.66

TOTAL 2,409.19 105,809.13 69.09 Difference between totals and sum of components is due to rounding off

13

(Table V, continued)

Loan Account

Number Name of Project IA Creditor

Outstanding Balance % to Total -by

Sector USD PHP

AGRICULTURE, NATURAL RESOURCES AND AGRARIAN REFORM

1 JBIC PH-CL 020 (POLICY LOAN)

MM Air Quality Improvement Sector Development Program

DOF

JBIC

425.38

18,682.47 16.26 2 JBIC PH-P199 Environmental

Infrastructure Support Credit Program, Phase II

DPB

JBIC

244.94

10,757.69

9.36

3 IBRD 7615 PH Food Crisis Response Development Policy

DOF

IBRD

200.00

8,783.80

7.65

4 JBIC PH-P203 Agrarian Reform Infrastructure Support Project, Phase II

DAR

JBIC

141.46

6,212.92

5.41 5 JBIC PH-P196 Central Luzon Irrigation

Proj./Casecnan Multi-purpose Irrigation & Power Project

NIA

JBIC

125.35

5,505.11 4.79 TOTAL 1,137.13 49,941.99 43.47

SOCIAL REFORM AND COMMUNITY DEVELOPMENT

1 8085-PH DISASTER RISK MGMT.DEV. W/ CAT

DOF

IBRD

743.24

32,642.20

7.64

2 8050-PH PHIL.DEV.POLICY LOAN TO FOSTER

DOF

IBRD

497.38

21,844.28

5.11

3 2715-PHI FINANCIAL MARKET REG II

DOF

ADB

496.94

21,824.91

5.11

4 IBRD 7393 PH National Program Support for Basic Education Project

DepEd

IBRD

406.40

17,848.46

4.18

5 ADB2136 PHI Health Sector Development Program

DOF

ADB

256.55

11,267.62

2.64

TOTAL 2,400.51 105,427.47 24.68

INDUSTRY, TRADE AND TOURISM 1 JBIC PH-P198 Industrial Support

Services Expansion Program, Phase II

DBP

JBIC

420.71

18,477.30

31.37 2 JBIC PH-P189 Domestic Shipping

Modernization Program, Phase II

DBP

JBIC

209.21

9,188.39

15.60 3 ADB2278 PHI Financial Market

Regulation & Intermediation Program Cluster

DOF

ADB

180.62

7,932.65

13.47

4 ADB2199 PHI Microfinance Development Program

DOF

ADB

140.70

6,179.40

10.49

5 JBIC PH-P157 Metro Cebu Dev. Proj. III (Cebu South Reclamation)

LBP

JBIC

109.10

4,791.65

8.14 TOTAL 1,060.34 46,569.39 79.07


14

3.1.3 By Implementing Agency

Of the outstanding liability, the amount of P625.91 billion (US$14.25 billion) or 72.38 percent was availed by the NGAs while P234.35 billion (US$5.34 billion) or 27.10 percent was accounted by the GOCCs. The balance of P4.53 billion (US$0.10 billion) or 0.52 percent is under the account of LGUs. Shown below is the total loan outstanding balance with the number of NG direct and relent loans and NG guaranteed loans.

Difference between totals and sum of components is due to rounding off Among the NGAs total outstanding balance, the amount of P245.99 billion

(US$5.60 billion) or 39.30 percent pertains to DOF representing program loans used for NGAs fund requirements. The DPWH also got P200.06 billion (US$4.56 billion) or 31.96 percent for the different government infrastructure projects such as construction and improvement of roads, bridges and highways, flood control projects and restoration/ rehabilitation of waterways, among others. The DepEd had P38.52 billion (US$0.88 billion) or 6.15 percent and the projects implemented were pertaining to support for basic education.

For the GOCCs, the implementing agencies that have more than 10 percent share

on the total GOCCs outstanding balance are DBP, LRTA, BCDA and LBP. For the LGUs, only two implementing agencies shared the total outstanding

balance, P3.10 billion (US$.070 billion) or 68.45 percent pertains to ARMM while the Provincial Gov’t of Lanao Del Norte had the amount of P1.43 billion (US$.033 billion) or 31.55 percent.

3.2 Availments – P1.12 trillion (US$25.43 billion)

As of December 31, 2011, Cumulative availments reached P1.12 trillion (US$25.43 billion)

or equivalent to 76 percent of the total net commitments as presented in Chart III. Of these, P123.43 billion (US$2.81 billion) or 11.05 percent is the availments during the year.

3.2.1 By Creditor

Of the Cumulative availments, Bilateral creditors provided the biggest amount of

P650.19 billion (US$14.80 billion) or 58.22 percent, of which P505.00 billion (US$11.50 billion) or 77.67 percent came from JBIC. Loans availed from multilateral creditors totaled P400.15 billion (US$9.11 billion) or 35.83 percent mostly coming from ADB – P228.40 billion (US$5.20 billion) or 57.08 percent and IBRD – P165.81 billion (US$3.78 billion) or 41.44 percent. Availments from Commercial creditors summed up to P66.40 billion (US$1.51 billion) or 5.95 percent. The graph presentation is shown in Chart III while details by creditor presented in Table XIV.

Table VI – Outstanding Balance by Implementing Agency (in million pesos)

Particulars NG Direct and Relent

loans

NG Guaranteed

Total No. of Loans

Amount

NGAs 227 - 227 625,908.81 GOCCs 28 67 95 234,347.60 LGUs 6 - 6 4,530.87 Total 261 67 328 864,787.29

15

The current availments of P123.43 billion are broken down as follows: Bilateral –

P65.09 billion (US$1.48 billion) or 52.74 percent, Multilateral – P55.08 billion (US$1.25 billion) or 44.62 percent and Commercial – P3.26 billion (US$0.07 billion) or 2.64 percent. Breakdown of current loan availments by creditor are shown in Table VII.

3.2.2 By Sector

Cumulative availments of P1.12 trillion is shared by the following sectors: Infrastructure – P604.27 billion (US$13.76 billion) or 54.11 percent, Governance and Institution Development – P172.10 billion (US$3.92 billion) or 15.41 percent, Agriculture, Natural Resources and Agrarian Reform – P146.01 billion (US$3.32 billion) or 13.07 percent, Social Reform and Community Development – P120.92 billion (US$2.75 billion) or 10.83 percent, Industry, Trade and Tourism – P73.44 billion (US$1.67 billion) or 6.58 percent.

Table VII - Current Year Availments by Creditor (in million)

Creditor CY Availments % to

Total USD PHP

Total CY Availments 2,810.45 123,432.22 100.00

Bilateral 1,482.13 65,093.48 52.74

1 JBIC 323.00 14,185.66 21.79

2 KEXIM 999.96 43,917.11 67.47

3 BNP Paribas 147.11 6,460.89 9.93

4 KFW 3.10 135.94 0.21

5 ICO 7.19 315.72 0.49

6 SFD 1.36 59.78 0.09

7 SOCIETE GEN 0.42 18.38 0.03

Multilateral 1,254.09 55,078.50 44.62

1 ADB 280.77 12,330.92 22.39

2 IBRD 967.26 42,481.23 77.13

3 IFAD 6.06 266.34 0.48

Commercial 74.23 3,260.24 2.64

1 CEXIM 61.24 2,689.78 82.50

2 ICO 7.43 326.41 10.01

3 SOCIETE GEN 2.49 109.47 3.36

4 ING Bank N.V. 2.12 92.93 2.85

5 CHI 0.95 41.65 1.28 Difference between totals and sum of components is due to rounding off

16

Under the Infrastructure sector, the

DPWH availed P253.37 billion (US$5.77 billion) which accounted for 41.95 percent of the cumulative availments for the implementation of different projects.

Current availments were made for

the Infrastructure – P68.25 billion (US$1.55 billion) or 55.29 percent, Social Reform and Community Development – P51.41 billion (US$1.17 billion) or 41.65 percent, Agriculture, Natural Resources and Agrarian Reform – P2.38 billion (US$0.05 billion) or 1.93 percent, Industry, Trade and Tourism – P 1.16 billion (US$0.03 billion) or 0.94 percent and Governance and Institution Development – P0.24 billion (US$0.06 billion) or 0.20 percent. Table XV shows the availments breakdown.


The NGAs cumulative availments reached P784.03 billion (US$17.85 billion) or 70.21 percent, GOCCs – P321.82 billion (US$7.33 billion) or 28.82 percent and LGUs – P10.89 billion (US$0.25 billion) or 0.97 percent. The DOF got the highest availment amount of P290.68 billion (US$6.62 billion) or 37.08 percent from different creditors as program loans such as Development Policy Support Program, Local Government Financing and Budget Reform Program, Health Sector Development Program, Power Sector Development Program and Banking Sector Reform Program, among others.

The current year’s availments by implementing agencies are as follows: NGAs –

P114.42 billion (US$2.61 billion) or 92.70 percent; GOCCs – P8.71 billion (US$0.20 billion) or 7.05 percent and LGUs – P0.30 billion (US$0.006 billion) or 0.24 percent.

The DPWH received P57.48 billion (US$1.31 billion) or 50.24 percent of the current

availments of NGAs which is intended for construction, rehabilitation and improvement of road and bridges, flood control projects and infrastructure rehabilitation projects while the DOF received P41.72 billion (US$0.95 billion) or 36.46 percent for Development Policy and Budgetary Support.

For GOCCs, the LBP received P2.80 billion (US$0.06 billion) or 32.16 percent of

the current availments of GOCCs for the following projects: Agricultural Credit Support Project – P1.56 billion (US$0.04 billion), Support for Strategic Local Development & Investment Project – P0.85 billion (US$0.02 billion), Manila Third Sewerage Project – P0.3 billion (US$0.01 billion) and Local Government Units Investment Programme – P0.09 billion (US$2.03 million). The amount of P1.93 billion (US$44.11 million) or 22.25 percent will be used by MWSS for Angat Water Utilization and Aqueduct Improvement Project (AWUAIP)-Phase II while the P1.81 billion (US$41.32 million) or 20.84 percent will be utilized by PPA for Greater Maritime Access (GMA) Ports project.

Chart VII - Cumulative Availments by Sector (in billion peso)

120.92, 11%

73.44, 7%

146.01 , 13%

604.27, 54%

172.1, 15%

Infrastructure Governance Agriculture

Social Reform Industry


17

3.3 Repayments – P251.95 billion (US$5.74 billion)

As of December 31, 2011, Cumulative repayment reached P251.95 billion

(US$5.74 billion) or equivalent to 22.56 percent of the total availments as presented in Chart III. Of these, P48.90 billion (US$1.11 billion) or 19.41 percent is the repayment during the year.

3.3.1 By Creditor

Cumulative Repayments of P251.95 billion (US$5.74 billion) was made to the

following: Bilateral Creditors – P141.50 billion (US$3.22 billion) or 56.16 percent, Multilateral Creditors – P79.97 billion (US$1.82 billion) or 31.74 percent and Commercial Creditors – P30.48 billion (US$0.69 billion) or 12.10 billion

The JBIC is the recipient of P101.61 billion (US$ 3.22 billion) or 71.81 percent of

the cumulative repayment among the bilateral creditors, followed by ECGD with P25.95 billion (US$0.59 billion) or 18.34 percent. For the multilateral creditors, ADB and IBRD received P49.05 billion (US$1.12 billion) or 61.33 percent and P29.50 billion (US$0.67billion) or 36.89 percent.

The details of repayments by creditor are shown in Table VIII.

Table VIII - Cumulative Repayment by Creditor (in million)

Creditor Amount

% to Total USD PHP

Total Cumulative Repayment 5,736.61 251,946.27 100.00

Bilateral 3,221.79 141,497.67 56.16

1 JBIC 2,313.47 101,605.18 71.81 2 ECGD 590.77 25,945.81 18.34 3 EFIC 70.39 3,091.59 2.18 4 ANZ/EFIC 68.82 3,022.72 2.14 5 US Public Laws 56.95 2,501.16 1.77 6 KFW 51.96 2,281.88 1.61 7 ICO 15.41 677.00 0.48 8 KFAED 10.95 480.98 0.34 9 FP 9.83 431.68 0.31

10 KEXIM 9.22 404.95 0.29 11 FORTIS BANK 7.32 321.41 0.23 12 ITALY II 6.80 298.52 0.21 13 SIDA INEC 2.64 116.12 0.08 14 LEONIA BANK 2.38 104.62 0.07 15 JFA 2.11 92.70 0.07 16 KBC BANK 1.76 77.43 0.05 17 SFD 1.00 43.92 0.03


18

3.3.2 By Sector

The sectors where the amount paid was applied are: Infrastructure – P176.84 billion (US$4.03 billion) or 70.19 percent; Agriculture, Natural Resources and Agrarian Reform – P31.13 billion (US$0.71 billion) or 12.36 percent; Governance and Institution Development – P16.26 billion (US$0.37 billion) or 6.46 percent Industry, Trade and Tourism – P14.54 billion (US$ 0.33 billion) or 5.77 percent and Social Reform and Community Development – P13.18 billion (US4 0.30 billion) or 5.23 percent.

(Table VIII, continued)

Creditor Amount

% to Total USD PHP

Multilateral 1,820.91 79,972.46 31.74

1 ADB 1,116.78 49,047.73 61.33 2 IBRD 671.80 29,504.60 36.89 3 IFAD 5.77 253.43 0.32 4 NDF 0.43 18.89 0.02 5 EIB 14.78 649.03 0.81 6 OPEC 11.36 498.78 0.62

Commercial 693.92 30,476.14 12.10

1 ECGD 197.83 8,688.38 28.51 2 EDC 112.04 4,920.81 16.15 3 BNP Paribas 69.94 3,071.90 10.08 4 Banco Bilbao Vizcaya 51.15 2,246.47 7.37 5 BAC 44.86 1,970.35 6.47 6 CHI 34.76 1,526.79 5.01 7 Credit Com'l de France 32.07 1,408.56 4.62 8 FP 26.34 1,156.88 3.80

9 Banco Santander(SMCF-Spain)

25.75 1,131.08 3.71

10 Bank of America 25.69 1,128.17 3.70 11 ANZ/EFIC 23.68 1,040.00 3.41 12 EFIC 14.08 618.28 2.03

13 ING Bank N.V. (Netherlands)

9.45 414.93 1.36

14 RZOA 7.50 329.31 1.08 15 Bancaja (SMCF-Spain) 7.01 308.06 1.01 16 SIDA 6.19 272.02 0.89 17 FORTIS BANK 3.40 149.35 0.49 18 CEXIM 2.11 92.49 0.30 17 NDF 0.05 2.30 0.01


19

3.3.3 By implementing Agency

Repayments made for NGAs totaled P158.12 billion (US$ 3.60 billion) or 62.76 percent while for GOCCs the amount is P87.47 billion (US$1.99 billion) or 34.72 percent and for LGUs it is P6.36 billion (US$0.14 billion) or 2.52 percent. For the DPWH account, P53.31 billion (US$ 1.21 billion) representing 21.16 percent of the cumulative repayment was paid while for DOF, the amount is P44.70 billion (US$1.02 billion) or 17.74 percent.

Current year’s repayments of P48.90 billion (US$1.11 billion) is made to the

following creditors: Bilateral – P30.52 billion (US$0.69 billion) or 62.41 percent; Multilateral – P13.74 billion (US$ 0.31 billion) or 28.09 percent and Commercial – P4.65 billion (US$0.11 billion) or 9.50 percent.

The current and cumulative repayments by implementing agency are shown in

Table IX.

Table IX - Current and Cumulative Repayment by Implementing Agency (in million)

Creditor Current Repayment Cumulative Repayment % to

Total USD PHP USD PHP

Total 1,113.46 48,901.91 5,736.61 251,946.27 100.00

NGAs 691.41 30,365.83 3,600.21 158,117.81 62.76

1 DPWH 230.32 10,115.29 1,213.91 53,313.68 33.72 2 DOF 208.65 9,163.58 1,017.76 44,699.06 28.27 3 DOTC 68.38 3,003.05 457.87 20,109.00 12.72 4 DILG 32.69 1,435.82 239.95 10,538.54 6.66 5 DAR 59.69 2,621.48 164.26 7,214.03 4.56 6 DepEd 28.63 1,257.22 140.28 6,161.11 3.90 7 DA 23.26 1,021.43 129.82 5,701.49 3.61 8 DOH 10.23 449.17 71.63 3,146.00 1.99 9 DENR 6.45 283.41 42.95 1,886.33 1.19

10 BFAR 4.11 180.49 37.57 1,650.00 1.04 11 NAMRIA - - 25.75 1,131.08 0.72 12 DSWD 7.89 346.39 11.65 511.87 0.32 13 TESDA 1.93 84.78 9.31 408.81 0.26 14 PRRC 3.08 135.12 9.01 395.61 0.25 15 DTI 1.22 53.55 7.25 318.58 0.20 16 UP/PGH - - 6.78 297.73 0.19 17 OP 0.56 24.67 5.59 245.71 0.16 18 PMMA 0.75 33.13 5.28 231.93 0.15 19 BOC 2.11 92.49 2.11 92.49 0.06 20 DOT 0.83 36.62 0.83 36.62 0.02 21 SC 0.64 28.12 0.64 28.12 0.02


20

These data on repayment were taken from the Report on NG Direct and Guaranteed Loans prepared by the BTr-DMAD

3.4 Commitments – P1.65 trillion (US$37.58 billion)

As of December 31, 2011, NG had already contracted 376 loans with the total commitments amount of P1.65 trillion (US$37.58 billion). Of these, seven loans amounting to P67.55 billion (US$1.54 billion) or 4.09 percent were signed and granted during the year.

Of the new loans, P41.72 billion (US$0.95 billion) or 61.77 percent was availed and

utilized by DOF for three programs namely: Financial Market Reg II, Phil. Dev. Policy Loan to Poster and Disaster Risk Management Development with CAT. The DAR had one program to be implemented which is funded by the loan from Artigiancassa amounting to P1.49 billion (US$0.034 billion) or 2.20 percent. The DPWH and DOTC used the loans for the Road Upgrading Preservation Project – P23.32 billion (US$0.53 billion) or 34.52 percent, and Laguindingan Airport Air Navigation project – P0.58 billion (US$0.013 billion) or 0.86 percent, respectively. Commitment amounting to P0.44 billion (US$0.10 billion) or 0.65 percent is for the Laguna Lake Development project. Table X shows the list of ODA loans signed in 2011.

(Table IX, continued)

Creditor Current Repayment Cumulative Repayment % to

Total USD PHP USD PHP

GOCCs 403.79 17,733.90 1,991.66 87,471.52 34.72

1 PSALM 51.95 2,281.65 528.67 23,218.62 26.54 2 LBP 48.29 2,120.97 319.95 14,051.71 16.06 3 NPC 3.58 157.23 262.34 11,521.62 13.17 4 LRTA 44.96 1,974.69 202.08 8,875.14 10.15 5 DBP 47.44 2,083.65 163.02 7,159.57 8.19 6 PNOC 109.06 4,790.02 136.61 5,999.59 6.86 7 PPA 30.17 1,325.05 136.09 5,977.03 6.83 8 NIA 25.70 1,128.70 86.61 3,803.78 4.35 9 MWSS 6.69 293.84 50.74 2,228.24 2.55

10 LWUA 5.60 245.88 43.45 1,908.08 2.18 11 SBMA 8.95 393.21 26.98 1,184.73 1.35 12 BCDA 12.39 544.14 12.39 544.14 0.62 13 PHIVIDEC 3.52 154.68 7.05 309.42 0.35 14 PTA 0.86 37.60 5.57 244.46 0.28 15 SBGFC 2.38 104.38 4.05 177.96 0.20 16 PNR 1.55 67.88 2.28 100.22 0.11 17 NFA 0.35 15.45 2.11 92.70 0.11 18 PEZA 0.34 14.89 1.70 74.49 0.09

LGUs 18.26 802.18 144.74 6,356.93 2.52

1 ARMM 16.50 724.54 137.41 6,034.96 94.94

2 Provl Gov't-LDN

1.77 77.64 7.33 321.97 5.06


21

The cumulative cancellation of commitments as of December 31, 2011 reached P185.79 billion (US$4.23 billion) or 11.26 percent of the cumulative commitment of P1.65 trillion (US$37.58 billion).

During the year, cancellation of commitments representing unused/undisbursed

balances were made by the creditors of 11 loan accounts amounting to P23.93 billion (US$0.54 billion) as shown in Table XI.

Table X - List of New ODA Loans (in million)

Loan Account Number

Name of Project IA Creditor Amount % to

Total Signing Date US$ PHP

Infrastructure

1 PH-P247 Road Upgrading & Preservation

DPWH JBIC 530.89 23,316.09 34.52 31-Mar-11

2 KEXIM PHL-13 US13.2M

Laguindingan Airport Air Navigation

DOTC KEXIM 13.29 583.82 0.87 13-Oct-11

Agriculture, Natural Resources and Agrarian Reform

3 Artigiancassa SPA-EUR26.19M

Reform Community Development Support Program

DAR Artigian-cassa

33.9 1,488.75 2.20 10-Feb-11

Social Reform & Community Development

4 2715-PHI Financial Market Reg II DOF ADB 200 8,783.80 13.00 22-Feb-11

5 8050-PH Phil. Dev. Policy Loan to Poster

DOF IBRD 250 10,979.75 16.25 19-May-11

6 8085-PH Disaster Risk Management Development with CAT

DOF IBRD 500 21,959.50 32.51 23-Sep-11

7 8035-PH Laguna Lake Development LLDA IBRD 10 439.19 0.65 12-May-11

TOTAL 1,538.08 67,550.90 100.00


Table XI - Cancelled Commitments for 2011 (in million)

Loan Account Number

Name of Project IA Creditor Amount

US$ PHP

TOTAL

544.93

23,933.14

Infrastructure

1 IBRD 7058 PH MM Urban Transport Integration Project DPWH IBRD

10.44

458.61

2 JBIC PH-P215 Subic Bay Port Development Project

SBMA JBIC

9.97

437.72

3 JBIC PH-P231 Urgent Bridges Construction Project-Rural Development DPWH JBIC

2.02

88.92

4 Export-Import Bank of Korea (PHL-7)-KEXIM

South Manila Commuter Rail Project

PNR KEXIM

0.01

0.22

22

3.4.1 By Type of Creditor

Cumulative loan commitments as of December 31, 2011 amounted to P1.65 trillion or US$37.58 billion sourced from the following: Bilateral creditors – P1,027.27 billion (US$23.39 billion) or 62.25 percent, Multilateral creditors – P540.16 billion (US$ 12.30 billion) or 32.73 percent and Commercial creditors – P82.85 billion (US$1.89 billion) or 5.02 percent. The JBIC, a bilateral creditor, reported P666.72 billion or 40.40 percent of the total commitments while the ADB and IBRD, multilateral creditors, committed the amount of P295.29 billion (US$6.72 billion) or 17.89 percent and P234.79 billion (US$5.35 billion) or 14.23 percent.

Current year’s commitments or new loans presented in Table X totaled P67.55 billion (US$1.54 billion) which came from Multilateral creditors – P42.16 billion (US$0.96 billion) and Bilateral creditors – P25.39 billion (US$0.58 billion).

Of the amount cancelled, P22.61 billion (US$0.515) pertains to Bilateral creditors while the balance of P1.33 billion (US$0.03 billion) were for Multilateral creditors.

The net loan commitments by creditor type are as follows: Bilateral – P916.57

billion (US$20.87 billion) or 62.59 percent, Multilateral – P466.47 billion (US$10.62 billion) or 31.85 percent and Commercial – P81.45 billion (US$1.85 billion) or 5.56 percent. Among the bilateral creditors, the JBIC of P580.35 billion (US$13.21 billion) accounted for 63.32 percent of the total Bilateral net loan commitments, followed by KEXIM – P187.78

Table XI, continued)

Loan Account Number

Name of Project IA Creditor

Amount

US$ PHP

Governance & Institution Development

5 IBRD 7191 PH Judicial Reform Support Project SC IBRD 0.50 21.96 Agriculture, Natural Ressources & Agrarian Reform

6 BNP Paribas Fortis EUR272

Laguna Lake Rehabilitation Project DENR

BNP Paribas

502.72

22,079.07

7 ADB1772 PHI Infrastructure for Rural Productivity Enhancement Sector Project DA ADB

9.80

430.41 8 ADB1668 PHI Southern Philippines Irrigation

Sector Project NIA ADB

7.39

324.59 9 IBRD 7689 PH 2nd Agrarian Reform

Communities Development Project (additional financing) DAR IBRD

1.03

45.43

10 IBRD 7298 PH Second Land Administration & Management Project DENR IBRD

0.83

36.58

11 IBRD 7152 PH Agrarian Reform Communities Development Project, Phase II DAR IBRD

0.22

9.63


Chart VIII - Commitments by Type of Creditor

540.16, 32.73%

1,027.27, 62.25%

82.85, 5.02%

Commercial M ultilateral Bilateral


23

billion (US$4.23 billion) or 20.49 percent. In multilateral creditors, the ADB and IBRD had an amount of P251.05 billion (US$5.72 billion) or 53.82 percent and P206.02 billion (US$4.69 billion) or 44.17 percent, respectively. Table XII shows the complete list of foreign creditors and net loan commitments.

Table XII - Net Loan Commitment by Creditor (in million)

Creditor Amount

% to Total USD PHP

Total Net Commitments

33,345.27

1,464,490.93

100.00

Bilateral 20,869.56 916,570.07 62.59

1 JBIC 13,214.07 580,348.84 63.32

2 KEXIM 4,275.70 187,784.46 20.49

3 BNP Paribas 1,051.79 46,193.57 5.04

4 ECGD 1,125.43 49,427.86 5.39

5 KFW 289.01 12,692.82 1.38

6 US Public Laws 219.13 9,623.93 1.05

7 AFD 194.15 8,526.65 0.93

8 ICO 118.73 5,214.32 0.57

9 ANZ/EFIC 98.81 4,339.62 0.47

10 EFIC 89.27 3,920.53 0.43

11 FP 47.33 2,078.89 0.23

12 Artigiancassa SPA-EUR26.19M 33.90 1,488.75 0.16

13 KFAED 19.76 867.71 0.09

14 SFD 20.00 878.33 0.10

15 SOCIETE GEN 16.19 711.24 0.08

16 KBC BANK 14.69 645.26 0.07

17 FORTIS BANK 10.98 482.12 0.05

18 ITALY II 10.46 459.26 0.05

19 Belgian 8.11 356.15 0.04

20 JFA 7.04 309.01 0.03

21 SIDA INEC 2.64 116.12 0.01

22 LEONIA BANK 2.38 104.62 0.01

Multilateral 10,621.22 466,473.36 31.85

1 ADB 5,716.13 251,046.76 53.82

2 IBRD 4,690.98 206,023.00 44.17

3 IFAD 114.25 5,017.69 1.08

4 OPEC 59.03 2,592.36 0.56

5 EIB 26.50 1,163.85 0.25

6 NDF 14.34 629.69 0.13 Difference between totals and sum of components is due to rounding off

24

Table XII, continued

3.4.2 By Sector

Loan cumulative commitments were intended to be utilized for the programs or projects and implemented in five different sectors: the Infrastructure, Governance and Institution Development, the Agriculture, Natural Resources and Agrarian Reform, Social Reform and Community Development, and the Industry, Trade and Tourism. The breakdown of the amount by sector is shown in Chart IX.

By sector, cumulative net commitments is broken down as follows: Infrastructure –

P891.98 billion (US$20.31 billion) or 60.91 percent, Governance and Institution Development – P172.65 billion (US$3.93 billion) or 11.79 percent, Agriculture, Natural Resources and Agrarian Reform – P166.16 billion (US$3.78 billion) or 11.35 percent, Social Reform and Community Development – P154.22 billion (US$3.51 billion) or 10.53 percent and Industry, Trade and Tourism – P79.47 billion (US$1.81 billion) or 5.43 percent.

Creditor Amount

% to Total USD PHP

Commercial 1,854.49 81,447.50 5.56

1 BNP Paribas 707.47 31,071.52 38.15

2 ECGD 206.08 9,050.74 11.11

3 BAC 201.62 8,854.74 10.87

4 EDC 200.26 8,795.28 10.80

5 CHI 122.18 5,365.98 6.59

6 Banco Bilbao Vizcaya 59.97 2,633.63 3.23

7 RZOA 52.13 2,289.54 2.81

8 FP 50.54 2,219.74 2.73

9 Credit Com'l de France 34.00 1,493.34 1.83

10 Banco Santander(SMCF-Spain) 32.07 1,408.56 1.73

11 Bank of America 25.75 1,131.08 1.39

12 ANZ/EFIC 25.69 1,128.17 1.39

13 ERSTE (Austria) 23.68 1,040.00 1.28

14 ICO 23.52 1,032.76 1.27

15 ING Bank N.V. (Netherlands) 20.33 892.93 1.10

16 EFIC 18.90 829.86 1.02

17 SOCIETE GEN 14.08 618.28 0.76

18 FORTIS BANK 13.57 596.18 0.73

19 Bancaja (SMCF-Spain) 8.58 376.75 0.46

20 SIDA 7.01 308.06 0.38

21 NDF 6.19 272.02 0.33

22 Credit Agricole Indosuez 0.87 38.35 0.05 Difference between totals and sum of components is due to rounding off

25

Type of Creditor

Cumulative Commitments

Cumulative Cancellation

Net Commitments

Amount % to Total

Amount % to Total

Amount % to Total

Infrastructure 986.70 59.79 94.72 50.98 891.98 60.91

Governance 201.96 12.24 29.31 15.78 172.65 11.79

Agriculture 212.93 12.90 46.77 25.17 166.16 11.35

Social Reform 165.07 10.00 10.85 5.84 154.22 10.53

Indudtry 83.62 5.07 4.15 2.23 79.47 5.43

Total 1,650.28 100.00 185.80 100.00 1,464.48 100.00

% to Cumulative Commitments 100% 11.26% 88.74%


Cumulative cancellation of P185.80 billion (US$4.23 billion) is distributed as follows:

Infrastructure – P94.72 billion (US$2.16 billion) or 50.98 percent, Governance and Institution Development – P29.31 billion (US$0.67 billion) or 15.78 percent, Agriculture, Natural Resources and Agrarian Reform – P46.77 billion (US$1.06 billion) or 25.17 percent, Social Reform and Community Development – P10.85 billion (US$0.25 billion) or 5.84 percent and Industry, Trade and Tourism – P4.15 billion (US$0.09 billion) or 2.23 percent.

9 8 6 .7

2 0 1 .9 6

2 1 2 .9 3

1 6 5 .0 7

8 3 .6 2

9 4 .7 22 9 .3 1

4 6 .7 7 1 0 .8 5

4 .1 5

8 9 1 .9 8

1 7 2 .6 5

1 6 6 .1 6

1 5 4 .2 2

7 9 .4 7

0

2 0 0

4 0 0

6 0 0

8 0 0

1 0 0 0

1 2 0 0

1 4 0 0

1 6 0 0

1 8 0 0

in b

illio

n p

eso

C u m u la t iveC o m m itm e n ts

C u m u la t iveC a n c e lla t io n

N e t C o m m itm e n ts

C h a r t IX - C u m u la ti v e C o m m itm e n ts, C a n c e l l a tio n a n d N e t C o m m itm e n ts b y S e c to r

(in b i l l io n p e so )

In fra s tru c tu re G o ve rn a n c e Ag r ic u l tu reS o c ia l R e fo rm In d u d try

26


The cumulative commitments is shared by NGAs – P1.19 trillion (US$27.10 billion)

or 72.11 percent; GOCCs – P447.18 billion (US$ 10.18 billion) or 27.10percent and LGUs – P13.09 billion (US$ 0.30 billion) or 0.79 percent. Chart X shows the distribution of cumulative commitments, cancellation and net commitments by implementing agency.

Of the cumulative

cancelled commitments of P185.79 billion (US$4.23 billion), P125.16 billion (US$2.85 billion) or 67.36 percent is for NGAs, P59.71 billion (US$1.36 billion) or 32.14 percent for GOCCs and P0.93 billion (US$0.02 billion) or 0.50 percent for LGUs.

Net loan commitments

at year end of P1.464 trillion is for the following: loans directly contracted by the NG – P1.065 trillion (US$24.25 billion) or 72.71 percent, guaranteed loans – P387.47 billion (US$8.82 billion) or 26.46 percent and for LGUs – P12.16 billion (US$0.28 billion) or 0.83 percent.

For the NGAs, more than 50 percent of the amount is accounted under the

following agencies: DPWH – P456.59 billion (US$10.40 billion) or 42.88 percent, DOF – P290.68 billion (US$6.62 billion) or 27.30 percent, DAR – P61.89 billion (US$ 1.41 billion) or 5.81 percent; DOTC – P59.52 billion (US$1.36 billion) or 5.59 percent; and DepEd – P45.28 billion (US$1.03 billion) or 4.25 percent.

Under the GOCCs, P87.77 billion (US$2.0 billion) or 22.65 percent and P46.80 billion (US$1.07 billion) or 12.08 percent were reported by the DBP and LBP, respectively. The share for LGUs is only P12.16 billion (US$0.28 billion) or 0.83 percent of the total loan net commitments. Shown in Table XIII is the Net Loan Commitments by Implementing Agency.

0

200

400

600

800

1000

1200

Chart X - Commitments, Cancellation and Net Commitments by Implementing Agency

NGAs 1190.02 125.16 1,064.86

GOCCs 447.18 59.71 387.47

LGUs 13.09 0.93 12.16

Cumulative Commitments


Net Commitments

Table XIII - Cumulative Commitments, Cancellation and Net Commitments by Implementing Agency (in million)

Creditor Cumulative Commitments Cumulative Cancellation

Cumulative Net Commitments % to

Total USD PHP USD PHP USD PHP

Total 37,575.66 1,650,285.35 4,230.39 185,794.42 33,345.27 1,464,490.93 100.00

NGAs 27,095.79 1,190,019.96 2,849.73 125,157.16 24,246.06 1,064,862.80 72.71

1 DPWH 10,763.17 472,707.48 367.06 16,120.81 10,396.11 456,586.67 42.88 2 DOF 7,406.72 325,295.66 788.07 34,611.31 6,618.65 290,684.35 27.30


27

(Table XIII, continued)

Creditor Cumulative Commitments Cumulative Cancellation



3 DAR 1,508.03 66,231.01 98.80 4,339.33 1,409.22 61,891.69 5.81 4 DOTC 1,829.93 80,368.72 474.82 20,853.41 1,355.12 59,515.30 5.59 5 DepEd 1,132.95 49,757.88 102.00 4,479.80 1,030.95 45,278.08 4.25 6 DSWD 964.12 42,343.36 - - 964.12 42,343.36 3.98 7 DA 825.80 36,268.32 246.29 10,816.79 579.51 25,451.53 2.39 8 DILG 468.94 20,595.49 45.77 2,010.37 423.17 18,585.12 1.75 9 DOH 452.99 19,895.06 101.60 4,462.14 351.40 15,432.92 1.45

10 SC 321.90 14,137.53 0.50 21.96 321.40 14,115.57 1.33 11 DENR 774.53 34,016.58 557.26 24,474.17 217.27 9,542.41 0.90 12 BOC 189.90 8,340.11 0.12 5.47 189.77 8,334.64 0.78 13 BFAR 107.45 4,719.03 28.45 1,249.33 79.00 3,469.70 0.33 14 PRRC 89.69 3,939.19 12.00 527.04 77.69 3,412.15 0.32 15 TESDA 77.45 3,401.52 18.14 796.50 59.31 2,605.02 0.24 16 DTI 46.46 2,040.50 7.58 332.87 38.88 1,707.63 0.16 17 DOE 31.10 1,365.88 - - 31.10 1,365.88 0.13 18 NAMRIA 25.75 1,131.08 - - 25.75 1,131.08 0.11 19 DOT 26.44 1,161.04 1.02 44.73 25.42 1,116.31 0.10 20 PMMA 17.21 755.67 0.10 4.55 17.10 751.12 0.07 21 UP/PGH 13.56 595.47 - - 13.56 595.47 0.06 22 BIR 11.00 483.11 - - 11.00 483.11 0.05 23 OP 10.71 470.29 0.15 6.60 10.56 463.69 0.04

GOCCs 10,181.87 447,177.65 1,359.44 59,705.09 8,822.44 387,472.56 26.46

1 DBP 2,094.64 91,994.47 96.15 4,222.93 1,998.49 87,771.54 22.65

2 LBP 1,390.61 61,074.29 129.44 5,685.03 1,261.17 55,389.26 14.30

3 LRTA 1,277.28 56,096.71 211.60 9,293.18 1,065.68 46,803.53 12.08

4 BCDA 767.30 33,699.22 11.68 512.88 755.63 33,186.34 8.56

5 PSALM 1,095.74 48,123.69 349.54 15,351.39 746.20 32,772.30 8.46

6 PPA 686.22 30,138.03 11.17 490.72 675.05 29,647.31 7.65

7 NIA 634.14 27,850.81 64.13 2,816.37 570.01 25,034.44 6.46

8 NLRC 400.00 17,567.60 - - 400.00 17,567.60 4.53

9 NPC 430.26 18,896.64 99.92 4,388.30 330.34 14,508.33 3.74

10 MWSS 271.16 11,909.16 28.56 1,254.40 242.60 10,654.76 2.75

11 SBMA 322.12 14,147.17 81.22 3,566.93 240.90 10,580.24 2.73

12 LWUA 270.65 11,886.88 119.75 5,259.12 150.91 6,627.76 1.71

13 PNOC 264.06 11,597.25 127.45 5,597.66 136.61 5,999.59 1.55

14 PHIVIDEC

107.43 4,718.36 0.01 0.58 107.42 4,717.78 1.22

15 SBGFC 50.84 2,232.89 - - 50.84 2,232.89 0.58 Difference between totals and sum of components is due to rounding off

28

(Table XIII, continued)

3.5 Undrawn Commitments – P347.76billion (US$7.92 billion)

As of December 31, 2011, the undrawn balance of commitments reached P347.76 billion (US$7.92 billion) represents 24 percent of the total net commitments as shown in Chart III.

3.5.1 By Creditor

Of the undrawn balance of commitments, P266.38 billion (US$ 6.07 billion) or

76.60 percent is from Bilateral Creditors, P66.32 billion (US$1.51 billion) or 19.07 percent from Multilateral Creditors and P15.05 billion (US$ 0.34 billion) or 4.33 percent from Commercial Creditors. Shown in Table XIV is the balance of undrawn commitments by specific creditor.

Creditor Cumulative Commitments




16 PNR 44.06 1,935.16 0.01 0.23 44.06 1,934.94 0.50

17 PTA 17.57 771.74 0.02 0.86 17.55 770.89 0.20

18 LLDA 15.00 658.79 - - 15.00 658.79 0.17

19 NFA 7.09 311.32 0.05 2.31 7.04 309.01 0.08

20 PEZA 35.69 1,567.46 28.74 1,262.21 6.95 305.25 0.08

LGUs 298.00 13,087.74 21.22 932.17 276.77 12,155.57 0.83

1 ARMM 241.75 10,617.25 4.85 213.10 236.89 10,404.15 85.59

2 Provl Gov't-LDN

56.25 2,470.49 16.37 719.06 39.88 1,751.42 14.41


Table XIV - Net Commitments, Cumulative Availments and Undrawn Balance by Creditor (in million)

Creditor Net Commitments Cumulative Availments Undrawn Balance % to


Total 33,345.27 1,464,490.93 25,427.12 1,116,733.56 7,918.15 347,757.37 100.00

Bilateral 20,869.56 916,570.07 14,804.26 650,188.25 6,065.30 266,381.82 76.60

1 KEXIM 4,275.70 187,784.46 1,071.44 47,056.43 3,204.26 140,728.03 52.83 2 JBIC 13,214.07 580,348.84 11,498.48 505,001.54 1,715.60 75,347.30 28.29

3 BNP Paribas 1,051.79 46,193.57 351.39 15,432.64 700.40 30,760.92 11.55

4 ECGD 1,125.43 49,427.86 795.10 34,919.97 330.33

14,507.89 5.45

5 KFW 289.01 12,692.82 227.34 9,984.70 61.66

2,708.12 1.02 Difference between totals and sum of components is due to rounding off

29

(Table XIV, continued)



6 Artigiancassa 33.90 1,488.75 - - 33.90 1,488.75 0.56 7 SFD 20.00 878.33 3.42 150.22 16.58 728.11 0.27 8 ICO 118.73 5,214.32 116.88 5,133.36 1.84 80.96 0.03

9 SOCIETE GEN

16.19 711.24 15.64 687.09 0.55 24.15 0.01

10 Belgian 8.11 356.15 7.94 348.61 0.17 7.55 0.00 11 FP 47.33 2,078.89 47.33 2,078.85 0.00 0.04 0.00

12 US Public Laws

219.13 9,623.93 219.13 9,623.93 - - -

13 AFD 194.15 8,526.65 194.15 8,526.65 - - - 14 ANZ/EFIC 98.81 4,339.62 98.81 4,339.62 - - - 15 EFIC 89.27 3,920.53 89.27 3,920.53 - - - 16 KFAED 19.76 867.71 19.76 867.71 - - - 17 KBC BANK 14.69 645.26 14.69 645.26 - - - 18 FORTIS BANK 10.98 482.12 10.98 482.12 - - - 19 ITALY II 10.46 459.26 10.46 459.26 - - - 20 JFA 7.04 309.01 7.04 309.01 - - - 21 SIDA INEC 2.64 116.12 2.64 116.12 - - - 22 LEONIA BANK 2.38 104.62 2.38 104.62 - - -

Multilateral 10,621.22 466,473.36 9,111.07 400,149.18

1,510.15

66,324.18 19.07

1 ADB 5,716.13 251,046.76 5,200.47 228,399.59 515.66 22,647.17 34.15

2 IBRD 4,690.98 206,023.00 3,775.26 165,805.54 915.72 40,217.46 60.64

3 IFAD 114.25 5,017.69 79.55 3,493.80 34.70 1,523.90 2.30

4 OPEC 59.03 2,592.36 18.26 802.11 40.76 1,790.26 2.70

5 EIB 26.50 1,163.85 23.19 1,018.46 3.31 145.40 0.22

6 NDF 14.34 629.69 14.34 629.69 - - - Commercial

1,854.49

81,447.50

1,511.79

66,396.13

342.71

15,051.38

4.33

1 CEXIM 707.47 31,071.52 426.53 18,732.81 280.94

12,338.71 81.98

2 BNP Paribas 206.08 9,050.74 150.32 6,601.77 55.76

2,448.96 16.27

3 CHI 59.97 2,633.63 55.90 2,454.97 4.07

178.66 1.19

4 ICO 20.33 892.93 18.73 822.66 1.60 70.27 0.47

5 SOCIETE GEN

13.57 596.18 13.25 581.96 0.32

14.23 0.09

6 BAC 200.26 8,795.28 200.25 8,794.75 0.01 0.52 0.003

7 FP 34.00 1,493.34 34.00 1,493.31 0.00 0.03 0.00

8 ECGD 201.62 8,854.74 201.62 8,854.74 - - -

9 EDC 122.18 5,365.98 122.18 5,365.98 - - - Difference between totals and sum of components is due to rounding off

30

3.5.2 By Sector

By Sector, the undrawn balance of commitments is shared by Infrastructure – P287.71 billion (US$ 6.55 billion) or 82.73 percent; Social Reform and Community Development – P33.30 billion (US$0.76 billion) or 9.58 percent; Agriculture, Natural Resources and Agrarian Reform – P20.15 billion (US$0.46 billion) or 5.80 percent; Industry, Trade and Tourism – P6.03 billion (US$ 0.14 billion) or 1.73 percent and Governance and Institution Development – P0.56 billion (US$ 0.01 billion) or 0.16 percent. Chart XI shows the undrawn balance of commitments by sector.

(Table XIV, continued)



10 Banco Bilbao Vizcaya 52.13 2,289.54 52.13 2,289.54 - -

-

11 RZOA 50.54 2,219.74 50.54 2,219.74 - - -12 Credit Com'l

de France 32.07 1,408.56 32.07 1,408.56 - - - 13 Banco

Santander(SMCF-Spain) 25.75 1,131.08 25.75 1,131.08 - -

-

14 Bank of America 25.69 1,128.17 25.69 1,128.17 - - -

15 ANZ/EFIC 23.68 1,040.00 23.68 1,040.00 - - -16 ERSTE

(Austria) 23.52 1,032.76 23.52 1,032.76 - - -

17 ING Bank N.V. (Netherlands) 18.90 829.86 18.90 829.86 - - -

18 EFIC 14.08 618.28 14.08 618.28 - - -19 SIDA 6.19 272.02 6.19 272.02 - - -20 FORTIS BANK 8.58 376.75 8.58 376.75 - - -21 NDF 0.87 38.35 0.87 38.35 - - -22 Bancaja

(SMCF-Spain) 7.01 308.06 7.01 308.06 - - - Difference between totals and sum of components is due to rounding off

Chart XI - Undrawn Balance by Sector (in billion peso)

33.301, 9.58%

73.44, 7%

20.15 , 5.80%

287.713, 82.73%

0.557, 0.16%

Infrastructure Governance Agriculture

Social Reform Industry


31

Presented below is the list of net commitments, cumulative availments and undrawn balance of commitments detailed by sector and by implementing agency.

Table XV - Net Commitments, Cumulative Availments and Undrawn Balance by Sector (in million)

Sector/IA

Net Commitments Cumulative Availments Undrawn Balance % to Total

USD PHP USD PHP USD PHP

Total 33,345.27 1,464,490.93 25,427.12 1,116,733.56 7,918.15 347,757.37 100.00

INFRASTRUCTURE 20,309.76 891,984.43 13,758.75 604,270.74 6,551.01 287,713.69 82.73

1 DPWH 10,396.11 456,586.67 5,769.05 253,371.05 4,627.05 203,215.62 70.63 2 DOTC 1,355.12 59,515.30 1,064.11 46,734.63 291.01 12,780.67 4.44 3 DOE 31.10 1,365.88 4.84 212.48 26.26 1,153.40 0.40 4 DILG 423.17 18,585.12 423.16 18,584.60 0.01 0.52 0.00 5 BOC 189.77 8,334.64 189.77 8,334.64 - - 0.00 6 DAR 519.32 22,807.97 203.50 8,937.56 315.82 13,870.42 4.82 7 DOF 998.05 43,833.33 998.05 43,833.33 - - 0.00 8 DAR 28.19 1,238.21 28.19 1,238.21 - - 0.00 9 OP 10.56 463.69 10.56 463.69 - - 0.00

10 LRTA 1,065.68 46,803.53 1,065.51 46,795.98 0.17 7.55 0.00 11 BCDA 755.63 33,186.34 755.63 33,186.34 - - 0.00 12 PSALM 1,213.15 53,280.22 1,213.15 53,280.15 0.00 0.07 0.00 13 PPA 675.05 29,647.31 394.72 17,335.52 280.33 12,311.79 4.28 14 DBP 815.70 35,824.80 294.40 12,929.77 521.30 22,895.02 7.96 15 SBMA 229.36 10,073.35 229.36 10,073.35 - - 0.00 16 LBP 425.19 18,674.13 252.57 11,092.67 172.62 7,581.46 2.64 17 NLRC 400.00 17,567.60 180.79 7,940.33 219.21 9,627.27 3.35 18 PHIVIDEC 107.42 4,717.78 107.42 4,717.78 - - 0.00 19 LWUA 150.91 6,627.76 137.79 6,051.55 13.12 576.21 0.20 20 MWSS 242.60 10,654.76 181.27 7,961.05 61.33 2,693.71 0.94 21 PNR 44.06 1,934.94 44.06 1,934.94 - - 0.00 22 NIA 67.71 2,973.95 44.95 1,973.97 22.77 999.98 0.35

23 Provl. Govt of LDN 39.88 1,751.42 39.88 1,751.42

0.00 24 ARMM 126.04 5,535.71 126.04 5,535.71 0.00 GOVERNANCE AND INSTITUTION DEVELOPMENT

3,931.21 172,654.65 3,918.52 172,097.58

12.68

557.07 0.16

1 DOF 3,348.81 147,076.23 3,348.81 147,076.23 - - 0.00

2 SC 321.40 14,115.57 316.38 13,895.13 5.02 220.43 39.57

3 DepEd 250.00 10,979.75 250.00 10,979.75 - - 0.00

4 BIR 11.00 483.11 3.33 146.47 7.67 336.64 60.43 Difference between totals and sum of components is due to rounding off

32

(Table XV, continued)

Sector/IA

Net Commitments Cumulative Availments Undrawn Balance % to Total

USD PHP USD PHP USD PHP

AGRICULTURE, NATURAL RESOURCES AND AGRARIAN REFORM

3,783.37 166,161.68 3,324.46

146,006.96 458.91 20,154.72 5.80 1 DENR 217.27 9,542.41 160.20 7,035.92 57.07 2,506.49 12.44 2 DAR 889.90 39,083.71 633.24 27,811.37 256.66 11,272.34 55.93 3 DA 551.32 24,213.32 469.38 20,614.79 81.94 3,598.52 17.85 4 DOF 771.79 33,896.29 771.79 33,896.29 - - 0.00 5 PRRC 77.69 3,412.15 77.69 3,412.15 - - 0.00 6 BFAR 79.00 3,469.70 79.00 3,469.70 - - 0.00 7 NAMRIA 25.75 1,131.08 25.75 1,131.08 - - 0.00 8 NIA

502.30

22,060.50 439.06 19,283.14 63.24 2,777.36

13.78 9 DBP 350.76 15,404.96 350.76 15,404.96 0.00 0.00 0.00

10 LBP 293.22 12,877.85 293.22 12,877.85 - - 0.00 11 SBMA 10.37 455.43 10.37 455.43 - - 0.00 12 PEZA 6.95 305.25 6.95 305.25 - - 0.00 13 NFA 7.04 309.01 7.04 309.01 - - 0.00

SOCIAL REFORM AND COMMUNITY DEVELOPMENT

3,511.49 154,221.20 2,753.25

120,919.94

758.24

33,301.26 9.58 1 DepEd 780.95 34,298.33 767.37 33,702.21 13.57 596.12 1.79 2 DSWD 964.12 42,343.36 322.95 14,183.46 641.18 28,159.90 84.56 3 DOH 351.40 15,432.92 288.18 12,656.60 63.21 2,776.31 8.34 4 DOF 1,150.00 50,506.85 1,150.00 50,506.85 - - 0.00 5 TESDA 59.31 2,605.02 58.55 2,571.33 0.77 33.68 0.10 6 DOTC 25.42 1,116.31 25.42 1,116.31 - - 0.00 7 PMMA 17.10 751.12 17.10 751.12 - - 0.00 8 UP/PGH 13.56 595.47 13.56 595.47 - - 0.00 9 ARMM 110.85 4,868.44 81.98 3,600.68 28.87 1,267.76 3.81

10 DPB 23.78 1,044.60 23.78 1,044.60 - - 0.00 11 LLDA 15.00 658.79 4.36 191.30 10.64 467.49 1.40

INDUSTRY, TRADE AND TOURISM

1,809.44 79,468.97 1,672.13 73,438.34

137.31

6,030.63 1.73

1 DBP 808.24 35,497.18 750.70 2,970.12 57.54 2,527.06 41.90 2 LBP 542.76 23,837.28 470.16 20,648.80 72.60 3,188.48 52.87 3 SBGFC 50.84 2,232.89 50.84 2,232.89 - - 0.00 4 PTA 17.55 770.89 17.55 770.89 - - 0.00 5 SBMA 1.17 51.46 1.17 51.46 - - 0.00 6 DOF 350.00 15,371.65 350.00 15,371.65 - - 0.00 7 DTI 38.88 1,707.63 31.71 1,392.54 7.17 315.09 5.22


33


The undrawn amount is reported under the following agencies: NGAs – P280.84 billion (US$6.39 billion) or 80.76 percent; GOCCs – P65.65 billion (US$1.49 billion) or 18.88 percent; and LGUs – P1.27 billion (US$0.03 billion) or less than one percent. Details of undrawn balance of commitments by implementing agency are shown in Table XV.

3.6 Debt Service Expenditures – P62.98 billion

The amount of debt service paid to creditors of ODA loans totaled P62.98 billion composed of principal – P47.10 billion or 74.79 percent; interest – P15.04 billion or 23.88 percent; commitment fees – P0.37 billion or 0.59 percent and other charges – P0.47 billion or 0.75 percent. Chart XII shows the breakdown of the 2011 debt service expenditures.

The amount paid as to type of

loans contracted is broken down as follows: loans directly contracted by the NG – P44.65 billion or 70.89 percent; loans relent by NG to GFIs/GOCCs – P2.19 billion or 3.48 percent and loans by GFIs/GOCCs guaranteed by the NG- P16.14 billion or 25.63 percent.

For NG direct and relent loans,

the debt service data was taken from the Report on Debt Service Expenditures furnished by the NGDAD, BTr while for Guaranteed and Relent Loans, the amount were sourced by the Auditor/Audit Team leaders from the GOCCs.

Presented in Table XVI are the actual total debt service expenditures by type of

loans and by creditor.

Table XVI - Debt Service Expenditures by Type of Loans and by Creditor (in million pesos)

Particulars

Amount

Total Principal Interest Commit

ment Fees

Other Charges

GRAND TOTAL 62,983.57 47,100.17

15,037.57

372.65 473.19

NG DIRECT 44,648.56 32,908.24

11,422.93

295.43 21.96

Bilateral 23,091.04 18,158.88 4,715.21 212.99 3.97

1 JBIC 11,656.06 8,251.04 3,402.92 - 2.10

2 ECGD 4,204.81 3,882.69 320.66 - 1.46

3 JEXIM 4,864.60 4,245.39 619.20 - 0.00 Difference between totals and sum of components is due to rounding off

Chart XII - Debt Service Expenditures (in billion peso)

15.04, 23.88%

47.10 , 74.79%

0.37, 0.59%

0.47, 0.75%

Principal Interest

Commitment fees Other Charges

34

(Table XVI, continued)

Particulars

Amount


ment Fees

Other Charges

4 EFFIC 417.07 386.88 30.19 - 0.00

5 ANZ/EFIC 477.93 462.07 15.86 - 0.00

6 USPL 557.43 455.48 101.62 - 0.32

7 BNP Paribas 340.81 - 128.37 212.39 0.06

8 KFAED No. 541 74.14 56.69 17.45 - 0.00

9 French Protocol 97.22 79.19 18.01 - 0.01

10 ICO 180.36 144.69 35.11 0.56 0.00

11 KEXIM 5.95 - 5.94 - 0.01

12 KFW 42.87 34.86 8.00 - 0.00

13 ITALY II 51.71 48.61 3.10 - 0.00

14 FORTIS BANK 38.25 38.24 - - 0.00

15 LEONIA BANK 16.49 16.49 - - 0.00

16 KBC BANK 56.54 56.54 - - 0.00

17 SOCIETE GEN - LOAN A

8.81 - 8.77 0.04 0.00

Commercial 5,644.97 4,502.12 1,094.04 47.82 0.98

1 BNP PARIBAS 2,021.99 1,639.77 340.97 40.78 0.48

2 Bank of Austria Creditanstalt

915.74 607.25 308.49 - 0.00

3 ECGD 893.47 860.89 32.10 - 0.48

4 EDC 478.29 437.91 40.38 - 0.00

5 CNCAM 464.08 427.06 37.02 - 0.00

6 BBV 190.70 180.93 9.76 - 0.00

7 CEXIM 272.43 90.70 175.14 6.58 0.00

8 Raiffeissen 106.66 36.37 70.29 - 0.00

9 ING Bank 95.43 87.94 7.49 - 0.00

10 French Protocol 102.95 80.21 22.72 - 0.01

11 ERSTE (Austria) 38.16 - 38.16 - 0.00

12 SOCIETE GEN - LOAN B

10.73 - 10.26 0.47 0.00

13 Credit Com'l de France

54.35 53.09 1.26 - 0.00

Multilateral 15,912.55 10,247.24 5,613.68 34.61 17.01

1 ADB 11,219.44 7,717.97 3,480.92 11.34 9.20

2 IBRD 4,594.58 2,457.41 2,121.76 23.27 (7.86)

3 IFAD 20.29 8.38 5.17 - 6.74

4 OPEC 60.55 50.57 5.83 - 4.15

5 Nordic Development

17.69 12.91 - - 4.77


35

Of the total debt service expenditures, P46.56 billion or 73.92 percent was paid by BTr and P16.43 billion or 26.08 percent was paid by GOCCs. Presented in Table XVII and Table XVIII are the details paid by the BTr and GOCCs by type of loan and implementing agency, respectively.

(Table XVI, continued)

Particulars

Amount


ment Fees

Other Charges

NG RELENT 2,192.77 1,622.36 564.55 - 5.87

Bilateral 1,991.14 1,475.49 515.65 - 0.00 1 JBIC 1,966.23 1,460.79 505.44 - 0.00 2 JAPAN FOOD

AGENCY 21.32 14.70 6.62 - 0.00

3 Belgian 3.59 - 3.59 - - Commercial 56.15 39.62 13.73 - 2.79

1 FORTIS BANK 56.15 39.62 13.73 - 2.79

Multilateral 145.48 107.25 35.16 - 3.07 1 ADB 71.95 57.94 14.01 - - 2 IBRD 6.22 5.89 0.33 - 0.00

3 IFAD 67.32 43.42 20.82 - 3.07

NG GUARANTEED 16,142.24 12,569.57

3,050.09

77.22 445.36

Bilateral 12,590.21 9,580.76 2,545.31 42.85 421.29

1 JBIC 11,969.06 9,105.77 2,422.38 28.92 411.99

2 KFW 473.00 407.92 55.83 0.04 9.21

3 Export Bank of Korea

148.15 67.07 67.10 13.88 0.09

Commercial 38.77 3.61 16.23 18.50 0.43

1 SIDA - - - - - 2 Nordic 1.35 0.92 - - 0.43

3 EFIC $14.8M 2.73 2.69 0.03 - 0.00

4 CEXIM 34.70 - 16.20 18.50 - Multilateral 3,513.25 2,985.20 488.55 15.87 23.64

1 IBRD 2,806.31 2,490.84 280.23 12.22 23.03

2 ADB 706.94 494.36 208.32 3.65 0.61 Difference between totals and sum of components is due to rounding off

Table XVII - Debt Service Expenditures Paid by BTr (in million pesos)

Particulars

Amount


ment Fees

Other Charges

NG DIRECT 46,555.36 34,327.85 11,907.05 295.43 25.03

Bilateral 25,055.47 19,619.66 5,218.85 212.99 3.97 1 DPWH 10,245.25 7,899.64 2,342.28 0.60 2.72

2 DOF 5,312.95 4,421.16 891.79 - 0.00

3 LRTA 1,776.87 1,313.43 463.44 - 0.00

0.00 - with value less than five thousand


36

(Table XVII, continued)

Particulars

Amount

Total Principal Interest

Commit

ment Fees

Other Charges

4 DOTC 1,707.29 1,318.75 388.38 - 0.16

5 DILG 1,094.71 1,030.08 64.63 - 0.01

6 DAR 1,088.96 626.33 348.63 113.56 0.44

7 NIA 887.13 620.36 266.63 - 0.13

8 DA 604.85 492.41 112.12 - 0.32

9 PPA 601.34 462.07 40.44 98.82 0.00

10 ARMM 566.82 535.59 31.23 - 0.00 11 DECS 366.04 257.60 108.44 - 0.00

12 Deped 212.32 161.19 50.99 - 0.14

13 PHIVIDEC 189.36 147.35 42.01 - 0.00

14 Provl Gov't-LDN

101.96 74.80 27.16 - 0.00

15 PRRC 56.54 56.54 - - 0.00

16 BFAR 53.74 47.97 5.77 - 0.00

17 DENR 49.25 40.69 8.56 - 0.00

18 DOH 47.14 38.74 8.40 - 0.00

19 DOT 43.17 35.17 7.97 - 0.03

20 PMMA 42.87 34.86 8.00 - 0.00

21 OP 6.03 4.93 1.10 - 0.00

22 UP/PGH 0.89 - 0.89 - 0.00

Commercial 5,578.05 4,455.05 1,074.19 47.82 0.98

1 DAR 1,694.13 1,605.86 87.31 - 0.95

2 DPWH 965.97 641.65 283.07 41.24 0.00

3 DILG 562.84 334.33 228.51 - 0.00

4 DOTC 532.64 491.00 41.64 - 0.00

5 PPA 521.51 459.45 62.05 - 0.00

6 DOH 398.65 285.62 113.02 - 0.01

7 NIA 328.73 291.03 31.11 6.58 0.00

8 BOC 254.42 90.70 163.71 - 0.00

9 DA 153.36 136.02 17.34 - 0.00

10 BFAR 106.75 100.43 6.32 - 0.00 11 TESDA 38.16 - 38.16 - 0.00

12 OP 20.89 18.95 1.94 - 0.01

Multilateral 15,921.84 10,253.13 5,614.01 34.61 20.09

1 DOF 8,114.19 4,554.08 3,554.09 5.12 0.90

2 PSALM 1,603.66 1,479.37 124.29 - 0.00

3 DPWH 1,234.80 1,027.66 201.82 0.55 4.76

4 DOTC 1,121.48 1,027.25 94.23 - 0.00



37

Among the GOCCs, the BCDA had the highest payment made during the year

amounting to P6.70 billion, followed by DBP and LPB for P3.03 billion and P2.54 billion, respectively. Complete list of GOCCs debts service expenditures is shown in Table XVI.

(Table XVII, continued)

Particulars

Amount

Total Principal Interest

Commit

ment Fees

Other Charges

5 DECS 935.86 285.02 647.54 3.34 (0.04)

6 DSWD 581.57 345.88 235.11 0.58 0.00 7 DA 554.17 393.02 140.55 11.00 9.59 8 DAR 465.64 307.39 154.33 0.01 3.91 9 DENR 248.59 185.18 70.04 3.32 (9.95)

10 DOH 247.81 111.57 126.65 6.23 3.35 11 ARMM 214.96 140.70 70.11 - 4.15 12 NIA 174.16 123.68 48.08 2.50 (0.09) 13 PRRC 114.40 95.62 18.79 - 0.00 14 SC 103.33 25.14 77.26 0.93 0.00 15 DTI 60.60 53.34 4.19 - 3.07 16 BFAR 51.19 41.48 14.07 - (4.35) 17 DILG 45.52 29.05 14.23 - 2.24 18 TESDA 34.89 27.09 5.26 - 2.54 19 LLDA 7.05 - 6.95 0.10 0.00 20 MWSS 6.22 5.89 0.33 - 0.00 21 BIR 4.21 - 3.28 0.94 0.00 22 SBMA (2.46) (5.28) 2.82 - 0.00



Table XVIII - Debt Service Expenditures Paid by GOCCs (in million pesos)

Particulars

Amount

Total Principal Interest Commitme

nt Fees Other

Charges

NG DIRECT 16,428.21 12,772.32

3,130.52 77.22 448.16

Bilateral 12,616.92 9,595.46

2,557.32 42.85 421.29 1 BCDA 6,692.29 5,560.61 1,105.96 - 25.72

2 DBP 2,223.69 1,688.88 504.55 21.06 9.19

3 LBP 1,120.01 788.23 326.09 5.69 -

4 LRTA 937.07 556.21 222.58 - 158.29 Difference between totals and sum of components is due to rounding off

38

3.6.1 Principal – P47.10 billion

3.6.1.1 By Creditor

Principal repayment of P47.10 billion is made to the following creditors: Bilateral – P29.22 billion or 62.03 percent; Multilateral – P13.34 billion or 28.32 percent and Commercial – P4.55 billion or 9.65 percent.

Of the amount paid, P32.91 billion or 69.87 percent is for loans directly contracted by the NG; P12.57 billion or 26.69 percent for NG guaranteed loans and P1.62 billion or 3.44 percent for NG relent loans. The details of repayment made are in Chart XIII and Table XVI.

(Table XVIII, continued)

Particulars

Amount

Total Principal Interest Commitme

nt Fees Other

Charges

5 PPA 667.01 379.28 148.63 - 139.10

6 SBMA 470.21 297.53 83.81 - 88.87

7 LWUA 261.34 193.56 67.76 0.01 0.02

8 PNR 148.15 67.07 67.10 13.88 0.09

9 PTA 49.46 36.53 12.93 - -

10 NFA 21.32 14.70 6.62 - 0.00 11 PEZA 20.08 12.87 5.01 2.20 -

12 SBGFC 4.48 - 4.48 - -

13 NPC 1.81 - 1.81 - -

Commercial 161.84 90.30 49.82 18.50 3.22

1 NPC 66.92 47.07 19.85 - -

2 LRTA 56.15 39.62 13.73 - 2.79

3 MWSS 34.70 - 16.20 18.50 -

4 LWUA 2.73 2.69 0.03 - 0.00

5 DBP 1.35 0.92 - - 0.43

Multilateral 3,649.44 3,086.56 523.38 15.87 23.64

1 LBP 1,418.98 1,299.16 107.60 12.22 -

2 DBP 808.57 755.66 49.26 3.65 -

3 PSALM 796.03 693.70 102.33 - -

4 MWSS 197.12 - 184.54 - 12.58

5 NPC 162.22 119.14 43.08 - -

6 SBGFC 118.23 99.93 18.31 - - 7 SBMA 91.20 75.49 4.66 - 11.06 8 LWUA 57.08 43.48 13.61 - 0.00

0.00 - with value less than five thousand Difference between totals and sum of components is due to rounding off

-

2,000.00

4,000.00

6,000.00

8,000.00

10,000.00

12,000.00

14,000.00

16,000.00

18,000.00

20,000.00

Chart XIII - Principal Repayment by Type of Creditor and Type of Loans (in million pesos)

Bilateral 18,158.88 1,475.49 9,580.76

Multilateral 10,247.24 107.25 2,985.20

Commercial 4,502.12 39.62 3.61

NG DirectP32,908.24

NG RelentP1,622.36

NG GuaranteedP12,569.57

39

3.6.1.2 By Implementing Agency

Principal repayments made by BTr during the year for the account of agencies totaled P34.33 billion. Of these, P9.57 billion or 27.88 is for DPWH, for DOF – P8.98 billion or 26.15 percent, for DOTC – P2.84 billion or 8.26 percent and for DAR – P2.54 billion or 7.40 percent. Table XVII shows the list of principal repayment by implementing agency and by type of creditor.

Of the amount repaid for DPWH of P9.57 billion, P1.3 billion is for the

account of Tulay ng Pangulo sa SZOPAD. Under the DAR, P747.19 million is for Tulay ng Pangulo para sa Magsasaka and P694.07 million is for Tulay ni Pangulo para sa Kaunlarang Pang-agraryo. Repayment for the account of DOF of P4.32 billion pertains to Power Sector Development Program.

The following payments were made by the BTr for the NG-Relent loan

accounts of GOCCs: Principal repayment for loans guaranteed by the NG was also reported by

the GOCCs are shown in Table XVIII.

3.6.2 Interests – P15.04 billion

Interest payment made during the year totaled P15.04 billion which increased by P1.63 billion or 0.12 percent compared with last year payment of P13.41 billion.

3.6.2.1 By Creditor

The creditors where the interest is paid are: Bilateral – P7.78 billion or

51.71 percent, Multilateral – P6.14 billion or 40.81 percent and Commercial – P1.12 billion or 7.47 percent. The bulk of the amount of interest of P11.42 billion or 75.96 percent was paid for NG Direct loans while P3.05 billion or 20.28 percent and P0.56 billion or 3.75 percent was for NG Guaranteed and NG relent loans, respectively.

Table XIX - Debt Service Expenditures Paid by BTr for the GOCCs Account (in million pesos)

Particulars

Amount

Total Principal Interest Commitment Fees

Other Charges

Total

6,093.56

4,897.35

1,088.16

108.00 0.05 1 PSALM 1,603.66 1,479.37 124.29 - 0.00 2 LRTA 1,776.87 1,313.43 463.44 - 0.00 3 NIA 1,390.01 1,035.07 345.83 9.08 0.04 4 PPA 1,122.84 921.52 102.50 98.82 0.00 5 PHIVIDEC 189.36 147.35 42.01 - 0.00 6 MWSS 6.22 5.89 0.33 - 0.00 7 LLDA 7.05 - 6.95 0.10 0.00 8 SBMA (2.46) (5.28) 2.82 - 0.00

0.0 - with value less than five thousand Difference between totals and sum of components is due to rounding off

40

Presented in Table XX is the breakdown of amount paid per type of creditor type and type of loans, while the details by creditor are shown in Table XVI.

3.6.2.2 By Implementing Agency

The amount paid for the account of DOF totaled P4.45billion or 37.34 percent of the total interest on NG direct loans. The bulk of the amount went to multilateral creditor of P3.56 billion. On the other hand, DPWH accounted interest, P2.34 billion was paid to bilateral creditor. Presented below are the amounts of interests paid by the BTr for the account of agency and the type of creditor where interests are paid.

Table XX - Interests by Type of Creditor and Loans (in million pesos)

Creditor Type NG Direct NG Relent NG-

Guaranteed Total

% to total

1 Bilateral 4,715.21 515.65 2,545.31 7,776.17 51.71 2 Multilateral 5,613.68 35.16 488.55 6,137.39 40.81 3 Commercial 1,094.04 13.73 16.23 1,124.01 7.47

Total 11,422.93 564.55 3,050.09 15,037.57 100.00 Percentage to total 75.96 3.75 20.28 100.00


Table XXI - Interests on NG Direct Loans, by Agency (in million pesos)

Particulars

Amount % to total Bilateral Commercial Multilateral Total

Total 5,218.85 1,074.19 5,614.01 11,907.05 100.00 1 DOF 891.79 - 3,554.09 4,445.88 37.34 2 DPWH 2,342.28 283.07 201.82 2,827.18 23.74

3 DECS 108.44 - 647.54 755.98 6.35

4 DAR 348.63 87.31 154.33 590.27 4.96

5 DOTC 388.38 41.64 94.23 524.25 4.40

6 LRTA 463.44 - - 463.44 3.89

7 NIA 266.63 31.11 48.08 345.83 2.90

8 DILG 64.63 228.51 14.23 307.37 2.58

9 DA 112.12 17.34 140.55 270.00 2.27

10 DOH 8.40 113.02 126.65 248.08 2.08 11 DSWD - - 235.11 235.11 1.97

12 BOC - 163.71 - 163.71 1.37

13 PSALM - - 124.29 124.29 1.04

14 PPA 40.44 62.05 - 102.50 0.86

15 ARMM 31.23 - 70.11 101.34 0.85 Difference between totals and sum of components is due to rounding off

41

GOCCs paid interest directly to the creditor pertaining to their NG

Guaranteed loans. Shown in the Table XXII is the list of GOCCs that interest for ODA loans were paid.

(Table XXI, continued)

Particulars

Amount % to total Bilateral Commercial Multilateral Total

16 DENR 8.56 - 70.04 78.60 0.66

17 SC - - 77.26 77.26 0.65

18 Deped 50.99 - - 50.99 0.43

19 TESDA - 38.16 5.26 43.42 0.36

20 HIVIDEC 42.01 - - 42.01 0.35

21 Provl Gov't-LDN

27.16 - - 27.16 0.23

22 BFAR 5.77 6.32 14.07 26.15 0.22

23 PRRC - - 18.79 18.79 0.16

24 PMMA 8.00 - - 8.00 0.07

25 DOT 7.97 - - 7.97 0.07

26 LLDA - - 6.95 6.95 0.06

27 DTI - - 4.19 4.19 0.04

28 BIR - - 3.28 3.28 0.03

29 OP 1.10 1.94 - 3.03 0.03

30 SBMA - - 2.82 2.82 0.02

31 UP/PGH 0.89 - - 0.89 0.01

32 MWSS - - 0.33 0.33 0.00 Difference between totals and sum of components is due to rounding off

Table XXII - Interests on Loans Paid by GOCCs (in million pesos)

Particulars Amount

% to Total Bilateral Commercial Multilateral Total

Bilateral 2,557.32 49.82 523.38 3,130.52 100.00 1 BCDA 1,105.96 - - 1,105.96 35.33

2 DBP 504.55 - 49.26 553.81 17.69

3 LBP 326.09 - 107.60 433.69 13.85

4 LRTA 222.58 13.73 - 236.31 7.55

5 MWSS - 16.20 184.54 200.74 6.41

6 PPA 148.63 - - 148.63 4.75 7 PSALM - - 102.33 102.33 3.27

8 SBMA 83.81 - 4.66 88.47 2.83

9 LWUA 67.76 0.03 13.61 81.39 2.60

10 PNR 67.10 - - 67.10 2.14 11 NPC 1.81 19.85 43.08 64.74 2.07

12 SBGFC 4.48 - 18.31 22.78 0.73

13 PTA 12.93 - - 12.93 0.41

14 NFA 6.62 - - 6.62 0.21 15 PEZA 5.01 - - 5.01 0.16


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3.6.3 Commitment Fees – P372.65 million

3.6.3.1 By Creditor

Commitment fees represent the charges made by creditors based on

undrawn commitments which may be due to the delay in project implementation that slowed down availments of loan proceeds. Details by type of creditor are shown below and the breakdown by creditor are presented in Table XVI.

For loans directly contracted by the NG, the amount paid is P295.43 million

or 79.28 percent while for NG guaranteed loans, payment totaled P77.22 million or 20.72 percent.

3.6.3.2 Implementing Agency

The top five agencies where bigger part of commitment fees are paid by

NG are the following: DAR – P113.57 million or 30.48 percent, PPA – P98.82 million or 26.52 percent, DPWH – P42.40 million or 11.38 percent, DBP – P21.06 million or 5.65 percent and MWSS – P18.50 million or 4.96 percent. Commitment fees by Implementing Agency are shown below.

Table XXIII- Commitment Fees by Type of Creditor and Loans (in million pesos)

Creditor Type NG

Direct NG-

Guaranteed Total

% to total

1 Bilateral 212.99 42.85 255.84 68.65 2 Multilateral 34.61 15.87 50.48 13.55 3 Commercial 47.82 18.50 66.32 17.80

Total 295.43 77.22 372.65 100.00 Percentage to Total 79.28 20.72 100.00


Chart XIV - Commitment Fees(in million peso)

13.88 , 3.73%

17.91 , 4.81%

46.49 , 12.48%

21.06 , 5.65%

18.50 4.96%

42.40 , 11.38%

113.57 , 30.48%

98.82 , 26.52%

1-DAR

2-PPA

3-DPWH

4-DBP

5-MWSS

LBP

PNR

Others


43

The amount paid by the BTr for the account of DAR of P113.57 million

pertains to Tulay ng Pangulo para sa Kaunlarang Pang-Agraryo. The list of agencies showing the amount of commitment fees paid is presented below.

The DBP amount of P83.09 million was paid for the project Environmental Development Project, Logistics Infrastructure Development Project and Credit for Better HealthCare. Shown in Table XXV is the list of GOCCs that paid Commitment Fees.

Table XXIV - Commitment Fees on NG Direct Loans, by Agency (in million pesos)

Particulars Amount

% to total Bilateral

Commer-cial

Multila-teral

Total

Total 212.99

47.82

34.61 295.43 100.00 1 DAR 113.56 - 0.01 113.57 38.44 2 PPA 98.82 - - 98.82 33.45

3 DPWH 0.60 41.24 0.55 42.40 14.35

4 DA - - 11.00 11.00 3.72

5 NIA - 6.58 2.50 9.08 3.07 6 DOH - - 6.23 6.23 2.11 7 DOF - - 5.12 5.12 1.73

8 DECS - - 3.34 3.34 1.13

9 DENR - - 3.32 3.32 1.12

10 BIR - - 0.94 0.94 0.32 11 SC - - 0.93 0.93 0.32 12 DSWD - - 0.58 0.58 0.19

13 LLDA - - 0.10 0.10 0.03 Difference between totals and sum of components is due to rounding off

Table XXV - Commitment Fees on Loans Paid by GOCCs (in million pesos)

Particulars Amount

Bilateral Commercial Multilateral Total % to total

Total

42.85

18.50

15.87 77.22 100.00 1 DBP 21.06 - 21.06 27.28

2 MWSS - 18.50 - 18.50 23.96 4 LBP 5.69 - 12.22 17.91 23.19

3 PNR 13.88 - - 13.88 17.98

5 BCDA - - 3.65 3.65 4.73

6 PEZA 2.20 - - 2.20 2.85 7 LWUA 0.01 - - 0.01 0.02


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The agencies and projects where commitment fees are incurred and the creditors where the fees are paid can be seen in Table XXVI.

Table XXVI – Commitment Fees by Implementing Agency and Projects (in million pesos)

IA Name of Projects Creditor Amount % to Total

Total 372.65 100.00

Bilateral 255.84 68.65

1 DAR Tulay ng Pangulo para sa Kaunlarang Pang-Agraryo

BNP PARIBAS

113.56 44.39

2 DBP 21.06 8.23

Environmental Development Project

JBIC 10.98

Logistics Infrastructure Development Project

JBIC 10.08

3 DPWH 0.60 0.24

Bridge Construction and Replacement Project

ICO 0.56

BCAP for Calamity Stricken Areas

ZOTH 0.04

4 LBP 5.69 2.22

Agricultural Credit Support Project

JBIC 5.66

Local Government Units Investment Programme

KFW 0.03

5 PPA Greater Maritime Access (GMA) Ports

BNP PARIBAS

98.82 38.63

6 PNR South Manila Commuter Rail Project

KEXIM 13.88 5.43

7 PEZA Special Economic Zones Environment Management Project

JBIC 2.20 0.86

8 LWUA Provincial Towns Water Supply Project I/II

KFW 0.01 0.01

Commercial 66.32 17.80

1 DPWH 41.24 62.19

Mega Bridges for Urban and Rural Development Project

BNP PARIBAS

40.78

BCAP for Calamity Stricken Areas

ZOTH 0.47

2 MWSS Angat Water Utilization and Aqueduct Improvement Project (AWUAIP)-Phase II

CEXIM 18.50 27.89

3 NIA Agno River Integrated Irrigation Project

CEXIM 6.58 9.92

Multilateral

1 DA 11.00 21.80

Infrastructure for Rural Productivity Enhancement Sector Project

ADB 3.72

Mindanao Rural Development Project Phase II

IBRD 7.28


45

3.6.4 Other Charges – P0.47billion

The Other Charges of P0.47 billion include service charge of P0.19 billion and guarantee fee of P0.25 billion.

Foreign exchange gains or losses are incurred for debt service payments

for loans on account of the Currency Pooling System and Exchange Risk Pooling System which were introduced to distribute equitably the foreign exchange risk associated with the loan among all borrowers at any given time. Every loan is assigned a share of the total of each currency outstanding proportional to its share of the total outstanding in the pool. Thus, at all times, each loan reflects the same currency composition as that of the pool. The pooling system does not eliminate the foreign currency exchange risk, but distribute it equally among borrowers. During the year, a net foreign exchange gain of P3.51 million was incurred.

(Table XXVI, continued)

IA Name of Projects Creditor Amount % to Total

2 DENR 3.32 6.57

National Program Support for Environment and Natural Resources Management Project

IBRD 3.29

Second Land Administration & Management Project

IBRD 0.02

3 DOH 6.23 12.34

National Sector Support for Health Reform Projects

IBRD 4.96

Second Women's Health & Safe Motherhood Project

IBRD 1.27

4 LBP 12.22 24.21

Support for Strategic Local Development & Investment Project

IBRD 7.97

Manila Third Sewerage Project IBRD 4.25 5 BIR National Program Support for Tax

Administration Reform Project IBRD 0.94 1.86

6 DAR Agrarian Reform Communities Development Project, Phase II

IBRD 0.01 0.03

7 DBP Credit for Better HealthCare ADB 3.65 7.23

8 DECS National Program Support for Basic Education Project

IBRD 3.34 6.61

9 DOF FINANCIAL MARKET REG II ADB 5.12 10.14

10 DPWH MM Urban Transport Integration Project

IBRD 0.55 1.10

11 DSWD Kapit-Bisig sa Kahirapan-Comprehensive & Integrated Delivery Of Social Service-CIDSS

IBRD 0.58 1.14

12 LLDA Laguna de Bay Institutional Strengthening & Community Dev't. Proj.

IBRD 0.10 0.19

13 NIA Southern Philippines Irrigation Sector Project

ADB 2.50 4.95

14 SC Judicial Reform Support Project IBRD 0.93 1.84


4.0 CONSOLIDATED AUDIT OBSERVATIONS AND RECOMMENDATIONS

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4.0 Consolidated ODA Audit Observations and Recommendations

In compliance with Section 8 (b) of the RA No. 8182 requiring the conduct of an audit on each ongoing and completed projects funded by ODA loans, the COA conducted the audit and evaluation of the 2011 transactions related to ODA funded projects.

The audit observations were grouped into audit issues related to a) Budget, b)

Procurement, c) Financial Performance, d) Physical Performance, e) Project Sustainability and f) Others.

GENERAL OBSERVATIONS

The significant and common audit observations are summarized as follows:

A. Budget

Cases of unutilized, underutilization of funds, non-release of allotments and Notice of Cash Allocation, inconsistencies in project titles and funding amount were observed. The following observations highlights the more notable cases:

1. The Project implemented by Department of Agriculture Regional Field Unit in the

Cordillera Autonomous Region (DA-RFU-CAR) continues to have zero physical accomplishment in Rural Infrastructure because the Local Government Units (LGUs) could not provide their funding counterpart in full and four checks totaling P1.67 million ready for issuance to certain LGUs from October to December 2011 for the implementation of civil works projects remained with the Project Support Office (PSO) as of year-end. Also, the NCIP-CAR spent a total of P7.118 million or 31.07 percent of the total budget of P22.912 million for Land Tenure Improvement Sub-component of CHARM 2, for three years ending December 31, 2011, due to poor performance resulting in unutilized budget of P15.794 million.

2. ODA loans/foreign borrowings amounting to P9.842 billion withdrawn from various

funders from 2008 to 2009 remained unutilized as of December 31, 2011 which may result in the delay or non-attainment of the purposes for which such loans/borrowings were acquired (Development Bank of the Philippines or DBP).

3. The Second Land Administration and Management Project (LAMP2) implemented by

Department of Environment and Natural Resources (DENR) reported a low fund utilization rate of 74.40 percent attributed to certain targeted activities not accomplished at year-end, thereby affecting the timely completion of the projects, while the Community-Based Forest and Mangrove Management Project (CBFMMP) Kreditanstalt fur Wideraufbau (KfW) Loan reported an overall low fund utilization rate of 43.67 percent attributed to certain targeted activities not accomplished at year-end.

B. Procurement

Various deficiencies were noted in the execution/implementation of procurement of consulting services, civil works and goods, such as the following:

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1. Information on the documents submitted by the Consultant did not support the 100 percent rating given by the Technical Working Group. The number of years of operation in the core business, years of experience in database migration and consolidation, projects undertaken and staff proficiencies in Oracle as reported in the Detailed Shortlisting Evaluation Report, did not match the information contained in the submitted documents. The Statement of all Government and Private Contracts Completed which are similar in nature and the list of all on-going government and private contracts including contracts awarded but not yet started were not attached for reference in shortlisting. (Bureau of Internal Revenue or BIR)

2. Absence of documents from the listed firms; namely, DBQuest, Inc., Seer Technologies,

Inc., and Solvento Philippines, Inc., signifying consent or authorizing Philcox (Phils.) Inc. in whatever undertaking with respect to the ITS Consolidation Project, puts to question the representation to BIR by the Bid Manager of Philcox (Phils.) Inc. and at the same time raises the issue as to whether the listed firms are in collaboration with this undertaking. The Special Conditions of the contract did not include a supplemental provision on this notwithstanding the mention of the three firms the Consultant is working with.

3. The dissimilarity in the presentation of the Approved Budget for the Contract (ABC) and

the Financial Proposal of the Contractor did not permit a thorough evaluation, in audit, of the bids proposed. The work items in the ABC are not comparable in quantities and in cost with the financial proposal. The delivered items could not also be compared with the requirements of the projects per ABC. Moreover, the non-delivery on certain major items (one clustered server with an estimated cost of P7 million and back-up tapes) cast doubt on the reasonableness of the estimates in the ABC. Evidences on software licenses and support could not be found on documents attached to the payment vouchers. The costing of work items/deliverables per ABC posed certain issues on reasonableness and responsiveness with regard to the evaluation of the Consultant’s submitted offer. (BIR)

4. Changes in the staff composition did not initiate, on the part of the Contractor, the

submission of information to the Agency and such documentation necessary to vouch for the capabilities of the replacement staff. The General Conditions of Contract in No. 4 and the Instructions in the Qualification Requirement Checklist necessitate the confirmation by the Consultant that those who will actually perform the service are registered professionals and the submission of validated documents on work experience and proficiencies. (BIR) Inspection by the team signing the Inspectors’ Report addresses only the physical acceptance of the delivered items but not the compliance to the requirements of the contract. Moreover, there is already a need to reconstitute the inspectorate team in pursuance to Revenue Memorandum Order No. 45-2011 dated October 26, 2011. (BIR)

5. The Project implemented by DA obtained price quotations for the rental of motor vehicles even from persons who are not registered to supply transport services contrary to Section 52.3 of the Implementing Rules and Regulations of R.A. No. 9184, thus, the winning bidders with private vehicles did not provide staff passengers with insurance coverage against possible untoward incidents to the disadvantage of the Project.

6. Postings in Philippine Government Electronic Procurement System (PhilGEPS) was not yet fully observed by National Irrigation Administration – Agno River Integrated Irrigation Project (NIA-ARIIP) in the procurement of infrastructure projects, goods and

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services implemented by NIA contrary to Section 8 of RA 9184 otherwise known as the Government Procurement Act.

7. There were inconsistencies in the details of consultancy contracts entered with a tri media monitoring services totaling to P803,400.00 which raises doubts as to its validity. (Supreme Court or SC)

8. Thirty Units X-Ray Equipment amounting to P7,953,.45 million on a project implemented

Bureau of Customs (BOC) were unrecorded. In a project implemented by DSWD, the accounting of various advocacy materials with an aggregate cost of P2.75 million could not be properly done as the attached distribution lists were not duly signed by the recipients.

9. Procurement of IT equipment in CY 2011 totaling P3.85 million were not included in the Judicial Reform Support Project (JRSP) Procurement Plan for the period December 1, 2010 to June 30, 2011 and July 2011 to June 30, 2012 contrary to the agreement between the Supreme Court and the World Bank. Moreover, other various expenses amounting to P3.04 million were also charged against the JRSP Fund for CY 2010 to November 2011 which were found to be not related to the project/program objectives and not agreed with the World Bank. There were payments made for the honoraria of resource speakers charged against the Loan Proceeds totaling to P50,400.00 contrary to the Section 2(c) of the Loan Agreement.

10. The distribution of the 5 million Compact Fluorescent Lamps (CFLs) procured under Lot

1 of Component 1.2 - National Residential Lighting Program of the Philippine Energy Efficiency Project (PEEP) implemented by DOE at a total cost of P171.59 million, programmed to be distributed within a period of three months as per contract to GRM International Inc. (GRM) was not yet completed as at year-end despite lapse of two years and three months with 359,711 pieces costing P13.6 million remaining undelivered as at January 12, 2012. Further, the 2,533,705 Incandescent Bulbs (IBs) stored at GRMs warehouse for disposal plus an undetermined number with the ECs in Mindanao remained undisposed as at year-end.

11. The procurement of 30 units mobile phones amounting to P342,400.00 and CY 2011

planners on projects implemented by DSWD, which were delivered in May 2011, worth P428,750.00 out of 4Ps funds are considered unnecessary and extravagant as defined under Section 3.2 and 3.4 of COA Circular No. 85-55-A and thus violates Section 1 of PD 1445 and Section 4 of RA No. 6713.

12. Contract costs of Post Ondoy and Pepeng Short-Term Infrastructure Rehabilitation

Projects (POPSTIRP) implemented by DOTC exceeded the COA estimated costs by P59.32 million due to over-estimated quantity in the ABC thus, the incurrence of excessive project cost on the part of the government.

13. Some procurement of goods and services charged to Fund 102 of Regional Office No. V

on a project implemented by DSWD in the total amount of P8.02 million was not in accordance with pertinent provisions of the Revised Implementing Rules and Regulations (IRR) of R.A. 9184 and GPPB Resolution No. 09-2009 dated November 23, 2009, thus the agency may not have obtained the most advantageous price for the said transactions. Also, the procured advocacy materials worth P2.75 million are not among those listed in Chapter 8 of 4Ps Manual of Operations and neither responsive nor supportive to the objectives of the 4Ps.

49

14. In TESDA-CAR, CEMMTP equipment costing P16 million intended for trainings on Computer Numeric Control (CNC) Production still remained unutilized since it was delivered and accepted in 2008 due to failure on the part of the supplier to make the necessary repair on such equipment. As a result, student beneficiaries continued to be deprived of additional skills necessary to meet the current emerging skills requirements of the manufacturing industry in the area of modern technology and the technological needs of manufacturing companies and better chances of employment. This further resulted in wastage of scarce government resources. This is a reiteration of previous year’s audit finding.

15. The propriety of the awarding of contract to Creativille Concepts and Design may be put

to question in view of the erroneous rating on the Organization and Staffing criteria in responding to the Terms of Reference. This is not in accordance with Section 3.7 of the Guidelines on the Selection and Employment of Consultants (January 2011) by the World Bank and Section 5.2 of the Terms of Reference (BIR).

C. Financial Performance

Various deficiencies in this area were observed as follows:

1. Unliquidated cash advances and fund transfers in the total amount of P360.81 million were noted from ten projects under the DAR, DepEd, DENR, DOH, DTI, DPWH, DSWD, NCIP, and NIA of which amount 76.17 percent was from the project implemented by the Department of Agrarian Reform (DAR) amounting to P274.84 million.

2. Funds in the total amount of P4,113.77 million in eight projects implemented by BOC,

DA, DENR, DENR-RO-IVB, DSWD, NIA & PEZA were unauthorized/unsupported of which amount, 91.65 percent or P3,770.16 was from a project implemented by the Department of Social Welfare and Development (DSWD).

3. There were overpayments of expenditures/claims in the total amount of P25.98 million in

four projects under DA RFU-CAR, DSWD, DOTC and SBMA of which amount, 84.64 percent or P 21.99 million was from a project implemented by Subic Bay Metropolitan Authority (SBMA).

4. There were erroneous/incorrect/double recording of transactions or accounts on nine

projects implemented by DA, DAR, DENR, DOTC, DSWD, NIA, SCP and TRC.

5. Payments/transactions amounting to P1,211.07 million pertaining to four projects implemented by DA, DAR, DOH and NIA were unrecorded of which amount 97.22 percent or P1,177.38 million was from the Department of Agriculture (DA).

6. Unreconciled balances of accounts in the total amount of P763.98 million, prominently

the PPE accounts (GL and RPCPPE), cash (book and bank balances) and unreconciled reports (monitoring and status report) were noted in nine projects implemented by DAR, DENR, and SCP, of which amount 90.90 percent or P694.46 million is from the Department of Agrarian Reform (DAR).

7. Non-preparation/submission and/or late submission by the Accountant of financial

reports and documents such as Trial Balances, BRS, RCI including JEV and DVs, Contracts and POs were noted in 26 projects implemented by DAR, DENR, DOH, DPWH, NIA and SCP.

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8. The following accounting and auditing rules and regulations on 16 projects implemented

by the DA, DAR, DOTC, DPWH, DSWD, SCP, TESDA, NIA, PEZA, and PHIVIDEC were not complied with:

a. COA Circular No. 97-002 – Rules and Regulations on the Granting, Utilization and

Liquidation of Cash Advance;

b. COA Circular No. 2009-002 – Reinstituting Selective Pre-Audit on Government Transactions;

c. COA Circular No. 2009-001 – Restatement with amendment of COA Circular 87-278

and COA Memorandum 2005-027 re: submission of copy of government contracts, purchase orders and their supporting documents to the Commission on Audit;

d. COA Circular No. 97-001 – Guidelines on the Proper Disposition/Closure of Dormant

Funds and/or Accounts of National Government Agencies; and

e. DBM-DOF and COA Joint Circular No. 2-97 – Revised and Updated Budgeting and Accounting Guidelines and Procedures Applicable to Foreign-assisted Projects Implemented by NGAs and GOCCs.

9. The validity of 58 transactions was doubtful due to unaccounted amount,

overstatement/understatement of accounts, lack of proper documents to support the projects and non-maintenance of separate cash accounts for collections on relending activities on projects implemented by the DA, DAR, DECS, DENR, DOE, DOH, DOTC, DPWH, DSWD, DTI, SCP, TESDA, DBP, LBP, NIA and PEZA.

10. Commitment Fees amounting to P205.92 million were incurred due to delayed utilization

of the loan amounts and implementation of the seven projects implemented by BIR, DA, DOE, DOH, DPWH and LBP, of which amount, 69.75 percent or P143.62 million was from the Department of Agriculture (DA).

D. Physical Performance

Non-completion/non-utilization/delay of projects were noted due to, among others:

1. Failure to evaluate the need for X-Ray machines in a project implemented by BOC in every port/sub-port based on its capacity to maximize the benefits that will be derived from its use and improve the collection of Container Service Fee.

2. Delayed preparation of guidelines for the utilization of the Project component for

Performance Based Grant PBG Incentive amounting to P75 million which is 12 percent of the total loan thereby delaying the benefits to the LGUs in improving health service and local governance implemented by DOH.

3. Delivered but uninstalled equipment for the Global Maritime Distress and Safety System

(GMDSS) project implemented by DOTC, resulting in the non-attainment of the project objectives and wastage of government resources.

4. Failure to determine whether contracts with NGOs are feasible considering that five of

the six Non-Government Organizations (NGOs) hired by the Project implemented by DA

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to render community mobilization and participatory planning services incurred delays in performing their obligations with slippage ranging from 15 percent to 45 percent of the required accomplishment.

5. Failure to coordinate, monitor and evaluate projects implemented by DOH, DAR, DSWD,

and NCIP-CAR resulting in the non-completion of several targeted activities.

6. Unrealistic physical accomplishment of 91 percent on a project implemented by DOH as reported by the GITEC Consultant was based on the total cost of contracted sub-grant projects instead of on the amount released by the MDFO to the LGU.

7. Lack of technical planning or implementation not in accordance with the standard plans

and specifications, the upgrading, rehabilitation and improvement works on five farm to market roads (FMRs) in Mindoro Oriental implemented by DSWD costing P9.36 million have not been fully and effectively carried out and some were poorly done resulting in damaged infrastructures and manifesting wastage of government funds.

E. Project Sustainability

In this area, the following are the more significant/common findings:

1. Reduction of Container Service Fee turned the Non-intrusive Container Inspection System Project implemented by BOC from self-sustaining to a financial burden to National Government.

2. The approach employed by the PSO in implementing the Agriculture, Agribusiness and

Income Generating Activities (AAIGA) component by DA-RFU-CAR was not in accordance with that provided in the Project Appraisal Report. Thus, the expenditures incurred in 2011 under the AAIGA amounting to P12.90 million may not impact on the attainment of the objectives of promoting agribusiness and marketing resulting in the possible waste of resources.

3. Low disbursement or availment of loan as of December 31, 2011 of 18 percent only,

considering that 68 percent of the project duration has elapsed thereby the project objectives and activities implemented by DOH were not attained.

4. Deficiencies were noted in the implementation of six Kapit-Bisig Laban sa Kahirapan-

Comprehensive and Integrated Delivery of Social Services or KALAHI CIDSS (KC) sub-projects implemented by DSWD in Besao, Paracelis and Natonin, Mt. Province in the amount of P.50 million due to underruns/uninstalled excess materials as of December 31, 2011 and in nine KC sub-projects in Region IX which prevented these projects from being fully operational and deprived the intended beneficiaries of the full enjoyment or use of the sub-projects.

Completed sub-projects implemented by DSWD with an aggregate cost of P22.88 million were found either as non-functional or partially-functional due to the failure of the Operations and Maintenance Group to sustain the operations of various community-based KC projects, thus, resulted in the loss and wastage of government funds and deprived the identified project-recipients of the maximum benefits thereof. Non-compliance of strategy/guidelines in selecting the beneficiaries to the Conditional Cash Transfer Program implemented by DSWD resulted in the decline in the number of

52

beneficiaries who received grants in CY 2011 as compared with the beneficiaries in CY 2010 coupled with the decrease in the amount received and the fluctuation in the number of beneficiaries in CY 2011.

5. The Banaoang Pump Irrigation Project implemented by NIA was not yet fully operational as of December 31, 2011, thus, delaying the provision of irrigation to farmer beneficiaries.

6. Delay on the part of the consultant in determining the non-viability of the Special

Economic Zones Environmental Management Project (SEZEMP) implemented by PEZA, particularly of the construction cost, at the early stage of the procurement process, resulted to the incurrence of unnecessary cost, non-implementation of the project and the eventual closing/cancellation of the loan.

F. Others

The other observations are shown below:

1. Unregistered lots in an aggregate amount of P60.49 million needed for right of way for the construction of irrigation, canals and laterals, and ownership was not transferred yet to NIA as of December 31, 2011. Also, deposits of P2.27 million representing payment of lots to various landowners for right of way expropriated by NIA were classified as dormant accounts by the bank due to the inability of the agency to inform the bank in writing the purpose of said deposits which may result to loss of funds if not claimed within ten years.

2. Cash bond amounting to P100,000.00 for the construction of irrigation structures

and road crossing along the highway implemented by NIA remained unclaimed from the DPWH although the purpose has long been achieved.

3. Project staff and other persons whose function did not include the preparation of

Feasibility Study (FS) were authorized to attend the training on FS preparation resulting in the incurrence of additional training cost of P358,893.93 on a project implemented by DA-RFU-CAR.

4. Transfer of Construction in Progress-Ports, Lighthouses, Harbors account of completed

projects implemented by DOTC amounting to P2,118,08 million to the appropriate asset account and the turn-over of said accounts to the Local Government Units under the Social Reform-Related Feeder Ports Project (SRRFPP) was not properly supported with the required documents.

5. Sixteen KC Additional Financing (KC-AF), a project implemented by DSWD, funded sub-

projects amounting to P10.85 million were implemented by barangay communities which were located in areas not listed in the pool of eligible municipalities in violation of the agreement between the WB and the Philippine Government and of the provisions of the KC Operations Manual.

The Pantawid Pamilyang Pilipino (CCT or 4Ps) program implemented by DSWD lacked qualitative performance indicators which will measure the improvements brought about by the program. The absence of these indicators rendered difficult the determination of the program’s success in meeting the agency’s desired objectives through provision of educational and health grants.

53

Non-validation or inadequate validation of beneficiaries in the areas of Bulacan and Antipolo resulted in over transfers of funds to LBP amounting to P1.03 million while non-coordination with the Barangay officials resulted in inclusion of unknown/non-resident beneficiaries in the barangay’s list of grantees and the inaccurate encoding of data in the beneficiaries profile resulted in discrepancies in the names of 4Ps grantees from sampled payroll and database in CAR and 3,068 in FO XI.

6. The Bank’s systems and procedures for relending foreign borrowings to private institutions (e.g. Manila Water Company, Inc.) showed deficiencies due to non-compliance with its lending policies, which may result in financing ineligible and/or incomplete construction projects implemented by LBP.

GENERAL RECOMMENDATIONS

In view of the significance of the foregoing observations and the need for appropriate

actions by the Implementing Agencies and intervention by the Congress and oversight agencies, prior years’ recommendations are reiterated, to wit:

It will be noted that the recommendations were similar to those issued last year.

For the Implementing Agencies

a. Ensure project readiness and ability of agencies to implement, own and maintain the project;

b. Identify potential/actual problems of projects using the NEDA-PMS Quarterly Alert

Mechanism Report and identify the root causes of delays to make the necessary and appropriate measures to be taken;

c. Exert best efforts to comply with loan conditionalities within the prescribed period/target date

to facilitate project start-up activities;

d. Follow strictly the existing accounting and auditing rules and regulations on the granting, utilization and liquidation of cash advance to prevent the accumulation of huge balance of the account;

e. Maintain the required accounting records and reconcile reciprocal and related accounts;

f. Reconcile regularly the balance of cash recorded per book and per bank; and

g. Conduct regular physical inventory of supplies and equipment.

For the Oversight Agencies

a. National Economic Development Authority

Sustain the review of necessity of projects, project design and implementation strategies, and absorptive capacity of implementing agencies to undertake and own projects; and

54

In the review of project feasibility studies, consider lessons learned from similar projects as an aid to determining project design deficiencies and viability of the projects under review.

b. Department of Finance

Facilitate the immediate request for loan cancellation with the Foreign Funding

Institutions (FFIs) to minimize payment of commitment fees. Negotiate with FFIs the refund of the corresponding front-end fees for the amount cancelled. Ensure that the amounts of loans contracted are necessary and can be absorbed by the IAs;

Institute a system where IAs are informed of commitment fees paid by the NG for the delays in project implementation and require the IAs to explain the causes of delay; and

Establish effective networking among IAs, LGUs, DBM and other concerned agencies.

Facilitate compliance with loan conditions for loan effectiveness and completion of the project as scheduled.

c. Department of Budget and Management Ensure adequate and timely release of project funds, both loan/grant proceeds and GOP

counterpart funds; Consider inclusion of debt service and commitment fees against implementing agencies’

budget for proper accountability and reporting of expenditures; and Release immediately the Non-Cash Availment Authority to facilitate the recording of

settlement of liabilities for goods delivered and services rendered.

d. Congress of the Philippines

Consider the funding requirements for FAPs in the approval of IAs’ budgets to ensure continuous project implementation and minimize incurrence of commitment fees.

These recommendations are similar to those issued last year.

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CONSOLIDATED ODA AUDIT OBSERVATIONS AND RECOMMENDATIONS

These findings and recommendations are grouped into six areas namely: Budgetary

Issues, Procurement, Financial Performance and Physical Performance, Project Progress Sustainability and Other Issues. The details of these findings and recommendations are contained in the individual audit reports on the projects or on the agencies concerned.

These are presented by sector and by agency with identification of the project and loan

account.

4.1 Infrastructure Sector

4.1.1 Department of Public Works and Highways (DPWH)

4.1.1.1 Sixth Road Project Loan Account No. – Asian Development Bank (ADB) 1473 PHI

4.1.1.2 National Road Improvement and Management Program, Phase I Loan Account No. – 7006-PH

4.1.1.3 Metro Manila Urban Transport Integration Project Loan Account No. – IBRD 7058-PH

4.1.1.4 Metro Manila Interchange Construction Project, Phase IV Loan Account No. – PH-P186

4.1.1.5 Arterial Road Links Development Project Phase III Loan Account No. – PH-P188

4.1.1.6 Arterial Road Links Development Project Phase IV Loan Account No. – PH-P204

4.1.1.7 Arterial Road Links Development Project Phase V Loan Account No. – PH-P217

4.1.1.8 Arterial Road Links Development Project Phase VI Loan Account No. – PH-P227

4.1.1.9 Rural Road Network Development Project II Loan Account No. – PH-P162

4.1.1.10 Rural Road Network Development Project III Loan Account No. – PH-P220

4.1.1.11 Philippines -Japan Highway Loan, Phase I, Mindanao Section Loan Account No. – JBIC PH-P174

4.1.1.12 Philippines -Japan Highway Loan, Phase II, Mindanao Section Loan Account No. – JBIC PH-P206

4.1.1.13 Rehabilitation & Maintenance of Bridges along Arterial Roads, Phase IV Loan Account No. – PH-P207

OBSERVATION RECOMMENDATION

Financial Performance

The recorded balance of Construction in Progress (CIP) accounts totaling P175.890 billion as of December 31, 2011 is doubtful and unreliable due to lack of adjustments on completed infrastructure projects amounting to P31.091 billion which were still carried and recorded under the account Construction in

Require the Chief Accountant and concerned accounting personnel: to reclassify completed projects from Construction in Progress accounts to appropriate Public Infrastructures accounts and eventually at year-end transfer them to the Registry of Public Infrastructures.

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Progress- Roads, Highways and Bridges (CIP-RHB). Confirmations of these completed infrastructure projects also revealed that some were already a decade completed and mostly accepted by the DPWH. The Chief Accountant was not able to close/adjust the corresponding CIP-RHB account since majority of the completed projects still has pending claims. The eventual transfer of these completed infrastructure projects to the Registry of Public Infrastructures at the end of the year was, likewise, not undertaken by the Accounting Office due to lack of adjustment closing the CIP account to the PI account. The non-transfer of completed infrastructure projects to the appropriate asset accounts overstated the CIP-RHB account and correspondingly understated the appropriate PI account by P31,090,748,695.96 or 17.00 percent of the total reported balance of P175,888,810,452.85 of the CIP accounts as of December 31, 2011.

Request the Project Management Office (PMO) Directors to submit to the Accounting Office an updated report on the Status of Financial Claims and compliance with Documentary Requirement. In case of any pending claims or documentary deficiencies, communicate/instruct the concerned PMOs to send letters to the contractors regarding the matter; and provide adequate disclosures in the Notes to Financial Statements.

4.1.1.14 Mega Bridges for Urban and Rural Development Project (MBURDP) Loan Account No. – BNP PARIBAS


The Technical and/or Feasibility Study for the Supply and Delivery of Modular Steel Flyover and Bridges of the President’s Bridge Program, Mega Bridges for Urban and Rural Development Project (MBURDP) were not submitted as well as the documents covering the procurement process from bidding to award of contract and Contract implementation documents.

Require the concerned Officials to cause the immediate submission of the authenticated/certified true copies of the documents and required supporting papers to enable the Auditor to facilitate review and evaluation of the contract and avoid delay and/or possible suspension of payments made for the projects.

4.1.1.15 National Road Improvement and Management Program, Phase II; (NRIMP II) Loan Account No. –IBRD 7552-PH


The balance of Accounts Payable account for Fund 102 was inaccurate due to inclusion of long outstanding payables without any relevant information as to the nature of the claim amounting to P2,123.05 million. The existence of abnormal/negative balances and “unreconciled balance” amounting to P245.03 million and P13,622.17 million, respectively,

Require the Chief Accountant to: (a) analyze and investigate the causes of the negative and abnormal balances totaling P245.03 million and record the corresponding adjustments to correct the deficiency; (b) in case of overpayment, institute remedies to recover the amount from concerned creditors; (c) examine/analyze accounts payable which

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raised doubts on the validity and reliability of the balance of Accounts Payable account.

have been outstanding for two years or more and revert those accounts which have no valid/actual claimants; (d) examine, analyze and reconcile the accounts payable under “unreconciled balance” amounting P13,622.17 million and record the corresponding adjustments to proper individual Subsidiary Ledgers and correct errors in recording; and (e) strengthen the review of journal entries and supporting documents on outstanding claims before recording the same in the books of accounts to minimize and avoid mistakes/errors in recording entries in the books of accounts.

Most contracts were not submitted to COA within five days from its execution pursuant to COA circular No. 2009-01; There were no acknowledgement receipts by the prospective bidders and the World Bank on the Minutes of Pre-bid Conference and the Supplemental/Bid Bulletins; In the review of the Improvement of Digos-Cotabato City Road, Digos-Kidapawan Section, Mindanao, with contract amount P623,610,214.70, it was observed that no performance security was stated or required under invitations for Bids, rather, only a Bid Security; procurement of project and it took 586 calendar days from the date of advertising to issuance of Notice to Proceed (NTP); NTP was issued 81 Calendar Days from the date of approval of the contract; the publication of award of contract online and in Market was undated; and the balance of the Accounts Payable and Advances to Contractors accounts were understated by P60,041,376.25 due to erroneous entry/recording of advances granted to contractors.

Require the concerned Officials to: (a) cause the immediate submission of the lacking documents and its required supporting papers; (b) explain the deficiencies for further review and evaluation of the contracts and avoid delay and/or possible suspension of payments made for the projects. In relation to the deficiencies in the balance of Accounts Payable and Advances to Contractors, require the Accountant to prepare and draw the adjusting journal entries by debiting the Advances to Contractors (181) account and crediting the Accounts Payable (401) account in the total amount of P60,041,376.25, respectively, to correct the balances of these affected accounts.

No official receipts were issued on payments made amounting to P121,677,895.16, casting doubt on the regularity, propriety and integrity of the transactions.

Ensure that Official Receipts are properly issued by the respective creditors/suppliers upon receipt of payment of claims from the agency in compliance with Section 237 of NIRC and BIR M.O. No. 19-2007 to avoid penalties and charges in the future; and review disbursement vouchers as to completeness of supporting documents and check veracity, validity and accuracy of the claims.

4.1.1.16 National Road Improvement and Management Program, Phase II; (NRIMP II) Loan Account No. –IBRD 7552-PH

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The balance of Accounts Payables was understated by P60.041 million due to erroneous recording of advances granted to contractors.

Require the Accountant to prepare adjusting journal entries by debiting the Advances to Contractors account and crediting the Accounts Payable account in the total amount of P60,041 million, to correct the balances of these affected accounts.

4.1.1.17 Central Mindanao Road Projects Loan Account No. – JBIC PH-P237


The review of the Contract Package 3, Construction/Improvement of Maguindanao/ Sultan Kudarat Bdry. Lebak-Kalamansig Road Project, showed that Variation Order Numbers 1,2, and 3 have lacking documents such as Performance Bond and Concurrence of Japan International Cooperation Agency.

Require the submission of documents within 15 days.

4.1.1.18Post Ondoy and Pepeng Short Term Infrastructure and Rehabilitation Project (POPSTIRP) Flood Control

Loan Account No. – JBIC PH-P246


Lacking documents were noted in the evaluation of several contract packages. Also, most contracts were not submitted to COA within five days from its execution pursuant to COA circular No. 2009-01; there were inconsistencies in the contract amount as per Contract Packages No. 36; Restoration of Flood Control Facilities in La Trinidad, Itogon and Mankayan, Benguet Province, CAR; Restoration of Flood Control Facilities in Noveleta, Cavite, Guinayangan, Infanta and TAgkawayan, Quezon and Sta. Cruz, Laguna, Region IV-A.

Require submission of documents within 15 days together with explanations/justifications on the foregoing audit observations.

Review of the contracts revealed that supporting documents were not submitted and pertinent information were not provided nor indicated in the appropriate documents, specified like: Date the contract was entered into; Date the contract was approved; Effectivity of contract time; and Expiry date of

Require submission of documents and explanations/justification within fifteen (15) days. Also, management should hasten the preparation of the revised PERT/CPM Diagram, S-Curve, Cash Flow, Manpower and Equipment Utilization Schedule, since it will be also needed for the Technical Review

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contract, time and date of Notice to Proceed. The review of the plans and contracts conducted by COA Technical Audit Specialist (TAS) disclosed lacking documents. It was also noted that the rehabilitation/restoration of Roads and Bridges along Various Road Section in Camarines Sur IV and V, Region V, with contract amount of P13,045,261.69, the submitted copies of Detailed Unit Cost Analysis of all items of work, do not tally with the unit cost reflected in the Approved Budget for the Contract (ABC). In addition, the TAS noted that the specifications of the heavy equipment used such as the Model, Brand, Capacity and Type were not indicated in the plans/contracts as required.

of our COA-TAS.

Contract costs of Post Ondoy and Pepeng Short-Term Infrastructure Rehabilitation Projects (POPSTIRP) exceeded the COA estimated costs by P59,320,961.78 due to over-estimated quantity in the ABC thus, the incurrence of excessive project cost on the part of the government.

Require management to explain the excessive difference and, if not meritorious, require the contractor to refund the variance of P59,320,961.78 or deduct the amount from any money due the contractor and/or deduct from retention money or other securities posted by the contractor, whichever is practicable.

4.1.1.19 DPWH Bridge Construction/ Replacement Project undertaken Loan Account No. – ICO (Spanish Assisted)


Non-submission of some pertinent documents was noted. Other deficiencies noted in the course of the review are: (a) In the construction of Tangcul Bridge and Approaches and Sicalao Bridge Approaches located in Iligan, Isablea and Lasam, Cagayan, the winning bidder or its authorized representative failed to submit complete documentary requirements within ten (10) Calendar Days (CDs) from receipt of the Notice of Award (NOA), prior to formally entering into contract. Documents were submitted to the Implementing Office with a delay of nineteen 19 Calendar Days and the approval of contract by higher authority exceeded the prescribed period of 15 CDs from receipt with a total delay of 33 CDs.

Require that documents be submitted to facilitate the complete review and evaluation of the contract and avoid delays and/or possible suspension of payments on the project. And also, to provide comments on the audit observations within fifteen (15) days.

4.1.2 Department of Transportation and Communications (DOTC)

4.1.2.1 New Communications, Navigations Surveillance/Air Traffic Management

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(CNS/ATM) System Development Project) Loan Account No. – JICA PH-228


Double Recording of Advance Payments to Sumitomo/Thales Australia amounting to P58.923 million for the New Communications, Navigations Surveillance/Air Traffic Management

Require the necessary adjustments to correct the double recording of advance payment to Sumitomo/Thales Australia.

4.1.2.2 Social Reform Related Feeder Ports Project (SRRFP) Loan Account No. – JBIC PH-173


Payables aged two years and above amounting to 118,760,849.69 were not reverted and payables under the direct payments schemes totaling 90,732,066.02 were recorded in the books resulting in the overstatement of Accounts Payable balance as of yearend.

Require management to revert the payables that remained outstanding for two years or more and against which no actual claim, administrative or judicial, has been or which was not covered by perfected contract or record and obtain copies of Journal Entry Vouchers from the Bureau of Treasury as basis in dropping from the books of accounts said payables under the Direct Payment Scheme;

Contractor’s retention monies totaling P13,362,563.32 which were not claimed for a long time since the projects were accepted by the Department, overstated the Guaranty Deposits Payable account balance as of December 31, 2011.

Require management to cause the forfeiture or reversion of the contractor’s retention money if unclaimed for two years or more from the time it became due in accordance with the provisions of RA 9184 and consequently, to do away with dormant/inactive balances.

The transfer of Construction in Progress-Ports, Lighthouses, Harbors account of completed projects amounting to P2,118,083,300.46 to the appropriate asset account and the turn-over of said accounts to the Local Government Units under the Social Reform-Related Feeder Ports Project (SRRFPP) was not properly supported with the required documents.

Require management to conduct inventory of completed projects and immediately effect the reclassification of the costs of completed projects to the respective asset accounts to achieve a reliable financial reports and require the concerned officials/personnel of the project to comply with the required documents before the transfer to the respective asset accounts and consequently to the recipient agencies.

4.1.2.3 Laguindingan Airport Development Project Loan Account No. – EDCF No. PHL-5(B)


Over Remittance of taxes withheld in the amount of P633,662.40

Require management to prepare adjusting entry to correct the over remittance and

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ensure that generally accepted principles and practices of accounting be observed and in accordance with BIR Revenue Regulation. Request refund of the over remittance or offset against the current taxes to be withheld.

Payables aged two years and above amounting to 2,632,802.95 were not reverted and payables under the direct payments schemes were recorded in the books resulting in the overstatement of Accounts Payable balance as of yearend.

Require management to revert payables that remained outstanding for two years or more and against which no actual claim, administrative or judicial, has been or which is not covered by perfected contract or record and obtain copies of Journal Entry Vouchers from the Bureau of Treasury as basis in dropping from the books of accounts of said payables under the Direct Payment Scheme;

Contractor’s retention monies totaling P87,581.67 which were not claimed for a long time since the projects were already accepted by the Department, overstated the Guaranty Deposits Payable account balance of December 31, 2011.

Require management to cause the forfeiture or reversion of the contractor’s retention money if unclaimed for two years or more from the time it became due, in accordance with the provisions of RA 9184 and consequently, to do away with dormant/inactive balances.

Understatement of Advances to Contractors due to non-reversion of the entry for the cancellation of the check amounting to P0.321 million.

Adjust the entry made for the recoupment of advance payment of Progress Billing Nos. 11-022 to restore the balance of the affected account.

4.1.2.4 Davao International Airport Development Project Loan Account No. – ADB 1333-PHI EIB


Payables aged two years and above amounting to 342,790.69 were not reverted and payables under the direct payments schemes totalling 8,749,108.91 were recorded in the books resulting in the overstatement of Accounts Payable balance as of yearend.

Require management to revert payables that remained outstanding for two years or more and against which no actual claim, administrative or judicial, has been or which is not covered by perfected contract or record and obtain copies of Journal Entry Vouchers from the Bureau of Treasury as basis in dropping from the books of accounts of said payables under the Direct Payment Scheme;

4.1.2.5 Global Maritime Distress and Safety Systems (GMDSS) Loan Account No. – L908-0D1 FP VIII ( c )


Taxes withheld in the total amount of P6,786,364.78 were not remitted to the Bureau of Internal Revenue (BIR) as of December 31, 2011 contrary to Section 2.58

Require management to instruct the accountant to: (a) investigate the existence of negative balances and make the necessary adjustments; (b) remit the amount to BIR in

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a.2(a) of Revenue Regulation No. 2-98. Also, there was an over remittance on the account amounting to P633,662.40 due to the cancellation of check payment to a transaction.

accordance with aforementioned provisions of BIR Revenue Regulation; and (c) prepare adjusting entry to correct the over remittance and ensure that generally accepted principles and practices of accounting be observed.

Advances to Contractors account was overstated by net amount of P58,601,909.68 due to double recording under Fund 102 of advances amounting to P58,923,269.03; and non-reversion of the recouped amount of P321,359.35 due to cancellation of the check payment.

Require the Accountant and Officials concerned to: (a) make the necessary adjustments to correct the double recording of advance payment to Sumitomo/Thales Australia (JV); (b) adjust the entry made for the recoupment of advance payment of Progress Billing Nos. 11-022 to restore the balance of the affected account; and (c) exhaust all possible means to recover advances granted to contractors whose contracts were terminated or rescinded.

The total balance of the Construction in Progress (CIP)- Ports, Lighthouses and Harbors and Other Public Infrastructure accounts in the amounts of P3,192,603,607.46 and P12,737,245,218.74, respectively, are overstated due to failure of the agency to transfer the cost of completed projects to the appropriate Property, Plant and Equipment (PPE) accounts and transfer the same to the recipient agencies.

Require management to conduct inventory of completed projects and immediately effect the reclassification of the costs of completed projects to the respective asset accounts to achieve a reliable financial reports; and b. Require the concerned officials/personnel of the project to comply with the required documents before the transfer to the respective asset accounts and consequently to the recipient agencies.

Contractor’s retention monies totaling P2,580,380.74 for abandoned project and P17,745,906.11 which were not claimed for a long time since the projects were already accepted by the Department, overstated the Guaranty Deposits Payable account balance of as of December 31, 2011.


The reported Accounts Payable balance (Fund 102) totaling P495,845,334.03 as of December 31, 2011 was inaccurate due to non-reversion of the payable accounts aging two years and above totaling P126,006,487.34 and inclusion of accounts payable of P288,048,948.22 under the direct payment scheme. There was also understatement of the account by P955,021.75 due to non-reversion of the entry made upon cancellation of the check.

Require management to: (a) make representation with the DBM to issue an official statement that they can no longer release the corresponding NCAA for the old accounts based on such statement and other documents that the payables were already paid through the approved withdrawal authorization, and notice of disbursements. (b) obtain copies of Journal Entry Vouchers from the Bureau of Treasury as basis in dropping from the books of accounts of said payables under the Direct Payment Scheme; (c) revert the payables that remained outstanding for two years or more and against which no actual claim, administrative or judicial, has been or which is not covered by

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perfected contract or record; and (d) draw a journal entry voucher to correct the understatement in the amount of P955,021.75.

Physical Performance

Out of the P295.593 million worth of delivered equipment for the Global Maritime Distress and Safety System (GMDSS) project, 70 percent or P208.454 million remained uninstalled and unutilized resulting in the non-attainment of the project objectives and wastage of government resources

Require management to take the necessary remedial measures to prevent the GMDSS equipment/facilities from further deterioration and damage. Provide adequate security measures to safeguard the equipment from thief and other intruder and explore all the possibilities on how to make use of the equipment for other projects of the agency to recover part of the cost invested in the project, if there is no pending arbitration filed.

4.1.2.6 Maritime Safety Improvement Project (MSIP) Phase I, IB, IC, II, III Loan Account No. – OECF PH-P208


The total balance of the Construction in Progress (CIP)- Other Public Infrastructure account in the amounts of P169,713,057.80, P489,499.75.00, P1,960,892,943.50.00, P84,032,756.47.00 and P977,475,349.87 of Maritime Safety Improvement Project (MSIP) Phase I, IB, IC, II, III, respectively, are overstated due to failure of the agency to transfer the cost of completed projects to the appropriate Property, Plant and Equipment (PPE) accounts and transfer the same to the recipient agencies.

Require management to conduct inventory of completed projects and immediately effect the reclassification of the costs of completed projects to the respective asset accounts to achieve reliable financial reports. Require the concerned officials/personnel of the project to comply with the required documents before the transfer to the respective asset accounts and consequently to the recipient agencies.

Contractor’s retention monies totaling P124,124.78 which were not claimed for a long time since the projects were already accepted by the Department, overstated the Guaranty Deposits Payable account balance as of December 31, 2011.


4.1.2.7 Nationwide Air Navigation Facilities Modernization Project Phase III Loan Account No. – JBIC PH-160


The total balance of the Construction in Progress (CIP)- Other Public Infrastructure account in the amount of P307,419.00 is

Require management to conduct inventory of completed projects and immediately effect the reclassification of the costs of completed

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overstated due to failure of the agency to transfer the cost of completed projects to the appropriate Property, Plant and Equipment (PPE) accounts and transfer the same to the recipient agencies.

projects to the respective asset accounts to achieve a reliable financial reports. Require the concerned officials/personnel of the project to comply with the required documents before the transfer to the respective asset accounts and consequently to the recipient agencies.

Payables aged two years and above amounting to 242,000.00 were not reverted and payables under the direct payments schemes were recorded in the books resulting in the overstatement of Accounts Payable balance as of yearend.

Require management to revert the payables that remained outstanding for two years or more and against which no actual claim, administrative or judicial has been or which is not covered by perfected contract or record and obtain copies of Journal Entry Vouchers from the Bureau of Treasury as basis in dropping from the books of accounts said payables under the Direct Payment Scheme.

Contractor’s retention monies totaling P21,166.42 which were not claimed for a long time since the projects were already accepted by the Department, overstated the Guaranty Deposits Payable account balance as of December 31, 2011.


4.1.2.8 New Iloilo Airport Development Project Loan Account No. – JBIC PH-214


The total balance of the Construction in Progress (CIP) - Other Public Infrastructure account in the amount of P860,100.00 is overstated due to failure of the agency to transfer the cost of completed projects to the appropriate Property, Plant and Equipment (PPE) accounts and transfer the same to the recipient agencies.

Require management to conduct inventory of completed projects and immediately effect the reclassification of the costs of completed projects to the respective asset accounts to achieve a reliable financial reports. Require the concerned officials/personnel of the project to comply with the required documents before the transfer to the respective asset accounts and consequently to the recipient agencies.

4.1.2.9 Selected Airport Development Projects (Phase I & II) Loan Account No. – JBIC PH-190 & PH-219

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The total balance of the Construction in Progress (CIP)- Other Public Infrastructure account in the amount of P5,516,711,239.98 is overstated due to failure of the agency to transfer the cost of completed projects to the appropriate Property, Plant and Equipment (PPE) accounts and transfer the same to the recipient agencies.


Payables aged two years and above amounting to 200,567.92 were not reverted and payables under the direct payments schemes totalling 22,920,142.80 were recorded in the books resulting in the overstatement of Accounts Payable balance as of yearend.

Require management to revert the payables that remained outstanding for two years or more and against which no actual claim, administrative or judicial has been or which is not covered by perfected contract or record.

4.1.2.10 Third Airports Development Project Loan Account No. – ADB 1536 PHI


The total balance of the Construction in Progress (CIP)- Other Public Infrastructure account in the amount of P310,000.00 is overstated due to failure of the agency to transfer the cost of completed projects to the appropriate Property, Plant and Equipment (PPE) accounts and transfer the same to the recipient agencies.


Direct payments schemes totaling 3,827,476.09 were recorded in the books resulting in the overstatement of Accounts Payable balance as of yearend.

Require management to: (a) revert the payables that remained outstanding for two years or more and against which no actual claim, administrative or judicial has been or which is not covered by perfected contract or record; (b) obtain copies of Journal Entry Vouchers from the Bureau of Treasury as basis in dropping from the books of accounts said payables under the Direct Payment Scheme.

4.1.3 Department of Energy (DOE)

4.1.3.1 Philippine Energy Efficiency Project (PEEP) Loan Account No. – ADB 2507 PHI

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Procurement

The distribution of the 5 million Compact Flourescent Lamps (CFLs) procured under Lot 1 of Component 1.2 - National Residential Lighting Program of the PEEP at a total cost of P171,593,960.00, programmed to be distributed within a period of three months as per contract to GRM International Inc. (GRM) dated September 9, 2009, was not yet completed as at year-end despite lapse of two years and three months with 359,711 pieces costing P13.6 million remaining undelivered as at January 12, 2012. Further, the 2,533,705 Incandescent Bulbs stored at GRMs warehouse for disposal plus an undetermined number with the Electric Cooperatives (ECs) in Mindanao remained undisposed as at year-end.

Require PEEP officials to ensure that the causes of the delay of project implementation of Lot 1 are addressed for the effective implementation of Lot 2 involving 3,600,000 CFLs for distribution up to 31 March 2013 and extend assistance to GRM and concerned ECs for the disposal of the Incandescent Bulbs.


The overall financial delivery rates for the Philippine Energy Efficiency Project’s GOP counterpart released under Fund 151 and loan proceeds under Fund 102-ADB stood at 71.27 percent (unadjusted) and 4.88 percent, respectively while the overall physical delivery rate was rather low at 31 percent due to the extension of target completion dates of some components as approved by the Investment Coordination Committee-Cabinet Committee (ICC-CC). Further, the low ADB loan availment rate of only 15.6 percent resulted in the payment of commitment fees by the National Government (NG) in the total amount of PhP2.685 million (US$60.7 thousand) for calendar years 2010 and 2011.

Require that the performance of planned activities as per Annual Work and Financial Plan be closely monitored to ensure its accomplishment within the prescribed timetable

The payment of CYs 2010 and 2011 honoraria totaling P5,891,457.03 to personnel involved in the implementation of the ADB funded Philippine Energy Efficiency Project, was not supported with documentation required under DBM Budget Circular No. 2007-2 and other standard supporting documents. Further, honorarium for CY 2011 was not taken up in the books, hence, the account, Honoraria, is understated by P3,057,594.21 while Advances to Officers and Employees, is overstated by

Require submission of the following: (1) Special Project Plan formulated for the project implementation which should embody the requirements in Section 4.3 of B.C 2007-02; (2) Performance Evaluation Plan formulated for rating purposes as required under Section 4.7 of the same BC; (3) Individual Accomplishment Reports of project personnel; (4) DTRs for CY 2010 and January to October and December 2011 of the personnel who were paid honorarium; (5) Explanation why the three project personnel

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P2,079,164.06 (net of taxes). assigned to a component that was not implemented were included in the payment of honoraria and Strict observance/compliance with the provisions of Sections 4.a and 60, Volume I of the Manual on NGAS

The Government Equity (501) and Due from NGAs (136) accounts are understated by P310,896,318.40 due to an erroneous journal entry in CY 2009 involving an Agency Procurement Request (APR) for the procurement of 3.6 million Compact Fluorescent Lamps for the Philippine Energy Efficiency Program whereby undelivered Compact Fluorescent Lamps were accounted for as Expense and Accounts Payable in violation of Section 4, Volume 1 of the Manual of New Government Accounting System (NGAS); and non recognition of a Due from NGAs- PS-DBM when the amount of P310,896,318.40 was transferred to PS-DBM in September 21, 2011 in violation of Section 29, Volume 3 of the same Manual.

Require the Accounting Division to prepare the necessary adjusting journal entry to correct the understatement of the accounts Due from NGAs and Government Equity.

4.1.4 Bureau of Customs (BOC)

4.1.4.1 Non-Intrusive Container Inspection Project (NCISP) Phase I & II Loan Account No. – Eximbank of China GCL No. (2006) 154-12 & GCL No. (2006)

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Thirty Units of X-Ray Equipment amounting to P7,953,453,000 were unrecorded..

Require management to: (a) reclassify/adjust the journal entry taken up under JEV No. 06-12-006: Dr. Other Machineries–(X-Ray) - 1,954,424,964.70; Dr. Accounts Payable - 799,028,035.30; Cr. Items in Transit - 2,753,453,000.00; (b) include a note in the Financial Statement on the nature of this account; and (c) submit the Acknowledgment Receipt for Equipment (ARE) together with other documents to the General Services Division and the Accounting Division that will serve as the basis in recording the X Ray machines.

Container Service Fee (CSF) Funds in the total amount of P317,636,298.77 for CY 2011 were utilized in the absence of guidelines issued by the Permanent Committee pursuant to Section 65 of PD 1445.

Require management to request the Permanent Committee to convene and issue guidelines on the maintenance and utilization of CSF.

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Underutilized/Idle X-Ray Equipment were noted.

Require management to evaluate the need for X-Ray machines in every port/sub-port based on its capacity, taking into consideration the number of containerized cargoes arriving, to maximize the benefits that will be derived from its use and improve the collection of CSF.

Project Sustainability

Reduction of CSF turned the Non-Intrusive Container Inspection Project Project from self-sustaining to a financial burden to the National Government.

Require Management to submit approval of Congress on the foreign loan of US$149.53 million.

4.1.5 Department of Agriculture (DA)

4.1.5.1 Infrastructure for Rural Productivity Enhancement Sectoral Project (InfRES) Loan Account No. - ADB 1772-PHI


Due to slow availment/utilization of the ADB loan arising from delayed implementation of the project, the government paid commitment fees totaling US$3,340,000 or P143,620,000 for the period covering CY 2002 to 2011.

Require management to: (a) accelerate/maximize the utilization of the fund intended for the Project by adopting efficient and timely procurement procedures in coordination with the LGUs and other parties involved; (b) make representations with the DBM for the immediate and timely allocation/appropriation of the funds for the projects; and (c) adopt an effective Project Monitoring System that will keep track of the implementation of the projects vis-à-vis the approved Implementation Schedule and the Disbursement Schedule to avoid the incurrence of huge commitment fees.

Unutilized cash balance under the InfRES-Loan Proceed Cash - Local Currency Current Account amounting to P389,089.93 as of December 31, 2011 was not yet remitted to the Bureau of the Treasury despite the closure of the loan on June 30, 2011 contrary to Executive Order No. 431 dated May 30, 2005 and Section 9 of Presidential Decree (PD) No. 1445.

Require management to remit to the Bureau of the Treasury the unutilized cash balance in the total amount of P11,942,019.32 pursuant to EO 431 and Section 99 of PD 1445.

Included in the Office Equipment account under the InfRES Project were items that should be classified as office supplies amounting to P17,985.

Analyze the account and effect the necessary adjustment.

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Several unserviceable PPE were not disposed and not classified to the Other Assets account amounting to P141,972.91.

Analyze the PPE accounts and effect the necessary adjustment.

4.1.5.2 General Santos Fish Port Complex (GSFPC) Expansion/ Improvement Project Loan Account No. - 1142003-000418


Misclassification of accounts per JEV No. 2100-07-5377 (Fund 102) was noted where the expansion/improvement of the General Santos Fish Port Complex under Contract No. 1142003-00418 was recorded as Other Assets instead of PPE.

Effect the adjustment on the erroneous classification of the account.

Accounts Payable under the GSFPC Project amounting to P1,177,380,612.52 as of December 31, 2011 is inaccurate due to unrecorded payment of obligations/payables by the same amount by the China National Constructional and Agricultural Machinery Import and Export Corporation (CAMC).

Require management to: (a) consider using the Notice of Disbursement issued by the Lender in recording the direct payments made to suppliers/contractors while waiting for the receipt of NCAA from DBM and the JEV from BTr to adjust the significant misstatements in the Accounts Payable of the GSFPC Project; (b) disclose properly in the Notes to Financial Statements the use of Notice of Disbursement as basis for recording direct payments from CAMC in lieu of the NCAA from DBM and JEV from BTr with the note that further adjustment shall be made upon the receipt of NCAA or the JEV in case discrepancies between the records occur; and (c) regularly request from DBM and BTr the issuance of the NCAA and JEV, respectively, to update and adjust the recording of Accounts Payable pertaining to direct payments.

4.1.6 Department of Agrarian Reform (DAR)

4.1.6.1 Tulay ng Pangulo Para sa Kaunlaran Pang Agraryo (TPKP) Loan Account No. BNP Paribas JPY 5.9B, BNP Paribas JPY 33.9B


The reported cash account balance of Tulay ng Pangulo totaling P59,630,117.74 was incorrect due to unreconciled balance of P16,016,654.61 between the bank and the book of accounts which is contrary to Section 74 of PD 1445.

Require the Accountant to coordinate with the officers of the bank depositories in devising ways for the timely delivery of bank statements to the Department and to investigate and resolve promptly all outstanding unreconciled differences.

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Delivery documents of goods were not furnished the Office of the Auditor.

Require the official concerned to furnish the Office of the Auditor copies of delivery documents of goods within 24 hours to serve as basis for timely inspection and establish the validity and correctness of the claim for payment of the same.

Failure of management to submit the Disbursement Vouchers and its supporting documents, Journal Entry Vouchers and financial reports/statements within the prescribed period caused delay in the verification of regularity and validity of paid transactions, and runs counter to pertinent laws rules and regulations.

Require the Chief Accountant to submit all the financial reports, Disbursement Vouchers, Budget Requests and complete documentation of the transactions under Fund 102; and ensure that no government funds should be expended without the necessary documents to substantiate the disbursement.

4.1.7 Development Bank of the Philippines (DBP)

4.1.7.1 Logistics Infrastructure Development Projet Credit for Better Health Care Environmental Development Project; Loan Account Nos. - JBIC PH-245; ADB 2515 PHI; JBIC PH-243

Budgetary Issues

ODA loans/foreign borrowings amounting to P9.842 billion withdrawn from various funders from 2008 to 2009 remained unutilized as of December 31, 2011 which may result in the delay or non-attainment of the purposes for which such loans/borrowings were acquired.

Require management to observe adherence to the provisions of the agreement with the funders on the purposes of the loans for which they were acquired. Intensify promotion and marketing of these facilities for the attainment of the loans’ objectives particularly those in support of the PPP program of the government, protection of the environment, and achievement of the Millenium Development Goal of 2015. If it would be more advantageous to the Bank, to consider the cancellation of the loan funds which could no longer be utilized due to different limiting factors in their implementation.

4.1.8 Subic Bay Metropolitan Authority (SBMA)

4.1.8.1 Subic Bay Port Development Project Loan Account Nos. - JBIC PH-215


SBMA overpaid PENTA-SHIMIZU-TOA Joint Venture for the Subic Bay Port Development Project at the Subic Bay Freeport Zone (with combined cost of P7,556,816,459.71) by

Require management to deduct from the available retention money of Penta worth P23,995,806.82 the amount of P8,511,444.18 pertaining to remaining unrecovered

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P21,990,473.80. overpayment as determined by the COA-TSO and reflected in its Final Technical Evaluation Report.

4.1.9 Land Bank of the Philippines (LBP)

4.1.9.1 Manila Third Sewerage Project Loan Account Nos. - IBRD 7311-Ph

Other Issues

The Bank’s systems and procedures for relending foreign borrowings to private institutions (e.g. Manila Water Company, Inc.) showed deficiencies due to non-compliance with its lending policies, which may result in financing ineligible and/or incomplete construction projects; machinery/or equipment that are not within required specifications, or not in good running condition.

Require the Bank’s Appraiser to validate or inspect the work accomplishments reports before release of loans. Inspections of delivered equipment, machinery/facilities before payments are made to contractors and submission of valid documents showing signatories of authorized MWCI/suppliers supporting the work accomplishment reports. Since the Bank has its own separate subsidiary loan agreement with Manila Water Company, Inc. (MWCI), it is the responsibility of the Bank to check the reliability of the reported SOEs. Management must exercise due diligence in relending foreign funds to MWCI; hence, compliance with established guidelines is necessary. The Bank must consider all necessary check and control procedures to safeguard the interest of the NG, as guarantor of the said loan. Strict compliance with Section 13.8 of the SLA is enjoined.

4.1.10 North Luzon Railways Corporatioin (NLRC)

4.1.10.1 Northrail Phase I, Section 1 and Phase I, Sections 1 & 2 Loan Account Nos. - BLA 04055

Other Issues

Indefinite suspension of the contract of agreement with the China National Machinery Industry Corporation (SINOMACH)

Require management to continue to negotiate with the SINOMACH for possible amicable settlement of the contract. Since a reconfiguration of the project is being considered from commuter train to fast train connecting Clark International Airport, the management of NORTHRAIL together with the other concerned agencies, to study thoroughly the terms of reference of the reconfigured project to come with smooth implementation of the railway project and avoid incurrence of unnecessary delay as

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well as the interest and other charges, and be made operational to the public within the target date of completion.

4.1.11 PHIVIDEC Industrial Authority (PIA)

4.1.11.1 Mindanao Container Terminal Project (MCT) Loan Account Nos. - JBIC PH P213


Due to non-payment of loan amortization and interest in arrears, total unpaid obligations of the Authority to the National Government as of December 31, 2011 stood at P567.76 million or an increase of 39 percent over that of last year.

Require management to step up efforts to ensure financial sustainability of MCT to be able to repay on time the advances made by the National Government to JBIC. Establish/strengthen MCT income generation policies to enhance collection performance and debt servicing and follow up from the Department of Finance the status of the repayment modification/debt restructuring proposal.

MCT funds were not prioritized for the payment of loan obligations. Despite available funds and the P322 million budget for debt servicing, only P84.5 million was used to pay interests.

Prepare a realistic budget for MCT apart from that of PIA-Main. Prioritize the servicing of loan obligations out of the funds derived from MCT operations in strict adherence to the budget. Utilize the time deposit to pay the interest in arrears. Enhance the Authority’s collection efficiency from regular income sources in order to carry out effectively its capital expenditure programs, projects, and activities.

Assessment of the financial condition of the Mindanao Container Terminal could not be made because the required financial statements, except the income statement, could not be generated owing to the Authority’s failure to maintain separate set of books for MCT.

Require the Accountant to set up separate books of accounts and render separate financial statements for MCT. Determine and segregate MCT funds from PIA funds and maintain separate depository account solely for MCT.

4.1.12 National Irrigation Administration (NIA)

4.1.12.1 Help for Catubig Agricultural Advancement Project (HCAAP) Loan Account Nos. - JBIC PH-P221

Procurement

Copies of Purchase Orders/Contracts for the purchase of goods and services amounting to P44,990,254.78 were not submitted to the Auditor within five (5) days as required in

Require the Bids and Awards Committee (BAC) or the official in charge in the procurement to submit to the Auditor copies of the purchase orders/contracts and other

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COA Circular No. 2009-001, resulting in the delay of the review and evaluation of the documents by the Auditor which hinders timely reporting thereof.

similar contracts of undertaking within five days from its execution/issuance, pursuant to COA Circular No. 2009-001.


The Collective Negotiation Agreement (CNA) Incentives granted to officials and employees for calendar years 2010 and 2011 amounting to P1,513,200.00 and P621,000.00, respectively, or for a total of P2,134,200.00, based on series of authorities issued by the NIA Acting Administrator were not in accordance with DBM Budget Circular No. 2006-1 dated February 1, 2006 and COA Decision No. 2012-041 dated April 23, 2012. (Notices of Disallowance were issued for the purpose)

Require the Project Manager and the Sr. Corporate Accountant to let all the employees who availed of the CNA Incentives to refund the amount claimed for lack of a valid authority.

Claims totaling P60,878.00 were disallowed in audit due to the following: (a) Fund source of BAC honorarium was not in accordance with DBM Budget Circular No. 2004-5A dated October 7, 2005. Total claim amounted to P51,200.00. (b) Excess claims of per diems, taxi fare and reimbursement totaling P3,318.00. (c) No waste material report for supplies and materials amounting to P6,360.00.

Require the employees/officials found liable for the transactions to refund the amount.

Due to management’s practice in the accounting of project funds, purchases/ payments of various expenditures covering the period from January 1 to November 30, 2011 totaling P34,772,620.42, were recorded as debits to Construction in Progress account instead of recording them to their proper account classification/ description contrary to COA Circular 2004-002 dated April 29, 2004 prescribing the Chart of Accounts for GOCC’s under the New Government Accounting System (NGAS) and COA Circular No. 2004-008 dated September 20, 2004, resulting in the misclassification of various accounts. This caused difficulty in the monitoring of expenditure items as well as the Property, Plant and Equipment accounts.

Require the Senior Corporate Accountant to maintain subsidiary ledgers for the expenditure items to include the equipment and other properties which fall under the Property, Plant and Equipment (PPE) accounts in order to ensure effective recording and monitoring of the expenses incurred and the properties falling under the PPE accounts. Also, require said official to submit authority or any document issued by NIA Central Office authorizing them to record all expenditure items to Construction in Progress account.

Disbursements totaling P215,903.52 for Fund GOP were not supported with some of the required documents for the claim for overtime

Require the Project Manager and the Sr. Corporate Accountant to submit the Accomplishment Reports of each of the

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services contrary to Sec. 4 (6) of Presidential Decree No. 1445 and Sec. 282, Volume-I of the Government Accounting and Auditing Manual (GAAM), hence, casting doubt as to the regularity of the transactions. (Notices of Suspensions were issued for the purpose)

employees who rendered and paid overtime services. Also, all claims for overtime services should be supported with the necessary and required supporting documents, more particularly the Approved Work Program.

Disbursement Vouchers in favor of Innove Communications, Inc. for the payment of telephone bills for CY 2011 amounting to P79,675.88 were not deducted with taxes due to the Bureau of Internal Revenue in violation of the Tax Code of the Philippines, thus depriving the government of additional income of P5,577.30.

Require management to exert effort to ensure that the taxes due the government should be deducted from every taxable claim and remit promptly to the Bureau of Internal Revenue as mandated by law.

Government shares for GSIS, HDMF, and Philhealth premiums; and terminal leave equivalent to eight percent of the employees’ salary, all for a total of P849,141.08 were included in the payroll for salaries in the form of allowances with their deductions booked up under accounts Due to GSIS, Due to HDMF, Due to Philhealth, and Other Payables, respectively, contrary to COA Circular Nos. 2003-001 and 2004-008 dated June 17, 2003 and September 20, 2004, respectively, causing the said payable accounts to be overstated by the same amount.

Require the Project Manager and the Sr. Corporate Accountant to stop including in their gross salaries the government’s share in premium contributions to the GSIS, PAG-IBIG, and PHILHEALTH, as well as the 8 percent terminal leave to avoid including them in the respective payable account. Remittances of the government’s share to the GSIS, PAG-IBIG, and PHILHEALTH should be booked up as a debit to Life and Retirement Contributions and ECC Contributions, PAG-IBIG Contributions, and PHILHEALTH Contributions, respectively. However, considering that the agency is operating under a project fund, instead of debit to these accounts, a debit to Construction in Progress account should be made as was the usual practice. We also recommend to the Sr. Corporate Accountant to adjust the payables accounts which were overstated by P849,141.08.

4.2 Governance and Institution Development

4.2.1 Supreme Court of the Philippines (SCP)

4.2.1.1 Judicial Reform Support Project (JRSP) Loan Account No. – IBRD 7191 PH

Procurement

There were inconsistencies in the details of consultancy contracts entered with a tri- media monitoring service totaling P803,400.00 which raises doubts as to its validity.

Require the Supreme Court - Program Management Office (SC-PMO) to: (a) clarify the contracts, the sequence of events with regard to dates the contracts were signed and as to the CAF and charging of funds; (b) obtain No Objection Letter (NOL) from the World Bank (WB) for the contract extensions

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of the MediaBanc Manila Monitoring Services, Inc. with SCP; (c) ensure that no retroactive contracts are signed/awarded out of the JRSP Loan Proceed or any other funds; (d) submit official receipt as proof of payment for services rendered covering the period August 9, 2009 to February27, 2010 and March 1, 2010 to December 31, 2010; (e) develop measures for consideration of the SCP to strengthen control particularly the segregation of functions/duties of high officials as BAC-APJR Chair, approving/authorizing Officer of contract extensions and the officer authorizing of payments.

Procurement of IT equipment in CY 2011 totaling P3,850,257.87 were not included in the JRSP Procurement Plan for the period December 1, 2010 to June 30, 2011 and July 2011 to June 30, 2012, contrary to the agreement between the Supreme Court and the World Bank. Moreover, other various expenses amounting to P3,038,812.17 were also charged to the JRSP Fund for CY 2010 to November 2011 which were found to be not related to the project/program objectives and not agreed with the World Bank. There were payments made for the honoraria of resource speakers charged against the Loan Proceeds totaling to P50,400.00 contrary to Section 2(c) of the Loan Agreement. There were other documentary deficiencies noted in various disbursements.

Require the SC-PMO to: (a) return the total amount equivalent to the procured IT equipment and various expenses not related to project component/project development objectives and the honoraria paid to resource persons and furnish the Office with a certified listings of refunds made; (b) stop the practice of using the loan proceeds in any JRSP related procurements or expenditures without prior approval/no objection letter from the WB or which are not agreed upon in writing between the SCP and WB; (c) stop the refund of unrelated JRSP expenditures from GOP Counterpart-Reform fund; (d) require the Accountant to properly charge these unrelated JRSP expenditures to the General Fund of the Court and to PHILJA funds for the honoraria; (e) submit/attach original copies of attendance sheets of actual participants in various training, price quotations of bidders, summary of technical evaluation, BAC-APJR Resolutions on the awarding of contracts; and (f) require the Chief Accountant to see to it that all other supporting documents are complete in all disbursement transactions of the loan proceeds to establish validity of claims.


The Government of the Philippines (GOP) Counterpart Fund refunded twice to Fiscal Autonomy (FA) Fund, the amount of P150,000.00 representing the borrowed amount from the FA Fund for the conduct of the Media Forum on Judiciary Coverage held on March 30, 2011. Moreover, the practice of temporary borrowings of PMO from other

Return back to the GOP Counterpart Fund from the Fiscal Autonomy Fund the amount paid twice for the conduct of Media Forum on Judiciary Coverage held last March 30, 2011 and the amount of expenditure paid which is unrelated to JRSP activities/project development objective.

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funds resulted in double take up of expenditures.

Determine the temporary borrowings and refunds/returns made under the GOP Counterpart Fund and record the appropriate/necessary adjusting entries in the corresponding books of accounts of the respective Funds for proper charging/recording of expense in the proper fund and easy determination of the existing balance of borrowings. Stop the practice of borrowing funds from other funds.

Management failed to conduct the physical count of IT equipment totaling P32,585,536.00 thus, existence of the IT equipment could not be determined. The accuracy of the PPE account in the amount of P199,777,193.95 could not also be ascertained due to unreconciled balances between accounting and property records by P30,779,739.97.

Complete the conduct of physical count of all PPE, funded by World Bank and to submit report thereon with the items properly classified by type, in accordance with Section 66 of the Manual on NGAS, Vol. II. Require the Accounting and Property Division to continuously exert extra effort to review, analyze and expedite the reconciliation diligently their records, excluding small items to be considered as PPE, and prepare the appropriate adjustments when necessary in accordance with Section 491, GAAM, Vol. I and Section 43 of the Manual on NGAS, Vol. I.

Twenty retroactive Contracts of Services of the Lapu-Lapu Trial Courts’ contractual personnel were paid in the total amount of P982,960.00 which raises doubts as to its validity.

Require the SC-Program Management Office to submit authority given by the Court Administrator dated August 8, 2011. Require the Asst. Regional Court Administrator for Fiscal Management and OIC, RCAO 7 to submit original Report of Disbursement with attached paid payroll duly acknowledged by the contractual employees, individual accomplishment report vis-à-vis the individual work plan and certificate of services rendered. Require the SC-Program Management Office (PMO)/OIC- RCAO 7 to clarify on the Contract of Services and the sequence of events with regards to dates the contracts were signed. Consider issuing instructions/directives prohibiting the signing of retroactive contracts without sufficient justification, Management’s approval and corrective action to avoid the same occurrences in the future.

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Require the Chief Accountant to see to it that all necessary original supporting documents are complete in every disbursement transactions to establish validity of each claim.

Depreciation was not properly provided on depreciable assets, which is not in accordance with Section 4, o, of the Manual on the New Government Accounting System (NGAS), Vol. I.

Require the Chief Accountant to properly compute the provision for depreciation in accordance with Section 67, Vol. I of the Manual on NGAS. Prepare a correct schedule of depreciation on all depreciable assets and make the necessary adjustments in the books to come up with a more reliable and accurate valuation at year-end.

The balance of Construction in Progress – Agency Assets account totaling P178,031,165.81 was misstated due to overstatement of the account resulting from completed projects but still carried in the books.

Require the Accounting Division to analyze and monitor the Construction in Progress-Agency Assets account and make the corresponding necessary reclassification of all completed/accepted infrastructure projects supported with certificate of completion/acceptance and other pertinent documents. Require the Office of the Hall of Justice to assist and furnish the Accounting Division copies of the necessary documents pertaining to the completion/acceptance of the infrastructure projects funded by the World Bank.

The erroneous recording of the project cost resulted in understatement of Construction in Progress-Agency Assets account and overstatement of Repairs and Maintenance- Office Buildings account both by P104,286,669.17 that affects the fair presentation of the accounts in the he financial statement.

Require the Chief Accountant to properly reclassify the Repairs and Maintenance – Office Building expense account to Construction in Progress – Agency Assets account for fair presentation of the said account in the financial statements.

4.2.2 Department of Education (DepED)

4.2.2.1 National Program Support for Basic Education Project (NPSBE) Loan Account No. – IBRD 7393 PH


Accumulation of cash advances with Disbursing Officers and Other Officers and Employees amounting to P35,110,934.52 as of December 31, 2011 resulted from non-compliance with the provisions of COA

Require the Disbursing Officers and employees to report cash advances as soon as the purpose for which it was given has been served, otherwise, no additional cash advance shall be allowed to any official or

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Circular No. 97-002. employee unless the previous cash advance is first settled or a proper accounting thereof is made. Management should furnish the Auditing Unit with complete inventory report of school buildings constructed and paid in the Region/Division Office books of accounts for audit purposes.

4.2.3 Bureau of Internal Revenue (BIR)

4.2.3.1 National Program Support for Tax Administration Reform (NPSTAR) Loan Account No. – IBRD 7431PH

Procurement

The propriety of the awarding of contract to Creativille Concepts and Design maybe put to question in view of the erroneous rating on the Organization and Staffing criteria in responding to the Terms of Reference. This is not in accordance with Section 3.7 of the Guidelines on the Selection and Employment of Consultants (January 2011) by the World Bank and Section 5.2 of the Terms of Reference.

Require Management to explain the inconsistencies in project titles and funding amounts per ABC and in the different documents attached as supporting papers in the set of project documents.

Information on the documents submitted by the Consultant did not support the 100 percent rating given by the Technical Working Group. The number of years of operation in the core business, years of experience in database migration and consolidation, projects undertaken and staff proficiencies in Oracle as reported in the Detailed Shortlisting Evaluation Report did not match the information contained in the submitted documents. The Statement of all Government and Private Contracts Completed which are similar in nature and the list of all on-going government and private contracts including contracts awarded but not yet started were not attached for reference in shortlisting.

Require explanation from the Contractor on the submission of Teaming Agreements which were confirmed by the Officer-In-Charge, Notarial Records, Regional Trial Court, Makati City, which were not among the records submitted by the subscribing lawyer. This compromised the integrity of the documents submitted by the Contractor and put to question the existence of agreements between the parties concerned. All contracts notarized by subscribing lawyer be confirmed to assure legality of the instruments. Consider the imposition of sanctions, as the internal rules of the Agency may provide and in pursuance to the GPPB Resolution S. 2004 setting the rules on the Uniform Guidelines for Blacklisting, to contractor who committed violation in the competitive bidding stage.

Absence of documents from the three other listed firms; namely, DBQuest, Inc., Seer Technologies, Inc., and Solvento Philippines, Inc., signifying consent or authorizing Philcox (Phils.) Inc. in whatever undertaking with respect to the ITS Consolidation Project, puts to question the representation to BIR by the Bid Manager of Philcox (Phils.) Inc. and at

Require the Project Proponents, Technical Working Group, BAC Secretariat and others concerned to exercise diligence in the procurement of services. Strict implementation of the terms, special and general conditions of the contract and the TOR particularly in the confidentiality of data and signing of the Non-Disclosure

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the same time raises the issue as to whether the listed firms are in collaboration with this undertaking. The Special Conditions of the contract did not include a supplemental provision on this notwithstanding the mention of the three firms the Consultant is working with.

Agreements by project staff.

Inconsistencies in the documents for the Key Personnel in Form Tech-5 and Form Tech-6 (Curriculum Vitae and its details) casts doubt on the credibility or authenticity of information. This could affect the assignment of tasks to be undertaken by the Key Personnel.

Require the Project Proponents, Technical Working Group, BAC Secretariat and others concerned to exercise diligence in the procurement of services. Strict implementation of the terms, special and general conditions of the contract and the TOR particularly in the Notification by the Consultant of any change in project staff composition and subsequent approval of the Agency including the submission of all pertinent documents that would justify that the replacements were of equivalent competencies.

The dissimilarity in the presentation of the Approved Budget for the Contract (ABC) and the Financial Proposal of the Contractor did not permit a thorough evaluation, in audit, of the bids proposed. The work items in the ABC are not comparable in quantities and in cost with the financial proposal. The delivered items could not also be compared with the requirements of the projects per ABC. Also, the non-delivery on certain major items (one clustered server with an estimated cost of P7,000,000.00 and to some extent, the units of back-up tapes) cast doubt on the reasonableness of the estimates in the ABC. Evidences on software licenses and support could not be found on documents attached to the payment vouchers. The costing of work items/deliverables per ABC posed certain issues on reasonableness and responsiveness with regard to the evaluation of the Consultant’s submitted offer.

Require the Technical Working Group to submit the basis for evaluation of the financial proposal in view of the substantial changes in the deliverables per ABC. Require explanation on the inability to comply with the requirements of No. 2.4 of the General Conditions of Contract which sets the provisions on modifications or variations and the engagement of two staff in two projects (ITS Database Consolidation and Data Center Hosting Services) contrary to No. 3.2.3 also of the General Conditions that prescribes the rules on Prohibition of Conflicting Activities.

Observations noted in the shortlisting of consultants have significant effect in the technical evaluation since the organization and staffing as a criterion is an issue of concern. The rating of 47 percent earned by the Consultant may not be proper given the results of the review of the documents submitted.

Require the Project Proponents, Technical Working Group, BAC Secretariat and others concerned to exercise diligence in the procurement of services. Strict implementation of the terms, special and general conditions of the contract and the TOR particularly in the Notification by the Consultant of any change in project staff composition and subsequent approval of the

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Changes in the staff composition did not initiate, on the part of the Contractor, the submission of information to the Agency and such documentation necessary to vouch for the capabilities of the replacement staff. The General Conditions of Contract in No. 4 and the Instructions in the Qualification Requirement Checklist necessitate the confirmation by the Consultant that those who will actually perform the service are registered professionals and the submission of validated documents on work experience and proficiencies.

Agency including the submission of all pertinent documents that would justify that the replacements were of equivalent competencies.

Inspection by the team signing the Inspectors’ Report, addresses only the physical acceptance of the delivered items but not the compliance to the requirements of the contract. Also, there is already a need to reconstitute the inspectorate team in pursuance to Revenue Memorandum Order No. 45-2011 dated October 26, 2011.

Require Management to reconstitute the Inspectorate Team pursuant to RMO No. 45-2011 dated October 26, 2011.


The continuous delay in the implementation of the programs and projects under the NPSTAR has consequently affected the desired outputs and resulted to the incurrence of P5,066,703.19 in commitment fees as of December 31, 2011.

Require BAC Secretariat and Technical Working Group to explain the basis for the rating of 100 percent given to Philcox (Phils.) Inc. in the shortlisting of contractors owing to the incompleteness of documentation. The documents submitted did not fully explain the results of rating obtained by the Contractor in the shortlisting process.

The absence of an over-all assessment on the Contractor’s deliverables and related certification on the full compliance to the requirements of the terms of the contract did not allow for the determination of the success of the undertaking.

Require the Project Proponents to quantify the project objectives which have been largely achieved and an explanation as to the full acceptance of the project when not all objectives were met. Quantify project objectives which are not met and assign corresponding monetary cost for possible reimbursement by the Contractor.

4.3 Agriculture, Natural Resources and Agrarian Reform

4.3.1 Department of Environment and Natural Resources (DENR)

4.3.1.1 Community-Based Forest and Mangrove Management Project (CBFMMP) Loan Account No. – KfW 200565317


The Community-Based Forest and Mangrove Require Management to instruct the

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Management Project (CBFMMP) KfW Loan reported an overall low fund utilization rate of 43.67 percent attributed to certain targeted activities not accomplished at year-end, thereby affecting the timely completion of the projects.

concerned Project Manager to devise ways and exert extra efforts to fully accomplish the activities indicated in the Annual Work and Financial Plan in order to ensure the full utilization of the budgeted fund and timely completion of the project.

In Region VI:

The amount of P.035 million allocated for a two-day activity which was proven by the Auditor to be fictitious is considered irregular.

Require Management to take appropriate action to stop the payment for catering services for the said activity and submit written explanation for the noted irregularity.

Despite of the non-provision for the yearly claim for honoraria to be charged from the Government of the Republic of the Philippines counterpart, CBFMMP paid honoraria amounting to P2.555 million covering the years 2009 to 2011. The disbursements were not supported with the necessary documents.

Require Management to observe and strictly adhere to the provision on the grant of honorarium and see to it that the activities in the Work and Financial Plan are fully accomplished at the end of the year.

The validity of expenses for gasoline and travel in the respective amount of P.235million and P1.337 million charged against CBFMMP-GOP counterpart could not be determined due to the use of the vehicles for some activities not related to CBFMMP, the period of travel were longer than necessary and DENR personnel who were the passengers schedule to travel for 5 to 6 days were seen at the DENR Region VI compound after a day or two which means that the travels were cut short. The travelling expenses of P1.337 million exceeded the target of P1.200 million per Work and Financial Plan by P.137 million.

Require the project officers to require the use of gasoline only for CBFMMP activities; Impose strict monitoring of official passengers who can be seen within the DENR Region VI compound while claiming to be on travel; and see to it that the duration of travel is in accordance with the activities to be undertaken.

Other Issues

Copies of the Memorandum of Agreement, entered into by and between CBFMMP and eleven LGUs in Region VI, were not submitted within the period prescribed under COA Circular No. 2009-001 dated February 12, 2009.

Management agreed to observe the period for the submission of the contracts to the Auditor, pursuant to the provision of the aforementioned COA Circular No. 2009-001.

4.3.1.2 National Program Support for Environment and Natural Resources Management Program (NPS-ENRMP)

Loan Account No. – IBRD 7470-PH

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The reported year-end balance of Cash-in-Bank – Foreign Currency, Savings Account totalling P36.955 million is unreliable due to unreconciled difference of P31.821 million between the balances per general ledger (GL) and subsidiary ledger (SL).

Require the Chief Accountant to reconcile the balance of the Cash-in-Bank – FCSA as per general ledger and subsidiary ledger and prepare the adjusting entries, if necessary to correct the balance of the cash account reflected in the Financial Statements.

Advances to Officers and Employees amounting to P117,638.00 remain unliquidated at year end, contrary to government accounting and auditing laws and regulations, and as a result overstated total reported receivable. (DENR - RO 12)

Require all concerned officials and employees to immediately settle/liquidate their outstanding cash advances especially those pertaining to prior years. Refrain from granting additional cash advances unless the previous ones have been liquidated. Withhold the salaries and other amounts due the accountable officers after demand and failure to liquidate the same within a specific period.


The National Program Support for Environment and Natural Resources Management Program (NPS-ENRMP) did not submit its CY 2011 Work and Financial Plan vs. Accomplishment Report, hence, it could not be determined if the planned activities were fully accomplished within the allotted budget.

Require the Project Manager to submit a duly accomplished Work and Financial Plan vs. Accomplishment Report for CY 2011 with complete information/data in order to evaluate whether the project’s activities were undertaken as planned within the allotted budget.

4.3.1.3 Second Land Administration and Management Project (LAMP2) Loan Account No. – IBRD 7298-PH


The Second Land Administration and Management Project (LAMP2) reported a low fund utilization rate of 74.40 percent attributed to certain targeted activities not accomplished at year-end, thereby affecting the timely completion of the projects.

Require the concerned Project Manager to devise ways and exert extra efforts to fully accomplish the activities indicated in the Annual Work and Financial Plan in order to ensure the full utilization of the budgeted fund and timely completion of the project.

Out of the total funds transferred to different national government agencies of P1.705 million, the amount of P.224 million or 13.12 percent remained unliquidated for more than one year to over two years as of December 31, 2011, thus, expenses incurred therefrom could not be recorded in the books, which tends to overstate the Receivable accounts

Require Management to improve the present monitoring and control measures on the liquidation of fund transfers and exert more efforts in enforcing the liquidation of fund transfers in Bureau of Local Government Finance and Procurement Service.

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The unutilized funds of LAMP2, Fund 102-GOP counterpart for the month of August 2011 amounting to P5 million which automatically lapsed at the end of the month were transferred to the Local Currency, Current Account (LCCA), Fund 101 National Treasury in violation of the provision of Section 3.1.3 of DBM Circular Letter (CL) No. 2008-11 dated December 8, 2008.

Require Management to stop the practice of transferring the unutilized funds to LCCA to avoid automatic lapsing of funds. If funds for the following month are not available due to automatic lapsing, timely coordination with the DBM must be made to arrange for the release of the NCA for the ensuing month.

The reported balance of PPE accounts totaling P69.797 million is unreliable due to (a) PPE with an acquisition cost of P5.020 million recorded in the books but not included in the Report on the Physical Count of Property, Plant and Equipment (RPCPPE); (b) discrepancy of P3.063 million between the balances of the General Ledger and RCPPE (c) PPE with a total acquisition cost of P1.881million were not provided with depreciation allowance.

Require management to instruct the concerned Project Accountant to submit the pertinent documents relative to the transfer/donation of PPE to UP; reconcile the discrepancy between the balances of the affected PPE accounts as per GL and RPCPPE; and provide monthly Depreciation Allowance of the PPEs recorded under the IT Equipment and Software to reflect the correct valuation of the affected account.

4.3.2 Department of Agrarian Reform (DAR)

4.3.2.1 Agrarian Reform Communities Project II (ARCP2) Loan Account No. – ADB Loan 2465-PHI


The recorded year-end balance of the Receivable accounts totaling P4,469,779.53 was erroneous due to a long outstanding expended fund transfers to GOCCs totalling P3,768,998.42; unliquidated expended Cash Advances to Officers and Employees totaling P700,706.79; and uncollected Due from Officers and Employees totaling P74.32.

Require management to: (a) coordinate with officials of the DAR Offices concerned to closely monitor the immediate submission of liquidation reports of fund utilization and supporting documents of the funds transferred to various GOCCs; (b) stop the practice of granting additional fund transfers unless the previous ones are liquidated to avoid accumulation thereof; (c) send demand letters to officials concerned with unliquidated cash advances and require them to fully liquidate/settle their cash advances immediately supported with complete documentation as a basis for adjustment of affected accounts.

The non-recording of Property, Plant and equipment in their appropriate accounts in DARPO-Lanao del Norte, Region X, in violation of Section 63 of PD 1445 and the NGAS Manual, understated the assets and equity accounts in the balance sheet.

In the absence of documents as basis in recording the government vehicles and other PPEs, the Provincial Agrarian Reform Officer (PARO) should constitute a committee that will conduct an appraisal of the properties so that the property in question will be recorded at the approved appraised value. Require the

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Accountant to draw the necessary Journal Entry Voucher and corresponding Property Ledgers in recognizing the PPEs in the books to correct the misstatement of the balance of PPE account; sequentially, the Property Officer shall prepare the Property Cards and issue the Acknowledgment Receipt for Equipment to the officer/employee in custody of the particular PPE. In addition, the PARO should require the Property Officer to insure the PPEs with GSIS and secure a government plate for the vehicle that does not have one.

The reported cash account balances of ARCPII totaling P368,373,369.57 was incorrect due to unreconciled balance of P26,583,127.28 between the bank and the book of accounts which is contrary to Section 74 of PD 1445.


The Property, Plant and Equipment (PPE) account totaling P9,148,489.00 as of year-end is unreliable and doubtful due to failure to conduct actual physical inventory and non-submission of complete Report on the Physical Count of PPE to reconcile the recorded balance with the existing properties; non-reconciliation between the accounting and property records; and non-maintenance of Property Cards and Property, Plant and Equipment Cards.

Require management to: (a) create an Inventory Committee to conduct the annual physical inventory/count of all PPE pursuant to Section 490 of the GAAM and to repare Inventory tags and attach it to the equipment during the conduct of the inventory taking; (b) instruct the Accounting and Property Units to regularly reconcile their respective records so that any discrepancy shall be immediately verified and adjusted and to analyze the discrepancies noted and prepare adjustments thereon to correct the balances of the affected accounts as of December 31, 2011; (c) instruct the Accounting Unit to regularly update and furnish the Property Unit with documents/information affecting the PPE accounts; (d) require the personnel concerned in the Accounting and Property Offices to prepare and maintain Equipment Ledger Cards and Property Cards for each PPE and promptly record all acquisition, description, transfer/disposal and other information about the asset.

Failure of management to submit the Disbursement Vouchers and its supporting documents, Journal Entry Vouchers and financial reports/statements within the prescribed period, caused delay in the verification of regularity and validity of paid transactions, and runs counter to pertinent laws, rules and regulations.

Require the Chief Accountant to submit all financial reports, DVs, BRS and complete documentation of the transactions and ensure that no funds should be expended without the necessary documents to substantiate the disbursement.

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4.3.2.2 Mindanao Sustainable Settlement Area Development (MINSSAD) Project Loan Account No. – JBIC PH-P222


The reported cash account balances of MINSSAD totaling P1,675,444.31 was incorrect due to unreconciled balance of P62,000.00 between the bank and the book of accounts which is contrary to Section 74 of PD 1445.


Property, Plant and Equipment (PPE) account totaling P457.209,923.83 as of year-end is unreliable and doubtful due to: non-conduct of actual physical inventory and non-submission of complete Report on the Physical Count of PPE to reconcile the recorded balance with the existing properties; non - reconciliation between the accounting and property records; and non - maintenance of Property Cards and Property, Plant and Equipment Cards.

a) Require Management to: (a) create an Inventory Committee to conduct the annual physical inventory/count of all PPE pursuant to Section 490 of the GAAM; (b) instruct the Accounting and Property Units to regularly reconcile their respective records so that any discrepancy shall be immediately verified and adjusted. Analyze the discrepancies noted and prepare adjustments thereon to correct the balances of the affected account as of December 31, 2011; and (c) require the personnel concerned in the Accounting and Property Offices to prepare and maintain Equipment Ledger Cards and Property Cards for each PPE and promptly record all acquisition, description, transfer/disposal and other information about the asset.


Require Management to furnish the Office of the Auditor copies of delivery documents of goods within 24 hours to serve as basis for timely inspection and establish the validity and correctness of the claim for payment of the same.

Failure of management to submit the Disbursement Voucher and its supporting documents, Journal Entry Vouchers and financial reports/statements within the prescribed period causes delay in the verification of regularity and validity of paid transactions, and runs counter to pertinent laws rules and regulations.

Require the Chief Accountant to submit all the financial reports, and complete documentation of the transactions under Fund 102 and ensure that no government funds can be expended without the necessary documents to substantiate the disbursement.

Unused/unexpended cash balance of P1,613,444.31 was not remitted to the National Treasury despite

Require Management to comply strictly with Executive Order Nos. 338 and 431, Paragraph 3.2 of National Budget Circular

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completion/termination of projects contrary to laws, rules and regulations.

No. 488 and DBM-COA-DOF Joint Circular No. 1-97 by enforcing the remittance to the National Treasury of the unused/unexpended cash balances.

The reported balance of the Other Assets account totaling P96,072.20 is unreliable and has been dormant for over two to ten years now.

Require the Officials concerned in the Accounting Office to exert extra efforts in locating the documents pertaining to the Other Assets account and effect the necessary adjustments so as to reflect the correct and true balance of the account. Require the Accountable Officer concerned to apply for inspection of the items recorded under the Other Assets account, to be inspected by the head of the agency or his duly authorized representative in the presence of the Auditor concerned to prove its existence and to prevent its further deterioration and loss in value. If found to be of value, it may be sold at public auction to the highest bidder under the supervision of the proper committee on awards or similar body in the presence of the Auditor or other duly authorized representative of the Commission so that the government will not be deprived of income that may have been derived in the sale thereof.

The reported balance of the Construction in Progress (CIP) account totaling P452,588,901.02 as of year-end is unreliable due to completed projects not transferred to proper Public Infra accounts and non-maintenance of Construction-in-Progress Ledger Card (CIPLC)/Schedules.

Conduct a detailed review and analysis of the CIP accounts to identify their composition. Reclassify the CIP accounts and effect the transfer of completed projects to the appropriate Public Infrastructure accounts. Require the Accountant to exert efforts to identify completed projects which have been recorded under the Public Infrastructure accounts for several years and facilitate the turn over of the completed projects to its end-users to ensure fair presentation of these accounts in the financial statements.

4.3.2.3 Agrarian Reform Infrastructure Support Project - Phase III (ARISP III) Loan Account No. – JBIC PHP - 242


The reported Receivables under Fund 102 Require DAR Management to follow up the

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was overstated by P17,372,755.23 because the DPWh and NIA failed to submit the liquidation reports of their implementing field units on the fund utilization, contrary to Section 4.6 of COA Circular No. 94-013 dated December 13, 1994.

submission of the liquidation reports from the implementing agencies, record the expenses and credit the Due from NGAs account in a timely manner so as not to overstate at year-end the total reported receivables and not understate the total reported expenses.

The recorded year-end balance of the Receivable accounts totaling P274,844,398.49 was erroneous due to long outstanding expended fund transfers to various NGAs and GOCCs under ARISP III totaling P274,843,668.64 and unliquidated expended Cash Advances to Officers and Employees totaling P247.95.

Require Management to: (a) coordinate with the management of the DAR Offices concerned regarding liquidation reports of fund utilization and supporting documents of the funds transferred to various NGAs and GOCCs; and (b) stop the practice of granting additional fund transfers unless the previous ones are liquidated to avoid accumulation thereof.

The reported cash account balances of ARISP III totaling P991,496,762.63 was incorrect due to unreconciled balance of P61,524,549.13 between the bank and the book of accounts which is contrary to Section 74 of PD 1445.


The reported balance of the Property, Plant and Equipment account totaling P113,777,024.64 as of year-end under Fund 102 is unreliable and doubtful due to non-reconciliation between the accounting and property records; unserviceable properties not yet disposed; and non-maintenance of Property Cards and Property, Plant and Equipment Ledger Cards.

Require the Accounting and Property Units to regularly reconcile their respective records so that any discrepancy shall be immediately analyzed, verified and adjusted to correct the balances of the affected accounts as of December 31, 2011 and to regularly update and furnish the Property Unit with documents/information affecting the PPE accounts. Require the Property Office to conduct complete inventory of all unserviceable properties and equipment of foreign assisted projects to be witnessed by the Auditor and to dispose the unserviceable properties in accordance with Section 79 of PD 1445 to maximize any realizable value thru its sale and avoid its further deterioration.

The amount of recorded Property, Plant and Equipment differed from the amount reported in the Report of Physical Count of Property, Plant and Equipment by P4,777,000.00. The said discrepancy could not be reconciled due to the absence of subsidiary ledgers affecting the fairness of the presentation of the balance sheet.

Require management to make an appraisal of the two motor vehicles for recording purposes at appraised value.

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Delivery documents of goods were not furnished to the Office of the Auditor.

Require the official concerned to furnish the Office of the Auditor copies of delivery documents of goods within 24 hours to serve as basis for timely inspection and to establish the validity and correctness of the claim for payment of the same.

Failure of management to submit the DVs and its supporting documents, JEVs and financial reports/statements within the prescribed period caused delay in the verification of regularity and validity of paid transactions, and runs counter to pertinent laws rules and regulations.

Require the Chief Accountant to submit all the financial reports, DVs, BRs and complete documentation of the transactions under Fund 102; and ensure that no government funds should be expended without the necessary documents to substantiate the disbursement.

The Office Supplies/Other Office Supplies purchased from January–August 2011 totaling P75,000.00 were directly charged to Office Supplies Expense (account 755) contrary to Section 43 of the NGAS Manual and may understate Supplies and Materials Inventory and overstate Office Supplies Expense as of year-end.

Require management to record as inventory the purchase of office supplies and materials, and take up the same as supplies and materials expense only upon issuance of the items; require the officials and employees in the Accounting and Property Offices to maintain Subsidiary Ledger Cards and Stock Cards for inventories; and regularly conduct physical count of office supplies and materials for proper control and check on the existence of the recorded balance.

The reported balance of the Construction in Progress account totaling P37,981,400.21 as of year-end under ARISP III, Fund 102, is unreliable due to non-maintenance of Construction-in-Progress Ledger Card (CIPLC)/schedules.

Require the Accountant to maintain complete and updated individual subsidiary accounting records/ledgers to support the CIP account balances of projects under construction so that by the time projects are completed, the cost of completed projects can be readily transferred to the respective Public Infrastructure account.


Non-completion of the Bato-Bantuagi Potable Water System deprived the 82 farm households of Barangays Lacong, Lipay Proper and Lipay Sur San Gabriel, La Union, the economic benefits derived from their vegetable farms.

Require the immediate completion of the Bato-Bantuagi Potable Water System (PWS) so that farm households in Lacong Agrarian Reform Community, San Gabriel, La Union, would be benefited from the economic gains of their farm produce. Management should collect the corresponding liquidated damages from the contractor.

4.3.2.4 Northern Mindanao Community Initiatives and Natural Resource Management Project (NMCIREMP)

Loan Account No. – JBIC PHP - 242


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Unused/unexpended cash balance of P3,441,412.15 was not remitted to the National Treasury despite completion/termination of projects contrary to laws, rules and regulations.

Require Management to comply strictly with Executive Order Nos. 338 and 431, Paragraph 3.2 of National Budget Circular No. 488 and DBM-COA-DOF Joint Circular No. 1-97 by enforcing the remittance to the National Treasury of the unused/unexpended cash balances.

The reported cash account balances of NMCIREMP totaling P3,476,425.36 was incorrect due to unreconciled balance of P1,228,621.49 between the bank and the book of accounts which is contrary to Section 74 of PD 1445.



Require the Chief Accountant to submit all the financial reports and complete documentation of the transactions under Fund 102 and ensure that no government funds should be expended without the necessary documents to substantiate the disbursement.



4.3.2.5 Solar Power Technology Support to Agrarian Reform Communities (SPOTS) – Phase I & II

Loan Account No. – ICO USD12.59M No. 1-4/2002, BPNP PARIBAS – USD 13.495M

Budgetary Issues

Unused/unexpended cash balances of SPOTS II totaling P3,281,579.51 were not remitted to the National Treasury despite completion/termination of project contrary to laws, rules and regulations.

Require management to comply strictly with Executive Order Nos. 338 and 431, Paragraph 3.2 of National Budget Circular No. 1-97 by enforcing the remittance to the National Treasury of the unused/unexpended cash balance


The reported cash account balance of SPOTS II totaling P3,238,789.51 was incorrect due to unreconciled balance of P42,790.00 between the bank and the book of accounts which is contrary to Section 74 of

Require the Accountant to coordinate with the officers of the bank depositories in devising ways for the timely delivery of bank statements to the Department and to investigate and resolve promptly all

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PD 1445. outstanding unreconciled differences.


Require the Chief Accountant to submit all the financial reports, DVs, BRs and complete documentation of the transactions under Fund 102; and ensure that no government funds should be expended without the necessary documents to substantiate the disbursement.

The reported balance of Other Assets account for SPOTS totaling P86,000.00 as of year-end under Fund 102 is unreliable and has been dormant for 2 years now.

Require the Accounting Office to exert extra efforts in locating the documents pertaining to the Other Assets account and effect the necessary adjustments so as to reflect the correct and true balance of the account. The Accountable Officer concerned should request inspection of the items recorded under the other Assets account, to be inspected by the head of the agency or his duly authorized representative in the presence of the Auditor concerned to prove its existence and to prevent its further deterioration and loss in value. If found to be of value, it may be sold at public auction to the highest bidder under the supervision of the proper committee on awards or similar body in the presence of the Auditor or other duly authorized representative of the COA so that the government will not be deprived of income that may have been derived in the sale thereof.

4.3.2.6 Second Agrarian Reform Communities Development Project II (ARCDP II –

WB) Loan Account No. - World Bank (WB) IBRD 7152 PH & IBRD 7689 PH

Budgetary Issues

Unused/unexpended cash balance of ARCDP II totaling P101,267,531.80 was not remitted to the National Treasury despite completion/termination of projects contrary to laws, rules and regulations.

Require Management to comply strictly with Executive Order Nos. 338 and 431, Paragraph 3.2 of National Budget Circular No. 488 and DBM-COA-DOF Joint Circular No. 1-97 by enforcing the remittance to the National Treasury of the unused/unexpended cash balances.


The reported cash account balances of ARCDP II and ARCDP II – Additional Financing totaling P103,120,401.63 and P2,220,978.24, respectively, were incorrect

Require the Accountant to coordinate with the officers of the bank depositories in devising ways for the timely delivery of bank statements to the Department and to

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due to unreconciled balances of P1,852,869.83 and P2,220,978.24 between the bank and the book of accounts which is contrary to Section 74 of PD 1445.

investigate and resolve promptly all outstanding unreconciled differences


Require the Chief Accountant to submit all the financial reports, DVs, BRs and complete documentation of the transactions under Fund 102 and ensure that no government funds should be expended without the necessary documents to substantiate the disbursement.



Property, Plant and Equipment (PPE) account of ARCDP II and ARCDP II – Additional Financing totaling P25,376,093.93 and P35,954,847.46, respectively, as of year-end is unreliable and doubtful for failure to conduct annual physical inventory and regularly reconcile records of PPE.

Require Management to create an Inventory Committee to conduct the annual physical inventory/count of all PPE pursuant to Section 490 of the GAAM. Prepare Inventory tags and attach it to the equipment during the conduct of the inventory taking; Instruct the Accounting and Property Units to regularly reconcile their respective records so that any discrepancy shall be immediately verified and adjusted.

4.3.2.7 Second Cordillera Highland Agricultural Resource Management Project (CHARM 2)

Loan Account No. - IFAD 749-PH


Expenses for traveling and training were not consistently recorded in the accounts, the costs of catering services for meetings and conferences were taken-up in the books as Other Supplies Expenses, and other minor accounting errors were done resulting in the overstatement of Training Expenses and Other Supplies Expenses by a total of P5.58 million and understatement of the affected accounts by same amount.

Require the Project Support Office to record expenses for traveling and training consistently, record the cost of meals and snacks for meetings and conferences as Representation Expenses, and use specific accounts provided for in the Chart of Accounts to record transactions.

Equipment costing P757,310.36 were not found during inspection; machinery and equipment amounting to P699,060.40 are not being used due to lack of power supply, ink,

Require the concerned personnel to present the equipment received by them and to submit to the Property Unit the list of distribution duly signed by the recipients, for

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etc.; and equipment costing P212,407.29 were not serviceable but remained in the books of accounts. Because of these, the validity of the balance of Property, Plant and Equipment (PPE) as presented in the Balance Sheet was doubtful.

items transferred to subordinates. Also, the PSO should retrieve all property and equipment issued to project staff that are no longer serviceable, cancel the covering Acknowledgement Receipt for Equipment and prepare the Inventory and Inspection Report of Unserviceable Property, which shall be used as basis to drop from the books of accounts the cost of unserviceable property that are still carried in the PPE accounts.

4.3.3 Department of Agriculture (DA) & DA Regional Filed Unit - CAR

4.3.3.1 Second Cordillera Highland Agricultural Resource Management Project (CHARM 2)

Loan Account No. – Organization of the Petroleum Exporting Countries (OPEC) 1224-P Loan Account No. – International Fund for Agricultural Development (IFAD) 749-P

Budgetary Issues

Four checks totaling P1.67 million ready for issuance to certain LGUs from October to December 2011 for the implementation of civil works projects remained with the Project Support Office as of year-end.

Instruct the DA RFU CAR to follow up the release of allotments from its Head Office to cover for the deficiency in funding from the counterpart of the LGUs and for upcoming fund transfers. The PSO should facilitate the release of checks to the concerned LGUs for the implementation of infrastructure projects as soon as these are signed.

The NCIP-CAR spent only a total of P7.118 million or 31.07 percent of the total budget of P22.912 million for Land Tenure Improvement Sub-component of CHARM 2, for three years ending December 31, 2011, due to poor performance resulting in unutilized budget of P15.794 million.

Require Management to utilize fully the budget intended for the Land Tenure Improvement to attain the objectives of the project; and implement the catch-up plan or design another, if no longer feasible due to factors affecting its implementation.

Procurement

The PSO entered into reforestation contracts with People's Organizations without the required accreditation from the Department of Environment and Natural Resources for the POs to operate nurseries for reforestation projects contrary to DENR Administrative Order No. 2010-11, thus, there is no assurance that the planting materials coming from the nurseries of the POs met the quality standards of the DENR.

Require the Project Support Office (PSO) to closely monitor the activities of the POs which were awarded Comprehensive Site Development Environmental Covenants and ascertain the capability of the POs to undertake the reforestation projects in accordance with the standards of the DENR.

The Project Support Office obtained price quotations for the rental of motor vehicles

Require the Project Support Office to strictly obtain price quotations from

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even from persons who were not registered to supply transport services, contrary to Section 52.3 of the Implementing Rules and Regulations of R.A. No. 9184, thus, the winning bidders with private vehicles did not provide staff passengers with insurance coverage against possible untoward incidents to the disadvantage of the Project.

bonafide suppliers of transport services pursuant to Section 52.3 of the IRR of RA No. 9184.


The conditions for fund release for the implementation of infrastructure projects were not stipulated in the covering Memorandum of Agreement entered into between DA RFU CAR and the LGUs, thus, the Disbursement Vouchers for the release of funds to LGUs Barlig, Besao and Pasil totaling P1.67 million were approved even when certain conditions were not complied with.

For the upcoming fund transfers, requireDA RFU CAR to include in the Memorandum of Agreement with the LGUs the condition for fund release for the implementation of infrastructure projects as required in the Project Implementation Manual for Rural Infrastructure Development.

The Project paid rental of motor vehicles in number of days more than the actual number of days the vehicles were used by the Project resulting in overpayment amounting to P111,251.00.

Require the PSO to require the owners of the motor vehicles that were rented during the conduct of site validations, survey and mapping of the reforestation and agro-forestry projects in the region to refund the excess payment of rental amounting to P111,251.00.

The Project overpaid two NGOs involved in community mobilization and participatory planning by P823,769.07 indicating that the billing statements of these NGOs were not adequately verified.

Require the PSO to adequately verify the validity of the claims submitted by the NGOs not only against their verified accomplishment reports but also against the payment schedule in the Terms of Reference.


Five of the six Non-Government Organizations (NGOs) hired by the Project to render community mobilization and participatory planning services incurred delays in performing their obligations with slippage ranging from 15 percent to 45 percent of the required accomplishment. As such, the deliverables required of the NGOs may not be fully accomplished within the contract period.

Require the PSO to evaluate the accomplishments of the NGOs vis-à-vis the expected outputs and the timeframe for the delivery of such outputs, and determine if the contracts with these NGOs are still feasible without sacrificing the efficiency of project implementation.

The Project continued to have zero physical accomplishment in Rural Infrastructure

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because the Local Government Units (LGUs) could not provide their funding counterpart in full.

Project Progress Sustainability

The approach employed by the PSO in implementing the Agriculture, Agribusiness and Income Generating Activities (AAIGA) component was not in accordance with that provided in the Project Appraisal Report. Thus, the expenditures incurred in 2011 under the AAIGA amounting to P12.90 million may not impact on the attainment of the objectives of promoting agribusiness and marketing resulting in the possible waste of resources. The basic outline of value chain is not laid down in a Memorandum of Understanding between the producers, the buyers and the Project. The Activities under sub-component 2, provision of agricultural support services, of AAIGA were undertaken despite the absence of the basic outline of value chain agreed upon by the producers, the buyers and the project.

Require the PSO to closely monitor the activities of the POs which were awarded Comprehensive Site Development Environmental Covenants and ascertain the capability of the POs to undertake the reforestation projects in accordance with the standards of the DENR.

Other Issues

Project staff and other persons whose function did not include the preparation of Feasibility Study (FS) were authorized to attend the training on FS preparation resulting in the incurrence of additional training cost of P358,893.93.

Require the PSO to limit the participation of its staff to trainings only to those relevant in the performance of their work.

4.3.3.2 International Development Fund (IDF) Loan Account No. – International Development Fund (IDF) - Trust Fund 056626


Accounts Payable under the IDF amounting to P6,885,404.81 as of December 31, 2011 is inaccurate due to unrecorded payment of obligations/payables by the same amount by the International Bank for

Require Management to: consider using the approved Withdrawal Applications issued by DA in recording the direct payments made to suppliers/consultants while waiting for the receipt of NCAA from DBM

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Reconstruction and Development (IBRD).

and the JEV from BTr to adjust the significant misstatements in the Accounts Payable of the IDF; disclose properly in the Notes to Financial Statements the use of Withdrawal Applications as basis for recording direct payments from IBRD in lieu of the NCAA from DBM and JEV from BTr with the note that further adjustment shall be made upon the receipt of NCAA or the JEV in case discrepancies between the records occur; and regularly request DBM and BTr for the issuance of the NCAA and JEV, respectively, to update and adjust the recording in Accounts Payable pertaining to direct payments.

4.3.4 National Irrigation Administration

4.3.4.1 Southern Philippines Irrigation Sector Project (SPISP) Loan Account No. – ADB 1668 PHI


Cash Advances amounting to P2,314,512.25 as of September 30, 2011 remained unliquidated in violation of COA Circular No. 97-002 which prescribes the rules and regulations on the grant, utilization and liquidation of Cash Advances. Out of this amount, P2,308,763.75 or 88 percent remained unliquidated for more than one year resulting in the overstatement of asset account and the understatement of the related expense account.

Management direct the Accountant to: strictly monitor the liquidation of cash advances; exert more effort to enforce the liquidations of cash advances by enforcing the penal sanctions provided for by law; and make the necessary adjustment to correct the negative balances of some accounts.

Receivables amounting to P1,904,521.52 were not supported with subsidiary records. The bulk of this amount consist of P1,121,883.13 and P372,333.89 receivables - Due from other Funds and from LGUs which have remained unliquidated as of date.

Require Management to: maintain subsidiary ledgers for receivable accounts and regularly reconcile the balances with the General Ledger balances; update the recording and posting of the transactions at all times; vigorously pursue the collection of receivable accounts to avoid the accumulation of uncollected/unsettled accounts at year-end; request for authority to write-off from COA following the

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prescribed rules and regulations relative to those accounts which could no longer be documented/verified and have remained dormant for several years; and cause the immediate liquidation of Fund Transfers and refrain from granting additional fund transfers/releases unless the previous ones have been liquidated.

The reported total balance of Property, Plant and Equipment (PPE) accounts of P757,487,277.06 was doubtful because of Management’s failure to conduct and submit complete Inventory Report for PPE; Maintain/update ledger and property cards for PPE; and provide adequate supporting documents/subsidiary ledgers for Land and Land Improvements and Construction in Progress (CIP) accounts in violation of existing laws, rules and regulations.

Require Management to comply with the rules and regulations relative to PPE accounts. submit a complete Inventory Report; exert extra effort to maintain and update regularly property and equipment ledger cards and reconcile any variance existing between accounting and property records; and reclassify all completed projects to appropriate asset account based on the List of Completed Projects supported with Certificate of Completion duly certified and signed by the officials concerned charged with the project.

Notice of Suspension No. 10-064-102(10) dated December 15, 2010 in the amount of P12,701,456.17 relative to the construction of Binalawan Concrete Buttress Dam and Appurtenant Facilities under SPISP-C-3 under contract with New Kanlaon/J.E. Manalo Joint Venture was originally issued for failure of Management to deduct Liquidated Damages as a result of the delay incurred in the completion of the project from progress billing No. 5 (NIA Finance Portion) covering the period July 1 to October 25, 2010.

On February 15, 2012, the Director, Corporate Government Sector, COA per CGS-C Decision No. 2012-001 granted the instant appeal of the contractor and accordingly lifted the Notice of Disallowance (ND) No. 11-003-102(10), citing however, that the Decision is not yet final and is still subject to automatic review by the Commission Proper pursuant to Section 7, Rule V of the 2009 COA Revised Rules of Procedure.

Accounting deficiencies and inadequacies relative to Cash accounts such as the lack of subsidiary records and absence of Bank Reconciliation Statements to support the General Ledger balance violated pertinent provisions of PD 1445, COA Circular No. 97-002 and NGAS Manual, casting doubt on the accuracy of its balance amounting to

Require Management to comply with the rules and regulations and pertinent provisions of law pertaining to Cash: maintain subsidiary ledgers and regularly reconcile the balance with the controlling accounts; and require the preparation/submission of the Monthly Bank Reconciliation Statement/s for all the bank accounts maintained.

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P7,425,415.36 as of December 31, 2011.

4.3.4.2 Banaoang Pump Irrigation Project Loan Account No. – China Nat’l Constructional Machinery Import & Export

Corporation


Lots with an area of 28.8215 having an estimated cost of P18,091,930.80 were expropriated/acquired by NIA-BPIP, although remained unpaid as of December 31, 2011, these were not booked as Accounts Payable at the end of the year except for the amount of P 2,272,080.00 representing payment of expropriated lots.

Require Management to book the unpaid acquired lots in order to present the true financial status of the project. The Senior Corporate Accountant should make the necessary adjustments in the books by debiting CIP-Irrigation, Canals, and Laterals in the amount of P 15,819,850.80 and crediting Accounts Payable by the same amount


The Banaoang Pump Irrigation Project was not yet fully operational as of December 31, 2011 thus delaying the provision of irrigation to farmer beneficiaries.

Management ensure the 100% completion of the projects including all reports/documents of the BPIP before end of March 31, 2012 so that a smooth turn over to the Irrigation System will be achieved, thus the project will become fully operational.

Other Issues

The lots needed as right of way for the Construction of Irrigation, Canals and Laterals in an aggregate amount of P60,488,916.73 as of December 31, 2011 were not yet registered with the Register of Deeds, thus, the ownership of these properties has not been transferred to the National Irrigation Administration.

Require the Project Manager to expedite the registration of the acquired properties with the Register of Deeds

Deposits of P2,272,080.00 representing payment of lots to various landowners for right of way expropriated by NIA were classified as dormant accounts by the bank due to the inability of the agency to inform the bank in writing the purpose of said deposits. Thus, it may result in the loss of funds if not claimed within ten (10) years.

Require Management to remind the bank of the purpose of the deposits and request them to inform the LBP Head Office so that these deposits will not be classified as dormant accounts. Signatories of the passbook should be changed upon turn-over of the project to the new management due to the upcoming retirement of the Project Manager.

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Cash bond amounting to P100,000.00 for the construction of irrigation structures and road crossing along the highway remained unclaimed from the DPWH although the purpose has long been achieved.

Require Management to inform immediately the DPWH in writing, that the projects for which the cash bond was issued were already completed with the original copies of the official receipts duly attached so that the amount of P 100,000.00 will be refunded.

Disallowances of P 38,828.30 of which the amount of P25,600.00 pertains to previous years remained unsettled as of December 31, 2011 which is not in conformity with the provisions of Section 7.1.1 of COA Circular No. 2009-006 dated September 15, 2009.

Require that disallowances be settled within the prescribed period and request authority to write off the amount of P 25,600.00 from the Adjudication & Settlement Board of COA Central Office which should be supported with valid documents.

4.3.4.3 Participatory Irrigation Development Project (PIDP) Loan Account No. – IBRD 7709-PH


The reported total balance of Property, Plant and Equipment (PPE) accounts of P7,428,132.99 was doubtful because of Management’s failure to conduct and submit complete Inventory Report for PPE; maintain/update ledger and property cards for PPE; and provide adequate supporting documents/subsidiary ledgers for Construction in Progress account in violation of existing laws, rules and regulations.

Require Management to comply with the rules and regulations and provisions of law relative to PPE accounts. Submit a complete Inventory Report; Exert extra effort to maintain and update regularly property cards and equipment ledger cards and reconcile any variance between the accounting and property records; and Reclassify all completed projects to its appropriate asset account on the basis of the list of competed projects supported with Certificate of Completion and other pertinent documents.

4.3.4.4 Agno River Integrated Irrigation Project (ARIIP) Loan Account No. – China Eximbank PBC 2009 No. (23)

Procurement

Annual Procurement Plan (APP) for CY 2011 was not prepared/submitted by the agency contrary to the Revised Implementing Rules and Regulations of RA 9184.

Require Management to prepare/submit its own Annual Procurement Program (APP) to conform with Section 7.1 and 7.2 of the Revised Implementing Rules and Regulations of RA 9184 otherwise known as the Government

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Procurement Act.

Postings in Philippine Government Electronic Procurement System (PhilGEPS) were not yet fully observed by NIA-ARIIP in the procurement of infrastructure projects, goods and services, contrary to Section 8 of RA 9184 otherwise known as the Government Procurement Act.

Require Management to strictly observe the posting in PhilGEPS the procurement of infrastructure projects, goods and services of the agency in compliance with Section 8 of RA 9184.


NIA-ARIIP personnel were granted CNA Incentives of P30,000.00 per employee or a total of P8,490,000.00 and the same were taken up under Receivables-Due from Officers and Employees account contrary to Budget Circular No. 2011-05 dated December 26, 2011 and the generally accepted accounting principle.

Require Management to strictly observe the guidelines under Budget Circular No. 2011-05. The accounting treatment of the CNA Incentives granted to the personnel of the agency should be changed using the expense method in order that there will be a proper matching of income and expenses and in order to have an accurate and fair presentation of its financial statements. Require also the refund of the excess CNA incentives granted to the employees.

All on-going and completed infrastructure projects and the costs of various equipment acquired by the agency were taken up under Property, Plant and Equipment – Construction in Progress (PPE-CIP) account contrary to Section 41 of the NGAS manual and likewise not provided with allowance for Depreciation making the PPE-CIP and the whole PPE account overstated and the expense account understated contrary to Sections 67 and 68 of NGAS Manual, Volume I.

Require Management to refer the matter to the higher authorities of NIA to conform with the provisions of the NGAS Manual and to have a fair and accurate presentation of the PPE account in the financial statements.

Copies of perfected contracts and purchase orders together with the basic supporting documents were not submitted within the prescribed period after its perfection for review and the Auditor was not notified of the deliveries of procured items within 24 hours from the date of acceptance contrary to COA Circular No. 2009-

Require the BAC secretariat to submit to COA all perfected contracts and purchase orders within five working days upon approval together with the supporting documents for review and technical evaluation and should comply strictly with the requirements as provided in COA Circular No. 2009-001 and COA Circular Nos. 95-

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001 dated February 12, 2009 and COA Circular Nos. 95-006 and 89-299A, thereby precluding the auditor of the early review and inspection of the procured goods and services of the agency.

006 and 89-299A.

4.3.5 Philippine Economic Zone Authority (PEZA)

4.3.5.1 Special Economic Zones Environment Management Project (SEZEMP) Loan Account No. – PH P183


Despite the non-implementation of the SEZEMP project under Loan PH P 183, payment for local consultancy services was continuously made in the total amount of P1,790,766 (Uncovered Peso A) contrary to the terms and conditions of the contract, particularly the work schedule thereof and paying interest charges of P1,246,522.

Payment for consultancy services should be made in accordance with the work schedule as agreed upon and that pending concurrence of JBIC on the request of PEZA to revise the TOR and reduce the scope of work, Management should suspend the consultancy services.

Management failed to impose the Value Added Tax (VAT) amounting to P1,434,932 on the payment of consultancy services to TCGI Engineers in violation of Sec. 102 of the National Internal Revenue Code, as amended by Sec. 3 of RA No. 7716, resulting in the understatement of tax liability of the agency by the same amount.

Management should impose the Value Added Tax on the consultancy services equivalent to P1,434,932 and remit the same to the BIR to avoid penalties and/or other sanctions.

Erroneous treatment of various items of project PH P183 in violation of paragraph 6.05 of the Consultancy Contract and paragraph 21 of the Statement of Financial Accounting Standards resulted in the understatement of Land and Land Improvement-In Process account by P663,146.67.

Necessary adjusting entry be made.


Delay on the part of the consultant in determining the non-viability of the SEZEMP, particularly of the construction cost, at the early stage

Management should impose sanctions on the Consultant for his failure or neglect to conduct a review of the financial feasibility report and

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of the procurement process, resulted to the incurrence of unnecessary cost, non-implementation of the project and the eventual closing/cancellation of the loan.

declare the project non-viable at the appropriate time which failure or neglect resulted to the incurrence of the Agency of unnecessary cost including payment of loan interest.

4.4 Social Reform and Community Development

4.4.1 Department of Education (DepEd)

4.4.1.1 National Program Support for Basic Education Project (NPSBE) Loan Account No. – IBRD 7393 PH


The outstanding balance of School Building Account amounting to P4,350,649,859.10 as reflected in the Balance Sheet as of December 31, 2011 cannot be ascertained due to non-availability of Property, Plant and Equipment Ledger Cards (PPELC) from the Accounting Units and Report on the Physical Count of Property, Plant and Equipment (RPCPPE) from the Property Officers of the Region/Division Offices contrary to the provisions of Section 23 of Manual on NGAS Volume I.

Require the Accounting and Property Units of the Region/Division Offices concerned to submit copies of PPELC and RPCPPE, respectively, particularly for school buildings. Submit and make available the monitoring reports to the DepEd Central Office. Management should furnish the Accounting Unit with complete inventory report of school buildings constructed and paid in the Region/Division Office books of accounts for audit purposes.

The balance of the Construction-in-Progress Agency Assets account amounting to P285,535,623.11 as shown in the Balance Sheet as of December 31, 2011 was not supported with subsidiary ledger cards and summary of projects still in process of construction contrary to Section 12 and Appendix 10 of the Manual on NGAS Volume II.

Require the Accounting Units of the Region/Division Offices concerned to maintain subsidiary ledgers for the Construction-in-Progress account. Submit copies of the subsidiary ledgers to DepEd Central Office Accounting Unit to show evidence that the reported amount is accurate. The NPSBE Project Coordinating Office and Physical Facilities Schools and Engineering Division (PFSED) should coordinate and ensure that the Construction-in-Progress account is properly monitored. Impose liquidated damages on contractors who do not comply with the stipulated time for project completion.

4.4.2 Department of Social Welfare and Development (DSWD)

4.4.2.1 Kapit-bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services Project (KALAHI-CIDSS)

Loan Account No. – IBRD 7147 PH

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Procurement

Some procurement of goods and services charged to Fund 102 of Regional Office No. V in the total amount of P8,022,397.45, were not in accordance with pertinent provisions of the Revised Implementing Rules and Regulations (IRR) of R.A. 9184 and GPPB Resolution No. 09-2009 dated November 23, 2009, thus the agency may not have obtained the most advantageous price for the said transactions.

Require Management to: (a) instruct the BAC that all procurement opportunities, notices, awards and reasons of awards should be posted in the PhilGEPS as part of the publication requirements regardless of the mode of procurement, except as provided therein, pursuant to Sections 8.1.2 and 8.2.1a of the Revised IRR of R.A. No. 9184 and GPPB Resolution No. 09-2009; (b) adhere strictly to Section 10 of R.A. 9184 that all procurement should be done through competitive bidding except as provided for in Rule XVI of the law; (c) follow the provisions of the same law when resorting to alternative mode of procurement particularly shopping for the procurement of goods and services; and (d) undertake procurement according to plan that shall take into account the lead time for the procurement process so that goods are available at the time needed and to avail of the discounts on bulk procurement.


Advances to Officers and Employees at Field Office Regional Office No. V amounting to P69,225.00 charged to Fund 102 (KALAHI) may have already been expended but have remained outstanding in the books as of December 31 2011 due to the failure of concerned employees to liquidate their cash advances as required under Sec. 14 of EO No. 298 dated March 24, 2004, Sec. 89 of PD 1445 and COA Circular Nos. 97-002 and 97-004 dated Feb. 10,1997 and April 19, 1996, respectively, thus, overstating the receivable account and understating the expense account.

Require concerned personnel to liquidate the cash advances as required under Section 89 of PD 1445, Sec. 14 of EO 298 and COA Circular Nos. 97-002 and 96-004. Also, require Management to send written reminders/notices to employees with unliquidated travel cash advances and require them to immediately submit liquidation reports and/or refund the balance of unused travel cash advance/s.

The transfer of community grants to various barangay communities on a one-time basis amounting to P7,588,592.57 deviated from Section 4.3, Community Finance Manual, thus, risks the government funds to imprudent spending and affects the quality required by the KALAHI-CIDSS Project.

Require Management to: (a) strictly monitor the implementation of the abovementioned subprojects to ensure their completion and eventual utilization by the beneficiaries; (b) hold liable KC officials who will be found remiss in the monitoring of the successful implementation of the subprojects; (c) refrain from the practice of releasing community grants on a one-time basis to protect government resources from possible misuse and to guarantee the completion of good

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quality subprojects.

Sub-projects amounting to P46,870,349.51 under the KC Loan Proceeds (KC-LP) were charged against the Millenium Challenge Corporation (MCC) - Government of the Philippines (GOP) counterpart in violation of Section 37, PD 1177, thus, may delay and/or affect the timely payments of project expenditures listed in Section 4.3.2, KC-MCC FM Guidelines No. 1, dated March 2011.

Require Management to: (a) refund immediately to MCC-GOP the funds transferred to community beneficiaries for the implementation of KC sub-projects in the amount of P46,870,349.51; (b) program/schedule properly the implementation of KC-LP sub-projects to prevent the utilization of MCC or even KC-GOP counterpart; (c) implement strictly the provisions of Section 37, PD 1177 which provides that all moneys appropriated for functions, activities, projects and programs shall be available solely for the specific purposes for which these are appropriated; (d) ensure that only project expenditures listed in and in accordance with Section 4.3.2, KCMCC FM Guidelines No.1 are funded by the GOP count.

Disbursements totaling P352,104.16 under Fund 102 lacked the necessary supporting documentation as required in Section 28 of the Manual on the New Government Accounting System (NGAS), Vol. l and other applicable rules and regulations due to the failure of the accounting unit to strictly require the submission of complete documents before effecting payments, thus, casting doubt on the validity of payments made.

Require Management to instruct all those concerned personnel to submit the required documents. The Accountant Designate/ Bookkeepers should strictly enforce the submission of all required documents before effecting payments and the Accountant/ Bookkeepers and all those concerned should adhere strictly to the applicable laws, rules and regulations in the disbursement of government funds.

Management failed to conduct inventory taking of its Property, Plant and Equipment amounting to P4,643,897.66, under Fund 102 (KALAHI-Additional Financing) pursuant to Section 490 of the Government Accounting and Auditing Manual Vol. 1, thereby casting doubt on the reliability and propriety of the account.

Require Management to conduct a physical inventory of all properties and equipment and prepare and submit the inventory report to the Office of the Auditor in accordance with Section 490 of GAAM Vol. I.


The two farm to market roads (FMRs) constructed in Lourdes and Malinao, Donsol, Sorsogon in the total amount of P3,598,193.60 and reportedly completed in 2008 and 2009 turned out to be only pathways as revealed during the inspection conducted in April, 2012, thus, may have defeated the purpose for which the funds have been granted and casts doubts on the

Require Management to: (a) coordinate with government agencies with technical knowledge in the construction of FMR to ensure proper design of this technically complicated subproject; (b) demand from concerned LGUs the corresponding LCC to complete the FMRs; (c) ensure that proposed sub-projects are feasible and completed in accordance with the plans and

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accuracy of the reports on accomplishments. specifications; and (d) procurements for infrastructure projects be considered only after thorough preparation of plans and other pre-construction requirements, and the submission of required supporting documents.

The upgrading, rehabilitation and improvement works on five farm to market roads (FMRs) in Mindoro Oriental costing P9,365,539.29 have not been fully, effectively carried out and some were poorly done due to lack of technical planning or not implemented in accordance with the standard plans and specifications, resulting in damaged to infrastructures and manifesting wastage of government funds.

Require Management to: (a) coordinate with government agencies with technical knowledge and expertise in the construction of FMR to ensure proper design of technically complicated sub-projects; (b) re-inspect projects and address issues and concerns to utilization of sub-projects; and (c) hold accountable concerned BSPMC officials who failed to implement the sub-projects properly and DSWD officials and employees found remiss in the monitoring of the upgrading, rehabilitation and improvement works on the same sub-projects.


Deficiencies were noted in the implementation of six KC sub-projects in Besao, Paracelis and Natonin, Mt. Province in the amount of P504,498.85 due to underruns/uninstalled excess materials as of December 31, 2011 and in nine KC sub-projects in Region IX which prevented these projects from being fully operational and deprived the intended beneficiaries of the full enjoyment or use of the sub-projects.

The Management of Field Office – CAR should require the Regional Project Monitoring Team (RPMT) to look into the projects with noted defects and make representations with concerned LGUs to correct the deficiencies. Likewise, RPMT and KC personnel/technical and financial specialist should make an on-site validation and verification, respectively, of all KC accomplishment reports on sub-projects implementation and completion to ensure that reports submitted are accurate. The Management of FO IX should make corrections on the structures noted to have differences from the approved POW. For the two-storey classroom buildings, the Engineering Section should adjust the specifications as to the number of windows in the POW/detailed estimates. To ensure uniformity and equitable costing of amenities, the specifications of these items should be more detailed, complete and uniform for each type of SP. Moreover, the RPMO should assign personnel to conduct inspection of SPs and install controls to check compliance by community-beneficiaries with specifications and relevant project guidelines.

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Completed sub-projects with an aggregate cost of P22,882,432.87 were found either as non-functional or partially-functional due to the failure of the Operations and Maintenance Group to sustain the operations of various community-based KC projects, thus resulted to the loss and wastage of government funds and deprived the identified project-recipients of the maximum benefits thereof.

Require Management that corrections be made on the structures noted to have differences from the approved Program of Work. For the two-storey classroom buildings, the Engineering Section should adjust the specifications as to the number of windows in the POW/detailed estimates. To ensure uniformity and equitable costing of amenities, the specifications of these items should be more detailed, complete and uniform for each type of SP. Moreover, the RPMO should assign personnel to conduct inspection of SPs and install controls to check compliance by community-beneficiaries with specifications and relevant project guidelines.

Other Issues

Sixteen KC Additional Financing (KC-AF) funded sub-projects amounting to P10,855,011.84 were implemented by barangay communities which are located in areas not listed in the pool of eligible municipalities in violation of the agreement between the WB and the Philippine Government and of the provisions of the KC Operations Manual.

Require Management to: (a) Explain why mentioned barangay communities were granted KC-AF funds for the implementation of various sub-projects despite the fact that they are not included in the list of 49 areas covered by the MT and 16 new/expansion municipalities; (b) exclude the said municipalities from future KC-AF sub-projects; (c) disseminate duly approved and signed List of Target Covered Areas of KC-AF to concerned municipalities, DSWD RO/CO Finance Offices and COA-DSWD for their information; and (d) release grants only to the target covered areas of KC-AF.

4.4.2.2 Pantawid Pamilyang Pilipino Program (4Ps) – Social Welfare and Development Reform Program (SWDRP)

Loan Account No. – IBRD Loan Nos. 7805 PH and 2662-PH

Procurement

Accounting of various advocacy materials with an aggregate cost of P2,750,200.00 could not be properly done as the distribution lists were not duly signed by the recipients.

Require concerned DSWD official and employee to submit fully accomplished distribution list duly signed by the authorized recipients from the Regions.

The procurement of 30 units mobile phones amounting to P342,400.00 and CY 2011 planners, which were delivered in May 2011, worth P428,750.00 out of 4Ps funds are considered unnecessary and extravagant as defined under Section 3.2 and 3.4 of COA

Require the Central Office that procurement be properly planned to prevent incurrence of unnecessary expenditures. For FO VI: (a) require the officials concerned to justify the necessity of the Galaxy phones in the performance of official duties of those

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Circular No. 85-55-A and thus violates Section 1 of PD 1445 and Section 4 of RA No. 6713.

persons concerned; (b) furnish the Team a copy of ARE of all mobile phones, laptop computers and net books previously issued to those persons issued with Galaxy phones; and (c) abide with the standards of personal conduct as mandated in RA No. 6713 in the discharge and execution of their official duties and faithfully adhere to State’s policy that all government resources shall be managed, expended and utilized in accordance with law and regulations, and safeguarded against loss or wastage through illegal or improper disposition, with a view to ensuring efficiently, economy and effectiveness in the operations of government.

The procured advocacy materials worth P2,750,200.00 are not among those listed in Chapter 8, 4Ps Manual of Operations. Further, these materials are neither responsive nor supportive to the objectives of the 4Ps.

Require Management that only advocacy materials which are responsive and supportive to the objectives of the advocacy and social marketing component of the 4 Ps be procured to broaden awareness and understanding of the target audiences on the 4Ps.


Second to fourth releases of 2010 grants were not subjected to compliance verification contrary to Step 8, Implementing Procedures, Chapter III, Manual on 4Ps which resulted in overpayment of education grants by a net amount of P2,419,800.00

Require Management to: (a) ensure, cash grants that payrolls are based only on accurate results of the CVS in order to avoid over/under payments thereof; (b) designate a staff who will thoroughly compare the payroll against the database of beneficiaries before cash transfer or payment to ensure that all eligible beneficiaries are included therein; and (c) regularly update the database of beneficiaries to ensure that only household members who are 14 years old and below and are attending school are entitled to education grants.

Of the total disbursements/ liquidation of P14,486,750,011.28, on 4Ps which are recorded in the books, only P10,716,588,449.28 were properly documented and verified, leaving an unaccounted balance of P3,770,161,562.00, thus, affecting the reliability of the ending balances of the Cash in Bank-LCCA various 4Ps accounts.

Require Management to: (a) demand from LBP immediate submission of documents that will support the liquidation reports; (b) record disbursements/ liquidation of 4Ps which are supported with complete documents and duly verified by concerned officials and employees; and (c) ensure that all liquidation reports are supported with pertinent documents.

Negative entries totaling P64,317,250.00 in the Status of Disbursements that support the

Require Management that the credit memos appearing in the bank statement and

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Bank Reconciliation Statement affect the reliability of the disbursements/ liquidation of grants.

presented as negative entries in the Status of Disbursements under the liquidation column be fully and clearly described.


The decline in the number of beneficiaries who received grants in CY 2011 as compared with the beneficiaries in CY 2010 coupled with the decrease in the amount received and the fluctuation in the number of beneficiaries in CY 2011 indicate that lesser beneficiaries had complied with the conditionalities of the program. This decreasing trend in the number of beneficiaries complying with the program raises doubts on the capacity of the agency to achieve the objectives.

Require Management to: (a) immediately update beneficiaries records/ profile so as to reflect the correct amount that they are entitled to; (b) cite other reasons that will explain the drop in the number of beneficiaries and the reduction in the amount received; (c) explain the causes of delays in the updating of the beneficiaries profile and the variances in the reported number of beneficiaries; (d) impose sanctions on officials and employees found remiss in the validation and updating of beneficiaries’ records and profile; (e) ensure that reported number of beneficiaries coming from different sources is accurate and valid; (f) see to it that the contents of the database are updated, reliable and sourced from valid documents as these show all the information about the beneficiaries which pertain to the requirements of the Program; and (g) regularly inform and update teacher and health coordinators on the 4Ps guidelines in order to help them address the complaints of beneficiaries.

Family Development Sessions were not conducted by the Municipal/City Link, thus, affecting the beneficiaries’ compliance with 4Ps conditionalities and also deprived them of the opportunity to expand their knowledge and enhance their skills.

Requireconcerned DSWD officials to impose sanction on MLs/CLs who do not conduct FDS. Ensure that FDS is conducted regularly.

Strategy/guidelines in selecting the beneficiaries to the CCT Program were not complied with.

Require concerned officials to: (a) delist from the Program beneficiaries who are not considered extremely poor; (b) conduct continuous validation of the beneficiaries to ensure that only qualified ones benefitted from the Program; and (c) impose sanctions on concerned officials and employees who do not conduct continuous monitoring, evaluation and validation of the Program beneficiaries. Require management to revisit the criteria on selecting and qualifying beneficiaries to ensure that only the poor are included in the program.

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Compliance with the conditionalities on health and education had been difficult for some beneficiaries residing in island-barangays in Taytay, Palawan due to problems in reaching the school, the limited number of health workers and the dangers of reaching the areas. Health centers in Donsol, Sorsogon are not open everyday that beneficiaries seeking medical assistance need to go to municipal health center which entails more expenses.

Require Management to undertake appropriate action to address the problems cited. Ensure that health facilities and workers will be available to beneficiaries at all times. In places where schools are too far and dangerous for children to reach, facilities for dormitory/lodging house funded with KALAHI funds can be considered and that grievances made by beneficiaries be acted upon and resolved immediately.

Other Issues

Non-validation of beneficiaries in the areas of Bulacan and Antipolo resulted in over transfers of funds to LBP amounting to P1,029,900.00 while non-coordination with the Barangay officials in Loakan Proper resulted in the inclusion of seven unknown/non-resident beneficiaries in the barangay’s list of grantees.

Require concerned officials to request from LBP to return the amount which pertains to fund transfers without corresponding actual grantees. And as the DSWD will add more beneficiaries to the Program, ensure that validation is conducted first to prevent over transfer of funds to LBP, beneficiaries be delisted from the Program and that during validation, coordination with LGUs concerned, particularly barangay officials, be undertaken.

The Pantawid Pamilyang Pilipino (CCT or 4Ps) program lacked qualitative performance indicators which will measure the improvements brought about by the program on the health care of beneficiaries, increase in the enrolment, reduction of the incidence of child labor, etc., and will gauge the efficiency and effectiveness and the degree of compliance by the grantees with the conditionalities. The absence of these indicators rendered difficult the determination of the program’s success in meeting the agency’s desired objectives through provision of educational and health grants. The efficiency and effectiveness of the Program in the present situation is difficult to assess since the children-beneficiaries have been attending school and household members are availing medical services even before the implementation of the Program.

Require Management to include qualitative performance measures to gauge improved health care, increased enrolment by the beneficiaries, reduced incidence of child labor, etc., in the program in addition to quantitative indicators, so that the efficiency and effectiveness of the Program could be easily evaluated and reported.

Inadequate validation of household data as required under Step 4.6 c of the Operations Manual on 4Ps and the inaccurate encoding of these data in the beneficiaries profile resulted in: (a) discrepancies in the names of

Require the CAR Management to follow up from the Central Office its request to effect the changes/updates/validation of the database of all 4Ps beneficiaries before releasing succeeding grants. This will

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46 4Ps grantees from sampled payroll and database in CAR and 3,068 in FO XI, thus, casting doubts on the reliability of the 4Ps database; (b) double entries of the names of 34 grantees in the payrolls covering CAR for the payment period January – December 2010 and January to June 2011, which contributed to the accumulation of idle funds in the LBP for over the counter (OTC) payments. There are no available data in the Region for the unclaimed/ idle funds in the bank for the cash card mode of payments; and (c) unclaimed funds transfer to LBP amounting to P1,818,900.00 due to double/duplicate entries of 4Ps grantees from CAR, thus, affecting the regularity of the transfers and accumulating huge balance of idle cash in LBP.

guarantee that only bonafide and deserving poor members are recipients of the 4Ps of the government, and that the government resources will be maximized and fully utilized properly to attain the objectives of the Program. This will, likewise, facilitate verification of the liquidation reports submitted by LBP and prevent the accumulation of idle funds in LBP. For FO XI, the Chief, Technical Assistance Division should coordinate with CO Project Director for the clean-up of the database.

4.4.3 Department of Health (DOH)

4.4.3.1 National Sector Support for Health Reform Program (NSSHRP) Loan Account No. – IBRD LN 7395-PH


Non-implementation/delay of the Project activities resulted in low fund utilization of 68 percent despite the completion of the project resulting in incurrence of commitment fees of $113,527.60 or P4,959,389.50 from January to December 2011. The non-reconciliation of loan availment per Project Monitoring Report vis-a-vis Uses of funds by Component Statement resulting in a variance of P304,061,453.00 or 7 percent of total loan amount resulted in an unreliable financial reporting to World Bank of the actual utilization of funds cumulatively and for the current period 2011. Financial monitoring report (FMR) was incomplete and not in accordance with Section 4.02 of the Loan Agreement, hence, the impact of the project performance could not be evaluated. There was no evaluation of project output and outcome based on the Performance Indicators in schedule 6 of the loan.

Require the Project Management to: (a) explain/discuss in detail the non-implementation/ delay of the Project components/ activities that have resulted in low fund utilization; (b) reconcile the actual loan amount disbursed as stated between the Project Monitoring Report and Uses of funds by Component Statement, any discrepancies be provided with explanation and discussion thereat; (c) prepare Financial Monitoring Report that conforms in form and substance with the requirement of the Loan Agreement which shows the sources and uses of funds of the Project, both cumulatively and for the CY 2011, showing separately funds provided under the Loan, and explains variances between the actual and planned uses of such funds and describes physical progress in implementation of the Project, both cumulatively and for the CY 2011, and explains variances between the actual and planned Project implementation; and sets forth the status of procurement under the Project, as at the end of 2011.

Non-conduct of periodic reconciliation of Require the Program Managers to coordinate

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physical inventory of supplies records of the Property unit with the records of Accounting unit resulted in huge amount of drugs and medicine inventory in the books from 2008 to 2011 averaging P779,011,052.41 per year. The Stock Ledger Cards of Accounting is not reconciled with the stock cards maintain by the Material Management Division / Research Institute for Tropical Medicine (MMD/ RITM), thus, casting doubt on the validity and accuracy of the inventory book balance.

and monitor the financial transactions affecting their programs in the management of deliveries and issuances of EPI vaccines and the Research Institute for Tropical Medicine (RITM) warehouse and DOH Accounting Section to reconcile inventory balance in the books of accounts and RITM records and effect adjustments to reflect actual inventory balances and quantity on hand. Ensure that periodic reconciliation between the RITM records and accounting books of accounts is established through concerted efforts of sharing information. Accounting Section should coordinate regularly with the MMD and RITM as well so that all documents for the issuances of EPI vaccines are submitted on time and immediately recorded in the books of accounts.


Measures that would improve the inventory reporting system like the Inventory Management Assessment Tool (IMAT) was not implemented despite inclusion of the system in the Warehouse Operations Manual. This resulted in an unclear flow of information and untimely reporting of the status of the drugs and medicine.

Require the Materials Management Division to implement the IMAT as well as advise the RITM Warehouse to apply the same tool for a faster and more accurate inventory management reporting system. The Program Management/Bureau of Internal Health Cooperation should ensure that project resources received and utilized are properly and accurately recorded and reported to the Direct Procurements and to provide guidance to project coordinators and implementors. Also, strictly monitor the status of the deliveries, issuances and physical inventory of drugs and medicine particularly EPI vaccines that would eventually impact the progress in the attainment of project objectives.

4.4.3.2 Development of Sub-Specialty Capabilities for Heart, Lung and Kidney Diseases

Loan Account No. – PH20030908 ING Bank N.V. (Netherlands)


Finance Services failed to record/ update the financial operations of the Heart, Lung and Kidney (HLK) project due to absence of Finance Staff to handle the recording of

Require the: (a) Finance Staff - Finance Service– to Draw JEV for the NCAA released by the DBM to record the grant utilization; coordinate with DBM for the issuance of

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transaction, as a result the grant amount of €7,860,937.96 or P0.542 billion and the loan availment of €14,598,887.09 or P1.007 billion was not completely and accurately recorded in the books.

NCAA so that recording of grant transaction will be made for the letter dated April 20, 2006; make representation with the Director, BIHC for the shortage of manpower to handle the financial transactions of all DOH Projects. (b) Project Management Office/r/UPMD to furnish and/or coordinate with the Finance Service/Staff to complete all the necessary and required documentation for the request for NCAA from the DBM are complied with/submitted to facilitate issuance of NCAA so that the recording of loan and grant portions are made on time and to include in its Project Profile the inclusion of a Finance Staff to handle the financial transactions.


The Project Management Office/r has not prepared Phase Out Plan, six months prior to its Project Closing as provided by under Administrative Order No. 81 s. 2002 despite the closing of the project in 2011.

Require the: (a) PMO to prepare Phase Out Plan and coordinate with Finance Service for all data/documents necessary for the winding up of accounting transactions/records of the Project; (b) Finance Service to make representation with the BIHC thru the UPMD/PMO for all the needed documents/data in order for them to complete them prepare the closed out financial statements; and (c) Submission to COA of the closed out financial statements for final audit.

4.4.3.3 Health Sector Development Project (HSDP) Loan Account No. – ADB 2137-PHI


The failure of BIHC/DOH to avail of 32 percent or $4,087,079.82 (P179,537,242.33) of the $13,000,000.00 ADB 2137 loan, with the remaining nine months before its closing date of September 30, 2012, was due to the prolonged procurement process which resulted in the incurrence of commitment fees in the amount of $26,750.00 or P1,152,945.31 for CY 2011.

Advise management that the Contract for End-Line survey should be revised to include liquidating damages in case of breach of contract as stipulated under Sec. 68 of RA 9184. COBAC should submit justification on the delayed publication for Expression of Interest (EOI) as receipt of TOR and ADBs NOL was August 13, 2010 but advertised on October 24, 2010 and TWG should explain the delayed submission of evaluation report on the short listing which should have been submitted on November 18, 2010 but submitted on January 28, 2011.

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The Project Team should come up with a practical budget allocation to avoid several re-allocation requests that causes delayed disbursement of funds.

4.4.3.4 Health Sector Reform Agenda – Support Programme (HSRA-SP) Loan Account No. – (KFW) BMZ No. 2006 65 109 D


The payment of consultancy service of GITEC Consult GmbH totaling €260,000 or P15.6 million was not recorded in the books due to failure of the BIHC/Finance Service to support the payment with complete valid documents which include Withdrawal Application and Consultant’s output evaluated by the DOH-Technical Assistance Committee (TACT) as required in the Consultant’s Terms of Reference, thus, understating the books by the same amount. As a result, the expenses were deducted from the loan without proper documentation and not assured that the loan was effectively and economically used for the benefit of the project.

Require BIHC to: (a) monitor the accomplishments of the project guided with the targets set on project physical implementation schedule and projected disbursement schedule of loan proceeds; (b) ensure the accuracy of the financial and physical accomplishment reported to the stakeholders by providing clear guidelines in computing for disbursement and physical accomplishment rate; (c) submit to Finance Services the original supporting documents necessary for the loan availment particularly for the payment to GITEC Consult GmbH, to include: Withdrawal Application duly approved by the DOH representative; copy of the invoices of GITEC Consult GmbH; DOH-TACT evaluation of the GITEC Consultant’s output.

Project component for Performance Based Grant PBG Incentive amounting to €1,171,875 or P75 million which is 12 percent of the total loan was not utilized due to delayed preparation of guidelines thereby delaying the benefits to the LGUs in improving health service and local governance.

Require BIHC to ensure the timely implementation of the PBG incentive in order that LGUs be encouraged to undertake reforms in key governance areas to enhance their institutional capacity to strengthen local governance and service delivery.

There was Low disbursement or availment of loan as of December 31, 2011 of 18 percent or €1,769,733.79 out of the total loan of €10 million considering that 68 percent of the project duration has elapsed, thereby, the project objectives and activities are not attained.

Require Municipal Development Fund Office and Grosse Internationale Technologie to fast track the implementation of the civil works by the LGU and facilitate the preparation of documentation of expenses for reimbursement from the loan in order to ensure the efficient use of loan.


Unrealistic physical accomplishment of 91 percent as reported by the GITEC Consultant was based on the total cost of contracted

Require BIHC to monitor the accomplishments of the project guided by the targets set on project physical implementation

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sub-grant projects and not on amount released by the MDFO to the LGU and the WA issued to KFW, thus physical rate should be 24 percent.

and disbursement schedule of loan proceeds and ensure the accuracy of the financial and physical accomplishment reported to the stakeholders by providing clear guidelines in computing disbursement and physical accomplishment rates.

4.4.3.5 Second Women’s Health and Safe Motherhood Project Loan Account No. – IBRD 7290-PH


Failure of the Accountant to verify the validity of the transactions totaling P25,560,472.50 pertaining to fund transfers made to Local Governments Units and DOH Operating Units resulted in unwarranted subsequent fund transfers.

Require the Accountant to conduct periodic monitoring and analysis of fund transfers made to LGUs/Operating Units, provide a justification on the validity and propriety of subsequent fund transfers despite of the non-liquidation of previous fund transfers; and before the subsequent fund transfers, ensure that liquidation of previous fund transfers is made and accounted for properly with complete documentation. Require Project Management to strictly monitor the activities covered for which the transfer of funds were made and ensure that the targets are achieved and met before another fund transfer is made and coordinate with the regional/local government project coordinators to cause the immediate liquidation of the funds received as well as the prompt submission of accomplishment reports on the implementation of the Project activities.

Non-conformity with the provisions of COA Circular No. 94-013, Department Order No. 2006-0036, as amended by Department Order 2006-036-A and further amended by Department Order 2006-0036-B on the release, disbursement, and liquidation of 2WHSMP funds transferred contributed in the significant balances of accounts Due from LGUs/ROs/SBs/OUs with an aggregate amount of P16,078,216.89.

Require the Project Manager and Accountant to: (a) coordinate with the regional/local government project coordinators to cause the liquidation of the funds for the fund transferred especially those past due accounts and submission of the report of disbursements/fund utilization report to account the funds received thereat; (b) ensure that no succeeding funds are transferred to those Project recipients who have outstanding accountabilities or without prior liquidation of previously transferred funds ; and (c) monitor the liquidation and reporting requirements of funds transferred to LGUs/ROs/SBs/OUs pursuant to COA Circular No. 94-013, Department Order No. 2006-0036 as amended by Department Order

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2006-036-A & 2006-0036-B.

4.4.4 Technical Education and Skills Development Authority (TESDA)

4.4.4.1 Development of Centers of Excellence in Modern Manufacturing Technology Project (CEMMT)

Loan Account No. – Austrian Government (ERSTE Bank Acct.)

Other Issues

In TESDA-CAR, CEMMTP equipment costing P16 million intended for trainings on Computer Numeric Control (CNC) Production still remained unutilized since it was delivered and accepted in 2008 due to failure on the part of the supplier to make the necessary repair on such equipment. As a result, student beneficiaries continued to be deprived of additional skills necessary to meet the current emerging skills requirements of the manufacturing industry in the area of modern technology and the technological needs of manufacturing companies and better chances of employment. This further resulted in wastage of scarce government resources. (Note: This is a reiteration of previous year’s audit finding)

Require the management to coordinate closely or make a follow-up with the supplier/contractor through the TESDA, Central Office for the necessary repair and maintenance of the equipment to attain the objectives of the CEMMT project of the agency and consider the training of at least one personnel/trainer who will be in charge in the maintenance of the equipment.

4.4.4.2 Technical Education and Skill Development Project (TESDP) Loan Account No. – 841-P/NDF-331/ 1750 PHI


Advance payments to the Procurement Services amounting to P19,391,647.01 as of December 31, 2011 remained outstanding for six years now due to the failure of the said agency to deliver the goods intended for the operations of the three foreign assisted projects which were already completed in 2006 and 2009. In effect, the opportunity to maximize the utilization of the said amount during the project’s implementation became futile.

Require Management to make representation with the Procurement Services to remit to the National Treasury the amount of advance payments that remained idle which were intended for the foreign assisted projects that had already been completed in 2006 and 2009; or coordinate with DBM for fund realignment then suspend the issuance of advance payments to Procurement Service until the said amount had been consumed by delivering the requested orders of TESDA.

Balance of account Cash with National Treasury as of December 31, 2011 was overstated by P18,385,500.23 due to unrecorded payment thru Automatic Debit to Account (ADA) amounting to P18,367,242.05 and the overpayment of P18,258.18 caused

Require the Accountant to: (a) set up immediate recognition of Accounts Payable for the goods and services delivered and accepted in the current year upon submission of required documents; (b) make the necessary corrections/ adjustments on the

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by non-provision of taxes. As a result, accounts Other Machinery and Equipment, Due to BIR and Guaranty Deposit Payable are understated by P21,699,695.24, P1,144,225.49 and P2,169,969.52, respectively.

unrecorded payments thru ADA and the erroneous entry taken up as current expenses of account Printing and Binding Expense instead of a Prior Year’s Adjustment account; and(c) demand the overpayment of P18,258.18 or require the supplier to remit the withholding tax directly to the BIR and present the receipt to TESDA and comply strictly with the provisions of DBM Circular Letter No. 2005-2 dated January 28, 2005 on the recording of Accounts Payable.

Correctness of account balance of Foreign Currency Savings amounting to P4,180,806.60 could not be ascertained because of non-preparation and submission of the Bank Reconciliation Statement/s since 2005.

Require the Accountant to assign a personnel to handle the preparation and timely submission of the bank reconciliation statements efficiently

4.4.4.3 ARMM Social Fund for Peace and Development Project Loan Account No. – JICA PH-P235

Procurement

The management failed to furnish the auditors with the pertinent documents on purchases/acquisitions.

Require Management to strictly adhere with COA Circular No. 2009-002.


Cash advances to various officers and employees amounting to P3,165,017.09 remained unliquidated.

Require the concerned officials and employees for the immediate settlement of their unliquidated cash advances pursuant to COA Circular No. 97-002, otherwise, withhold their salaries. Strict adherence to Section 89 of PD 1445 that no additional cash advance shall be granted unless their previous cash advances are liquidated must be made.

4.4.4.4 ARMM Social Fund for Peace and Development-FMO Loan Account No. – IBRD 7153 PH



Require the concerned officials and employees for the immediate settlement of their unliquidated cash advances pursuant to COA Circular No. 97-002, otherwise, withhold their salaries. Strict adherence to Section 89 of PD 1445 that no additional cash advance shall be granted unless their previous cash advances are liquidated must

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be made.

4.4.4.5 Additional Financing for ARMM Social Fund Project Loan Account No. – IBRD 7912-PH



Require the concerned officials and employees for the immediate settlement of their unliquidated cash advances pursuant to COA Circular No. 97-002, otherwise, withold their salaries. Strict adherence to Section 89 of PD 1445 that no additional cash advance shall be granted unless their previous cash advances are liquidated must be made.

4.4.5 Development Bank of the Philippines (DBP)

4.4.5.1 Development of Poor Urban Community Sector Project; Rural Power Project; Credit Line for Solid Waste Management Program; Credit Facility for Environmental Management Project

Loan Account No. – ADB 2063 PHI; IBRD 7673 PH; KFW No. 22/A-200196951; SIDA


The Corporation’s total assets increased by P186.339 million due to its accounting of Foreign Exchange Risk Cover (FXRC) on revaluation loss on foreign borrowing extended by the National Government as a derivative resulting in a Net Gain on Derivatives of P1.059 million.

Require Management to make representation with BSP to revisit the treatment of FXRC as a financial derivative instrument; and record Foreign Exchange Risk Cover Fee as an expense and accrue unpaid fees for the year.

4.5 Industry, Trade and Tourism

4.5.1 Land Bank of the Philippines (LBP)

4.5.1.1 Support for Strategic Local Development and Investment Project (SSLDIP) Loan Account No. – IBRD 4833-Ph


LBP’s failure to fully utilize the loan granted by World Bank (WB) totaling JPY11.710 billion (P5.150 billion), having drawn only JPY6.729 billion (P3.220 billion) or 57.46 per cent of total loans as of December 31, 2011 resulted in incurrence of additional commitment fees amounting to P1.760 million.

Require Management to evaluate the causes of the underutilization of the loan fund and properly address the same. Consider pre-terminating the loan if maximum utilization and/or extension of the loan is not possible, to avoid further payment of commitment fees.

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Manual computation of interest income for loans granted to various LGUs resulted in net overstatement of interest income and the corresponding cash account amounting to P0.518 million and net understatement of accrued interest receivable amounting to P7,728.00.

Incorporate the computation of SSLDIP interest income to eliminate the risk of misstatement due to manual computation in the enhancement of the Integrated Project Monitoring and Financial Management System (IPM-FMS). Prepare the appropriate adjustments in the interest income, cash and accrued interest receivable accounts to properly reflect accurate balances in the financial statements.

4.5.2 Department of Trade and Industry (DTI)

4.5.2.1 Rural Micro-Enterprise Promotion Programme (RuMEPP) Loan Account No. – IFAD 661-PH


The yearend balance of account Due from Regional Offices /Staff Bureaus (Account 142) of RuMEPP - Loan Proceeds, Government of the Philippines (GOP) and Grant totaling P8,229,908.19, P4,206,153.15, and P 1,695,015.80, respectively, were not correctly stated due to negative reply to the confirmation of account balances and accounts that have not been liquidated in accordance with terms set in the Memorandum of Agreement and COA Circular No. 94-013.

Require the RuMEPP Programme Manager to initiate action to compel the concerned regional offices to liquidate their outstanding accounts in accordance with the Memorandum of Agreement and to comply with the requirements of COA Circular No. 94-013.

Property, Plant and Equipment (PPE) were overstated due to non provision of Accumulated Depreciation in the amount of P3,543,814.79.

Require Management to direct the Acting Chief, Accounting Division to immediately take up in the books the Accumulated Depreciation in the amount of P3,543,814.79 to enable the presentation in the financial statements of the correct net book value of the PPEs.

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4.6 Status of Implementation of Prior Years’ Audit Recommendations

Out of the 216 prior years’ audit recommendations, 72 or 33 percent were implemented, 86 or 40 percent were partially implemented or in-progress, 58 or 27 percent were not implemented as presented in Chart XV.

The details of the distribution of the status of implementation of prior years’ audit recommendations for the three sectors of the government such as: the National Government Sector (NGS); Local Government Sector (LGS); and Corporate Government Sector (CGS) are presented in Table XXIV:

Table XXIV – Status of Implementation of PYs’ Audit Recommendations Government

Sector Implemented

Partially Implemented

Not Implemented

Totals PERCENTAGE

NGS 49 61 39 149 69

LGS 6 6 3

CGS 23 19 19 61 28

TOTAL 72 86 58 216 100

PERCENTAGE 33 40 27 100

Out of the 58 unimplemented prior years’ audit recommendations, 20 were with no information or reports submitted specifically on projects implemented by the Department of Environment and Natural Resources, particularly those related to Second Land Administration and Management Project (LaMP2) and National Program Support for Environment and Natural Resources Management Project (NPSNRMP) and the Supreme Court of the Philippines on Judicial Reform Support Project (JRSP).

Chart XV - Status of Implementation of PYs' Recomendation

Implemented, 72, 33%

Not Implemented,

58, 27%

Partially Implemented,

86, 40%

Not Implemented Partially Implemented

Implemented