guidelines on pre audit

NON-TECHNICAL NON-TECHNICAL OPERATIONS AUDITOPERATIONS AUDIT

SCOPE OF PRESENTATION

Auditable Key Areas/Process

Frequency of Findings CY 2011

Common Findings

Adverse Findings

AUDITABLE AREAS

A - Planning, Programming & Requisitioning

B – Bidding Stage

C – Contract Award

D – Delivery, Inspection & Acceptance

E - Asset Management & Custodianship

F - Personnel Management

FREQUENCY OF FINDINGS

Areas/Process No. of Findings

Planning, Programming & Requisitioning

Bidding Stage Contract Award Delivery, Inspection & Acceptance Asset Management &

Custodianship Personnel Management

- 75- 72 - 50- 41

- 123

- 24

---------Total -

385 =====

Non-preparation of Annual ProcurementPlan (APP) for Goods

Section 7.1-2, Revised IRR of RA 9184, provides that...

The APP shall include provisions for unforeseeable emergencies based on historical records.

Provisions:

No Procurement shall be undertaken unless it is in accordance with the approved APP.

APP must be approved by the HOPE or 2nd in Rank designated by the HOPE to act on his behalf.

APP shall include specific Project Procurement Management Plan (PPMP)

Implications:

Non-preparation of (APP) continued...

Procurement not within the Approved Budget

Procurement not meticulously and judiciously planned.

Ref.No.

Contract Package (Description)

Procurement Method ABC

TENTATIVE PROCUREMENT SCHEDULEPre-

Procurement Conference

Advertisement

Pre-Bid Conference

Submission and

Receipt of Bids

Bid Evaluation

Post-Qualification

Award of Contract

FUND 101COMMON OFFICE SUPPLIES1st Quarter2nd Quarter3rd Quarter4th Quarter

PUBLIC BIDDING

6,393,548.923,722,773.20 938,002.84 1,151,167.78 581,605.10

1st Quarter2nd Quarter3rd Quarter4th Quarter

COMMON OFFICE DEVICES1st Quarter2nd Quarter3rd Quarter4th Quarter

SHOPPING 106,011.8297,949.36

383.107,679.36

56,908.00

COMMON COMPUTER SUPPLIES1st Quarter2nd Quarter3rd Quarter4th Quarter

PUBLIC BIDDING

9,413,881.914,513,021.231,393,237.102,817,030.70

690,592.28


COMMON JANITORIAL/HARDWARE/CONSTRUCTION SUPPLIES/PEST CONTROL SERVICES 1st Quarter2nd Quarter3rd Quarter4th Quarter

PUBLIC BIDDING

86,880,746.8821,714,414.72

21,726,423.72 21,717,563.72 21,722,367.65


SUB-TOTAL 102,794,189.53

ANNUAL PROCUREMENT PLAN FOR FY 2012

Page 1 of 13 Pages

Ref.No.

Contract Package (Description)

Procurement Method ABC

TENTATIVE PROCUREMENT SCHEDULEPre-

Procurement Conference

Advertise-ment

Pre-Bid Conference

Submission and Receipt

of BidsBid

EvaluationPost-

QualificationAward of Contract

REPAIR & MAINTENANCE OF OFFICE1st Quarter

PUBLIC BIDDING

1,436,960.001,436,960.00 1st Quarter

UNFORESEEN EXPENDITURES1st Quarter2nd Quarter3rd Quarter4th Quarter

SHOPPING 267,252.0078,688.0050,188.0069,188.0069,188.00

SUB-TOTAL (this page) 1,704,212.00SUB-TOTAL (Page 1) 102,794,189.53SUB-TOTAL (Page 2) 14,848,900.40SUB-TOTAL (Page 3) 28,575,864.50SUB-TOTAL (Page 4) 18,831,349.81SUB-TOTAL (Page 5) 18,970,893.89SUB-TOTAL (Page 6) 6,687,966.01SUB-TOTAL (Page 7) 23,317,026.00SUB-TOTAL (Page 8) 20,858,877.48SUB-TOTAL (Page 9) 20,767,559.95

SUB-TOTAL (Page 10) 6,561,297.63SUB-TOTAL (Page 11) 22,812,780.00SUB-TOTAL () 4,713,833.56

GRAND TOTAL 291,444,750.76

Prepared by: Submitted by: Recommending Approval: Approved by:

TERESITA C. PACULAN ARDELIZA R. MEDENILLA, MNSA, CESO IV ROY L. MANAO, CESO VI JAIME A. PACANAN, Ph.D, CESO IAsst. Head, BAC for Goods Secretariat Head, Central Procurement Office Chairman, BAC for Goods Undersecretary for Support Services

NOTE: This APP for Goods FY 2012 is still subject for updating in linkage to the budgetary allocation to be provided by the Budget Division, CFMS, pursuant to GAA for FY 2012. This APP also includes the ten percent (10%) contingency expenditures for supplies, materials, equipment and services (goods) for FY 2012. This APP is a partial consolidation of submitted PPMPs from various offices/end-users as of December 31, 2011. This APP contained common office supplies not available from PS-DBM as per PS Virtual Store List of Goods posted in the Phil-GEPS. Specific date of procurement schedule cannot be determined yet due to the APP finalization subject to budgetary allocation. Alternative Method of Procurement is subject to the Annex “H” of the Revised IRR of R.A. 9184.

Page 13 of 13 Pages

Non-preparation of Project Procurement Management Plan (PPMP) for Goods

Section 7.3.2, Revised IRR of RA 9184, provides that...

End-user units of Procuring Entity to prepare their respective PPMP for their different PAPs, which shall include the following:

Provisions:

a. Info on whether PAPs will be contracted out, implemented by Admin, or consigned

b. Type and objective of Contract to be employed

c. Extent/size of contract scopes/packages

Non-preparation of (PPMP) continued.....

d. The procurement methods to be adopted (indicating if the procurement task is to be “Outsourced” as provided in Sec. 53.6 of this IRR.

Provisions:

e. Time schedule for each procurement activity

f. Estimated budget for each procurement

g. The proposed APP shall be consistent with the PE budget proposal

Implication:

Funds may not be available for procurement of items covered by PPMP and APP.

Non-preparation of (PPMP) continued.....

DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS

Name of the Office: Internal Audit Service

Office Location __________________

PROJECT PROCUREMENT MANAGEMENT PLAN

P.R. No. 1 Contract Package (Description) CP 6

Procurement MethodABC² (Fund

Source)

PROCUREMENT SCHEDULE

Pre-Procurement Conference (1

c.d.)

Advertisement (7 c.d.)

Pre-Bid Conference ( 1 c.d.) 12 cd

before submission of bid

Submission and Receipts of Bids (1

c.d.)

Bid Evaluation (1 c.d.)

Post-Qualification (1

c.d.)

Award of Contract (2

c.d.)

1. Vehicle Repair & Maintenance

1st Quarter Direct Contracting 52,500.00

2nd to 3rd Quarter Shopping 147,500.00

Total Budget Amount Php 200,000.00

PREPARED: RECOMMENDED: EVALUATED BY: APPROVED:(To be included in the DPWH

Budget Proposal)

EVANGELINE B. VELANO FAUSTINO N. STA. MARIA, JR., CESO IV MARCIANA G. HERRERA ROY L. MANAOInternal Auditor III OIC-Director, Internal Audit Service OIC, Chief Budget Division Assistant Secretary

(Supply Officer) (Head, Implementing Office) for Support Services

¹PR No. = Purchase Request No.

²ABC = Approved Budget for the Contract

The BAC Secretariat shall consolidate all the Project Procurement Management Plans (PPMP) prepared by the Project Management Offices (PMOs) into an Annual Procurement Plan (APP). The APP shall bear the approval of the head of the procuring entity. Updating the PPMP and the consolidated APP shall be undertaken every six (6) months or as often as required by the head of the procuring entity.

ITEMIZED LIST OF GOODS

Annex to Contract Package No. 6

PPMP, FY 2012

SERVICE/RO/PMO CENTRAL OFFICE

DIVISION/DISTRICT/CITY INTERNAL AUDIT SERVICE

COMMODITY

UNIT

UNIT TOTAL DISTRIBUTION BY QUARTERS

(NATURE AND DESCRIPTION) PRICE CALENDAR 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER

QTY. AMOUNT QTY. AMOUNT QTY. AMOUNT QTY. AMOUNT QTY. AMOUNT

1.Maintenance & Repair of service vehicles

- - - -

A. Spare Parts

Inn Ball Joint pc. 1,000.00 2 2,000.00

End Assy Tie Rod RH pc. 1,700.00 1 1,700.00

End Assy Tie Rod LH pc. 1,500.00 1 1,500.00

Ball Joint Lower pc. 1,400.00 2 2,800.00

Link Assy FR Stabilizer set 1,350.00 1 1,350.00

Link Assy RR Stabilizer set 1,400.00 1 1,400.00

Link Assy Control LH pc. 1,200.00 1 1,200.00

S u b - t o t a l P 11,950.00

B. Labor 9,000.00 9,000.00

C. Wheel Alignment 2,500.00 2,500.00

D. Complete Wash 1,000.00 1,000.00

SUB - TOTAL P 24,450.00

2.Maintenance & Repair of Service Vehicles

p 147,500.00

PROGRAM AMOUNT P 171,950.00

PREPARED BY: APPROVED BY:

EVANGELINE B. VELANO FAUSTINO N. STA. MARIA JR., CESO IVInternal Auditor III OIC-Director, Internal Audit Service

Section 7.4, Revised IRR –RA 9184, states that…

“Updating of individual PPMPs and the consolidated APP for each procuring entity shall be undertaken every six (6) months or as often as may required by the HOPE.

Supplemental APP was prepared instead of Updated APP

Procurement may not be meticulously and judiciously planned by the procuring entity.

The updating of PPMPs shall be the responsibility of the respective end-user units of the PE, while the consolidation of these PPMPs into an APP shall be logged with the BAC-Secretariat, subject to the approval of the HOPE.”

Funds may not be available for procurement of items covered by PPMP and APP.

Implications:

Section 36, GAAM, Volume III - Responsibilities of agency management for internal control.

In line with the primary responsibility, the head of the agency has the following responsibilities, among others:

It shall be the primary responsibility of the head of the agency to install, implement and monitor an adequate system of internal control under such guidelines prescribed by the Commission on Audit.

Provision:

To develop and install the internal control structure of the agency, to include the control environment, accounting system and control procedures.

No check and balance to safeguard assets.

( Pls. refer to the next slide for an example)

To maintain an internal control environment in order to safeguard assets, produce reliable accounting data and promote operational efficiency and effectiveness.

Implication:

Estimated unit and total costs not indicated in the PRs

Appendix 51 (Instructions) of NGAS, Vol. II. Manner of accomplishing the PR is shown in 1-8...........

Provision:

10. Total Cost – estimated total cost of the goods/property being requested

9. Unit Cost – the estimated cost per unit of the goods/property being requested

Estimated Unit and Total Cost continued...

Reasonableness of estimated cost of goods/supplies requisitioned could hardly be determined.

Implication:

Section 18, Revised IRR of RA 9184, states that: “Specifications for the procurement of goods shall be based on relevant characteristics and/or performance requirements. Reference to brand names shall not be allowed”.

Reference to Brand Names

Bias to a particular brandDepleted competition among items of similar nature

Provision:

Implication:

Not supported by Stock Position Sheet (SPS)

Section 428(2) of GAAM Vol. 1 “Each requisition for any single commodity in excess of P1,000 in value shall be accompanied by a stock position sheet of the article being requisitioned.”

Possibility of overstocking

(Pls. refer to the next slides for illustration)

Provision:

Implication:

Procurement of IT equipment not coordinated with the MIS

Section 4(a.2) of D.O. 49, series of 2007 states that: “All procurement of IT equipment and services, other than PC Workstations and Network Printers, whether directly by the DPWH or indirectly through Consultants/ Contractors, shall be coursed through the MIS for review and evaluation.”

Implication:

IT equipment incompatibility with the Department’s network system.

Visit-http://dpwhweb/bureau-service/mis specifications/ index.htm

Provision:

Intranet

BIDDING STAGEBIDDING STAGE

Provisions:

Section 12.1(j), IRR of RA 9184, states that... “The BAC shall have the following functions:..xxx.. recommend to the Head of the Procuring Entity the use of Alternative Methods of Procurement as provided for in Rule XVI hereof...xxx”

Sec. 48.3 of IRR of RA 9184, states that “The method of procurement to be used shall be as indicated in the approved APP. If the original mode of procurement recommended in the APP was public bidding but cannot be ultimately pursued, the BAC, through a resolution, shall justify and recommend the change in the procurement to be approved by the Head of the procuring entity”.

Implications:

The most economical cost of procurement would not be obtained.

Procurement may not be advantageous to the government.

Splitting of contracts is strictly prohibited

Decision to resort to shopping/small value procurement done in context of APP

Resolution No. 09-2009, dated 17 December 2009

General Guidelines:

Provisions:

General Rule:Competitive Public

Bidding

Alternative Methods of Procurement

After approval, BAC may delegate execution to the appropriate bureau, committee or support unit

Justified by conditions specified in the IRR

To promote economy and efficiency

Highly exceptional cases

Section 48, Revised IRR-RA 9184Resort to Alternative Methods Allowed –

Section 52.1(a), states that..a)When there is an unforeseen contingency requiring the immediate purchase, and Amount not to exceed the threshold prescribed in Annex “H” of this IRR.

Provisions:

Shopping (a)

There is “Unforeseen Contingency” when there is an immediate need to purchase goods due to the event or a series of events which could not have been reasonably foreseen by the procuring entity.

Goods readily available off-the –shelf items

Requisites:

May be undertaken directly with a supplier

Amount to be procured shall not exceed P100,000.00

Suppliers from whom the goods are procured are of known qualifications

Provisions:Shopping (b)

Section 52.1(b), states that..

b) Procurement of ordinary or regular office supplies and equipment not available in the Procurement Service involving an amount not exceeding the thresholds prescribed in Annex “H” of this IRR.

Def: Ordinary or regular office supplies are supplies, commodities or materials which depending on the PEs mandate and nature of operations are necessary in the transactions of its official businesses, and consumed in its day-to-day operations. It does not include services such as repair and maintenance of equipment and furniture, as well as trucking, hauling, janitorial, security and related services.

To justify Shopping under Section 52(b) the end-user must ensure that the Reply/Action Document (RAD) from the PS-DBM or it Depot is obtained stating that the regular office supplies or equipment are not available.

Requisites:

Must not be available in the PS-DBM (LOI No. 755 and EO No. 359 s. 1989)

Amount shall not exceed P500,000.00

There is no “Splitting of Contracts”

At least 3 price quotations shall be obtained from bonafide supplier.

Procurement does not fall under Shopping (a) and (b)

Small Value Procurement

Provisions:

Section 53.9, states that..Where the procurement does not fall under Shopping in Section 52 of this IRR and the amount involved does not exceeds the thresholds prescribed in Annex “H” of this IRR.

Applicability: All (Infra, Goods & Consulting Services)

Requisites:

Quotation from at least 3 supplier, contractors, or consultants of known qualification

Amount does not exceed the threshold (P500T)

Section 53.2 states that.. In case of imminent danger to life or property during a state of calamity, or when time is of the essence arising from natural or man-made calamities or other causes where immediate action is necessary to prevent damage to or loss of life or property, or to restore vital public services, infrastructure facilities and other public utilities”

Provision:

Negotiated Procurement (Emergency Cases) -

Prices may not be advantageous to the government

Applicability: All (Infra, Goods & Consulting Services)

PEs directly negotiates a contract with a technically, legally and financially capable supplier, contractor or consultant.

Implications:

It may not promote economy and efficiency

The Request for Quotation (RFQ), indicating the specifications, quantity, Approved Budget for the Contract (ABC), and other terms and conditions of items to be procured, shall be prepared, and;

Provision:

Item 3 (a) of Appendix 18, Revised IRR of RA 9184, states that...

Terms and Conditions (Excerpt from RFQ Forms)

1. All entries must be typewritten or legibly written.

2. Delivery period within _____ upon receipt of the approved funded Purchase Order (PO). Administrative penalties pursuant to Sec. 69 of the Revised IRR-RA 9184 shall be imposed for non-delivery without valid reasons.

3. Warranty shall be for a minimum of three (3) months for supplies & materials; one (1) year for Equipment from date of acceptance by the end-user.

4 Price validity shall be for a period of sixty (60) calendar days

5. G-EPS Registration Certificate/Mayors Permit/DTI shall be attached upon submission of the quotation

6. Bidders shall submit original brochures showing certifications of the product.

7. Please indicate brand for each items being offered.

8. The approved budget ceiling for this procurement is _____________.

Canvass form continued….

The RFQ must also prescribe the manner by which price quotations shall be submitted i.e., by sealed or open quotation, and the deadline for their submission. In all instances, however, information relating to the examination, evaluation, and comparison of price quotations shall be kept confidential and should not be disclosed to any other party except to those officially concerned until award of contract.”

Provision:

Item 3 (b) of Appendix, Revised IRR of RA 9184, further states that...

Implications:

Failure to utilize the prescribe format terms and conditions not known by the prospective bidders

Assertive of compliance to the Terms and Conditions could not be determined.

(Pls. refer to the next slide for Illustrations)

Provisions:

Sec. 21.2.(b) of IRR of RA 9184, states that ...Invitation to Bid..shall be posted continuously in the Phil-GEPS website, the website of the procuring entity, if applicable, for seven (7) c.d. starting on the date of advertisement”.

Appendix 18.3.d Guidelines for Shopping and Small Value Procurement, Revised IRR-RA 9184, states that...RFQs SHALL also be posted for a period of seven (7) c.d. in the Phil-GEPS website, website of the PE, if available, and at any conspicuous reserved for the purpose in the premises of the Procuring Entity...xxx..., this posting requirement SHALL NOT be applicable:

Implications:

Non-transparency and competitiveness of procurement activities.

I. When there is an unforeseen contingency requiring immediate purchase under Sec. 52.1 (a) of the IRR; or

II. RFQs with ABCs equal to Fifty Thousand Pesos (Php50,000.00) and below

Medium≤ 2 M (goods) ≤ 5 M (infra)

2 M (goods)> 5 M (infra)

Frequency

Newspaper Once in 1 newspaper

PhilGEPS Continuously for 7 cd

Website of Procuring Entity Continuously for 7 cd

Conspicuous place Continuously for 7 cd

hyperlink

Section 13.1, Revised IRR of RA 9184, states that…“to enhance the transparency of the process, the BAC shall, in all stages of the procurement process, invite, in addition to the representatives of the COA, at least two observers, who shall not have the right to vote, to sit in its proceedings”; and;

Section 13.3, Revised IRR of RA 9184, further provides that..”Observers shall be invited at least three (3) calendar days before the date of the procurement stage/activity. The absence of observers will not nullify the BAC proceedings, provided that they have been duly invited in writing.”

Provisions :

Provisions:

c)Prepares minutes of the meetings and resolutions of the BAC;

a. Secretariat which will serve as the main support unit of the BAC….xxxx…The Secretariat shall have the following functions and responsibilities……a----j. . :

Section 14.1.c. BAC Secretariat

The HOPE of the Procuring entity shall create

Section 29 of IRR of RA 9184, states that “...The minutes of the bid opening shall be made available to the public upon written request and payment of a specified fee to recover cost of materials.”

Implication:

Interested or concerned public may question the credibility of the bidding process

Provision:

Sec. 38.2, IRR of RA 9184, states that ....The maximum periods and earliest possible time for action on specific procurement activities are provided for in Annex “C” of this IRR. In case the deadline for each activity falls on a non-working day (i.e Saturday and Sunday), legal holiday, or special non-working holiday, the deadline shall be the next working day.”

Implication:

Rushing or shortcutting of procurement process/activities may result to defective documentation.

(Please refer to the next slide for Illustration)

Table 8 - List of Sample Transactions on Procurement Timelines

Kalinga District Engineering Office

Period of Action on Procurement Activities

As per DEO

As per Annex "C" Earliest Possible Time

Name of Project Variance

(Total number of days From publication of ITB to issuance of NTP)

(Total number of days From publication of ITB to issuance of NTP)

(1) (2) (3) (4) = (2-3)1 Supply and delivery of various maintenance

materials for use in the rehabilitation of road damages along Ableg Creek

12 days 28 days (16 days)

2

Supply and delivery of maintenance materials for use in the rehab. Of Luplupa Footbridge


3

Supply and delivery of various maintenance materials for use in the rehabilitation of road damages along Ableg Creek


Sec. 37.1.1, Revised IRR of RA 9184, states that…”The BAC shall recommend to the HOPE the award of contract to the bidder with LCRB/HRRB or Single Calculated Bid/Rated Responsive Bid after the post qualification process has been completed”.

Sec. 37.1.3, Revised IRR of RA 9184, states that…”in case of approval, the HOPE shall immediately issue the Notice of Award. . . x.x.x”

Provisions:

Sec. 37.1.5, Revised IRR of RA 9184, states that. .. “Contract Award shall be made within the bid validity period provided in Section 28 of this IRR”.

Implication:

Lack of transparency on procurement process

Provisions:

Sec. 37.1.6, IRR-A of RA 9184, states that....The BAC, through the Secretariat, SHALL post, within three (3) calendar days from its issuance, the Notice of Award in the PhilGEPS, the website of the procuring entity, if any, and any conspicuous place in the premises of the procuring entity”, while

Implication:

Lack of transparency in the procurement process

Sec. 37.4.2, IRR-A of RA 9184, states that “The procuring entity, through the BAC Secretariat, SHALL post a copy of the Notice to Proceed and the Approved Contract in the PhilGEPS or the website of the procuring entity, if any, within fifteen (15) calendar days from the issuance of the Notice to Proceed.”

guidelines on pre audit

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