person/d -...

NO

Person/Dept.

ResponsiFrom To

AAR 2018(3)

The valuation, existence and accuracy ofthe Other Supplies and Materials Inventory-Drums and Pallets accounts in the amountof P34,979,733.40 and P6,406,334.17,respectively, could not be ascertained dueto the unreconciled records of the agencywith the actual physical count and thosesupposed to be in the custody of customersthus, casting doubt as to the reliability ofthe accounts.

For compliance Warehouse Supv/ Acctg Supv

Jun-18 May-19 d

Management stated thatthey will followthe recommendation toderecognize the totalamount duefrom “INACTIVE” customers amounting toP8,655,610.94.

AAR 2018(4)

Poor collection strategy of AccountsReceivable resulted in an outstandingbalance of P22,933,683.38 as of May 31,2018, of which the amount ofP9,548,028.29 represent those receivablesranging from one month to one year andabove which may no longer be collected atall and may result to loss of governmentfunds.

The management is now doing a close monitoring of all its receivables.

Acctg supv

Jun-18 May-19 d

Audit Observations

Status of

Implementation

NORTHERN FOODS CORPORATIONSarrat, Ilocos Norte

AGENCY ACTION PLAN AND STATUS OF IMPLEMENTATION For the Fiscal Year 2018

Ref Action PlanTarget Implementation

Date

Reason for Partial/Delay/Non-Implement-ation,

if applicable

Action Taken/ Action to be

taken

As of 31 December 2018

Out of the 28 audit recommendations contained in prior years’ ( 6 in 2018, 5 in 2017, 3 in 2016, 2 in 2015, 2 in 2014, 2 in 2013; 1 in 2012; 4 in 2011; 1 in 2010, and 2 in 2009) Annual Audit Reports, six (6)were (a) fully implemented, one (1) was (b) on going, and twenty one (21) were ( d) partially implemented.

AGENCY ACTION PLAN and STATUS of IMPLEMENTATION

Audit Recommendations

Agency Action Plan

We reiterated the auditor’s previousrecommendation to (a) direct the accountant todrop/derecognize from the NFC’s books theamount of drums and pallets that can no longerbe accounted for based on existing recordsespecially those considered as “INACTIVE”. Inaddition, we further recommended thatManagement (b) make it a policy to implementa reasonable amount of deposit on returnablecontainers (drums) in order to oblige thecustomers to promptly return the drums andpallets to prevent losses on the unreturneddrums and pallets.

We recommended that management adoptstrategies to collect from its clients and iffeasible, deduct from the salaries and benefitsof employees the outstanding balancesguaranteed by them to avoid the accumulationof overdue accounts.

Page 1 of 15

NO

Person/Dept.

ResponsiFrom To

Audit Observations

Status of

Implementation


Date


if applicable


taken



Agency Action Plan

AAR 2018(5) same asAAR2014 (3)AAR 2011(2)

The Other Receivables-Others accountincluded receivables in the total amount ofP2,443,761.69 which have been outstandingand non-moving for more than 10 years,thus, considered Dormant ReceivableAccounts pursuant to COA Circular 2016-005on the Guidelines and Procedures on theWrite-off of Dormant Receivable Accounts,Unliquidated Cash Advances, and FundTransfers of National Government Agencies(NGAs), Local Government Units (LGUs) andGovernment-Owned and ControlledCorporations (GOCCs) dated December 19,2016.

Finalize request for writeoff to be submittef toCOA proper

Admin Manager amd Acctg Supv.

Jun-18 May-19 d

AAR 2018(6)

The recognition of Deferred Tax Asset ofthe agency in the amount of P1,500,509.78is not in accordance with IAS 12 because itis not probable that taxable profit will beavailable within which the unused tax lossesor unused tax credits can be utilized.

For compliance

Accounting Supv

a

AAR 2018(8)

The valuation and existence of the “Items inTransit” under the Other Supplies andMaterials Inventory account in the amountof P46,289.46 could not be ascertained dueto the non-submission by management ofthe necessary schedule showing thecomposition of the said items which iscontrary to PAS 1, paragraph 12.

For compiance

Accounting Supv

Jan 1,2019

May-19 a

For presentation tothe Notes tofinancial statements.

We recommended that management adhere tothe provisions of PAS 1- Presentation ofFinancial Statements in the preparation andpresentation of the agency’s FinancialStatements and Notes to Financial Statementsfor a better and more expedient understandingby the users of financial information.

We recommended that management: a. Exertexhaustive efforts to collect from AgrimanConsulting Services and if efforts prove futile, arequest for write-off in consonance with COACircular 2016-005 be undertaken and; b.Formulate a policy/program to strictly monitorand collect all receivables accruing to theagency in order to prevent possible losses.

We therefore recommended that Managementdirect the Accountant to consider the provisionsof IAS 12 and discontinue recognizing DeferredTax Asset especially when it is not probablethat taxable profit is available.

Page 2 of 15

NO

Person/Dept.

ResponsiFrom To

Audit Observations

Status of

Implementation


Date


if applicable


taken



Agency Action Plan

AAR 2018(9) same asAAR2017 (10); AAR2012 (8); AAR2011 (16)

Evaluation of the Gender and Development(GAD) Plan and Budget for the FY 2018revealed that the agency has onlyappropriated a total amount of P331,975.00for its Gender and Development (GAD) Planwhich is equivalent to 0.12% only of theTotal Corporate Operating Budget andutilized P326,101.00. In addition, majorityof the activities stated in the agency’s GADPlan are not gender-related which iscontrary to the PCW, NEDA and DBM JointCircular No. 2012-01.

Management stated in aletter-reply dated October17, 2018 that two (2) NFCemployees will attend theSeminar on GAD Planning,Budgeting and Auditing tobe conducted by COAProfessional andInstitutional DevelopmentSector which is scheduledon November 27-29, 2018to capacitate the membersof the GAD Focal PointSystem.

For compliance

d

AAR 2017(3)

For Compliance

Warehouse Supv/

Acctg Supv

Jan-19 May-19 d

d

b

b

Management proposed that

the validation/confi

rmation be continued with the remaining

customers.

a) Designate full-time personnel who wouldbe responsible in reconciling the balance ofdrums and pallets from the 14 customerssubjected to direct confirmation last August 30-31, 2017. Said personnel should focus on thedrums and pallets actually counted using theperiod August 31, 2017 as the ct-off date, thenwork backwards to establise the accuratebalance. Once established, other customers'account should also be verified and reconciled.

Other Supplies and Materials Inventory –Drums and Pallets carried in the books at₱36,311,396.04 and ₱6,406,334.17,respectively, are unreliable due tosignificant discrepancies noted between thebalance of drums and pallets supposedly inthe custody of customers as observed in thepartial physical count and that of theaccounting recored, thus, fair presentationof the financial statements is at stake.consequently, management assertions onaccuracy and existence of account balanceare uncertain.

d) Closely monitor the whereabouts ofdrums and pallets henceforth and coordinatewith the customers regularly to ensure accuratebalances of drums and pallets.

b) Bill the Customers for the Drums andPallets that are properly documented as a resultof the reconciliation process in order to recoverthe cost;

c) Direct the Accountant todrop/derecognize from NFC books the amountof drums and pallets that can no longer beaccounted for based on available records.Journal Entry Voucher to cover the recognitionof such inventory items should be properlysupported with complete documentation.

We reiterated the previous recommendationthat Management through the Board ofDirectors formulate GAD Policy, which is alignedwith the Magna Carta of Women or RA 9710 inorder to promote gender awareness andequality in the organization. Moreover, create aGAD Focal Point System (GFPS) and advise theGFPS to attend the various capacitydevelopment seminars on GAD for them to becapacitated. Finally, it is recommended for theManagement to coordinate with the GCG, whichacts as the oversight agency of all GOCCs,relative to the review and submission of GADPlans and Budgets to PCW.

Page 3 of 15

NO

Person/Dept.

ResponsiFrom To

Audit Observations

Status of

Implementation


Date


if applicable


taken



Agency Action Plan

2 AAR 2017(4) same aAAR 2016(3)

Acctng Supervisor

a

d

a

Inspected and documented per PDCS 16-

019 dated 12/14/2016

and prepared Inventory & Inspection

report no 16-035 dated 12

a

Disposal recorded per

JEV#10-049.18 dated October 31, 2018 with Waste Material

Report

6 AAR 2017(8)

Various unserviceable properties valued at₱9,073,525.92 were still included in theReport on the Physical Count of PPE as atMay 31, 2017, which should have beendisposed of for de-recognition in the booksof the agency pursuant to PAS 16 andExecutive Oder (EO) No. 888, therebydepriving the agency the potential incmoefrom disposal of the same.

Management willundertake action plan tofinally determine cost ofdisposable items foradjustment from thebooks

Property Officer / Accounting supervisor

Jun-19 May-19 bOn going

evaluation.

Some for disposal already

documented with Property

disposal control sheet

report . (PDCS # 17-017 and 17-018) dated Sept 12 & 19,

2017 ti l

Based on the foregoing, we reiterated ourprevious audit recommendations, with someamendments that Management:

a) Direct the Inventory Committee toprepare a separate report of all non-movingitems of Other Supplies and Materials Inventory(Spare Parts) and assess them for possibleimpairment;

2. Other Supplies and Materials Inventory(Spare Parts) includes ₱1.7 Million non-moving items and no allowance forimpairment was provided for.

We recommended that Management undertakeimmediate and proper disposal of the agency’sunserviceable and disposable machinery andequipment totaling ₱9,147,975.91 (Annex “F”)to avoid unnecessary expenses pursuant to EONo. 888. The agency may still benefit from theresidual value of said properties when these aredisposed through sale.

c) Submit the foregoing report to the Officeof the Auditor for inspection and appraisal;

d) Instruct the Disposal Committee tofacilitate the disposal of all non-movinginventories thru trade-in or sale at a lower costonce the report duly inspected and appraisedby COA has been received; and

e) Direct the Accountant to prepare thenecessary adjusting journal entry once thesubject inventory items have been disposed oftaking into consideration the proper accounts tobe used in accordance with COA Circular No.2015-010 dated December 1, 2015 and otherrelated issuances.

Page 4 of 15

NO

Person/Dept.

ResponsiFrom To

Audit Observations

Status of

Implementation


Date


if applicable


taken



Agency Action Plan

7 AAR 2017(9)

The fiscal year of the agency begins on thefirst day of June and ends on the last day ofMay of each year as stated under ArticleVII, Sec. 2 of the Amended By-Laws of theNorthern Foods Corporation, thus thefinancial statements submitted at thereporting date are not in harmony with theaccounting period of all Government-Ownedand Cotrolled Corporations, which is not inaccordance with Sec. 1 of PD 777 nd otherrelated issuances.

Management requestedbased in their letter-replydated 25 Aug. 2017 thatthis matter will bediscussed with the NFCBoard of Directors and getthe blessing of theDepartment of Finance,the Land Bank of thePhilippines, and theGovernement Commissionfor GOCC before makingrepresentation with theSEC.

President Jan-18 Dec-18 bWaiting for the response from

DOF.

AAR 2017 (10) Same

as AAR 2012 (8) & AAR 2011 (16)

Evaluation of Gender and Development(GAD) Plans and Budgets for FY 2017discloses various flaws caused byunawareness of Management on GADmandate, thus, theprograms/activities/projects identifiedtherein are not gender responsive andappropriations do no account for at least5% of the total Corporated OperatingBudget. Lokewise, said plan was notendorsed by the Phil. Commission onWomen.

For compliance

Admin & Fianance manager

Jan-18 Dec-18 b

Management will coordinate with the GCG regarding the review and

submission of GAD Plans and Budgets to PCW

Admin/Finance Manager and

Admin Supervisor

attended GAD Seminar last

November 27-29, 2018

9 AAR 2016( 2)

9. Management assertions on accountsbalance relative to the sub-accountscomprising the Supplies Inventory with anaggregate sum of Php58,787,917.01 as ofMay 31, 2016 is doubtful due to thefollowing deficiencies / inaccuracies noted inaudit:

a

Adjusted per JEV 09-038-16 dated Sep 30,

2016

We reiterate our prior year’s recommendationswith certain amendments for the Managementto: a: Identify the causes of negative balancesin the agricultural supply Inventory and instrustthe ccountant to prepare the necessaryadjusting journal entry, where appropriate.

We recommended that Management throughthe Board of Directors formulate GAD Policy,which is aligned with the Magna Carta ofWomen or RA 9710 in order to promote genderawareness and equality in the organization.Moreover, Management is advised to direct theGFPS to attend the various capacitydevelopment seminars on GAD for them to becapacitated. Finally, it is recommended for theManagement to ccordinate with the GCG, whoacts as the oversight agency for all GOCCs,relative to the review and submission of GADplans and Budgets to PCW.

We recommendedthat Management throughthe Board of Directors make representation with the Securities and Exchange Commission (SEC)for the amendment of Art. VII, Sec. 1, of theNFC’s By-Laws justifying the need to repeal saidsection even in the absence of quorum in orderto conform the year-end financial statements toSec. 1 of PD 777 and other related issuances.

Page 5 of 15

NO

Person/Dept.

ResponsiFrom To

Audit Observations

Status of

Implementation


Date


if applicable


taken



Agency Action Plan

10 AAR 2016(3) sameas AAR2017(4)

a

a

Disposal recorded per

JEV#10-049.18 dated October 31, 2018 with

c

Property Disposal

Control Sheet (PDCS) No. 16-

019

On going evaluation. Some for disposal already

documented with Property

disposal control sheet report

Based on the foregoing, we recommendManagement to:

b) Submit the foregoing report to the Office of the Auditor for inspection and appraisal;

c) On the basis of such report duly inspected and appraised by COA, facilitate the disposal of all non-moving inventories thru trade-in or sale at a lower cost; and

Management willundertake action plan tofinally determine cost ofnon-moving inventoryitems as basis of adjustingthe books

a

a) Prepare a separate report for all non-moving items of Spare Parts and Construction Materials Inventory and undertake the assessment to determine the amount of impairment;

d) Once the subject inventory items are disposed, direct the Accountant to prepare the necessary adjusting journal entry by debiting Impairment Loss-Inventories and crediting Other Supplies and Materials Inventory or other related inventory account as prescribed by the COA circular No. 2015-010 dated December 1, 2015 for the difference between the carrying amount and the recoverable amount of the assets.

10.Non-moving inventory items under Spare Parts and Construction Materials Inventory amounting to Php1,693,669.83 and Php734,240.02, respectively, kept for a certain number of years, were still carried in the books under the related Inventory accounts contrary to PAS 36 and COA Circular 2015-010 dated December 1, 2015, thereby affceting its fair presentation in the financial statements.

Page 6 of 15

NO

Person/Dept.

ResponsiFrom To

Audit Observations

Status of

Implementation


Date


if applicable


taken



Agency Action Plan

11 AAR 2016(7)

11.The E1 Recirculating Pump worth Php3.7Million has been unutilized from the time ofits acquisition in 2004 due tocompatibility/technicality issues, therebydepriving the agency of the benefits thatcould have been derived from its usage andequally incurring loss opportunity for theimproper investment of their scarceresources.

Installation of the sparerecirculating pump is beingproposed in view if theprojected increase in pasteproduction.

d

The installation of the new

pump will be included in the

plans and budget for

CY2018 processing

season, considering the annual projected

increase in the paste

production volume.

12 AAR 2015 (2) Same asAAR 2016 (2)

To finalize in the Notes toFinancial Statements thedrums and palletsaccountability ofCustomers. NFC to sendStatement of Accounts(SOA) to customers withdrums and palletsbalances

Jan 18 May 2018 c

Review and finalization of

quantity accountabilities

SOA were sent to customer

for the 90 day accountability. Physical count is moved to May 2019

We recommend management to prioritize the acquisition of the upgraded version of the other components of the evaporator that would suit to the capability of E1 Re-circulating Pump in order to utilize the same at its maximum capacity. Likewise, Management is advised to consider all possibilities or options inclusing cost-benefit analysis and to involve other Department heads whenever a decision to buy or not to buy a high-value item of greater impac to its operations.

c) Conduct an onsite inventory of drumsand pallets with the customers in order toestablish the correct valuation of drumsinventory in the books.

12. The Other Supplies Inventory accountwith an aggregate sum of Php43,518,404.78 as of May 31, 2015 as recorded in the books did not tally with the balances obtained inaudit of Php16,390,864.37 or a difference ofPhp27,127,540.41, casting doubt onmanagment assertions on completeness ofaccounts balance.

Page 7 of 15

NO

Person/Dept.

ResponsiFrom To

Audit Observations

Status of

Implementation


Date


if applicable


taken



Agency Action Plan

13 Coordinate with NLDC asto the documentation ofthe commodatumincluding pictures of itemsto be disposed. Admin &

Finance Manager

d

d

c

c

c

AAR 2015 (7)

13. Machinery and Laboratory Equipment without cost, which were received by NFC sometime in June 2003 and August 2004, remained unrecorded in the books of the agency due to absence of duly signed Contract of Loan Commodatum. Likewise, the bulk of this equipment is already unserviceable and management could not dispose the same due to question of ownership.

We have recommended management toa. Secure from the National LivelihoodDevelopment Corporation (NLDC) (formerlyLivecor) a copy of the perfected Contract ofLoan Commodatum in 2003;

e. Dispose the subject property, if itwarrants.

NLDC was abolished as of September 2015. Management to dispose items from NLDC. The consideration which will be generated from the sale of the items will be set aside by NFC together with the documents relating thereto so that in case that NLDC will claim

NFC has communicated with NLDC thru emails with Ms. Luz Jacinto re: items. Awaiting

NLDC's final action on this.

b. Negotiate with NLDC management throughthe Board of Directors, for the NFC to disposethru public auction those subject unserviceableproperties and to come up with an agreementas to the disposition of proceeds from sale ofsuch properties, in the event the consummatedContract of Loan Commudatum is no longeravailable.

c. Require the Accountant to record in thebooks the subject property in accordance withthe terms and conditions stipulated in thecontract, in the event that Management will beable to secure the signed Contract of LoanCommodatum;

Dependent on the the final

action of NLDC

d. Direct the Property Officer to prepare anInventory and Inspection Report ofUnserviceable Properties once authority fromNLDC or the duly signed contract becomesavailable and submit the same to COA forappraisal; and

Page 8 of 15

NO

Person/Dept.

ResponsiFrom To

Audit Observations

Status of

Implementation


Date


if applicable


taken



Agency Action Plan

14 AAR 2014 (2)

14. The account “Due from NGAs (BIR-VAT)” recorded at Php3,980,246.76 as ofMay 31, 2014 which has remainedoutstanding for more than 20 years iscertain of uncollectibility, thus, should bewritten-off from the books after havingsought authority in accordance with RuleVIII, 2009 REVISED RULES OFPROCUREMENT of COA (RRPC) in order topresent fairly the Agency's financialcondition and results of operation.

Finalize request for write-off to be submitted toCOA Proper.

Admin & Finance Department -Accounting

d

The Audit Teamadvised management toreuest for write-off directly toCommission Porper of theCommission onAudit per letterreceived December 5,2016. The replyof BIR RegionI, CalasiaoPangasinan does not havean account"DUE TO NFC"as verified.

NFC wrote the Commission Proper re: write-off but due to absence of the original documents, letter was not received by the Commission. Still pending

15 AAR 2014 (3) (AAR 2011 (2)

15. The account “Other Receivables-Others(Agriman Consultant, Inc.)” carried in thebooks at P2,443,761.69 as of May 31, 2014which has remained outstanding for morethan 20 years is certain of uncollectibility,thus, should be written-off from the booksafter having sought authority in accordancewith Rule VIII, 2009 REVISED RULES OFPROCUREMENT of COA (RRPC) in order topresent fairly the Agency's financialcondition and results of operation.

Finalize request for wrieoffto be submitted to COAProper.


d

Auditor's Rejoinder: During the exitconference, theAudit Teamadvised management tofurther refer thematter to theAudit TeamLeader becausesuch is notconsidered astrade receivable.

Submitted to COA Supervising Auditor for the request letter last September 11, 2015 (NFC OIL 149-2015) which they responded that they can not act upon as it is not within the jurisdiction of the Audit Team to

In view of the dormancy of such accountand its certainty of uncollectibility, we haverecommended that such be the subject of arequest for write-off by NFC Management tothe Commission Proper, Commission on Audit,Quezon City.

Management shall file a request fo reconsideration due to inability to produce the original documents

despite all earnest efforts to locate them.

Page 9 of 15

NO

Person/Dept.

ResponsiFrom To

Audit Observations

Status of

Implementation


Date


if applicable


taken



Agency Action Plan

16 Procurement of Legal services for Legal consultant to recommened appropriate action, and still pending with OGCC

2. An inventory of equipments and computation of amount to be charged to Amertech is already prepared. Management to pursue the termination of contract and/or file a case against Amertech. NFC wrote COA to request for its written concurrence.

In case of the continued refusal and or failureof AMER-TECH to fulfill its obligations, NFCshould now enforce its entitlement forliquidated damages and all other damageswhich may be reasonably attributable.Otherwise, NFC is constrained to avail of all thelegal remedies necessary against the defaultingparty.

16. The contractual obligation of AMERTECHIndustrial Ventures, Inc. to supply the drysaturated steam which NFC needed for itstomato paste production for Crop Year 2012-2013 was not met, resulting in breach ofcontract.

We have recommended that NFC Managementdemands fulfilment by AMER-TECH of itscontractual obligations, as demand is necessaryto put it (AMER-TECH) in default.

Due to the non-performance ofAMERTECH to theprovisions of the contract,NFC MANAGEMENT iscompiling all relevantrecords and documents topush for the termination ofthe contract based on theguidelines, rules andregulations of thePhilippine Governmen

Management shall dispose of the property andthe proceeds shall be applied to offset anyamount due to NFC from AMERTECH.

Management

Jan 31,2018

Amertech wasgiven anotherchance to makethe BiomassBoiler run 100%for Crop 2014as per Contractbut did notmaterialize asproponent's useof rubber orcoal as fuel wasdisallowed.

Dec 31,2018

d

AAR2013(1)

Page 10 of 15

NO

Person/Dept.

ResponsiFrom To

Audit Observations

Status of

Implementation


Date


if applicable


taken



Agency Action Plan

17 Collection letter was sentto Mr. Jayme Ancla,President of Amer-TechIndustrial Ventures, Inc.last September 16, 2013.

During the 18 July 2014meeting with NFC Pres.FJSMontes, VPONDMendoza and Mr.Jayme Ancla at NFCMandaluyong Office, Mr.Ancla said that aboutP’27M was invested in thefacilities alone. He wasagain informed of hiscontractual obligation tosettle the

d

The balance ofP'977,567.00 will form part ofthe settlementonce thecontract termination iseffected.

To be includedfor collectionupon filing oflegal case.

AAR2013(2)

12. The balance of the “Advances” grantedto AMER-TECH Industrial Ventures, Inc. inthe amount of Php977,567.00 remainedoutstanding as at Crop Year End, resultingin possible loss of NFC’s funds, in the eventthe Contractor fails to deliver thegoods/services and/or make good of thepurposes for which the advances weregranted.

In order to avoid the possible loss of funds, wehave recommended that NFC Managementdemands settlement/liquidation of theoutstanding Advances granted to AMER-TECH.

TIME is of the ESSENCE.Management shall offset the amount from theproceeds that will be generated from the sale ofthe boiler.

Legal consultant /MfgManager

Page 11 of 15

NO

Person/Dept.

ResponsiFrom To

Audit Observations

Status of

Implementation


Date


if applicable


taken



Agency Action Plan

18 AAR2012 (8) same as AAR 2011 (16)

18. The agency did not incorporate Genderand Development (GAD) plans andprograms in their annual corporateoperating budget for the fiscal year 2011,which is not in conformity with Section 4 ofthe Joint Circular No. 2004-01 of the DBM,NEDA and the National Commission on theRole of Filipino Women hence, noaccomplishement report is submitted for thispurpose.

To attend the Seminar onGAD Planning andBudgeting in order toaddress the GAD issuesand concerns, which areorganization-focused andclient-focused.

d

NFC can not fully implement GAD Plans and Program equivalent to at least 5% of its total budget due to limited funds for operation as it subsist on its own Sales alone which is not even enough to sustain operations.

Due to limited funds, NFC has included GAD related trainings in the Annual Training Plan budget. Attendance to seminar on GAD planning was done last Nov 27-29, 2018.

19 Finalize request for wrieoffto be submitted to COAProper.


d

Field personnel review ofstatus and collectibility ofthe accounts

d

AAR 2011(2)

AAR 2014 (3)

19. The Non-Current Assets-OtherReceivables-Others amounting toPhp3,861,537.24, have been outstandingfor more than twenty-years now andexistence of these accounts in the booksaffects the accuracy of the true financialcondition of the agency.

We recommended and management agreed to:a) Request for write-off the account of ACIamounting to Php2,443,761.69 pursuant toSections 4 and 5 Rule VI of the Revised Rulesof Procedures of COA;

Auditor's Rejoinder: During the exit conference, the Audit Team advised management to further refer the matter to the Audit Team Leader because such is not considered as trade receivable.

Submitted to COA Supervising Auditor for the request letter last September 11, 2015 (NFC OIL 149-2015) which they responded that they can not act upon as it is not within the jurisdiction of the Audit Team to decide on such matter.

b) Determine the farmers who are included inthe Contract Growers 1988-1989 who are stillconnected with NFC at present. Deduct fromwhatever amount due them, if any, their unpaidaccounts. If no longer connected, request forwrite-off in accordance with the provisionsstated in letter a above and.

c) Request the corporation’s lawyer to issuefinal demand letters to all concerned NFCofficers and consultant and to institute legalremedies to collect their accounts.

Advice management to integrate in the annualbudget of the agency, GAD plans and programsand to appropriate at least 5% of its totalbudget for this purpose pursuant to NEDA,DBM, NCRFW Joint Circular No. 2004-01.

Page 12 of 15

NO

Person/Dept.

ResponsiFrom To

Audit Observations

Status of

Implementation


Date


if applicable


taken



Agency Action Plan

20 AAR 2011(4)

20. The concerned official and consultantdid not turn-over some properties of NFCvalued at Php233,105.26 to the agencywhen they were separated from office,contrary to Memorandum Circular No. 34, s.1993, hence the existence of saidproperties could not be established duringthe conduct of actual physical count of PPE.

A letter was sent toconcerned separatedofficial last February 12,2019. Since no responsehas been received,Management will offsetwhatever amount due tothe separated employeesfrom the amount of un-returned properties.

Admin & Finance Departm

ent -Accountin

g

d

Waited for concerned separated employee's response.

Proposed to offset against accountability but then ATL Ms. Maximo did not allow as employee has not been cleared with money and property accountabilities. To send another reminder letter.

21 As a matter of control, ICThas continued toimplement user access login/logged out monitoringsystem for newlydeveloped in-housesystem.

Office of the VP

for Operations / ICT

d

Implemented. Access to applications are already password-protected.

A draft policy andguidelines on security isbeing reviewed forrelevance and applicabilityto NFC setting.

Fo compliance

We recommend management to makerepresentations to the concerned official andconsultant for the smooth retrieval of thoseproperties not accounted for in audit.Otherwise management shall apply alladministrative and criminal sanctions.

In view of the foregoing, it is highly recommended that top management should formulate an Information Systems Security

Policy to address the weaknesses noted in the existing systems of the agency and to safeguard the information resources.

AAR 2011(12)

21. The agency has no Information SystemsSecurity Policy thus; some Data Encoder caneven access and make changes in themaster file and has an access to data, whichare supposed to be formanager/supervisor’s level and/or ITpersonnel only.

Page 13 of 15

NO

Person/Dept.

ResponsiFrom To

Audit Observations

Status of

Implementation


Date


if applicable


taken



Agency Action Plan

22 AAR 2011(14)

22. The Information & CommunicationTechnology Section (ICT) under the Officeof the Vice-President for Operations has noexclusive room assignment; instead, theyshare office space with the Agri-Productionand Extension Department. This set up isnot a suitable physical control over the ITequipment and people.

Auditor's Rejoinder: The Audit Team emphasized during the exit conference that if it is not feasible to have an exclusive room for ICT, we further advised management to secure the area intended for ICT by enclosing the space being occupied in the APEx Department.

a

23 The Northern FoodsCorporation (NFC) isamong the GOCCs listedunder the GCG classifiedunder the Food Sector.

Admin & Finance Department

Reconciled principal balances for 4 Creditors.

With GCG as the “centraladvisory, monitoring, andoversight body withauthority to formulate,implement and coordinatepolicies” for GOCCs likeNFC, Management awaitsGCGs final plan for thecompany. Per GCG pressrelease dated March 3,2014, NFC is now

GCG hasapproved theprivatization ofNFC. Awaitingfor thecreationTechnical WorkingGroup (TWC)composed ofNFC, NLDC,LBP / DOF andGCG.

It is therefore recommended that the ICT be transferred to an exclusive place, preferably on the

second floor of a building, to safeguard the computer hardware, software and IT personnel against intentional and unintentional threat from the physical and environmental

exposures.

AAR 2010 (1)

23..The Northern Foods Corporation (NFC) could hardly pay the amortizations and corresponding interests of its Current and Long Term Liabilities, a manifestation that the Corporation could not sustain itself and is relying mainly from the creditors’ bounty of granting / restructuring existing loans requlting in the enormous increase of financing charges.

We recommend that Top Management shouldmake a careful evaluation on the financialstatus and going concern of the Corporation.Consider the cropping up of loans and financialcharges and capability of the corporation tomeet all its obligations.

d

Still waiting positive

response from concerned creditors.

Page 14 of 15

NO

Person/Dept.

ResponsiFrom To

Audit Observations

Status of

Implementation


Date


if applicable


taken



Agency Action Plan

24

NFC has previously sentcollection letters to allconcerned. d

All liable persons are no longer connected with the company.

1.) Resentcollection letters.

2.) For filinglegal action.

25 NFC Managementcontinues to collectespecially for those whoare still connected with the company. To date,P’255,500.00 have beencollected.

dFor filing oflegal action.

Noted. To take upadjustment as proposedwith proper disclosureunder PAS 12 in the May31, 2014 NFC FinancialStatements.

Agency sign-off:

DateNote : Status of Implementation may either be (a) Fully Implemented, (b) Ongoing, (c) Not Implemented, (d) Partially Implemented, or (e) Delayed

Management should exert extra effort in collecting said receivables from the persons determined to be liable by directing the Cashier to withhold the payment of any money due such persons, so as to enforce full settlement of the audit disallowances.

AAR 2009(2)

24. Total Audit Disallowances amounting oPhp1,653,214.29 as affirmed by theCommission Proper under COA DecisionNos. 2006-001 and 2006-049 dated January5, 2006 and August 10, 2006 respectivelyand affirmed further by the Supreme Courtunder G.R. No 174683 dated December 5,2006, had not been settled by the personliable, despite the issuance of final Order ofAdjudication dated November 14, 2007 bythe COA General Counsel.

Management should demand payment fromthose persons primarily liable therefore or facethe consequence as a result thereof as providedunder Sec.8, Rule XII of the 1997 of theRevised Rules of Procedures of the Commissionon Audit.

The following courses

Implement the Final Order of Adjudication by directing the Cashier to withhold the payment of any money due such persons who are still in service.

Take legal action against officials no longer connected with the Agency.

Name and Position of Agency Officer

AAR 2009 (4)

25. Audit Disallowances amounting to Php2,589,179.72 remained unsettled and unrecorded in the books of accounts in violation of Sec. 6 of Rule IV of the 1997 Revised Rules of Procedures of the Commission on Audit.

Management should book up the disallowances and enforce settlement thereof from the persons liable.

RUTH AMARYLIS CHRISTIE F. VALENCIAADMIN AND FINANCE MANAGER

Limitations in collecting from liable persons who are no

longer connected with the company but Statement of Account are

being sent.

Page 15 of 15

person/d -...

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