memo to all sas & atls on the audit observations o

8/10/2019 Memo to All SAs & ATLs on the Audit Observations o

1/14

MEMORANDUM

TO

SUBJECT

DATE

Republic of the Philippines

COMMISSION ON UDIT

Commonwealth venue Quezon City Phil ippines

ORPOR TE GOVERNMENT SE TOR

Cluster 4 - Industrial and Area Development

ALL SUPERVISING AUDITORS / AUDIT TEAM LEADERS

Audit observations of the Bureau of the Treasury (BTr) Audit Team

affecting some GOCCs

September 15,2014

Attached are documents related to the above-captioned subject. Please pursue/follow up the

issues raised by the Auditor of the Bureau of Treasury as it pertains to your respective auditess.

LE~S

Director IV

LSP /medp/bdb

Re vc 336-010-09152014


2/14

Commission on Audit

Commonwealth Ave., Quezon City

CTION REFERR L SLIP

OFFICJ::: eo CGS OAC

1

09.12.14

OUT; :r: -:-:

RI=FNO.:

(NGS -2) OAC-CG& 2014-09-12-0169

DATE RECEIVI=D; IN:

St::NDt::R;

Director Adelina Concepcion 1 - . Ancajas

Auctit Observations of the Bureau of the Treasury (BTr) Audit Team affecting some

GOCCs

FOR:

o

0

o

Comments/Recommendation

DSee me

lZIotners

o Appropriate Action

o Review/evaluation

o

Compliance

lnforrnation

File

RI=MARKS:

.

Action

Officer

Date Ref~rredl

Date Received

COMMENTS/ACTION MADE


3/14

MEMORANDUM

FOR

THRU

Assistant Commissioner WINNIE ROSE H. ENCALLADO

Head, Corporate Government Sector

Assistant CO~ issioneB~

Head, This Sector

SUBJECT

Audit observations of the Bureau of the Treasury (BTr) Audit Team

affecting some GOCCs

DATE

September 8, 2014

Attached is the matrix of issues and concerns and the corresponding resolutions

discussed during the meeting on August 15, 2014 with some CGS Cluster Directors,

Supervising Auditors, Audit Team Leaders relative to the audit observations noted by

the BTr Audit Team which are also the concern of some government-owned and/or

controlled corporations (GOCCs).

For information and appropriate action.

~.

ADELINA

CONCEPCI~

ANCAJAS

Directo~~ ,

NGS/Cluster 2

ACLAlYNUIlGC

CGS-Resolution on BTR issues


4/14

x of Issues and Concerns

u of the Treasury-National Government

13

BTr Audit Team ObservationslRecommendations

Comments of CGS

.

NGS Rejoinder

Resolution Agreed upon During

Directors/SAs/ ATLs

the Meeting

P

1. Subsidies of three GOCCs for P20,190,426.00 intended for

1. Once the Subsidy to GOCCs are 1.According to SA

1. The concerned Auditors of

MOOE were spent for PS received, the fund forms part of

Myrna Monzon, the CGS should issue an audit

C CCP - 15,255,000 the Corporate Operating Budget COB should contain query on these issues.

crc

898,876

(COB), thus, the Auditor is

information on the

CITC - 4,035,550

unable to keep track if the Subsidy and the Likewise, they should see to it

release was utilized as MOOE.

intended purpose for

that the Subsidies were utilized

which it was released.

in accordance with the

proposed project reflected in

the SARO.

2. Subsidies ofP5,641,089.35 released to two GOCCs remained

2. Director Joseph Anacay

2. The Auditor of the LWUA

unutilized as at year-end.

observed that the status was as

should look into the unutilized

of November 30,2013 which as

balance of the Subsidy

Amount of

Amount of

of date, the amount could have

Name of Subsidy as of

Unutilized

been utilized.

GOCC

November 30,

Subsidy

2013

The unexpended balance of the

1 LWUA F 10,700,000.00 P4,059,684.00

SSS had been uti lized as of July

31,2014.

2 SSS 759,572,145.00 1,581,405.35

d

-

Total

P-770,272,145.00 F5,641,089.35

.

Recommendation:

Management release funds only to GOCCs when needed to

forestall increase in unutilized subsidies and to require GOCCs

to submit reports on their utilization of subsidies received.


5/14


the Meeting


3. The subsidies given to the different GOCCs exceeded the

programmed budgetary support by M8,363,233,339.00

contrary to Chapter 35 of Republic Act 10352. (Schedule 1)

Recommendation:

The Treasurer of the Philippines request the DBM Secretary

for the legal b sis for the release of SAROslNCAs totalling

P48,363,233,339.00 to GOCCs which exceeded their

programmed appropriations by F33,622,960,968.00

(excluding PDAF ofF57,590,000.00) and those without

programmed appropriations per GAA ofF14,740,272,371.00

(excluding PDAF ofF 58,222,265.00).

Comments of CGS

Directors/SAs/ ATLs

3. These releases may pertain to

Disbursement Acceleration

Program (DAP).

The CGS Auditors said that our

concern should only cover those

releases made after the DAP

was declared unconstitutional

since the implementing agencies

are only recipients of the fund.

Also, every Auditor should look

into the utilization of the

releases made prior to the

declaration, whether in

accordance to the projects stated

in the SAROs.

NGS Rejoinder

3. The CGS Auditors should

issue an Audit Observation

Memorandum and require that

unobligated balances should

no longer be utilized and the

corresponding balance ofNCA

be returned to the National

Treasury.

~ ~~ _L _L ~L_ ~

, DBP,

P, NDA,

4. Five GOCCs who were given budgetary support forCY 2012

were included in the thirty-one (31) GOCCs ordered to

refund to the government all bonuses, allowances and other

financial rewards given to officials and employees that were

considered by COA as unauthorized expenditure. (Schedule

2)

Recommendation:

Management coordinate with the Corporate Affairs Group

(CAG) of the DOF, in charge of the GOCCs to raise the

above cited issue in order that subsidies be given to GOCCs

who are financially unable and have really scarce/limited

resources in carrying out present Programs/Projects.

2

4. The GOCC Auditors shall look

into this issue.


6/14

gency Resolution Agreed upon During

the Meeting

GCOR


Unremitted PAGCOR share - PI8,047,297,434.29

Comments of CGS

Directors/SAs/ ATLs

NGS Rejoinder

5. NG share from PAGCOR revenues were not adjusted as at

year-end of CYs 2011-2013 resulting to under remittance of

P5,533,009,508.55 for 2011, P6,367,139,999.40 for 2012 and

P6,147,147,926.34 for 2013 or a total ofP18,047,297,434.29

contrary to Section 12ofPD 1869

Section 12 of PD No. 1869 dated July 11, 1983 otherwise

known as the Charter of PAGCOR, as amended by PD 1993,

provides that after deducting five per cent (5%) from annual

gross earnings, as franchise tax, the NG shall have a share of

fifty per cent (50%) of the gross earnings, or 60% if the

aggregate gross earnings less than ]2150,000,000.00.

Recommendation:

Require PAGCOR to remit P18,047,297,434.29, representing

unremitted share for CYs 2011-2013 and compute and

collect also the dividends due and demandable for CY 2010

and prior years since the creation of PAGCOR.

5.The computation ofNG's share

in the earnings ofPAGCOR had

been elevated to the Supreme

Court (SC).

5. The PAGCOR Auditor to

monitor status of the case

elevated to the SC

GCOR 6. The duly cert if ied statement disclosing gross earnings and

franchise tax payable as prescribed under par. 3.3 of the DOF

Circular 2-98 dated August 12, 1998 was not yet submitted

despite previous audit recommendation to do so.

Section 3.4 of the DOF Circular No. 2-98 dated August 12,

1998 sett ing the guidelines on the implementation of the

abovecited provision provides that

A djustments in the

amount paid by PAGCOR to the National Treasury under

this Section shall be made at the end of each year based on

their audited financial statements which shall be submitted to

the BTr on or before 30 April of the fo llowing year.

3

6. The Supervising Auditor,

PAGCOR should require the

corporation to submit duly

certified statement disclosing

gross earnings and franchise

tax payable.


7/14

Agency


Comments of CGS

NGS Rejoinder


oncerned Directors/SAs/ ATLs

the Meeting

AGCOR

Unremitted PAGCOR share - P18,047,297,434.29

5. NG share from PAGCOR revenues were not adjusted as at

5.The computation ofNG's share

5. The PAGCOR Auditor to

year-end of CYs 2011-2013 resulting to under remittance of

inthe earnings ofPAGCOR had

monitor status of the case

,

P5;533,009;508.55 for 2011, P6,367,139,999.40 for 2012 and

been elevated to the Supreme

elevated to the SC

P6,147,147~926.34 for 2013 or a total ofP18,047,297,434.29 Court (sq.

contrary to Section 12 of PD 1869

Section 12 of PD No. 1869 dated July 11, 1983 otherwise

known as the Charter of PAGCOR, as amended by PD 1993,

provides that after deducting five per cent (5%) from annual

gross earnings, as franchise tax, the NG shall have a share of

fifty per cent (50%) of the gross earnings, or 60% if the

aggregate gross earnings less than-F150,000,000.00.

Recommendation:

Require PAGCOR to remitP18,047,297,434.29, representing

unremitted share for CYs 2011-2013 and compute and

collect also the dividends due and demandable for CY 2010

and prior years since the creation ofPAGCOR.

GCOR 6. The duly certified statement disclosing gross earnings and

6. The Supervising Auditor,

franchise tax payable as prescribed under par. 3.3 of the DOF

PAGCOR should require the

Circular 2-98 dajed August 12, 1998 was not yet submitted

-

-

corporation to submit duly

despite previous audit recommendation to do so.

certified statement disclosing

gross earnings and franchise

Section 3.4 of the DOF Circular No. 2-98 dated August 12, tax payable.

1998 setting the guidelines on the implementation of the

abovecited provision provides that A djustments in the

amount paid by PAGCOR to the National Treasury under

this Section shall be made at the end of each year based on

their audited financial statements which shall be submitted to

the BTr on or before 30 April of thefollowing year .

3


8/14

Agency

oncerned


the Meeting


Recommendations:

y

Require PAGCOR to adjust the 50% share of NG not later

than April 30 of each year and remit the same to the BTr.

y

Require PAGCOR to submit duly certified statement

disclosing gross earrnngs and franchise tax payable as

prescribed under par. 3.3 ofDOF Circular 2-98 since 1987.

7. Unremitted GOCCs dividend - P123,181,140,877.33

The GOCCs' dividends due and demandable of

P75,366,710,713.76 under RA 7656 for CY 2012 and 2011

and prior years amounting to P47,814,430,163.57 or a total

of P123,181,140,877.33 had not been remitted in full, thus,

depriving the NG of additional resources to fund its

programs and projects. (Schedule 3)

Recommendation

BTr-MAAD, in coordination with the DOF-CAG, ensure the

following:

y

Pursue aggressively the monitoring of GOCCs~ compliance

to RA 7656 and enforce faithfully the penalty as provided

therefore as part of the NG's efforts to generate the needed

funds for the implementation of various programs and

projects; and

y

Prepare the necessary data on dividends due from the

GOCCs for CYs 2012 and prior years based on net earnings

as shown on their audited FSs and issue collection letters to

GOCCs on the dividends of P123,181,140,877.33 still due

the NG.

7. In2012, a meeting was 7. The GOCC Auditors shall look

attended by SA into this issue.

Monzon and Ms. Nory

Jozes-tc cliscusstk \

(

~endment to RA 7656

on the exclusion of the

subsidies received by I )

the GOCCs from the

~ ~

Comments of CGS

Directors/SAs/ ATLs

~ NGSRejoinder

Inquiry from DOF-

CAG on the status

revealed that the

amendment was not yet

approved. Thus, the

audit group computed

the 50% dividends due

to NG based on the net

income of the GOCCs.

This is in accordance

with Section 2 (d) and

Section 3 of RA 7656

(copy of RA 7656

attached)

8.

Un remitted

dividends earned from NGs equity

contribution to GOCCs amounting to P3780 907534.02

4

8. The Auditors ofDBP, LWUA

and PADC shall look into this


9/14

Agency

rned


the Meeting


Section 55 (4), Chapter 1, Title II, PD 1445 provides that

the auditor shall obtain through confirmation, among

others, sufficient evidential matter to afford himself a

reasonable basis for his opinions, judgments,

conclusions, and recommendations.

Article 5 of Ownership and Operations Manual for the

GOCC Sector provides that T he State, as the Owner

representing the sovereign people, constitutes the

controlling interest in, or is the majority stockholder of

Gaees and Subsidiaries, and thereby exercises all the

prerogatives of ownership in every Gaee, including, but

not l imited tothe:

(a) right to register its equity holdings in the books of

the Gaee for all its equity investments therein,

together with the right to be issued certificates of stock

representing its investment in the Gaee; State s Role

and Relationship with Gaees;

(b) right to dividends, when declared, pertaining to its

equity holdings inthe Goee. ...

(g) right to receive a proportional share in the net

assets of the Gace upon its dissolution.

3,780,907~:;34.02

DBP

P2,947,087,534.02 The unremitted dividend pertains

to 2013.

LWUA

8~()

Ql{\ {\{\{\n o

Dividends for CYs2010 2013

PADC

~ O O O O O O .O O

Total

Recommendation

BTr pursue the collection of the unremitted dividends earned

from the concerned GOCCs and verify the financial status of

those GOCCs with no dividends.

Comments of CGS

Directors/SAs/ ATLs

5

NGS Rejoinder

issue.


10/14

R EP UB L IC A C T N O 765 6

A N A CT R EQ UIR IN G G OV ER NM EN T O WN ED O R C ON TP oL LE D C OR PO RA TiO Ns T O D EC LA RE

D iV iD EN DS U ND ER C ER TA IN C ON DIT IO NS T O T HE N A TIO NA L G O V ~ R N M E N T A ND F OR O TH EIt

PURP S S

SECTION 1. Declaration of Policy. - It is hereby declared the policy of the State that in order for

the National Government to realize additional revenues, government-owned or -controlled

corporations, without impairing their viability and the purposes for which they have been

established, shall share a substantial amount of their net earnings to the National Government.

SECTION 2. Definition of Terms. - As used in this Act, the term:

(a) National Government refers to the entire machinery of the central government, as

distinguished from the different fo rms of local governrnents.

(b) Government-owned or controlled corporations refers to corporations organized as a stock or

non-stock corporation vested with functions relating to public needs, whether governmental or

proprietary in nature, and owned by the Government directly or through its instrumentalitles elther

wholly or, where applicable as in the case of stock corporations, to the extent of at least fifty one

percent (51%) of ils capital stock. This term shall also include financial lnstttutlons, owned or

controlled by the National Government, but shall exclude acquired asset corporat ions, as defined ih

the next paragraphs, state Universities, and colleges.

(c) .Acquired asset corporation refers to a corporation: (1) which is under private ownership, the

voting or outstanding shares of which were: (i) conveyed to the Government or to a government

agency, instrumentality or corporation in satisfaction of debts whether by foreclosure of otherwise,

or (i1)duly acquired by the Government through final judgment in a sequestration proceeding; or (2)

which is a SUbsidiary of a government corporation organized exclusively to own and manage, or

lease, or operate specific physical assets acquired by a government financial institution In

satisfaction of debts incurred therewith, and which in anv case by law or by enunciated policy is

required to be disposed of to private ownership within a specified period of time.

(d) Net earnlngs shal lmean income derived from whatever source, whether exempt Or subject to

tax, het of deductions allowed Under Sectlon1.9 of the Natlonal lnternal Revenue Code, as amended,

and income tax and other taxes paid there~but in no case shall any reserve for whatever purpose

be allowed as a deduction from net earnings. ~


11/14

properties or funds held in trust for the use and the benefit of its members, shall not be covered by

this Act such as, but not limited to: the Government Service Insurance System, the Home

Development Mutual Fund, the Employees Compensation Commission, the Overseas Workers

Welfare Administration, and the Phil ippine Medical Care Commission.

SECTION 5. Flexible Clause. - In the interest of national economy and general welfare, the

percentage of annual net earnings that shall be declared by a government-owned or

-contro l led

corporation may be adjusted by the President of the Philippines upon recommendation by the

Secretary of Finance.

SECTioN 6. Penalty. - Any member of the governing board, the chief executive officer and the

chief financial officer of a government-owned or -controlled corporation who violates any provision

of this Act or any of the implementing rules and regulations promulgated thereunder, in addition to

other sanctions provided by law, upon conviction thereof, shall suffer the penalty of a fine not less

than Ten thousand pesos

P iO ,o oo .o O

but not more than Fifty thousand pesos

PsO ,O O O .O O

or

imprisonment of not less than one (1) year but not more than three (3) years, or both, at the

discretion of the court.

SECTION 7. Implementing Rules and Regulations, - The Department of Finance shall formulate

and issue the necessary rules and regulations within sixty (60) days from the effectivity of this Act

and shall exercise primary jurisdiction in its implementation.

SECTION 8. Separability Clause. - If for any reason or reasons any part of the provision of this Act

shall be deemed to be unconstitutional or Invalid, the other parts or provisions hereof which are not

affected thereby shall continue to be in force and effect.

SECTION 9. Repealing Clause. - Executive Order No. 399, dated April 29, 1990, and other laws,

decrees, executive orders, letters of instruction, rules and regUlations, and portions thereof

inconsistent with the provisions of this Act are hereby repealed or modified accordingly.

SECTiON 10. Effectivity Clause. - This Act shall take effect fifteen (15) days after its publication in

the Official Gazette or in at least two (2) national newspapers of general circulation, whichever

comes earlier.

Approved: November 9, 1993

f'k


12/14

Schedule 1- List of GOCCs that received subsidy not in accordance with the GAA

Name of GO CC PerGAA

SUbsidy Released

Under (Over)

Releases

A.

GOCCs given subsidy beyond the GAA

1.

Credit Information Corporation 28,410,000.00 44,725,000.00

( 16,315,000.00)

2. Center for International 'I rade

96,810,000.00 188,118,000.00

(91,308,000.00)

Expositions Missions

3. Development Academy of the

129,300,000.00

135,330,920.00

(6,030,920.00)

Philippines

4.

Lung Center of the Philippines

173,400,000.00

180,450,000.00

(7,050,000.00)

5.

National Dairy Authority

261,744,000.00

761,744,000.00

(500,000,000.00)

6.

National Electrification Administration

5,405.029,000.00

14,027 ,810,337.00

(8,622,781,337.00)

7.

National Irrigation Administration

1,72_ '08,(lOO.00

3,024,241,784.00

(1,302,033,784.00)

8.

National Kidney Transplant Institute 202,865,000.00

1,283,546,000.00

(1,080,681,000.00)

9.

Philippine Coconut Authority

1,738,750,000.00

5,107,440,000.00

(3,368,690,000.00)

10. Philippine Center of Economic

14,500,000.00

72,835,000.00

(58,335,000.00)

Development

11.

Philippine Children Medical Center

345,000,000.00

349,330,000.00

(4,330,000.00)

12. Philippine Deposit Insurance

1,884,164,000.00

6,998,717,0001.00

(5,114,553,001.00)

Corporation

13. Philippine Heart Center

187,000,000.00

210,875,000.00

(23,875,000.00)

14. Phil ippine Institute for Development

33,000,000.00

37,000,000.00

(4,000,000.00)

Studies

15. Philippine Postal Corporation

301,000,000.00

1,173,548,026.00

(872,548,026.00)

16. Others

13,606,000.00

12,621,625,900.00

J 2,608,0 19,900.00)

Sub-total li2,536,786,000.00

J 46,217,336,968.00 F(33,680,550,968.00)

B .

GOCCs not Included in the GAA as recipients of Subsidies

/ 1

17. Bangko Sentral ng Pilipinas

0.00

:317,000,000.00 (317,000,000.00)

18~Civil Aviation Authority of the Phi.i.

0.00 1,000,000,000.00

(1,000,000,000.00)

--r.Development Bank of the Philippines

0.00

420,746,708.00 (420,746,708.00)

20. Light Rail Transit Authorily

0.00

1,314,000,000.00 (1,314,000,000.00)

21. Local Water Utilities Administration 0.00 587,710,000.00

(587,710,000.00)

22. National Transmission Corporation

0.00 1,500,000,000.00

(1,500,000,000.00)

23. Philippine Health Insurance

0.00

95,047,365.00

(95,047,365.00)

Corporation (from DOH)

24. Power Sector Assets Liabilities

0.00

8,134,690,381.00 (8,134,690,381.00)

Management Corporation

,

25. Social Housing Finance Corporation

0.00 19,728,037.00

(19,728,037.00)

~

..J~ Social Security System 0.00 759,572,145.00

(759,572,145.00)

JTour Sln Infrastructure and Enterprise

0.00 650,000,000.00

650,000,000.00

Zone Authority

Sub-total

r

0.00 14,798,494,636.00

J(14,798,494,636.00)

Grand Total 1'-12,536,786,000.00

I'- 61,015,831,604.00 1'-(48,479,045,604.00)

LessPDAF

115,812,265.00

(115,812,265.00)

Net

l12,536,786,OOO.OO J 60,900,019,339.00

J (48,363,233,339.00)

Schedule 2 - GOCCs Who were givetl b u d ge ta ry suppo rt fo r CY 2012 ordered to refund

P ro gra m m e d

A m o u n t

of

B o n u s e s,

budgetary Actual releases in Allowances and

Other

support per

CY 2012

Ilnauclal rewards ordered

G A A

fot refund

Development Academy of the Philippines

F45,000,000.00

I

48,195,900.00

I

23,838,000.00

Development Bank of the Philippines

0.00

117,870,772.00

216,801,000.00

Lung Center of the Philippines

257,560,000.00

277,915,000.00

Not indicated

National Dairy Authoritv

170,472,000.00

170,472,000.00

Not indicated

Philltealth

1

0.00

14,068,084,040.00

1,651,084,000.00

1


13/14

Sched u le 3 - Sched u le o f GOCCs w ith U nre rn ltte d D iv id en ds

1

.

2012 Net Income 50% Dividends

Dividends paid in

Due &Name

o t

Corporation subjectto

tu

DUe under

itA

CY 2013

rot

2012

Demandable

\

7656 7656 Income

A .

GOCCs consldered parent corporations

_

._

Bases Conversion

f r

17

Development

5,157,550,100.00

2,578,775,050.00

679,012,168.00

1,899,762,882.00

Authority

v .

l 1 t i l

Aviation

.

~~

32

uthority of the

1,925,707,420.00

962,853,710.00

0.00 961,853,710.00

Philippines

v 61

Laguna Lake

Development

3,062,535.00

1,531,267.50 0.00

1,531,267.50

Authority

(

/73

Manila International

2,640,559,099.00

1,320,279,549.50

1,008,034,244.89

Airport Authority

312,245,304.61

~3

National

Development

330,549,630.00

165,274,815.00

114,627,351.92

50,647,463.08

Company

V

94

National

Electrification

340,577,922.00

170,288,961.00 136,548,873.55

33,740,087.45

Administration

:1

1 4

Philippine

0

Aerospace

6,482,088.00

3,241,044.00

2,000,000.00

1,241,044.00

Development

C orpora tio n

o _

..--

\

Philippine

4 Red arnatiort 2,163,463,965.00 1,081

1

731,982.50 0.00 1,081,731

1

982.50

Authority

..

;

Tourism

1 5

Infrastructure and

1,236,181,257.00

618,090,628.50 0.00 618,090,628.50

Enterprise Zone

Authority

I

Tott i l

1l 165

1

3:H;294,695.231'( 82;666,647,347.62 7 ,29~,936,633.86

75;366j710,713.16 I


14/14

Dividends Due (CY 1012 AAR) and Remittances in CY 2013

Due and Demandable as

O

Particulars

of December

j

1, 2012

Remittances

ill

Due and Demandable

(pet 2012 AAA)

2013

2011

P -

8,242,668,532.32

P -

92,846,066.95

P

8,149,822,465.37

2010 and orior years

39,814,607,698.20

150,000,000.00

39,664,607,698.20

Total

l 4S,057

j

276

j

230.52

l

242,846,066.95

P

47,814,430,163.57

2012

20li PYs

Tota1

A m ou n t

P 75,366,710,713.76

47,814.430,163.57

I 1 12:t181.140,877.33

memo to all sas & atls on the audit observations o

Documents