09-AntiqueProv2021 Part2-Observations and Recomm

PART II
AUDIT OBSERVATIONS AND

RECOMMENDATIONS
PART II – AUDIT OBSERVATIONS AND RECOMMENDATIONS
For CY 2021, the Audit Team noted the following observations on the financial accounts and
operations of the Provincial Government of Antique, to wit:
Property, Plant and Equipment (PPE)
1. The Property, Plant and Equipment (PPE) account balance of ₱3.971 billion as of
December 31, 2021 was overstated by ₱107.323 million due to existence of
unidentified dormant account balances, inclusion of missing PPEs and
unserviceable properties amounting to ₱100.888 million, ₱0.496 million and ₱5.939
million, respectively, thus, affecting the fair presentation of the agency’s financial
position in the financial statements.
Paragraph 27 of the International Public Sector Accounting Standard (IPSAS) 1 -

Presentation of Financial Statements, provides that financial statements shall present
fairly the financial position, financial performance, and cash flows of an entity. Fair
presentation requires the faithful representation of the effects of transactions, other
events, and conditions in accordance with the definitions and recognition criteria for
assets, liabilities, revenue, and expenses set out in IPSASs.
As of December 31, 2021, the PPE accounts in the Statement of Financial Position of
the Provincial Government of Antique showed a total balance of ₱4.711 billion at cost,
less accumulated depreciation of ₱739.460 million, or a net value of ₱3.971 billion.
Examination of available records and inquiry with the Provincial Accountant and the
Provincial General Services Office (PGSO) personnel revealed the following
deficiencies:
A. Unaccounted dormant PPE account balances of ₱100.888 million.
To address the existence of enormous amounts of discrepancies in PPE account

balances of government agencies, COA Circular No. 2020-006 dated January 31, 2020
was issued to prescribe the specific guidelines and procedures in the conduct of physical
count of PPE, recognition of PPE items found at station and disposition for non-
existing/missing PPE items, for the one-time cleansing of PPE account balances of
government agencies. Section 8 of aforesaid Circular provides the procedures in the
derecognition of non-existing/missing PPEs without available records of accountability.
In the prior year’s audit report, it was discussed that there were Subsidiary Ledgers
(SLs) for PPE being maintained by the Provincial Accountant’s Office (PAO) with
unaccounted balances. According to the Provincial Accountant, these SLs existed since
CY 2002, when the Provincial Government adopted the New Government Accounting
System (manual). During the transition, PPEs that were not identified, were lumped
under the “Unreconciled SL”, “No data SL”, etc. accounts with the intention of reconciling
the same in the future. However, as of December 31, 2021, the balances of these
accounts were still reflected in the books. The Provincial Accountant explained that
these remained unaccounted and unidentified due to the unavailability of records.
Necessary information, such as, acquisition dates, description, and location of the
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corresponding PPE items still could not be determined by the PAO. In addition,
depreciation for these PPE accounts were not recognized for the same reason. The
affected PPE accounts are presented below:
Table 1. Summary of Unaccounted Dormant PPE

Fund
PPE Account Total
General Fund SEF
Land ₱1,110,908.13 ₱0.00 ₱1,110,908.13
Other Land Improvement 1,122,226.80 0.00 1,122,226.80
Road Networks 786,889.14 0.00 786,889.14
Building 6,147,757.81 1,605,142.53 7,752,900.34
School Building 325,396.21 0.00 325,396.21
Hospital and Health Center 20,965,946.27 0.00 20,965,946.27
Other Structures 1,193,572.86 0.00 1,193,572.86
Machinery 11,050,213.70 0.00 11,050,213.70
Office Equipment 1,109,752.39 0.00 1,109,752.39
Other Machinery and
Equipment 19,536,944.85 0.00 19,536,944.85
Motor Vehicle 3,149,393.35 0.00 3,149,393.35
Watercrafts 144,802.00 0.00 144,802.00
Construction and Heavy
Equipment 32,086,521.70 0.00 32,086,521.70
Technical and Scientific 552,514.75 0.00 552,514.75
TOTAL ₱99,282,839.96 ₱1,605,142.53 ₱100,887,982.49
The unaccounted dormant PPE account balances of ₱100.888 million overstated the
PPE account balance.
B. Missing PPE totaling ₱0.496 million but still carried in the books.
One of the Management’s assertions on the account balances in the financial

statements is “Existence”. Existence means that the assets, liabilities, and shareholder’s
equity balances appearing on the Agency’s financial statements exist as stated at the
end of the accounting period that the financial statement covers.
Moreover, Section 377 (a) of RA No. 7160 provides that, the person immediately
accountable for government property shall be liable for its money value in case of illegal,
improper or unauthorized use or misapplication thereof, by himself or any other person
for whose acts he may be responsible, and he shall be liable for all loss, damage, or
deterioration occasioned by negligence in the keeping or use of property unless it is
proved that he has exercised due diligence and care in the utilization and safekeeping
thereof.
Review of the Report on the Physical Count of Property, Plant and Equipment
(RPCPPE) as of December 31, 2021 showed that PPE with a total amount of ₱1.281
million were reported missing. These PPE were still carried in the books with a total Net
Book Value of ₱496,112.91, the details are presented on the next page:
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Table 2. List of Missing PPE as of December 31, 2021
Particulars Qty Amount Net Book Value
Office Equipment 7 ₱ 195,025.00 ₱ 168,947.44
Disaster Response and Rescue
Equipment 7 145,010.00 104,019.70
Furniture and Fixtures 65 228,491.00 67,187.31
Sports Equipment 26 56,640.00 17,991.60
Communication Equipment 3 27,798.50 8,071.85
ICT Equipment 21 628,504.00 129,895.01
Total 129 ₱ 1,281,468.50 ₱ 496,112.91
The RPCPPE showed the name of the office of the accountable officers who were
responsible for the missing properties, however, no investigation or legal sanctions were
initiated and/or implemented by the Provincial Government on the former. Neither
request for relief from accountability was received by the COA.
The noted deficiency resulted in the overstatement of the PPE accounts by a total
amount of ₱0.496 million.
C. Unserviceable properties amounting to ₱5.719 million were not yet disposed

of, thus overstated the PPE accounts.
Section 79 of the Presidential Decree (P.D.) No. 1445 provides that when government
property has become unserviceable for any cause, or is no longer needed, it shall, upon
application of the officer accountable therefor, be inspected by the head of the agency or
his duly authorized representative in the presence of the auditor concerned and, if found
to be valueless or unsalable, it may be destroyed in their presence. If found to be
valuable, it may be sold at public auction to the highest bidder under the supervision of
the proper committee on award or similar body in the presence of the auditor concerned
or other duly authorized representative of the Commission.
Relative thereto, Section 125, Chapter 7, Volume I, of The New Government Accounting
System Manual for Local Government Units provides that in the disposal of supplies or
property, the Inventory and Inspection Report of Unserviceable Property (IIRUP) shall be
used. As provided in Section 59, Chapter 2, Volume II of the same manual, it shall be
the basis to record the dropping from the books of the unserviceable properties carried
in the Property, Plant and Equipment and Inventory accounts.
Further scrutiny of the RPCPPE as of December 31, 2021 disclosed that PPE items
totaling ₱33.764 million and with Net Book Value of ₱5.719 million, were identified as
unserviceable and remained undisposed of as of the year-end.
The undisposed unserviceable PPE of the Provincial Government as of December 31,

2021 are classified and broken down on the next page:
Table 3. Undisposed Unserviceable PPE
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Particulars Cost per RCPPE Net Book Value
Agricultural and Forestry Equipment ₱ 53,600.00 ₱ 5,360.00
Communication Equipment 857,097.32 214,088.03
Disaster Response and Rescue
309,290.00 44,552.15
Equipment
Furniture and Fixtures 1,051,961.85 227,925.29
ICT Equipment 9,083,317.72 1,238,828.87
Marine and Fishery Equipment 279,000.00 27,900.00
Medical Equipment 10,309,283.63 2,163,763.77
Military Police and security Equipment 681,814.00 119,029.40
Office Equipment 8,244,809.17 935,248.88
Other Machinery and Equipment 2,131,417.77 713,554.50
Sports Equipment 101,775.00 11,715.15
Technical and Scientific Equipment 51,940.00 17,144.17
Total ₱ 33,155,306.46 ₱ 5,719,110.21
The Management’s delayed action on the disposal of unserviceable PPE items

overstated the affected PPE accounts as of year-end.
AOM No. 2022-008 (21) dated April 8, 2022 was issued on the foregoing observation.
We recommended and the Management agreed to avail of the one-time cleansing

of PPE account balances, following the guidelines and procedures enumerated in
COA Circular No. 2020-006, to establish the PPE balances that are verifiable as to
existence, condition, and accountability.
Further, we recommended and the management agreed that the:
a. PGSO investigate and institute appropriate action/s on the missing

PPEs; and
b. Disposal Committee expedite the disposal of unserviceable properties.
2. The incomplete conduct of physical inventory and reconciliation as required by

the Handbook on Property and Supply Management System (PSMS) resulted in
variance amounting to ₱617.646 million, thereby, rendering the accuracy,
completeness, validity and existence of the recorded PPE balances in the
Financial Statements unreliable.
The PSMS provides that inventory taking is an indispensable procedure for checking the
integrity of property custodianship. It requires the chief of agencies to take physical
inventory of all the equipment and supplies of their respective offices at least once a
year. It further requires that after the physical inventory taking, the Inventory Committee
shall reconcile the results of the count with the property and accounting records, and all
discrepancies between the physical and book inventories must be investigated and
cleaned immediately.
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As of December 31, 2021, the PPE accounts, excluding the Construction in Progress
(CIP), in the Statement of Financial Position of the Provincial Government of Antique
(Provincial Government) showed a total balance of ₱3.656 billion at cost.
Examination of available records and inquiry with the Provincial Accountant’s Office
(PAO) and the Provincial General Services Office (PGSO) personnel revealed that there
was an incomplete conduct of physical inventory and a variance of ₱617.646 million
between the reported balance per Statement of Financial Performance (SFP) and the
Report on the Physical Count of PPE (RPCPPE).
Physical inventory taking was not conducted in 14 out of 45 offices/hospitals under the
Provincial Government, due to the pandemic. In lieu thereof, the PGSO provided each
concerned office with list of their respective PPE accountabilities and requested them to
confirm the existence of the said PPEs and return it to the former. The PGSO then
included these reports in the RPCPPE, which was submitted to the Audit Team on
January 29, 2022.
From CYs 2016, 2018 and 2020 audit, the discrepancies in the PPE account balances,
excluding CIP accounts, between the PGSO and PAO were gradually reduced from
₱724.580 million in CY 2017 to ₱599.372 million in CY2018 and down to ₱309.794
million during the audit of CY 2020.
However, comparison of the CY 2021 PPE balance between the RPCPPE and the PAO
showed a significant increase in the unreconciled discrepancies aggregating to
₱617.646 million, despite the adjustments drawn by the Provincial Accounting Office
relative to the errors in the recording of the Land account, as recommended by the Audit
Team in the last year’s audit report. The table below shows the discrepancies between
the two records.
Table 4. Discrepancies Between Balances per GL and per RCPPE

Balances
Particulars *Variance
Per GL Per RPCPPE
Land
Land ₱109,269,341.52 ₱104,614,545.54 ₱4,654,795.98
Land Improvements
Land Improvements 989,030.32 989,030.32 0.00
Other Land Improvements 39,504,816.44 39,504,816.44 0.00
Infrastructure Assets
Road Networks 1,297,043,427.77 1,079,793,750.06 217,249,677.71
Flood Control Systems 64,065,994.54 59,284,790.05 4,781,204.49
Water Supply Systems 30,212,171.84 24,051,772.44 6,160,399.40
Communication Networks 159,000.00 159,000.00 0.00
Seaport Systems 36,346,082.61 0.00 36,346,082.61
Other Infrastructure Assets 4,359,467.23 4,359,467.23 0.00
Building and Other Structures
Buildings 79,377,818.57 78,370,474.08 1,007,344.49
School Buildings 31,957,880.81 26,676,873.54 5,281,007.27
Hospitals and Health Centers 503,176,361.69 261,818,590.23 241,357,771.46
Slaughterhouses 3,987,561.59 0.00 3,987,561.59
Other Structures 712,729,041.80 696,630,270.29 16,098,771.51
Machinery and Equipment
Machinery 11,748,703.70 11,748,703.70 0.00
Office Equipment 60,003,493.75 59,952,453.75 51,040.00
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Balances
Particulars *Variance
Per GL Per RPCPPE
ICT Equipment 93,688,713.79 92,958,182.79 730,531.00
Agriculture and Forestry Equipment 2,021,273.30 2,021,273.30 0.00
Marine and Fishery Equipment 436,000.00 436,000.00 0.00
Airport Equipment 0.00 0.00 0.00
Communication Equipment 22,671,566.37 25,255,571.37 2,584,005.00
Construction and Heavy Equipment 116,747,061.07 116,747,061.07 0.00
Disaster Response and Rescue Equipment 35,332,007.00 35,332,007.00 0.00
Military, Police and Security Equipment 3,020,475.16 3,020,475.16 0.00
Medical Equipment 146,544,111.08 154,291,931.08 7,747,820.00
Printing Equipment 766,943.49 766,943.49 0.00
Sports Equipment 10,956,241.95 10,990,895.95 34,654.00
Technical and Scientific Equipment 8,650,166.70 8,650,166.70 0.00
Other Machinery and Equipment 81,283,563.92 141,087,633.92 59,804,070.00
Transportation Equipment
Motor Vehicles 94,423,403.35 99,027,403.35 4,604,000.00
Watercrafts 15,067,149.00 15,067,149.00 0.00
Furniture, Fixtures and Books
Furniture and Fixtures 33,807,076.40 33,672,436.60 134,639.80
Books 216,526.36 201,531.36 14,995.00
Work/Zoo Animals 439,400.00 439,400.00 0.00
Other Property, Plant and Equipment 5,360,736.54 345,105.00 5,015,631.54
TOTAL ₱3,656,362,609.66 ₱3,188,265,704.81 ₱617,646,002.85
Review of the accounts showed significant discrepancies in the Infrastructure Assets.

Interview with the PGSO personnel disclosed that PPE recorded in the Infrastructure
Assets of the RPCPPE were merely based on the Certificates of Completion furnished to
the PGSO. Also, there were no physical inventory conducted on these accounts due to
lack of manpower, coupled with the threat of the pandemic. Hence, as shown in the
above table, the PGSO reported a lower amount in the RPCPPE. Moreover, prior years’
transfer of accountabilities without available records caused difficulty in the
reconciliation.
Nevertheless, the PGSO personnel informed the Audit Team that they are continuously
reconciling the discrepancies.
The foregoing observation rendered the accuracy, completeness, validity, and existence
of the recorded PPE balance in the Statement of Financial Position unreliable.
We recommended and the Management agreed that the:
a. PGSO and the Provincial Accounting Office continue reconciling the

RPCPPE and the books of account and effect the necessary adjustments in
their respective records; and
b. Inventory Committee observe the required complete physical inventory-

taking of all PPEs of the Provincial Government.
Due from LGUs
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3. The discrepancy amounting to ₱6.339 million between the recorded balance of
fund transfers to LGUs in the books of the Provincial Government of Antique and
in the books of the recipient municipal and barangay LGUs amounting to ₱8.827
and ₱2.488 million, respectively, rendered the accuracy and reliability of the
balance of the “Due from LGUs” account in the statement of financial position,
doubtful, thereby affecting the fair presentation of the financial position of the
agency in the financial statements.
Item No. 27 of the International Public Sector Accounting Standard (IPSAS) I –

Presentation of Financial Statements, provides that financial statements shall present
fairly the financial position, financial performance and cash flows of an entity. Fair
presentation requires the faithful representation of the effects of transactions, other
events and conditions in accordance with the definitions and recognition criteria for
assets, liabilities, revenue and expenses set out in IPSASs.
As of June 30, 2021, the balance of fund transfers to LGUs was ₱ 46.415 million. In
November 2021, the Audit Team sent confirmation letters to municipal and barangay
LGUs with unliquidated FTs from the Provincial Government of Antique (PGA), thru their
respective resident auditors, confirming the June 30, 2021 balance of these accounts.
Out of 18 confirmation letters sent, only five were returned to the Audit Team. These
returned confirmation letters pertain to ₱8.827 million or 19 percent of the total amount
of FTs to LGUs as of June 30, 2021, which were still found on the December 31, 2021
balance of the “Due from LGUs” account.
Based on the returned confirmation letters, out of the ₱8.827 million balance appearing
in the books of the PGA, only ₱2.488 million was confirmed by the municipal and
barangay LGUs, with a discrepancy of ₱6.339 million (Annex C).
As per clarification with the Provincial Accountant, Liquidation Reports (LR) for FTs
amounting to ₱198,070.00 and ₱486,463.24 were received by the Accounting Office in
CY 2020 and 2021, respectively, but were booked up in January 2022. In addition, LRs
amounting to ₱2.349 million (Annex D) were submitted in the 1st quarter of CY 2022
and not yet booked up by the Accounting Office, while the LRs for FTs amounting to
₱5.791 million (Annex E) were not yet received by her office.
The discrepancy between the recorded balance of FTs to LGUs in the books of the PGA
and in the books of the recipient municipal and barangay LGUs cast doubt on the
accuracy and reliability of the December 31, 2021 balance of the “Due from LGUs”
account, that likewise impacts the reliability and correctness of the affected balances of
the affected accounts in the financial statements.
AOM No. 2022-003 (21) dated February 21, 2022 was issued on the foregoing
observation.
We recommended and the Management agreed to instruct the Provincial

Accountant to follow-up with the concerned LGUs the submission of their
liquidation reports and reconcile their respective records.
Audit of COVID-19 Fund Receipt, Allocation and Utilization
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4. Procurement of drugs and medicines, medical supplies and equipment necessary
to combat COVID-19 amounting to ₱42.377 million was not efficiently and
expediently undertaken resulting in the incurrence of up to 100 calendar days in
the delivery despite the adoption of Negotiated Procurement (Emergency Cases)
under Sections 53.2(b) of Republic Act (RA) No. 9184 and 53.2 of its 2016 IRR
hence, the objective of the adopted mode of procurement was not attained.
Moreover, the Notices of Awards and Purchase Orders pertaining thereto were not
posted in the website of the Province, contrary to Item IV(L)(2) of Annex “H” of the
Revised IRR of RA No. 9184, thus, relevant information on the procurement was
not made available to the public.
Sections 53(b) of RA No. 9184 and 53.2 of its 2016 Revised Implementing Rules and
Regulations (IRR) provide that Negotiated Procurement may be resorted to by procuring
entities 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.
The instances or situations where the foregoing conditions may be applied include the
provision of immediate response and initial recovery steps to avoid loss of life, injury,
disease and other negative effects on human, physical, mental and social well-being,
together with damage to property, destruction of assets, loss of services, social and
economic disruption and environmental degradation.
In addition, Item IV(L)(2) of Annex “H” of the Revised IRR of RA No. 9184 requires the
BAC, through its Secretariat, to post the Notice of Award, Contract/PO, including the
NTP if necessary, of all procurement through alternative methods of procurement, for
information purposes. These shall be posted in the PhilGEPS website, the website of
the Procuring Entity concerned, if available, and at any conspicuous place in the
premises of the Procuring Entity within ten (10) days from their issuance. (Emphasis
ours)
The COVID-19 pandemic continued to cause significant risk to public health and safety
in CY 2021 in the country. In view of the urgent necessity of various items necessary to
combat the pandemic, several drugs and medicines, medical supplies, and equipment
were procured through Negotiated Procurement under Emergency cases.
Perusal of the copies of the revised Annual Procurement Plan of the Provincial
Government of Antique to cover the items that were subjected to Negotiated
Procurement during Emergency Cases showed that the following procurement activities
- the opening of the Request for Quotations (RFQ), the Notice of Award and the Contract
signing, were done on the same day.
However, review of the corresponding vouchers and its supporting documents disclosed
that delivery of procured drugs and medicines, medical supplies and equipment for
COVID-19 operations amounting to ₱42.377 million took up to 100 calendar days from
the opening of bids/quotation despite the adoption of Negotiated Procurement under
Emergency Cases, as shown on the next page:
Table 5. Days of Delay of Negotiated Procurement Under Emergency Cases
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RFQ Date Days
Particulars Amount Reference NOA PO
Opening Delivered Incurred
(a) (b) (c) (e) (f)
(d) (g) (h=e-f)
1 Various drugs and ₱ 5,443,534.85 2021-04- 04/18/2021 05/31/202 05/31/2021 06/01/202 44
medicines 012(m) 1 1
2 Remdesivr 100mg 1,490,000.00 DD-2021-04- 04/28/2021 07/01/202 07/01/2021 07/02/202 65
014(m) 1 1
3 Remdesivir, 694,750. DD-2021-04- 05/06/2021 07/01/202 07/01/2021 07/02/202 57
tocilizumab; 00 013(m) 1 1
enoxaparin
4 Various drugs and 1,698,440. DD-2021-05- 05/12/2021 05/31/202 05/31/2021 06/01/202 20
medicines 00 019(m) 1 1
6 Various medical 1,000,000. DD-2021-05- 05/19/2021 06/08/202 06/09/2021 06/14/202 26
supplies 00 025(m) 1 1
7 Various medical 1,417,000. DD-2021-05- 05/26/2021 06/08/202 07/06/2021 07/07/202 42
supplies 00 028(m) 1 1
8 Various drugs and 254,413. DD-2021-05- 05/26/2021 06/02/202 07/07/2021 07/08/202 43
11 Various 217,000. DD-2021-06- 06/17/2021 06/30/202 06/30/2021 07/01/202 14
medical/laboratory 00 034(m) 1 1
supplies
12 *Oxygen refill 4,350,000.00 DD-2021-05- 06/24/2021 07/01/202 07/09/2021 *7/9/2021 15
026(m) 1
13 Various drugs and 250,000. OO-2021-06- 07/07/2021 07/14/202 07/14/2021 10/15/202 100
14 Various drugs and 1,103,772. MM-2021- 07/28/2021 08/06/202 08/06/2021 10/01/202 65
medicines 00 07-039(m) 1 1
15 Remdesivir/tocilizub 1,700,100. DD-2021-08- 08/18/2021 08/25/202 08/25/2021 08/26/202 8
400mg 00 044(m) 1 1
16 Cadaver bags, 1,350,000. OO-2021-08- 08/20/2021 08/31/202 08/31/2021 11/10/202 82
hazmat; disinfectant 00 007(m) 1 1
sprays; facemask,
surgical gowns etc
17 Portable Mechanical 3,891,900. OO-2021-09- 09/22/2021 10/04/202 10/04/2021 10/05/202 13
Ventilator 00 008(m) 1 1
18 Various medical 1,562,491. MM-2021- 10/08/2021 10/21/202 10/21/2021 10/27/202 19
supplies 03 10-057(m) 1 1
19 Rapid Antigen Test 3,000,000. OO-2021-10- 11/03/2021 11/11/202 11/11/2021 11/17/202 14
Kits 00 014(m) 1 1
20 Disinfectant Spray for 499,300. MM-2021- 11/24/2021 12/01/202 12/14/2021 12/15/202 21
distribution to health 20 11-063(m) 1 1
facilities
21 Payment of Drugs 2,000,000. DD-2021- 11/26/2021 11/29/202 12/20/2021 12/21/202 25
and Medicines 00 011-50(m) 1 1
22 Acetylcysteine, 3,900,000. DD-2021-11- 11/26/2021 11/29/202 12/20/2021 12/21/202 25
200mg..etc 00 051(m) 1 1
23 Various medical 308,987. MM-2021- 11/26/2021 11/29/202 12/07/2021 12/07/202 11
supplies for 00 11-064(m) 1 1
immunization
Total ₱42,376,737.08
* due to unavailability of space in the hospital, PO stipulated staggered delivery, 1st delivery was on July 9, 2021
Liquidated Damages were deducted on deliveries beyond 48hours after the signing of PO
Further review of the related documents disclosed the following observations:
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a. Except for the emergency procurement which were previously scheduled for
public bidding and were subsequently declared failure, the gap between the date
of the Purchase Request (PR) and negotiation with the Supplier/RFQ took up to
94 days (Annex F);
b. Notices of Award and Purchase Orders were not immediately prepared and
issued to the suppliers (Annex G, columns h and i); and
c. BAC Resolutions Recommending Award for nine projects were earlier than the
dates affixed by BAC Chairman or Technical Working Group (TWG) Member in
the Evaluation of Quotation (Annex G, columns f and g).
Furthermore, verification of the corresponding Disbursement Vouchers and its

supporting documents submitted and a walk-through on the official website of the
Province of Antique disclosed the absence of documentary evidence on the required
posting of notices of awards, contracts/purchase orders in the website of the Provincial
Government. Likewise, we have noted the following deficiencies:
a. 19 out of 23 NOA were posted in the PhilGEPS beyond the prescribed period
with delays up to 155 days, while one NOA was not provided with document
supporting its posting (Annex G, column m).
b. There were no documents attached to support posting of the

Contracts/Purchase Orders in the PhilGEPs.
c. The actual period/date of posting of Notice of Awards at any conspicuous place

within the premises of the Provincial Government were not indicated in the
Certifications issued by the BAC Secretariat.
According to the Head of the BAC Secretariat, In CY 2021, there is no web page in the
official website of the Province of Antique purposely for the posting of Notice of Award
and the Purchase Orders. Also, during that period, the website was undergoing an
upgrading.
With the extensive delays in the procurement process of the medicines, medical supplies
and equipment for COVID-19 operations, the objective of the adopted mode of
procurement, the Negotiated Procurement (Emergency Cases), was not attained.
Likewise, the assertion that emergency procurement for the aforementioned items was
necessary because time was of the essence where immediate action was essential to
prevent damage to or loss of life was unsupported.
AOM No. 2022-014 (21) dated April 12, 2022 and 2022-014 (21) dated April 15, 2022
were issued on the foregoing observations.
We recommended and the Management agreed to require the BAC and Head of
the PPMU to timely observe the duration of each activities undertaken under the
Negotiated Procurement (Emergency Cases) incurring the shortest possible time.
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We further recommended and the Management agreed to direct the BAC
Secretariat to strictly comply with the posting requirement as prescribed under
Item IV(L)(2) of Annex “H” of the Revised IRR of RA 9184.
Management Comment:
The Management attributed the inefficient and inexpedient procurement of drugs and
medicines, as well as medical supplies and equipment necessary to combat COVID-19
to the difficulties encountered by the suppliers in the shipment of these goods due to
IATF restrictions. Thus, they asserted that the delay was beyond the control of the BAC
for Health and the Secretariat. Moreover, they asserted that the function of the BAC for
Health and the BAC Secretariat for Health is limited until the release of the Purchase
Order (P.O.), and the delivery period is under the supervision of the Provincial General
Services Office.
Auditor’s Rejoinder:
The delay in the procurement of drugs and medicines, as well as medical supplies and
equipment necessary to combat COVID-19 did not happen just between the release of
the PO and the delivery of the goods, but from the start of the procurement process.
The Audit Team pointed out that from the Purchase Request date up to the negotiation
with the Supplier/RFQ there was already a gap of up to 94 days.
Cash and Cash Equivalents
5. Official Receipts (ORs) were not immediately issued for collections received and
collections were not deposited intact and daily or once a week or as soon as the
collections reached ₱10,000.00, instead stayed in the hands of the Cashier for up
to 187 days and reaches the amount of up to ₱158,140.50 before being deposited,
contrary to Item Nos. 21 and 32, Chapter II of the Revised Cash Examination
Manual. Moreover, it resulted in unaccounted collections and exposed
government funds to the risks of being stolen and misappropriated.
Item Nos. 21 and 32, Chapter II of the Revised Cash Examination Manual, respectively
states that:
 No payment of any nature shall be received by a Collecting Officer (CO) without

immediately issuing an official receipt (OR) in acknowledgment thereof.
 All COs shall deposit intact all their collections, as well as collections turn-over to
them by sub-collectors/tellers, with authorized government depository bank
(AGDB) daily or not later than the next banking day. Where collections are
minimal and daily deposit thereof becomes costly and impractical, the COs shall
deposit their collections at least once a week, or as soon as the collections reach
₱10,000.00.
Moreover, the last paragraph of Section 04 (e), Chapter 2 of the Manual on the New
Government Accounting System for Local Government Units (MNGAS for LGUs),
Volume I, provides that the Treasurer/Collectors shall prepare the Report of Collections
and Deposits daily.
84
In November and December 2021, the Audit Team conducted examinations on the cash
and accounts of several AOs of Ramon Maza Sr. Memorial District Hospital (RMSMDH)
in Sibalom, Justice Calixto O. Zaldivar Memorial Hospital (JCOZMH) in Pandan, and
Pedro L. Gindap Municipal Hospital (PLGMH) in Barbaza and observed the following:
A. ORs were not promptly issued for collections received.
In JCOZMH and PLGMH, ORs were not promptly issued for collections received.
In JCOZMH, aside from the Cashier, other hospital personnel like the
pharmacist, dentist, and records personnel collect payments from
patients/clients. The Cashier explained that since she was promoted to
Administrative Officer (AO) IV in June 2021, she has to travel outside of her
station to perform functions inherent to her new position, thus, there were days
that she could not make the collections personally. During these days, payments
were made to the pharmacist for outgoing patients, dentist for dental services,
and records personnel for medical/birth certificates. However, these personnel
merely received payments from patients and did not issue ORs. ORs were
subsequently issued by the Cashier upon her return or whenever she had time to
issue them.
During the examination date, the Audit Team found at the Cashier’s table several
billing statements (BS) of patients discharged as early as May 2021, amounting
to ₱78,333.00, still subject for issuance of ORs (Annex H). Furthermore, there
are stubs of ORs with unused pages (Annex I). The Cashier explained that she
run out of unused ORs after April 26, 2021 because her requested ORs did not
arrive until August 25, 2021, and the unused ORs were reserved for BS found at
her table. She further explained that she has not yet issued ORs for all the BSs
on her table because of her duties and responsibilities as AO IV, and that she
could no longer cope up with the work of a cashier.
The Audit Team requested from the Management a copy of the Purchase
Request for the ORs received by the Cashier on August 25, 2021 to determine
the timeliness of the request, but none was provided by the latter.
Review of the Agency’s previous years’ Annual Audit Reports (AAR) disclosed
that the non-issuance of ORs, immediately after the collection, was brought to
the attention of the Management in CY 2019 thru Audit Observation
Memorandum (AOM) No. 2019-001 (18) and was included in the CY 2018 AAR
of the Province of Antique. In the CY 2019 AAR, it was indicated in its Part III
that the following recommendations relative to AOM No. 2019-001 (18) were fully
implemented:
a. Immediately issue ORs for all collections; and

b. Ensure that ORs (AF 51) are always available by taking into account
the processing time and average number of hospital transactions.
Nevertheless, in November 2021, when the Team conducted an examination on

the cash and accounts of the Cashier, it was observed that she reverted to her
prior practice of not immediately issuing OR for collections made. And once
85
again, she ran out of supply of unused ORs. This showed that the non-issuance
of ORs immediately upon receipt of payment and the non-monitoring of the
usage of accountable forms were deliberate practices in JCOZMH, and not just
because the Cashier was promoted to AO IV.
In PLGMH, ORs were likewise not promptly issued for collections received
because the Cashier is not the one personally receiving payments from the
patients/clients, she was sometimes on official business outside of her station
and observes a work-from-home (WFH) alternative work arrangement (AWA).
The Cashier’s temporary office is located inside the hospital’s premises and due
to the COVID-19 pandemic, as much as possible, outpatients and/or their folks
are not allowed to enter and roam around inside the hospital’s premises. To
assist them in paying the services they availed, a medical clerk at the Triage area
received payments for the Cashier and brought such to the Cashier for issuance
of ORs.
Moreover, the pharmacist disclosed that her bond expired in September 2021
and not yet renewed as of the examination date, thus, she was not issuing ORs
from the expiration of her bond until the time of the examination. All collections in
the pharmacy were being turned over to the Cashier for issuance of ORs.
However, it was made known to the Audit Team that the Cashier adopted a WFH
alternative work arrangement (Annex J) and there were instances when she was
not around the office due to official business outside her station. During these
days, there was no one to issue ORs immediately when someone would make
payment. Payments were being received by unauthorized personnel and being
turned over to the Cashier, together with several pieces of small papers
containing the name of patients and the amount they paid, to the Cashier upon
her return.
B. Collections were not deposited intact and as frequent as required by

regulations.
Based on the Report of Collection and Deposits (RCD) submitted by the

respective cashiers of RMSMDH, JCOZMH and PLGMH, collections were not
deposited intact and as frequent as required by law.
During the first quarter of the CY 2021, the Cashier in RMSMDH deposited her
collection after an average of 14 days from the last day of her collection period
per RCD. The period covered of her collections per RCD ranged from three to
seven days or an average of five days with collections ranging from ₱18,003.20
to ₱46,333.50 or an average of ₱30,140.26 (Annex K).
However, starting April 2021, although the length of time of deposits from the last
day of collection for the period covered in the RCD was shortened to 1 to 24 days
or an average of 10 days (previously an average of 14 days) the collection
period was extended to 8 to 21 days or an average of 13 days (previously three
to seven days). It was noticed that the period covered per RCD was extended
after the Cashier was granted her first special cash advance for the payment of
educational assistance for the 1st semester of the SY 2020-2021, which was
March 25, 2021.
86
On the other hand, JCOZMH has the following funds being maintained:
1. General Fund (GF);
2. General Fund (GF)_Laboratory;
3. Trust Fund (TF) Proper;
4. Trust Fund (TF)_Laboratory-Consignment; and
5. Trust Fund (TF)_Consignment.
For the period starting February 2021 to August 2021, there were four instances
when the collections for the General Fund were deposited on two separate dates,
with a gap of 11 to 71 days, as shown in Table 6:
Table 6. Schedule of Deposits Made on Separate Dates

RCD No. Period OR Series Amount Amount Date No. of Days
Covered Number Collected Deposited Deposited Lapsed from
Previous
Deposit
4421-4 Feb. 1-15 0578881- ₱31,750.0 ₱10,820.00 2/18/2021 27
(21-02-004) 0578968 0 20,930.00 3/17/2021
4421-4 Apr. 1-12 0579292- 28,641.40 25,600.00 4/26/2021 24

(21-04-009) 0579356 3,041.40 5/20/2021
4421-4 Apr. 13-15 0579357- 24,373.40 15,000.00 5/20/2021 71

(21-04-010) 0579386 9.373.40 7/30/2021
4421-4 Aug. 1-31 1612796- 45,981.00 12,659.20 11/18/2021 11

(21-11-013) 1704850 33,321.80 11/29/2021
It was further noted that collections for all funds were not deposited together. In
particular, collections from January 4-6, 2021 under the GF was deposited on
January 15, 2021. However, collections as of January 14, 2021 for TF_Proper,
TF_Consignment, and TF_Laboratory-Consignment funds were not deposited on
the same date, rather, these were deposited on February 4, 2021.
In addition, collections were not deposited once a week or as soon as the

collections reached ₱10,000.00. In particular, under the GF, deposits were made
once to twice a month from January to July 2021, no deposits were made in the
months of June and August to October 2021. It was only in the months of
November and December 2021, after the Audit Team conducted an examination,
that the frequency of deposits was increased to thrice a month (Annex L).
Except for the collections for the period December 12-27, 2021, the Cashier
deposited her collections after 3 to 187 days or an average of 37 days from the
last day of the period covered by her RCD. The period covered for her
collections to be deposited ranged from 3 to 196 days or an average of 22 days,
while her collections per RCD ranged from ₱6,503.50 to ₱158,140.80 or an
average of ₱38,019.43 (Annex M).
The Management explained in its letter dated February 10, 2022 that collected
amounts were not remitted immediately to the Provincial Treasurer due to the
distance of the hospital from the provincial office, where the collections should be
87
remitted. The Management did not give comment on the issue as to why
collections for all funds were not remitted together.
Similarly, the PLGMH has the following funds being maintained:
1. General Fund (GF);

2. Trust Fund (TF) Proper;
3. Trust Fund (TF)_Consignment (Drugs and Medicines); and
4. Trust Fund (TF)_Consignment (Laboratory).
Just like in JCOZMH, collections for all funds in the PLGMH were not deposited
together. For example, on February 5, 2021, the Cashier went to the bank to
deposit her collections for the TF_Consignment (Drugs and Medicines).
However, she did not deposit on the same date her collections from January to
February 4, 2021 for the GF, rather, these were deposited on March 1, 2021.
The Cashier explained to the Audit Team that the reports/documents pertaining
to the undeposited amount/s were not yet prepared when she deposits the other
collections, that’s why these were not included in the deposits.
C. Report of Collections and Deposits were not prepared daily.
The Report of Collections and Deposits (RCD) were not prepared daily as
required in the last paragraph of Section 04 (e), Chapter 2 of the MNGAS for
LGUs, Volume I.
In RMSMDH, the RCDs were being prepared once every 3 to 21 days or an

average of 10 days, in JCOZMH, once every 3 to 196 days or an average of 22
days and in PLGMH, except for the August 19, 2021 collections, RCDs were
being prepared once every 3 to 31 days or an average of 14 days.
The Management explained that the reports were not being prepared promptly
because the Cashier has no assistant and laptop to be used.
The non-issuance of ORs immediately after every receipt of payment and the failure to
deposit intact and daily or once a week or once the collection reached ₱10,000.00 is
contrary to Item Nos. 21 and 32, Chapter II of the Revised Cash Examination Manual.
Moreover, it resulted in unaccounted collections and higher risk of theft and
misappropriation of funds.
In addition, the non-preparation of the RCDs daily is not in accordance with the last
paragraph of Section 04 (e), Chapter 2 of the MNGAS for LGUs, Volume I, and it
resulted in the delayed deposit/remittance of collections.
We recommended and the Management agreed to instruct the Cashier to:
a. Personally receive payments from patients/clients or their folks and issue

ORs immediately after every receipt of payment;
88
b. Deposit the collections intact, and once a week or as soon as it reaches
₱10,000.00, considering that daily deposit is not feasible due to the
distance of the hospitals from the depository bank; and
c. Prepare the Report of Collection and Deposits daily.
We further recommended and the Management agreed to instruct the Cashier of

the JCOZMH to issue official receipts for billing statements found at her table
during the time of examination amounting to ₱78,333.00 and deposit/remit the said
amount immediately to the bank or Provincial Treasurer, copy furnish the Audit
Team of the deposit/remittance slip.
Furthermore, we recommended and the Management agreed to:
 Relieve the current designated cashiers, who were promoted to

Administrative Officer IV, of the duties and functions of a Cashier;
 Appoint/Designate a new Cashier who can perform well the duties and
functions of the position and an Alternate Cashier to replace the former if
he/she is not around;
 Refrain from granting special purpose cash advances for educational

assistance to the Cashier of the hospital as this is unrelated to the
operation of the hospital; and
 Remind all accountable officers to renew their bonds before they expire.
6. Special cash advance of the Nutritionist/Dietician III (Special Disbursing Officer) of

Ramon Maza Sr. Memorial District Hospital for educational assistance for the 1 st
semester of the SY 2020-2021 amounting to ₱1.585 million was entrusted to the
hospital’s Cashier/Special Disbursing Officer, contrary to Item 4.1.6 of COA
Circular No. 97-002 dated February 10, 1997. Moreover, two signatures in the
payroll attached in the Liquidation Report were falsified and the amount
corresponding thereto was misappropriated by either or both the
Nutritionist/Dietician and/or Cashier.
Item 4.1.6 of COA Circular No. 97-002 states that the transfer of cash advance from one
Accountable Officer (AO) to another shall not be allowed.
Further, Article 171 of the Revised Penal Code of the Philippines, states that falsification
is committed by any public officer who, taking advantage of his official position, shall
falsify a document by counterfeiting or imitating any handwriting, signature, or rubric.
Furthermore, Article 217 of the same Code provides that malversation is committed by
any public officer who, by reason of the duties of his office, is accountable for public
funds or property, shall appropriate the same, or shall take or misappropriate or shall
consent, through abandonment or negligence, shall permit any other person to take such
public funds or property, wholly or partially, or shall be guilty of the misappropriation or
malversation of such funds or property. (Emphasis ours)
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The Nutritionist/Dietician III of the Ramon Maza Sr. Memorial District Hospital
(RMSMDH) also acts as Special Disbursing Officer (SDO) for the subsistence of the
patients of the hospital, hence, was issued with a revolving fund of ₱300,000.00. Apart
from this accountability, for CY 2021, a special order was issued by the Provincial
Governor designating her as SDO to handle disbursements of Educational Assistance
for the Provincial Youth Development Office.
As of October 2021, the following checks were issued to the Nutritionist/Dietician III
(SDO) of the RMSMDH as cash advances for the payment of educational assistance for
the 1st semester of the SY 2020-2021:
Table 7. Cash Advances Issued to Nutritionist/Dietician III of RMSMDH

Check Date Check No. Amount
03/25/2021 73141034 ₱ 2,420,000.00
05/14/2021 73141392 2,500,000.00
06/29/2021 73141835 2,500,000.00
07/22/2021 73142097 2,500,000.00
08/17/2021 73142456 2,490,000.00
10/13/2021 73143102 2,497,000.00
TOTAL ₱ 14,907,000.00
The Audit Team conducted an examination on the cash and accounts of the accountable
officer (AO) on November 16, 2021. Based on available records as of October 31, 2021,
the special cash advance dated October 13, 2021, amounting to ₱2.497 million was not
yet liquidated. However, upon demand, the AO produced cash items equivalent to
₱0.912 million only because the remaining ₱1.585 million was not on hand. She
explained to the Audit Team that the ₱1.585 million was allocated for scholars from the
Municipality of Caluya. Since she could not leave her posts as Nutritionist/Dietician for
days, she entrusted to the Cashier/SDO of RMSMDH, the said amount to be distributed
by the latter.
When the Nutritionist/Dietician was asked why she accepted the cash advance for
educational assistance considering that the distribution of the said assistance would
require her to leave her post and incompatible with the duties and functions of her
position as nutritionist/dietician of RMSMDH, she reasoned out that she just followed the
Special Order issued by the Provincial Governor (Annex N). Besides, aside from the
Cashier, she is the only bonded officer whose bond is sufficient to cover the amount
advanced, because her maximum cash accountability is ₱2.5 million.
During the examination day, the Cashier/SDO was not around as she was on official
travel to Caluya to distribute the ₱1.585 million educational assistance, as shown by her
unnumbered Travel Order dated November 13, 2021. Thus, the ₱1.585 million was not
presented and accounted during the examination. The cash and cash equivalents
pertaining thereto was presented to the Audit Team on December 21, 2021 only.
On December 27, 2021, the Nutritionist/Dietician III (SDO) liquidated the subject cash
advance. Then, the Audit Team conducted confirmation with the scholars whose names
were found in the payroll attached to the Liquidation Report. Out of the 317 provincial
scholars from the Municipality of Caluya, only 64 or 20 percent responded. Out of the 64
respondents, two claimed that they did not receive any educational assistance from the
Provincial Government, nor sign any payroll. When the payroll with their signature was
90
showed to them, they acknowledged that the signature looks that of their own, but they
did not sign it.
Scholar A said that the handwriting of his/her purported signature on the payroll is
different from his/her. While Scholar B contended that he/she cannot recall affixing
his/her signature on the payroll because he/she was not around during the distribution
period. He/she was just informed later on by the coordinator that the amount pertaining
to him/her was returned to the treasury because she was not able to sign. However,
perusal of the liquidation reports submitted to the Audit Team showed that the ₱5,000.00
pertaining to this scholar was not included in the amount refunded to the Provincial
Treasurer.
Both scholars remembered that they submitted/sent a copy of their IDs with signature to
the scholarship coordinator.
It was also gathered from the confirmation with the scholars that:
a. Most of the time, the payroll was being signed prior to the actual release of the
educational assistance;
b. The scholars were not being informed as to what semester the educational
assistance they are receiving pertained to;
c. There were many instances where the educational assistance was released at
the house of the PYDO personnel who accompanied the Cashier/SDO in the
Municipality of Caluya; and
d. Some scholars were not informed of the scheduled date of release of their
educational assistance, thus, they were not able to receive the amount pertaining
to them.
The transfer of cash advance amounting to ₱1.585 million from the Nutritionist/Dietician
III (SDO) to the Cashier/SDO is contrary to Item 4.1.6 of COA Circular No. 97-002, which
provides that the transfer of cash advance from one AO to another shall not be allowed.
Moreover, the denial of the two scholars of their signature appearing on the payroll and
receipt of ₱5,000.00 each, showed that their signatures on the payroll were falsified and
the amount of ₱10,000.00 intended for them was misappropriated by either or both the
Nutritionist/Dietician III (SDO) and/or Cashier/SDO.
Lastly, the existence of the four conditions enumerated above cast doubt on the
regularity of the disbursement and resulted in the non-receipt by several scholars of their
educational assistance.
AOM Nos. 2022-001 (21) dated January 10, 2022 and 2022-012 (21) dated
March 24, 2022 were issued on the foregoing observations.
We recommended and the Management agreed to refrain from allowing all the
accountable officers to transfer their cash advances to another accountable
officer as this is contrary to Item 4.1.6 of COA Circular No. 97-002.
91
Further, it is recommended and the Management agreed that no additional cash
advance for educational assistance be granted to the Nutritionist/Dietician (SDO)
of the Ramon Maza Sr. Memorial District Hospital because its distribution requires
her to leave her post and is incompatible with her duties and responsibilities at
the district hospital.
Furthermore, we recommended and the Management agreed to instruct the

Cashier/SDO in-charge of distributing educational assistance to the scholars to:
a. Ensure that the persons signing the payroll and receiving the cash are the
bonafide scholars;
b. Stop the practice of requiring students to sign the payroll prior to the day
of the actual release of the educational assistance;
c. Inform the students of the semester to which the educational assistance

that they are currently receiving pertains to; and
d. Notify the students of the date and venue of the release of their educational
assistance prior to the scheduled date, and the venue should be in a public
establishment like school or gymnasium.
Implementation of HFEP Projects Funded by the DOH
7. Implementation of 10 Health Facilities Enhancement Program (HFEP) projects with

a total contract cost of ₱308.425 million was delayed due to the inexcusable fault
of the contractors and the management’s non-enforcement of calibrated actions
on negative slippages, contrary to GPPB Circular No. 03-2019 and the
Memorandum of Agreement between the Provincial Government of Antique and
the Department of Health. Moreover, the Approved Contract Extensions granted
were not supported with written consent of bondsmen and the validity of
performance security were not correspondingly extended, thus, depriving the
government of remedy against the contractor and/or bondsmen in case the
contractor failed to faithfully perform its obligations until the contract extension
period.
The Government Procurement Policy Board (GPPB) issued Circular No. 03-2019 dated
March 8, 2019 to guide procuring entities on the actions to be undertaken when
contractors incurred negative slippage in the implementation of infrastructure projects.
Section 4 of the said Circular provides the following calibrated actions to be adopted in
response to delays in the implementation of infrastructure projects:
Table 8: Calibrated Actions to be Undertaken for Negative Slippage

Negative Slippage Calibrated Actions to be Undertaken
Negative slippage of five The contractor shall be given a warning and be
percent required to: (1) submit a detailed “catch-up” program
every two weeks; (2) Accelerate work and identify
specific physical targets; and (3) Provide additional
input resources.
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Negative Slippage Calibrated Actions to be Undertaken
Negative slippage of 10 The contractor shall be issued a final warning and be
percent required to come-up with a revised detailed “catch-up”
program with weekly physical targets together with the
required additional input resources.
Negative slippage of 15 The implementing unit shall initiate termination of the

percent contract or take-over of the work by administration.
Moreover, Section 10.5 of the Annex “E” of the Revised IRR of the R.A. No. 9184
provides the following provision on the granting of extension of contract time:
10.5 “xxxx”. The written consent of bondsmen must be attached to any request of
the contractor for extension of contract time and submitted to the procuring
entity for consideration and the validity of the performance security shall be
correspondingly extended.
The HFEP is a program of the Department of Health (DOH) with the main goal of
improving the basic, essential, as well as specialized health services to all Filipinos
through the rationalization and critical upgrading of health facilities nationwide. Through
the HFEP, the national government provided funds for the construction, upgrading and
rehabilitation of Local Government Unit (LGU) Health Care Facilities and medical
equipment for better and more responsive health services.
From CY 2017 to 2021, the Provincial Government of Antique (PGA) received a total
amount of ₱915.138 million (Annex O) assistance from the DOH for the implementation
of 24 HFEP infrastructure projects in the province.
As provided in the Memorandum of Agreement (MOA) for all HFEP Projects between the
DOH-Regional Office VI and the PGA, the following are among the latter’s
responsibilities:
(a) Prepare the Detailed Architecture and Engineering Drawing (DAED) Plans,
technical specifications, scope of work, detailed estimates, Approved Budget for
the Contract and all other documents for bidding purposes;
(b) Bid and award the project/s;
(c) Manage and supervise the implementation; and
(d) Ensure immediate implementation and completion of the projects.
As of December 31, 2021, the PGA has reported that 13 of the 24 HFEP infrastructure
projects were completed, 5 of which were completed in the previous years while the 8
were completed in CY 2021. The remaining 11 projects were still on-going, one of them
has reported accomplishments within the timeline, while the 10 have incurred negative
slippages. The summary and details of the on-going projects with negative slippages are
presented below:
Table 9. Summary of On-going Projects with Negative Slippages
Negative slippage No. of Projects
93
Five percent 1
Ten percent 3
Fifteen percent 6
Total 10
Table 10. Details of On-going HFEP Projects

Accomplishment
Particulars Contract Cost
Date Expiry Revised Negative
Started Date Expiry Sched- Slippages
Actual
ule
Expansion/Upgrading/Repair/ ₱13,569,330.
Renovation of Hospital Building- 48 02/07/2019 09/04/2019 05/23/2020 100% 92.98% -34.54%
VMH
Expansion/Upgrading/Repair/ 39,499,137.9
Renovation of Hospital Building, 4 03/04/2019 01/01/2020 08/20/2021 100% 86.09% -15%
BMCH
Completion of 9,878,797.6
Upgrading/Expansion/Repair and 6 02/09/2021 08/06/2021 10/15/2021 100% 24.32% -82.65%
Renovation and Construction of
Sewage Treatment Plant, VMH
Expansion/Upgrading/Repair/ 18,272,865.9
Renovation of Hospital Building- 8 12/09/2019 08/04/2020 01/06/2022 99.98% 52.41% -47.57%
JCOZMH
Construction of Sewage 19,775,167.7
Treatment Plant, Installation of 3 05/31/2021 12/27/2021 07/01/2022 56.56% 16.63% -39.93%
Solar Panel System and Other
Mechanical Works -CDH
Upgrading/Expansion/Repair and 4 05/31/2021 01/05/2022 01/24/2022 76.08% 64.49% -11.59%
Sewage Treatment of RMSMDH
Sewage Treatment of PLGMH
Renovation of Ancillary/Clinical
Services and Construction of
Sewage Treatment Plant,
PDMDH
Upgrading/Expansion/Repair and 113,544,846.6
Renovation of Annex Bldg. and 7 05/31/2021 07/24/2022 44.77% 38.61% -6.15%
Completion of 6-Storey Clinical
Services Building and
Cosntruction fo Sewage of
ASMGH
Upgrading/Expansion/Repair/ 8 05/27/2021 04/06/2022 72.61% 62.25% -10.36%
Renovation and Constuction of
Sewage Treatment Plant, BMCH
Total ₱308,425,219.71
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Further evaluation disclosed that 4 out of 10 projects with negative slippages were
already granted with numerous contract extensions, and 3 of them were already beyond
their revised contract duration.
According to the Heads of the Construction Section of the Provincial Engineering Office
(PEO), the completion of the HFEP projects were delayed due to the following reasons:
a. Lack of manpower of the contractor;

b. Delayed delivery/lack of materials;
c. Insufficient equipment of the contractors;
d. Equipment failures;
e. Ordinary unfavorable weather conditions; and
f. Inappropriate project schedule.
The Audit Team requested copies of the calibrated actions taken by the management in
response to the reported negative slippages, however, none were submitted except for
the four communications sent to the contractors of the two on-going projects in
Valderrama Municipal Hospital. These communications were mere reminders of the
delays with the instruction to fast track the completion, despite the slippage of more than
negative 15 percent.
Aside from the four communications, the agency did take further actions as provided in
GPPB Circular No. 03-2019. According to the Heads of the Construction Section of the
PEO, they have no actions yet on the delays incurred by the contractors as they have
only computed the slippages when the Audit Team requested for it in February 2022.
The delay in the implementation of the HFEP infrastructure projects deprived the public
of the benefits they could have derived from its immediate and maximum use. Further,
the timely completion and proper implementation of the Health Facilities Enhancement
Program would have been beneficial to the Provincial Government’s response to the
current pandemic.
Further review of the documents and inquiry with the Construction Personnel disclosed
that the contractors of the projects with approved extensions did not attach to their
request for extension a written consent from the bondsmen and the validity of the
performance security was not correspondingly extended.
The non-submission of aforesaid document deprived the government of a remedy

against the contractor and/or his bondsmen in case the contractor failed to faithfully
perform its obligations until the contract extension period.
Likewise, during the inspection conducted by the Audit Team, it was noted that the Site
Engineers of the contractors of the following projects were not among those key
personnel named in their bid proposals to be assigned in the projects:
(a) Completion of Upgrading/Expansion/Repair and Renovation of Hospital and

Construction of Sewage Treatment, BMCH;
(b) Expansion/Upgrading/Repair/ Renovation of JCOZMH;
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(c) Completion of Upgrading/Expansion/Repair and Renovation of Hospital and
Construction of STP, PLGMH; and
(d) Construction of STP and Installation of Solar Panel System and Other
Mechanical Works, CDH.
There were no submitted qualifications and experience data of these substitute

personnel, hence, verification and validation of their competence and experiences were
not conducted by the Technical Working Group during the procurement process.
We recommended and the Management agreed to instruct the Provincial Engineer

to:
a. To perform regular monitoring and close supervision to ensure the

immediate completion of the delayed projects;
b. Enforce calibrated actions as provided in GPPB Circular No. 03-2019 for

negative slippages of 5, 10 and 15 percent; and
c. For contracts with approved project duration extensions, require

submission of the consent of the bondsmen and extensions of the validity
of performance security.
We further recommended and the Management agreed that the Construction

Section ensure that the key personnel of the contractors during project
implementation are those that were pledged by the contractors to be assigned to
the projects, otherwise, require justification and approval of the Local Chief
Executive of the substitution of personnel.
Construction of the Provincial Assessor’s Building
8. The substantially completed Provincial Assessor’s Building with the total cost of
₱22.758 million was constructed without the necessary Building Permit, contrary
to Sections 301 of PD 1096, otherwise known as the National Building Code of the
Philippines, thus raising doubt on its conformity with the minimum standards and
requirements on building design and construction. Moreover, due to its non-
compliance with the same provision of the Code, the implementation of its Third
Phase (Completion) was suspended, delaying the completion of the structure and
transfer of the Provincial Assessor’s Office from its rented space, thereby
incurring additional rental fees amounting to ₱95,000.00 monthly.
Section 301 of the PD 1096 or the National Building Code (NBC) of the Philippines
clearly states that “No person, firm or corporation, including any agency or
instrumentality of the government shall construct, alter, repair, convert, use, occupy,
move demolish, and add any building/structure or any portion thereof or cause the same
to be done, without first obtaining a building permit therefor from the Building Officer
assigned in the place where the subject building/structure is located to be done.”
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As provided in Section 303 of the NBC, the Building Official, through the issuance of
Building Permit ensures that the applicant satisfies and conforms with approved
standard requirement on zoning and land use, lines and grades, structural design,
sanitary and sewerage, environmental health, electrical and mechanical safety as well
as with other rules and regulations promulgated in accordance with the provisions of the
code.
The Provincial Government of Antique through the PEO has implemented the
Construction of the new Provincial Assessor’s Building in three phases, with the total
cost of ₱22.758 million, as detailed on the next page:
Table 11. Contract Amount of Construction of New Provincial Assessor’s Building per Phase of
Implementation
Contract
Phase Contractor Contract Period
Amount
Phase I CTG Construction and
Enterprises ₱ 9,961,067.89 01/02/2019-05/22/2019
Phase II UYG Construction 9,893,417.31 12/24/2019-07/10/2020
Phase III EON Construction
and Supply 2,903,316.89 06/01/2021-08/29/2021
TOTAL ₱ 22,757,802.09
As of December 31, 2021, the Phase I and II of the construction were reported
completed, while the construction of the third phase with 90% completion was
suspended since July 30, 2021 due to the Notice to Stop Work issued by the Bureau
of Fire Protection (BFP). The Notice was issued by the BFP for absence of Fire Safety
Evaluation Clearance and other fire safety requirement.
Rule 3 of the Revised Implementing Rules and Regulations of the Republic Act (R.A.)
No. 9514, otherwise known as The Fire Code of the Philippines defined “Fire Safety
Evaluation Clearance” as a document issued by the BFP as a prerequisite for the grant
of Building Permit by the Office of Building Official having jurisdiction upon determination
that the evaluated plans are compliant with RA 9514 and its RIRR.
Upon inquiry of the Audit Team with the Construction Section, PEO, and the Building
Official of the Municipality of San Jose, Antique, it was discovered that the Provincial
Assessor’s Office, which is substantially completed, was constructed without the
necessary building permit. As of April 5, 2022, the PEO has yet to comply with the
requirements for Building Permit.
However, review of the Statement of Work Accomplished submitted by the Contractors

and Inspection Reports signed by the Inspectorate Team of the PEO for the Phase I and
II of the construction showed that the items of work paid included Item No. II. General
Requirements (Licenses, Permits, etc.).
When asked by the Team, the Chief of the Construction Section (North), explained that
the verification of the compliance of the contractor/s in securing the building permit was
inadvertently overlooked by their section.
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The construction of the Provincial Assessor’s Building without the necessary building
permit is contrary to Section 301 of the National Building Code of the Philippines.
Moreover, it raised doubts as to the conformity of the building with the standards and
requirements on building design and construction.
Also, due to the suspension of the implementation of the Third Phase (Completion), the
transfer of the Provincial Assessor’s Office from its rented space was also delayed,
thereby causing the Provincial Government to incur rental fees amounting to ₱95,000.00
monthly.
We recommended and the Management agreed to instruct the PEO to:
a. Explain in writing why the facilitation of Building Permit has been

overlooked and was not processed up to this date;
b. Facilitate as soon as possible the production of the necessary documents

and submit to the Building Official of the Municipality of San Jose for their
proper evaluation on the compliance with the standard requirements in the
building and construction; and
c. Henceforth, require the contractors of vertical structures to secure Building

Permit prior to construction and Certificate of Occupancy prior to the
occupation and use by the end-users.
Property Insurance
9. Properties amounting to ₱1.437 billion were not insured with the General
Insurance Fund of the GSIS, as required under Republic Act No. 656, thereby
exposing the Provincial Government to the risk of not being indemnified in case of
damage or loss due to fire, earthquake, storm or other fortuitous events/
casualties.
Section 5 of the Republic Act (R.A.) No. 656, otherwise known as the Property Insurance
Law, as amended by Presidential Decree (PD) No. 245, requires all government
agencies, except a municipal government below first class, to insure its properties
against any insurable risk, with the Property Insurance Fund (Fund) being administered
by the Government Service Insurance System (GSIS).
In relation thereto, the Commission on Audit issued COA Circular No. 2018-002 dated
May 31, 2018, setting up the guidelines prescribing the submission of the Property
Inventory Form (PIF) as basis for the assessment of general insurance coverage over all
insurable assets, properties and interest of the government with the GIF.
Pertinent provisions of the above-mentioned circular are shown below:
“4.1 Property include vessels and crafts, motor vehicles, machineries, permanent
buildings, properties stored therein (i.e. furniture, fixtures, equipment, supplies
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and materials, etc.) or in any buildings rented by the government, or properties
in transit, the ownership of which had already passed to the government.
“xxx”
5.1. Heads of government agencies shall direct the pertinent official under his/her
supervision to:
“xxx”
b. Prepare the Property Inventory Form (PIF) listing of all insurable properties
and other assets, showing their latest appraised values/valuation,
appraisal date, location, and other information.
c. Extract from the Report on the Physical Count of Property, Plant and
Equipment, as well as from the Report on the Physical Count of
Inventories, prepared in accordance with the provisions of the Government
Accounting Manual, the data for the PIF pertaining to the insurable assets
and interests of the government;
“xxx”
e. Submit the consolidated PIF to the Supervising Auditor/Audit Team Leader

and the GIF, GSIS, not later than April 30 of each year.
As of December 31, 2021, the net book value of the insurable assets of the Provincial
Government amounted to ₱1.464 billion, broken down as follows:
Table 12. Net Book Value of Insurable Assets of the Provincial Government
Net Book Value as of
Particulars
12/31/2021
Buildings ₱ 64,060,621.93
School Buildings 17,818,507.18
Hospitals and Health Centers 447,771,923.09
Slaughterhouses 3,987,561.59
Other Structures 608,702,385.14
Machinery 11,125,334.45
Office Equipment 23,186,393.86
Information and Communication Technology Equipment 34,917,991.47
Agriculture and Forestry Equipment 740,743.32
Marine and Fishery Equipment 43,600.00
Communication Equipment 12,368,995.15
Construction and Heavy Equipment 44,536,896.31
Disaster Response and Rescue Equipment 23,911,372.88
Military, Police and Security Equipment 1,493,060.49
Medical Equipment 72,613,189.18
Printing Equipment 364,298.24
Sports Equipment 5,967,805.58
Technical and Scientific Equipment 4,156,036.86
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Net Book Value as of
Particulars
12/31/2021
Other Machinery and Equipment 52,951,158.89
Watercrafts 13,842,296.56
Furniture and Fixtures 19,492,465.68
Books 86,558.75
TOTAL ₱ 1,464,139,196.60
However, out of the P1.464 billion, only 26.641 million or 1.82 percent were insured with
the GIF, composed of the following property:
Table 13. Properties Insured with the GIF

PROPERTIES INSURED SUM INSURED
1 Bugasong Medicare Community Hospital
- One (1) Storey Class “A” Building ₱21,700,000.00
2 Pres. Diosdado Macapagal District Hospital
- One Storey Class “A” Building occupied as
OPD, ER, Equipment, Furnitures and Fixtures 2,991,954.93
contained thereat
3 Ramon Maza Sr. Memorial District Hospital
- Pre-Fabricated Building
One Storey Class “B” Building occupied as
OPD, ER, Equipment, Furnitures and Fixtures 449,266.00
contained therein
- Main Building
One Storey Class “A” Building occupied as
OPD, ER, Equipment, Furnitures and Fixtures 1,499,907.00
contained therein
TOTAL ₱ 26,641,127.93
Since the Provincial Government has insured only properties amounting to ₱26.641
million, at least ₱1.437 billion of the Agency’s properties were exposed to the risk of not
being indemnified in case of damage to fire and other causes.
Moreover, the Provincial Government Services Office (PGSO) has not prepared and
submitted the Property Inventory Form to the Auditor and the GIF, GSIS, as provided in
COA Circular No. 2018-002.
Query with the PGSO relative to their non-compliance therewith disclosed that they were
unaware of the said Circular.
Perusal of the prior years’ Annual Audit Reports (AAR) disclosed that this deficiency was
discussed in the CYs 2014 and 2016 AAR, however, recommendations to address the
deficiency remained unimplemented to date. Since CY 2014, the only properties that
were insured with the GIF were the motor vehicles and three hospitals.
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The PGSO stated that they exerted rigorous effort to insure all of the properties of the
Provincial Government of Antique with the GIF, GSIS for CY 2021 amidst the surge of
the COVID-19 pandemic, but subsequently failed as all GSIS transactions were by
appointment/schedule. Moreover, there has been no reply from the GSIS relative to
their application.
The failure of the agency to insure all of its insurable assets with the General Insurance
Fund of the GSIS denied the government adequate and reliable protection against any
damage to or loss of its properties or assets and interests due to fire, earthquake, storm,
or other fortuitous events/casualty.
We recommended and the Management agreed that starting CY 2022, the PGSO
will:
i. Prepare the Property Insurance Form and submit to the Auditor and the
GIF, not later than April 30 of each year; and
ii. Ensure that all insurable assets/property of the Provincial Government are
insured with the General Insurance Fund of the GSIS.
Fund Transfers
10. Fund transfers amounting to ₱64.272 million remained unliquidated as of

December 31, 2021, contrary to COA Circular Nos. 94-013 dated December 13,
1994, and 2007-001 dated October 25, 2007, resulting in the accumulation of long
outstanding and dormant receivable accounts.
Items 4.6 and 4.9 of COA Circular No. 94-013 re: Rules and Regulations in the Grant,
Utilization and Liquidation of Funds Transferred to Implementing Agencies, dated
December 13, 1994, respectively, provides that: (1) within ten days after the end of each
month/end of the agreed period for the Project, the Implementing Agency (IA) shall
submit the Report of Checks Issued (RCI) and the Report of Disbursement (RD) to
report the utilization of the funds; and (2) the IA shall return to the Source Agency (SA)
any unused balance and refund of disallowance upon completion of the project.
Further, Item 5.4 of COA Circular No. 2007-001 dated October 25, 2007 re: Revised
Guidelines in the Granting, Utilization, Accounting and Auditing of the Funds Released to
Non-Governmental Organizations/People’s Organizations (NGOs/POs) states that,
within 60 days after the completion of the project, the NGO/PO shall submit the final
Fund Utilization Report certified by its Accountant and approved by its
President/Chairman, to the Government Organization (GO), together with the inspection
report and certificate of project completion rendered/issued by the GO’s authorized
representative, list of beneficiaries with their acceptance/acknowledgment of the
project/funds/goods/services received.
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Furthermore, COA Circular No. 2016-005 dated December 19, 2016 re: Guidelines and
Procedures on the Write-off of Dormant Receivable Accounts, Unliquidated Cash
Advances, and Fund Transfers defined “Dormant Unliquidated Fund Transfers” as
advances granted by the source entity to implementing entity for the implementation of
programs/projects which remained non-moving for ten years or more, the
collectability/settlement of which, could no longer be ascertained.
The Provincial Government of Antique extended assistance in the implementation of

various programs/projects/activities (PPAs) of the 18 municipalities in the Province of
Antique in the form of Fund Transfers (FT) to municipal/barangay Local Government
Units (LGUs), NGOs/POs and other implementing agencies, which is subject to
liquidation.
These transactions were recorded in the books as either Due from LGUs, Due from
NGOs/POs or Due from National Government Agencies (NGAs).
As of December 31, 2021, the total balance of fund transfers to LGUs, NGOs/POs, and
NGAs was ₱64.272 million, as shown in Table 14.
Table 14. Balance of Fund Transfers under the Due from LGUs, NGOs/POs,
and NGAs accounts as of December 31, 2021
Account Name Balance
Due from LGUs ₱ 46,244,436.07
Due from NGOs/Pos 16,920,692.54
Due from NGAs 1,106,524.92
TOTAL ₱ 64,271,653.53
Aging of these accounts showed that as of December 31, 2021, ₱19.080 million or 29.69
percent is composed of FTs aged five to less than 10 years which may become dormant
if unacted upon, and ₱4.339 million or 6.75 percent aged 10 years and more which were
considered dormant, as shown in Table 15.
Table 15. Aging of Due from LGUs, NGOs/POs, and NGAs accounts as of December 31, 2021
Age of Receivables
Not Yet Due 5 to less 10 years or
Account Name Less than TOTAL
than 10 more
5 years
years
Due from LGUs ₱2,000,000.00 ₱29,700,252.24 ₱14,461,655.50 ₱82,528.33 ₱46,244,436.07
Due from
NGOs/POs 0.00 8,552,752.54 4,398,000.00 3,969,940.00 16,920.692.54
Due from NGAs 0.00 600,473.94 220,000.00 286,050.98 1,106,524.92
TOTAL ₱2,000,000.00 ₱38,853,478.72 ₱19,079,655.50 ₱4,338,519.31 ₱64,271,653.53
Percentage 3.11% 60.45% 29.69% 6.75% 100%
Review of the subsidiary ledgers (SL) of these accounts, 4th Quarter Report on the
Status of Fund Transfers to LGUs, NGOs/POs and Other Government/Implementing
Agencies, and previous years’ Annual Audit Reports (AAR) disclosed the following:
Due from LGUs
The balance of fund transfers to LGUs under the “Due from LGUs” account
amounting to ₱46.244 million (Annex P) consists of fund transfers to various
barangays and municipalities in the Province of Antique for either of the following
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purposes: (1) aid for participation in the celebration of Binirayan Festival from CYs
2015 to 2017; (2) acquisition of patrol rescue vehicle; and (3) implementation of
various projects such as improvement of drainage system, construction of multi-
purpose hall, improvement of barangay road/FMR, etc. The funds were released as
early as 2008.
The non-liquidation of FTs to LGUs was included in CYs 2015 and 2016 AARs.
However, it was not fully acted upon by the management up to this date, thus,
₱44.244 million or 95.68 percent of the year-end balance of the “Due from LGUs”
account amounting to ₱46.244 million, consists of overdue accounts.
Due from NGOs/POs
The balance of the “Due from NGOs/POs” account amounting to ₱16.921 million
(Annex Q) consists of fund transfers to NGOs/POs for livelihood projects, training
programs, sports development, environmental advocacies, and others. The funds
were released as early as 2006.
The non-liquidation of FTs to NGOs/POs was included in the CYs 2012 to 2013 and
2015 to 2019 AARs of the Province of Antique. However, this was not yet fully acted
upon by the management up to this date, thus, the balance of the “Due from
NGOs/POs” account as of December 31, 2021 remained at ₱16.921 million.
Due from NGAs
The unliquidated balance of the “Due from NGAs” account amounting to ₱1.106
million (Annex R) consists of fund transfers to schools and other national
government agencies. The funds were released as early as 2012, but there were
those recorded prior to 1994 amounting to ₱116,050.98, with no records available.
In our letter dated October 8, 2021, the Audit Team inquired with the Management why
these accounts remained unliquidated as of June 30, 2021, the date of the latest
Quarterly Report on the Status of Fund Transfers to LGUs, NGOs/POs and Other
Government/Implementing Agencies (NGAs) available at that time.
In the agency’s reply dated October 13, 2021, it was stated that they have been sending
out demand letters and conducting table assessment to assist the accountable officers in
the preparation of their liquidation report, however, due to the pandemic, it was
discontinued. It was further stated therein that as per their inquiry with barangay
officials, the reason of the latter’s failure to liquidate is the non-availability of documents
due to the absence of turnover from the previous officials after their term ended.
In addition to the non-turn-over from previous officials, the following were also identified
as major causes in the non-liquidation of fund transfers:
a. Non-cooperation of the previous NGOs/POs and LGU officials to the new ones;
b. Non-ascertainment of the existence of the NGOs/POs due to the pandemic; and
c. Difficulty in locating the officials of the NGOs/POs.
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The agency likewise stated in the same reply that they were still in the process of
sending out communication letters to concerned agencies/LGUs/NGOs/POs with
unliquidated fund transfer as of June 30, 2021.
The composition of the December 31, 2021 balance of FTs to LGUs, NGOs/POs and
NGAs amounting to ₱64.272 million is substantially the same with the composition of the
June 30, 2021 balance amounting to ₱63.686 million.
The non-liquidation of fund transfers to LGUs, NGOs/POs, and NGAs is contrary to COA
Circular No. 94-013 and 2007-001. Moreover, it resulted in the accumulation of long
outstanding receivables which turned into and will likely turn into dormant receivables, if
not acted upon immediately.
observation.
We recommended and the Management agreed to instruct the:
a. Monitoring and Evaluation Division of the Provincial Planning and

Development Office to closely monitor the implementation of the various
programs/ projects/activities funded by fund transfers from the Provincial
Government of Antique in the past years.
a.1. If the PPAs were already completed, require the LGUs, NGOs/POs, and
NGAs to prepare and submit liquidation reports;
a.2. If the PPAs were suspended or not yet started, inquire with the concerned
LGU, NGO/PO, and NGAs if they are still willing to continue with its
implementation. If yes, require the immediate resumption/ implementation
of the project and monitor its progress. Otherwise, require the return of
the fund to the Provincial Government of Antique.
b. Provincial Accountant to:
b.1 Verify, analyze, and validate the balances of fund transfers appearing in the
Quarterly Report on the Status of Fund Transfers to LGUs, NGOs/POs and
Other IAs aged 10 years and more, if these are eligible for write-off. If the
accounts can be validly written-off, suggest to the LCE to file a request for
authority to write-off dormant fund transfers to the COA following the
procedures provided in COA Circular No. 2016-005; and
b2. Coordinate with the Provincial Legal Officer for legal remedies the PGA
may enforce to compel the previous officials of the barangays to submit
the necessary documents for liquidation, for those barangays with
problems of non-turnover of documents from previous officials.
Utilization of 20 percent Development Fund
11. The 20 percent Development Fund (DF) amounting to ₱369.322 million for CY 2021
was not optimally utilized contrary to Item 4.0 of Department of Budget and
Management - Department of Finance - Department of Interior and Local
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Government (DBM-DOF-DILG) Joint Memorandum Circular (JMC) No. 2020-1 dated
November 4, 2020 due to generic project titles that caused delay in the
identification of target beneficiaries, unclear timeline of project implementation,
and delayed implementation of projects, hence, the benefits that could be derived
from the Programs, Projects and Activities (PPAs) were not promptly delivered.
Section 287 of Republic Act No. 7160 or the Local Government Code of 1991 requires
that each local government unit appropriate in its annual budget no less than twenty
percent of its annual Internal Revenue Allotment (IRA) for development projects.
The Department of Budget and Management (DBM), Department of Finance (DOF) and
Department of Interior and Local Government (DILG) Joint Memorandum Circular No.
2020-1 dated November 4, 2020 provides the following general guidelines on the
appropriation and utilization of the 20 percent DF, to wit:
1. The 20 percent DF shall be utilized to finance the LGUs’ priority development

projects, as embodied in their respective duly approved local development plans;
2. The development projects that may be included under the 20 percent DF shall be
those that are necessary, appropriate, or incidental to efficient and effective local
governance, and those which are essential to the promotion of the general
welfare of the people; and
3. The LGUs shall ensure that the development projects to be funded out of the 20
percent DF are well-planned and procurement-and-implementation-ready.
Furthermore, Item 4.0 of the aforementioned JMC provides that the responsibility and
accountability in ensuring that the development projects funded under the 20 percent DF
comply with the guidelines under this JMC and optimally contribute to the attainment of
desirable socio-economic targets and outcomes of the LGU shall rest upon the local
chief executive and other officials concerned.
For CY 2021, the Provincial Government of Antique (PGA) appropriated ₱369.322

million for its 20 percent DF out of its Internal Revenue Allotment (IRA) of ₱1.417 billion
for the implementation of 235 PPAs. Sixteen PPAs with total appropriation of ₱30.5
million were realigned to nineteen new projects as requested by the intended project
beneficiaries, thereby giving a total of 238 PPAs charged to 20 percent DF to be
implemented by the PGA. (Annex S).
Table 16. CY 2021 – 20 percent Development Fund Appropriation per Service Sector
Service Original Appropriation Realignment Revised
No. of No. of No. of
Sector PPAs
Amount PPAs
Amount PPAs
Amount
Social
134 ₱202,321,733.00 (13) (₱23,000,000.00) 121 ₱179,321,733.00
Development
Economic
78 133,300,000.00 (3) (7,500,000.00) 75 125,800,000.00
Development
Environmental
23 33,700,000.00 23 33,700,000.00
Development
Total 235 ₱369,321,733.00
New PPAs 19 30,500,000.00 19 30,500,000.00
Total 238 ₱369,321,733.00
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Perusal of the Statement of Appropriations, Allotments, Obligations and Balances
(SAAOB) showed that out of the ₱369.322 million appropriations for CY 2021, the PGA
had obligated ₱181.295 million or 49.09 percent (Annex S – Column C) as of
December 31, 2021, leaving an unobligated balance of ₱188.027 million or 50.91
percent (Annex S – Column D).
Out of the 238 identified PPAs charged to 20 percent DF for CY 2021, 88 were
completed, 111 were on-going, 27 were for implementation, 8 for reprogramming, 2 were
suspended and 2 were not implemented.
Table 17. Status of Implementation of CY 2021 PPAs

Status of Implementation No. of PPAs
Completed 88
On-going 111
For Implementation 27
For Reprogramming 8
Suspended 2
Not Implemented 2
Total PPAs 238
Review of the Annual Budget, Annual Investment Plan (AIP), SAAOB, Accomplishment
Report of the Provincial Engineering Office (PEO) and verification from the Provincial
Planning and Development Office (PPDO), disclosed the following deficiencies on the
utilization and implementation of PPAs charged to 20 percent Development Fund:
A. Generic project titles caused delay in the identification of target beneficiaries
Seven programs with total appropriation of ₱32.700 million have generic project titles
and location not properly specified. As per annual budget, these were to be implemented
provincewide. These have caused delay in the finalization of identified target of
beneficiaries and some identified target beneficiaries were not compliant with the
requirements set forth by the Provincial Government. The Management intended to
coordinate with the target beneficiaries in order to fast track the implementation of the
said programs.
Table 18. 20 percent Development Fund PPAs with Generic Project Titles and Location
PPAs Amount Location
1 Purchase of Jetmatic Pump with Pipes & ₱ 11,000,000.00 Provincewide
Fittings
2 Construction of Local Government- 6,000,000.00 Provincewide
Owned Portable Water Supply System
3 Computerization Program 3,000,000.00 Provincewide
4 Rehabilitation of Multi-Purpose Halls 2,700,000.00 Provincewide
5 Concreting of Local/Barangay Roads 4,000,000.00 Provincewide
6 Purchase of Toilet Bowls 5,000,000.00 Provincewide
7 Riprapping Projects 1,000,000.00 Provincewide
TOTAL ₱ 32,700,000.00
As provided in Circular, development projects to be funded out of the 20 percent

Development Fund should be well-planned and procurement-and-implementation-ready.
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Management should have properly planned and specified already the intended
beneficiaries of the projects before including them in the list of development projects
charged to 20 percent Development Fund in order not to delay the implementation of the
said projects.
B. Timelines for Implementation of projects not set in the AIP
Scrutiny of the Annual Investment Plan (AIP) of the Provincial Government of Antique
revealed that the Schedules/Timelines of Implementation for the 20 percent
Development Fund PPAs were not specifically set. Instead, the starting dates were in
January and the completion dates were in December. As such, the implementing
office/department for these projects was given the leeway when the implementation
should commence and when the same may be completed. As a result, the earliest
commencement date of implementation was on June 7, 2021 and the latest of which
was on December 16, 2021 as reported in the Accomplishment Report of Projects
undertaken by the PEO. Furthermore, there were projects which have not been started
or implemented during the year.
This condition of not setting the specific dates of implementation had contributed in the
delay in the implementation of the 20 percent Development Fund PPAs or their non-
implementation thereof.
C. Delayed Implementation of 20 percent Development Fund projects
Review of the submitted Accomplishment Report of the Projects Undertaken by

Provincial Engineering Office (PEO) as of January 31, 2022 showed that 19 PPAs with
total appropriation of ₱28.4 million have starting implementation dates of January 2022,
beyond their target schedules of implementation of January to December 2021 as
embodied in their Annual Investment Plan.
Table 19. CY 2021 – 20 percent Development Fund PPAs Implemented in January 2022
Target Date of
Programs /Projects/ Activities (PPAs) Appropriation Date Started
Completion
Const of Evacuation Center (Phase ll)
1 ₱ 1,000,000.00 01/27/2022 04/10/2022
Brgy Butuan, Anini-y
Const of Multi-Purpose Center (Phase
2 1,000,000.00 01/26/2022 04/10/2022
ll), Igtumarum,Anini-y
Completion of Multi-Purpose Center,
3 1,000,000.00 01/21/2022 04/14/2022
Mabuyong, Anini-y
Completion of Manpower Devt
4 1,000,000.00 01/04/2022 03/19/2022
Center, Paciencia, T. Fornier
Completion of Manpower Devt
5 500,000.00 01/03/2022 03/08/2022
Center, Brgy Ysulat, T. Fornier
Improvement of Multi-Purpose
6 1,000,000.00 01/14/2022 04/13/2022
Center, Pob. Sur, T Fornier
Completion of Evacuation Center,
7 1,000,000.00 01/03/2022 04/02/2022
Linaban, Hamtic
Const of Evacuation Center (Phase ll)
8 1,500,000.00 01/03/2022 04/02/2022
Brgy Pis-anan, Sibalom
Const of Senior Citizen Center, Pis-
9 1,500,000.00 01/02/2022 03/25/2022
anan, Sibalom
107
Target Date of
Programs /Projects/ Activities (PPAs) Appropriation Date Started
Completion
10 1,500,000.00 01/19/2022 04/18/2022
ll) Brgy Sta Ana, Tibiao
11 1,000,000.00 01/04/2022 03/29/2022
ll) Brgy Bagacay, Culasi
Expansion of Libertad Municipal
12 Water System (Municipal 3,000,000.00 01/03/2022 04/16/2022
Waterworks)
Conc of Brgy Road & Rehabilitation of
13 1,400,000.00 01/03/2022 02/19/2022
Canals, Guintas, Hamtic
Rehab of Manlacbo-Pangalcagan
14 3,000,000.00 01/03/2022 04/03/2022
Road, Valderrama
Concreting of FTMR, Pojo-Lacayon,
15 1,500,000.00 01/20/2022 02/18/2022
Bugasong
Const of Drainage System Binirayan
16 3,000,000.00 01/19/2022 05/13/2022
Sport Complex San Jose
Const of Flood Control, Sitio Viejo,
17 1,500,000.00 01/02/2022 03/01/2022
Poblacion, Sebaste
Const of Slope Protection, Kamalasag
18 2,000,000.00 01/19/2022 05/14/2022
FMR, Abiera, Sebaste
Concreting of Road, Bagumbayan,
19 1,000,000.00 01/19/2022 06/03/2022
Brgy 8, San Jose de Buenavista
TOTAL ₱28,400,000.00
Due to numerous projects being undertaken by the PEO, some were implemented
beyond their timelines causing delays and affected the schedules of the succeeding
projects, thus, the immediate delivery of benefits to the intended beneficiaries were
hampered.
Furthermore, twenty on-going projects being implemented by the PEO with total
appropriation of ₱25.300 million have incurred negative slippages ranging from -1.31
percent to -61.78 percent as of January 31, 2022 as presented below:
Table 20. CY 2021 – 20 percent Development Fund Ongoing PPAs with Negative Slippages
Slippage
Programs /Projects/ Activities (PPAs) Appropriation Date Started (as of Jan.
31, 2022)
Const Of Multi Purpose Center
1 ₱ 1,000,000.00 11/28/2021 -1.31%
(Phase ll) Brgy Boroc-boroc, Belison
Const of Evacuation C
2 1,000,000.00 12/07/2021 -1.60%
(Phase ll) Brgy Ubos, Valderrama
3 1,500,000.00 12/07/2021 -2.24%
Tigmamale, Valderrama
Improvement of Multi-Purpose
4 1,000,000.00 01/14/2022 -3.70%
Center, Pob. Sur, T Fornier
Const of Multi-Purpose Center
5 1,000,000.00 11/21/2021 -5.10%
(Phase ll) Brgy Lugta,Laua-an
Const of Multi-Purpose Center, Sitio
6 800,000.00 11/21/2021 -5.44%
Madarag, Ilaures, Bugasong
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Slippage
Programs /Projects/ Activities (PPAs) Appropriation Date Started (as of Jan.
31, 2022)
7 1,500,000.00 11/28/2021 -6.07%
Bunsod Elem School, Valderrama
Conc of Palma-Capuyu-an Road,
8 2,000,000.00 12/12/2021 -7.04%
Barbaza
9 1,000,000.00 01/21/2022 -9.14%
Mabuyong, Anini-y
1 Const of Multi-Purpose Center
1,000,000.00 01/04/2022 -9.86%
0 (Phase ll) Brgy Bagacay, Culasi
1 Const of Seawall, Brgy Callan,
2,000,000.00 12/02/2021 -15.01%
1 Sebaste
1 Const of Multi-Purpose Hall (Phase
1,000,000.00 11/18/2021 -15.71%
2 2), Tica, Bugasong
1 Const of Multi-Purpose Center,
1,500,000.00 12/12/2021 -25.97%
3 Alegre, Sebaste
1 Concreting of FMR, Sitio Puro,
1,000,000.00 10/31/2021 -26.28%
4 District lll, Sibalom
1 Completion of Multi-Purpose Center,
1,000,000.00 12/16/2021 -28.22%
5 Salvacion, Sibalom
1 Completion of Multi-Purpose Hall,
1,000,000.00 11/21/2021 -28.74%
6 Tene, Tobias Fornier
1 Const of Flood Control, Sitio Viejo,
1,500,000.00 01/02/2022 -34.77%
7 Poblacion, Sebaste
Const of Multi-Purpose Center
1
(Phase ll) Callan Elem School, 1,000,000.00 11/21/2021 -43.15%
8
Sebaste
1 Const of Lambayagan-Igparas Road,
2,000,000.00 11/28/2021 -47.87%
9 Sibalom
2 Const of Multi-Purpose Center, Paz,
1,500,000.00 11/28/2021 -61.78%
0 Libertad
₱25,300,000.0
TOTAL
0
This indicated that the actual accomplishments for these projects were lower than what
should be as of the reporting date. This could adversely affect the completion of the
project if not addressed properly. The PEO should monitor and supervise closely the
implementation of the projects, issue warnings and require the contractors to catch-up
on the schedule through more intensive work programs.
The PEO laid down the following reasons hindering the optimal utilization of 20 percent
Development Fund:
 The COVID-19 outbreak was a detriment to the implementation of the

projects/programs in the province, with heightened protocols, border controls,
and lockdown measures which limited and restricted mass mobilization. Regular
working scheme has been reconstructed into a flexible system such as work from
home and skeletal workforce to manage the number of employees in the office.
The intensive health regulations affected the workforce and disrupted the
109
schedule of field investigations and infrastructure projects stalling the progress of
construction;
 In CY 2021, numerous development projects were managed by their office

including other projects downloaded from national government agencies. With
this, the PEO has insufficient personnel to simultaneously conduct surveys and
prepare Detailed Engineering Designs and Program of Works, thereby, they have
hard time coping up with the demands of all these projects;
 For the contractors’ side, they had difficulty finding laborers and mobilize
construction equipment during the resurgence of the virus because of the
increased health risk and established regulations affecting their performance,
hence, incurring negative slippages;
 Lengthy intervals from the start of procurement activities up to the preparation of

the contract, Notice of Award, and Notice to Proceed;
 Changes in the transaction flow of processing documents. The

interconnectedness of offices was another variable that should be considered
wherein any delay of the process in an office affects the time frame of the
transaction; and
 Delay in project execution due to dragging finalization of projects because of

changes in projects details and generic project titles and location.
The PEO has been reassessing problems for prompt remedies, hasten the momentum
of implementation, and optimally utilize the allocated resources without compromising
the quality of the projects and welfare of the beneficiaries. Meanwhile, the Provincial
Planning and Development Office has considered providing specific project titles and
location in the preparation of CY 2023 Annual Invested Program (AIP) as the CY 2022
AIP has already been prepared. They will closely coordinate with the project proponents
for specific titles in their project proposals. Also, the adoption of early procurement
activity can greatly help in the early implementation of the projects.
Generic project titles and location rendered difficulty in project execution since identifying
project beneficiaries would entail additional manhours. Unclear timelines on project
implementation defeated the purpose of setting timeframe for efficient project
implementation. Furthermore, the delay and non-implementation of 20 percent
Development Fund PPAs indicated that the Provincial Government was not able to
strictly observe the specific scheduling which have been embodied in the approved
Annual Investment Plan for their implementation. Being priority development projects,
utmost observance on their immediate implementation should be given importance to
facilitate and ensure the prompt completion of these 20 percent Development Fund
PPAs.
Likewise, had the management maximized the full implementation of these projects,
timely benefits therefrom could have been received by the constituents and optimum
utilization of all its resources in the achievement of common goal could have been
attained at its programmed cost, further avoiding more expenses due to increase in
prices of materials and labor costs.
110
We recommended and the Management agreed that:
a. The PPDO provide clear and specific project titles and location, and
identify the intended beneficiaries before incorporating the same in the
Annual Investment Plan (AIP);
b. The PPDO indicate a more specific time period of commencement and

completion in the date of implementation column of the AIP for due
observance;
c. The PEO closely monitor the implementation of the development projects

especially those with negative slippages to ensure timely completion of the
same; and
d. The Management to hasten the implementation of development projects

identified in the AIP to maximize utilization of the 20 percent Development
Fund in order to enhance the delivery of essential services to its
constituents
LDRRM Funds
12. The unexpended balances of CY 2014, CY 2015 and CY 2016 Local Disaster Risk
Reduction and Management Fund (LDRRMF) amounting to ₱0.623 million, ₱2.200
million and ₱ 1.645 million, respectively, which were transferred to Special Trust
Fund were not reverted back to the General Fund despite the lapse of five years,
contrary to Section 5.1.13 of COA Circular No. 2012-002, hence, overstating the
Trust Liability – LDRRMF and understating the Government Equity accounts by
the same amount. Moreover, it deprived the Provincial Government of additional
funds for other social services.
Section 5.1.13 of COA Circular No. 2012-002 dated September 12, 2012 states that the
unutilized balance of the LDRRMF shall be available for use in the disaster risk reduction
and management activities as provided in the Local Disaster Risk Reduction and
Management Fund Investment Plan (LDRRMFIP) within the next five years. Any
unutilized amount after five years shall be reverted back to the unappropriated surplus of
the General Fund and shall be made available for other social services after subsequent
enactment by the Local Sanggunian.
For Calendar Year 2021, the Provincial Government of Antique had appropriated
₱82.164 million equivalent to five percent of its regular revenue for Local Disaster Risk
Reduction and Management Fund (LDRRMF). ₱24.649 million pertained to 30 percent
Quick Response Fund (QRF) and ₱ 57.515 million for the 70 percent Mitigation Fund.
Unexpended balances of the QRF, DRRMF – Maintenance and Other Operating
Expenses (MOOE), and the unprogrammed amount for adjustment made based on
actual revenue earned totaling ₱21.758 million for the year were transferred to the
Special Trust Fund (STF) under the account Trust Liability - DRRM. As of year-end, the
111
LDRRMF of the Provincial Government of Antique reflected a balance of ₱162.866
million, details of which were as follows:
Table 21. CY 2021 Local Disaster Risk Reduction and Management Fund
Particulars Available Amount Utilized Balance
Current Year Appropriation:
Quick Response Fund (QRF) ₱ 24,649,330.84 ₱ 7,357,860.45 ₱ 17,291,470.39
Mitigation Fund (MF)
MOOE 12,550,000.00 8,590,629.20 3,959,370.80
Capital Outlay 44,457,498.80 7,250,366.39 37,207,132.41
Total 81,656,829.64 23,198,856.04 58,457,973.60
Unprogrammed 507,606.49 507,606.49
Total 82,164,436.13 23,198,856.04 58,965,580.09
CY 2021 Transfer to STF (21,758,447.68) 0.00 (21,758,447.68)
Total 60,405,988.45 23,198,856.04 37,207,132.41
Continuing Appropriations: 62,452,393.11 3,010,168.89 59,442,224.22

Special Trust Fund:
CY 2021 Transfer to STF 21,758,447.68 0.00 21,758,447.68
CY 2020 Transfer to STF 24,010,425.59 16,951,908.81 7,058,516.78
CY 2019 Transfer to STF 0.00 0.00 0.00
CY 2018 Transfer to STF 33,663,382.86 10,381,779.77 23,281,603.09
CY 2014 Transfer to STF 623,068.34 0.00 623,068.34
other sources 31,805.39 0.00 31,805.39
Total 93,550,085.85 27,333,688.58 66,216,397.27
GRAND TOTAL ₱ 216,408,467.41 ₱ 53,542,713.51 ₱ 162,865,753.90
As shown in the table, the unexpended balances of CY 2014, CY 2015 and CY 2016
Special Trust Fund amounting to ₱0.623 million, ₱2.200 million and ₱1.645 million,
respectively, were still included in the CY 2021 balance of the Fund. The same should
have been reverted back to the General Fund and made available for other social
services after subsequent enactment by the Local Sanggunian as required under
Section 5.1.13 of COA Circular No. 2012-002.
Inquiry from the Provincial Accountant disclosed that the unutilized amounts in the
Special Trust Fund for CY 2014 – CY 2016 were still subject to reconciliation due to prior
years’ charges that were erroneously charged to the subsidiary of the Special Trust
Fund in order to determine the correct amount to be reverted back to the General Fund.
Moreover, there was a change in the personnel in-charge in monitoring the DRRM Fund
but the Provincial Accountant target to make the necessary adjustment this year.
Non-reversal of the said unexpended balances to the General Fund rendered the Trust
Liability – LDRRMF account overstated and the Government Equity account understated
by the same amount. Furthermore, these amounts could have been programmed for
other social services beneficial to the public.
112
We recommended and the Management agreed that the Provincial Accountant
reconcile and revert back to the General Fund the unexpended balances of CY
2014, CY 2015 and CY 2016 LDRRMF in the Trust Liability – DRRM account to be
made available for other social services and to present fairly the amount in the
Financial Statements.
Revenue
13. Rental fees, including interests and surcharges, amounting to ₱11.544 million,
remained uncollected as of December 31, 2021 due to the failure of the
Management to take appropriate legal steps in imposing and collecting the correct
rental fees, depriving the Provincial Government of Antique of additional source
of funds to finance its other programs, projects, and activities.
Article 1306 of the Civil Code of the Philippines states that the contracting parties may
establish such stipulations, clauses, terms, and conditions as they may deem
convenient, provided they are not contrary to law. (Emphasis ours.)
Pertinent provisions of Chapter V, Article A. – Rental Fees, of the Revenue Code of the
Province of Antique (Code), which was approved on December 15, 2006 and took effect
on January 1, 2007, provide for the following:
1. Rentals for commercial lands located in the municipalities of the Province of

Antique and owned by it is ₱75.00/sq.m./month;
2. Rentals shall be paid to the Provincial Treasurer or his deputy within five (5) days
after the end of each month;
3. Payment of fees after the prescribed periods shall subject the taxpayer to
surcharge of 25 percent of the original amount of fee, and an interest of 2 percent
per month from the due date until fees are fully paid, shall be imposed upon the
unpaid amount, but in no case shall the total interest exceed 36 months;
4. The provincial government reserves the right to revoke or cancel the lease
contract for violation of any part or portion thereof or for any other justifiable
reason or cause;
5. Rental of lands and buildings is subject to 10 percent increase annually; and
6. Failure of the renter to pay the fee/s including surcharges and interests for three
(3) consecutive months shall be sufficient ground for the termination of the
contract.
The December 31, 2021 balance of the “Other Receivables” account of the Provincial
Government of Antique (PGA) includes rental receivables, surcharges and interests from
Advance Central College (ACC) and Esprutingkle Food Corporation (EFC) amounting to
₱11.544 million, broken down as follows:
Table 22. December 31, 2021 Balance of Rental Receivables, Interests and Surcharges
Lessee Particulars Amount
113
Advance Central College (ACC) Principal (rental of leased property) ₱8,298,351.46
Interest 1,077,869.66
Sub-Total ₱ 9,376,221.12
Esprutingkle Food Corporation (EFC) Principal (rental of leased property) 1,911,974.84
Interest 245,039.61
Surcharge 10,610.48
Sub-Total ₱ 2,167,624.93
TOTAL ₱11,543,846.05
Review of subsidiary ledgers, contracts, previous audit observations and annual audit
reports disclosed that, in September 2015 and January 2017, the Provincial Government
of Antique (PGA) entered into contracts of lease (contract) with ACC and EFC,
respectively, both for the duration of 10 years.
The original and amended contracts with ACC stipulates that the rental rate is
₱60,000.00 or ₱120.00/sq.m./month which shall be increased by 10 percent annually for
10 years, to commence on September 7, 2015. However, the 2nd amended contract
provided that the 10-year period will commence from October 5, 2016.
On the other hand, the contract with EFC stated that the rental rate is ₱125.00/sq.m. per
month which shall be increased by 10 percent per month annually after the lapse of the
first year, for 10 years, to commence upon the date and signing of the contract. The
contract was undated, but it was notarized on January 27, 2017.
However, based on the provisions of the Code, the supposed rental rates for CY 2015
and 2017 are ₱160.78 and ₱194.55 per square meter per month, respectively, as
computed in Table 23.
Table 23. Rental Rate from CY 2007 to 2021

Increment Rental Rate per
Year (10% of previous year’s rate) Sq. M. (Php)
2007 - 75.00
2008 7.50 82.50
2009 8.25 90.75
2010 9.08 99.83
2011 9.98 109.81
2012 10.98 120.79
2013 12.08 132.87
2014 13.29 146.16
2015 14.62 160.78
2016 16.08 176.86
2017 17.69 194.55
2018 19.46 214.01
2019 21.40 235.41
2020 23.54 258.95
2021 25.90 284.85
Based on the foregoing, the rental rates provided in the two contracts were lower than
the rates provided in the Code by 25 to 35 percent, as shown in Table No. 24.
Table 24. Comparison of Rental Rates

Lessee Year Rental Rate Per Square Variance
114
Meter Per Month
per Contract per Code Amount %
ACC 2015 ₱120.00 ₱160.78 (₱40.78) 25.36
EFC 2017 125.00 194.55 (69.55) 35.75
The non-conformity with the Code of the rental rate stipulated in the contract with ACC
was raised to the Management in CY 2020 thru AOM No. 2020-001 (19), while that of
EFC was brought to the attention of the Management in CY 2018 thru Audit Observation
Memorandum (AOM) No. 2018-015 (17). However, as of this date, the deficiencies
noted were not yet addressed.
In our letter dated October 8, 2021 (Annex T), the Audit Team asked the Provincial
Treasurer (PT) and Legal Officer what action/s were taken by their respective offices to
enforce and collect the correct rental fees due from ACC and EFC. It was stated in their
reply dated October 14, 2021 (Annex U) that the Provincial Legal Officer (PLO) drafted
a revised contract for ACC, however, the chairperson of the latter did not agree to the
revised provisions and argued that the annual ten (10) percent rent increase should be
simple and not compounded.
In our follow-up letter dated February 9, 2022 (Annex V), the Audit Team inquired with
the management and the PLO of the subsequent action/s undertaken by their respective
offices after receiving the reply of ACC Chairperson not agreeing to the provisions of the
revised contract of lease and contending that the annual ten percent rent increase
should be simple and not compounded. The PLO replied that he will request for a copy
of the minutes of the SP deliberation on the enactment of the Provincial Revenue Code
of 2006, to determine the legislative intent as to the computation of the 10 percent rent
increase.
With regard to EFC, the PLO relayed that they had a dialogue with Mr. Lester Mark E.
Yee, Chief Executive Officer of the former, on August 19, 2021 concerning the subject
matter, and they learned that a portion of the leased premises was dispossessed by
Angel Salazar Memorial General Hospital (ASMGH), and the Provincial Engineer will
have to measure the dispossessed area so that the rental rate of EFC will be adjusted.
On February 9, 2022, the Audit Team inquired with the Provincial Engineer’s Office
(PEO) if they have already measured the dispossessed area by ASMGH. The Audit
Team received the PEO’s reply on February 16, 2022 with attached survey result
conducted on February 14, 2022 only.
It must be noted that from the beginning, the contracts of lease entered into by the PGA
with ACC and EFC were not in conformity with the Revenue Code of the Province of
Antique, which is the law governing the imposition of rental rates of commercial land in
the Province of Antique at the time the contracts were executed. Applying Article 1306
of the New Civil Code, which provides that contracting parties may establish stipulations,
clauses, terms, and conditions as they may deem convenient, provided they are not
contrary to law, contracts entered into, which is contrary to law, like the contracts of
lease entered into by the PGA with ACC and EFC are considered null and void. Being
null and void, the management, with the assistance of the Provincial Legal Officer,
should have taken appropriate legal steps to rectify the contracts or rescind the same if
the other parties did not agree, from the time these were first brought to their attention,
because these contracts are disadvantageous on the part of the Provincial Government
of Antique. Unfortunately, they failed to act speedily on the matter. Further, the Audit
115
Team noticed that the management takes action only after they receive follow-ups from
the former.
Moreover, based on the Schedule of Payments of ACC (Annex W), the lessor failed to
make rental payments for the months of September 2015 to December 2015 (4 months),
September 2016 to December 2016 (4 months), and January 2017 to October 2017
(10 months), but the management did not take any action, when it could have terminated
the contract on the ground of failure of ACC to pay the fee/s including surcharges and
interests for three (3) consecutive months, as provided in the Code.
The non-enforcement and non-collection of the correct rental fees and delayed action on
the part of the management and PLO to resolve the matter resulted in the accumulation
of receivables amounting to ₱11.544 million which remained uncollected as of
December 31, 2021. Moreover, it resulted in the doubtful collection of ₱9.376 million or
81.22 percent of the said receivable because the chairman of the ACC consistently
refused to acknowledge the correct rental rate.
observation.
We recommended and the Provincial Legal Officer agreed to immediately:
a. Take the necessary legal steps in imposing and collecting the correct
rental fees from ACC, since the inception of the lease contracts;
b. Draft a revise contract for EFC with the adjusted area and rental rate to
conform with the Code.
If the lessee/s will not agree to amend their respective contract to confirm with the
rental rate provided in the Revenue Code of the Province of Antique, the PLO will
advise the Provincial Governor to consider rescinding the contract/s.
Advances
14. Advances to Officers & Employees and to Special Disbursing Officers amounting
to ₱60,050.00 and ₱0.981 million, respectively, were not liquidated within the
required period and/or as soon as the purpose have been served; and at the end
of the year, contrary to COA Circular No. 97-002, dated February 10, 1997,
resulting in the understatement of the affected asset and expense accounts and
the overstatement of the accounts “Advances to Officers & Employees” and
“Advances to Special Disbursing Officers” by the same amount as of December
31, 2021.
Pertinent provisions of COA Circular No. 97-002 dated February 10, 1997 provides the
following:
1.1. A cash advance shall be reported on as soon as the purpose for which it was
given has been served.
5.1. The AO shall liquidate his cash advance as follows:
116
5.1.3. Official Travel - […] within thirty (30) days after return to his permanent
official station in the case of local travel, […]
Failure of the AO to liquidate his cash advance within the prescribed

period shall constitute a valid cause for the withholding of his salary […]
5.8. All cash advances shall be fully liquidated at the end of each year. Except for
petty cash fund, the AO shall refund any unexpended balance to the
Cashier/Collecting Officer who will issue the necessary official receipt.
Further, one of the documentary requirements in the liquidation of cash advances,

regardless of type, is Official Receipt (OR) in case of refund for unclaimed salaries or
refund of excess cash advance, as provided in Item Nos. 1.2.1, 1.2.2, and 1.2.4 of COA
Circular No. 2012-001 dated June 14, 2012.
As of December 31, 2021, the balance of the “Advances to Officers and Employees” and
“Advances to Special Disbursing Officers” accounts reported in the Status of
Unliquidated Cash Advances amounted to ₱60,050.00 (Annex X) and ₱0.981 million
(Annex Y), respectively. The balance of the “Advances to Officers and Employees”
account consists of cash advances and unexpended balance of cash advances for
traveling expenses granted to provincial government personnel who assisted the
governor during her visits to sacadas in November and December 2021, which were not
liquidated by the accountable officers within 30 days after their return to their permanent
official station or at the end of the year. ₱16,000.00 or 26.64 percent of this amount was
liquidated in January 2022.
On the other hand, ₱0.881 million or 89.81 of the balance of the “Advances to Special
Disbursing Officers” account consists of unexpended balance of cash advances for
patients’ and prisoners’ subsistence; purchase of drugs, medicines, medical, dental and
laboratory supplies; and educational assistance for the 1st semester of SY 2020-2021,
the liquidation of which were made in the last working day of CY 2021, and cash returns
were made in January 2022. The ₱100,000.00 or 10.19 percent pertains to the cash
advance of the pharmacist of the Pedro L. Gindap Municipal Hospital for the payment of
drugs and medicines, which she claimed to have been liquidated before she went on
maternity leave in June 2021. However, the Provincial Accountant explained that the
liquidation report (LR) pertaining thereto was received by the Accounting Office on June
9, 2021 but was returned on July 1, 2021 for some deficiencies, which she can no longer
recall as they have no more copy of it.
Based on the remarks in the report on the Status of Unliquidated Cash Advances, notes
in the financial statements, and inquiry with some accountable officers and the Provincial
Accountant, it was noted that the unexpended balance of the cash advances was not
refunded before the submission of the LRs to the Accounting Office, but only after the
latter was done checking the submitted documents, so that the amount to be refunded
by the accountable officer (AO) was the correct and exact amount. Thus, at the end of
the year, even though the AOs already submitted their LRs, since the unexpended
balance of their cash advances were not yet refunded, there appeared an unliquidated
balance in the report and in the books.
117
It must be noted that Item Nos. 1.2.1, 1.2.2, and 1.2.4 of COA Circular No. 2012-001
provides that the OR in case of refund of unclaimed salaries or refund of excess cash
advance is one of the documentary requirements in the liquidation of cash advances.
This means that the LR being submitted to the Accounting Office must contain the OR
for the refund of the unexpended balance.
Thus, the unexpended balance of cash advances should be refunded and issued with
OR before the submission of the LR to the Accounting Office, because the said OR
should be part of the supporting documents of the liquidation.
Failure of accountable officers to liquidate their cash advances within the required period
and/or after the purposes for which they were granted have been served, and at end of
the year, as required by the above rules and regulations, resulted in the non-recording of
asset, traveling and other expenses during the period these were acquired/incurred.
Thus, affected asset, “Traveling Expenses” and other expense accounts were
understated and “Advances to Officers and Employees” and “Advances to Special
Disbursing Officers” accounts were overstated by ₱60,050.00 and ₱0.981 million,
respectively, as of December 31, 2021.
AOM No. 2022-004 (21) dated March 23, 2022 was issued on the foregoing observation.
We recommended and the Management agreed that the Provincial Accountant:
a. Require all concerned accountable officers (AOs) to liquidate immediately

their outstanding cash advances as of December 31, 2021; and
b. Withhold the salaries and any amount due the AOs if they fail to settle their
accountabilities, until their balances have been fully liquidated.
Henceforth, unexpended balance of cash advances should be refunded before the

submission of the liquidation report to the Accounting Office, the OR for the said
refund should be attached to the report, and all cash advances should be
liquidated at the end of the year, even though these were granted in December of
each year.
Share from National Wealth
15. Acquisition of 590 units of Generator Sets amounting to ₱164.610 million charged
against the Share from National Wealth cannot redound to the reduction of
electricity rates in the area as contemplated in Section 294 of Republic Act (RA)
No. 7160, Section 66 of RA No. 9136 and Section 2.4(a) of DILG-DOE Circular
No. 98-01, thereby, casting doubt on the propriety of the project.
The Provincial Government of Antique (PGA) receives an annual 20 percent share from
the 40 percent share of the local government units in Antique of the gross collection
derived by the national government from the preceding fiscal year from mining taxes
paid by the Semirara Mining and Power Corporation in the utilization and development of
the national wealth within their territorial jurisdiction. In CY 2021, the share of the PGA
amounted to ₱131.257 million.
118
The utilization of the 80 percent component of the Share from the National Wealth is
governed by the following laws and regulations:
1. Section 294 of Republic Act No. 7160 provides that “the proceeds from the share
of local government units pursuant to this chapter shall be appropriated by their
respective sanggunian to finance local development and livelihood projects:
Provided, however, that at least eighty percent (80%) of the proceeds derived
from the development and utilization of hydrothermal, geothermal, and other
sources of energy shall be applied solely to lower the cost of electricity in the
local government unit where such a source of energy is located.” (Underscoring
ours)
2. Section 66 of Republic Act No. 9136 (Electric Power Industry Reform Act of
2001) states that “to ensure the effective implementation of the reduction in cost
of electricity in the communities where the source of energy is located, the
mechanics and procedures prescribed in the Department of the Interior and Local
Government (DILG)-DOE Circulars No. 95-01 and 98-01 dated October 31, 1995
and September 30, 1998, respectively and other issuances related thereto shall
be pursued.” Also, it added that “the fund generated from the eighty percent
(80%) of the national wealth tax shall, in no case, be used by any local
government unit for any purpose other those for which it was intended.
(Underscoring ours)
3. Section 2.4(a) of DILG-DOE Circular No. 98-01 provides that “either one or a
combination of two approaches can be adopted in the reduction of electricity,
namely subsidy and non-subsidy schemes. The non-subsidy benefits may take
form but not limited to electrification, the technical upgrading and rehabilitation of
distribution lines to reduce electricity losses, the use of energy saving devices,
and support of the electrical consumption of the infrastructure facilities servicing
the public which can all redound to the reduction of electricity rates of the area.”
(Underscoring ours)
The Provincial Government of Antique authorized, through Appropriation Ordinance

No. 2021-02, the utilization of the remaining part of Supplemental Budget No. 01 for
Fiscal Year (FY) 2021 in the total amount of ₱175.000 million. The said supplemental
budget was sourced out from the unappropriated portion of the Share from National
Wealth for CY 2020. Projects to be funded out of the Share from National Wealth were
as follows:
Table 25. Projects Funded Out of Share from National Wealth

Name of Project Appropriation
Acquisition of 590 units 13KVA Generator Sets (590 ₱ 170,000,000.00
Barangays, Provincewide)
Acquisition of One Unit 375 KVA Generator Set for 3,480,000.00
Provincial Sports Office, EBJ Gym, San Jose de
Buenavista, Antique
Acquisition of 75KVA Generator Set for Valderrama 700,000.00
Municipal Hospital – Valderrama, Antique
Acquisition of 100KVA Generator Set for Bugasong 820,000.00
Medicare Community Hospital- Bugasong, Antique
Total ₱ 175,000,000.00
119
Among the projects funded out of the Share from National Wealth implemented by the
Provincial Government of Antique is the acquisition of 590 units 13KVA generator sets to
be distributed to all 590 barangays in the province. Proposed distribution of the
generator sets is as follows:
Table 26. Proposed Distribution of Generator Sets per Municipality

No. of Generator
Municipality
Sets Allocated
1 Anini-y 23
2 Barbaza 39
3 Belison 11
4 Bugasong 27
5 Caluya 18
6 Culasi 44
7 Hamtic 47
8 Laua-an 40
9 Libertad 19
10 Pandan 34
11 Patnongon 36
12 San Jose de Buenavista 28
13 San Remegio 45
14 Sebaste 10
15 Sibalom 76
16 Tibiao 21
17 Tobias Fornier (Dao) 50
18 Valderrama 22
Total 590
Although it was not specified if the project was funded out of the 80% component of the
Share from National Wealth, the project cost formed part of a substantial portion of the
fund. Procurement of the said project was done through public bidding on September 7,
2021 and Notice of Award was awarded to the winning bidder on November 2, 2021.
Notice to Proceed and Purchase Order were likewise issued on November 22, 2021.
Perusal of the Purchase Order disclosed that the unit cost of each generator set
amounted to ₱279,000.00, thereby, giving a total contract cost of ₱164.610 million for
the 590 units. Delivery term was within ninety calendar days upon receipt of the Notice
to Proceed but on a staggered basis due to lack of storage facility.
Review of the project proposal showed that the said generator sets would serve as back-
up sources of electricity in case of power outages, especially during typhoons and other
natural disasters. Another objective of the project was to provide power source for far
flung areas which have no access to electricity. Yet, the generator sets would be
installed in the multipurpose halls of the barangays thereby casting doubt on the
accessibility of the target beneficiaries especially those residents who are situated in
remote areas. The Audit Team cannot determine or make an inference on how the
acquisition of generator sets will lower the electricity expenses of the target
beneficiaries, thus, could not believe that reduction of electricity rates in the area would
be among the benefits that could be derived from the project as contemplated in Section
294 of Republic Act (RA) No. 7160, Section 66 of RA No. 9136 and Section 2.4(a) of
DILG-DOE Circular No. 98-01. Although the purpose of the project is noble, it must still
120
abide with the requirements set forth by pertinent laws and regulations on the proper
utilization of the fund.
We recommended and the Management agreed to ensure that all disbursements

charged out of the 80 percent component of the Share from National Wealth be
supported with documents showing that the provisions of Section 294 of RA No.
7160, Section 66 of RA No. 9136 and Section 2.4(a) of DILG-DOE Circular No. 98-01
are properly observed.
Management Comment:
The Management commented that the procurement of generators was in response to

the resolutions passed by barangays requesting for generator set as one of the
alternative sources of power in the barangay especially during power interruptions
caused by shortages and damaged power lines during calamities. The generator sets
can help communities immediately regain power supply and will allow the charging of
communication devices and other important gadgets that are used during emergency
situations while also indirectly reducing electricity rates since there will no longer be
charges on generation, transmission, system loss and distribution among others.
Additionally, the generator sets distributed to the barangays was a timely response to
communities that were greatly affected by loss of power supply caused by typhoon
Odette.
The Management’s claim that the procurement of generators will indirectly reduce
electricity rates since there will no longer be charges on generation and transmission,
system loss and distribution among others, is incomprehensible. Although there will be
no generation and transmission charges, system and distribution loss, there’s a need to
buy petroleum products to fuel the generator, the cost of which was significantly
increasing since the last quarter of CY 2021. Consequently, the cost of electricity
produced by these generators will be high. As to the timeliness of the procured
generator sets to the power loss suffered during the onslaught of Typhoon “Odette”, it
must be noted that Typhoon “Odette” hit the Province of Antique in December 2021 only,
while the procurement process for the 590 generator sets started as early as September
2021, thus, it cannot be said that it was a timely response to the loss of power during
Typhoon “Odette”.
Philippine Rural Development Project
16. Investment for Rural Enterprises, and Agricultural and Fisheries Productivity
(I-REAP) subproject Antique Muscovado: Production & Marketing Enterprise with
total project cost of ₱25.227 million was not fully implemented despite the lapse of
1,096 days from the target completion date, thereby, delaying the delivery of
benefits to the intended recipients.
The Provincial Government of Antique (PGA) executed Implementation Management

Agreements (IMA) with the Department of Agriculture (DA) to implement the Investment
121
for Rural Enterprises, and Agricultural and Fisheries Productivity (I-REAP) subprojects,
the Enterprise Development Component, of the Philippine Rural Development Project
(PRDP). The I-REAP of PRDP intends to strengthen and develop viable agri-fishery
based enterprises through the development of efficient value chains of key agricultural
and fishery products in targeted program areas. To realize this intention, the PGA
entered into Enterprise Investment Agreements (EA) with different associations based in
the Province of Antique to serve as Proponent Groups in the implementation of the I-
REAP subprojects.
One of the identified I-REAP subprojects of the PGA is the Antique Muscovado:
Production and Marketing Enterprise with a total project cost of ₱25.227 million. The
PGA entered into an Enterprise Investment Agreement with Laua-an Multi-Purpose
Cooperative on February 28, 2017 as the Proponent Group (PG) of the said subproject
while the Implementation Management Agreement between PGA and DA was executed
on December 29, 2017. The Enterprise Investment Agreement was later revised on
January 24, 2019 due to changed in the estimated subproject cost for the civil works.
The subproject is divided into two parts – the civil works (building), and the enterprise.
The civil works has a project cost of ₱6.817 million and ₱18.410 million for the
enterprise, thereby, giving a total subproject cost of ₱25.227 million. The subproject is to
be funded by the Loan Proceeds from the World Bank, counterpart from the Government
of the Philippines (GOP), and equity from the PGA. Financing mix of the said subproject
is as follows:
Table 27. Financing Mix of Antique Muscovado I-REAP Subproject

Loan Govt. of the Phil.
LGU Equity
Proceeds (GOP) Total
(20%)
(60%) Counterpart (20%)
Civil Works ₱4,090,381.67 ₱1,363,460.56 ₱1,363,460.56 ₱6,817,302.79
Enterprise 11,045,850.00 3,681,950.00 3,681,950.00 18,409,750.00
Total ₱15,136,231.67 ₱5,045,410.56 ₱5,045,410.56 ₱25,227,052.79
Section 5.01 of the IMA stipulates that the PGA shall start the implementation of the
subproject, based on the schedule presented in the Project Implementation Plan (PIP),
immediately from the date of effectivity of the IMA. Timeline of Enterprise
Implementation based on the PIP is as follows:
Table 28. Antique Muscovado I-REAP Subproject Implementation Plan

Implementation
Activities
Schedule
Enterprise Implementation
1 Signing of Enterprise Investment Agreement (EA) Dec. 2017 – Jan. 2018
2 Proponent Group provide 20% Equity for the Dec. 2017 – Jan. 2018
enterprise
3 Enterprise Implementation Dec. 2017 – Jan 2018
4 LGU Final Inspection Feb. 2018 – Aug. 2018
5 Completion and Issuance of Certificate of Sept. 2018 – Oct.
Completion 2018
Post Enterprise Implementation Phase
1 Preparation of subproject completion report Nov. 2018 – Dec.
2018
2 Closing of LGU accounts Nov. 2018 – Dec.
122
2018
Upon perusal of the PIP, the Audit Team observed that the I-REAP subproject was not
fully implemented on the date it was targeted to be completed. As of yearend,
implementation of the subproject is still ongoing, thereby, resulting to 1,096 days of
delay from the target completion of December 31, 2018.
The civil works (building) has been completed in CY 2020 with total cumulative
expenditures of ₱6.792 million. For the enterprise, only ₱2.690 million or 14.61percent of
the total project cost representing first tranche release was downloaded to the Proponent
Group as of December 31, 2021.
Inquiry from the Provincial Program Management and Implementing Unit (PPMIU)
Secretariat disclosed that there has been delay in the implementation of the subproject
due to the suspension of the fund releases as a result of monitoring and evaluation
activities conducted by the PPMIU to the PG. Details of the activities were as follows:
• July - December 2020 – Series of assessment activities were conducted by

the PPMIU thru the Provincial Cooperative Development Office in
accordance with Article VII of the EA
• February 2, 2021 – PPMIU wrote a letter to the Provincial Governor

detailing the results of its assessment with the PG including the failure of
the PG to comply the provisions of the EA especially on the maintenance
of accounts, books and financial records with the recommendation of
suspension of subsequent release of grant and cancellation of the EA
among others
• May 28, 2021 – Memorandum Order No. 47, Series of 2021 was issued by
the Provincial Governor directing the suspension of subsequent releases
of grant to the PG and the cancelation of the enterprise agreement
• May 28, 2021 – Executive Order No. 77, Series of 2021 was issued by the
Provincial Governor directing the Internal Audit Office of the Provincial
Government of Antique to conduct a special audit of the financial and other
activities of the LMPC
• October 4, 2021 – Project Support Office-Visayas Cluster of the PRDP

wrote a letter to the Provincial Governor underscoring that under the EA
the Province of Antique, through the PPMIU, shall make available to the
PG the enterprise fund and its timely release, (b) provide technical support
to the PG, and (c) assist the PG in installing financial records to facilitate
proper disbursement of funds, liquidation and record keeping
• December 6, 2021 - Chairperson of the LMPC wrote a letter to the

Provincial Governor for (a) an urgent request for the reconsideration and
lifting of Memorandum Order No. 47, (b) admitting the failure of the LMPC
to process the required liquidation of previous procurements, and (c)
requesting the assistance of PPMIU Secretariat in the preparation of
required liquidation reports
123
• January 11, 2022 – Memorandum Order No. 05 Series of 2022 was issued
by the Provincial Governor (a) setting aside Memorandum Order No. 47,
(b) directing PPMIU Secretariat to render assistance to the PG in the
preparation of its liquidation, (c) directing the PPMIU to make available the
enterprise fund, provide technical support and assist the PG in installing
financial records, and (d) directing the PG to submit its liquidation of the
disbursed enterprise funds
• February 6, 2022 – Resolution No. 82, Series of 2022 was issued by

LMPC requesting Regional Project Coordination Office VI (RPCO6) for the
revision of the Procurement Plan and Working Financial Plan due to
changes in specifications of equipment to be procured and machineries
needing repair
• May 2022 – Revised Procurement Plan was approved by the Provincial

Governor as recommended by the PPMIU Head
Subsequent releases of fund to the Proponent Group are already on process this CY
2022 for the full implementation of the subproject.
The delayed implementation of the subproject deprived the intended beneficiaries of the
economic benefits from the full implementation thereof. Thus, the objective of developing
and implementing projects that provide the poor sectors of the community, especially
those engaged in subsistence agriculture, with equitable access to resources, income
opportunities, support services, and rural infrastructure was not realized as scheduled,
thereby, delaying the delivery of benefits to the intended recipients.
We recommended and the Management agreed that the PGA, through the
Provincial Program Management and Implementing Unit (PPMIU), fast-track the
implementation of the Antique Muscovado: Production & Marketing Enterprise
IREAP subproject in order not to hamper the delivery of benefits to the intended
recipients.
17. Inspections of deliveries of supplies, materials, equipment, foodstuff, drugs,

medicines, spare parts, and the like were not jointly conducted by the designated
Inspectorate Team, thus, casting doubt as to the regularity of the deliveries.
Moreover, the Acceptance and Inspections Reports (AIRs) were not submitted
within the prescribed period from the acceptance of the goods/services delivered,
contrary to Section 6.09 of COA Circular No. 95-006, thereby precluding the timely
inspection of deliveries to check if such conformed with the specifications in the
Purchase Orders (POs) or contracts.
Section 118, of the New Government Accounting System (NGAS) Manual for Local
Government Units (LGUs), Volume I, states that the acceptance and inspection of
deliveries of items purchased by the local government units shall be made using the
Acceptance and Inspection Reports (AIR). This report contains the date of acceptance
and inspection of the items delivered.
124
Further, Item D of A-31 - AIR Instructions of the NGAS Manual for LGUs, Volume II,
provides that the AIR shall be signed by the authorized Inspection Officer/Committee
who conducted the inspection and verification of the items.
Furthermore, Section 6.09 of COA Circular No. 95-006 dated May 18, 1995 provides that
inspection of consumables and perishable items, as well as unserviceable and
disposable government property and other assets shall be conducted by management. A
copy of the report of inspection or its equivalent shall be submitted to the Head of the
Auditing Unit within twenty-four (24) hours from acceptance of the items delivered and,
in the case of unserviceable and disposable property/assets, immediately after
inspection thereof by management.
In 2020 and 2021, the Provincial Governor issued Executive Order (EO) No. 15, series
of 2020 and EO No. 112, series of 2021, respectively, reconstituting the composition of
the Inspectorate Team who will conduct inspection of deliveries of supplies, materials,
equipment, foodstuff, drugs, medicines, spare parts and the like, purchased by the
Provincial Government of Antique (Provincial Government). The Inspectorate Team was
composed of the Chief Inspectorate, Provincial General Services Office (PGSO)
Representative, (Governor’s Office) GO Representative, Accounting Representative,
and End-User Representative. Under these two EOs, the members of the Inspectorate
Team shall jointly conduct inspection activities.
In CY 2021, the Provincial Government submitted 835 AIR for deliveries of supplies,
materials, equipment, foodstuff, drugs, medicines, spare parts, and the like. Scrutiny of
these AIRs revealed that these were not signed by the accounting and end-user
representatives. Moreover, these AIRs were not submitted within 24 hours from the
acceptance of the goods/services delivered. (Sample AIRs with deficiencies marked as
Annex Z)
The PGSO claimed that they are informing the Accounting Office of the scheduled
deliveries, however, due to the latter’s busy schedule, they are not sending their
representative to join the inspection. When the Accounting was asked, they
counterclaimed that they were not being informed of the scheduled deliveries.
On the other hand, the non-submission of AIRs within 24 hours from the acceptance of
the goods/services was included in the CY 2013 and 2016 Annual Audit Report (AAR) of
the Provincial Government, to which the previous Audit Teams recommended that the
assigned Property Officer and Inspection Officer/Committee immediately accomplish the
AIR after the delivery of items purchased and submit the report to the Office of the
Auditor within the prescribed period. However, the recommendations remained to be
partially implemented and the cited reason is the unavailability of signatories.
The absence of the signature of the accounting and end-user representatives in the
Acceptance and Inspection Report casted doubt as to the regularity of the deliveries.
Moreover, the non-submission of the AIR within 24 hours from the acceptance of
goods/services delivered is contrary to Section 6.09 of COA Circular No. 95-006 and
precluded the Audit Team in conducting timely inspection of deliveries to check whether
it conforms with the specifications in the POs or contracts.
125
We recommended that the Local Chief Executive instruct the Provincial General
Services Officer to:
a. Inform in writing the Accounting Office and the end-user of the scheduled
delivery of goods/services, so that their respective representatives will be
present during the inspection;
b. Immediately accomplish the AIR after the delivery and inspection of items
purchased and require all members of the Inspectorate Team to sign it right
after; and
c. Submit the AIR to the Audit Team within 24 hours from the acceptance of
goods/services delivered.
Management Comment:
The PGSO commented that they cannot submit the AIRs within 24 hours from
acceptance of deliveries because there are deliveries made thru couriers which are
being delivered directly to hospitals. In these instances, the Delivery Receipt, which is
being attached to the AIR being submitted to the COA, is being taken back by the
courier and return to the supplier. Thus, they must wait for the AIR to be received by
their office before they can submit the AIR to the COA.
126
The non-submission of AIR within 24 hours from acceptance of goods delivered was
observed in all deliveries, and not just in some instances.
18. Several activities scheduled to be conducted during the year were re-scheduled or
moved to another date/s and venue/s, however, no notices of such changes were
submitted to the Audit Team.
Section 39 (1) of the State Audit Code of the Philippines or Presidential Decree (P.D.)
No. 1445 states that the Commission shall have the power, for purposes of inspection, to
require the submission of the original of any order, deed, contract, or other document
under which any collection of, or payment from, government funds may be made,
together with any certificate, receipt, or other evidence in connection therewith.
(Emphasis ours).
The Provincial Government of Antique submits copies of its Purchase Orders (POs), with
supporting documents, to the Commission on Audit. Based on the submitted POs, the
Audit Team (Team) randomly inspected the conduct of various consultative meetings
and trainings and discovered that 25 activities were re-scheduled and/or transferred to a
different venue, but no notice/s were given to the Team of such changes in the time and
place of delivery (Annex AA).
It was likewise noted that the following activities were not conducted on the date and
venue stipulated in the POs, however, the Team received AIRs pertaining to these
activities, with acceptance and inspection date/s similar to the that in their corresponding
POs, and in the case of Item No. 3, same venue as well.
Table 29. List of Activities Not Conducted on the Date and Venue Stipulated in the PO
Particulars Duration Venue (per Caterer/ Amount Remarks
No. (per PO) PO) Supplier per Billing
Statement
1. Catering Services 10/5/2021 Binirayan Gym, Antique ₱ 20,500.00 Inspected the

relative to the conduct of San Jose, Federation of venue and
Consultative Meeting Antique Cooperatives interviewed the
with Stakeholders of personnel of the
Office of the Governor gym.
2. Catering Services 10/26/2021 Binirayan Gym, Antique 20,500.00 Inspected the

relative to the conduct of San Jose, Federation of venue and
Consultative Meeting Antique Cooperatives interviewed the
with Stakeholders of personnel of the
Office of the Governor gym.
(50pax)
3. Catering Services 11/23/2021 Hamtic Kots Resto & 45,600.00 Inspected the
relative to the conduct of Gymnasium Catering venue and
Training for the Services interviewed
Beneficiaries of Native personnel of
Animal Dispersal Hamtic Disaster
127
Particulars Duration Venue (per Caterer/ Amount Remarks
No. (per PO) PO) Supplier per Billing
Statement
Program for the Farmer Operation Center,

Beneficiaries of Antique an office located
Province focus on Pig beside the
Production gymnasium.
TOTAL ₱ 86,600.00
The non-submission to the Audit Team of notices of change in date and venue of
activities to be conducted by the Provincial Government, precluded the former in
conducting random and surprise inspection on the correct date and venue.
Moreover, the submission of Acceptance and Inspection Reports for catering services
that were not conducted on the date and venue stipulated in the POs casted doubt on
the existence of these deliveries.
We recommended and the Management agreed to instruct the Provincial General

Services Officer to furnish the Audit Team a notice that the date and venue of a
particular activity was postponed and/or transferred, prior to the re-scheduled
date.
19. Tarpaulins/Signboards/Billboards made for various programs, events and

activities bears the names, images and motto of government officials, in violation
of DILG Memorandum Circular No. 2010-101 and COA Circular No. 2013-004.
DILG Memorandum Circular No. 2010-101 dated September 23, 2010 prohibited the
practice of putting up of billboards and signages and other information materials bearing
the names, initials or pictures of government personalities on all government projects,
and government properties because this practice is being abused and misused by some
public officials for their personal interests and has taken the credit away from the
taxpayers who are the ones paying for such programs or projects through their tax
payment.
Moreover, Sections 2.2.6 and 2.2.7 of COA Circular No. 2013-004 dated January 30,
2013, respectively provides that: (1) The display and/or affixture of the picture, image,
motto, logo, color, motif, initials or other symbol or graphic representation associated
with the top leadership of the project proponent or implementing agency/unit/office, is
considered unnecessary; and (2) The display and/or affixture of the items mentioned in
Item 2.2.6 above on equipment and facilities; vehicles of all type, whether engine,
manpower or animal driven; wrappers, containers, and similar items; tokens, souvenir
items, calendars, ballpens, T-shirts or other apparel, and other publicity materials
relating to any PPA, is also considered unnecessary.
During the Audit Team’s random inspection of the programs, activities and events of
conducted by the Provincial Government and a walkthrough on its official social media
page, it was noticed that the names, images and motto of government officials are
shown on the tarpaulins displayed during the distributions of cash assistance, incentives,
128
farm machineries and equipment to indigents, senior citizens, sacadas, provincial
scholars, and farmers; blessings and inaugurations of infrastructure projects; ceremonial
turn-over of ambulances and patrol boats from the Department of Health, and others.
In addition, the envelope containing the incentives to indigents, the container of the
biscuits and bags containing goods being distributed bore the name/s, image/s and
motto of the top officials of the provincial government.
Images of the activities with tarpaulins, envelopes for cash incentives, biscuit containers
bearing the names and images of the top officials of the provincial government are
attached herewith as Annex BB.
The affixing of names, images, and motto of the top government officials of the province
is unnecessary and contrary to DILG Memorandum Circular No. 2010-101 and COA
Circular No. 2013-00.
We recommended that the Local Chief Executive instruct the concerned

project/program/activity coordinators to stop the practice of affixing the names,
initials, images, or other graphic representation associated with the government
officials, and their motto on all tarpaulins/signboards/billboard displayed on all
projects, programs, and activities of the Provincial Government.
The Management refused to give comment during the conduct of exit conference
because they will have to discuss the findings and the recommendations to the Local
Chief Executive, who was not present at that time.
As of the report the date, the Audit Team has not yet received any comment/reply from
the Management.
20. Compliance to Tax Laws
The Agency has complied with BIR Regulations on withheld and remittances of taxes in
CY 2021. For CY 2021, total debits and total credits to the Due to BIR are as follows:
Table 30. Summary of Taxes Withheld, Remitted and Balances

Beginning Ending
Balance as of Total Debits* Total Credits** Balance as of
Jan. 01, 2021 Dec. 31, 2021
Due to BIR ₱21,001,200.15 ₱128,763,721.97 ₱127,708,653.42 ₱19,946,131.60
*Total Debits represent amounts remitted to the BIR and other prior-period adjustments and
reclassifications.
**Total Credits represent amounts withheld and other prior-period adjustments and
reclassifications
21. Remittance of Mandatory Contributions
129
The Agency had complied with the remittance of mandatory GSIS, PhilHealth, and
HDMF contributions to the respective government agencies for CY 2021. Amount
withheld in CY 2021 was remitted during the year. The amounts withheld in December
2021 are remitted in the following month. Total debits and total credits to the Due to
GSIS, Due to PhilHealth and Due to HDMF for CY 2021 are as follows:
Table 31. Summary of GSIS and HDMF Contributions, Remittances and Balances
Beginning Ending
Balance as of Total Debits* Total Credits** Balance as of
Jan. 01, 2021 Dec. 31, 2021
Due to GSIS ₱6,626,248.11 ₱125,459,452.91 ₱143,934,656.96 ₱25,101,452.16
Due to
778,882.67 9,591,390.32 9,927,942.74 1,115,435.09
PhilHealth
Due to HDMF 2,289,683.66 18,356,661.54 19,280,189.39 3,213,211.51
*Total Debits represent amounts remitted to the concerned agencies and other prior-period
adjustments and reclassifications.
**Total Credits represent amounts withheld and other prior-period adjustments and
reclassifications
22. Status of Notice of Suspension, Notice of Disallowance and Notice of Charge
There were no audit suspensions, disallowances and charges issued in CY 2021.

Likewise, no settlements were made. The balances of Notice of Suspensions (NS),
Notice of Disallowances (ND) and Notice of Charges (NC) as of December 31, 2021 is
shown in the next table:
Table 32. Summary of ND, NS and NCs Issuances, Settlement and Balances
Beginning CY 2021
Ending Balance
Balance as of
Notices as of December
January 01, 2021
Issuances Settlements 31, 2021
Notice of
₱ 3,465,640.44 ₱ 0.00 ₱ 0.00 ₱ 3,465,640.44
Suspension
Notice of
38,500,639.37 0.00 0.00 38,500,639.37
Disallowance
Notice of
250,914.51 0.00 0.00 250,914.51
Charge
Total ₱ 42,217,194.32 ₱ 0.00 ₱ 0.00 ₱ 42,217,194.32
1.
130

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PART II

AUDIT OBSERVATIONS AND

Property, Plant and Equipment (PPE)

Paragraph 27 of the International Public Sector Accounting Standard (IPSAS) 1 -

A. Unaccounted dormant PPE account balances of ₱100.888 million.

To address the existence of enormous amounts of discrepancies in PPE account

Table 1. Summary of Unaccounted Dormant PPE

One of the Management’s assertions on the account balances in the financial

C. Unserviceable properties amounting to ₱5.719 million were not yet disposed

The undisposed unserviceable PPE of the Provincial Government as of December 31,

Table 3. Undisposed Unserviceable PPE

The Management’s delayed action on the disposal of unserviceable PPE items

We recommended and the Management agreed to avail of the one-time cleansing

Further, we recommended and the management agreed that the:

a. PGSO investigate and institute appropriate action/s on the missing

b. Disposal Committee expedite the disposal of unserviceable properties.

2. The incomplete conduct of physical inventory and reconciliation as required by

Table 4. Discrepancies Between Balances per GL and per RCPPE

Review of the accounts showed significant discrepancies in the Infrastructure Assets.

We recommended and the Management agreed that the:

a. PGSO and the Provincial Accounting Office continue reconciling the

b. Inventory Committee observe the required complete physical inventory-

Due from LGUs

Item No. 27 of the International Public Sector Accounting Standard (IPSAS) I –

We recommended and the Management agreed to instruct the Provincial

Audit of COVID-19 Fund Receipt, Allocation and Utilization

Table 5. Days of Delay of Negotiated Procurement Under Emergency Cases

Furthermore, verification of the corresponding Disbursement Vouchers and its

b. There were no documents attached to support posting of the

c. The actual period/date of posting of Notice of Awards at any conspicuous place

Cash and Cash Equivalents

 No payment of any nature shall be received by a Collecting Officer (CO) without

A. ORs were not promptly issued for collections received.

a. Immediately issue ORs for all collections; and

Nevertheless, in November 2021, when the Team conducted an examination on

B. Collections were not deposited intact and as frequent as required by

Based on the Report of Collection and Deposits (RCD) submitted by the

Table 6. Schedule of Deposits Made on Separate Dates

4421-4 Apr. 1-12 0579292- 28,641.40 25,600.00 4/26/2021 24

4421-4 Apr. 13-15 0579357- 24,373.40 15,000.00 5/20/2021 71

4421-4 Aug. 1-31 1612796- 45,981.00 12,659.20 11/18/2021 11

In addition, collections were not deposited once a week or as soon as the

Similarly, the PLGMH has the following funds being maintained:

1. General Fund (GF);

C. Report of Collections and Deposits were not prepared daily.

In RMSMDH, the RCDs were being prepared once every 3 to 21 days or an

We recommended and the Management agreed to instruct the Cashier to:

a. Personally receive payments from patients/clients or their folks and issue

c. Prepare the Report of Collection and Deposits daily.

We further recommended and the Management agreed to instruct the Cashier of

Furthermore, we recommended and the Management agreed to:

 Relieve the current designated cashiers, who were promoted to

 Refrain from granting special purpose cash advances for educational

6. Special cash advance of the Nutritionist/Dietician III (Special Disbursing Officer) of

Table 7. Cash Advances Issued to Nutritionist/Dietician III of RMSMDH

Furthermore, we recommended and the Management agreed to instruct the

c. Inform the students of the semester to which the educational assistance

Implementation of HFEP Projects Funded by the DOH