COA questions validity of P479 million QC pandemic procurements

OBSERVATIONS AND RECOMMENDATIONS The audit covered all identified thrust areas pursuant to the General Audit Instructions from the Assistant Commissioner, and Specific Audit Instructions of the Director, Local Government Sector dated October 15 and 22, 2020, respectively, and in accordance with COA Memorandum No. 2020-019 dated November 09, 2020, on the Guidelines in the Financial and Compliance Audit of the Coronavirus Disease 2019 (COVID-19) Funds during the period of State of National Emergency, in addition to the areas as observed in the course of our risk assessments during the year. The deficiencies noted in audit are the following: FINANCIAL AND COMPLIANCE AUDIT 1. The general ledger (GL) and adjusted bank balances in the Bank Reconciliation Statements (BRS) shows a difference of P170.456 million as of December 31, 2020 due to reconciling items not effected in the books contrary to Section 3.3 of COA Circular No. 96-011 dated October 02, 1996. Thus, overstating the Cash in Bank account by P170.456 million and Government Equity by P27.856 million, while understating the income and expense accounts in the amounts of P37.018 million and P179.618 million, respectively.

1.1. Section 3 of COA Circular No. 96-011, provides the guidelines in the preparation of BRS. 2.

The Local Accountants shall within ten (10) days from receipt of the Bank Statements, reconcile the same (BS) with the General Ledgers (GL) and prepare the BRS in five (5) copies.

3.

The accountant shall draw journal vouchers to record all valid reconciling items that require adjustment and correction in the GL.

1.2. Review of the City’s 15 BRS as of December 31, 2020, shows subsidiary ledger balances totaling P5,890,445,657.33, and adjusted consolidated bank balance of P5,719,989,563.28. Likewise, accounting records disclosed the following transactions: a. A total of P42,341,315.88 credit advices that remained unrecorded; b. Reconciling items totaling P94,548,816.03 from unrecorded deposits and various errors; c. Unrecorded debit advices totaling P168,071,985.50 composed of payrolls paid to the City’s various employees; d. Disbursements totaling P14,041,399.20 remained unrecorded; and 64

e. Errors totaling P125,232,841.26, due to prior unreconciled balances since 2000.

1.3. Our audit disclosed that GL and adjusted bank balances in the BRS showed a difference of P170,456,094.05 due to reconciling items not effected in the books contrary to Section 3.3 of COA Circular No. 96-011, as computed in Table 1-Computation of Net Effect of Reconciling Items.

Table 1-Computation of Net Effect of Reconciling Items Adjustments to Cash in Bank Account

CY 2020

Prior Years

Amount

Add: (a) Unrecorded Credit Advices

P28,948,125.61

P13,393,190.27

P42,341,315.88

8,069,865.66

86,478,950.37

94,548,816.03

37,017,991.27

99,872,140.64

136,890,131.91

165,457,988.34

2,613,997.16

168,071,985.50

12,522,433.33

1,518,965.87

14,041,399.20

1,637,799.80

123,595,041.49

125,232,841.26

179,618,221.47

127,728,004.52

307,346,225.99

(P142,600,230.20)

(P27,855,863.88)

(P170,456,094.08)

(b) Various reconciliations Sub-total Subtract: (c) Unrecorded Debit Advice (d) Unrecorded Disbursements (e) Various Reconciliations Sub-total Net effect of reconciling items

1.4. Thus, overstating the Cash in Bank account of P170,456,094.08 and Government Equity of P27,855,863.88, while understating the income and expense accounts in the amounts of P37,017,991.27 and P179,618,221.47, respectively.

1.5. We recommended that Management: a. Draw journal entry vouchers to record all valid reconciling items that require adjustment and correction in the GL; and b. Henceforth, adhere to the regulations cited in COA Circular No. 96-011 relative to the preparation of BRS of the City.

Management action/comment: 1.6. The City Treasurer’s Office (CTO) commented that the supporting documents pertaining to unrecorded Debit Advices totaling P113,926,673.06 for CY 2020, composed mostly of payrolls, returned checks, supplemental allowances and bank errors were submitted late to City Accounting Department (CAD).

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Auditor’s rejoinder: 1.7. Submit the necessary documents for the recording and reconciliation of the remaining balances with a net effect of P56,529,420.99.

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2. Receivables totaling P129.204 million representing net loan proceeds assigned to City by Habitat for Humanity Philippines Foundation Inc. (HHPFI), Phinma Property Holdings Corporation (PPHC), and landowner of Bistekville 2 Housing Projects remained uncollected for more than five years contrary to Section 6.1 of COA Circular No. 2016-005 dated December 19, 2016. Thus, the City’s resources were tied up with a non-governmental organization, a corporation and private individual depriving the constituents of possible funds for more socialized housing projects.

2.1. Section 6.1 of COA Circular No. 2016-005 states: All government entities shall conduct regular monitoring and analysis of receivable accounts to ensure that these are collected when these become due and demandable and that cash advances and fund transfers are liquidated within the prescribed period depending upon their nature and purpose. (Underscoring supplied) 2.2. Review of the Other Receivables account disclosed that the Quezon City Government (QCG) has receivables from HHPFI, PPHC and a landowner totaling P129,203,763.72 as of December 31, 2020.

2.3. On October 14, 2011, the QCG and HHPFI had entered into a Memorandum of Agreement (MOA) to address the lack of affordable and decent In-City housing for QC residents by developing Bistekville 1. It was stipulated that the latter will construct socialized housing units for qualified and verified public school teachers and informal settlers of the City, and in return, the net loan proceeds of every taken-out housing unit availed by the beneficiaries from Home Development Mutual Fund (HDMF) shall be distributed to the parties as return of their contributions based on the agreed proportionate sharing scheme in Table 2-Distribution of HDMF Loan Proceeds.

Table 2-Distribution of HDMF Loan Proceeds Net Loan Proceeds for loft type row-house socialized housing units Share of HHPFI

P195,000.00

Share of QCG

P205,000.00, or less

Net Loan Proceeds for ground floor of walk-up housing units Share of HHPFI

P155,000.00

Share of QCG

P225,000.00, or less

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P400,000.00

P380,000.00

Net Loan Proceeds for second floor walk-up housing units Share of HHPFI

P155,000.00

Share of QCG

P175,000.00, or less

P330,000.00

2.4. Likewise, in another contract, QCG had entered into a MOA with a land owner, and PPHC on October 27, 2011, for the development of Bistekville 2 whereby housing units will be offered for purchase to informal settlers in Quezon City through housing loans from the HDMF. Under the MOA, the land owner shall provide 48,876 square meters of land for the housing units while PPHC shall construct the houses. Further, the City shall open a special financing facility with HDMF for the use of the informal settlers in the purchase of the housing units. It was also agreed that the landowner, PPHC, and QCG shall receive their respective shares from the sales proceeds of the housing units for the cost of land, the development and construction of housing units, and the return of guarantee fund and the origination fee, respectively. The agreed proportionate sharing scheme per unit is in Table 3-Sharing Scheme.

Table 3-Sharing Scheme Particulars PPHC (for land development and construction of housing unit)

Amount P284,443.95

Landowner (price of land)

90,269.40

LGU-QC (for return of guarantee fund and origination fee)

25,286.65

Total

P400,000.00

2.5. In both contracts, it was stipulated that the aforementioned shares shall be immediately released simultaneously to each party in separate checks by HDMF upon loan approval and completion of the housing units. In case of delay, the City shall advance the proportionate share of completed housing units to HHPFI, PPHC and landowner to ensure the continuity of housing development of the projects. Deeds of Assignment were executed between the City and each party to effect the transfer of rights, title and interest on the net loan proceeds due to the developer and land owner in favor of QCG. 2.6. As of December 31, 2020, the subsidiary ledgers (SLs) for Other ReceivablesBistekville 1 (HDMF-Habitat), Other Receivables-Bistekville 2 (HDMFPhinma), and Other Receivables-Bistekville 2 (HDMF-Landowner) accounts shows uncollected receivables of P43,870,000.00, P94,435,724.12, and P21,123,039.60, respectively, for a total of P159,428,763.72. However, payments made to HHPFI, PPHC and landowner for CYs 2013 and 2014 based on the 2014 SLs totaled P129,203,763.72, showing a discrepancy of 68

P30,225,000.00. Details are shown in Table 4-Discrepancy between Other Receivables and Payments.

Table 4-Discrepancy between Other Receivables and Payments Particulars

SL 2020

SL 2014

Discrepancy

HHPFI

P43,870,000.00

P33,145,000.00

P10,725,000.00

PPHC

94,435,724.12

74,711,398.84

19,724,325.28

Landowner

21,123,039.60

21,347,364.88

(224,325.28)

P159,428,763.72

P129,203,763.72

P30,225,000.00

Total

2.7. Our audit disclosed that receivables totaling P129,203,763.72 from HHPFI, PPHC and landowner of Bistekville 2 remained uncollected for more than five years due to the inaction of Management to enforce collection contrary to Section 6.1 of COA Circular No. 2016-005. Details are shown in Table 5-CY 2013-2014 SL:

Table 5-CY 2013-2014 SL Reference

Check No.

Date

Particulars

100-14-10-138

467126

10/7/14

Payment for 51 units Row Houses and 24 Walk-up Units at Bistekville 1

P13,665,000.00

100-13-02-1322

460731

2/25/13

Payment for 42 units row houses

8,190,000.00

12/23/13 Payment for 42 units row houses

11,290,000.00

Sub-total

33,145,000.00

A.

HHPFI

100-13-12-9077-A

B.

Amount

PPHC

100-13-03-1925

0461301

03/14/13

15 units

4,266,659.25

100-13-05-3157

0483648

05/07/13

49 units

13,937,753.55

100-13-06-4403

0484518

06/04/13

45 units

12,799,977.75

100-13-09-6827

0487251

09/24/13

51 units

14,506,641.45

100-13-09-6743

0487176

09/19/13

35 units

9,955,538.25

100-13-11-7915A

0467101

11/08/13

45 units

12,799,977.75

100-14-04-120

0467117

04/30/14

106 units

30,151,058.70

100-14-02-42

0467108

02/10/14

117 units

33,279,942.15

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Table 5-CY 2013-2014 SL Reference

Check No.

Date

Particulars

100-14-10-142

0467130

10/31/14

78 units

25,350,000.00

100-14-09-134

0467122

09/16/14

40 units

11,377,758.00

100-14-12-147

0467135

12/09/14

22 units

6,257,766.90

100-14-12-149

0467137

12/23/14

40 units

11,377,758.00

JEV-2014-12026531

Adjustment

C.

Amount

(111,349,432.91) Sub-total

74,711,398.84

Landowner of Bistekville 2

100-13-07-5177

485328

07/05/13 Payment for the corresponding land area of the completed 95 socialized housing units

P8,575,593.00

100-13-11-8354A

0467102

11/26/13 Payment for the 139 socialized housing and its corresponding land area

12,547,446.60

100-14-04-119

0467116

04/30/14 Payment for the 117 socialized housing and its corresponding land area

10,561,519.80

100-14-02-49

0467109

02/17/14 Payment for the 131 socialized housing and its corresponding land area

11,825,291.40

100-14-08-132

0467121

08/06/14 Payment for the 106 socialized housing and its corresponding land area

9,568,556.40

100-14-12-148

0467136

12/11/14 Payment for the 40 socialized housing and its corresponding land area

3,610,776.00

12/29/14 Adjustment

JEV 2014-12026531

(35,341,818.32) Sub-total

Grand Total

21,347,364.88 P129,203,763.72

2.8. As a result, the City’s resources were tied up with a non-governmental organization, a corporation, and private individual wherein constituents were deprived of possible funds for more socialized housing projects.

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2.9. We recommended that Management: a. Send demand letters to HHPFI, PPHC, and landowner to pay immediately the amount of P33,145,000.00, P74,711,398.84, and P21,347,364.88, respectively;

b. Reconcile/adjust the differences of P10,725,000.00, P19,724,325.28 and P224,325.28 or a net difference of P30,225,000.00 in the SL/GL of Other Receivables-Bistekville 1 (HDMF-Habitat), Other ReceivablesBistekville 2 (HDMF- Phinma), and Other Receivables-Bistekville 2 (HDMF-Landowner), respectively; and c. Henceforth, conduct regular monitoring and analysis of receivable accounts to ensure collection when these become due and demandable as prescribed in COA Circular No. 2016-005.

Management actions/comments: 2.10. QCG will reclassify/adjust the other receivables account upon receipt from the Housing Community Development and Resettlement Department (HCDRD) of the List of the Socialize Housing (SH) Beneficiaries containing the specific Bistekville project, the amount of their respective loans take out, the corresponding official receipts issued by the City Treasurer’s Office as proof that the amount of the said loans take out were received by the city government and the specific HDMF receipt/information, if needed. In case the total amount of the loans take out would not be sufficient to cover the total amount of the other receivables account, the balance will be taken up in the books as receivables from the SH Beneficiaries, whose approved loans take out is inadequate to pay the total cost of the units awarded to them.

2.11. QCG will conduct regular monitoring and analysis of receivables accounts to ensure collections needed and in adherence to the COA Circular No. 2016-005.

3. Outstanding cash advances totaling P5.205 billion, drawn from less than one year to more than nine years and the purpose of which has been served, remained unliquidated contrary to Sections 4 and 5 of COA Circular No. 97-002 dated February 10, 1997. Thus, resulting to a significant amount of unliquidated cash advances as of December 31, 2020.

3.1. Pertinent portions of Sections 4 and 5 of COA Circular No. 97-002 prescribe certain rules in the granting, utilization and liquidation of cash advances:

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Section 4.1.2 No additional cash advances shall be allowed to any official or employee unless the previous cash advance given to him is first settled or a proper accounting thereof is made.

Section 4.1.3 A cash advance shall be reported on as soon as the purpose for which it was given has been served.

Section 5.1.1 Salaries, Wages, etc. - within five (5) days after each fifteen (15) day/end of the month pay period.

Section 5.1.3 Official Travel-within sixty (60) days after return to the Philippines in the case of foreign travel or within thirty (30) days after his return to his permanent official station in the case of local travel, as provided for in EO 248 and COA Circular No. 96-004.

Section 5.7

When a cash advance is no longer needed or has not been used for a period of two (2) months, it must be returned to or refunded immediately to the collecting officer.

Section 5.8

All cash advances shall be fully liquidated at the end of the 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.

3.2. Likewise, it shall be the responsibility of the City Mayor to ensure the proper granting, utilization, and liquidation of all cash advances in accordance with the above rules and regulation as provided under Section 8 of COA Circular No. 97-002.

3.3. The balances of the SL for Cash Advances and reports of the City, for all funds, as of December 31, 2020, are shown in Table 6-CY 2020 Cash Advances.

Table 6-CY 2020 Cash Advances Fund General Fund Special Education Fund Trust Fund Total

Grant

Liquidation

Balance

P3,068,396,252.62

P915,543,869.94

P2,152,852,382.68

25,956,368.01

6,216,766.56

19,739,601.45

3,176,341,409.82

143,736,357.60

3,032,605,052.22

P6,270,694,030.45

P1,065,496,994.10

P5,205,197,036.35

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3.4. The aging analysis of the unliquidated cash advances totaling P5,205,197,036.35 as of the same period is shown in Table 7-Analysis of Unliquidated Cash Advances. The outstanding balances aged 2 to 9 years and above pertain to the previous administrations while the balances of 1 year and below belong to the current administration, to wit:

Table 7-Aging Analysis of Unliquidated Cash Advances Account/ Fund GF

Outstanding balance Less than 1 yr

1year

2-4 years

P2,066,674,590.60 P43,259,135.56

5-6 years

P8,620,621.86 P10.00

7-8 years

9 yrs& above

P363,999.80 P33,934,024.86

Total

P2,152,852,38

SEF

32,030.34

11,267,912.16

3,950,074.00

-

-

4,489,584.95

19,739,60

TF

3,031,908,000.00

112,500.00

0.90

-

-

584,551.32

3,032,605,05

Total

P5,098,614,620.94 P54,639,547.72 P12,570,696.76 P10.00 P363,999.80 P39,008,161.13 P5,205,197,03

3.5. The outstanding Cash Advances under Trust Fund includes fund transfers from the Department of Social Welfare and Development (DSWD) for Social Amelioration Program-Emergency Subsidy (SAP-ES) totaling P3,020,672,000 recorded in the books as Due to National Government Agencies (NGAs), SAPES and were granted to four Accountable Officers as Advances to Special Disbursing Officer. Details of which are shown in Table 8-SL Due to NGAS, SAP-ES. Table 8-SL Due to NGAS, SAP-ES Accountable Officer

JEV No.

Date of Cash Advance

Amount

AO 1

April 20, 2020

2020-04-000217

P 200,000,000.00

AO 2

April 14, 2020

2020-04-000471

200,000,000.00

AO 2

May 4, 2020

2020-05-000238

740,000,000.00

AO 3

April 14, 2020

2020-04-000473

200,000,000.00

AO 3

May 4, 2020

2020-05-000239

740,000,000.00

AO 4

April 20, 2020

2020-04-000216

200,000,000.00

AO 4

May 4, 2020

2020-05-000237

740,672,000.00

Total

P3,020,672,000.00

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3.6. The AOs informed that the distribution of SAP-ES started in April and ended on July 15, 2020, after which the preparation of liquidation reports (LRs) followed.

However, these LRs were not submitted to the CAD for liquidation at year end.

3.7. Initial information from CAD reveals that the total amount of P400,000,000 was submitted for liquidation as of February 2021, nonetheless, the AOs revealed that the total Advances from SAP-ES were fully liquidated as of March 2021.

3.8. The inability of City Officials to enforce the liquidation of cash advances whose purpose have been served as prescribed under Sections 4 and 5 of COA Circular No.97-002 resulted to a significant amount of unliquidated cash advances as of December 31, 2020.

3.9. We recommended that the City Mayor: a. Enforce the liquidation of cash advances in accordance with the prescribed period pursuant to COA Circular No. 97-002; b. Instruct the City Accountant to decline the grant additional cash advances to officers and employees unless their previous cash advances have been accounted and settled; c. Require all accountable officers to immediately liquidate their respective cash advances as soon as the purposes for which the advances were granted has been served and submit the required LRs and supporting documents to CAD; d. Require CAD to ensure that LRs and supporting documents are processed and recorded immediately; and e. Henceforth, comply strictly with COA Circular No. 97-002 in the granting, utilization, and liquidation of cash advances.

Management actions/comments: 3.10. Demand letters were issued to accountable officers with outstanding cash advances in a regular basis and currently coordinating with Internal Audit Services (IAS) to enforce the scheme of salary deduction for erring disbursing officers.

3.11. No cash advances are granted without a Certification of No Pending Cash Advances provided by the Financial Accounts and Analysis Division (FAAD).

This method has been intact in QCG system of granting advances as compliance to Section 4.1.2 of COA Circular No. 97-002. Any unauthorized cash advances are blocked or halted upon non-compliance to this requirement.

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3.12. For SAP-ES, CAD commented that liquidation documents were submitted to their Office on the first week of March 2021. The documents included the Fund Utilization Report as of May 31, 2020, duly signed by the City Treasurer, OIC-City Accountant and the City Mayor in the total amount of P3,020,672,000.00. Also submitted were the supporting documents such as Report of Disbursements of the four SDOs, for the period April to May 2020, totaling P3,020,648,000.00 and the Official Receipt No. 6029455 in the amount of P24,000.00 dated March 3, 2021, for the return of the unused SAP-ES to Department of Social Welfare and Development (DSWD), National Capital Region.

Auditor’s rejoinder: 3.13. We require all SDOs to submit Reports of Disbursement and paid payrolls to support the liquidation.

4. The Bayanihan Grant under Local Budget Circular (LBC) No. 125 amounting to P479.120 million which in nature is not a regular source of income of the City was recorded as Share from Internal Revenue Collections (IRA) instead of Transfers from National Government account contrary to the Government Accounting Manual (GAM) for Local Government Units (LGUs), Vol. III. Thus, overstating the Share from Internal Revenue Collections (IRA) account with the same amount which may affect the budget projection of the next fiscal years.

4.1. LBC No. 125 dated April 17, 2020, provides guidelines on the release and utilization of the Bayanihan Grant: 1.

The BGCM shall be released to all cities and municipalities to boost their capacity in immediately responding to the COVID-19 emergency.

2.

The grant shall be equivalent to the one-month FY 2020 Internal Revenue Allotment share of the cities and municipalities. xxx.

7.

The utilization of the BGCM shall be subject to the usual local budgeting process pursuant to the pertinent provisions of the Local Government Code of 1991 (RA No. 7160).

4.2. For the recording of transactions, GAM for LGUs, Vol. III, which prescribed the Chart of Accounts for LGUs described the account Transfers from National Government as: 75

This account is used to recognize transfers from the national government for specific projects in the LGU upon fulfilment of the condition for the transfer.

4.3. On April 7, 2020, the Department of Budget and Management (DBM) released in favor of the City an amount of P479,120,265.00, in relation to RA No. 11469 and LBC No. 125, to aid the City in its response to mitigate the spread of COVID-19 and its impact to the community.

4.4. On April 30, 2020, the City approved Quezon City Ordinance No. SP-2921 series of 2020, an ordinance approving the Supplemental Budget (SB) No. 2, General Fund (GF) for FY 2020, in the amount of P479,120,265.00, representing the 13th month IRA which was downloaded by the National Government pursuant to RA No. 11469, otherwise known as “Bayanihan to Heal as One Act.” The purpose is to fund various maintenance and other operating expenses of the City.

4.5. Based on accounting records, the Bayanihan Grant to the City amounting to P479,120,265.00 was recorded as debit to Cash in Bank–Local Currency, Current Account, and credit to Share from IRA on April 30, 2020, under JEV No. 2020-04-008671.

4.6. The Bayanihan Grant, which in nature is not a regular source of income of the City, should have been recorded as Transfers from National Government account instead of Share from IRA in accordance with the GAM for LGUs, Vol. III. 4.7. Accordingly, overstating the Share from IRA account with the same amount which may affect the budget projection of the next fiscal years.

4.8. We recommended that Management prepare necessary adjusting entries to reclassify the receipt of Bayanihan Grant from Share from IRA to Transfers from National Government account.

Management actions/comments: 4.9. Management commented that SAGF – Bayanihan was reclassified from Share from IRA to Subsidy from National Government Agencies under JEV No. 2020-12-028405 dated December 29, 2020, since, as of date, they could not use the account Transfers from National Government because it is not available in the Chart of Accounts of e-NGAS facility.

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4.10. Hence, Management had coordinated the same to the Accounting Systems Development & Other Services Office (ASDOSO), Government Accounting Sector (GAS) of the COA on April 21, 2021, and once available they will be using the said account for similar transactions.

Auditor’s rejoinder: 4.11. We maintain our position that Transfers from National Government account be used to record the receipt of the Bayanihan Grant under LBC No. 125.

4.12. We are waiting for the comment and instruction of Division Chief and Director of ASDOSO, GAS, COA regarding the request on the availability of the Transfer from National Government Agencies account in the City’s e-NGAS.

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5. Payments for relief goods totaling P479.120 million sourced from Bayanihan Grant to Cities and Municipalities (BGCM) were not supported with complete documentation contrary to Section 4(6) of Presidential Decree (P.D.) No. 1445, and Item No. 3.6 of Government Procurement Policy Board (GPPB) Circular No. 01-2020 dated April 6, 2020. Likewise, the posting and reporting requirements under Item Nos. 4.1 and 4.4 of Local Budget Circular (LBC) No. 125 dated April 7, 2020, were not complied with. Thus, the validity and regularity of the transactions cannot be ascertained.

5.1. Section 4(6) of PD No. 1445 states: Claims against government funds shall be supported with complete documentation.

5.2. For COVID-19 response, the GPPB has issued Circular No. 01-2020 dated April 6, 2020 to provide guidelines for Emergency Procurement under Republic Act (RA) No. 11469 or the Bayanihan to Heal as One Act. 5.3. Further, the DBM issued LBC No. 125 dated April 7, 2020, to prescribe the guidelines and procedures on the release and utilization of the BGCM. Item 4.0 of the said Circular provides as follows: 1.

Comply with the posting requirements prescribed under RA No. 9184 and its 2016 Revised IRR and all relevant policies issued by the GPPB; xxxx

4.

The local chief executive (LCE) of the implementing city/municipality shall send a written notice when said reports have been posted on its website to the DBM, House of Representatives, Senate of the Philippines, House Committee on Appropriations, Senate Committee on Finance, and other offices where the submission of reports is required under existing laws, rules, and regulations.

5.4. We conducted review of the BGCM under Notice of Authority to Debit Account Issued (NADAI) dated April 7, 2020 with a total cash allocation of P479,120,265.00 to the City. This grant shall be exclusively used for COVID-19 related Programs/Projects/Activities (PPAs) and expenses such as, among others, personal protective equipment, medicines, hospital equipment and supplies, disinfectants, food assistance and other relief goods for affected households.

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5.5. The Report on Fund Utilization and Status of PPAs Implementation of the BGCM as of December 31, 2020, show the following details in Table 9-CY 2020 PPAs Utilization and Status.

Table 9-CY 2020 PPAs Utilization and Status DV No.

Date

LBP Check No.

Items Delivered

100-20-07-2637

7/10/20

754776

Grocery Packs

P385,000,000.00

100-20-05-1999

05/18/20

753955

Rice and Plastic Bags

84,747,000.00

100-20-07-2638

7/10/20

754777

Noodles

9,373,265.00

Total

Gross Amount

P479,120,265.00

5.6. Review of the above payments show that these were not supported with the following documents contrary to Section 4(6) of PD No. 1445, and Item No. 3.6 of GPPB Circular No. 01-2020: i.

Updated Annual Procurement Plan (APP) showing the above procurement, approved by the City Mayor or her delegate indicating Emergency Procurement under Bayanihan Act;

ii. Proof that the Notice of Award (NOA), contract or Purchase Order (PO) were posted in (i) the website of the City, and (ii) the GPPB online portal for Emergency Procurement under Bayanihan Act; iii. Copy of the notice of the City Mayor, when said reports have been posted on its website, to the DBM, House of Representatives, Senate of the Philippines, House Committee on Appropriations, Senate Committee on Finance and other offices where the submission of reports is required; and iv. Details of the quantity received by each beneficiary in the Distribution Lists for relief goods.

5.7. Likewise, the posting and reporting requirements under Item Nos. 4.1 and 4.4 of LBC No. 125 dated April 7, 2020, were not complied with.

5.8. Further, there is a disparity of P51,876,735.00 on the amount stated in the Fund Utilization Report (FUR) as compared with the DV and JEV per actual validation made on the purchases of noodles, details shown Table 10Comparison of FUR with DV and JEV.

79

Table 10-Comparison of FUR with DV and JEV Check No.

Particulars

100-2020-07-07164 754777

Purchase of Noodles

DV No.

FUR P9,373,265

DV/ JEV

Difference

P61,250,000 P51,876,735

5.9. Thus, the validity and regularity of the transactions cannot be ascertained.

5.10. We recommended that Management submit the lacking documents/ justification as enumerated to comply with the basic requirements for emergency procurements pursuant to GPBB Circular No. 01-2020, and with the posting and reporting requisites stipulated in Item Nos. 4.1 and 4.4 of LBC No. 125 dated April 7, 2020.

Management actions/comments: 5.11. Management in their letter reply dated February 22, 2021, presented the breakdown of the payment that was sourced from the BGCM. 5.12. The receiving copies of letters submitted to the Senate of the Philippines, Senate Committee on Finance and House of Representatives were furnished to this Office on May 4, 2021.

Auditor’s rejoinder: 5.13. The Management should submit the necessary lacking documents: •

Updated APP showing the projects sourced from Bayanihan Grant;

•

Proof of posting of Notice of Award, PO/Contract in the website of the City and GPPB Online Portal; and

•

Details of the quantity received by each beneficiary in the Distribution Lists for relief goods.

Local Disaster Risk Reduction and Management Fund

80

6. Sixty-two PPAs amounting to P214.251 million or 65 percent of the 95 planned LDRRM PPAs remain unimplemented as of December 31, 2020, thus, the City’s objective in mitigating the impact of disaster through fully equipped, welltrained response teams and available infrastructure facilities were not fully attained. Moreover, the list of projects and activities charged to the unexpended LDRRMF of prior years’ totaling P1.376 billion were not included under a separate caption in its LDRRM Fund Investment Plan (LDRRMFIP), contrary to the provisions of COA Circular No. 2012-002 dated September 12, 2012,and COA Memorandum No. 2014-009 dated August 28, 2014.

6.1. Section 5.1.2 of COA Circular No. 2012-002 states: A LDRRMFIP for the DRRM program shall be prepared annually.

It shall present the 30% allocation for QRF in lump-sum and the allocation for disaster mitigation, prevention and preparedness with details as to projects and activities to be funded. The LDRRMFIP shall also include under a separate caption, the list of projects and activities charged to the unexpended LDRRMF of previous years. xxx.

6.2. Moreover, Section VI (6) of COA Memorandum No. 2014-009, on the specific guidelines in the audit of DRRM funds, provides that the auditors shall verify/validate compliance by Management that: The utilization of DRRM Funds is in accordance with the purpose for which these were appropriated and/or with the intent of the donors. In addition, for LGUs, the utilization is in conformity with the LDRRM Fund Investment Plan prescribed in COA Circular No. 2012-002 dated September 12, 2012.

6.3. For CY 2020, the City had appropriated a total of P1,177,380,939.00 or 5.03 percent of the total revenue from regular sources. Of the said amount, P824,166,657.30 or 70% was allocated for preparedness and mitigation projects while the P353,214,281.70 or 30% was allotted for the Quick Response Fund (QRF) or stand-by fund for relief and recovery projects and activities, summary shown in Table 11-CY 2020 LDRRMF Budget.

Table 11-CY 2020 LDRRMF Budget Description

Amount of Appropriations/Allocation P824,166,657.30

Preparedness Fund (70%)

and

Mitigation

Preparedness Projects (CO)

and

Mitigation

P496,568,941.00

Preparedness and Projects (MOOE)

Mitigation

327,597,716.30

81

Table 11-CY 2020 LDRRMF Budget Description

Amount of Appropriations/Allocation P824,166,657.30

Preparedness Fund (70%)

and

Mitigation

Preparedness Projects (CO)

and

Mitigation

P496,568,941.00

Preparedness and Projects (MOOE)

Mitigation

327,597,716.30

Quick Response Fund (30%)

353,214,281.70 Total LDRRMF

P1,177,380,939.00

6.4. Our review disclosed that: a. Sixty-two PPAs amounting to P 214,250,513.80 or 65 percent of the 95 planned LDRRM PPAs remain unimplemented as of December 31, 2020, details are in Table 12-CY 2020 LDRRM PPAs. Table 12-CY 2020 LDRRM PPAs Thematic Areas

Budget for unimplemented projects

No. of PPAs Planned

Completed

On-going

Unimplemented

Disaster Preparedness

35

4

-

31

P55,430,002.00

Disaster Prevention and Mitigation

6

2

-

4

33,880,478.51

Disaster Response

34

1

8

25

90,274,672.19

Disaster Rehabilitation And Recovery

20

18

-

2

34,665,361.10

95

25

8

62

P214,250,513.80

Total

b. The list of projects and activities charged to the unexpended LDRRMF of prior years totaling P1,376,186,785.07 were not included under a separate caption in its LDRRM Fund Investment Plan (LDRRMFIP) contrary to the 82

provisions of COA Circular No. 2012-002 and COA Memorandum No. 2014-009.

6.5. As a consequence, the City’s objectives in mitigating the impact of calamities through fully equipped, well-trained response teams and available infrastructure facilities were not fully attained.

6.6. We recommended that Management: a. Strictly monitor the implementation of all planned LDRRM PPAs to ensure the achievement of the City’s goal and objectives in mitigating the impact of disaster; and b. Henceforth, strictly observe the guidelines regarding the implementation of LDRRM PPAs under COA Circular No. 2012-002, COA Memorandum No. 2014-009 and other related issuances.

Management action/comment: 6.7. Management commented that due to the pandemic, all PPAs not related to COVID-19 have been postponed to prioritize PPAs needed during the pandemic.

Auditor’s rejoinders: 6.8. Prospectively, the 62 unimplemented LDRRM programs should be considered in the succeeding budget preparation.

6.9. Also, the Audit Team requested Management to include under a separate caption the unexpended LDRRMF of prior years in its LDRRMFIP for CY 2021.

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Gender and Development (GAD) Fund

7. The approved GAD Plan and Budget was not completely adhered to due to: (a) 47 GAD programs, projects and activities with a total appropriation of P104.549 million were not implemented contrary to Item 2.3 of PCW-DILGDBM-NEDA JMC No.2013-01 dated July 18, 2013; (b) 38 GAD activities with a total appropriation of P197.140 million were not fully utilized, leaving a balance of P92.625 million as of year-end contrary to Item 2.3 of the said JMC; (c) 15 implemented projects exceeded the total appropriations by P149.949 million per GAD Plan and Budget (GPB) contrary to Section 305(a) of RA 7160 or the Local Government Code of the Philippines, thus, defeating the purpose in addressing women’s empowerment and gender equality issues. Also, the City GAD Focal Point System-Technical Working Group (GFPS-TWG) was delayed by 265 days in submitting the CY 2020 GPB to the DILG for review and approval contrary to Item 4.1.C.5.3 of PCW-DILG-DBM-NEDA JMC No. 201601 dated January 12, 2016; the submitted GPB and GAD Accomplishment Report (GAD AR) of the City were not prepared in the form prescribed under Annexes D and E of PCW-DILG-DBM-NEDA JMC No. 2013-01; and the output of twenty-nine (29) GAD related undertakings totaling P159.153 million were not included in the submitted CY 2020 GAD AR. 7.1. PCW-DILG-DBM NEDA JMC No. 2013-01 prescribes the policies and procedures in mainstreaming gender perspectives in local planning, programming and budgeting; local legislation; project development, implementation, monitoring and evaluation pursuant to RA No. 9710 or “The Magna Carta of Women (MCW).”

7.2. Item 2.3 of the Circular served as one of the guiding principles in the localization of the MCW: Promote the general welfare, provide basic services and facilities and implement programs, projects and activities (PPAs) as provided for by Sections 16 and 17 of the LGC, the Philippine Plan for Gender-Responsive Development (PPGD) [1995 – 2025], the Philippine Development Plan (PDP) and other succeeding term plans; xxx 7.3. Item 4.0 provides the general function of LGU GAD Focal Point System (GFPS) and the schedule to be observed in GAD Planning and Budgeting: 4.1.A.5.b.iv

GAD GFPS Executive Committee - ensure the effective and efficient implementation of the GAD

84

PPAs and the judicious utilization of the GAD budget.

7.4. On the submission of GAD PB and AR, the JMC No.2013-01 was amended by PCW-DILG-DBM-NEDA JMC No. 2016-01, stating that: 4.1.C.5.3 March – Xxx For provinces, highly-urbanized cities (HUCs) and independent component cities (ICCs), the LGU GFPS TWG shall submit not later than March 31 the GPBs and GAD ARs to the DILG Regional Office for review and endorsement 7.5. Further, Annexes D and E of the JMC No.2013-01 direct the use of required formats in the preparation of the GPB, and GAD AR. 7.6. For the disbursement of funds, Section 305 (a) of RA No. 7160, provides: No money shall be paid out of the local treasury except in pursuance of an appropriation ordinance or law.

7.7. Review of the City’s Annual Budget for CY 2020 showed that the City has appropriated the amount of P1,704,390,921.78 or 6.12 percent of its annual budget for GAD related programs and projects. The City GPB was submitted for review to the DILG on December 19, 2019, per inquiry at the GAD Office.

7.8. As of December 31, 2020, the report from GFPS showed a total obligation of P1,657,116,995.86 for GAD PPAs. These projects are summarized below: Table 13-CY 2020 Obligations-GAD PPAs Sector

GAD Budget

Actual obligation

Client-Focused

1. Social Development Program

1.1. Health and Nutrition 1.2. Health Essentials and Support Program 1.2. Social Welfare and Protection

P83,992,600.00

P52,536,207.00

P31,456,393.00

1,287,500.00

1,287,025.00

475.00

361,687,337.55

1.3. Information, Education and Culture 1.4. Special GAD Activities (Women's Month Celebration)

85

Balance

386,527,823.17 (24,840,485.62)

26,617,000.00

2,728,944.00

23,888,056.00

2,110,175.00

2,242,075.20

(131,900.20)

Table 13-CY 2020 Obligations-GAD PPAs Sector

GAD Budget

2. Economic /Infrastructure Development Program

Actual obligation

Balance (11,854,538.43)

9,665,231.25

21,519,769.68

300,000.00

0.00

300,000.00

485,659,843.80

466,841,844.05

18,817,999.75

1,784,335.00

1,042,063.52

742,271.48

25,576,358.48

8,002,879.50

17,573,478.98

3,995,174.00

3,517,635.29

477,538.71

31,355,867.48

12,562,578.31

18,793,289.17

168,750,000.00

168,750,000.00

0.00

2. Streetlight and Energy Conservation

31,250,000.00

25,378,363.00

5,871,637.00

3. Solid Waste Management Program

906,084,210.50

906,084,210.50

0.00

3,791,000.00

0.00

3,791,000.00

77,500,000.00

77,500,000.00

0.00

1,187,375,210.50

1,177,712,573.50

9,662,637.00

3. Capacity Development Program Sub-Total Organizational-Focused 1. Planning Support Services 2. Health Essentials and Support Program 3. Administrative Support Sub-Total Attributed Programs 1. Socialized Housing Program

4. Land Acquisition and Resettlement Program 5. Scholarship and Youth Development Program Sub-Total Grand Total

P1,704,390,921.78 P1,657,116,995.86 P47,273,925.92

7.9. Our audit showed that the approved GAD Plan and Budget was not completely adhered to due to the following: a. There were 47 PPAs with a total appropriation of P104,549,413.75 or 6.13 percent of the total GPB that were not implemented contrary to Item 2.3 of PCW-DILG-DBM-NEDA JMC No. 2013-01. These are programs that aim to deliver basic services to the constituents, as shown in Table 15CY 2020 Unimplemented GAD PPAs. Table 15-CY 2020 Unimplemented GAD PPAs Sector

No. PPAs

86

Appropriation

Table 15-CY 2020 Unimplemented GAD PPAs Sector

No. PPAs

Client-Focused

Appropriation

1. Social Development Program

1.1. Health and Nutrition

6

P10,660,000.00

1.2. Social Welfare and Protection

10

41,618,877.10

1.3. Information, Education and Culture

8

25,091,000.00

2. Economic /Infrastructure Development Program

2

6,156,528.17

3. Capacity Development Program

1

300,000.00

27

83,826,405.27

Sub-Total Organizational-Focused

1. Health Essentials and Support Program

18

16,532,008.48

2. Administrative Support

1

400,000.00

Sub-Total

19

16,932,008.48

Attributed Programs

1. Land Acquisition and Resettlement Program Sub-Total Grand Total

1

3,791,000.00

1

3,791,000.00

47

P104,549,413.75

b.

b. The report also revealed that 38 GAD activities with total appropriation of P197,140,179.63 were not fully obligated/utilized, leaving a balance of P92,625,395.55 as of year-end contrary to Item 2.3 of the said JMC. Details in Table 16-CY 2020 Utilization of GAD PPAs. Table 16- CY 2020 Utilization of GAD PPAs Sector

No. of Activities

Client-Focused

87

Budget

Total Expenditures

Balance

Table 16- CY 2020 Utilization of GAD PPAs Sector

No. of Activities

Budget

Total Expenditures

Balance

1. Social Development Program 1.1. Health and Nutrition - Child Health Care Services

3

P7,800,000.00

P2,000,000.00

P5,800,000.00

- Physical Therapy and Rehabilitation Program

1

18,000,000.00

3,000,000.00

15,000,000.00

1.2. Health Essentials and Support Program

1.2. Social Welfare and Protection

- Family Welfare Program

3

3,263,301.15

1,630,079.50

1,633,221.65

- Solo Parent Program

2

462,979.59

409,500.00

53,479.59

- Philhealth Program

1

120,070,593.92

66,218,400.00

53,852,193.92

- Women Welfare Program

2

145,213.00

40,505.98

104,707.02

- Reception and Action Center Programs

2

7,019,451.74

1,477,078.00

5,542,373.74

- Medical and Dental Services

1

17,500.00

8,750.00

8,750.00

- Livelihood Skills Training & NonFormal Education Services

1

7,591.95

1,249.00

6,342.95

526,000.00

438,944.00

87,056.00

1

159,100.00

139,100.00

20,000.00

1

241,600.00

131,881.40

109,718.60

2,006,253.28

436,869.68

1,569,383.60

1.3. Information, Education and Culture - Information Education Program

2

1.4. Special GAD Activities (Women's Month Celebration) - Women's Month Celebration - GAD Summit 2. Economic Development Program

- Vocational Development Program

3

88

Table 16- CY 2020 Utilization of GAD PPAs No. of Activities

Sector 3. Capacity Development Program

Organizational-Focused

1. Planning Support Services

8

2. Health Essentials and Support Program

- Administrative Support Services

5

3. Administrative Support

Budget

Total Expenditures

Balance

1,784,335.00

1,042,063.52

742,271.48

3,925,600.00

2,023,350.00

1,902,250.00

460,660.00

138,650.00

322,010.00

1

- Secretarial and Technical support to GAD Council

Attributed Programs 1. Streetlight and Energy Conservation

1

31,250,000.00

25,378,363.00

5,871,637.00

Total

38

P197,140,179.63

P104,514,784.08

P92,625,395.55

c.

c. Out of the obligated amount, 15 PPAs with total expenditures of P206,618,336.28 have exceeded its appropriations by P149,948,631.20 compared with the approved GPB, Section 305 (a) of RA No. 7160, as shown in Table 14-CY 2020 GAD PPAs Comparison of Appropriation and Expenditures.

Table 14- CY 2020 GAD PPAs Comparison of Appropriation and Expenditures PPAs

Appropriation

Expenditures

Over

1. Facilities like Special Lane and designated waiting area and seats

P100,000.00

P104,207.00

P4,207.00

2. Welfare & Relief Program-Medical Assistance

200,000.00

979,080.00

779,080.00

3. Welfare & Relief Program- burial/ financial assistance

300,000.00

27,428,500.00

27,128,500.00

4. Emergency Disaster Relief Program

718,346.08

5,924,089.69

5,205,743.61

89

Table 14- CY 2020 GAD PPAs Comparison of Appropriation and Expenditures PPAs

Appropriation

Expenditures

Over

5. Establish the HOPE caring facility to identified Covid 19 positive patients

15,000,000

40,082,650.00

25,082,650.00

6. Provision of food, PPEs and other health essentials necessary for the facility

32,861,250.00

102,327,941.00

69,466,691.00

7. Information, Education, Communication (IEC) Materials

1,000,000.00

2,290,000.00

1,290,000.00

8. Women's Month Celebration

1,521,695.00

1,734,225.00

212,530.00

9. 18 Day Campaign on Violence Against Women

134,350.00

236,868.80

102,518.80

10. Community Development Program

100,000.00

19,168,350.00

19,068,350.00

11. Livelihood and Skills Development Program

524,550.00

1,024,550.00

500,000.00

1,000,000.00

1,106,369.50

106,369.50

sanitation

75,000.00

832,520.00

757,520.00

14. Secretarial and Technical support to GAD Council

2,612,000.00

2,856,411.29

244,411.29

15. Procurement of GAD Council office supplies and materials

522,514.00

522,574.00

60.00

P56,669,705.08

P206,618,336.28

P149,948,631.20

12. Provision of essential health kits 13. Procurement materials

of

health

and

Total

d.

7.10. The non-adherence to the GAD Plan and Budget diminished the City’s efforts to address women’s empowerment and gender equality issues.

7.11. Our audit also disclosed that: a.

The City GFPS-TWG was delayed by 265 days in submitting the CY 2020 GPB to the DILG for review and approval contrary to Item 4.1.C.5.3 of PCW-DILG-DBM-NEDA JMC No. 2016-01;

b.

The submitted GPB and AR of the City were not prepared in the forms prescribed under Annexes D and E of PCW-DILG-DBM NEDA JMC No. 2013-01;

c.

The output of 29 GAD related undertakings totaling P159,153,296.52 were not included in the submitted 2020 GAD AR; and

d.

Significant data such as the number of patients and beneficiaries of the 29 implemented GAD PPAs totaling P159,153,296.52 were not indicated in the GAD AR. 90

e.

Further, the submitted GPB and GAD AR lack designated columns for the cause of gender issue, its performance indicator and performance target column were merged, and no space was provided for the signature of the Chairperson of GFPS-TWG.

91

7.12. We recommended that the City: a. Maximize the utilization/implementation of the GPB to attain its objective in accordance with Item 2.3 of PCW-DILG-DBM-NEDA JMC No. 2013-01; b. Monitor through the GFPS Executive Committee and TWG the effective and efficient implementation of the GAD PPAs and the judicious utilization of the GAD funds; c. Prepare GAD PPAs budget judiciously so as not to exceed the project’s appropriation during implementation; d. Prepare the GPB and GAD AR in accordance with the format provided in Annexes D and E of PCW-DILG-DBM NEDA Joint Memorandum Circular No. 2013-01; e. Provide complete details in the GAD AR on the implementation of GAD related programs to determine efficiency and effectiveness of intervention in addressing gender related issues; and f. Henceforth, strictly observe the guidelines regarding GAD PPAs under PCW-DILG-DBM-NEDA JMC No. 2013-01, as amended by PCW-DILG-DBM-NEDA JMC No. 2016-01 and Section 305 (a) of RA No. 7160.

Management actions/comments: 7.13. PPAs were not implemented because of the unsuccessful bidding due to the pandemic, and there was no ample time to proceed with an alternative mode of procurement. Furthermore, some PPAs which required face-to-face participation were not pursued due to restriction in conducting group activities.

7.14. The difference/variance was due to: (1) the Bid amounts were lower than the approved GAD Budget; and (2) various GAD PPAs were partially implemented because of limited participants and activities undertaken to avoid contagion and spread of corona virus.

7.15. Excess of expenditures over the approved budget was due to adjustment/augmentation of the approved GAD Budget in compliance with PCW Memorandum Circular No. 2020-03 dated April 7, 2020 on the “Adjustment and/or Implementation of the FY 2020 GAD Plan and Budget” in view of the COVID-19 situation.

7.16. The delay was due to skeletal workforce of the personnel because of the lockdown and restriction to avoid contagion of the virus. The advisory of the DILG dated April 3, 2020, on the “Easing of the Review Process of the FY

92

2020 GPB of LGUs’ in view of COVID-19 states that the review of 2020 GPB by concerned high level LGU and the DILG are temporarily suspended, provided, that the LGUs shall still submit a copy of the CY 2020 GPB to the concerned DILG Office highlighting the changes made.

7.17. The forms used were in consonance with the prescribed form in JMC No. 2013-01, as amended by JMC No. 2016-01.

Auditor’s rejoinder: 7.18. We maintain our position that the GAD Forms used for the GPB and GAD AR were not in consonance with JMC No. 2013-01, as amended by JMC No. 2016-01. Further, to determine the efficiency and effectiveness of the program, the GAD AR should be completed with details regarding the implemented projects.

8. The Green Fund maintained by retailers totaling P259.919 million were not remitted to the City as of December 31, 2020, contrary to Section 7 of Quezon City Ordinance No. SP-2868, S-2019 dated September 30, 2019, thus, the City’s resources were tied-up with private companies further delaying the implementation of environmental projects.

8.1. Quezon City Ordinance No. SP-2868, series of 2019 has amended City Ordinance Nos. SP-2140, series of 2012 and SP-2350, series of 2014 by providing the mechanism for the remittance and utilization of the Green Fund, as follows: Section 7. Remittance of the Remaining Green Fund The remaining Green Fund maintained by Type 1 Retailers as of the effectivity date of the Ordinance should be remitted to the City through the City Treasurer’s Office within thirty (30) days from the effectivity of this Ordinance Section 8.Environmental Trust Fund An Environmental Trust Fund for the Green Fund shall be established by the City Government. Projects to be implemented using the Trust Fund shall be evaluated by the EPWMD, subject to the approval of the Office of the City Mayor.

93

94

Section 9. Utilization of the Green Fund The Green Fund shall be exclusively used to fund projects that produce tangible and measurable benefits to the environment.

This shall include, but not limited to: a) Renewable energy technologies, b) Greening programs, c) Technologies for the improvement and development of the environment in the communities and d) Other projects similar xxx.

8.2. Review of the latest report submitted by the Environmental Protection and Waste Management Department (EPWMD) dated February 23, 2021, on the Green Fund collections and utilizations showed unutilized balance of P338,936,084.48 as of December 31, 2020, details in Table 17-CY 2020 Green Fund Balance.

Table 17-CY 2020 Green Fund Balance Year Collected

Amount

2012

P17,715,644

2013

54,049,796

2014

57,096,686

2015

59,798,928

2016

65,047,780

2017

54,729,384

2018

42,438,702

2019

12,889,472

Total

363,766,392

Less: Utilized for Environmental Projects

24,830,307.52

Balance of Green Fund as of December 31, 2020

95

P338,936,084.48

8.3. In CY 2019, the CTO issued several Letters of Authority (LOA) to concerned retailers in the City that collected the plastic recovery system fee. The purpose of the LOA was to examine and assess the correct amount of Green Fund due from them.

8.4. On October 27, 2020, initial report from the Special Business Audit Unit (SBAU) shows that the audited Green Fund for the 32 retailers amounted to P176,771,989.91 as compared with EPWMD report of P163,063,626. The audit resulted in additional fund of P13,708,363.91.

8.5. For CY 2020, 30 notices were subsequently sent to the said retailers for the remittance of the fund. As of year-end, the CTO were able to collect a total of P92,725,058.43 from 16 retailers representing their collections from CYs 2012 to 2019.

8.6. The details of unremitted Green Fund as of year-end, after adjustment are shown in Table 18-CY 2020 Unremitted Green Fund.

96

Table 18-CY 2020 Unremitted Green Fund Particulars Green Fund Balance

Amount P338,936,084.48

Add: Initial Adjustment per CTO Audit Adjusted Balance

13,708,363.91 352,644,448.39

Less: Amount Remitted to CTO

92,725,058.43

Unremitted Collection as of December 31, 2020

P259,919,389.96

8.7. Our audit disclosed that the Green Fund collections maintained by retailers totaling P259,919,389.96 were not remitted to the City as of December 31, 2020 contrary to Section 7 of Quezon City Ordinance No. SP-2868, series of 2019.

8.8. Due to the above observation, the City’s resources were tied-up with private companies further delaying the implementation of environmental projects and understating the Receivables account.

8.9. We recommended that Management: a. Cause the immediate remittance of the remaining Green Fund maintained by retailers in the total amount of P259,919,389.96 as of December 31, 2020, including interest, if any; and b. Strictly comply with the provisions under Quezon City Ordinance No. SP-2868, series of 2019.

Management actions/comments: 8.10. CTO replied that as of March 25, 2021, P125,362,527.37 was remitted already.

However, in consideration for the negative financial impact of the COVID-19 pandemic, they allowed staggered remittance in the case of some retailers which deposited post-dated checks payable until April 30, 2021. Also, the CTO requires first the remittance of outstanding Green Fund from the retailers as a prerequisite for the payment of their CY 2021 Business Tax and renewal of their Mayor’s Permit.

8.11. Further, Letters of Authority for the examination of the books of accounts of the concerned retailers were already issued and some examinations are still ongoing to assess the correct amount of Green Fund.

Auditor’s rejoinder:

97

8.12. We require the remittance of Green Fund balance by the concerned retailers amounting to P134,556,862.59 and the additional amount based on the result of examination and assessment by CTO, if any.

COMPLIANCE WITH TAX LAWS AND OTHER REGULATORY REQUIREMENTS 9. Premium contributions and loan amortizations deducted from the employees for CY 2020 totaling P0.956 million were not remitted to Pag-IBIG as of December 31, 2020, contrary to Section 3, Rule VII of the IRR of RA No. 9679, thus, exposing the City to possible penalties on the non-remittance of the fund.

9.1. Section 3, Rule VII of the IRR of RA No. 9679 provides in part: a. All employers shall remit to the Fund their contributions and the contributions of their covered employees as well as the latter’s loan amortizations or payments to the Fund, as provided for under Section 2 of this Rule, when applicable, within fifteen (15) days from the date the same were collected xxx. b. Every employer required to set aside and remit such contributions as prescribed under RA No. 9679 and these Rules shall be liable for their payment, and non-payment thereof shall further subject the employer to a penalty of three percent (3%) per month of the amounts payable from the date the contributions fall due until paid.

9.2. Review of the SL balances of the account Due to Pag-IBIG as of December 31, 2020, to determine the agency’s compliance with IRR of RA No. 9679 on the remittances of premium contributions and loan payments are show in Table 19-CY 2020 Remittance to Pag-IBIG. Table 19-CY 2020 Remittance to Pag-IBIG Particulars

General Fund

Beginning Balance, January 1, 2020

P4,550,114.78

P168,844.79

29,306,459.24

-

Add: Withheld premium and loan amortization from

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Trust Fund

January to December 2020

Total Less: Remittances of premium and amortization from January to December 2020 Ending Balance, December 31, 2020

33,856,574.02

168,844.79

29,375,025.02

-

P4,481,549.00

P168,844.79

9.3. Our review disclosed that premium contributions and loan amortizations deducted from the employees for CY 2020 totaling P6,477,472.41 were not remitted to Pag-IBIG as of December 31, 2020, details in Table 20-CY 2020 Under Remittance to Pag-IBIG. Table 20-Under Remittance to Pag-IBIG Particulars

Amount

Beginning Balance, January 1, 2020

P4,718,959.57

Add: Withheld from January to December 2020

29,306,459.24

Total

34,025,418.81

Less: Remittances from January to December 2020

29,375,025.02

Balance as of December 31, 2020

4,650,393.79

Less: Withheld in December due for remittance in January 2021

3,694,800.40

Net under remittance in CY 2020

P955,593.39

9.4. Hence, the City exposed itself to possible penalties on the non-remittance of the fund.

9.5. We recommended that Management: a. Remit premium contributions and loan amortizations withheld from employees totaling P955,593.39; and b. Henceforth, strictly comply with Section 3, Rule VII of the IRR of RA No. 9679 on the remittances of premium contributions and loan payments.

Management action/comment:

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9.6. CAD asserted that all recorded premiums, contributions and loan amortizations deducted from the employees to Pag-IBIG were promptly remitted except for those remittance involving employees with outdated Membership Data.

Auditor’s rejoinder: 9.7. We maintain our position that the City remit immediately all withheld premium contributions, and loan payments in compliance with Section 3, Rule VII of IRR of RA No. 9679. The CAD and HRMD should coordinate their data in aligning with the Pag-IBIG’s System to avoid the recurrence of this observation.

10. Taxes withheld in the net amount of P50.175 million remain unremitted as of December 31, 2020, contrary to Section 2.58 of BIR Revenue Regulations No. 2-98 dated April 17, 1998, as amended by BIR Revenue Regulations No. 11-2018 dated January 31, 2018. Thus, exposing the City to unnecessary expenses as a result of tax assessment and other sanctions that may be imposed by the BIR. 10.1. Section 2.58(a) of BIR Revenue Regulations No. 2-98, states: The withholding tax return, whether creditable or final, shall be filed and payments should be made within ten (10) days after the end of each month except for taxes withheld for December which shall be filed on or before January 25 of the following year. xxx 10.2. Likewise, Section 2.80(C) of BIR Revenue Regulations No. 11-2018 provides liability for tax: (2) Interest –

There shall be assessed and collected on any unpaid amount of tax, interest at the rate of double the legal interest rate for loans or forbearance of any money in the absence of an express stipulation set by the Bangko Sentral ng Pilipinas from the date prescribed for payment until the amount is fully paid. Provided, that in no case shall the deficiency and the delinquency interest prescribed under Subsections (B) and (C) hereof, be imposed simultaneously.

10.3. We have examined the Due to BIR account which shows a balance of P302,180,103.90 as of December 31, 2020, to determine whether taxes withheld

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from officers/employees, contractors/suppliers and other entities are remitted fully and promptly to the BIR. 10.4. Our audit disclosed that the taxes withheld in the net amount of P50,175,158.76 remain unremitted as of December 31, 2020, contrary to Section 2.58 of BIR Revenue Regulations No. 2-98, as amended by BIR Revenue Regulations No. 11-2018. Details in Table 21-CY 2020 Unremitted Taxes Withheld.

Table 21- CY2020 Unremitted Taxes Withheld Particulars Beginning Balance, January 1, 2020

Amount P194,708,725.15

Add: Taxes from January to December 2020 Total taxes for remittance to BIR

982,899,441.57 1,177,608,166.72

Less: Taxes remitted to BIR from January to December 2020

875,428,062.82

Balance as of December 31, 2020

302,180,103.90

Less: Taxes withheld in December due for remittance on January 2021

252,004,945.14

Net under remittance as of December 31, 2020

P50,175,158.76

10.5. Therefore, exposing the City to probable unnecessary expenses as a result of tax assessment and other sanctions that may be imposed by the BIR. 10.6. We recommended that Management: a. Remit the tax withheld of P50,175,158.76 from officers/employees, contractors/suppliers and other entities to the BIR; and b. Henceforth, ensure prompt and full remittance of taxes withheld pursuant to Section 2.58 of BIR Revenue Regulations No. 2-98, to avoid incurrence of interest as defined under Section 11 of BIR Revenue Regulation No. 11-2018.

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Management actions/comments: 10.7. Management commented on May 3, 2021, that verification and checking of the Due to BIR resulted to Prior Period Adjustments under JEV Nos. 2020-12029305, 2020-12-001648, 2020-12-001912 totaling P22,150,914.77 10.8. Also, various Bistekville contractors already refunded their EWT on VAT and EWT on income upon receipt of their Tax Exemption Certificates from BIR totaling P11,991,719.39.

10.9. Further, the remaining balance that was not yet refunded in the amount of P17,139,671.23 is to be remitted the soonest. The rest of the items in the account are in the process of verification for adjustment.

Auditor’s rejoinder: 10.10. We maintain our position to remit all the withholding taxes within the reglementary period pursuant to Section 2.58 of BIR Revenue Regulations No. 2-98, as amended by BIR Revenue Regulations No. 11-2018 to avoid incurrence of tax penalty.

11. The City failed to remit PhilHealth premiums and payments totaling P0.364 million as of December 31, 2020, contrary to Section 20(b), Rule III, Title III of the Revised IRR of the National Health Insurance Act; and the Due to PhilHealth account included fund transfers totaling P23.278 million which was inappropriate to the said account contrary to Section 5, Volume III of GAM for LGUs. Thus, the City is exposed to possible unnecessary expenses due to the late remittances while overstating the Due to PhilHealth account by P23.278 million and understating the Due to GOCCs by the same amount.

11.1. Section 20(b), Rule III, Title III of the Revised IRR of the National Health Insurance Act states: The monthly premium contributions of employed members shall be remitted by the employer on or before the tenth (10th) calendar day of the month following the applicable month for which the payment is due and applicable.

11.2. Likewise, Section 20(c) of the said IRR provides: The failure of the employer to remit the required contribution and to submit the required remittance list shall make the employer liable for reimbursement of payment of a properly filed claim in

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case the concerned employee or his/her dependent/s avails of NHIP benefits, without prejudice to the imposition of other penalties as provided for in this Rules.

11.3. Section 5 of GAM Vol. III for LGUs provides for the accounting and recording of Due to Philhealth and Due to GOCCs. Section 5. Description of Accounts

Account Title

Due to PhilHealth

Description

This account is used to record the withholding of employees’ premium payment for remittance to the Philippine Health Insurance Corporation (PHIC). Debit this account for the remittance of withheld amount.

Account Title

Due to GOCCs

Description

This account is used to record the receipt of: a) funds for delivery of goods/services as authorized by law; b) fund transfers from the GOCCs for the implementation of specific programs or projects; c) NG-managed fund; d) escrow accounts; e) collateral deposits for the account of GOCCs/GFIs; and f) other inter-agency transactions except those pertaining to GSIS, Philhealth and Pag-ibig. Debit this account for delivery of goods/services, liquidation/release of funds received and settlement of liabilities.

11.4. Our review of the SL of Due to PhilHealth account shows an ending balance of P23,642,319.50 as of December 31, 2020. Details are as follows: Table 22-CY 2020 Due to PhilHEALTH Fund GF

Subsidiary Ledger Contractual Employees

Particulars Amount withheld from contractual employees in 2010

103

Amount P154,455.00

Table 22-CY 2020 Due to PhilHEALTH Fund

Subsidiary Ledger

Particulars

Amount

SEF

QC School Teachers

Amount withheld from QC School Teachers since 2003

266,430.57

GF

Regular Employees

Amount withheld of employees’ premium and payment for remittance to PhilHealth

(56,444.05)

Sub-total

364,441.52

GF

Accounts Payable

Payable to Philhealth for the health care premiums of indigents and accreditation fees of various health centers in QC

2,757,700.00

TF

A.J. Maximo Lying-inClinic

Maternity Health Care Packages Provider

2,962,926.52

TF

Batasan Lying-in-Clinic

Maternity Health Care Packages Provider

5,919,961.70

TF

Betty Go Belmonte Lying-in-Clinic

Maternity Health Care Packages Provider

2,767,622.43

TF

Kamuning Lying-inClinic

Maternity Health Care Packages Provider

1,756,600.60

TF

Murphy Lying-in-Clinic

Maternity Health Care Packages Provider

1,691,362.12

TF

National Government Center Lying-in-Clinic

Maternity Health Care Packages Provider

1,651,424.75

TF

San Francisco Lying-inClinic

Maternity Health Care Packages Provider

1,614,445.80

TF

Sta. Lucia Lying-inClinic

Maternity Health Care Packages Provider

551,173.81

TF

Payroll Account Trust Fund

Medicare-Employees and Employers share

742,160.25

TF

Animal Bite Package

Animal Bite Package

315,000.00

TF

Klinika Bernardo

Outpatient HIV Aid Treatment Package

547,500.00 Sub-total

Total

11.5. The negative amount of P56,444.05 relative to the withheld premiums and payments of regular employees resulted due to timing difference in the recording of the withheld amounts and the corresponding remittances.

11.6. Further inquiry revealed that the SL accounts under TF totaling P23,277,877.98 were fund transfers from PhilHealth to support various health care projects of the City.

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23,277,877.98 P23,642,319.50

11.7. Our audit disclosed that the City failed to remit PhilHealth premiums and payments totaling P364,441.52 as of December 31, 2020, contrary to Section 20(b), Rule III, Title III of the Revised IRR of the National Health.

11.8. Further, the Due to PhilHealth account included fund transfers totaling P23,277,877.98 which was inappropriately recorded to the said account pursuant to Section 5 of GAM, Vol. III for LGUs. 11.9. As consequence, the City is exposed to possible unnecessary expenses due to late remittances. Also, the Due to PhilHealth account was overstated by P23,277,877.98 while understating the Due to GOCCs by the same amount.

11.10. We recommended that Management: a. Remit immediately all unremitted premium contributions, consisting of the City’s and employees’ shares to avoid unnecessary expense; b. Reclassify the amount of P23,277,877.98 from Due to PhilHealth to Due to GOCCs account; and c. Henceforth, strictly observe Section 20(b), Rule III, Title III of the Revised IRR of the National Health and Section 5 of GAM, Vol. III for LGUs for the accounting of Due to PhilHealth.

Management actions/comments: 11.11. The CAD reclassified the amount of P23,277,877.98 in JEV Nos. 2020-12001899 and 2020-12-029168 dated December 29, 2020.

11.12. However, the remittance of the remaining P364,441.52 was deferred due to lack of details since these amounts were withheld in CY 2010 and below.

Auditor’s rejoinder: 11.13. We recommend that Management should coordinate and reconcile with PhilHealth regarding the withheld amount of P364,441.52 to avoid recurrence of this audit observation.

12. Government Service Insurance System (GSIS) premium contributions and loan amortizations in the net amount of P4.200 million remain unremitted at yearend contrary to Sections 6(b) and 7 of RA No. 8291. Thus, exposing the City to possible unnecessary interest expenses and may deprive employees in availing programs and services offered by the GSIS.

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12.1.

RA No. 8291 provides the guidelines in the collection and remittance of GSIS contributions and interest on delayed remittance: Section 6(b) Each employer shall remit directly to the GSIS the employees’ and employers’ contributions within the first ten (10) days of the calendar month following the month to which the contributions apply. The remittance by the employer of the contributions to the GSIS shall take priority over and above the payment of any and all obligations, except salaries and wages of its employees.

Section 7.

12.2.

Agencies which delay the remittance of any and all monies due the GSIS shall be charged interests as may be prescribed by the Board but not less than two percent (2%) simple interest per month.

Such interest shall be paid by the employers concerned.

We have reviewed the subsidiary ledger balances of the account Due to GSIS for all funds as of December 31, 2020, to determine whether the agency’s remittances of premium contributions and loan payments conform with the Government Insurance Act of 1997, details in Table 23-CY 2020 Due to GSIS. Table 23-CY 2020 Due to GSIS Particulars

GF

Beginning Balance, January 1, 2020 Add: Withheld premium and loan amortization from January to December 2020 Total Less: Remittances of premium and amortization from January to December 2020 Ending Balance, December 31, 2020

106

SEF

TF

P43,475,147.96

P42,034.79

P61,134.83

252,432,370.48

-

-

295,907,518.44

42,034.79

61,134.83

256,098,407.19

-

-

P39,809,111.25

P42,034.79

P61,134.83

12.3.

Our review disclosed that premium contributions and loan amortizations deducted from the employees for CY 2020 totaling P4,200,028.84 were not remitted to GSIS as of December 31, 2020, details in Table 24-CY 2020 Unremitted GSIS. Table 24-CY 2020 Unremitted GSIS Particulars

Amount

Beginning Balance, January 1, 2020

P43,578,317.58

Add: Withheld from January to December 2020

252,432,370.48

Total

296,010,688.06

Less: Remittances from January to December 2020

256,098,407.19

Balance as of December 31, 2020

39,912,280.87

Less: Withheld in December due for remittance in January 2021

35,712,252.03

Net under remittance in CY 2020

P4,200,028.84

12.4.

Thus, exposing the City to possible unnecessary interest expenses and may deprive employees in availing programs and services offered by the GSIS.

12.5.

We recommended that Management: a. Remit immediately the amount of P4,200,028.84 pertaining to unremitted premium contributions consisting both of the City’s and employees’ shares and loan payments; and b. Henceforth, strictly comply with Sections 6(b) and 7 of RA No. 8291.

Management action/comment: 12.6.

CAD asserted that all premiums, contributions and loan amortizations deducted from the employees as recorded in the GSIS online and based from HRMD’s premium contribution report were promptly remitted except for those remittances rejected by the GSIS data base due to outdated employee information.

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Auditor’s rejoinder: 12.7.

We maintain our position that the City remit immediately all withheld premium contributions, and loan payments in compliance with Sections 6(b) and 7 of the RA No. 8291. The HRMD should initiate aligning with the GSIS to update the employee data and avoid the recurrence of this audit observation.

Settlement of Suspensions, Disallowances and Charges 13. Audit suspensions, disallowances and charges amounting to P37.096 million, P25.768 million and P158.945 million, respectively, were not settled at the end of the year.

13.1.

The Statement of Audit Suspensions, Disallowances and Charges (SASDC) as of year-end, shows that the audit suspensions, disallowances and charges amounted to P37,096,457.71, P25,767,665.22 and P158,944,817.17, respectively, details are in Table 25-CY 2021 SASDC. Table 25-CY 2020 SASDC Particulars Balance, December 31, 2019

Disallowances

Charges

P67,457,973.59

P25,767,665.22

P158,944,817.17

Add: 2020 Issuances

14,718,000.00

10,000.00

-

Sub-total

82,175,973.59

25,777,665.22

158,944,817.17

Less: Settlement

45,079,515.88

10,000.00

-

P37,096,457.71

P25,767,665.22

P158,944,817.17

Balance, December 31, 2020

13.2.

Suspensions

We reiterated our recommendation that the City Accountant immediately enforce the settlement of all audit suspensions, disallowances and charges in compliance with Sections 5.4 and 7.1.1, Chapter II of COA Circular No. 2009-006 dated September 15, 2009; and Management to be more vigilant in the implementation of the existing accounting and auditing rules and regulations in processing of claims to avoid possible audit suspensions and disallowances.

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