Professional Documents
Culture Documents
A. INTRODUCTION
1.
The carrying value of the Property, Plant and Equipment (PPE) at P35.408 billion
was not correctly stated due to non-conduct of revaluation/appraisal since CY 1995.
1.1
For this audit observation, we were guided by the following accounting standards
and COA rule, as follows:
a.
b.
COA Resolution No. 89-17 dated March 17, 1989 provides that:
xxx, the revaluation shall be done by an independent appraiser or expert
every five (5) years (on fixed assets existing as of the end of the fifth year), or
even before the five year period ends, whenever there is a currency
devaluation or price increase which raises price levels (based on the
Consumer Price Index) xxxx
1.2
Note 4 of the Notes to Financial Statements for CY 2013 disclosed that PPE were
stated at appraised value based on the appraisal conducted in 1995 by Cuervo
Appraiser Inc. PPE acquired after said appraisal was recorded at cost.
1.3
1.4
Since no appraisal on PPE was recorded in the books for the last 18 years, the
carrying value of the assets as of December 31, 2013 in the amount of
P35,408,365,000 was not correctly stated. The PPE accounts consisted of the
following:
Asset
1.5
2.
Look into the possibility of using the report on the valuation of assets
used in operation by MWSS and its Concessionaires and the review
and validation of the Concessionaires Asset Condition Report as of
CY 2010 submitted by the Consultant hired for the purpose and whose
report was accepted by the Regulatory Office; or
b.
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2.1
2.2
The Deputy Administrator for Engineering & Operations informed the Audit Team in
a letter dated January 21, 2014 that MWSS had no on-going construction projects
as of the end of CY 2013. We found the information from the DA for Engineering &
Operation valid. However, the trial balance showed that the CIP account had a
balance of P6,401,373,993 as of December 31, 2013.
2.3
Further review of the subsidiary ledger balance of the CIP account showed that the
balance of P6,401,373,993 pertained to the following transactions, to wit:
2.3.1
The cost of the completed project - Angat Water Utilization and Aqueduct
Improvement Project Phase 2 (AWUAIP) in the amount of
P6,243,877,726.89
Based on the Performance Certificate issued by MWSS on September
24, 2013, the contractor of the AWUAIP Phase 2, China International
Water Electric Cooperative (CWE), has fully completed its obligations
under the Contract and the defects liability period of 365 calendar days
reckoned from project completion on September 10, 2012. As such, the
cost of the project should no longer be included in the CIP account
balance.
In addition, the project was inaugurated on July 2012 and now being used
by the two Concessionaires as water source. The account should have
been reclassified to an appropriate Property, Plant and Equipment
account subject to depreciation expense. This resulted in the
understatement of the expense (depreciation) and the overstatement of
the income accounts.
2.3.2
264-01-03-01-MTSP
264-01-01-02-05-ICB-1-4
Section B,D,E,F&K
264-01-01-01-03-AUX#5
264-02-02-04-03-01-mssp-5sec
b-9 & b-13
264-01-01-01-08-Fund 77-
Particulars
La Mesa/Balara Aqueduct
Consultancy Services for
Strengthening in MWSS
Capability in Water Supply
Sewerage and Sanitation
Service Provision
Supply & delivery ci adaptor, ci
bend reducer
Hydro Electric Power
supply 7 delivery of 1 diving
equipment & 1 lot inflatable
sewer plugs
Supply and delivery of various
Amount
80,476,040.31
50,677,422.49
5,002,015.25
2,991,854.00
2,478,439.72
1,989,735.17
42
AWSOP BOND
264-01-03-04-02-ADB 1379
264-02-02-04-03-02-ELN-002
264-02-01-06-IS-14 Section B
264-01-01-01-11-Fund 77 Awsop
Bond
Total
2.3.3
1,366,222.87
959,145.60
629,319.12
108,955.51
146,679,150.04
Interest and guarantee fees paid on foreign loan ADB 2012 Phi for the
New Water Sources Development Project in the total amount of
P8,248,784.59
The above fees should have been charged to the appropriate interest and
other finance charges account, with breakdown shown below:
Sub account code
264-01-03-03-02-ADB 2012
264-01-03-04-02-ADB 2012
264-01-03-05-02-ADB 2012
Particulars
New Water Sources
Development Project (NWSDP)ADB 2012 (For Allocation)
New Water Sources
Development Project-NWSDPADB 2012
New Water Sources
Development Project-NWSDPADB 2012
Total
2.3.4
Amount
7,282,557.76
(1,267,253.16)
2,233,479.99
P8,248,784.59
Amount
2,565,452.24
2,879.70
2,658,331.94
2.4
The failure to transfer costs of the completed CIP in the amount of P6,243,877,727
to the appropriate asset account excludes them from the depreciable assets
subject to depreciation charges, thereby causing an understatement in the total
annual depreciation from the time of their completion and overstatement of the
income account.
2.5
2.6
2.7
3.
b.
c.
Immediately review the charges made to the CIP account which are
dormant and for reconciliation with the General Ledger account and
effect the necessary adjustments.
The Cash and cash equivalents in the amount of P2.149 billion was not sufficient to
cover the Loans Payable to the Bureau of Treasury (BTr), which have been collected
from the concessionaires and all recognized Trust Accounts, totalling P2.583 billion
at the end of the year. This is indicative that the funds for remittance to the BTr
and that the funds intended for specific purposes were used for other purposes.
3.1
Section 6 of the GAA FY 2013 provides that trust funds shall not be paid out except
for the fulfillment of the purpose for which the fund was received. Trust receipts
includes receipts which are collected or received by department, bureaus and
offices acting as trustee, agent or administrator; which have been received as
guaranty for the fulfillment of an obligation; or classified by law, rules and
regulations as trust receipts.
3.2
Based on the above definition, trust receipts of MWSS Corporate Office at the end
of the year consist of the following:
3.3
a.
b.
Unremitted share of the MWSS Regulatory Office (RO) from the collections
from the concessionaires (MWSI & MWCI) of the Concession Income for
the Corporate Operating Budget of MWSS Regulatory Office as provided
under Section 11.3 of the Concession Agreement;
c.
Receipts held in trust from SM Prime Holdings Inc. and the various financial
assistance for watershed programs and other funds withheld from
employees claims.
recognized Trust Accounts in the total amount of P2.58 billion at the end of the
year as shown below:
Analysis of Cash & Cash Equivalents vs. Trust Accounts
As of December 31, 2013
Cash
Cash & Cash Equivalents
Amount
2,149,379,985
3.4
254,596,729
1,608,205,797
1,862,802,526
632,770,395
62,999,060
20,726,901
3,521,717
2,582,820,599
As can be gleaned from the foregoing information, the cash and cash equivalents
were not sufficient to pay the loans and various trust accounts of MWSS Corporate
Office. Management failed to keep the collections/trust receipts intact so as to
meet its obligations to pay the loans due to the BTr and creditors/lending
institutions, the remittances to the government agencies of the statutory obligations
and the possible payment of the other funds received for the performance of a
specific purpose. The following explanations were made:
a.
The Acting Finance Manager explained that the JBIC loan collections
were collected by MWSS in various dates since December 2004.
However, these were not remitted due to the absence of billing from the
BTR which since 2005 were being requested from the BTR but to no
avail.
b.
c.
On the P632.77M Due to /due from issue with the RO, it was explained
that by CY 2014, the Due to the Regulatory Office share in concession
fee will no longer be remitted to the Regulatory Office. This is in view of
45
4.
3.5
3.6
In the exit conference, Management informed that the observation could also be
attributed to the following:
a.
Payment of Dividends in 2010 after the SONA, where the amount paid was
over the required remittance; and
b.
MWSS may face the risk of possible lawsuit arising from the lease of MWSS
property along Katipunan Avenue covered by a Lease Agreement between MWSS
and SM Prime Holdings Inc. which the MWSS Board of Trustees declared as null
and void. MWSS received initial deposit of P33.248 million on July 13, 2010.
4.1
Perusal of the submitted documents relative to the lease contract showed that:
4.1.1
4.1.2
4.1.3
46
Excerpts from the Minutes of the Committee Meeting of the Board dated
February 19, 2010 stated that Resolution No. 2010-029(E) contained the
following informationa. Board Resolution No. 2009-18 dated September 04, 2009
authorizing the lease of 1.4 hectares MWSS property, to any
party, under such terms and conditions beneficial to MWSS, and
OGCC Opinion dated October 19, 2009.
b. Approval and confirmation of the proposed lease to SM Prime
Holdings (SM) of the 4.1 hectare MWSS property thru Unsolicited
Proposal Mode with Competitive Swiss Challenge;
c. Approval and confirmation of the corresponding procedure and
timelines of the Swiss-Challenge; and
d. Approval and confirmation of the creation of the Evaluation
Committee to appraise the Comparative Proposals.
However, it was noted that the Excerpts from the Minute of the
Committee Meeting, although signed by Ms. Darlina T. Uy, Manager,
Legal Services Dept/Board Secretary Designate, were stamped
CANCELLED.
4.1.5
A Contract of Lease was entered into by and between the MWSS and
SM on May 27, 2010, signed by Atty. Diosdado Jose M. Allado and Mr.
Hans T. Sy, for MWSS and SM, respectively. The rate of lease was
P1,200.00 per square meter.
It was noted that the authority invoked for entering into the Lease
Contract were Board Resolution Nos. 2008-251 and 2009-178, dated
November 20, 2008 and September 04, 2009, respectively, when the
47
latest Board resolution relating to the lease was Board Resolution No.
2010-029(E) dated February 19, 2010, and much earlier than the OGCC
Opinion dated October 19, 2009.
4.1.6
4.1.7
Excerpts from the Minutes of the 4th Special Meeting of the Board held on
August 12, 2010 (Annex 7) under Resolution No. 2010-113 stated that:
Considering that the Lease Agreement covering the 1.4 hectare
MWSS property xxxx entered into by the former Administrator with SM
Prime Holdings, Inc. is not in compliance with the policies and
guidelines set by the xxx (OGCC) in its letter of 19 October 2009 and
adopted by the Boards of Trustees under Board Resolution No. 2010029 (E) dated 19 February 2010, the Board, RESOLVED, xxx, to
DISAVOW any participation therein, and DIRECT Management to
return the P33,248,892.86 payment made by SM Prime Holdings, Inc.
thereto.
Another Excerpt from the same special meeting and on the same date
stated that:
RESOLVED, that the purported Lease Agreement covering the 1.4
xxx not being in compliance with the policies and guidelines set by the
Office of the Government Counsel (OGCC) in its letter dated 19
October 2009 and adopted by the Board of Trustees under Board
Resolution No. 2010-029(E) dated 19 February 2010, be, as it is
hereby declared null and void. (emphasis ours)
Both resolutions were certified by Ms. Ma. Lourdes R. Naz, Board
Secretary VI.
4.2
In spite of Board Resolution No. 2010-113 dated August 12, 2010 where
the then Board of Trustees disavowed any participation in the Lease
Agreement and directed Management to return the payments received
from SM, the amount was not returned and still remained with the MWSS
bank account;
4.2.2
4.2.3
.
4.3
Check Nos. 0058095 and 0000033962, dated July 13, 2010 and August
17, 2010, respectively, in the total amount of P33,248,892.86, were
prepared in an attempt to return the amount paid by SM Prime but were
declined by SM Prime.
4.3.2
MWSS agreed with our observation that receipt of the then SM payment
by then Acting Finance Manager was contrary to sound internal control,
and thus written instruction will be sent to the former Acting Finance
Manager to submit a reply directly to the Auditor.
4.3.3
4.3.4
4.4
As a rejoinder to the above, we requested for the other courses of action taken by
Management after the attempts to return the rental payments including interests
were declined by SM Prime Holdings Inc; and for a copy of the informal written
instruction sent to the former Acting Finance Manager to explain his issuance of
the O.R. instead of the designated collecting officer.
4.5
4.6
On April 2, 2014, the former Acting Finance Manager furnished this Office with a
copy of his Counter Affidavit with Motion to Dismiss submitted to the Office of the
Ombudsman.
4.7
The filing of the case against the concerned officials of MWSS in the Office of the
Ombudsman is an action of Management to determine any possible liability and
accountability of the persons responsible for the Lease Agreement.
4.8
It is our view that another major concern on this issue is on the Lease Agreement
declared as null and void by the Board of Trustees with instruction to return the
49
5.
4.9
4.10
During the exit conference, Management informed that the issue was already
discussed with the Office of the Government Corporate Counsel and are looking
into the possible legal remedies of returning the money that MWSS received from
SM Prime Holdings Inc. and say that the contract is void. If the same is not
accepted, the money will be consigned in court.
We gathered the following information from the MWSS Former Finance Manager
and confirmed by the present Acting Finance Manager :
5.1.1
5.1.2
5.1.3
When MAYNILAD exited from the DCRA in January 2008, the Dispute
Committee created after the exit was able to establish that there is an
additional Cost of Borrowings payable to MWSS in the amount of
$14.79M.
5.1.4
5.1.5
MWSS rejected the $14.79M offer because of the Quit claim that
Maynilad wanted in exchange.
50
5.1.6
From January 2008, MWSS had to shoulder the Cost of Borrowings of the
BNP Paribas up to its maturity in March 2011. The advances for said
Cost of borrowing reached $44.75M plus the established additional of
$14.79M now amounting $55.55M.
5.1.7
The non recovery of the $55.55M from Maynilad resulted jn the shortage
in the total amount needed to fully pay the maturity of BNP Paribas in
2011. This led to MWSS availing of a new loan, the P2.25B DBP-LBP
Club Deal Arrangement (Floating Bonds).
5.1.8
MWSS asked the opinion of the OGCC relative to the current dispute
between MWSS and Maynilad Water Services regarding the Subscription
Agreement entered into by MWSS with BNP Paribas Securities Services
(BNP Paribas) guaranteed by the Republic of the Philippines and the
OGCC issued Opinion No. 215 series of 2011 dated October 5, 2011.
Paragraph 16 of the OGCC Opinion No. 215 stated that clearly, the
dispute between MWSS and Maynilad arose when Maynilad refused to
pay for the additional COB incurred by MWSS, amounting to
US$55,550,457.21 composed of the following:
a.
b.
The OGCC opinion concluded that all costs incurred by MWSS for
securing various loans and funding arrangement to pay for obligations
which should have been covered by the unpaid concession fees should
be charged to Maynilad since these are paid out of government funds
which must be safeguarded with utmost fidelity by MWSS.
5.1.9
MWSS payments for the principal and interest amortization of the loan
totaled P1,163,858,844.57 as of December 31, 2013. Breakdown is as
follows:
Year
2011
2012
2013
Total
Principal
241,071,428.58
396,085,130.82
321,428,571.44
958,585,130.84
Interest
71,819,196.43
74,656,559.38
58,797,957.92
205,273,713.73
Total
312,890,625.01
470,741,690.20
380,226,529.36
1,163,858,844.57
5.2
It is our view that the payments in the total amount of P1,163,858,844.57 are to the
disadvantage of MWSS as the funds could have been used to finance the
improvements of the retained assets of MWSS.
5.3
5.4
6.
Management informed that the issue was already discussed with the OGCC on the
possible filing of arbitration case against MWSI.
Funds withheld for GSIS, PAGIBIG, Philhealth and BIR under account Inter-agency
Payables in the aggregate amount of P30.303 million as of December 31, 2013 were
not remitted on time which in effect, may cause forfeiture of claims/benefits due the
members/employees of MWSS and may deprive the concerned agencies of the
timely use of the funds due them.
6.1
6.2
Section 6 of Republic Act No. 8291 (GSIS Act) states that 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. Under Section 7,
interests on delayed remittances shall be charged on Agencies which
delay the remittance of any and all monies due the GSIS 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.
b.
c.
1 Letter of Company
Name
A to D
E to L
M to Q
R to Z
6.3
Remittance Schedule
th
th
Analysis of the Inter-agency Payables account showed that withholding taxes and
contributions from employees/members were not remitted as required in the
abovementioned regulations, as shown as follows:
52
Account
Due to BIR (412)
Due to GSIS (413)
Due to Pag-ibig (414)
Due to Philhealth (415)
Due to NHMFC (417)
TOTAL
Amount
29,639,558.45
562,086.88
89,701.80
12,103.55
2, 727.43
30,303,450.68
6.3.1.2
6.3.1.3
Amount
4,216.99
(402,277,94)
45,923.12
18,810,115.25
113,789.61
58,592.18
8,176,836.23
2,229,631.44
602,678.58
29,639,558.45
Amount
20,829,228.80
458,397.34
53
6.3.2
6.3.1.4
6.3.1.5
Due to GSIS
6.3.2.1
6.3.2.2
Amount
5,930,141.34
(5,368,054.46)
562,086.88
Amount
406,212.25
2,446.14
35,230.94
1,475.24
500.00
5,455,191.05
4,760.00
2,000.00
188.89
54
Account Title
Cash Advance (e-card) Regular
Emergency Loan Assistance Regular
State Insurance Fund Regular
Total
6.3.2.3
(1,047.78)
(136.50)
(135.70)
(30,173.18)
(3,772.03)
(2,977.16)
(1,000.00)
(200.00)
(5,307,466.93)
(4,413.68)
(5,368,054.46)
Due to PAG-IBIG
6.3.3.1
Due to Philhealth
6.3.4.1
6.4
(95.30)
(3,834.45)
6.3.4
Balance
(4,767.66)
(1,134.09)
(6,900.00)
6.3.3
Amount
3,851.80
18,185.03
100.00
5,930,141.34
55
7.
The Acting Finance Manager explained that in the process review, it was found
that posting of the payments were not reflected in the proper account and all
payables were remitted to the concerned office. Adjustments will be taken up in CY
2014.
Prior years transactions amounting to P28.176 million were recorded only in the
current year, resulting in numerous Prior Years adjustments.
7.1
7.2
7.3
Credits
3,086,966.36
1,418,294.47
415,500.00
273,543.59
200,000.00
47,949.54
29,946,576.89
12,664,392.64
655,567.59
1,770,703.02
56
7.4
Project Description
Hydrographic survey at Angat Dam Reservoir
Consultancy for 300 MLD Bulk Water Supply Project
Consultancy-1200 MLD Bulk Water Supply Project
Consultancy-Agos River Multipurpose development
Amount
345,000.00
1,520,000.00
1,335,750.00
2,357,597.07
5,558,347.07
The payment of 2012 CNA Incentive should have been recorded under
the account code Personal Services Other Bonuses pursuant to Section
4.4.4 of DBM Budget Circular No. 2012- 4 dated December 17, 2012.
The aforementioned DBM Circular prescribed the guidelines on the grant
of Collective Negotiation Agreement Incentive for FY 2012. Under Section
4.4.4, the amount paid as CNA Incentive shall be recorded in the agency
books under the account code Personal Services Other Bonuses.
In addition, the report on Management compliance to the procedural
guidelines for the grant of CNA for CY 2012 enumerated under Section 7
of DBM Circular No. 2012-4 should be submitted to this Office for our
reference in the audit of the CNA payments.
7.4.3
Code
439-23-04
Amount
39,126,380.16
57
Account
Cost of living allowance
Trust fund COLA
Trust fund AA
Amelioration allowance
Total
7.4.4
Code
439-23-02
439-21
439-09
439-23-01
Amount
29,823,714.16
26,209,179.57
361,608.82
157,896.22
95,678,778.93
The payments for the consultancy services of Ms. Marian P. Roces in the
total amount of P200,000 were not valid for the following reasons:
7.4.4.1
7.4.4.2
7.4.4.3
7.4.4.4
7.5
These charges to Prior Period Adjustments during the year reduced the Retained
Earnings of MWSS by P28,946,576.89.
7.6
7.7
59
8.
7.8
7.9
Fifteen pieces of paintings and four brass sculptures acquired during the old
NAWASA with acquisition cost of P69,400 were missing and the accountability of
the persons responsible have not been settled.
Moreover, all paintings with recorded value of P0. 542 million were not appraised by
the National Museum as required under COA Memo 88-569 and Financial Reporting
Standard (FRS) 30, resulting in the undervaluation of the value of the assets
recorded in the books.
Also, the oil painting by H.R. Ocampo Abstract in Red and Black and the water
color painting Rooster by Kiukok, both declared National Artists of the
Philippines, were not registered in the Philippine Registry of Cultural Property of the
National Museum contrary to the IRR of RA 10066.
8.1
Our audit of the account is guided by the following rules and regulations:
8.1.1
8.1.2
8.1.3
Sections 7.2 and 8.2 Rule IV of the Implementing Rules and Regulations
(IRR) of RA 10066, an act providing for the protection and conservation of
the National Cultural Heritage, strengthening the National Commission for
Culture and Arts (NCCA) and its affiliate cultural agencies, and for other
purposes, which requires that:
a. Undeclared property not falling under the presumption of Important
Cultural Property, but contains characteristics that will qualify them
as such shall be registered in the Philippine Registry of Cultural
Property (Section 7.2).
60
8.2
The account Furniture and Fixtures as of December 31, 2013 with the following
Subsidiary ledger accounts showed the following book balances:
Schedule of Furniture & Fixtures
As of December 31, 2013
SL Account
Brass
Presidential Bust
Paintings
Paintings
Total
8.3
Code
222-01-01
222-01-02
222-01-03
222-01-19
Amount
27,800
16,500
475,000
23,000
542,300
The Reconciliation Report of MWSS Art Works revealed that there were 15 pieces
of paintings and four pieces of brass sculptures missing under the accountability of
a former MWSS employee. Hereunder are the details of the missing paintings:
PAINTER
DATE
YR.
Acquired
Acquisition
cost
Diego
Diego
1980
1980
6/1/1981
6/1/1981
3,000.00
3,000.00
White Sack
Tiongco
1980
6/1/1981
4,000.00
Disco
Daroy
1980
6/1/1981
2,700.00
Tiboli Woman
George Bennet
1981
6/1/1981
1,800.00
Floral in Blue
Not indicated
1981
6/1/1981
11,000.00
Weaver
Diego
1981
6/1/1981
3,000.00
Sunset
Alcoseba
1981
6/1/1981
2,000.00
Laro
Madrilejos
1981
6/1/1981
2,200.00
Bintana 1
Memeje
1981
6/1/1981
900.00
Bintana 2
Memeje
1981
6/1/1981
900.00
Shanty 1
Malang
1981
6/1/1981
1,600.00
Shanty 2
Malang
1981
6/1/1981
1,600.00
Mag aani
Dizon
1981
6/1/1981
7,500.00
Cock Fighting
Hugo C. Yonzon
1981
3/13/1981
3,000.00
Man Sitting
Rose Arcilla
1981
3/19/1981
7,000.00
Sculpt Lover
Rose Arcilla
1981
3/19/1981
2,500.00
Dancer
Fernadez Gilho
1981
3/13/1981
4,000.00
61
Boni Arcilla
TOTAL
1981
3/19/1981
1,500.00
63,200.00
8.4
Perusal of the documents showed that the missing paintings and brass sculptures
were under the accountability of a former MWSS employee who retired in CY
1999. He has not been granted clearance from money and property accountability
and that his gratuity pay of P143,965.28 remained unpaid.
8.5
Furthermore, our audit revealed that there were no appraisal and authentication
conducted by the National Museum on the above mentioned works of art as
certified by the Manager, Property Management Department in a letter dated
January 14, 2014. The book value recorded in the books remained at its
acquisition cost of P542,300 which dates back to the old NAWASA era (prior to
1997). Considering the time that had elapsed, the value of the property recorded
in the books may no longer be the relevant amount at the present time.
8.6
It is our view that the accountability of the person/s liable for the missing paintings
and brass sculptures should be based on the appraised value of the painting and
the brass sculptures; the rationale being that the government shall not suffer for
replacing properties lost thru negligent act of persons accountable/responsible for
the property.
8.8
Management informed that on February 27, 2014, requests for appraisal and
authentication of its paintings and art works and registration of the works of the
National Artists were made and awaiting their positive response on the said
request.
62
9.
Section 2.4 of GCG-MC No. 2012-2 dated May 2, 2012 which provides
that:
Reimbursable Expenses Should Not Be Used as a Form of
Compensation Section 12 of E.O. 24 ensures that GOCC Directors
do not abuse the structure of reimbursements of expenses as a
means to gain indirect compensation by:
a. Making it a matter of policy that expenses of members of the
Governing Board to attend Board and other meetings and
discharge their official duties shall be disbursed directly by the
GOCC;
b. The only time that Directors obtain a reimbursement of
expenses can be:
(1) when due only to the exigency of the service and subject to
the submission of receipts; and
(2) Limited only to transportation expenses for attending
meetings;
travel
expenses
for
official
travels;
communications expenses; and for meals during business
meetings.
9.2
9.1.2
COA Circular No. 96-004 dated April 19, 1996 which provides that no
reimbursement of the cost of gasoline and oil shall be allowed when a
private vehicle is used.
9.1.3
Amount
105,410.36
379,724.19
225,987.95
60,855.59
666,567.73
45,186.91
63
9.3
711,754.64
817,165.00
9.4
Further review of the documents revealed that in some cases, the number of meals
served during Board Meetings costing P 53,371.50 exceeded the actual number of
attendees based on the attendance sheets submitted by the Board Secretariat
Office.
Date of Meeting
02-000533
01/09/2013
01/10/2013
01/24/2013
No. of
food
orders
10
15
15
02-000988
01/23/2013
01/18/2013
03/01/2013
10
10
9
JEV No.
04-001300
Paid Amount
2,310.00
5,775.00
6,600.00
7
8
8
770.00
1,705.00
550.00
7
8
4
64
Date of Meeting
JEV No.
No. of
food
orders
Paid Amount
07-002731
03/07/2013
03/14/2013
10
15
4,600.00
6,900.00
8
7
07-002841
05/06/2013
05/07/2013
05/09/2013
05/14/2013
05/30/2013
10
12
12
8
10
1,045.00
698.50
3,762.00
1,628.00
2,420.00
2
3
9
3
7
09-003667
07/03/2013
07/04/2013
07/11/2013
10
10
15
990.00
2,497.00
4,114.00
07/15/2013
10
627.00
07/23/2013
07/25/2013
10
12
1,595.00
4,785.00
53,371.50
7
6
12
No attendance Sheet
submitted for the said
date.
6
10
Total
9.5
It was also noted in the review of the attendance sheets that some attendees have
no signatures and only a check () or present is indicated beside the names.
There were no other documents that would show proof of attendance such as
minutes of board meetings where the member attended or other relevant
documents.
9.6
9.7
In COA Decision 2013-130 dated September 18, 2013, it was emphasized that
While Official Receipts have been duly submitted; this Commission does not find
the same sufficient to support the validity of the expenditures. The requirement of
full documentation is to establish the propriety of the expenses in relation to the
purpose for which the allowance is granted.
9.8
b.
65
10.
c.
Strictly comply with COA Circular 96-004 which provides that under
no circumstances should fuel be issued to privately owned motor
vehicles;
d.
Discrepancies between the records of the Board Secretariat and the Finance
Department in the number of board meetings attended were noted, hence the
accuracy of the amount of per diems paid to the BOT under account, Personnel
Expenses - Honorarium, totalling P2.877 million was not established.
10.1
GCG Authorization Letter dated July 19, 2013 authorized MWSS to grant the FY
2012 PBI to the Appointive Members of its BOT in accordance with the entitlement
scheme provided under Section 2 of GCG Memorandum Circular No. 2012-14.
Based on the certification from the Corporate Secretary of total actual annual
authorized per diems received, four members of the BOT were granted PBI
equivalent to 90% of their total actual annual authorized per diems.
10.2
Review showed discrepancies on the number of board meetings attended and the
amount of per diems received by the BOT between the records of the Board
Secretariat and the Finance Department, summarized as follows:
Total Number of
Meetings Attended
Name
Ramon B.
Alikpala
Gerardo A.I.
Esquivel
Emmanuel L.
Caparas
Benjamin J.
Yambao
Hermogenes
Fernando
Ma. Cecilia
Soriano
Jose Ramon
Villarin, S.J.
Board
Designation
Board
Chairman
Board
Member(Ex
Officio)
Board
Member
Board
Member
Board
Member
Board
Member
Board
Member
Per Board
Secretari
at Report
to GCG
Difference
32
31
432,000
432,000
27
35
(8)
369,000
384,000
15,000
(refunded)
47
54
(7)
561,000
561,000
47
53
(6)
561,000
561,000
29
27
357,000
43
50
(7)
471,000
10
126,000
Per
Finance
Record
Per
Finance
Record
Per Board
Secretariat
Report to
GCG
Not
included
Not
included
Not
included
Difference
NA
NA
NA
66
11.
10.3
Although the above differences did not result in any overpayment to the other
Board Members, the noted discrepancies cast doubt on the correctness of the
number of meetings attended and the amount of per diems paid.
10.4
The attendance report is a vital document in the computation of actual per diems
and the allowable Performance Based Incentive of the Board of Trustee by the
GCG and should therefore be prepared with utmost care to ensure that an
accurate report will be submitted.
10.5
The disengagement of the Bantay Kalikasan from the Ipo Watershed management
activities had forced upon MWSS the obligation to manage and secure the 560
hectare plantation. Relative to the reforestation program, MWSS hired 162
workers, who are members of Peoples Organization who previously reforested the
area, on job order status. The payroll and the supporting documents were prepared
and prepared/certified correct by the officers of the Organization and
approved/noted by the concerned MWSS officers
11.2
Our audit of the payrolls for the period January to May 2013 disclosed
following deficiencies:
the
a.
The signatures of nine workers in the Daily Attendance Sheet was in long
handwriting while the one that appears in the Payroll sheet and
Consolidated Report of Attendance was the printed name which anyone
can write.
b.
Some workers were allowed to affix their thumb marks on the Daily
Attendance Sheets having no formal education. However, they were able
to sign the payroll sheets and other documents as follows;
Marcelino Cruz affixed his thumb mark in the Daily Attendance Sheet
and Payroll Sheet but signed MC in the Consolidated Report of
Attendance (from January to May 2013)
Romano Cruz signed RC in the Daily Attendance Sheet but affixed his
thumb mark in the Payroll sheet and Consolidated Report of Attendance
(from January to May 2013)
Romeo Maalat signed Romeo in the Daily Attendance Sheet but affixed
his thumb mark in the Payroll sheet and Consolidated Report of
Attendance for January 2013
67
c.
Jimmy Cruz signed his given name Jimmy in the Payroll sheet and
Consolidated Report of Attendance but affixed his thumb mark in the
Daily Attendance Sheet (January, February & April 2013)
Rogelio Cruz, Jr. signed his given name Rogelio in the Daily
Attendance Sheet but affixed his thumb mark in the Consolidated Report
of Attendance and Payroll sheet (From January to April 2013)
Rogelio S.J. Cruz signed in full in the Daily Attendance Sheet but affixed
his thumb mark in the Payroll sheet and Consolidated Report of
Attendance (from January to May 2013)
Worker
Michael Coraez
Jun-jun Coraez
Representative
Reynaldo Aquino
Romeo San Jose
Louie Cruz
Mario Cruz
23,400
Benito Temblor
Rogelio G Cruz
17,100
Mario Marcelino
Alwin Lago
Vicente Rodriguez, Jr.
29,750
10,000
7,740
d.
Amount of salary
44,450
35,700
Period covered
January to May 2013.
January to April 2013
January, March, April &
May 2013)
January, March & April
2013
January to May 2013
April 2013
May 2013
Absences were not deducted from the salaries of the following workers:
Worker
Dionisio Dejano
Rogelio S. Cruz
Isagani Cruz
Vicente
Rodriguez, Jr
Marcelino San
Jose
Total
Audit finding
He did not sign the Daily Attendance Sheet on January 5, 2013.
He was marked absent on March 28, 2013 in the Daily
Attendance Sheet
He was marked absent on March 24, 2013 in the Daily
Attendance Sheet
Amount
350
380
300
430
He did not sign the Daily Attendance Sheet on March 12, 2013.
430
1,890
e.
On the other hand, Cenon Reyes signed the Daily Attendance Sheet on
May 31, 2013 but the Consolidated Report of Attendance and the Payroll
sheet showed that he was not paid the salary of P350 for the day.
f.
There was no Daily Attendance Sheet for April 9, 2013 to support the
payment of salaries for that day.
11.3
The above observations put into question how much salaries were actually
received by the workers and if the legitimate workers/payees received the salary.
11.4
12.
11.5
In reply, Management submitted the Identification Cards of the 118 out of the 164
Ipo Workers and informed that the other 46 workers were confirmed by the
Foresters. Refunds in the total amount of P1,890 were made on May 7, 2014 for
the absences of workers not deducted from their salaries.
11.6
As a rejoinder, the Identification Cards of the Ipo workers were not complete and
some did not bear the signatures of the workers. Further, the confirmation by the
foresters of the receipt of the 46 workers of the salaries was not acceptable in
audit. Thus, there was no conclusive proof that the amount disbursed was actually
received by the legitimate workers/payees.
COA Circular No. 2009-001 dated February 12, 2009 covering all contracts,
purchase orders and the like entered into by any government agency irrespective
of amount involved, states:
Within five (5) working days from the execution of a contact by the
government or any of its subdivisions, agencies or instrumentalities, including
government owned and controlled corporations and their subsidiaries, a copy
of said contracts and each of all the documents shall be furnished to the
Auditor concerned.
13.
12.2
12.3
a.
discrepancy of P1.941 million between the total debits (Actual Input VAT)
during the year and the Input VAT Summary list of Purchases/BIR return
submitted to BIR; and
b.
13.1
Our audit revealed deficiencies in the required disclosure relative to input VAT
taxes and accuracy of the Account Other Prepaid Expense Input VAT, as
follows:
13.1.1
b.
13.1.2
b.
c.
13.1.3
20,196,761.88
22,137,821.38
(1,941,059.50)
2,262.85
2,582,850.14
869,018.60
2,579,313.33
4,606,359.72
192,429.55
4,668,075.78
2,332,862.12
262,266.42
358,429.97
0
308,819.49
1,434,073.91
20,196,761.88
22,137,821.38
Per SL
From the foregoing, we may conclude that the Prepaid Input VAT
recorded in the books was understated.
Beginning Balance
Input Tax Claimed for 4th Quarter-2012
Input Tax Carry Over
2,172,952.70
(162,304.78)
2,010,647.92
2,172,952.70
20,194,761.88
21,983,943.78
383,770.80
The 3rd and 4th Quarterly VAT returns (BIR Form 2550Q) contain
erroneous information as follows:
i. The boxes in the returns which pertain to payments for the
3rd and 4th Quarter were marked as payments for the 1st
Quarter. It was also observed that item 21P or Total
Purchases from which the Input Tax Credits claimed for the
1st Quarter are sourced amounting to P40,188,639.18 also
appeared on the 3rd and 4th Quarter Returns.
ii. The Net VAT Payable was footed in the Total Available Input
Tax (Item 22) and Total Allowable Input Tax (Item 24) of the
4th Quarter Return
iii. The amount of Total Sales/Receipts (Item 19A) and Total
Current Purchases (Item 21E) in the 4th Quarter return are
inclusive of Value Added Tax. The guidelines provide that
these items shall be exclusive of tax as basis of the 12%
VAT footed in Item 19B and 21F respectively.
Description
Total Sales/
Receipts
per Return
48,229,205.16
per Guidelines
43,124,290.32
Difference
5,174,914.84
72
(19A)
Domestic
Purchases
(21E)
19,531,704.40
17,439,021.79
2,092,682.61
13.2
The errors mentioned above made the information indicated in the returns
misleading. These however, did not involve misapplication of complex tax laws or
regulations, but they nonetheless may give rise to significant tax assessments from
the Bureau of Internal Revenue.
13.3
We also noted that the collection of rental amounting to P137,718.75 from leased
properties of MWSI was debited to Other Prepaid Expenses-Input Tax. This
should have been recorded in Other Prepaid Expenses-Expanded Withholding Tax
as this is a creditable withholding tax for rentals (5%) and not Input Tax from
domestic purchases (12%).
13.4
recommended and
a.
b.
Ensure that all returns filed with the BIR are reviewed diligently to
ensure that the information contained in the returns are correct; If
possible amend the 3rd and 4th Quarterly VAT returns to correct
inputted entries to avoid assessments from the Bureau of Internal
Revenue and henceforth,
1.
The consultants final report and other deliverables in the consultancy services
contract for the MWSS Regulatory Office 2013 Rate Rebasing in the total amount of
P61.397 million contracted by MWSS Regulatory Office (RO) and Isla Lipana & Co.
Joint Venture with Lahmeyer IDP Consultant, Inc. was not submitted within the sixmonth contract period reckoned from the receipt of the Notice to Proceed to the
Consultant due to the request of the Regulatory Office for the consultant to do
further evaluation of the items that were raised/disputed in the arbitration.
1.1
MWSS RO and Isla Lipana & Co. in Joint Venture with Lahmeyer IDP Consultant,
Inc. entered into contract for the CY 2013 Rate rebasing consultancy service in the
total amount of P61,397,288 with a contract duration of six months reckoned from
73
the receipt of the Notice to Proceed on March 1, 2013. The deliverables, which
should be completed/finished by August 31, 2013, consists of the following:
Table of Deliverables
1.
2.
3.
Particulars
Briefings to the RO, CO, the Board Advisory
Committee and the MWSS Board on
alternative interpretations of specific
principles, CA provisions, approaches to the
financial model, sensitivity analyses, and
other financial issues/ treatments that affect
the outcome of tariffs at specific points of the
engagement as may be specified or
warranted by urgency.
Inception Report which shall include a
detailed methodology for the conduct of the
third Rate Rebasing exercise and establish
the basic principles of Rate Rebasing.
Monthly Accomplishment Reports
Timeline
As required
4.
1.2
Review of the contract and supporting documents revealed that there were
documents not submitted, when required by the COA Technical Audit Specialist in
the initial technical review of the contract dated October 29, 2013. Considering that
the contract expiry period was on August 31, 2013, the following documents should
have been available at the time of review, namely:
a.
b.
c.
1.3
that the Regulatory Office considered fair and warranted to move the final
submission of the consultants final report and other deliverables on or before
April, 30, 2014.
b. In the said letter, it was explained that in the ongoing arbitration cases filed by
the concessionaires, there were series of discussion with the Consultant.
Noting after the discussion that there were a number of key items to be
incorporated in the consultants report, the RO requested that they be
considered in the final version of the documents to be submitted:
Given the above information, the Audit Team inquired during the exit conference
how the MWSS Regulatory Office was able to come up with the MWSS Regulatory
Office Resolution Nos. 13-010-CA and 13-009-CA dated September 10, 2013
recommending to the MWSS Board of Trustees the rate rebasing determination for
MWSI and MWCI for charging years 2013-2017. It was noted that one of whereas
clauses stated that given the complexity of the rate rebasing process, the
Regulatory Office engaged experts for the economic, financial, accounting, legal
and technical aspects of the audit with the footnote that Isla Lipana & Co. in Joint
Venture with Lahmeyer IDP Consult, Inc. was contracted for the 2013 Rate
Rebasing Consultancy Services.
We noted that the communications on the submission of the deliverables to April
30, 2014 due to submission of additional and enhanced data by the Consultant did
not mention whether additional costs will be incurred by MWSS RO. Likewise,
there is the question on whether the moving of the submission date is considered a
75
In the exit conference, the Acting Chief Regulator explained that all the data in raw
form that was submitted by the consultants during the Rate Rebasing Exercise were
evaluated processed and were used for purposes of reporting and computation of the
new rate.
He also explained that there are plenty of reports that the consultants have to submit
to RO in accordance with the deliverables which include the Rate Rebasing Manual, a
manual that is very accurate with other report. The delay for the submission was
attributed to the Arbitration dispute notice filed by the concessionaires. He said that the
RO evaluated the issues stipulated in the complaints in terms of form, substance and
processes. These things are being considered/evaluated in revisiting the raw data and
suggested revisions to the consultants because RO wants to have documentation for
the future Rate Rebasing exercise that are understandable and acceptable. The RO
want it to be the best and make the most out of the contract.
2.
1.6
1.7
Deficiencies were noted in the consultancy contracts for the following purposes:
a.
In the Consultancy services for the 2013 Rate Rebasing in the amount of
P61.597 million, changes in key personnel were not in accordance with the
General Conditions/Special Conditions of the contract and Section 33.6 of
IRR of RA 9184 ; and
b.
In the contract for the Review and Validation of the Concessionaires Asset
Condition Report (ACR) with a contract cost of P21.028 million, the validity
of the claim for reimbursable costs was questionable due to (i) issues
raised on the rental of vehicles claimed to have been used for the project
and (ii) the purchase of laptops and cameras for the project were not
warranted.
76
2.1
MWSS Regulatory Office and Isla Lipana & Co. in joint venture with
LAHMEYER IDP CONSULT entered into a contract for the 2013 Rate
Rebasing exercises for Manila Water Company, Inc. (MWCI) and
Maynilad Water Services inc. (MWSI) with contract cost of P61,597,388.
2.1.2
Amount
11,856,425
39,990,350
51,846,775
1,272,321
342,857
235,714
171,429
291,071
107,143
267,857
71,429
133,929
257,143
3,150,893
54,997,668
6,599,720
61,597,388
Payments during the year to Isla Lipana & Co for the 2013 Rate Rebasing
are covered by the following reference document and particulars:
Check/DV No.
430285/143-04/13
469741/227-05/13
469868/414-10/13
469910/469-11/13
469955/516-12/13
Total
2.1.3
Date
April 18, 2013
June 7. 2013
October 7, 2013
November 14, 2013
December 17, 2013
Amount
P2,773,802
5,478,437
714,350
10,956,874
13,696,093
P33,619,556
c.
d.
We
recommended
the
submission
of
justification/explanation on the necessity of changing
the key personnel of the Consultant as required under
Section 39.5 of the GCC, the SCC and Section 33.6 of
IRR of RA 9184.
e.
78
2.1.3.2
i.
ii.
iii.
iv.
v.
d.
ii.
iii.
81
2.1.3.4
The subject contract started on March 11, 2013 and based on Section E
of the Terms of Reference the project is to be completed seven months
from the time the Notice to Proceed was received by the Consultant or on
October 11, 2013.
2.2.2
2.2.3
Amount
460,000
140,000
1,694,000
646,000
56,000
2,996,000
The purchase of the laptops and cameras listed below for the
project in the total amount of P520,000 was not warranted as
their use for the project was found not fully maximized, as
discussed in the succeeding paragraphs.
Equipment
Digital Camera
Laptop Computer with
software
Quantity
6
Cost
P 120,000.00
400,000.00
i.
We noted that the date of purchase did not match with the
activities in the Time (Work) Schedule where said equipment
was deemed to have been utilized.
ii.
nd
3rd
4th
5th
Month 2
6th
7th
8th
Phase 1: Mobilization
Organization of audit team and
orientation
Identification of information
requirements
Discussion of detailed
methodology
Discussion of contents ad
forms of reports
Discussion of how constraints
will be treated
Phase 2: Review and
Validation of ACR
Review of ACR reporting
requirement
84
Month 2
2.2.3.3
Full Time
Intermittent
iii.
iv.
v.
vi.
86
2.2.4
b.
2.2.5
2.2.6
2.2.7
2.2.8
As explained, Kyra Enterprise does not need to own its vehicles for car
rental business because car rental is not among the business they were
authorized to engage in as stated in the business permit.
2.2.9
3.
2.2.10
On the digital cameras, it was explained that since 2013 was the year
when 3rd Rate Rebasing exercise was actually conducted, the MWSS RO
saw the need to prioritize the Reports on Full Current Asset Valuation and
Real Estate Assets to be used in the computation of the Return on Rate
Base (RORB). As such, the validation of the Concessionaires Asset
Condition Reports (ACRs), where the digital cameras were necessary,
was conducted on the latter part of the project/contract period. Thus, the
reason for purchasing them on the latter part of the contract period.
2.2.11
Transfer of funds of P70 million from PNB Combo account to LBP current bank
account, both maintained by MWSS-RO, was effected without proper
documentation.
3.1.
Our audit disclosed that MWSS-RO made a fund transfer in July 2013 from a
combo account to a current account, with details below.
Bank
Acct
Philippine National
Bank
Current Account
Purpose
Payment of salaries and
allowances to employees/
deposit of collections received
Payment of its operating expenses
3.2.
We noted that said fund transfer with the purpose to augment the current account
balance as stated in the disbursement voucher was supported only with a copy of
check deposit slip of the LBP.
3.3.
Since the purpose of the fund transfer was to augment its fund balance at the LBP,
the disbursement should have been supported with Cash Position Report showing
the cash in bank balance at the LBP at the time of the fund transfer duly signed by
the Chief Accountant and the Department Manager for Administration. It should
also have been supported with a written request to the Acting Chief Regulator for
the approval of the transfer of funds before the preparation of the disbursement
voucher.
3.4.
COA Circular 2013-002 dated January 30, 2013 states that one of the general
requirements for all types of disbursement is that there should be sufficient and
relevant documents to establish validity of claims. Without any supporting
documents attached to the Disbursement Voucher, the validity of the transfer of
funds recorded in the books of accounts of MWSS- RO cannot be established.
3.5.
3.6.
4.
Management submitted the required documents on April 10, 2014 and committed
that henceforth, all transfer of funds will be properly supported.
4.2
The accomplishment reports submitted showed that project had been completed
as follows:
Year
3
4
5
4.3
Although the project had been completed, the outstanding advances to UP NEC as
of December 31, 2013 amounts to P6,130,438.70
4.4
4.5
5.
Management informed that to date, the closure activities for the project are still ongoing. The RO in coordination with the UP-NEC shall facilitate the turnover of the
PAWS equipment as well as the COA verified Financial Report to be used in the
reconciliation of the Advances to UP-NEC for the eventual refund of the
unexpended balance.
The period of action on procurement activities for General Services contracts
exceeded the period required under Section 38 of the IRR of RA 9184, which was
disadvantageous to both contracting parties. Delay without justifiable cause in the
required three months procurement process is punishable under Section 65 of the
IRR OF RA 9184.
5.1
Section 38.1 of the IRR of RA 9184 provides that the procurement process from
the opening of bids up to the award of contract shall not exceed three months, or
at a shorter period to be determined by the procuring entity concerned.
5.2
Period of action
89
Issuance of Notice of
award
December 5, 2013
received on
December 6, 2013 by
the contractor
December 5, 2013
106 days or 3
Months and 16
Days
5.3
As can be gleaned from the above, it took 3 months and 15 days from the date of
the opening of bids the notice of award was issued. This is not in accordance with
the provision of Section 38 of the IRR of RA 9184.
5.4
5.5
We invite your attention to the particular provisions of the IRR of R.A. 9184 which
states as follows:
RULE XXI PENAL CLAUSE
Section 65. Offenses and Penalties
65.1. Without prejudice to the provisions of R.A. 3019 and other penal
laws, public officers who commit any of the following acts shall suffer
the penalty of imprisonment of not less than six (6) years and one (1)
day, but not more than fifteen (15) years:
b) Delaying, without justifiable cause (underscoring ours), the
screening for eligibility, opening of bids, evaluation and post
evaluation of bids, and awarding of contracts beyond the
prescribed periods of action provided for in this IRR.
5.6
Furthermore, the GPPB in its Non-Policy Opinion (NPM 057-2013) dated June 26,
2013 regarding the query of the Department of Education on the legality of the
procurement process that exceeded the three (3) month period of procurement
under the revised IRR of RA 9184 opined and we quote:
xxx, we wish to clarify that the extension of mandatory period under
the IRR of RA 9184, including the allowable extensions recognized by
laws and rules is proscribed. Should the PE decide to extend the
same, it must show and provide compelling, sufficient, valid,
reasonable, and justifiable cause for such extension. Such valid
justification, however, will only free officials from penal sanction or
liability, but not from applicable administrative and civil sanctions or
liabilities under existing laws, rules and regulations.
90
5.7
1.
The validity of the Payables aggregated balance of P515.678 million was found
doubtful due to the inclusion of:
a. Accounts totaling P181.548 million outstanding for more than two years;
b. Undocumented Accounts totalling P32.180 million; and
c. Accounts with abnormal or debit balance of P3.281 million.
1.1
1.2
Schedule of Payables
CO Books
RO Books
12,717,473.90
177,362,832.21
11,205,979.68
52,190,237.91
139,247,720.00
0
122,799,291.92
155,241.59
285,970,465.50
229,708,311.71
Total
190,080,306.11
63,496,217.59
139,247,720.00
122,954,533.51
515,678,777.21
Our herein audit observations relative to the Accounts Payable account are
anchored on the following:
a.
b.
Section 8 of COA Circular No. 94-001 dated January 20, 1994 which
provides:
The Chief Accountant, Bookkeeper or other authorized official
performing accounting and/or bookkeeping function of the
audited agency shall ensure that (a) the reports as submitted
by the accounting officers are immediately recorded in the
books of accounts and submitted to the auditor within ten (10)
days from such receipt, xxx
91
1.3
MWSS RO
Accounts Payable
Due to Officers & Employees
Total
MWSS CO
Accounts Payable
Due to Officers & Employees
Total
Grand Total
Total
Outstanding for
more than two
years
177,362,832.21
52,190,237.91
229,553,070.12
124,818,193.00
47,048,281.00
171,866,474.00
70
90
75
12,717,473.90
11,205,979.68
23,923,453.58
253,476,523.70
0
9,681,960.09
9,681,960.09
181,548,434.09
86
40
72
b. In the MWSS RO, the Accounts Payable (accrued expenses) and Due
to Officers and Employees account showed a year - end balance of
P229,708,311.71. Of this amount, P171,866,474 or 75% has been
outstanding for more than two years. Most of these accounts have
been outstanding since CY 2010 and prior years, to wit:
Account
Accounts Payable accrued
expenses
Due to officers & employees
Total
Code
Amount
401
124,818,193
403
47,048,281
171,866,474
c. In the MWSS CO, analysis revealed that of the balance of the Due to
Officers and employees account of P11,205,979.68, the amount of
P9,681,960.09 or 86% of total payables had been outstanding for
more than two years. Most of these accounts were set up in CY 2007
and there were no documents attached to the Journal Entry voucher.
Details are as follows:
Account
Code
Amount
Due to
employees 19891997
403-02-01
8,574,214.69
Due to
employees 19992001
403-02-02
1,107,745.40
Total
Audit Finding
The amount was originally
recorded in January 2007.
Last transaction was in
December 2009
The amount was originally
recorded in January 2007.
Last transaction was in
December 2010
9,681,960.09
92
1.3.2
Undocumented Accounts totalling P32.179 million a. As at year-end, the undocumented accounts totalled P32.18 million
with the following details.
Office/ Accounts
MWSS RO
MWSS CO
Total
Total
127,394,157.00
12,717,473.90
140,111,630.90
Amount without
documentation
24,392,533
7,787,177
32,179,710
%
19
61
23
9,674,434
4,622,521
4,937,000
5,158,578
24,392,533
118,000
43,055
15,000
55,392
20,000
4,375
5,853,847
3,100,000
18,454
6,143
126,678
313,489
9,674,434
320,820
11,442
85,955
250,000
93
Auditing Services
Other-Prof Services WQ Test
R&M - Motor Vehicles
Total
65
3,929,239
25,000
4,622,521
2,600,000
2,100,000
250,000
96,000
50,000
50,000
1,062
6,960
4,263
293
5,158,578
c. In the MWSS CO, audit of the accrued expenses at the end of the
year showed that of the year end balance of P12,717,473.90, only the
accruals in the amount of P4,930,297.35 were supported with
documents.
The journal entry vouchers and the supporting
documents taking up accrual of expenditures in the amount of
P7,787,176.55 have not been submitted to COA for verification; thus,
the validity and accuracy of the following accounts could not be
ascertained:
Account Title
Amount
Advertising Expenses
37,800.00
ECC Contributions
12,100.00
Electricity Expenses
3,168,026.26
Extraordinary Expenses
86,349.26
58,314.59
Honoraria
93,000.00
Internet Expenses
87,758.42
Janitorial Services
273,156.00
474,651.36
Miscellaneous Expenses
55,678.46
199,878.37
PAG-IBIG Contributions
12,100.00
PHILHEALTH Contributions
36,937.50
41,100.00
Security Services
Telephone Expenses - Landline
993,465.75
62,921.15
94
Account Title
Amount
Training Expenses
12,712.88
Water Expenses
16,377.83
Due to BIR
Sub total
(16,530.00)
5,705,797.83
Accruals in CY 2012
Office Supplies Expenses
37,500.00
3,400.00
Office Supplies
5,000.00
600.00
30,918.72
1,579,160.00
120,000.00
Extraordinary Expenses
304,800.00
Sub total
2,081,378.72
Total
7,787,176.55
1.4
The non submission of the vouchers prevented this Office from conducting a timely
audit, hence, deficiencies noted, if any, could not be relayed immediately to
Management for corrective action.
1.5
In the MWSS RO, we also observed that the account Due to Officers and
Employees Payroll included accounts with abnormal or debit balances of
P3,281,295.
1.6
The deficiencies noted above are significant enough to cast doubt on the validity
and accuracy of the Payables aggregated balance.
1.7
b.
c.
95
d.
2.
2.1
The Property, Plant and Equipment accounts showed the following year-end
balances:
At the MWSS Corporate Office Account Name
Office Buildings
Other Structures
Office Equipment
Furniture and Fixtures
IT Equipment and Software
Library Books
Communication Equipment
Construction and Heavy
Equipment
Medical, Dental and Laboratory
Equipment
Sports Equipment
Technical and Scientific
Equipment
Other Machinery and Equipment
Motor Vehicles
Other Transportation Equipment
TOTAL
Acquisition Cost
1,103,938,145.81
60,352,642,078.84
4,522,241.83
6,895,503.63
116,531,807.38
167,507.50
1,249,392.84
Accumulated
Depreciation
872,362,296.85
37,906,133,758.19
3,946,641.49
5,020,923.90
109,799,540.88
112,345.50
682,270.69
Book Value
231,575,848.96
22,446,508,320.65
575,600.34
1,874,579.73
6,732,266.50
55,162.00
567,122.15
248,240,733.67
197,817,433.94
50,423,299.73
40,535,469.89
34,161,074.01
6,374,395.88
1,603.00
877.46
725.54
45,921,951.93
39,226,119.02
6,695,832.91
60,174,454.07
4,703,553.43
448,828,657.76
74,878,800,219.71
43,986,054.93
4,065,931.89
309,546,549.45
39,526,861,818.20
16,188,399.14
637,621.54
139,282,108.31
22,907,491,283.38
96
MWSS Regulatory
At the MWSS Regulatory Office Account Name & Code
Office Buildings- Improvements
Office Equipment
Furniture and Fixtures
IT Equipment & Software
Library Books
Communication Equipment
Medical, Dental & Lab Eqpt.
Sports Equipment
Technical & Scientific Eqpt.
Other Machineries & Eqpt.Electrical & Aircon
Other Machineries & Eqpt.-Tools
Other Machineries & Eqpt.Appliances
Other Machineries & Eqpt.-Audio
Visual
Motor Vehicles
TOTAL
2.2
Acquisition Cost
SL
Accumulated
Depreciation
Book Value
2,925,095.64
1,580,245.22
4,659,429.72
131,848,605.18
693,572.26
2,232,660.24
21,110.00
377,918.75
3,480,486.20
2,925,015.64
1,547,313.88
4,520,101.68
75,779,707.92
693,552.26
2,232,611.24
21,108.00
377,909.75
3,321,258.89
80.00
32,931.34
139,328.04
56,068,897.26
20.00
49.00
2.00
9.00
159,227.31
623,807.32
623,793.32
14.00
60,385.00
60,381.00
4.00
244,407.00
244,388.00
19.00
1,865,314.36
1,841,097.38
24,216.98
8,499,774.00
159,112,810.89
8,499,744.00
102,687,982.96
30.00
56,424,827.93
Section 102 of PD 1445 COA Circular No. 80-124 dated January 18, 1980
which require that physical inventory of fixed assets shall be conducted at
least once a year and that the inventory reports shall be prepared and
certified by the committees in charge of the inventory taking and approved
by the Head of the Agency and that the reports shall be properly reconciled
with the accounting and inventory records.
b.
c.
COA Circular No. 2003-007 dated December 11, 2003 which prescribes the
computation of depreciation expense of property, plant and equipment
(PPE). As provided in paragraph 4 thereof, residual value equivalent to ten
(10) percent of the acquisition cost/appraised value shall be provided for
PPE which is deducted before dividing the same by the estimated useful
life.
d.
COA Circular No. 1997-005 dated July 01, 1997 which increases the value
of items to be categorized as PPE from P1,500 to P10,000 and above;
97
e.
2.3
COA Circular 1997-003 dated May 22, 1997 which provides that PPE
costing below P10,000 per unit of item shall be recorded as Inventories semi-expendable property or Supplies and Materials expense as may be
applicable.
Verification disclosed that the PPE accounts were not reasonably valued for the
following reasons:
2.3.1
Particulars
Office Building
Medical, Dental
& Laboratory
Equipment
Construction and
Heavy
Equipment
Other Machinery
& Equipment
Other Structures
Total
At the MWSS CO
Recorded Net
Acquisition Cost
Book Value
130,133,968.48
15,824,110.92
Should Be
Residual value
13,013,396.85
Difference
2,810,714.07
13,511,388.40
2,657,450.11
1,351,138.84
1,306,311.27
24,306,049.16
5,137,372.65
2,430,461.33
2,706,911.32
3,742,894.49
752,354.99
374,289.45
378,065.54
19,611,521,363.59
19,783,215.664.12
3,537,976,784.19
3,562,348,072.86
1,957,385,463.39
1,974,554,749.86
1,580,591,320.80
1,587,793,323.00
At the MWSS RO
Particulars
Office Building
Office Equipment
Furniture & Fixtures
IT Equipment
Library Books
Communication Equipment
Medical, Dental & Lab. Eqpt.
Sports Equipment
Technical & Scientific Eqpt.
OME Electrical & Aircon
OME Tools
OME Appliances
Acquisition
Cost
2,925,095.64
1,522,914.22
4,025,085.42
15,211,622.80
693,572.26
2,232,660.24
21,110.00
377,918.75
2,832,290.66
623,807.32
60,385.00
244,407.00
Recorded
Net Book
Value
80
55
77
148
20
49
2
9
14
14
4
19
Should be
Residual
value
292,509.56
152,291.42
402,508.54
1,521,162.28
69,357.23
223,266.02
2,111.00
37,791.88
283,229.07
62,380.73
6,038.50
292,429.56
152,236.42
402,431.54
1,521,014.28
69,337.23
223,217.02
2,109.00
37,782.88
283,215.07
62,366.73
6,034.50
24,440.70
24,421.70
Difference
98
OME Audio
Motor Vehicles
Total
2.3.2
1,816,933.36
8,499,774.00
Recorded
Net Book
Value
51
30
Should be
Residual
value
181,693.34
849,977.40
41,087,576.67
572
4,108,757.67
Acquisition
Cost
Particulars
Difference
181,642.34
849,947.40
4,108,185.67
2.3.3
Amount
84,151.96
4,363,719.77
376,113.82
176,634.50
1,331,621.91
1,603.00
266,479.52
6,600,324.48
Estimated
useful life
Acquisition Cost
Accumulated
depreciation
Carrying
amount/Net
book value
IT equipment from
PAWS project in
CY 2003
20
115,446,818.30
59,647,522.81
55,799,295.49
99
c. Using the 5-year estimated useful life, the IT equipment should have
been fully depreciated in CY 2008. As a result, the depreciation
expense and the corresponding accumulated depreciation were
understated. On the other hand, the PPE and income accounts were
overstated.
d. The IT equipment should have been recorded at its residual value
equivalent to ten percent of acquisition cost if the equipment is still
serviceable and being used in operation.
2.3.4
2.3.5
b.
Account Name
Code
Unit
Value
221
Office Equipment
1,108,797.86
223
5,040,549.22
229
Communication Equipment
1,891,488.62
233
Medical Equipment
235
Sports Equipment
236
241
Motor Vehicles
Other Machineries & Eqpt.Electrical & Aircon
Other Machineries & Eqpt.Appliances
Other Machineries & Eqpt.-Audio
Visual
240-1
240-3
240-4
9,610.00
86,995.00
157,573.00
3,762,000.00
37,380.00
34,374.00
873,674.50
100
GL
Account Name
Code
Unit
Value
TOTAL
2.4
2.5
3.
13,002,442.20
Compute for the residual value of PPE which are fully depreciated in
the accounting records but are still serviceable or used in operations;
and
b.
b.
c.
d.
3.2
The rationale for the prohibition is anchored on the fact that there are decisions of
the Regulatory Office that may require action by the MWSS Board of Trustees.
(Article 11, item 11.1 of the CA). This apparent prohibition is further amplified in
item 3 (Physical Location) of Exhibit A where it states that:
3. Physical Location
The Regulatory Office shall be given suitable office in Metro
Manila at a location separate from any other office or
establishment of MWSS or either Concessionaire. XXX.
Thereafter, the Director shall be responsible for any subsequent
relocation or adjustment of office space, provided that the
physical location of the Regulatory Office shall always be
separate from any other office or establishment of MWSS or
either the Concessionaires. (underscoring supplied)
3.3
Considering that the Acting Chief Regulator is a current member of the MWSS
Board of Trustees, he cannot therefore, perform the function of an Acting Chief
Regulator of the MWSS Regulatory Office, regardless of whether he receives
compensation or not.
3.4
3.5
During the exit conference, the MWSS Administrator who is also the Acting
Chairman of the Board, informed that changes will be forthcoming in MWSS.
1.2
Account
Code
2012
498,412.16
570,602.17
(72,190.01)
221/223
146,904,805.48
262,618,569.84
(115,713,764.36)
229/233/234/
236/240
397,146,225.20
773,727,886.88
(376,581,661.68)
241
148,864,219.89
315,672,180.24
(166,807,960.35)
264
457,018,738.82
462,577,085.89
(5,558,347.07)
1,150,432,401.55
1,815,166,325.02
(664,733,923.47)
1,691,656.63
1,692,034.41
(377.78)
127,467,151.89
231,609,539.82
(104,142,387.93)
329/333/334/
336/340
387,935,632.42
658,956,412.82
(271,020,780.40)
341
155,238,035.40
317,279,114.71
(162,041,079.31)
672,332,476.34
1,209,537,101.76
(537,204,625.42)
149
413
323
Sub-total
NET of
RECONCILED
AMOUNT
1.3
Increase
(Decrease)
2013
(127,529,298.05)
However, review of the balance sheets accounts revealed that there were 42
accounts, with total net amount of P362,735,930.18, that were still for reconciliation
and verification as of December 31, 2013 as shown below:
No. of
Accounts
(General
Ledger) for
reconciliation
Assets
(includes)
contra-assets
accounts
30
Amount for
Reconciliation
575,883,408.35
Percentage to
total
assets/liabilities
TOTAL
52,017,412,546.19
103
No. of
Accounts
(General
Ledger) for
reconciliation
Liabilities
Equity
Unreconciled
Accounts, NET
1.4
Amount for
Reconciliation
Percentage to
total
assets/liabilities
TOTAL
11
938,337,667.02
15,745,931,775.99
281,671.51
36,271,480,770.20
42
362,735,930.18
104,034,825,092.38
Account
Code
2013
2012*
Remarks
Accounts Receivable
121
2,993,155.09
2,993,155.09
Still unreconciled;
123
17,825,117.96
17,825,117.96
Still unreconciled;
Loans Receivable
126
900,000.00
900,000.00
Still unreconciled
Receivables
Disallowances/
Charges
146
609,942.00
609,942.00
Dormant since
1997; Still
unreconciled
498,412.16
570,602.17
Decrease of
P72,190.01 is due
to refund of
overpayment to
Fortune Care Inc.
2,888,349.43
2,888,349.43
Other Receivables
149
Deposit on Letters of
Credit
180
Advance to
Contractors
181
78,823,893.58
78,823,893.58
Other Prepaid
Expenses
185
19,577,362.70
19,577,362.70
(10,319,400.00)
(10,319,400.00)
Still unreconciled
23,691,891.73
23,691,891.73
Still unreconciled
Land
201-01-99
Buildings
215-01-1399-1OR&AD01-00001
Dormant since
1997; Still
unreconciled
Dormant since
1997; Still
unreconciled
P11.097M
represents
Creditable
Withholding Tax for
offsetting to Income
tax payable
according to
Managements
response. Still
unreconciled
104
Accumulated
Depreciation Buildings
Account
Code
2013
2012*
315
(21,322,702.56)
(21,322,702.56)
Office Equipment,
Furniture and Fixtures
221/223
146,904,805.48
262,618,569.84
Accumulated
Depreciation - Office
Equipment, Furniture
and Fixtures
321/323
(127,467,151.89)
(231,609,539.82)
Remarks
Corresponding
Accumulated
Depreciation for
Unreconciled
Buildings account
P115,713,764.36
decrease is due
reclassification
P104,142,387.93
decrease is due
reclassification.
P376,581,661.68
decrease are due
to the following
reclassifications:
Machineries and
Equipment
229/233/23
4/236/240
397,146,225.20
773,727,886.88
Accumulated
Depreciation Machineries and
Equipment
329/333/33
4/336/340
(387,935,632.42)
(658,956,412.82)
Transportation
Equipment
241
148,864,219.89
315,672,180.24
P166,807,960.35
decrease is due to
reclassification
Accumulated
Depreciation Transportation
Equipment
341
(155,238,035.40)
(317,279,114.71)
P162,041,079.31
decrease is due to
reclassification
decrease is due to:
Reclassification in
the amount of
P5,558,347.07
Dormant since
2003; Still
unreconciled
Construction in
Progress
264
457,018,738.82
462,577,085.89
Other Assets
290
499,424,638.42
499,424,638.42
(519,000,421.84)
(519,000,421.84)
P575,883,408.35
P703,413,084.18
401
533,802,866.88
533,802,866.88
Still unreconciled
403
48,999,125.01
48,999,125.01
Still unreconciled
412
413
2,527,112.25
2,527,112.25
1,692,034.41
Still unreconciled;
P377.78 decrease
301-02-99
TOTAL ASSETS
Accounts Payable
Due to Officers and
Employees
Due to BIR
Due to GSIS
Still unreconciled
P127,529,675.83
decrease
105
Account
Code
2013
2012*
1,691,656.63
Due to PAG-IBIG
Due to Philhealth
Due to other GOCCs
Guaranty Deposits
Payable
Performance/Bidders/
Bail Bonds Payable
Other Payables
Other Deferred Credits
due to adjustments
414
415
417
111,068.74
29,275.00
430,174.81
111,068.74
29,275.00
430,174.81
Still unreconciled
Still unreconciled
Still unreconciled
426
170,533,388.90
170,533,388.90
Still unreconciled
427
1,428,947.39
1,428,947.39
439
455
156,151,331.89
22,632,719.52
156,151,331.89
22,632,719.52
P938,337,667.02
P938,338,044.80
281,671.51
281,671.51
P281,671.51
P281,671.51
TOTAL LIABILITIES
AND EQUITY
P938,619,338.53
P938,619,716.31
P377.78 decrease
UNRECONCILED
ACCOUNTS, NET
P362,735,930.18
P235,206,632.13
P127,529,298.05
(net)
TOTAL LIABILITIES
Capital Stock
TOTAL EQUITY
2.
Remarks
502
Still unreconciled
Account
Still unreconciled;
Still unreconciled
P377.78 decrease
Still unreconciled;
-
1.5
1.6
1.7
1.8
The balance of the Land account in the amount of P12.444 billion as of December
31, 2013 was not correctly stated due to:
106
a. The dropping from the books of accounts of land with carrying value of
P89.725 million was not effected because of the discrepancy in land area
by 29.573 million square meters between the accounting records and TCT
No. 36069, with the area per accounting records higher than the area per
land title. Likewise, a difference of 2,594.40 square meters was noted
between the area in the remaining lots per land title and the area per
inventory after the sale of the lots.
b. Land with an area of 92.61 hectares, titled under MWSS name, was not
recorded in the books;
c. Transfer Certificate of Titles (TCT) of 128 lots with an area of 194.91
hectares were not found during the actual inventory of land titles which
were recorded in the books but were not included in the inventory list of
TCTs in MWSS vault; and
d. Transfer Certificate of Titles of eight lots with an area of 7.78 hectares
were not found during the actual inventory of land titles; these were land
recorded in the books and included in the inventory of TCTs in MWSS
vault.
1.
2.1
2.2
2.3
However, audit of the land and land improvement accounts disclosed the following:
2.3.1
The dropping from the books of accounts of land with carrying value
of P89,725,083.90 was not effected due to a discrepancy in land area
by 29,573,498.09 square meters between the accounting records
and TCT No. 36069, with the area per accounting records higher
than the area per land title. Likewise, a difference of 2,594.40 square
meters was noted between the area in the remaining lots per TCT
and the area per inventory after the sale of the lots.
a. The land located in Balara, Quezon City has total land area of
2,047,409.70 under TCT No. 36069. Documents gathered showed
that sometime in 1983, 1,333,335.60 square meters of land were sold;
thus, the remaining lots should have a land area of 714,074.10 square
meters.
b. Analysis revealed the following:
107
i.
ii.
Area (sq.m.)
716,668.50
714,074.10
2,594.40
The
Physical
Inventory
Committee
in
its
Investigation/Verification report dated January 7, 2014
recommended the dropping from the books of accounts the
remaining parcels of land under TCT No. 36069 with total area
of 716,668.50 square meters based on the Committees report
that TCT No. 36069 was already cancelled due to the sale of the
lots in 1983.
c. While the dropping from the books of accounts for the remaining
parcels of land was recommended by the Physical Inventory
Committee, the Finance Department deemed it not proper to
immediately record the dropping from the books of accounts the
remaining lot areas due to the discrepancy of 29,573,498.09 square
meters in land area with carrying value of P89,725,083.90.
d. The Finance Departments computation of the difference of
29,573,498.09 square meters of land, with the area per accounting
records higher than the area per TCT, is shown below:
Particulars
Remaining area per books
Remaining area per TCT 36069
Difference
Area (sq.m.)
30,290,166.59
716,668.50
29,573,398.09
2.3.2
Land with an area of 92.61 hectares, titled under MWSS name, was
not recorded in the books.
108
b.
c.
2.3.3
Lot
No.
15793
955-A
255999
1120
27641
752A
26284
805-A
16
5667
10103
10254
10254
27642
27643
30213
16
B1
111
87
88
795A
797A
5A1
Location
Part of Tala Estate Commonwealth/ Capitol,
Q.C.
Part of Tala Estate Commonwealth/ Capitol,
Q.C.
Luzon Avenue (Municipality of Caloocan,
Province of Rizal)
Luzon Avenue (Municipality of Caloocan,
Province of Rizal)
Matitic, Norzagaray
Sapang Palay, Sta. Maria, Bulacan
Municipality of San Mateo, Province of Rizal
San Juan
San Juan
Municipality of Caloocan (Luzon Avenue)
Municipality of Caloocan (Luzon Avenue )
th
15 Ave., E. Rodriguez Street, Cubao
th
15 Ave., Socorro Santolan, Murphy San
Juan, Rizal
Caloocan City
Quezon City
Area
(Sq.
m.)
36,738
96,953
12,263
19,309
10,699
29,047
391,677
3,843
7,890
34,261
30,827
401
Transf
er
Certific
ate of 27255
23
1,635
Titles
41028
2695
599
(TCT)
15801
697
250,000
of 128 Total area
926,142
lots
with an area of 194.91 hectares were not found during the actual
inventory of land titles which were recorded in the books but were
not included in the inventory list of TCTs in MWSS vault.
a.
b.
Actual inventory of land titles showed that there were lands recorded
in the books but the land titles were not found. Breakdown as follows:
i. Summary of List of land with TCTs not found during actual
inventory of land titles is shown below.
Summary list of land with TCTs not found during actual
inventory of land titles
109
Location
Lot Area
(sq.m.)
382,205.40
934,892.79
631,983.00
1,949,081.19
No. of Lots
Allocated to MWCI
Allocated to MWSI
Retained Assets
Total
42
63
23
128
ii. Details as to location of the lots with TCTs not found during actual
inventory of land titles are shown below:
Allocated to MWCI
Location
No.
of
Lots
Lot Area
(sq.m.)
127,850
29
217,722
1
2
1
1
42
14,045
21,547.90
991
49.50
382,205.40
Allocated to MWSI
Location
La Mesa Bagbag right of way
Bagbag-Tandang Sora aqueduct
row
Bagbag reservoir & pumping station
D. Tuazon pumping station &
reservoir
Manila
Norzagaray , Bulacan
Caloocan city
Quezon city
Total land area
No. Of
Lots
5
Lot Area
(sq.m.)
3,763
17
24,994
6,596
800
26
2
9
1
63
15,120.79
1,545
867,093
14,981
934,892.79
Retained Assets
Location
Novaliches, Caloocan city
Novaliches, Quezon City
Rodriguez, Rizal
Total land area
2.3.4
No. of
Lots
9
6
8
23
Lot Area
(sq.m.)
144,923
387,940
99,120
631,983
a.
Lot No.
62 B
592 A-1A
20
49-C-3A-3C-2A19349
3A-1
19349
49C-3A-3C-A1-1A
19349
49C-3A-2
35390
1B-3B-3C-2A
19350
49C-3A-3C-3A-4C
Total land area
b.
Quezon City
Quezon City
Quezon City
Area
(Sq. M.)
24,220
1,114
22,206
Quezon City
8,095
Location
Quezon City
Quezon City
Mandaluyong City
Quezon City
175
2,076
2,557
17,383
77,826
The ownership of the parcel of land per TCT No. 11095, Lot No.
1B45, located in Taguig with an area of 1,773 square meters is still
under the name of the National Housing Authority (NHA). Said TCT
has not been transferred in the name of MWSS as of to date.
2.4
The above observations showed leniency in the custody of MWSS land titles. A
Transfer Certificate of Title (TCT) is the best evidence to prove ownership over a
parcel of land. It is the evidence of the right of the owner or the extent of his
interest, and by which he can maintain control and as a rule assert to exclusive
possession and enjoyment of the property. It is therefore necessary that all TCTs
are kept in the MWSS vault.
2.5
b.
c.
d.
e.
2.6
Management informed the Audit Team that the Property Management Department
was instructed to:
a.
Validate the correctness of the land area through the conduct of a re-survey
of the property and sub-divided, and prepare the Terms of Reference for
the procurement of an independent surveyor, so that a separate TCT may
be issued in the name of MWSS;
b.
Establish the reason for the discrepancies in the TCT 36069 in a full report
to be submitted to the Office of the Administrator not later than 25 April
2014;
Provide status or breakdown for the 1,949,081.19 square meters property
which TCT were not found in the actual inventory of land titles, as these
properties were recorded in the books but were not included in the
inventory list of TCTs in MWSS vault;
c.
3.
d.
On the 8 lots with an area of 77,826 square meters not found during the
actual inventory of land titles, which according to PMD is the subject of
petition for reconstitution of title filed in court, give a copy of latest order and
status of the petition, as these properties were recorded in the books but
were not included in the inventory list of TCTs in MWSS vault; and
e.
Of the four individual loan accounts with foreign and local lending banks under the
Bonds/Loans Payable accounts with year-end balance of P11.993 billion, two loans
accounts posted variance against the confirmed balances by the foreign lending
institutions with the latter higher by P112.488 million. The reconciliation between
MWSS and the foreign and local lending banks records have not been consistently
pursued.
3.1
Loan
Purpose
Date Granted
LBP DBP
Club Deal
Facility
To
partly
finance
the
MWSS
maturing
7year
USD
150M 9.25%
Fixed
rate
Bond with the
Maturity
date
December
31, 2018
Amount
1,366,071,428
112
Bureau
Treasury
ADB
IBRD
ADB
of
Loan
Loan
transfer
from NHA
SPIAL
779 and
780
1272/1282
1746
IBRD
4019
ADB
986
ADB
1150
ADB
1379
OECF/JBIC
1146
Purpose
BNP Paribas
which matured
last March 14,
2011.
Fund for the
transfer
of
water
and
sewer systems
in
Tondo
Foreshore,
Dagat-Dagatan
and
Kapitbahayan
Manila Water
Supply
Rehabilitation
Project
I
(MWSRP
I),
Manila Water
Supply Project
II (MWSP II)
and
Metro
Manila
Sewerage
Project
(MMSP).
Manila Urban
Development
Project
A
sanitation
component of
the loan Pasig
River
Environmental
Management
and
Rehabilitation
Sector
Development
Program
(PREMRSDP),
Manila Second
Sewerage
Project
Angat
Water
Optimization
Project
Manila South
Distribution
Project
Umiray Angat
Transbasin
Project
Angat
Water
Optimization
Date Granted
Maturity
date
Amount
Still subject to
confirmation
and subsequent
preparation of
MOA between
MWSS,
NHA
and the two
concessionaires
November 1991
and November
1996
respectively
98,795,399
May
2026
15,
355,625,715
November
1981.
15,
October
2003
13,
July
2020
15,
64,143,909
February 1,
2022
196,176,064
July
2016
1,
362,428,909
December
1989
18,
Oct
2014
1,
561,752,590
January
1992
23,
Oct
2016
15,
141,852,578
November
1995
27,
July
2020
15,
2,208,587,322
Feb
2020
20,
1,458,649391
113
Loan
French
Republic
French
Loan
Export-Import
Bank of China
AWUAIP
II
Purpose
Project
Rizal Province
Water Supply
Improvement
Project
(RPWSIP
Angat
Water
Utilization
&
Aqueduct
Improvement
Program
Date Granted
Maturity
date
December 2002
December
31, 2018
May 7, 2010
Jan
2030
Total
3.2
Amount
21,
56,368,591
5,122,278,629
11,992,730,525
Requests for confirmation were sent out to lending banks as regards year-end
balances. Confirmation results for Bonds/Loan Payables balances as of December
31, 2013 showed a discrepancy of P112,487,895.01 as shown in the following
table.
Result of confirmation
Creditor
French Protocol
IBRD 4019 (ODA)
TOTAL
Per Bank
65,552,516.03
465,732,879.18
531,285,395.21
Overstated
(Understated)
(9,183,925.39)
(103,303,969.62)
(112,487,895.01)
4.
The collections from the two concessionaires for the payment of foreign loans from
CYs 2005 to 2013 in the total amount of P1.863 billion were not remitted to the
114
Bureau of Treasury due to the unresolved issue on whether the loan was equity of
the government or will remain as a loan since the concessionaires continued the
implementation of the project.
4.1
In the CY 2012 AAR, we reported that the collections from the Concessionaires for
the payment of the JBIC/OECF loan during the year were not paid to the Bureau of
Treasury. Management explained that non-remittance was `due to the unresolved
issue on whether the loan was equity of the government or will remain as a loan
since the concessionaires continued the project.
We then recommended that Management immediately resolve with the Department
of Finance and the Bureau of Treasury the issue on whether the disbursements for
the AWSOP before privatization recorded as Loan Payable JBIC/OECF is to be
treated as equity from the National Government or will remain loan as it is the
concessionaires who implemented the project.
We further recommended that should the recorded loan to JBIC/OECF continue to
be treated as loan, Management require the immediate remittance to the National
Government of the amount received from the concessionaires intended for the debt
servicing to JBIC/OECF.
4.2
For CY 2013, audit of the loans payments to the Bureau of Treasury as against the
collections from the two concessionaires for the payment of loans revealed that
payments received from the concessionaires for the payment of loans were not
remitted to the Bureau of Treasury. These are the following:
Loan
JBIC (OECF) Loan PH
110
Special Project
Implementation
Assistance Loan
Total
Amount collected
1,608,205,797.55
254,596,729.12
Period covered
February 2006December 2013
January 2005November 2008
1,862,802,526.67
The JBIC (OECF) Loan PH 110 and the Special Project Implementation Assistance
Loan (SPIAL) are classified under Long Term Liabilities - Foreign and Domestic
Loans respectively.
4.3
Date
Total
CY 2006
February
31,401,634.13
September
26,071,930.61
PNB savings
account
PNB savings
account
57,473,564.74
CY 2007
355,416,404.51
54,396,758.04
January
February
21,386,917.32
August
25,020,647.05
PNB savings
account
LBP Time
deposit
24,103,738.76
25,659,154.97
PNB savings
account
LBP Time
deposit
505,983,620.65
CY 2008
242,934,653.91
14,387,827.11
January
March
20,678,461.27
August
26,247,959.61
CY 2009
February
August
27,579,426.58
31,613,033.92
PNB
Savings
Acct
LBP Time
deposit
LBP Time
deposit
LBP Time
deposit
26,989,828.69
PNB time
deposit
35,229,752.74
LBP Time
deposit
43,251,919.71
41,648,032.02
DBP Time
Deposit
LBP Current
account
366,468,483.33
144,092,412.23
116
Date
Total
CY 2010
February
25,555,171.32
August
32,092,104.65
LBP Time
deposit
LBP Time
deposit
40,940,108.25
42,476,907.47
LBP Current
account
LBP Current
account
141,064,291.69
LBP Current
account
LBP Current
account
141,589,503.62
LBP Current
account
LBP Current
account
140,138,216.83
CY 2011
February
25,879,244.88
August
32,229,215.65
LBP Time
deposit
LBP Time
deposit
40,859,818.31
42,621,224.78
CY 2012
February
26,675,245.51
August
30,625,582.04
LBP Time
deposit
LBP Time
deposit
41,730,910.62
41,106,478.66
CY 2013
February
20,700,554.88
LBP Time
deposit
32,578,597.44
August
24,342,859.09
LBP Time
deposit
33,773,693.05
Total
d.
428,099,988.51
LBP Current
account
LBP Current
account
1,180,105,809.04
111,395,704.46
1,608,205,797.55
In a letter dated April 14, 2014 to MWSS, copy furnished this Office, the
Bureau of Treasury informed that based on BTrs records, of the total loan of
Y6,593,113,021(US$61.75 million) only the amount of Y416,046,615 or
P106,072.026 represents equity of the government and that there was no
document that would show that this amount is to be treated as grant or
subsidy of the government.
e. Further, the Bureau of Treasurys records showed that the amount payable by
MWSS to BTr for the JBIC/OECF loan as of December 31, 2013 amounted to
P2,477,380,362.75 which MWSS should settle immediately.
4.4
b. Accounting data showed that all collection from Manila Water Company Inc.
(MWCI) for the payment of the SPIAL was remitted to the Bureau of Treasury.
c. It was the collections from Maynilad Water Services Inc. (MWSI) covering the
period January 2005 to November 2008 in the amount of P254,596,729.12 that
was not remitted to the Bureau of Treasury, with details below:
Date
Jan. 20, 2005
Amount
364,440,021.88
84,329,724.81
21,657,197.23
4,686,350.77
4,236,407.43
56,410,811.93
5,951,741.36
6,779,681.38
548,491,936.79
293,895,207.67
254,596,729.12
d. From CY 2009 onwards, the collections from MWSI for the SPIAL were
remitted to the Bureau of Treasury.
4.5
We also observed that the collections for the payment of the abovementioned
loans were not deposited in a single bank account and kept as restricted cash but
were deposited in different bank accounts of MWSS, thus, there is the risk that the
funds were used for purposes other than the payment of loans.
4.6
In the herein Audit Observation No. B.1.3 for the MWSS CO, we observed that
the cash and cash equivalents of MWSS CO were not sufficient to pay the loans,
the amounts of which have been received from the concessionaires, and the other
trust accounts of MWSS.
4.7
Considering that the Bureau of Treasury has billed MWSS for the loan
obligations, we reiterated our previous year recommendation that
Management remit immediately to the Bureau of the Treasury all collections
from the two concessionaires for the JBIC and SPIAL.
4.8
During the exit conference, the MWSS Administrator said that MWSS is mindful of
the obligation to the National Government and if the amount being billed needs to
be paid, then the MWSS will do as appropriate. The Administrator is looking at it in
the context of the Water Security Legacy Program, because the Agency has
118
several projects in line and funds are needed for expenditures related to the
Project.
Nonetheless, Management will address the issue and will make
representation with the DBM, DOF or OP on the matter.
5.
4.9
Management also commented that the intention was to treat as equity the JBIC
collection considering that the Government Capital Subscription is not yet fully
delivered to MWSS. The Capital Stock is P8B, and only P6.2B have been
released to MWSS as of 1997.
4.10
The accuracy and validity of the Loans Payable-Domestic account with outstanding
balance of P714.741 million was not established due to unreconciled variance
between the MWSS books of accounts and the confirmed balance from the Bureau
of Treasury with the latter higher by P532.778 million.
5.1
a.
The NHA loan, which remained dormant since 1996, funded the transfer
of water and sewer systems in Tondo Foreshore, Dagat-Dagatan and
Kapitbahayan. As disclosed in the Notes to Financial Statements, the
validity of the account is still subject to confirmation and subsequent
preparation of MOA between MWSS, NHA and the two concessionaires.
b.
c.
d.
The results of confirmation with the Bureau of the Treasury disclosed variance in
the total amount of P532,778,580.69 with the year-end outstanding loan balance
for the following loans:
Result of Confirmation Loans Payable-Domestic account
SPIAL (ADB 779 & 780)
IBRD 1272
IBRD 2676
TOTAL
6.
Per Books
355,625,714.73
64,143,909.08
0
419,769,623.81
Per BTr
526,084,422.24
67,840,144.00
358,623,638.26
952,548,204.50
Variances
(170,458,707.51)
(3,696,234.92)
(358,623,638.26)
532,778,580.69
5.3
It was noted that IBRD 2676, intended to finance the Manila Water Distribution
Project with a principal amount of US$35.30M payable in 30 semi-annual
installments until May 15, 2006, showed zero balance in MWSS books but per BTr
confirmation showed that MWSS has a loan payable balance of P358,623,638.26.
Based on the audited Financial Statements of CY 2006, the loan IBRD 2676
already reflected a zero balance.
5.4
Coordinate with NHA and BTr regarding MWSS loan with NHA.
Facilitate the confirmation and subsequent preparation of MOA
between MWSS, NHA and the two concessionaires for the immediate
settlement of the outstanding balance of P98,795,399.07; and
b.
The year-end balance of the Inter-Agency Payables Due to the Bureau of Treasury
(BTr) account in the amount P233.665 million was doubtful of accuracy due to
variances of P871.821 million between the MWSS and the BTrs books on the
balances of the respective receivables and payables accounts.
6.1
The account Payable to the Bureau of Treasury which showed a year-end balance
of P233,665,256.43 pertained to the guarantee fees on existing loans, deposits for
special reserve fund and interest/other charges on SPIAL loan. Details are shown
below:
Schedule of Inter-Agency Payables Due to the Bureau of Treasury
As of December 31, 2013
Balance
Particulars
Dec. 31, 2013
Guarantee Fee - Project Loans - ADB 986
15,307,571.89
120
6.2
6.3
Analysis disclosed that no separate subsidiary ledger for the dormant accounts
payable to the BTr was maintained in the MWSS books of accounts. Instead, all
accounts are lumped in the Due to BTr Guarantee Fees account.
6.4
Balance
Dec. 31, 2013
P
585,767.01
7,800,000.00
8,300,550.00
5,516,900.00
58,308,600.00
3,521,16.91
101,904,653.51
P 185,938,187.43
121
b.
c.
Balance
Dec. 31, 2013
P 185,938,187.43
962,986,178.92
P 777,047,991.49
187,028,115.79
P 208,160,093.10
80,141,723.37
487,656,246.66
775,958,063.13
962,986,178.92
6.5
As shown above, the significant increase in the dormant accounts from last years
figure of P187,028,115.79 to P962,986,178.92 was due to BTRs reclassification of
overdue and dormant accounts from Loans Receivables to Due from GOCCsDormant Accounts.
6.6
6.7
6.8
122
7.
a.
b.
c.
P3,521,716.91
7.2
Contractor
Consuelo Builders Corp.
FF Cruz Const. & Co. Inc.
Filipino Pipes & Foundry Corp.
Gotesco Kawalan Joint Venture
Makati Development Corp.
Pacifico Austria & Sons
R.D. Tuazon
Sigma Const.
Wilper Construction
A.M. Oreta & Co.
W.M. Lewis & Asso.
B.C. Cuerto Const. Corp.
Devt. of Environmental System
Amount
2,500,340.59
2,959,907.17
34,792,597.88
16,184,338.44
4,675,912.94
704,028.70
9,459,323.95
132,812.02
212,062.79
47,970,710.51
73,523.29
1,309,449.55
127,839.48
181-01-000-000-000-649
70,989,440.27
181-01-000-000-000-674
181-01-000-000-000-687
181-01-000-282-265-000
181-01-000-341-915-000
25,712.45
4,418,767.89
35,495,704.55
16,170,003.29
123
181-01-000-725-926-000
181-01-110-439-160-000
Sub total
Various SL 181-01
Total
R II Builders
MMRR Construction
Various contractors
56,005.10
47,680,244.28
295,938,725.14
(3,635,198.23)
292,303,526.91
7.3
The above advances should have been deducted from the progress billings for ongoing projects or recouped from the surety bonds posted by the contractors.
Considering that these accounts have been dormant for several years there is the
very remote possibility that the said advances to contractors will be collected.
Thus, MWSS faces the risk of possible losses on the non-recoupment of the
advances granted to contractors.
7.4
We also observed that information relative to the advances/ mobilization which are
necessary to facilitate the monitoring of the accounts were lacking, namely:
7.5
a.
name of the project to which the above advances were made and the
status of said projects;
b.
c.
Whether the contractor was fully paid without deducting the above
advances;
Date of Payment; and
d.
8.
7.6
Considering the above explanation from Management, we will issue the necessary
Notice of Disallowance on advance payments that were not deducted from
contractors claim for final billing.
7.7
7.8
As reported in the CY 2012 AAR, interest on the P2.250 billion floating rate Bond
Issuance under the DBP/LBP Club Deal Arrangement guaranteed by the National
Government in the amount of P203.605 million as of year-end was not recognized by
MWSI as its liability to MWSS, hence its collection was doubtful.
8.1
8.2
The Office of the Government Corporate Counsel (OGCC) issued Opinion No.
215 dated October 5, 2011 regarding the dispute between MWSS and MWSI on
the subscription agreement between MWSS and BNP Paribas, pertinent provision
in page 10 3rd paragraph quoted hereunder:
Lastly, we opine that the same legal bases for the claim of
interest penalty and COB may be used to support a claim for
the payment of the Land Bank DBP Loan and the other loans
in the 2001-2006 Bridge Loans which were incurred in order
to retire the MWSS BNP Paribas Loans. These bridge loans
are still a consequence of Maynilads failure to remit the
concession fees.
8.3
8.4
125
9.
8.5
8.6
Management informed that they had been in pursuit of the legal remedies to be
able to collect the disputed amount. They had written a letter to the OGCC dated
February 3, 2014 requesting for the filing of dispute or arbitration against MWSI on
the unresolved claims: MWSS BNP Paribas loan.
MWSS has not collected its 40% share in the net income from CYs 2004 to 2013 on
the operation of the La Mesa Ecopark (La Mesa Resort Zone) by the ABS CBN
Foundation Inc. (AFI) due to the unresolved issue on the 15% management fee
being charged by AFI. Likewise, the MWSS Board of Trustees post facto approval of
the Memorandum of Agreement (MOA) which will make the agreement fully effective
has not been secured.
9.1
In the CYs 2011 and 2012 Annual Audit Reports, we recommended, among others,
that Management:
a. Seek the approval from the MWSS Board of Trustees of the 15%
management fee being charged by the AFI in order to comply with
Section 1.1 of the Memorandum of Agreement; and
b.
Require the post facto approval and ratification of the MOA to enable the
Agreement to be fully effective. Otherwise, the MOA could be considered
null and void, ab initio.
9.2
9.3
In the MWSS letter/response dated October 30, 2013, regarding COA CY 2012
Annual Audit Report, we were informed that the MWSS audit team has submitted
its findings and observations which included a table showing the Revenue Sharing
Scenarios between MWSS, AFI AND LGQC in the La Mesa Ecopark operations
from 2004 to 2011. Portion of the letter/report is quoted as follow:
(b) On the issue of sharing:
(i)The amount of sharing each party should have received from 2004 to 2011 is
itemized below for the Management appreciation.
(ii) There are three considerations however, as shown below:
Table 5: Revenue Sharing Scenarios between MWSS, AFI AND LGQC
MWSS
40%
No Mngt Fee,
No Capex
(6,781,162)
126
AFI
LGQC
30%
30%
14,388,056
14,388,056
47,960,187
5,565,011
5,565,011
18,550,037
(5,085,872)
(5,085,872)
(16,952,906)
Per Section 11 of the MOA AFI shall share with MWSS and the LGQC the
net income after tax derived annually from LMRZ operations on a 30%-40%30% basis, respectively, subject to Section 6 hereof. The Financial Report shall
be prepared and submitted by AFI to the LMEB for the LMRZs initial operation
ending June 30, 2005. Thereafter, an Annual Financial Report shall be
prepared and submitted by AFI to the LMED and the net income, if any, shall
be distributed among the parties accordingly.
(iii) Since 2005, no distribution of the share out of the net income was done by the
AFI. The AFI has gone overboard by collecting Management Fees of 15% and
still holding on to the 100% net income for the past 7 years.
9.4
9.5
The report stated that the finding was presented by the MWSS audit team for
Managements information and guidance. However, it appears that no decision or
action has been taken by Management on the findings by the MWSS audit team.
There is no book entry as of December 31, 2013 taking up the amount of Accounts
Receivable from AFI or income earned from La Mesa Ecopark Operation.
Furthermore, the post facto approval/ratification of the Memorandum of Agreement
by the Board of Trustees for the agreement to be effective has not been secured
to date. Section 22 of the MOA mentioned four (4) requisites of the Agreement to
be effective, as follows:
a.
b.
c.
d.
9.6
9.7
9.8
a.
Collect the 40% share in the net income from CYs 2004 to 2013 on the
operation of the La Mesa Ecopark (La Mesa Resort Zone) by the ABS
CBN Foundation Inc. (AFI);
b.
Settle the issue on the 15% management fee deducted from the gross
revenue as management fee of AFI; thereafter, secure the approval of
the Board of Trustees in order to comply with Section 1.1 of the MOA;
c.
Look into the effectivity of the MOA considering that it has no post
facto approval/ratification by the Board of Trustees as of to date and
therefore not in compliance with the provision of Section 22 thereof;
If the Agreement will still be found valid, we restate the prior years
recommendation which were as follows:
127
9.9
10.
a.
Create the LMRZ-EC that will formulate policies regarding the LMRZ
aside from other functions and responsibilities stated in the MOA.
Upon creation, members of said body should convene regularly to
address and assess the operations and concern of the LMRZ/La Mesa
Ecopark;
b.
c.
Collection efficiency of rental income for the use of Right of Way properties
decreased by 34% or P1.046 million, from P 3.102 million in CY 2012 to P2.056
million in CY 2013, due to the non-renewal of the contract of lease.
10.1
Memorandum Circular 02-11 dated July 22, 2002 was issued with the objective of
generating additional income from MWSS ROW thru lease rental to adjacent and
non-adjacent lot owners including unauthorized settlers/squatters who have
already established their residence within the MWSS properties and who
manifested their intention to lease.
10.2
10.3
However, audit revealed that collections from ROWs made as of December 31,
2013 showed a decrease of 34% compared to CY 2012 collections. Shown below
is the comparison of actual collections for CYs 2013 and 2012:
Total Collection
No of payees
10.4
2013
2,056,659.68
36
2012
3,102,972.69
50
Decrease
1,046,313.01
14
%
34
39
10.6
10.7
a.
b.
c.
d.
The Acting Finance Manager informed that during the Management Committee
meeting, Management had instructed the Property Management Department to
prepare Program of Relocation of ROW lessees/ ROW Clearing Program to arrive
at a schedule for Ejectment of Informal Settlers and or whether other lessees may
be allowed for Renewal for those who will not be affected by the Schedule. The
objective is to justify the renewal of contracts and the non renewal of leased ROW
properties. Guidelines on the issuance of contract of lease will be revised if there
is a need to do so.
129
11.
The reconciling items appearing in the bank reconciliation statements over the
years in the amount of P4.252 million remained unadjusted; thus, the Cash-in-Bank
balance of P40.952 million was not correctly stated.
11.1
11.2
Audit of cash accounts and review of Bank Reconciliation Statements showed the
breakdown of the discrepancies as follows:
List of bank accounts with discrepancies
Bank Account
Balance
Balance per
per Book
Bank
Difference
24,832.67
(118,139.94)
142,972.61
36,660,311.24
36,622,656.73
37,654.51
15,909.37
(718,739.54)
734,648.91
4,251,655.43
942,120.43
3,309,535.00
40,952,708.71
59,116,295.14
4,224,811.03
11.3
Amount
56,991.44
743,652.95
800,644.39
20,361.69
833,660.08
(854,021.77)
3,100,758.23
10,448.66
862.50
15,000.00
101.50
203.00
(3,127,373.89)
10,000.00
0.96
84,996.43
94,997.39
130
(15,000.00)
(8,344.49)
(6,069.96)
7,500.00
13,068.75
356.00
3,000.00
(23,926.75)
(87,350.69)
200.00
(455.26)
(998,110.00)
(4,224,811.03)
11.4
11.5
11.6
1.2
We conducted cash examination on the cash and accounts of Ms. Ma. Theresa V.
Makiling, Special Disbursing Officer (SDO) and Mr. Alan D. Chuegan, Cash
Collecting Officer (CCO)of MWSS-RO covering the period January 29, 2013 to
131
January 15, 2014 and April 19, 2013 to January 15, 2014, respectively, and found
no shortage nor overage.
1.3
b.
The designated SDO was also a Finance Officer B whose duties include
processing of all disbursements of the Regulatory Office, preparation of
payroll register and summary journal for posting in the General Ledger
and other accounting reports.
c.
On the other hand, the Cash Collecting Officer was designated as the
Acting Chief Corporate Accountant A in concurrent capacity. He signed
Box B of the disbursement vouchers and certified the correctness of the
financial reports.
d.
e.
f.
g.
The AOs had safe or adequate cash receptacles but the office was not
properly enclosed and secured/protected against intrusion of
unauthorized persons.
h.
There was no change in the combination of the safe whenever there was
a change of accountable officers.
132
i.
1.4
In addition, the requirement under Treasury Circular No. 02-2009 dated August 6,
2009 that the Bureau of Treasury should be notified of the cancellation of the
bonds of separated/retired accountable officers was not complied with.
1.5
b.
c.
Require the accountable officers to stamp PAID all vouchers and its
supporting documents;
d.
e.
f.
g.
Comply with the provisions set forth in Treasury Circular No. 02-2009
dated August 6, 2009 on the cancellation of the fidelity bond of the
separated/resigned SDO.
133
2.
Actual Extraordinary and Miscellaneous Expenses (EME) for CY 2013 exceeded the
DBM approved Corporate Operating Budget by P0. 608 million. In CY 2012, same
observation was incorporated in the Annual Audit Report.
2.1
2.2
2.3
The General Ledger as of the end of the year showed the following balances:
Extraordinary Expenses by MWSS-RO Officials Add: Miscellaneous Expenses
EE-Sports/Wellness
Total
649,359.67
491,093.21
29,785.00
1,170,237.88
2.4
The DBM approved the Corporate Operating Budget for EME with a footnote that
the disbursement for extraordinary and miscellaneous expenses shall be subject to
the provision of Section 23, General Provisions of R.A. No. 10352.
2.5
Under the abovementioned provision, the prescribed rates for the payments of the
EME should be:
POSITION/SALARY GRADE
Chief Regulator / 29
Deputy Administrator / 28
Total
2.6
Extraordinary
Expense
50,000.00
38,000.00
2013
Miscellaneous
Expense
72,000.00
72,000.00
TOTAL
122,000.00
440,000.00
562,000.00
Amount
491,093.21
29,785.00
649,359.67
562,000.00
87,359.67
608,237.88
2.7
Under COA Circular 2012-003 dated October 29, 2012, claims for EMEs and other
similar expenses of GOCCs in excess of the amounts fixed under the General
Appropriation Act, are considered excessive expenditures of government funds.
2.8
3.
2.9
2.10
Management explained that the excess expenditure was due to the fact that the
DBM form for detailed MOOE does not provide a separate line item for
miscellaneous expenses where the above expenses were budgeted. Thus, MWSS
RO lumped the budgeted amounts in it submission to the DBM of the COB For CY
2013 to follow the DBM line item classifications. They further informed that the said
expenses were allowable expenditures incurred within its DBM approved total
MOOE.
2.11
As reported in the CY 2012 AAR, the policy on monetization of leave credits under
Section 22 of Omnibus Rules on Leave, Rule XVI of the Omnibus Rules
Implementing Book V of Executive Order 292) was not observed, as employees were
allowed to monetize their leave credits although their vacation leave credits were
less than five days after monetization.
3.1
Audit of the Terminal Leave Benefits account as of December 31, 2013 showed
that several MWSS-RO employees were allowed to monetize their leave credits
although their vacation leave credits are less than five days after monetization
contrary to Section 22 of Omnibus Rules on Leave, Rule XVI of the Omnibus Rules
Implementing Book V of Executive Order 292.
3.2
NAME
1. Isabel Bagaporo
2. Victor Cariaga
3. Candelaria Castasus
4. Alan Chuegan
5. Jose Noel Dalistan
6. Edgar Lumbres
7. Randolph Marcial
8. Crescenciano Minas
9. Mylene Joy Parras
10. Cheryll Ann Razon
11. Ma. Claudine Tenorio
12. Rosalinda Valdez
13. Maritess Victoria
14. Debbie Cachuela
15. Clarissa Jallorina
16. Vicente Avila
17. Candelaria Castasus
Total Balance
Before
Monetization
12.07
12.01
10.85
31.64
15.92
10.63
21.59
23.65
22.50
11.95
21.29
10.02
19.84
13.88
115.99
12.27
12.35
No. of Days
Monetized
15
25
13
30
15
15
50
30
40
15
20
15
20
30
115
10
10
Remarks
Negative balance
Negative balance
135
Total Balance
Before
Monetization
NAME
18. Roberto Diala
19. Edgar Lumbres
20. Christian Marcelino
21. Randolph Marcial
22. Crisanto Nagtalon
23. Cheryll Ann Razon
24 Ma. Claudine Tenorio
25. Olivia Tolentino
26. Rosalinda Valdez
27. Maritess Victoria
3.3
No. of Days
Monetized
13.94
11.04
21.56
12.02
12.27
10.29
18.20
10.91
13.80
17.58
Remarks
10
10
20
20
10
12
15
12
15
15
This is a reiteration of an audit finding in the MWSS Annual Audit Report since CY
2008.
1.2
Particulars
Shared expenses paid by
Corporate Office
Concession fees
received from the two
concessionaires (MWSI
and MWCI) for the
Corporate Operating
Budget of MWSS and for
the term extension of the
contract.
Nature
Corporate Office
(CO)
Nature
Regulatory
Office (RO)
Asset
Liability
Due to CO (421)
Liability
Due to RO (423)
Asset
Due from CO
(141)
136
1.3
CO Books
Asset - Due from
254,939,771.58
R.O. (143)
Liability - Due to
632,770,398.94
R.O. (423)
1.4
RO Books
Liability - Due to
116,525,403.82
C.O. (421)
Asset - Due from
1,434,533,304.68
C.O. (141)
Net Amount
138,414,367.76
801,762,905.74
940,177,273.50
The year-end balance of the asset account, Due from CO (141) was
P1,434,533,304.68 while that of the liability account, Due to RO (423) was
P632,770,398.94 or a difference of P801,762,905.74 accounted for as follows:
Particulars
Book Balance 12/31/2012
Transactions for 2013 (RO)
Recognition of term extension of
MWSI
Recognition of term extension of
MWCI
Concession Fee COB for CY 2013
Offsetting of Meralco Bills (later part
of 2012 and the year 2013)
Receipt of Partial Payment of COB
2013
Transactions for 2013 (CO)
Set-up of COB for 2014
Offsetting of Meralco Bills for the
year 2013
Partial Payment of COB 2013 to RO
Total Reconciling Items
Book Balance 12/31/2013
1.5
Difference
Due from CO
(RO Books)
1,099,161,770.38
Due to RO
(CO Books)
523,932,729.19
Difference
575,229,041.19
114,614,733.81
114,614,733.81
229,229,467.62
(3,087,400.94)
(120,000,000.00)
231,212,534.28
(2,374,864.53)
335,371,534.30
1,434,533,304.68
(120,000,000.00)
108,837,669.75
632,770,398.94
226,533,864.55
801,762,905.74
On the other hand, the year-end balance of the asset account, Due from RO was
P254,939,771.58 while that of the liability account, Due to CO was
P116,525,403.82 or a difference of P138,414,367.76, with details shown as
follows:
Particulars
Book Balance 12/31/2012
Transactions for 2013 (CO)
Payment of electric bills
COA telephone/internet bill
(434-4303)
COA telephone bill (928-2516)
COA internet bill
BOT Chairman telephone bill
(435-5011)
Fuel Consumption (January)
Total Reconciling Items
DUE FROM RO
(CO Books)
254,439,743.17
DUE TO CO
(RO Books)
116,525,403.82
Difference
137,914,339.35
481,118.85
2,006.70
5,059.14
6,470.99
2,626.03
2,746.70
500,028.41
500,028.41
137
254,939,771.58
116,525,403.82
138,414,367.76
1.6
We noted that the bulk of the reconciling items to the unsettled issue on the
sharing of concession fees received for the regular Corporate Operating Budget
and from the approval of the term extension of the contract with the two
concessionaires.
1.7
MWSS Management, in its letter dated October 30, 2013, informed the Audit Team
that within November 2013 they will resolve the discrepancies between the
reciprocal accounts and that the same will be duly approved by the MWSS Board
of Trustees. The necessary adjusting entries will be prepared upon approval.
1.8
Apparently, the issues on the sharing of concession fees and expenses have not
been settled. The year-end balances showed that the reciprocal accounts have not
been reconciled and in fact increased in CY 2013 from P713,143,380.54 to
P940,177,273.50 or a difference of P227,033,892.96 as shown below:
Transactions in Corporate Office Books:
Set-up of accounts on COB for 2014
Transactions in Corporate Office Books:
Offsetting of Meralco bills for the year 2013
Remittance (partial payment of COB 2013)
Payment of electric bills
COA telephone/internet bill (434-4303)
COA internet bill
COA telephone bill (928-2516)
BOT Chairman telephone bill (435-5011)
Fuel Consumption (January)
Sub total
Transactions in Regulatory Office books:
COB for 2013
MWSI Extension
MWCI Extension
Offsetting of Meralco bills (later part of 2012
and 2013)
Receipt of the partial payment of COB 2013
Sub total
Net amount of unreconciled balance
1.9
231,212,534.28
(2,374,864.53)
(120,000,000.00)
(481,118.85)
(2,006.70)
(6,470.99)
(5,059.14)
(2,626.03)
(2,746.70)
P108,337,641.34
229,229,467.62
114,614,733.81
114,614,733.81
(3,087,400.94)
(120,000,000.00)
335,371,534.30
P227,033,892.96
138
1.10
2.
Management informed that the Board of Trustees has issued Board Resolution No.
2014-041-CO dated April 24, 2014 directing both MWSS Corporate Office and
Regulatory Office to implement the necessary adjusting entries to reconcile their
books of accounts consistent with the purely regulatory character of the RO
pursuant to government accounting and auditing rules and regulations.
Among the audit observations contained in the undated COA Fraud Audit Report
No. 2013-001, copy furnished this Office on October 23, 2013, on the results of
audit of MWSS Allowances and Benefits received for CY 2008 was the grant of Car
Assistance Plan, lot and housing benefits to the MWSS officials and employees
without approval from the Office of the President.
2.2
On the other hand, the CY 2008 Annual Audit Report included an audit finding that
the implementation of the Car Assistance Plan was an irregular disbursement of
public funds in violation of RA 6758 and the MWSS Corporate Operating Budget. It
was recommended that Management cease the implementation of the Car
Assistance Plan.
2.3
Other Receivables
Subtotal MWSS CO
Loan Receivable from
the Officers and
Employees
Subtotal MWSS RO
Nature
Amount
49,960,508.93
7,428,600.66
11,357,250.00
68,746,359.59
11,691,439.65
9,470,603.72
21,162,043
139
Total
2.4
89,908,402.96
Analysis revealed that during the year, collections for the abovementioned loans
receivables amounted to P2,553,836.78 as shown below:
Beginning balance ( per GL)
Loan granted in previous year
recorded only in CY 2013
Less; Collections during the year
Car and Housing loan
Ending balance
MWSS CO
70,243,817.07
MWSS RO
21,418,052.05
800,370.60
Total
91,661,869.12
800,370.60
2,297,828.10
256,008.68
2,553,836.78
68,746,359.59
21,162,043.37
89,908,402.96
2.5
The low collection was due to the issuance of MWSS Memorandum Circular No.
2012-002 dated October 23, 2012 imposing a moratorium on the payment of loans
due to the welfare fund and other MWSS based loans. This is in compliance with
Board Resolution No. 2012-127-H directing the Corporate and Regulatory Offices
to ensure strict and faithful compliance with the employees minimum take home
pay requirement under Section 36, General Provisions of the GAA 2012. For CY
2013, the minimum monthly net take home pay requirement is P4,000.
2.6
While the intention of the moratorium was to comply with the law, it is emphasized
that the loans were disbursed out of government funds and should be repaid by the
borrowers within the period provided for in the loan agreement. Moreover, the grant
of the loans was not for public purpose and thus prohibited under Section 4(2) of
PD 1445.
2.7
Section 4(2) of PD 1445 provides that government funds shall be spent or used
solely for public purpose. Although it is in the nature of a loan program, MWSS
funds were used to pay for the housing and vehicles of the borrowers. When
MWSS granted and released the loan, it used its funds for a purpose not within its
mandate under Republic Act 6234 dated June 19, 1971 which is to ensure an
uninterrupted and adequate supply and distribution of potable water for domestic
and other purposes at just and equitable rates.
2.8
Furthermore, based on the definition of fringe benefit abovementioned, the car and
housing loans granted qualifies as fringe benefits which are subject to the approval
of the Office of the President upon the recommendation of the DBM under Section
5 of PD 1597 abovementioned.
2.9
As regards the Loan Receivable from the MWSS RO Multi-Purpose Cooperative P25,000,000, we noted the following:
a.
Regulatory employees who will avail of the housing benefit shall be the
one to execute the loan agreement with the MWSS RO. They also
informed that the Regulatory Office has the actual custody of the
original owners copy of the Transfer Certificate of Title.
b.
It is our view that the housing benefits partakes the nature of a fringe
benefit defined as side, non wage benefits which accompany or are in
addition to a persons employment xxx (Blacks Law Dictionary).
c.
Granting that it was seed money for the housing benefit of employees,
being a fringe benefit as defined above, it should have been submitted
to the Office of the President for approval upon the recommendation of
the DBM in compliance with Section 5 of PD 1597, which provides:
Section 5. Allowances, Honoraria, and Other Fringe Benefits
Allowances, honoraria and other fringe benefits which may
be granted to government employees, whether payable by
their respective office or by other agencies of government,
shall be subject to the approval of the President upon
recommendation of the Commissioner of the Budget.xxx
d.
2.10
3.
b.
For the MWSS RO, the demand for the return by the MWSS RO MultiPurpose Cooperative of the P25 million seed money should be made.
2.11
In the exit conference, Management informed that they have already taken up the
issue with the employees and they did a survey on how much each employee will
pay for the loans.
2.12
We were informed that the necessary Notice of Disallowance will be issued by the
COA Fraud Audit Office in accordance with COA Office Order Nos. 2010-504 and
2010-679 dated July 29, 2010 and October 15, 2010 respectively, regarding the
audit of the MWSS disbursements of funds from CY 2005 to June 30, 2010.
The actual expenditures for Personal Services (PS) for CY 2013 exceeded the DBM
Approved Corporate Operating Budget by P9.921 million, contrary to Section 4(1) of
PD 1445 and Section 47 of PD 1177.
141
3.1
D.
E.
3.2
The Corporate Operating Budget (COB) for CY 2013 of MWSS for its Personal
Services approved by DBM amounted to P103,459,000.00 for MWSS CO and
P46,925,000 for MWSS RO. Comparative presentation of MWSSs Actual
Personal Services Expense for CY 2013 as against the DBM-Approved Corporate
Budget is shown in the table below:
For MWSS CO
Actual Personal Services Expense vs. DBM-Approved Corporate Budget
MWSS CO
Personal Services
Salaries and Wages - Regular
Personnel Economic Relief Allowance (PERA)
Additional Compensation (ADCOM)
Representation Allowance & Transportation
Allowance (RATA)
Clothing/Uniform Allowance
Productivity Incentive Allowance (includes
proposed budget for BOT ofP5,184 M)
Other Bonuses and Allowances
Honoraria (BOT)
Hazard Pay
Longevity Pay
Cash Gift/13th Month Pay
Life and Retirement Insurance Contributions
PAG-IBIG Contributions
PHILHEALTH Contributions
ECC Contributions
Terminal Leave Benefits
Other Personnel Benefits
Total
Actual
Expenditure
(a)
49,941
2,803
189
DBM-Approved
COB
(b)
62,023
3,672
-
8,717
4,502
(4,215)
630
765
135
8,164
14,181
6,017
7,032
2,630
1,432
5,163
4,757
5,940
150
461
150
422
9,697
108,278
51
3,456
5,934
7,443
184
503
184
528
33
103,459
(6,981)
826
(1,432)
(5,163)
1,177
1,503
34
42
34
106
(9,664)
(4,819)
Variance
(b-a)
12,082
869
(189)
Amount
142
Rice allowance
Meal allowance
Anniversary bonus
Total
2,695,541.64
3,970,790.00
366,000.00
7,032,331.64
Amount
4,072,431.29
3,025,000.00
2,347,403.37
224,000
28,030.04
9,696,864.70
For MWSS RO
Actual Personal Services Expense vs. DBM-Approved Corporate Budget
MWSS RO
Personal Services
Salaries & Wages
Personnel Economic Relief Allowance (PERA)
Uniform/Clothing Allowance
Year-End Bonus
Cash Gift
RATA
Honoraria
Hazard Pay
Terminal Leave Benefits
Longevity Pay
Loyalty Bonus
Performance Based Bonus
Performance Enhancement Incentive
Rice Allowance
Meal Allowance
Childrens Allowance
Provident Fund
Life & Retirement Insurance Premium
Employees Compensation Ins. Premium
Pag-I.B.I.G. Contributions
Philhealth Contributions
Total
3.3
Actual
Expenditures
24,069
1,359
295
1,970
278
5,193
167
408
2,100
1,671
125
5,007
0
3,228
34
1,595
1,232
2,918
68
68
242
52,027
DBMApproved
30,007
1,656
345
2,501
345
2,724
0
0
0
0
0
5,007
345
0
0
0
0
3,601
83
83
228
46,925
Excess
Expenditures
5,938
297
50
531
67
(2,469)
(167)
(408)
(2,100)
(1,671)
(125)
0
345
(3,228)
(34)
(1,595)
(1,232)
683
15
15
(14)
(5,102)
Our audit disclosed that the negative variance in personal benefits was due to the
following:
a. The payment of allowances lacked the approval from the Office of the
President as provided under Section 5 of PD 1597, to wit:
Allowance
Rice Allowance
Hazard Pay
Longevity Pay
MWSS CO
2,695,541.64
1,423,522.44
5,163,462.69
MWSS RO
3,228,304.74
407,745.17
1,670,500.00
143
Provident Fund
Total
2,347,403.37
11,629,930.14
1,231,430.82
6,537,980.73
f.
4.
MWSS CO
4,072,431.29
2,630,000
224,000
MWSS RO
2,100,000
167,000
125,000
2,392,000
3.4
We gathered that payment of hazard pay, longevity pay and the 40% RATA in
excess of the allowable rates except for incumbents prior to privatization of MWSS
were already stopped effective January 2014 and August 2013, respectively, due
to the COA disallowance in CY 2013.
3.5
The grant of CNA to MWSS Officials and Employees in the total amount of P4.350
million was not supported with documents that showed compliance with the
pertinent guidelines under DBM Budget Circular No. 2013-4.
4.1
Budget Circular No. 2006-1 dated February 1, 2006 authorizes the grant of the
Collective Negotiation Agreement (CNA) incentives to employees, subject to some
criteria and guidelines. On the other hand, Budget Circular No. 2013-4 dated
November 25, 2013 provides supplemental guidelines on the grant of the CNA
144
incentive for fiscal year 2013. Certain conditions have to be complied with to merit
the grant of CNA, such as but not limited to the following:
a.
b.
c.
d.
4.2
In the MWSS CO, the Journal Entry Vouchers submitted taking up the
disbursements for the payment of CNA in the amount of P3.025 million were not
supported with documents that would show proof of compliance with the
abovementioned requirements under DBM Budget Circular 2013-04.
4.3
In the MWSS RO, the Payroll with Control No. RO-13-149 (12/13 P-83) dated
December 20, 2013 covering the payment of CNA Incentive to MWSS-RO Officials
and Employees totalling P1.325 million was supported only with the following
documents:
145
a.
b.
5.
4.4
The above mentioned documents were not complete to support the granting of
CNA Incentive for CY 2013 as there are other conditions that have to be complied
under DBM Budget Circular No. 2013-4.
4.5
4.6
The MWSS RO submitted the required documents on May 2014. The MWS CO
has not complied with the submission of documents showing compliance with the
requirements on the payment CNA.
MWSS did not have approved Gender and Development Plan (GAD) for CY 2013 and
did not make any budget allocation of its total agency appropriation for Gender and
Development contrary to Joint Circular No. 2004-1 of DBM, NEDA and Philippine
Commission for Women (PCW).
5.1
For three consecutive years, MWSS did not comply with the requirements of the
above cited circular pertaining to the implementation of GAD activities based on
approved GAD Plan and budgetary requirements.
5.2
The Pinugay Sewerage Treatment Plant (STP) project was not completed/utilized but
MWSS had paid mobilization fees of P70.989 million to the contractor and still has
to pay the ADB Loan 1746 Phi for the project which as of December 31, 2013
amounted to P196.176 million.
In addition, the concessionaire, Manila Water Company Inc, assumed the obligation
of MWSS to pay the amount of P375.000 million for the progress billings claimed by
the contractor. As a passed-on cost, the amount was included in the rate rebasing
computation, as stated in the Project Continuity Agreement, which added amount
yielded a higher water rate for the consumers who did not even benefit from the
project. Likewise, MWCI did not complete the project as required in the Project
Continuity Agreement which according to MWSI was due to supervening events that
prompted them to revisit and review the timing and implementation of the project.
146
1.1
1.2
The contract for the Pinugay Sewerage Treatment Plant (STP) project was
awarded thru bidding to Salcon Pte. Ltd. with a project cost of P608.28 million. In
August 2006, advance payments (mobilization fees) of P70 million was paid to
implement the STP project.
1.3
When a new MWSS Administrator took over in latter part of CY 2006, he refused to
pay the contractor for the progress billings due to lack of approved Construction
Plan which would have served as the basis for evaluating the reasonableness of
the contract price. Due to the non-payment of the progress billings, the Contractor
suspended work on the project.
1.4
On September 10, 2008, Salcon Pte Ltd filed a request for arbitration against
MWSS with the Construction Industry Authority of the Philippines (CIAP). The
CIAP issued a Final Award on December 18, 2009 ordering MWSS to pay
P349,473,728.91 and $1,092,653.80. To forestall prolonged litigation, Salcon
offered to reduce the Final Award to P375,000,000 on the condition that MWSS
shall no longer appeal the final award to the Court of Appeals and/or to the
Supreme Court. Considering the substantial reduction of the amount, MWSS
accepted the offer of Salcon and agreed not to appeal the Final award.
1.5
MWSS and Salcon entered into an Agreement to Implement the CIAP Final Award
dated 18 December 2009 in CIAC Case No. 29-2008 dated February 9, 2010.
Also, Manila Water Inc. agreed to assume the obligation of MWSS to pay the
amount of P375 million and MWSS in turn agreed to assign to Manila Water all its
rights, title and interest over the project. This is the subject of a Project Continuity
Agreement Contract executed on February 9, 2010.
1.6
Under the Project Continuity Agreement (page 3, Nos. 2 and 3) , Manila Water Inc.
shall complete the project and that the expenditures to be incurred by Manila Water
in assuming the obligation of MWSS under the Final Award/Agreement to
Implement have already been considered in the approved 2008 Rate
Rebasing/MWCI Business Plan Extension. (underscoring ours).
1.7
Verification of the ADB Loan 1746 PHi subsidiary ledger balance as of year-end
showed that MWSS had outstanding payables in the amount of P196,176,063.72.
There were no payments made on the loan and transactions in the ledger pertain
only to the loan revaluation. The amount excludes the interest and other charges
which may be billed from MWSS.
1.8
Accounting records also showed that mobilization fees were paid to the contractor
from CY 2006-2007 in the total amount of P70,989,440.27.
147
1.9
The validation and inspection of the project was done by the COA Special Audit
Team in connection with the audit of the water rates billed by the two
Concessionaires. The following pictures on the project were provided by Special
Audit Team :
148
1.10
As can be gathered from the above pictures, the project was not completed since
the equipment was not installed and the constructed structures were left
unused/idle. This resulted in wastage of government funds and the nonachievement of the purpose for the construction of the Sewerage Treatment Plant
project and would have already benefited the public in general.
1.11
1.12
1.13
Management informed that the MWSS Regulatory disallowed the cost of the
Pinugay Sewage Treatment Plant amounting to P326.3 million. The MWSS
Regulatory Office in its assessment, deferred full recovery to a later date, when the
facilities are projected to be operational. They further reported that the Regulatory
Office set criteria that are directly aimed at finding a fair balance between the
concessionaires cash flow considerations and customers interest not to be
charged for projects from which they do not, at present, derive any benefit. They
also mentioned that the assessments of the MWSS Regulatory Office are currently
subjects of an on-going arbitration initiated by MWCI.
149
2.
Various parcels of Land with total acquisition value of P143.222 million remained
idle as of December 31, 2013 and have not been serving the purposes for which
they were acquired in previous years.
2.1
Some lands were classified in the Balance Sheet under the Other Asset account
due to its being an idle asset of MWSS.
2.2
The Other Asset account represents the cost of idle land acquired in the past in the
following areas:
Schedule of Other Assets Land
As of December 31, 2013
Location
Laiban site, Tanay, Rizal
Laiban,Tinucan, Sta. Ines, Mamuyaw, Tanay Rizal
Antipolo
Quezon City
Rodriguez, Montalban
Matictic, Norzagaray, Bulacan
Angono, Rizal
San Juan City
Total
2.3
Amount
484,292.00
12,273,564.48
1,716,165.69
95,751,590.36
301,040.83
8,635,468.61
19,842,183.74
4,217,690.00
143,221,995.71
Lands are essential resource of MWSS as they are necessary for the expansion of
the water supply and sewerage Systems. They are to be used to build its various
facilities, as stockyards for operating and maintenance materials and for other
developmental and operational purposes. Physical inventory of the lands revealed
the following:
2.3.1
These are agricultural lands left idle since its acquisition dates due to
non-implementation of the Laiban Dam Project and presumed to
have been taken over by the original owners of the land as shown in
the pictures below:
150
151
152
153
b.
c.
154
d.
2.3.2
The MWSS lots in Barangay Sta. Ines, Tanay, Rizal, with an area of
71.15 hectares can only be reached by foot due to inaccessibility to
vehicles. It is known to be the bailiwicks of government rebels.
Land in Sitio Pantay, Barangay San Jose, Antipolo City for the
resettlement of families affected by the Laiban Dam Project
a.
155
b.
2.3.3
Lot No. A located at Malinta, San Roque, Antipolo City, which has an
area of 8.94 hectares is now being occupied by informal settlers. See
pictures below:
Lot Nos B-1-A and B-1-B with an area of 2.70 hectares and 174.89
hectares respectively are occupied by squatters.
156
2.3.4
Land (Lot 69) located at Norzagaray and San Jose del Monte, Bulacan
a.
157
2.3.5
Lot No. 1-A-1 with an area of 1.63 hectares located within the
compound of the Loyola Retreat House in Angono, Rizal was
acquired exclusively for the construction of the proposed Angono
reservoir. Inspection showed that the area is a vacant lot as shown
below:
158
b.
2.4
2.5
2.6
Lot No.2-E-1 and 2-F-1 with an area of 2.64 hectares and 3.06
hectares respectively, acquired for the proposed Laguna Lake Water
Treatment Plant, are now occupied by squatters as shown in the
pictures below:
1.
A summary of the audit disallowances and suspensions issued as of December 31, 2013
is shown below
159
MWSS Corporate
Audit Office
Particulars
Audit Disallowances/Charges
with Pending Appeal with the
Cluster 3/Commission Proper or
Without Appeal Received but
Appeal Period has not yet
Expired
204,308,256.03
MWSS-Regulatory
Office
105,681,064.04
900,000.00
5,571,999.13
3,392,443.22
Shown below are tables showing status of audit disallowances for transactions of the
MWSS CO and RO:
MWSS Corporate Office
List of Audit Disallowances with Pending Appeals with COA
ND NO.
10-001-05-(09)
Date
Nature of
Disallowance
Amount
Year-End Financial
Assistance
6,565,910.90
Pending Appeal with the
Commission Proper
-do-
10- 02-05-(09)
Anniversary Bonus
5,417,999.39
10-003-05-(09)
5,688,443.56
-do-
10-004-05-(09)
1,178,209.03
-do-
10-005-05-(09)
686,000.00
-do-
10- 06-05-(09)
5,818,138.91
-do-
10-007-05-(09)
104,000.00
-do-
10-008-05-(09)
104,000.00
-do-
10-009-05-(09)
104,000.00
-do-
10-010-05-(09)
1,800,000.00
-do-
10-011-05-(09)
5,764,746.31
-do-
10-012-05-(09)
6,454,899.70
-do-
10-013-05-(09)
Anniversary Bonus
Monetization of
Leave credits
Traditional
Anniversary Bonus
Mid-Year Financial
Assistance
RATA for January
2009
RATA for February
2009
RATA for March
2009
Family Day
Allowance
(Regular)
Rate Rebasing
Bonus (Regular)
Family Week
Allowance
(Regular)
Performance
Enhancement
6,524,033.20
-do-
160
ND NO.
Date
Nature of
Disallowance
Amount
Incentive
10-014-05-(09)
10-015-05-(09)
10-016-05-(09)
10-029-05-(09)
10-017-05-(09)
10-108-05-(09)
10-019-05-(09)
10-020-05-(09)
10-021-05-(09)
10-022-05-(09)
10-023-05-(09)
10-024-05-(09)
10-025-05-(09)
10-030-05-(09)
Aug.18, 2010
10-031-05-(09)
Aug.18, 2011
10-032-05-(09)
Aug.18, 2011
10-033-05-(09)
Aug.18, 2011
Amended/Supplemental
ND No. 2012-01-(05-08) dated
March 15, 2012 (ND was issued
by FAIO)
GOCC Incentive
For CY 2008
Scholarship
Allowance (1st
Tranche)
Scholarship
Allowance (2nd
Tranche)
Corporate
Christmas Package
for
CY 2009
PX Mart Allowance
(4th Quarter)
5,471,382.77
-do-
3,985,333.71
-do-
6,603,893.90
-do-
10,730,286.97
-do-
2,630,000.00
2,048,273.83
-do-
2,053,273.85
-do-
2,635,000.00
-do-
5,929,843.97
-do-
5,679,037.49
-do-
5,741,017.42
-do-
1,325,375.40
-do-
2,111,192.85
-do-
77,628.50
-do-
73,747.09
-do-
Grocery Allowance
(3rd Quarter - BOT)
90,000.00
-do-
Grocery Allowance
(4th Quarter - BOT)
120,000.00
-do-
Grocery Incentive
Pay (1st Quarter)
Grocery Incentive
Pay (2nd Quarter)
PX Mart Allowance
(3rd Quarter)
Efficiency Incentive
Benefit for CY 2009
Privatization
Financial
Assistance
Educational
Assistance
Extraordinary
Expenses
Extraordinary
Expenses
Grocery Allowance
(2nd Quarter BOT)
Grocery Allowance
(1st Quarter - BOT)
Various allowances
and benefits for the
period CY 2005 to
2008
13-001-05-(12)
June 13,
2013
Amelioration
Allowance
13-002-05-(12)
June 14,
2013
13-003-05-(12)
July 1, 2013
60,483,592.40
3,680,227.14
of the consultant
COLA
14,720,328.21
-do-
RATA
6,001,992.84
-do-
161
ND NO.
Date
13-004-05-(12)
July 1, 2013
13-005-05-(12)
July 1, 2013
13-006-05-(12)
July 1, 2013
13-007-05-(12)
July 1, 2013
13-009-05-(12)
Dec. 3, 2013
Nature of
Disallowance
Amount
RATA
2,704,617.28
-do-
Procurement of
private health
insurance
3,072,183.95
-do-
-do-
857,205.00
-do-
-do-
2,985,516.00
-do-
Hazard and
Longevity Pay
1,269,627.39
5,017,297.07
204,308,256.03
Date
RO10-001719-3(09)
7/16/2010
RO10-002719-3(09)
Nature of
disallowance
Amount
Status
Anniversary Bonus
(Traditional)
622,000.00
7/16/2010
Productivity
Enhancement Pay
(PEP)
622,000.00
-do-
RO10-003510(09)
7/16/2010
Rate Rebasing
Allowance
622,000.00
-do-
RO10-004510(09)
7/16/2010
622,000.00
-do-
RO10-005510(09)
7/16/2010
416,000.00
-do-
RO10-006719-6(09)
7/16/2010
793,400.00
-do-
RO10-007510(09)
7/16/2010
793,400.00
-do-
RO10-008510(09)
7/16/2010
793,400.00
-do-
793,400.00
-do-
793,400.00
-do-
447,400.00
-do-
RO10-009510(09)
7/16/2010
RO10-010510(09)
7/16/2010
RO10-011510(09)
7/20/2010
Rate Rebasing
Incentive Pay
(Premium)
Family Day &
Educational
Allowances
Traditional
Christmas Bonus
Productivity
Incentive Bonus
(PIB) 1
GOCC Incentive
Collective
Negotiation
Agreement
(C N A) Incentive
Scholarship
Allowance
nd
(2 Tranche)
Efficiency Incentive
Bonus
162
Nature of
disallowance
ND NO.
Date
RO10-012510(09)
7/20/2010
Scholarship
Allowance
st
(1 Tranche)
597,400.00
-do-
RO10-013510(09)
7/20/2010
Family Week
Allowance
793,400.00
-do-
RO10-014510(09)
7/20/2010
Performance
Enhancement
Incentive
793,400.00
-do-
RO10-015510(09)
7/20/2010
Calamity Economic
Assistance 1
793,400.00
-do-
RO10-016510(09)
7/20/2010
Calamity Economic
Assistance 2
793,400.00
-do-
RO10-017510(09)
7/20/2010
Corporate
Christmas Package
1,033,400.00
-do-
RO10-018717-1(09)
7/20/2010
695,400.00
-do-
RO10-019510(09)
7/20/2010
311,000.00
-do-
RO10-020883-3(09)
7/22/2010
150,000.00
-do-
RO10-021717-1(09)
7/20/2010
Productivity
Incentive Bonus 3
793,400.00
-do-
RO10-022510(09)
7/22/2010
Rate Rebasing
Additional
447,400.00
-do-
RO10-023510(09)
7/22/2010
RATA Differential
756,000.00
-do-
RO10-024719-3(09)
7/22/2010
597,400.00
-do-
RO10-025719-3(09)
7/22/2010
597,400.00
-do-
RO10-026510(09)
7/22/2010
695,400.00
-do-
RO10-027717-1(09)
7/22/2010
3,175,426.20
-do-
RO10-028717-1(09)
7/22/2010
5,943,527.44
-do-
RO10-029717-1(09)
7/22/2010
3,454,313.88
-do-
RO10-030719-1(09)
7/22/2010
3,482,425.50
-do-
RO10-031717-1(09)
7/22/2010
3,451,319.10
-do-
RO10-032719-9(09)
7/22/2010
3,482,425.50
-do-
Productivity
Incentive Bonus 2
Additional
Educational
Allowance
Health & Wellness
Allowance
Privatization
Anniversary Bonus
1
Privatization
Anniversary Bonus
2
Performance
Bonus
Performance
Enhancement
Incentive
Productivity
Incentive Benefit
Productivity
Incentive Bonus
Collective
Negotiation
Agreement
(C N A) Incentive
Performance
Bonus
GOCC Incentive
Amount
Status
163
ND NO.
Date
Nature of
disallowance
Amount
Status
RO10-033-721
dated (09)
7/22/2010
498,000.00
-do-
RO10-034-721
(09)
7/22/2010
493,800.00
-do-
RO10-035719-1 (09)
7/22/2010
Anniversary Bonus
2,712,493.34
-do-
RO10-036719-1 (09)
7/22/2010
Anniversary (Bigay
Pala I)
2,737,201.58
-do-
RO10-037-510
(09)
7/22/2010
Rate Rebasing
Incentive 1
9,358,872.69
-do-
RO10-038883-4 (09)
7/22/2010
Grocery Incentive
st
Pay 1 Quarter
1,330,000.00
-do-
RO10-039883-4 (09)
7/22/2010
Grocery Incentive
nd
Pay 2 Quarter
1,340,000.00
-do-
RO10-040883-4 (09)
7/22/2010
Grocery Incentive
rd
Pay 3 Quarter
1,350,000.00
-do-
RO10-041883-4 (09)
7/22/2010
Grocery Incentive
th
Pay 4 Quarter
1,375,000.00
-do-
RO10-042-510
(09)
7/22/2010
Educational
Assistance 1
1,513,200.00
-do-
RO10-043-510
(09)
7/22/2010
Rate Rebasing
Incentive 2
2,451,400.00
-do-
RO10-044-510
(09)
7/22/2010
Educational
Assistance 2
1,519,000.00
-do-
Productivity
Enhancement Pay
(PEP)
3,015,729.40
-do-
10/22/2010
Corporate
Christmas Package
5,554,413.46
-do-
10/8/2010
Scholarship
Allowance
3,392,897.70
-do-
Amelioration
Allowance
1,991,974.15
-do-
COLA
7,910,835.98
-do-
3,924,797.50
-do-
RO10-045-510
(09)
RO10-0467191
(09)
RO10-047717-1(09)
13-001-RO(12)
10/21/2010
13-002-RO(12)
June 10,
2013
June 10,
2013
13-004-RO(12) Amended
June 10,
2013
Productivity
Incentive Bonus
13-005-RO(12)
June 10,
2013
Representation and
transportation
allowance
13-006-RO(12)
June 10,
2013
Procurement of
health insurance
4.389,873.84
1,551,528.00
1,389,177.00
-do-
-do-
164
ND NO.
Nature of
disallowance
Date
13-007-RO(12)
Dec. 3, 2013
13-008-RO(12)
Dec. 3, 2013
Longevity Pay
Amount
Status
464,127.10
1,816,335.48
105,681,064.04
Nature of
disallowance
Date
Amount
Status
10-026-05-(09)
200,000.00
10-027-05-(09)
Financial
AssistanceLorenzo S. Sulaik
250,000.00
10-028-05-(09)
Medical/Financial
AssistanceOscar Garcia
450,000.00
900,000.00
ND NO.
Nature of
disallowance
Date
Amount
Status
14-001-05-(12)
Feb. 4, 2014
Janitorial Services
2,855,968.14
14-002-05-(12)
Rice Allowance
2,716,030.99
14-003-05-(12)
Welfare Fund
Government Share
11,848,750.23
14-004-05-(13)
Welfare Fund
Government Share
3,789,683.15
21,210,432.51
165
ND NO.
Date
14-001-RO(12)
Feb. 5, 2014
Janitorial Services
14-002-RO(12)
14-003-RO(12)
Amount
Status
686,587.61
Security Services
1,334,050.05
Rice Allowance
1,371,805.56
14-005-RO (12)
Welfare Fund
Government Share
7,121,527.82
14-005-RO (13)
Welfare Fund
Government Share
1,231,430.82
11,745,401.86
Contractor
Contract Amount
4,058,160.15
5,765,312,520.62
Status
Additional
documents
required in the initial
Technical
Evaluation
report dated December
12, 2012 were submitted
on April 12, 2013.
Additional
documents
required in the initial
Technical
Evaluation
report was submitted by
MWSS Management on
December 13, 2013 and
was
forwarded
to
Technical Services Office
on January 20, 2014.
MWSS-RO
2012 Rate Rebasing
Consultancy Services
Contract
61,597,388.00
Additional
documents
required in the initial
Technical
Evaluation
report dated October 29,
2013 were requested to be
submitted by MWSS RO
166
Contractor
Contract Amount
Status
on October 29, 2013.
21,028,000.00
14,812,000.00
Request
for
contract
review made on May 23,
2013
Request
for
contract
review was made on the
nd
2 quarter of CY 2011
167