CONSTRUCTION INDUSTRY AUTHORITY OF THE PHILIPPINES

MATRIX OF AUDIT OBSERVATION MEMORANDUM

FOR ML CY 2015

AOM Observation / Recommendation Management Comment / Auditor's

No. Date Reply Rejoinder/Remarks
2016-005 Feb. 19. Disciplinary action not imposed on violations of
(15) 2016 contractors investigated

The CIAP was able to discover and investigate 22 Management commented that
violations of RA No. 4566, or the Contractors License for timeliness, PCAB resolved
Law or 147 percent above its 15 targeted number of 10 licensing cases in 2015
discoveries for CY 2015 costing P2.879 million with an which is equivalent to 12% of
allotted budget of P3.086 million, thus, is compliant in the total 81 cases against target
upholding its mandate to enforce strictly the provisions of 3%. However, of these 10
of the said act. However, it failed to subject to cases, 4 cases or 5% were
disciplinary action at least one violation within one year resolved WITHIN ONE YEAR
from the start of the investigation as reflected in their from start of investigation.
CY 2015 Annual Targets.
The 22 newly discovered cases
We recommended that Management strictly subject to are undergoing due process and
disciplinary action within one year from the start of the one year prescribed period
investigation, the number of violations discovered and relative to the timeliness target
investigated as targeted and observe the timeliness in the will lapse this 2016. The audit
imposition of such disciplinary actions/penalties to the team was also informed that
violators, pursuant to RA 4566 or the Contractors License of the 22 cases, 4 cases were
Law. referred to DTI Legal Service
for further investigation in
2015; 8 cases were issued
formal charges by various DTI
Regional/provincial offices as

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 AOM Observation / Recommendation Management Comment / Auditor's
No. Date Reply Rejoinder/Remarks
the cases relates to unlicensed
firms which is not within
PCABs jurisdiction, 2 cases
were dismissed and the rest are
awaiting contractors explana-
tion.

In summary, 10 or 12% were

resolved within one year from
investigation.

2015-02 Oct. 2, Non-submission of CY 2015 financial statements and its

(15) 2015 supporting reports/schedules

Non-submission of the Financial Statements (FS) and all

the required reports/attachments for CY 2015 of the
CIAP to the Office of the Auditor was not in conformity
with EO 292 and PD 1445, thus, precluding the conduct
of financial audit for the purpose of rendering an
opinion on the fairness of presentation of the financial
statements, in accordance with the Philippine Public
Sector Standards on Auditing.

We recommended and Management agreed to:

a) Require the Accountant to delegate her work to one With the integration of the
of her staff to lessen her load and focus her work on Finance and Administrative
the more important and immediate matters to ensure Division of the CMDF with
the submission of the required financial statements CIAP under the approved
within the period prescribed; and Rationalization Plan, the

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 AOM Observation / Recommendation Management Comment / Auditor's
No. Date Reply Rejoinder/Remarks
accounting tasks have
increased. Despite the heavy
workload, there is only one
filled up position in the
accounting section for CY
2015. The Accountant I position
was filled up only in January
2016.

CIAP already delegated to the

Accountant I some of the
works, and the process of hiring
another Accountant and
Bookkeeper for further ease the
load from the Accountant III.

b) Initiate the necessary administrative and/or criminal A letter dated February 6, 2017
action in case of unjustified failure/refusal to effect was issued by the Chief, AFMD
compliance with the foregoing requirements by to the Asst. Commissioner,
subordinate officials pursuant to Section 7.1.2 of COA informing her that as an
COA Circular No. 2009-006 dated September 15, administrative sanction for the
2009. non-submission of FS, the
agency will suspend the salary
of the Accountant effective
February 2017.

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 AOM Observation / Recommendation Management Comment / Auditor's
No. Date Reply Rejoinder/Remarks
2016-006 Mar. 22, Weak cash management controls
2016
Weaknesses in cash management controls such as (a)
granting an excessive Petty Cash Fund; (b) frequent
reimbursement of expenses by the accountable officer
despite low utilization of the PCF; and (c) non-recording of
transactions immediately in the Cashbooks/Cash
Disbursements Record (CDR) may lead to possible misuse
of the fund and unnecessarily tying up the agencys
funds/cash which could have been used for other purposes.

We recommended and the Management agreed to:

a. Review the actual need of the PCF and reduce or
limit the grant of PCF to its AO for the one month
requirement only in accordance with Paragraph
4.3.1 of COA Circular No. 97-002.
Reduced the PCF of one of the
implementing boards and con-
tinue review the utilization of
PCF of other boards to de-
termine the actual amount to be
granted.

b. Stop the practice of reimbursement of expenses; and Monitor the reimbursement of

expenses vis--vis petty cash
utilization

c. Require the AO to record transactions in the Required the AO to record the

Cashbook/CDR in chronological order or as the transactions in the Cashbook
transactions are incurred everyday to come up with daily in chronological order.
the correct cash advance balance.

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 AOM Observation / Recommendation Management Comment / Auditor's
No. Date Reply Rejoinder/Remarks
2016-006 March 22, Non-submission of DVs - P266,709.69
2016
Ten DVs of the CMDF amounting to P266,709.69 were not
submitted for audit due to negligence of some accounting
personnel.

We recommended that management require the Acting Nine (9) DVs were already
Accountant to respond to the Notice of Suspension within retrieved and submitted to
90 days from receipt thereof, through submission of the ten COA; management is presently
DVs otherwise, the same shall be disallowed pursuant to exerting due diligence to find
Section 82 of P.D. No. 1445. the remaining one DV. (GSIS)

Non-submission of report on the actions taken on audit

findings and recommendations.

We recommended that management submit a status report CIAP has prepared this Action
on the actions taken on said audit findings and Plan for submission to COA.
recommendations using the AAPSI form, copy furnished
the DBM, House Committee on Appropriations and the
Senate Committee on Finance, within sixty (60) days from
their receipt of the COA AAR or ML, in this case.

2016-001 Feb. 1, Enforcement of COA Audit Suspension and Disallowance

(15) 2016
Of the total balances of suspensions and disallowances of
the CIAP for prior years and CY 2015 amounting to
P3.947 million, only the amount of P2,233,450.26 or
56.59 percent was settled, leaving a balance of P1.714
million. Moreover, audit disallowances issued prior to
the effectivity of COA Circular No. 2009-006 dated

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 AOM Observation / Recommendation Management Comment / Auditor's
No. Date Reply Rejoinder/Remarks
September 15, 2009, amounting to P15,589.47 remained
unsettled to date.

We recommended that Management:

a. Require the persons responsible and liable for the Management already sent due
disallowances to settle their accountabilities notification to all concerned
immediately; employees on the implement-
ation of COA Resolution No.
2015-031.

b. Request for the approval of the COA, through the For implementation beginning
Director of the Prosecution and Litigation Office, July 2016.
Legal Service Sector, the remaining balance of the
partial settlements of the disallowances, in accordance
with COA Resolution No. 2015-031:

c. Initiate the necessary actions in case of failure/refusal For compliance

of the concerned officials/employees to settle their
accounts; and

d. Exert more effort to trace the present whereabouts of For compliance

the persons liable and consider resorting to other legal
modes of extinguishment of liability permitted by law.
2014 AAR Unreliable PPE account balances P 40.093 million

CY 2014 CMDF AAR We recommended and management agreed to:

a. Inventory Committee to conduct physical count of PPE

and prepare and submit on time the RPCPPE to the

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 AOM Observation / Recommendation Management Comment / Auditor's
No. Date Reply Rejoinder/Remarks
Accounting Unit and audit team for reconciliation and
verification purposes;

b. Accounting Division to maintain Property, Plant and

Equipment Ledger Cards (PPELC); and

c. Property Officer to make an assessment of the existing

PPE if there is any indication of impairment as
prescribed in PPSAS 17.

CY 2014 CMDF AAR Compliance with GSIS Regulations P8,033.52

We recommend and Management agreed to require the

Accountant to:

a. Ensure that the monthly premiums/contributions with-

held are exactly the amounts to be remitted;

b. Prepare adjusting entries for the errors in recording

remittances; and

c. Identify/determine the causes of disparity noted in CY

2013, and prepare adjusting entries, if warranted to
reflect the correct account balance.

CY 2013 CIAP AAR Overstatement of balance of Accounts Payable account

P 9.370 million

We recommend that the Chief Accountant:

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 AOM Observation / Recommendation Management Comment / Auditor's
No. Date Reply Rejoinder/Remarks
a. Revert to the Unappropriated Surplus of the General
Fund the amount of long outstanding and all undocu-
mented payables totaling P811,752.76;

b. Prepare adjustments for the (i) amount recorded as

payables for which no goods/services were yet
delivered/rendered; and (ii) payables which were
already paid in CY 2013;

c. Ensure that the recognition of payables complies with

Section 4(s) of the Manual on NGAS, Vol. I.

CY 2013 CMDF AAR Insufficient collection of fees/bills from tenants for use of
the CMDFTC

We recommend that the OIC of CMDF:

a. Demand immediate collection of the unpaid rentals/ To date, the outstanding

dues from Komatsu and MKK in the amounts of obligation of Komatsu and
P398,308.85 and P9,000.00, respectively; MKK are P164,736.00 and
P9,000.00, respectively.
b. Secure pertinent documents relative to the unpaid dues
which could not be determined due absence of basis
and demand their immediate collection from Komatsu
and MKK; and

c. Devise an efficient collection and monitoring system to

maximize collection of income.

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 AOM Observation / Recommendation Management Comment / Auditor's
No. Date Reply Rejoinder/Remarks
CY 2013 CMDF AAR Long Outstanding Other Receivables Account-P0.233
million

We recommended that the Acting Chief Accountant:

a. Exert efforts to locate the whereabouts of the

aforementioned named accountable officers formerly
connected with CMDF and demand prompt settlement
of their long outstanding cash advances totaling
P230,521.86;

b. Trace the unidentified accountable officer/s with

outstanding cash advances of P2,511.56 from pertinent
documents and perform appropriate action on the
results thereof.

CY 2013 CMDF AAR Unreliable Property, Plant and Equipment-P200.015

million

We recommended that the:

a. Officer-in-Charge of CMDF issue an Office Order

reconstituting the CMDF Inventory Team to conduct
complete physical count of the PPE accounts for all
offices to determine the existence, present condition
and correctness of the balances of all property
accounts;

b. Acting Chief Accountant and the Supply Officer

prepare the PPELC and PC, respectively, and reconcile

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 AOM Observation / Recommendation Management Comment / Auditor's
No. Date Reply Rejoinder/Remarks
both records on a regular basis to determine whether
there are appropriate adjustments to be made on the
balances of the PPE accounts;

CY 2013 CMDF AAR Non-recognition of income and expenses accounts

We recommended that the Acting Chief Accountant:

a. Prepare the necessary adjustments to correct the errors

noted and henceforth, use the proper accounts in
recording collections of income and expenses;

b. Analyze the balance of the Other Payables account to

determine the amount to be remitted to the BTr
representing the excess collection from seminar/
training fees and all other income which CMDF is not
authorized to use; and

c. Henceforth, record collection of rental payments, sale

of handbooks and other miscellaneous income in the
NG books and deposit the same to the BTr immediately
after collection thereof.

CY 2012 CIAP AAR Unreliable two receivable accounts-P693,450.03

We recommended that management undertake the following

courses of actions:

a. Make follow-up collection letters to the concerned

participants; and

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 AOM Observation / Recommendation Management Comment / Auditor's
No. Date Reply Rejoinder/Remarks
b. Send demand letters to the concerned companies,
employees and clients; and

c. Require the three regional DTI offices to liquidate their

accounts.

CY 2012 CIAP AAR Absence of subsidy ledgers for six liability accounts-
P1.59 million

We recommended that the Accountant exert extra effort in

gathering old records/files to determine the details of the
above accounts for subsequent reconciliation with the
concerned agencies.

CY 2012 CMDF AAR Seminar fees collected not approved by proper authority

We recommended that CMDF management:

a. Standardize the seminar fees and seek the approval of

the DBM and CSC on the rates of fees to be charged to
clients; and

b. Upon the conclusion of the seminar/training, submit to

the DBM a report on the fees collected and expenses
thereon.

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 AOM Observation / Recommendation Management Comment / Auditor's
No. Date Reply Rejoinder/Remarks
CY 2012 CMDF AAR Unreliable Current Liability accounts-P26.58 million

We recommended that the personnel in charge of the

account exert extra effort to collect date/information that
would support the general ledger with SLs to properly
identify the persons or establishments to whom the CMDF
has a liability.

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