Professional Documents
Culture Documents
Hospital equipment, buildings, and other facilities of nine DOH retained hospitals
amounting to P121,857,463.25 were found to be either defective, unutilized, or left
unfinished due to lack of funds for installation of water and electrical, workstations,
lack of a trained hospital personnel and hospital facility thereby resulting in foregone
revenues, wastage of government funds and deprived the hospital in the delivery of
quality health care services.
1. Despite our previous years’ audit recommendations on the proper use and
maintenance of equipment and other facilities, a number of defective and unutilized
equipment, patient’s wards and buildings of nine DOH retained hospitals in Regions 2, 3,
12, 13 and NCR were still noted in CY 2009 due to various reasons as follows.
Tondo Medical Laparoscopic 4,500,000.00 Not being used/put into operation since it
Center (TMC) machine was installed in November 2009 as the
consultant/resident surgeon assigned lacks
adequate training on laparoscopy; absence
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Hospitals Facility Amount Reason for Being Idle/Non-Utilization
of hospital policies and guidelines in the
operation of the machine; and the rate of
charges to be imposed to prospective
patients was not yet determined and
approved.
Research Institute Various Laboratory 57,806,050.50 Unutilized from the time of acquisition as
of Tropical equipment acquired these were never installed due to the
Medicines in CYs 1995 to 1998 merging of the then Biological Production
(RITM) for the production of Service (BPS) with RITM in CY 2001.
Tetanus Toxoid
vaccines
Cagayan Valley
Southern Isabela Medical and 2,106,750.00 Remained idle due to lack of a trained
General Hospital Laboratory hospital personnel to operate the same
(SIGH) Equipment since it was pulled out from a private
hospital which was operated thru profit
sharing scheme but the memorandum of
agreement was subsequently revoked.
Central Luzon
Dr. Paulino J. 13,425,379.67 Found defective but were not subjected to
Garcia Memorial repair to maximize their use and prevent
Research and Hospital equipment their further deterioration.
Medical Center
(DPJGMRMC)
DPJGMRMC 272,169.00
-Talavera
Extention
SOCCKSARGEN
Cotabato Regional BizBOX Hospital 3,505,519.00 Only the OPD was able to use the System
& Medical Center Information System. in October 2009 however, the other
(CRMC) An integrated hospital operations were not able to use
package software the system since the required outputs
application designed could not be generated due to defective
for hospital installation of cabling system.
operations that
includes in-patient
admissions, out-
patients transaction
Caraga Region
Adela Serra Ty Five units of Infant 2,775,000.00 Unutilized since acquisition in 2004 due
Memorial Medical Warmers (Viken US) to the absence of a hospital facility
Center (ASTMMC) suitable to the requirement for such
equipment to be operational.
Total P121,857,463.25
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3. The Medical Center Chief of ARMMC informed that the construction of the
three-storey OPD Building specifically covering the ceiling works, painting and
installation of electrical fixtures were suspended in CY 2009 since these were the primary
items affected by the installation of the sprinkler system. The installation of fire sprinkler
system was not included in the contract since the Hospital was one of the recipients of the
Proposed Fire Safety and Protection System Project of the Department of Health, which
was funded only in December 2009.
a. EAMC –
The Chief of Hospital consider the use of the Detoxification Unit located
at the basement for some other purpose so that the money spent for its
renovation will not be put to waste; and
The Bids and Awards Committee fast track the bidding for the rentals
of the required number and specifications of personal computers and
internet connections for downloading purposes and its other
counterparts to make the whole Bizbox Hospital Information System
working for the over-all improvement and efficiency of its
computerized system.
c. The Medical Center Chief ARMMC look for possible sources of funding for
the needed electrical and water tapping and for other unfinished items of
work to complete the OPD building and to attain the objective of its
construction.
5. The DOH, prior to the transfer of funds, determine before hand the need of
facility/equipment based on patients’ and hospital requirements with proper coordination
with the concerned hospitals.
a. Prior to request and/or acceptance of funds from DOH, identify the need
for hospital facility/equipment based on its requirements and patients
demand for services related thereto;
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b. Coordinate closely with the DOH on the specific needs for
facility/equipment before requesting and/or accepting funds for the purpose;
7. The Management of SIGH informed that it will designate a personnel who will
undergo training to operate the equipment. The Management of TMC stated that they had
submitted the Hospital policies and procedures on the utilization and maintenance of
laparoscopic machine including the rate of charges to be imposed to prospective patients.
TMC also informed that there are two part-time consultants who have a technical know
how on the lap procedure and by April 2010, their full time Surgeon will undergo training
on laparoscopy.
8. Ocular inspection of equipment of ten hospitals and two CHDs disclosed the
presence of unserviceable properties which were beyond economic repair worth
P59,096,035.23 distributed as follows:
CHDs/Hospitals Amount
Metro Manila
Valenzuela Medical Center (VMC) P 1,138,847.18
Research Institute of Tropical Medicine (RITM) 2,147,067.68
Rizal Medical Center (RMC) 18,154,885.23
Ilocos Region
Region 1 Medical Center (R1MC) 2,274,041.98
Mariano Marcos Memorial Hospital and Medical Center 899,479.00
(MMMHMC)
Central Luzon
Dr. Paulino J. Garcia Memorial Research and Medical 7,965,171.50
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CHDs/Hospitals Amount
Center (DPJGMRMC)
DPJGMRMC - Talavera Extension 268,986.25
Bicol Region
Bicol Regional Training & Teaching Hospital (BRTTH) 6,510,642.23
Central Visayas
Center for Health Development (CHD) 17,724,005.08
Zamboanga Peninsula
Zamboanga City Medical Center (ZCMC) 1,427,768.00
Mindanao Central Sanitarium (MCS) 254,204.84
SOCCKSARGEN
CHD 330,936.26
Total P59,096,035.23
9. These equipment which continued to occupy space were left exposed to natural
elements on a prolonged period, thereby further diminishing their value.
10. There were no measures yet undertaken by the said hospitals and CHDs to
dispose the same while they still have considerable salvage value and to use the spaces
they now occupied.
12. The Management of the following Hospitals rendered their comments on the
recommendations:
a. RMC – They have already requested for the services of a COA Technical Audit
Specialist (TAS) for inspection and review of the appraisal of the said assets.
However, the request was returned by the TAS in April 2010 for submission of the
required documentation.
b. VMC - The Administrative Officer IV, the designated Chairman of the Inventory
Committee, informed that the Audit Team was furnished with a copy of an
Inventory and Inspection Report for Unserviceable Property (IIRUP) for CY 2008
but it was returned by the former ATL to the Disposal Committee sometime in
April 2009 as the items lack cost/value.
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c. MCS - Management had been making a follow-up on the disposal of the items
however, these were not inspected due to unavailability of COA-Technical
Inspectors to conduct the inspection and appraisal thereof.
13. We recommended the following courses of actions for the said hospitals and
CHDs:
a. The Chiefs initiate action on the immediate disposal of all the equipment
found to be beyond economical repair not only to avoid further deterioration
but also to generate additional funds for the purchase of new equipment and
to make use of the storage spaces occupied by these equipment.
b. The Property Sections submit to the Accounting Section the IIRUP and other
pertinent documents to facilitate dropping from the books the cost of the
disposed properties.
The expenses for water consumption of the National Center for Mental Health at an
average of P1.6 million per month or a total of P19,200,000.00 for CY 2009 which
represents 16% of the total Maintenance and Other Operating Expenses budget for the
year was considered excessive which contributed to the tight financial position of the
Center and adversely affected the delivery of hospital services and deferment of the
needed repair/rehabilitation of several dilapidated buildings.
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15. Analysis of the expenses incurred for water consumption of the National Center
for Mental Health (NCMH) for year 2009 showed that the Hospital is paying more or less
P1.6 million monthly for its water bills to Manila Water Company, Inc., a water
distribution company. Records showed that although major expenses for food supplies,
water, hospital and health centers maintenance, other repairs and maintenance and Other
MOOE have registered significant increases in amount, the appropriation for
Maintenance and Other Operating Expenses (MOOE) of the Center posted only minimal
growth for the past four years from P119 million in CY 2006 to P126 million in CY 2009
or only a six percent increase. For CY 2009, water expenses alone represent 16% of the
total MOOE for the year which contributed to the tight financial position of the Hospital.
16. The substantial monthly payment for water consumption somehow adversely
affected the delivery of some hospital services like free drugs and medicines for indigent
patients including the payment for personnel benefits which suffered reductions in
amounts and the deferment of the needed repair/rehabilitation of several dilapidated
buildings. The prolonged failure to effect the repair of the said buildings could result in
further deterioration of the structures due to non-maintenance and continued exposure to
the elements.
17. Inquiry and investigation conducted disclosed that only less than half of the water
provided by Manila Water Company, Inc. is being consumed for drinking purposes. The
bulk of the supply is utilized for bathing of the more or less 3,000 hospital patients,
cleaning of hospital premises and facilities, watering numerous plants and for laundry
service since the operation of the two operational deepwells could not cope up with the
required volume needed for non-drinking purposes.
18. Inspection of all the 24 existing deepwells of the Hospital and verification
revealed that 22 are not functioning due to various defects. The total cost of repair of
these 22 facilities as estimated by the NCMH Engineering Section could reach to P5.0
million to be used for the procurement of G.I. pipes and fittings, electric motors, jack and
cylinder pumps, pressurized and elevated water tanks and the hiring of expert labor to
conduct re-drilling. If the said repair will be undertaken, the cost thereof can be
recouped/recovered in just within six months as shown in the following computation:
Particulars Amount
Savings from monthly water payment to Manila Water
Company, Inc. – (70% of current bill of P1.6 million since P1,120,000.00
only 30% is actually needed for drinking purposes)
Less: Monthly operating cost for operation of 22 175,000.00
deepwells
Monthly savings P 945,000.00
Divided by P 5 Million
No. of months to recover repair cost of deepwells 5 ½ months
19. The net monthly savings of P945,000.00 can then be used in financing the much
needed repairs and other operating expenses.
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20. We recommended and the Chief of NCMH agreed to give utmost priority to
the repair of the 22 deepwells to make them fully operational to reduce substantially
the water expenditure to give way to rendition of vital and critical hospital services.
The needed funds could be sourced either from DOH Central Office or from savings
from other expense items.
Use and Deficiencies in Recording of Petty Cash Fund – Regions 1, 5, 10 and NCR
The utilization of Petty Cash Fund and the recording of transactions relative thereto in
three Hospitals and one CHD were not in consonance with existing law and
regulations on the handling of the fund which resulted in the immediate depletion of
the fund as well as depriving the Hospitals/CHD of obtaining the most advantageous
price for their purchases.
21. In the review of the 2009 transactions paid through the Petty Cash Funds (PCF) of
four Hospitals/CHDs, the following deficiencies were noted in the handling/utilization of
the PCF:
CHD/Hospital Deficiencies
Metro Manila
Philippine Orthopedic Center The fund was used to reimburse expenses already paid, and
(POC) there was delayed submission of liquidation documents.
Ilocos Region
Mariano Marcos Memorial Although the Dietician of the Hospital was granted a PCF of
Hospital and Medical Center P50,000.00 for the daily purchases of food supplies, the
(MMMHMC) deliveries of suppliers were not paid out of the fund. Instead,
suppliers were made to sign reimbursement expense receipts
(RERs) for the amount due to them. These RERs were used by
the Dietician to support the replenishment of her petty cash
fund although no amount was yet charged to the fund. After
several checks accumulated in her possession, these will be
encashed by the Dietician at the same time to be used as
payment to the concerned suppliers.
The suppliers were paid only after all the checks were encashed
which exposed them to risk of loss since the checks
accumulated first before being encashed at the same time.
Bicol Region
Bicol Regional Training and The Accounting Office does not maintain subsidiary ledger for
Teaching Hospital (BRTTH) each of the accountable officer who were granted PCF.
Northern Mindanao
CHD PCFs were used to procure gasoline, vehicle spare parts,
office/IT supplies and other regular expenses that were
recurring in nature instead of paying the same in check.
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22. The results of the above deficiencies are summarized in table below.
CHD/Hospital Results/Effects
POC Delay in the replenishment of the fund - the fund was replenished when
disbursements reached almost 100% thus, depleting the fund and
defeating the purpose thereof in meeting the emergency requirements
of the Hospital.
BRTTH Cast doubt on the reliability of the reported amount of PCF and
reconciliation of the balance of the fund per accountable officer and
that of the accounting records could be done.
CHD for Northern Mindanao Deprived the agency of obtaining the most advantageous price for the
purchases paid through the PCF.
23. Further, the above practices in the handling of the PCF were not in consonance
with the following law and regulations:
d. Section 176 of GAAM, Volume I - The accountable officer may request for
replenishment of the cash advance when the disbursements reach at least 75% or
as the need requires, by submitting a replenishment voucher with all supporting
documents duly summarized in a report of disbursements.
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e. COA Circular No. 97-002 dated February 10, 1997 - Requires the submission of
official receipts to support the liquidation of cash advance/PCF as proof of
payments.
24. The BRTTH justified that the difference on the balance of the fund was due to late
posting of entries to the SL. MMMHMC admitted that it has been their usual practice to
allow accountable officers to replenish daily especially at times that the Chief of Hospital
is on official travel and the OIC is limited to sign up to P20,000.00 only.
The Custodian of the fund reduce the amount of PCF which is sufficient
enough to cover their needs and for expenses which are difficult,
impractical or impossible to pay through checks; and
b. The PCF Custodian of POC replenish the fund when the disbursements
reach at least 75% or as the need requires.
c. The Accountant of BRTTH maintain SLs for the fund and reconcile the
balances appearing in the SLs with that of the controlling account at the end
of each month.
26. The Management of BRTTH stated that the Accounting Section will update its
records for reconciliation purposes.
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Cash- Collecting Officers Account
Weaknesses and lapses in the existing controls on cash collections were not in
conformity with the provisions of PD No. 1445 and Manual on the NGAS, Volume I
resulting in unreliable data of cash records at Las Piñas General Hospital and Satellite
Trauma Center, loss and misappropriation of collections totaling P797,550.00 at Food
and Drug Administration.
27. During the audit, we noted that the existing controls over collections of Food and
Drug Administration (FDA) and Las Piñas General Hospital and Satellite Trauma Center
(LPGHSTC) were inadequate as follows:
Office/Hospital Deficiencies
Metro Manila
FDA a. The Land Bank of the Philippines (LBP) released the bank
statements to the FDA Cashier instead of the Accountant. The bank
statements were not forwarded to the Accountant as basis of the
preparation of the bank reconciliation statements (BRS).
LPGHSTC a. The amount of the daily collections from October to December 2009
per report of the Cashier and per audit differ from P166.50 to
P282,102.26. The discrepancy noted was the result of not reporting
collections on the date of actual receipt.
b. The collections of the Cashier were not deposited daily with the
depository bank of the Center. For the months of October, November
and December 2009, the collections during Fridays, Saturdays and
Sundays ranging from at least P189,521.60 to at most P453,573.47
were deposited only on Tuesdays instead of Monday which is the
next banking day.
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28. As shown above, there were lapses in the controls adopted by the two agencies to
safeguard the collections. Further, the current practices on collections were not in
accordance with the following provisions:
a. PD No. 1445 –
ii. Section 74 - The depositories to report to the agency head, at the close of each
month, the condition of the agency account outstanding in their books. The
head of the agency shall see to it that reconciliation is made between the
balance shown in the reports and the balance found in the books of accounts
of the agency.
iii. Section 105 - Every officer accountable for government funds shall be liable
for all losses resulting from the unlawful deposit, use or application thereof.
b. COA Circular No. 92-125A dated March 4, 1992 - The preparation and
submission of Bank Reconciliation Statements (BRS) by the Accountant to the
Auditor within fifteen days after the end of each month.
i. Section 21 - All Collecting Officers shall deposit all their collections as well
as collections turned over to them by sub-collectors/ tellers, with the
Authorized Government Depository Bank (AGDB) daily or not later than the
next banking day.
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30. We recommended the following:
a. For FDA –
The Acting Director (i) demand from the AO the full and immediate
restitution of the unaccounted collections of P266,100.00 and apply all
money due to him as part of the recovery of the said amount; and (ii)
institute immediately legal action against the AO for malversation thru
falsification of public documents;
The Accountant (1) regularly prepare the monthly BRS duly supported
by valid, complete and appropriate documents; (2) review monthly the
RCD and its supporting documents prior to recording in the books of
accounts to ensure their correctness and completeness; and (3) follow
strictly the procedures in the receipt and recording of dishonored
checks as provided under Section 26 of the of the Manual on the New
NGAS, Volume I;
31. The Cashier of LPGHSTC commented that the recommendations were already
implemented despite the difficulties due to time pressures on the indefinite schedule of
bank pick-up for security reasons.
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32. Verification of the financial statements as at December 31, 2009 disclosed that the
total of the unreleased and cancelled checks as of year-end amounting to P28,508,495.25
of the following two CHDs and a hospital were not restored to the Cash – National
Treasury, Modified Disbursement System (MDS) account:
Cagayan Valley
CHD Unadjusted unreleased checks during the year 19,319,351.15
Total P28,508,495.25
33. The Management of the above offices/hospital failed to implement properly the
reporting of checks issued and recording of unreleased checks as provided under
GAFMIS Circular Letter No. 2002-001 dated December 16, 2002, to wit:
b. Section 2.5 - In the ensuing year, a JEV shall be prepared to reverse the
entries made by debiting the appropriate payable/liability accounts and
crediting Cash-National Treasury, MDS.”
34. Since the cash equivalent of unreleased and cancelled checks were not restored to
the Cash – National Treasury, MDS account, the corresponding payable/liability accounts
were not likewise recognized in the books of accounts.
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35. The non-restoration of the cash equivalent of unreleased and cancelled checks of
P28,508,495.25 to the cash in bank account and the non-recognition of the appropriate
payable/liability accounts at the end of the year understated both the balances of accounts
Cash – National Treasury, MDS and Accounts Payable by that amount as of CY 2009.
b. The Accountants and the Cashiers comply with the requirements of the
said GAFMIS Circular Letter that:
37. The Regional Directors of CHDs for Metro Manila and Cagayan Valley informed
that the recommendations shall be considered and will inform all concerned accordingly.
38. The TMC Accountant has already drawn a JEV to this effect and will comply with
the requirements of the said COA Circular.
Lapses in the recording of transactions and accounting procedures as well as the non-
preparation of bank reconciliation statements of DOH-CO, a CHD, two DOH attached
agencies and six hospitals resulted in net overstatement of the Cash in Bank – Local
Currency, Current Account by P1,283,815.92, unreconciled dormant cash account
balance of P13,286,904.27, unaccounted difference between the General and
Subsidiary Ledgers of P1,191,449.14 and discrepancies between the accounting and
bank records in net amount of P3,978,143.12 as of CY 2009 thus, rendering the year-
end cash balances of these offices and hospitals unreliable.
39. The audit disclosed some errors in the recording and unrecognized/unrecorded
cash in bank transactions as well as reconciling items at the agency and bank records as
follows:
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CHD/Hospital Deficiencies Errors
Metro Manila
CHD Unrecorded reconciling items of P499,850.00 which were P 499,850.00
credited to the bank account on November 5, 2009;
amount was transferred by the DOH-CO for still
undetermined/unknown purpose hence, remained
unrecorded in the books of accounts as at year-end
Food and Drug Unrecorded interest earned for the 4th quarter 329,284.41
Administration (FDA)
Bureau of Quarantine Unrecorded payment of year-end additional cash bonus (2,388,466.01)
(BQ) and refund of multi- purpose loan
Western Visayas
Western Visayas Medical Unrecorded interest income earned from Jan.-Dec. 2009 275,515.68
Center (WVMC)
Net Overstatement ( P1,283,815.92)
40. Moreover, discrepancies in the cash balances between the bank and the book
records, GLs and SLs were not reconciled over the years as summarized below:
a. At FDA, the Trust Fund and Special Fund R.A. No. 9502 accounts balances per
books do not tally with that of the bank statements.
Balance
Bank Account Discrepancy
Per Books Per Bank
Trust Fund P 9,891,746.33 P 7,631,540.33 P 2,260,206.00
FDA Special Fund R.A. No. 9502 240,964,700.73 240,990,130.72 (25,429.99)
Total P 250,856,447.06 P 248,621,671.05 P 2,234,776.01
The discrepancy of the Trust Fund account has been consistently reported in the
Management Letters of FDA from CYs 2003 to 2008.
b. At LPGHSTC, the discrepancies existed between the book and bank balances of
the two accounts.
Balance
Account Discrepancy
Per Books Per Bank
Cash NTMDS P -0- P 348,473.28 P 348,473.28
Cash-LCCA 16,458,691.82 19,376,503.48 2,917,811.66
Total P 16,458,691.82 P 19,724,976.76 P 3,266,284.94
c. At NCH, the balances of the accounts reflected in the subsidiary records with
those of the Bank Statements as of December 31, 2009 differ.
Amount
Bank Account No Discrepancy
Per SL Per Bank
0682-1001-33 P11,550,315.64 P13,065,635.15 (P1,515,319.51)
0682-1028-10 530,469.77 545,928.76 (15,458.99)
0682-1026-75 11,413,401.72 7,366,530.89 4,046,870.83
0682-1024-38 17,228,493.94 14,734,934.22 2,493,559.72
Total P40,722,681.07 P35,713,029.02 P5,009,652.05
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d. At Rizal Medical Center (RMC) and Ilocos Training and Regional Medical Center
(ITRMC), there were disparities in the balances of cash in bank accounts as
recorded in the SLs and in the GLs.
Balance Discrepancy
Hospital
Per GL Per SL
RMC P 45,932,687.33 P 46,517,516.84 P 584,829.51
ITRMC 63,322,874.25 63,929,493.88 606,619.63
Total P 109,255,561.58 P 110,447,010.72 P 1,191,449.14
41. The causes of the above discrepancies in the balances of cash in bank accounts
were as follows:
Office/Hospital Causes
FDA Failure of the former Bookkeeper to turn-over the complete accounting
files and records from CY 2003 downwards to the Accountant prior to the
transfer of the former to the DOH. The Accountant had searched for the
soft and hard copies of the accounting files but to no avail. The
Bookkeeper admitted that the soft copies have been corrupted while the
hard copies could not be located. The absence of records renders it
difficult for the Accountant to work back on the transactions.
LPGHSTC and NCH The causes of the discrepancies could not be identified/determined as no
bank reconciliation statements (BRS) were prepared in CY 2009. For
LPGHSTC, the latest BRS prepared and submitted by the Accountant
was as of June 30, 2008 although the latest bank statement furnished by
the bank was for December 2009.
42. The following law and regulations require the reconciliation of records for the
cash in bank accounts:
a. Section 74 of PD No. 1445 - The depositories to report to the agency head, at the
close of each month, the condition of the agency account outstanding in their
books. The head of the agency shall see to it that reconciliation is made between
the balance shown in the reports and the balance found in the books of accounts
of the agency.
b. COA Circular No. 92-125A dated March 4, 1992 – Requires the preparation and
submission of BRS by the Accountant to the Auditor within fifteen days after the
end of each month.
c. Sound internal control for cash requires that a periodic reconciliation of bank
accounts and control accounts should be undertaken and reconciling items
immediately corrected in order to ensure accuracy of cash balances appearing in
the financial statements. It is only when both the book and bank records are
reconciled that the reported cash balances are rendered accurate and reliable.
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d. Section 12 of the NGAS Manual Vol. II - The SL is a book of final entry which
shall contain the details or breakdown of the balance of controlling accounts
appearing in the GL. It shall be kept for each control account in the GL. Postings
to the SL generally come from the source documents. The totals of the SL
balances shall be reconciled with their respective control account regularly or at
the end of each month. Schedules shall be prepared periodically to support the
corresponding controlling GL accounts.
43. The said errors and unrecorded transactions resulted in net understatement of the
Cash in Bank – Local Currency, Current Account (LCCA) of two DOH attached
agencies, a CHD and a hospital by P1,283,815.92, unaccounted difference between the
GL and SL of P1,191,449.14 in two hospitals, and discrepancies between the accounting
and bank records in a DOH attached agency and two hospitals in net amount of
P3,978,143.12 as of December 31, 2009 thus, rendering the year-end cash balances of
these offices unreliable.
44. Further, analysis of Cash in Bank – LCCA of DOH-CO disclosed that the balance
of the account includes the net balances of dormant accounts totaling P13,286,904.27
broken down as follows:
Motorcycle Plan of DOH SV Loan (4,710,525.54) Dormant from four to five years
Fund maintained with PNB Rizal
Avenue Branch
Balance of the Payroll Fund Account 8,681,554.17 Since CY 2004, it has an ending
or the ATM Payroll System, net balance ranging from P2M to
amount of the set-up beginning P15M
balance of e-NGAS after deducting
the negative of P(675,070.01).
45. The Accountant of DOH-CO stated that the book balance on PNB-Rizal Avenue
Branch account amounting to P9,315,875.64 could not be closed due to absence of
records and documents to support such balance. The amount consists of the balances of
completed 20 projects under Fund 101 and foreign assisted projects under Fund 102
which remained dormant for six years. On the other hand, confirmation with the PNB-
Rizal Avenue Branch revealed that the negative balance of P4,710,525.54 for the
Motorcycle Plan of DOH SV Loan Fund does not exist in their records and/or already
closed.
46. Further analysis of the SL for the Motorcycle Plan of DOH SV Loan Fund at PNB
revealed that on January 1, 2004, the Management set up a beginning balance for
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e-NGAS amounting to P2,709,154.36 and on January 31, 2005, JEV No. 2005-01-00065
was prepared to record the withdrawal from PNB Account No. 205-8303375 the amount
of P7,419,679.90 for deposit to Philippine Veterans Bank Account No. 00501-000427-0.
The withdrawal resulted in negative balance of P4,710,525.54 in the SL which remained
dormant since CY 2005.
47. The Accounting Staff in charge for dormant accounts under Fund 101 is in the
process of gathering documents to support their request for write-off for the said negative
balance while the Accounting staff in charge for Fund 102 promised to prioritize the
closing of financial statements and the transfer of accounts of completed projects.
48. Review of dormant accounts showed that the P8,681,554.17 balance of Payroll
Account was the result of accumulation of the excess amount transferred from CYs 2004
to 2008 for the salaries of DOH personnel ranging from P1,250,150.56 to P15,839,733.00
as shown below:
49. COA Circular No. 97-001 dated February 5, 1997 defined dormant accounts as
individual or group of accounts with balances that remained non-moving for more than
five years. It also prescribes the guidelines on the proper disposition/closure of dormant
funds and/or accounts of national government agencies which provides that “If the
analysis/review of the accounts/funds is not possible due to absence of records and
documents, the agency head concerned should request for write-off and/or adjustment of
account balances from the COA.”
50. The presence of dormant accounts and negative balance with net amount of
P13,286,904.27 in account Cash in Bank – LCCA of DOH-CO cast doubt on the
existence and accuracy of the same which ultimately affected the accuracy of the account
totaling P78,553,064.92 as of year-end.
51. We recommended that the Accountants of the CHD, three DOH attached
agencies and five hospitals undertake the following courses of actions:
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c. Prepare and submit the monthly BRS for all bank accounts within
15 days after the end of each month. Take up the necessary adjustments for
reconciling items and provide the banks with copies of reconciliation
statements to enable them to make the necessary corrections in the records.
b. The Chief Accountant coordinate with the bank for the daily transfer of
funds from foreign currency – savings account to local currency - current
account based on actual payments to payees instead of on a monthly basis to
avoid the abnormal or negative balance in the books of accounts.
The idle cash of two CHDs, two hospitals and a DOH attached agency as of year-end
totaled P5,898,453.99 of which P4,390,227.66 was due for remittance to the National
Treasury as required under Executive Order No. 338 and DOH, DBM and DOF Joint
Circular No. 2003-01, while the P1,508,226.33 financial assistance from PCSO
remained unutilized, which exposed the fund to risk of unauthorized and/or improper
use and deprived the hospital of effective use thereof as intended, respectively.
70
Unremitted Amount to the National Treasury - P4,390,227.66
54. Review of financial records of a hospital, two CHDs and a DOH attached agency
for CY 2009 disclosed that a total of P4,390,227.66 remained idle in their custody/books
of accounts, the details of which are shown below.
CHD/Hospital/Office Particulars Amount
Metro Manila
CHD Unexpended balances of 12 completed health related
projects of DOH totaling P2,709,794.97 (over- P 2,556,514.61
expenditures of P153,280.36 for the New Born Screening
Program was utilized)
Central Luzon
CHD Cash balance representing accumulated balances from
accomplished programs and projects released by DOH 172,854.31
Central Office that remained idle in the depository
account
Caraga Region
Caraga Regional Refunds collected from SONA Incentive Bonus
Hospital (CRH) disallowance of CY 2004 were deposited to the Trust 495,765.79
Fund account
Total P 4,390,227.66
56. Verification of records revealed that the cash balance pertains to the unutilized
funds provided by PCSO which was deposited in a separate bank account pursuant to the
Memoranda of Agreement (MOAs) entered into between and by the Hospital and the
PCSO as follows:
Last Date of
Amount of the Balance as
Date of MOA Purpose Recorded
Fund per MOA of CY 2009
Transaction
P12,683,401.00 September 25, Financial assistance for the
1998 procurement of medical equipment
P1,508,226 August 2006
P3,000,000.00 February 21, Endowment fund to help defray the .33
2002 medical expenses of indigent patients
seeking consultation or confinement
in charity wards of the Hospital
71
57. The Chief Accountant informed that the unutilized amount could have been the
balance of the fund transferred intended for the procurement of hospital equipment. She
further stated that the bank account was considered dormant by the bank, thus no
transaction could no longer be made for that account.
58. The following law and regulations however, prescribe the proper disposition of
idle cash:
a. Executive Order No. 338 dated May 17, 1996 as implemented by COA, DBM and
DOF Joint Circular No. 1-97 dated January 2, 1997 - The transfer to the Bureau of
the Treasury (BTr) of all existing trust receipts balances that are deposited with
authorized government depository banks.
b. COA Circular No. 97-001 dated February 5, 1997 - If the purpose of the fund is
found completed, discontinued or abandoned and no financial transaction is
expected, review, analyze and reconcile the fund’s account to determine existence
and validity and whatever cash balances be remitted to the National Treasury.
c. Section 3.3 of the DOH, DOF and DBM Joint Circular No. 2003-01 dated July
16, 2003 - Interest income arising from current account deposits as income of the
General Fund shall be deposited with the BTr.
59. The non-remittance of the said amount to the BTr was only not in accordance
with the above-cited law and regulations but also exposed the fund to risk of
unauthorized use/utilization/disposition.
60. For the fund of QMMC, the amount could have been used to procure hospital
equipment and help indigent patients of the hospital which were the intended purposes of
the fund as stated in the MOA between the Hospital and PCSO.
61. We recommended that the Accountants of the above offices prepare the
disbursement voucher for remittance of all cash balances to the National Treasury
pursuant to EO No. 338, s. of 1996 and DOH-DBM-DOF Joint Circular No. 2003-
01; and henceforth, observe the guidelines on the proper procedures for the deposit
of trust receipts to the BTr and the authorized withdrawals therefrom as provided
under COA-DBM and DOF Joint Circular No. 1-97.
62. For QMMC, we recommended that the Chief Accountant verify the
composition of the account balance and facilitate the reactivation of bank account
no. 0582-1016-20 to fully utilize the remaining balance of the fund.
63. Management of CHD for Metro Manila and FDA concurred with the
recommendations.
72
Inaccurate Balances and Non-Settlement of Receivable Accounts – Regions 5, 9, 13 and
NCR
64. The DOH-CO, CHD, hospitals and DOH attached agencies transfer funds to
various National Government Agencies (NGAs), Local Government Units (LGUs),
Government Owned or Controlled Corporations (GOCCs) and Non-Government
Organizations (NGOs)/People’s Organizations (POs) for the implementation of various
DOH projects. These funds are treated as receivable accounts from said
agencies/organizations until these are liquidated/accounted for by the beneficiary
agencies/recipients.
73
Due from Due from Receivables
Agency/ Officers and Other
NGAs LGUs GOCC NGOs/POs Account Notes Total
Hospital Employees Receivables
DOH CO P181,781,988 P 98,288,858 P 78,663,962 P925,750,862 P1,284,485,670
CHD for Bicol 3,718,063 13,819,541 1,033 2,835,913 P 389,634 P 42,784,184 P 1,069,947 64,618,315
CHD for Caraga 45,755,774 10,315 45,766,089
Basilan General
Hospital (BGH) 3,174,895 78,377,621 13,696,793 102,462 15,335,330 23,844 110,710,945
TMC 62,341,555 48,672 86,282 12,354,275 1,207,280 76,038,064
EAMC 5,406,255 5,278,930 195,113 22,501,624 18,185,881 51,567,803
RMC 638,893 12,609,296 1,003,696 14,251,885
POC 199,750 13,947,894 14,147,644
Total P 257,261,399 P 236,241,794 P 92,410,460 P933,865,705 P 783,806 P119,532,603 P 19,255,828 P 2,234,820 P1,661,586,415
66. Analysis of the balances of these receivable accounts of the said
agencies/organization disclosed that the reported balances were either overstated or
understated as shown below.
74
67. On the other hand, based on the results of confirmation from the reported
recipients, the following balances of receivable accounts of DOH-CO were either fully or
partially liquidated or not recognized in their books thus casting doubt on their accuracy.
Account Amount
Due from NGAs P107,828,740.18
Due from LGUs 33,843,493.25
Due from GOCCs 28,109,874.69
Due from NGOs/POs 1,544,919.75
Total P171,327,027.87
The above receivables do not include advances made to Procurement Service which was
separately discussed.
68. As such, the reported balances of the following receivable accounts and other
affected accounts as of CY 2009 were unreliable and over or understated:
75
Accounts Unreliable Overstatement Understatement
Due from NGAs P107,828,740.18
Due from LGUs 33,843,493.25 P91,881,803.00
Due from GOCCs 28,109,874.69
Due from NGOs/POs 1,544,919.75
Notes Receivable 3,668,081.00
Accounts Receivable 8,282,022.00
Due from Officers and Employees P 90,421.00
Other Receivables 3,387,525.00
Total P171,327,027.87 P 90,421.00 P107,219,431.00
Net Amount P 107,129,010.00
69. Further, records of DOH-CO showed that the advance payments made to the
World Health Organization (WHO) totaling P256,986,357.33 for the purchase of drugs
and medicines from CY 1992 to 2002 recorded under Due from NGOs/POs account
remained unliquidated as of year-end. Similarly, the funds transferred to LGUs by the
CHD for Caraga Region aggregating P45,755,773.93 granted from CYs 1997 to 2008
were not yet accounted for/liquidated despite the completion/termination of the purposes
thereof.
70. The non-liquidation of amounts granted was not in consonance with COA
Circular No. 94-013 dated December 13, 1994 which requires the immediate liquidation
of the fund transfers upon the termination/completion of the purpose thereof.
76
c. Accounting Section of CHD for Bicol Region properly record the transfer of
funds to account Due from LGUs and maintain and update regularly the
pertinent SLs to ensure the correctness of the account balance and the
Accountant of the NCH draw the necessary JEVs to correct the errors noted
and record/post these to the GLs, and ensure the proper and accurate
recording of all financial transactions in the books of accounts;
e. For EAMC –
The Accountant maintain and update SL for each type of income due,
payments received and unpaid balances.
For future contracts of lease to be entered into by the Hospital, the Billing
Section formulate formal guidelines for approval of the Medical Center
Chief for efficient and effective recording and monitoring of rentals and
other income due from the lessees.
f. Medical Center Chief of POC enforce strictly the collection of the unpaid
dormitory fees both at the Ladies Dorm and Boys’ Quarter and impose
sanction of eviction from the use of the facilities for failure to settle their
accounts and to document the rental of dormitory facilities through a formal
agreement that will set forth the terms and conditions of the hospital
including the imposition of sanctions/penalties for violators; and
77
72. The following were the comments of the concerned agencies:
Agency/Hospital Comments
DOH –CO Management is undertaking a reconciliation of accounts receivables
to ensure the validity of the claims recorded in the books; follow up
letters were sent to entities with existing receivables.
TMC The OIC of the Billing Section promised to submit the SAR report
on a monthly basis to the Accounting Section which will be the
basis in the recording of receivables.
POC The Management stated that they issued Memorandum Letter dated
September 1, 2009 to all occupants of the Ladies Dormitory and
Boys’ Quarters relative to payment of lodging fees on a regular
basis and on time.
CHD for Caraga Region Management will continue to send demand letters to the LGUs
concerned except for some LGUs wherein records are no longer
available considering the lapse of time.
CHD for Bicol Region The Accountant committed to adjust the affected accounts.
Management will request the Commission on Audit for the write-
off of the uncollected Accounts Receivable as the pertinent
documents thereof can no longer be located with the devolution of
the Hospital from National to Local then back to National. With the
super typhoon Milenyo and Reming in November 2006, it made
more difficult for the BRTTH to locate the documents.
73. As of December 31, 2009, the books of the DOH-CO and EAMC showed that the
balance of account Due from National Government Agencies - PS were as follows:
78
Agency/Hospital Amount
DOH- CO P143,550,138.39
EAMC 5,406,255.26
Total P148,956,393.65
74. Confirmation with the Procurement Service of the Department of Budget and
Management (PS-DBM) disclosed that the balance thereof was only P43,850,944.95
instead of P143,550,138.39 or an overstatement of P99,699,193.44 which includes a
negative balance P3,491,438.93 for ambulance account of DOH-CO. The reason for the
disparity in the amounts could not yet be established as the reconciliation of accounts
between the DOH-CO and PS-DBM is still on-going as of year-end.
a. The Accountants of the DOH-CO and EAMC do not keep and/or properly
maintained SLs for account Due from NGAs which include that of the advances
made to PS.
b. As stated in the Notes to Financial Statements for CYs 2005 to 2009 of EAMC,
the balance of account was inaccurate as deliveries from the PS-DBM were not
properly monitored by the Accountant and the account was still subject for
reconciliation and adjustments as soon as the Reports of Deliveries and/or other
supporting documents or proofs of deliveries are received. However, there were
no efforts exerted on her part to prepare any reconciliation and come up with the
correct balance neither was there any move on the part of the agency to request
confirmation and reconciliation of the account balance with the PS.
77. The maintenance of subsidiary records is prescribed under Section 12, Manual on
NGAS, Vol. II, which provides that “The subsidiary ledger (SL) is a book of final entry
which shall contain the details or breakdown of the balance of controlling accounts
appearing in the General Ledger (GL). It shall be kept for each control account in the GL.
Postings to the SL generally come from the source documents.”
79
79. Moreover, the practice of the DOH-CO of transferring funds to PS-DBM without
closely monitoring the liquidations and timely delivery of procured items defeat the
purpose of expediting procurement of supposedly needed supplies and materials for
agency operations through this Office. This also renders the agency funds idle that could
have been used for other urgent needs of various programs of the Department.
a. For DOH-CO, the (1) Materials and Management Division (MMD) (i)
forward immediately the delivery documents to the Accountant for recording
in the books of accounts; and (ii) coordinate with the Accounting Division on
the advances made to the said agency and to make follow-ups with the PS-
DBM for the delivery of items covered by the paid Agency Procurement
Requests; (2) accounting personnel in-charge facilitate and prioritize the
reconciliation of the records of DOH-CO with those of PS on the balance of
the advance payments made to the latter; (3) Accounting Division
verify/trace the cause/s of the negative balance of P3,446,269.63 so that the
appropriate adjusting entries can be made; and (4) Accounting Division and
the MMD conduct regular reconciliation of their records.
Receivables from patients, NGAs, GOCCs, NGOs/POs, Other Funds, officials and
employees and other receivables totaling P34,954,461.00 of five hospitals and two
CHDs remained uncollected and dormant in the books from one to over ten years
casting doubt on the validity, accuracy and existence of total receivables of
P117,899,547.57 as of December 31, 2009.
80
82. Review of financial records of the following two CHDs and five hospitals showed
that their receivables totaling P117,899,547.57 include dormant accounts aggregating to
P34,954,461.00 broken down as follows:
83. Verification disclosed that the dormant accounts pertain to the following:
Due from Other 618,402 Balances deposited with the Trust Fund- Regular Income
Funds from the General Fund or which were erroneously taken
up as another account incidental to the consolidation of
the Trust Fund and Regular Funds of the Hospital.
Total P 34,954,461
81
84. The EAMC Accountant informed that the Due from NGOs/POs and from Other
Funds shall be subject to analysis, reconciliation and adjustments.
85. Further verification and inquiry disclosed that at the CHD for Caraga Region, no
SLs were maintained by the Accounting Section thus, rendering the monitoring of the
account difficult. At the CHD for Bicol Region, although SLs were maintained, these
were not updated and no Schedules of Accounts Receivable were also available/prepared.
86. Records did not show that the dormant accounts were analyzed and documented
to establish their validity and existence nor actions were taken for the write-off or closed
the same pursuant to COA Circular No. 97-001 dated February 5, 1997 which prescribes
the procedures on the proper disposition/closure of dormant accounts and/or accounts of
national government agencies which have remained non-moving for more than five years.
87. The inclusion in the receivables accounts which remained dormant from one to
over ten years coupled with the absence/outdated subsidiary records cast doubt on the
validity, accuracy and existence of the receivables totaling P127,680,419.62.
b. For the hospitals in CHDs for Bicol and Caraga Regions, their Accountants
maintain and update the pertinent SLs and supporting schedules to facilitate
the determination of the completeness and accuracy of the balance of
receivable controlling account. Exert efforts to collect the receivables from
patients by sending demand letters to the concerned patients and if found
ineffective, seek other recourse through write-off of the accounts provided
under the aforesaid COA regulation;
c. For CRH, the Admitting Section ascertain the correct residences of patients
admitted by requiring patients or their relatives to present valid IDs,
MERALCO or MWSS bills, Barangay Certification or any valid proof that
will show their correct addresses to avoid problems of collection in the future,
if any;
d. For CHD for Central Visayas, the Head (i) require all concerned officials and
employees to liquidate immediately their cash advances after the purpose for
which these were granted have been served in conformity with existing
regulations; (ii) discontinue the practice of granting additional cash advances
82
if the previous ones have not yet been liquidated; and (iii) instruct the
Accounting Section to issue demand letters in case the concerned employees
fail to account their cash advances within the prescribed period and order
the withholding of their salaries pursuant to COA Circular No. 97-002; and
e. For DJRMH, the (i) Accountant and the Property Officer (PO) make regular
reconciliation of account Due from NGAs - PS by regularly submitting the
Reports of Deliveries from the PS by PO which shall be the basis of posting
to the SL of the Accountant; (ii) Accountant, using the resulting balances,
regularly reconcile with the PS on the balance of the account to come-up with
the correct balance thereof; and (iii) if disallowance of PIB was final and
executory, direct the officials and employees liable therefor to settle or refund
their respective obligations.
89. The EAMC Management made an assurance that the Chief Accountant shall
prepare the necessary analysis and reconciliation of these accounts and file a request for
authority to write off all unreconciled balances of the accounts with the Commission on
Audit. As per verbal advise of the GAFMIS, all current transactions for Accounts and
Notes Receivable representing claims shall temporarily be recorded in a registry and
actual recording in the books of accounts shall only be made based on the actual amount
reimbursed or paid by PCSO and PHIC.
Inventory Accounts
90. Our audit of inventory accounts of hospitals particularly for office supplies, drugs
and medicines, medical, dental and laboratory supplies and other supplies and materials
disclosed discrepancies among the accounting, property and pharmacy records as well as
the physical inventory reports hence, the actual existence of these items and the
correctness of the reported book balances could not be determined. Comparison of the
GL balances against the physical inventory reports and pharmacy records for these items
showed the following variances:
83
Amount Per
\CHDs/Hospitals/Office Inventory Report/
Difference
General Ledger Supply /Pharmacy
Records
A. Drugs and Medicines Inventory
Metro Manila
DOH-CO P 9,055,591.89 P 6,474,840.00 P 2,580,751.89
CHD 56,692,990.14 25,993,043.36 30,699,946.78
ARMMC 3,446,726.29 2,011,526.07 1,435,200.22
Bicol Region
CHD 16,124,723.67 (7,833,679.26) 23,958,402.93
Western Visayas
CHD 22,678,186.79 18,577,180.67 4,101,006.12
Zamboanga Peninsula
Mindanao Central Sanitarium (MCS) 1,004,283.54 552,967.80 451,315.74
Sub-Total 109,002,502.32 45,775,878.64 63,226,623.68
B. Medical, Dental, and Laboratory Supplies
Metro Manila
CHD 17,144,647.64 5,700,728.13 11,443,919.51
ARMMC 8,850,548.42 553,150.35 8,297,398.07
FDA 15,127,535.32 -0- 15,127,535.32
Bicol Region
CHD 10,650,800.65 4,521,370.51 6,129,430.14
Bicol Medical Center (BMC) 45,722,578.67 6,573,294.46 39,149,284.21
Western Visayas
CHD 2,580,584.09 4,458,340.43 (1,877,756.34 )
Zamboanga Peninsula
MCS 1,852,822.03 1,067,844.91 784,977.12
Sub-Total 101,929,516.82 22,874,728.79 79,054,788.03
C. Merchandise Inventory
Metro Manila
Jose R. Reyes Memorial Medical Central 14,521,529.11 13,896,806.12 624,722.99
(JRRMMC)
Zamboanga Peninsula
Northern Mindanao Medical Center
(NMMC) 16,502,110.08 8,294,002.48 8,208,107.60
Sub-Total 31,023,639.19 22,190,808.60 8,832,830.59
D. Office Supplies Inventory
Metro Manila
CHD 24,767,352.00 920,511.94 23,846,840.06
ARMMC 3,341,129.73 174,411.05 3,166,718.68
FDA 500,248.56 500,850.84 (602.28)
Bicol Region
BMC 606,829.95 412,720.77 194,109.18
Western Visayas
CHD 340,931.25 1,048,548.45 (707,617.20 )
Sub-Total 29,556,491.49 3,057,043.05 26,499,448.44
E. Other Supplies Inventory
Metro Manila
FDA 1,300,154.00 -0- 1,300,154.00
Bicol Region
BMC 1,597,857.24 275,298.27 1,322,558.97
Western Visayas
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Amount Per
\CHDs/Hospitals/Office Inventory Report/
Difference
General Ledger Supply /Pharmacy
Records
CHD 2,876,510.42 2,292,625.57 583,884.85
Sub-Total 5,774,521.66 2,567,923.84 3,206,597.82
Grand Total P277,286,671.48 P96,466,382.92 P180,820,288.56
b. ARMMC – Some lapses were noted in the record keeping of inventories which
were attributed to (i) the failure of the Supply Section to furnish the Accounting
Unit on a monthly basis with copies of the Monthly Report on Drugs and
Medicines Issued and the RSMI; (ii) postings of the issuances for both drugs
and medicines and supplies and materials were not done on a regular basis as
only two issuances were recorded thru JEVs in the General Journal and Ledger
during the year 2009, in the months of April and December; and (iii) non-
reconciliation of the accounting and property records was conducted. The
P3,797,927.85 losses in the inventories during Typhoon Ondoy which were
not also recorded contributed to the discrepancy in the reported balance of
inventories as of December 31, 2009. The inventory reports were only prepared
after the Typhoon Ondoy.
85
The cost of the destroyed items could only be dropped from the books after
approval of the request for relief from accountability as required under Section
73 of Presidential Decree No. 1445 which provides that credit for loss of
government funds or properties when in transit or caused by fire, theft or other
casualty or force majeure, shall be allowed when the request for relief from the
loss shall be approved as warranted by the supporting evidence submitted.
86
c. MCS – The non-reconciliation of the balances per books of inventories against
the pharmacy records contributed to the P1,236,292.86 disparity in the balances
of the two records as of year-end. Although the total difference in the balances
of the accounts as of CY 2009 decreased by 76% as compared to the preceding
year of P5,244,645.70, the amount was still substantial.
e. NMMC – The Merchandise Inventory was not adjusted for drugs and medicines
issued to indigent patients including those charged against the PDAF. Per GL,
the balance of the account amounted to P16,502,110.08 while that of actual
inventory of the Pharmacy Section totaled only P8,294,002.48 or a discrepancy
of P8,208,107.60. The unreconciled balance has been reported in prior years.
(i) Section 4.j - Supplies and materials shall be recorded using the Perpetual
Inventory System wherein issuances thereof shall be recorded as they take
place.
87
b. Manual on the NGAS, Volume II –
(i) Section 12 - Maintenance of the subsidiary ledger (SL) as a book for final
entry containing the details or breakdown of the controlling account in the
General Ledger (GL). The Accounting Unit shall maintain a Supplies
Ledger Card (SLC) for each type of drugs and medicine included under
Merchandise Inventory account where all receipts and issuances shall be
recorded promptly.
(ii) Section 41 - Stock card shall be used to record all receipts and issuances of
supplies. It shall be maintained by the Supply and Property Unit for each
item in stock. The physical inventory of supplies shall be reconciled every
six months with the stock cards and any discrepancy/ies shall be
immediately verified and adjusted. The balance per stock card shall be
reconciled regularly with the stock ledger card maintained by the
Accounting Unit.
(iii) Section 62 - The Supply Officer to summarize all supplies and materials
issued during the month to the RSMI for submission to the Accounting Unit
as basis in the preparation of JEV to record in the books of accounts the
inventory issuances monthly.
93. The concerned hospitals and CHD rendered the following comments/justifications
on the audit observations on inventory accounts:
Hospital/CHD Comments/Justifications
CHD for MM The Accountant informed that the discrepancy between the
accounting and property records already existed in the prior years;
hence, they have difficulty in tracing the records
Late preparation of the RSMI during the year caused by the “Ondoy”
flooding in the vicinity area of the CHD for MM Pasig Warehouse
where some property records and stocks to be verified were being
kept
MCS The unreconciled balances occurred in instances wherein the supplier makes
partial delivery of items procured and were accepted by the Supply Officer-
Designate due to their immediate need
94. Further, analysis of the Inventory accounts of FDA disclosed that the procurement
of feeding bottles totaling P109,200.00 in March 2009 was recorded under account Other
Supplies Inventory instead of MDLS Inventory account. Sections 48 and 57 of the
Manual on the NGAS, Volume III prescribe that:
a. MDLS Inventory – This account shall be used to record the appropriate value of
medical, dental and laboratory supplies acquired for use the course of
88
government operations. It includes drugs and medicines purchased for
consumption of hospital/sanitary/clinic/center and other items used in research
activities.
b. Other Supplies Inventory – This account shall be used to record the cost or
appropriate value of inventories which cannot be classified under specific
inventory accounts like, among others, forms, (income tax returns, voters forms,
etc.), brochures, printed leaflets for information dissemination of government
projects/programs, scrap materials, motor vehicle plates, car stickers, workbooks
used in schools, etc.
96. At DOH-CO, the Audit Team reported that deficiencies were noted in the
procurement of Vitamin A capsules totaling US$358,243.68, equivalent to
P17,285,257.56, made in March 2007 thru UNICEF under Cost Estimate (CE)
#10006783. Records showed that in June 2007, out of the P17,285,257.56 procurement
covered by CE #10006783, the UNICEF delivered a total of P16,874,677.69 which were
received in the same month by DOH-CO. The DOH-CO however, noted a shortage of
P410,579.87 in the delivery of the procured items from UNICEF. In October 2007, the
DOH submitted a “Claim for Loss or Damage” to UNICEF for the under delivery. In
March 2008, the DOH-CO received P853,558.56 worth of drugs and medicines from
UNICEF as replacement of the lost/damaged items paid out of the proceeds from the
insurance claim.
97. On 30 January 2009, the delivery of P853,558.56 drugs and medicines from
UNICEF was taken up as debit to Drugs and Medicines Inventory and as credit to
account “Due from NGOs/POs”, the account used for procurement transactions to
UNICEF. However, as discussed earlier, the lost/damaged items cost only P410,579.87
thus, an excess delivery of P442,978.69. On the same date, a Journal Entry Voucher
(JEV) was drawn to take up the P19,312.68 revaluation of foreign currency relative to the
transaction. With the said revaluation, the total excess delivery aggregated to
P462,291.37.
Particulars Reference Amount
Transfer of funds to UNICEF JEV#2007-03-2972 dated 3/31/07 P17,285,257.56
Receipt of deliveries Vitamin JEV#2007-12-12319 dated P16,874,677.69
A capsules 12/28/07
To correct understatement of JEV#2009-01-000332 dated 19,312.68
currency valuation 1/30/09
Receipt of goods from JEV#2009-01-000299 Dated 853,558.56
insurance claim 1/30/09
Total P17,285,257.56 P17,747,548.93
89
Particulars Reference Amount
98. The cost of the over deliveries of P462,291.37 in March 2008 should have been
recorded under Income from Grants and Donations instead of credit to Due from
NGOs/POs account.
a. The reported P5,406,675.25 balance for the delivered drugs and medicines from
UNICEF as of CY 2009 was understated by P1,068,164.75 as shown below:
Amount
Particulars References
Debit Credit
Receipt of Vitamin A JEV#2007-12-12319
Capsules from UNICEF dated 12/28/07 P16,874,677.69
Issuance of Drugs & JEV#2008-09-008687
Medicines dated 9/30/08 P 8,691,957.04
Correction of understatement JEV#2009-01-000332
dated 1/30/09 16,893,990.37 16,874,677,69
Receipt of goods from JEV#2009-01-000299
Insurance Claim dated 1/30/09 853,558.56
Total P34,622,226.62 P25,566,634.73
Correct Balance of Inventory as of year-end P 9,055,591.89
100. However, of the P9,055,591.89 balance per audit, only P6,474,840.00 was
accounted for as shown in the actual inventory balance thereby showing an unaccounted
balance of P2,580,751.89.
101. This resulted in unreliable account balances of Drugs and Medicines Inventory,
Due from NGOs/POs and Income from Grants and Donations accounts.
90
102. We recommended that the concerned accounting, property and pharmacy
employees of the above-mentioned DOH offices adopt the following corrective
measures to address the deficiencies noted:
d. The Supply Officer of MCS (i) report immediately to the Accounting Unit all
deliveries of drugs and medicines, and medical, dental and laboratory
supplies forwarded to the pharmacy; (ii) prepare the Monthly Report on the
Issuances of Drugs and Medicines and Medical, Dental and Laboratory
Supplies; and (iii) submit this Report promptly to the Accounting Unit;
103. The Management of MCS gave an assurance that they will no longer accept
partial delivery and a computer unit will be issued to the Pharmacy Section to facilitate
91
the preparation of the report. They further informed that the Accountant was directed to
initiate the reconciliation of reports and to check the discrepancies the earliest possible
time.
104. The Management of JRRMMC stated that two contractual employees shall be
hired for DOH-Botika to take charge of the maintenance of the SLCs and stock/bin cards
in the Accounting Unit and DOH-Botika, respectively.
105. Verification and audit of inventory accounts of the following agencies and
hospitals disclosed some lapses in the management of inventories which are summarized
below.
Agencies/Hospitals Deficiencies
Metro Manila
Bureau of Quarantine Non-recording of issuances of inventories due to delayed submission of
(BQ) the RSMI
Ilocos Region
Ilocos Training and Inadequate records and absence of physical inventory report for inventories
Regional Medical totaling P27,767,765.74
Center (ITRMC)
Central Luzon
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Agencies/Hospitals Deficiencies
CHD GL balances totaling P115,680,889.63 could not be validated due to non-
maintenance of SLs and lack of documentation for the following accounts:
Jose B. Lingad Stocks issued and dispensed with by the Pharmacy Section were not
Memorial General recorded in the books due to its failure to update records and submit the
Hospital (JBLMGH) required monthly reports to the Accounting Unit, resulting in the
overstatement of the inventory account.
The reports of medical supplies and medicines issued and dispensed
with by the Pharmacy Section for the last quarter of the year have not
been submitted for recording in the books.
Bicol Region
Bicol Sanitarium (BS) Non-conduct of physical inventory of supplies and materials hence, no
corresponding report could be submitted for CY 2009.
Only the RSMI was prepared and submitted by the Property Custodian
to the Accounting Section without the required supporting documents.
Western Visayas
Western Visayas RSMI were not prepared for issuances of materials for construction or
Medical Center general repair of facilities and vehicles undertaken by administration from
(WVMC) the Supply Office Engineering and Maintenance Unit of the Hospital.
Zamboanga Peninsula
Dr. Jose Rizal The year-end balances of the following inventory accounts amounting to
Memorial Hospital P2,791,962.60 were not supported with details as there were no SLCs
(DJRMH) maintained by the Accounting Office.
Account Amount
Merchandise Inventory P 60,433.66
MDLS 498,959.89
Office Supplies 561,855.66
Food Supplies 53,170.39
Other Supplies 370,639.00
Accountable Forms 148,012.80
Gasoline, Oil & Lubricants 33,947.80
Spare Parts 173,170.00
Construction Materials 891,773.40
Total P
2,791,962.60
Caraga Region
CHD Issuances amounting to P1,786,934.77 were not recorded in the books due
to unreturned Requisition Issue Slips (RISs) and inadequate record-keeping
practices.
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106. The amount of inventories with deficiencies totaled P168,457,756.48. These
deficiencies resulted in:
Results Amount
Overstatement of inventory accounts and P 20,430,203.74
understatement of related expense accounts
P 168,457,756.48
b. The BnB Coordinators of CHD for Caraga Region follow-up the return of
RISs from PHTs and submit them to the Accountant for recording;
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c. The Accounting and Supply Units of DJRMH and CHD for Central Luzon (i)
maintain SLCs and Stock Cards (SC) for each inventory stock; and (ii)
reconcile the balances in quantity per SC with the SLCs of the Accounting
unit to check the accuracy and existence and reliability of the year-end
balances; and
d. The Supply Officer of BQ (i) request for additional personnel, even only for
the purpose of updating and preparation of reports; and (ii) based on
approved RIS, record the daily issuances of supplies and materials and other
inventories in the RSMI and furnish the Accounting Section with the copy of
the RSMI on a monthly basis for recording and consolidation purposes.
109. The Management of BQ and ITRMC agreed to comply with the recommendations
and assured that all discrepancies will be corrected accordingly in the future. The Supply
Officer of BS committed to conduct physical inventory for all the hospital supplies and
materials in June 2010.
110. The Management of DJRMH commented that the need to comply with the
recommendations has been stressed considering that this is part of their Inventory and
Asset Management. Moreover, considering the time from which this problem arose and
the history of the hospital, from its pre-devolution, devolution and re-nationalization, the
reconciliation of at least the hospital’s current inventories and assets be maintained and
sustained including the disposal of some of the unserviceable assets so as not to aggravate
this problem further.
Procurement of Inventories not in Accordance with R.A. No. 9184 – Regions 2, 5, 7 and
12
111. The audit revealed that for CY 2009, the CHD for Cagayan Valley and Bicol Regional
Training and Teaching Hospital (BRTTH) resorted to alternative modes of procurement in
the purchase of medicines, supplies and other services instead of thru public bidding as
shown below:
Mode of
CHDs/Hospitals Inventories Amount
Procurement
CHD for Cagayan Valley Medical supplies and other Direct Contracting P19,655,910.00
requirements intended for
various medical programs
95
Mode of
CHDs/Hospitals Inventories Amount
Procurement
BRTTH Regular medical supplies, Shopping 6,353,298.60
Drugs and Medicines and
MDLS
Total P26,009,208.60
112. Further review of the procurement process for inventories disclosed the following
lapses/deficiencies together with their effects/impact which are presented hereunder:
Vicente Sotto Memorial The BAC did not establish and Defeat the purposes for which the
Medical Center implement a mechanism for RA No. 9184 was enacted, which
(VSMMC) identifying/selecting members of are, among others, transparency,
the Technical Working Group competitiveness and accountability.
(TWG) for specific procurements.
96
Hospitals Deficiencies/Lapses Effects/Impact
Invitations for observers were
limited only during the bidding
stage of the procurement process.
Eversley Childs Consigned drugs and medicines Overpricing from 4.48% to 119.9%
Sanitarium (ECS) totaling P3,228,209.00 from over the prevailing retail market
September 2008 to April 2009 price in local drugstores or 17.05%
were procured without the required to 500% higher compared to the
advertising for submission of price costs of in-house drugs and
offers by all qualified suppliers. medicines procured thru shopping.
Cotabato Regional and Supplies and materials procured from Possible unnecessary/unplanned
Medical Center (CRMC) January to June 2009 amounting to purchases, overstocking of supplies
P7,976,576.78 were not included in which will ultimately lead to
the approved APP. wastage of government funds.
113. The current practices of these CHDs and hospitals were not in accordance with
the following provisions of RA No. 9184 and its Implementing Rules and Regulations
(IRR) and DOH regulation:
97
Requirements Law/Regulations Provisions
relevant to the procurement at hand,
and, to the extent possible, has
knowledge, experience and/or expertise
in procurement and (b) a representative
from the end user who has knowledge
of procurement laws and procedures.
Term of BAC Members Section 11.2.6 of IRR Unless sooner removed for a cause, the
members of the BAC shall have a fixed
term of one (1) year reckoned from the
date of appointment, renewable at the
discretion of the head of the Procuring
Entity.
Invitation for Observers Section 13.1 of IRR The BAC shall, in all stages of the
procurement process, invite, in addition
to the representative of the COA, at
least two (2) observers, who shall not
have the right to vote, to sit in its
proceedings.
Creation of BAC Secretariat Section 14 of IRR The Head of Procuring Entity shall
create a Secretariat which shall serve as
the main support unit of the BAC. An
existing organic office within the
procuring entity may also be designated
to serve as Secretariat.
Adoption of Alternative Sections 48 to 54 of IRR Provides the conditions when to adopt
Methods of Procurement alternative methods of procurement.
Procurement of consigned DOH Administrative Order No. The hospital thru its Consignment
drugs and medicines 2006-039 dated December 8, Management Committee shall advertise
2006. its intention to pursue the DOH Drug
Consignment System by inviting all
suppliers to submit price offers.
Supplier’s eligibility requirements shall
also be conveyed in the invitation
letters considering that these documents
shall be verified by the said Committee.
Consignors must pass the eligibility
requirements unless they present the
Registry Certificate issued by the DOH
indicating the supplier is listed in the
Simplified Supplier Registry System.
a. The Heads of the CHD for Cagayan Valley, BRTTH and CRMC adhere
strictly with the provisions of RA No. 9184 and its IRR on procurement
through public bidding and the limitations and conditions for adoption of
alternative modes of procurement;
b. BRTTH and CRMC prepare their APP containing their actual needs in
pursuit of its priorities and objectives of the given year. Ensure that the APP
98
99
is formulated and approved at the start of the year and that all procurements
are undertaken in accordance with the approved APP and its revisions, if
any;
c. VSMMC comply strictly with the provisions of R.A. No. 9184 in the (i) tenure
of BAC members; (ii) selection of members of TWG; (iii) designation of
provisional members of BAC; (iv) creation of BAC Secretariat; and (v)
invitation of observers; and
d. ECS strictly observe and comply with the specific guidelines and procedures
in the procurement of consigned drugs and medicines prescribed under the
said DOH Administrative Order.
115. The Management of BRTTH had already conducted meetings with personnel
concerned and agreed to submit the Hospital’s APP in compliance with the provisions of
Sections 7.1 and 10 of R.A. No. 9184. The CRMC had submitted their APP for CY 2009
and corrective measures have been undertaken to correct the deficiencies noted in audit.
A supplemental APP has already been submitted.
116. The ECS Management informed that they had stopped the procurement of drugs
and medicines through consignment.
117. Inspection of medical supplies, drugs and medicines inventory at the warehouse
and Pharmacy Section of RMC as at year-end and review of records showed the
following:
a. Stocks for drugs and medicines totaling P258,197.26 were already expired and
about to expire. The expired medicines consisted of the Oseltamivir 75mg tablet
(Tamiflu) amounting to P30,565.08 for H1N1 which were donated by DOH on
June 2, 2009 and expired in November 2009, while those about to expire are
composed of ten drug/medicines totaling P227,632.18.
100
118. Interview disclosed the following:
a. Part of the non-moving stocks are the Pipette Tips (blue) for the use of
Chemistry/Hematology Section of Laboratory Department in extracting
plasma/serum amounting to P1,636 which were purchased under Purchase Order
No. 09-08-302 dated September 1, 2009 and delivered on September 16, 2009,
were not yet issued/sold as of year-end. According to the head of the Laboratory
Department, she was not informed by the Property Section on the availability of
said stocks.
b. Since 2007, the Property Section no longer procured the slow moving supplies.
However, they cannot determine the reason/s why some supplies which were then
normally used has become slow moving.
c. The Head of the Pharmacy emphasized that the movement (whether fast, slow,
non-moving) or usage of the medicines depends on the cases of the patients
undergoing treatment in the Hospital.
d. There was a directive from the DOH that the Oseltamivir 75mg tablet was to be
dispensed with only to patients confirmed to have H1N1virus.
119. Overstocking, non-moving and slow-moving medical supplies and drugs and
medicines were the results of improper procurement planning, monitoring and
coordination between the different departments/offices of the Hospital. Prior years’ data
on procurement, utilization and level of stocks could have been used in deciding the type
and quantity of supplies, drugs and medicines to be procured/kept in stock.
120. Further, overstocking of supplies was not in accordance with Section 20 of R.A
No. 9524, the General Appropriations Act for CY 2009, which states that the inventory of
supplies, materials and equipment, spare parts to be procured out of available funds shall
at no time exceed the normal three-month requirement, subject to pertinent rules and
regulations issued by competent authority.
121. The Head of the Property Section informed that they followed the requirement on
the acceptance of drugs and medicines with expiry dates of not less than 18 months.
However, there were instances when they have to accept some drugs and medicines with
expiry dates lesser than 18 months especially when there were no available stocks in the
warehouse. The Hospital had required the supplier to issue a letter that they will pull-out
or replace the stocks three months before their expiry date.
122. The above lapses in the procurement, issuances and monitoring of stocks resulted
in excessive, slow/non-moving stocks and expired or about to expire medical supplies,
drugs and medicines and wastage of scarce resources of the Hospital.
101
123. We recommended that the Property and Pharmacy Sections:
b. Consider the necessity, shelf life, and prescription acceptability of drugs and
medicines to be procured/received;
c. Not to accept deliveries and donations of drugs and medicines with less than
18 months of shelf-life; and
d. Monitor the stock level and expiry dates of drugs and medicines inventories
and coordinate with other hospitals for the transfer of excess and
unnecessary stocks.
124. The Head of the Pharmacy Section commented that they will inform the end-users
(physicians) on the availability of the medicines in the pharmacy for issuance.
125. Verification of records disclosed that the following offices/hospitals have not
conducted/completed the physical inventory-taking of their Property, Plant and
Equipment (PPE) as of December 31, 2009 to substantiate the reported balances for these
accounts totaling P2,104,210,771.08. The details of the amount as well as the latest
available inventory reports are as follows:
Latest
CHD/Hospital/Office Balance of PPE Inventory Remarks
Conducted
Metro Manila
DOH-CO P 684,640,201.18 Oct. 2009 No Report
VMC 118,999,167.38 CY 2008
San Lorenzo Ruiz Hospital for Women 7,064,700.67 CY 2007 With Report
(SLRHW)
RMC 320,225,973.83 Jan. 2010 For CY 2009
No Report
102
Latest
CHD/Hospital/Office Balance of PPE Inventory Remarks
Conducted
Ilocos Region
ITRMC 259,367,058.30
Central Luzon
CHD 91,227,318.60 CY 2009 No Report
Central Visayas
Eversley Childs Sanitarium (ECS) 148,424,121.74
Zamboanga Peninsula
Zamboanga City Medical Center 391,650,501.17
(ZCMC)
Caraga Region
CHD 82,611,728.21
Total P2,104,210,771.08
126. It was also observed that a total discrepancy of P220,154,021.31 existed between
the accounting and property records/inventory reports for PPE account balances for the
following agencies/hospitals:
CHD/Office/Hospital Per Books Per Inventory Difference
Metro Manila
FDA P 683,101,131.66 P 492,337,621.53 P190,763,510.13
JRRMMC 559,732,504.82 639,406,376.03 (79,673,871.21)
Central Luzon
DPJGMRMC 279,094,114.86 172,762,045.18 106,332,069.68
DPJGMRMC – Talavera Extension 40,985,546.92 39,364,297.03 1,621,249.89
Western Visayas
CHD 1,504,062.70 811,135.25 692,927.45
Corazon Locsin Montelibano 511,258,888.80 511,625,784.70 (366,895.90)
Memorial Regional Hospital
(CLMMRH)
Zamboanga Peninsula
Mindanao Central Sanitarium (MCS) 50,545,649.52 49,760,618.25 785,031.27
Total P 2,126,221,899.28 P1,906,067,877.97 P220,154,021.31
127. The reasons for the non-conduct of physical inventory of assets, non-preparation
of reports thereon as well as the discrepancies noted were as follows:
Office/Hospital/CHD Reason
Non-Conduct of Inventory- Taking/Non-Preparation of Report
Metro Manila
DOH-CO Inventory-taking was conducted, however the consolidated report
was not yet prepared.
VMC Not able to finish the PPE inventory-taking for CY 2009 as their
efforts were focused on the repair/renovation of the Hospital building
in CY 2009 in complying with the requirements for PhilHealth
accreditation of the Hospital.
SLRHW Handful of employees who are really capable of multi-tasking but
who are already assigned to other Hospital Committees.
RMC No full-time employees to conduct the inventory-taking.
103
Zamboanga Peninsula
ZCMC Compulsory retirement in 2007 of the Center’s Supply Officer
without rendering a report on the Status of Inventory on PPE.
araga Region
CHD The respective schedules of the Inventory Committee members
prevented the conduct of the physical count.
Discrepancies in the Balances of Accounts
Central Luzon
DPJGMRMC and Unrecorded hospital equipment, land improvement and hospital
Talavera Extension buildings amounting to P107,953,319.50.
128. The conduct of physical inventory and preparation of report thereon however, are
required by the following:
b. Section 66 of the Manual on the NGAS, Volume II – The Report on the Physical
count of Property, Plant and Equipment shall be used to report the physical count
of property, plant and equipment by type as of a given date. It shows the balance of
property and equipment per cards and per count and shortage/overage, if any.
129. On the other hand, the reconciliation of accounting and property records on PPE
is required under Section 43 of the NGAS Manual, Volume 1 which provides that for
check and balance, the Property and Supply Office/Unit shall maintain Property Cards
(PC) for PPE. The balance per PC should always reconcile with the PPELC of the
Accounting Unit.
130. The absence of reports on physical inventory as well as the discrepancy of the
balances of PPE accounts cast doubt on the existence and validity of the reported
balances totaling P4,230,432,670.36 for the 14 offices/hospitals as of year-end of CY
2009.
131. It was also noted that no PPELC and PC are maintained and/or updated at the
following offices/hospitals which made the reconciliation between these records
difficult:
104
g. Mindanao Central Sanitarium
h. Zamboanga City Medical Center
i. Amai Pakpak Medical Center
j. CHD for SOCCSKSARGEN
k. CHD for Caraga Region
b. The Accountants maintain PPELCs and the Property Officers keep PCs to
facilitate reconciliation of records.
134. Review of the existing controls and systems in property management disclosed the
following deficiencies/lapses in property management:
105
Office/Hospital Deficiencies Amount
SLH Cost of major repairs were not capitalized but instead 60,736,498.63
charged to Maintenance Expenses
CAR
CHD Non-transfer of eight structures to LGUs which are the
end-users thereof and the value reclassified to Other Assets 6,042,258.27
account
Ilocos Region
MMMHMC Inventory items recorded under PPE accounts 5,375,030.59
Cagayan Valley
Cagayan Valley Medical PPE balance of P335,135,637.74 was doubtful due to non-
Center (CVMC) reconciliation between the books and property records
Southern Isabela General PPE balances of P41,905,523.49 were not provided with
Hospital (SIGH) depreciation from CYs 2007 to 2008
Central Luzon
DPJGMRMC Overstatement of accumulated depreciation due to error in 1,013,705.46
computing prior years’ provision for depreciation
Bicol Region
BRTTH Lot occupied by the BRTTH without title hence, remains
unrecorded
Western Visayas
CHD Lot occupied by the CHD office remained untitled hence,
ownership is not ensured
Zamboanga Peninsula
Labuan Public Hospital PPE of P7,757,264.74 not provided with depreciation in
(LPH) CYs 2008 & 2009
Basilan General Hospital Overpayment of progress billing for the construction of
(BGH) Administration Building due to overstated accomplishment
of 72.45% instead of 55% as of October 23, 2009.
Dr. Jose Rizal Memorial No reconciliation was made between accounting and
Hospital (DJRMH) property records of PPE.
Zamboanga City Medical Office Equipment recorded as Furniture and Fixtures 3,930,463.66
Center (ZCMC)
Mindanao Central Sanitarium Office Building and Other Structures recorded under 4,585,711.35
(MCS) Hospital and Health Centers account
Furniture and Fixtures recorded under Office Equipment 483,892.75
Northern Mindanao
Mayor Hilarion Ramiro Sr. Lapses in the conduct of public bidding, the contract for the 12,034,124.00
Regional Training & construction/completion of OR/DR Complex, Phase III
Teaching Hospital with an ABC was declared illegal upon review by the COA
(MHRSRTTH) resulting in the delayed implementation of the project and
the eventual illegal disbursement of government funds of
P8,437,963
106
Office/Hospital Deficiencies Amount
SOCCSKSARGEN
CHD Medical, dental and laboratory equipment issued to 6,532,394.12
different national and local government agencies remained
in the books
Caraga Region
Caraga Regional Hospital Inclusion of small tangible items to PPE accounts 1,205,522.10
Total P132,057,141.62
135. The above lapses in property management and erroneous recording of transactions
relative thereto either overstated or understated the PPE accounts thus, rendering the
reported balances of these assets unreliable as of year-end.
136. Presented below were the reasons for the above observations.
CHD/Hospital Reasons
Metro Manila
ARMMC Donated items were transferred without cost to the Hospital.
RMC Completion of the preparation of the PPELCs and review which are the bases
of the computation of depreciation.
SLH Absence of proper coordination with the predecessor of the Accountant since
he assumed his post in CY 2009.
CAR
CHD Absence of Certificates of Acceptance from the LGUs as end-users. Account
reclassified to Other Assets account because these were not used in the
operations of the CHD.
Cagayan Valley
CVMC Documents needed to support the inclusion of motor vehicles, land, building
and other structures of the Center were not furnished the Supply Office for
recording in the inventory report.
137. The following laws and regulations were not complied with by the said
agencies/hospitals in the management of their property:
a. Section 73 of the Manual on the NGAS, Volume I - Responsibility for the fair
presentation and reliability of financial statements rests with the management of
the reporting agency. This responsibility is discharged by applying generally
accepted and accounting principles that are appropriate to the entity’s
circumstances, by maintaining effective system of internal control and by
adhering to the prescribed chart of accounts.
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c. Section 63 of PD No. 1445 - Except as may otherwise be specifically provided by
law or competent authority all moneys and property officially received by a public
officer in capacity or upon any occasion must be accounted for as government
funds and government property. Government property shall be taken up in the
books of the agency concerned at acquisition cost or appraised value.
d. COA Circular No. 2005-002 dated April 14, 2005 – Small tangible items with
estimated useful life of more than one year shall be recorded as inventories upon
acquisition and expenses upon issuance. Other tangible assets not classified as
inventories shall be classified as PPE subject to depreciation.
a. Heads of the DOH offices and hospitals (i) review the existing property
management policies to conform with all the government regulations
governing the same; (ii) conduct regular reconciliation between the
accounting and property records; and (iii) adopt adequate controls and
procedures in property management to ensure the accuracy of year-end
balances of PPE accounts;
f. Management of the BRTTH and CHD for Bicol Region make representations
with the proper authorities to acquire legitimate ownership, as well as
facilitate recording in the books of accounts of the lot these offices occupy;
108
g. Property Officer and Accountant of CHD for CAR facilitate the transfer of
eight structures valued at P6,042,258.27 to the Municipal Governments of
Aguinaldo, Ifugao, Balbalan and Pinukpok and prepare JEV to record the
corresponding depreciation expenses.
l. Management of the BGH stop the practice of paying progress billing without
verifying the actual work accomplishment; and
139. The Management of BGH informed that they do not have the technical expertise
to conduct assessment of the actual accomplishment of on-going projects but rely on the
assessment made by an engineer from DPWH Regional Office as basis for payment on
progress billing while the Management of CHD for CAR committed to facilitate the
disposal/transfer of the assets to the LGUs.
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Non-Reclassification of Unserviceable Properties - Regions 1, 3, 9,13 and NCR
140. Verification of the accounting records and inspection disclosed that various PPE
items which were unserviceable were still recorded under PPE accounts of the
following
offices/hospitals instead of reclassifying them to Other Assets account:
Office/Hospital Amount
Metro Manila
Research Instittute for Tropical Medicines (RITM) P2,147,067.68
Bureau of Quarantine (BQ) 1,815,547.52
Tondo Medical Center (TMC) 1,568,252.50
Valenzuela Medical Center (VMC) 1,138,847.18
Jose R. Reyes Memorial Medical Center (JRRMMC) 10,822,000.00
Rizal Memorial Center (RMC) 18,154,885.23
Ilocos Region
Mariano Marcos Memorial Hospital & Medical Center 899,479.00
(MMMHMC)
Region I Medical Center (RIMC) 2,274,041.98
Central Luzon
Mariveles Mental Ward (MMW) 2,785,268.65
Dr. Paulino J. Garcia Memorial Research & Medical 2,881,295.10
Center (DPJGMRMC)
DPJGMRMC – Talavera Extension 344,967.42
Zamboanga Peninsula
Zamboanga City Medical Center (ZCMC) 8,148,760.00
Mindanao Central Sanitarium (MCS) 254,204.84
Caraga Region
CHD 1,884,367.00
Grand Total P 55,118,984.10
141. Section 143 of the Manual on NGAS, Volume III provides that Other Assets
account is used to record the value of obsolete and unserviceable assets awaiting final
disposition as well as those assets still serviceable but no longer being used.
142. With this provision, the P55,118,984.10 worth of unserviceable property should
have been reclassified from their respective PPE accounts to Other Assets account. The
non-reclassification of these assets overstated the PPE accounts and understated Other
Asset account by the same amount.
143. The following DOH offices that failed to reclassify the value of unserviceable
properties to Other Assets account offered these justifications:
110
Office/Hospital Reasons
Metro Manila
BQ Failure by the Supply Section to furnish the Accounting Section with a
copy of the report on unserviceable property
VMC The re-classification could not yet be made since no IIRUP was prepared
and submitted by the Property Section. The Property Section started
preparing the IIRUP in CY 2008 but as of year-end the same was not yet
finished as they are still in the process of identifying and labeling the
unserviceable properties. Hence, the Chief Accountant could not re-
classify the affected PPE accounts to Other Assets account.
RMC The unserviceable properties were not yet re-classified to Other Assets
account as the Accountant has to check first whether these were recorded
in the books.
144. At the ARMMC, the total damage to properties brought by Typhoon Ondoy in
September 2009 as shown in the List of Hospital Equipment, Office Equipment and
Other Supplies Damaged by Typhoon Ondoy submitted by the management was
tentatively valued at P144,009,718.19. The submitted list consists of PPE items retrieved
but damaged, retrieved and repaired as well as unaccounted/missing units of PPE. The
request for relief from property accountability for these damaged assets however, could
not be readily documented as of December 31, 2009, hence, the same could not be
forwarded to higher authorities for approval and for subsequent dropping from the books
of accounts.
145. We recommended that the Property Officer of the above-cited agencies and
hospitals prepare the IIRUP and submit the same to the Accountant for the re-
classification of these properties to Other Assets account.
147. Management of ARMMC is undertaking a review and revalidation of the said list.
Also, the Accountant and the Property Officer are reconciling their respective records.
The value of the damaged and unserviceable properties shall be reclassified to Other
Assets account as disclosed in the Notes to Financial Statements pursuant to Section 143
of the NGAS, Volume III following all the required procedures and after identifying the
units repaired, lost and/or unaccounted items.
148. The Accountant of BQ informed that the reclassification of PPE accounts to Other
Assets account will be effected in April 2010.
149. The Administrative Officer of VMC, the designated Chairman of the Inventory
Committee, informed that the Audit Team was furnished with a copy of an IIRUP for CY
2008 but it was returned on August 25, 2009 by the former ATL to the Disposal
Committee as the items lack/value.
111
Construction in Progress Account
150. As of December 31, 2009, the e-NGAS recorded balance of the account
Construction in Progress – Agency Assets under Fund 101 of DOH-CO was
P160,699,181.66.
151. Review of the DOH-CO e-NGAS records for the said account for CY 2009
showed that:
152. The Accountant of DOH-CO informed that they had exerted efforts to document
the balance of the account. However, they could no longer find any document relative
thereto. Hence, the dormant balance of the account.
153. As prescribed under Section 128 of the Manual on the NGAS, Volume III,
account Construction in Progress – Agency Assets shall be used to record the cost or
accumulated value of agency assets, which are still under construction. The account shall
be credited for transfer to appropriate asset account upon completion.
154. The absence of records to support the details of the dormant accounts as of year-
end renders the reported account balance doubtful.
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b. After all the possible measures were undertaken to ascertain the details of the
account and proven them to be futile, recommend to the agency head for
request for write-off and/or adjustment of the account balance from COA.
156. As of December 31, 2009, the balance of Items in Transit account at RMC was
P6,218,202.08.
157. Verification and review of records for the account disclosed that the balance of
P6,218,202.08 had been dormant for more than five years. However, the nature as well
as the composition thereof could not be determined in the absence of available records at
the Accounting Section to substantiate the balance of the account.
158. Due to lack of personnel and knowledge on existing rules and regulations on the
disposition of the said account, analysis of the dormant accounts was not yet undertaken
by the Accounting Section.
159. COA Circular No.97-001 dated February 5, 1997 prescribes the guidelines on the
disposition of dormant accounts, which include, among others, the following:
a. Dormant accounts shall be reviewed, analyzed and reconciled together with the
other related accounts in the trial balance.
b. If analysis is not possible due to absence of records and documents, the agency
head concerned shall request for write-off and/or adjustment of account balances
from COA, supported by a list of available records and extent of validation made
on the accounts; and certification and reasons why the books of accounts/records,
financial statements/schedules and supporting voucher/document cannot be
located.
160. The dormant balance of the account as at year-end renders the same doubtful.
161. We recommended that the Accountant comply strictly with the prescribed
procedures of COA Circular No. 97-001 on the proper disposition of the dormant
accounts.
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Payable Accounts
The erroneous recording of payables transactions of three hospitals resulted in the net
overstatement of an asset account, four liability accounts, and two equity accounts by
P1,400,280.45, P31,059.55 and P1,431,340.00, respectively, as at year-end. Moreover,
the correctness of liability accounts of BRRTH aggregating P26,328,869.59 could not
be ascertained due to absence of subsidiary records/breakdown as prescribed in
Section 12 of the NGAS Manual, Volume II to support the reported amount.
Accounts Amount
Hospital/CHD Deficiencies
Affected Overstated Understated
Metro Manila
Rizal Medical Center Erroneous recording of Other Prepaid P1,581,980.45
(RMC) payments for drugs and Expenses
medicines Accounts 1,581,980.45
Payable
Erroneous recording of Accounts P181,700.00
deliveries from PS- Payable
DBM, NPO and NFA
Other Prepaid 181,700.00
Expenses
CHD for Metro Manila Erroneous recording of Subsidy from 1,323,800.00
transfer of funds from Central Office
DOH – CO for the
Integrated HIV
Behavioral and
Serologic Surveillance Due to Central 1,323,800.00
(IHBSS) activities for Office
Global Fund Round 6
HIVAID Project to
CHD
Erroneous recording of Due to Other 574,850.20
receipt of funds for the NGAs
Global Fund Round 6 Other Payable 574,850.20
Central Luzon
Don Paulino J. Garcia Erroneous recording of Income 107,540.00
Memorial Research advances to the
Medical Center PJGMRMC Multi-
(DPJGMRMC) purpose Employees
Other Payables 107,540.00
Cooperative for
hemodialysis supplies
financed by PCSO.
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163. The erroneous recording of transactions for liabilities overstated and understated
the balances of payables as well as other contra/related accounts as follows:
Net Amount
Accounts
Overstated Understated
Other Prepaid Expenses P 1,400,280.45
Accounts Payable 1,400,280.45
Due to Central Office P 1,323,800.00
Due to Other NGAs 574,850.20
Other Payables 682,390.20
Subsidy from Central Office 1,323,800.00
Income 107,540.00
164. In summary, an asset, four liability and two income accounts were all overstated
by net amount of P1,400,280.45, P31,059.55 and P1,431,340.00, respectively.
165. At BRTTH, the validity and correctness of Accounts Payable and Other Payable
accounts balances as of December 31, 2009 amounting to P18,241,304.45 and
P8,087,565.14, respectively, could not be ascertained due to the absence of SLs and
updated reports or schedules to support said balances.
166. Section 12 of the NGAS Manual, Vol. II states that the subsidiary ledger (SL) is a
book of final entry which shall contain the details or breakdown of the balance of
controlling accounts appearing in the General ledger (GL). It shall be kept for each
control account in the GL. Postings to the SL generally come from the source documents.
The totals of the SL balances shall be reconciled with their respective control account
regularly or at the end of each month. Schedules shall be prepared periodically to support
the corresponding controlling GL accounts.
168. The Management of BRTTH committed to update the SLs of payables to support
the controlling accounts.
Income Accounts
The reported income of five hospitals were understated by P74,843,451.40 due to non-
recording of Accounts and Notes Receivable of P34,518,937.68 and the erroneous
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classification of receivables from PHIC as liability instead of income totaling
P40,324,513.72, which was not in accordance with COA Circular No.2002-002.
169. Verification and analysis of the income accounts of the following hospitals
disclosed that there were three unrecorded income accounts and erroneous classification
of income from PHIC receivables as shown below:
170. Records showed that receivables from the PHIC representing the total costs of
hospitalization charges of medicines and medical supplies, professional fees, operating
room fees, laboratory fees and room and board of its patient-members are recorded as
follows:
a. At QMMC -
(i) The receivables from PHIC representing the total costs of hospitalization of its
members are recorded in the regular books as debit to Accounts Receivables
account and credit to Sales Revenue account for charges of medicines and
medical supplies while charges for professional fees, operating room fees,
laboratory fees and room and board are credited to Other Deferred Credits
account, a liability account.
(ii) Upon collection from PHIC, the amounts collected are recorded as follows:
Account
Charges
Debit Credit
Regular Agency Books
Medicines and medical supplies Cash - Collecting Accounts Receivable
Professional fees Officers Due to Officers and Employees
Professional fees, operating room Other Deferred Credits Accounts Receivables
fees, laboratory fees and room
and board charges.
Use of Income Books
Operating room fees and Medical Dental Laboratory Fees
Cash - Collecting
laboratory Fees
Officers
Room and board charges Hospital Fees
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b. At ARMMC -
(i) Upon rendition of hospital services and receipt by the Accounting Unit from the
Billing Section of PHIC Claims (Form 2):
Accounts Receivable xx
Other Deferred Credits xx
(iii) Based on the Report of Collections and Deposits, additional entry is made recording
the breakdown of amount collected as follows:
171. The Accountants of QMMC and ARMMC justified that the Other Deferred
Credits account was used because claims for reimbursements from PHIC other than
medicines and medical supplies were sometimes disallowed. They also reasoned out that
reclassification of the Other Deferred Credits account to the appropriate income accounts
would bloat the hospital income because the accounts included long outstanding balances
that could no longer be collected.
172. As such, the cost of medical services extended to PHIC patient–members are
recorded at the time of actual rendition of such services whereas the corresponding
income is only recorded upon receipt of reimbursement from the PHIC which may be
beyond the accounting period.
173. The existing modified accrual basis of recording receivables from PHIC was not
in consonance with the following:
a. COA Circular No.2002-002 dated June 18, 2002 which prescribes that:
Other Deferred Credits account shall be used to record amount collected for
revenues not yet earned; and
Hospital fees shall be used to record regular charges by hospital for services
rendered to patients.
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118
174. The reasons for non-recording of receivables and interest income are as follows:
Hospitals Reason for Non-recording
TMC Failure of the Billing Section to submit monthly the report of
Summary of Accounts Receivables (SAR) to the Accounting
Section.
VMC Billing Section did not prepare the Monthly Summary of Bills
Rendered (MSBR) for the Promissory Notes received from
patients as the Status Report of Patients with Outstanding Balance
(SRPOB) was not submitted by the Medical Service Section. The
MSBR was the basis of setting up of receivables.
WVMC Billing Section submitted the Reports of Bills Rendered after the
Accountant had closed the books for CY 2009.
175. The personnel in charge of the Billing Section of TMC justified that the
voluminous work and lack of personnel in their unit contributed to the delay in the
preparation and submission of the required reports. On the other hand, the Accountant of
VMC emphasized that due to uncertainty in the collection of hospital bills covered by the
PNs, they opted not to book-up the receivables.
176. The non and erroneous recording of income resulted in understatement of income
by P74,843,451.40 and their related receivable and cash accounts by their corresponding
amounts as of year-end.
b. For TMC, the Billing Section submit immediately the SAR of P8,282,021.53
from PHIC to the Accounting Section for recording in the books as debit to
Accounts Receivable and credit to Prior Year’s Adjustments and henceforth,
submit the SAR on a monthly basis.
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c. VMC -
The Chief of the Billing Section (i) after receipt of the SRPOB,
prepare immediately the MSBR for CY 2009 and thereafter, on a monthly
basis, render the said report copy furnish the Accountant for recording of
the receivables; (ii) issue demand letters to patients with unsettled PNs;
and (iii) adopt an effective collection measures for the unsettled current
PNs and future receivables; and
178. The OIC of the Billing Section of TMC promised to submit the SAR report on a
monthly basis to the Accounting Section which will be the basis in the recording of
receivables. Meanwhile, the Management of VMC agreed to devise/improve measures to
strengthen collection of receivables for PNs.
179. As emphasized under DOH AO No. 5-A, s. 1996 dated February 17, 1996, the
production and development of Health Human Resource is necessary for the promotion,
maintenance and delivery of health services. The DOH is making available its hospitals
and accredited government community health resources for the learning and training of
students from health professional schools. The said AO provides further for the
following:
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b. Section 5 - Creation of HCATS with functions on formulating guidelines
appropriate to their situation based on the set affiliation policies and procedures
and the proration of affiliation fees both for the groups directly and indirectly
involved in affiliation and training;
c.Section 9.1 - The standard rates of fees to be collected by the affiliating agencies
from the affiliating students from various disciplines are as follows:
Students Amount
Medicine P 5.00/hour/student,3rd year
60.00/mo./student,4th year
Nursing P 20.00/student for 1-9 hours
30.00/student for 10-29 hours
40.00/student for 30-49 hours
60.00/student for 50-80 hours
180. On May 27, 1997, AO No. 9-C, s. 1997 was issued by DOH providing the
Implementing Rules and Regulations Governing the Affiliation and Training of Students
in Government Hospitals and other Health Facilities. These rules and regulations shall
govern all affiliation activities of the health facilities accredited by NCATS/RCATS for
affiliation and training of students. Among the functions of HCATS is to devise
mechanism that will ensure on time and full payment of affiliation fees.
181. The Order further provides that in accordance with Executive Order No. 338
dated May 17, 1996, affiliation fees collected by health facilities under the Department of
Health or the National Government shall be remitted to the National Treasury and will be
disbursed as stipulated therein.
182. The Valenzuela Medical Center (VMC), being a tertiary level hospital, was given
the opportunity to participate in the scheme and to earn additional income from the
affiliation fees paid by the participating schools for the internship of their nursing
students. On August 26 2004, a Certificate of Accreditation was awarded to VMC by the
RCATS and from CY 2005 to present, the Center had entered into a Contract of
Affiliation (CoA) with different schools for their nursing student interns.
183. Review of the VMC Standard Operating Procedures for the affiliation disclosed
that the Billing Section shall issue to the participating schools the Statement of Account.
However, due to lack of manpower at the Billing Section, a Hospital Order was issued on
January 10, 2010 reconstituting the HCATS, which shall, among others, determine the
appropriate affiliation fees to be collected by the Hospital from affiliating schools and
prepare the statement of accounts. However, the period when to collect these affiliation
fees was not indicated/included therein.
184. Pursuant to DOH Administrative Order No. 9-C s. 1997 dated May 27, 1997, the
Hospital collects the corresponding standard affiliation rate, as stated in paragraph c
above, from each nursing student interns. Verification revealed that from CYs 2006 to
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2009, the affiliation fees collected totaled P1,926,950.00. The amount collected are
debited and credited to Accounts Receivables and Affiliation Fees, respectively, which
are recorded in the RA books as MDS Trust Fund. The affiliation fees collected by the
Hospital are deposited with the Bureau of Treasury pursuant to Executive Order 338
dated May 17, 1996 which requires that affiliation fees collected by health facilities under
the Department of Health or the National Government shall be remitted to the National
Treasury and will be requested and disbursed as stipulated therein.
185. In addition to the affiliation fees collected during the affiliation period, the Center
also bills P100.00 per affiliate student for the use of its facilities. The amount billed are
debited and credited to Accounts Receivable and Other Business Income, respectively, in
the Special Fund books as trust receipts and are deposited with the Land Bank of the
Philippines, Valenzuela Branch.
186. Further review of the receivable from affiliation fees disclosed that the amount
due from the different affiliated schools totaling P3,979,977.60 as of December 31, 2009
remained uncollected as of this date. Verification showed that the amount included long
outstanding receivables from affiliations fees of nursing students and use of Hospital
facilities as shown in the Aging of the Accounts below.
187. Review of the existing procedures revealed that the preparation of statement of
accounts was not given much attention. The statements of accounts sent by VMC to
various participating schools were not served on time as shown below.
188. Records do not also show that follow-up and demand letters were prepared and
served for the collections of unpaid affiliation fees.
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189. Further, the Audit Team was not furnished with copies of Contract of Affiliation
(CoA) executed between and by the Hospital and the affiliated schools for audit purposes
as required by COA Circular Nos. 76-34 dated July 15, 1976 and 87-278 dated
November 12, 1987 and reinstated by COA Circular 2009-001 dated February 12, 2009.
a. The HCATS, (i) in coordination with the Billing Section, prepare and send
demand/follow-up letters to the concerned affiliated schools for the payment
of unpaid affiliation fees particularly those with long outstanding obligations;
and for future Contract of Affiliations (CoAs), include the specific period of
payment of the affiliation fees; and
b. The Training Office furnish the Audit Team with copies of CoAs for audit
purposes.
191. The Hospital Director gave an assurance the observations will be discussed with
the HCATS and Billing Section. The Billing Section informed that a demand letter was
sent to Far Eastern University, one of the affiliated schools with huge collectibles, twice
but as of this date no response was yet received. The HCATS promised to submit updated
Schedule of Accounts Receivable-Students Affiliations.
Lapses/Deficiencies in the Revenue Sharing Scheme with Himex Corporation, Inc. - NCR
192. Records showed that in 2007 and 2009, the JRRMMC and ARMMC, respectively,
entered into MOAs with Himex Corporation, Inc. (HCI), a supplier of medical/hospital
equipment, for a revenue sharing scheme agreement wherein the latter shall supply,
deliver and install the following medical equipment to the former :
Hospital Equipment
JRRMMC 800m A radiographic/fluoroscopic x-ray machine
Hitachi whole body x-ray CT system
Mammography machine
Hitachi 500mA conventional x-ray machine
Hitachi high performance premium magnet open MR
Imaging system
PACS system
MRI shielding room
ARMMC Phase I
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Hospital Equipment
Hitachi high performance premium magnet open MR
Imaging system
Hitachi whole body x-ray CT system
Hitachi 800mA radiographic/ fluoroscopic x-ray
machine
Hitachi 500mA conventional x-ray machine
Hitachi untrasound EUB 5500 probes 2D echo
PACS system
Phase II
Hitachi general ultrasound
Hitachi C arm machine
Hitachi 200mA portable x-ray machine
Mammography machine
193. Review of the MOA disclosed that among the significant stipulations thereon
were as follows:
a. The monthly gross receipts from the use of the medical equipment provided by
HCI shall be divided equally between the Hospitals and the Corporation;
b. The supplier shall perform the collecting function and shall remit the 50% share
of the Centers on or before the 5th working day of the succeeding month and every
month thereafter until expiration of the term of the revenue sharing agreement.
c. HCI shall provide the consumables necessary for the operation of all the medical
equipment as well as the cost and/or expenses for maintenance, spare parts and
comprehensive insurance of the subject units during the period of the agreement.
194. For the MOA with ARMMC, the Himex shall be granted exclusivity on
radiological and other equipment necessary in providing the needs of the Hospital to
protect the interest of the investment partners hence, no similar equipment shall be
installed inside the vicinity of the hospital except one existing X-Ray machine.
195. The MOA for the two Hospitals did not however, include the following
provisions:
a. A penalty clause for late remittances of the share of the Hospital from income
from the equipment.
b. Prescribed controls that will ensure the completeness, accuracy and correctness of
income collections such as:
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Types of financial reports and supporting documents with specific due dates
of submission and penalty clause for the non-compliance.
126
196. The absence of the said stipulations in the MOA, sanctions were not imposed
against the supplier’s delayed remittance of the Hospitals’ share thus, encouraging non-
compliance with the provisions of the agreements and deprived of the immediate use of
the much needed income. On the other hand, with the lack of prescribed controls and
monitoring on collections, the Centers are always at the mercy of Himex in requesting for
collection reports and their supporting documents such as official reports, charge slips,
schedule of refunds, discounts and others and have to be contended with the computed
share by the supplier.
197. In addition to the expenses for consumables and maintenance mentioned in the
MOA, the HCI also deducts a monthly cost of service to the two Hospitals which
represents the cost of the depreciation of the equipment computed on a straight line
method for a seven year period. Under COA Circular No. 2003-007 dated 11 December
2003, the Commission on Audit estimated that the useful life of hospital equipment as
well as medical, dental and laboratory equipment is ten years.
198. With the seven year estimated life of the equipment instead of the prescribed ten
years, the share in income of the Hospital is reduced as the shorter the depreciation period
is the bigger is the monthly cost of service deducted from the income.
199. Further review of documents and reports relative to the scheme, verification and
interview with the concerned personnel revealed the following lapses/deficiencies on the
implementation of the revenue-sharing scheme:
I. At JRRMMC
a. From September 2007 to May 2009, Himex was delayed in the remittance
of the Hospital share ranging from 219 to 459 days. The unremitted
monthly income aggregated to P155,000.00, on the average.
b. For CY 2009, only for the months of May, July and December that the
Hospital had a collectible amount from Himex. For the rest of the year,
only a deficit of P1,349,843.90 was shared to the Hospital. To date, the
Hospital’s share for July and December 2009 totaling P65,151.48
remained unremitted by HCI.
c. As mentioned earlier, the HCI deducts a monthly cost of service for the
cost of the depreciation of the equipment computed on a straight line
method for a seven year period. The monthly deduction totaled
P1,397,627.72.
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d. In his letter dated 10 February 2010 to the Medical Center Chief, the
Senior Executive Vice-President of Himex explained that the depreciation
referred to as the Cost of Services is deemed necessary as it covers the
comprehensive maintenance inclusive of labor and spare parts, the wear
and tear of the machines and its upgradeability within the contract period.
e. The cost of services being deducted from the gross income, however was
much higher than the service income collected for the given period.
Below is a comparative data showing the gross income/deficit earned after
deducting the cost of services or depreciation cost.
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h. On the other hand, JRRMMC had incurred P1.96 million for the
repair/renovation of Radiology Department contracted to Himex
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Corporation funded out of donations and still incurring the following
expenses in connection with the implementation of the joint venture
agreement:
Amount
Nature of Expense
(in million)
Electricity expenses estimated at 10% of the annual consumption
of JRRMMC of P25.11 million P2.51
Water expenses estimated at 10% of the annual consumption of
JRRMMC of P22.41 million 2.24
Salaries and Wages of the Radiology Department personnel
complement consisting of the following with their monthly 10.65
salaries excluding other allowances and benefits:
8 consultant-PT @P19,566.50 = P156,532.00
3 Med Specialist (Fellow) @ P16,430.50 = 49,291.50
14 Resident Physician @P28,671.00 = 401,394.00
12 Med. Tech @P21,040.00 = 252,480.00
2 Admin Staff @ P13,871.00 = 27,742.00
Total Monthly Salaries 887,439.50
Multiplied by 12 months x 12
Annual Salaries P10,649,274.00
============
Total P15.40
i. The chance to recover the huge expenses that JRRMMC had incurred and
will continuously spend within the seven-year term of the agreement is
remote. In terms of recovery of costs of investments, only Himex is
guaranteed while JRRMMC has to continue sustaining the price of the
scheme.
j. It was also noted that adequate controls in the collection system adopted
by Himex were not provided to ensure the correctness of the amount of the
50% share due the Center. As stated earlier, the supplier collects the
charges from patients. As such, cash collections, records, reports and
supporting documents relative thereto are kept and maintained by Himex.
k. Interview with the Accounting personnel disclosed that in CYs 2008 and
2009, Himex failed to comply with the agreed daily submission of official
receipts during the meeting of the Accounting Unit with the HCI. The
ORs for the period September 28 to December 26, 2009 were received
only on January 13, 2010 while those for December 26, 2009 to January
31, 2010 were received only on 4 March 2010. Also, as discussed above,
the submission of the Revenue Sharing Statement (RSS) for CY 2009 was
always delayed ranging from one to 10 months. Despite the demand letters
of the Medical Center Chief to Himex, the required financial reports and
supporting documents to validate the RSS were not submitted to the
Center.
130
131
D. Errors/Deficiencies in Computation of Revenues
m. Based on the above observations on the RSS for December 2009, a re-
computation was made to arrive at the correct Hospital share for that
month. Computation revealed that the Hospital share for December 2009
should have been P377,321.64 instead of only P43,796.09 or a
discrepancy/understatement of P333,525.55 as shown below.
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Per RSS Per Recomputation
Less: Subsidized thru Kruvim Principle
Charge to Patient 751,849.50 751,849.50
Social Services 214,820.50 109,512.00
PHIC 22,920.00 19,720.00
To Pay Later 48,710.00 48,710.00
Other Funding 122,266.10 104,182.00
Total 1,160,566.10 1,033,973.50
Hospital Share P P 377,321.64
43,796.09
Discrepancy/Understatement P333,525.55
o. While Himex is submitting triplicate copies of ORs issued and the RSS to
the Accounting Unit which were verified by the OIC, Finance Service, no
copies of the ORs were forwarded to the Audit Team for post-audit
purposes. Only the following reports were submitted in compliance with
AOM No. 90-06 dated 10 November 2009:
F. Inadequate Records
II. At ARMMC
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and the like were kept and maintained at the office of the supplier in Pasig
City instead of within its office and store room provided by the Hospital at
its premises.
r. The MOA provided for the delivery and installation of nine line items of
diagnostic equipment. Verification disclosed however, that the following
units listed in the MOA were not delivered and installed by Himex:
s. It was learned from a representative of the supplier that the PACS System
was never installed apparently because the expected income from it was
inadequate to cover the cost of the system. Moreover, she contended that
the undelivered Mammography Machine and the delivered General
Ultrasound Scanner with Tissue Elastography are one and the same
although these were listed separately under Phase II in the MOA.
200. The Management of JRRMMC commented that a meeting with Himex was
conducted on 24 March 2010 to discuss the deficiencies noted in the review of the MOA.
The Medical Center Chief informed that the collecting function was lodged with Himex
because JRRMMC has no staff available to act as the Collecting Officer.
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201. The Chief of ARMMC rendered the following justifications:
a. The PACS System was not installed because of inadequate income from the tie-up
scheme but as soon as the number of patients increase, Himex has agreed for the
installation of the equipment.
c. While the MOA provided Himex exclusivity on the radiological and other
equipment necessary in providing the needs of the Hospital, the provision is only
true for as long as their equipment are functional and available. That in case of
disasters and calamities that may cause equipment damage and no immediate
replacements were made as what it experienced during typhoon Ondoy, the
Hospital may source out other service providers to provide continuous diagnostic
services.
d. Himex tried its best to replace with back up units the X-ray Machine and
Ultrasound. Inasmuch as the DOH National Center for Health Facility
Development recommended to place all diagnostics, laboratories and radiological
equipments on the second floor, Himex has submitted a proposal of temporary
Radiographic X-ray and CT Scan services in a mobile container van until such
time that the infrastructure to accommodate their equipment have been
constructed.
202. The Medical Center Chief of ARMMC further asserted that COA Circular No.
2003-007 dated December 11, 2003 on the estimated ten-year useful life of hospital
equipment is applicable only to government-purchased equipment. The agreement with
Himex is under a machine tie-up scheme, that prior to extension after the minimum
seven-year term expires, there is a provision to acquire updated equipment models if
there is an agreed continuation of the joint venture project. He also stressed that
embarking on this joint venture is for the interest of the institution for it to continue
providing services to patients the soonest possible time, otherwise delivery of health care
services may be compromised because requesting for and procuring government hospital
equipment will take a long time before that can be granted.
203. Notwithstanding the justifications of the Chief of ARMMC and Himex, the Audit
Team maintains that the provision of the contract on what units of radiological equipment
were to be installed, should be observed including the PACS System. Moreover, the ten-
year estimated useful life as basis for computation of depreciation should be applied
because ARMMC which is a party to the joint venture agreement is a government
hospital.
204. The revenue sharing scheme agreement between JRRMMC and ARMMC and the
HCI may have addressed the Hospital’s lack of funds to purchase capital equipment
considering that income from government hospital operations could not adequately meet
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expenditures because most of the health services are extended free of charge to indigent
patients. However, the best interest of the Hospitals had to be considered in such joint
venture.
a. Ensure that the interest of the Center is well protected, (i) invoke for the
amendment/revision of the MOA to include a penalty clause for non/delay
remittance of the share of the Center and that the computation of the
depreciation cost will be in accordance with Section 4.0 of the Manual on the
NGAS, Volume I, using the estimated life of the hospital equipment of ten
years pursuant to COA Circular No. 2003-007; and (ii) since the depreciation
of the equipment shall be deducted from the share of the Hospital, ensure
that the equipment will be transferred to the Hospital at the end of the
concession period;
c. Create a Task Force to examine, verify and audit income collections from the
Himex-JRRMMC joint venture agreement to establish the accurate amounts
of the hospital share from 2007 to date.
b. Require the supplier to submit its computation together with the parameters
used in determining the life of the machine as well as the monthly cost of
services which are deducted from the income from the machines before the
sharing of the net revenues;
137
d. Coordinate with the Supplier for the immediate replacement of the units
destroyed by flood and secure written explanation on its failure to install and
make operational the PACS System ; and
e. Re-evaluate the viability and benefits of the joint venture to ensure that the
interest of the government and the hospital in particular is
safeguarded/protected and that the delivery of services to the clients of the
Center are not sacrificed whenever there are similar undertakings in the
future.
208. The Chief of ARMMC informed that the Center and Himex have agreed to (a)
amend the MOA to include a late payment penalty clause computed at 1/10 of 1% for
every day of delay; (b) implement daily reporting in the billing of patients.
The RMC does not keep separate books of accounts on the receipt of hospital income
while the DJNRMH does not maintain a separate bank account for the Revolving Fund
on the sale of medicines, drugs, medical and laboratory supplies as prescribed by DOH-
DOF-DBM Joint Circular No. 2003-01 and Section 121 of the Government Accounting
and Auditing Manual (GAAM), Volume I, respectively.
209. Verification of the records of RMC showed that since CY 2003, the receipts and
utilization of hospital income, regular accounts and other accounts of the Hospital are
recorded in just one set of books instead of maintenance of separate set of books for the
hospital income as required by DOH-DOF-DBM Joint Circular No. 2003-01 dated
July 16, 2003 which prescribes the guidelines on the retention and use of hospital income
as follows, among others:
Hospital fees;
Medical, dental and laboratory fees;
Rent income derived from the use of hospital equipment/facilities;
Proceeds from the sale of hospital therapeutic products, prosthetic
appliances and other medical devices;
Diagnostic examination fees; and
138
Donations in cash from individuals or non-government organizations that
are satisfied with hospital services, which are in turn given as assistance to
indigent patients.
b. Section 3.1 – DOH hospitals concerned shall maintain separate books of accounts
to cover the receipt and utilization of all income collected pursuant to the
guidelines prescribed in this joint circular.
210. This resulted in difficulty in the accounting and preparation of the reporting
requirements for submission to DOH and DBM by the Accounting Section as well as
audit of the collection and disbursement transactions of the Hospital income.
211. Records likewise showed that the DJNRMH maintains a bank account at LBP
Commonwealth Branch which was subsequently transferred to LBP Robinson Branch,
Novaliches for the proceeds from sale of medicines, drugs, medical and laboratory
supplies which were mingled with other collections such as affiliation fees, professional
fees, bid/performance/security bonds. The proceeds from sale of medicines, drugs,
medical and laboratory supplies shall be used for the procurement of similar items for
replenishment.
212. However, combining the deposits of the proceeds from sale of medicines, drugs,
medical/laboratory supplies with other collections was not in accordance with Section
121 of the GAAM, Volume I, which provides that receipt derived from business-type
activities of the departments, bureaus, offices or agencies which are authorized by law to
be constituted into a Revolving Fund shall be separately recorded and deposited in an
authorized government depository bank.
a. The Accounting Section of RMC maintain separate set of books for the
receipt and the utilization of the hospital income; and
b. The Cashier of DJNRMH open a separate bank account for the Revolving
Fund.
214. The Management of RMC stated that the Accounting Section has begun the
maintenance of separate books for TRC funds. They are also studying further the
separation of the books for the Hospital Income.
Expense Accounts
The payment of benefits/expenses of three CHDs and six Hospitals was not in
accordance with existing government laws and regulations resulting in the
incurrence
139
140
of unauthorized and excessive expenses as well as the understatement/overstatement of
affected expense accounts totaling P25,070,178.32 rendering the validity and accuracy
of the affected accounts unreliable. Further, improper use of
appropriations/allotments, non/erroneous recording and inadequate controls over
expenses amounting to P58,021,214.00 were also noted at DOH CO, a CHD and three
hospitals.
215. Audit of transactions of three CHDs and six Hospitals in CY 2009 disclosed non-
compliance with laws and regulations in the payment of expenses totaling
P25,070,178.32 which affected the validity and accuracy of the different expense
accounts as summarized below:
Ilocos Region
MMMHMC Longevity pay was granted to P1,247,992.84
employees in addition to the step
Cagayan Valley increment already availed of.
CVMC 2,114,430.60 Longevity Pay
VRH 2,011,468.45
Central Visayas
ECS Double collections of benefits 841,636.80
Longevity Pay and Step Increment.
Western Visayas
CHD Payment of Rice Subsidy to officials 1,857,600.00 Other Personnel
and employees for the period Benefits
January to June 2009.
CLMMRH Payment of CYs 2008 and 2009
CNA Incentive was not adequately 4,160,000.00
documented.
Central Visayas Other Personnel
CHD Payment of CY 2008/2009 CNA 11,050,000.00 Benefits
Talisay District Hospital Incentive was not adequately 819,261.63
(TDH) documented.
Total P25,070,178.32
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CHD/Hospital Nature of Deficiency Amount
Metro Manila
DOH- CO Charging of advertising expenses for various
infomercials to improper appropriations/ P43,992,860.49
allotments
Central Visayas
Don Emilio Del Valle Non-verification by the Accounting Section of the
Memorial Hospital accuracy of Obligation Requests. 253,379.75
Caraga Region
CHD Control measures have not been provided in the
procurement of T-shirts and/or training kits/bags
in the conduct of various trainings and seminars. 146,080.00
Anniversary bonus Administrative Order No. 263 The grant of anniversary bonus to officials and
dated March 28, 1996 employees of government entities shall be
authorized in an amount not exceeding
P3,000.00 each provided that the employee has
rendered at least one (1) year service in the same
agency as of the date of the milestone year and
may receive anniversary bonus only once every
five years, regardless of transfers from one
government entity to another.
Longevity pay/step Section 4 Rule XX of R.A. No. Whenever other laws provide for the same
increment 7305 benefits covered by this Act, Public Health
Workers shall have the option to choose which
benefit shall be paid him. In case the benefit
chosen is less than provided by the Act, the
workers shall be paid only the difference.
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Payment For Laws and Regulations Provisions
DBM Circular Letter No.2004- Although the incentives given and the years of
4 dated February 26, 2004 service required differ, the nature and purpose
for the grant thereof are essentially the same.
Rice subsidy DBM Budget Circular All existing cash incentives in the CNA in the
NO.2006-1 dated February 1, form of allowances and benefits, x x x, shall be
2006 consolidated into a single cash incentive and
shall be referred to and collectively paid as the
CNA Incentive.
CNA Incentive DBM Budget Circular No. A report on the utilization of savings for the
2006-1 dated February 1, 2006 payment of the CNA Incentive shall be
submitted to the DBM.
Section 4(6) of P.D. No. 1445 Claims against government funds shall be
supported with complete documentation.
Charging of Expenses Sections 66 and 64 of the Appropriations for MOOE and Capital Outlays
to appropriations General Appropriations Act of authorized in this Act shall be available for
CY 2008 and CY 2009 release and obligation for the purpose specified
and under the same special provisions applicable
thereto, for a period extending to one fiscal year
after the end of the year in which such items
were appropriated.
Re-alignment of DBM Circular Letter No.2008 The DBM shall validate the savings requested
savings – 09 dated November 26, 2008 for realignment by the qualified agency and shall
issue SARO to cover said realignment of savings
in favor of qualified agencies i.e., from savings
under electricity and fuel or other expenditure
items to appropriate expense item(s) to fund any
of the priorities cited in the IRR.
Recording of Sec. 73 of the Manual on the The responsibility for the fair presentation and
transactions New Government Accounting reliability of financial statements rests with the
System (NGAS), Volume I management of the reporting agency. Further, it
requires that all financial data presented shall be
accurate, reliable and truthful.
Use of funds/resources COA Circular No. 85-55A Government funds and property should be fully
dated September 8, 1985. protected and conserved, and that irregular,
unnecessary, excessive or extravagant
expenditures or uses of such funds and property
should be prevented.
143
218. These also resulted in the overstatement and understatement of the following
expenses and cash in bank accounts for CY 2009:
CHD for Central Visayas Appropriate cost-cutting measures were made which resulted in the
generation of savings through:
CHD for Caraga One of the major roles of DOH is to conduct advocacy on various
health programs. Training kits/items with prints of the
program/activity or campaign slogan are much needed for advocacy
and all items not distributed even after the conduct of the activity
were already promised to be sent out to the participants.
b. The concerned personnel of CHD for Metro Manila refund the amount
representing overpayment of taxi fares. Henceforth, the approving officials of
transactions strictly comply with the cited provisions on the payment of the
said allowances;
144
145
c. The recipients of the unauthorized anniversary bonus by DJNRMH refund
the amount received by them;
e. The Medical Center Chief of TMC remind all concerned officials and
employees to correctly reflect in the proper records and documents all
authorized re-alignment of allotments on time;
f. The employees of MMMHMC, CVMC and VRH refund the Longevity Pay
paid to them;
g. The concerned employees of ECS select in writing the benefit they want to
collect, either Longevity Pay or Step Increment, and to refund the amount
pertaining to the double compensation and to restore the original rates of
salaries of employees concerned prior to step increment for those who opted
for the Longevity Pay;
h. The Head of CHD for Western Visayas require the concerned officers and
employees to refund the rice subsidy claimed;
i. The Heads of CLMMRH, CHD for Central Visayas and TDH submit the
required documentation on CNA Incentive payments;
146
Name of CHD/Hospital Management Comments
only be granted such benefits in CY 2010; and (iii) the amount
received in July 2008 by the officials and employees who shall
retire, resign or separated from the service shall be deducted from
their terminal pay.
CHD for Metro Manila Memoranda will be issued on the non-entitlement of transportation
allowance during trainings of four (4) days and less and shall
implement the refund on the said disallowed expenses effective
June 2010.
The hazard pay of the officials and employees with Salary Grades 20 and above of
DOH- CO, four CHDs, 16 Hospitals and two DOH attached agencies was pegged at
P4,989.75 per month, without further increase, as authorized by DOH
Administrative Order No. 2006-0011 was not in accordance with the provisions of
Section 21 of R.A. No. 7305 and Section 7.1.5a of its Implementing Rules and
Regulations which was affirmed by Supreme Court Resolution dated November 27,
2008 thus, resulting in the overpayment of P33,798,135.10 for such pay.
222. Audit of payrolls for hazard pay in CY 2009 revealed that the officials and
employees with Salary Grades 20 and above of four CHDs, 16 Hospitals and three DOH
offices was pegged at P4,989.75 per month pursuant to AO No. 2006-0011 issued by the
DOH Secretary May 16, 2006 which provides, among others, that the hazard pay of DOH
officials and employees with Salary Grades 20 and above is pegged at P4,989.75, without
further increase, which is equivalent to 25% of the basic salary per month of those with
Salary Grade 19, Step 8 as of June 30, 2007.
223. The rate of hazard pay paid to these officials and employees was however,
contrary to the provisions of Section 21 of RA No. 7305 and Section 7.1.5.a of its
Implementing Rules and Regulations (IRR) which provide that hazard pay allowance of
personnel with Salary Grades 20 and above should be computed at 5% of their basic
monthly pay. The rate for this allowance authorized by RA No. 7305 and its IRR was
affirmed by the Supreme Court in its Resolution dated November 27, 2008 stating,
among others,
147
a. Fundamental is the precept in administrative law that the rule-making power
delegated to an administrative agency is limited and defined by the statute
conferring the power. The Court finds that the AO violates the established
principle that administrative issuances cannot amend an act of Congress;
b. The DOH, in issuing the AO, has exceeded its limited power of implementing the
provisions of R.A. No. 7305. The rule-making power of DOH is a delegated
legislative power which may not be used either to abridge the authority given by
the Congress or Constitution or to enlarge the power beyond the scope intended.
The power may not be validly extended by implication beyond what may be
necessary for its just and reasonable execution;
224. As such, there was an overpayment of hazard pay to the DOH officials and
employees with Salary Grades 20 and above totaling P33,798,135.10 which were
disallowed in audit as follows:
CHD/Hospital/ Office Period Covered Disallowed Excess Hazard Pay
Metro Manila
POC P 2,425,241.21
ARMMC Jan. to Dec. 2009 2,974,800.34
BQ 879,332.42
CHD for MM 1,108,735.63
DJFMH 1,091,083.27
DJNRMH 328,596.58
FDA 676,751.94
NCMH 1,032,625.66
DOH – CO Jan. to June 2009 7,736,946.20
RITM 921,147.70
RMC 717,608.12
SLH 1,374,676.26
TMC 510,990.14
VMC 257,556.54
EAMC Jan. to July 2009 1,995,577.64
LPGHSTC 329,308.08
QMMC Jan. to Aug. 2009 1,867,280.13
NCH 1,304,792,34
JRRMMC Jan. to Sept. 2009 2,087,863.67
CAR
CHD Jan. to Nov. 2009 768,262.40
Ilocos Region
CHD Jan. to Dec. 2009 2,827,473.23
Western Visayas
CHD July and Aug. 2009 398,440.90
Caraga Region
Adela Serra Ty Memorial Medical Jan. to July 2009 183,044.70
Center (ASTMMC)
Total P33,798,135.10
148
225. We recommended that the Management of DOH-CO and other concerned
CHDs/Hospitals/DOH offices (a) stop immediately the payment of the hazard pay of
the officials and employees with Salary Grades 20 and above based on the pegged
amount of P4,989.75; and (b) require the refund of the excess amounts paid to them.
Henceforth, payment thereof be based on 5% of their basic monthly salary pursuant
to RA No. 7305.
226. The Management of DOH-CO, LPGHSTC and CHD-CAR have filed their
appeals from the subject Notices of Disallowance issued on payment of hazard pay to the
COA Central Office and are awaiting its decision on the matter. Other CHDs and
Hospitals are still waiting for the results of the appeal by the DOH-CO since the appeal is
DOH-wide before implementing the recommendation.
227. As of December 31, 2009, the e-NGAS recorded a consolidated total assets of 40
Foreign-Assisted Projects (FAPs) of the DOH-CO aggregated to P3,413,086,424.80. Per
Summary of Financial Statements, the status of these FAPs accounts were as follows:
Status
Number of Projects Amount of Assets
Status Years Dormant
16 P1,859,079,075.07 On-going Active
15 1,296,018,170.00 Completed in CYs 1997 to 5 to 12 years
2004
9 257,989,179.73 Completed in CYs 2007 to Less than a year to
2009 (exclude 2009) 2 years
40 P3,413,086,424.80
228. As shown above and verification disclosed that 24 projects which have been
completed ranging one to 12 years, their accounts were not yet closed and/or their
account balances transferred to the General Fund.
229. COA Circular No. 97-001 dated February 5, 1997 defines dormant accounts as the
individual or group of accounts with balances that remained non-moving for more than
five years and prescribes the guidelines on the proper disposition/closure of dormant
funds and/or accounts of national government agencies as follows:
149
a. If upon verification the purpose of the fund is found fully completed,
discontinued and/or abandoned and no financial transactions are expected,
conduct review, analysis, and reconciliation of the subject funds accounts and
determine their existence and validity.
b. Effect adjusting journal entries and prepare the preliminary trial balance.
Upon completion of the above steps, prepare the adjusting and closing
entries and the final trial balance.
230. Further, the transfer of the dormant accounts to the Bureau of the Treasury is also
required by the following:
a. Executive Order (EO) No. 338, s. 1996 dated May 17,1996 - All government
offices and agencies, unless otherwise specifically provided by law, to
immediately transfer all public monies deposited with depository banks and other
institutions to the Bureau of the Treasury, regardless of income sources.
b. Sec. 29(3), Article VI of the Constitution - Once the purpose for which a special
fund was created has been fulfilled or abandoned, the balance, if any, shall be
transferred to the general funds of the government.
c. EO No. 431 dated May 30, 2005 – Reversion of all dormant accounts,
unnecessary special and trust funds to the General Fund and for other purposes to
augment depleting funds of the National Government.
150
231. Interview with accounting personnel revealed that the balances in the financial
statements for completed projects that were dormant per e-NGAS records were the set-up
balances since the start of e-NGAs thus, adjusting and closing of these accounts could not
be facilitated due to lack of documentation.
232. The non-compliance with the said guidelines resulted in accumulation of the
following dormant accounts in the financial statements as of year-end:
Amount
Account
Debit Credit
1 Cash P56,328,451.10
2 Receivables 303,754,771.73
3 Inventories 286,747,763.45
4 Other Assets 588,695,310.22
5 Fixed Assets 318,481,052.23
6 Payables P837,535,024.43
7 Government Equity 716,472,324.30
Total P1,554,007,348.73 P1,554,007,348.73
b. Comply strictly with the guidelines embodied in COA Circular No. 97-001 on
the proper disposition/closure of dormant funds and/or accounts of national
government agencies; and
c. After all the possible measures were undertaken to ascertain the details of
the account and proven to be futile, recommend to the agency head to
request for write-off and/or adjustment of the account balance from COA.
234. Management commented that they will request LBP for the latest copy of Bank
Statements and after preparation of Bank Reconciliation Statements all available cash
balances will be remitted to the Bureau of the Treasury.
235. Management also committed that analysis, reconciliation and closing of the books
of fully completed and dormant foreign-assisted projects will be given priority. The
closing of books were pending due to incomplete supporting documents such as deed of
donations for equipment from concerned offices, request for release of NCAA from
DBM, gathering of invoice receipts and other documents to effect the adjusting and
closing entries. Some finished projects could not be transferred to General Fund due to
unavailability of subsidiary ledgers which were handled by Project Management Office
despite exerted efforts.
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Foreign Grant Fund and Other Trust Funds
Non-inclusion of Foreign Grant Fund and Other Trust Funds in the Financial Statements
- NCR
The accounts pertaining to the project funded out of the grant program of the
Bloomberg Initiative to Reduce Tobacco Use and the trust fund on collected fees and
bids and award transactions were not included in the reported financial statements as
at year end of CHD for Metro Manila, thereby understating the asset, liability and
government equity accounts of the Center by an aggregate amount of P14,902,125.58,
P2,552,249.72 and P12,349,875.86, respectively.
236. Examination of the cash accounts maintained with the authorized depository bank
revealed that the CHD for Metro Manila also maintains two separate depository bank
current accounts with LBP, CA Nos. 0562-1035-70 and 0562-1026-04, accounted under
separate sets of books with financial reports identified as “The International Union
Against Tuberculosis and Lung Disease” and “Trust Fund”.
237. Further verification disclosed that the accounts maintained for “The International
Union Against Tuberculosis and Lung Disease”, also referred as “The Union” in the
project documents, pertain to an international grant agreement program for tobacco
control entered jointly by “The Union” of Paris, France, and the Tobacco-Free Kids
Action Fund (TFKAF) based in Washington D. C., USA, with the CHD for MM, with an
approved amount of grant of US$545,165 to implement the project “SMOKEFREE
MANILA: Making Cities and Municipalities in Metro Manila 100% Smoke Free”, as part
of the grants program of the Bloomberg Initiative to Reduce Tobacco Use. The project
started in August 2008 and was expected to be completed within 24 months.
238. As of December 31, 2009, the account balances of the Bloomberg Initiative
Project totaled P11,509,459.87, the breakdown of which were as follows:
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239. On the other hand, the Trust Fund books of accounts recorded the collections from
bids and awards transactions, income derived from rentals for the use of buildings and
facilities, fees collected for board and lodging, and remittance of share on affiliation fees
for the Regional Committee on Affiliation and Training of Students (RCATS); and
disbursements related to the operations of the conduct of bidding, maintenance of the
government facilities, supplies and materials, and honoraria. The Trial Balance as of
December 31, 2009 for the said Trust Fund reflected total account balances of
P3,392,665.71, details of which are shown below:
240. Review of the financial records and reports disclosed the following:
a. The accounts presented in the Trial Balances of the Trust Funds were neither
incorporated in the General Fund nor consolidated in the financial statements of
CHD for MM as of the end of the year as required under Section 4, Chapter 2 of
the Manual on the NGAS, Volume I which states that “the One Fund Concept
shall be adopted by all government agencies. Separate fund accounting shall be
done only when specifically required by law or by the donor agency or when
otherwise necessitated by circumstances subject to prior approval of the
Commission on Audit”.
b. In the case of the Bloomberg Initiative Project grant, there was no provision in the
International Grant Agreement that separate books of accounts shall be
maintained solely for the Project. Item 4.9 of the Agreement provides that “The
Contractor (CHD for Metro Manila) shall keep accurate and regular records and
accounts of the implementation of the Bloomberg Initiative project using a
dedicated double-entry bookkeeping system as part of or as an adjunct to the
Contractor’s main accounts” (underscoring supplied).
242. The Accountant admitted its failure to consolidate the Trial Balance of Trust Fund
with the year-end financial statements of the Region, but was not aware that the
153
Bloomberg’s accounts should form part of the CHD for Metro Manila financial
statements not until the project’s termination.
Non-remittance of Trust Receipts, Interest Income and Affiliation Fees to the National
Treasury and Use of Income for Payment of Personnel Benefits – Regions 1 and NCR
Trust Receipts received from DOH-CO, collections from affiliation fees and interest
income earned totaling P6,252,229.48 of a DOH attached agency, two CHDs and a
hospital were not remitted to the BTr as required by Executive Order No. 338 and
COA-DBM-DOF Joint Circular No. 1-97 dated January 2, 1997. Further, hospital
revenue of P470,166.00 was used to pay the Medical and Dental Allowance of the
employees of Bicol Sanitarium which was not in accordance with DOH-DOF-DBM
Joint Circular No. 2003-1.
244. Review of records of a DOH office, two CHDs and a hospital in the following
Regions revealed that as at year-end, the Trust Receipts totaling P5,922,945.07 were not
remitted to the BTr:
Trust Receipts
Agency/Hospital Transfer from Collections - Interest Total
DOH CO Affiliation Fees Income
CHD for Metro Manila P2,556,514.61 P 2,556,514.61
DJNRMH P1,853,086.05 1,853,086.05
FDA P1,165,092.95 1,165,092.95
329,284.41 329,284.41
CHD for Ilocos Region 348,251.46 348,251.46
Total P2,556,514.61 P 2,201.337.51 P 1,494,377.36 P 6,252,229.48
a. CHD for MM –
The SLs showed that the balance of Fund 101 as of year-end consists of trust
receipts received from DOH – CO for the implementation of the following 13
health related projects of the Department:
End of Program
Name of Program/Particulars Balance Implementation/
Remarks
First Water Supply Sewerage and Sanitation Sector
Project P 187,872.86 1998
Rural Water Supply and Sanitation Sector Project 82,690.00
154
End of Program
Name of Program/Particulars Balance Implementation/
Remarks
Urban Health and Nutrition Program 17,312.91
WHO Fund – Red Project 14,369.89 January 2006
PCHRD – Scholarship granted to Ms. Susan Juangco 4,715.50
Natural Family Planning 322,278.75 October 2006
Avian Pandemic Influenza Preparedness 66,080.00 February 2007
Knock – out Tigdas 159,545.54 October 2007
World No Tobacco Day 12,767.06 May 2008
1,396,979.86 December 2008
Integrated Family Planning and Maternal Health
Global Fund Round 1 HBSS 118,400.00 May 2009
Global Fund Round 6 HIV AIDS 326,782.60 Unexpended balance for
completed activities
New Born Screening Program (153,280.36) On-going
Total P2,556,514.61
(i) EO No. 338 dated May 17, 1996 directing the deposit to the National
Treasury of all cash balances classified by law or regulations as trust
receipt and treated as trust liability of the recipient agency acting as a
trustee implemented by COA-DBM-DOF Joint Circular No. 1-97 dated
January 2, 1997.
(ii) Section 6 of the General Provisions of RA No. 9524, the GAA for FY
2009, provides that “Receipts from non-tax sources, including insurance
proceeds, and donations for a term of not exceeding one (1) year,
authorized by law or contract for specific purpose (i) which are
collected/received by a government office or agency acting as a trustee,
agent or administrator, (ii) which have been received as guarantee for
the fulfillment of obligation, or (iii) all other collections classified by
law or regulations as trust receipts, shall be booked as a trust liability
account of the agency concerned and deposited with the National
Treasury in accordance with E. O. No. 338, s. 1996 and pertinent
guidelines, xxx.”
155
156
246. The P470,166.00 hospital revenue earned by BS during the year were utilized for
the payment of Medical and Dental Allowance of P5,000.00 each to all regular and casual
employees, P3,000.00 for service contract worker and P2,000.00 for Job Order (those
with minimum six months service) as of November 30, 2009. The grant was made in line
with Office Order 2009-29 of the Chief of Hospital dated December 23, 2009. Section 3.6
of DOH-DOF-DBM Joint Circular No. 2003-1 dated July 16, 2003 which states however,
that hospital income shall not be used for salaries and other allowances and benefits
whether in cash or in kind.
247. The non-remittance of income to the BTr and the use of hospital revenue for
payment of allowances were not in consonance with the above cited laws and regulations.
a. Accountant of CHD for Metro Manila (i) prepare the disbursement voucher
for the deposit to the BTr all cash balances pursuant to EO No. 338, s. of
1996, and trust receipts covered by Section 6 of the General Provisions of RA
No. 9524; and (ii) henceforth, observe the guidelines on the proper
procedures for the deposit of trust receipts to the Bureau of the Treasury and
the authorized withdrawals therefrom as provided under COA-DBM-DOF
Joint Circular No. 1-97 dated January 2, 1997;
c. Cashiers of CHD for Ilocos Region, DJNRMH and FDA (i) withdraw the
interest earned for CY 2009 from the Hospital’s bank accounts and remit the
same to the BTr; and (ii) henceforth, comply strictly on the requirement of
the above cited regulation on the remittance of interest; and
Contracts and Purchase Orders as well as copies of delivery documents were not
submitted to the Audit Team assigned in two hospitals and in a DOH attached agency
within five working days upon approval by the Head of the Agency within 24 hours
after acceptance of the deliveries of goods and services, respectively, which prevented
the timely conduct of review and inspection thereof and not in consonance with COA
Circular Nos. 2009-001 and 2009-002.
157
249. Sections 3.1 and 3.2 of COA Circular 2009-001 dated February 12, 2009 and
Section 6.9 of COA Circular 2009-002 dated May 18, 2009 requires the submission of the
following documents to the Office of the Auditor:
a. Contracts - Within five (5) working days from the execution of a contract by the
government or any of its subdivisions, agencies or instrumentalities, including
government-owned and controlled corporations and their subsidiaries, a copy of
said contract and each of all the documents forming part thereof by reference or
incorporation shall be furnished to the Auditor of the agency concerned.
b. Purchase Orders - A copy of any purchase order irrespective of amount, and each
and every supporting document, shall, within five (5) working days from
issuance thereof, be submitted to the Auditor concerned. Within the same period,
the Auditor shall review and point out to management defects and/or
deficiencies, if any.
c. Deliveries - Agency official/s concerned are also required to furnish the Auditor
copies of delivery documents within twenty-four (24) hours after acceptance of
the deliveries of goods and services, regardless of amount and whether or not the
transaction is subject to pre-audit.
250. The Audit Teams of the following agencies reported non-submission of Purchase
Orders (POs) and documents were not submitted within the time frame as required by the
said COA Circulars:
251. Delayed submission of the said documents prevented the Audit Teams from
conduct of auditor’s review as to compliance with applicable rules and regulations and as
to legality and completeness of the information contained in the contract as well as spot
inspections of the deliveries.
158
252. The Management of BQ that due to their preparation for the Influenza A[HINI]
the submission of the said documents was delayed.
Gender and Development Plan (GAD) - All Regions Except Regions IV-A, IV-B and 11
The lack of information and awareness on GAD, preparation of the GAD Plan and
budget, allocation of funds, implementation of GAD programs and activities, reporting
of accomplishments and expenses relative thereto were not in accordance with Joint
Circular 2004-l of the DBM, NEDA and NCRFW. These resulted in the identification
and pursuance of programs/projects/activities that did not contribute to the attainment
of fundamental objectives of GAD, planned programs and activities were not all
pursued, expenses incurred as well as reported accomplishments for the
implementation of the GAD could not be determined/identified and deprived the
intended beneficiaries of GAD the benefits that can be derived therefrom.
254. Review of records and interview disclosed that the GAD Plans/Budgets of nine
hospitals and two DOH attached agencies for CY 2009 were not submitted to the
National Commission on the Role of Filipino Women (NCRFW) for review prior to the
submission of the agency budget proposal to the DBM as prescribed under Sec. 5.1 of
Joint Circular No. 2004-1 of DBM, NEDA and NCRFW dated April 5, 2004 quoted as
follows:
a. Agencies shall submit their annual GAD plans and budgets to the NCRFW for
review and endorsement prior to the submission of the agency budget proposal.
b. Agencies shall submit to the DBM their NCRFW-endorsed annual GAD plans
and budgets along with the agency budget proposals in accordance with the
budget call.
255. The GAD Plans and the corresponding accomplishment reports vis-a-vis the
budget and expenditures thereof of DOH CO, six CHDs, 30 hospitals and four DOH
attached hospitals were also evaluated and analyzed to determine the extent of
implementation as well as compliance with pertinent laws and regulations relative thereto
and the following were noted:
Hospital/CHD/Offi Budget
% to Expenses Audit Observations
ce Amount Appropriations
Metro Manila
DOH-CO P11,930,000.00 0.17% undetermined There was no designated GAD Focal
Point to catalyze and facilitate the
institutionalization of gender
mainstreaming and women’s
empowerment.
159
Hospital/CHD/Offi Budget
% to Expenses Audit Observations
ce Amount Appropriations
Management officials were not fully
aware of the GAD program as
evidenced by their responses on the
questionnaires. They do not even know
the principal person who shall take
charge of the program. .
160
Hospital/CHD/Offi Budget
% to Expenses Audit Observations
ce Amount Appropriations
BQ Not mentioned 547,937.94 Cost of services rendered by the Music
Trainor of the newly organized Bureau
of Quarantine Chorale of P170,625.00
was reported in the GAD expenses
although such activity lack gender
issues.
San Lorenzo Ruiz 360,000.00 1.85% 41,440.00 No designated GAD Focal Point to
Women’s Hospital catalyze and facilitate the
(SLRWH) institutionalization of gender
mainstreaming and women’s
Valenzuela Medical 2,857,150.00 4.16% undetermined empowerment.
Center (VMC)
No Fund Utilization Report to show
the details of the expenses
incurred/paid for the implementation
of GAD activities to determine
whether all the reported expenditures
pertain to GAD activities.
NCMH 1,019.250.00 0.5% undetermined The amount allotted for GAD budget
was minimal when compared to the
required 5% of the total agency
appropriations of P517,941,000.00.
161
Hospital/CHD/Offi Budget
% to Expenses Audit Observations
ce Amount Appropriations
that these were implemented during the
year for validation.
CHD for MM 22,666,960.00 15% undetermined Funds allotted were in excess of the
5% required under the 2009 GAA.
LPGHSTC 3,434,000.00 2.84% Not discussed Basis of allotment for GAD budget was
the PS and MOOE appropriations only.
The appropriation for capital outlay was
not included.
Ilocos Region
CHD 1,420,000.00 1.18% 566,000.00 No fund was budgeted for the
exclusive implementation of GAD
planned programs but expenses were
charged to MOOE as the need arises.
Region 1 Medical 120,000.00 0.08% 80,639.56 GAD Budget of 5% was based on the
Center total budget of the Hospital Center of
162
Hospital/CHD/Offi Budget
% to Expenses Audit Observations
ce Amount Appropriations
Wellness Program only and not based
on the total appropriations of the
hospital
Cagayan Valley
CHD 2,600,000.00 2.29% Not specified GAD Committee was only re-activated
second semester of 2009.
Cagayan Valley Not mentioned Not specified No specific program activities were
Medical Center made and that GAD related activities had
(CVMC) been integrated with the implementation
of the agency’s programs and activities
for the year.
Veterans Regional Not mentioned Not specified The working committee for GAD was
Hospital (VRH) last organized in 2000 under Regional
Office Order No. 771. Since then no
reorganization was made despite the
majority of the members were already
separated from the service.
Central Luzon
Dr. Paulino J.
Garcia Memorial
Research and No Annual Plans/Programs was prepared
Medical Center and budget allotted specifically for
Not mentioned Not specified
(DPJGMRMC) Gender and Development (GAD) in the
DPJGMRMC - year 2009.
Talavera
Extension
Bicol Region
CHD 3,414,352.00 3% Not mentioned Accomplishments for GAD activities
were not properly identified
Bicol Medical Not specified Not specified Identified activities were similar with
Center that of the Wellness Program. However,
its objective is focused on empowerment
of women, promotion of good health and
widening of women’s economic
opportunities, the end result of the
program is geared towards quality and
affordable patient care services including
custodial care adequately provided
Bicol Regional 1,970,600.00 2% 1,970,600.00 The targeted activities set in the GAD
Training & Plan were undertaken during the year.
Teaching Hospital
(BRTTH)
Central Visayas
CHD 3,672,800.00 5.10% 3,672,800.00 The programs, projects, activities
163
Hospital/CHD/Offi Budget
% to Expenses Audit Observations
ce Amount Appropriations
implemented under the GAD Plan and
reported accomplishments were more on
the regular programs instead of GAD-
related.
Zamboanga Peninsula
Zamboanga City Not mentioned 66,063.85 No separate accomplishment Report for
Medical Center GAD implemented activities were
(ZCMC) prepared for CY 2009 as well as the
actual amount expended for the
implementation of GAD activities to
determine whether all the reported
expenditures pertain to GAD activities.
Dr. Jose Rizal 1,075,721.40 1.56% 252,399.94 Hospital officials were not fully aware
Memorial Hospital of the guidelines and procedures for
(DJRMH) the implementation.
164
Hospital/CHD/Offi Budget
% to Expenses Audit Observations
ce Amount Appropriations
Mindanao Central Not mentioned Not mentioned Implementation of GAD related
Sanitarium (MCS) activities were integrated with their
usual or regular activities, hence detailed
validation of accomplishments and the
related expenditures could not be
accounted for.
Northern Mindanao
CHD 1,072,750.00 0.84% 1,072,750.00 Although the amount allotted was less
than the 5% required under Joint
Circular 2004-1, the accomplishment
Northern Mindanao 3,771.050.00 1.54% 3,771.050.00 reported were in accordance with GAD-
Medical Center related plans/ programs/ activities of the
CHD and the Center.
Dr. Hilarion A. 411,600.00 0.33% 417,684.00 Allocation for GAD was from MOOE
Ramiro Sr. only.
Regional Training
and Teaching Funds allotted were spent for GAD
hospital related activities that were included in
(MHARSRTTH) the hospital’s GAD Plan
SOCCKSARGEN
Cotabato Regional None 11,050.00 No amount was budgeted for the
& Medical Center Center’s GAD Planned activities since
(CRMC) these were incorporated in the General
Fund program of expenditures.
Cotabato Sanitarium 100,000.00 0.21% 118,180.00 No allocation for GAD but undertook
(CS) various activities on health care of
women and children and other public
health programs which addressed the
gender needs of its employees and
clients. However, no corresponding cost
were submitted to validate the above-
mentioned activities
256. The CHDs for CAR, Western Visayas and Caraga Region and six hospitals from
Central Visayas and Soccksargen did not report on GAD.
257. The afore-cited observations on GAD deprived the intended beneficiaries the
benefits therefrom and were not in consonance with the provisions of undated Joint
Circular No. 2004-1 of the DBM, NEDA and the NCRFW:
165
Requirements Sections Provisions
gender issues within their concerned sectors. The
annual GAD plan/activities and budget shall be
geared towards the achievement of the desired
outcomes and goals as identified in the Framework
Plan for Women.
Designation of Gender and Section 3.2 (e) The GAD Focal Point shall advocate for,
Development (GAD) Focal Point coordinate, guide and monitor the development
and implementation of the agency’s GAD plan and
GAD-related programs, activities and projects.
The gender issues identified by the Section 4.2 The development of agency GAD activities shall
CHD to be addressed by the GAD proceed from a review of sex-disaggregated data,
Program were not supported by the conduct of gender analysis of major programs
relevant analysis and documentation and the conduct of consultation/s with women’s
that would validate that these issues groups or groups concerning GAD.
were among the identified forms of
discrimination against women clients
and/or employees of the Center.
The GAD activities implemented
lack gender issues.
No concrete programs/activities for Section 4.3 The conduct of massive information, education
GAD due to inadequate information and communication campaigns on the gender
and orientation relative hereto. issues/s being addressed by the agency and on the
Officials of the hospital have no clear corresponding agency program, activities and
understanding on GAD as the gender projects shall be given priority in terms of budget
issues affecting the hospital were not allocation.
identified.
Submission of accomplishment Section 4.4 The agency GAD Focal Point shall prepare the
report annual GAD accomplishment report in
coordination with the agency budget officers
following the format prescribed in Annex B to be
approved by the agency head.
Amount required for GAD Section 4.4 At least five percent (5%) of the total agency
budget appropriations as authorized under the
annual General Appropriations Act shall
correspond to activities supporting GAD. Agency
heads shall be responsible for ensuring that GAD
activities are provided with adequate resources.
The amount allotted for GAD Section 4.6 Department/agency heads shall ensure the
activities was not maximized. implementation of the annual GAD Plan and the
utilization of the GAD budget of the agency.
Most of the targets set were neither Section 4.7 The implementation of the agency GAD plan and
quantified nor were qualitative budget and GAD activities shall be integrated into
results to measure desirable the existing monitoring and evaluation system of
outcomes of gender mainstreaming the agency that has been adjusted for gender-
defined as bases for monitoring and responsiveness.
evaluating the Center’s
accomplishments.
166
Requirements Sections Provisions
Expenses incurred for GAD during Section 4.8 Agencies shall prepare their annual GAD
the year could not be determined accomplishment reports for the previous year that
inasmuch as these were contain actual accomplishments vis-à-vis targets as
mingled/incorporated in the total well as the amounts utilized for the achievement of
disbursements of the Department. such.
167
258. The Management of the concerned CHDs/Hospitals made the following
comments/explanations on the foregoing audit observations:
BQ The GAD Focal Person informed that the hiring of a Music Trainor was
incorporated in the 2008 and 2009 GAD Plans and Budgets.
TMC Management admitted that the planned program activities are not yet realized up
to this time especially the Day Care Room for the employees’ children
NCMH The GAD Focal Point officer was not aware of the requirements of the Joint
Circular 2004-1 that the GAD Plan should be submitted to NCRFW.
SLRWH The Hospital also extends all forms of assistance and provides support services
for abused women and children as well as trainings on women’s health and
welfare in the community. As such, they don’t only have to allocate 5% of their
total appropriations but in fact, the Hospital is mandated to spend 100% of these
on activities and services geared on improving women’s health and general
welfare.
VMC The Head of the Hospital informed that the amount allotted is less than the 5% of
the total agency’s appropriations as the budget for OB Gyne, Family Planning,
Improvement of Women’s Condition and Counseling/Training for Women were
given priority.
RMC and SLH The Head of the Budget Section justified that they submitted to the DOH their
Annual GAD Plan and Budget for 2009 and the DOH will be the one to submit to
NCRFW the consolidated one. A copy of the GAD Plan submitted to DOH for
consolidation was presented.
RITM Management admitted that the GAD Plan was not in accordance with Joint
Circular No. 1 but emphasized that their attention was not called by neither the
DOH nor the DBM. They asserted that it is the DOH Central Office
responsibility to secure the endorsement from NCRFW because the GAD Plan
was submitted to the DOH for evaluation, approval and consolidation. The
Director also emphasized that the sub-allotment received from DOH for vaccine
Self-sufficiency Program (VSSP) are considered as part of the regular funds of
the agency or of its appropriations. Further, management stressed that the
mandate of RITM was expanded to include production of vaccines and other
biological under the VSSP, with the merger of RITM and BPS in 2001.
SOCCKSARGEN
CRMC The issue on GAD was brought out during the Budget forum with the DBM
Regional Office No, XII in 2007 that expenditures on GAD may not necessarily
be 55 of the total yearly appropriations since the mandate of the hospital already
caters to the health needs of both men and women
168
259. The Audit Team of BQ believes that the expenses for the BQ Chorale should not
be included in the expenses for the GAD due to lack of gender issues.
a. Prepare an annual GAD plan and budget following the policy guidelines set
forth by DBM, NEDA and NCRFW Joint Circular No. 2004-1;
b. Submit the GAD Plan to NCRFW for the required review and endorsement
to the DBM;
c. Include only those programs, activities and projects that directly address
gender issues and concerns that are well -defined to avoid duplication of or
overlapping with the regular activities;
d. Allocate funds for GAD Plan’s activities of at least five percent of not only
the total budget for maintenance and other operating expenses but based on
the total agency budget appropriations. Agency heads ensure that GAD
budget is utilized exclusively for GAD activities included in the GAD Plan;
CHD/Hospital Comment
CHD for Cagayan Valley The Regional Technical Committee was reorganized to
provide advisory on matters concerning issues on
Gender and Development, formulate policies,
strategies, programs of the agency and monitors GAD
activities as embodied in the plan.
CHD for Metro Manila The GAD related programs and projects as well as the
provision of 5% of the total agency appropriations
shall be considered in the 2011 WFP.
169
CHD/Hospital Comment
DJFMH the GAD Plan and Budget FOR CY 2010, shall be
prepared in accordance with those prescribed by the
Joint Circular and will be aligned with the Philippine
Plan for Gender-Responsive Development for CYs
1995-2025 to achieve the desired outcomes and goals
for women’s empowerment and gender equality.
263. Being a tax withholding agent of the BIR, the Accounting Sections of these DOH
attached agencies, CHDs and Hospitals withheld monthly income taxes from the taxable
emoluments of their personnel in conformity with the said rules and regulations. In
addition to the unremitted taxes of P66,190,356.18 as of CY 2008, the amount
withheld during the year totaled P472,105,472.41. Total remittances aggregated to
P479,521,104.71 with tax refunds and adjustments totaling to P5,107,053.20, leaving
an unremitted amount of P53,667,670.68 as of CY 2009 of which substantial amount of
the balance was remitted in January 2010.
264. Presented hereunder are the details on taxes withheld and remittances of three
DOH attached agencies, four CHDs and 20 Hospitals from the said Regions.
Unremitted
Offices/CHDs/ Balance as of 2009 Tax Refund/
Balance as of
Hospitals January 2009 Adjustments
Withheld Remitted December 2009
Metro Manila
ARMMC P2,710,910.56 P13,095,595.19 P13,419,548.55 P2,386,957.20
BQ 1,125,239.32 9,008,568.85 8,766,235.75 1,367,572.42
DJNRMH 32,038.96 7,608,109.04 7,555,913.99 84,234.01
EAMC 8,575,155.46 36,378,784.76 39,908,604.21 5,045,336.01
FDA 2,548,417.89 11,338,781.56 10,769,625.21 3,117,574.24
JRRMMC 2,341,619.57 35,976,744.61 35,891,389.87 2,426,974.31
NCMH 955,384.44 24,824,885.27 23,918,330.83 1,861,938.88
QMMC 4,133,426.45 69,383,008.41 68,999,595.82 4,516,839.04
RMC 3,144,957.33 21,485,064.70 22,419,512.01 2,210,510.02
RITM 171,598.41 18,766,733.38 18,544,998.25 393,333.54
SLH 3,705,845.02 27,550,856.63 29,460,166.17 1,796,535.48
SLRWH 102,525.38 856,356.17 838,557.60 120,323.95
170
Unremitted
Offices/CHDs/ Balance as of 2009 Tax Refund/
Balance as of
Hospitals January 2009 Adjustments
Withheld Remitted December 2009
MC 1,624,407.64 9,803,982.13 10,173,303.92 P 147,802.31 1,106,658.73
624.81
VMC 233,525.20 2,099,865.04 2,207,541.39 125,848.85
DOH-CO 32,697,153.80 107,170,710.13 131,623,807.52 4,958,626.08 3,285,430.33
CHD 443,703.71 9,201,537.21 7,821,329.97 1,823,910.95
Ilocos Region
CHD - 7,720,178.90 7,366,989.86 353,189.04
Bicol Region
CHD 1,151,735.18 8,000,069.52 7,483,257.72 1,668,546.98
BRTTH 415,287.68 20,668,872.01 19,037,564.61 2,046,595.08
BS - 235,701.47 - 235,701.47
Central Visayas Region
ECS 77,424.18 2,722,881.11 2,645,456.93 154,848.36
Zamboanga Peninsula Region
CHD - 6,306,368.07 4,263,773.82 2,042,594.25
MCS - 2,015,340.20 1,984,459.54 30,880.66
ZCMC - 17,783,313.69 2,362,914.24 15,420,399.45
DJRMH - 1,760,323.36 1,760,323.36 -
LPH - 342,841.00 297,903.57 44,937.43
Total P66,190,356.18 P472,105,472.41 P479,521,104.71 P5,107,053.20 P53,667,670.68
265. The following hospitals and CHD also reported compliance with the laws and
regulations but did not give details on the amount withheld and remitted:
a. NCH
b. DJFMH
c. Region 1 Medical Center
d. CHD for Cagayan Valley
e. JBLMGH
266. The total Tax Remittance Advice (TRA) received by Las Piñas General Hospital
and Satellite Trauma Center for CY 2009 was P3,537,104.83 and the taxes
withheld/deducted for transactions from Advice to Debit Account (ADA) amounted to
P2,387,570.54.
267. At Basilan General Hospital (BGH), minimal withholding taxes were deducted
from its officials and employees monthly compensation income since some employees
individually file their income tax return every year.
268. For the following CHD and two hospitals, the Accountants failed to include the
benefits received by their personnel in the computation of employees’ taxable income as
required by Section 2.79 of Revenue Regulation 2-98 which resulted in non-
withholding/remittance of taxes totaling P7,390,879.83 for CY 2009:
171
Taxes not
CHD/Hospitals Taxable Income
Withheld/Remitted
CHD for Central Visayas CNA benefits P 2,483,051.30
and TDH
VSMMC Affiliation Fee sharing
CNA benefits 4,907,828.53
Honorarium to lawyers
Total P 7,390,879.83
269. Management justified that CNA Incentive was not subjected to withholding tax
since it is not purely compensation income, not a regular benefit and it is given only
through excellent performance of employees using savings as a result to cost-savings
measures during the year derived from austerity or control in expenditures.
b. Chief Accountant of BGH strictly adhere with Revenue Regulations No. 2-98
which states that under the credible Withholding Tax System, taxes withheld
on certain income payments are intended to equal or at least approximate the
income and/or pay the difference between the tax withheld and tax due to
income; and
271. Some CHDs and Hospitals informed that the unremitted taxes withheld as of year-
end were remitted in January 2010 and that the balances for prior years are still being
analyzed before remitting the same.
272. Management of CHD for Central Visayas invoked Section 33 (c) of the National
Internal Revenue Code which provides that “ Fringe benefits given to rank and file
employees, whether granted under a Collective Bargaining Agreement or not, are not
taxable under this section.”
273. The total audit suspensions and disallowances found in the audit of various
transactions of the agencies under the Department of Health as of year-end amounted to
P1,286,677,923.24 which were due to:
172
Workers, and Section 7.1.5a of the Implementing Rules and Regulations (IRR)
resulting in overstatement of expenses by the same amount; and
Amount
Office/Hospital
Suspensions Disallowances Total
DOH CO P 1,194,253,577.58 P 74,677,463.18 P 1,268,931,040.76
QMMC 2,287,945.45 2,287,945.45
POC 2,425,241.21 2,425,241.21
EAMC 54,450.00 1,995,577.64 2,050,027.64
BQ 1,822,341.13 1,822,341.13
NCH 1,304,792.34 1,304,792.34
SLH 1,375,596.26 1,375,596.26
DJFMH 1,091,083.27 1,091,083.27
RITM 329,305.28 921,147.70 1,250,452.98
NCMH 1,032,625.56 1,032,625.56
CHD-MM 646,881.14 646,881.14
FDA 676,751.94 676,751.94
JRMMC 386,000.00 386,000.00
RMC 300,000.00 300,000.00
TMC 510,990.14 510,990.14
VMC 257,556.84 257,556.84
DJRMMC 328,596.58 328,596.58
Grand Total P1,195,669,958.42 P91,007,964.93 P 1,286,677,923.24
173