Republic of the Philippines

COMMISSION ON AUDIT
Regional Office No. 1
City of San Fernando, La Union
Telefax No. (072) 888-6781

April 24, 2017

THE BOARD OF REGENTS

Pangasinan State University
Lingayen, Pangasinan

Gentlemen/Mesdames:

We are pleased to transmit the Annual Audit Report on the Pangasinan State
University, Lingayen, Pangasinan, for the year ended December 31, 2016 in compliance
with Section 2, Article IX-D of the Philippines Constitution and Section 43 of
Presidential Decree No. 1445.

The audit was conducted to ascertain the propriety of financial transactions and
compliance with prescribed rules and regulations. It was also made to ascertain the
accuracy of financial records and reports, as well as the fairness of the presentation of the
financial statements. Likewise, a Value for Money Audit (VFM) was conducted to
determine whether the resources of the University were utilized in an economical,
efficient and effective manner.

We expressed a qualified opinion on the fairness of the presentation of the

financial statements of the University for the reasons stated in the independent Auditor’s
Report in Part I of the report.

The significant findings and observations that need immediate actions are:

1. The consolidated balance of the Property, Plant and Equipment (PPE)

accounts of PSU totaling P1,991,968,010.29 as of year-end does not
reconcile with the Report on the Physical Count of Property for Plant and
Equipment of P1,701,905,242.39, or a difference of P290,062,767.90, which
is not in conformity with Section 38 and 42 of the Government Accounting
Manual (GAM), thus the accuracy, existence and physical condition of these
assets could not be ascertained.

2. Collections/receipts from students and from other National Government

Agencies (NGAs) were recognized in the books under Trust Liability and
Other Payables accounts amounting P4,543,800.00 and P6,052,168.62,
 respectively or a total of P10,595,968.62, which is not consistent with the
Revised Chart of Accounts (RCA) of the Government Accounting Manual
(GAM) and the provisions of CHED Memo No. 20 series of 2011 on the use
of income and IRR of R.A. 8292, thus rendering unreliable the consolidated
balance of the liability account.

3. Long-Term Investment amounting to P3,750,000.00 included in the balance

of the Other Assets account was not supported by a Certificate of Investment
or equivalent official document containing the terms and conditions of the
investment, rendering the propriety, validity, and existence of the reported
investment doubtful.

4. Cash Advances totaling P1,886,666.59 were not liquidated within the

prescribed period and remained outstanding as of December 31, 2016,
although the purpose for which it were granted have already been served,
contrary to COA Circular No. 97-002, thus, expenses were not immediately
recognized when incurred, and rendering unreliable the balances of the
affected accounts.

5. In addition, as of December 31, 2016, the total suspensions and disallowances

of all campuses amounted to P17,425,134.51 and P12,979,270.96,
respectively.

Details of these significant findings and observations together with the other audit
findings and observations are discussed in detail in the Observations and
Recommendations portion in Part II of the report.

We acknowledge the support and cooperation that you and your staffs extended to
the Audit team thus facilitating the submission of the Report.

We request that the recommended remedial measures be immediately

implemented by submitting the duly accomplished Agency Action Plan and Status of
Implementation form hereto attached within sixty (60) days from receipt hereof, in
pursuance with the General Provisions of the General Appropriations Act (GAA) of 2016
(Republic Act No. 10924).

Very truly yours,

MICHAEL R. BACANI
OIC-Regional Director