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Republic of the Philippines COMMISSION ON AUDIT
Commonwealth Avenue, Quezon City
ANNUAL AUDIT REPORT
on the
HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL
For the Year Ended December 31, 2014
i
EXECUTIVE SUMMARY
A. Introduction
The House of Representatives Electoral Tribunal (HRET) was constituted
under Section 17, Article VI of the 1987 Philippine Constitution to act as the sole
judge of all contests relating to the election, returns and qualifications of Members of
the House of Representatives. The major function of the HRET and its principal
program, project and activity is the adjudication of electoral contests involving
Members of the House of Representatives.
B. Financial Highlights
A summary of the financial position and sources and utilization of funds for
the calendar year 2014 is presented below:
The Statement of Appropriations, Allotments, Obligations, Disbursements and
Balances for calendar year 2014 is shown in Annex A.
C. Operational Highlights
The HRET reported the following accomplishments:
1. Promulgated the following decisions for cases pertaining to 2013-2016 Congressional Term:
a. HRET Case No. 13-001 (QW), Omar vs. Dimaporo, decision dated June 9, 2014
Particulars Amount
Financial Position
Assets 34,730,224.52
Liabilities 19,452,626.33
Net Assets/Equity 15,277,598.19
Sources and Application of Funds
Allotments Received 154,503,000.00
Continuing Appropriations 411,000.00
Total Allotments 154,914,000.00
Obligations Incurred 148,998,000.00
Unexpended Balance 5,916,000.00
ii
b. HRET Case No. 13-002 (EP), Rodriguez vs. Radaza, decision dated July 31, 2014
c. HRET Case No. 13-003 dated January 30, 2014, Apacible vs. Ermita-Buhain, decision dated January 30, 2014
d. HRET Case No. 13-005, Castillo vs. Revilla, decision dated June 9, 2014 e. HRET Case No. 13-007, Matillano vs. Hagedorn, decision dated January 30,
2014
f. HRET Case No. 13-009, Benaldo vs. Uy, decision dated February 27, 2014 g. HRET Case No. 13-021, Muhlach vs. Fuentebella, decision dated August 28,
2014
h. HRET Case No. 13-026, Talaga vs. Alcala, decision dated January 30, 2014 i. HRET Case No. 13-027, Matienzo vs. Reyes, decision dated January 30, 2014 j. HRET Case No. 13-029, Dumarpa vs. Adiong, decision dated May 29, 2014
2. A total of seventeen cases for the 2013-2016 congressional term have attained finality;
3. Conducted technical examination of the signatures and thumbmarks or fingerprints appearing in the Voters Registration Records and Election Day
Computerized Voters’ List pertaining to the 66 revised protested clustered
precincts;
4. Decryption of printed and ballot images of five HRET cases in the Commission on Election; and
5. Revision of ballots of six HRET cases.
D. Scope of Audit
An audit was made on the accounts and operations of the HRET for the CY
2014. The audit was aimed to ascertain the propriety of the financial transactions and
determine the fairness of the presentation of the financial statements of the agency.
E. Auditor’s Report
The Auditor rendered an unqualified opinion on the fairness of presentation of
the financial statements of HRET as of December 31, 2014.
F. Observations and Recommendations
1. Expense allowance of P312,307.08 paid to personnel detailed to two Tribunal Members were charged erroneously to Honoraria (Account Code 50102100),
instead of Other Maintenance and Operating Expenses (Account Code 50299990).
iii
Likewise, reimbursement of cervical and HPV vaccines and payment for flu
vaccines administration amounting to P9,000.00 and P31,800.00, respectively,
were charged erroneously against Office Supplies Expense (Account Code
50203010) instead of Medical, Dental and Laboratory Supplies Expenses
(Account Code 50203080).
We recommended that Management instruct the Accountant to recognize
expenses using the appropriate accounts in the Revised Chart of Accounts.
2. The House of Representatives Electoral Tribunal has no GAD Plan for CY 2014 as required under Section 33 of the General Provisions of the General
Appropriations Act (GAA) for FY 2014 and Joint Circular No. 2012-01 of the
Philippine Commission on Women (PCW), National Economic and Development
Authority and Department of Budget and Management (DBM).
We recommended that Management prepare and implement an annual GAD plan
and budget endorsed by the PCW as required in Section 8.2 of Joint Circular
2012-01.
3. The HRET reported GAD-related projects costing P450,474.47 only or 6.09 percent of the required allocation of P7,399,200.00, contrary to Section 6.1 of the
Philippine Commission on Women/National Economic and Development
Authority/Department of Budget and Management Joint Circular No. 2012-01.
We recommended and Management agreed to increase expenditures for GAD-
related projects and activities to meet the minimum amount prescribed by law.
The aforementioned observations and the corresponding recommendations were
discussed with Management during the exit conference on April 13, 2015.
Management views and comments were incorporated in the report, where appropriate.
G. Implementation of Prior Years’ Recommendations
Of the four prior years’ audit recommendations, one was implemented and three
were not implemented.
TABLE OF CONTENTS
PART PARTICULARS PAGE
I - Audited Financial Statements
Independent Auditor’s Report
1
Statement of Management’s Responsibility for
Financial Statements
3
Statement of Financial Position
4
Statement of Financial Performance
Statement of Changes in Net Assets/Equity
5
6
Statement of Cash Flows
Statement of Comparison of Budget and
Actual Amount
7
8
Notes to Financial Statements
9
II - Observations and Recommendations
19
III - Status of Implementation of Prior Years’
Audit Recommendations
24
IV - Annexes
PART I
AUDITED FINANCIAL STATEMENTS
PART II
OBSERVATIONS AND RECOMMENDATIONS
PART III
STATUS OF IMPLEMENTATION OF PRIOR
YEARS’ AUDIT RECOMMENDATIONS
PART IV
ANNEXES
Note Amount
Current Assets
Cash and Cash Equivalents 5 19,270,747.03
Receivables 6 16,240.92
Inventories 7 431,521.78
Other Assets 8 148,860.74
Total Current Assets 19,867,370.47
Non-Current Assets
Property, Plant and Equipment 9 14,838,354.05
Investments 10 24,500.00
Total Non-Current Assets 14,862,854.05
Total Assets 34,730,224.52
Current Liabilities
Financial Liabilities 11 5,257,648.46
Other Payables 12 14,194,977.87
Total Liabilities 19,452,626.33
Accumulated Surplus/(Deficit) 15,277,598.19
Total Net Assets/Equity 15,277,598.19
Total Liabilities and Net Assets/Equity 34,730,224.52
NET ASSETS/EQUITY
HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL
STATEMENT OF FINANCIAL POSITION
AS OF DECEMBER 31, 2014
ASSETS
LIABILITIES
In Peso
4
Note Amount
Revenue
Service and Business Income 13 99,284.01
Total Revenue 99,284.01
Less: Current Operating Expenses
Personnel Services 14 89,263,869.84
Maintenance and Other Operating Expenses 15 58,103,088.08
Non-Cash Expenses 16 2,366,772.19
Total Current Operating Expenses 149,733,730.11
Surplus/(Deficit) from Current Operations (149,634,446.10)
Net Financial Assistance/Subsidy 17 153,047,384.72
Losses 18 (291,767.16)
Surplus/(Deficit) for the Year 3,121,171.46
HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNALSTATEMENT OF FINANCIAL PERFORMANCE
REGULAR AGENCY BOOKS
For the Year Ended December 31, 2014
In Peso
5
Balance at January 1, 2014 13,041,496.69
Prior Period Adjustments/Unrecorded Income and Expenses (508,421.54)
Restated balance 12,533,075.15
Changes in net assets/equity for Calendar Year 2014
Surplus for the Year 3,121,171.46
Total recognized revenue and expense for the period 3,121,171.46
Others (376,648.42)
Balance at December 31, 2014 15,277,598.19
HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL
STATEMENT OF CHANGES IN NET ASSETS/EQUITY
GENERAL FUND
Accumulated
Surplus/(Deficit)
FOR THE YEAR ENDED DECEMBER 31, 2014
In Peso
6
Note Amount
Cash Flows From Operating Activities
Cash Inflows
Receipt of Notice of Cash Allocation 143,473,000.00
Collection of Income/Revenues 92,279.53
Other Receipts 10,742,645.23
Adjustments 4,899,608.15
Total Cash Inflows 159,207,532.91
Cash Outflows
Remittance to National Treasury 376,648.42
Payment of Expenses 122,546,995.77
Purchase of Inventories 1,985,867.84
Grant of Cash Advances 6,215,324.80
Prepayments 44,160.00
Refund of Deposits 9,187,712.29
Payment of Accounts Payable 3,840,988.34
Remittance of Personnel Benefit Contributions and Mandatory Deductions 10,464,575.97
Other Disbursements 285,967.89
Reversal of Unutilized NCA 1,117,057.23
Adjustments 4,295,483.82
Total Cash Outflows 160,360,782.37 Net Cash Provided by (Used in) Operating Activities 19 (1,153,249.46)
Cash Flows from Investing Activities
Cash Inflows
Proceeds from Sale of Other Assets 31,500.00
Total Cash Inflows 31,500.00
Cash Outflows
Purchase/Construction of Property, Plant and Equipment 1,013,981.42
Total Cash Outflows 1,013,981.42
Net Cash Provided By (Used In) Investing Activities (982,481.42)
Cash Flows From Financing Activities
Cash Inflows
Total Cash Inflows -
Cash Outflows
Total Cash Outflows -
Net Cash Provided By (Used In) Financing Activities -
Increase (Decrease) in Cash and Cash Equivalents (2,135,730.88)
Cash and Cash Equivalents, January 1, 2014 21,406,477.91
HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL
STATEMENT OF CASH FLOWS
GENERAL FUND
FOR THE YEAR ENDED DECEMBER 31, 2014
In Peso
7
Cash and Cash Equivalents, December 31, 2014 19,270,747.03
8
9
HOUSE OF REPRESENTATIVES ELECTORAL TRIBUNAL NOTES TO FINANCIAL STATEMENTS
For the Year Ended December 31, 2014
1. General/Agency Profile
1.1 The House of Representatives Electoral Tribunal (HRET) was constituted
under the 1987 Constitution (Section 17, Article VI) to act as the sole judge of
all contests relating to the election returns and qualifications of Members of
the House of Representatives.
1.2 The major function of the HRET and its principal program/project/activity is
the adjudication of electoral contests involving Members of the House of
Representatives. No target is set for the number of electoral cases to be
resolved each year because the adjudication depends upon the progress of
each proceedings strictly followed in each case.
1.3 The tribunal is composed of nine members, three of whom are Justices of the
Supreme Court and the rest are Members of the House of Representatives.
The Senior Justice acts as the Chairman. As of December 31, 2014, the
HRET has a total personnel complement of 122, composed of the following:
Permanent 76
Coterminous 46
Total 122
2. Statement of Compliance and Basis of Preparation of Financial Statements
2.1 The financial statements of the House of Representatives Electoral Tribunal (HRET) have been prepared in accordance with and comply with the
Philippine Public Sector Accounting Standards (PPSAS) issued by the
Commission on Audit per COA Resolution No. 2014-003 dated January 24,
2014.
2.2 The financial statements of the HRET have been prepared on the basis of historical cost. The Statement of Cash Flows is prepared using the direct
method.
10
3. Summary of Significant Accounting Policies
3.1 Basis of Accounting
a. The Tribunal uses accrual basis of accounting for all of its income and expense accounts. All income and expense accounts are recognized when
earned or incurred, as the case maybe, and reported in the financial
statements in the period to which they relate. Income is generally
composed of filing fees, photocopying and certification charges and sale
of TSNs, HRET Rules, CDs and Reports of the Tribunal.
b. Accounts were reclassified to conform with the Revised Chart of Accounts for National Government Agencies under COA Circular No. 2013-002
dated January 30, 2013. The said conversion/reclassification was made in
order to conform with additional accounts/revised description/title of
accounts and relevant Accounting Policies and Guidelines.
3.2 Cash and Cash Equivalents
a. Cash and cash equivalents comprise cash on hand and cash in bank, deposits on call and highly liquid investments with an original maturity of
three months or less, which are readily convertible to known amounts of
cash and are subject to insignificant risk of changes in value. For the
purpose of the consolidated statement of cash flows, cash and cash
equivalents consist of cash and short-term deposits, net of outstanding
bank overdrafts.
b. Petty Cash Fund (PCF) account is maintained under the Imprest System. All replenishments are directly charged to the expense account. The PCF
is not used to purchase regular inventory items for stock.
3.3 Inventories
a. Inventory is measured at cost upon initial recognition. To the extent that inventory was received through non-exchange transactions, the cost of the
inventory is its fair value at the date of acquisition.
b. After initial recognition, inventory is measured at the lower of cost and net realizable value. However, to the extent that a class of inventory is
distributed or deployed at no charge or for a nominal charge, that class of
inventory is measured at the lower of cost and current replacement cost.
c. Net realizable value is the estimated selling price in the ordinary course of operations, less the estimated costs of completion and the estimated costs
necessary to make the sale, exchange, or distribution.
11
d. Inventories are recognized as an expense when deployed for utilization or consumption in the ordinary course of operations of the agency.
e. Supplies and materials purchased for inventory purposes are recorded using the Perpetual Inventory System.
3.4 Property, Plant and Equipment (PPE)
a. PPE are carried at cost less accumulated depreciation. Regular maintenance, repairs and minor replacements are charged against the
respective Maintenance Expense accounts of each type of Property and
Equipment.
b. An item is recognized as PPE if it meets the characteristic and recognition criteria as a PPE. A PPE acquired through non-exchange transaction is
measured at its fair value as at the date of acquisition.
3.5 Payable Accounts
a. Payable accounts are recognized and recorded in the books of accounts only upon acceptance of the goods/inventory/other assets and rendition of
services to the agency.
3.6 Budget Information
a. The annual budget is prepared on a cash basis and is published in the government website. As a result of the adoption of the cash basis for
budgeting purposes, a separate Statement of Comparison of Budget and
Actual Amounts is presented showing the basis, timing or entity
differences.
3.7 Employees Benefits
a. The employees of HRET are members of the Government Service Insurance System (GSIS), which provides life and retirement insurance
coverage.
b. The HRET recognizes the undiscounted amount of short term employee benefits, like salaries, wages, bonuses, allowances, etc., as expense unless
capitalized, and as a liability after deducting the amount paid.
c. The HRET recognizes expenses for accumulating compensated absences when these are paid (commuted or paid as terminal leave benefits).
Unused entitlements that have accumulated at the reporting date are not
recognized as expense. Non-accumulating compensated absences, like
special leave privileges, are not recognized.
12
4. Changes in Accounting Policies
4.1 On January 1, 2014, the HRET adopted the Philippine Public Sector Accounting Standards (PPSAS), which replaced the existing standard. The
new standard includes the requirement for recognition, measurement,
presentation and disclosure of financial statements.
4.2 The HRET recognizes the effects of changes in accounting estimates prospectively by including in surplus or deficit.
5. Cash and Cash Equivalents
5.1 This account consists of:
Petty Cash Fund P 57,742.40
Cash-in-Bank-Local, Currency, CA 14,313,396.48
Cash–Modified Disbursement System, Regular 4,899,608.15
Total P19,270,747.03
5.2 Cash-in-Bank - Local Currency, Current account amounting to P14,313,396.48 is maintained at the Land Bank of the Philippines–COA Branch. This
represents the deposits made by the Protestants and Protestees who are parties
to electoral cases for expenses incidental to the adjudication of their cases,
which are held-in-trust by the Tribunal.
5.3 Cash-Modified Disbursement System, Regular account amounting to P4,899,608.15 represents the balance of the restored cash equivalent of all
unreleased MDS checks as of December 31, 2014. The said restoration is in
compliance with COA GAFMIS Circular Letter No. 2002-001 dated December
16, 2002, in which all unreleased checks as of December 31, 2014 were
restored in the Cash – National Treasury, MDS account and the appropriate
payable/liability account was recognized under a Journal Entry Voucher (JEV).
However, in the ensuing year, a JEV shall be prepared to reverse the journal
entry made by debiting the appropriate payable/liability account and crediting
the Cash-National Treasury, MDS account. The said MDS account is
maintained at the Landbank-COA Branch.
6. Receivables
This account consists of Due from NGAs amounting to P16,240.92 which
represents prepayments made to the Procurement Service for various office supplies.
13
7. Inventories
This pertains to Office Supplies Inventory which are held for consumption,
details summarized as follows:
Carrying amount, January 1, 2014 P 559,603.42
Purchases for the year 1,180,554.30
Expensed during the year except write-down (1,308,635.94)
Carrying amount, December 31, 2014 P 431,521.78
8. Other Assets
8.1. This account consists of:
8.2. The Advances account consists of:
Advances to Special Disbursing Officers P 8,218.58
Advances to Officers and Employees 79,912.41
Total P 88,130.99
8.3. The Advances to Special Disbursing Officers account represents cash advances for special purpose/time-bound undertakings. The remaining
balance of P8,218.58 pertains to excess of cash advances granted over
expenses incurred. The said amount has already been returned in January and
February, 2015 covered by various Official Receipts.
8.4. The Advances to Officers and Employees account represents the amounts advanced to officers and employees for official travel. The remaining balance
of P79,912.41 pertains to excess of cash advances granted over expenses
incurred. The said amount has already been returned in 2015 covered by
various Official Receipts.
8.5. Prepayments in the amount of P5,520.00 pertain to Other Prepayments account which represents balance of the prepayments made to Central Book
Supply, Inc. for Supreme Court Reports Annotated (SCRA) Volumes 722 up
to 724 which were not yet delivered as of December 31, 2014. The said books
were delivered under Charge Invoice Nos. 127828 dated January 13, 2015 and
128026 dated January 26, 2015 in the amounts of P3,680.00 and P1,840.00,
respectively.
Advances P 88,130.99
Prepayments 5,520.00
Deposits 55,209.75
Total P 148,860.74
14
8.6. The Guaranty Deposits account amounting to P55,209.75 consists of deposits for telephone lines (PLDT), water lines (MWSS) and cellular phones.
9. Property, Plant and Equipment
9.1 This account consists of:
Account Description
Amount
Accumulated
Depreciation
Net Book Value
Office Equipment P 4,942,137.90 P 3,934,263.68 P 1,007,874.22
Information and Communication
Technology Equipment
8,559,354.40 5,313,445.28 3,245,909.12
Communication Equipment 1,081,127.92 712,821.80 368,306.12
Disaster Response and Rescue Equipment 105,902.85 88,573.51 17,329.34
Other Machinery and Equipment 20,992.20 18,893.00 2,099.20
Motor Vehicles 8,856,142.17 2,100,416.69 6,755,725.48
Furniture and Fixtures 3,370,751.15 2,427,530.91 943,220.24
Books 1,225,612.40 997,547.76 228,064.64
Leased Assets Improvements, Building 3,589,274.21 1,319,448.52 2,269,825.69
Total P31,751,295.20 P16,912,941.15 P14,838,354.05
9.2 The Leased Assets Improvements, Building account pertains to the cost of improvements made to the COA-NCR Building which is subject to a Lease
Agreement with the Commission on Audit together with the Senate Electoral
Tribunal.
10. Investments
This account represents Investment in Stocks with PLDT with carrying
amount of P24,500.00.
11. Financial Liabilities
a. This account consists of:
Accounts Payables P5,236,648.46
Guaranty/Security Deposits Payable 21,000.00
Total P5,257,648.46
b. The Accounts Payable represents obligations to various suppliers arising from the purchase of goods and services and other obligations in connection
with the Tribunal’s operations. As of December 31, 2014, the balance
includes the amount of P261,371.47 which represents various accruals made
on services rendered which remained unpaid as of December 31, 2014. Also
included in the balance of Accounts Payable Account is the restored cash
15
equivalent of various unreleased checks drawn from the Cash-Modified
Disbursement System, Regular Account amounting to P4,899,608.15. The
remaining balance of P48,656.27 represents various outstanding accounts
payable which were set-up in 2014.
c. The Trust Liabilities account pertains to Guaranty/Security Deposits Payable amounting to P21,000.00. This represents the Performance Bond paid by the
House of Representatives Electoral Tribunal-Employees Cooperative in
compliance with the Photocopying Service Agreement.
12. Other Payables
The Other Payables account amounting to P14,194,977.87 pertains to the cash
deposits made by various Protestants and Protestees for expenses to be incurred in
connection with the adjudication of their cases filed with the Tribunal.
13. Revenue
13.1. Total Revenue for the year consists of the following:
Other Service Income P51,946.72
Interest Income 47,337.29
Total P99,284.01
13.2. The Other Service Income is composed of the following:
Filing Fee P30,000.00
Sale of Valueless Records 8,984.22
HRET Rules 5,900.00
Certified True Copy 3,300.00
Certification 2,070.00
Stenographic Notes 1,642.50
Research Fee 50.00
Total P51,946.72
13.3. Interest Income amounting to P47,337.29 pertains to the interest earned from the Current Account maintained at the Landbank-COA Branch.
16
14. Personnel Services (PS)
Personnel Services is composed of the following:
Salaries and Wages
Salaries and Wages - Regular P47,932,194.09
Other Compensation 16,883,297.47
Personnel Economic Relief Allowance (PERA) 2,932,841.84
Representation Allowance (RA) 2,955,112.91
Transportation Allowance (TA) 4,812,112.90
Clothing/Uniform Allowance 590,000.00
Productivity Incentive Allowance 459,000.00
Honoraria 525,800.00
Year End Bonus 3,993,304.82
Cash Gift 615,125.00
Personnel Benefit Contributions 6,414,825.62
Retirement and Life Insurance Premiums 5,660,113.12
Pag-IBIG Contributions 146,100.00
PhilHealth Contributions 462,512.50
Employees Compensation Insurance Premiums 146,100.00
Other Personnel Benefits 18,033,552.66
Terminal Leave Benefits 391,744.46
Other Personnel Benefits 17,641,808.20
Total PS P89,263,869.84
15. Maintenance and Other Operating Expenses (MOOE)
MOOE is composed of the following:
Travelling Expenses P3,664,889.44
Travelling Expenses - Local 1,627,388.97
Travelling Expenses - Foreign 2,037,500.47
Training and Scholarship Expenses
Training Expenses 2,219,244.50
Supplies and Material Expenses 3,442,766.82
Office Supplies Expenses 2,912,972.53
Accountable Forms Expenses 5,500.00
Non-Accountable Forms Expenses 110.00
Fuel, Oil and Lubricants Expenses 523,811.79
Other Supplies and Materials Expenses 372.50
Utility Expenses 2,662,661.05
Water Expenses 216,354.61
Electricity Expenses 2,446,306.44
17
Communication Expenses 2,480,460.04
Postage and Courier Expenses 42,790.00
Telephone Expenses 1,980,610.04
Internet Subscription Expenses 457,060.00
Confidential, Intelligence and Extraordinary Expenses
Extraordinary and Miscellaneous Expenses 4,887,965.41
Professional Services 4,978,886.33
Legal Services 500.00
Consultancy Services 4,978,386.33
General Services 2,685,669.04
Janitorial Services 1,509,461.08
Security Services 1,176,207.96
Repairs and Maintenance 425,158.58
Repairs and Maintenance - Machinery and Equipment 202,518.41
Repairs and Maintenance - Transportation Equipment 122,074.42
Repairs and Maintenance - Furniture and Fixtures 2,500.00
Repairs and Maintenance - Leased Assets
Improvements, Bldg. 98,065.75
Taxes, Insurance Premiums and Other Fees 204,091.47
Taxes, Duties and Licenses 2,579.06
Fidelity Bond Premiums 116,625.00
Insurance Expenses 84,887.41
Other Maintenance and Operating Expenses 30,451,295.40
Representation Expenses 5,035,195.29
Rent/Lease Expenses 1,247,662.37
Subscription Expenses 92,268.00
Other Maintenance and Operating Expenses 24,076,169.74
Total MOOE P 58,103,088.08
16. Non-Cash Expenses
This consists of the following:
Depreciation-Machinery and Equipment P 993,389.47
Depreciation-Transportation Equipment 901,832.29
Depreciation-Furniture, Fixtures and Books 148,515.75
Depreciation-Leased Assets Improvements Building 323,034.68
Total P2,366,772.19
18
17. Net Financial Assistance/Subsidy
This consists of the Subsidy from the National Government, as follows:
NCA received from DBM for the payment of expenses for
the Tribunal’s operational requirements and various
accounts payable incurred in operations
P143,473,000.00
Reversion of unutilized NCA (1,117,057.23)
Tax Remittance Advice (TRA) issued to BIR 10,691,441.95
Total P153,047,384.72
18. Loss on Sale of Assets
The Loss on Sale of Assets of P291,767.16 pertains to the difference between the
selling price or the proceeds from sale of unserviceable properties totaling
P31,500.00 and the carrying amount of these properties of P323,267.16.
19. Reconciliation of Net Cash Flows from Operating Activities to Surplus/(Deficit)
Surplus/Deficit for the year 3,121,171.46
Add/(Deduct) Non-Cash Movements:
Depreciation 2,366,772.19
Increase/(Decrease) in Payables (6,976,967.21)
(Gain)/Loss on sale or property, plant and
equipment
291,767.16
(Increase)/Decrease in other current assets 123,343.04
(Increase)/Decrease in receivables (79,336.10)
Net Cash Flows from Operating Activities (1,153,249.46)
19
OBSERVATIONS AND RECOMMENDATIONS
Erroneous charging of expenses
1. Expense allowance of P312,307.08 paid to personnel detailed to two Tribunal Members were charged erroneously to Honoraria (Account Code 50102100),
instead of Other Maintenance and Operating Expenses (Account Code
50299990). Likewise, reimbursement of cervical and HPV vaccines and
payment for flu vaccines administration amounting to P9,000.00 and
P31,800.00, respectively, were charged erroneously against Office Supplies
Expense (Account Code 50203010) instead of Medical, Dental and Laboratory
Supplies Expenses (Account Code 50203080).
1.1 Section 18 of the General Provisions of the GAA for FY 2014 states that, “Use of Government Funds. Government funds shall be utilized in
accordance with the appropriations authorized for the purpose.”
Expense allowance charged erroneously to Honoraria
1.2 Section 53 of the same General Provisions states:
“Honoraria. The respective agency appropriations for honoraria
shall only be paid to the following:
(a) Teaching personnel of the DepEd, TESDA, x x x .
(b) Those who act as lecturers, resource persons, coordinators and facilitators in seminars, training programs, and other similar
activities in training institutions, including those conducted by
agencies for their officials and employees wherein no seminar
fees are collected from participants;
(c) Chairs and members of commissions, boards, councils, and other similar entities, including personnel thereof who are not paid
salaries nor per diems but compensated in the form of honoraria
as provided by law, rules and regulations;
(d) Those who are involved in science and technological activities and render services beyond their regular workload;
(e) Officials and employees assigned to special projects, xxx.
20
(f) Officials and employees authorized to received honoraria under
RA No. 9184 and its IRR.”
1.3 Review and verification of the transactions for CY 2014 showed that the following personnel detailed to two Tribunal Members claimed expense
allowance at the rate stated opposite their names. The expense allowance is in
the form of a compensation in lieu of services rendered, for these personnel
are not included in the payroll of co-terminous employees:
Name
Rate for the
Month of
Jan. to Dec.
Rate for the
Month of Jan.
to Sept.
Rate for the
Month of Oct.
to Dec.
Staff of Justice Diosdado Peralta
1. Flor Madarang 5,000.00
2. Flerida Lim 5,000.00
3. Arnel Gacayan 5,000.00
Staff of Justice Lucas Bersamin
1. Erlano Ruiz 4,500.00 4,500.00
2. Donald Edralin Nonato 2,500.00 2,500.00
3. Ramon Nicolei Ramos 2,000.00 2,500.00
4. Ara Janica Austria 2,000.00 2,500.00
5. Alan H. Dalisay 2,000.00 2,500.00
6. Santa Carolina Bersamin 2,000.00 2,500.00
1.4 Payments were made in favor of these personnel as shown in Annex B. The schedule showed that the nine detailed personnel claimed a total of
P312,307.08 for the period January to December 2014 which were charged
erroneously against Honoraria (Account Code 50102100), in violation of
Section 53 of the General Provisions of GAA.
1.5 As a result, expenditure for the Honoraria is overstated by P312,307.08 and Other Maintenance and Operating Expenses is understated by the same
amount.
Vaccine expenses charged erroneously to Office Supplies Expense
1.6 Review and evaluation of the disbursement vouchers for the months of October and December 2014 showed that the following were charged
erroneously to Office Supplies Expense instead of Medical, Dental and
Laboratory Supplies Expenses:
C H E C K
Particulars Date No. Amount Payee
10/01/14 260738 31,800.00 Uni-Vax Medical and Equipment Supplies
Payment for flu vaccine administration for 100 personnel at P336.00 per dose
12/17/14 261180 9,000.00 Atty. Girlie I. Salarda Reimbursement of cervical and HPV vaccine
Total 40,800.00
21
1.7 As a result of the erroneous charging of the expenses, there was an overstatement of the Office Supplies Expenses by P40,800.00 and
understatement of Medical, Dental and Laboratory Supplies Expenses by the
same amount.
1.8 We recommended that Management instruct the Accountant to recognize expenses using the appropriate accounts in the Revised Chart of
Accounts.
1.9 Management commented that they will comply with the recommendation and that they will take the necessary steps to prevent the occurrence of a similar
situation in the future.
2. Status of Audit Suspensions, Disallowances and Charges (SASDC)
2.1 There was no Audit Suspension and Disallowances for CY 2014 and there is no unsettled audit suspension, disallowance and charges in prior years.
3. Gender and Development (GAD)
3.1 The House of Representatives Electoral Tribunal has no GAD Plan for CY 2014 as required under Section 33 of the General Provisions of the
General Appropriations Act (GAA) for FY 2014 and Joint Circular No.
2012-01 of the Philippine Commission on Women (PCW), National
Economic and Development Authority and Department of Budget and
Management (DBM).
3.2 Section 33 of the General Provisions of GAA for FY 2014 states that, “All agencies of the government shall formulate a Gender and Development
(GAD) Plan designed to address gender issues within their concerned sectors
or mandate and implement applicable provisions under R.A. No. 9710 or the
Magna Carta of Women, Convention on the Elimination of All Forms of
Discrimination Against Women, the Beijing Platform for Action, the
Millennium Development Goals (2000-2015), the Philippine Plan for
Gender-Responsive Development (1995-2025), and the Philippine
Development Plan (2011-2016).” The GAD plan shall be integrated in the
regular activities of the agencies, which shall be at least five percent of their
budget.
3.3 Further, Section 8.2 of Joint Circular 2012-01 of the PCW/NEDA/DBM states that, “The GFPS of the agency shall review all submitted GPBs and as
needed, provide comments or recommendations for revision. Agency review
22
of GPBs shall focus on the alignment of the GAD plan with the GAD agenda
and the correctness and alignment of the entries in each column of the GPB
template, e. g. if the proposed activities respond to the identified gender issue
or cause of the issue, the issues are correctly identified or formulated, if
there are clear indicators and targets, if the proposed budget is realistic, if
the number of proposed activities are doable within the year, among others.
The GFPS shall then submit the final GPBs and the corresponding GAD ARs
to PCW for review and endorsement to DBM.”
3.4 It was observed that for CY 2014, Management did not have a GAD Plan and
Budget which was supposed to be endorsed by the Philippine Commission on
Women (PCW). Management admitted such lapse in their letter dated March
6, 2014 to the Supervising Auditor.
3.5 Due to the absence of a GAD plan and budget, Management was not guided as to which GAD-related projects and activities were to be funded and
implemented. Without this plan, the Audit Team found it difficult to
evaluate and determine if the projects stated in the HRET’s accomplishment
report were GAD-related.
3.6 We recommended that Management prepare and implement an annual GAD plan and budget endorsed by the PCW as required in Section 8.2
of Joint Circular 2012-01.
3.7 Management commented that in acknowledgement of the said deficiency, all the members of the GAD Focal Point System, which include both the
Executive Committee and the GAD Technical Working Group, underwent
several trainings starting 2013 in order to secure the endorsement of the PCW
for their GAD Plan and Budget for CY 2015. Further, Management
commented that they were nonetheless guided by RA No. 9710, otherwise
known as the Magna Carta of Women, and its Implementing Rules in
determining which projects and activities were GAD-related and thus the
expenses of which may be attributed to GAD.
3.8 The HRET reported GAD-related projects costing P450,474.47 only or 6.09 percent of the required allocation of P7,399,200.00, contrary to
Section 6.1 of the Philippine Commission on Women/National Economic
and Development Authority/Department of Budget and Management
Joint Circular No. 2012-01.
3.9 Section 6.1 of Joint Circular 2012-01 states that, “At least five percent (5%) of the total agency budget appropriations authorized under the annual GAA
shall correspond to activities supporting GAD plans and programs. The
GAD budget shall be drawn from the agency’s maintenance and other
operating expenses (MOOE), capital outlay (CO), and personal services
(PS).”
23
3.10 The HRET had a total appropriations of P147,984,000.00 for CY 2014, of which five per cent or P7,399,200.00 was authorized for GAD activities.
Although HRET had no GAD plan, its GAD accomplishment report showed
a total actual cost of P450,474.47, or only 6.09 per cent of the required
budget of P7,399,200.00.
3.11 We recommended and Management agreed to increase expenditures for GAD-related projects and activities to meet the minimum amount
prescribed by law.
3.12 Management commented that they will continue to endeavor to comply with the adverted provisions of Section 33 of the General Provisions of the 2014
GAA and Joint Circular 2012-01 and increase the expenses for GAD-related
projects and activities.
4. Compliance with Tax Laws and Regulations
4.1 In compliance with DOF-DBM-COA Joint Circular 1-200 dated January 3, 2000 and Presidential Memorandum Order No. 219 dated February 13, 1989,
taxes withheld from 2014 disbursements were remitted to the Bureau of
Internal Revenue (BIR) on or before due dates. The total taxes remitted to
BIR amounting to P10,714,740.20 consist of taxes withheld from salaries and
expanded and final taxes withheld from payment of goods and services.
Month
Date
Remitted
Taxes Withheld
Total
Compensation
Purchase of
Goods and
Services
January 2/4/2014 P 704,744.61 P 15,697.58 P 720,442.19
February 3/6/2014 712,090.50 77,097.90 789,188.40
March 4/3/2014 701,055.31 84,520.15 785,575.46
April 5/6/2014 704,147.58 273,003.26 977,150.84
May 6/2/2014 692,068.02 78,825.56 770,893.58
June 7/2/2014 692,537.97 108,832.33 801,370.30
July 8/5/2014 722,148.63 55,669.38 777,818.01
August 9/3/2014 1,828,485.37 66,357.50 1,894,842.87
September 10/3/2014 751,819.04 76,345.22 828,164.26
October 11/6/2014 751,965.05 64,092.77 816,057.82
November 12/3/2014 715,698.10 76,075.98 791,774.08
December 1/5/2015 635,124.37 126,338.02 761,462.39
Total P9,611,884.55 P1,102,855.65 P10,714,740.20
24
5. Compliance with GSIS Premium Deductions and Remittances (RA 8291)
5.1 GSIS Social Insurance and Employees Compensation Fund (SIF and ECIF) premiums were deducted from the salaries of employees and remitted on time
to the GSIS.
6. Compliance with PDAF Decision
6.1 The HRET did not receive funds from the Priority Development Assistance Fund (PDAF) for the calendar year 2014.
7. Disbursement Acceleration Program (DAP)
7.1 The HRET did not receive allotment for the DAP for CY 2014.
25
STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT
RECOMMENDATIONS
Of the four prior years’ audit recommendations, one was implemented and three
were not implemented.
Observations and
Recommendations
Reference
AAR
Page No.
Actions Taken by
Management
Auditor’s
Validation
Results
2013
Management failed to
furnish the Office of the
Auditor copy of purchase
orders within five (5)
working days from issuance
thereof contrary to COA
Circular No. 2009-001
dated February 12, 2009.
We recommended that
Management require the
officials concerned to
comply with COA Circular
No. 2009-001 on the
submission of a copy of
purchase order issued
within the reglementary
period.
16-17
Implemented
Purchase Orders
(POs) and Job
Orders (JOs)
were religiously
forwarded to the
Office of the
Auditor.
POs and JOs
were submitted
within 5 days
after receipt of
the supplier/s.
26
Observations and
Recommendations
Reference
AAR
Page No.
Actions Taken by
Management
Auditor’s
Validation
Results
2012
1. The agency had no programs/projects
related to senior citizens
and the differently-
abled persons and did
not allocate at least one
per cent of its budget as
required under Section
29 of the General
Provisions of R.A. No.
10155, GAA for CY
2012.
We recommended that
Management prepare
programs/projects
related to the senior
citizens and differently-
abled persons and
allocate at least one
percent (1%) of its
budget as required in
the GAA provision
2011
1. Management was still using the traditional cash
payroll scheme in paying
the salaries, allowances
and other personnel
benefits of its officers
and employees instead of
the automated payroll-
thru-bank system, thus,
incurring unnecessary
manpower resources and
exposing payroll money
to risks of losses through
theft or robbery.
20-21
Not implemented
Management had
instructed
the General
Service to
complete the plan
for the project as
soon as possible,
so that the
necessary budget
be allocated for
the purpose.
Not implemented
The HRET has
only 127
employees and
payment of
salaries,
allowances and
other personnel
benefits is more
convenient using
the traditional
cash payroll
scheme.
Management did
not prepare
plans/projects
related to the
senior citizens
and differently-
abled persons,
hence no
disbursement
was made.
Management
contended that
using the
Automated Bank
Scheme would
entail much
time queuing at
the bank. And
if they use such
scheme,
employees
assigned at the
Cash Manage-
ment Service
will have no
27
Observations and
Recommendations
Reference
AAR
Page No.
Actions Taken by
Management
Auditor’s
Validation
Results
We recommended that
Management consider
adopting payment of
salaries thru automated
bank scheme to
strengthen internal
control on cash and to
promote operational
efficiency. Initiate
arrangements/coordinate
with government
depository bank to
implement the payroll
thru ATM.
2. The agency has not created an Internal Audit
Service/Unit contrary to
Administrative Order
Nos. 278 and 70 dated
April 28, 1992 and April
14, 2003, respectively.
We reiterated our
previous
recommendation that
Management organize an
IAS pursuant to
Administrative Order
Nos. 278 and 70.
Otherwise, Management
should request an
exemption from the
application of these
regulations.
21
Not implemented
In compliance
with the pro-
vision of Admi-
nistrative Order
Nos. 278 and 70,
the Tribunal will
create an IAS to
be supervised by
the Section Chief
of the Accounting
Service, who will
be relieved of her
work in the
Processing Unit.
more duties to
perform.
Moreover, their
depository bank
is very near the
HRET.
Management is
considering im-
plementing the
recommendation
in the future.