EXECUTIVE SUMMARY

A. INTRODUCTION

On December 13, 1990, the Department of the Interior and Local Government
(DILG) was reorganized by virtue of Republic Act No. 6975, otherwise known as the
Department of the Interior and Local Government Act of 1990.

The Department’s function is primarily to assist the President in the exercise of

general supervision over local governments in promoting local autonomy, encouraging
community empowerment and maintaining peace and order and safety. The Department
continuously provides trainings, technical assistance, develops materials and implements
various infrastructure development programs and projects in support to the capability
building efforts of the Local Government Units (LGUs).

The Department is composed of the Office of the Secretary, five staff bureaus,
five line bureaus and 16 regional offices.

Under the present organizational set up, the DILG is headed by a Secretary who is
assisted by two Undersecretaries and nine Assistant Secretaries. As of December 31,
2017, the key officials in the Department Proper are the following:

Name Designation
Eduardo M. Año Officer-in-Charge, effective January 4, 2018
Austere A. Panadero Undersecretary for Local Government
Emily O. Padilla Undersecretary for Legislative Liaison and
Special Concerns
Ester A. Aldana Assistant Secretary for Administration and
Finance
Epimaco V. Densing Assistant Secretary for Plans and Programs
III
Ricojudge Janvier M. Assistant Secretary for External and Legislative
Echiverri Affairs
Jonathan E. Malaya Assistant Secretary for Communication and
Public Affairs
Marjorie N. Jalosjos Assistant Secretary for Mindanao Affairs and
Special Concerns
Roosque B. Calacat Assistant Secretary for Barangay Affairs and
Partnership
Alexander L. Macario Assistant Secretary for Peace and Order
Nestor F. Quinsay, Jr. Assistant Secretary for Public Safety
Hamid K. Ladjakahal Assistant Secretary for Muslim Affairs and
Special Concerns

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 The personnel complement of the Department as of December 31, 2017 totaled to
4,363 consisting of 4,313 permanent employees and 50 contractual personnel of Patrol
117 Commission.

B. OPERATIONAL HIGHLIGHTS

In CY 2017, the following were among the major activities undertaken by the
DILG:

Particulars Targets Accomplishments Remarks

Part A: Operations
Organizational Outcome 1:
Percentage of LGUs fully complying 75 percent of 87.70 percent
with the Full Disclosure Policy 1,592 PCMs 1,416 PCMs
Organizational Outcome 2:
Percentage of LGUs with plans, 68 provinces and 70 provinces and
policies, programs and projects on their CMs their CMs
Disaster Risk Reduction and
Management (DRRM) and Climate 178 LGUs 178 LGUs
Change Adaptation (CCA) (Manila Bay)

105 LGUs 106 LGUs

(Mainstreaming
CCA-DRR in
Local
Development
Planning)
Organizational Outcome 3:
Percentage of LGUS with plans, 10 percent 38 percent
policies, programs and projects that increase in the (BPLS - 85
improve competitiveness number of LGUs PPPP - 115)
(72)
Organizational Outcome 4:
Percentage of LGUs with plans, 7.4 percent 10 percent
programs and projects for poverty increase in the decrease
reduction, social protection and number of LGUs (1,378)
security of local communities

Part B: Major Programs/Projects

KRA 1. Transparent, Accountable and Participatory Governance
1.1 Supervision and Development of Local Governments
- No. of LGUs provided with 1,653 LGUs 1,671 PCMs
technical assistance on accountable, (76 provinces
transparent, participative and 142 cities
effective local governance 1,374 muns.
61 PCMs in
ARMM)
- No. of LGUs provided with Econ. Dev’t - 25 20 CMs – BPLS

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 Particulars Targets Accomplishments Remarks
technical assistance on programs DRR - 105 automation
and projects related to economic 80 CMs
development, climate change 5 CMs – BPLS end
adaptation and disaster risk to end transaction
373 LGUs – oriented
reduction and management
on P4
106 - DRR
1.2 Local Governance Performance Management Program-Performance Based Challenge Fund
for Local Government Units (LGUs)
- No. of qualified PCMs provided 100 percent of 100 percent of
with the Performance Challenge qualified LGUs qualified LGUs
Fund (PCF) subsidy
- Percentage completion of PCF
projects
a) 2011-2015 95 percent of 97 percent of PCF
PCF projects projects completed
completed
61 percent or 59
b) 2016 75 percent out PCF projects
of 97 PCF completed
projects
completed
- No. of LGUs with completed 50 59
projects validated
1.3 Civil Society Organization/ People’s Participation Partnership Program
- No. of LGUs conducted CSIS 30 municipalities 30
Survey 15 cities 15
- No. of LGUs with CS reports 30 municipalities
21
18 cities
- No. of LGUs conducted Utilization 30 municipalities 14
Conference 18 cities 15
- No. of LGUs covered with Citizen- 31 municipalities -
Driven Priority Action Plan (CPAP)
updated and monitored
- No. of LRI trainings conducted for 4 4
the 2017 CSIS implementation
- No. of LRIs provided with grants on 10 10
the DILG Technical Assistance
Program
1.4 Lupong Tagapamayapa Incentives Awards (LTIA)
- Regional winners selected and 62 Lupons 56 Lupons
assessed per category
- No. of Lupon National Finalists 12 12
validated
- No. of national awardees conferred 12 12
with 2017 LTIA
KRA 2. Poverty Reduction and Empowerment of the Poor and Vulnerable
2.1 Support for the Assistance to Municipalities Projects (Empowerment Fund)

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 Particulars Targets Accomplishments Remarks
- No. of LGUs with formulated plans 1,373 1,372
for FY 2018
- No. of ADM projects status/ 4,440 4,440
implementation monitored
- No. of LGUs oriented/ trained/ 1,373 1,489
capacitated on ADM
- No. of LGUs trained on 3rd party 1,373 - Activities for
monitoring TPE will be
conducted in
coordination
with LGA
2.2 Provision for Potable Water Supply - SALINTUBIG
- No. of LGUs provided with 308 204
technical assistance in project
preparation, implementation and
operation and management of water
facilities

- No. of LGUs provided with 204 204

financial subsidy
- No. of projects monitored 204 302
sub-projects sub-projects
2.3 Capacitating LGUs on Housing and Resettlement Governance
- No. of LGUs provided transitional
resettlement assistance to support
the provision of basic services in
resettlement sites
a) Establishment of coordinating 12 12
center or One-Stop Shop
b) Maintenance of Community 12 12
Facilities
c) Wages/ Compensation for 12 12
Community Workers
d) Augmentation Fund Support to 12 12
community development
programs
- No. of POs/CSOs provided capacity 18 - The activity
building will not be
conducted
since it is
already
integrated in
the capacity-
building for
POs and CSOs

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 Particulars Targets Accomplishments Remarks
for People’s
Plan
KRA 3: Rapid, Inclusive and Sustained Economic Growth
3.1 Building Business-Friendly and Competitive LGUs
- No. of LGUs oriented on
a) Business Plan Formulation 25 30
b) Investment Promotions 25 30
c) Updating LIIC and LRC 25 25
d) Formulation of Workforce 25 43
Development Plans
- Information Communication 1 1 100 LGUs
Technology for improved LGU oriented
Competitiveness conducted
3.2 Support to Conditional Matching Grant to Provinces for Road Repair, Rehabilitation and
Improvement
- No. of provinces with technical 78 78
assistance in the preparation and
compliance with the 2017 fund
release
- No. of provinces endorsed to DBM 78 77
for direct fund release
- No. of on-going projects monitored 312 316
- No. of provinces implementing its 78 78
governance reform targets
- No. of LGSF projects documented 50 63
KRA 4: Just and Lasting Peace and the Rule of Law
4.1 911 Emergency Services
- Percentage of received calls 100 percent 100 percent of
responded within 8 to 10 minutes 66,047
response time
- No. of 911 Public Safety Answering 14 14
Points monitored
- No. of Emergency Communicators 140 119
trained on effective emergency
response
KRA 5: Integrity of the Environment and Climate Change Adaptation and Mitigation
5.1 Manila Bay Clean-Up
- No. of LGUs monitored on the 178 178
compliance to SC Mandamus
- No. of LGUs validated for the 5 5
Manila BAYani Awards and
Incentives Program
- No. of LGUs granted awards and 5 5
incentives (Regional level-2017)
- No. of LGUs granted awards and 2 2
incentives (National level-2016)
*PCM - provinces, cities, municipalities

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C. FINANCIAL HIGHLIGHTS

2017 2016 Increase/

Particulars
(‘000) (‘000) (Decrease)
Financial Position
Assets ₱ 16,937,228 ₱ 17,801,045 ₱ (863,817)
Liabilities 556,724 1,335,267 (778,543)
Net Assets/Equity ₱ 16,380,504 ₱ 16,465,778 ₱ (85,274)
Financial Performance
Total Revenue ₱ 17,719 ₱ 7,955 ₱ 9,764
Total Current Operating 6,568,374 3,877,211 2,691,163
Expenses
Surplus (Deficit) from Current (6,550,655) (3,869,256) (2,681,399)
Operation
Net Financial Assistance/ 12,853,791 10,811,687 2,042,104
Subsidy
Other Non-Operating Income 14 400 (386)
(Loss)
Surplus (Deficit) for the Period ₱ 6,303,150 ₱ 6,942,831 ₱ (639,681)
Sources and Application of Funds
Allotments Received ₱ 14,166,456 ₱ 16,665,509 ₱ (2,499,053)
Obligations Incurred 13,379,289 14,129,657 (750,368)
Unexpended Allotments ₱ 787,167 ₱ 2,535,852 ₱ (1,748,685)

The details of the allotments, obligations and balances are shown in Annex A.

D. SCOPE OF AUDIT

The audit covered the financial accounts and operations for calendar year 2017 of
the Central Office and the 15 Regional Offices. The report does not include R.O. No. IV-
A due to non-submission of the auditor’s report at the time of consolidation.

E. AUDITOR’S REPORT

The Auditor rendered a qualified opinion on the fairness of presentation of the

financial statements of the DILG due to accounting errors and deficiencies which affected
the fairness of the presentation of the financial statements, as herein enumerated together
with the recommendations:

1. The Cash in Bank–Local Currency, Current Account (LCCA) balance of

₱747.901 million as at year-end was misstated due to: (a) unadjusted book
reconciling items and accounting errors totalling ₱514,605.90; and (b)
delayed/non-preparation of bank reconciliation statements in Central Office and
in four regions. Moreover, unutilized funds/excess fund balances totalling ₱79.87
million intended for the implementation of projects, programs and activities for

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 CYs 2014 to 2017 of four regions were not remitted to the Bureau of the
Treasury. (Observation No. 8)

We recommended that Management: (a) require the Accountant to: (i) prepare the
necessary adjustments to record book reconciling items to reflect the correct
balances of the affected accounts in the financial statements; (ii) prepare bank
reconciliation statements regularly and submit the same to the Office of the
Auditor for verification purposes; and (iii) consider the enrollment of the accounts
with the LandBank e-MDS and weAccess, internet banking facilities developed
for LBP’s institutional clients to facilitate the generation of the monthly bank
statements; (b) require the Accountant of Region I to submit to COA the
Schedule of Outstanding Checks to support the BRS; and (c) remit all unutilized
and excess fund balances to the Bureau of the Treasury.

2. The reliability of the balance of Receivables accounts totalling ₱15.167 billion

cannot be ascertained due to: (a) discrepancy of ₱482.387 million between the
balances per books of DILG and the Implementing Agencies (IAs); and
(b) inclusion of dormant balances amounting to ₱585.993 million. Moreover,
Management failed to strictly monitor the liquidation of fund transfers which
resulted in the accumulation of huge balance at year-end. (Observation No. 9)

We recommended that Management: (a) continue to strictly monitor and enforce

the liquidation of fund transfers by the IAs in accordance with COA Circular No.
94-013 especially for completed activities and discontinued programs; (b) require
the Accountant to: (i) reconcile the discrepancies noted in the Receivables
accounts and prepare the necessary adjustments for valid reconciling items; and
(ii) exert extra effort to locate the required documents to support the recorded
amounts; and (c) request authority from COA for the write-off and/or adjustment
of dormant fund transfers pursuant to COA Circular No. 2016-005.

3. The balance of the Due from National Government Agencies-Procurement

Service-DBM in the Central Office and NCR aggregating ₱62,488,713.10 as at
year-end was doubtful due to: (a) accounting errors totalling ₱6.935 million; and
(b) unsupported recorded deliveries totalling ₱151,773.07. Furthermore, it
includes unutilized or excess balances amounting to ₱59.436 million in the
Central Office and ₱212,076.18 in NCR for undelivered supplies and equipment
and transfers amounting to ₱2.839 million made during the last quarter of CY
2017 which is contrary to Section 20 of the GAA for CY 2017 that prohibits the
transfer of funds during the said period. (Observation No. 10)

We recommended that Management: (a) require the concerned Accountant to

prepare the necessary adjustments for accounting errors noted; (b) require the
Procurement Section/ Property/Supply Officer to: (i) submit to the Accounting
Office the delivery or liquidation report of PS-DBM and maintain a copy thereof
for record purposes; and (ii) monitor the delivery of items requested per APRs;
(c) demand from PS-DBM the immediate delivery of the procured supplies and
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 require the refund of any excess or unutilized funds especially long-outstanding
balances for subsequent remittance to the Bureau of the Treasury; and (d) comply
with Section 20 of the General Provisions of the GAA for FY 2017.

4. The accuracy of the balance of the Property, Plant and Equipment accounts
aggregating ₱914.486 million, net of depreciation, as at year-end was doubtful
due to: (a) inclusion of untitled land and building valued at ₱34.490 million;
(b) discrepancy of ₱127.769 million between the balances per books and per
Report on the Physical Count of PPE (RPCPPE) in Central Office and in two
regions; and (c) inclusion of PPE costing ₱922,852.00 already transferred to
Regional Offices (ROs) which resulted in the overstatement of the PPE accounts
and Accumulated Surplus/Deficit account by ₱922,852.00 and ₱778,852.00,
respectively, and the understatement of the Subsidy to Regional Offices account
by ₱144,000.00. Moreover, unserviceable properties with aggregate value of
₱125.081 million remained not disposed, thus, exposed to damage and further
deterioration which could diminish its resale value. (Observation No. 11)

We reiterated our previous year’s recommendation that Management:

(a) continuously undertake the necessary actions to resolve the issue of ownership
of the subject land and building; (b) require the Accounting Office and Property
Section to: (i) conduct periodic reconciliation of their records and prepare the
necessary adjustments, if any; and (ii) prepare the necessary adjustments in their
respective records to reflect the transfer of PPE to ROs; (c) require the
Accountant to prepare the necessary adjustments on the erroneous classification
of affected accounts; (d) facilitate the disposal of the unserviceable properties to
avoid further deterioration and optimize whatever income from sale thereof.

5. The accuracy of the balance of the Due to NGAs account amounting to

₱169.012 million as of December 31, 2017 was doubtful due to: (a) discrepancy
of ₱62.764 million between the balance per books and the confirmed balances
with the source agencies; (b) accounting errors totalling ₱15.827 million in
Central Office and in NCR which resulted in the overstatement of the Due to
NGAs account and the understatement of various accounts by the same amount;
and (c) inclusion of dormant accounts amounting to ₱484,179.15 without
supporting documents. (Observation No. 12)

We recommended that Management require the Accountant to: (a) coordinate

with the source agencies to establish the correct balance of the unliquidated fund
transfers and make the necessary adjustments, if any; (b) prepare the necessary
adjustments on the errors committed in the classification of accounts; and (c)
exert efforts to locate the documents pertaining to the dormant accounts to
substantiate their balances.

F. OTHER SIGNIFICANT OBSERVATIONS AND RECOMMENDATIONS

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6. The objective of the MASA MASID program of increasing the awareness level on
corruption, drugs, criminality, and encouraging participation among community
members and capability building for stakeholders with budget allocation of ₱500
million for CY 2017 was not achieved due to the: (a) slow/non-implementation of
programmed activities resulting in the reversion of allotment to the General Fund
of ₱10.545 million; and (b) non-utilization of fund transfer amounting to ₱10.500
million. Moreover, funds totaling ₱88.689 million were transferred to the
Philippine Public Safety College (PPSC) and Local Government Academy (LGA)
in December 2017 to avoid the reversion of unutilized allotment to the General
Fund despite the discontinuance of the program in 2018. (Observation No. 1)

We recommended that Management: (a) ensure that target activities are

implemented in due time and funds for the purpose are utilized; (b) require the
IAs to submit the necessary liquidation reports and immediately refund the
remaining/ unused balance from the fund transfers and remit the same to the
Bureau of the Treasury; and (c) require the Accountant to monitor the submission
of liquidation reports by the IAs.

7. Due to significant changes and deviations from the previously approved plan,
withdrawal of potential beneficiaries of the housing units and non-availability of
the land where the project is to be constructed, the implementation of the Micro-
Medium Rise Building project costing ₱1.050 billion posted delivery rate of
30.94 percent wherein only one project or nine percent was completed, four
projects or 36.30 percent were on-going implementation with 5 to 88.80 percent
completion rate while the remaining five projects or 54.50 percent have not yet
been started at year-end. On the other hand, due to continuous delay in the
distribution of the interim shelter fund of ₱18,000.00 per family brought about by
the absence of timeline to distribute the same and delayed endorsement of
beneficiaries by DILG to partner agencies, only 27,886 or 52.80 percent of the
52,734 targeted ISF beneficiaries have been paid the amount of ₱501.948 million
after almost four years of implementation; hence, depriving the 24,848 unpaid
ISFs of the immediate receipt of the financial assistance amounting to ₱447.264
million. Moreover, there was a discrepancy of 437 ISFs per accomplishment
report and disbursement list who have been paid financial assistance totalling
₱7.866 million due to double listing of ISFs in the validated list of endorsed ISFs,
endorsement of both husband and wife as beneficiary instead of one per family
and inconsistency in the number of paid beneficiaries. (Observation No. 2)

We recommended that Management coordinate with the: (a) concerned LGUs and
SHFC to fast track the construction of the MMRB; (b) direct the ISF-PMO to
enforce the provision of the MOA for the refund of the funds transferred in the
event that the implementing partner fails to implement the project based on the
agreed Program of Work or in case of inordinate delay in the implementation of
the project; (c) require the focal person of DILG NCR to report the actual status
of project implementation by the LGUs for monitoring; (d) coordinate with the
NHA and PCUP for the immediate disbursement of the ₱18,000.00 financial
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 assistance to identified beneficiaries; (e) devise a plan to promptly identify,
validate and endorse ISFs to NHA and PCUP; (f) in future undertakings, include a
provision in the MOA on the timeline within which financial assistance will be
distributed to the beneficiaries; and (g) coordinate with the DSWD regarding the
discrepancies of 437 ISFs between the accomplishment report and the
disbursement list.

8. Unliquidated fund transfers intended to support the activities of the Philippines’

hosting of the ASEAN in 2017 have accumulated to ₱1.046 billion at year-end
due to the failure of the implementing agencies (IAs) to submit liquidation
reports/documents within the prescribed period pursuant to Section 4.6 of COA
Circular No. 94-013. Moreover, a discrepancy of ₱404.138 million between the
recorded balances of fund transfers in the DILG books and in the books of eight
IAs was noted. Furthermore, the release of supplemental funds totalling ₱800.84
million to 11 IAs for the same purpose was not covered by Memoranda of
Agreement. (Observation No. 3)

We recommended that Management: (a) in future undertaking, Management

document the transfer with MOA embodying the conditions and responsibilities
of each party to the agreement; (b) require the Accountant to: (i) strictly monitor
and enforce the liquidation of fund transfers in accordance with COA Circular
No. 94-013; and (ii) reconcile the discrepancy noted between the books of DILG
and the IAs and prepare the necessary adjustments to record valid reconciling
items.

9. The implementation of 4,377 subprojects by 1,310 LGUs under the Assistance to

Disadvantaged Municipalities program with budget allocation of ₱18.981 billion
for CY 2017 posted only 45.03 percent physical delivery rate and 40.50 percent
financial delivery rate due to the late release of funds by the Department of
Budget and Management (DBM) to Local Government Units (LGUs) caused by
late submission of documents by the latter to the DILG. Moreover, the agency
failed to fully undertake/conduct targeted seminars/workshops with allocation of
₱10.639 million to capacitate the beneficiary Local Government Units (LGUs) to
ensure the proper implementation of the projects. (Observation No. 4)

We recommended that Management require the PMO to: (a) coordinate with the
concerned LGUs to fast track the implementation of the projects and monitor its
implementation; and (b) provide technical assistance to LGUs that were not able
to comply with the governance conditions.

10. Despite completion of various projects under the SALINTUBIG, BUB and PCF,
these were not used/utilized by the intended beneficiaries due to lacking electrical
connection, no potable water supply, no enclosure for the sanitary toilets and lack
of funds to sustain the operations. (Observation No. 5)

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 We recommended that Management: (a) adopt a strategy to address the recurring
issues and gaps that challenge the operation of completed projects; and (b) direct
the concerned PMO to intensify monitoring and supervision of the
implementation of the projects.

11. The MOA covering the transfer of funds totaling ₱274.780 million to 12 Local
Government Units (LGUs) in the National Capital Region, Regions III and IV-A
under the Resettlement Governance Assistance Fund (RGAF) program lacked
provision regarding timeline of project implementation, submission of financial
reports pertaining to utilization and liquidation of funds transferred and return of
the remaining/ unutilized balance of funds in case of completion of the project
which may result in the accumulation of unliquidated fund transfer, late
implementation of the project and use of funds other than the intended purpose.
(Observation No. 6)

We recommended that Management require the PMO to: (a) coordinate with the
concerned LGUs to fast track the implementation of the projects and activities;
(b) coordinate with the concerned DILG RO to monitor the submission of
progress and financial reports as required under the MOA; (c) coordinate with the
concerned DILG RO to address the deficiencies noted in the Memoranda of
Agreement; and (d) make sure that all programmed activities are undertaken to
avoid the reversion of the allotments.

12. The utilization of ₱755.45 million funds allocated for 11 projects was not
maximized resulting in unutilized allotments amounting to ₱103.707 million
which was reverted to the General Fund at year-end. In view of the utilization rate
ranging from 4.91 percent to 73.3 percent, planned work/activities of the projects
were partially or not carried out during the year. (Observation No. 7)

We recommended that Management: (a) improve its absorptive capacity through

timely implementation of programs and activities to avoid expiration of
allotments and lapsing of cash allocations; and (b) require the responsible officials
to closely monitor the utilization of project funds and see to it that the
programmed projects and activities are all implemented in due time.

13. Various ICT equipment and other equipment valued at ₱2.855 million were
procured/acquired under the guise of lease purchase using the appropriations for
Maintenance and Other Operating Expenses (MOOE) which is not in keeping
with the existing laws on the proper use of government funds. (Observation 17)

We recommended that Management: (a) stop the practice of using the

appropriations for MOOE for the acquisition of equipment under the lease
purchase agreement; (b) justify to DBM the need for the allocation of budget
for capital outlay for the acquisition of equipment; and (c) require the Accountant
to submit to COA the lacking documents to support the transactions.

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14. The balance of Training Expenses amounting to ₱1.048 billion as of December
31, 2017 includes: (a) unnecessary and excessive procurement of various training
supplies totalling ₱1.706 million and ₱128,860.00, respectively; (b) cost of
trainings amounting to ₱5.719 million for 4,773 participants who did not attend
the same; and (c) accounting errors of ₱24.372 million which resulted in the
overstatement of Training Expenses account and the understatement of various
expenses accounts by ₱24.372 million. (Observation No. 15)

We recommended that Management: (a) be prudent and cautious in spending

government funds; (b) require the concerned offices to coordinate the rescheduled
trainings with the PS to avoid the overlapping of the same; and (c) require the
Accountant to prepare the necessary adjustments on the accounting errors and
ensure that financial transactions are recorded under the proper account.

15. Absence of policy/guidelines in the hiring of COS personnel resulted in the:

(a) performance by COS personnel of some duties and responsibilities of existing
regular employees of DILG contrary to the limitation set under Section 7.3 of
CSC-COA-DBM Joint Circular No. 1 s. 2017; (b) assignment of two to eight
COS personnel to one or same office who are performing same functions; (c)
holding of same positions by 158 COS personnel with different
compensation/salary rates; and (d) grant of compensation to hired COS personnel
equivalent to salary grades 24 to 26 has no basis or qualification standards to
justify the same. (Observation No. 16)

We recommended that Management: (a) adhere to CSC-COA-DBM JC No. 1 s.

2017 which prescribes the rules and regulations governing the JO/COS workers in
the government; (b) conduct review of the qualifications of the personnel hired on
contract of service basis and determine whether they may be qualified for the
available positions to be filled-up; (c) for uniform application, adopt a guideline
in the hiring of COS worker/personnel consistent with the existing rules and
regulations; and (d) submit explanation on: (i) various COS holding same position
but with different compensation/salary rates; (ii) basis of the compensation/salary
given to COS personnel whose position was not indicated in the contract; and
(iii) basis of granting compensation to COS personnel equivalent to salary grades
24 to 26.

16. The DILG officials incurred expenses for representation totaling ₱2.060 million
which are similar to the expenses claimed by the same officials for Extraordinary
and Miscellaneous Expenses (EME) which are considered in excess of or beyond
the limit set by law. (Observation No. 18)

We recommended that Management stop charging expenses which are similar in

nature and purpose of the EME such as food and meals incurred for meetings,
conferences and official entertainment attended by DILG officials and employees
and submit the supporting documents to support the same such as list of
attendance of participants and minutes of meetings conducted.
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 17. The validity of disbursements totalling ₱107.447 million cannot be ascertained
due to incomplete documentation contrary to Section 4 of PD 1445. (Observation
No. 20)

We recommended that Management require the concerned Accountant to

immediately submit to COA the necessary documents to support the
disbursements of funds. Henceforth, ensure that documentary requirements for
each disbursement are attached to the claim before effecting payment.

18. Financial reports and supporting documents/schedules were not submitted within
the prescribed period causing delay in the verification of accounts and the timely
communication of the noted deficiencies to Management. (Observation No. 21)

We recommended that Management strictly comply with the reglementary period

of submission of the required reports, supporting documents and contracts in
compliance with the aforementioned regulations.

Other equally significant audit observations and recommendations are also noted
and discussed in detail under Part II of this report.

These observations and recommendations were discussed with the concerned

officials of the agency in an exit conference conducted on May 30, 2018. Management’s
view and compliance with the recommendations were considered in the report, where
appropriate.

G. STATUS OF IMPLEMENTATION OF PRIOR YEARS’ AUDIT

RECOMMENDATIONS

Of the 91 recommendations contained in the Consolidated Annual Audit Report

of 2016, 33 were fully implemented, 55 were partially implemented and three were not
implemented. Details are shown in Part III of this report.

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