Republic of the Philippines

COMMISSION ON AUDIT
National Government Sector
Cluster 4 – Defense and Security
Commonwealth Avenue, Quezon City, Philippines

July 10, 2015

Atty. VIRGILIO L. MENDEZ

Director
National Bureau of Investigation
Taft Avenue, Manila

Dear Director Mendez:

Management Letter on the audit of the

National Bureau of Investigation
for the year ended December 31, 2014

1. Pursuant to Section 2, Article IX-D of the Constitution of the Philippines and

Section 43 of the Government Auditing Code of the Philippines (PD 1445), we have
audited the accounts and operations of the National Bureau of Investigation (NBI) for the
year ended December 31, 2014. The audit was conducted in accordance with applicable
legal and regulatory requirements, and generally accepted state auditing standards. Those
standards require that we plan and perform the audit to obtain a reasonable basis for our
conclusions.

2. The audit was conducted to: a) ascertain the propriety of the financial transactions
and operations of the agency; b) ascertain compliance with prescribed rules and
regulations; c) recommend agency improvement opportunities; and d) determine the
extent of implementation of prior year’s audit recommendations.

3. Deficiencies observed in the course of the audit were early communicated through
Audit Observation Memoranda (AOMs) and discussed in an exit conference conducted
on June 19, 2015 with concerned officials of the NBI. Their responses/comments were
incorporated in this Management Letter (ML), where appropriate.

4. The Annual Audit Report (AAR) on the NBI cannot be prepared because of the
non-submission of the complete component of the Financial Statements (FS), which are
necessary in the preparation thereof. Instead, the herein ML is issued, in line with COA
Memorandum No. 2014-011 dated October 21, 2014. The AAR shall be issued when the
required 2014 FS are submitted within 30 days from receipt of this ML (refer to No. 6 to
11 hereof).

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 Summary of Audit Recommendations

5. We recommended that NBI Management:

a. require the Chief Accountant to prepare and submit the FS in

conformity with the provisions of COA Circular No. 2015-002 dated
March 9, 2015 and Philippine Public Sector Accounting Standards
(PPSAS) 1;

b. (i) make the Stockroom Section the central repository of OR and

distribute/issue the same strictly in adherence to Section 95 of the
GAAM-III; (ii) demand the former SCO assigned at Robinson’s-Imus
to account for the unreported ORs together with the unreported
collections; and (iii) require the SCOs to accomplish the form Invoice
Receipt for Property in case of transfer of accountable forms.

c. (i) require CCO to properly account the actual collections coming

from the SCOs by checking and verifying the Teller’s
Receipts/Remittance against the actual ORs issued for the day and
demand any unremitted collections; (ii) direct the Regional Directors
(RDs)/Agents-in-Charge (AIC) to ensure strict compliance on the
daily and intact deposit of collections, pursuant to Section 69 (1) of
the Presidential Decree 1445; thus, preventing the recurrence of
misappropriation of collections; and (iii) file the necessary criminal
and administrative cases against SCOs, who misappropriated their
collections, and take the necessary action for the recovery of the
misappropriated funds.

d. (i) secure and renew the fidelity bonds of all accountable officers to
ensure that the government will be indemnified in case of loss; and (ii)
refrain from allowing the two casual employees from performing the
functions of a collecting officer, in line with COA Circular No. 97-
002.

e. (i) instruct all SCOs to maintain CRR and prepare RCD in

recording their daily collections and deposits in accordance with the
prescribed forms under Sections 38 and 57 of MNGAS; and (ii) we
also reiterate our recommendation embodied in the 2013 AAR to send
SCOs to a cash management training/seminar for them to be
equipped with the proper handling and management of cash and
related accounts.

f. (i) the strict compliance with the provisions of RA 9184, particularly

in the preparation of the APP, the mode of procurement to be used,
and the selection of suppliers; (ii) to procure the common-use supplies
and equipment from the PS-DBM; and (iii) strictly comply with the

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 Revised IRR of R.A. 9184, particularly the conduct of public bidding,
to avoid the tedious and long process of the filing of money claim
before the Commission on Audit.

g. instruct the Inventory Committee to immediately conduct complete

physical inventory of all property and equipment and submit the
Report of Physical Count of PPE to the Office of the Auditor pursuant
to Section 490 of the GAAM, Volume 1.

h. (i) require all NBI field offices to submit the DTRs and MRAU on or
before the 9th day of the ensuing month in time for the preparation of
the monthly payroll; (ii) provide control mechanism in monitoring
submission of DTRs and MRAU and impose sanctions for late or non-
submission thereof; (iii) require the immediate supervisor to see to it
that each employee signs the monthly DTR and the same should be
verified/attested by them; (iv) enable and assign a personnel within
the Districts and ROs to facilitate timely submission of Report of
Attendance; (v) direct the Personnel Division to regularly update the
personnel record and immediately effect deduction in the payroll for
absences and undertimes of personnel without leave credits; and (vi)
summarize the DTRs in a Monthly Report of Attendance and
Undertimes by Office and by Regions in order to facilitate prompt
updating of the leave cards.

i. cause the immediate registration of all vehicles and secure insurance

coverage for all properties with insurable risks from the GSIS to
assure that the Bureau will be indemnified in case of loss or damage to
property.

j. We reiterated our prior year’s recommendation that Management

prepare and submit in the ensuing year the plans, programs and
projects intended for the concerns of senior citizens and PWDs (or
differently-abled persons), to integrate the same in their regular
activities, and to allocate budget for the said purpose.

Detailed Audit Observations and Recommendations

Non-submission of complete financial statements

6. Of the six components of the FS, only the Statement of Financial Position and
Statement of Financial Performance were submitted, inconsistent with the
provisions of COA Circular No. 2015-002 dated March 9, 2015, and Paragraph 21 of
the Philippine Public Sector Accounting Standards (PPSAS) 1.

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7. COA Circular No. 2015-002 dated March 9, 2015 provides the supplementary
guidelines on the preparation of financial statements and other financial reports, the
transitional provisions on the implementation of the PPSAS, and the coding structure.

8. Further Section 4.2 of COA Circular No. 2015-002 states that-

For the purpose of preparing the Annual Financial Report (AFR) and the
annual audit reports (AARs) for CY 2014, all NGAs shall submit to the
COA Auditors and the Government Accountancy Sector (GAS), COA, the
detailed financial statements and trial balances consolidated by fund
cluster as follows:

a) Regular Agency Fund

b) Foreign Assisted Projects Fund
c) Special Accounts – Locally Funded/Domestic Grants Fund
d) Special Accounts – Foreign Assisted/Foreign Grants Fund
e) Internally Generated Funds
f) Business Related Funds
g) Trust Receipts/Inter-Agency Transferred Funds (IATF)

9. Paragraph 21 of PPSAS 1 and paragraph 4.1 of the above-mentioned circular

enumerates the components of the Financial Statements (FS) as follows:

a) Statement of Financial Position;

b) Statement of Financial Performance;
c) Statement of Cash Flows;
d) Statement of Changes in Net Assets/Equity;
e) Statement of Comparison of Budget and Actual Amounts; and
f) Notes to the FS, comprising a summary of significant accounting policies
and other explanatory notes.

10. The records show that NBI had been delayed in the submission of the required FS
and on May 11, 2015, the Accounting Division submitted only the Statement of Financial
Position and Statement of Financial Performance which are short of the six components
of the Financial Statements enumerated in Paragraph 21 of PPSAS 1, and not in
accordance with Section 4.1 of COA Circular No. 2015-002.

11. Viewed from the non-submission of the complete components of the FS, the AAR
on the NBI cannot be prepared; hence, the issuance of this ML.

12. We recommended that Management require the Chief Accountant to

prepare and submit the FS in conformity with the provisions of COA Circular No.
2015-002 dated March 9, 2015 and PPSAS 1.

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13. The Acting Chief Accountant averred that the financial statements were
submitted, but were returned due to non-compliance with the PPSAS; hence, the financial
statements are currently being revised to conform to the said COA Circular and PPSAS.

Weak Internal control system on collection

14. Internal control on the procurement, request, issuance and monitoring of

Official Receipts (ORs) was not established contrary to Sections 50, 95 and 104 of
the Government Accounting and Auditing Manual, Volumes II and III, thus,
resulted in unaccounted use of ORs amounting to approximately P8,201,225.00 and
possible loss of government funds.

15. Section 50 of the Government Accounting and Auditing Manual (GAAM),

Volume III, which states that the“key duties and functions such as authorization, custody
and accounting shall be assigned to separate offices and individuals to eliminate
opportunities to conceal errors and irregularities…”

16. Section 95 of GAAM, Volume III, provides that Collecting Officers shall keep
adequate permanent record books which should show, among other things, the
whereabouts of the accountable forms with which they are charged, the name and title of
the officer or employee to whom such forms have been given, and the evidence of the
receipt and subsequent sale and issuance of the same.

17. Section 104, GAAM, Volume II, states that: “Transfer of government funds from
one officer to another. x x x When government funds or property are transferred from
one accountable officer to another, or from one outgoing officer to his successor, it shall
be done upon properly itemized invoice and receipt which shall invariably support the
clearance to be issued to the relieved or out-going officer.

18. Evaluation of the collection system revealed the following breakdown in the
internal control system in the procurement, custody and issuance of ORs:

a) A central repository for the procured ORs was not maintained. At present,
ORs are being procured by two sections at the NBI, the Collection and
Stockroom Section. The purchase of ORs by two different sections in an
agency involved two different accountabilities that should be monitored.
Monitoring of ORs would have been easy had the procurement, issuance and
monitoring was lodged in one Section.

b) The segregation of duties and functions, as provided in Section 50 of the

Government Accounting and Auditing Manual, Volume III was not observed.
The personnel assigned at the Collection Section (CS) is in charge in the
procuring, custody and issuance ORs to the Special Collecting Officers
(SCOs) and at the same time charged with the collection of clearance fees.
The handling of ORs by the CS does not conform to sound internal control
and contrary to Section 50 of the GAAM-III as there exists no check and

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 balance over collections process, most especially on the control in the use and
issuances of ORs.

c) As a consequence in the poor internal control in the monitoring of Official

Receipts, unaccounted use of ORs were noted with a possible loss of
government funds amounting to approximately P8,201,225.00. This
happened in Robinson’s, in Imus, Cavite when a total of 1,400 booklets (100
at a time) were issued to the SCO, without first accounting and reporting for
the previous ORs issued. If these ORs were used to collect NBI clearances at
the regular rate of P115.00 per OR, the total collections would be
P8,201,225.00 (See Annex A). As of this writing, the SCO had not reported
his/her accountability despite of his/her relieve from being an SCO in
November 2013. The unaccounted ORs were not discovered immediately
because of the failure of the SCO to prepare the monthly Report of
Accountability for Accountable Forms (RAAF), indicating therein the
receipt, issuance and balance of ORs, and which should be use to support the
request for new ORs.

d) Postings in the Stock Card (SC) of the issuances of the ORs revealed that
only the names of the regional or district offices were indicated instead of the
names of SCOs, which is not in accordance with Section 95 (c) of GAAM,
providing that the name of the accountable officer to whom the accountable
form was issued should be indicated.

e) Transfers of ORs among the SCOs to another were noted. This is indicative
of poor planning in an organization as the head in the regional office failed to
anticipate the bulk of clearance applicants; thus, ORs in the hands of the SCO
were not sufficient, and they resorted to borrow of ORs from the nearby
district offices. Such activity might be abused, and become a source of
corruption. Nonetheless, if it cannot be avoided, proper itemized invoice
and receipt of the accountable form should be accomplished by both
accountable officers, in conformity with Section 104, GAAM, Vol. II.

19. We recommended and Management agreed:

a) make the Stockroom Section the central repository of OR and

distribute/issue the same strictly in adherence to Section 95 of the
GAAM-III;

b) demand the former SCO at Robinson’s-Imus, Cavite to account for the

unreported ORs together with the unreported collections; and

c) require the SCOs to accomplish the form Invoice Receipt for Property in
case of transfer of accountable forms.

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Undeposited/misappropriation of funds amounting to P3,383,990.90

20. Collections were not deposited intact and daily, contrary to Section 69 (1) of
Presidential Decree (PD) No. 1445 and Section 21 of the Manual on the New
Government Accounting System-Volume I (MNGAS-I), and resulted in the
accumulation of undeposited collections and/or misappropriation of funds totaling
P3,383,990.90.

21. Section 69 (1) of the Presidential Decree 1445 states that ”public officers
authorized to receive and collect moneys arising from taxes, revenues, or receipts of any
kind shall remit or deposit intact the full amounts so received and collected by them to
the treasury of the agency concerned ….” (underscoring supplied)

22. Section 21 of MNGAS-I provides that “all Collecting Officers shall deposit intact
all their collections as well as collections turned over to them by sub-collectors/tellers,
with Authorized Government Depository Bank (AGDB) daily or not later than the next
banking day….”

23. Collections at the NBI-Main Office were not remitted intact by the sub-collectors
to the Chief Collecting Officer (CCO), who is in charge of depositing all collections to
the depository bank of the NBI for the account of the National Treasury, Bureau of
Internal Revenue and University of the Philippines System.

24. During the cash examination on August 22, 2014, we noted that three SCOs were
not able to remit their collections intact to the CCO. On the basis of the official receipts,
report of remittance to the CCO and deposit slips, remittances were undertaken the
following day after the date of collection, as shown in the transactions of one of the SCOs
as follows:

Table No. 1
Collections Remittance to the CCO Running
Date Collected Qty. of ORs Amount Date Remitted Amount Balance
7/31/14 231 P 26,565.00 P 26,565.00
8/1/14 603 69,345.00 8/1/14 P69,000.00 26,910.00
8/4/14 397 45,655.00 8/4/14 46,000.00 26,565.00
8/5/14 537 61,755.00 8/5/14 57,500.00 30,820.00
8/6/14 449 51,635.00 8/6/14 51,750.00 30,705.00
8/7/14 493 56,695.00 8/7/14 57,500.00 29,900.00
8/8/14 540 62,100.00 8/8/14 57,500.00 34,500.00
8/12/14 534 61,410.00 8/12/14 69,000.00 26,910.00
8/13/14 435 50,025.00 8/13/14 63,250.00 13,685.00
8/14/14 444 51,060.00 8/14/14 63,250.00 1,495.00
8/15/14 531 61,065.00 8/15/14 57,500.00 5,060.00
8/19/14 552 63,480.00 8/19/14 63,250.00 5,290.00
8/20/14 480 55,200.00 8/20/14 51,750.00 8,740.00
8/22/14 424 48,760.00 8/22/14 57,500.00 0.00
8/26/14 476 54,740.00 8/26/14 46,000.00 8,740.00
8/27/14 513 58,995.00 8/27/14 57,500.00 10,235.00

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 Table No. 1
Collections Remittance to the CCO Running
Date Collected Qty. of ORs Amount Date Remitted Amount Balance
8/28/14 412 47,380.00 8/28/14 51,750.00 5,865.00
8/29/14 449 51,635.00 8/29/14 57,500.00 0.00

25. The requirement for daily remittance/deposit of collections is to prevent the

possible misappropriation of funds in the hands of SCOs. As shown in the above table, if
the collections in July 31, 2014 were used for personal purposes of the SCO, the same
can be covered by the collections for August 31, 2014, or what is termed as lapping –
concealing fraud from a day to the succeeding day’s collections.

26. We also noted that the CCO received the remittances from the SCOs without
checking into the actual collections, that is, the remittances are not being checked
aagainst the actual ORs issued for the day. This made him not able to account for the
actual daily remittance of the SCOs; thus, the full amount of collections was not
deposited intact, contrary to Sec. 69 (1) of PD 1445.

27. The same practice was noted in Region IV-A, particularly, in Robinson’s Place –
Imus, Cavite. Verification on the Tellers Receipt/Remittance submitted by Ms. Amelia
Remollo against the ORs revealed that cash collections amounting to as high as
P235,750.00 remained in her custody with a lag time of about two to six days before
depositing to the Land Bank of the Philippines (LBP), contrary to Section 21 of the
MNGAS-I and Section 111 of the GAAM-I and exposing government funds to the risk of
loss, misappropriation and or unauthorized use.

28. Likewise, in Region VIII, the Audit Team Leader reported that Mr. Lemuel
Dominic Yu, SCO, deposited his collections on a monthly basis. The ATL thereat also
reported that the collections of Mr. Yu for eleven consecutive months totaling to
P1,627,880.00 were not deposited, and the deposit was made upon demand by the ATL.
After the cash examination on August 14, 2014, Mr. Yu remained the SCO of NBI in
Region VIII and his collections totaling to P1,326,860.00 from the date of examination
until October 31, 2014, when he was relieved as SCO, were not deposited yet as of this
writing.

29. The practice of holding cash for more than a day to as long as eleven in the hands
of SCOs resulted in the loss of government funds amounting to P3,383,990.90 on account
of misappropriation. These misappropriation of funds by the SCOs were reported by the
ATLs in various regions nationwide, as follows:

Table No. 4
Region Accountable Officer Period Covered Shortage
III-Tarlac Nicolas A. Mendoza 12/13/12-9/24/13 P 118,070.00
VIII- Tacloban Limuel Dominic Yu 6/28/13-8/14/14 155,266.50
VIII-Ormoc Limuel Dominic Yu 10/2/12-8/18/14 1,585,390.00
XIII-CARAGA Wilfredo D. Baylin 12/27/12-10/8/13 778,480.50
IV-A-Imus Amelia Remollo 746,783.90
Total P3,383,990.90

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30. The deficiency was the subject of an audit observation in the previous year, as
embodied in the 2013 Annual Audit Report, yet, misappropriation of collection were
noted in 2014, which indicate that management failed to address or install the necessary
control preventing the reoccurrence of the deficiency.

31. We recommended that Management:

a) require the CCO to properly account the actual collections from the
SCOs by checking and verifying the Teller’s Receipts/Remittance against
the actual ORs issued for the day and demand any unremitted
collections;

b) direct the Regional Directors (RDs)/Agents-in-Charge (AIC) to ensure

strict compliance on the daily and intact deposit collections, pursuant to
Section 69 (1) of the Presidential Decree 1445; thus, preventing the
recurrence of misappropriation of collections; and

c) file the necessary criminal and administrative cases against SCOs, who
misappropriated their collections, and take the necessary action for the
recovery of the misappropriated funds.

32. Management commented that as part of its remedial measure, the Bureau will
coordinate with Land Bank of the Philippines (LBP) in providing roving tellers to pick-
up collections from the SCOs of satellite offices.

33. Further, several people are already being investigated by the Internal Affairs
Division of the Bureau relative to the unremitted collections by satellite offices. The
Accounting Division will also be sending memoranda to all relevant division to strictly
comply and monitor collections within their jurisdiction.

34. Furthermore, to strengthen and align all matters relating to collection and
remittances of all satellite offices, the Bureau intends to create a Collection Office,
directly under the Financial Service, who will monitor and prepare reports on the
collections of satellite offices. The functions, duties and responsibilities of this Office
will be made in consultation with the Accounting Division, Budget Division and Legal
Division.

35. By way of a rejoinder, the audit team would like to emphasize that the preparation
of the Report of Collections and Deposits remains with the SCOs and this should not be
transferred to the planned “Collectio Office”.

36. We further recommended that the Office of the Auditor be furnished with a copy
of Office Order/ Memorandum Order every time a new SCO is designated or when there
is an opening of a new satellite office, in the NCR as well as in the Regional Offices
(ROs), in order for COA to be updated on the SCOs and to know who are to be cash
examined.

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Non-compliance on bonding and maintenance of collection reports

37. Seven SCOs (four at the NBI-Main Office and three at the regional offices)
were not properly bonded, contrary to Section 101 of PD 1445 resulting in non-
indemnification in case there are losses and misuse of government funds. Further,
two of the four SCOs at the Main Office were casuals, contrary to COA Circular
No. 97-002 dated February 10, 1997, requiring that accountable officers shall be a
holder of a permanent position.

38. Section 101(2) of PD 1445 requires that “every accountable officer shall be
properly bonded in accordance with law.”

39. Verification on the bonding requirement disclosed that out of the 13 SCOs at the
Main Office, four were not bonded and two of these four accountable officers cannot be
designated as SCOs as they are casual employees. We also observed that the practice of
delegating the collection of clearance fees to casual employees. The non-bonding of
SCOs is contrary to Section 101(2) of PD 1445.

40. Likewise, three SCOs in the Regional Offices (assigned in Mandaue Satellite
Office in CEVRO, ERVO – Tacloban and SEMRO – Davao City) were not bonded,
thereby exposing funds to risks of loss as the government will not be indemnified in case
of loss, misappropriation or misuse by the accountable officer.

41. We recommended that management secure and renew the fidelity bonds of
all accountable officers to ensure that the government will be indemnified in case of
loss. We further recommended that management refrain from allowing the two
casual employees from performing the functions of a collecting officer, in line with
COA Circular No. 97-002.

42. In relation to bonding of accountable officers, this Bureau is now making a

careful study on how to strictly implement the “no bond, no collection” rule. As a
safeguard measure, for the meantime, if there will be no available bonded officer, the
executive officer will be bonded.

43. The accountable officers assigned at the NBI satellite offices and mall outlets
are neither maintaining Cashbook/Cash Receipt Record (CRR) nor preparing
Report of Collections and Deposits (RCD); instead, they are using the Daily Tellers
Remittance form in recording their collections and deposits rendering difficult the
determination of cash accountability at any given time, inconsistent with Sections 38
and 57, MNGAS, Volume II.

44. Section 38 of the MNGAS, Volume II, provides that the CRR shall be used by the
designated Collecting Officer to record his/her collections and deposits. Section 57 of the
same manual states that “the RCD shall be prepared by the Cashiers/Collecting Officers
to report all collections received and deposits made. The report lists all the Official
Receipts (ORs) issued in numerical sequence, including the cancelled ones. The report

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shall be the basis in preparing the Journal Entry Voucher (JEV) for recording in Cash
Receipts Journal/Cash Journal, as the case maybe xxx”.

45. We noted in the examination of the report of collections prepared by the SCOs
assigned at the NBI-NCR satellite offices and mall outlets showed they did not prepare
the CRR. Instead, they prepare the “Daily Teller Remittance with the following columns:

a. Teller’s Receipt - indicates the OR serial numbers with the total numbers of ORs
issued;
b. Teller’s Remittance – indicates the OR serial numbers, date issued, number of
ORs, rate of fees and amount; and
c. Collector’s Receipt - the total amount remitted during the day.

46. This report together with the amount collected for the day is being remitted to the
CCO at the NBI Main Office, who in turn, deposit the collections to the LBP. The SCOs
do not prepare RCD; instead, the CCO prepares the same based on the report submitted
by the SCOs and eventually submits to the Accounting Division for recording in the
books of account.

47. Because of the failure of the SCOs to maintain the CRR and prepare the RCD,
determination of the breakdown of receipts/income received and deposits as well as
his/her cash accountability as of a specific date is difficult and misappropriation of funds
cannot not readily determined.

48. We recommended that Management instruct the all SCOs to maintain CRR
and prepare the RCD in recording their daily collections and deposits, in
accordance with the prescribed forms under Sections 38 and 57 of MNGAS.

49. The Accounting and Budget Divisions was directed to cascade all official forms
and reportorial documents to all SCOs to enable all satellite offices to record collections
and remittances.

50. We also reiterate our recommendation embodied in the 2013 AAR to send
SCOs to a cash management training/seminar for them to be equipped with the
proper handling and management of cash and related accounts.

Audit of the NBI Procurement Activities

51. The Bureau failed to prepare an Annual Procurement Plan (APP) for CY
2014 and resorted to the procurement of goods and services through shopping or
emergency purchases, contrary to Section 7.1, 7.2 and 8.1.2 of the Revised
Implementing Rules and Regulations (IRR) of the R.A. 9184.

52. Section 7.1 of the Revised IRR of the R.A. 9184 states that “all procurement shall
be within the approved budget of the procuring entity and should be meticulously and
judiciously planned by the procuring entity.” x x x,”,

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53. Section 7.2 provides that “no procurement shall be undertaken unless it is in
accordance with the approved APP of the procuring entity. The APP shall bear the
approval of the Head of the Procuring Entity or second-ranking official designated by the
Head of the Procuring Entity to act on his behalf, and must be consistent with its duly
approved yearly budget.”

54. Section 8.1.2 states that “to take advantage of the significant built-in efficiencies
of the PhilGEPS and the volume discounts inherent in bulk purchasing, all procuring
entities shall utilize the PhilGEPS for the procurement of common-use supplies in
accordance with the rules and procedures to be established by the GPPB.”

55. The Bureau, in pursuance to the IRR of R.A. 9184, constituted the composition of
the Bids and Awards Committee (BAC), as well as the BAC Secretariat, through a
Memorandum Order, and stating therein the functions of the BAC and the BAC
Secretariat, one of which is to consolidate the Project Procurement Management Plans
(PPMP) (into an APP) from various units of the agency and to make them available for
review.

56. The bureau procured a total of P22,699,259.15 common-use office supplies for
CY 2014. Verification revealed that the procurement of these common-use office
supplies were not based on approved APP, because the agency failed to prepare the APP,
contrary to Section 7.1 and 7.2 of the Revised IRR of R.A. 9184. Despite the continued
reminder/recommendation that purchases of supplies/materials and services should be in
accordance with the approved APP, still the Bureau failed to prepare the same for
CY 2014.

57. Section 8.1.2 of the Revised IRR of R.A. 9184 provides that the procuring entity
shall utilize PhilGEPS in the procurement of common-use supplies to take advantage of
the volume discounts inherent in bulk purchases, as in three months supplies requirement.

58. Out of the total P22,699,259.15 cost of office supplies delivered to the bureau,
P12,914,703.99 or 57% were procured from the different suppliers through shopping or
emergency purchase. Verification of the disbursement vouchers revealed that these
purchases were not supported by Certificate of Non-availability of Stocks from the PS-
DBM. As stated in Section 4.9 of DBM Circular Letter No. 2013-14 dated November 29,
2013, “the COA Auditors are enjoined to include in their audit observations, the status of
agency compliance with RA 9184, i.e. disallow procurements from other sources if not
covered with PS Certificates of Non-availability of Stocks.”

59. Moreover, we noted from the abstracts of canvass verified that two out of three
quotations were taken from regular suppliers (involved in the retail business) of the
bureau, who alternately took turns in the award of procurement of goods/services. These
suppliers regularly supply of office and computer supplies. One of the suppliers is
engaged in the construction and engineering business but supplying the Bureau with auto
supplies, office supplies and computer parts and supplies and appears to be connected
with its nature of business indicating that this supplier and the others are mere

12
middlemen, which offer much higher prices; hence, the procurements were
disadvantageous to the government.

60. Analysis of the payments made for the common-use supplies purchased through
shopping and emergency purchases showed that the bureau paid 13% to 507% more than
the allowable mark-up of 10% compared with the prices of PhilGEPS.

61. The above practices were all contrary to Section 8.1.2 of the Revised IRR of R.A.
9184, which provides that all procuring entities shall utilize the PhilGEPS for the
procurement of common-use supplies to avail of the volume discounts inherent in bulk
purchasing.

62. Good procurement planning brings about an effective, efficient and economic
discharge of the functions of the agency. The non-preparation of APP, procurement by
shopping method instead of bidding, procurement of common-use supplies from private
suppliers instead of PS-DBM, and procurement in piecemeal instead of bulk purchases
are indications of poor procurement planning which may lead to unwarranted purchases
of goods and services, resulting to unnecessary depletion of the much needed
budget/resources of the agency, and may eventually affect the efficient discharge of the
functions of the Bureau.

63. Had management prepared the APP, and procured common-use supplies in bulk
from PS-DBM or utilized the PhilGEPS in its procurement, the bureau could have
generated big savings, which could be utilized in other programs/projects of the agency.

64. We recommended that Management strictly comply with the provisions of

RA 9184, particularly in the preparation of the APP, the mode of procurement to be
used, and the selection of suppliers.

65. We also recommended that common-use supplies and equipment be

procured from the PS-DBM.

66. Management commented that under the present BAC, all items amounting to five
thousand pesos are currently being procured using the PhilGEPS. They are amenable to
the recommendations stated above and will therefore take steps in ensuring compliance
with the provisions of R.A. No. 9184.

67. The advance delivery and installation of IT Equipment and software even
before the conduct of a public bidding and in the absence of a contract, was not in
accordance with the Revised IRR of R.A. 9184, particularly Section 3 (a and b).

68. Section 3 (a and b) of the Revised IRR of R.A. 9184 provides:

“The procurement of the GOP shall be governed by these principles:

13
 (a) Transparency in the procurement process and in the
implementation of procurement contracts through wide
dissemination of bid opportunities and participation of
pertinent non-government organizations.

(b) Competitiveness by extending equal opportunity to enable

private contracting parties who are eligible and qualified
to participate in public bidding. x x x”

69. The DOJ rescinded the contract of the NBI clearance service provider, the
Realtime Data Management Systems, Inc. ( RDMSI), just a few days before its expiration
in a Memorandum dated December 23, 2013.

70. On July 10, 2014, this office was furnished a copy of a letter dated June 23, 2014
of the President of the Value Systems Philippines (VSP), addressed to the NBI Director,
requesting for payment for the value of services rendered for the months of January to
July 2014 for the supply and delivery of ICT equipment and software based on quantum
meruit due to the absence of a contract. Scrutiny of the documents pertaining to the
money claim of the VSP revealed that as early as December 26, 2013, the VSP delivered
the ICT equipment to the NBI main office as well as in the regional offices.

71. On April 25, 2014, this Office received an invitation from the Head, NBI Bids
and Awards Committee (BAC) Secretariat requesting the presence of the Auditor as
observer to the pre-bid conference on April 29, 2014, and the opening of bids on May 13,
2014 for the bidding of One (1) Year Lease of IT Equipment and Software for the NBI
Clearance Processing System.

72. During the public bidding conducted on May 13, 2014, three contractors
participated, namely, the MEGA DATA Inc., iOne Resources and VSP. In the opening
of the bids, iOne offered the lowest calculated bid, followed by VSP and then MEGA
DATA.

73. On June 10, 2014, the Head of the BAC Secretariat wrote iOne Resources
informing the contractor that it was post-disqualified for failure to comply with some
requirements of the BAC.

74. Incidentally, based on the documents presented by VSP for their money claim, the
conduct of public bidding was upon the advice of the NBI Legal Division, who made a
comment that the hiring of a service provider for the NBI Clearance Processing and
Issuance System should comply with the requirements of R.A. 9184.

75. The Notice of Award (NOA) was issued on July 10, 2014, duly received by VSP
on July 30, 2014, and the contract therefor was executed on September 22, 2014. The
Notice to Proceed (NTP) was issued on October 14, 2014, duly received by VSP on
October 23, 2014.

14
76. This scenario was not different from the previous service provider, the Realtime
Data Management Systems, Inc. (RDMSI), who also filed a money claim against the NBI
for services rendered in the absence of a contract, an indication of the laxity in the
implementation of R.A. 9184, particularly Section 3 (a and b) of the Revised IRR of
R.A. 9184. These providers (VSP and RDMSI) rendered even in the absence of a
contract. In the case of VSP, the public bidding was done after the VSP had allegedly
delivered the IT equipment and software, and eventually awarding the contract in favor of
the VSP.

77. Had the bureau planned and conducted the public bidding as early as six months
before the expiration of the contract of the RDMSI, a money claim, which entails long
and a lot of processes and procedures, would be avoided.

78. We recommended that Management strictly comply with the Revised IRR of
R.A. 9184, particularly on the conduct of public bidding, to avoid the tedious and
long process of the filing of money claim before the Commission on Audit.

79. Management commented that they took note of the recommendations and will
make appropriate measures to avoid the incurrence of the same deficiency.

Non-conduct of physical count of properties

80. The existence of the Property, Plant and Equipment (PPE) accounts of
P1,005,237,621.63 (excluding Land and Land Improvements), as of December 31,
2014, could not be ascertained due to the failure of the agency to conduct annual
physical count, contrary to Section 490 of the GAAM, Volume I.

81. For effective control of government property, Section 490 of the GAAM, Volume
I states: “Inventories of supplies, materials and equipment - Physical stock-taking is an
indispensable procedure for the checking the integrity of property custodianship. In all
cases, the physical inventory taking which is required semi-annually or annually should
be regarded with importance. x x x”.

82. The Bureau’s PPE accounts (excluding Land and Land Improvements) as of
December 31, 2014 totaling P1,005,237,621.63, are presented as follows:

Account Name Amount

Office Buildings P 231,344,677.20
Office Equipment 124,371,972.31
Furniture and Fixtures 18,417,777.80
Information and Communication Technology 127,737,597.76
(ICT) Equipment
Books 923,617.52
Communication Equipment 94,291,343.59
Disaster Response and Rescue Equipment 2,228,953.80
Medical Equipment 38,497,210.59

15
 Account Name Amount
Military, Police and Security Equipment 66,667,017.25
Sports Equipment 31,360.00
Technical and Scientific Equipment 140,263,377.33
Machinery and Equipment 33,551,402.16
Motor Vehicles 123,663,998.72
Other Property, Plant and Equipment 3,362,205.60
Total 1,005,237,621.63
Less: Accumulated Depreciation 302,449,955.98
Net Property, Plant & Equipment P 702,787,665.65

83. It is recalled that in the audit of the accounts and operations of NBI in 2013, we
noted the non-conduct of physical inventory of PPEs, except for motor vehicles. This
year’s audit disclosed that an Inventory Committee was created to conduct physical count
of all properties of the bureau, but again, no physical count was undertaken, contrary to
Section 490 of the GAAM, Volume 1 and rendering doubtful the existence of the PPEs.

84. We recommended that Management instruct the Inventory Committee to

immediately conduct complete physical inventory of all property and equipment
and submit the Report of Physical Count of PPE to the Office of the Auditor
pursuant to Section 490 of the GAAM, Volume 1.

85. According to the Chief, SPS, physical inventory of all property and equipment has
not been accomplished due to lack of manpower. However, updating of the list of
properties and equipment are being done to prepare for the yet to be scheduled actual
inventory pursuant to Section 490 of the GAAM, Vol. I.

86. By way of rejoinder, the Audit Team would like to emphasize that updating the
list is not sufficient. The existence of the assets has to be ascertained.

Delayed/Non-submission of Monthly Report of Attendance

87. The propriety on the payment of Salaries and Wages for regular employees
totaling P127,561,919.00 was doubtful due to the non-submission by field offices of
the monthly Individual Daily Time Record (IDTR) and/or Monthly Report of
Attendance as proof of actual service rendered, contrary to Section 194 of GAAM
Volume I, and which also denotes weakness in internal control in monitoring of
attendance of NBI employees.

88. Section 194 of GAAM Vol. I states that“the service must be actual and according
to the prescribed office or work hours, recorded on time record, certified as correct by
the employee concerned, and approved by the immediate superior.”

89. Inquiry and verification of personnel records disclosed that the centralized
monthly payrolls of the NBI officials and employees for the ensuing month are prepared
every 9th day of the current month with the corresponding salaries and wages, debited to

16
their respective bank accounts on the 13th and 27th of the month. Personnel assigned at
the Central Office (CO) are using the biometric system in recording their attendance,
while those in the satellite units, mall outlets, district and Regional Offices (ROs) are
using the logbook or manual entry system.

90. In the case of employees using the manual entry or the logbook system, they
prepare their DTRs manually and submit them to the authorized officials, usually to their
immediate supervisor, for signature. Browsing at the transmittal of the DTRs submitted
by the ROs and based on the interview with the Leave Clerks assigned at the Personnel
Division (PD) revealed that the submission of DTRs using the manual entry was almost 4
to 6 months delayed. According to the Leave Clerk, the delayed submission of the DTRs
was due to lack of personnel in the field to undertake the preparation and submission of
reports, thus, field offices resorted to a courier to facilitate the submission of DTRs and
reports. However, the submission of the DTRs through the courier was not done on a
regular monthly basis but was 2 to 3 months delayed because of monetary constraints.
Statistics on the submission of 2014 DTRs of ROs is shown below:

Particulars Number of Employees Percentage of Total

Timely Submission 157 36%
Delayed Submission 163 38%
No DTR for 6 months 102 24%
No DTR for CY 2014 12 2%
Total 434 100%

91. As shown in the above table, 163 employees were delayed in the submission of
DTRs, 102 employees have no DTRs for 6 months, while 12 employees did not submit at
all. The delayed or non-submission of the DTRs affected the propriety on the payment of
salaries because these were not supported with DTRs, casting doubts on whether services
were actually rendered by those employees whose DTRs were delayed or not submitted
at all.

92. The non-submission or delayed submission of DTRs also showed that mechanism
on the monitoring of attendance by the PD was not in place, which is indicative of weak
controls in the Payroll System.

93. It was further noted that the DTRs and/or their logbook of attendance for the
month are submitted without the Monthly Report of Absences and Undertimes (MRAU).
As a result, the assigned staff has to check the individual DTRs in determining the
absences and undertimes instead of just checking the Report of Attendance; thus
incurring unnecessary manhours to perform this activity.

94. Moreover, when the PD received the DTRs from the districts, satellite units, mall
outlets and regional offices, the DTRs are first submitted to the Office of the Chief for
purposes of monitoring. The DTRs are arranged alphabetically before distribution to the
leave clerks who will then update the leave credits according to their assigned leave
cards. This process contributed to so much delay in updating the leave cards. Because of

17
the delay in the distribution of the DTRs to leave clerks, the updating was done on
semestral instead of monthly basis.

95. The absence of DTRs or delay in the submission thereof may result to full
payment of salaries and allowances of employees with no available leave credits.

We recommended that Management:

a. require all NBI field offices to submit the DTRs and MRAU on or before the
9th day of the ensuing month in time for the preparation of the monthly
payroll;

b. provide control mechanism in monitoring submission of DTRs and MRAU

and impose sanctions for late or non-submission thereof, such as deletion or
non-inclusion in the payroll for those who failed to submit;

c. require the immediate supervisor to see to it that each employee sign the
monthly DTR and the same should be verified/attested by them;

d. enable and assign a personnel within the Districts and ROs to facilitate
timely submission of Report of Attendance;

e. direct the Personnel Division to regularly update the personnel record and
immediately effect deduction in the payroll for absences and undertimes of
personnel without leave credits; and

f. summarize the DTRs in a Monthly Report of Attendance and Undertimes by

Office and by Regions in order to facilitate prompt updating of the leave
cards.

96. Management commented that the Bureau will direct the PD to immediately order
the concerned personnel to explain relative to the non-submission of DTRs.

Non-registration of Motor Vehicles and Insurance of Bureau’s Properties

97. Some motor vehicles were not registered with the Land Transportation
Office (LTO); Moreover, the corresponding insurance cover therefor together with
other properties of the Bureau were not secured from the Government Service
Insurance System (GSIS), contrary to COA Circular No. 82-186 dated May 19, 1982
and Section 489 of GAAM, Volume I; hence, the agency may not be indemnified in
the event of loss or untoward incident over the properties.

98. COA Circular No. 82 – 186 dated May 19, 1982 provides for the annual
registration of all government and military vehicles with the Bureau of Land
Transportation, now Land Transportation Office, and secure and properly display the
appropriate license plates.

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99. Relative thereto is Section 489 of GAAM, Volume I, which states that:

“All heads of departments, commissions, x-x-x offices of national and

local governments concerned except municipal governments below
first class, x-x-x shall secure from the Government Insurance fund
directly all insurances or bonds covering properties, x-x-x and other
insurable risks of their respective offices, including all those in which
they have an insurable interest only.

x-x-x

“The officials mentioned above shall submit their respective

inventories of property every end of the fiscal year to the Commission
on Audit, furnishing the GSIS with a copy of said inventory for
appraisal of the amount of premium to be paid for the insurance of the
property reported.”

100. Review of the accounting and property records showed that in CY 2014, the
agency failed to renew the registration of some of their motor vehicles with the LTO and
secure the insurance cover from GSIS. Verification of the Inventory of Motor Vehicles as
of February 2015 submitted by the Supply and Property Unit (SPU) disclosed that out of
226 vehicles acquired as well as those donated to the bureau, only 84 were registered
with the LTO, while 113 were not renewed and 29 were already declared for disposal.

101. It has been the policy of the bureau that all users of NBI vehicles in Metro Manila
shall register and secure insurance for their assigned vehicles with the LTO and GSIS
respectively, and the registration and insurance expenses paid will be reimbursed to them
by the bureau. Likewise, all regional and district offices were instructed to register and
secure insurance coverage of their official vehicles with the nearest LTO and GSIS in
their respective areas and all expenses incurred pertaining to the registration and
insurance are also subject to reimbursement by the Central Office in Manila.

102. Verification of the accounting records revealed that out of the 113 vehicles
without registration, 30 vehicles were still registered in the names of the donors and
others were not renewed by the accountable officials since CY 2011. It was also noted
that about 30 vehicles have no record of their last registration and these were already
unserviceable, as indicated in the listing of motor vehicles provided by the SPU.

103. Despite non-renewal of registration, these vehicles were utilized as service

vehicles around Metro Manila and provinces, thereby exposing the lives of people to
undue risks and could cost the government substantial amount if accidents happen
on the road.

104. Moreover, we also noted that the Bureau failed to secure from the General
Insurance Fund of the GSIS the necessary insurances cover for the motor vehicles and
other properties.

19
105. The agency officials is required in Section 489 of GAAM, Volume I, to submit
their respective inventories of property every end of the fiscal year to the Commission on
Audit, furnishing the GSIS with a copy of said inventory for appraisal of the amount of
premium to be paid for the insurance of the property reported. However, Management
did not submit the Report on the Physical Count of PPE (RCPPE) as of December 31,
2013, which was the subject of one our audit observation in the Annual Audit Report for
CY 2013. The total amount of Property, Plant and Equipment, exclusive of Land and
Land Improvement, as reported in the Balance Sheet as of December 31, 2013 was
P993,264,900.26.

106. Without insurance coverage, the agency may not be reimbursed or may sustain
losses in case untoward incident happen to these properties.

107. We recommended that Management cause the immediate registration of all

vehicles and secure insurance coverage for all properties with insurable risks from
the GSIS to assure that the Bureau will be indemnified in case of loss or damage to
property.

108. According to the Chief, SPU, they forwarded to the GSIS the List of various
properties submitted by the Accounting Division for insurance coverage. The GSIS then
will provide the NBI the Revised/Updated Insurance Quotation/Proposal, after which, it
will be forwarded to the Chief, Budget for the Certificate of Availability of Funds to be
requested from the DBM.

109. In addition, management commented that they will prepare a memorandum

designating the Supply and Property Section to be in-charge in the Registration/Insurance
of Vehicles assigned in different offices/officers in Metro Manila.

Gender and Development (GAD) Program

110. The Bureau incurred a total of P71,376,748.59 or 7% of the total budget of

P978,277,000.00 for the implementation of the GAD Program.

111. Section 33 (2) of the GAA 2014 General Provisions provides that, “x x x. For
this purpose, activities currently being undertaken by agencies which relate to GAD or
those that contribute to poverty alleviation, economic empowerment especially of
marginalized women, protection, promotion and fulfillment of women’s human rights
and practice of gender-responsive governance are considered sufficient compliance with
said requirement.

112. The Bureau has, for its mandate, a division called Anti-Violence Against Women
and Children (AVAWCD), which conducts investigation of offenses committed against
women and children. Thus, in the formulation of the GAD Plan and Budget, the OIC
GAD Focal Point integrated the GAD related activities of the said division, aside from
the specific GAD activities.

20
113. Hence, the total amount of P71,376,748.59 expended for the GAD Program
consisted of salaries of personnel involved in the investigation of crimes/offenses
committed against women and children, printing and dissemination of flyers/reading
materials on relevant laws/Advocacy kits, etc, conduct of GAD related trainings and the
celebration of the Women’s Month in March 2014.

Senior Citizens and Persons with Disability (PWDs)

114. The Bureau failed to formulate programs and projects intended to address
the concerns of the senior citizens and PWDs, and to integrate the same in their
regular activities, contrary to Section 34 of the General Provisions of the GAA, FY
2014.

115. Section 34 of the General Provisions of GAA, FY 2014 states that all government
agencies shall formulate plans, programs and projects intended to address the concerns of
senior citizens and PWDs, insofar as it relates to their mandated function, and integrate
the same in their regular activities.

116. We requested management for the submission of the 2014 Programs and Projects
and the Accomplishment Report relative to the senior citizens and PWDs, but no
programs and accomplishment report were submitted. Only photographs of the Courtesy
Lane with television and comfortable chairs intended for the senior citizens, PWDs and
pregnant women were presented.

117. We commend management for putting up the Courtesy Lane, but it would be
more meaningful if said project was properly planned/programed and given enough
budget.

118. We reiterated our prior year’s recommendation that Management prepare

and submit in the ensuing year the plans, programs and projects intended for the
concerns of senior citizens and PWDs (or differently-abled persons), to integrate the
same in their regular activities, and to allocate budget for the said purpose.

Compliance with Tax Laws

119. For the year 2014, the NBI withheld taxes from compensation and Value-Added
Tax/Expanded Value-Added Tax from the purchase of goods and services all totaling
P78,660,400.70 and with an ending balance of P543,298.06, for which a Tax Remittance
Advice (TRA) was duly issued and remitted to the Bureau of Internal Revenue in January
2014.

Status of Audit Suspensions, Disallowances and Charges

120. As of December 31, 2014, unsettled disallowances, suspensions and charges

showed a balance of P486,750,127.58 as shown in the next page:

21
 Notice of Suspension P 476,650,295.77
Notice of Disallowance 10,099,831.81
Total P 486,750,127.58

121. The total amount of suspension pertains to the disbursement vouchers the
Accounting Division failed to submit on the prescribed period. This suspension was
already settled before the end of 2014, but the NSDC was issued only in January 2015.
The Notice of Disallowance pertains to the disallowed payment to RDMSI and the
intelligence fund of the previous Director submission of reports. Both disallowances are
now under appeal with the Commission Proper.

Status of Implementation of Prior Year’s Audit Recommendations

122. Of the eleven audit recommendations contained in the 2013 Annual Audit Report
(AAR), three were implemented, four were partially implemented and four were not
implemented. The results of the validation were as follows:

Observations Management Auditor’s

and Recommendations Actions/Comments Validation
1. Collections were not Not implemented
deposited daily and intact to the The recommendation
authorized government depository is reiterated in
bank, in violation of Section 69 of paragraph no. 32 of
PD 1445 and DOF-COA Joint this ML.
Circular 1-81 dated January 1,
1981, exposing government
moneys to unlawful use,
misapplication and possible loss
attributable to negligence, theft or
robbery.
We recommended and management
agreed to:
1.1. require all SCOs regardless
of place of assignments to (a)
directly deposit their collections
to the Land Bank of the
Philippines or any AGDB for
the account of NBI; (b)
maintain Cash Receipts Record
(CRR); and (c) prepare the
Report of Collections and
Deposits (RCD), in order to
facilitate proper monitoring and
early detection of cash

22
 Observations Management Auditor’s
and Recommendations Actions/Comments Validation
shortages; and
1.2. send the SCOs to a cash
management training/seminar
for them to be equipped with
the proper handling and
management of cash and related
accounts.
(Ref.: 2013 AAR, pages 28-30)

2. Petty Cash Fund balance of Partially Implemented

P676,168.87 granted from 2006 to
2013 remained outstanding as of Out of P676,168.87
December 31, 2013, contrary to outstanding balance of
COA Circular No. 97-002 dated PCF as of Dec. 31,
April 19, 1997 and Section 1.2 of 2013, P524,871.91
COA Circular No. 2012-001 dated were liquidated and
June 14, 2012. refunded in 2014
leaving an outstanding
We recommended and Management balance as of Dec. 31,
agreed to direct all accountable 2014 of P151,296.96.
officers to immediately refund the
balance of petty cash fund/cash
advances no longer needed,
specifically those granted from
2006 to 2013. Otherwise, withhold
the salaries of the AOs concerned
pursuant to the provision of the
COA Circular No. 97-002 and
apply the same to their outstanding
balances.
(Ref.: 2013 AAR, pages 31-32)

3. Absence of or inadequate Not Implemented

internal control system in the
monitoring and reporting of Mr. Raul Diaz and
collections and deposits resulted in Mariano Mortel, Jr.
the accumulation of undeposited were dismissed from
collections and/or cash shortages the government service
totalling P3,138,146.70, recorded and forfeiture of
under the Due from Officers and retirement benefits per
Employees account. Ombudsman decisions.
We recommended and Management No internal control

23
 Observations Management Auditor’s
and Recommendations Actions/Comments Validation
agreed to devise and install a sound was established by the
system of internal control in the management, thus we
monitoring and reporting of reiterated the
collections and deposits in order to recommendation in
prevent the misappropriation of paragraph no. 49 of
undeposited collections in the this ML.
hands of collecting officers, in line
with Sections 123 and 124 of PD
1445.
(Ref. 2013 AAR, pages 32-34)

4. The validity, accuracy and Not implemented

existence of the Property, Plant and
Equipment (PPE) accounts of Recorded in the books
P761,920,223.06 (excluding Land, the amount of
Land Improvements and Office P3,931,000.00 in CY
Buildings) as of December 31, 2014, representing
2013 was doubtful because of the: donated motor
(a) failure to conduct annual vehicles. However in
physical count, except for Motor CY 2014 there still
Vehicles in the NCR, contrary to unrecorded donated
Section 490 of the Government properties and non-
Accounting and Auditing Manual, conduct of physical
Volume I (GAAM, Vol. I); (b) count of PPE, thus
unrecorded donated motor vehicles reiteration of this
of undetermined amount; and (c) finding in ML 2014.
non-maintenance of Property Cards The recommendation
(PC) and PPE Ledger Cards is reiterated in
(PPELC) by the Property Unit and paragraph no. 33 of
Accounting Division, respectively. this ML.
We recommended and Management
agreed to:

4.1. cause the immediate

conduct of complete
physical inventory of all
property and equipment
pursuant to Section 490 of
the GAAM, Volume 1 and
identify those that were
already unserviceable for
proper disposal;
4.2. register all donated vehicles

24
 Observations Management Auditor’s
and Recommendations Actions/Comments Validation
in the name of the NBI and
cause the immediate
appraisal and eventual
recording thereof in the
books for the fair
presentation of motor
vehicles account in the
financial statements; and
4.3. direct the Property Officer
and Chief Accountant to
maintain updated PC for
each PPE and PPELC,
respectively, and to
regularly reconcile both
records with the end view of
eliminating discrepancies.
(Ref. 2013 AAR, pages 35-37)

5. Fund transfer amounting to

P2,700,000.00 from the Department Implemented
of Justice (DOJ) intended for
IACAT activities was not used for Already prepared
the intended purpose and remained Journal Entry
outstanding as of December 31, Voucher for the
2013. Further, the same fund correcting entry of
transfer was erroneously credited to fund transfer.
the account Due to Other GOCCs,
instead of Due to Other NGAs
resulting in the
overstatement/understatement of
the same accounts.
We recommended and Management
agreed to require the Accounting
Division to draw a journal entry
voucher correcting the erroneous
entry made for the fund transfer.

(Ref. 2013 AAR, pages 38-39)

6. Carried over balances for
accounts Due to GSIS, Due to Partially Implemented
PHILHEALTH and Due to
PAGIBIG of P4,328,072.34, No action made by the

25
 Observations Management Auditor’s
and Recommendations Actions/Comments Validation
P1,678,940.49 and P4,427,460.61, Accounting Division
respectively, could not be remitted on the implementation
to the respective agencies for a long of the audit
period of time due to the absence of recommendations for
accurate records of deductions the reconciliation.
made; and lack of analysis and However, the
reconciliation. preparation of payroll
was already transferred
We recommended and Management from the Cash and
agreed to: Budget Office to the
Personnel Division.
6.1. analyze and reconcile
immediately the inter-agency
payable accounts with the end
view of remitting all
unremitted balances to the
concerned government
agencies for the benefit of
NBI officials and employees
affected thereby;

6.2. exercise due prudence in the

preparation and posting of
entries to the appropriate
books of accounts to prevent
the incurrence of
discrepancies or unreconciled
balances of accounts; and

6.3. transfer the preparation of

payroll, regardless of status of
employment, from the Cash
and Budget Sections to the
Personnel Section, in order to
strengthen internal control in
the payment of salaries and
allowances of NBI officials
and employees.

(Ref. 2013 AAR, pages 39-41)

7. Expenses totaling
P18,748,976.82 in CY 2012 were Implemented
obligated and paid from the CY
2013 appropriation, contrary to The Budget and

26
 Observations Management Auditor’s
and Recommendations Actions/Comments Validation
Section 15 of R.A. No. 10352. Accounting Division
complied with the
We recommended and Management audit
agreed to stop approving payments recommendations.
or charging prior year’s expenses to
current appropriations, and adhere
strictly to the rules and regulations
on the utilization of funds as well as
in the recording of expenses under
Section 119 of PD 1445, Section 15
of RA 10352 and Section 4 (a),
Chapter 2 of the Manual on NGAS,
Volume 1, in order to avoid the
sanctions provided in Section 43,
Chapter 5 and Section 80, Chapter
7, Book VI of E.O. No. 292, and
the appropriate criminal action
under existing penal laws.

We also recommended that the

Director request all concerned
officials and employees including
creditors to submit their unpaid
claims against NBI at the end of the
year for proper recording/
recognition of the expenses for the
year and in order to appropriately
set up the accounts payable thereof.

(Ref. 2013 AAR, pages 39-44)

8. The validity, reliability and Partially implemented

propriety of Food Supplies
Expenses of P3,920,285.20 cannot We verified the
be ascertained due to (a) disbursement vouchers
insufficiency of documents and noted that there
supporting the same, contrary to were still charges to
Section 4 of PD 1445, Section 28, Food Supplies
MNGAS, Volume 1, and Section Expenses of meals and
8.0 of COA Circular No. 2012-001 snacks served other
dated June 14, 2012; (b) inclusion than the detainees
of meals and snacks amounting to amounting to
P2,140,447.20 served to persons P281,868.16 but the
other than patients/inmates, or payment for food
distributed to people affected by served to detainees

27
 Observations Management Auditor’s
and Recommendations Actions/Comments Validation
calamities/disasters/ground conflict, was improperly
in violation of COA Circular No. charged to
2004-008 dated September 20, Representation
2004. Expenses totaling
P1,265,154.50 in CY
We recommended and Management 2014.
agreed to:

8.1. charge Food Supplies

Expenses account only for
meals served to detainees, in
strict adherence to Section 2
of COA Circular No. 2004 –
008 dated September 20,
2004, and debit OMOE for
meals served during rendition
of overtime services and the
rest to be charged to
Representation Expenses;
8.2. ensure that all disbursements
relative thereto are properly
documented pursuant to
Section 4 of PD 1445,
Section 28, NGAS, Volume
1, and Section 8.0 of COA
Circular No. 2012-001 dated
June 14, 2012; and
8.3. establish guidelines for the
entitlement to meals in lieu
of overtime pay.
(Ref. 2013 AAR, pages 44-47)

9. The Accounting Division Not Implemented

failed to submit to the Office of the
Auditor the required financial Submission of
documents within the reglementary accounting reports
period, contrary to paragraph 6.05 were always delayed
of COA Circular No. 95-006 and hence we reiterated
Sections 71 and 81 of the Manual our recommendation
on the New Government in paragraph no. 11 of
Accounting System (NGAS); thus, this ML.
timely audit of financial

28
 Observations Management Auditor’s
and Recommendations Actions/Comments Validation
transactions cannot be undertaken.
We recommended and Management
agreed to direct the Accounting
Division to submit immediately the
required financial documents to
avoid the imposition of sanctions
provided in Section 122 of PD
1445.
(Ref. 2013 AAR, pages 47-49)

10. The Bureau expended Implemented

P44,166,397.07 for its GAD
activity, or 97% of the
P45,540,850.00, the equivalent 5%
of the total appropriations allotted
for the Bureau’s GAD project for
CY 2013.
(Ref. 2013 AAR, page 49)

11. The Bureau was not able to Partially Implemented

provide at least one percent (1%) of
its budget during the year and to We requested
integrate specific plans, programs management for the
and projects in its regular activities submission of the
intended to address the concerns of 2014 Programs and
senior citizens and differently-abled Projects and the
persons, contrary to Section 29 of Accomplishment
the General Appropriations Act of Report relative to the
2013. senior citizens and
PWDs, but no
We recommended and the Director programs and
agreed to comply with Section 29 accomplishment report
of GAA in order to address the were submitted. Only
concerns of the senior citizens and photographs of the
the differently abled persons by: Courtesy Lane with
television and
11.1. allocating at least 1% of its comfortable chairs
budget; intended for the senior
citizens, PWDs and
11.2. integrating specific/ pregnant women were
appropriate plans, programs presented.
and projects for senior

29
 Observations Management Auditor’s
and Recommendations Actions/Comments Validation
citizens and the differently-
abled persons; and

11.3. designating focal person/unit

to monitor the compliance
and implementation of its
plans and programs.
(Ref. 2013 AAR, pages 49-50)

123. We wish to express our appreciation to the Management and staff of the NBI for
the cooperation and assistance extended to our Audit Team during the audit.

124. We request that appropriate actions be taken on our audit recommendations and
that we be informed of the actions taken thereon by accomplishing the attached Agency
Action Plan and Status of Implementation form and submitting it to us (in hard and
electronic copies) within 30 days from date of receipt hereof.

Very truly yours,

For the Commission on Audit:

Copy furnished:

The Director, NGS, Cluster 4 – Defense and Security

30
 Annex A

National Bureau of Investigation

List of Unreported Official Receipts (ORs)
Amelia C. Remollo – Special Collecting Officer
Imus, Cavite Satellite Office
January 2013 – November 29, 2013

OR Series No. No. of

Date Issued Quantity
From To Booklets
Jan. 22, 2013 8920001 8925000 100 5,000
Feb. 12, 2013 355001 360000 100 5,000
Mar. 1, 2013 95001 100000 100 5,000
Apr. 3, 2013 3995001 4000000 100 5,000
Apr. 30, 2013 3275000 3280000 100 5,000
May 22, 2013 2830001 2835000 100 5,000
Jun. 7, 2013 6125001 6230000 100 5,000
Jul. 4, 2013 9010001 9015000 100 5,000
Jul. 16, 2013 9705001 9710000 100 5,000
Jul. 30, 2013 9790001 9795000 100 5,000
Sep. 2, 2013 4440001 4445000 100 5,000
Sep. 20, 2013 2930001 2935000 100 5,000
Oct. 16, 2013 3445001 3450000 100 5,000
Nov. 8, 2013 3575001 3580000 100 5,000
Nov. 29, 2013 9005001 9006315 100 1,315
Total No. of Unreported ORs 71,315
Clearance fee rate per OR 115.00
Unreported Collections P8,201,225.00

31