AOM No. NCR 2020 -03 (2019)

Date : June 19, 2020

AUDIT OBSERVATION MEMORANDUM (AOM)

Executive Order No. 449, s. 1997 was issued to restructure the functional groupings of the Bureau of the Treasury to perform more effectively its functions. Section 2 (5) of the said EO states that the Regional Offices which includes all Provincial/District Offices directly reporting to the TOP is responsible for the examination of the books of accounts of national collecting officers (NCOs) and local treasurers (LTs), including the monitoring of reports of provincial offices; providing technical advice and support to government field representations in the implementation of laws, rules and regulations governing Treasuryoperations, recommending Fidelity Bond claims to the Treasurer of the Philippines for payment, chargeable against the Fidelity Fund; and consolidating daily reports on national collections and disbursements as submitted by provincial offices.

Aside from the examination of books of NCOs and LTs, the BTR-NCR is also in-charge in the processing and approval of bond applications and cancellation, renewal of Fidelity Bond, accreditations of NCOs and LTs, preparation and transmission of Provincial and Regional Reports, validation of Monthly Report of Collections and Deposits (MRCDs) from NCOs and LTs, certification/confirmation of Deposited National Collections requested by NGAs, monitoring of Other Revenues, monitoring of paid MDS Checks through Authorized Government Servicing Banks (AGSBs), re-order/purchase of MDS Checks, opening of bank accounts for receipts and MDS Disbursements from NGAs, and back support for Regional Offices (ROs) such as administrative, cashiering, budgeting and accounting activities.

Evaluation of the compliance and performance of the BTr-NCR on its mandate disclosed the following:

1. The examination of the books of accounts of National Collecting Officers (NCOs) and Local Treasurers was not conducted since January 2015

Under the Manual of Operations of the BTr-NCR, the Treasury Operations Officer (TOO) IV/TOO III/Administrative Officer IV and Fiscal Examiner II are tasked to:

1. Validate/encode/download Authorized Government Depository Banks (AGDBs) daily summary of deposited national collections and MDS disbursements submitted by AGDBs/AGSBs;
2. Validate Monthly Report of Collections and Deposits submitted by the National Collecting Officers and Local Treasurers;
3. Process fidelity bond application of accountable public officers and ensures correctness of the bond premium;
4. Prepare certification/confirmation of deposited national collections;
5. Receive and process re-order of MDS Checks;
6. Received requests for opening of MDS bank accounts and transfer of IR AGDBs and check its completeness;
7. Examine the books of accounts of National Collecting Officers/Local Treasurers and
8. Conduct of inventory of Property, Plant and Equipment.

On the other hand, under the same manual, in conducting examination of the book of accounts of the NCOs/LTs, the TOO/FE will:

1. conduct the actual examination by requiring the Accountable Officers (AOs) to produce the cash book/Cash Receipts Record (CRR) and related accountable forms such as Official Receipts (ORs), Abstract of Collections and Subsidiary Ledger;
2. conduct the actual physical count and inventory of accountable forms;
3. check and verify record of collections against the duplicates of issued ORs and theamount reflected in the deposit slips as book/CRR;
4. determine if the national collections are deposited intact on the same day of collection or on the next banking day, as the case maybe; and
5. validate the deposited national collections by the AOs with the subsidiary ledger maintained by the him/her and prepare the narrative report with findings, recommendations and actions taken at the District/Provincial level upon return to the office to be submitted to the Chief Treasury Operations Officer (CTOO) I/II.

To evaluate the performance of BTr-NCR, we requested a copy of the report on the examination of the books of accounts of NCOs and LTs, conducted by the District Offices, for CY 2019. Instead of the requested report, BTr-NCR submitted their Accomplishment Report (AR) for CY 2019. Review of the submitted AR revealed that the examination of books of account of NCOs and LTs was not conducted by the BTr-NCR due to lack of manpower resources of the District Offices (DOs), as stated in the List of Issues and Concerns attached to the AR. Further verification showed that said activity was not undertaken since the beginning of CY 2015.

Since January 2015, the observation was reported to the top management throughthe List of Issues and Concerns attached to the AR and the BTr-NCR recommended immediate filling-up of vacant items and hiring of personnel on Job Order basis to augment its manpower resources.Verification of the actual Personnel Complement as of January 15, 2020, submitted by the Acting Administrative Officer of the BTr-NCR disclosed 35 TOO Plantilla Position for the District Offices as follows:

Position	Salary Grade	District	Total
I	II	III	IV
Treasury Operations Officer IV	19	3	3	1	3	10
Treasury Operations Officer III	16	6	5	3	3	17
Treasury Operations Officer II	13	2	2	1	2	7
Treasury Operations Officer I	11	0	0	0	1	1
Total		11	10	5	9	35

Out of the total plantilla positions cited above, 23 TOO positions were unfilled as of January 15, 2020, details are shown in the next table:

Position	Salary Grade	District	Total
I	II	III	IV
Treasury Operations Officer IV	19	0	1	0	1	2
Treasury Operations Officer III	16	6	5	1	3	15
Treasury Operations Officer II	13	2	1	0	2	5
Treasury Operations Officer I	11	0	0	0	1	1
Total		8	7	1	7	23

Had the 23 TOO positions were properly filled-up, the task of examining the books of NCOs/LTs should have been undertaken.

1. Sanctions stated in Department of Finance (DOF) Order No. 52-96 with regards to the non-submission of the MRCD by NCOs/LTs was not enforced

Section I.1 of DOF Order No. 52-96 dated May 22, 1996 requires the NCOs/LTs to deposit daily their collections for the day into the interest earning Savings Account of the Treasurer of the Philippines (TOP) with AGDBs to which they are accredited by the Treasury Fiscal Examiner (TFE). Further, Section III.1.c of the same DOF Order states that collections received after banking hours or after deposit had been made, shall be deposited on the next banking day.

DOF Order No. 20-99 with an effectivity date of August 1, 1999 was issued to supplement the guidelines in Section III of DOF Order No. 52-96 dated May 22, 1996, to include the following:

1. Section III.1.e states that the NCO/LT shall accomplish the MRCD and submit to the concerned TFE on or before the 10^th day of the ensuing month.
2. Section III.3.a requires the TFE to check from the MRCD whether all collections reported by the NCOs/LTs are deposited on the same day or the next banking day, as the case maybe. Should there be deviations to DOF Order No. 52-96, the TFE shall call the attention of the concerned NCOs/LTs in writing, copy furnished the Head of the Agency and the Resident COA Auditor.

Section V of DOF Order No. 52-96 provides that failure to comply with the requirements of the DOF Order shall subject the responsible officer and employee to appropriate criminal and/or administrative action.

Review of accomplishment on the evaluation and assessment of the MRCD disclosed that the percentage of the MRCD received and assessed by the BTR-NCR ranged from 27.54% to 41.24% monthly or an average of 31.77% of the total NCOs for CY 2019. Details are shown in the next table:

Percentage of the MRCD received and assessed to Total NCOs
Months	District I	District II	District III	District IV	Total
January	13.00	41.23	49.00	30.48	33.43
February	17.00	42.79	38.00	19.25	29.26
March	17.00	51.33	41.00	55.61	41.24
April	15.00	51.33	41.00	27.81	33.78
May	15.00	42.98	56.00	17.65	32.91
June	15.00	42.98	56.00	17.65	32.91
July	14.00	45.89	51.00	10.70	30.40
August	10.00	45.73	51.00	22.46	32.30
September	9.27	41.81	51.00	22.46	31.13
October	10.42	48.68	35.00	16.04	27.54
November	12.00	51.71	36.00	14.97	28.67
December	12.35	50.64	33.00	21.39	29.35
Average	13.34	47.12	43.58	23.04	31.77

It is evident in the above data that majority of the NCOs/LTs did not comply with the provision of Section III.1.e of DOF Order No. 20-99. Interview with concerned BTr-NCR personnel on the actions taken with regards to the said violation disclosed that, due to limited manpower, they only called the attention of the concerned NCOs/LTs verbally and not in writing as required under Section III.3.a of the same DOF Order.

Enforce the sanctions stated in DO No. 52-96 to eliminate/lessen erring NCOs/LTs and safeguard government funds.

Further review of the ARs showed that one of the significant findings in the assessment of the MRCD is the non-compliance with the above-cited provisions, wherein the collections were not deposited intact daily. Hence, it increases the risks of misuse or loss of government funds and may eventually affect the cash flow programming and incur additional cost to the National Government.

Despite the continuous disregard of the NCOs/LTs with the provision of DOF Order No. 20-99, specifically on the submission of MRCD to the concerned TFE on or before the 10^th day of the ensuing month and the findings on the failure of NCOs/LTs to deposit their collections daily, the BTr-NCR was still not able to enforce the sanctions stated in the DOF Order No. 52-96.

To prove the effect of the non-enforcement of the sanctions of DOF Order No. 52-96, the audit team gathered data from the COA Annual Financial Report (AFR) for CYs 2015-2018 and collated the following:

1. The government loss a total amount of P80.593 due to misappropriation of funds, as follows:

Year	Amount (in million)	Agency
2015	P 1.28	UPS, DOST, IFSU (CAR)
2016	37.762	BI, BIR RROs 1,7 and 19, DA, BSU (CAR), ISCOF (R6), ESSU (R8)
2017	34.791	SCP, NBI, UPS, MARINA
2018	6.76	BIR, OCD, OMSC, CTU
Total	P 80.593

Although the amount of loss of funds in CYs 2017 and 2018 decreased, it still deprived the government of using the amount to finance its programs/projects and activities and entails additional cost in borrowing funds by issuing bonds and bills.

1. Collections of 2,036 accountable officers (AOs) totaling P3,377.434 million were not deposited intact the next banking day, details are as follows:

Year	No. of NGAs	No. of AOs	Amount (in million)
2015	25	73	P 335.57
2016	29	253	642.101
2017	23	94	159.763
2018	20	1,616	2,240.00
Total	97	2,036	P3,377.434

The increasing number of AOs that failed to deposit their collections increases the risks of misappropriation and loss of government funds.

Should the BTr-NCR enforce the sanctions in DOF Order No. 52-96, the degree of non-compliance n the provisions of DOF Order Nos. 52-96 and 20-99 and loss of funds can be minimized and lessen the additional cost to the National Government.

1. Noteddelays of 1 to 48 days in the issuance of Certificate of Deposited National Collections of various COs in the NCR

Another function of the District Offices (DOs) is to issue a certification/confirmation ofdeposited National Collections of various collecting officers (COs) in the NCR upon the request of various NGAs and COA Auditors. The processing time for the issuance of the certification/certification depends on the classification of application as follows:

Classification of Application	No. of Working Days
Simple	3
Complex	7
Highly Technical	20

Interview with concerned BTr-NCR personnel disclosed that NGAs' requests for certification/confirmation of the deposited collections for the following purpose: (a) to support their request for the release of NCA from the DBM; (b) to validate the deposits made by their COs; and (c) to reconcile the deposits made to the BTr against the amount recorded in the books of accounts. On the other hand, COA Auditors requests for the said certification/ confirmation to determine whether all collections of COs, being audited, were deposited in the account of the BTr.

Instruct the District Offices to mobilize available personnel to fast tract the processing andissuance of certification on the Deposited National Collections of various COs in the NCR in order for the requestors to conduct timely validation and reconciliation of the deposited made by the COs and the possible implementation of appropriate corrective measures for any defects and/or deficiencies that may be noted in the process.

Review and evaluation of the submitted Report on Pending Transactions beyond the Prescribed Processing Time as of December 31, 2019, revealed that there were delays, ranging from 1 to 48 days, in the verification and issuance of Certificate of Deposited National Collections, details are as follows:

Name of Applicant	Period	Classification of Application	Date of Filling	Date of Issuance	Delays
Requests from NGAs
National Telecommunications Commission - National Capital Region (NTC-NCR)	12/1-31/18	Simple	1/17/19	1/30/19	8
Environmental Management Bureau (EMB)	12/1-31/18	Simple	1/11/19	1/30/19	10
Land Transportation Office (LTO)	10/01/18-12/31/18	Complex	1/14/19	2/18/19	13
EMB	1/1-31/19	Simple	2/8/19	2/18/19	3
LTO	1/1/18-12/31/18	Complex	2/15/19	3/18/19	14
NTC-Central Office (CO)	2/1-28/19	Simple	3/14/19	3/19/19	1
NTC-CO	3/1-31/19	Simple	4/8/19	4/15/19	2
NTC-NCR	3/1-31/19	Simple	4/4/19	4/15/19	6
LTO	10/1/18-12/31/18	Complex	4/4/19	4/17/19	2
DFA-Novaliches	1/1-31/19	Simple	4/12/19	4/22/19	2
NTC-CO	1/1-31/19	Simple	2/8/19	4/25/19	48
Bureau of Internal Revenue-Revenue Region (RR) No. 7	7/1/18-12/31/18	Complex	4/30/19	6/4/19	18
NTC-CO	5/1-31/19	Simple	6/14/19	6/26/19	6
DFA-NCR	2/1/19-3/31/19	Simple	6/4/19	6/26/19	13
BIR-RR7	4/1/19-6/30/19	Complex	6/26/19	7/12/19	7
NTC-CO	6/1-30/19	Simple	7/15/19	7/23/19	4
NTC-NCR	6/1-30/19	Simple	7/11/19	7/23/19	6
NTC-NCR	7/1-31/19	Simple	8/22/19	8/30/19	3
PRC-Novaliches	1/1/19-6/30/19	Simple	8/23/19	8/30/19	2
NTC-NCR	9/1-30/19	Simple	10/7/19	10/17/19	6
LTO-NCR	7/1/19-9/30/19	Complex	10/10/19	11/18/19	15
Land Registration Authority (LRA)	1/1/19-9/30/19	Complex	10/14/19	11/22/19	22
Requests from COA Auditors
Land Transportation Franchising and Regulatory Board (LTFRB)	1/1/18-12/31/18	Complex	1/16/19	2/12/19	16
PHILVOCS	2016-2017	Complex	12/13/18	1/15/19	11
LTFRB-CO/NCR	Jan-Dec.2018	Complex	1/16/19	2/12/19	11
DILG	Jan-Dec. 2018	Complex	1/30/19	2/18/19	6
OMB	7/10/2005	Simple	3/1/19	3/20/19	10
DAR	9/3-12/31/08 / 1/02-09/19	Complex	8/6/19	8/28/19	2
CHED	8/16/18 - 7/8/19	Complex	8/6/19	8/28/19	7
Quirino Memorial Medical Center (QMMC)	8/29/18-9/9/19	Complex	10/1/19	10/22/19	8
DPWH RO IVA	8/1/2018 - 8/6/2019	Complex	10/16/19	11/26/19	22

As of February 14, 2020, delays ranging from 1-44 days were still noted,as follows:

Name of Applicant	Period	Classification of Application	Date of Filling	Date of Issuance	Delays
Advance Science Technology Institute	9/7/18 -9/25/19	Complex	1/31/20	2/14/20	3
National Telecommunications Commission-NCR	1/2-31/20	Simple	2/11/20	2/17/20	1
Professional Regulation Commission-NCR	12/1/19-1/31/20	Simple	2/3/20	2/17/20	7
Optimal Media Board-COA	1/1/19 - 12/31/19	Simple	2/3/20	2/17/20	7
National Telecommunication Commission - CO	1/2-31/20	Simple	2/10/20	2/17/20	2
Department of Foreign Affairs, Office of the Consular Affairs	11/2/2019 - 12/31/2019	Simple	1/28/20	2/20/20	14
Land Transportation Office (LTO), NCR (25 Collecting Officers)	10/1/19 - 12/31/19	Complex	1/14/20	2/20/20	20
Land Transportation Franchising and Regulatory Board (LTFRB). CO and NCR - COA (2 NCOs)	1/2/19 - 12/31/19	Complex	1/23/20	2/20/20	13
Philippine Nuclear Research Institute (PNRI)	09/01/19-1/31/20	Simple	1/28/20	2/20/20	14
DOH-Philippine Blood Center (3 NCOs)	10/01/18-10/31/19	Complex	2/3/20	2/27/20	10
LTO, NCR	10/01/19-12/31/19	Simple	1/15/20	3/2/20	29
LTO, NCR	1/1/19-09/30/19	Simple	1/29/20	3/2/20	20
ASTI	12/20/2019	Simple	2/7/20	3/2/20	20
POEA	11/02/19-12/31/19	Simple	2/10/20	3/2/20	20
Philippine Coast Guard	9/01/17-11/30/19	Complex	12/10/19	2/27/20	44
LTFRB VII	04/01/19-12/31/19	Simple	1/22/20	2/27/20	22

Inquiry disclosed that the noted delays in the verification and issuance of the Certificate of Deposited National Collections were due to limited personnel to perform the task.

The delays in the issuance of theCertificate of Deposited Collections precluded the requestors from conducting timely validation and reconciliation of the deposited made by the NCOs and the possible implementation of appropriate corrective measures for any defects and/or deficiencies that may be noted in the process.

In the review of the plantilla positions, it was noted that the BTR-NCR hired one (1) employee in CY 2018 and four (4) employees in CY 2019 or a total of five (5) new employees. However, during the same period seven (7) newly employees of the BTr-NCR were separated from the service. In CY 2018, one (1) employee retired and two (2) employees were deceased while in CY 2019, one (1) employee transferred to another government agency, two (2) employees retired, and one (1) employee resigned from the service. It is worth to mention that in CY 2020, four (4) employees will be retiring in the second quarter.

Instruct the Acting Administrative Officer, in coordination with the Human Resource Management Division-BTr-CO, to fast tract the processing and screening of new applicants; and follow-up with the HRMPSB the status of the applications submitted by the Acting Administrative Officer.

With regards to the demographics by age of the personnel under the BTr-NCR as of December 31, 2019, 31% is under the age bracket of above 60 years old and 34% is under the age bracket of 51-60 years old, details were as follows:

Age	Station	Total
RO	District I	District II	District III	District IV
below 30	3	2	2	2	1	10	29%
31-40	-	-	-	-	-	-	-
41-50	2	-	-	-	-	2	6%
51-60	2	1	5	2	2	12	34%
above 60	-	3	3	3	2	11	31%
Total	7	6	10	7	5	35	100%

The Acting Administrative Officer is already processing the hiring of various personnel for the unfilled positions. In CY 2019, the Acting Administrative Officer, processed nine (9) new applications and two (2) promotions to higher position. Out of the nine (9) new applicants, five were approved by the Human Resource Management Promotion and Selection Board (HRMPSB) of which an applicant was assigned to the BTr-Central Office (CO) while the remaining four (4) new applicants and two (2) promotions were deferred by the Head of the Agency.

With the current personnel complement of BTr-NCR, some functions were not undertaken. Given the demographics, in two (2) to four (4) years, 31% or 11 of the 35 personnel will retire. If management will not hire additional personnel to fill-up vacant positions, all the more that BTr-NCR will not be able to carry on fully its mandate stated under EO No. 449.

Identify the Criteria, Conditions, Cause, Effect, Recommendations